Category Archives: economic stimulus

OBAMACARE IS A WELFARE PROGRAM THAT IS REDUCING THE QUALITY AND AVAILABILIITY OF HEALTHCARE AND HARMING BUSINESS AND THE MIDDLE-CLASS

Obamacare is a multi-trillion dollar welfare program that makes health insurance available to 30 million previously uninsured Americans. It requires insurance companies to disregard pre-existing conditions. The inevitable affect is to raise the rates of required Obamacare policies. Most importantly, it makes Medicaid available for free to the poor and offers large premium subsidies to lower income individuals. It also offers other benefits to selected individuals, such as, allowing students to stay on their parents healthcare plan until age 26 and elimination of the doughnut hole in Medicare drug plans.

Why do Americans not like Obamacare if it helps so many people? Americans are discovering what the draftsmen of Obamacare knew, or should have known, that businesses, middle-class and healthy individuals are going to have to pay, directly or indirectly, for a substantial portion of the increased costs mandated by Obamacare. They will not be paying for improved insurance coverage for themselves, but to provide free coverage for the poor and reduced or subsidized premium costs for people with pre-existing conditions and low income individuals. Obamacare is designed to advance liberal Democrats acknowledged goal of improving the lot of the poor by taking money from the rich individuals and businesses who they think have more income than they need. To make matters worse it is destroying the availability and quality of healthcare and is giving too much responsibility to bureaucrats at the IRS.

Liberal Democrats do not seem to care that it will cost hundreds of billions of dollars a year to make such insurance benefits available. They fraudulently claimed, that when Obamacare was adopted and became effective it would enable everyone with insurance to keep their policy and receive the same benefits from the same doctors and healthcare providers, at reduced costs. We are only beginning to recognize how fraudulent those claims were. The draftsmen hid the true cost of purchasing healthcare under Obamacare by including large deductibles and co-pays that significantly raise aggregate healthcare costs. The availability and quality of care are declining. Doctors are leaving the profession and hospitals are reducing staffs. Medicare benefits are being reduced. President Obama repeated the false claims about Obamacare during the re-election campaign and now unashamedly claims that voters supported his views on Obamacare. The Obamacare discussion during the 2012 campaign focused on women’s rights issues, not the disastrous financial consequences of Obamacare.

Democrats, who rammed through the passage of Obamacare withhout a single Republican vote, knew that because our country was in the midst of the Great Recession, the federal and state governments couldn’t afford to pay for a new gigantic welfare program. They therefore devised an extremely complicated plan relying on a hodge-podge of new taxes and rules and regulations applicable to Medicare, Medicaid and health insurance to provide for funding the costs of Obamacare and to limit benefits and payments to providers. They gave it the misleading name of “The Affordable Care Act”. They didn’t care, or negligently failed to realize, the secondary affects of the new taxes including the negative impact they would have on young people looking for jobs and the middle-class who are losing good full-time, tax-paying jobs and existing insurance coverage.

Businesses seek to maximize profits. They have for years been seeking ways to limit increases in employee healthcare expenses. Outrageous Obamacare requirements encourage businesses to rethink their providing of healthcare benefits for employees. They are modifying business plans in ways to minimize or eliminate their health insurance costs. Some employers will save money by requiring their employees to purchase their own insurance from the state exchanges. Some will pay penalties to avoid paying for expensive Obamacare policies. Aggregate payrolls are being controlled by not hiring or laying off full-time employees and hiring additional part-time employees. Retired employees and spouses are losing healthcare coverage.

Obamacare is based on tens of thousands of pages of laws and regulations which are extremely difficult to understand and interpret. It requires the filling out of forms that make the practice of medicine and the delivery of healthcare more stressful and less profitable. Liberal Democrats who proposed Obamacare deliberately ignored pleas of doctors about the outrageous cost of purchasing malpractice insurance because of out of control claims and excessive jury awards. Why would we expect them to do otherwise? Tort lawyers are major contributors to Democrats. Obamacare was promoted to gain votes for Democrats. It is turning into a train wreck which may cost them votes.

The draftsmen of Obamacare tried to hide the cost of giving the new benefits by adopting a variety of new taxes on the middle-class and the rich and requiring businesses and individuals to purchase insurance. They knew that taxes on medical products and drugs, not only drive business off-shore and reduce research and development efforts to produce new products, but also, are inevitably passed on to the consumer. They knew that, if they told the truth about Obamacare, young people, middle-class workers and their employers would object to paying larger insurance premiums or penalties to pay for the new welfare benefit for the poor and those with pre-existing conditions. That is the reason they adopted penalties for businesses and individuals if they failed to buy insurance. They did not anticipate many of the adverse consequences that have surfaced as businesses and individuals have learned about the requirements of Obamacare. Now they are trying to get people to purchase Obamacare policies by claiming it is the patriotic thing to do to help your fellow Americans. Why should young people, strapped with student loans or working in part-time jobs as a result of Obamacare, do so?

