Categories
National

Don’t Rely on the Altruism of Baby Boomers


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David Brooks must have thought yesterday was April Fools Day – that or he thinks he’s getting old so he decided to pen a column painting a rosy picture for seniors by coming to a senile conclusion. In The Geezers’ Crusade he comes to this wildly impossible conclusion:

It now seems clear that the only way the U.S. is going to avoid an economic crisis is if the oldsters take it upon themselves to arise and force change. The young lack the political power. Only the old can lead a generativity revolution — millions of people demanding changes in health care spending and the retirement age to make life better for their grandchildren.

Categories
General

Abolish Earmarks


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photo credit: Skrewtape

For some time I have been internally conflicted on the issue of congressional earmarking. Many people, including such diverse characters as President Obama and Congressman Chaffetz, have been vocal about calling for an end to earmarks. Others such as my own Congressman, Rob Bishop, reply that earmarks are not an addition to the total size of our federal expenditures – but simply a direction regarding the spending of money already appropriated. Believers in small government who make that argument say that our focus should be on reducing total expenditures rather than shutting down the earmarking process. Personally, I would like to see an end to earmarking and a significant reduction in total spending. (Earmarks alone are an insignificant portion of our spending.)

Categories
Local National

Marionette Bob Bennett


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photo credit: © Giorgio

While candidate Mike Lee acted like a senator on the issue of confirming Ben Bernanke for another term as chairman of the Federal Reserve Board, Bob Bennett acted like a marionette under the control of the mystical wizard of Washington D.C. With a short press release and a predictable vote, our “Senator” Bob Bennett plainly demonstrated the cancerous logic that is rampant among Washington insiders. Here is how he justified his vote to confirm Ben Bernanke:

I reluctantly cast a vote in favor of Ben Bernanke because I do not want to give President Obama the opportunity to put someone who shares his leftist views in charge of the Federal Reserve. I am aware of the mistakes that have been made at the Fed while Chairman Bernanke has been there, but I fear an alternative would be worse for the country’s economic future.

So our elected Marionette is simply trying to save us from having the president nominate someone else. Cute. Perhaps he should have engaged his brain and realized two simple facts – first, if Bernanke was not confirmed by the senate there is little chance that President Obama would have name a more extreme nominee (the natural reaction would be to nominate a safer pick); second, considering the makeup of the Senate (not to mention the final vote tally) opposing Bernanke would have been unlikely to prevent his confirmation but at least it would not have demonstrated approval for his performance (a vote to confirm sends that message more strongly than any press release about your supposed reluctance to cast the vote).

Categories
culture State

Defined Benefit Pensions: A Failed Experiment


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photo credit: inspecie.co.uk

After the town hall meeting I attended on Wednesday I have been thinking about pension plans generally. The state of Utah is looking at changing their pension offerings for new employees to save the state from future financial ruin. I have seen other companies go through that process already. As a nation we have seen the cost of defined benefit pensions contribute mightily to the downfall of GM and Chrysler as well as having a hand in the struggles throughout the airline industry not so many years ago.

As I thought about all these examples I realized that even a fully funded defined benefit pension program is a gamble for any organization. Employees like the security, but it is an inherently risky proposition to offer such a plan.

Categories
National

Fiscal Discipline for the American Dream


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Congressman Jason Chaffetz (UT-03) has proposed a Congressional Action Plan (CAP) called the Contract for the American Dream which he is inviting members of Congress and candidates for Congress to sign. While I agree with his CAP generally I thought I would take the time to break out the four sections of the plan and evaluating what I agree or disagree with more specifically. This post focuses on Fiscal Discipline. Later posts will focus on Limited Government, Accountability, and Strong National Defense.

Congressman Chaffetz describes our current fiscal discipline situation as:

Our national debt exceeds $12 trillion, with our annual deficit in excess of $1.4 trillion. Federal spending as a percentage of our Gross Domestic Product (GDP) is roughly 25%, when historically it has been roughly 19-20%. We pay approximately $600 million per day in interest payments. In short, the current government spends too much, taxes too much, and borrows too much of the people's money. It is unacceptable and unsustainable. No longer can we run this government on a credit card. We are not going to borrow and spend our way out of these challenges.

He suggests a goal to work for as:

Imagine a federal government that treats the national treasure with respect and responsibility by living within its means-where every American pays a fair share.

