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Mar. 24 2010 - 7:54 am | 11,284 views | 1 recommendation | 44 comments

Don’t believe the numbers, Obamacare is a financial disaster

It’s done.

The health care overhaul, the biggest legislative initiative since LBJ’s Medicare bill, has become the law of the land.  The cost, says the Congressional Budget Office (CBO), is ONLY $940 billion over the next 10 years.  Better yet, adds the CBO, it will reduce the federal deficit by $138 billion over those same 10 years.

Let me see if I got this right.  The Obama administration and its congressional allies  would like us to believe that the biggest piece of legislation in 45 years, one that will expand medical coverage to 32 million uninsured Americans, that will set up two new huge entitlement programs – health insurance subsidies and long-term health care benefits – is going to cost just $940 billion while reducing the U.S. government’s fiscal deficit by $138 billion?

Sorry, I don’t buy it.

In a recent Op-Ed piece in the New York Times, Douglas Holtz-Eakin, the director of the CBO from 2003 to 2005, now president of the American Action Forum and obviously someone in the know, doesn’t buy it either.  I quote:

…the budget office is required to take written legislation at face value and not second-guess the plausibility of what it is handed. So fantasy in, fantasy out.

In reality, if you strip out all the gimmicks and budgetary games and rework the calculus, a wholly different picture emerges: The health care reform legislation would raise, not lower, federal deficits, by $562 billion.

Now this makes more sense.  According to Holt-Eakin’s calculations, instead of a reduction of $138 billion in the U.S. government’s deficit, we have an increase of $562 billion.  And although Holtz-Eakin doesn’t explicitly say it, that means the total cost of this bill over the next 10 years is not $940 billion but a whopping $1.6 trillion.  That’s a negative swing of $700 billion.

The full Op-Ed is here and I highly suggest a read.

From where I sit though, the true cost of this bill, and the impact on the U.S. government’s deficit, looks to be higher than even Holtz-Eakin contends for two reasons.

First, the bill front-loads tax revenues and back-loads spending; specifically, the new taxes the bill mandates are set to begin immediately while the new spending it authorizes will not begin in earnest until four years out.  In other words, the full cost of this bill and the negative impact it will have on the deficit are being grossly underestimated.

Drawing from Holtz-Eakin’s Op-Ed, have a look at my rough, though I think closer approximation of the true cost of this bill:

Based on this simple exercise, the 10-year cost of this bill when fully implemented, what financial analysts call its normalized run rate, is a huge $2.7 trillion, yielding a negative blow to the deficit of an equally huge $1.6 trillion.  Now, I admit I may be guilty of some double counting with this simple calculation, but by the same token, the bills provisions ramp up over time, meaning this calculation is likely not capturing the full cost of every program.

To put these numbers into perspective, when in full swing, the provisions in this bill will generate $270 billion more in spending per year, or 8% of the government’s fiscal 2009 spend.  It will require $160 billion more in borrowing capacity per year, or 11% of government’s 2009 borrowing requirements.  And it will be done by a government that currently sports a deficit to GDP ratio of 10.5%.

This on an economy considered doing well when it’s growing at 3% per year.

Second, the $1.6 trillion deficit increase that my arithmetic yields is likely too low, for the new taxes mandated by the bill and assumed as revenue by the CBO are simply not going to be realized, quite possibly at anywhere near the CBO’s estimates.

Indeed.  Not only does history teach us that raising taxes is largely self-defeating, inhibiting production, income and employment and therefore the hoped for increase in government revenue, but so too does sound economic logic.

You see, higher taxes discourage the factory worker from taking overtime to earn a few more bucks, a spouse from seeking a job to help with the family budget or a seasoned executive from working a few more years, instead of opting for early retirement. Combined with unemployment insurance, higher taxes may even discourage an unemployed worker from seeking new employment, at least until his unemployment benefits run out.

Higher taxes discourage entrepreneurs from starting new business ventures, expanding existing ones and of course hiring new workers.  And when those taxes become particularly onerous, those same entrepreneurs may even close up shop.

And, most importantly, higher taxes discourage people from saving and investing, the very fuel for economic growth.  It is these kinds of taxes, more than any other, that deprive the economy of the funds necessary to grow production, income, and employment, especially when those taxes, like the taxes in this bill, target those most able to save and invest – the so-called “rich.”