DEMOCRATS WANT A SHORT GOVERNMENT SHUTDOWN

A federal government shutdown for a few days will do little damage to the US economy, but will inconvenience and scare many Americans. Democrants  want the shutdown to enhance their chances of gaining control of the House in the 2014 elections. They are goading Republicans into a fight over the funding of Obamacare to give President Obama the opportunity to claim Republicans have forced a shutdown. Polls show that any shutdown will cause great political harm to Republicans who are being wrongfully attacked by President Obama as extortionists. 

Regardless of whether it was adopted based on false promises, Obamacare is the law of the land. Like it or not, many of its provisions will become operative on October 1, with, or without, US government funding.  It is irrelevant that Obamacare is a new welfare program that is causing great damage to our economy. The poor and low-income people it is designed to help  will line up to enroll for the free or highly subsidized insurance policies, with no pre-existing conditions. President Obama has committed to spend billions of marketing dollars to convince Americans that they will love Obamacare in a few years after we make some corrections and to get young people to purchase policies.

Republicans, led by Senators Cruz and Lee, are publicizing many of the negative aspects of Obamacare. They should continue to make their case before the Senate over the next few days.  However, it is inevitable that the Senate bill will be passed without the provision to de-fund Obamacare. When it returns to the House, Republicans should permit the Democrats to prevail. The best that Republicans can accomplish is to get an agreement for the appointment of a joint Congressional committee to consider the modification or repeal of Obamacare. Any attempt to de-fund or delay the effectiveness of Obamacare merely runs time off  the clock before the potential government shutdown.  Republicans will have an opportunity to expose the terrible consequences of Obamacare, including the harm to the middle-class, in the 2014 Congressional campaigns.

Obamacare, even if further modified, will remain a horrible law and hodge-podge of regulations rammed through Congress, without a Republican vote, during the Great Recession. It changes Medicare, Medicaid and almost every aspect of healthcare. It mandates federally approved insurance to be purchased by or for everyone. The poor and low-income taxpayers get free or highly subsidized coverage. To expand the class of beneficiaries, they threw in benefits for children living at home until age 26 and eliminated the doughnut hole from the Medicare drug plan. Our federal and state governments couldn’t afford to pay for it. They, therefore, adopted all kinds of new taxes and penalties on businesses and individuals to pay for their new welfare program.  Our economy, businesses and the middle-class are suffering from the confusion and increased costs. Obamacare is slowing hiring and capital investment and Is is leading to an increase in undesirable part-time  jobs, while causing the loss of full-time, tax-paying jobs.  It is increasing insurance premiums and causing the loss of coverage for many who had insurance. It is harming doctors, hospitals and other healthcare providers and reducing the availability and quality of healthcare. It taxes the gross sales of medical equipment suppliers and drug companies. Such taxes
(unless passed on as increased healthcare costs that will add to the burden being placed on the middle-class) will confiscate the cash needed to support research and development efforts that have placed the US in the forefront of life saving and enhancing equipment and medications. Some of the manufacturers will become unprofitable or will be unable to raise capital, and go out of business. It puts the IRS in control of major healthcare decisions.  Based on recent experience this assures that healthcare subsidies and availability will become politicized and allocated unfairly.  It is so complex that years after its adoption our governments are not prepared for it to become effective.

Why does President Obama like it? It gives the government greater control of our lives and  takes from businesses and individuals who have and gives to those who have not. It adds to his base of people who benefit from handouts. It is unlikely that President Obama and his liberal cronies realized, when it was adopted, how much damage it would do to the economy and the middle-class. As the problems have surfaced, he has made changes in the law and granted waivers without Congressional approval. He talks of further adjustments in the law to work out the kinks. He may not have yet realized that  Obamacare is so conceptually flawed that it is irreparable and should be repealed so that we can go back to a free market solution. Of course that would require taking away or reducing the new welfare benefit. Why should the poor expect to get the same or better healthcare benefits for free than will be available for middle-class people who work to earn the insurance or who may lose their benefits or have to pay for them? Why should we harm business and eliminate or prevent the creation of middle-class jobs, to create another welfare benefit, while the economy remains in a weakened state?