Here are the steps he proposes to achieve that goal:

  • Reduce total federal payroll and workforce by 10%, except for military. This action will force all federal departments to identify and eliminate waste.
  • Support a balanced budget amendment.
  • Require 2/3 majority vote for any tax increase.
  • Cut non-defense discretionary spending by inflation minus 3% across the board.
  • Impose a moratorium on all appropriations earmarks until the process is reformed legislatively. Work to maximize openness and transparency with filters, to ensure only expenditures with a federal nexus, and prohibit allocations to for-profit companies.
  • Reduce the capital gains rate to 10%. This will lead to increased receipts to the federal treasury and will also increase investment in the USA.
  • Engage in entitlement reform.

Here are my thoughts in a point-by-point format:

  • The idea to reduce government spending and bureaucracy is right but he seems to be using a very blunt instrument to perform this surgical operation.
  • Sounds good to me but show me the proposed amendment.
  • I’m not sure what drawbacks this might have.
  • Why 3%? (Plus, show me the math so that I’m clear on the meaning here.)
  • Sounds like politician-speak for “earmarks are bad but we can’t really get rid of them – let me show you that I want to fix the system.”
  • I favor flat tax rates without loopholes – that provides predictability so that people know what to expect on tax day. That certainty allows businesses to more confidently make decisions.
  • Vague but promising.
Categories
General

A Real Christmas Gift


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President Obama, Harry Reid, Nancy Pelosi, and other congressional leaders among the Democrats hailed the passage of the Senate health “reform” bill as a Christmas gift to the American people. That’s about the equivalent of trying to convince the chief income earner(s) in a home that the real gift of Christmas for them is the increased balance on the credit card (or the reduced balance of their checking and/or saving’s accounts) rather than the presents they got.

In response to the news that the bill had finally passed my wife had a great idea for a real gift that the Senate could give us for Christmas some year (besides repealing that bill). If they have the authority to mandate that we buy insurance that opens up a world of possibilities. First and foremost her suggestion is that they should mandate that everyone in America should get an answering machine. Just imagine and end to:

Ring . . .

Ring . . .

Ring . . .

Ring . . .

Ring . . .

Ring . . .

Ring . . .

Ring . . .

The person you are calling is not available. *click*

I’m quite confident that universal telephone answering machines would have a positive impact on interstate commerce.

Categories
culture National

Medical Cultures


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[quote]I have called David Goldhill’s How American Health Care Killed My Father a must-read for anyone who wants to speak up in the health care debate. The New Yorker also has a must-read article on the issue called The Cost Conundrum. In that article we are introduced to the town of McAllen, Texas where Medicare spends much higher than average amounts per capita than the national average ($15000 vs $8000) in an area with much lower than average per capita income($12000 vs $21500) and cost of living. Atul Gawande, himself an associate professor of surgery at Harvard Medical School, introduces us to the town and begins an attempt to discover why the costs of health care are so high in McAllen.

Are the people there less healthy? No, they have higher rates of some health conditions than average and lower rates than average of other conditions. Overall health fails to explain the cost differential.

Was the quality of health care being provided higher than average? While they were not lacking for available medical technology or facilities the quality of care was, once again, nothing unusual.

McAllen costs Medicare seven thousand dollars more per person each year than does the average city in America. But not, so far as one can tell, because it’s delivering better health care.

Gawande went to dinner with some McAllen doctors and showed them the data on health care costs in McAllen:

Some were dubious when I told them that McAllen was the country’s most expensive place for health care. I gave them the spending data from Medicare. In 1992, in the McAllen market, the average cost per Medicare enrollee was $4,891, almost exactly the national average. But since then, year after year, McAllen’s health costs have grown faster than any other market in the country, ultimately soaring by more than ten thousand dollars per person.

He then asked them why they thought the care was so costly there. One suggested the cost of malpractice insurance but then they admitted that since Texas had passed caps on malpractice lawsuits they had virtually no lawsuits to drive up the cost of care.

Finally a general surgeon among the dinner party declared that the issue in McAllen was overutilization.

Everyone agreed that something fundamental had changed since the days when health-care costs in McAllen were the same as those in El Paso and elsewhere. Yes, they had more technology. “But young doctors don’t think anymore,” the family physician said.

Anecdotal evidence and agreement is fine, but Gawande went in search of more concrete evidence.

To determine whether overuse of medical care was really the problem in McAllen, I turned to Jonathan Skinner, an economist at Dartmouth’s Institute for Health Policy and Clinical Practice . . . I also turned to two private firms—D2Hawkeye, an independent company, and Ingenix, UnitedHealthcare’s data-analysis company—to analyze commercial insurance data for McAllen. The answer was yes. Compared with patients in El Paso and nationwide, patients in McAllen got more of pretty much everything—more diagnostic testing, more hospital treatment, more surgery, more home care.