Now, without all these people doing what they do best, hampered as they will be by this bill’s burdensome taxes, the hoped for new tax revenue coming the government’s way, the same revenue assumed in the CBO’s revenue assumptions, will be sure to disappoint.

What this means is that my $1.6 trillion deficit impact is likely just the beginning of even higher government deficits and larger borrowing requirements to come.  Then again, leaving the costs of government spending programs to future generations has been the modus operandi in Washington for years.

I’m not here to debate the government’s role in health care.  What I am here to say is that in the end Obamacare will prove a financial disaster for America, no different that LBJ’s Medicare, which I think is what the boys and girls in Washington originally set out to fix.

One final thought.  When’s the last time a government program began and ended with its opening salvo.  Unless this bill is overturned in the Supreme Court or repealed by a future Congress, this baby may just be getting started.

A full update on the U.S. government’s financial condition, tables and graphs tracking 50 years of financial metrics, can be found here courtesy of THE CONTRARIAN TAKE.


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  1. collapse expand

    Higher taxes discourage factory workers from working overtime? Higher taxes discourage unemployed workers from finding jobs? Do you even know any workers? Am I missing sarcasm here or do you realy think thr rich are knights in shining armor that need protection?

    • collapse expand

      etlorgo

      tx for your comment

      yes I do know many workers, and at the margin, people do think this way. and the higher the tax rates, the more they will

      in a free and open economy, that rewards hard work,innovation and the delivery of goods and services that consumers are voluntarily willing to pay for and allows indeed protects open and active competition so that those that fail to deliver are allowed to perish, the “rich” get “rich” because they met the challenge. And in so doing everyone benefits.

      What we have in the USA is not free markets. It’s a society that is increasingly being run by the politically connected, for the benefit of the few at the expense of the many, because the few have the full might and power of the government behind them

      a fair amount of the “rich” today are not simply rich because they delivered but because they are politically connected. They are already protected. What I would like to see, which I think you imply, is just the opposite

      In response to another comment. See in context »
      • collapse expand

        “the rich get rich because they met the challenge. And in so doing everyone benefits.”

        No, everyone does NOT benefit. The elite benefit – at the expense of the rest of us:

        “In 1970, CEOs made $25 for every $1 the average worker made. Due to technological advancements, production and profit levels exploded from 1970-2000. With the lion’s share of increased profits going to the CEO’s, this pay ratio dramatically rose to $90 for CEOs to $1 for the average worker.

        As ridiculous as that seems, an in-depth study in 2004 on the explosion of CEO pay revealed that, including stock options and other benefits, CEO pay is more accurately $500 to $1.

        Paul Buchheit, from DePaul University, revealed, “From 1980 to 2006 the richest 1% of America tripled their after-tax percentage of our nation’s total income, while the bottom 90% have seen their share drop over 20%.” Robert Freeman added, “Between 2002 and 2006, it was even worse: an astounding three-quarters of all the economy’s growth was captured by the top 1%.”

        Due to this, the United States already had the highest inequality of wealth in the industrialized world prior to the financial crisis. Since the crisis, which has hit the average worker much harder than CEOs, the gap between the top one percent and the remaining 99% of the U.S. population has grown to a record high. The economic top one percent of the population now owns over 70% of all financial assets, an all time record.

        As mentioned before, just look at the first full year of the crisis when workers lost an average of 25 percent off their 401k. During the same time period, the wealth of the 400 richest Americans increased by $30 billion, bringing their total combined wealth to $1.57 trillion, which is more than the combined net worth of 50% of the US population. Just to make this point clear, 400 people have more wealth than 155 million people combined.

        Meanwhile, 2009 was a record-breaking year for Wall Street bonuses, as firms issued $150 billion to their executives. 100% of these bonuses are a direct result of our tax dollars, so if we used this money to create jobs, instead of giving them to a handful of top executives, we could have paid an annual salary of $30,000 to 5 million people.
        So while U.S. workers are now working more hours and have become dramatically more productive and profitable, our pay is actually declining and all the dramatic increases in wealth are going straight into the pockets of the Economic Elite.

