Tag Archives: Congressional Budget Office

The Financial Legacy Of Barack Obama

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On Wednesday, Investor’s Business Daily posted an article about the financial consequences of eight years of Barack Obama as President. The article includes the following chart:

EDIT3-CBO-012816

Some comments from the article:

“Government has failed to fully confront the deep, systemic problems that year after year have only become a larger and larger drag on our economy,” Obama said in his inaugural budget plan, promising to make “the tough choices necessary to … put our nation on sound fiscal footing.”

Seven years later, a new Congressional Budget Office report reveals that Obama will bequeath chronic and rising deficits, rapidly expanding debt, and exploding health care costs to his successors.

First, there’s the deficit, which the CBO says will top $1 trillion in six years, and continue climbing. Over the next decade, deficits will total more than $9 trillion. The CBO’s outlook has worsened significantly since its last forecast, mainly because it expects the economy to grow more slowly.

…And while Obama had promised that his health care reform would “bend the cost curve down,” it has instead turbocharged federal spending on health care. In fact, in 2015, for the first time ever, federal spending on health care programs exceeded Social Security spending.

The CBO says that Medicare, Medicaid, ObamaCare and other health program costs climbed 13% last year, are expected to go up another 11% this year and double over the next decade. ObamaCare’s annual subsidy cost will hit $109 billion by 2026. By 2026, health spending will account for nearly a third of all federal spending.

President Obama did not create this problem alone. He had the help of Congressmen who represent the Washington establishment rather than the American people. It is time for ALL Americans to take a good look at their Congressmen (and Congresswomen) and their voting records. If your Congressman has consistently voted for more spending and voted against ending ObamaCare, it is time for him to come home and live under the economy he created. It is time for state governors to take a good look at the concept of nullification to see if they can regain the state sovereignty they have lost in recent years. Even the small step of refusing federal money in an area can have a very positive effect on a state’s economy (one example). Our current fiscal policies will not lead to future success.

The article concludes:

The CBO report also makes clear that Obama’s tax hikes have been swamped by out-of-control spending.

Revenue as a share of GDP will be slightly above 18% over the next decade, which is higher than the 17.4% average for the previous 50 years.

But federal outlays — which averaged 20% of GDP over the previous 50 years — will climb from an already high 21% this year to 23% by 2026. Worse, almost two-thirds of the entire federal budget will go towards entitlement programs.

Not only did Obama not solve any of the problems he promised to, he’s also made all of them worse. This isn’t the legacy Obama and his supporters will brag about. But it is the legacy that future presidents will have to confront.

Do Bad Government Programs Last Forever?

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Ed Morrissey posted an article at Hot Air today about the recent enrollment numbers in ObamaCare. It seems that the program is not reaching the people it was designed to reach and is costing far more than the American people were told it would cost.

The article reports:

The Congressional Budget Office issued a new estimate for the next decade under the Affordable Care Act that lowers the enrollment projection by 40% in 2016. In fact, according to the CBO, next year’s enrollment is now expected to barely grow at all from 2015:

ObamaCare will enroll significantly fewer people than expected in 2016, ending the year with about 13 million customers, the Congressional Budget Office (CBO) said Monday.

The figure, which was included in an expansive budget report, is a decline of about 40 percent from last year’s enrollment prediction of about 20 million people.

The latest projections confirm the Obama administration’s previous assessment that fewer people are signing up as the marketplace closes in on its third enrollment season — the final one under President Obama.

…Similarly, subsidies that help people who meet income and other eligibility criteria to purchase health insurance through exchanges and to meet their cost-sharing requirements, along with related spending, are expected to increase by $18 billion in 2016, reaching a total of $56 billion.

The politicians who designed ObamaCare (it was obviously not designed by healthcare experts) did not understand actuary tables or human nature. Young, healthy people do not consider health insurance a necessity and do not sign up for it. So far the fines have been cheaper than the insurance, so there is no incentive for young, healthy people to sign up for ObamaCare. Thus, you don’t have the young paying enough premiums to cover the expenses of those who are older or less healthy.

The article concludes:

Defenders of ObamaCare argue that the program has still succeeded in lowering number of uninsured Americans. However, millions of people got their previous coverage canceled, forcing them into the exchanges, so a significant percentage of the 13 million represent a reshuffled status quo rather than an improvement. Furthermore, Democrats pushed for this policy by arguing that having 40 million or more uninsured Americans constituted a crisis that required overhauling a market that covered 88% of Americans in 2007. Having forced six-to-ten million of those Americans to buy needlessly expensive and inefficient coverage isn’t success — it demonstrates that the solution applied to that problem has failed, all while causing enormous damage to the market it “reformed.”

Hopefully the 2016 presidential election will free us from ObamaCare.

The Current State Of ObamaCare

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Today’s Wall Street Journal included an article about the current state of ObamaCare. The article mentioned that Health and Human Services Secretary Sylvia Burwell recently announced that by the end of next year she expects 10 million people to be enrolled in ObamaCare. She failed to mention that in March 2014 the Congressional Budget Office predicted that 21 million people would be enrolled in 2016. The Obama Administration explains the difference as the result of fewer companies dropping employee heath insurance than expected.

There are some facts left out of the statistics quoted by ObamaCare supporters. Supporters claim that ObamaCare helped 9 million Americans get health insurance coverage in 2014. The Heritage Foundation showed that nearly 9 million people were added to Medicaid. The 9 million were given free or nearly free health insurance. That’s really not much of a sales accomplishment.

