As I was driving yesterday from Maryville back to Columbia, I was thinking about that little interchange between President Obama and Senator McCain during Thursday’s health care discussion. The president interrupted Senator McCain with a condescending, “Let me just make this point, John, because we are not campaigning anymore. The election is over.” If Senator McCain had stood at that point, saluted, and given his name, rank, and Social Security number, it would have been an appropriate response to the disrespectful comment, recalling responses he might have given his captors as a Vietnam POW, and might have brought the house down. At least, it might have been a good reminder to President Obama of the need for protocol and mutual respect. On the other hand, I have some concern that the president might have considered it to be the most appropriate response.
In my working years I often participated in such workshop style discussions (never televised, by the way) and sometimes was responsible for moderating them. One key to success for such meetings is that the moderator, regardless of personal opinions, has to remain neutral and concentrate on pulling the best ideas from all participants and even play “devil’s advocate” in order to move the group toward some agreement. President Obama did not attempt that but clearly aligned himself with one side against the other and was much more political than presidential. I guess that shows the limit of his professional experience. The president should have stayed home or taken a seat with the Democrats and brought in as moderator former President Bill Clinton who has the political skill to listen, empathize, and project neutrality and reasonableness regardless of his personal opinion.
The other big problem with the event as conducted was that getting professional politicians to have an honest discussion with each other with the TV cameras on is unachievable except in the case of lost tempers or other emotional outbursts. I would have great difficulty having an honest discussion with my wife if it were being televised and broadcast as is done on some of those reality TV shows. There is no way a professional politician can avoid focusing primarily on the image he or she is projecting to voters back home rather than on carefully understanding what has been said and making honest responses to it.
One clear ground rule that should have been established for the event was, “No anecdotes!” Was it Ronald Reagan who first sprinkled his speeches with stories beginning something like, “Just last week I was talking to a lady who…?” If he was the first, he did us a tremendous disservice, because government is not supposed to be about the business of catering to the needs of individuals or companies or industries or unions or trial lawyers or doctors or any other special interest group. The responsibilities of the government are to provide national security, robust infrastructure, fair and reasonable regulation, personal freedom, responsible financial management, and national competitiveness.
As I suggested in an earlier posting commenting on the president’s ten page proposal, I believe the process now will be to continue to make concessions to reduce direct costs to taxpayers and improve benefits until a majority begin to feel that the legislation is not too bad a deal “for me” and that it will then pass. And government employment will grow and health care costs will continue to climb and the national debt will continue to increase. And there will still be millions of uninsured people. Just a guess.
Saturday, February 27, 2010
Thursday, February 25, 2010
Complexities of the Tax Code and Why Congress Loves It
Here is my nomination for most ridiculous instruction on the 2009 Form 1040.
Line 42 Exemptions. If line 38 is $125,100 or less and you did not provide housing to a Midwestern displaced individual, multiply $3,650 by the number on line 6d. Otherwise, see instructions
Others that were in the running are these:
Line 40a Itemized deductions (from Schedule A) or your standard deduction (see left margin)
Line 40b If you are increasing your standard deduction by certain real estate taxes, new motor vehicle taxes, or a net disaster loss, attach Schedule L and check here (see instructions) (In South Carolina, new motor vehicle property taxes might be considered a "disaster loss.")
Line 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ (How in the world did performing artists and fee-basis government officials end up in the same category?)
Line 23 Educator expenses (see instructions)
Line 35 Domestic production activities deduction. Attach Form 8903 (Does this refer to activities targeted to having children?)
What brought all these to my attention was working on my mother’s tax return. I questioned her carefully about whether any displaced Midwesterners had been hanging out in her basement during 2009. She doesn’t go down there very often, but she was pretty sure they had not. My sister from Memphis was there a couple of nights maybe but fails on the displacement and the Midwestern criteria.
What all these mysterious instructions have in common is that they are the results of congressional tweaks to the tax code to gain votes or to respond to contributors or to motivate or punish personal behavior or to do a favor for some group or maybe just to feel good or useful. All those, in my opinion, are inappropriate uses of congressional time and power. Routine insertion of such obscure complexities into the tax code is the reason my mother and millions of others with modest incomes shell out a few hundred dollars each year to have someone prepare their income taxes.
There are four things that bother me about the current income tax system: First is the corrupting influence on Congress of the power to use it inappropriately. Second is the inequities that result from favoritism and unequal treatment of taxpayers. Third is the non-productive work and un-necessary expense required to figure out what we owe. Fourth is the invasion of privacy required for citizens to comply with all the rules. If we are guaranteed a “right to privacy” in the Constitution (Discussion here) as those who argue for reproductive choice argue, I don’t see why that same right would not apply to our incomes and investments.
Just think how all those problems could be avoided with either the Flat Tax which would be a fixed tax on all income of around 20% with no exemptions or deductions or exclusions, or the Fair Tax, a retail sales tax of around 20% on all new purchases. Both proposals have a lot of support and are gaining momentum but will, of course, never come to pass. Congress will never give up the power they now have with the income tax code to manipulate and control, reward and punish.
The major problem with the Flat Tax is that it will still require a lot of enforcement and auditing to make sure people are actually reporting all income correctly, and there would still be the invasion of privacy. The beauty of the Fair Tax is that there would be no way to avoid paying it. The possible downside, if consumer spending is truly the primary driver of our economy, is that taxing consumption would tend to decrease consumption and would possibly dampen the economy. Environmentalists should love the Fair Tax if it reduced consumption since that would reduce our "carbon footprint."
A big upside to the Fair Tax is that it would unburden American business of taxes and greatly improve our competitiveness in world markets. That should boost employment and incomes and overall wealth of US citizens. I'd like to see us give it a try because, after a couple of years of adjustment, I believe the dampening effect on the economy would disappear even as the positive effects on national competitiveness would continue to increase. It would be a fairer system.
If you like one of these new tax systems, you might want to go to the appropriate link and cast a vote or sign a petition or join the conversation. At the same time, we should all prepare for more complexity with more exclusions, exemptions, and rebates and higher marginal rates in the income tax code. That is what will best serve the needs of Congress. We may get a Fair Tax on top of the current Income Tax. That wouldn't surprise me.
Line 42 Exemptions. If line 38 is $125,100 or less and you did not provide housing to a Midwestern displaced individual, multiply $3,650 by the number on line 6d. Otherwise, see instructions
Others that were in the running are these:
Line 40a Itemized deductions (from Schedule A) or your standard deduction (see left margin)
Line 40b If you are increasing your standard deduction by certain real estate taxes, new motor vehicle taxes, or a net disaster loss, attach Schedule L and check here (see instructions) (In South Carolina, new motor vehicle property taxes might be considered a "disaster loss.")
Line 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ (How in the world did performing artists and fee-basis government officials end up in the same category?)
Line 23 Educator expenses (see instructions)
Line 35 Domestic production activities deduction. Attach Form 8903 (Does this refer to activities targeted to having children?)
What brought all these to my attention was working on my mother’s tax return. I questioned her carefully about whether any displaced Midwesterners had been hanging out in her basement during 2009. She doesn’t go down there very often, but she was pretty sure they had not. My sister from Memphis was there a couple of nights maybe but fails on the displacement and the Midwestern criteria.
What all these mysterious instructions have in common is that they are the results of congressional tweaks to the tax code to gain votes or to respond to contributors or to motivate or punish personal behavior or to do a favor for some group or maybe just to feel good or useful. All those, in my opinion, are inappropriate uses of congressional time and power. Routine insertion of such obscure complexities into the tax code is the reason my mother and millions of others with modest incomes shell out a few hundred dollars each year to have someone prepare their income taxes.
There are four things that bother me about the current income tax system: First is the corrupting influence on Congress of the power to use it inappropriately. Second is the inequities that result from favoritism and unequal treatment of taxpayers. Third is the non-productive work and un-necessary expense required to figure out what we owe. Fourth is the invasion of privacy required for citizens to comply with all the rules. If we are guaranteed a “right to privacy” in the Constitution (Discussion here) as those who argue for reproductive choice argue, I don’t see why that same right would not apply to our incomes and investments.
Just think how all those problems could be avoided with either the Flat Tax which would be a fixed tax on all income of around 20% with no exemptions or deductions or exclusions, or the Fair Tax, a retail sales tax of around 20% on all new purchases. Both proposals have a lot of support and are gaining momentum but will, of course, never come to pass. Congress will never give up the power they now have with the income tax code to manipulate and control, reward and punish.
The major problem with the Flat Tax is that it will still require a lot of enforcement and auditing to make sure people are actually reporting all income correctly, and there would still be the invasion of privacy. The beauty of the Fair Tax is that there would be no way to avoid paying it. The possible downside, if consumer spending is truly the primary driver of our economy, is that taxing consumption would tend to decrease consumption and would possibly dampen the economy. Environmentalists should love the Fair Tax if it reduced consumption since that would reduce our "carbon footprint."
A big upside to the Fair Tax is that it would unburden American business of taxes and greatly improve our competitiveness in world markets. That should boost employment and incomes and overall wealth of US citizens. I'd like to see us give it a try because, after a couple of years of adjustment, I believe the dampening effect on the economy would disappear even as the positive effects on national competitiveness would continue to increase. It would be a fairer system.
If you like one of these new tax systems, you might want to go to the appropriate link and cast a vote or sign a petition or join the conversation. At the same time, we should all prepare for more complexity with more exclusions, exemptions, and rebates and higher marginal rates in the income tax code. That is what will best serve the needs of Congress. We may get a Fair Tax on top of the current Income Tax. That wouldn't surprise me.
Tuesday, February 23, 2010
WSJ vs. NYT
On the same day that the New York Times published Nicholas Kristof’s appeal to proceed with current health care reform proposals in spite of their many shortcomings and apparently just for the sake of change, the Wall Street Journal printed an op-ed by Jeffrey Flier, Harvard Medicine Faculty Dean, and David Goldhill, author of How American Health Care Killed My Father in the September 2009 Atlantic. If you haven’t read the Goldhill article, check it out here. It is well worth your time.
Flier and Goldhill seem to be trying to bring some rational thought, careful diagnosis, and intelligent design principles to the discussion on how to bring about changes in the US health care system. The key point they make is that accurate diagnosis requires that the problems or issues be carefully defined and not just lumped together as “health care.” They suggest there are three main areas of concern which need separate consideration and treatment: Health, Health Care, and Health Insurance. They argue that good Health depends only partly on Health Care, that having Health Insurance does not guarantee good Health Care, and that regulating and subsidizing Health Insurance drives up costs of Health Care for everyone. They argue that improved Health Care probably depends on discovery of new therapies which will require investment in R&D. The logical extension of all that is that focus of reform should be not on universal Health Insurance but on improved Health.
