Food Stamp Policy, Obesity, and the Poor

Mr. Warren Bolton, columnist for The State Newspaper in Columbia, SC, argues today that since most overweight people in South Carolina are not on food stamps and since not all people on food stamps are overweight, it is unfair to restrict use of food stamps, actually SNAP Benefits, to purchase of “healthy” foods, and to prohibit purchase of soft drinks, chips, and other fattening and generally non-nutritious foods.

Mr. Bolton argues that such restrictions would “make some of the poorest among us the poster children for obesity” or would “target those who are poor and need a helping hand.”  (Actually, I thought that was the whole idea: To target those who are poor and offer a helping hand.)  He prefers that, instead of “a crusade directed against all poor people,” legislators should come up with a “comprehensive effort (against obeisity) aimed at low-, middle- and upper-income bellies.”  (I'd rather worry about my own belly and let the legislators worry about theirs.)

For a little context, I checked out the current level and growth rate of SNAP spending by the federal government.  It is incredible.  After little to no net growth during the twelve years of the GHW Bush and Clinton administrations, it doubled during the eight years of the GW Bush administration and has doubled again during the first three years of the Obama administration.

Be sure to note the trend during President Clinton's eight years, helped admittedly by the dot.com bubble and a conservative Congress.  I remember President Clinton saying something about "the end of welfare as we know it."  Well, it certainly is different now.

There are a number of possible drivers of this phenomenal growth since 2000.  One that seems reasonable is that the economic meltdown hit lots of folks hard and necessitated getting food stamps for a period of time.  That came into play in 2009.  Now, with all the good economic news coming out of Washington, we can expect that driver to go away.

A second is that government has been promoting and advertising and pushing food stamps.  There has even been a joint effort with Mexico to make sure Mexican immigrants know about the availability of and requirements to get Food Stamps when they come to the USA.  And there have been advertising and recruiting programs in the US as well, such as this one in Florida, to increase the number of users.  Food Stamps can be great vote getters.

A third reason is that states with lots of folks who qualify for Food Stamps, Florida  for example as mentioned in the article linked in the previous paragraph, benefit from the revenue coming into their states and therefore do whatever they can to enroll new recipients.

And finally, the food industry lobbies heavily to get additional food items included on the qualified list because it is good for their business.  And Congress depends heavily on lobbyists.

I’m thinking that with those last three drivers in place we won’t see any downturn in Food Stamp spending no matter how good the economy gets.

But, back to Mr. Bolton’s column.  I’m not sure where baloney falls on the healthy to unhealthy spectrum, but Mr. Bolton’s position on this is pure baloney.  The only logical conclusion his reasoning can lead to is that SNAP money should not be restricted at all and should be available to spend on whatever the recipient chooses including clothing, gas, electronics, utilities, lottery tickets, booze and cigarettes.  After all, it is disrespectful to the recipients to limit their choices and their freedom and might lower their self esteem.  We have to trust them to combine SNAP money with whatever other funds they have and allocate the total appropriately among their various spending needs.  

And that would never work because the food industry lobbyists would be really unhappy after all the time and effort they have spent to get their less nutritious items on the approved list. And unhappy lobbyists would  result in an unhappy Congress.

One thing we can be sure of is that, if the health of the people getting Food Stamps were the primary concern, junk food would not be an eligible purchase.  So, the primary concern must be elsewhere.  Money and votes maybe?

Tweet
Follow @dkw2020

Surprise, Disappointment, and Skepticism

Many were surprised in May, 2009, when President Obama joked about asking the IRS to audit the president and members of the board of regents of Arizona State University over some issue about a football game and a missing honorary doctorate.  Of course it was just a joke, but an inappropriate one. The president sets the tone, and, as it turns out, we should have been both surprised and disappointed.

Now with the quadruple scandals, IRS, AP, Benghazi, and the less well known solicitation of donations, by Ms. Sibelius, Secretary of Health and Human Services, from companies she regulates, a clear majority are disappointed, the hopes of many are dashed, and it is obvious to most that, if America has been fundamentally transformed as promised, it has not been in a positive direction.  But don’t worry about that because there hasn't been any fundamental transformation.  The same old problems have just gotten bigger.

This is not intended to pile on the president.  He has done the best he could given his qualifications and experience and has done far better than I could even dream of.  I don’t like politics and compromise either, and, like him, I would have trouble concealing my biases and providing non-partisan national leadership to bring people together on difficult issues. I can't even deliver a good speech, with or without a Teleprompter.

