Archive for the ‘Economy’ Category
The older are getting richer on the backs of the poor. How? Rich people who don’t need government services get them whether they need them or not. Medicare and Social Security isn’t a safety net for the poor, it’s a cash cow for many people who already have money.
Where does this money come from? Younger workers who don’t have the money to pay off student loans, buy a house, or save for their retirement.
In documenting a rising age gap with regard to economic well-being, the authors compare households headed by adults over age 65 to households headed by adults younger than 35. They examine data over time–particularly from 1967, 1984, 2005, and 2009-2010. (The comparison between 2005 and 2009-2010 illustrates the impact of the Great Recession.)
Here are some of their conclusions:
• From 1984 to 2009, the median net worth of older households rose 42%. For younger households, it declined by 68%.
The author of the post ends on a high note, saying that more young people have college education and says that the education translates into higher income potential.
My thought is that college education is worth less now, too. Basically, college education is what a high school education used to be. I see the very intelligent and innovative foregoing college and working right out of high school–often in the tech industry. Some professions will still benefit from education, but I see an impending burst bubble there, too.
Bottom line, the way things currently are, the Baby Boomers will hoover up all the revenue and incur tremendous debt that will cause the younger generation to transfer their wealth to pay the tab.
I get the West Virginian misery and the Rust Belt depression, but Florida? Are old people just cranky? Is it the swamps? Unemployment? Housing crisis? Sucky schools?
Maybe I answered my own question.
Gallup has the rest of the data on the states. The mid-west and west (all but Nevada–shocka!) are pretty happy.
I wonder if there’s any correlation with legalized prostitution and misery. Hey, just wondering!
Seems to me, that work and home stress is the key to lack of well-being, more than anything.
Is Bain a villain or victim? Is Mitt Romney a hero or a heel? That’s the question before Republican primary voters and a few things need to be understood about Capitalism generally first before answering these questions specifically.
Capitalism is well regarded by most Americans. The bailout of investment firms that backed bad mortgage-backed securities i.e. bank bailouts is not well-regarded by Americans.
Bank bailouts, business bailouts, bailouts, period, are not capitalism.
A truly free market means the freedom to succeed or fail. A truly free market means I don’t have to pay for your screw up.
America no longer has the freest of free markets. [For more about this and Bain, please read Jonathan Last in the Weekly Standard. He makes excellent points.]
Americans who work for GM and GM subsidiaries, for example, are more than happy to take taxpayer money, rip off GM investors, give the money to the unions, and currently keep their jobs even though the company has a bunch of money-losing products and the company has yet to make money back that it took from the taxpayers (and probably never will).
Americans who see nearly $750 billion taxpayer dollars go to a failed company like Solyndra (Obama cronies who want to make money off of the failed green-jobs hoax at taxpayer expense) are not so happy.
American Iowans who get ethanol subsidies to grow corn for energy production even though it’s more expensive, and shockingly, dirtier, like a more nuanced capitalism.
Americans are romantic about capitalism. They like a free market a little freer and a little more socialist-y (new word) depending on their mood.
Politicians are worse.
Politicians can use taxpayer dollars, regulations, lawsuits, threats, audits, and all sorts of means to manipulate the market.
So, corporations, in response to the government unevenness, seeks favor. They buy advertising (hello Wall Street
investors donors to Obama) and hope to influence the laws, regulation, bailouts, etc. in a way favorable to their business, their stockholders and their board. And who wouldn’t?
When the government gets so powerful, corporations and individuals are forced to be obsequious and cower before the throne of power lest their businesses and lives be ruined.
Obama and Democrats enjoy this power. Many big government Republicans don’t mind it so much either.
Corporations enjoy the arrangement as long as it benefits them. Greasing the government skids becomes part of doing business. The more corrupt the government, the more it costs but the cost of NOT paying off the politicians is far worse and a destroyed business or even industry.
Individual Americans look at all this and are disgusted. They forget their own involvement or excuse it figuring that the “big guys” will win anyway, so “might as well get my share”.
