The Reluctant Optimist

I’m fascinated by the delicate “plate spinning” the Administration is using to avoid a calamitous crash. It feels like they keep adding another plate (a very pretty, shiny, distracting one) to keep us from noticing the three on the other end that are woefully close to coming down. I hear folks talking about the shift in focus from the economy to energy, or health care, or the tax code, or the new herb garden on the White House grounds. But the health care piece, especially, feels like an unnecessary distraction.

I just don’t see a scenario where meaningful health reform happens. Chairman Baucus balked at paying for it out of the deductions of high earners. Many more oppose taxing employer-offered benefits. Even if they could agree on what to do, no one seems to know how to pay for it. I keep hearing individual members of Congress talking about working on “the 80 percent where we agree,” but 80 percent seems like an awfully high bar for agreement. If they truly agreed on 80 percent, wouldn’t they have already done a portion of it?

I’ve always thought the problem was this: we want health care to be both a business, with competition and yes, profit, and we want it to be a state-given right for all citizens. We can’t figure out how to have both. The private sector could introduce all sorts of efficiencies and common-sense to the system, but we can’t get out of our own way as a country to let it happen. We have to stop talking about the system we’d create now, if we were starting from zero. That ship has sailed. Too many stakeholders are too married to some portion of the haphazard system we’ve created to let it be dismantled. Like it or not, this hodge-podge, quasi-entitlement, public/private mess is our system. It’s imperfect, it’s bureaucratic, it’s inefficient, it’s outrageously expensive. But until Washington is willing to allow the sacrifices that would have to be made to undo what we’ve got, I think the best we’ll get is an expensive distraction.

The Health Care Come-On

American taxpayers, right now, are a little bit like a young woman who regrets going a bit “too far” with the wrong guy. As we smooth our collective hair and tuck in our collective blouse, backing gently away from the grabby, greedy federal government, we are probably still hoping for a gesture of caring and genuine affection. Perhaps we think it might come in the form of more affordable health care, making up for the mauling we’ve suffered from bailing out the financial industry.

At this moment, I can only tell taxpayers what I’ve told many young female friends: Girls, be sharp and keep your clothes on.

Here are a few tips to at least de-coding the health-care come-ons that are likely to come out of Washington, DC in the coming months:

1. Don’t fall for the phrase “reform the American health-care system.” We don’t have a health-care system in the U.S. We have a health-care marketplace where insurance, medical services, and pharmaceuticals are bought and sold. Government spending, taxation and regulation impact this marketplace profoundly. A politician that boldly promises to reform “the system” needs to explain him or herself a little more fully. Don’t let them get away with this kind of smooth talk. You’re too smart for that. Ask questions, seek specifics on taxation, regulation and spending.

2. Don’t fall for the big spender; he’s going to stick you with the tab, and his plan isn’t necessarily going to work. Much like efforts to improve education, spending more taxpayer dollars has failed to solve our various health-care problems. So listen to four-star-restaurant-level spending proposals as you would listen to a salesman – after all, you’re paying for this date.

3. “I want what’s good for you, baby,” the “consumer.” Addressing you as a consumer is some sweet, caring, empowering talk. But do you really feel like a consumer? Honestly? Have you ever comparative-price-shopped for a doctor, a diagnostic test, or a prescription? Maybe you’d like to become a consumer. Maybe you’d like to buy your own health insurance or your own medical goods and services. And that’s fine. That would be empowering. But don’t believe that they respect your rights as a consumer before they actually let you become one.

One final piece of advice that applies to girlfriends and taxpayers alike: take a second look at the nerds. They can be better for us.

If a geeky politician, for example, starts talking about the “tax treatment of employer-provided health insurance,” your eyes may start to glaze over. But fight it! The tax treatment of health insurance is actually at the root of most of our health-care problems.

Ever wondered why we rely on our employers for insurance? It’s a tax answer. Here’s a short primer so that the nerd talk might more sense:

Employers can buy health insurance with pre-tax dollars, while individuals have to buy it with money that has already had a bite taken out of it by taxes. The difference in price paid is staggering – and flatly unfair.

