Posted on Friday, March 5, 2010 by Coco Letterman

by Coco Letterman, QNO contributor-at-large

Senator Kit Bond (R-MO) told me one time that getting a majority of votes together in the House and the Senate “is like trying to herd cats.  You’d have better luck trying to stick frogs in a wheelbarrow.”

After countless months of deliberation, a day-long photo op at the White House last week, the awarding of a judicial seat to the brother of an undecided Senator, and Speaker Pelosi and Majority Leader Reid’s assertions that the health care bill will be passed sooner rather than later, 11 Democrats today announced they would join Representative Bart Stupak (D-MI) in his opposition of the newly-revamped, rekindled, rehashed and revolting Health Care Reform package.

I’m sure the administration isn’t looking kindly on the Dirty Dozen of 2010.

According to a Reuters article from Thursday, Stupak left little wiggle room.  “’Yes. We're prepared to take responsibility,’ Stupak said on ABC's ‘Good Morning America’ when asked if he and his 11 Democratic allies were willing to accept the consequences for bringing down healthcare reform over abortion.”  The White House and Cabinet leadership say their bill “will not change the status quo on the policy of abortion. There will be no federal funding for abortion.”  Yet Stupak and his Gang of 11 are unmoved.

The cheers of Tea Party revolutionaries can be heard from Maine to pockets of Southern California.  The bill that just won’t die just won’t pass, either.  People have had easier times passing kidney stones the size of Buicks than democrats have had passing this bill.

This President, who previously asserted that reconciliation would not be used in this process, is piece by piece destroying the Democratic party and any hopes it had of retaining a majority in 2011 and beyond.  Rarely do we see anyone so methodically shoot themselves in the foot on a national stage.  In this environment, however, the president isn’t just using a shotgun or a rifle; he’s using a bazooka.

Even Howard (“AIIEEERRRGGHHH!”) Dean announced today he thinks this pursuit of health care at any cost is ill-fated, and by doing so, the president is hanging his fellow party members out to dry.

So why is he doing it?  Why is Obama shoving his health care bill down the throats of Congress and the American people?

Everyone has their own beliefs.  Mine?  I believe he’s just cocky, arrogant, and believes he’s smarter than you.  I know he thinks he’s smarter than me.  I’m a conservative.  That makes me stupid, ignorant, intolerant, and a fan of those black-hearted insurance folks.

You know, say what you want about Bill Clinton, but at least he knew when to take his foot off of the gas when he proposed ClintonCare.  If Obama’s hitting the brakes, he must be in a Toyota, because he’s not stopping.  If anything, he’s just picking up speed.

As this bill is debated and we begin to hear more of the behind-the-doors pressures and prizes being handed out to win votes, the odds of the democrats actually cobbling together a coalition of 216 votes in the House and 51 votes in the Senate are probably no better than 50-50 at this point.

I’m just happy Kit’s still there to watch one more catfight in person.

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Posted on Friday, October 16, 2009 by J. Robert Gough

Congressman Aaron Schock (R-Peoria) writes this in The Hill: To me the choice is simple: We can continue to hold money in the treasury so that it can be used on wasteful, underperforming programs in the future while we put off passing the most important infrastructure investment bill Congress considers, or we can admit our mistake and redirect the stimulus funding toward the Highway Trust Fund and allow for the expeditious passage of a new highway bill.

For the full op-ed, click here.

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Posted on Sunday, August 16, 2009 by J. Robert Gough

by Flynn

Obamacare is dead.

Not officially, mind you. There will be many more town halls and more twists. The drug companies will send millions on ads to try to save the Democrat proposals. (Read that sentence again...ironic, isn't it? The left's only hope now is the deep pockets of big PhRMA.) But, even if some kind of health care legislation emerges from Congress (even money), there won't be a public option or any kind of universal coverage. Neither will there be any end-of-life counseling nor, more importantly, the real origin of the "death panel" charge; the expert panel charged with evaluating the most effective treatments.

If you think I'm just peddling scare tactics, check out this interview the President did with the New York Times in April. Read this quote carefully, about his grandmother getting a hip replacement in her final months:

Whether, sort of in the aggregate, society making those decisions to give my grandmother, or everybody else's aging grandparents or parents, a hip replacement when they're terminally ill is a sustainable model, is a very difficult question.