It seems that the goal of the champions of current health care reform bills is to separate health care decisions from any concern about their cost and make health care a free basic right available to all of us on equal terms. Nirvana! The problem is that such a separation, in the absence of strict and arbitrary limits on health care spending (rationing) will result in accelerated escalation of costs. That free basic right concept is basically the way Medicare and most employer provided health insurance operate now, and it is the reason that most people covered by Medicare or employer provided insurance are happy with their coverage. It is also the reason that Medicare is not financially sustainable without large premium or tax increases and that employers are looking for relief from escalating health care costs. Granted Medicare and private insurers continually squeeze doctors and hospitals by reducing reimbursement rates, but the whole system of reimbursing for treatment procedures with no significant cost to the patient continues to motivate more and more treatment procedures. It’s a gift to patients and the only thing doctors and hospitals get paid for.
So, I think everybody knows but avoids saying that making health care a free basic right available to all will not work in the absence of strict rationing. Already we are reading, for example, that women don’t really need mammograms so often, that stents for treatment of heart disease might not be any more effective than diet and lifestyle and drug regimens, that testing for prostate cancer is overdone, and that arthroscopic knee surgery may not be any more effective than less expensive rest and rehabilitation. And we all know that scans of various kinds and colonoscopies are being overdone. I don’t think I ever had a scan until after I was retired, and I have had half a dozen or so of various kinds since then. I think the concept of rationing by government is fine for lots of folks. It is the system in place in the UK and Canada, and many there defend it, at least so long as they are well, while others with medical needs and resources come to the US for treatment rather than queue up in their own system.
Actually, I am in favor of rationing health care. I just don’t want it done by the government. Everything else that we consume is rationed. That includes food and water and shelter and clothing and boats and cars and vacation homes and season tickets to sports events. But they are rationed by economics mostly controlled by decisions of consumers in a freely competitive environment mostly without government intervention. And the basic necessities, food, shelter, and clothing, have been taking less and less of our resources while health care, in the absence of competition, has been taking more and more. Health care can work just fine in the same kind of competitive marketplace with consumers making their own choices in consultation with their insurers, pharmacists, and physicians. Maybe some will choose to drive a cheaper car or skip a vacation because health care is a bigger priority to them. Maybe somebody will choose to forego a $3,850 (Ridiculously Inflated Charge) trip to the hospital and a CT Scan after a minor bicycle crash and take the one in several million risk they will die during the night due to a brain injury. (Check out my personal experience with this here.) And, just as we have systems in place to assist the poor with food and clothing and shelter, we need a system in place to assist the poor with health care. If we free up competition among health care providers and health care insurance companies and put patients in control of their own treatments and expenditures, worked out in discussions with their doctors, I suspect that costs will come down and there will be plenty of money available to take care of the poor.
Bottom line is that the goal of improved health is a more challenging and inspiring goal than health insurance for everybody and is more likely to result in significant improvements in policies and procedures and technologies and, finally, health.
(I know it isn't going to happen. I read the Presidents proposal at whitehouse.gov this morning, all ten pages of it, and guess he is going to gain some traction with this reduction of costs and improvement of benefits approach. Who but a true Grinch can argue with that?)
Flier and Goldhill seem to be trying to bring some rational thought, careful diagnosis, and intelligent design principles to the discussion on how to bring about changes in the US health care system. The key point they make is that accurate diagnosis requires that the problems or issues be carefully defined and not just lumped together as “health care.” They suggest there are three main areas of concern which need separate consideration and treatment: Health, Health Care, and Health Insurance. They argue that good Health depends only partly on Health Care, that having Health Insurance does not guarantee good Health Care, and that regulating and subsidizing Health Insurance drives up costs of Health Care for everyone. They argue that improved Health Care probably depends on discovery of new therapies which will require investment in R&D. The logical extension of all that is that focus of reform should be not on universal Health Insurance but on improved Health.
It seems that the goal of the champions of current health care reform bills is to separate health care decisions from any concern about their cost and make health care a free basic right available to all of us on equal terms. Nirvana! The problem is that such a separation, in the absence of strict and arbitrary limits on health care spending (rationing) will result in accelerated escalation of costs. That free basic right concept is basically the way Medicare and most employer provided health insurance operate now, and it is the reason that most people covered by Medicare or employer provided insurance are happy with their coverage. It is also the reason that Medicare is not financially sustainable without large premium or tax increases and that employers are looking for relief from escalating health care costs. Granted Medicare and private insurers continually squeeze doctors and hospitals by reducing reimbursement rates, but the whole system of reimbursing for treatment procedures with no significant cost to the patient continues to motivate more and more treatment procedures. It’s a gift to patients and the only thing doctors and hospitals get paid for.
So, I think everybody knows but avoids saying that making health care a free basic right available to all will not work in the absence of strict rationing. Already we are reading, for example, that women don’t really need mammograms so often, that stents for treatment of heart disease might not be any more effective than diet and lifestyle and drug regimens, that testing for prostate cancer is overdone, and that arthroscopic knee surgery may not be any more effective than less expensive rest and rehabilitation. And we all know that scans of various kinds and colonoscopies are being overdone. I don’t think I ever had a scan until after I was retired, and I have had half a dozen or so of various kinds since then. I think the concept of rationing by government is fine for lots of folks. It is the system in place in the UK and Canada, and many there defend it, at least so long as they are well, while others with medical needs and resources come to the US for treatment rather than queue up in their own system.
Actually, I am in favor of rationing health care. I just don’t want it done by the government. Everything else that we consume is rationed. That includes food and water and shelter and clothing and boats and cars and vacation homes and season tickets to sports events. But they are rationed by economics mostly controlled by decisions of consumers in a freely competitive environment mostly without government intervention. And the basic necessities, food, shelter, and clothing, have been taking less and less of our resources while health care, in the absence of competition, has been taking more and more. Health care can work just fine in the same kind of competitive marketplace with consumers making their own choices in consultation with their insurers, pharmacists, and physicians. Maybe some will choose to drive a cheaper car or skip a vacation because health care is a bigger priority to them. Maybe somebody will choose to forego a $3,850 (Ridiculously Inflated Charge) trip to the hospital and a CT Scan after a minor bicycle crash and take the one in several million risk they will die during the night due to a brain injury. (Check out my personal experience with this here.) And, just as we have systems in place to assist the poor with food and clothing and shelter, we need a system in place to assist the poor with health care. If we free up competition among health care providers and health care insurance companies and put patients in control of their own treatments and expenditures, worked out in discussions with their doctors, I suspect that costs will come down and there will be plenty of money available to take care of the poor.
Bottom line is that the goal of improved health is a more challenging and inspiring goal than health insurance for everybody and is more likely to result in significant improvements in policies and procedures and technologies and, finally, health.
(I know it isn't going to happen. I read the Presidents proposal at whitehouse.gov this morning, all ten pages of it, and guess he is going to gain some traction with this reduction of costs and improvement of benefits approach. Who but a true Grinch can argue with that?)
Monday, February 22, 2010
Those Obscene Profits of Health Care Insurers
Below are a couple of quotes, one having to do with profits of US health insurance companies and one having to do with total health care costs in the United States. Below that is a chart which illustrates how much total health care costs could theoretically be reduced by elimination of the insurance company profits.
Senator Feinstein, in an interview, pointed to the $12.2 billion in profits reaped by the five biggest private insurers in 2009. “When you look at the profits in ’09, up 56 percent over the year before,” she said, “you begin to understand that something is going on that is not in the interests of the American people.” (Source)
Health care costs have been rising for several years. Expenditures in the United States on health care surpassed $2.2 trillion in 2007, more than three times the $714 billion spent in 1990, and over eight times the $253 billion spent in 1980. Stemming this growth has become a major policy priority, as the government, employers, and consumers increasingly struggle to keep up with health care costs. (Source)
Here is a pie chart that shows the insignificance of the profits of the big health insurers in the total health care cost picture. The profits may or may not be "too high," but can we agree that completely eliminating the insurance company profits will not have any measurable impact on total health care costs?
I have written on this subject earlier, but Senator Feinstein must have missed that posting. She is right about one thing. Something is going on that is not in the interests of the American people and that thing is government establishment of a system that prevents free and open competition among health insurance companies across state lines and exempts them from all antitrust regulations. If we get those problems corrected, I suspect we will see insurance company profits on a fast downhill run as they compete for market share through improved payout ratios and higher customer satisfaction.
Senator Feinstein, in an interview, pointed to the $12.2 billion in profits reaped by the five biggest private insurers in 2009. “When you look at the profits in ’09, up 56 percent over the year before,” she said, “you begin to understand that something is going on that is not in the interests of the American people.” (Source)
Health care costs have been rising for several years. Expenditures in the United States on health care surpassed $2.2 trillion in 2007, more than three times the $714 billion spent in 1990, and over eight times the $253 billion spent in 1980. Stemming this growth has become a major policy priority, as the government, employers, and consumers increasingly struggle to keep up with health care costs. (Source)
Here is a pie chart that shows the insignificance of the profits of the big health insurers in the total health care cost picture. The profits may or may not be "too high," but can we agree that completely eliminating the insurance company profits will not have any measurable impact on total health care costs?
Friday, February 19, 2010
Don't Just Do Something. Stand There!
One of the worst standard pieces of advice ever uttered is, “Don’t just stand there. Do Something!” A far wiser admonition would be, “Don’t just do something. Stand there (and think before you act.)” Both phrases get lots of hits on a Google search.
In today’s column, New York Times columnist Nicholas Kristof amazes me with his illogical reasoning in defense of just doing something on the health care reform bills currently under consideration. I hate to be critical, but he is a prominent, well known, and well read columnist, and I really think he is misguided on this issue. I’ll be lucky to have fifty people read my opinions, but I just have to put my two cents worth in.
Mr. Kristof acknowledges that, “Critics are right to be disappointed that the legislation doesn’t curb malpractice suits and doesn’t do more to change the basic fee-for-service structure that incubates rising health care costs.” He acknowledges that critics who doubt that the current bills in the House and Senate will do much to contain costs “may be right.” He acknowledges that “there is something to” the suggestion that America’s poor health statistics in some areas are “a result of social inequities and a large underclass” and not just a result of our health care system. Nevertheless, he argues that all the trends of the past will, if we don’t pass health care reform NOW, extrapolate to some ridiculous point in the future at which time ‘we’ll probably get daily M.R.I.’s and CAT scans even as we starve naked in caves.”
I reread the column and still I found nothing positive about the bills under consideration except that they will result in change and will comprise doing something. The whole argument could be stated like this: “We have a problem. Lets do something…anything.”