With all the hull-a ballo over Obamacare and the  potential government shutdown, it has gone virtually un-noticed that the disastrous Sequester cuts are retained in the proposed government funding proposal. President Obama and the liberal financial press have been effective in misleading  voters into thinking that the economy is improving  because unemployment is falling and the federal deficit is shrinking. They disregard the large number of people who have left the work-force, the great increase in the number of part-time jobs (largely as the result of Obamacare),  the reduced government spending as a result of the Sequester and the increased revenues from the 2013 tax increases. As a result, and because he refuses to discuss un-funded long-term entitlement (largely Medicare) liabilities, he is in no position to be insisting on necessary increases in defense and infrastructure construction spending to stimulate the economy, provide homeland security  and create full-time, tax-paying jobs. The Obamacare mess makes it highly unlikely that our economy will grow satisfactorily during the remainder of the Obama term. 

Jump Start America Bonds Represent the Perfect Economic Stimulus

My book, “Perpetuating American Greatness After The Fiscal Cliff”, proposes changes in the federal corporate income tax laws that will encourage our international corporations to STEP UP and invest, risk free, a portion of the $2 trillion parked overseas, in state transportation infrastructure construction projects. They will do so by purchasing a new type of tax-exempt bonds offered by our states that will be called Jump Start America Bonds. The sale of such bonds to finance shovel ready state transportation infrastructure construction projects will generate the perfect economic stimulus. Hundreds of thousands of good tax-paying jobs will be created.

Corporations investing in Jump Start America Bonds will be able to repatriate to the US billions of dollars of cash, held offshore for tax reasons, at highly discounted tax rates, and without risk of loss. If they prefer they can treat the investment in Jump Start America Bonds as having been made and remaining offshore and only pay a repatriation tax on the interest received. Five years after issuance the transferable bonds may be repatriated at the discounted tax rates and used at face value plus accrued interest to pay any federal corporate income taxes.

Corporations will alternatively be able to STEP UP and promote the economic stimulus by floating their own bond issues domestically at the currently low rates and investing the proceeds in Jump Start America Bonds. Corporations will profit from the interest rate spread and will be able to use the proceeds from the Jump Start America Bonds to repay their bonds when the principal becomes due.

Wealthy individuals will also be able to STEP UP and purchase Jump Start America Bonds without risk of loss because the bonds will be usable at face value plus accrued interest to pay federal estate taxes (like previously issued “Flower Bonds”).

 A corporation providing the major portion of the funding of a bridge or tunnel might acquire naming rights during the term of the Jump Start America Bonds that finance a project.

The federal government will see a surge in tax revenues from the taxes which will be paid, even at reduced rates, from the repatriation of offshore profits, and from the income taxes payable by the contractors building the construction projects and their employees. Welfare and unemployment benefits will decline. The federal deficit and the rate of growth of the National Debt will be reduced.

The multiplier effect will create tens of thousands of additional jobs and generate billions of additional federal and state income tax revenues. The housing and auto industries will benefit from the creation of middle class jobs.

The US government’s accepting Jump Start America Bonds, if they are tendered in payment of corporate or estate taxes, will act much like QE. The Jump Start America Bonds will ultimately be converted into cash as interest payments are made and when they mature.

The tax law changes recently proposed by President Obama as part of his “grand bargain” are merely a slightly different form of tax and spend legislation he has previously proposed. He would reduce corporate tax rates, but increase net tax revenues by eliminating deductions and adding a tax to confiscate a portion of the $2 trillion held overseas by US corporations to legally avoid the unfair tax upon repatriation. The “grand bargain” is dead on arrival.

By way of contrast, changing the US corporate tax laws to enable the sale of Jump Start America Bonds will encourage our rich corporations to finance transportation infrastructure construction of the type which President Obama has suggested. We would expect that our corporations would choose to invest in projects likely to generate the revenues to fund the carrying costs of the Jump Start America Bonds. On the other hand we would expect President Obama to spend, as he previously did with DOT funds, on projects in states where Democratic candidates would benefit in the upcoming 2014 elections.

We Must Repeal Obamacare Because It Is Destroying The Middle Class

Obamacare is an extremely complex, highly flawed, law that was designed by President Obama’s appointees and Democratic liberals. They claimed that by controlling costs, taxing the rich and healthcare product suppliers, and forcing everyone to have coverage, we could afford to offer healthcare insurance to everyone, including 30 million people previously uninsured, and despite eliminating consideration of pre-existing conditions, without increasing premiums. They knew that middle class Americans would object to Obamacare if they were forced to pay to subsidize the poor or those with pre-existing conditions. They concocted a scenario designed to mislead the public into thinking that everyone would be better off after the passage of Obamacare.

Obamacare was passed based on promises, all of which are proving to be untrue, that included:

* It would be revenue positive for federal and state governments;
* If you liked your insurance policy you could keep it;
* The cost of your insurance would not be increased; and
* If you were on Medicare you could keep your relationship with your own doctor and continue to receive the medical care which your doctor recommended.