Then, there's this, again from the President:

I mean, the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here.

When asked how to deal with this, Obama said:

Well, I think that there is going to have to be a conversation that is guided by doctors, scientists, ethicists. And then there is going to have to be a very difficult democratic conversation that takes place. It is very difficult to imagine the country making those decisions just through the normal political channels. And that's part of why you have to have some independent group that can give you guidance. It's not determinative, but I think has to be able to give you some guidance. And that's part of what I suspect you'll see emerging out of the various health care conversations that are taking place on the Hill right now.

Add in that Obama has stated the foundational reason we need to pass Obamacare is to control costs, and it is easy to understand why some people are terrified. At least half the money to expand insurance coverage is supposed to come through "cost-savings" in Medicaid and Medicare, the existing "public options". The President believes that 80% of our health care spending is on the chronically ill and those at the end of their lives. And, he's creating a panel of experts...including "ethicists"...to give "guidance" on which treatments to perform. (If it looks like a death panel and walks like a death panel...)

There are a lot of reasons for the inevitable failure of Obamacare. Personally, I think the existence of Medicare is a big factor. Senior citizens, the demographic most likely to vote in massive numbers, already has universal health care. They gain nothing from passage of Obamacare. Indeed, they stand to lose, since a lot of the proposal is predicated on "cost savings" from their health program.

No wonder they're showing up at townhalls. Which brings us to the absolute reason Obamacare will fail. Despite what they say in the press and to the leftist base, Democrat lawmakers know the townhall gatherings are real and organic. They aren't part of any industry-funded astro-turf campaign. (Which industry presumably is funding this? The drug companies support Obamacare because they'll make billions. The American Medical Association supports it because they get slightly higher reimbursement rates. And, the insurance companies support most of it because the proposals would force every American to have or purchase health insurance.)

[I'm in a position to know something about this. Trust me, there is no business group in DC guiding the town hall events. They have neither the creativity, capacity nor stomach to pull this off.]

No, the backlash you're witnessing is very real. And it is reflected in the polls. Meanwhile, the left has to pay people to show up at town halls. 

When Congress returns in September, the thoughts of the members will turn to their own reelection. As the season turns to Fall, the members in DC will watch the GOP make serious runs at the governerships of Virginia and New Jersey (!). That's when the real fear will set in. The Democrat leadership went "a bridge too far", and everyone knows it.

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Posted on Saturday, August 1, 2009 by J. Robert Gough

by Flynn 

Last Friday, the much-celebrated "Cash for Clunkers" program opened its doors for business. The following Thursday, the Obama Administration announced to Congress that it would "suspend" the program to "assess the situation."  

Lawmakers predictably tripped over themselves to proclaim the program a success. The House, announced it planned to vote Friday to throw another $2 billion into the program. Rep. Candice Miller (R-state that used to build a lot of cars) called the program: 

"simply the most stimulative $1 billion the federal government has spent during the entire economic downturn."  

There two giant red flags in all this. First, it is doubtful there is anything actually stimulating going on here. In the most basic sense, to be stimulative, the program would spur transactions that wouldn't otherwise take place. Let's look at some auto sales data. 

At the peak of the auto market in 2007-the year everything peaked-Americans bought up about 1.3 million autos a month. At its trough, earlier this year, Americans bought just about 750,000 cars a month. In June, the month before "Clunkers" Americans bought around 825,000 cars.  

The maximum number of cars that could be sold through the como-induced Clunkers program is about 285,000. The minimum is about 220,000. These numbers aren't far off the weekly pace of sales in June, when taxpayers weren't subsidizing purchases. If you consider the very real liklihood that buyers held off purchases in July to take advantage of the Clunkers program...well, we may not have stimulated anything except a temporary boost to automakers bottom-lines. At the very least, we have simply cut automakers a check to subsidize some sales, a large majority of which probably would have taken place anyway.  

The second red flag comes in the second paragraph of this story:  

"...it appears to have run dry of the $1 billion allocated to it, aides said Thursday." 

The quote in the article is a paraphrase...but....really? It appears to. As in, we don't really know. 

