Debt Supercommittee Failure and the Blame Game

(Note--this is a rapid reaction to Obama's press conference on November 21 regarding the lack of a budget deal from Congress.  It will be shorter and less sourced than other posts typically are, and may well have revisions subsequently.)
Obama's brief (about 4 minute) press conference this afternoon had only one purpose--for him to use his bully pulpit as President to get out his approved message, namely that the failure for a supercommittee solution to the mandated $1.2 trillion cuts is all the Republicans' fault.

However, the truth of the matter is that both sides showed an unwillingness to sacrifice certain sacred cows, though the intransigence is greater on the left.  The Republicans did include a proposal for a tax increase of as much as $300 billion dollars, which is a major concession on their part.  The Democrats on the committee, to my knowledge, did not advance or approve of any idea that included a similar amount of cuts to entitlement programs.

As detailed on this blog in a prior post, the current budget problem is one of spending, not revenue.  Tax, tax, and tax some more, but there is not sufficient income by the top 1% (who apparently have trees that really do grow unlimited sums of money, according to the continued Democratic delusion that taxing the rich will provide a bottomless supply of cash for their programs), even if confiscated in toto, that can solve the deficit problem.  There would have to be significant tax hikes on the middle class as well to support the current budget projections, yet alone actually decrease the debt.

Make no mistake, Obama will use this as a campaign talking point next year.  Congress, especially the Republicans, blocked his earnest efforts to fix this problem.  This is crap, but the media will dutifully report it as gospel truth.  The key is to spread the word that taxes cannot solve this problem, that an axe must be taken to the federal budget, and that Republican control of one half of Congress does not excuse the utter failures of Obama and the Democrats who control the other half of Congress, not to mention control of both branches of government in 2009-10, and succeeded only in digging a bigger financial hole.

High Crimes And Misdemeanors

While much of the talk among conservatives right now seems to resemble a circular firing squad, with picking at candidates' flaws with occasional breaks to note just how terrible the economy is, it is easy to forget what should be daily headline news--the scandals of the current administration.

The most recent, and hottest topic, has been Solyndra, et al.  This is certainly a scandal, as the appearance is that those who donated to Obama and the Democratic Party received preferential treatment in both having the loan applications approved and in being the first to have loans repaid when the companies filed for bankruptcy.  This is not a particularly novel scandal, and favortism for donors is as old as the political system, and this actually rates comparatively low on the scandal scale for President Obama.  It looks bad, but is more a matter of creativity in policy and law than criminal behavior.

Next is the ATF clusterjob, made up of Fast and Furious and Gunwalker.  On a scale of fixing a traffic ticket to selling the nuclear codes to the highest bidder, this ranks right about the same as Iran/Contra--I think.  There is a lot about F&F and GW that we just don't know yet.  Was tracking the guns the actual plan, and if so why did it not happen?  The existence of a weapons pipeline was not serious doubted, but taken as a given.  Similarly, the government already knew who the straw buyers were, so it was not an attempt to identify them.  A federal agent is dead, and an as yet unknown number of Mexican civilians have also been killed, with weapons from this operation.  The whole operation could be reasonably argued to be an act of war against Mexico.  Reagan was not impeached for Iran/Contra, but there was some serious consideration given to the idea at the time.

Finally, we come to the forgotten scandal, at least from where I stand as I have not seen any serious coverage of it in months--the conflict in Libya.  Now, there is serious debate as to whether or not the War Powers Resolution is constitutional or not, but it unless and until it is in fact deemed unconstitutional or repealed, it is the law of the land.  Obama did not keep to the letter of the law, or even the spirit of it, during combat operatoins in Libya.  Obama has even possibly violated the Separation of Powers enumerated in the Constitution, which is almost certainly an impeachable offense.  Short of committing treason, it is hard to imagine an action by the President that is more contrary to the Constitution and Rule of Law than claiming the powers of another branch of government for his own.