If I were in Kansas and wanted to go to New York but could find no available flights except to California so decided to get on one of the flights to California just so I would be able to say that at least I wasn’t in Kansas anymore, I would be using logic and reasoning similar to what Mr. Kristof seems to be advocating in his column. It’s clear we need changes in our health care system to provide better access and competition and to balance the budget on Medicare and to improve education and personal responsibility. But we do not need to approve either of the bills currently under consideration. Let’s do some thinking about this before we head off.
In today’s column, New York Times columnist Nicholas Kristof amazes me with his illogical reasoning in defense of just doing something on the health care reform bills currently under consideration. I hate to be critical, but he is a prominent, well known, and well read columnist, and I really think he is misguided on this issue. I’ll be lucky to have fifty people read my opinions, but I just have to put my two cents worth in.
Mr. Kristof acknowledges that, “Critics are right to be disappointed that the legislation doesn’t curb malpractice suits and doesn’t do more to change the basic fee-for-service structure that incubates rising health care costs.” He acknowledges that critics who doubt that the current bills in the House and Senate will do much to contain costs “may be right.” He acknowledges that “there is something to” the suggestion that America’s poor health statistics in some areas are “a result of social inequities and a large underclass” and not just a result of our health care system. Nevertheless, he argues that all the trends of the past will, if we don’t pass health care reform NOW, extrapolate to some ridiculous point in the future at which time ‘we’ll probably get daily M.R.I.’s and CAT scans even as we starve naked in caves.”
I reread the column and still I found nothing positive about the bills under consideration except that they will result in change and will comprise doing something. The whole argument could be stated like this: “We have a problem. Lets do something…anything.”
If I were in Kansas and wanted to go to New York but could find no available flights except to California so decided to get on one of the flights to California just so I would be able to say that at least I wasn’t in Kansas anymore, I would be using logic and reasoning similar to what Mr. Kristof seems to be advocating in his column. It’s clear we need changes in our health care system to provide better access and competition and to balance the budget on Medicare and to improve education and personal responsibility. But we do not need to approve either of the bills currently under consideration. Let’s do some thinking about this before we head off.
Tuesday, February 16, 2010
Our National Debt, and the Lenders We Owe
Some of the comments in my posts about borrowing money from China are a bit misleading. The fact is that we are borrowing from almost everybody. A US Treasury website gives estimated US debt holdings by country. Japan is actually first with China close behind. Then come The United Kingdom and the Oil Exporting Countries. Here’s a chart. Foreign held debt is about $3.6T, up 20% in the past year and around a third of our total debt. So I guess you could say we owe the rest of it to ourselves. I think we also owe it to ourselves to tighten our belts and pay it off.
Here's an Idea...and an Offer – A Personal Note
Why do “conservatives” resist tax increases of any kind? I have no idea, but I can tell you why I resist tax increases of any kind. It is because of government’s inability or unwillingness to prioritize and use tax money appropriately. It is because tax money is too often used in brazen bids for votes. It is because our local, state, and national governments already have plenty of money to accomplish all the legitimate functions of government and begin paying off the national debt if they would focus and prioritize and establish efficiency and effectiveness as goals. In total denial of that simple fact, it seems that every new need identified calls for additional taxes and every proposed tax increase has to be targeted to some additional spending.
You may say I am just selfish and don’t want to help my fellow humans. You may say I just want to keep my money for myself. Well, there is some truth in that because our nature is to be selfish and our challenge to overcome it. But here’s the problem. I believe that the way our government is spending, whatever money we have in personal accounts is going to be seriously devalued over time. And, I still feel some responsibility for my family because I suspect that current government policies will result in less opportunity for our grandchildren than we have had. I really don’t want them to be in debt to the government for their educations and dependent on government for their health care and income. I don’t want any of today’s youth to be indentured victims of the patronizing disrespect inherent in a government promise that any student loan debt not repaid in 20 years will be forgiven. But, give me a little break, because I do enjoy supporting, with time and money and direct personal contact, charitable organizations that help the same folks who are getting food stamps and subsidized housing and Medicaid and child care and other benefits from the government.
I love and value this country and the freedom and opportunity it has given us, and, even though my current and projected incomes are well within the range for which President Obama has promised that he will not increase taxes a single dime (as if it were up to him), I would be quite happy to pay a lot more if I could see a dramatic turnaround in fiscal responsibility in Washington. As a matter of fact, if the federal government were to immediately eliminate all earmarks, cut to zero all discretionary spending, and make whatever cuts and tax increases are necessary to immediately begin running an annual surplus in order to reduce indebtedness, I could live with them taxing away all my Social Security and Medicare benefits if that were necessary to make it work. That would be giving up quite a bit because the total Social Security and Medicare taxes I paid over my thirty four working years would comfortably cover my current and future Social Security and Medicare benefits had it been appropriately invested rather than spent.
Of course I realize that whether I pay more or less and whether the purchasing power of whatever savings I have increases or decreases is going to be determined by the folks in Washington, DC. So I am not going to be making any voluntary charitable gifts to Washington. But I would support a bipartisan commitment to begin reducing our national debt…if it works. Promises to reduce the deficit are meaningless because just reducing the deficit assures that the debt will continue to increase. Only running an annual surplus will reduce the debt. So let’s give that a try. After all, we did it at for three years at the end of the last century with Clinton-Dole-Lott-Gingrich in the leadership positions. I think I know where the resistance to that idea will come from, and it won’t be from “conservatives.”
(I am acutely and uncomfortably aware of the fact that liberal use of the pronoun “I” in this posting puts me in direct competition with President Obama. Hopefully there will be less of that from both of us in the future.)
You may say I am just selfish and don’t want to help my fellow humans. You may say I just want to keep my money for myself. Well, there is some truth in that because our nature is to be selfish and our challenge to overcome it. But here’s the problem. I believe that the way our government is spending, whatever money we have in personal accounts is going to be seriously devalued over time. And, I still feel some responsibility for my family because I suspect that current government policies will result in less opportunity for our grandchildren than we have had. I really don’t want them to be in debt to the government for their educations and dependent on government for their health care and income. I don’t want any of today’s youth to be indentured victims of the patronizing disrespect inherent in a government promise that any student loan debt not repaid in 20 years will be forgiven. But, give me a little break, because I do enjoy supporting, with time and money and direct personal contact, charitable organizations that help the same folks who are getting food stamps and subsidized housing and Medicaid and child care and other benefits from the government.
I love and value this country and the freedom and opportunity it has given us, and, even though my current and projected incomes are well within the range for which President Obama has promised that he will not increase taxes a single dime (as if it were up to him), I would be quite happy to pay a lot more if I could see a dramatic turnaround in fiscal responsibility in Washington. As a matter of fact, if the federal government were to immediately eliminate all earmarks, cut to zero all discretionary spending, and make whatever cuts and tax increases are necessary to immediately begin running an annual surplus in order to reduce indebtedness, I could live with them taxing away all my Social Security and Medicare benefits if that were necessary to make it work. That would be giving up quite a bit because the total Social Security and Medicare taxes I paid over my thirty four working years would comfortably cover my current and future Social Security and Medicare benefits had it been appropriately invested rather than spent.
Of course I realize that whether I pay more or less and whether the purchasing power of whatever savings I have increases or decreases is going to be determined by the folks in Washington, DC. So I am not going to be making any voluntary charitable gifts to Washington. But I would support a bipartisan commitment to begin reducing our national debt…if it works. Promises to reduce the deficit are meaningless because just reducing the deficit assures that the debt will continue to increase. Only running an annual surplus will reduce the debt. So let’s give that a try. After all, we did it at for three years at the end of the last century with Clinton-Dole-Lott-Gingrich in the leadership positions. I think I know where the resistance to that idea will come from, and it won’t be from “conservatives.”
(I am acutely and uncomfortably aware of the fact that liberal use of the pronoun “I” in this posting puts me in direct competition with President Obama. Hopefully there will be less of that from both of us in the future.)
Saturday, February 13, 2010
Creation or Intelligent Design
No, this is not a religion posting. It has to do with the “jobs” bill currently being cooked up in Congress. As far as religion goes, creation is very simple for me: “I believe in God the Father Almighty, Creator of Heaven and Earth.” (First line of Apostles' Creed) I’m interested in but not really concerned about how God accomplished that creation.
With respect to Congress and jobs bills, it is also very simple for me but different. I do not have faith in Congress and I am both interested in and concerned about how things are being done. Two things are pretty clear:
1. Meaningful jobs that provide something called “job satisfaction” cannot be “created.”
2. Congress is responsible for “intelligent design” of their bills.
I suppose “work” can be created. Seems I have seen examples of such in movies or hazing activities. A group of prisoners or initiates may be told to move a pile of large rocks or a stack of firewood from point A to point B and, upon completion, told to move it back again. That could qualify as created work, and, if the workers were paid for it, I suppose one could say that they have been the beneficiaries of “created jobs.” But those jobs are not going to lift the human spirit or result in a better world or meet any customer needs or add to the GDP or provide any job satisfaction. (If it is a government job, I think it actually would add to the GDP.)
All of us who have worked for a living have seen cases of meaningless “created” work going on in our organizations, have had to do some of it ourselves, and, if we are completely honest, will admit that we have mistakenly created some of it ourselves. However, in companies with published financials, real customers making choices whether to buy it’s products, and shareholders deciding the value of the company, there is a relentless effort to identify and stamp out such meaningless work. Not so apparently in Washington. As a matter of fact, I seem to recall some meaningless work done during my career trying to comply with the government regulations.
With the election and seating of Senator Brown from Massachusetts providing some welcome relief from the unintelligent design and railroading of some large and undefined and unread healthcare bill(s), short term attention turned to “jobs creation.” Here are two simple truths to keep in mind as the effort proceeds:
1. Meaningful work and the potentially satisfying jobs to accomplish it arise from identified real needs.
2. In a free economy with available capital and opportunity for profit, resourceful people figure out ways to meet those needs and hire people to help them do so.
So, how are these fundamental truths affecting what should be “intelligent design” going on in Washington around this so-called jobs bill? (Let me hasten to say that we need a strong and effective government because a certain subset of those real needs is best met by government, and that meeting those particular needs is what Washington should be focused on.)
Apparently the jobs bill got started when Senator Schumer proposed exempting employers who hire unemployed people from payment of the employers’ half of the Social Security tax for one year and then giving the employers a $1000 tax credit for new employees who stay on the job for a year.
