More on budget & healthcare

In a previous blog, I wrote that we need to focus on budget cuts to help balance the budget. This means a reduction in military spending by 30%, and reducing Social Security retirement benefits. The military, Social Security and Medicare/Medicaid make up a little more than 60% of the US federal budget. My concern about reducing Medicare/Medicaid outlays is because of the amount of people unemployed. This translates to loss of medical insurance for several reasons. When this happens, people turn to emergency rooms for either primary medical care, or even housing. This hurts state, city and county budgets, as many hospitals are financed through these governments.

Now of course budget cuts go along with letting the Bush tax cuts expire, and raising the gas tax a dime per gallon.  I’m not suggesting this will fix all problems, and I’m open to different ideas (limiting or eliminating the mortgage interest deduction for example), but relying on budget cuts to simply balance the budget will strain state budgets further. We’ve had the Bush tax rates in place for years, along with cuts to interest/dividends tax rates, and we’ve not been able to produce anything near a balanced budget.  I’ve heard the argument many times that raising taxes on the upper income brackets will impact the “job creators”. As I drive around Roseville, I notice how the parking lots at Rosedale and Target are packed. My guess is that the parking lots aren’t packed with people making over $500k per year. I think a great question to people opposed to trying to increase government revenue is: What will generate more economic activity, 10 people making $1 million per year, or 200 people making $50k per year? While these two will naturally exist in a free market, I have a hard time believing that the impact of paying an income tax rate of 39% versus 35% on income over ~$380k will destroy job creation. Raising the gas tax will cause incomes across the income spectrum to be involved in helping to balance the budget.

Anyway, states have been forced to cut budgets too, and naturally medical services have been cut to help balance state budgets. One area this impacts is preventive medical services, especially for people who are mentally ill. As I mentioned above, when people lose medical insurance, the emergency room becomes the default insurer. Emergency rooms are costly parts of a hospital, and are more costly than running a clinic. So a result of the slow economy is that there has been an increase in mentally ill patients coming to emergency rooms. The web link below is to a report describing this issue.

http://www.msnbc.msn.com/id/45790987/ns/health-mental_health/#.TvlEMvKx4mE

While this report isn’t scathing, I think it supports the idea that we’re seeing a negative impact of state budget cuts on mentally ill people and local hospitals.

Currently the list of plausible GOP presidential candidates is shrinking, with Ron Paul, Newt Gingrich and Mitt Romney being the top three, based on news reports I’ve seen. Of these three, according to their websites, only one of them mentions how Medicare is currently funded; rather all three address reform. I don’t see how taking the time to reform healthcare policy will help the immediate need for emergency rooms seeing the increase in mentally ill patients. But the bigger issue I see with the promises these three are making is that the immediate priority is repealing the Patient Protect and Affordable Care Act (PPACA), which with the exception of the individual mandate, is a more free-market policy than Medicare, attempts to finance itself, and actually covers people better than the current laws have set up.

So if it bothers you that your current premiums and state or local taxes are increasing, you can expect more of it. If you also oppose PPACA, then I ask you to consider what the alternative is? As states and localities cut budgets, hospitals and clinics will either need to find funding elsewhere, or they will reduce services.

My suggestion is that we write our legislators or support politicians who in the near term will work to keep Medicare and Medicaid from cuts but also support targeted budget cuts I listed above. Would this require us to pay more in taxes? Yes. Will the economy be impacted? I have a hard time believing it. Medicare and Medicaid taxes are monies spent here in the US. Emergency rooms (and homeless shelters) will see some reprieve, or at least hopefully won’t see more increases in demand. It seems to me that preventing ER visits will cost us less in our health insurance premiums and local taxes.

I’m not really surprised by much these days. I think a line from the movie Christmas Vacation sums it up well.
Eddie: You surprised to see us, Clark?
Clark: Oh, Eddie... If I woke up tomorrow with my head sewn to the carpet, I wouldn't be more surprised than I am now.
Do you believe a major hospital would refuse ER services to people? If their budgets become so constrained, I wouldn’t rule it out. Do you want that? Would you be surprised if you heard that on the evening news?

6 Weeks

6 Weeks

What were you doing 6 weeks ago? It’s kind of hard to remember if you just sit and ask yourself. It was August 31^st. State Fair time. The end of the summer. I’d say in the past 6 weeks I’ve gotten a lot done, though I’m not sure what it is. Painted a few rooms, put together some closet organizers, got some stuff done at work.

