Archive for the ‘federal budget’ category

Is The Federal Debt A Problem?

July 21, 2017

At almost $20 trillion, the Federal Debt is a big number. Politicians’ rhetoric range from “the sky is falling” to “how can we leave this to the next generation”. Others counsel that the US can borrow at historically low interest rates, so from strictly a business perspective, the US should be borrowing more and investing in infrastructure, medical research, alternate forms of renewable energy, and increasing the skills and education level of American workers. So why is there such a divergence in opinions?

Continuing with the business analogy, no investment is wise unless there is a positive return. This means that any money spent on new or improved roads, harbors, or airports must generate enough profit to repay the amount of the investment AND some additional “profit”. So if the Government can borrow (by issuing Treasury Bonds) at 3%, any investment should return the bond value plus some interest in excess of 3% (preferably greater than 6-8%.

When the Government spending, however, goes for Obamacare, Medicare, Medicaid, or Social Security, what is the return?  The Republican debt argument roughly lies upon this premise. There is no return for entitlements and accordingly there should be no spending on them.

Democrats see Government spending on entitlements as a sacred promise Government has made to citizens. Democrats would be ok with funding entitlements through increased taxes but have not been successful getting Republicans to agree. Consequently, the Government does borrow, does put the cost onto the Federal Debt, and does pass it on to the next generation.

Considering the strength of the dollar and the credit worthiness of the US, increasing the Federal Debt does not present the catastrophic consequences many conservatives see.  Also, if entitlements come with no return, what is the return on military spending?  Hmmm.

But over and above the question of what is the return on government spending, there is still a huge problem, namely continuing to increase the Federal Debt is a default result, not a conscious decision by Congress. The inability of Congress to reconcile its spending and taxing priorities is a far greater problem with far greater potential consequences.

Behind a deadlocked Congress lies one or more special interests which stand to gain mightily. Dark Money (conservatives like Koch Brothers, Mercers, and others) seek simply to keep more of their earnings through lower taxes.   Business interests seek industry specific favoritism normally to increase earnings. This has bred a Congress of era centric, anything but statesmen members.

The current candidate for Congress is normally good looking, modestly well off, and primarily interested in getting reelected. For Representatives, most rely upon districts whose boundaries have been set with the thought towards favoring one party or the other. Who is going to think about the country as a whole?

The Federal Debt could become a problem were interest rates to increase dramatically. Today that is not the case. Never the less, the debt and the unbalanced budget both represent large warning signals about the quality of public officials Americans elect.

Healthcare Debate Show Down?

July 10, 2017

Republicans have fought mightily to pass legislation which “repeals and replaces” the Affordable Care Act (Obamacare). Divisions within their own party have prevent Senate ratification of a repeal and replace, and now back from the 4th of July holiday, Republican Senators are back to the grindstone. Will they be successful?

Unlikely, unless one counts failure as success.

Medicaid expansion, thanks to Obamacare, has provided many more Americans with healthcare than before. These voters have made it known that they would not be pleased with Republican Senators were this coverage to disappear. Hmmm.

Pre-existing condition coverage is another “must have” option in voter’s minds. Relatively speaking this is an expensive option and Republican law makers are worrying how they can pay for that option and still provide a tax cut. Hmmm.

And the thinking that no one should be required to have healthcare insurance comes also with the freedom for companies to elect not to offer their employees group insurance plans. This “freedom” might have Americans beginning to wake up to the possibility that although they may have health insurance today, tomorrow they might be laid off or their employer may just choose not to offer coverage. In both cases these Americans will be out of luck.

But what seems to have gotten the GOP’s attention is not the impact poor coverage or no coverage at all will have upon Americans, it is the phasing out of Federal Government funding of the Medicaid expansion and the dawning that States would need to increase their contribution to maintain coverage.

What? States would need to raise taxes or become responsible for dropping State residents from Medicaid rolls.