In an attempt to get “bipartisan support,” the bill was apparently opened up to addition of earmarks and other pet projects. (I keep using the word, “apparently,” because I have no idea what is really going on.) Money was put in, for example, to renew some expiring tax breaks, to renew an expiring Medicare payment formula, to subsidize bio-diesel fuels, and to extend unemployment benefits. I wouldn’t be surprised if one could find a monument or a park in there somewhere. Somebody complained, and Senator Reid stripped out all the extra stuff and cut the bill to $15B to cover just the payroll tax holiday and $1,000 benefit. Now the Republicans are crying, “Foul,” saying it’s no longer a “bipartisan” bill.
Don’t the folks in Washington know that nobody in business will hire anybody because of a payroll tax holiday and a $1000 tax credit? Business folks hire people because they see real demand for their products and services and need somebody to do the work required for expanding the business. The only business people who will benefit from this bill are those who see the need for hiring and would hire anyway.
The requirements for new jobs are market demand and available capital. Good ways to get those two things are elimination of the capital gains tax and reduction of personal income taxes. Those are two real needs government can meet.
Oh well, maybe the remaining benefits in this $15B bill will be enough to persuade some government agencies or non-profits to hire.
In any case, we have seen the creative power of God in the magnificent beauty of the historic snowstorm that has covered Washington, DC, in the past couple of weeks. I don't know if any new jobs have resulted, but it certainly created a lot of snow removal work. I guess that quick removal of that snow would qualify as a “real need,” but I’m not sure. The snow will go away regardless. And I certainly don't interpret the storm as God’s expression of displeasure with activities in Washington. Nor have I heard anything from Pat Robertson on that.
With respect to Congress and jobs bills, it is also very simple for me but different. I do not have faith in Congress and I am both interested in and concerned about how things are being done. Two things are pretty clear:
1. Meaningful jobs that provide something called “job satisfaction” cannot be “created.”
2. Congress is responsible for “intelligent design” of their bills.
I suppose “work” can be created. Seems I have seen examples of such in movies or hazing activities. A group of prisoners or initiates may be told to move a pile of large rocks or a stack of firewood from point A to point B and, upon completion, told to move it back again. That could qualify as created work, and, if the workers were paid for it, I suppose one could say that they have been the beneficiaries of “created jobs.” But those jobs are not going to lift the human spirit or result in a better world or meet any customer needs or add to the GDP or provide any job satisfaction. (If it is a government job, I think it actually would add to the GDP.)
All of us who have worked for a living have seen cases of meaningless “created” work going on in our organizations, have had to do some of it ourselves, and, if we are completely honest, will admit that we have mistakenly created some of it ourselves. However, in companies with published financials, real customers making choices whether to buy it’s products, and shareholders deciding the value of the company, there is a relentless effort to identify and stamp out such meaningless work. Not so apparently in Washington. As a matter of fact, I seem to recall some meaningless work done during my career trying to comply with the government regulations.
With the election and seating of Senator Brown from Massachusetts providing some welcome relief from the unintelligent design and railroading of some large and undefined and unread healthcare bill(s), short term attention turned to “jobs creation.” Here are two simple truths to keep in mind as the effort proceeds:
1. Meaningful work and the potentially satisfying jobs to accomplish it arise from identified real needs.
2. In a free economy with available capital and opportunity for profit, resourceful people figure out ways to meet those needs and hire people to help them do so.
So, how are these fundamental truths affecting what should be “intelligent design” going on in Washington around this so-called jobs bill? (Let me hasten to say that we need a strong and effective government because a certain subset of those real needs is best met by government, and that meeting those particular needs is what Washington should be focused on.)
Apparently the jobs bill got started when Senator Schumer proposed exempting employers who hire unemployed people from payment of the employers’ half of the Social Security tax for one year and then giving the employers a $1000 tax credit for new employees who stay on the job for a year.
In an attempt to get “bipartisan support,” the bill was apparently opened up to addition of earmarks and other pet projects. (I keep using the word, “apparently,” because I have no idea what is really going on.) Money was put in, for example, to renew some expiring tax breaks, to renew an expiring Medicare payment formula, to subsidize bio-diesel fuels, and to extend unemployment benefits. I wouldn’t be surprised if one could find a monument or a park in there somewhere. Somebody complained, and Senator Reid stripped out all the extra stuff and cut the bill to $15B to cover just the payroll tax holiday and $1,000 benefit. Now the Republicans are crying, “Foul,” saying it’s no longer a “bipartisan” bill.
Don’t the folks in Washington know that nobody in business will hire anybody because of a payroll tax holiday and a $1000 tax credit? Business folks hire people because they see real demand for their products and services and need somebody to do the work required for expanding the business. The only business people who will benefit from this bill are those who see the need for hiring and would hire anyway.
The requirements for new jobs are market demand and available capital. Good ways to get those two things are elimination of the capital gains tax and reduction of personal income taxes. Those are two real needs government can meet.
Oh well, maybe the remaining benefits in this $15B bill will be enough to persuade some government agencies or non-profits to hire.
In any case, we have seen the creative power of God in the magnificent beauty of the historic snowstorm that has covered Washington, DC, in the past couple of weeks. I don't know if any new jobs have resulted, but it certainly created a lot of snow removal work. I guess that quick removal of that snow would qualify as a “real need,” but I’m not sure. The snow will go away regardless. And I certainly don't interpret the storm as God’s expression of displeasure with activities in Washington. Nor have I heard anything from Pat Robertson on that.
Monday, February 8, 2010
Health Care System Analysis – A Good Read
Sometimes I have a little discomfort with things I have said or posted on Medicare shortcomings and general government mismanagement of health care and ideas for correcting the problems. I read the arguments of people who say we just need to turn over all our health care dollars and decisions and policies to the government and let them handle it because that way “everybody will have health care.” They say, “Everybody else is doing it,” and if we do, we can hold our heads high and join the rest of the industrialized world as one more civilized country.”
Maybe they are right, I think, and all those little state-sized European countries with city-sized populations and tight borders and free education and health care and strong work ethics and strong peer pressure to contribute will quit criticizing us. Maybe we can pick and choose from what others do and have the world’s best system, hopefully a “single payer” system. I think, How can I possibly be so selfish as to argue against just going ahead and giving everybody free health care? Maybe we really would be better off if we had Universal Food Stamps rather than a system that just provides food assistance to the poor. Maybe we really would be better off if we had Universal Housing rather than a relatively small HUD program that just subsidizes the poor in their acquisition of housing. I’ve never really thought about Universal Clothing, but think how democratic that would be!
And then I say to myself, “That is crazy thinking.” Food and housing, basic necessities even more important than health care, are provided and purchased in free markets allowing 90% of the people in the United States to choose and pay for their own food and housing based on their own needs and resources, and the percent of our incomes that goes to food and housing keeps going down even as the quality and variety and availability of food and housing keep going up. What is there to dislike about that system?
The market for health care, on the other hand, has been destroyed first by employer plans that took patient decisions and responsibility out of the picture and then by Medicare and Medicaid policies that have established medical procedure reimbursement rates based on some arcane calculation having nothing to do with supply and demand or with efficiency or effectiveness and have the final result of driving health care providers to favor wrong procedures and make wrong choices. As a result of all that, the percent of our incomes that goes to health care keeps steadily rising, and patients and sometimes even doctors are left sitting on the sidelines while groups of administrators and insurance company employees and government bureaucrats discuss our health and make decisions about what should be done about it, how much it should cost, and who will pay. What is there to like about that system?
And we do have universal Social Security which collects billions of dollars from young folks trying to raise and educate families and distributes it to millions of comfortable retirees who don’t really need it but are “entitled” to it because they paid a few dollars when they were young. And it is unsustainable. Social Security would have been so much better as a safety net to keep the elderly out of poverty instead of a universal entitlement.
I love to read, but there is a little problem. It puts me to sleep, almost as effectively as the television. I just finished The Tender Bar by JR Moehringer and I loved it but, I would crawl into bed and start reading and after fifteen minutes or so I would be awakened by my Kindle slipping out of my hands and falling over on my legs. Still, I got through it in a couple of weeks and highly recommend it. But Saturday I picked up a book called Flatlined at the public library and read half Saturday night and got up early Sunday and finished it. Not sleep inducing at all! In a fact and statistic and anecdote filled book that reads like a novel, author Guy L. Clifton, neurosurgeon, fully explores and explains and diagnoses the US health care system, and, in so doing, speaks with authority and confidence based on his personal experiences and observations including time in Washington working on health care reform as a congressional staffer. He even confesses some things that might be considered ethically questionable, but assures us that he always believed he was doing the right thing at the time. I guess I liked the book so much because it reaffirmed with logic and data, and not with ideology, all the stuff I really believe about health care.
He explains clearly why people are dying as a result of shrinking emergency room capacity, why primary care physicians are shrinking in number, why the Medicare driven physician reimbursement system is motivating unnecessary procedures and unnecessary surgeries resulting in at least 30% of medical expense being waste, why hospitals are dangerous places to be, and why we are wasting billions on unnecessary prescription drugs. And he explains clearly why the current system is unsustainable and will have to be severely curtailed or will drive the country into bankruptcy.
One disturbing fact he reveals which was new to me is that congress behaves as a board of directors for Medicare and that, “Medicare headquarters receive tens of thousands of letters a year from members of Congress who are protesting one or another payment decision. If administrators do not respond, sometimes a law is passed reversing their decision.” (Page 196) That is shameful and makes it clear that members of Congress are responsible for many of our health care system problems and that they are not helping.
Clifton argues that we have to have insurance for everybody because not doing do skews the whole system as hospitals and physicians, quite reasonably, design their facilities and their practices to maximize revenue which means avoiding the uninsured, especially in emergency rooms, as much as possible and focusing on the procedures for which Medicare and private insurers will pay the most. He points out, for example, that reimbursement for a neurosurgeon on night duty in an emergency room is a small fraction of what the same person would get for an hour of scheduled surgery which tends to steer neurosurgeons away from hospitals with big emergency room operations which results in less emergency room availability.
Clifton references the teachings of Dr. W. Edwards Deming, Total Quality guru, who consistently promoted reduction of variability and waste. Consistent with Deming’s teaching, he argues for process improvements such as getting doctors and hospitals on the same team, transparent pricing, and bundled rather than itemized pricing.
I believe Clifton would like all my ideas from last weeks posting, but would say they are not quite enough because physicians tend to be somewhat independent and defensive, which leads to his only recommendation that caught me by surprise. He believes we need a Federal Reserve-like independent American Medical Quality System (AMQS) organization which would be responsible for working with physicians and hospitals to identify and disseminate best practices and standard protocols and he wants to provide liability protection for physicians who follow such practices and protocols. It seems he thinks that Medicare is far too broken and politicized to ever provide such a function and that this new non-partisan, politically independent entity will be required. Compliance would be voluntary, but it is hard to argue against standardization of procedures once they are shown to improve results and reduce costs. Clifton’s bottom line is that there is enough waste in the system that all the uninsured can be covered without diminishing care for those already covered simply by dramatic and innovative waste reducing process improvements.