        If our income had kept pace with compensation distribution rates established in the early 1970s, we would all be making at least three times as much as we are currently making. How different would your life be if you were making $120,000 a year, instead of $40,000?”

        source: http://www.alternet.org/story/145705/

        In response to another comment. See in context »
      • collapse expand

        I also highly recommend this article http://bit.ly/bbUNko

        “Wall Street’s Killer Instinct Spells Death Knell for Jobs”

        Here’s an excerpt:
        “Wall Street can and does make enormous profits on bets that share prices will decline (shorting), that companies will disappear (credit default swaps), that the economy will crater (interest rate swaps). And there’s a slogan on Wall Street: the trend is your friend. When it’s clear the bull is lying in the center of the ring (think Lehman’s death and the Merrill Lynch shotgun wedding on September 15, 2008), Wall Street moves its bets to the downside.”

        ——–

        I think Allison Kilkenny said it best:

        “The market and its players have no conscience. There is no soul on Wall Street. The almighty dollar dictates everything, and so the boards of cash machines known commonly as “corporations” are legally obligated to their shareholders to make as much money as possible even if doing so demands engaging in things like shady lending practices that ultimately tank the entire US economy.

        There is no government-provided incentive for Wall Street to behave morally. If the right players make tons of cash when they win, and shift the financial burden to taxpayers when they lose, why would they ever change their behavior? Wall Street makes crap, sells it to the public, and then when citizens get sicks, they’re responsible for their own medical bills.”

        source: http://bit.ly/d0dmpi

        In response to another comment. See in context »
        • collapse expand

          Hi Gregory Paull

          Maybe you and I share the same passion

          I AGREE, in the system we have, the elite get to rape the unsuspecting. read my posts and I think you might see I’m not a what you think

          The best system i know to prevent what you despise is a free market. Not perfect. And that’s because you, me even Obama are not perfect.

          but the beauty of the free market is that it is self correcting, it tends towards perfection but never does get there, but try it will do. a mixed economy, one where even a good intentioned government presides, no chance. in that economy, the inertia is always towards self destruction

          In response to another comment. See in context »
  2. collapse expand

    What’s one more financial disaster?

  3. collapse expand

    Thank you Mr. Pollaro. This Obama/Pelosi ‘Thing’ is a terrible piece of work, a ‘F’ at any Public Affairs Masters program, and has as its primary purpose to give Obama some kind of legacy and his lusted after glorious bill signing. I’d put its cost higher than your figures. But its real cost is the damage it does to business incentive in the U.S.A. Why would anyone shakle domestic enterprise with this ‘Thing’ in this fragile global market? It every man for himself now.

  4. collapse expand

    “…history teach(es) us that raising taxes is largely self-defeating…” Please- offer specific examples of that. I am not an economist, Austrian, Keynesian, or otherwise; so I require some explanation of why George W. Bush’s 1.4 trillion $ over a decade tax cuts (which even you must admit favored the very wealthiest Americans) failed to generate real, rather than speculative, growth.

    • collapse expand

      Amen. I would like to see Mr. Pollaro comment on this /reply to this. He is making standard glib talking points about taxes. Can you please answer this one, Mr Pollaro?

      In response to another comment. See in context »
    • collapse expand

      Hi ncfrommke

      tx for your comment

      This is a very difficult question to answer in a few sentences

      May I suggest one of my favorite books, Economics in One Lesson (Hazlitt), to answer this question and a lot of other related questions you may have. Also try Austrian Theory of the Trade Cycle. Both on mises.org

      I will say this. Bush may have cut taxes and cutting taxes is always good. But he didn’t cut spending. In fact he did just the opposite. And that meant more borrowing and as a result more Fed money printing to support it.

      And money printing, especially the kind we had, always means less savings and investment and instead speculation galore.

      I addressed some of these issues in my series on the coming U.S Bankruptcy

      In response to another comment. See in context »
    • collapse expand

      this bill has nothing to do with GWB
      why so many off topic rants

      In response to another comment. See in context »
  5. collapse expand

    You are right on-the-money with your figures. Obamacare will bankrupt this country. In addition, it will cost this nation a million additional jobs. In my industry, medical sales, we have already lost 30,000 jobs in 2009 as medical companies prepare for reform. On my web site, http://www.gorillamedicalsales.com , we are witnessing a dramatic decrease in the numbers of jobs in medical sales posted.