Um, yes it would seem. The suspension is the result of a bureaucratic backlog. The money excerpt:  

"Through late Wednesday, 22,782 vehicles had been purchased through the program and nearly $96 million had been spent. But dealers raised concerns about large backlogs in the processing of the deals in the government system, prompting talk of a possible suspension.

A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet been approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program.

"There's a significant backlog of 'cash for clunkers' deals that make us question how much funding is still available in the program," said Bailey Wood, a spokesman for the dealers association."

The Obama Administration doesn't know how much it has spent in the program. It is overwhelmed by 25,000 deals not yet approved.

However stupid the "Clunkers" program, it at least was supposed to be very simple. There are only two variables. The trade in couldn't be more than 25 years old (Clunker Lite) and the new car had to have some amount of increased fuel efficiency.

It wasn't anything complicated like, say, oh, health care. Still, the feds couldn't handle it.

Maybe we could have a program to trade in inefficient bureaucrats. I have no problem subsidizing that.  

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Posted on Friday, July 24, 2009 by J. Robert Gough

by Flynn

So the National Teleprompter held a primetime press conference to rescue the latest $1 trillion+ "emergency, absolutely vital" legislative proposal; health care reform.  With a self-imposed deadline of the end of July, Obama is trying to get Congress to transform one-seventh of the economy in a matter of weeks. Congress spends more time than that naming federal buildings.  

Here are the only two things you needed to know before the press conference:

1. Virtually every current participant in the health care system SUPPORTS the overhaul: the American Medical Association, American Nurses Association, insurance companies, unions, and drug companies. Sheesh, even Wal-Mart supports it. (Of course, patients seem less impressed.) If everyone who gets money from the current system supports an "overhaul" of that system, at the end of the day, how much "reform" is there, really. 

2. The Democrat National Committee is running ads against democrats to get them to support the bill. 

Most of the debate is over a so-called "public option", urged by supporters as a necessary way to inject competition into health care. There are more than 1,300 different companies offering health insurance. My math suggests that's a lot of existing competition. 

Somehow I think UPS faces more intense competition from FedEx, rather than the US Postal Service. If the USPS didn't exist, would anyone credibly suggest we should create a public postal service to ensure competition between UPS and FedEx?  

The other debate is how to pay for all this. (I know government actually knowing how it will pay for something may seem rather quaint these days, but apparently even Chinese communists have limits on how much of our debt they will buy.) It will cost trillions. (Any figure you read right now is bullshit. They've used every budget trick in the book and even then, they've got a $1 trillion + price tag. [One trick they've used: increased payments to doctors-see AMA support above-won't be counted in the budget. Seriously. Sorry, I can't link to this...it's a private subscription news service I get.] No one really knows how much this will cost.)  

But let's assume the Democrats can piece something together with duct-tape and chewing gum. New taxes, surtaxes, benefit caps, individual mandates, etc. Let's assume they can find the requisite trillions. What will actually happen? 

At a certain snapshot in time, every American will have health insurance of some kind. They will be in some kind of system that will provide some percentage of payment for their health care consumption.  

We won't have more doctors. We won't have more nurses, hospitals, drug companies or clinics. We may have more health care coverage, but we won't have more health care.  

At the end of the day, what are we trying to do: expand and improve the health care system itself or simply finding everyone a "payment plan" for the existing system. What we're doing isn't going to improve our health. It is just shadowboxing.  

What if, instead of creating a Rube Goldberg plan to pay for health care, we actually did some simple things to improve our health care. No doubt, there are dozens of drugs that are currently only available with a doctor's prescription. How much could we save-and how much could we improve our actual health-if more of these were moved to "over the counter"? What if we chipped away at the doctor cartel and gave Physicians Assistants and Nurses more authority to make certain low-threshold medical decisions?

Currently, every state regulates health insurance products sold in their state. Along with this regulation often comes a long list of conditions and procedures that have to be covered. Insurance costs vary widely across the country. I live in Virginia, but why can't I buy a health insurance product out of Idaho, which has generally lower premiums-because their legislators don't muck about much with insurance mandates?  

Health care is the one sector of the economy where adults are treated like children. Set us free.

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Posted on Wednesday, July 22, 2009 by J. Robert Gough

by Flynn

Last week (on Tuesday), House Democrats released their whopping 1,000+ pages, more than $1 trillion plan to "reform" the health care industry. (Is 1,000 pages the minimum threshold for legislation these days? Sheesh, the framer's just needed a few pages to establish an entire republic.)  