The article reminds us:

In other words, ObamaCare expanded coverage in 2014 to the extent that it gave people free or nearly free insurance. That goal could have been accomplished without the Affordable Care Act. To justify its existence, ObamaCare must make affordable private insurance available to a broad cross-section of uninsured Americans who are ineligible for Medicaid.

But with fewer people buying insurance through the exchanges, the economics aren’t holding up. Ten of the 23 innovative health-insurance plans known as co-ops—established with $2.4 billion in ObamaCare loans—will be out of business by the end of 2015 because of weak balance sheets.

The article is written by Andy Puzder, Chief Executive Officer of CKE Restaurants. He observes that of his company’s 5,453 employees who were not eligible for company health insurance, only 420 enrolled in ObamaCare. The problem with ObamaCare is that it expects healthy young people to pay higher premiums to cover the cost of the older, less healthy, insured. Young people are not inclined to do that and are instead paying the penalty for not being insured. The problem with that is that the penalties are paid to the government and not to the insurance companies and do nothing to help with the imbalance on what is paid in and what is paid out. Insurance companies charge premiums based on actuary tables, and ObamaCare has chosen to ignore the basis of the business model of insurance companies. In essence, they have attempted to reinvent the wheel while leaving out the spokes and the hub. The private sector always does better than the government when it comes to business models.

The article concludes:

How have things changed under ObamaCare? Wealthy Americans continue to have health insurance, albeit at a higher price. But they can afford it. Many middle-class Americans are paying higher premiums they can hardly afford. And then millions more low-income Americans have heavily subsidized insurance or Medicaid coverage.

However, millions of other Americans who enjoyed good individual insurance before ObamaCare have found themselves forced out of affordable plans, with their new premiums rising rapidly. Other middle- and working-class Americans who were uninsured are still uninsured and paying the penalty or claiming an exemption. That isn’t affordable care. In many cases, it isn’t care at all.

Hopefully, we will elect a President next year who will rid us of this horrendous program.

The Problem Is Not The Income

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The Wall Street Journal posted an article yesterday about the amount of tax revenue the federal government collected for fiscal 2015. The good news is that the government collected a record amount of money–$3.249 trillion. That is an 8 percent increase in revenues for the year. The bad news is that the government still managed to spend more than it took in. The budget deficit was $435 billion–a decline of $48 billion. The article notes that although the decline is small, it is huge for the seventh year of what the government claims is an expansion. The article also notes that inflation is growing by less than 2 percent.

The article reports:

The reason for the small decline is that spending for the fiscal year climbed 5.2% to $3.685 trillion. That increase came even though defense spending fell $16 billion, or 2.7%, thanks to the drawdown in Afghanistan.

The spending burst included a 16.1%, or $49 billion, increase in Medicaid for the first full year of ObamaCare. Medicaid spending has climbed $85 billion to $350 billion in two years, and that’s with 19 states declining to join.

The Congressional Budget Office also cites a $30 billion, or 51%, spending increase for the Department of Education—“mostly because of an $18 billion upward revision in the estimated net subsidy costs of student loans and loan guarantees issued in past years.” Translation: Mr. Obama’s takeover of the student-loan business is costing far more money than advertised, probably due to growing defaults.

Let’s put these numbers together. Inflation is less than 2 percent. There was an 8 percent increase in revenues collected by the federal government. There was a $435 billion deficit. These numbers are unsustainable. They will assure the destruction of America. We need to elect people to Congress and the White House who will cut government spending. It is a national disgrace to have an 8 percent increase in revenues and still have a deficit. It is time for any rational members of Congress to demand a spending cut.

The Problem Is Not The Revenue–It’s The Spending

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CNS News posted a story today stating that the federal government raked in a record of approximately $2,883,250,000,000 in tax revenues through the first eleven months of fiscal 2015 (Oct. 1, 2014 through the end of August), according to the Monthly Treasury Statement released Friday. This equals approximately $19,346 for every person who was working either full or part-time in August.

The article further reports:

Despite the record tax revenues of $2,883,250,000,000 in the first eleven months of this fiscal year, the government spent $3,413,210,000,000 in those eleven months, and, thus, ran up a deficit of $529,960,000,000 during the period.

…The largest share of this year’s record-setting October-through-August tax haul came from the individual income tax. That yielded the Treasury $1,379,255,000,000. Payroll taxes for “social insurance and retirement receipts” took in another $977,501,000,000. The corporate income tax brought in $268,387,000,000.

The chart below is an illustration of America‘s spending problem.

The article also noted that under ObamaCare new taxes took effect in 2013.

Excessive spending is a problem that Washington has no incentive to fix. It is up to the voters to give them an incentive–fix this or we vote you out of office!

 

Wasn’t This Supposed To Make Things Better?

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On Tuesday, Investors.com posted an article about the Congressional Budget Office‘s report on ObamaCare.

The article included this chart:

The article states:

Thanks to ObamaCare, the CBO now expects that 10 million workers will lose their employer-based coverage by 2021.

This finding stands in sharp contrast to earlier CBO projections, which at one point suggested ObamaCare would increase the number of people getting coverage through work, at least in its early years.

The budget office has, in fact, increased the number it says will lose workplace coverage every year since 2011.

The latest CBO finding also thoroughly debunks the many promises ObamaCare backers made when selling the law — about how those with work-based coverage had nothing to worry about.

Scott Brown was elected to the Senate to stop ObamaCare. Because the Democrats used an unusual parliamentary procedure to avoid letting him cast that vote, ObamaCare was not stopped. The Republicans now have majorities in the House and in the Senate. We have seen enough damage caused by ObamaCare to know that the American people were lied to and that all ObamaCare has done is disrupt healthcare for Americans who were satisfied with their healthcare. It is time for the Republicans to do what they were elected to do–repeal ObamaCare.