Anyway, if you are interested in health care issues and feel strongly that everybody should be covered by health care insurance, as I do, and as Dr. Clifton does, this is a book you should read. I downloaded the book to my Kindle so I would have a searchable copy handy. And if I ever do fall asleep reading it, it will wake me up.
If you search Amazon books for “health care reform,” you get hundreds of hits. While Flatlined is selling pretty well and gets good reviews, another that jumps out as highly rated and selling well in both hardcover and Kindle editions is Innovators Prescription by Christensen. I guess I will order it too, and hope it keeps me awake. And I hope it affirms my belief in free market solutions to the health care crisis. I already know from the Amazon reviews that Christensen agrees that we have to get rid of the current fee-for-service model for paying health care expenses, so that is encouraging. Even President Obama spoke in favor of that change last summer, but I really have no idea if such a thing is likely to end up in any health care bill that might result from the current congressional processes.
Maybe they are right, I think, and all those little state-sized European countries with city-sized populations and tight borders and free education and health care and strong work ethics and strong peer pressure to contribute will quit criticizing us. Maybe we can pick and choose from what others do and have the world’s best system, hopefully a “single payer” system. I think, How can I possibly be so selfish as to argue against just going ahead and giving everybody free health care? Maybe we really would be better off if we had Universal Food Stamps rather than a system that just provides food assistance to the poor. Maybe we really would be better off if we had Universal Housing rather than a relatively small HUD program that just subsidizes the poor in their acquisition of housing. I’ve never really thought about Universal Clothing, but think how democratic that would be!
And then I say to myself, “That is crazy thinking.” Food and housing, basic necessities even more important than health care, are provided and purchased in free markets allowing 90% of the people in the United States to choose and pay for their own food and housing based on their own needs and resources, and the percent of our incomes that goes to food and housing keeps going down even as the quality and variety and availability of food and housing keep going up. What is there to dislike about that system?
The market for health care, on the other hand, has been destroyed first by employer plans that took patient decisions and responsibility out of the picture and then by Medicare and Medicaid policies that have established medical procedure reimbursement rates based on some arcane calculation having nothing to do with supply and demand or with efficiency or effectiveness and have the final result of driving health care providers to favor wrong procedures and make wrong choices. As a result of all that, the percent of our incomes that goes to health care keeps steadily rising, and patients and sometimes even doctors are left sitting on the sidelines while groups of administrators and insurance company employees and government bureaucrats discuss our health and make decisions about what should be done about it, how much it should cost, and who will pay. What is there to like about that system?
And we do have universal Social Security which collects billions of dollars from young folks trying to raise and educate families and distributes it to millions of comfortable retirees who don’t really need it but are “entitled” to it because they paid a few dollars when they were young. And it is unsustainable. Social Security would have been so much better as a safety net to keep the elderly out of poverty instead of a universal entitlement.
I love to read, but there is a little problem. It puts me to sleep, almost as effectively as the television. I just finished The Tender Bar by JR Moehringer and I loved it but, I would crawl into bed and start reading and after fifteen minutes or so I would be awakened by my Kindle slipping out of my hands and falling over on my legs. Still, I got through it in a couple of weeks and highly recommend it. But Saturday I picked up a book called Flatlined at the public library and read half Saturday night and got up early Sunday and finished it. Not sleep inducing at all! In a fact and statistic and anecdote filled book that reads like a novel, author Guy L. Clifton, neurosurgeon, fully explores and explains and diagnoses the US health care system, and, in so doing, speaks with authority and confidence based on his personal experiences and observations including time in Washington working on health care reform as a congressional staffer. He even confesses some things that might be considered ethically questionable, but assures us that he always believed he was doing the right thing at the time. I guess I liked the book so much because it reaffirmed with logic and data, and not with ideology, all the stuff I really believe about health care.
He explains clearly why people are dying as a result of shrinking emergency room capacity, why primary care physicians are shrinking in number, why the Medicare driven physician reimbursement system is motivating unnecessary procedures and unnecessary surgeries resulting in at least 30% of medical expense being waste, why hospitals are dangerous places to be, and why we are wasting billions on unnecessary prescription drugs. And he explains clearly why the current system is unsustainable and will have to be severely curtailed or will drive the country into bankruptcy.
One disturbing fact he reveals which was new to me is that congress behaves as a board of directors for Medicare and that, “Medicare headquarters receive tens of thousands of letters a year from members of Congress who are protesting one or another payment decision. If administrators do not respond, sometimes a law is passed reversing their decision.” (Page 196) That is shameful and makes it clear that members of Congress are responsible for many of our health care system problems and that they are not helping.
Clifton argues that we have to have insurance for everybody because not doing do skews the whole system as hospitals and physicians, quite reasonably, design their facilities and their practices to maximize revenue which means avoiding the uninsured, especially in emergency rooms, as much as possible and focusing on the procedures for which Medicare and private insurers will pay the most. He points out, for example, that reimbursement for a neurosurgeon on night duty in an emergency room is a small fraction of what the same person would get for an hour of scheduled surgery which tends to steer neurosurgeons away from hospitals with big emergency room operations which results in less emergency room availability.
Clifton references the teachings of Dr. W. Edwards Deming, Total Quality guru, who consistently promoted reduction of variability and waste. Consistent with Deming’s teaching, he argues for process improvements such as getting doctors and hospitals on the same team, transparent pricing, and bundled rather than itemized pricing.
I believe Clifton would like all my ideas from last weeks posting, but would say they are not quite enough because physicians tend to be somewhat independent and defensive, which leads to his only recommendation that caught me by surprise. He believes we need a Federal Reserve-like independent American Medical Quality System (AMQS) organization which would be responsible for working with physicians and hospitals to identify and disseminate best practices and standard protocols and he wants to provide liability protection for physicians who follow such practices and protocols. It seems he thinks that Medicare is far too broken and politicized to ever provide such a function and that this new non-partisan, politically independent entity will be required. Compliance would be voluntary, but it is hard to argue against standardization of procedures once they are shown to improve results and reduce costs. Clifton’s bottom line is that there is enough waste in the system that all the uninsured can be covered without diminishing care for those already covered simply by dramatic and innovative waste reducing process improvements.
Anyway, if you are interested in health care issues and feel strongly that everybody should be covered by health care insurance, as I do, and as Dr. Clifton does, this is a book you should read. I downloaded the book to my Kindle so I would have a searchable copy handy. And if I ever do fall asleep reading it, it will wake me up.
If you search Amazon books for “health care reform,” you get hundreds of hits. While Flatlined is selling pretty well and gets good reviews, another that jumps out as highly rated and selling well in both hardcover and Kindle editions is Innovators Prescription by Christensen. I guess I will order it too, and hope it keeps me awake. And I hope it affirms my belief in free market solutions to the health care crisis. I already know from the Amazon reviews that Christensen agrees that we have to get rid of the current fee-for-service model for paying health care expenses, so that is encouraging. Even President Obama spoke in favor of that change last summer, but I really have no idea if such a thing is likely to end up in any health care bill that might result from the current congressional processes.
Saturday, February 6, 2010
Shatterproof Pub Glasses – A Permanent Fix?
With apologies to my friends and readers in the United Kingdom, and a request for comments if I am misinterpreting this situation or missing some key point, I can’t help but chuckle over yesterday’s news item about new safer British pub glasses. According to the article, the “shatterproof pint glass was proudly unveiled by the government on Thursday.” Additional searching on the internet revealed that a company called Design Bridge developed the new glass with funding provided by the taxpayers under the justification that bar fight injuries resulting from use of broken glasses as weapons were putting a burden on the National Health Service. There were 87,000 alcohol related glass attacks costing the NHS $4.3B in a single year! They must have one of those national health care databases that easily coughs up such information. Apparently, providing the funding gave the government the right to do the “unveiling.” The issue of unemployment resulting from a diminishing economy, excessive debt, and general economic malaise did not come up in the article, but that may be resulting in more pub time and lower self esteem and more fights, and therefore worthy of government attention as well.
The web search revealed also that pub glasses in Britain are regulated with respect to size and must bear the official stamp of the government so drinkers can be sure they are getting their money’s worth. (May not be a bad idea. It seems that the more I pay for a "glass" of wine in the US, the less wine there is in it.) I guess with national health care in place the government has time for more mundane issues. I don't know what the British position on venetian blind cords is.
“Nanny” is a good British term in more ways than one.
The web search revealed also that pub glasses in Britain are regulated with respect to size and must bear the official stamp of the government so drinkers can be sure they are getting their money’s worth. (May not be a bad idea. It seems that the more I pay for a "glass" of wine in the US, the less wine there is in it.) I guess with national health care in place the government has time for more mundane issues. I don't know what the British position on venetian blind cords is.
“Nanny” is a good British term in more ways than one.
Friday, February 5, 2010
"Elegant Solution" for Health Care Mess - No Duct Tape Allowed
I first remember running into the concept of the “elegant solution” in connection with computer programs. The most “elegant solution” in such cases is the one with the simplest approach, the fewest steps, the quickest answer, and the least demand on computing power and memory. A graduate school friend with whom I took my first FORTRAN course and with whom I recently re-connected through this blog always seemed to be able to come up with the most elegant solutions. I found the following elegant explanation at elsol.org.
Lest somebody accuse me of being a no-sayer and a person without ideas, here is my vision of the key elements of an elegant solution to the health care insurance mess (I still believe our actual health care is the best.):
1. Physicians are free to offer routine screening for health problems at competitive prices with no insurance filing or paperwork involved. Any kind of price fixing or discussion of pricing among health care providers is illegal and subject to anti-trust prosecution.
2. Government funded health clinics with fees based on income are available in each county to cover routine and preventive care for those who cannot afford the fees of private practice physicians. Availability is limited to those with incomes at or below two times the poverty level.
3. Physicians, hospitals, and other providers are not allowed to negotiate separate deals with insurance companies that give them special low prices in return for volume business. In business parlance, individual purchasers of health care are granted a “most favored nation” status whether paying from their own resources or being reimbursed by their insurance company.
4. Employer owned and paid insurance is not legal. Premiums for individual policies may be paid by payroll deduction, but the policies are the property of the individual policy holders and are not dependent on continued employment.
5. Insurance companies are free to do business anywhere within the United States, are subject to all anti-trust regulations, and must offer insurance policies that are guaranteed non-cancelable as long as premiums are paid. Premiums will increase with age. Payout of benefits for insurance companies as a percent of premiums collected must be reported quarterly and must equal or exceed 80% of premiums collected. Insurance companies compete partially on the basis of their payout ratios.