Okay, so WHY do employers get this break that individuals don’t? Well, it’s an accident of history. During World War II, there were caps on wages and employers had to find different ways to reward and attract employees. They started offering health insurance as part of compensation packages. Congress later thought that practice was quite nice and should be rewarded – and they used their favorite reward-and-punishment tool, the tax code, to show their approval. The rest, as they say, is history.

So if the geek-y politician or pundit on TV talks about the “tax treatment” of employer-sponsored health insurance, listen up. A nerd can be insightful, and that can be very attractive. He is also likely to be a very respectful date. He’ll let you keep your shirt.

Private Giving in the Age of Obama

Among others, Larry Kudlow correctly notes that President Obama has declared war on investors, entrepreneurs and businesses. But there is another less heralded group standing athwart the President’s goal of reconstructing the American social contract: givers.

To help pay for President Obama’s enormous new $630 billion health care reserve fund, certain long-standing charitable deductions will be eliminated. CQ Politics describes the proposal as follows:

Obama would raise $318 billion over 10 years by limiting the value of itemized deductions claimed by taxpayers in the top two income tax brackets to the value those deductions would have in the 28 percent bracket. A $100 tax-deductible contribution, for example, would save an upper-income taxpayer no more than $28 in federal income tax, rather than the $33 or $35 savings those in the top brackets would see under current law.

It is a truly awful policy and one that simply robs Peter to pay Paul. I am opposed to the Obama Administration’s health care plan and its incremental approach to single payer, socialized medicine because I do not care for the rise of American statism. But you need not be an opponent of government-provided universal health care to understand the slow erosion of self-directed charitable giving at play here with the new Obama policy—further evidence of a decline in American liberties in the age of Obama.

Under President Obama’s tax policy, individual value decisions about where charity is directed may be tolerated, but the principle of such self-direction will find little encouragement. Rather, the Administration is signaling that those in need of charity should look to President Obama and the federal government as their provider, not private philanthropy.

Lowering eligible charitable deductions effectively taxes the charities now receiving such assistance. After all, when the government raises taxes on an activity, less of that activity is experienced. Charities will receive less under President Obama going forward, and all Americans will be tied closer to and controlled more by their government.

Submitted by ASO member: John Kalitka

Obama Nominates Kansas Governor Kathleen Sebelius To Head HHS

President Obama will today nominate Kathleen Sebelius to be his Health and Human Services Secretary.

According to the New York Times, Ms. Seabelius and Mr. Obama plan the largest expansion of taxpayer subsidized health insurance in more than four decades.

ASO will be tracking health care developments closely over the coming months. Stay tuned.

WHY PASSING STIMULUS BILL #2 IN AMERICA WILL BREAK THE FINANCIAL SYSTEM JUST LIKE THE HEALTHCARE SYSTEM

Remember in November when politicians were scrambling with a gun to their head to pass BAILOUT #1 (now sometimes referred to as TARP) that the original problem was the collapse of the housing sector in the U.S.? It is a little hard to remember at this point, because no one is talking any more about what needs to be cured as the genesis of this financial cancer, they are just giving a pill for every symptom while the disease spreads because no one is addressing the underlying problems that would indeed if addressed, cure the cancer in our financial sector. American "standard" medicine is a failure because it spends more time and money than any other country "ruling out" all the diagnoses that you don't have before it even comes close to diagnosing what you do have. It's wasteful of resources, inefficient & expensive for society and most importantly, time-consuming, painful & costly for patients. No common sense is used any more in just cutting to the chase of the problem either in medicine or bailouts these days and both are running up a tab on American taxpayer's backs that will likely never be paid off. Politicians are selling the future generations of Americans mostly off to foreigners (whichever countries national treasuries and individual investors or corporate investors will still have them) via Treasury securities. All politicians and heads of Wall Street are thinking about now is, "Get the band-aid, get the band-aid, get the band-aid and put it on ME!" They want an instantaneous solution to a cancer that has been growing since the Clinton administration with the relaxation of Federal Housing policies. These policies were fed by G.W. Bush's dream and corresponding relaxation of policies so that every American could own a home. The cancer grew.