Why The Republicans Need To Repeal ObamaCare

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Hot Air posted an article yesterday reporting that according to the Congressional Budget Office, ObamaCare will cost about $50,000 per person.

The article reports:

If you want to read the report yourself, it’s tucked away back in Appendix B of the document. (.pdf format) The total bill over ten years is closing in on the two trillion mark, and the various taxes and fees imposed under Obamacare are only going to make up for $643B of it. So I guess we really did have to pass the bill to find out what was in it.

The article concludes:

The plan is covering 27 million people with estimates of that growing by 25% over the next decade. A mid-range quality health care plan through most employers – including the employer contribution – can be had for roughly $5,400 per year. That works out to a little less than 150 billion dollars to just buy all of those people a health plan under the old system and the insurers would have been thrilled. The crippled, complicated government web site could have been stripped down to just ask how much you make each year and, based on that, issue you a voucher for a health insurance plan from a company that covers your area. We wouldn’t have liked it, but it would have come in at one heck of a cheaper rate and the debate would be over.

Rather than an exit question, we’ll just close with an observation. You were lied to. Again.

At some point, we need to elect a Congress that understands that the private sector does things better. It would have been much cheaper and easier to set up a system of tax refunds for health care premiums run by the private sector. The plan could easily have included insurance for children in college, portability across state lines, tort reform, and other ways to insure the previously uninsured. Unfortunately, Congress had a better idea–which wasn’t.

 

It May Seem Like A Good Idea, But Does It Work?

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One of the new mantras of the political left is income inequality. It is simply a crime that people who spent years becoming educated and learning things make considerably more money than those who didn’t. A college graduate has always made more money than a high-school graduate (but that was back when people majored in subjects that included marketable skills–but that’s a whole different issue).

Yesterday the Wall Street Journal posted an editorial explaining how President Obama’s efforts at wealth redistribution have impacted the poor and middle class. In one sentence, higher taxes and redistribution policies have helped neither the poor nor the middle class.

The article reports:

On taxes, Mr. Obama often claims that the rich don’t pay their “fair share,” yet the most affluent one-fifth of taxpayers on average supplied 68.7% of federal revenue for 2011. That’s according to the Congressional Budget Office, which last week updated its statistics on the U.S. distribution of income and taxes for 2011 and preliminary calculations for last year.

As for the top 1%, they funded 24% of everything the government does in 2011. The CBO also estimates that the end-of-2012 fiscal cliff deal that lifted the top marginal income tax rate to 39.6%, plus ObamaCare’s taxes on high-income individuals, increased their average federal taxes by 4.3 percentage points to 33.3% of income. The Warren Buffett minimum-tax rule asserted that no millionaire should pay an effective tax below 30%. Mission accomplished.

So what has been the impact of the increase in taxes on the wealthy? The editorial reports that in 2011, two years after the recession was declared over, middle class income fell by 1.9% compared with 2007.

The article concludes:

The main lesson in these statistics is not about dependence on government. Rather, it is a verdict on Obamanomics. Presidents who put reducing inequality above increasing prosperity end up with less growth and opportunity that benefits everyone, and thus with more inequality.

There’s also a lesson about the exhaustion of the liberal tax agenda. As a matter of arithmetic in a tax system as tilted toward the high end as America’s, the rich aren’t nearly rich enough to finance progressive ambitions. If Hillary Clinton wants more redistribution, she’ll inevitably have to tee up everybody between the 21st to 80th income percentiles for a European-style value-added tax, carbon tax or some other revenue maker.

Have you ever noticed that the people who want to redistribute wealth have enough money to pay accountants to shield their money? It is always the middle class that ends up paying the bill.

Was This What America Wanted?

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Yesterday Investors.com posted an article about the new ObamaCare insurance premiums and the expected enrollment in 2015.

This is a chart from the article:

The article reports:

Just 9 million to 9.9 million people will be enrolled by the end of 2015, the Department of Health and Human Services predicted. That’s far below an earlier Congressional Budget Office projection of 13 million.

Instead of a near-doubling of the exchange population projected by CBO, the White House’s estimate amounts to a 25%-40% increase vs. the newly disclosed 7.1 million tally as of October.

It is becoming very obvious that ObamaCare is not working out the way the American people were promised it would work.

Meanwhile, sometime next summer we can expect the Supreme Court to rule on whether of not the federal government is allowed to pay the subsidies needed to make ObamaCare work.

The article concludes:

Excluding subsidies, the lowest-cost bronze plan will rise 3%, and the cheapest silver plan will go up 4%, on average.

The after-subsidy premium cost increase of the cheapest bronze and silver plans has to do with how the subsidies are calculated. As income rises, even just to match inflation, the amount paid in premiums before subsidies kick in goes up.

Further, individuals will pay more for the cheapest plans, after subsidies, if the second-lowest-cost silver plan premium increases less — or falls more — than premiums for the lowest-cost silver and bronze plans.

In 11 of the 34 cities, the subsidized lowest-cost bronze premium will rise by double digits, but the subsidized rate will be flat or negative in nine of the cities.

So, in addition to not being able to keep your doctor or your health insurance plan if you like them, you will be paying more for what you do have under ObamaCare.

Being Force-fed Spin

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Every now and then a person involved in policy making makes a mistake and tells the truth. Admittedly, creating and passing legislation can be messy, but that mess should be subject to scrutiny by the American people who vote for our legislators.

Yesterday the Daily Caller posted an article about some of the things that were involved in the passage of ObamaCare. As I am sure you remember, ObamaCare was passed through the reconciliation process rather than the normal Parliamentary Procedure. Also, not one Republican voted for it.