6. No insurance claims may be filed during any year until the patient has documentation of at least $2,500 of medical expense for that year. As a result, the paperwork burden of insurers and providers is greatly diminished.
7. All insurance policies are all-inclusive covering drugs, physician care, hospitalization, and long term care. In other words, people need only one policy instead of four.
8. Insurance companies can limit maximum payouts but must offer benefits of at least $100,000 per year and $1,000,000 per lifetime, in 2010 dollars, to policy holders. Patients are responsible for working out affordable treatment options with health care providers given the personal assets and insurance coverage they have. Charges must be pre-approved by the patient who is responsible for any negotiation with the insurance company. There will be rationing, but it will be the responsibility of the patient and worked out in negotiation between the patient and the physician and not between the government or insurance company and the physician.
9. Denial of coverage due to pre-existing conditions is not allowed for anyone under the age of 35. Over age 35, any who have not already purchased non-cancelable policies may be denied coverage or provided with restricted coverage in case of pre-existing conditions. There is assigned risk coverage available at considerably higher premiums for those over 35 who cannot purchase regular insurance. For those who fail to be insured and go broke due to medical bills, see items 2 and 12.
10. Hospitals may not use detailed billing for each and every service and/or provider involved in a patient’s care but must use “all costs included” transparent billing based on procedures with broad scope and/or duration of treatment. Accurate costs estimates must be presented to the patient or other responsible person at the time treatment is agreed to. Hospitals compete partially on the basis of advertised rates for various procedures and services.
11. Liability claims against health care providers and institutions are limited to actual damages and future actual costs to be incurred as a result of the damages plus legal fees of 10% of the total award. Plaintiffs keep 100% of the awards and the lawyers keep 100% of the legal fees (minus their taxes of course.)
12. A “Public Option” health insurance policy is available only to those at or below the poverty level. Benefits are defined only in terms of dollars available for reimbursement to the policy holder and not in terms of reimbursement rates directly to providers for procedures performed.
I believe adoption of this plan would result in a reduction of 50% in the total cost of health care in the United States by reducing un-necessary tests and procedures, eliminating jobs of many who are part of the health care bill but do not provide health care, reducing malpractice insurance costs, and allowing competition to drive down the costs of technology based procedures. And it would protect the rights and privacy of individuals and the concept of personal responsibility.
It would also make basic health care available to every single citizen of the United States of America.
Later Note: Every good solution has to begin with accurate diagnosis. For the diagnosis leading to this solution, check out this August 2009 posting on GovernmentActingStupidly.com.
In dance or martial arts, elegance is minimum motion with maximum effect. In a mathematical proof or a computer program, elegance is the minimum number of steps to achieve the solution with maximum clarity. Engineers strive to use the least amount of material and minimize the number of moving parts; duct tape is not an elegant solution, except for taping ducts. Like an elegant theory, an elegant solution is recognized by its parsimony of definition and power of explanation. The most complex games have the fewest rules, as do the most dynamic societies.
A designer knows he has achieved perfection not when there is nothing left to add, but when there is nothing left to take away. Letters, 1656--Antoine de Saint-Exup'ery
The present letter is a very long one, simply because I had no leisure to make it shorter. --Blaise Pascal in ProvincialThe current senate and house health care bills are the antithesis of elegance. They are hard to understand or even see because of the prevalence of duct tape. We know they were constructed by senators and representatives unashamedly getting things they wanted into the bills in return for their promises of support. And the message President Obama gave Republicans recently sounded to me like this: The democrats have worked hard to get the stuff they wanted into these bills. Why don’t you guys come up with some things you want and we will stick them in also and then we can all support the bill.” I hope no Republicans buy that approach because what the bill needs is not more stuff but less stuff.
Lest somebody accuse me of being a no-sayer and a person without ideas, here is my vision of the key elements of an elegant solution to the health care insurance mess (I still believe our actual health care is the best.):
1. Physicians are free to offer routine screening for health problems at competitive prices with no insurance filing or paperwork involved. Any kind of price fixing or discussion of pricing among health care providers is illegal and subject to anti-trust prosecution.
2. Government funded health clinics with fees based on income are available in each county to cover routine and preventive care for those who cannot afford the fees of private practice physicians. Availability is limited to those with incomes at or below two times the poverty level.
3. Physicians, hospitals, and other providers are not allowed to negotiate separate deals with insurance companies that give them special low prices in return for volume business. In business parlance, individual purchasers of health care are granted a “most favored nation” status whether paying from their own resources or being reimbursed by their insurance company.
4. Employer owned and paid insurance is not legal. Premiums for individual policies may be paid by payroll deduction, but the policies are the property of the individual policy holders and are not dependent on continued employment.
5. Insurance companies are free to do business anywhere within the United States, are subject to all anti-trust regulations, and must offer insurance policies that are guaranteed non-cancelable as long as premiums are paid. Premiums will increase with age. Payout of benefits for insurance companies as a percent of premiums collected must be reported quarterly and must equal or exceed 80% of premiums collected. Insurance companies compete partially on the basis of their payout ratios.
6. No insurance claims may be filed during any year until the patient has documentation of at least $2,500 of medical expense for that year. As a result, the paperwork burden of insurers and providers is greatly diminished.
7. All insurance policies are all-inclusive covering drugs, physician care, hospitalization, and long term care. In other words, people need only one policy instead of four.
8. Insurance companies can limit maximum payouts but must offer benefits of at least $100,000 per year and $1,000,000 per lifetime, in 2010 dollars, to policy holders. Patients are responsible for working out affordable treatment options with health care providers given the personal assets and insurance coverage they have. Charges must be pre-approved by the patient who is responsible for any negotiation with the insurance company. There will be rationing, but it will be the responsibility of the patient and worked out in negotiation between the patient and the physician and not between the government or insurance company and the physician.
9. Denial of coverage due to pre-existing conditions is not allowed for anyone under the age of 35. Over age 35, any who have not already purchased non-cancelable policies may be denied coverage or provided with restricted coverage in case of pre-existing conditions. There is assigned risk coverage available at considerably higher premiums for those over 35 who cannot purchase regular insurance. For those who fail to be insured and go broke due to medical bills, see items 2 and 12.
10. Hospitals may not use detailed billing for each and every service and/or provider involved in a patient’s care but must use “all costs included” transparent billing based on procedures with broad scope and/or duration of treatment. Accurate costs estimates must be presented to the patient or other responsible person at the time treatment is agreed to. Hospitals compete partially on the basis of advertised rates for various procedures and services.
11. Liability claims against health care providers and institutions are limited to actual damages and future actual costs to be incurred as a result of the damages plus legal fees of 10% of the total award. Plaintiffs keep 100% of the awards and the lawyers keep 100% of the legal fees (minus their taxes of course.)
12. A “Public Option” health insurance policy is available only to those at or below the poverty level. Benefits are defined only in terms of dollars available for reimbursement to the policy holder and not in terms of reimbursement rates directly to providers for procedures performed.
I believe adoption of this plan would result in a reduction of 50% in the total cost of health care in the United States by reducing un-necessary tests and procedures, eliminating jobs of many who are part of the health care bill but do not provide health care, reducing malpractice insurance costs, and allowing competition to drive down the costs of technology based procedures. And it would protect the rights and privacy of individuals and the concept of personal responsibility.
It would also make basic health care available to every single citizen of the United States of America.
Later Note: Every good solution has to begin with accurate diagnosis. For the diagnosis leading to this solution, check out this August 2009 posting on GovernmentActingStupidly.com.
Thursday, February 4, 2010
The Money Is in the Budget, But Is It in the Bank?
There is a fundamental difference in the way that government looks at budgets and the way that for-profit enterprises look at them. Far too often, the attitude of government toward budgets is “use it or lose it,” while the usual attitude of for-profit enterprises is that the budget is a not-to-be-exceeded amount to be spent in pursuit of some specific goal and the less spent the better so long as the goal is achieved. Too often in government, the objective is no loftier than the spending of the money itself in some perverted belief that good things will result from that alone. The only budget items treated that way in business are lobbying, advertising, and entertaining.
Clear evidence of the attitude of government can be seen in a comment that caught my eye in Congressman James Clyburn’s defense of earmarks. This is not a criticism of Congressman Clyburn because he is just describing the prevailing attitude in Washington that there is money in the budget and we have to figure out how to spend it. Here is the politically loaded statement he wrote (5th paragraph) in defense of earmarks:
The private for-profit attitude is exemplified by an incident I encountered during my Eastman career. A capital project had been proposed and budgeted, and the projected profitability did not quite meet requirements. The CEO kept asking for more cost reductions before agreeing to final approval, and finally the engineering division proposed that they could save significant engineering time and money by duplicating some old drawings rather than preparing new ones. The CEO’s response was, “If you can save money by doing it that way, why weren’t you already doing it that way?"
Another example of government think can be seen in the presidents recent proposal to use some of the “leftover TARP funds” to boost jobs by eliminating capital gains taxes on small businesses and starting some more infrastructure projects. TARP stands for Troubled Asset Relief Program and that is what $700MB was approved for and allocated to. Some has been repaid and so net expenditures are apparently only about $500MB. The business way of looking at this is that we did what we set out to do for $200MB less than was allocated. Congratulations to us. The government way is to say that we have $200MB left over and we need to figure out some way to spend it.
There is no money left over. There is no money. The $200MB may be in the budget, but it is not in the bank, and there is no justification for trying to figure out how to spend it. Just borrow a little less!
The president has proposed a freeze on discretionary, non-entitlement, non-security spending beginning next year that is expected to "save" $250B over ten years. Trivial as it is, it will never happen because congress will fight it every inch of the way. But now, in 2010, we have an immediate opportunity to spend or not spend $200MB that we don't have. What will it be?
It’s just a different environment and an entirely different way of thinking, and if government would shift its thinking to get more in line with business thinking (excluding lobbying, advertising, and entertaining), we would all be richer and more financially secure for it.
For some good insights on why the federal government cannot reduce spending, check out today’s Gail Collins op-ed in the NYT.