Now, from a practical standpoint, filing article of impeachment against President Obama may be virtually meaningless, especially if he fails to win re-election.  However, the symbolism of it is important.  Whether or not he were to be found guilty of high crimes and misdemeanors by the Senate, the articles should be filed by the House to show remind everyone that no one, not even the president, is above the law.

Cut The Fat--Why Budget Cuts, Not Higher Taxes, Must Be Used To Balance The Budget

Numbers and figures here.

The money quote (pun intended):  Finally, to put everything in perspective, think about what would need to be done to erase the federal deficit this year: After everyone making more than $200,000/year has paid taxes, the IRS would need to take every single penny of disposable income they have left. Such an act would raise approximately $1.53 trillion.

That's right--to save the current nanny-state model, every person making $200K or more a year would have to turn over every cent of that income, to keep us revenue neutral!  That's on top of all the taxes already collected on everyone making less than $200K/year.  Putting every high-earning individual on welfare in order to support welfare is, well, insane.  It makes sense in a pure communist or pure socialist society, though practically speaking those societies do not function.

Harbinger Of Great Depression 2.0?

Full story here: http://money.cnn.com/2011/08/05/news/economy/downgrade_rumors/index.htm?hpt=hp_t1

Before anyone packs up all the ammo and moonshine they can carry and heads for the hills, let's take a moment to think all this through.

First, yes, this is unprecedented in American history.  Not during the Great Depression, not during stagflation in the 70s, not under any other recession in our history have we lost our AAA bond rating.  This is not a good thing.  It demonstrates the complete and utter failure of government to manage the world's largest economy, and the nearly unimaginable sums of money it generates.

Second, this is a klaxon call to action to fix the problems with government spending.  Nonwithstanding how banal it is to talk about the meaning of the Chinese character for crisis, this is the time for reform.  Lots of people may have to eat their peas, but that's hardly the worst that could happen.

Third, let's look at the Great Depression with perspective.  It was an awful economy, to be sure, but the majority of Americans did not lose their homes, did not go hungry, and did go to work every day.  History tells us that the current storm will likely last several years, but that prosperity will return after a time.  We would all do well to remember that going forward.

Opinion On Program Cuts

There will be cuts of some sort to federal spending later this year.  With each side having sacred cows (Defense and Medicare) slated for the sacrifical altar if the double secret super-duper commission cannot come to a consensus solution for trimming the budget, it is pretty safe to assume that almost everything else will be open for discussion, if not necessarily for cuts (Social Security being the obvious candidate to remain sacrosanct).

Disclaimer: I do not know the current outlays for various programs, so I will not be dealing with hard numbers.

Clearly, I am willing to trim most things in order to preserve Defense, but I'm not naive enough to think that there won't be cuts there as well.  I'm also a big believer in grants and loans for education, and I would not going to cut that funding either if it can be avoided.  Short term, obvious targets seem like the government programs which accomplish very little for the money spent--some of the more outlandish EPA enforcement issues, many agricultural and industrial subsidies, and all the redundant bureaucracies.  Is there a reason why TSA has to be a separate entity from the DOT?  How much money is saved by folding one department into the other, even if no one is actually let go?  I'm wagering it makes for more than a rounding error and would be a mostly painless step for those employees.

Incidentally, I'm mildly upset by the change to the loan program in the debt compromise, to wit the loss of having a portion of federal loan interest being subsidized for grad students.  The total amount of money available to grad students is unchanged, but the loans did just become a little more expensive in terms of repayment for those who take them.  I have no idea what that program cost the federal government, but I'm betting it's a pittance compared to what needs to be slashed from total expenditures.  Still, I did benefit from the program when I was in school, and I would like it to have stuck around for future students.