The point is that, if we stake our hopes on bigger and stronger centralized government, we are doomed to serious disappointment.  And that is without even mentioning the well known link between power and corruption.

President Obama makes no apology about being a big government advocate.  Big government, relatively speaking, can work fairly well for small nations with cultural homogeneity, a strong work ethic, and lots of peer pressure, countries such as Norway, Finland, Austria, and Switzerland, but there is no way that, for a country as large and as diverse as the United States of America, the best strategy is centralization of power and control and decision making for all significant commercial and social issues in a tiny community of wealthy and well-educated folks living and working, surrounded by lobbyists with suitcases of money, in one of the most prosperous and expensive cities in the world (albeit one with some of the worst poverty), to ask people in North Dakota and Florida and Tennessee and New Mexico, not to even mention Alaska and Hawaii, to follow the same Washington DC rules as and behave just like folks in Brooklyn and Manhattan and San Francisco. 

I write this while visiting Brooklyn and, once again, being struck by how population density and lifestyle tend to drive political preferences and blind people to what others in different circumstances are experiencing. 

It is no wonder, for example, that (lawful) Brooklynites would see little reason at all for anyone to have a gun and would have limited understanding of why a citizen of Montana or Texas would treasure and enjoy his or her collection of firearms, perhaps even including an "assault rifle" or two.  And so we have illogical arguments such as that if young men in Detroit and Chicago are shooting each other because of drug and gang activity, firearms should be severely restricted in Arkansas. 

After 75 years of ever expanding intrusion of the federal government into personal and private matters, some have come to believe that continuation of that trend is both desirable and inevitable, that it is reasonable for the IRS to monitor our health care policy compliance and penalize us for failures, for our physicians to ask about our guns, and even that “universal” is a desired modifier for all the fundamentals of life, universal health care, universal housing, universal food stamps, universal clothing, universal cars, universal toilet paper, etc.  Yes, that is an exaggeration, but the "Equal Outcomes" ideology is alive and well.

Some will continue to look to Washington for answers and dream of a presidential savior, someone who will be wise enough and smart enough and maybe even loving enough to resolve all our issues on a national level in ways that will be best for each and for all, a benevolent dictator who will never die and will have no children.  But each new candidate will only disappoint and frustrate.  Hopefully it will be a long time before such a person chosen by the people is given too much power and turns out to be a Hitler or a Stalin or a Mao or a Chavez.

The secret to 250 years of success and progress of the United States is the balance of power among the three major branches of government and two major political parties.  It is a system that has protected and improved the lives of majority and minority, rich, poor, and middle class alike.  There are some who argue that we are a democracy and that the majority should rule, that a popularly elected president should be given freedom to govern and should not have to struggle with a stubborn Congress or an adversarial opposition party or a judgmental Supreme Court. Such arguments show a lack of understanding that the job of elected government in a representative democracy is to protect the rights and freedoms of all, both majority and minority, to maintain a system that does not always succeed and is sometimes late but has the clear objective of guaranteeing, not equal outcomes, but equal opportunity under the law. 

“Equal Outcome” goals imply that we believe that we are what we have, but we know that is not true.  We are what we do.  And, we may be unable to control what we have, but we can control what we do in any given circumstance.

The pendulum swings, and it is time for a little swing back in the directions of freedom, personal responsibility, and smaller and less expensive and less intrusive government.  Probably more would agree with that now than even three months ago.  Maybe it is time again to talk about Hope and Change.

This could be a good place for a joke about expecting an audit from the IRS, but it would be inappropriate.  If that were to happen, I would be surprised and disappointed…and upset.

Whatever happens, maintenance of a healthy and informed skepticism about Big Government is highly recommended.

Tweet

Follow @dkw2020

Austerity Problems

“The nation’s unemployment rate would probably be nearly a point lower, roughly 6.5 percent, and economic growth almost two points higher this year if Washington had not cut spending and raised taxes as it has since 2011, according to private-sector and government economists.”

That is the lead sentence in today’s New York Times article titled, “Economists See Deficit Emphasis as Impeding Recovery.” Well, the implication is that all economists everywhere are finally in agreement and there is no more need to search for the elusive “one-armed economist.”  But, the only economists identified in the article are Mr. Ian Shepherdson, chief economist of Pantheon Macroeconomic Advisors, Mr. Gregory Daco, a senior principal economist at IHS Global Insight, and Jerry Webman, chief economist at OppenheimerFunds.  I’m sure there are many others who would agree and many who would disagree.  Even the statements provided by these three sound a bit wishy-washy.  For example, Mr. Webman says, “I join the likes of the I.M.F. in cautioning that too much austerity, too soon, is likely counterproductive.”  Well, lacking clear definition of how much is too much and when is too soon, who could argue with that, especially with that poorly understood qualifier, “likely,” having snuck in?  Even I find myself in agreement with Mr. Webman.