Clear evidence of the attitude of government can be seen in a comment that caught my eye in Congressman James Clyburn’s defense of earmarks. This is not a criticism of Congressman Clyburn because he is just describing the prevailing attitude in Washington that there is money in the budget and we have to figure out how to spend it. Here is the politically loaded statement he wrote (5th paragraph) in defense of earmarks:
A recent Washington Post investigation uncovered what happened last year when Congress imposed a moratorium on earmarks. The report discovered that a division of the Transportation Department found itself with a billion dollars of taxpayers’ money to spend. Two Bush appointees, with no transportation experience, refused to meet with state and local transit officials seeking funding for their communities. Instead, they decided – without any outside input – that the billion dollars would be spent on radical toll-roads experiments for seven projects in five states. - Representative James ClyburnWhat a strange experience it must be to find oneself with “a billion dollars of taxpayer’s money to spend,” and to have to figure out something to do with it before it self-destructs. The Congressman was not questioning the spending of the money. That needed to be done. He just didn't like somebody else getting to decide how to spend it. Of course the simple and regrettable fact is that while that billion dollars might have been in the budget, it was not in the bank. Yet it was spent and, as a result, the national debt was increased.
The private for-profit attitude is exemplified by an incident I encountered during my Eastman career. A capital project had been proposed and budgeted, and the projected profitability did not quite meet requirements. The CEO kept asking for more cost reductions before agreeing to final approval, and finally the engineering division proposed that they could save significant engineering time and money by duplicating some old drawings rather than preparing new ones. The CEO’s response was, “If you can save money by doing it that way, why weren’t you already doing it that way?"
Another example of government think can be seen in the presidents recent proposal to use some of the “leftover TARP funds” to boost jobs by eliminating capital gains taxes on small businesses and starting some more infrastructure projects. TARP stands for Troubled Asset Relief Program and that is what $700MB was approved for and allocated to. Some has been repaid and so net expenditures are apparently only about $500MB. The business way of looking at this is that we did what we set out to do for $200MB less than was allocated. Congratulations to us. The government way is to say that we have $200MB left over and we need to figure out some way to spend it.
There is no money left over. There is no money. The $200MB may be in the budget, but it is not in the bank, and there is no justification for trying to figure out how to spend it. Just borrow a little less!
The president has proposed a freeze on discretionary, non-entitlement, non-security spending beginning next year that is expected to "save" $250B over ten years. Trivial as it is, it will never happen because congress will fight it every inch of the way. But now, in 2010, we have an immediate opportunity to spend or not spend $200MB that we don't have. What will it be?
It’s just a different environment and an entirely different way of thinking, and if government would shift its thinking to get more in line with business thinking (excluding lobbying, advertising, and entertaining), we would all be richer and more financially secure for it.
For some good insights on why the federal government cannot reduce spending, check out today’s Gail Collins op-ed in the NYT.
Wednesday, February 3, 2010
Deficits Not Always Bad
I was in the gym on the elliptical cross trainer Monday afternoon watching “The Ed Show” on MSNBC. Yes, I do watch that some and “Hardball” as well. I don’t like “The Ed Show” very much and am not surprised he tries to keep his last name confidential, but these are shows conservatives should watch because that is where we get our ideas challenged and come up with new ideas for blog postings. No point in just watching something that always reinforces what we already think.
Anyway, at the end of a video clip of President Obama talking about his budget proposal and the deficit, Ed said this in introducing Jared Bernstein, chief economist for VP Biden:
When congress and President George Bush launched wars in Iraq and Afghanistan and a major new drug entitlement program without any cost reductions or new taxes to pay for them, even as congress encouraged and enabled citizens to stop saving and take on unsustainable debt in the housing market, the financial result could not have been anything but bad. The problem is no longer small deficits but mounting debt and debt does matter, especially when it is held by foreign governments and investors and is growing and approaching GDP and is already, even with interest rates at historic lows, at several times annual federal government spending.
And the Obama administration budget projections look bad and are unrealistic at that. Here is a table I copied from Page 146 of the recently released White House Budget Proposal:
Notice that the deficit is shown as peaking this year at $1.556T and dropping to $828B by 2012. That projection assumes an actual decline in federal spending in 2012, something that has not happened in any other of the 39 years of history shown on the chart below, and on unrealistically optimistic GDP increases of 4.6% in 2011 and 5.9% in 2012. Even with those bullish projections, debt is projected to reach 70.8% of GDP and 392% of federal income. And, if the economy were to expand so rapidly, we can be sure that interest rates would be up as well and the interest on the debt could easily double within that time frame. Click on the chart for a better view.
I think the administration and congress and the American people face three options:
1. Massive tax increases which will further grow the federal government at the expense of the private sector and result in the United States following the same economic path as England and giving up future leadership to the dynamic economies of China and India. In that case, we can just relax and try to get our kids lined up for government jobs.
2. Massive cuts in government spending which will shrink the federal government to the benefit of the private sector and create millions of jobs and reassert the United States economy as a world leader. That could be fun, but it could also be stressful.
3. Find and fully exploit a lucky gold or oil or uranium deposit. Clearly this would be the easiest and most fun of the three options.
My suggestion: Let’s do Number 2, just to be safe, while we hope for Number 3.
Anyway, at the end of a video clip of President Obama talking about his budget proposal and the deficit, Ed said this in introducing Jared Bernstein, chief economist for VP Biden:
And, of course, the Obama White House has taken a bunch of heat for the deficit and how it blows that up. But I do remember an interview with former Vice President Dick Cheney who once said that deficits don‘t matter.He is really grasping, isn’t he? Well, I have often said the same thing Cheney said and still believe that small deficits funded by citizens with money to invest in their own growing economy with a reasonable rate of inflation and a reasonable total debt as a percent of GDP don’t really matter. That was the situation we were in from the end of WWII until at least the first big oil crunch in the 1970’s and, some might say, even until the end of the 1990’s dot.com boom. But we have not been in that situation since 2000.
When congress and President George Bush launched wars in Iraq and Afghanistan and a major new drug entitlement program without any cost reductions or new taxes to pay for them, even as congress encouraged and enabled citizens to stop saving and take on unsustainable debt in the housing market, the financial result could not have been anything but bad. The problem is no longer small deficits but mounting debt and debt does matter, especially when it is held by foreign governments and investors and is growing and approaching GDP and is already, even with interest rates at historic lows, at several times annual federal government spending.
And the Obama administration budget projections look bad and are unrealistic at that. Here is a table I copied from Page 146 of the recently released White House Budget Proposal:
Notice that the deficit is shown as peaking this year at $1.556T and dropping to $828B by 2012. That projection assumes an actual decline in federal spending in 2012, something that has not happened in any other of the 39 years of history shown on the chart below, and on unrealistically optimistic GDP increases of 4.6% in 2011 and 5.9% in 2012. Even with those bullish projections, debt is projected to reach 70.8% of GDP and 392% of federal income. And, if the economy were to expand so rapidly, we can be sure that interest rates would be up as well and the interest on the debt could easily double within that time frame. Click on the chart for a better view.
1. Massive tax increases which will further grow the federal government at the expense of the private sector and result in the United States following the same economic path as England and giving up future leadership to the dynamic economies of China and India. In that case, we can just relax and try to get our kids lined up for government jobs.
2. Massive cuts in government spending which will shrink the federal government to the benefit of the private sector and create millions of jobs and reassert the United States economy as a world leader. That could be fun, but it could also be stressful.
3. Find and fully exploit a lucky gold or oil or uranium deposit. Clearly this would be the easiest and most fun of the three options.
My suggestion: Let’s do Number 2, just to be safe, while we hope for Number 3.
Note To Followers
I think almost all of you who kindly signed up as "followers" of Permanent Fixes several months ago are also getting the iContact emails I send out so that is putting an unnecessary burden on your inbox. I have found that the iContact sign-up option and unsubscribe option are much easier for readers to use than the Google "Follower" options and plan to stick with iContact for the time being. The "Sign Up For Email Notification of Postings" block at the upper right of the Blog automatically adds email addresses to the iContact list.
So, if you are not getting the iContact emails let me know or check to see if they are ending up in your junk email or sign up in the "Sign Up For Email Notification of Postings" block because I will stop the automatic mailouts to "Followers."
Darryl
So, if you are not getting the iContact emails let me know or check to see if they are ending up in your junk email or sign up in the "Sign Up For Email Notification of Postings" block because I will stop the automatic mailouts to "Followers."
Darryl
Tuesday, February 2, 2010
Now We Are All on Welfare, Even if Not on "Welfare"
In all the furor over Andre Bauer’s recent political career-ending comment, let’s take a look at some actual data on "welfare" over the past forty years or so and maybe dispel some myths. Are "welfare" costs climbing? Are people clamoring to get on the "welfare" rolls? Are "welfare" payments a good place to look for budget balancing opportunities? I believe the answer to all these questions is "NO."
One of the major events in welfare history in the US was the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 signing by President Bill Clinton in fulfillment of his 1992 campaign pledge to “end welfare as we know it.” That legislation replaced AFDC (Aid to Families with Dependent Children) with TANF (Temporary Aid to Needy Families), shortening the time that such direct financial aid could be paid and putting more emphasis on getting needy families back in the workforce. Payments made under both programs, AFDC and TANF, are reported in National Income and Product Accounts Table 3.12.Government Social Benefits on Line 35. The plot of that data from 1970 through 2008 clearly shows the impact of the 1996 legislation on the trend line. Who said congress never slows down spending?
However, these particular payments are of little or no significance (about 13%) in the overall “welfare” system. Other payments that are normally considered “welfare” include Food Stamps, now called SNAP (Supplemental Nutrition Assistance Program), housing subsidies, and the EITC (Earned Income Tax Credit). The EITC was designed to encourage the poor to work even for minimal income and be able to receive a sort of negative income tax payment or income if income falls below certain levels. There are other minor payments available including ABC Vouchers for reduced child care expense and school lunch programs, but the four above are the major components of welfare as we know it today.Medicaid is designed to provide medical assistance to low income people and might be considered “welfare,” but given the current attention to health care issues, I am not going to consider that to be "welfare" for purposes of this discussion. Also, Social Security and Medicare without which many elderly would be in abject poverty are not included because they theoretically represent social insurance bought and paid for by the recipients and therefore would not be considered “welfare.”
So, let’s take a look at how much we are spending on “welfare.” SNAP payments are on line 21 and EITC payments are on line 25 of the aforementioned table. Government expenditures on housing are found on Line 4 of Table 3.13.Subsidies. If you dig out these numbers and add them up for all the years from 1970 through 2008, a couple of things are obvious:
1. “Welfare” under this narrow definition is only about 1% of GDP
2. “Welfare” under this narrow definition is not growing.
So, I’m not sure where we draw the line between so called “Welfare” and so called “Social Benefits” because if we keep wanting to receive more and more and to pay less and less and insist on running continually increasing federal budget deficits, we are all on welfare, funded by the Chinese Government.
Former VP Dick Cheney is famously quoted as having said that President Reagan proved that deficits don’t matter. Small deficits in and of themselves in an environment of expanding GDP and moderate inflation and steady or declining debt as a percent of GDP don’t matter, but debt does matter and it is going to take a lot more than picking on “welfare” recipients to solve our debt problem.