So, long term, where should the fat be cut out?  As this columnist rightly pointed out, start with the biggest programs around.  (H/t to AoS HQ where I originally saw this linked, long since disappeared from the sidebar there.)  Until someone grabs the third rail of politics and holds on long enough to actually change its trajectory, this problem will continue.  The age for full benefits for Social Security must be raised, and the benefits themselves probably should be cut.  When the program was implemented, 1 in 7 people lived long enough that they reached the age for full benefits.  Today, the average man will make it at least a decade past 65, and the average woman even longer, and if anything the average lifespan will only lengthen.  I'm not suggesting that we cut Grandma off at the knees; there are ways to do this reasonably.

For example, preserve the current plan for everyone already retired or close to retirement, say 60 years or older.  Do an across the board cut of benefits by some amount, let's say 10%, for anyone under the age of 60.  Change the reitrement age for anyone currently under the age of 55, so that going forward it increases by one year every other year until the age is raised by 10 years.  Finally, add in some means testing that scales based on reported income, so that the most well-off seniors do not receive as much, because frankly they don't need it.

Let's say this is approved sometime next year, but will start in 2015, government inertia being what it is (and makes it a little easier for me to do the math here).  Anyone born before 1955 is grandfathered in to the current age/percentage benefits calculations.  Anyone born before 1960 still gets full benefits (though those benefits are 10% less than previously) at age 65.  In 2025 the retirement age goes to 66, in 2027 the age goes to 67, etc.  So, for example, in 2035 the retirement age becomes 71, and anyone born before 1965 can get the full benefits.  By the time 2043 rolls around, the retirement age is up to 75 for full benefits.  One doesn't need to be an actuary to know that such a regime would save money.  I also doubt such a plan could pass in the current political environment, probably an increase in age by 1 year every third year is more realistic, as well as an increase in the age to 70 for full benefits.  But it would be interesting to see the CBO game some numbers for plans like this and see how much savings it creates.

Then again, with how horrible things look right now, candidates who run on platforms of gradual changes to entitlement programs and not altering the programs for those already enrolled in them may have a chance in 2012--and that's a mandate I'd like to see.

Debt Ceiling Debate

Balanced, bipartisan, fair, smart...these are some of the words President Obama used in his press conference today.  Certainly, the president has not shown through his actions that he is interested in any of these things--he gives high-minded speeches, but they are only empty words until backed by action.  Historically, countries in this sort of economic stall return to growth only with significant cuts in spending, not by increasing taxes.  While the House (Republicans) has advanced numerous plans that have actually been voted on and passed, the Senate (Democrats) has been running in circles for the past few weeks trying to create a single plan, and the president hasn't put a single bloody idea to paper.  Now, there can be debate over which of the House plans is the best option at this time, but the Senate and Oval Office combined have given not a single plan.  If Obama wants a deal so badly, simply send the marching orders to the Democrats that they should pass Cut, Cap and Balance in the Senate.

As to Obama's biggest complaint with the current plans, namely that we will have the same crisis again in a few months and we must have a solution through 2013--this is even more b.s. than usual political gamesmanship.  The only way we go through the same crisis again in a few months--is if he sits on his a** for those few months and doesn't use that time to come up with a long-term solution!  I could continue on a screed against Obama and his failures, but frankly I'm worn out by the whole debt debate debacle at this time.

Why Medicare Needs To Change

This thread kicked off by this item and subsequent discussion here.

First, let's review a couple basic realities of Medicare.  It is a huge portion of the federal budget, and any attempts to seriously address the current out of control deficit and debt will involve some cuts to the program.  The efficiency of the program itself is actually quite good--I've heard before that something like 2% of Medicare's budget goes to administrative costs (confirmed here), the rest goes out in paying benefits.  Fraud does occur, and while it is not an isignificant amount of money, the overwhelming majority of payouts are legit.

There are a number of factors that go into increasing medical costs--R&D, people are living longer because of better treatments and have more chronic conditions to treat, prescription costs (related to the outrageous sums spent on R&D to bring a new drug to market), donated medical care, and also Medicare pricing practices.