The political-corporate nexus has become a mutually-beneficial and exclusive system. The American taxpayer, the guy on the hook for all the flights of fancy (Solyndra) and foibles (Fannie, Freddie, and Wall Street investment bankers) stands on the outside.
$15 trillion in debt later and little to nothing to show for it, the little guy is fed up.
The stories, that the press will finally tell about how the little guy has been screwed (not by Obama mind, never by Obama) but by Mitt Romney and other villains like him, will be front and center.
The American economy is not free-market capitalist in the sense that businesses or government are having to pay the consequences of bad behavior. Two words: “Moral Hazard”. We are seeing the consequences of the moral hazard of these bailouts and they’re unintended.
The most dire consequence: People are questioning capitalism itself, rather than the bad government behavior that drove bad business behavior.
Romney supporters conflating defending Mitt Romney with defending capitalism are stretching this sentiment. It’s been long since companies like Bain were strictly operating in a free market system and while it’s subtle, this fundamental unfairness is what has people hopping mad.
When Romney piously decried the in-state tuition for illegal immigration, he was playing on the sense that people feel that it is unfair for people to get benefits they haven’t paid for. It was a populist argument. Further, Mitt didn’t just let that argument stand. He outright lied about Governor Perry’s illegal immigration stance making it seem as though Rick Perry was soft on illegal immigration while he, Romney, was a defender of all things America. It’s laughable, but it worked and he knew it would.
And I suspect Romney and his acolytes are afraid right now because they know that the attacks about Bain also work. But if they work now, they’ll work in the general.
The American people are angry and feel totally alienated from their government and the “big”, powerful businesses that use their influence to influence a favorable business client.
On Twitter, Brooks Bayne rightly notes the conflation by Romney supporters of mercantilism and capitalism.
The histrionics displayed by Romney’s supporters ignores the collusion between government and business to the harm of the individual citizen.
How do these folks think the Teaparty started? It’s this very unfairness that caused outrage. TARP started boiling at the end of the Bush administration, was supported by both Obama and McCain and the unholy alliance has, instead of abating, gotten worse. At least a sliver of this emotion is encapsulated by Occupy Wall Street.
Occupy Wall Street just took the opposite tack of the Tea Party. Rather than being left alone–which is what the Teapatiers want–the OWS folks want the bailouts to go to them. Forget corporate bailouts, they want personal bailouts.
Somehow, personal bailouts is socialism but big bank bailouts is “supporting the free market”? No it’s not.
Obamacare was collusion with Insurance companies at the expense of tax payers. TARP benefited banks and businesses over leveraged by making bad bets.
Over and over, the taxpayer is being asked to look the other way while their taxes are being raided for the benefit of irresponsible players — the government, banks and businesses all angling to take great risk. They receive all the benefits if they succeed and the taxpayer is on the hook for the losses should they fail.
The problem with Romney is that he neutralizes every single Obama negative — Romneycare, big regulations (buying global warming, etc.), bailouts, TARP, and the collusion of Wall Street with the government.
Capitalism as a concept is just fine. The problem is that America is a far cry from a truly free market. A market isn’t free when the risk takers can make someone else pay for their mistakes.
Americans are tired of paying for others mistakes. They’re tired of being on the losing end. They thought Obama was going to bring “fairness”. Obama just made things worse–socialism is always worse.
Republicans should be for something better, but as far as I can see, the front runners all like using the Government for their own fanciful schemes. For some reason voters are supposed to trust them to do different. No wonder the Republican field is divided and depressed. [Update: William Jacobson says the Republican party has become “the party of Bain”. Heaven help us.]
Trusting a politician is always a bad bargain. Voters don’t seem ready, though, to trust themselves and that’s the only solution.
More about Romney’s own class warfare here.
Updated: Dan Riehl says that the left will “hang Romney with the rust belt and win“.
Playing cover up for President Obama, Americans have seen little of the economy’s human impact. Rich Lowry rightly notes that amidst the nonsense, there is real pain (something I wrote about yesterday):
If you put aside the political rants and the obnoxious construct of the 99 percent versus the 1 percent — which has the whiff of the guillotine about it — the stories are a stark pointillist portrayal of the grinding misery of the Great Recession.