Providing coverage for everyone including those with pre-existing conditions sounded like a good idea to most people. The poor liked it because they were not going to have to pay for the insurance coverage that would supplement their Medicaid and hospital emergency room benefits they were already getting without having to pay. Most working people with tax-paying jobs believed President Obama when he promised them it wasn’t going to cost them anything. Hospitals liked it because they would be paid by the insurance companies for the emergency room treatment of the poor instead of having to pass on emergency room losses to others. The most likely reason that unions supported Obamacare is they didn’t understand the consequences and support almost everything the Democrats and President Obama propose. They have recently awakened and voiced objections to Obamacare.

How could they have expected Obamacare to be revenue positive without increasing everyone’s insurance policy cost, if they were generously going to provide healthcare insurance coverage to 30 million additional people and ignore pre-existing conditions? The true insurance cost of providing healthcare to individuals under age 65 with pre-existing conditions varies in each case, but can be 50 or 100 times more expensive than providing coverage for people without pre-existing conditions.

Democrats and President Obama claimed it would be cost positive by (i) adopting new sales taxes to be paid by medical equipment manufacturers and drug companies (ii) adding a new tax (which unfairly taxed families) of up to 3.8% of income on taxpayers President Obama called rich, but who were really middle class and above in most large cities, (iii) requiring businesses with 50 or more full-time employees (those working more than 30 hours per week) to provide qualifying insurance, (iv) requiring everyone, who does not otherwise have insurance, to purchase insurance, including young people, who will be required to pay an excessive price for their age, or pay a penalty, and (v) reducing Medicare benefits by $700 billion (which Democrats defended by claiming it was a Republican idea).

Moreover, in an outrageously fraudulent attempt to make Obamacare appear to be cost-effective, they included a provision offering long-term care insurance that they claimed would be highly profitable in the first ten years. In doing so they were ignoring a standard insurance business requirement that they establish reserves from the premiums collected for the very large claims expected in later years as some of the insured became incapacitated. After the fraudulent claim of the long-term care profitability was exposed, the long-term care provisions were repealed, before any policies were sold, but after Obamacare was passed. The ten-year cost of Obamacare has since been recalculated numerous times by the Congressional Budget Office and has gone from a profit to a loss that will exceed $2 trillion.

Even that amount may prove to be much too low. Taxpayers have begun to realize they were being misled and they or their employer will have to pay much more for their insurance coverage in most states to subsidize the poor and those with pre-existing conditions.

One group after another has been requesting relief from the onerous provisions of Obamacare. As was predictable, requiring employers with 50 or more full-time employees to provide insurance coverage is causing disastrous consequences. Some employers will be forced to close their doors. Other employers are laying off full-time employees and hiring part-time employees to avoid Obamacare. The middle class which has been decimated by the Great Recession are losing good tax-paying jobs with healthcare benefits as employers seek to avoid the cost of providing the healthcare coverage required by Obamacare. President Obama recently, without fanfare, on a Friday afternoon, postponed the effective date of the employer mandate until 2015 so as not to effect his attempts to get control of the House of Representatives at the mid-term elections. It is questionable as to whether he had the legal right to change a law passed by Congress. If successful in getting control of the House, he will probably repeal the employer mandate and leave Obamacare with a large revenue shortfall.

Although the business insurance mandate has been postponed for a year until January 2015, businessmen will continue to plan ahead. Millions of individuals forced to accept 30 hours per week jobs will become eligible for welfare benefits.

Obamacare has stirred the pot. Businesses faced with rising insurance costs have studied the law and will weigh their options. Some, particularly those whose employees will qualify for substantial premium subsidies if they purchase their own insurance, will prefer to offer their employees a raise and pay a $2000 per employee penalty. Other businesses, that currently provide healthcare coverage, will be able to eliminate healthcare benefits for part-time employees since most of them will qualify for 100% or substantial subsidies if they purchase their own insurance.

Unless the employer mandate is modified or repealed many businesses will keep their head-count of full-time employees below 50 to avoid the purchase of insurance or paying the penalty. Such actions, coupled with young people electing to pay the small penalty rather than overpay for insurance they don’t need, is going to cause revenues to be received by insurance companies to cover low risk beneficiaries to be much less than anticipated. The penalties are payable to the US Treasury and not the insurance companies. They will be left with a higher risk group that purchases insurance and will have to raise their rates.

