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Wednesday, March 31, 2010

Stuck in the Middle Again: Money Ain’t for Nothing But the Checks are for Free

Have you ever noticed that progressives always start conversations “in the middle?” What I mean by that is their arguments are about “moral” inequities and the “grand funk” of the present: they never, ever want to document the efficacy of their “proven” solutions by citing historical fact nor are they willing to commit to metrics against which the consequences of “new” policies will be measured in the future. We need to hold them accountable for both.


Social security is a good example. When an accountant quizzed Roosevelt about the Ponzi scheme-like economic issues with social security, he said “I guess you are right about the economics, but those taxes were never a problem of economics. They are politics all the way through … with those taxes in there, no damn politician can ever scrap my social security program.” [“Statements on Taxes by Members of this Administration in 1939,” in Morgenthau Diary, January 5, 1939]. Both the accountant’s and Roosevelt’s perspective proved to be correct. Seventy years later, Social security, Medicare, and Medicaid have an off-balance sheet liability of $50T to $55T. This is equivalent to the annual GDP of all the people on the planet (currently 6B) working for one year or approximately 4 years of the GDP of the United States. In fact, Social Security, like nationalized healthcare, was presented as insurance, when in fact the “revenue” received from current payees was never invested in a sinking fund, but instead was transferred to the treasury, in exchange for an IOU, to meet ongoing obligations. As of today, Social Security has just reported, for the first time in history, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office. Stephen Goss, chief actuary of the Social Security Administration, has said that although the CBO projection will probably be borne out, the change will have no effect on benefits in 2010 and retirees will keep receiving their checks as usual. Perhaps we should adopt a variant of the Dire Straits’ song as our national anthem: money ain’t for nothing but the checks are for free!


Health care will be no different. Progressives are remiss to discuss the disastrous future financial implications of the bill. Instead, they stack the cards to get an “acceptable” Congressional Budget Office score, while leaving out the cost of the “doctor fix [$250B],” they raise taxes for four years before realizing most of the benefits and all of the annualized cost of the legislation, and they double count the cuts in Medicare [$500B]. To paraphrase Joe Biden, our erstwhile Vice President, “ you have to spend money to keep from going bankrupt.” Only one problem, Joe, the government is not a business that creates wealth, it is no more than corporate overhead, whose purpose is to redistribute created wealth.


Conservatives need to transform the debate from the progressive’s mantra that somehow the absence of present pain and suffering is the moral pinnacle of a civilized culture. Using this logic, providing crack to a heroin addict – with no regard for the long term personal, societal, or economic consequences – is a morally acceptable solution. In fact, morally correct choices many times come from pain and suffering. As the saying goes, “good judgment comes for experience and experience comes from bad judgment.” Bad judgment is minimized through an understanding of history and a healthy respect for measuring and comparing future performance against objective reality, which we used to call Truth.

Until then, we will continue to be "Stuck in the middle, again."

Tuesday, March 30, 2010

Beck's Rhetoric Fuels Anger

The following is my response to a letter to the USA Today editor (March 30, 2010), entitled Beck’s Rhetoric Fuels Anger. I think it is important that we stand up to obfuscation of fact, tortured logic, and hysteria coming from an uninformed public, all of which fuels vitriolic rhetoric from the left. The letter to the editor follows.

In her letter to the USA Today editor (March 30, 2010), entitled Beck’s Rhetoric Fuels Anger, Marilyn Mulvihill of Sewickley, PA, asserts that “Beck teaches revisionist history at best,” yet does not cite one example. Exactly what is he saying that is revisionist? Historical events to which he refers either occurred or did not occur. Second, she states “[the] recent ugly taunts toward members of Congress, the violence at congressional offices, and the yelling of ‘baby killer’ on the House floor are proof that his tactics are working.” I have two problems with this statement: (1) the quote is incorrect – “it’s a baby-killer” is the correct quote and was directed toward the legislation and not an individual – and (2) correlation does not imply cause – she provides no factual evidence these events were directly attributable to any actions by Glenn Beck. While, Ms. Mulvihill is entitled to her opinion, she is not entitled to her own facts nor is she entitled to twist logic beyond what the facts can support. I do acknowledge her First Amendment right to express her opinion, but I have carefully reviewed the Constitution, and cannot find her right not to be offended.

Monday, March 29, 2010

“Re-Peeling” Health Care Legislation

After “passing” health care reform – like passing a kidney stone – the Obama administration is hard at work re-framing the debate, much like a used car salesman following you home after buying a lemon to make sure you understand the car did come with new tires.

