Archive for the ‘federal budget’ category

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at all), and moderates (The Tuesday Group who fear sharp political retribution if the benefits of Obamacare are rescinded).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?

GOP – Near Sighted?

August 29, 2015

The 2016 Presidential elections preliminaries are underway. Both Parties have begun their primary processes, and pundits speculate daily over which candidates will become their party’s standard bearer. Hillary Clinton has appeared the Democrat favorite and in polls has been preferred over all the GOP hopefuls. So, is the election over (already)?

Not so fast.

Hillary Clinton is like honey, she attacks all sorts of attackers who hunger for her defeat. Clinton, however, is every bit their match. She campaigns in a highly controlled manner and provides as few openings for her opponents as possible. The “Bengazi morphed into private email server” controversy has lasted this long mainly because Clinton has chosen to not engage the issue (apparently because she believes it is irrelevant). Clinton’s strategy, however, has given credence to a “trustworthiness” issue and the original Clinton glow has faded somewhat. She appears beatable although defeat is by no means certain.

The GOP seems unwilling to accept this opportunity to win back the White House. With Donald the Trump leading the way, most of the Presidential candidates have made prejudicial comments while campaigning. To be sure, with 16 hopefuls, attracting voter attention is not easy. A “near sighted” party, however, must recognize that the way they attract attention now will have consequence in the future election.

Recent reports indicate the broader GOP controlled Congress might enter the election dynamics. When Congress returns from its summer recess, it will be facing a budget and debt hurdle of their own making.

GOP Congressional members have laid down the gauntlet that any budget or any debt extension bill must contain measures that “defund” planned parenthood. Do you see the connection?

Apparently these GOP Congress members think they can hold hostage the budget and debt extension (that is the US paying its bills) until Democrats agree to defund Planned Parenthood. It is hard to image anything more nearsighted. Women and poor citizens vote in the national election and will remember a Government shutdown (again).

One can question whether Planned Parenthood represents a substantive issue or whether GOP support is just a cynical sop for their evangelical wing. In either case, Planned Parenthood has nothing of meaning to do with either the Budget or the Debt. Even worse, politically speaking Planned Parenthood plays right into the Democrat’s claim that the GOP is conducting a war on women.

As in 2012, the GOP sees things differently. Focusing two inches away, they see a path to defund Planned Parenthood, and see no consequences. Maybe the country is not ready for nearsighted President.

Sequestration Again

August 3, 2015

As Congress returns to “work” (maybe session is a better word than work) , the Federal Budget and the Federal Debt issues will come front and center. For those who link the two and see the Federal Debt as driven by unbalanced budgets, this is the time to take a stand. The more “Tea Party-ish” the Congress member, the stronger the opposition to any unbalanced budget. And damn the consequences.

We have seen this irrational behavior before. Each time the GOP conservatives rise up and block passage of funding bills, the inevitable “shutting down” Government is presented as a viable option. While Congress members cloaked themselves in the flag, this attitude is arrogance at the extreme and incompetent at the least.

The Government shut downs actually save little money (since Government workers are always granted missed pay). The shutdowns also inconvenience average Americans (who have no part in this food fight) by closing functions like passport services, Federal Parks, and all sorts of Federal Benefits Offices. Polls have consistently indicated that voters shift their support from the GOP to Democrats each time this exercise is run.

The early 2015 “battle cry” is tied to “Sequestration”. This budgetary process was a bi-partisan compromise where mandatory cuts would be imposed, across the board, to maintain government spending at some specified level. This meant that if Federal spending was projected to increase 2% above this magic number, all Federal agencies with discretionary spending would need to cut by 2%. That meant both the Department of Education and the Defense Department would need to cut all programs by 2%.

Today neither party likes sequestration.  The main argument against sequestration has been that cuts should not be across the board. Opponents reasoned a Department head should be able to select which parts of its budget to cut providing these cuts were equivalent to 2% of the total budget. This year the argument is taking on a new twist.