The first three items are givens for the purpose of this post, and don't warrant any further discussion.  The fourth item is an interesting side note I'll tackle here in a moment, and the fifth is the main focus of the post.

Donated medical care is a huge sink on healthcare.  Ask anyone who works in another service profession, a restauranteer is my favorite example for this: Could you run your business if 70% of the people who came in never paid a dime for the products or services you rendered them?  This is the reality of some emergency departments in this country.  Thanks to EMTALA, an unfunded mandate if ever there was one, any patient who presents to an emergency room must be evaluated and must be treated if they are unstable or in labor, regardless of ability to pay (or how stupid the complaint).  Now, I don't think anyone wants to say a woman in labor should be thrown out on the street because she doesn't have her insurance card with her, or that someone dropped off on the front steps with a knife in his back and bleeding to death should be left there, but anyone who has been to the ER more than a few times knows that one person's hangnail is another person's emergency.  And, you ask, just how much money is set aside by the government to compensate the hospitals and doctors who treat those who cannot pay?  Why, none, of course.

Now, as to Medicare pricing practices.  Ever looked at a hospital bill before?  Ever wonder why it costs 10 grand to open up an operating room, or how a bag of saline the size of your water bottle could cost $150?  (There are reasons why it does cost significantly more than a bottle of Perrier, but the price the hospital pays for it is much less than $150.)  The only people who pay that much for those services are those with hard cash and no insurance, everyone else pays a negotiated rate--and Medicare sets the bar on negotiated rates, which not only are significantly less than the line item on the bill, they are often at break-even or less than what it costs the hospital to provide said service in the first place.  The actual reimbursement rate of Medicare varies considerably from item to item, surgery to surgery, and each year Medicare decreases the number of items it will reimburse for.

So, Medicare tells doctors and hospitals how much they will pay them ("You billed $15,000 to remove an appendix?  Here's $4,000, take it and go."); private insurance companies in turn set their rates based on Medicare.  These are negotiated rates that typically fall somewhere in-between what the line item charges are and what Medicare will pay for them.  So, private insurance pays better than Medicare, but still less than what is asked (maybe $6,000 in the hypothetical appendix surgery above).

Where is the actual break-even point for the hospital, or physician?  Obviously, it will vary, but in most cases it is greater than what Medicare reimburses.  Think about that for a moment--the government, the single largest payor in the healthcare system, is not even covering the costs of providing the service, yet alone for any profits.  And it's nigh impossible to expand, hire new staff, buy new equipment, or keep up with other overhead costs if there are no profits.  By the way, any healthcare provider or organization that accepts any kind of insurance must accept Medicare, by law.  The government requires that medicine operate at a loss when the government is paying for it--nothing like those fat-cat union contracts handed out for construction projects where everyone on the receiving end comes out ahead.  As to where private insurance falls relative to the break-even point, I do not know.  My gut tells me that it is probably in the black on most things but in the red on some others, though I have no hard data to support this assumption.

And so we come to the last of the three legs that supports medicine, the uninsured.  If Medicare doesn't even cover costs (and Medicaid, a seperate program, pays even less than Medicare) and private insurance isn't sufficient to make up the difference, then the rest will have to pay through the nose to support the system.  That's why it costs the consumer $150 for a liter of saline.  The third leg must bear a disproportionate cost in order to prop up medicine--or rather, to counter the undermining of the system by government.

Do I have the answer for how to fix Medicare?  Hell, no--if I did, I'd have written a book on it and run for Congress.  But I do know that the system has to change, and that it's unrealistic and unfair to ask hospitals and doctors to just suck it up and kiss their revenue streams goodbye--because if the projected shortfall of tens of thousands of doctors in the coming years sounds bad now, wait until they can't make a decent living at it.

Hat tip to Ace of Spades HQ

Happy Independence Day

Sometimes, you want to see something profound--and sometimes, you want to see something sizzling on the grill.