  6. collapse expand

    Is Medicare Part D a “financial disaster?” Did this esteemed author and Holtz-Eakin make the same complaints about the Medicare Part D prescription drug plan that Delay and company rammed thru the House in 2005 that was COMPLETELY unfunded? That plan cost more than this one, even if we believe your numbers. At least this administration made attempts at paying for this. You may be right in the end and/or the funding structure may be modified prior to 2014. Regardless, it is a little late for the GOP to be complaining about deficits.

  7. collapse expand

    This from a guy working in the finance “industry”. Give me a break.

    • collapse expand

      Hi beerzie

      tx for your comment

      You have a good point and I do respect it

      The financial industry is a primary beneficiary of government largesse, especially as first recipient of the the Fed’s printing press. Because of their unique position in the economy, protected by the way by the government, they get the benefit of all this money before that money bids prices up – effectively “stealing” purchasing power from the rest of the economy

      The source of the problem is the Fed’s free money. And trust me, the Fed is anything but a free market creation.

      I would love to see this change, and a good start is Ron’ Paul’s Audit the Fed bill

      Please give me a shot here and read my series on U.S. bankruptcy, especially Part 1

      In response to another comment. See in context »
  8. collapse expand

    During Eisenhower’s presidency the income tax at the highest bracket was 90%. Nixon-70%. Even during Reagan’s first term-50%. The tax burden over the last 40 years has been shifted from the wealthy to the middle class. Of course that goose has been killed by the profit over jobs mentality. If you want to look for a deficit culprit, there you have it. We are all in this together and we are all going to have to pony up. Healthcare cost and entitlements need to be addressed, but so does the ridiculous notion that America’s wealthy are overtaxed.

  9. collapse expand

    “You see, higher taxes discourage the factory worker from taking overtime to earn a few more bucks, a spouse from seeking a job to help with the family budget or a seasoned executive from working a few more years, instead of opting for early retirement.”

    I’m not sure I follow the logic regarding the disincentives to trying to work you’re suggesting taxes cause. Unless you’re referring to the idea that working overtime shifts the individual’s income tax bracket to cause a lower net pay scenario, overtime workers will continue to work overtime for extra pay because they want extra pay. I definitely don’t see how a spouse is discouraged from trying to earn additional income for a family, especially since nothing I’ve read suggests to me that the tax benefits for married folks are disappearing. And I absolutely don’t see how “seasoned executives” are more likely to retire early than to continue to collect paychecks, given that generally there’s a sizeable decrease in benefits when you give up a salary in exchange for social security benefits.

    • collapse expand

      hi ford

      tx for your comment

      please see my reply to eltorgo

      At the margin people do think this way, the higher and more progressive the tax rate structure becomes

      In the 1930-40’s when hoover then roosvelt jacked up tax rates, movie stars made just one movie a year. Note also the declining population in high tax rate states like california. people at the margin do change behavior when they keep less and less of their earnings, for the same effort

      In response to another comment. See in context »
      • collapse expand

        I’m not sure I follow that logic. The number of movies produces in the 1930s and 1940s pales drastically in comparison to the movies made now, but part of that has something to do with the ability to distribute those movies. I don’t know that they only did one movie a year because they were disincentivized to work. And I’m certain that correlation, assuming your facts are correct, does not equal causation.

        The argument you seem to be making is that at some level, people care about the marginal benefits they earn and there comes a point where they stop wanting to produce more because the benefit they get is worth less than the effort they put into it. If they don’t get to take home any additional pay, they will stop working completely (or so says your argument). In fact, swaths of working class Americans have been working the same hours in the last two years without raises and bonuses, despite increases in the marginal costs of consumer goods (a net decrease to the marginal benefits they gain from working).

        Further, I think you’re ignoring the idea that take-home pay isn’t the only benefit people get from working. Satisfaction at work is a benefit and driving force for some people, as are access to employer sponsored health care and retirement programs. Most Americans have so little net worth that they couldn’t afford to stop working following 2008, even though the ones who remained employed generally produced more for their employers without a proportional increase in take-home pay. I still don’t see how this creates a realistic situation where droves of people stop working completely.