But why is 6 weeks a relevant time to blog about? Because 6 weeks from now is the deadline for the Stupid Committee to agree upon recommendations to fix the US budget problems. My guess is that 95% of the people out there don’t know who is on the Stupid Committee. The best known is probably John Kerry. One sad reality is that 4 of the members of the Stupid Committee were on the President’s Debt Commission, and they all voted against its recommendations. I think this panel is designed to fail.

And when I say fail, I don’t mean that they won’t come to a compromise. They very well might come to a compromise, but I think it will be like the MN legislature’s compromise with Gov Dayton. Instead of finding true budget and policy reform, they’ll come up with some way to continue to defer paying our bills.

Here’s the funny part. They can all win with their ideas. They’re politicians – when questioned they won’t give a straight answer anyway. If they support something that has some of their {insert ridig failed ideology}, it’s not the end of their careers. They’ll get re-elected anyway. So why are they afraid to put their necks on the line? A recent AP report indicated they haven’t made much progress. We didn’t need the AP to tell us that; it was a forgone conclusion they’d be at a standstill at this point. But here’s the best part (better than the aforementioned (thank you Dan Simmons for that word) funny part). They can support a compromise, but vote against it when it actually goes to Congress for a real vote. I mean it’d be nice if they’d at least pretend to care by passing something in six weeks. Sooner is better, because then it gives Congress more time to not look at it.

Our best hope unfortunately lies in Wall Street. If the markets respond negatively to inaction, hopefully they will become more willing to comrpomise. The reality is tax rates will have to go up, and not just on the “rich”, probably on the middle class too. Military spending will have to see significant cuts. Gas taxes may have to go up. Social Security benefits may have to be cut. Obamacare may have to stay as it is.

So please, please, please, write the members of the Stupid Committee. Don’t go to your own representative – he/she doesn’t care. Email them. They are:

Patty Murrary - http://murray.senate.gov/public/index.cfm?p=ContactMe

Max Baucus - http://baucus.senate.gov/?p=contact

John Kerry – http://kerry.senate.gov/contact/

James Clyburn – https://clyburn.house.gov/contact-me

Xavier Becerra – http://forms.house.gov/becerra/webforms/issue_subscribe.html

Chris Van Hollen – http://vanhollen.house.gov/Contact/

Jeb Hensarling – http://hensarling.house.gov/contact/

Dave Camp – http://camp.house.gov/Contact/ ->This guy appears to only want to hear from his constituents. Look up zip code in MI and tell him not to be so picky because he’s part of the super committee.

Fred Upton – https://upton.house.gov/Contact/default.aspx -> Another MI guy who thinks he’s above having to be responsible to his constituents. Remind him that he poops like the rest of us, so he has to listen to you.

John Kyl - http://kyl.senate.gov/contact.cfm

Pat Toomey – http://toomey.senate.gov/?p=contact

Rob Portman – http://portman.senate.gov/public/index.cfm/contact?p=contact-form

Let them hear your voice. They have 6 weeks.

A local conservative blogger recently wrote a blog titled "I like big trucks and I cannot lie". This blog is a counterpoint to the article.

The article is available at http://katiekieffer.com/2011/08/15/i-like-big-trucks-and-i-cannot-lie/


The first point is that we (the US) must drill for more oil. Let's clarify a few things about oil. First, the US is the world's third largest producer of oil (source wikipedia). More than Iran, Canada, Mexico, Venezuela, or Iraq. Second, the US is by far the largest consumer of oil. But here's the topping on the ice cream: the US has the 14th largest proven reserves of oil.

Back to drilling for oil. There are advancements in drilling techniques of which I know nothing about, but oil production can increase if we are willing to pay more for oil. Higher oil prices, which translate to higher gas prices, guarantee more oil because it is becomes economically feasible to drill miles below the oil floor when we pay $100/barrel.

So we are supposed to produce more oil, even though we have the 14th largest reserves in the world, and we are already third in production. As an analogy, Warren Buffet is the third richest person in the world, Babe Ruth is the third leading home run hitter of all time, the third  fastest mile ran of all time is 3:46, and the world's third largest economy is China. Third isn't bad. That doesn't mean we shouldn't push for first. But oil production isn't sky-rocketing, not like the consumption of it.