Both Democrats and Republicans favor increasing the Defense Department budget. Hmmm.

The GOP wants to exempt Defense from sequestration (but keep sequestration for the rest of the budget). Hmmm.

President Obama has said he will have none of that. Unless there are increases also in aid to education and certain other favored programs, the President has promised to veto any budget proposal. No agreement, no budget, and hello government shutdown.

One would think that serious minded people would question why Defense needs to increase? The Defense Budget is close to $600 billion and one would think there must be “waste and fat” through out it. That same view could be held for the remainder of the Federal Budget too. Never the less, our elected representatives assure the public programs can not be cut.

Wouldn’t logic then convince voters to increase tax revenues to cover these absolutely necessary expenses? And, at this thought, our 535 Congress members come unglued.

There are many compromises easily at hand. The President and Congress could agree upon exemption which would allow increases in Defense and other Agencies’ budgets, and simply accept an increase in the Debt. They could also stick to sequestration and accept the cuts.

Until, however, there is a serious structural look that the Budget in which we thoughtfully question the cost drivers in Medicare, Medicaid, and Defense, there can be little hope of balancing the budget. Simply raising taxes is a mistake but it is the compromise of last resort.

Medicare creates a budget drain because payroll taxes are too low (what has been put into the fund) to cover current costs (what the medical industry is charging). Medicaid is more complex since it introduces the notion of whether healthcare should be available to everyone regardless of ability to pay. Simplistically, Medicaid is also a function of too little taxes and too high expenses “unless” you subscribe to the notion that healthcare is delivered only to those who can afford it.

Defense spending is the most complex. Inspection can quickly show us that Defense costs are murky and hide many programs deemed too classified to reveal. Spreading Defense spending around the 50 States makes for good politics but it is unlikely this practice leads to fiscal sensibility.

In the minds of our elected officials, keeping spending about where it is, with certain increases, makes the most sense. They prefer to hold their noses rather than undertake the hard work of real reform. Mix into these elected officials, some who see only a zero sum game, you have the makings of gridlock.

With the American public weary of war, selling Defense Budget increases will be tough (if the consequence is shut down). Shutting down the Government so close to the 2016 election could very well backfire even more than in the past.

With 17 GOP Presidential aspirants the budget should be red meat for the upcoming debates.

Get It?

April 15, 2015

Yesterday, New Jersey Governor Chris Christie opened his unofficial run for the GOP Presidential nomination with speeches in New Hampshire. It is well accepted that Governor Christie needed to do something especially noteworthy to gain the public’s attention. And he did.

Most everyone recognizes that Medicare, Medicaid, and the overall Federal Budget are spending more than they are receiving in tax revenues. Social Security while technically solvent is projected to produce a huge deficit in the years ahead. Christie chose to speak about these entitlement programs and proposed some steps to reign in their future costs. Was that bold? Was that wise?

The ideas of means testing Social Security or increasing the age when one qualifies for entitlement benefits is not new but for a politician seriously running for a major office, it is extremely noteworthy.

It will take a few weeks to know whether Christie’s proposals have any measurable impact upon his candidacy. In the meantime, however, it is worthwhile to recognize how unfair and unbalanced Christie’s proposals are.

To be clear, I do not mean that “means” testing is unfair or that increasing the age of the onset of benefits is out of hand a bad idea.

What I mean is that these measure done by themselves transfer the burden of balancing the US budget to many of those who can least afford the costs, and in effect shield the very wealthy from paying for the services that enable them to accumulate so much wealth.

Further, similar changes to Medicare simply display ignorance of the fundamental underlying healthcare problem, US healthcare costs are the highest in the world (two times) and deliver no better outcomes.

If Governor Christie wants to be America’s President and if he interprets that to be all Americans’ President, he will need to broaden his domestic economic views. Tax reform where loop holes and exemptions are eliminated, increased marginal rates will apply to the highest income levels, Federal expenditure reductions will include both Defense and Entitlements and are proportionally, and a determination that Government services exist for the benefits they provide citizens and not as an employment vehicle are worthy additions.