        In response to another comment. See in context »
    • collapse expand

      I got a perfect example of this. Say, daycare will cost about $10,000 a year per child and you have 2 kids. Wife (or husband) is looking to go work for a few extra dollars. They would need to net $20,000 after taxes. So we’re talking about $30K per year job. If Medicare and income taxes go up, at what point do they decide it’s not worth it? Suddenly those looking jobs need income over $35K to $50K to justify not just staying home with kids instead of making a little extra income for the family. I’ve had friends deal with this in the past.

      It may result in less second income families (which, in of itself is not bad), less child care services, less building leases, less capital, and so on. Ultimately less jobs as a result in higher taxes.

      In response to another comment. See in context »
      • collapse expand

        I sort of follow that logic, but think it’s misdirected. It assumes (1) that there is no value in providing child care to one’s own children, (2) that jobs are tied only to those fringe position individuals, and (3) that the value of that added employment is less than the value of the taxes on that employment.

        The conclusion that there are fewer jobs as a result of higher taxes discounts completely the peopel who don’t have any income (the 9.7% of American adults currently unemployed and seeking employment). Below some income level, they aren’t taxed substantially anyway, but there are going to be enough people who will be able to afford to eat, pay rent, and have fun on the salaries those fringe people are rejecting. The overall number of jobs doesn’t diminish because someone makes the financial decision that they can’t afford to work there. Instead, someone who is willing or able to take that salary and who is hopefully qualified to do that work takes that position. I don’t think Mr. Pollaro’s example of the seasoned executive (more than likely making a high five figures or better) is realistically at a margin where he won’t work because $50,000 of take home pay is worth less than $20,000 of social security payments. At a time where there are (reportedly) six applicants for every open position, the number of families willing to forgo second incomes has no impact on the overall number of employed.

        In response to another comment. See in context »
  10. collapse expand

    The best part of this health care disaster is it will be administered by the IRS…the most hated and despised government agency in america….which is hiring 16,000 new thugs to administer it….wait to the people find out

    This is no different than having the Waffen SS
    administering it….

  11. collapse expand

    hi scottchaffee

    totally agree, the middle class is increasingly being gutted.

    And its the inflation tax more than anything else that’s doing it

    the “rich” have assets, which benefit from inflation, so if they are smart they can protect themselves. but not so the average working guy

    but who’s fault is this. i say the fed, and all its apologists, like one politician after another that benefits from this institution

  12. collapse expand

    This whole post is misleading and disingenuous, and amounts to nothing more than “some guy with an axe to grind said the bill will cost a fortune, and I believe them over the nonpartisan and frequently right-on-the-money CBO.”

    • collapse expand

      Hi Justin St Giles Payne

      tx for your comment

      No axe to grind

      I’m a numbers guy first, a self-taught Austrian Economist second

      The mission of this column, to present a view that generates thought that you might not get in the mainstream, leveraging what I think I do best – numbers

      In this case, the CBO, a fine agency, did what their charter requires – put numbers to the legislation handed to them, no opinion or adjustments interjected

      In my opinion, its a misleading account of the costs of this program, and anyone interested in this issue – tax payers or investors in government debt – get a chance to see

      In response to another comment. See in context »
      • collapse expand

        No axe to grind

        You don’t think Holtz-Eakin has an axe to grind? You think the economic advisor to McCain’s 2008 Presidential campaign is a trustworthy and objective source? Your naiveté astounds.

        a self-taught Austrian Economist second

        That strikes me as immediately disqualifying, I guess.

        leveraging what I think I do best – numbers

        Well, ok – so where are the numbers? I don’t see any economic analysis in this post. What I see is your dismissive skepticism of the claim that expanding insurance will reduce the deficit, but you don’t say why you’re skeptical; you just seem to think that’s a claim that is false on its face.

        I guess you think the uninsured incur absolutely zero health care expenses? Remember the point of insuring the uninsured isn’t just so that they can get health care they otherwise wouldn’t, it’s to help keep them more healthy, so that they incur less expenses overall. So that they don’t need to use the (expensive) ER for routine matters. So that preventable conditions can be caught early on, instead of developing into serious, expensive health crises.

        The idea that insuring the uninsured will actually save money strikes me as obviously true, especially if you’re not under the absurd impression that the uninsured don’t cost us anything now. They do. They cost a lot, in fact.

        put numbers to the legislation handed to them, no opinion or adjustments interjected

        That’s clearly false. The CBO determines scores by modelling, and they use a series of models each based on assumptions about future conditions. They run multiple models, one pessimistic, one optimistic, and several based on their best guess about what actual future conditions will be. They’re not just a bookkeeping outfit, Mike. You’re simply being dishonest about the mission and practices of the CBO.