Having identified the cause of the high costs the search was on for an explanation of why there was so much overutilization. The answer was in the culture of the medical practitioners in McAllen – they were very profit oriented rather than results oriented. I believe the one place that Gawande’s article falls short is that he stopped with exploring the cultures among the medical community and failed to examine whether the general community culture in McAllen helped to foster that inefficient mindset among the medical practitioners in the area. I’m willing to bet that such a short-sighted culture in the medical community might not need encouragement from the local culture, but could not survive if the local culture were one that actively discouraged a similar outlook in the community at large.

Talking to a surgeon from McAllen, Gawande concludes that whether we have a public option, single payer, or private health insurance will not matter if the culture in McAllen continues to become more common as it has been doing.

In contrast to McAllen, Gawande explores the cultures in the Mayo Clinic and the Medical community of Grand Junction, Colorado and finds that both of these low-cost, high-quality health care systems took very different approaches to each arrive at “accountable-care {organizations} . . . {where} leading doctors and the hospital system adopted measures to blunt harmful financial incentives  {and} took collective responsibility for improving the sum total of patient care.” He also lists four other high-quality low-cost health care systems each of which has a culture of accountable care – the Geisinger Health System, the Marshfield Clinic, Intermountain Healthcare, and Kaiser Permanente.

Whatever approach Congress tries to take to reform our health care system they and the American people need to understand that we cannot successfully plant a Health Care tree. The only workable approach will be to plant Health Care seed and help it to grow into a health new health care system.

Categories
National

A New Federal Role in Economic Recovery


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My post on fundamental assumptions generated some good discussion which began waxing economic in flavor. As part of that discussion I had a new idea about a more reasonable approach the federal government could take to soften economic hard times without outright manipulating our expectations of reality as they do now.

I should start by clarifying my perspective on what the federal government does and what is economically realistic. Economic realism insists that we recognize the inevitability of economic downturns. They are going to happen. Unfortunately the assumption at the federal level seems to be that we must strive for perpetual economic growth – we might tolerate one or two quarters of a mild contraction but anything beyond that is unacceptable. As proven by our significant and now two year old recession sometimes the economy needs to undergo a much harsher adjustment – especially after the government has been pumping the supposedly healthy market with perpetual stimulus for years. (I know, they have not called anything they did stimulus until the stimulus bill in early 2008.)

Personally I think a better approach to the federal government smoothing the rough spots out would be to establish a baseline – let’s say 5% unemployment – where any state meeting that baseline would not receive any federal economic assistance to combat unemployment. Then they would look a the spread between the unemployment rate of various states and be allowed to give economic aid to any state with at least 5% higher unemployment than the state with the lowest unemployment. The upper limit of that aid would be equal to 1/3 of the difference in unemployment between the higher of 5% and the unemployment rate of the state with the lowest unemployment with the limitation that government aid cannot help one state leapfrog another. Let’s show what that would mean with current (October 2009) numbers.

The state with the lowest unemployment is North Dakota at 4.2% so any state with more than 9.2% unemployment could get aid from the federal government to help lower their unemployment. For the October 2009 numbers that would mean that only 21 states could get any federal assistance rather than having the federal government trying to jump start the economies of all 50 states. Of those 21 states Arizona, Missouri, and Washington (at 9.3% unemployment) could receive aid equal to 0.3% of their respective economies (they would not be allowed to leapfrog Idaho and new York which have 9% unemployment and cannot receive this federal aid because they are within 5% unemployment of North Dakota’s unemployment rate). In fact, 12 of the 21 states would receive enough aid to bring them equal to the 9% unemployment rate of Idaho and New York because that would be less than 1/3 of the difference between their actual unemployment rates and the magical 5% unemployment. At the other end of the scale Michigan, with the highest unemployment would have their rate cut below 12% from their current 15.1%.

If every state had unemployment rates over 5% the new benchmark would be the lowest unemployment rate of any state. If we imagine that lowest unemployment rate was 6.5% (adjusting all states up to 6.5% and leaving states with higher unemployment where they are) only states with unemployment over 11.5% would receive aid, six states in all, and only Michigan would get the full 1/3 of the difference between their rate and the base rate of 6.5% (leaving them with 12.2% unemployment).