Monday, February 1, 2010
Every Tub on It’s Own Bottom – Except for Earmarks
Where in the world did the idea come from that a local municipal, county, or state government that has an unfunded project of strictly local impact on it’s wish list should be able to prevail upon its congressman or senator to tack on to a major national spending bill, like an afterthought or an, “Oh, by the way,” or “I could support that if…,” kind of thing, funds to cover that project?
It would be bad enough and still wrong if such funds were just coming from taxpayers in other municipalities, counties, or states, but that is not where the funds come from. The funds are being borrowed from the surplus dollars China and other nations hold as a result of our trade deficit. Maybe that is why otherwise reasonably responsible and conservative people will say that they oppose earmarks in general but if we are going to have them, we need to make sure we get our share. It’s just borrowed money anyway! Put it on the credit card! Talk about pigs feeding at the trough!
Some practitioners of earmarking argue that it has been common since the founding of the country and that senators and representatives are the ones who know what the local needs are and the ones who should be able to direct federal funds to those needs. I’ve done a little research on the subject and I don’t buy that. Earmarking is a late 20th century serious corruption of the governing process designed to further entrench incumbents and is a major driver in the federal budget deficits and unfortunate lack of independence and sustainability of local governments. Not only have we failed to have each locality match it’s spending with funding from local sources. The federal government cannot even sit on its own bottom and match its spending with resources available from within this wealthy nation.
Tennessee Senator and former presidential candidate Lamar Alexander is a friend of mine, a couple of years older, who was an excellent example for me and many other young folks who grew up in the 1960’s in Maryville, TN. I followed Lamar through Maryville High School, learning something about leadership from him in Key Club activities, and then, with his encouragement, to Vanderbilt University. The only disappointment I have ever had with Lamar was when he aggressively advocated something called Federal Revenue Sharing, a program in which federal money was sent to states and localities to be spent as they saw fit. It was in effect from 1972 until President Reagan killed it in 1986. That was a terrible system in my view because, if there had been excess money in Washington, which there wasn’t because we were running deficits even then, it should have resulted in tax reductions and not in distribution to local governments resulting in their increasing lack of fiscal responsibility and dependence on federal funding. It was better than earmarks because local governments were still deciding how to use the funds, but probably set the stage for rapid growth in earmarks once President Reagan killed it.
There are lots of websites which discuss the history and practice and growth of earmarking. Of course they are all of a conservative and critical bent because there is no way on earth to defend the practice of earmarking except in a local venue discussion between the earmarker and the recipients of his or her efforts. (That didn’t stop Senator Harry Reid from arguing that any senator who didn’t have something he or she personally wanted for his or her state in the senate version of the health care bill should not be thought well of.) Some details and data, such as in this quote from Americans for Prosperity, are found in the websites.
The site most loaded with data and charts, which I love, is that of The Heritage Foundation. Click here for a quick look at their charts on earmarking and federal government spending.
South Carolina has two extremes represented in its congressional delegation. Representative James Clyburn is an unapologetic champion of earmarking, argues that it is “constitutionally mandated,” and has defended it and used it very effectively to fund local projects and guarantee his continuing position and growing seniority in the House. Senator Jim DeMint, on the other hand, is absolutely opposed to earmarking and has none attributed to him. Hopefully he will be able to stay in office as a minority champion of smaller and more responsible government.
Senators and Congresspersons are now publishing their lists of requested earmarks. That was supposed to encourage responsibility, but I fear it will only encourage a feeding frenzy as local entities see stuff on the list that they hadn’t thought of and wish they had. You can find lists of requested earmarks by individual at Washington Watch. Representative Clyburn has one of the more straightforward lists, about 270 items totaling almost $1.6B which he prefaces by apologetically stating that, “these are requests and they may or may not be included in the final appropriations legislation.” Well, at least he gets some political points for putting them in the list.
Representative Clyburn’s smallest 2010 earmark request is for $88,000 for “A Center for the Study of Applied Southern Black Business and Entrepreneurship” at Claflin University. The largest is for $128M for a “Berkeley County Bio-Energy Park,” whatever that is. Competing for most inappropriate are…there are so many I can’t even pick any. Read the list for yourself. But, if the city of Sumter needs $4.8M to improve Frierson road, let them sell bonds or collect taxes from the citizens of Sumter to pay for it. The rest of us have our own problems, and we sure don’t need to borrow money from China to pay for it.
By the way, that “Every Tub” reference is something I first ran into while serving on an advisory board at Vanderbilt. It may be a paraphrase of a line from Beowulf. It seems that great liberal institution, Harvard University, uses it as a budget management philosophy (click here and scroll down to E), and Vanderbilt was trying to follow their example.
It would be bad enough and still wrong if such funds were just coming from taxpayers in other municipalities, counties, or states, but that is not where the funds come from. The funds are being borrowed from the surplus dollars China and other nations hold as a result of our trade deficit. Maybe that is why otherwise reasonably responsible and conservative people will say that they oppose earmarks in general but if we are going to have them, we need to make sure we get our share. It’s just borrowed money anyway! Put it on the credit card! Talk about pigs feeding at the trough!
Some practitioners of earmarking argue that it has been common since the founding of the country and that senators and representatives are the ones who know what the local needs are and the ones who should be able to direct federal funds to those needs. I’ve done a little research on the subject and I don’t buy that. Earmarking is a late 20th century serious corruption of the governing process designed to further entrench incumbents and is a major driver in the federal budget deficits and unfortunate lack of independence and sustainability of local governments. Not only have we failed to have each locality match it’s spending with funding from local sources. The federal government cannot even sit on its own bottom and match its spending with resources available from within this wealthy nation.
Tennessee Senator and former presidential candidate Lamar Alexander is a friend of mine, a couple of years older, who was an excellent example for me and many other young folks who grew up in the 1960’s in Maryville, TN. I followed Lamar through Maryville High School, learning something about leadership from him in Key Club activities, and then, with his encouragement, to Vanderbilt University. The only disappointment I have ever had with Lamar was when he aggressively advocated something called Federal Revenue Sharing, a program in which federal money was sent to states and localities to be spent as they saw fit. It was in effect from 1972 until President Reagan killed it in 1986. That was a terrible system in my view because, if there had been excess money in Washington, which there wasn’t because we were running deficits even then, it should have resulted in tax reductions and not in distribution to local governments resulting in their increasing lack of fiscal responsibility and dependence on federal funding. It was better than earmarks because local governments were still deciding how to use the funds, but probably set the stage for rapid growth in earmarks once President Reagan killed it.
There are lots of websites which discuss the history and practice and growth of earmarking. Of course they are all of a conservative and critical bent because there is no way on earth to defend the practice of earmarking except in a local venue discussion between the earmarker and the recipients of his or her efforts. (That didn’t stop Senator Harry Reid from arguing that any senator who didn’t have something he or she personally wanted for his or her state in the senate version of the health care bill should not be thought well of.) Some details and data, such as in this quote from Americans for Prosperity, are found in the websites.
Just take a look at the history of the Defense Appropriations Bill: Taxpayers for Common Sense calculated that the 1970 Defense Appropriations Bill had a dozen earmarks; the 1980 bill had 62 earmarks; and by 2005, the defense bill had skyrocketed to 2,671 earmarks. The most recent bill spends money on anything from the eradication of brown tree snakes in Guam, to a virtual reality spray paint simulator system in Pine City, Minnesota. (And remember, this is the Defense Appropriations Bill. What do snakes and spray paint have to do with maintaining our nation’s security?)
The same story goes for the now notoriously larded-up Transportation Bill. When President Eisenhower proposed the first national highway bill a half century ago, there were two projects singled out for funding. Last August, when Congress passed the latest six year, $286.4 billion Transportation Bill, there were, by one estimate, 6,371 of these “special” projects, ranging from $200,000 for a deer avoidance system in Weedsport, N.Y., to $3 million for dust control mitigation on Arkansas’ rural roads.In this same article, Americans for Prosperity credits South Carolina’s John C. Calhoun with the first ever earmark request which was tacked on to the Bonus Bill of 1817 and was to pay for a road in South Carolina. It was vetoed as unconstitutional by President James Madison.
The site most loaded with data and charts, which I love, is that of The Heritage Foundation. Click here for a quick look at their charts on earmarking and federal government spending.
South Carolina has two extremes represented in its congressional delegation. Representative James Clyburn is an unapologetic champion of earmarking, argues that it is “constitutionally mandated,” and has defended it and used it very effectively to fund local projects and guarantee his continuing position and growing seniority in the House. Senator Jim DeMint, on the other hand, is absolutely opposed to earmarking and has none attributed to him. Hopefully he will be able to stay in office as a minority champion of smaller and more responsible government.
Senators and Congresspersons are now publishing their lists of requested earmarks. That was supposed to encourage responsibility, but I fear it will only encourage a feeding frenzy as local entities see stuff on the list that they hadn’t thought of and wish they had. You can find lists of requested earmarks by individual at Washington Watch. Representative Clyburn has one of the more straightforward lists, about 270 items totaling almost $1.6B which he prefaces by apologetically stating that, “these are requests and they may or may not be included in the final appropriations legislation.” Well, at least he gets some political points for putting them in the list.
Representative Clyburn’s smallest 2010 earmark request is for $88,000 for “A Center for the Study of Applied Southern Black Business and Entrepreneurship” at Claflin University. The largest is for $128M for a “Berkeley County Bio-Energy Park,” whatever that is. Competing for most inappropriate are…there are so many I can’t even pick any. Read the list for yourself. But, if the city of Sumter needs $4.8M to improve Frierson road, let them sell bonds or collect taxes from the citizens of Sumter to pay for it. The rest of us have our own problems, and we sure don’t need to borrow money from China to pay for it.
By the way, that “Every Tub” reference is something I first ran into while serving on an advisory board at Vanderbilt. It may be a paraphrase of a line from Beowulf. It seems that great liberal institution, Harvard University, uses it as a budget management philosophy (click here and scroll down to E), and Vanderbilt was trying to follow their example.
Used throughout the University, the acronym ETOB stands for "Every Tub on its Own Bottom." This axiom, coined in the early nineteenth century, is the bedrock of a highly decentralized system of financial management.Here is at least one case where the United States Government could learn something from Harvard. I wonder if Lawrence Summers, Director of the National Economic Council and former Harvard President, has brought it up in White House discussions.
In Harvard parlance, a tub is a high-level institutional unit—one of the 10 faculties, for example, or the central administration. All told, there are 52 tubs and countless sub-tubs. Each tub is expected to be self-financing: to prepare its own budgets, raise its own funds, and keep itself solvent.
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