        In response to another comment. See in context »
        • collapse expand

          Hi Justin St. Giles Payne

          Tx again for the feedback

          First, I am not a fan of McCain. And Holkin-Eakin may or may not be partial, but assuming medicare costs are going to be cut $500 billion, as well as many of his observations, resonated with me

          Second, I think I am a pretty good Austrian Economist. The fact that I’m a numbers guys doesn’t mean that that makes me less of an economist

          As I understand, the CBO takes the legislation handed to them and does the score. That is something that I understrand as a fact. To the extent that the CBO uses multiple GDP or other scenario analysis as base numbers is a different issue

          Would have a more exhaustive analysis yielded a more accurate assessment of the true costs of this bill. OBVIOUSLY. But it is going to take experts many months before this works itself out, I think. Having said that, on the basis of not only Holkin-Eakin’s analysis but other bits too, I truly do not think this is anywhere near a $940 billion bill, and I certainly would not put my money on that number. My piece was simply to point that fact out

          Regarding whether this legislation is good or bad for the American health care system or America’s health is another issue. I don’t think it is, both in terms of cost and quality, but that’s not my point. My only point is that all this not free and it is going to put quite a hole in the U.S government’s finances

          And if you want numbers, have a look at my tracking of the government’s financial condition on my site under About Be. That’s the result of years of government largesse, like this bill, courtesy of BOTH parties

          In response to another comment. See in context »
          • collapse expand

            assuming medicare costs are going to be cut $500 billion, as well as many of his observations, resonated with me

            They didn’t with me, and more importantly, they don’t “resonate” with the facts.

            As I understand, the CBO takes the legislation handed to them and does the score.

            What do you think “does the score” means, though? It means modelling the consequences of the legislation against a number of different assumptions about future conditions in the United States.

            You have this idea that the CBO is just one guy who is handed a copy of the bill and feeds it into a computer slot, and then it spits out a score, which he writes down and sends back to Congress. That’s not how it works at all.

            But it is going to take experts many months before this works itself out

            These things are hardly new, Mike. This legislation has been over a year in the making; the Senate bill (which this basically is) was passed months ago. The reconciliation sidecar is basically exactly what they agreed on in February.

            I truly do not think this is anywhere near a $940 billion bill, and I certainly would not put my money on that number.

            Ok, but why? Don’t they teach Austrian economists how to make arguments, or is guessing the only form of analysis you’re prepared to do, here?

            My only point is that all this not free and it is going to put quite a hole in the U.S government’s finances

            Doing nothing was going to put a substantially larger hole in the government’s finances, which is why this bill reduces the deficit so much. Surely that’s a point even an Austrian economist can grasp.

            In response to another comment. See in context »
  13. collapse expand

    Ah, the propaganda and lies by both sides. Both seem to believe that if you shout a lie loud enough and long enough that it will become the truth. Anyone remember who said that?

  14. collapse expand

    Does the concept “credible source” have meaning to you?
    Also, please describe the problem with Medicare that you referred to.

  15. collapse expand

    This article does not factor in one of the biggest benefits and cost savings of Obamacare, the impact on the Social Security program. Social Security has been regarded as the unsustainable entitlement that all politicians were afraid to touch. The worker beneficiary ratio has decreased tremendously and is seen as going much lower. Analysis showed the program would stay viable only if the tax was raised from 15.3% to 25%, the retirement age for full benefits raised from 67 to 75, or the program benefits become means tested. Or a combination of these fixes established.

    Now without even mentioning the words Social Security, Obama has made the program sustainable in a bold new way. No raising the social security tax, the retirement age, or means testing benefits. Just reduce the life span of the recipients! Cut $500 billion in Medicare reimbursements to ensure that fewer and fewer doctors will treat them. Significantly delay the medical treatment social security recipients can receive by establishing lengthy bureaucratic reviews before treatment is allowed–maybe. And make sure these reviews consider the economic benefit to society of providing any treatment, just as in England and Canada.

    Wow, Obama has solved the Social Security dilemma. What a politician!