This line of reasoning reflects a morally bankrupt political party. Public shaming has not worked to date in changing Republican thinking. Maybe the political reality and risk of being voted out of office will have a different result.

The Smell Of Coffee

July 5, 2017

Six months does not make a year, and a year does not make a four year term. President Trump (and his advisors), however, are waking up to the reality of governing. Much of President Trump campaign’s boastful rhetoric have already been exposed as misguided myths. Too little time has passed to fairly pass judgement upon what President Trump has done or what he has not. A quick look is not encouraging, however.  Maybe his staff and advisors are saying “pass the coffer”.

On the domestic front, President Trump has continuously blustered about both creating and retaining American jobs. There is little evidence of either, and as important, his budget proposals have circled thousands of current Federal jobs for elimination. I wonder whether the President is using “new math”?

And just in case the Administration has not been looking, internet giants such as Amazon have been marching forward with “job eliminating” new efficiencies. If Trump’s advisors are honest with themselves they should marvel at how resilient the economy they inherited really was.

The Obamacare “repeal and replace” has not turned out to be a “walk in the park”, done, and mark that one off the list type of initiative. Funny but most Americans want the benefits of Obamacare. Further, once fact checked, Republican criticisms melt under a healthy dose of facts and transparency. And best of all, voters have seen what was always there. Republicans are only interested in the tax cut which will accrue for the wealthy. The specific American Health Care Act benefits, if enacted, will be the bare minimum necessary to pass the AHCA.

The campaign’s vitriolic immigration slogans have also been shot full of holes. The top priority Mexican border wall has gone no where after just about everyone involved has declined to endorse the efficacy of addition fencing. Congress has twice chosen not to appropriate money. And, more telling is that there are no indications that illegal immigration has increased.   Even more telling is that business leaders are calling for more temporary labor since they cannot find enough American citizens to fill jobs ranging from technology to agriculture to domestic occupations.

Foreign affairs, probably, best characterizes the Trump Administration ineptness. Trump’s shoot from the hip style has proven to be grossly ineffective. Foreign leaders who possess much less power (ships, soldiers, and planes), have learned to survive employing long term strategies and short term diplomacy. Countries such as Germany, France, Japan, China, and India have over the years cleverly closed large parts of their economies to American companies. These leaders are not going to concede these advantages to President Trump’s taunts and threats.

The President’s decision to withdraw from the TPP and the Paris Climate Accord, both actions were designed to appeal to Trump supporters domestically, simply convinced leaders around the world to say little, work together, and forget about the US until it regains its senses.

His claims of “bombing the S**t out of ISIS and quickly ending the conflict has been shown bogus, but what will he do with what follows ISIS? In Afghanistan, the Trump Administration appears on the verge of increasing troop strength with no known strategy for ending the conflict.

North Korea was to have melted away after President Trump became “buddy-buddy” with China’s President Xi. Today, after North Korea demonstrated ICBM capability President Trump looks to more people, simply a king with no clothes.

There is, of course, plenty of time for future world events to prove President Trump’s blustering prescient.  I wonder whether his staff will up their coffee intake in order to get a real grip on reality?

Heated Rhetoric

June 16, 2017

Following the baseball field shooting of Republican legislators, bi-partisan cries have gone out calling for an end to heated (often misguided and misinformed) rhetoric. “Enough”, cry some of the most practiced in the art of partisan politics. Does anyone really mean those words? Doubtful.

Why doubtful?

While those words calling for a return to civility were echoing through Congressional halls, Senate Republicans were huddling behind closed doors attempting to cobble together a healthcare plan which met the test of reducing healthcare coverage and still keeping a Republican majority to pass the bill. No public hearings, no open discussion, no Democrat input. Do you think that is bipartisan behavior?

Like climate change and the abdication of the Paris Agreement, or the pending “huge” tax cut for the wealthy, or the private sector infrastructure proposal designed to put money is special pockets, Republicans are stacking the deck with intentions favorable to a few, neutral to a few more, and dangerous to the many.