And Bank of America has very little to do with it. The recession has added a layer of joblessness on top of punishingly dysfunctional and expensive health-care and higher-education systems. Despite themselves, the people posting at the 99 percent page aren’t really making an implicit case for burning down the financial system, but for blowing up how we handle health care and higher education.
As the Republicans look more likely to win the 2012 election, expect the horror stories to finally come dribbling out through the press. The point, of course, will be to paint the Republicans as heartless and uncaring. The fact that Barack Obama deepened the despair and left people worse off will go unnoticed and ignored.
People are desperate and despairing, that much is true. And the press has hidden this fact to save Barack Obama’s hide. It’s despicable.
The Stimulus threw a bandaid on a flesh wound: That is, the states and unions were given taxpayer money of future generations to prop up employment for workers friendly to the Democratic party.
The money has run out.
Talk of a second stimulus is talk of another state and union bailout, for the Federal government is incapable of creating private sector jobs. They’re only capable of getting out of the way of the private sector and the government has been very determined to be in the way of business.
So the question turns to the private sector. Why aren’t jobs being created? I know this is difficult for bureaucrats to comprehend as they don’t have to make a profit, but business owners are rational. There are no reasons to take risks when there are no rewards. So, business owners refuse to expand because expansion translates into increased overhead.
What is the #1 cost of overhead? Business owners are screaming the answer. Bureaucrats are looking up the answer in their basic business text book. Hint: It’s people related. That’s right, employees present the biggest employer cost. That rule is true of nearly every industry.
Employers look at salary, benefits, unemployment insurance, legal liabilities, and now, somewhere in the nebulous future, Obamacare, and employers have zero incentive to hire more people. They’ll sit and wait, keep production costs as low as possible. They’ll pay cash for capital outlays instead of using credit.
Or, they’ll close because of ridiculous regulations — like selling used children books (lead in ink!), like arcane rules for toy manufacturers, like punitive EPA regulations on a state that’s exceeding current regulations, like invading a guitar company instead of going after union malfeasance. All these rules and regulations chip away at businesses and make their lives more difficult. A zillion dollars to change food labeling takes away from the bottom line. A business needs money to hire and create goods.
This is not difficult.
What’s difficult is sucking it up through the inevitable. Jim Pethokoukis has an excellent piece in Commentary basically running through all the “what if” scenarios. The ultimate question, though, is did President Obama’s actions help? The answer is, no (I’m only excerpting a part of it. Please go read the whole thing.):
Did Obama make it worse? It is certainly the case that he only deepened a long-term trend that threatens American prosperity more than any other. The events of 2008–2009 exposed a truth about the U.S. economy from which we had shielded ourselves: economic growth has been slowing in a worrisome way throughout the decade. The nation’s GDP has averaged 3.3 percent annual growth for the past half century. But from 2001 to 2007—before the recession hit—it averaged only 2.6 percent. Going forward, growth might be even slower due to the aftermath of the financial crisis and the aging of the population. The Congressional Budget Office, for instance, pegs long-term growth at just 2 percent or so.
But that downshift isn’t fated. The McKinsey Global Institute thinks a higher retirement age and smarter immigration policy could make the labor force grow more quickly, while smarter tax and regulatory policy could boost worker productivity. Replacing the income tax with a consumption tax, for instance, would likely make the economy grow faster over the long run by increasing investment.
These are the sorts of ideas that are likely to be a central part of the political discussion going forward in a way they never have been. The two-party debacle that was the debt-ceiling debate and the disgusted national reaction to it suggest that the American public is likely to be more open to new remedies for the nation’s ills—remedies that have not been stained by their association with the failed policies of the past four years.
We’re stuck for now with an anemic and debt-laden economy that may muddle along for years. But it didn’t have to be this way. The one thing we can all say for certain is that we could have made it better.
No one wanted to take their medicine. Is there a stomach for it now? President Obama made many promises and they’ve all failed to deliver. His stimulus prolonged the misery and starved the private sector.