Although attempts are being made (including the planned spending of hundreds of millions of dollars) to trick healthy young people to overpay for insurance, it does not make economic sense for them to do so. To reduce the cost of purchasing insurance there are little known co-pays and deductibles if you buy insurance. For example. CA’s insurance exchange silver-level coverage requires a $45 co-payment for each office visit, $250 co-payment for each emergency room visit, and has a $2000 annual deductible. The cheapest plan has a $5000 deductible. Those who receive highly or fully subsidized policies will go to the emergency rooms, as in the past, and claim they are unable to pay the co-pay or deductible.

Many young people, who have jobs, will pay the small penalty (which will increase over a three-year period, but probably not enough to change one’s decision) and get by without coverage. The can buy the insurance when they need it without fear of a pre-existing condition. Many of these young people are saddled with college loans and unable to get good jobs. President Obama is travelling the country trying to convince them that if Obamacare succeeds they will be better off in the long run. His problem is that he is promoting a law which contains unfair and unsound financial provisions. He will try to convince young people that they will be violating the law if they fail to purchase insurance, but the pre-determined penalty makes it look more like an option.

Even the formulas for determining the portion of one’s premium that will be subsidized are carelessly drafted and highly flawed. Like all Obama tax proposals, the subsidies are calculated in a manner which is extremely unfair to families and the middle class. A married couple may pay thousands of dollars more for insurance than if they were unmarried and living together. Obamacare provides reduced subsidies as individual or family income rises. As expected, the poor get a free ride. The subsidies phase out at family income levels around $90,000. The middle class must bear the brunt of the increased premiums of Obamacare insurance so that the poor and those with pre-existing conditions can be subsidized. One commentator points out that, in calculating the subsidy under one exchange’s formula, there is even a point in the subsidy formula, where, if your family income goes up by $1000, your annual insurance cost goes up by more than $8000. You have to refuse a raise or a bonus or your net take home pay will decline.

We cannot be certain of the extent that Obamacare has contributed to President Obama’s failed fiscal policies which have encouraged the Fed to extend QE. Obamacare by inducing the reduced hiring of full-time employees and the hiring of more part-time employees is creating an illusion of job creation. Despite the increase in part-time jobs and reduced participation rate during recent quarters, the top line rate of unemployment has remained around 7.5%. U6, a better measure of unemployment, paints a much worse picture, showing a 14% level of unemployment. We have more than 2 million less full-time jobs than in 2008. Not enough middle class jobs are being created. Nevertheless, we hear repeatedly from the financial press and Obama supporters of the jobs created by the Obama stimulus programs (which created few good jobs, if any) and the reduced rate of unemployment. They cheer the reduced top-line unemployment number each month. There is nothing to cheer about. Full-time employment has stagnated. The middle class is suffering.

Before Obamacare, most large businesses provided health insurance coverage for their employees. If the cost of insurance coverage increases as a result of the requirement that pre-existing conditions be ignored, or if the economy stagnates and profits decline, expect some businesses to begin to eliminate health insurance coverage and to pay the Obamacare penalty. Employees might be given a raise to cover their individual purchase of insurance, but the after tax benefit of such raise may cover only a fraction of the cost of purchasing an individual or family policy. Of course since pre-existing conditions will not pose a risk, the employees may elect to go without coverage and pay the individual penalty. As a result the poor, who had no coverage before Obamacare will have coverage, and many working people, who had coverage, will wind up paying a penalty and having no coverage.

Some of them will purchase annual healthcare plans, with limited coverage, being put forth by groups of physicians. This will give them access to a family doctor who can advise them and treat most of their problems. If a family member develops a serious illness, that is not covered by the plan, they can then purchase a policy which qualifies under Obamacare.

The excess of middle class workers take home pay over that of welfare recipients who work part-time and collect negative income taxes was being reduced prior to the adoption of Obamacare. Since President Obama was elected there has been an unprecedented increase in the number of Americans receiving food stamps and other types of welfare payments. This has resulted in large part from the effects of the Great Recession that resulted in the loss of millions of good tax-paying jobs and from politically motivated federal government efforts to encourage people to seek benefits. There are a growing number of individuals who have decided that receiving a broad range of welfare benefits supplemented by the income from a part-time or low-paying job that is increased by the negative income tax, will give them a better quality of life than if they found and accepted a tax-paying job and lost their eligibility for welfare benefits. Almost 73% of black children are born out-of-wedlock. In many cases the father sneaks in and out of the home so that they can collect maximum welfare benefits.

There has also been a large increase in the number of people on disability many of whom would work if they could find a good job.