Criticism opposing legislation kept in secret is called heated rhetoric by some. One wonders why?

Special interests?

Our elected officials are called politicians for a reason. Congress members first must convince enough citizens in their districts to choose them over their opposition. Promises are usually part of the bargain and in that lies the seeds for the problems we see today.

Instead of advocating for rebuilding the infrastructure, it is preferred to call for tax cuts. Instead of warning about global warming and taken specific steps towards control, it is easier to question the science and play for time. Instead of calling for basic healthcare availability, it seems wiser to claim (falsely) that America is exceptional and has the world’s greatest healthcare system.

Heated rhetoric could be a “generation thing”. In other words, current public officials inherited a wealthy country have done little or nothing themselves to create national wealth. With no practical experience in what it takes to build a nation, it should not be a surprise that Congress members’ sphere of vision is simply themselves. The role of today is to survive and worry about the future tomorrow. Hmmm.

While there are plenty of examples to support this theory, there is also a more sinister hypothesis. Americans are people. People are by nature greedy. Politicians are people and therefore without adequate checks, are greedy too.

Share that realization with clever and also greedy wealthy citizens and in not too much time, politicians learn to promise one thing but do another (and what they do is what their financial backers want).

Heated rhetoric may simply be the natural end which occurs when politicians make one false claim after another, long enough. Explaining behavior which leads no where can only be done so long before citizens sense dishonesty or incompetence. Raising the tempo, going negative, and if necessary, using “dog whistles” of race, religious, or national origin helps mold the electorate into “we” and “them”. Hmmm.

IMO, Congress reflects middle and upper class American. Congress’ ineffectiveness and willingness to engage in “heated rhetoric” is what any of us would do if public life were our chosen field. Fortunately, most Americans do not seek public office and the power to change government lies in our hands.

Ask the simple question, “what is the problem awaiting a fix”?

The problem is not necessarily that the US is spending too much money as those who say “the Federal Government” is too large. Rather, if there is a problem, one must cite the problem first.

For example, Medicare is often cited as a major contributor to the growing federal debt. Why not collect more fees and taxes to eliminate the deficit? The problem, rather is not the spending amount, it is whether there a need for Medicare at all.

Once there is agreement on why some healthcare subsidy for those on fixed incomes is fair and warranted, then the discussion on how Medicare should be paid for should begin. The same applies to Medicaid, Social Security, and healthcare in general.

Each American can figure out whether the incumbent is interested in the problem or just some special interest outcome (like paying less in taxes). Term limits by voting the incumbent out of office is the fastest way to get Congress members’ attention and to begin to lessen this problem.

I bet, however, that “heated rhetoric” will rule the day until Americans use the ballot box to over come “dark money” and other special interests.

Public Option?

April 21, 2017

The GOP and the Trump White House are beating the healthcare drum again. The President promises a really good plan for replacing Obamacare. According to a report in the Washington Post, Trump said, “We’re doing very well on health care.” “The plan gets better and better and better, and it’s gotten really good, and a lot of people are liking it a lot.”  “We have a good chance of getting it soon. I’d like to say next week, but we will get it.” Hmmm.

I suspect those Americans who loose their coverage or those who subsequently find out their coverage covers a lot less will not think their health plan got “better and better”.

Republicans are now debating behind closed doors a plan which seeks to bring together conservatives (Freedom Caucus who do not want any hint of entitlements in healthcare and would prefer for the government to not be involved at all), and moderates (The Tuesday Group who fear sharp political retribution if the benefits of Obamacare are rescinded). The Tuesday crowd are offering weasel words that would allow States to opt out of certain Obamacare services. Hmmm.

The overall facts appear unchanged. The American Health Care Act, even as amended, will provide less coverages to fewer Americans than Obamacare and will provide huge tax savings for the wealthiest Americans. The GOP’s embrace of “the best healthcare money can buy” is a sad replacement for the Affordable Care Act (Obamacare). Is that the best we can hope for?