Remembering that actual current GDP is unknowable but is routinely estimated by totaling up the spending of individuals and government (explanation here), nobody can argue that increasing government spending would not increase the estimate of GDP.  That would be true whether the spending were on vitally needed infrastructure improvements, fighting wars, or moving piles of dirt back and forth from one place to another.  Transfer payments, however, don’t count as additions to GDP.

My only point here is to look at the data on federal revenues and spending and try to cast a little light on what is actually going on.  Consumption spending by government has leveled out, beginning in 2010, at a bit over a trillion dollars per year.  Had it continued on the 2000 to 2008 trajectory, it would be at about $1.3 Trillion per year.  If it were at that higher rate,  there is little question that the reported GDP, and the national debt, would be higher.  Whether that additional spending would have added real value and would have been worth the required borrowing is unknown and another matter entirely.  It would depend on what the money had been spent on and whether it had been well and wisely spent.  

Since the crisis first hit, transfer payments, which are federal spending but are not counted as part of GDP, have increased by about a third from $1.8Trillion to $2.4Trillion per year.  That increase also is funded by increased borrowing.  As a result of all the additional spending, annual deficits, while somewhat diminished from the 2009 peak, continue at about six times the pre-crisis levels.

So, my questions to those economists who advocate even more spending and even higher deficits has to be, “How much is enough and how long must it continue and how long will it take to get the debt back to reasonable levels?  And just how likely is it that a bit of austerity would be counterproductive?  And how counterproductive? Having read quite a few of Mr.  Paul Krugman's columns, I think I know what his answers would be: "I'll let you know when we get there."

Tweet
Follow @dkw2020

Executive Power?

Cal Thomas’s column in yesterday’s The State Newspaper caught my eye because it reminded me of my 2010 analysis of the Patient Protection and Affordable Care Act, the PPACA or ACA or Obamacare.  Thomas included some Daily Caller word counting in the currently proposed BSEOIMA or BSA or Border Security, Economic Opportunity, and Immigration Modernization Act.  (Don’t you love those titles?  Who could be against security, opportunity, modernization, protection and affordable care?)

But the titles may be misleading.  I have examined both bills and find them difficult to comprehend.  Being a Senator or Representative and having to vote yea or nay on either is a burden I doubt I could bear.  To vote nay is to favor the current unsustainable situations, and to vote yea seems to mean abdication of power, responsibility, and control by the Legislative Branch and granting of almost unlimited license to the Executive Branch to just do something, for Pete’s sake!  Troublesome phrases in both bills include such as “The Secretary may…,” “The Secretary shall…,” and “…shall be determined.”  “Waiver” is a troublesome word that pops up too frequently.  Here is what Mr. Thomas said in his column, quoting The Daily Caller: “…it contains roughly 400 exemptions, exceptions, waivers, determinations, and grants of discretion.”

I downloaded the full 844 page text of the BSA, looked over the outline, did some word counting, and picked out a few interesting sentences.

      Phrase                                                                Count

     "The Secretary (of Homeland Security) may"       ~102

     "The Secretary shall"                                           ~130

     "The Secretary may not"                                     ~   16

     "Waiver"                                                            ~ 100

You can find my troublesome phrase count for the ACA here. 

In the introduction to the bill, in a section titled “Effective Date Triggers,” we find “waiver” first showing up  in this example of grammatical nonsense: 

(d) WAIVER OF LEGAL REQUIREMENTS NECESSARY FOR IMPROVEMENT AT BORDERS.—Notwithstanding any other provision of law, the Secretary is authorized to waive all legal requirements that the Secretary determines to be necessary to ensure expeditious construction of the barriers, roads, or other physical tactical infrastructure needed to fulfill the requirements under this section. Any determination by the Secretary under this section shall be effective upon publication in the Federal Register.

So, a literal reading of that indicates that any legal requirement the Secretary deems necessary may be waived!  Sloppy pronoun reference.  It would have been clearer to say, “The Secretary may ignore any existing legal requirements that impede expeditious construction…”  At least I think that is what was meant. Is that a reasonable thing? I don’t think so.