Obviously given this diseased state of the U.S. economy, you cannot cure the cancer without attacking it at its origin and cutting that off first. By doing that you will have the exponential uptick in the economy just as we have lived through the erosion these last several months as it fell out in many ways.
We've been hearing a lot of talk and analysis over the past several weeks both from President Obama and the Democrats as well as their Republican counterparts. Essentially the differences in the two perspective simply boil down to this: the Republicans want to continue the Bu-sh-it policies of cutting taxes as a way to stimulate the economy & the American financial sector while the Democrats want to finance government projects, jobs and programs to stimulate the economy. Neither will achieve any of the goals of truly making the economy & financial sector fundamentally any different NOR DO THEY AT ALL ADDRESS THE ORIGINAL PROBLEM FOR WHICH WE WERE CALLED UPON TO FORK OVER CURRENT AND FUTURE GENERATIONS OF MONEY.

I assure you that forking over a trillion more dollars to the Baby Boomers in charge who mismanaged and ruined our economy and finances in the first place is by no means worthy period. They failed in the first place as they disregarded the balance sheets and shareholders of the very institutions they were charged with a fiduciary duty to run. They failed in the second chance with the first bailout by misusing American taxpayer funds for their own personal gain. Now, Americans at the hands of our Congressmen and Senators and President Obama and his staff are about to sell out countless future American generations underneath the Baby Boomers financially by endebting them endlessly for yet another foreseeable unsuccessful set of partisan programs that benefit the same captain of industry who RAPED AND PILLAGED AMERICAN SOCIETY IN THE FIRST PLACE UNDER THE BUSH REGIME? Grow up! Even with the best of intentions on their side, this BAILOUT #2 is ill conceived, rushed, and misdirected piece of legislation that should die now!

What needs to happen now is what needed to happen before, those who wrote bad mortgages and profited from them, need to write the interest rates down to current levels and the homeowners and investors who bought the homes at artificially inflated prices need to suck up their personal losses, not socialize these losses on society while they keep all the profits when they make winning financial bets. It's very simple. This is a private problem that needs a private solution between the two parties involved. The FBI should investigate and prosecute all those involved in the LIAR LOANS who took enormous fees on the front side of those mortgages just for origination and seize their personal assets to pay for the costs. This is theivery pure and simple. So is using taxpayer money by Wall Street executives for boondoggles as they are called in finance. Pay for your own offsite golfing. Pay for your own AIG spa treatments. Pay for your own transportation to work just like the rest of America does-we'll see how many executives commute from Chicago to NYC on private jets at that point. Pay for your own meals, don't charge the firm for the after-tax cost & the American people for the tax deduction. Pay for your own escorts. Wall Street attitude of entitlement has grown well beyond cancer and the propsed new legislation for bailout #2 doesn't address it. Fair tax and other regulation of the financial services sector and enforcement will go along way. Let the institutions fail-no one is lending anyway. Get a huge clawback clause and seize the assets of all the employees involved not just the top 5 executives and give the money back to the American taxpayer to who it belongs. Why is it that we have such a hard time in America calling a crime a crime and seeing right from wrong when using other people's money? Cure the cancer and stop the bailout package. We need to rebuild an economy based on fundamentals, not try to sustain or reach again to the height of the illusions of where our economy was before. So any package that tries to restore America to what it was before the crisis is going to fail. We need to treat the cause, and the symptoms will then dissipate. If we go forward with bailout #2 amd treat only the symptoms, you might see some illusory improvement in some areas where the economy is hurting, but the fundamental erosion will still continue to proceed underneath the illusion. Let's start practicing medicine and finances in America that make sense.

Submitted by ASO member: Kimberly Wilcox