So we can drill for more oil, fair enough, but most of the cheap oil is already found. The US will be drilling for off-shore oil, and tapping more expensive forms of oil. Additionally, we are depleting our reserves, and have been doing it faster than other countries. It's difficult to argue that gas prices will go down.

The next claim of this joke of a blog is that environmentalists are "behind the times", suggesting that the environmental movement is disconnected from reality. I'm wondering where the disconnection from reality was last summer when the largest oil spill in the world's history happened in the Gulf of Mexico. In my previous paragraph, I pointed out that offshore oil will continue to be a larger portion of the oil we recover. so while I don't expect there to be more oil well blowouts, I do expect that the US to do what the blogger bemoaned: enforce regulations that will better prevent oil spills.

The next concern is that President Obama's proposals for 54.5 mpg for cars doesn't rely on "natural, free-market" competition, and the "technology requires time to develop and become affordable". Unfortunately, that's the opposite of what's been happening in the US. Gas prices have been rising and the efficiency isn't much higher than it was in 1980.

I can go on. I've had the concern for years that the US needs to take relevant steps to decrease gas consumption. This blog and attitude it enforces does not accept the realities of the US oil reserves, worldwide oil consumption increasing, the environmental impact of oil consumption, and how the free market has not produced cheap gas. I actually don't think increasing CAFE standards is the best way to  address gas prices. I think increasing the gas tax will do a better job of it. Instead of relying on auto-makers to make more efficient cars, consumers can decide which car to drive based on their driving needs and ability to afford it. It can be argued that high consumer taxes impact poor people, but in the last 10 years, we've already endured large increases in gas prices. Also, it's hard to argue that there will be a negative impact to the oil industry by taxing gas more. Oil is one of the most precious natural resources on the planet. Rather than cheering on to drill for more oil that's running out and believing the foolhardly lie that gas prices will fall significantly, I think we need to accept the economic reality that there's a limited amount of oil underneath the planet, and that it's not going down in price. The better approach is to start re-working our society and economy to not rely on cheap oil.

Thursday Night Ramblings and Thoughts

So first it was the 9/11 Commission. Next it was Bowles-Simpson. Then it was the "Gang of Six". Now it's the super-committee. Too often these committees' recommendations are ignored. Do we honestly believe that by November this group will find a way to cut nearly $1.5 trillion from the budget for the next ten years? I'm not suggesting we don't support this decision, but realistically, I don't think Congress will support their decisions.

In Minnesota, the Gov. Pawlenty used unallotment to balance the state budget a while back. This included $1.4 billion not paid to schools. This money has not been paid back yet. The recent budget agreement between Dayton and the Republicans delays another $700 million to schools. Based on the current economic situation, I don't see the MN budget finding a surplus anytime soon. This unallotment and borrowing from a future budget effectively works as a tax cut. The state is claiming it's delaying this payment, but never does. So taxpayers are not on the hook for paying this. It's a de facto tax cut.

Out for a while

It's been a while since I've written anything to bore people with, but I'll get something out soon.

It'll likely have to do with the rapture, elections, gay marriage, budget deficits, and my normal rant.

Thanks for hanging with me. More bad opinions on the way.

Word of the day, 3/27/2011

Morass.

1: marsh, swamp

2 a : a situation that traps, confuses, or impedes <a legal morass> b : an overwhelming or confusing mass or mixture 

Word of the day, 3/26/2011

Philistinism. 

a : a person who is guided by materialism and is usually disdainful of intellectual or artistic values 

b : one uninformed in a special area of knowledge

Ignoramous Ginormous

An article in Newsweek this week gives a quiz about American government, rights, history and civics. Readers could answer questions. Also, the quiz had already been given to 1000 people, so readers could see how what percent got the answers right and wrong. My wife and I took the test. Admittedly, I didn’t do great on it. Overall, according to Newsweek, 38% of people who took the quiz failed.

A few of the questions where we did poorly:

• Who was president during WWI? 20% correct. 80% incorrect.
• What is the economic system in the US? 33% correct. 67% incorrect.
• What is the Supreme law of the land? 30% correct. 70% incorrect.
• How many amendments does the Constitution have? 6% correct. 94% incorrect.
• The House of Representatives has how many voting members? 14% correct. 86% incorrect.