If all states were below 5% unemployment or if they were all clustered between 3.5% and 8.5% unemployment then the federal government would not give unemployment assistance to any of the states. If anyone is curious to see them, I have all my numbers in a spreadsheet that you can download.

The fact is that of the economy of the entire nation is slumping then no government program can provide a solid foundation to real economic growth – all it can do is produce the illusion of economic stability. Real economic growth can only be build on fundamental economic change, not on the illusion of stability provided by printing money and manipulating interest rates. While committed free marketers would likely hate my proposal just like they hate the current government intrusions in the economy and while those who don’t object to socialism will find my suggestions very harsh on downtrodden regions of the nation, I think that my idea is much better at providing a cushion for the hardest hit areas while allowing the economy to shrink or grow towards whatever the realities of our national economy are which the government tries so hard to mask right now as if our perceptions were the only economic reality worth considering.

Categories
General

Stretching Our TARP


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photo credit: wolfheadfilms

When the TARP bill was first being discussed I made a statement that I would like to repeat about the TARP money:

[T]his should not be used as a windfall by Congress to fund some pet projects.

We have come to the point now where Congress is faced with the question of whether to extend the program past the initial time of authorization. From the earliest versions of the bill (not including the 3 page version written by Sec. Paulson) to the final version the program was authorized only until 2009 with the option for Congress to extend it as far as two years from the day it was enacted (October 10, 2010 being that two year mark). Faced with the reality of this first deadline there are people who are absolutely opposed to those members of Congress who have indicated a desire to not extend the program.

I stand by my response to what I called “my favorite section” of that first version of the bill:

Of course I won’t hold my breath that it will die in two years or less.

Indeed, Sec. Geithner testified before Congress yesterday that:

he would not support a permanent extension of the program, but . . .

(emphasis added)

Categories
General

Hit Them Where it Hurts


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[quote]As Congress finds new and ever more inventive ways to spend money (both real money and imaginary money) more and more voters are waking up to find themselves becoming fiscal conservatives. First off, I must say that there are not nearly enough of us among the voters and secondly I feel compelled to add that we would be in a much better position to be taken seriously if there had been many more converts to the cause while Bush was still in office.

Earlier this week a friend of mine asked for my thoughts on an idea he had to slow and/or reverse the growth in government spending. (I feel compelled to state that said friend was awake to this issue well before Obama was elected – lest anyone mistakenly think that he just woke up to this in the last week.) His idea consists of two parts and boils down to this:

  1. Have states set the wages for their Congressional delegation.
  2. Have each member of Congress pay for 0.00001% of the federal budget out of their own paychecks. (That’s one out of 10 Million dollars for each member of Congress.)

My initial response was to point out the fact that it would take a Constitutional amendment to make the first part legal due to the provisions of Article I Section 6 that their salaries be paid out of the U.S. treasury (not that state money is not already mostly from the U.S. Treasury).

After thinking about the proposal more I recognize that it only works if both parts are enacted because if only the second portion is enacted it would only take about 30 minutes for the House to pass emergency legislation (or simply attach it to that proposal if they want to be efficient) in which the calculation for Congressional salaries is changed from it’s current “$170,000 plus an automatic annual cost of living increase” to “0.000012% of that year’s annual budget plus $169,999.99 plus an automatic annual cost of living increase.”

The real kernel of the idea was to hit Congress in the wallet – where it hurts – for the egregious budgets they pass from year to year like kidney stones in the national economy. For myself I have long believed that we should make congress feel the pain of their overspending by having them be responsible for a portion of their deficit spending – say 3 times whatever portion of their budget is financed by deficits. (In other words,  if 15% of the budget is deficit spending then members of Congress lose 45% of their salaries – and probably the same portion of their budget for staffers etc. for the year – to help offset their budget.) This only works if there are no exceptions (“oops, we had an emergency and had to overspend – but our regular spending didn’t include a deficit so we should not pay a penalty.”) On the other hand they should also receive some incentive for wise management by offering a bonus of one tenth of any percentage surplus they run for their personal salaries. (That would be, if 10% of revenues were in excess of the annual budget they would get a 1% bonus on their salary for the year.)

Theoretically this would have the downside of encouraging them to raise taxes to cover their spending priorities thus causing citizens to bear a greater cost for their government. Personally I think that would be beneficial because people would spend less time clamoring for more government handouts because they would almost universally feel the effects of any spending increases. Such a change should also have the side effect of having people be more engaged in the process of removing representatives who ignore them because they would be more likely to feel the effects of whatever votes their elected officials cast.