Included in the section titled, “TITLE II—IMMIGRANT VISAS, Subtitle A—Registration and Adjustment of Registered Provisional Immigrants,” we find the rules for rulemaking:

SEC. 2110. RULEMAKING IN GENERAL.—Not later than 1 year after the date of the enactment of this Act, the Secretary, the Attorney General, and the Secretary of State separately shall issue interim final regulations to implement this subtitle and the amendments made by this subtitle, which shall take effect immediately upon publication in the Federal Register. 

So, we are to get three different sets of “interim final regulations” which take effect immediately?  What nonsense!  I guess the reference for the pronoun “which” may be unclear.

And, the very last paragraph in the 844 page bill, at the end of a section titled “Subtitle H—Investing in New Venture, Entrepreneurial Startups, and Technologies” we have this statement: 

OTHER AUTHORITY.—The Secretary, in the Secretary’s unreviewable discretion, may deny or revoke the approval of a petition seeking classification of an alien under this paragraph or any other petition, application,or benefit based upon the previous or concurrent filing or approval of a petition for classification of an alien under this paragraph, if the Secretary determines, in the Secretary’s sole and unreviewable discretion, that the approval or continuation of such petition, application, or benefit is contrary to the national interest of the United States or for other good cause.

Unreviewable discretion of the Secretary of Homeland Security?  I’m voting “nay,” and I'm not even sure what it says, let alone what it means.

It seems to have become standard operating procedure in the nation's capital to pass legislation in order "to find out what is in it," meaning to find out what and how and when the Executive Branch chooses to implement.

Tweet
Follow @dkw2020

Sustainable Fiscal Strategies

August 21, 2011, I did a posting titled Even Warren Buffett Can Think Fuzzily; Maybe Keynes Also.   In that essay, I was poking a little fun at one of the world’s richest men for having difficulty explaining his position that we can safely run long term federal deficits of 2% of GDP.  At that time, our deficit was running almost 9% of GDP with stimulus spending high and tax revenues depressed due to low salaries, bonuses, capital gains, profits, and general business activity.  I certainly was in agreement with Mr. Buffett that we needed to move quickly back to deficits of around 2%.  I think he was assuming continuation of historical trends on GDP growth and inflation.

I believed, and still believe, that there is a mathematical relationship between deficits, interest rates, real growth, inflation, and debt as a percent of GDP and that some combinations of those variables describe sustainable fiscal strategies and some lead to economic disaster.  For that August 21, 2011, posting, I developed an Excel spreadsheet that allowed exploration of the effect of various combinations of those variables on debt as a percent of GDP. 

My general conclusion was that, “unless the interest rate is less than half the total of the inflation and real GDP growth rates, the debt keeps growing.”  Since the interest rate is almost certain to be higher than the inflation rate, it follows that the real GDP growth rate has to be higher than the inflation rate.  I went on to say that, “If a country has a robust real growth rate and little or no inflation, it is pretty easy to borrow at half the real growth rate. Three percent long bonds in an environment of 6% real growth and no inflation would be quite achievable.”  In other words, that would be a sustainable fiscal policy.  Sounds like double talk, doesn’t it.

Prior to my posting, two Harvard professors had published a paper, sometime in 2010, which purported to prove that national debt levels above 90% of GDP spelled economic doom.  They too were using Excel spreadsheets to explore the variables, but, as I understand it, their results were empirical and were based on what has actually happened to economies that reached that level of debt.  Since the USA national debt as a percent of GDP was rapidly approaching and sure to exceed the 90% tipping point, many fiscal conservatives seized upon the Harvard paper as justification for dramatic cuts to USA federal spending.  I was suspicious of the 90% but never took time to explore the data.  I just figured that there were other important variables, inflation, interest rates, and GDP growth primarily, which would have a major impact on the onset of doom and that it could not depend just on debt levels.

Just in the past few days, it has been revealed and admitted that the Harvard professors made an error in their spreadsheet and published an incorrect conclusion.  And, just as fiscal conservatives seized on the original paper to advocate reduced spending, some big spenders are now using the mistake to argue that there is no practical limit on government spending and we should let the dollars flow. One extreme to the other!  (Column here.)