President Obama speaks often of the mess he “inherited.” Well. He’s made it worse. Much worse.
Not so long ago, I was upset with the State of Things and it was Andrew Malcolm the LA Times Blogger, my podcasting co-host and former NYT editor, who disabused me of the notion. Recalling the race riots of the late 60s and the angst around the Vietnam war, he convinced me that we ain’t nowhere near bad, yet. I’m inclined to believe him.
Politics, these days, is what politics in our Democracy has been a long time: pointed, shrill, symbolic and silly. One only needs to read Mark Twain, to know that average Americans have long held their leadership in tolerant contempt. We all just think what we are experiencing is the worst ever. Why wouldn’t we? History, especially in this self-centered, immediate-gratification age begins with us, well, “me”, right?
So this morning, my longtime online friend Brendan Loy decried the political environment. I suggest that you go read his whole post. He pretty fairly encapsulates the bulk of our intense Twitter back and forth argument. He says,”America is at something closer to an event horizon than a cross-roads“. Rather apocalyptic for a professed non-religious person.
A couple things occur to me as I’ve contemplated his anxiety and anger. I’m going to put my thoughts in a numbered format in no particular order of importance–it will just be easier when people disagree with me.
1. America faces an identity crisis: Are we going to be Europe-lite and recede into irrelevance ala Britain. Are we going to value, as I say, a social safety net over freedom? The two are inversely proportional. America, as it stands, wants both. They want a less bossy government. They also want the government to take care of them permanently. Americans are much like teenagers: all the fun, none of the responsibility! But the bill is about to be paid. The population statistics cannot support this current double-bind. The economics of it are failing. So the overriding tension in America is an identity-crisis. It is a crisis within each citizen. It is not resolved.
2. America faces a cultural crisis. The young people and the left side of our country seem to dislike America. This is supported in polling. They don’t like the culture. They don’t like the word “capitalism”. They like the word “progressive” and “socialism”. They view America as essentially bad. Of course, they’ve been told that America is bad, so it’s no wonder they see that perspective. Unlike during World War II, the Iraq and Afghanistan wars, both resulting in the freeing of heretofore abused people, Hollywood has portrayed soldiers as merchants of death and destruction and evil instead of liberators of people. So the older WWII generation love America and see it as a force for good in the world. The young and left do not. In fact, they believe in a quasi-we-are-the-world, utopianism that elevates third world despots to the level of America. American exceptionalism? Oh, hell no! That would mean someone is better than another. But America is better. Objectively better. A culture cannot survive if it hates itself. And so there is tension. Remember, we now have a generation of kids who have received awards for participation. Every no-talent-ass-clown believes he’s as good as anyone else. Competition, capitalism, merit and excellence have been exchanged for participation, redistribution, self-esteem and trying. America didn’t win culturally by being communal but by freeing individual creativity. There is cultural tension against this very notion–against the notion of greatness itself.
3. America faces an institutional crisis. The church was undermined with the pedophile priest scandals. Science has been undermined with global warming, I mean cooling, I mean climate change. Academia has become a propaganda churning machine. The government writes more laws and our leaders seem more lawless. The press is not trusted as an unbiased forum for fact. The courts seem capricious. No one trusts any institutions anywhere.
4. America faces an economic crisis. In this, we are not alone. The world suffers with us. There is a lot less money going in than going out. We cannot print money forever. We simply can not do it. Eight million people (8 million!) people have lost jobs and they are not going to start working tomorrow. Not only that, but many Boomers face retirement and reality is dawning: money is running out. Not only that, but doctors willing to deal with Medicare/Medicaid, etc are running out. The jig is up all the way around. This is anxiety provoking.
5. America faces a moral crisis. I hesitate to write on this because it’s a can o’ worms. What I mean: Americans used to have a collective ethic that they shared–hard work, church, marriage, kids, home, etc. Life from one home to another at least appeared to be relatively the same. People married young. Had kids young. This had the result of forcing kids to grow up. Being a perpetual adolescent didn’t work so well when you had another mouth to feed. It also created social cohesion of sorts. Things have changed. People stay single longer, get married later. People may have kids or not. Now, there are positives and negatives to this, I don’t intend to oversimplify–only to note that social expectations, well, there aren’t any social expectations or no uniform expectations, anyway, which is my point. This causes anxiety, too. What is right and wrong? What is the best way to do something? This used to not be a question, right? My parents generation didn’t seemed to be plagued with this self-doubt. Fill-in-the-blank was just “the way it was”. Now, there is no “way.”