This quiz included an article by Andrew Romano that focused on our ignorance. If it’s any reprieve, the author suggested that this hasn’t varied much over the last 60 years. But the countries of Britain, Denmark, and Finland clobbered the US on a test regarding international affairs. I think it’s hard to say the US versus any of these countries is necessarily an apple to apples comparison, and the article points that out. These are much smaller countries, don’t have Mexico south of them, the population is a little more homogeneous, and so on. But, these are also countries with advanced economies and high standards of living, which should cause us concern.

But the article lists possible reasons for our…lack of knowledge.

• Decentralized educational system.
• Complex political system with several layers of government.
• Income inequality. The top 400 households make more than the bottom 60% combined.

When the quiz focused on better earners, the results were much better. 75% of those earning $100k or more passed.

The article went on to discuss how our ignorance can manifest itself. In terms of balancing the budget, many Americans want smaller government, but also oppose cuts to Medicare, Medicaid and Social Security. Most serious economists know that balancing the budget and paying down the debt long term requires cuts to entitlements and the military. But most Americans think that to balance the budget we need to cut government waste. If you’re read my blog to this point, you know which politicians talk about cutting government waste, probably the more Bachmann-esque type of politician. By being able to talk about cutting “waste”, politicians can pander to people who don’t have a clue that entitlement and defense spending make up about 2/3 of federal spending.

The reality is, and I’ve expressed this to my federal politicians, that we need to cut military and entitlement spending. These together make up about 2/3 of the overall budget. Unfortunately they only seem to be able to hear the people that will be impacted by cutting aid to the poor. To be sure, there is a difference between aid to the poor, and entitlements.

Point of the story: the US is in for a tough time balancing its budget in a competitive world while our citizens aren’t plugged in to reality. Whether its apathy or poor education, it’s not acceptable.

Word of the day, 3/25/2011

Retinue

a group of retainers or attendants

Illegal Immigration

Today's rant is about the ongoing problems with our immigration policy and its impact on the labor market.

Again, I take this from the Star Tribune. This article explains the policy enforced by the Obama administration.

http://www.startribune.com/local/stpaul/118301014.html

Basically ICE is doing audits of payrolls at companies. The fallout is that employees are being fired or just flat out leaving. The focus is on low skilled labor. These audits are increasing in number, fines are increasing, and arrests are increasing. For once it appears SEIU is on the same side as the Chamber of Commerce; they oppose Obama.

I'm no economist, but markets that are mobile seem better geared to meet our economy's needs.  Labor is a market that is typically not mobile. However the illegal immigrants that come to the US go against the trend.

The fact that employers readily hire illegal immigrants to do these jobs points to the fact that there is an under-served market for labor. There is definitely a black market for labor, and just like marijuana the government spends lots of money enforcing something and not accomplishing much.

The list of negative issues with the current immigration policy is long. The US-Mexico border is pretty much a warzone. To name a few issues: human-trafficking, people being left for dead, rape/exploitation of women, poverty, costs of enforcement, morgues piling up with dead bodies, ICE agents being murdered, and environmental impact of trash along the border.

We could explore the reasons that Mexico is a poor country, but this issue applies to anyone coming to the US to work for a better life.

My position on this issue is not popular. I think we need an expanded guest worker program that welcomes immigrants. Particularly along the US-Mexico border, we can end the problems I listed above. There are plenty of problems legally, I have no doubt. However I think the upside is very good.

• Illegal immigrants coming here to work are no longer criminals.
• Guest workers pay income taxes.
• Less people die along the border.
• Human-trafficking becomes less of a problem.
• The safe houses with 20 people living in a 1000 square foot area, mistreating women, and having people living in fear end.
• Border patrol workload lessens and enforcement costs go down.

To be fair, I'll list the downsides.

• Guest workers are viewed and treated as second class citizens.
• Racial tensions against people of Hispanic/Latino Americans persist.
• Other people can offer their input.

With or without my suggestions, the first two bullets still exist.

Sadly enough, the guest worker program was what Pres. Bush wanted. What we have no is Pres. Obama's approach. The US has a guest worker program, but it is rarely used, and doesn't accomplish much. I think the pros outweigh the cons. We are going to continue to have a blackmarket for cheap labor, and our businesses and illegal immigrants will pay the price.