The next day, the Senate Health, Education, Labor and Pensions Committee approved its $600 billion draft reform plan. (Don't get too excited...the Senate bill isn't necessarily cheaper...they just decided to leave out, for now, any Medicaid expansion-a near certainty in any final action-to avoid the dreaded "t" word on cost.) Next stop is the Senate Finance Committee, which is expected to take a substantially different tact.  

Eventually, the different House and Senate versions will have to be ironed out. The gulf between them is huge. And a White House imposed deadline of the end of the month is daunting. Think of it this way; in just three weeks Congress is supposed to completely restructure one-seventh of the entire US economy. (If you add up the three major pushes this year: energy, health care and financial services, Obama is proposing to completely revamp 35% of the economy...) 

For those keeping score at home, there are three main questions to be settled in the coming weeks:

• 1. Public Option
• 2. Individual Mandate to have insurance and,
• 3. How exactly to pay for all of this

Over the next few days, Counter Revolution will look at each of these individually. But, to a certain degree, how we answer these questions is the least of our worries. (By our, I mean those of us who prize liberty.) Americans have proved adept at working around government interventions and distortions. (I personally know of three couples who are seriously considering formal divorces because they would save tens of thousands in taxes.) I expect we'll do the same with health care.

 The real threat is what happens after we've eventually collectivized health care. Once we are all paying some portion of our health care costs, we can start dictating how people live their lives and what choices about their life they can make. Check out this excerpt from a sit-down interview Obama gave NBC news (emphasis added): 

Obama: So, self-responsibility is going to be critical. This is probably not going to be something that's legislated. But I tell you what, every business out there is going to be looking at their health care bottom line. And increasingly what you're going to see is that businesses are going to incentivize their employees to stop smoking, lose weight, get exercise, get regular checkups.

What we can do is we can encourage those companies that have those sorts of wellness-prevention programs. We can make sure that it's easier to find a primary care physician to get a regular checkup, that everybody has basic insurance. But the American people are going to have to participate in their own health. 

Probably not something that's legislated. Color me unconvinced. Word on Capitol Hill is that the Senate health care bill will contain a mandate that chain restaurants post calorie counts of each item on menus and menu-boards.  

How long before we have calorie cap-and-trade?

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Posted on Thursday, July 16, 2009 by J. Robert Gough

by Flynn

Okay, I got this one wrong. When I saw that Rep. Mark Kirk (R-Clueless) was one of just seven GOP members to vote for the Waxman-Markey cap-and-tax bill, I thought, okay, I guess Rep. Kirk isn't going to run for US Senate after all. You could make a reasonable case-I suppose-that a vote in support of the ineffective, high-cost, feel-good legislation would be popular in Kirk's wealthy Chicago North Shore district. But, I didn't think there was any way a GOP candidate, who needed to rack up a huge number of votes in downstate Illinois (read, Coal Country) to prevail statewide, would vote for this clunker of a bill.  

But now,  Kirk has announced his intention to run for US Senate. To make it worse, I came across this gem on YouTube. In it, Rep. Kirk claims that he is reading the entire Waxman-Markey bill (all 1,000+ pages and, presumably, the 300+ page "amendment" released at 3am the night before the vote), before deciding how to vote.  

Whoever is giving Kirk political advice is guilty of malpractice. Fortunately, next November, they'll be able to find a new line of work. 

There are a few problems with the Kirk video:

1) He's lying. Or, I should say, he is most likely lying. Having worked around politics for over 15 years, I have found politicians to be among the most over-scheduled human beings on the planet. There is almost no way that Rep. Kirk had a few solitary hours to devote to reading the legislation. (That's why they have staff.)

2) Reading bills is less than it seems. If you've ever looked at a piece of legislation, it is not a straightforward narrative. While the legislation does create new statutory language, much will be amending existing law. For example, an excerpt from the Kirk-approved Waxman-Markey bill: 

(d) Enforcement- Subsection (f) of section 304 of the Clean Air Act (42 U.S.C. 7604(f)) is amended as follows:

(1) By striking `; or' at the end of paragraph (3) thereof and inserting a comma.

(2) By striking the period at the end of paragraph (4) thereof and inserting `, or'.