6. America faces an educational crisis. American education lacks an overarching historical context and cohesion. I believe this lack of understanding of history also contributes to our unease. What caused the Great Depression? How about the World Wars? How did Rome fall? What caused the French revolution? How could a civilized people support the rise of Hitler? We have a vague sense that things are bad, but how bad? And do we have any context to put our current crises into? Not really. Not only that, but Americans have been institutionalized from cradle to grave; systemized from day care to end of life care. Yes, it matters. Have you seen how children are forced to march through halls with their hands behind their backs? Of course, it’s for expedience sake, but with education so systematized, the deficits in learning are universal. Not only that, following the system is valued over critical thinking. Also, objective truth, established facts, are dismissed as “that’s your opinion”. In addition, fierce debate and being forced to defend a position seems to not be the way of education these days. The act of debating is itself stressful because children aren’t forced to defend their opinions. They are honored by sharing them. It makes for an intense interest in politesse but a lack of cogent thinking and overt hostility to having a thought challenged or corrected.
7. Technology amplifies every good and ill. Where the loud-mouthed jerk used to only annoy his family and neighbors at reunions and picnics, now he blogs and annoys everyone. Good news, fair news is also amplified. But the ignorant, arrogant, clueless, mouthy, amoral, mediocrity now has a platform. It can be annoying. Still, on the whole, the best rise to the top, and the arena of ideas is debated across the country–like Brendan and I did this morning. I don’t even know where he lives now. Tennessee? Colorado?
Anyway, this all reminds me of a scripture. Sorry agnostics reading this, but this scripture seems so apt. 2 Timothy 3:
1 But realize this, that in the last days difficult times will come. 2 For men will be lovers of self, lovers of money, boastful, arrogant, revilers, disobedient to parents, ungrateful, unholy, 3 unloving, irreconcilable, malicious gossips, without self-control, brutal, haters of good, 4 treacherous, reckless, conceited, lovers of pleasure rather than lovers of God, 5 holding to a form of godliness, although they have denied its power; Avoid such men as these. 6 For among them are those who enter into households and captivate weak women weighed down with sins, led on by various impulses, 7 always learning and never able to come to the knowledge of the truth. 8 Just as Jannes and Jambres opposed Moses, so these men also oppose the truth, men of depraved mind, rejected in regard to the faith. 9 But they will not make further progress; for their folly will be obvious to all, just as Jannes’s and Jambres’s folly was also.
There is no question that in these times we have more information, more knowledge, but less understanding and nearly no wisdom, it seems.
Discourse can be disrespectful and unfair. A general lack of kindness can be extended to our ideological adversaries. There seems to be no sense that “we’re all in this together.” Demonization passes for communication. Humor is really ridicule and meanness. Charity seems extended to no man.
Well, there is a crisis in America, more than one actually, and if it feels like war, it’s because it is. We are struggling for our very souls as a nation of free people. Who are we? What do we stand for? Who do we want to be? What do want for ourselves and for our children?
The first phase of a fight is ideological. And we’re in this phase. Ultimately, this is an individual struggle. People are having to reassess their notions of themselves. Do they believe they can take care of themselves? At what point does a person need, want, deserve a bailout?
I mean, these are painful questions. Shaming questions. America suffers generally because we’ve been indulgent individually. And our institutions have reflected the individual failure. We tolerated sin in our churches. We tolerated dishonesty in our halls of science. We tolerated propaganda in our schools of higher learning. We tolerated living beyond our means economically. We tolerated immaturity and selfishness in our relationships. We tolerated things because, like the Corinthians of Paul’s time, we thought it made us more righteous. We fell in love with our tolerance and we indulged our self-indulgence.