Here’s a dream.  “Medicare for all” could be a next step in healthcare. Compared to the “oh so many” for-profit insurance companies today (which stand between you and your doctor), Medicare, which insures post 65 year old Americans, and fits seamlessly into existing doctors, hospitals, and pharmacies, could offer “a ready to go” alternative.

Of course Medicare is not without some problems, namely how it is funded. Republicans will decry the expansion of government and seek ways to defund Medicare. Cooler minds, however, might see Medicare as the ideal vehicle to determine what is basic healthcare and how to pay for it, especially if Medicare became the standard package for employer provided healthcare.

No sane discussion of healthcare reform should avoid the obvious elephant in the room. Americans spend more on healthcare than any other country in the world and receive mediocre healthcare outcomes in return. The difference in cost is significant (greater than two times).

An additional revelation is that balancing the Federal Budget can not be achieved unless there is a fix for Medicare and Medicaid, both of which collect less in tax revenues than they spend on healthcare benefits. With “Medicare for All” there is one program providing basic coverage with significant negotiating power with healthcare providers. Existing insurance companies could continue to “administer” Medicare benefits but would be unable to set different conditions around services.

Most likely efficiencies associated with a single payer would be insufficient to assure Medicare would be solvent. Consequently tax reform coupled with healthcare reform could be seen as reforms aimed at serving all Americans and not as ploys to pass on huge tax breaks to the already very wealthy.

Despite wrong headed GOP motivation on both tax reform and healthcare, Democrats, unfortunately, appear willing to simply play for a tie (defined as thwarting the American Health Care Act thereby keeping Obamacare) and rejecting tax reform unless the proposal is revenue neutral or positive.  Hmmm.

The can is poise for another kick down the road.

What’s Going On?

December 18, 2016

It seems every news venue, radio or TV talk news program, or in the pages of the top newspapers, the subject, in some way, is about Donald Trump. Further, the inference questions (1) his victory as not legitimate, (2) his opinion poll numbers as terrible and getting worse, or that (3) he is hopelessly ensnared in conflict of interest situations. These reports question the wisdom of those who elected Donald Trump.  Hmmm.

There are, IMO, two important observations to remember. First, these same media outlets failed to point out the threat that the rust belt (or fire wall) States posed, and second, there are far more important matters about to impact Americans thanks to the upcoming Trump Administration.

Russian hacking and the subsequent Wikileaks disclosures were hardly earth shattering and even FBI Director Jim Comey’s totally out of place report to Congress was to a thinking person not decisive events. What the media could have reported was that despite overwhelming information on Donald Trump’s character, preparation, and natural disposition, a large group of voters could not care less. These voters cared only about their personal situation and preferred someone who offered them a life preserver, even if imaginary, to someone else who would be an adult in the room.

So it is now. Those “margin of victory” voters who decided the election thinking Trump was a great business man and was the only person who could deal with the economy and provide (good) jobs for everyone (but especially them) are still of the same mind.

This group cares little whether Donald Trump’s companies do well, even if the Trump Administration trades favors with foreign countries to boost more favorable outcomes for Trump enterprises… as long as these voters do well.

Rather than question Trump’s legitimacy, his razor thin temperament, or his near corrupt business dealings, the media would do well to inform all voters what other Trump and GOP policies are about to bring them.

Healthcare. The emphasis, the GOP says, will be on repealing Obamacare. With that, coverage of those under 26, those with pre-existing conditions, and those really sick Americans who exhaust some predetermined amount of coverage will be without coverage. In addition, Medicaid roles will be reduced and consequently hospital emergency room lines will increase while hospital balance sheets turn red. And while they are at it, Medicare will be up for improvements, read less coverage for more money. Buying the Trump line gets all this at the same price.