After reading about the mistake by the Harvard academics, I got a little worried about my own spreadsheet.  What if I had made an error and reported incorrect results!  I doubt that I would have gotten any media coverage, but I would certainly have been embarrassed and would have had to publish a correction. Especially so since that particular posting has been viewed, if not read, far more times than any other single posting on permanentfixes.com.  (It is at the top of the list on the right side of this page.) So, I dug out the old spreadsheet and checked it out.  I even started from scratch and did a new spreadsheet in slightly different form just to be sure I wasn't repeating old mistakes.  Both exercises confirmed the original, so I felt pretty good.

That exercise did lead to some new insights and ideas about clearer and simpler presentation of the data and expression of the conclusions, and those are reflected in the charts below.  In each chart, the total of real GDP growth and inflation is 6%.  The individual lines in those charts represent different combinations comprising that total ranging from 1% inflation and 5% real growth to 5% inflation and 1% real growth.  Real growth is better than inflation!  Here is the bottom line: 

1.  Annual deficits of 3% of GDP are sustainable with real GDP growth of 5% and low inflation
2. Annual deficits of 2% of GDP are sustainable with real GDP growth of 4% to 5% and inflation of 1% to 2%.
3. Annual deficits of 1% of GDP are sustainable with real GDP growth of 2% and inflation as high as 4%.
4.  Lots of combinations of these variables are unsustainable and will lead to economic disaster.

There is a book, available at Amazon.com, called The Four Percent Solution.  I haven't read the book, but reviews indicate that the gist of it is that, if we reinvigorate our economy and achieve 4% real growth in GDP, we can work our way out of our current fiscal problems and get the debt back down to a more reasonable percentage of GDP.  It makes sense to me.  But I can't take much comfort in that proposal since we have never had consistent 4% real GDP growth for more than a couple of years at a time since the 1960's.

Note: This chart was originally posted and discussed in Rosy Outlook on January 18, 2013.

Tweet 

Follow @dkw2020

Mutual Scorn Society

I commented in a recent post that the White House budget proposal should not be an object of scorn by those of us who prefer a more conservative approach and a smaller government.  The fact is that the president’s budget proposal is consistent with spending and taxing trends of the past, trends that have been supported by both Democrats and Republicans in their pursuit of votes.  You can see the trends in context here.

The problem, from my viewpoint, is that those established trends have become unsustainable and fail to recognize that everything changed beginning in the mid 1970’s with the first big oil crisis, the full recovery of Europe and Japan from the ravages of WWII, and the rise of China and India as economic powers.  (I wrote about that in Exit Blocked, No Way Out.) We still act like we are in the post WWII recovery and boom, economic champions of the whole world, just getting richer and richer.  So, I don’t support the president’s budget, but I don’t think it deserves scorn and ridicule.  He means well, but he is just wrong, in my opinion.

One reason I want to stay away from scorn, is that scorn is keeping us from solving our problems.  Washington and folks interested in what goes on there have organized into a sort of mutual scorn society, stoked and encouraged by commentators on the left and right.  And it is very difficult for anyone to work with and cooperate with folks who scorn them.

Right now, the president, unfortunately, is the scorner-in-chief, attacking "millionaires and billionaires" for not paying their fair share and Republicans for simply trying to obstruct the good he wants to do.  His position isn't unreasonable or surprising since he has been scorned by leading Republicans ever since the 2008 elections, many having been dedicated to being sure the president would lose the 2012 elections.   That didn't work, but there is residual bitterness and lack of trust.  "Do unto others..." becomes operative in politics in situations such as this.  And, of course leading Democrats set the tone with plenty of scorn for President George W. Bush.  Before that, lots of folks were embarrassed by President Clinton’s foibles, but I didn't detect a lot of scorn.  Widespread scorn seems to be a 21st century phenomenon. 

So, the president’s attitude might be reasonable except, as President of the United States, he has the responsibility to rise above the turmoil and provide leadership toward consensus.  He is not the president of his primary constituencies of single women, African Americans, Hispanics, and food stamp recipients.  He is the President of The United States of America, and he bears the primary responsibility, not for serving his constituencies, but for making sure the United States of America remains strong and free.

And, if he rises to that high calling, maybe the leaders of the Senate and House and the members of those institutions will be shamed into rising to theirs as well.  And they will stop being the objects of public scorn.  