Obamacare is going to greatly reduce the incentive for young people to stay in school or to seek full-time tax-paying jobs. It is going to encourage settling for part-time employment and seeking ways to maximize welfare benefits. Teenagers will be further encouraged to have out-of-wedlock babies, and the inner city education and crime problems will be exacerbated. Young people of all races, growing up in inner city areas across the country, will, with the exception of the scholarship student, athlete or performer, have little incentive for self improvement or to seek a good tax-paying job with an opportunity for advancement. They will choose to settle for lives in a ghetto with minimum comforts and little self-esteem. They will vote for candidates who promise to give them greater welfare benefits. Obamacare is accelerating the conversion of American capitalism into a terrible form of socialism.

We should question whether this is the type of America we want or whether American capitalism will be sustainable.

Liberals refuse to acknowledge that Obamacare is fatally flawed and currently unaffordable because of the current weakness in our economy. They argue that the problems that Obamacare is facing are caused by Republicans who want Obamacare to fail. They argue that conservatives predicted doom and gloom for Medicare when it was adopted and now almost everyone likes it. They ignore Medicare’s unfunded liabilities. They argue that when Obamacare is fully in force it will accomplish its objectives.

However, Obamacare is not funded like Medicare is. Medicare is funded by a payroll tax paid by all working people prior to retirement and an annual supplemental payment for the coverage after reaching age 65. Unless you become disabled, you must work and pay taxes for years before you get benefits. Obamacare is funded by a variety of new taxes (a portion of which will be passed on to consumers) and the mandatory purchase of insurance coverage by corporations and individuals. Obamacare is in large part a welfare benefit for the sick and the poor to be paid for, in large part, by middle class working people.

There is talk about means testing Medicare. This means that those considered rich, who pay the most in Medicare withholding taxes and the new Obamacare tax based on income, will lose some or all of their benefits. Their payments will effectively become additional income tax payments.

We are the world’s richest nation and have the best healthcare system. We can afford to and should provide a reasonable level of healthcare to all of our citizens, regardless of their ability to pay. Every child needs pre-natal care, required preventive shots and antibiotics from time-to-time. We can afford to treat those who acquire leukemia and can cure or ameliorate most children’s cancers and many other inherited or acquired diseases. Prior to Obamacare we were doing all these things under existing insurance coverages and without cost to those who did not have insurance and couldn’t afford to pay. We needed to control costs (particularly, those at health insurance companies) and were working on it. A significant portion of family care can be provided more cost effectively at a clinic by a technician or nurse.

We cannot afford to give each person every high cost heart, liver, kidney, bone, retina, hip, knee or shoulder transplant or replacement they want, without a charge, whether or not they have insurance. We must have life-time limits, co-pays or deductibles for these expensive procedures.

Since most of these procedures are needed by people after reaching age 65, they were creating Medicare cost problems as our population aged and new expensive procedures became available before Obamacare was introduced. We needed to bring aggregate Medicare costs under control. Obamacare’s expanded healthcare benefits, that are provided for free for the poor under Medicaid, are exacerbating the problem of affordability.

Even though one has contributed to the cost of obtaining Medicare benefits in the form of withholding taxes for years and pays to purchase Medicare coverage, the benefits to be received by Medicaid beneficiaries, who will pay nothing, may be the same. This makes no economic sense. Either the Medicare benefits, or the payments to healthcare providers will be reduced or someone is going to have to pay for our generosity.

The onerous reporting provisions and limited fees payable by Medicare and Medicaid under Obamacare, when added to excessive malpractice costs, are driving doctors out of private practice and reducing the availability and quality of care.

The IRS, which is under investigation for unfairly targeting conservative groups for political purposes, is going to decide what healthcare benefits and premium subsidies you will be eligible for under Obamacare. They will be acting as death panels when determining who is eligible for and in what order a patient receives a transplant or treatment. Because President Obama has politicized the IRS, people paying for insurance may find that they receive lesser benefits than others whose vote is being sought or rewarded. We have heard it before. To the victor will belong the spoils.

Health insurance companies are required by Obamacare to offer benefits through qualifying policies. In an attempt to keep premium costs down our governments may use their insurance exchanges being established under Obamacare to undercut price. If insurance companies are driven out of business by Obamacare, we may end up with a one party payor system run by our inefficient federal and state governments that can be expected to further squeeze healthcare providers and reduce or delay service to limit the cost of providing coverage.

 

 

The IRS Scandals Are Expanding Daily And Harming The Economy

The criminal targeting of conservative organizations and their members and contributors by the IRS is an outrageous abuse of power for political gain. The crimes have been compounded by permitting the practices to continue for years after they were exposed. The Obama Administration, although acknowledging that a wrong has been committed, has permitted a cover-up of the wrongdoings and made no attempt to punish the wrongdoers. New scandals relating to IRS spending irregularities are being exposed on a weekly basis. They are causing a rapid decline in President Obama’s approval rating.