Confirmation That The Crank Is Not Alone

A couple nights ago, I went to the bar with a couple coworkers after we were done for the day.  The conversation quickly turned to politics, and I asked them to share their opinions on what they thought was the single most important function of government.  It's worth noting that one of them self-identifies as a non-practicing Jew who considers himself a true moderate, and the other is a Mormon who considers himself a moderate conservative (no, I did not set this up in advance).

After a few seconds of consideration, first one and then the other said it was to provide for national defense.  There was some heated debate about how strong the defense must be--i.e. enough to protect borders versus projecting power beyond borders--but the consensus was pretty clear that defense IS the priority.

I've never made a secret of the fact that I am a big fan of defense, that I believe in American exceptionalism most especially in the military, and that we should be able to project power globally.  That being said, I firmly believe that if we had, say, Britain's or Germany's or even Sweden's military, scaled appropriately given our population and borders, we would still have a sufficient defense to enable the other benefits of this country, like the rights we enjoy as American citizens that are possible because we are protected from without.  And let's face it, those rights are what define the United States as the country it is--freedom of religion, freedom of the press, due process, the right to bear arms, etc.  But being the world's superpower is pretty freaking cool too, and I'm perfectly willing to let the government have a little bit bigger piece of my paycheck for that--as opposed to funding "art" that features profaning the Virgin Mary, or supporting radical Latino groups that want to reconquer the southwest, or ACORN.

How many people would be happy with China being the world's superpower--I'm guessing about 1.2 billion or so, but they're all Chinese, and the rest of the world would become pretty darn unhappy with it pretty quickly.  Lots of countries (and seemingly, lots of liberals) piss and moan about the US being a superpower, but who else would be better for the world?  Some client states might like if France were king, but it wouldn't do the world as a whole much good.  The U.N. is an attempt to put everyone on equal footing--how's that working out?  In the end, there has to be at least one nation who is the leader if there is to be stability--we did the two nation thing for 50-odd years, and it worked, there was global stability of a kind, though it relied on MAD to balance on the knife edge, a truly mad system if ever there was one.  Orwell depicted a 3 superpower perpetual Mexican standoff in 1984, which was stable though also patently insane (and that's setting aside the domestic policies of that dystopian nightmare).  No, if there is to be a better world, taking in the limits of human nature, there should be one superpower, and frankly, the US is the only nation currently with the resources and the will to be a superpower that has also consistently demonstrated that it will generally try to do the right thing.

Is America perfect?  Hardly.  But to twist a great Chruchill quote (which he in turn quoted from an unknown source), "America is the worst possible world leader, except for all the rest..."

The Crank's First Principle

The Crank's First Principle is thus:

The most important function of government is to provide for the common defense, against threats both foreign and domestic.

Not exactly revolutionary (or would that be reactionary?), but it is profound.  And I don't mean profound in the casual, everyday sense of having a particularly keen insight; I mean profound in the less common usage, of being broadly and inclusively significant in that it bears on and ultimately informs nearly all of my beliefs regarding government.

George Bernard Shaw claimed, "Morals are a luxury of the rich."  I think Shaw missed the mark slightly--morals are more akin to a luxury of the secure.  Riches are one, obvious form of security, but they are in turn only a form of security because we have a civil society, one in which there are rules that set limits on our actions.  Ten kajillion dollars in the bank means very little if the manager can clean out the account without a real, existential threat of punishment.  Hiring a legion of private bodyguards is no guarantee, even in a society of rules (witness Caligula), but in an environment with no structure, no laws, or even with laws but no means to enforce them, one's security is guaranteed only as long as it takes one of the knuckle-draggers to decide he'd rather give orders than take them.