(3) By adding the following after paragraph (4) thereof:

`(5) any requirement of title VII or VIII.'.

What does that mean? I have no idea. And no one simply "reading" the bill would know either.

 3) Even if we allow that Rep. Kirk actually read the bill and he fully digested and understood its meaning, since he voted for it, he now "owns" every provision in this bill. This is his chief problem.

 When I was briefly a philosophy major, I was saved from insanity by the British philosopher G. E. Moore. So, I'll apply my own application of Moore to Kirk's position: What does it mean to believe that Kirk read and digested the whole proposal and still voted for it:

He would know that the bill, for all its costs to the economy, would reduce temperatures by a mere nine-hundreths of one degree Fahrenheit. That's damn close to a rounding error.

He would know that the bill threatens to run afoul of WTO agreements and spark a new wave of protectionism and a possible trade war. (During a recession...brilliant!)

He would be fully aware of all the other silliness that will come to light over the following weeks. Like this, for example.  

Kirk asks too much of us. And my guess is, his campaign for the Senate-which once seemed promising-will underwhelm. In the most recent fundraising quarter, Kirk raised just $580,000, which is decent for a House race, but far behind what he'll need for a Senate run.  

There's a vote on another 1,000+ page bill on the horizon, a $1 trillion plan to inject the feds even further into health care. Let's hope Kirk doesn't have time to read it.

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Posted on Thursday, July 9, 2009 by J. Robert Gough

by Flynn

On Wednesday, Lisa Madigan, state Attorney General and heir to the Madigan political dynasty, surprised everyone and announced that she would run for reelection in 2010. 

This means, obviously, she won't run for Governor or US Senate, despite being heavily recruited for both. This is one of those stories that is bigger than the sum of its parts. On paper, she'd be a strong favorite in either race. So, her taking a pass on both is actually pretty big news. More than that, though, it is one hell of a political tell.  

There are few more astute observers of Illinois politics than Madigan's father and political patron, House Speaker Mike Madigan. Few political leaders anywhere in the US wield power with anything near the level of skill and strategic discipline of Speaker Madigan. (You'll have to trust me on this assessment. I'm not going to try to "prove it" on anything that's "discoverable".)

No doubt, some commentators may say she didn't want to have to wage any nasty primary fights. That is bunk. Madigan wouldn't face nasty primary fights. Speaker Madigan is Chair of the Illinois Democrat Party and has enough political IOUs in his pocket to cover even the Federal Reserve's bloated balance sheet. Sure, Gov. Quinn would contest the primary, but he's an accident of history.  He can't raise any money and, as sitting governor, wouldn't be able to wage the insurgent-type campaign-where you are only judged on campaign slogans and not an actual record-that is his only strength.  

No, Madigan could have had the democrat nomination for either seat. For the asking. And here's where the tell comes in: she'd have to run for either office as a Democrat. In 2010, that looks like a very risky situation. My gut tells me that Madigan has calculated the same thing, i.e. 2010 is going to be a terrible, horrible, no-good, very bad election year for Democrats. 

Running for reelection, she's essentially decided to sit this one out. By the time national Democrats realize what Madigan signaled today, it will be too late for them.

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Posted on Monday, July 6, 2009 by J. Robert Gough

by Flynn

Lots of folks have asked me for my take on Sarah Palin’s decision to resign the Governor’s office in Alaska at the end of the month. Rather than reiterate all the questions and speculations, let me just say to all of them: I have no idea.

Personally, I think it is pretty damn clear she is still thinking about, and probably already planning on, running for President in 2012. Does the resignation help or hurt her chances? Again, I have no idea. Anyone saying otherwise is blowing smoke out their ass. The traditional calculus for the road to the White House has been blown up in the Internet/twitter/social networking age. (See, for example, Obama, Barack.)

In the pre-Internet age, a long political resume was a necessary prerequisite, simply because one needed actual time to get to know the political players and activists across the country. One needed to spend years glad-handing local power brokers and attending the “rubber chicken circuit” to build any kind of credible national organization. Those days are gone. (See, again, for example, Obama, Barack.)

Many have said that Palin’s resignation prevents her from building a list of legislative accomplishments to ride to the White House. (Right, another 18 months in office in Alaska would have provided the appropriate mix of resume-builders to appease the New York Times.) The importance of these accomplishments is overblown.