Tweet
Follow @dkw2020

Creating Jobs...for the Able Homeless Unemployable

Homelessness is an issue in Downtown Columbia, SC.  There are several agencies providing services not generally available in smaller towns in South Carolina, and, as a result, homeless individuals tend to gravitate to Columbia.  I received this in my email this morning:

The current flurry of interest in the issue is a result of loss of a location for feeding the homeless, mostly male individuals, an evening meal. For years it was done at the local Salvation Army. They gave up their facility and, for two or three years, had an agreement to use facilities at my former church, Ebenezer Lutheran.  Now that agreement has ended. And the winter "Emergency Shelter" has closed so the population on the streets with nowhere to go has increased. And that presents a serious conflict with a current city focus on development of housing and retail in the downtown area. 

I provided my input via email, and this is what I am suggesting:

To: columbiacares@columbiasc.net

The city should authorize a contractor to provide jobs for able homeless, those neither physically nor mentally disabled, to enable them to earn enough to pay for their food and lodging.  Long term free services then could be provided only for the disabled, and those able to work would benefit from the respect shown them by offering work rather than handouts.
 Lots of street cleaning, litter pickup, riverfront clean up, and recycling effort could be accomplished through such an activity.  For example, the power plant behind the Children's Museum now collects floating plastic bottles and other trash floating down the Broad River and dumps it into a sluice that deposits it in the Congaree River.  Somebody could collect and recycle that material.
 Sidewalks all over town would benefit from pressure washing which would give them a like-new appearance.  Many sidewalks are disgustingly filthy.
 Lots of work to be done, and nobody is doing it.  Continuing to hand out free services will only increase the homeless population.  Offering real work will raise expectations and decrease the homeless population.
 Special concessions would probably have to be made to a contractor to enable hiring people with often questionable backgrounds and poorly developed work habits.  That can be done only by city government.
 Darryl K Williams

White House Budget Proposal Doesn't Deserve Scorn

OK, who was happy with the state of the economy six years ago in 2007?  Most everybody was, with unemployment at a reasonable level, housing  and equity prices strong, and the federal deficit at a reasonable level, especially given the expense of the wars and the Medicare drug benefit and the No Child Left Behind effort.  And then the wheels came off with the mortgage crisis and the failure of Lehman Brothers and the stock market crash.  And since then, almost nobody has been happy with federal tax revenues depressed by lower personal and corporate earnings, federal spending stoked by stimulus and welfare expense, and both unemployment and the federal deficit stuck at levels far too high for comfort for most of us.

I had the idea of looking at the latest White House budget proposal, with projections for federal revenues and spending out through 2023, in the context of trends in 2007, before the crisis hit.  It doesn't look too bad, revenue growing only 95% and spending only 89% over the sixteen years.  Those are both growth rates of about 4% per year which would be fine if GDP grows around 4% per year and inflation remains under control.

Of course we are behind now on GDP growth since 2007 and have a lot to make up.  And inflation is looming. And, there is that big debt we built up over the last four years and which will become extremely burdensome if interest rates return to more normal levels.  But, one conclusion that might be drawn from looking at this budget proposal in that longer term context is that it does not represent a radical departure from the trends of the first several years of the 21st century and is not to be scorned.

As a matter of fact, the White House proposal is pretty much in line with our past fiscal policies which led to the big upsets and crashes beginning in 2008!

So, if I believed we could get 4% GDP growth with inflation still in control and meet rather than exceed the spending projections in this budget, I might go along with the proposal because it would at least stop the bleeding, with debt no longer growing as a percent of GDP.  However, since I doubt our ability to meet those three goals, I prefer going with the much more conservative House of Representatives budget proposal which curtails spending and increases the possibility of 4% GDP growth.

The three proposals are compared in this earlier posting.  Even the most conservative proposal projects continued growth of the debt.

Tweet
Follow @dkw2020

Higher Premiums or Lower Benefits, Bigger Government or Smaller Government

The administration proposal on Medicare reform is just another income tax increase, poorly disguised.  The idea, according to today’s news story is to expand the link between income and the Medicare Part B outpatient coverage premiums to nine income brackets and to stop the annual adjustment for inflation until 25% of Medicare recipients are paying increased premiums.  Currently only 5% are so taxed. The first tax, in the form of a higher premium, kicks in at an individual income of $85,000, and the highest of the nine brackets would start at an annual income of $196,000.  I suppose retirees with such incomes qualify as millionaires and billionaires who are not currently paying their fair share.

Of course Medicare is going broke and demands reform.  The question is whether to address the issue by running more money, higher taxes, through the federal government and keeping everybody on the same basic benefits plan with the fixed fee-for-service benefits schedules that are slowly destroying our health care system or to free those who can afford it to pay for their own health care at market prices. 