For more information on the "problems" with illegal immigration, a.k.a. people coming to the US to work, watch this Hulu video.

http://www.hulu.com/watch/91600/vanguard-death-train

Word of the day, 3/24/2011

Riparian.

relating to or living or located on the bank of a natural watercourse (as a river) or sometimes of a lake or a tidewater <riparian trees>

Twin Cities - Transportation for the next 20 years

An article in the Star Tribune makes some really good points about the coming years for commuting in the Twin Cities metro area.

http://www.startribune.com/local/118341244.html

The expectation is that in the next 19 years, the population in the Twin Cities will grow by 700,000. While that seems a little high to me, if it's anywhere near true, the current traffic congestion will turn into more gridlock.

Additionally, in this time I expect gas prices to increase well over $5/gallon. I don't necessarily think that there will be gas shortages, though I don't doubt there will be some.

When the interstate highway system was built, people were probably curious whether it was necessary. The government had to obtain land and finance this massive project. I imagine people were opposed to it, opposed to the costs, skeptical whether these massive roads would be used. Others probably welcomed it as necessary to enabling commerce and moving people around. Today, we can't imagine living without it.

In the Twin Cities the light rail was recently built between downtown Minneapolis and the Mall of America. I initially opposed it because I thought such mass transit should be focused on the most congested highways such as 394. Plenty of people argued against it. Other people welcomed it. While the light rail is primarily used for pub crawls and getting to Twins and Vikings games, I can't see its ridership decreasing, especially with increasing gas prices. Another rail project, the Northstar line was recently opened. It ended up costing more than it had to because of typical Republican/Democrat fighting and refusal to finance. Again, I don't see ridership decreasing with the increasing cost of gas, and the deteriorating roads and bridges. Last, the Central Corridor is being built down University. When this project was envisioned years ago, I argued it should use the Soo Line that goes from around the Lake/Hiawatha intersection to the riverfront in St. Paul. That would have been too obvious, but thankfully the project panned out.

The common theme is that the MN state government moves very slowly on transportation projects. Now I don't want to suggest that outside of the Twin Cities doesn't need improvements. My viewpoint extends to those communities as well.  But, it seems like the argument is that we can't raise taxes to finance these projects because it will kill jobs.

So we have a couple options. We can let our bridges fall down and our roads get busier. Commute times can increase while gas prices go up, and road rage can get worse. Or we can formulate a long term strategy for transportation and accept that paying the taxes now will save us money, and time in the long term.

I have no idea what the strategy should be, but it seems like it should focus on the congested corridors, such as highways 35, 94 and 394. Whether this strategy is more light rail, or bus innovations such as the one on 35W in Minneapolis, I'll leave that to the transportation experts.

So every time the price of gas jumps 20 cents in a day, I wonder why 10 or 15 cents more per gallon to finance transportation projects is such a damning concept to business.

I really like living the in Twin Cities, and think it would do itself a great service by striving for advances in transportation. As the article that I linked above says:

Delays cost average commuters in the Twin Cites $970 a year in lost time and wasted fuel, $244 more than the average for similar large cities, said the Texas Transportation Institute at Texas A&M University, a transportation research agency.

The reality of a strong economy with dwindling resources is that we are doing a disservice to ourselves by having a large chunk of our personal budgets be dedicated to transportation. If we continue to lag in transportation, the Twin Cities and the state of Minnesota will be less attractive to businesses. If we focus on automobiles as the primary form of transportation, we will pay more for gas, and have the associated environmental problems.

In many of my posts I rant about the federal deficit. That is a real issue facing us today. Transportation in the Twin Cities is something we have time to fix. A long term vision and dedicated policy and financing can turn this around. Hopefully our state and local government can realize this, and come to an agreement to improve our metro area.

Statement on debt from Dallas Fed president - Yahoo link

It's nice to see that one of the federal reserve presidents feels the US debt is unsustainable.

http://finance.yahoo.com/news/Feds-Fisher-US-debt-situation-rb-2041699246.html?x=0&sec=topStories&pos=main&asset=&ccode=

In my letter to my senators and representative, both Franken and Klobuchar responded. Klobuchar gave "copy and paste" response that I had seen from her before.

Franken I think realizes the situation a little more, but railed against HR 1, which I think is the GOP's move to cut like $60 billion from the current year's economy.