Each American stopped viewing himself as a responsible patriot and more like a co-dependent citizen. Everyone was drunk together.
Now, Americans are furious with bailouts here and there, a stagnant economy and the general State of Things. They are cutting back their lives. They’re making hard choices…well, most are. And still, it doesn’t look to be getting better. Meanwhile, the government, in contrast, spends like a meth-addled lottery winner. And, blaming the people while they’re at it.
So in this environment, people fight. Will a solution come, Brendan? I don’t know. Will America have to fully implode to reset the button? I doubt it will come to that. More likely, there will be internal struggle and strife as tough decisions are made out of necessity.
So the Wall Street Journal has an article documenting the split betwixt economists:
Economists were evenly divided between those who fear inflation will accelerate over the next year and those who see a bigger risk that the inflation rate will slow from already low levels, according to the latest Wall Street Journal forecasting survey.
See forecasts for growth, unemployment, housing and more. Plus, views on the Fed’s rates, stimulus and more. Survey conducted April 9-13. (Or download all data as .xls)
Complete Coverage: Forecasting Survey
On average, the 56 surveyed economists, not all of whom answer every question, expect tame inflation, forecasting consumer prices in December will be just 1.8% above year-earlier levels.
But there was a wide variance in the estimates which ranged from predictions of no increase in prices at all to a 4.4% increase. Consumer prices barely rose in March from February, and increased 2.3% over the previous year.
When asked what presents a bigger risk over the next year, 23 economists said accelerating inflation and 23 said slowing inflation. That mirrors a divide inside the Federal Reserve. At their March policy meeting, some officials argued the downturn in house prices is causing key measures to understate prices increases; others focused on the decline in inflation measures that exclude food and energy. Chairman Ben Bernanke appears to be in the latter camp.
“The moderation in inflation has been broadly based, affecting most categories of goods and services with the principal exception of some globally traded commodities and materials, including crude oil,” he said Wednesday.
The inflation issue is a key consideration for Fed officials debating when to signal markets that they are preparing to raise their target for short-term interest rates, now being held near zero.
“The Fed doesn’t want to start raising rates when you haven’t got really solid employment momentum,” said economist Kurt Karl of Swiss Re, who doesn’t see much risk of inflation amid widespread unemployment.
About the Survey
The Wall Street Journal surveys a group of 56 economists throughout the year. Broad surveys on more than 10 major economic indicators are conducted every month. Once a year, economists are ranked on how well their forecasts have fared. For prior installments of the surveys, see: WSJ.com/Economist.
On average, the economists expect the unemployment rate, currently at 9.7%, to fall to just 9.3% by December while the economy adds around 1.9 million jobs over the next 12 months. The survey found that, on average, the economists expect the U.S. economy to expand at about a 3% annual rate in each of the four quarters of this year, although three-quarters said growth is more likely to be stronger than weaker than their forecast.
Economists continued to push back their expectations for when the Fed will begin raising rates. On average, the economists don’t expect the central bank to move until November; two months earlier they were predicting September. But predictions ranged widely from June 2010 to January 2012.
Some respondents worry that Fed officials are too focused on today’s measures of consumer inflation. “Pipeline price pressures are there,” said Conrad DeQuadros of RDQ Economics. He noted signs of increased prices of imports, commodities and at the wholesale level. “Commodity prices are increasing very rapidly, which suggests markets are sniffing out an inflation problem down the road.”
Most of the respondents—45 of 52 who answered the question—think that over the next five years, the risks of accelerating inflation are bigger than the risks of slowing inflation. Some say near-term inflation debate shouldn’t be the key to Fed policy.
These are the same people who would like to dictate policy. Every. Single. One. Of. Them.
The only thing worse than divided economists? Economists who agree. They are “certain” that this or that will or won’t happen.
Do you want these people telling you how to live your life?
The reason I bring this all up is this: We are constantly told that the smart people know what is best for us if we’d just listen. But they don’t know.
How about this simple economic advice? Get out of debt. Stop spending so much. Yeah, I’m talking to the folks who run the government and can’t manage their own house and want to manage yours.