Without a commitment to providing for defense, any group of people (can it even be called a society without this precondition?)  is inevitably doomed to anarchy and violence--if not from dissensions within, than certainly from forces without, because sooner or later someone will want what that group has and will resolve to take it, by any means necessary.  This "society" is doomed to fall into a Hobbesian jungle scenario.  This is inevitable because of human nature.  It is rational to pursue what one wants and needs, and it's hard to convince a man that killing you for your food is wrong when he is starving to death and you have no way to stop him.  This is simply a principle of survival, as primitive and as savage as the reptillian brain that still plays a key role in motivations despite uncounted generations for evolution to have effected a change.  The suffering of a Ghandi in a hunger strike is considered noble precisely because it is such an abnegation of a root survival instinct that the average person can barely conceive of carrying out such a plan, yet alone following through on it.  In a society without laws, would such a display have any meaning?  It is much more likely that in the jungle Ghandi would simply be killed if he was perceived to have anything of value, or ignored if he was perceived to have nothing of value.  Only laws, and the promise/threat of enforcement of those laws with punishments for transgressions, makes the concept of civil disobedience possible.

So, enter the need for common defense.  The defense must first necessarily protect against outsiders, for if it doesn't they will be free to violate the society and impose their own rule upon it--history is so rife with examples that it would be insulting to name specifics here.  Without this security, there can be no faith in the government, and hence no faith in anything else it may do, for it is all as fragile as a sandcastle under the foot of the next beach bully to come along.

Once the outsiders are (theoretically) eliminated as a threat, the protection of the insiders from each other must be the next step.  Criminals are, in a very real sense, the outsiders within the society.  They coexist with members of the society, to an extent, but also have put themselves above the rules of the society to gain some advantage over those who follow the rules.  In more elemental terms, a criminal is someone who takes someone else's desserts for himself, contravening justice, vis-a-vis that everyone should get their own desserts, and neither more nor less.  Without means to guarantee justice, or at least a reasonable approximation of justice, the criminals can run amok internally and render all other tasks of the government meaningless, leading inevitably to anarchy and Hobbesian savagery.  Only with external threats turned aside and internal justice preserved can other, secondary functions of government hope to succeed.

Ground Rules For Comments

My blog, my rules.  If you don't want to follow them, make your own blog--that's the beauty of the internet.

1.  No hate speech directed at an individual or a group will be tolerated.  There may be stories about hate speech, there may be direct quotes or paraphrasing of hate speech in the role of supporting an argument, but any post using hate speech itself as a weapon to attack will be summarily removed, no matter what other merits it may have.

2.  Profanity will be kept to a minimum by use of abbreviations or comicification.  So, "WTF" or "F-ing" or "F***", or even "F*ck", are all acceptable alternatives; actually using the acronym for "Fornication Under Consent of the King" is not.

3.  Personal attacks are the weapon of the witless.  Attack someone's evidence, rationale, or conclusions at will, but do not attack the speaker for who he or she is.

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The Reason For This Madness

All things begin with reason, else they are just madness.  Not that reason alone is sufficient to avoid madness, but it is a necessary condition.

The reason for this blog is that I wanted an avenue to express what I wanted to say, politically and philosophically, as well as to have other musings and miscellany thrown out there.  The reason for the nom de plume is two-fold: most people reading this will neither know nor care who I am, so my name is nothing to them.  For the people who might know or care, such as present or future employers, what I will have on this blog should not reflect on their opinon of me as an employee one way or the other, so why risk confusion on their part by putting my name to something that can be searched but should not have any bearing on their opinion?

This will be, before all things, a conservative blog--I am told by many friends that I am actually more moderate than conservative, but I think that many people suffer under the belief that a true conservative is of the David Duke/Jerry Falwell mold, as opposed to the Ronald Reagan/Abraham Lincoln persuasion.  I hope to have engaged readers, who will comment, and question, and even challenge and correct when appropriate.  Most of all, I hope to have fun with this, and hope my readers will enjoy it too.

Test post

This post is for test purposes only.