The reframing goes something like this: “can you believe those uncaring Republicans want to repeal free health care for all Americans …,” followed by a list of benefits with which any reasonable human being (including most Republicans) would agree. What they do not list is ALL the bad stuff, with which no person would agree, unless you were a Marxist. For example, a minimum of $2.5T in additional debt, 182 government agencies between you and your doctor, cuts in Medicare of $500B, 4 years of taxes before benefits really kick in, and a litany of other unintended (or possibly intended) consequences that are just starting to come out.

Within days of the bill’s passage, several major corporations, including AT&T, Caterpillar, Deere, and others are setting aside between $31M to $1B in one-time, current quarter charges to cover unfunded liabilities that they will incur because of loss of deductibility of certain pension related deductions. In all S&P 500 companies will take a combined hit of $4.5B to first quarter earnings, estimates David Zion, an analyst with Credit Suisse. Of course the administration says that these firms are exaggerating the impact of the loss of these deductions. Bottom line, companies will be less profitable and have less capital to invest in a market that is trying to find a bottom and put people back to work.

So, before the Obama administration has too much time to reframe the debate and repeat the lie for months, thereby moving it from opinion to truth, I want to do some reframing myself. My narrative goes like this: The benefits of Obamacare have much in common with crack cocaine: once you get on it, you’ll love the high, until your health fails and you run out of money. But not to worry, the administration is working on a clean needles program so that we can comfortably rest assured we will not catch a “bad” disease administering a fatal overdose.

The healthcare legislation needs to be “re-peeled:” common sense and market based approaches can achieve better benefits at lower cost.

A Show of Bigotry at Health Care Tea Party Rally

In a letter last week to the editor of the USA Today, Tom Geronimo, from Crystal River, FL, stated “Saturday, outside the U.S. Capitol, we saw people using the N-word and spitting on a black congressman. This demonstrated what we've known, and what the Tea Party has been denying, all along: this is not about policy; it's about race. Bigots control the conservative movement in this country, and the Republican Party panders to them.” Having framed the discussion as a racial one, Mr. Geronimo then went on to quote financial facts that he believes indicates the country is on right track.

While Mr. Geronimo is entitled to his own opinion, he is not entitled to his own facts. Subsequent news interviews and investigation by the Capitol police revealed no video evidence or audio evidence that supports his purported claim of racial epithet or spitting to be true. At best, we have one person’s word against another. Vitriolic, unsubstantiated attacks do little to advance the debate, which is not about race, but about smaller government, fiscal responsibility, personal accountability, and a return to constitutional principles.

Thursday, March 25, 2010

So Much Money, So Little Time - Really?

You have heard the saying, "So much money and so little time." Well, when it comes to Hampton Roads and the Stimulus Bill money, this aphorism should more appropriately read "So little money and such a long time."

In a March 21 article entitled "Stimulus Money Mired in Red Tape," the editorial board of the Virginian Pilot reported "that a Chesapeake city audit indicated only 4 percent of $12 million in stimulus money awarded to the city was spent in 2009 ... so far, only two jobs have been created in Chesapeake ..." The article goes on to state that "even though audits have not been done in the region's other cities ... the results would have been similar. Norfolk, for instance, has spent only $836,000 out of $15.3 million. Most of the money allocated to Virginia Beach, Portsmouth, and Suffolk is also unspent, including funds to end [emphasis mine] homelessness, hire new police officers, and make city buildings more energy efficient." The article then goes on to explain that money is starting to flow to long-term, high tech investments that will make us more economically competitive in the world, like construction projects to fix pot holes, widening roads, pouring elementary school footings. The editorial board blames the delay on "City officials [who] were forced [emphasis mine] to expend too much time and energy to qualify for stimulus funding, and that's unacceptable [emphasis mine]." The article concludes "Whatever you think of the stimulus package [emphasis mine], the Chesapeake audit doesn't mean that money is being wasted or that it won't create jobs. It just confirms the old axiom that government bureaucracy can get in the way of progress [emphasis mine]."

My conclusion is different: the FACT is that the stimulus is not delivering and the progressive's choice of delivery systems -- statist government -- is incapable of efficiently and effectively allocating scarce resources that have alternative uses. When I was a child, I believed in the magnamity of the tooth fairy, but, as it turned out, the tooth fairy just could not deliver. At ten cents a tooth and a limited time horizon for tooth loss, I ran out of teeth, time, and money. I had to grow up and get a real job. It turned out, junior entrepreneurship won the day and bridged the gap between fantasy and reality.