The Daily Caller reports a statement from the man who designed it, Jonathan Gruber:

“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies. Okay, so it’s written to do that.  In terms of risk rated subsidies, if you had a law which said that healthy people are going to pay in – you made explicit healthy people pay in and sick people get money, it would not have passed… Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really really critical for the thing to pass… Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.”

This is the YouTube video of his remarks:

This is an example of a party with a political agenda taking advantage of the lack of involvement of the American people in the political process in America. If we are to keep the republic we were given by our Founding Fathers, we need to wake up and start paying attention. Otherwise, we will become the world’s next banana republic.

 

Economic Policies Have Consequences

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Today’s Washington Examiner posted a story about Congressional Budget Office (CBO) statements on the condition of the American economy. The CBO is not optimistic about the future.

The article reports:

The CBO updated its fiscal projections Wednesday, and they reflected its new gloomy view that the future of the U.S. economy is one of slower growth and lower productivity.

“They think that we will get back up to potential growth,” said Loren Adler, an analyst at the Committee for a Responsible Federal Budget, “but they make it clear that they think potential growth is lower than it used to be in the ‘80s and ‘90s.”

The CBO first reached the conclusion that future growth will be slower when it released its long-term budget projections in July, but only incorporated it into its official 10-year budget projections Wednesday.

In its new projections, the CBO sees the economy suffering from a scenario in which its potential is slightly lower than before — 1 percent lower in 2024 than previously expected.

As a result of weak economic growth this year and slightly slower potential growth over the next 10 years, the CBO sees $514 billion in lost revenue.

…The CBO’s scenario — slower growth and permanently lower interest rates — is consistent with the “secular stagnation” scenario outlined by former Obama economic adviser and Harvard professor Larry Summers, who has argued that the U.S. economy may not be able to generate enough consumer demand for goods and services on its own without stimulus from the Federal Reserve or through federal spending.

The assumption that demand will return to normal “now seems problematic,” Stein (Center for American Progress’ Harry Stein) told the Washington Examiner, noting that he wasn’t sure whether the CBO assumed secular stagnation in its model.

So how do you grow an economy? Ronald Reagan seemed to have the answer–lower taxes. If you look at the deal that President Reagan made with Congress (a Democrat-controlled Congress), Congress was going to cut spending along with the tax cuts. Unfortunately, Congress chose to ignore their part of the bargain, and spending during the Reagan years increased greatly and deficits went up despite record tax revenues coming into the government. Even with the growing deficits, the economy grew rapidly once the tax burden was taken off of the people who create jobs and produce wealth. The Obama Administration has increased the income of the wealthy while leaving the middle and lower classes behind. This is the fruit of crony capitalism. The gap between rich and poor has increased during the Obama Administration–not decreased. If you want to see America prosper again, elect people to Congress who will cut taxes and cut spending.

This Is Just Wrong

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The Congressional Budget Office website has posted a suggestion for cutting our military spending. As usual, it is a suggestion that does nothing to solve the bureaucracy problem–it just takes money away from people who were actually promised benefits.

Aside from the toll twenty or more years in the military takes on families, it also takes a physical toll on the soldiers. Many of our retiring soldiers also collect disability pay for various injuries suffered in the course of their service. These injuries include war injuries, but they also include more simple (but often painful) injuries acquired in the various physical requirements of service. Under the current program, soldiers with injuries collect disability pay (the amount is based on the severity of the injuries) as well as retirement pay. The Obama Administration is wanting to change that.

The article explains:

Military service members who retire—either following 20 or more years of military service under the longevity-based retirement program or early because of a disability—are eligible for retirement annuities from the Department of Defense (DoD). In addition, veterans with medical conditions or injuries that were incurred or worsened during active-duty military service (excluding those resulting from willful misconduct) are eligible for disability compensation from the Department of Veterans Affairs (VA).

Until 2003, military retirees who were eligible for disability compensation could not receive both their full retirement annuity and their disability compensation. Instead, they had to choose between receiving their full retirement annuity from DoD or receiving their disability benefit from VA and forgoing an equal amount of their DoD retirement annuity; that reduction in the retirement annuity is generally referred to as the VA offset. Because the retirement annuity is taxable and disability compensation is not, most retirees chose the second alternative.

As a result of several laws, starting with the National Defense Authorization Act for 2003, two classes of retired military personnel who receive VA disability compensation (including those who retired before the enactment of those laws) can now receive payments that make up for part or all of the VA offset, benefiting from what is often called concurrent receipt. Specifically, retirees whose disabilities arose from combat are eligible for combat-related special compensation (CRSC), and veterans who retire with 20 or more years of military service and who receive a VA disability rating of 50 percent or more are eligible for what is termed concurrent retirement and disability pay (CRDP). CRSC is exempt from federal taxes, but CRDP is not; some veterans would qualify for both types of payments but must choose between the two.

This option would eliminate concurrent receipt of retirement pay and disability compensation beginning in 2015: Military retirees currently drawing CRSC or CRDP would no longer receive those payments, nor would future retirees. As a result, the option would reduce federal spending by $108 billion between 2015 and 2023, the Congressional Budget Office estimates.

This is not the place to cut government spending. One of the things President Obama has done in office has been to undo the welfare reforms put in place by the Clinton Administration. Going back to those regulations, which actually decreased welfare rolls and put people back to work, would seriously reduce government spending. We need to give money to people who have earned it–not people who have not. When Congress recently did not extend the amount of time people could collect unemployment, unemployment went down. When you reward a behavior, it increases. We need to learn that lesson if we are ever going to cut government spending.