I’d prefer that everybody pay the same low premiums, currently around $100 a month, that higher income folks have much higher deductibles with no Medicare paperwork or influence at all, and that health care providers be freed to compete for the considerable cash business that would be available from such persons.  So, for example, anybody with an income of $100,000 or more might not qualify for any Medicare benefits at all until total medical expense for a calendar year reaches ten percent of income. Under such a plan, those who have incomes of a few hundred thousand dollars might as well just forget about Medicare benefits unless they have truly major medical problems.  And that is as it should be.  Let us pay cash upon receipt of service for our own flu shots, annual checkups, aches and pains, and all other routine health care.  It's the way we pay for food, clothing, and shelter, after all.

Or, it may be too late...more freedom than we could handle.

Tweet Follow @dkw2020

Trudging with Drudge

I have been a bit puzzled about the animosity toward The Drudge Report which has gotten a few big things right and a few big things wrong but is basically a bunch of people trolling news sources and blogs for interesting items to link and writing headlines to entice people to click on the links and improve their advertising revenue.  Drudge provides almost no original content but, in addition to the news items, provides easy links to more than a hundred columns and blogs including those with extremely right wing, extremely left wing, and moderate positions.  You will find both Paul Krugman and Walter Williams, both Bill Press and Michael Savage there.

I spent fifteen minutes this morning making a list of the sources included in their links, and this is what I found:

Reuters (2), ABC News, Mirror News, Christian Science Monitor, The Forge (Blog), Mail Online (2), The Independent, The Telegraph (2), Investors Business Daily, NBC News, Infowars.com (Blog), CNN Money, National Journal, The Smoking Gun (Blog) (2), Detroit Free Press, Los Angeles Times, Politico (2), TMZ, Complexmusic.com, Rapgenius.com, myway (2), Zerohedge.com, Bloomberg (2), France 24, Daily Express, The Detroit News, The Guardian (2), Fox, Computerworld (Blog), Sumner Books (Blog), The Examiner, Denver Post, New York Times, Associated Press, CBS (NY), CBS (DC), National Journal (Blog), USA Today, Yahoo News.

There is no such thing as neutral news.  Bias begins with selection of the stories to be covered, and, if one wants to trust Brian Williams and his staff at NBC or the editorial staff at New York Times or the Wall Street Journal to make ones selections that is fine.  But it is a big complex world out there, and there will be many things going on that never show up on the radar screen of such a person.

Drudge is conservative and will link stories that tend to support his philosophy.  For the other side of the story, you can check msnbc.com.  I appreciate the efforts of both organizations.  If you want a rational, unbiased, compilation, you will have to do a lot of trolling and develop it yourself.  And, when you do, you will be accused of bias.

Wikepedia has an interesting write up on The Drudge Report including descriptions of some of the scoops and some of the mistakes.

Tweet
Follow @dkw2020

The Less Fortunate and the More Fortunate

Even though I disagree with almost everything Paul Krugman writes, I normally read his columns just to see what points he is failing to make.  In his continued attack on fiscal conservatives today, he includes the following sentence, which jumped off the page and stuck in my mind:

“It goes without saying that Republicans oppose any expansion of programs that help the less fortunate — along with tax cuts for the wealthy, such opposition is pretty much what defines modern conservatism.”

I don’t know about “modern conservatism” in general, but he describes two thirds of my position fairly well.  I favor strong, well funded, programs that truly help the truly poor, but being “less fortunate” does not, in my mind, qualify anyone for help.  If it did, I should get in line because I am clearly far “less fortunate” than Buffett and Gates and Obama and millions of others.  Well, at least financially less fortunate.  And there are scores of millions who are less fortunate than I and are getting along just fine and don’t need any financial help at all from me or from other fellow taxpayers.

The problem at one end is that all the chatter about millionaires and billionaires not paying their fair share does nothing, in the absence of some understanding of basic economics and the nature of and responsibilities associated with wealth, but stoke envy and dissatisfaction and encourage a misguided sense of entitlement to some of that wealth.  And, at the other end, the problem is that many of the programs we have to help the “less fortunate” are more likely  to enslave and insult and demoralize and perpetuate the poverty of the truly poor than to preserve their dignity by helping them become more self sufficient.

As far as taxation of the wealthy goes, I would argue that there are many "wealthy" or, more accurately, high income folks who should be paying more in taxes than they currently pay and many who should be paying less than they currently pay.  We need to solve those problems by cutting tax rates and eliminating the exemptions, deductions, credits, and exclusions that enable the government to make personal judgments, show favoritism, and pick winners and losers.