  16. collapse expand

    Well, with so many old Americans losing their jobs, starting at the age of 62+ right now, they will be signing up early for Social Security just to have monthly income so this is going to burden the federal system.

    Good Lord!! Of course, the numbers don’t add up. Adding 30+ million more people to the health care & that is going to save money?

    I strongly suggest that you read that new book just out about a small, modern day town in America that finally stands up to federal tyranny & ends up starting the 2nd American Revolution.

    Great book for what’s may be coming in 2010. I recommend it.
    http://www.booksbyoliver.com

  17. collapse expand

    1. not sure i agree with your worldview or worshipping at the altar of the almighty fee market, oops, free market…

    2. BUT, you have consistently ‘called out’ the comments which dispute your take on things, and answered them to some extent, that is to your credit… (i mean that sincerely)

    3. i have not parsed all your comments, (i have to run in a minute), but i *hope* you are not saying that the ‘flaw’ in the ‘fake’ free markets and financial sector is that they are ‘too regulated’…
    *that* is koo-koo-kwazy: as far as i’m concerned, this latest fleecing of the people by the masters of the universe *SHOULD* be evidence enough to discredit simplistic notions of ‘invisible hands’ (stealing from US), and the ‘infallibility’ of free/open markets to ’self-correct’, etc, etc, etc, ad infinitum, ad nauseum…

    one of my favorite quotes: (um, by an economist of all people! i’m sure you are familiar with it):
    Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”
    JMKeynes

    another favorite from econ 101:
    if you laid all the economists in the world end-to-end, they would never reach a conclusion…
    and,
    teach a parrot to say ’supply and demand!’, and you have an economist !

    art guerrilla
    aka ann archy
    eof

    • collapse expand

      hi artguerrilla

      Tx for your comments, I think?

      What upsets me most about the attack on free markets is that those attacks are based on what we have in the U.S. And we have anything but free markets. The fleecing you talk about is not a product of the free markets. It is the product of government-special interest partnership which could not exist if the government took something like the Constitution to heart and backed off

      People like Greenspan who many people think was a free market advocate was anything but. He was a central planner of the highest order and may have been one of the more destructive individuals of the past 35 years. And because of it , he gave free markets a bad name

      Believe or or not, I am for the poor and middle class. I am NOT for the special interest/government partnerships taking their turns raping these unsuspecting people. With some government administrations, those partnerships are “pro-business” with others “pro-union” or pro whatever. But it is all the same – the poor and middle class are sold a bill of goods, told they are getting something for nothing when its anything but, all the while the protected guys at the top get rich at their expense

      When government can’t play in this arena, dictate to us what we can or cannot do, then these special interests are left on their own, to prosper or die based on their value to consumers, consumers who vote every day by their buying or abstention from buying their products or services. profits are privatized but so are losses. The hard working, the innovative prosper. The lazy, the parasites perish

      The question to me is this. What is the best social and economic arrangement. They are ALL imperfect, because people are. Yes even free markets are imperfect. But free markets, through the price system, competition and yes the profit motive, have built-in checks and balances that tend to eliminate the imperfections, although never completely eliminating all of them, all the time. Command and control economies have people at the top, that you may or may not agree with, good intentioned or not, making the decisions for the wants and desires of millions of people like you. To me that’s kind of like playing god, an impossible job when you are not an all-knowing god

      FWIW, and it may be worth nothing to you, try some Austrian Economics over at mises.org. And again one of my favorite intros, Economics in One Lesson by Hazlitt

      Tx again

      In response to another comment. See in context »
  18. collapse expand

    I would not recommend doing nothing. I would recommend is this…

    What we need is a return to open competition among health care providers, at all levels, and a return to a traditional catastrophic insurance model. The result will be lower medical costs and higher quality health care, for the widest amount of people, getting better all the time, with voluntary charities filling in the gaps more than anyone could possibly imagine.

    Look, the world is not perfect, not even when we have free markets. But government interference in free markets creates more problems than it solves. And, through the continued effort of government to fix the very problems it creates, we end up with total government control, accompanied by high costs and poor products, the very things the government wishes to avoid. Exactly where we are today

    The course we are on now, more and more government, which includes more and more special favors, is good for no one but the politically connercted few

    I’m not saying that there is not a lot of good intentioned people behind this legislation. What I am saying is is government intervention and special interests connected to government got us here. Free markets can get us out

    BTW, have you read any of the Austrians?