 

Looking Behind The Economic Numbers

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Breitbart.com posted an article today the current state of the American economy. The article points out that the current stated unemployment rate of 6.1 percent does not tell the whole story.

The article reports:

Only about half of the drop in the adult participation rate may be attributed to the Baby Boom generation reaching retirement age. Lacking adequate resources to retire, a larger percentage of adults over 65 are working than before the recession.

Many Americans who would like full time jobs are stuck in part-time positions, because businesses can hire desirable part-time workers to supplement a core of permanent, full-time employees, but at lower wages. And Obamacare’s employer health insurance mandates will not apply to workers on the job less than 30 hours a week.

The article also mentions the fact that many of our young people are being encouraged by colleges to obtain degrees in subjects that are of limited value in the workplace. These students graduate with massive debt and no marketable skills.

The article concludes:

New business regulations, more burdensome than are necessary to accomplish legitimate consumer protection and environmental objectives, exacerbate these problems.

All of this suppresses wages except for the most skilled and talented workers.

No surprise, average family income, adjusted for inflation has fallen from about $55,600 in 2007 to $51,000 even as the gap between families at the bottom and top widens.

It’s time for a new economic policy for America.

The Practical Side Of Economic Policy

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I hate to admit this, but I think economics is boring. I understand the basics, but after that I get lost. Yet economics and economic policy have a lot to do with how successful all of us are and how successful the country is. Right now America is not in good economic shape, and economic policies have a lot to do with that fact.

Fox News posted an article on Friday by Peter Morici entitled, “Why I can’t be both an economist and a liberal.” Mr. Morici goes into detail about the effects of some of the economic policies coming out of the Obama Administration.

The article cites an example of the consequences of one Administration policy:

The Congressional Budget Office estimates raising the federal minimum wage to $10.10 an hour, as President Obama proposes, would eliminate 500,000 to 1,000,000 jobs. Businesses will be forced to raise prices, lose customers and lay off employees. Fast food restaurants will begin to use more machines and we’ll see something similar to automated checkout devices at drug stores and supermarkets.

Past increases in the federal minimum wage did not have large impacts on employment, because those were in line with inflation, and businesses adopted strategies expecting such periodic adjustments. The minimum wage was last reset in 2009 and we knew that raising it one dollar to $8.25 to preserve purchasing power would not cost many jobs.

Jumping it up to $10.10 an hour, however, would fundamentally redefine the tradeoffs businesses face regarding unskilled labor and automation. The workers left standing would have more spending power but overall, increasing unemployment by at least 500,000 would take a bite out of GDP and growth from an already anemic economic recovery.

Meanwhile, the Democrats criticize the Republicans for not being willing to raise the minimum raise. Common sense and cause and effect are not mentioned.

The article also mentions the idea that if America would cut its CO2 emissions to curb global warming, China would follow suit.

The article points out:

Liberals argue that by setting a good example the United States can bring China along.

Nonsense! American diplomats have not been able to get Beijing to respond on its undervalued currency or protectionism generally, abandon the use of force to settle territorial disputes in the China seas, or anything else the Chinese Communist Party sees as impairing economic growth or its quest to wrest leadership from the United States on global economic and security issues.

It’s time for those in leadership in America to begin putting the good of the country above the good of their political party or worse, the desire to stay in power. We have created a political class–something never intended by the founders of this country. It is time to limit terms of Senators and Representatives and return to government by the people. A Congressional term should not be a ticket to lifelong wealth.

When Cuts Aren’t Cuts

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The CATO Institute posted an article yesterday about Congressman Paul Ryan’s budget proposal.

The article included this chart which tracks spending in the coming years under Congressman Paul Ryan’s proposed budget:

The chart below compares Paul Ryan’s budget against the CBO projections of the federal budget:

Notice that there are no actual spending cuts in Paul Ryan’s budget–it simply represents a slower rate of growth.

The article reports:

Chairman Ryan’s budget would spend $42.6 trillion over the next ten years. Opponents will say that Ryan’s budget slashes federal spending, while supporters will say that it includes large budgetary savings. The reality is that Ryan’s budget would increase spending at an annual average rate of 3.5 percent, or from $3.54 trillion in 2014 to $5.0 trillion in 2024. Only in Washington would that be considered substantial restraint, let alone slashing.

Until we change the culture of Washington, we can expect to see Congress drive America into bankruptcy. If you want to see change, you need to change the people you vote for. Continually voting for the people who keep spending high will not result in lower spending.  Most of the establishment Republicans (as well as the Democrats) have forgotten their promises to cut spending. Those Republicans need to be replaced by people who will remember their promises.

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The New Definition Of Senate Oversight

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Yesterday the Washington Examiner posted a story about an exchange between HELP Committee Chairman Tom Harkin and ranking Sen. Lamar Alexander at a Senate Hearing.

Senator Alexander asked Labor Secretary Thomas Perez  if he believes that the Congressional Budget Office (CBO) is qualified to judge the impact of raising the minimum wage. The CBO has stated that raising the minimum wage will cost jobs. Perez did not directly answer the question.

The article reports what happened next:

Harkin said that Perez can “answer as he wants to answer, not as you direct him to answer. You can’t force him to say one thing or another. If he wants to answer that question, then he can answer that question.”

Alexander: “So a senator is not entitled to a yes-or-no answer to a specific question?”

Harkin: “The senator is entitled to ask a question, and the secretary can give the answer as he sees fit.”

Alexander: “That’s not much congressional oversight in my book.”

Harkin: “Well, it’s being respectful of people who want to respond in the way that they feel is best suited to answering the question.”

Alexander: “Well then we might as well not ask questions if we can’t get answers.”