And Mr. Krugman fails to mention the third leg of my conservative perch, elimination of wasteful spending by government.  He always advocates more spending, usually for good things such as infrastructure, but never suggests that more could be spent on infrastructure by spending less on the frivolous and useless.  In his mind, it always takes more revenue.

So, just to make it clear what "defines" my own brand of conservatism, here are the three main points: 

1. Simpler personal and corporate tax codes with lower marginal rates for all and no special treatment for anybody.  If it collects more tax revenue immediately in order to help get our debt back to a reasonable percentage of GDP, that is fine with me.  I have no doubt such a system would collect more tax revenue in the future because it would promote investment and revitalize the economy.  
2. Full financial support for the truly mentally and physically disabled along with job training, child care, meaningful work, and income for the poor who are able to work. Let’s show them some respect rather than patronize and insult them by handing out food stamp EBT cards and asking them to stand in line for housing vouchers.
3. Wise choices and responsible control of federal spending at or below 20% of GDP.  (State and local governments will spend another 10% to 15%.) 

And, that brand of conservatism does not include any programs to just spread wealth around from the “more fortunate” to the “less fortunate.”  Those are meaningless descriptors, and we are all more fortunate than some and less fortunate than others.

Tweet Follow @dkw2020

Once Upon a Time...Happily Ever After

There was a time in our history when almost everyone agreed that it was good for the country for men and women to get married and share responsibility as they gave birth to and raised children and then spent the rest of their lives together, taking care of each other as they aged and spoiled their grandchildren.  It was a time when home cooking was the standard, eating at a restaurant was a special treat, fast food establishments were local greasy spoons with slow service, dishwashers had two arms and two legs, ring-around-the-collar was a problem, clothes dryers were strung between poles in back yards, schools were neighborhood establishments expecting parental involvement, and kids had lots of free time to roam their neighborhoods and expected to run home for cookies and milk or a kiss and a Band-Aid on a regular basis.  In those days of yore, running a household was a full time job.  Many even had home gardens and did lots of planting, hoeing, harvesting, canning, and freezing.

In its wisdom, our federal government decided to support families that chose such a life style with various financial benefits such as letting married couples file joint tax returns, thereby spreading income over two persons, one working outside the home for income and one inside the home without income.  Also, spouses could give money to each other and leave money to each other without tax consequences. Such concessions to “traditional” families seemed appropriate to almost everybody, given the responsibilities they were assuming.

Over the decades since those Norman Rockwell days, two income families, divorce, unwed parents, nursing homes, prepared foods and eating out, fast food on every corner, nannies and daycare, fully scheduled childhoods, carpools, and locked schools offering sex education and prohibiting valentines and cupcakes from home have become standard.  Unfortunately, nobody told our lawmakers about the change, and the options of joint tax returns and estate sharing have expanded to a list, according to an article in today’s newspaper, of 1,138 federal benefits available to married persons of opposite sexes and unavailable to persons not so married.  Two income families are advised to compute their taxes both jointly and separately to see which results in the lower bill.  And, since the federal spending continues to grow unabated, the costs of those benefits have to be paid, of course, by the persons not so married.

Coincidentally, as social standards changed, the lawmakers also began to feel sympathy for unwed, marginally educated, and unemployed mothers and established benefits available to them that would disappear or diminish if they married or got jobs.  Of course there were unintended consequences of such a strategy, and the federal government now provides financial incentives to get married alongside financial incentives to not get married.

I’m not longing for the past.  I know that there were many injustices associated with those Rockwell days and that all was not well then just as all is not well now.  I am just saying that the circumstances are different now and that, whatever one’s position on same sex marriage, this overwhelming intrusion into our private lives, and this arbitrary transfer of money from one group of tax payers to another group are, in my opinion, major problems. Whether I am married or not perhaps should be a matter of public record but should have no more impact on how I am treated by the government than whether I am baptized or not.

But, if you disagree with me, don’t worry.  I fully expect the list of benefits to continue to grow, especially when same sex marriage becomes the law of the land and there is a whole new group of constituents demanding concessions.  Pity the poor single, childless, professional men and women in the big city trying to make a living.  And probably lonely to boot.  They should get together, organize, and demand their rights.  Some might even find mates and qualify for some of those federal benefits.

Check out the Permanent Fixes Facebook Page.

Tweet
Follow @dkw2020