Quick: name any legislative or policy “accomplishment” any of the last five Presidents achieved before they were in the White House. (Were liberals aware in 1992 that Clinton had raced back to Arkansas during the campaign to sign the execution order of a mentally retarded inmate on death row? Were conservatives aware in 1980 that, in the 1960s, Reagan had campaigned aggressively against an anti-gay rights ballot initiative?) We don’t vote for President based on past accomplishments. We vote for President based on their articulated vision for the future. A list of accomplishments is only a proxy to help us support candidates we don’t really know. If we feel we know them, a list of accomplishments isn’t quite so important. (See, yet again, for example, Obama, Barack.)

I admit, I’ve had mixed feelings about Sarah Palin. And, reading through the transcript of her press conference does give me pause. She strikes me as someone who has memorized her lines, but doesn’t really know the point of the play. (At times, it is like she is simply reading through “Successories” posters.)

There is much to recommend her. She won office by running against a strong, good-old-boy—and possibly corrupt—GOP establishment. There is within her a lot of that “live and let live” attitude that is grounded in a love, above all else, for freedom. The McCain campaign completely failed to utilize her strengths. They used her to shore up the social conservative base, which was never really the source of her political energy. (The McCain campaign was so poorly run that it may go down in history as the first to destroy two candidates; McCain in 2008 and Palin in 2012.)

My gut tells me that Palin knows this and is now trying to change the dynamics. My gut also tells me that she has seen the strength of the “tea party” movement and wants to become their titular leader. I think she wants to enter the GOP primaries in 2012 as the representative of the “tea party” wing of the party.

In Art of War, Sun Tzu advised invading generals to burn their boats on the shore, to show the troops that there was no way back. They could only get home by going forward and winning.

Palin has burned her boats.

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Posted on Wednesday, July 1, 2009 by J. Robert Gough

Over the past couple of months, a new term has entered the economic lexicon: green shoots. First coined by Fed Chairman Ben Bernanke, it describes certain specific signs that the economy may be improving. It is built on things like, "The Baltic Dry Index is moving up" or "The pace of home price declines seems to be slowing."

Yes, it is mostly bunk.

Prediction: the Department of Labor's next jobs report, due out on Friday, July 2^nd, is going to be brutal. Expect more job losses in June than in May. And, expect unemployment to break above 10%.

Today, ADP released their jobs report and it shows 473,000 additional job losses in June, well head of predictions. Now, ADP has a mixed record on getting the exact numbers right, but they are usually right about the trend.

A lot of businesses held one through the first quarter and prayed recovery would begin in the 2^nd. It isn't. So, no longer able to hold on, they're making further cuts-i.e. more layoffs.

And high unemployment will be with us for a while. JP Morgan recently estimated that, to return to 6% unemployment next year, we would need GDP growth of over 10%. That ain't happening.

The problem with looking for "green shoots" is they only factor isolated economic measurements. Even if we can find a basket of positive economic news, unless it also factors in political developments, we really can't predict what's happening to the economy.

So, let's recap recent political developments: this week the House moved to make energy more expensive , Congress is likely to increase by some measure government's involvement in health care, it may require employers to provide health insurance or fine them some kind of penalty, and, it is highly likely that taxes-especially on corporations-will increase in the near future.

We don't know the details on any of these. And in a way, that is worse. Business and household decisions are based on predictions of the future. We all know we are going to be paying more taxes, but we don't know how much.

Until we know that, nothing much will happen to improve the economy. Double-digit unemployment is back and will be with us for quite a while.

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Posted on Monday, June 22, 2009 by J. Robert Gough

As I recently noted, the $787 Billion Stimulus package isn't working and was probably a mistake to begin with. The chief problem is the lion-share of spending flows to state governments to support existing social programs. Salon magazine, which has no conservative ax to grind, recently noted this. Key graph:

Most of the roughly $300 billion coming directly to the states is being funneled through existing government programs for health care, education, unemployment benefits, food stamps and other social services.

"We all talked about 'shovel-ready' since September and assumed it was a whole lot of paving and building when, in fact, that's not the case," said Chris Whatley, the Washington director of the Council of State Governments, a trade group for state governments. He estimates states will get three times more money for education than for transportation.