Unfortunately, the editorial board's conclusion is that we need to believe centralized allocation of resources will work out, only if bureaucracy gets out of the way. Of course, centralization of allocation of resources requires larger bureaucracies: approximately 182 new ones for health care. So instead of "believing" in this new religion, perhaps we should examine how it has worked out in the real world.

Thomas Sowell in his book, "Basic Economics," page 17, reports that two soviet economists, Nikolai Smelev and Vladimir Popov described a situation that occured during an era of soviet directed economy "where prices were not set by supply and demand but by central planners who sent resources to their various uses by direct commands, supplemented by prices that the planners raised or lowered as they saw fit." In this situation, the planners raised prices on moleskin pelts:

"State purchases increased, and now all the distribution centers are filled with these pelts. Industry is unable to use them all, and they often rot in warehouses before they can be processed. The Ministry of Light Industry has already requested Gokomsten twice to lower purchasing prices, but the question has not be decided yet. And this is not surprising. Its members are too busy to decide. They have no time: besides setting prices on these pelts, they have to keep track of another 24 million prices." [Emphasis mine.]"

So, let's recap. We have thousands of trailers sitting in Mississippi and Lousiana that are toxic and were never delivered to "persons in need." It has cost the government $300 million to store these trailers. The government has obligated almost $800B to stimulus, 30% of which nationally has been spent, with few jobs created. The government has nationalized health care, increased the national debt by several trillion dollars, and created 182 new bureaucracies AND no one can adequately explain how any of this will work.

I think it is time we reject "progressive" religion -- belief in statist government -- and return to real religion -- a belief in God and the rights he has given to each individual. True "progress" is the product of free people, free markets, and limited government.

Monday, March 22, 2010

Open Letter to Congressman Glenn Nye March 22, 2010

Thank you for voting NO on passage of the health care legislation.

I hope that you will continue to vote in a manner that: (1) reaffirms constitutional principles (viz., the government's responsibility is to protect our individual rights, which come from God not government, and health care is not a right, it is a good or service); (2) precludes enactment of regulatory reforms that carry the force of law, while circumventing the congress and the will of the people; and (3) acting in a fiscally responsible manner that reduces the on-balance sheet and off-balance sheet liabilities of the Country.

To accomplish such an agenda will require moral courage and persistence. It will also require you to be honest with your constituents about what we can afford and what we cannot afford; what is a right and what is a privilege; and what you have authority to do and what you do not have authority to do under the Constitution. I know this will be difficult because Democrats think so much of the rule of law that they appointed Congressman Alcee Hastings to the rules committee. He was a Federal Judge for 10 years. Jimmy Carter appointed him a U.S. District judge in 1979 and, two years later, Hastings accepted a $150,000 bribe which led to his impeachment. Seven years later, House Democrats weighed in to add perjury to the charges against him and in 1989 he became "the sixth federal judge in the history of the United States to be removed from office by the Senate." He is also the congressman who recently stated " when the deal [health care] goes down, all this talk about rules, we make them up, as we go along."

We are in historic times and I really do appreciate your NO vote on health care. But if you think that it was simply good political calculus, voting NO because sufficient YEA votes were present to pass the bill and therefore voting in the negative would allow you to fight another day, rest assured, your constituents are far more actively engaged in this process now and will examine every vote you make. My pledge to you is that I will keep an open mind and judge your performance by your record and not the company you keep.

Thursday, March 18, 2010

Do Not Confuse Me With the Facts on Health Care

A recent e-mail crossed by desk, which contained some facts that I found interesting and want to share with you. What follows is the e-mail, with facts confirmed, my redactions, and my personal thoughts.

To place the subject in context, I ask you to consider a quote by former Sen. Daniel Moynihan, a liberal democrat: “You’re entitled to your own opinion, but you’re not entitled to your own facts.” Or for those of us who love sports analogies: “It ain’t bragging if it is in the record book.” (Yogi Berra). So, as you consider a government takeover of health care and the actual business experience of those behind this monstrosity, you should consider the facts, which my liberal friends are remiss to do. Typically, all conversations with them start in the middle, with a lack of willingness on their part to judge the outcome of their actions against history or establish metrics against which their proposed policies will be judged. They are always in the moment: there is a moral crisis that needs to be solved and if we do not do it “people will be hurting.” If they were to consider the historic performance of their policies – social security is insolvent, medicare is insolvent, medicaid is insolvent, welfare is insolvent, the federal government is insolvent and most (but not all) of this is due PRINCIPALLY to PAST social engineering policies and entitlements which have not economically performed – they would find that their policies have caused more “people to hurt” and no basis for the average American to trust the future economic performance of any policy they might propose. And yes, Republicans and Democrats are at fault, but the root cause of this problem is traceable DIRECTLY to progressive thought in both parties. Progressives are the villains, as I see it.