With Governor Christie’s words, the GOP candidates all sighed in relief that someone else had said what they wanted to say.

I wonder whether the other candidate “get it” and will add to these proposals cuts in Defense, tax reform and an overall attack on healthcare costs?

Should The Progressives Speak Now?

March 25, 2015

Republicans in both the Senate and the House have issued budget proposal outlines. While slightly different, the GOP proposals share the belief that Government expenditures should shrink, the Affordable Care Act should be repealed, and in the House version, Medicare spending should be capped with the introduction of vouchers. Both proposals predict that magically the economy will boom and life will become better for everyone. Hmmm.

Regrettably, it is no clearer than with these budget proposal that everyone is entitled to their own opinion but not to their own facts. There are serious problems in the American economy and the GOP ideas do not deal with them.

Income inequality data shows that average wage earners’ income has been stagnated (for 30 years or so) while the income of the top 2% has grown handsomely. Without more even income distribution, the average earner will not be able to purchase as many goods and services from business as they do now. In time following the GOP script, our economy will shrink, not grow.

Bridges and roads, the backbone of business, are woefully in need of repair and maintenance. Without substantial investment, getting goods to market or for consumers to easily travel to services will become much more difficult. Undertaking the massive investment to prevent this will require substantial expenditures, something the GOP is reluctant to fund due to their “no new tax” pledge.

Standardized tests continue to show American K-12 education lagging over 15 other modern industrial countries. While the path to improving our students’ performance is not agreed upon, abandoning the “Common Core” curriculum and instead following the paths of Alabama, Mississippi, and South Carolina sounds more like a race to the bottom.

And whether we want to recognize it or not, the cost of healthcare services is beyond the reach of all Americans but the top1/2 of 1%. Without the aid of health insurance, normally provided by employers, few Americans could afford any healthcare at all. So the notion of repealing the Affordable Care Act, without an equally affordable alternative appears wrong headed at best and cruel at the worst.

So the question is, should Progressives speak now?

I guess the answer is “it depends”.

It will serve of little value for Progressives to only point out the obvious, the GOP plans are grossly unfair and will almost certainly not deliver their promises. Progressives, if they choose to speak, must address the facts.  Progressives must offer remediation ideas that provide a pathway to a fairer and more stable future state. Here’s why.

The business world has changed.  American no longer lives in the world of the wild frontier, the gilded age, or post World War II. Globalization and wide spread use of qualify principles insures that goods (and many services) can be produced anyplace in the world where the economics dictate. In and of itself, this will continue to drive down wages. Simply paying workers more (without commensurate productivity gains) will only lead to inflation. Sharing productivity gains liberally with workers, however, will have a very positive impact upon real average wages.

The “average” wage earner must acquire new skills and training in order to fill better paying jobs of the 21st century. Without the new skills and training, workers will be relegated to “minimum” wages, part time hours, and a world of few benefits.

Conservatives may choose to think it helpful to remove entitlements like Medicaid, Medicare, or social network expenditures thinking these reductions would motivate Americans to “pull themselves up by the boot straps” (the way it was done in the past). The GOP, however, will see their hopes fail. The world has changed.

Progressives, on the other hand, who call for these programs to be left alone and even new programs added for training and skill development are just as off base… unless funding is addressed. Tax code reform (a GOP recommendation) offers a route to increasing the tax revenue flow even while lowering certain tax rates.

Probably the biggest opportunity to reduce Government spending and eliminating the deficit lies in reducing the reasons Medicare and Medicaid cost so much. The GOP method appears to be based upon capping the Government’s portion and forcing those without generous business supplied health insurance to pay more. Over time, much more.

The GOP’s budget proposals call for no action to control and reduce the actual healthcare cost. With over two dozen other modern industrial countries experiencing health care delivery at half the cost per capita and equal or better outcomes as the US, there is clearly food for thought in a fairer approach to dealing with our deficit.

Maybe that will come up in a future Ted Cruz speech?