Two-thirds of recovery money that flows directly to states will go toward health care.

And, here:

Among the poorest states in the nation, Mississippi expects to receive about $2.8 billion in federal stimulus money through December 2010. So far, about 13 percent of that is for construction, mostly highways and bridges. The rest will be spent as it is in other states, to preserve existing government programs and jobs. (emphasis mine)

Well. We can agree, perhaps, that supporting the social safety net is important, but I think we can also agree that it isn't exactly simulative.  I think we can also agree that preserving cushy public sector jobs isn't the best way to jump-start production on the factory floor.

So, as the public is beginning to turn on the whole stimulus package, it is worth considering what might have been.

Of course, $800 billion is a lot of money. In fact, its almost 85% of expected federal personal income tax collections this year. (figure on table s-3) In other words, instead of pumping stimulus money through states for social programs, we could have given just about everyone an "income tax holiday" all year.

Imagine that; a year without federal income taxes. Think of your own tax burden and you could have used that extra money. Talk about a stimulus.

Of course, the political class can't risk you getting used to the idea of a "tax holiday"...

Flynn

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Posted on Tuesday, June 16, 2009 by J. Robert Gough

This week, President Obama launches a massive PR effort behind his push for health care reform. Amid growing concern over the already white-hot pace of government spending, the Administration is scrambling to identify "savings" that can be used to cover the at least $1 trillion tab for "reform."

This past Saturday, during his weekly radio address, Obama revealed that he had found another $300 billion in "savings." Added to a previously reported $600 billion in savings, the Administration now claims it has found just over $900 billion to pay for the program.

Only problem is that these aren't your traditional notion of "savings". As reported here,

under his revised budget released last month, $326 billion of that amount would come from tax hikes on Americans making over $250,000 a year, "loophole closers," and higher fees for some government services. 

Um, I'm not certain most people would consider higher taxes as "savings". It does reveal a lot about the Administration's political philosophy that it thinks lower taxes "cost" the government money. 

Then, there is this:

The bulk of the new $313 billion in savings would come from cutting or reducing the growth of payments to hospitals, medical equipment manufacturers and laboratories - though the major cuts don't target doctors, 

Okay, this is savings of a kind; the kind you would get if you just decided you were going to pay a lower amount on your mortgage. "Hey, I know I my mortgage is $1,000 a month, but I'm just going to pay $800 and save myself $200." 

The feds decision to pay a lower amount for any treatment doesn't actually bring down that cost of that treatment. It just forces the provider to find other ways to make up the difference. Most likely, they'll just raise the prices they charge private insurance for care, driving up premiums for everyone with insurance. 

Of course, that might be the most benign way providers adjust to these "savings." As reported here, a hospital in Knoxville, Tennessee recently shelved plans for a new hospital. Money graph:  

In addition to the economy, hospital officials also cited "the unpredictability of the national health care policy debate."

The Obama administration has announced its intention to enact sweeping health care reform this year.

"The only certainty is that reimbursements for Medicare and Medicaid are going to go down," Askew said.

Mercy Health has also put on hold any future capital expenditures at all of its campuses other than what has already been started.

Here's something actually close to  a real definition of savings:

Another $106 billion would come from cuts in so-called disproportionate share payments the federal government makes to hospitals with large numbers of uninsured patients. "As the ranks of uninsured decline under health reform, those payments become less necessary," Orszag said.

Right. Since these people will now be covered by a new government plan, we'll no longer have to spend the money in the "uninsured" line-item. Of course, presumably, these people will still seek medical care, so we'll pay those costs through the new program.

At this point, the Administration is just making shit up.

Flynn

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Posted on Sunday, June 14, 2009 by J. Robert Gough

Pictures from Iran. This story isn't over yet.

It is good to remember that, every day, thousands of individuals around the world risk their lives to secure the things that we take for granted. We should remember.

Also, I hope the administration adjusts its position. We might want to add at least one "precondition" to future talks.

Flynn

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Posted on Tuesday, June 9, 2009 by Flynn

You wouldn't know it from the historically positive press coverage it has received, but the young Obama Administration is potentially in real trouble. There's no other way to explain the press conference on Monday, announcing a new "Roadmap to Recovery." The Roadmap is the Obama Administration's plan to accelerate the stimulus spending. Remember, the stimulus? The $787 Billion boondoggle investment meant to "jump-start" the economy which Congress passed earlier this year.  It isn't working.