This exchange depicts where we are in Washington. Congress has given up so much power that it has lost its oversight of the executive branch of government. It will be interesting to see if the minimum wage gets raised by an executive order. Then we will see if there are enough people in Congress who respect the Constitution to demand that it be followed. America has serious economic issues–this is not the time to play political games with people’s lives.

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Creative Spinning

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Jonah Goldberg posted an article at National Review today indicating his choice for “word (or phrase) of the year.” He admits it’s only February, but he is convinced that “joblock” will be the winner.

The article reports:

The Congressional Budget Office issued a politically explosive report this week, finding that Obamacare will reduce the number of hours Americans work by the equivalent of 2.5 million full-time jobs. This is different from killing 2.5 million jobs, Obamacare defenders are quick to insist. This will be a shortfall on the supply, not demand, side. In other words, people with health insurance will opt not to work in certain circumstances if they know they won’t lose their coverage.

…House minority leader Nancy Pelosi says the CBO report vindicates Obamacare, because “this was one of the goals: to give people life, a healthy life, liberty to pursue their happiness. And that liberty is to not be job-locked, but to follow their passion.” Pelosi is particularly invested in this view. She’s been mocked for years now for her repeated claims that Obamacare is an entrepreneurial bill because it would let Americans quit their jobs to, among other things, “write poetry.”

Good grief! Mr. Goldberg goes on to point out the irony of wanting people to have the freedom to quit their jobs and write poetry while at the same time forcing them to buy health insurance for conditions they are not physically able to have.

The article concludes:

Which is why the real CBO story should be: “That awkward moment when everyone realizes Obamacare was a huge mistake.” The same CBO report projects that by 2024 the number of non-elderly uninsured will be — drum roll, please — 31 million Americans.

And that’s why all of this talk of Democrats as the Job-Lock Liberators is pathetic and hilarious at the same time. Virtually every promise has been broken, every prediction falsified. And now, at a time when millions want work that doesn’t exist, Democrats are claiming victory by trimming the amount of work actually being done.

Hopefully voters will look for ways to liberate these Democrats from the curse of job-lock come November.

What a wonderful idea!

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I Hope This Headline Is True

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John Podhoretz posted an article at the New York Post today with the headline, “Congressional Budget Office sends death blow to ObamaCare.”

The article reports the contents of the CBO report:

The one-two punch: Virtually as many Americans will lack health coverage in 10 years as before the law was passed — but 2 million fewer will be working than if the law hadn’t passed.

One killer detail comes on Page 111, where the report projects: “As a result of the ACA, between 6 million and 7 million fewer people will have employment-based insurance coverage each year from 2016 through 2024 than would be the case in the absence of the ACA.”

The irony of the whole ObamaCare program is the fact that ObamaCare was supposedly designed to provide health insurance to some 30 million Americans who are currently without health insurance. The CBO report predicts that in 2024, under ObamaCare, 31 million Americans will be without health insurance. If you consider ObamaCare as  the ‘War on the Uninsured’ in America, it appears that it will be about as successful as the War on Poverty in America.

The article also reports:

If that’s not startling enough, there’s also the telling projection about ObamaCare’s impact on employment — “a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024.”

Overall employment will rise, the report says, but not steady, secure, long-term assured employment. The possibility of securing government-provided health-care without employment will give people a new incentive to avoid it. “The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply,” the report says.

Indeed, overall, between 2017 and 2024, the actual amount of work done in this country will decline by as much as 2 percent.

It really is time to come up with an alternative to ObamaCare. I only hope Congress is up to the task.

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Income Inequality

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Lately we have been hearing a lot about ‘income inequality.’ It’s even a Biblical concept–Jesus said, “The poor you will always have with you, and you can help them any time you want.” So income inequality was with us in Biblical times and is still with us. It seems to be a constant thing. Other than help the poor among us, do we have the ability to change it. Well, we have a government that right now is trying.

Yesterday CNS News reported that according to a new study by the Congressional Budget Office, the top 40 percent of households by before-tax income actually paid 106.2 percent of the nation’s net income taxes in 2010. So what did the bottom 60 percent pay? That sounds like too few people pulling the wagon with too many people in it.

The article explains:

The households in the top 20 percent by income paid 92.9 percent of net income tax revenues taken in by the federal government in 2010, said CBO. The households in the fourth quintile paid another 13.3 percent of net income tax revenues. Together, the top 40 percent of households paid 106.2 percent of the federal government’s net income tax revenue.

The third quintile paid another 2.9 percent—bringing the total share of net federal income tax revenues paid by the top 60 percent to 109.1 percent.

That was evened out by the net negative income tax paid by the bottom 40 percent.

There is one aspect of the tax code that needs to be considered when viewing these statistics. When Congress has the highest percentage of millionaires per capita in America, why would they produce a tax code that is so unfavorable to the rich? Well, it’s not totally unfavorable to the rich–it is unfavorable to rich people who currently are earning their wealth. Family wealth carefully invested in tax shelters is not taxable. Previously acquired assets are not taxed unless they are sold.

The American tax code is already 13 miles long. We need to scrap it, and make it very simple–how much did you make, how much did you give to charity, how much mortgage interest did you pay? Subtract that from your gross income and pay a small percentage of what is left. The charitable deduction encourages people to support charitable works and the mortgage deduction encourages people to buy houses and form communities. End of story.

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The Positive Impact Of Sequestration

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On Sunday, Stephen Moore posted an article at the Wall Street Journal about the positive aspects of sequestration. The bottom line in the story is that because of sequestration the federal government is shrinking.

In fiscal 2013, the sequestration will save the government more than $50 billion.