The actions of the IRS have raised serious concerns as to whether its role in the administration of Obamacare will also be politicized and result in wasteful spending.

 Part-time and low-income jobs have enabled Obama supporters to claim that unemployment is declining, but the long-term unemployed and college graduates are not finding an adequate number of good tax-paying job opportunities. The healthcare turmoil and uncertainty being caused by pending Obamacare requirements has discouraged both the offering of good tax-paying jobs and the making of capital investments by large and small businesses. The IRS scandals, together with the Benghazi, journalism and NSA scandals, are proving to be a distraction preventing the stimulus spending necessary to generate infrastructure construction projects needed to create middle class, tax-paying jobs.

The IRS Scandal Continues Unabated

Months ago President Obama acknowledged wrongful actions by the IRS in reviewing requests of organizations for tax exempt status. He replaced the head of the IRS and promised an investigation. He never acknowledged whether he or his advisors knew that the practice had continued for years before he acted. We soon heard the first fraudulent attempt at a cover-up from Democratic apologists claiming that the wrongdoing was perpetrated by a few rogue agents in the Cincinnati office. It is now clear that the complex illegal practices designed to silence and financially punish political adversaries of the Obama administration were traced to officials in the Washington office, including an attorney appointed by the president. Next deliberately misleading statements were floated claiming that liberal sponsored entities received the same treatment. An examination of the facts soon showed that more than ten times as many conservative groups were harassed and that some of the liberal sponsored entities, but not one of the conservative sponsored entities, received IRS approval.

The continued unjustified and relentless investigations by the IRS on conservative organizations and their members and contributors is a horrific and illegal abuse of power. It is impinging on freedom of speech and causing great financial hardship for adversaries of the Obama administration.

President Obama has conveniently forgotten that he acknowledged wrongdoing by the IRS. He appointed a new IRS Chairman who conducted a white-washed investigation. The IRS and President Obama are stonewalling the ongoing investigation by House of Representative Republicans. Permitting the practice to continue for years, followed by a cover-up and failure to punish the wrongdoers, compounds the crimes.The failure to end the continuing the investigations, even by issuing a denial of the requested tax exemptions, is impeding the entities from going to court to seek appropriate relief. What happened to the Equal Protection Clause of the Fourteenth Amendment?

The scandal has been expanded by the exposure of outrageous IRS spending.

The IRS role in administering Obamacare virtually assures that Obamacare will be corrupted for political purposes and that its costs will get out of control.

The rapid loss of confidence in the Obama Administration as a result of the IRS and other outrageous scandals is making it impossible to get Congress to act on a needed fiscal stimulus plan to generate tax-paying jobs to jump-start the economy.

The pro-Obama press fails to express outrage.

It’s Graduation Time And The Economic Recovery Gets a Failing Grade

As we reach the middle of 2013 our colleges are conducting graduation ceremonies and our in debt seniors are looking for jobs. Too many of our graduates are having a difficult time. The US economy is growing slowly, but this recovery is different from previous recoveries. Top line unemployment has fallen because of the substantial growth in low-income and part-time jobs. However, such low paying jobs are not the type of entry-level positions our college graduates seek and are qualified for.

Many of the new jobs have compensation so low that the employees become entitled to negative income taxes. Twenty-four million people are either unemployed, have given up looking for work or have accepted part-time employment. These are the unemployment ranks which our graduates are joining. The number of people collecting welfare is growing.

There is a serious risk that American capitalism is being converted under President Obama into a new form of socialism which is eerily similar to European socialism. Because of the failure to stimulate the economy and create tax-paying jobs, the National Debt is growing at a faster rate than the GDP. Non-income-tax-paying jobs, that offer negative income taxes, grow the GDP, but they also grow the National Debt.

Our transportation infrastructure is decaying because a large number of our cities and states are insolvent and Congress is not supplying adequate assistance. The author of this article in his book, “Perpetuating American Greatness After The Fiscal Cliff”, has proposed federal tax law changes to permit the sale of Jump Start America Bonds to enable and encourage our international corporations and wealthy individuals to invest in infrastructure spending.

Few members of the decimated middle class are participating in the recovery. Many of them have lost their jobs and their homes. Obamacare is encouraging part-time employment and many employees have or are going to lose their health care coverage. The IRS, which will have major responsibilities under Obamacare, has become politicized and too few Americans are outraged. The acknowledged wrong-doing has been permitted by the Obama administration to continue for years. Housing prices have seen a small increase because of purchases by investors, while young families remain in large part as renters. 