During the debate over the stimulus, President Obama warned that unless Congress passed the plan, unemployment would rise to 8.5% in April and even reach 9% by the end of this year.

Last Friday, the Labor Department reported that unemployment had risen to 9.4% in May. Of course, that's higher than the Obama Administration estimated it would be if Congress didn't pass the Stimulus.

On Monday, the Obama Administration reported that 150,000 jobs had been saved or created by the program since the Stimulus was enacted. Setting aside the obvious problem of how one measures a job that was saved, Labor Department data shows that

1.6 million jobs have been lost since the Stimulus was enacted. Even if we take the Obama Administration at its word and accept that the program saved 150,000 jobs, the overall economy lost ten times that amount. Isn't this a little like curing a cancer patient of pneumonia?

So, now, the Administration promises to accelerate spending and save or create 600,000 jobs over the summer. (What, they weren't going to act quickly when this was enacted in March? Course, then, Obama said the economic situation was "not as bad as we think.")

Obviously, it does take a while to spend $800 billion, even for the federal government. So, how much have we spent to far? Hard to say, actually. The New York Times recently reported that a recent estimate from the Obama Administration on stimulus spending to day was off by almost 20%. (And these guys are going to run real, actual companies? Imagine the SEC's reaction if a CEO's report to his shareholders was off by 20%?)

As that article states, however, the Obama Administration argues you can't just calculate money that has actually been spent, but also money that has been authorized, since knowing the money is eventually coming can prevent layoffs. Okay, by that measurement, the fed's have authorized around $130 billion so far.

So--again, assuming all Obama's numbers are true-to date, the Stimulus package as spent close to $900,000 for each job it has saved or created. Nice work if you can get it.

The entire package is fundamentally flawed. The vast majority of the spending is being sent through the states to shore up or enhance existing programs. Look through this list of recently announced funding. There is little there that is stimulative in classic economic sense. Most of it is designed to subsidize the public sector, rather than incentivize the private sector. Enhanced unemployment benefits are nice for those unemployed, for instance, but they aren't exactly a way to jump-start an economy. Sure, there is some infrastructure spending that might help. (Cause we don't normally have highway construction in the spring and summer...) But, this spending is less than 10% of the overall program.

So, by all means, speed up, accelerate, go into hyper drive, warp speed, whatever to increase spending of stimulus dollars. Repackage the program in another hundred days as a "Concrete-we really mean it this time-Roadmap to Recovery." But, don't expect any real improvement anytime soon.

Not only is the plan incapable of boosting a recovery, there are growing indications that it is actually hurting the economy. Obama is a politician with real and extraordinary talents. But, he's playing a losing hand and even a fawning press can't save him on this turn.

Flynn

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Posted on Monday, June 1, 2009 by J. Robert Gough

There are lots of ways to measure the social health of a state. One could look at various economic, education or "quality of life" stats. Problem is, there are various ways these figures can be "gamed" or manipulated by all sides of the political divide. (Too long to explore here, but trust me, as the old saying goes, "if you torture statistics long enough, they'll confess to anything.")

Personally, I like simple population figures. Not just the simple top-line figure, which is largely based on birth and death rates, but, more specifically, migration patterns. Where are people moving from and where are they going? 

Fortunately, the Pew Foundation does exactly this. Their Center for Social and Demographic Trends tracks migration flows into and out of the individual states. The numbers are the results of the individual decisions of millions of Americans about where their best future lies. 

The political class in Illinois may talk about a rosy future under their leadership, but lots of its citizens aren't buying it. In just the last three years, 230,000 more people moved out of the Land of Lincoln than moved into it. That means that every day, including Sundays and Holidays, 210 more people leave the state than move into it. In terms of raw numbers, it is the third worst in the nation. 

And, no it isn't just because people are escaping Mid-west weather. Every state bordering Illinois has seen more people move into that state than move out. This has enormous economic implications, as their energies, ambition and talent will now take root elsewhere.

The ultimate vote citizens have isn't at the ballot box, it is with their feet. Unfortunately, lots of Illinois citizens are using it.

Flynn

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