Social Security which these “margin of victory” voters expect to receive may look a bit different. Rather than a government managed benefit private enterprise might be called upon to offer 401K-like policies where social security taxes are invested by investment firms and the future of many Americans with no other means will ride upon the stock market.

Income inequality will become an accepted way of life. Work hard, get rich, and why worry. But for these “margin of victory” voters, there is no pot of gold waiting for them. Higher taxes on the richest or hire minimum wage levels are not going to happen. Income inequality will be transformed into what makes America Great Again (for the wealthy).

Regrettably there are other changes coming for which the “margin of victory” voters will not immediately register concern. For example, ignoring global warming, diminishing the EPA’s reach, pushing charter schools, expanding the concept of religious freedom (read making legal discrimination on the basis of deeply held religious beliefs) and reversing all sorts recent progress on inclusion will be the just reward for the “margin of victory” voters.

But the cruelest hoax will come under the flag, “cutting government spending” for the purpose of reducing the national debt.  Consider that the budget is currently unbalanced by about $600 billion or roughly the size of the defense budget.  So, there is suppose to be a massive tax cut, a massive investment in the infrastructure, and a rebuild of the military (to make it great again).  Where is the money going to come from to balance the budget?  Hmmm.  Cut baby cut.

Fasten your seat belts, the race to “Make America Great Again” is about to begin.

Promises Have Consequences

November 4, 2016

Donald Trump has promised “big time” tax cuts, the repeal and replacement of Obamacare, a get tough policy with China, renegotiation of major trade treaties, a massive investment in the infrastructure, new wall between Mexico and the US, and a return of previously outsourced jobs, including steel and coal jobs. There are many who like these positions and will vote for Trump thinking the Donald will produce. I wonder whether they ever thought “will he/she love me in the morning”?

My guess is that Trump really doesn’t worry about keeping these promises, even if he gets elected. He will simply make up some new promises while claiming he never promised anything in the first place. But what might happen if Trump actually tries to fulfill his campaign pledges?

Were Congress to pass a “big time” tax cut, Congress would be immediately confronted with an exploding deficit. The Federal Debt would have to expand to cover the tax shortfall. Trump is a businessman and no stranger to debt and even bankruptcy would remain relaxed.

The more fiscally conservative Republicans, however, would go apoplectic.

These conservative budget hawks would demand immediate budget cuts and target entitlements along with defense spending. Defense cuts, however, would put the fear of god into other Republicans especially the neoconservative crowd. These patriots would agree to entitlement cuts but cutting defense is a non-starter for them. So much for party unity.

But what about the infrastructure and all the new jobs it would bring, or the Mexican wall and all the immigrants it would keep out, and what about the buses, trains, and federal agents necessary to deport the 11 million undocumented aliens? These might have to wait.

About this time, Ford, General Motors, GE, and dozens of other companies will announce they are unable to bring back outsourced jobs for competitive reasons, even if President Trump does cut their corporate income tax. And by the way, in order to remain competitive, more jobs might be teed up to go overseas… for competitive reasons.

Oh, and repealing Obamacare will bring with it some significant political damage when most Americans find out that their insurance costs are not going to decrease. (Do you remember the US healthcare delivery program before Obamacare?  The previous program experienced annual increases two or more times the rate of inflation.  So why should we expect cost to suddenly decrease?)

Insurance companies will say “no, thank you” to picking up the extra cost for “pre-existing conditions” and “no limits on total payouts”. Insurance companies will balk at covering dependents under 26 years of age too. And when President Trump asks States to pick up more Medicaid costs, they will not so politely say no.

And, those “low cost” policies sold across State borders, we’ve heard so much about, will come more into focus. They will protect the insured for just what they are written to do and no more. These bargain policies will come with huge deductibles and co-pays or very narrow coverage, or both.  Those wanting broader coverage will need to get the check book out again.

By this time, Trump will realize it was so much easier running for office than actual being President. Who will he blame then?