Most people don't notice this but the federal government has run out of money for its current fiscal year (which doesn't line up with the calendar year), and has authorized short spending resolutions to keep itself going.

We can take our pill now when it's not as strong, or we can take it later when it's going to knock us out. On editorial I saw suggested that 64 of the senators sent Obama a letter recommending he work with the debt commission's recommendations.

Word of the day, 3/19/2011

denouement. 

1: the final outcome of the main dramatic complication in a literary work 

2: the outcome of a complex sequence of events

Word of the day, 3/16/11

Perfidy.

1: the quality or state of being faithless or disloyal : treachery

2: an act or an instance of disloyalty

Word of the day, 3/15/11

Bachannal.

1 orgy

2 a : a devotee of Bacchus; especially : one who celebrates the Bacchanalia b : reveler

Word of the day, 3/14/11

Garrulous.

 

given to prosy, rambling, or tedious loquacity : pointlessly or annoyingly talkative.

Word of the day, 3/13/2011

Klatch. 

A gathering characterized usually by informal conversation.

Word of the day, 3/12/11

Adjuration. 

1: a solemn oath 

2: an earnest urging or advising

Word of the day, 3/11/11

Dint.

Noun.

1 archaic : blow, stroke

2: force, power

 

Verb.

1: to make a dent in

2: to impress or drive in with force

Welcome Home Discovery. You've served us well.

Discovery landed, and will be the most flown shuttle in the fleet. There are still two more missions, one for Atlantis, and one for Endeavour.

39 missions, 148 million miles, 5830 orbits of earth, and an accumulated 365 days in space.

My thanks to the people who designed and maintained Discovery; and to the crews that flew her, and the teams that planned the missions. Both times Discovery was the "return to space" craft, after losing Challenger and Columbia. Those were scary times I'm sure for the shuttle teams, knowing that a lot was riding on those missions.

Few government programs have inspired me like the space program. The shuttle fleet has been the face of it.

http://www.msnbc.msn.com/id/41978588/ns/technology_and_science-space/
Someday I hope to take children to see at least one of the shuttles.

Word of the day, 3/8/2011

Didactic.

1a : designed or intended to teach b : intended to convey instruction and information as well as pleasure and entertainment <didactic poetry>

2: making moral observations

Factoid - 3/8/2011

I never knew this but the postmaster general is the second highest paid government official, after the president.

See the top ten at this link:
http://247wallst.com/2011/03/04/the-ten-highest-paid-government-jobs/

Word of the day, 3/7/2011

Seriatim. in a series.

My letter to my members of Congress, 3/6/11

I’ve written recently concerning the federal budget. I’m writing concerning the inevitable vote on the debt ceiling. I encourage you to vote against raising the debt ceiling unless Congress can agree to implement many of the recommendations of the National Commission on Fiscal Responsibility and Reform.

I can appreciate that people can support and oppose recommendations of the commission. I think the tradeoff there is the bipartisan nature of the commission underscores an important shift that is needed in the current political culture of our country. Additionally, I see it as the only serious, plausible plan to improve the federal government’s balance sheet.

I’ve been concerned about the federal debt ever since it grew to the hundreds of billions in the early 2000’s. The product of inaction by the Congress and president during that time has forced us to make much more difficult decisions now. At the time I thought incremental, meaningful policy changes would be a good means to fix the deficit, but that never materialized. We can’t change those policy decisions, but the longer we wait to make a fix, the harder it will be, and the more our finances will be impacted. 

Of all the reading I’ve done over the last ten years concerning the deficit and debt, not one serious article has suggested we won’t have to significantly raise taxes and cut spending once we become debt intolerant (default). I would rather take steps now to have a long-term fix to the nation’s finances than to force the federal government to default on its debt, and implement massive tax increases and spending cuts.

While military spending, Medicare and Social Security need to be changed to accomplish serious deficit and debt reduction, there are other areas of the federal government that need to be changed to realize savings. There are undoubtedly intangible costs associated with the overlapping programs and regulatory laws associated with the USDA, FDA, EPA, Department of Education, ATF, ICE, DoD, etc. I don’t see this is as being as high of a priority as the debt.

The US has a phenomenal history of paying its bills, which is reflected in our economy, our standard of living, our debt tolerance, and our limitless access to foreign capital.