The article explains the potential future impact of sequestration:

In other words, Mr. Obama has inadvertently chained himself to fiscal restraints that could flatten federal spending for the rest of his presidency. If the country sees any normal acceleration of economic growth (from the anemic 1.4% growth rate so far this year), the deficit is on a path to drop steadily at least through 2015. Already the deficit has fallen from its Mount Everest peak of 10.2% of gross domestic product in 2009, to about 4% this year. That’s a bullish six percentage points less of the GDP of new federal debt each year.

…Discretionary spending soared to $1.347 billion in fiscal 2011, according to the CBO, but was then cut by $62 billion in 2012 and another $72 billion this year. That’s an impressive 10% shrinkage. And these are real cuts, not pixie-dust reductions off some sham baseline. Discretionary spending as a share of the economy hit 9.4% of GDP in fiscal 2010 but fell to 7.6% this year and is scheduled to slide to 6.4% in Mr. Obama’s last year in office.

There are still major problems with entitlement programs going broke (I would like to repeat myself here and say that Social Security is not an entitlement program. If you are going to call it an entitlement program, just give everyone the money they have paid into it over the years and stop payments.). Social Security, Medicare and Medicaid will eventually have to be reworked in order to make them viable, but I seriously doubt that will happen under a Democrat president. Partial privatization of all three programs would extend their viability, but would need politicians willing to take a political risk for the good of the country. Right now that’s not what we have in Washington.

 

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Behind The Scenes In The Student Loan Battle

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Today’s Wall Street Journal posted an editorial about the current debate over student loan interest rates.

Today the Senate voted on student-loan subsidies. The news just reported that an attempt to roll back the interest rate increase has failed a procedural hurdle. One proposal suggests that the interest rate on the loans be tied to the 10-year Treasury rate. The advantage of this idea is that the taxpayers do not have to guarantee the lower rate to borrowers while the cost of the loans to the government goes up.

The Congressional Budget Office recently estimated taxpayer losses on student loans to be $95 billion over the next ten years. Remember that the government takeover of student loans was part of ObamaCare. (see rightwinggranny.com)

The article in the Wall Street Journal reports:

Liberals apologize for the price hikes imposed by their friends in the faculty lounge by pretending that universities are starved for revenue. Rep. Frank Pallone (D., N.J.) claimed on MSNBC on Saturday that “the federal government is not making the investment in higher education.” Perhaps he’s forgotten that annual Pell grant spending of $34 billion has roughly doubled in the Obama era, or that Uncle Sugar now originates more than $100 billion in annual loans.

In October 2011, I wrote in rightwinggranny.com:

The article also points out that under the proposed changes, the government would be entirely responsible for college loans. Students would borrow directly from the government and pay the government back. What happens when students default? The taxpayers pick up the tab. Aside from the fact that the benefits to the students of this program are minuscule, we need less government in all aspects of our lives–not more.

In a New York Post article quoted in the above article, John Podhoretz wrote:

One federal study found that between 1982 and 2007, tuition costs rose 432 percent while family income rose only 147 percent.

As taxpayers, we are subsidizing inflationary spending on the part of higher education. There is no incentive to cut costs if you know that the money will keep pouring in and that the government will enable the students to afford the rising tuition. Until parents refuse to pay the rising tuition at some of the prestige schools, we will continue to have this problem.

The Harvard University website reports:

The complete budget at Harvard College (exclusive of transportation) for 2012-2013 is $57,950. Tuition – $37,576; Room and Board – $13,630; College Facilities Fees (for use of library and other University facilities including the Health Services) – $3,290; Minimum for extras (books, clothing, dues, recreation, etc.) – $3,454.

In some parts of America, you can buy a house for that amount.

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How To Lie With Statistics

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This article has three sources–a Power Line article by John Hinderaker posted yesterday, a Hot Air post from yesterday, and a CNS News article from today. The subject of this article is the Congressional Budget Office report being hailed by supporters of the immigration bill as another reason to pass the bill. Not so fast.

The Congressional Budget Office (CBO) is non-partisan. It is also required to base its report of the numbers given to it. This makes it fairly easy for Congress to scam the system. Since the CBO only scores a ten-year window, all Congress has to do is put the major expenses of the legislation being scored outside of that window. Thus the current immigration bill says that the newly legalized immigrants will not be eligible for any federal programs for ten years. Amazing coincidence that the period of ineligibility ends after ten years. Does anyone want to predict what will happen on the first day after the ten years is up and our government is flooded with applications for government aid?

The article at Power Line points out:

Behind these rather antiseptic observations lies a human tragedy: falling wages and rising unemployment for the very segment of American society that has struggled the most in recent years. On top of that, the nation’s welfare system will be severely strained. While newly-legalized immigrants will not immediately be eligible for federal welfare benefits, that does not apply at the state and local levels. Those welfare systems will be overwhelmed with millions of new claimants–the cost to be borne, of course, by the taxpayers.

CNS News reports:

However, the cost estimate of the legislation that was released on Tuesday by the Congressional Budget Office says that the legislation would actually allow the flow of new illegal aliens into the United States to continue at a rate equal to 75 percent of the current rate of illegal immigration. This will be the case, in part, argues CBO, because of people who overstay temporary work visas that will be authorized by the bill.

This revelation that 75 percent of illegal immigration would continue if the Senate immigration reform proposal were enacted is included in a section of the report headlined, “Future Unauthorized Residents.” The section is on page 23 of the 63-page report.

So let’s get this straight. The current immigration bill would negatively impact wages of Americans, strain state welfare programs, hurt taxpayers, and only stop 25 percent of illegal immigration. So why in the world would we want to pass it?