  19. collapse expand

    I assume by “open competition” you actually mean “deregulation”, and that you think deregulation of health care providers is a good idea implies that you’ve never in your life heard the term “snake oil salesman” or the even more descriptive “quack”.

    But government interference in free markets creates more problems than it solves.

    Sometimes it does! I can admit that. Can you admit the reverse, that sometimes government interference in free markets actually solves some of the problems free markets can create? Health care – our health – shouldn’t be something people buy and sell. Just like human beings aren’t something you sell on the free market, either.

    No civilized nation on Earth has chosen to adopt a free market approach to health care. Doesn’t that give you the least amount of pause? Why on Earth not? What does it tell you about your ideology that it never seems to survive in the marketplace of ideas?

  20. collapse expand

    Very well said, Justin. You hit the nail on the head there.

    Michael:
    “The result will be lower medical costs and higher quality health care, for the widest amount of people, getting better all the time, with voluntary charities filling in the gaps more than anyone could possibly imagine.”

    Look at the industries that have been deregulated over the past two decades. Look at what happened with Wall Street since the Glass-Steagal was tossed out. Deregulation makes things better for business interests, and worse for Americans. Think about the reasons why the federal government’s power has been expanded over the last century. It’s because the people cried out for it. We needed it because we were getting financially slaughtered by the elite.

    You’re living in a fantasy-land. There seems to be a complete disconnect in your conception of the world from the reality we live in.

  21. collapse expand

    Hi Gregory Paull

    The U.S economy is massively regulated, and is increasingly so. IMO, the big push began in 1913, the year the income tax was born and more importantly the year special interests created the federal reserve. it was put into overdrive during the great depression (which btw the government/fed created then prolonged thru massive intervention) these 2 laws made it possible for the massive expansion in government cause it gave the government sweeping taxing and money printing powers

    the financial industry is massively regulated, and we still got a bust. the financial industry, the fed and all the other regulators protect the big guys at the top at everyone else’s expense. the industry lives with the regulation, they in part create, because it protects them from the better, more efficient competitors. Get rid of the regulation, the protection, and you will start cleaning things up. glass-steagal btw was more a recognition that the boys at the top had already figured out how to get around the law than it was about actual deregulation

    people are getting slaughtered because of the cartelization of the economy the boys at the top orchestrate. That’s why government must stay out. government empowers and enforces the cartelization

    nowhere is this more evident than w/ the federal reserve, created by the government, so they said, to protect us and our currency. so what do they do – they protect fractional reserve banking, a fraud. they print money out of thin air and dole it out to special interests. and they print money and buy treasuries so the government can spend what it does not have and dole it so they look like heroes

    worst of all, the fed backstops the big guys at the top by printing money and bailing them out. privatization of profits and socialization of loses. but they had to do it to save us, so they say

    and you know who pays for this – the poor and the middle class, through a depreciated currency. And all the while the government says we got your back

    That to me, this is the reality

  22. collapse expand

    The U.S economy is massively regulated, and is increasingly so.

    Yes. That’s why you can put your money in a bank and trust it to still be there the next day. That wasn’t the case for most of your grandparent’s life, but just consider the implications for the “free market” – consider how much more economic power there is in people investing their money in their local communities, being able to write checks, earning interest – as compared to places where people have to hide their cash in mattresses.

    Relatively little investment in business or community happens in Somalia.

    Get rid of the regulation, the protection, and you will start cleaning things up.

    That’s like saying “get rid of the policemen and the criminals will arrest themselves.” Impossibly naive.

    the poor and the middle class, through a depreciated currency.

    The poor and the middle class, most of whom are impossibly mired in debt, stand to gain quite a bit from a couple years of currency devaluation. A little inflation (as opposed to the zero inflation we have right now) would be a good thing.

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    About Me

    I am a retired Investment Banking professional, most recently Chief Operating Officer for the Bank's Cash Equity Trading Division. I am a passionate free market economist in the Austrian School tradition, a great admirer of the US founding fathers Thomas Jefferson and James Madison and a private investor.

    See my profile »
    Followers: 33
    Contributor Since: January 2010
    Location:New York