More Jobless Claims: Obama Administration & Press [But That’s Redundant] Flummoxed By “Unexpected” Economic NewsThursday, April 15th, 2010
Okay, I might have made up that last part. It’s true, though, the jobless claims have gone up again. My prediction? They’ll continue to go up for a while, unfortunately. If gas prices inflate (and they will), costs to employers inflate across the board. Makes it tough to hire more people.
In the week ending April 10, the advance figure for seasonally adjusted initial claims was 484,000, an increase of 24,000 from the previous week’s unrevised figure of 460,000. The 4-week moving average was 457,750, an increase of 7,500 from the previous week’s unrevised average of 450,250.
Also, as Ed Morrissey points out, the government is still hiring thousands of temporary workers so that means that the private sector is losing significantly more jobs–thousands of them.
If the Democrats succeed in enacting more of their policies, permanent joblessness will be the American way.
Thanks, President Obama!
More unintended consequences. For doctors who offer payment plans for patients who can’t afford to pay up front, a new regulation by the government. It’s designed to “fix” problems, don’t you know:
Our new ad below. Learn more at StopTheCFPA.com.
“Of course I allow my patients to pay in installments. They couldn’t afford orthodontics otherwise. Does that make me a financial company?”
Legislation that has passed the House and is pending in the Senate would create a new regulatory agency with the power to regulate a small business that allows its customers to pay in more than four installments or applies late fees –Senate Bill § 1027(a)(2)(B)(iii)– This is the wrong way to fix financial regulation and the wrong way to protect consumers. Let’s get it right by working together on a commonsense solution without creating a new $410 million big government bureaucracy with powers to regulate businesses that had nothing to do with the financial crisis.
I don’t know why Democrats are so touchy about the description. Well, some, like Al Sharpton isn’t. Their motivation is “fairness” which means to take from one person and give to another who hasn’t earned it. From the New York Times:
A big chunk of the money to pay for the bill comes from lifting payroll taxes on households making more than $250,000. On average, the annual tax bill for households making more than $1 million a year will rise by $46,000 in 2013, according to the Tax Policy Center, a Washington research group. Another major piece of financing would cut Medicare subsidies for private insurers, ultimately affecting their executives and shareholders.
The benefits, meanwhile, flow mostly to households making less than four times the poverty level — $88,200 for a family of four people. Those without insurance in this group will become eligible to receive subsidies or to join Medicaid. (Many of the poor are already covered by Medicaid.) Insurance costs are also likely to drop for higher-income workers at small companies.
Finally, the bill will also reduce a different kind of inequality. In the broadest sense, insurance is meant to spread the costs of an individual’s misfortune — illness, death, fire, flood — across society. Since the late 1970s, though, the share of Americans with health insurance has shrunk. As a result, the gap between the economic well-being of the sick and the healthy has been growing, at virtually every level of the income distribution.
The health reform bill will reverse that trend. By 2019, 95 percent of people are projected to be covered, up from 85 percent today (and about 90 percent in the late 1970s). Even affluent families ineligible for subsidies will benefit if they lose their insurance, by being able to buy a plan that can no longer charge more for pre-existing conditions. In effect, healthy families will be picking up most of the bill — and their insurance will be somewhat more expensive than it otherwise would have been.
Each according to his need. Enforced fairness.
What is the natural consequence of such actions? The rich make sure they are no longer rich. By any means necessary, they will make sure their income falls below the taxation threshold. A whole new industry will pop up to help rich people. And rich people will go buy health care somewhere else. They can afford to travel to Mexico after all, to get cheaper health care. And the cost of health care in America will rise from this legislation.
And then, the government will have to force people to pay more taxes, which is why the President is considering a VAT tax. This whole issue will spiral. Costs will increase, tax revenue will decline. The black market for everything will flourish.
The incentives are all wrong. Why should people quit smoking and eat right? Pay the fine for not having insurance and then buy insurance when you get sick.
Socialism never works because it fundamentally operates against human nature. It reinforces bad behavior and extinguishes good behavior.
But it’s “fair.”