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It All Depends On How You Name Something

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There have been some negative comments lately from Democrats worried about how the implementation of ObamaCare will impact the 2014 mid-term elections. Historically, a President in his second term loses big in the mid-term elections, so the Democrats don’t want any additional difficulties. Recently a Democrat referred to ObamaCare as a ‘train wreck’ about to happen. That certainly does not improve the image of ObamaCare. Also, a lot of 26-year-olds are timing out of their parents’ health insurance and realizing that the IRS will be fining them if they do not pay the increased premiums ObamaCare requires from them. Keep in mind that increasing premiums on younger people is supposed to subsidize medical expenses for the elderly and for those with pre-existing health conditions.

Well, now it’s time for the goodwill tour for ObamaCare. Yesterday the Washington Examiner reported that as part of the Mother’s Day offensive for ObamaCare, President Obama has described ObamaCare as “largest health care tax cut for working families and small businesses in our history. “ Really. If you believe that, please call me about buying some waterfront property in Arizona–or maybe I could interest you in a bridge in New York.

The article reports:

His argument was a Hail-Mary effort to redesignate subsidies for individuals to purchase health insurance on government-run exchanges as a “tax cut.” But according to the Congressional Budget Office, these subsidies actually qualify as more than $1 trillion in “Exchange Subsidies and Related Spending.” (Emphasis mine.)

Far from being a historic tax cut, Obamacare actually qualifies as one of the largest tax increases in history. It contains roughly $1 trillion in taxes — on insurance plans, medical devices and investment income. And many of the taxes will end up falling on the middle class. The law’s individual mandate, which the Obama administration successful argued was a tax before the U.S. Supreme Court, is projected to hit nearly 5 million Americans with incomes less than $60,000 by 2016.

I understand that right now we have a lot of low-information voters who know more about American Idol than about what is going on in Washington. However, as these people begin to notice what is happening to their household budgets, maybe they will wake up and start paying attention. I can relate to the low-information voters–I used to be one. My excuse was not American Idol–my excuse was juggling family, work, etc. Either way, it’s time for America to wake up and begin to vote for people who will actually tell us the truth and practice fiscal restraint. I am sure that we have people in politics who are capable of that–I am just not sure how much power they have right now. We need to pay attention and vote accordingly.

 

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A Disturbing Report On The Economy

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CNS News posted a story yesterday about the fate of the American economy under President Obama. The article cites a Congressional Budget Office (CBO) report projecting that America will never see full employment under President Obama.

The article reports:

The natural unemployment rate, according to CBO, is the “rate of unemployment arising from all sources except fluctuations in aggregate demand. Those sources include frictional unemployment, which is associated with normal turnover of jobs, and structural unemployment, which includes unemployment caused by mismatches between the skills of available workers and the skills necessary to fill vacant positions and unemployment caused when wages exceed their market-clearing levels because of institutional factors, such as legal minimum wages, the presence of unions, social conventions, or wage-setting practices by employers that are intended to increase workers’ morale and effort.”

CBO Director Doug Elmendorf has stated, “we think it will take four more years to get back close to full employment.”

I believe that America will recover from this recession. I also believe that the recovery would be much faster if businesses were not totally over-regulated by the government. A glaring example of this is the fact that the energy revolution that is taking place in America is taking place on private land–the government has blocked fracking on government land. If the government land were opened up and the Keystone pipeline put in place, the economy would recover very quickly.

We can recover, but we need to let private citizens have more power and the government have less. That won’t happen as long as the current Washington politicians are in power.

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The Obama Administration Targets Women And Children First

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Actually, the Obama Administration targets the elderly, and women and children first. Today’s American Spectator posted an article about a recent announcement from the Centers for Medicare and Medicaid Services (CMS) that it plans to cut an extra 2.2 percent from the Medicare Advantage (MA) program. This new cut, which came as a surprise to everyone except Obama’s health care commissars, will be added to the $200 billion in cuts Obamacare has already mandated for MA. What does this have to with low-income and minority seniors? The administration’s new Medicare cuts will come directly out of their pockets.

Medicare Advantage is one of the most popular health care plans among senior citizens. It is successful because it involves competition in the private sector.

The article reports:

… The MA plans are already taking a huge hit pursuant to Obamacare’s $200 billion cut, and they will be unable to absorb these newest slashes in the program without passing at least some of the costs to the patients in the form of increased co-pays and deductibles.

And it is by no means an exaggeration to say that these extra out-of-pocket costs will hit the seniors who can least afford them. America’s Health Insurance Plans (AHIP), a trade group to which many MA carriers belong, recently issued a report confirming that reality: “Sixty-one (61) percent of all minority (nonwhite) beneficiaries enrolled in Medicare Advantage in 2011 had incomes of $20,000 or less; 59 percent of African-American and 75 percent of Hispanic Medicare Advantage beneficiaries had incomes of $20,000 or less.”

…”This reduction in funding will leave many vulnerable seniors with fewer benefits, higher out-of-pocket costs, and in some cases the loss of their current MA coverage.”

It will indeed. As AHIP reminds us, “The Congressional Budget Office projects that the reform law’s payment cuts alone will result in three million fewer people enrolled in Medicare Advantage.” The group goes on to point out that Obamacare is already expected to increase the out-of-pocket expenses endured by MA enrollees: “Actuaries at Oliver Wyman estimate that the health insurance tax will result in seniors facing $220 in higher out-of-pocket costs and reduced benefits next year and $3,500 in additional costs over the next ten years.”

It is time to repeal and replace Obamacare. Otherwise the American health care system will never be able to recover from the damage being done to it.Enhanced by Zemanta