So here are the facts. A recent "Investor's Business Daily" article provided very interesting statistics from a survey by the United Nations International Health Organization.

Percentage of men and women who survived a cancer five years after diagnosis:

U.S. 65%
England 46%
Canada 42%

Percentage of patients diagnosed with diabetes who received treatment within six months:

U.S. 93%
England 15%
Canada 43%

Percentage of seniors needing hip replacement who received it within six months:

U.S. 90%
England 15%
Canada 43%

Percentage referred to a medical specialist and see one within one month:

U.S. 77%
England 40%
Canada 43%

Number of MRI scanners (a prime diagnostic tool) per million people:

U.S. 71%
England 14%
Canada 18%

Percentage of seniors (65+), with low income, who say they are in "excellent health:”

U.S. 12%
England 2%
Canada 6%

These statistics speak for themselves!

Now consider the business experience of those persons who are responsible for advising the President on policy and administering the departments that will bring us an enlightened utopia. What follows is a listing, by President and party of the percentage of the president’s cabinet who had business experience prior to entering the administration in which they served.

Pre-1950 Presidents

T. Roosevelt (R) ........38%
Taft (R) ................... 40%
Wilson (D) ............... 52%
Harding (R) ............. 49%
Coolidge (R) .............48%
Hoover (R) ...............42%
F. Roosevelt (D) .......50%
Truman (D) ..............50%

Post-1950 Presidents:

Eisenhower (R) ..........57%
Kennedy (D) ............ 30%
Johnson (D) .............. 47%
Nixon (D)................ 53%
Ford (D).................. 42%
Carter (D)............... 32%
Reagan (R) .............. 56%
G H Bush (R) ............51%
Clinton (D) ............. 39%
G W Bush (D) ........... 55%
Obama (d) ................. 8% !!!

The Obama administration’s cabinet is filled with persons who are the least experienced by far of the last 19 presidents! And this administration is telling our big corporations how to run their business? They know what's best for GM, Chrysler, Wall Street, and you and me? How can the president of a major nation and society – the one with the most successful economic system in world history – talk about business when he's never worked for one? Or about jobs when he has never really had one or had the responsibility for making payroll? Neither have 92% of his senior staff and closest advisers.

I have never been hired by a poor man. I have never worked for anyone who did not have a track record of success and whom I thought incapable of successfully leading the organization to accomplish its mission. However, many Americans cannot see beyond the veneer of his eloquence and his physical attractiveness to discern his total lack of experience, incompetence, and ideological commitment to move our country toward socialism, which in the history of mankind and through the demonstrated insolvency of our own social entitlements, has consistently proved to be a failure. This is not high school, where the best looking gal or guy or the best athlete who has the best GSA poster should be elected to be leader of the free world. Unless good people become engaged in the political process, understand that it is not government’s role to provide us with goods and services, but to protect our rights – which come from God not the Government and therefore cannot be taken away – we will enter into a period of decline from which it will be difficult to overcome.

I urge each person to actively engage your political representatives and do what you can to stop this administration’s agenda in its tracks. Most importantly, I urge each person to: (1) understand the issues and the facts; (2) test proposed policies against what has historically worked or not worked; (3) vet political candidates running for office based on their moral character, business experience, and elected community service; and (4) take the necessary action to remove incumbents whose progressive views have no constitutional basis or have proved to be unworkable in the real world. What we need is smaller government, fiscal responsibility, and a return to the rule of law, as envisioned in our constitution. Underlying all of this is the need for each individual to be accountable for his or her own actions, within the context of moral code that abandons post-modern relativistic thought.

"All that is necessary for the triumph of evil is for a few good men to do nothing." Anonymous

Remember ...

"You're entitled to your own opinion, but you're not entitled to your own facts," Sen. Daniel Patrick Moynihan.

"Against public stupidity, the gods themselves are powerless." Schiller.

“Who controls the past controls the future. Who controls the present controls the past.” – George Orwell, 1984

"Statistics are no substitute for judgement," Henry Clay

"The problem with socialism is that you eventually run out of other peoples' money," Margaret Thatcher