Austerity being fostered by the Sequester is the wrong remedy and is harming the economy. The Obama administration has lost control over its ability to stimulate the economy because it refuses to deal with our out-of-control entitlements which are becoming worse under Obamacare and because it has failed to deal with the scandals which have caused a decline in President Obama’s approval ratings.

Good Income Tax Paying Jobs and Other Not So Good Jobs

All jobs are good, but some are better than others. A part time job at or near the minimum wage for a high school student or drop-out can be a good job for such person. Hopefully, it will lead to advancement. The low-income employee can be expected to promptly spend all of the take home pay which increases the GDP. However, such spending, mostly on food and clothing, creates only a minimal and meaningless multiplier effect and the low compensation results in the payment of negative income taxes.

Other jobs that pay salaries that require the employee to pay federal income taxes are much more desirable from a macroeconomic prospective. Individuals with tax-paying jobs buy cars, homes and other products and services, while people with low paying jobs generally do not. The increase in demand for such products and services leads to hiring additional workers and capital spending each of which generates additional tax-paying jobs.

The greatest failure of the Obama stimulus programs is that they failed to create enough federal income tax paying jobs. A large portion of the tax rebates was used to reduce debt and created no jobs. The effect of Obamacare on employment is only beginning to be understood. It seems to be encouraging part-time jobs (to avoid Obamacare requirements) that are reducing head-line unemployment but are not materially increasing aggegate payrolls or federal income tax revenues. 

Welfare spending improves the lives of the recipients, but does not create many tax-paying jobs. Food stamps are generally spent at groceries or discount stores that might hire a clerk or two in a low-paying job. Farmers, overseas clothing manufacturers and their supply chains increase their sales, but hire few additional domestic workers. Insignificant tax revenue increases result from welfare spending. The GDP goes up on a better than 1 to 1 ratio because all of the welfare payments are spent almost immediately and the added low income wage earners spend their earnings. However, since almost no federal income tax revenues are generated, the National Debt grows by a large percentage of the welfare payments.

The size of the National Debt matters. It is true that as long as short term interest rates remain near zero, the carrying cost of the National Debt remains negligible. However, if short term interest rates rise so will the carrying cost of the National Debt.

Transportation infrastructure construction projects create good tax-paying jobs. The states are broke and must balance their budgets. They are unable to obtain funding for such projects. As a result, funding for such projects must come from the US government or other sources. The Obama stimulus programs should have allocated hundreds of billions of dollars for transportation infrastructure construction loans or subsidies. Instead the money was spent in ways that didn’t generate tax revenues.

We still need hundreds of billions of dollars to be spent on transportation infrastructure construction. The Obama administration has called for a new stimulus program for a fraction of the amount needed. There is a zero chance that the Republicans in the House of Representatives will approve such spending. The President squandered his chance to adequately finance transportation construction during his first two years in office. He blamed all of his economic failures on the policies of George W. Bush and the refusal of Republicans to cooperate. As a result of the multiple scandals, confusing and misleading statements about Obamacare and disgraceful theatrics in dealing with the sequester, President Obama and his advisors have lost a great deal of credibility among voters. Now, ridiculous arguments by Republicans favoring austerity measures, like the sequester, that is causing harm to our economy, seem more credible to voters. Too many people think our economy is growing and it is time to try to reduce deficit spending. 

My book, Perpetuating American Greatness After The Fiscal Cliff introduces Jump Start America Bonds. Such bonds that will be purchased by corporations and indviduals will have tax features that enble them to be purchased virtually risk free. They will enable the funding of hundreds of billions of transportation infrastructure construction projects. Such bonds will only come into being if Congress changes the federal corporate and individual estate tax laws to permit and encourage their sale. The required changes will be revenue generating for the US Treasury almost immediately. They should sail through Congress and be signed into law by the president. As I have previously written on this website, Jump Start America Bonds represent the perfect economic stimulus.

Housing construction and renovation are another source of good income tax paying jobs. The great wealth of private equity and foreign investors appears to have temporarily stabilized the housing market. A limited number of good tax-paying jobs are being created and auto sales have benefitted. Nevertheless, the foreclosed homes have devastated the middle class and increased bank losses. An increase in home prices means that some homes are no longer underwater, but the recovery in prices is not  yet significant. It may not continue if mortgage rates keep going up. Single family homes are not suited for the rental market. There is a better way to help the housing recovery. It entails giving mortgage relief to homeowners as described in my book Perpetuating American Greatness After The Fiscal Cliff.

Temporarily Reducing The Deficit Hasn’t Solved The Problem

Paul Krugman should not be stressing the temporary reduction in the federal deficit. After all, the deficit went up when the federal government extended the Bush tax cuts and reduced withholding taxes during the two years prior to the election. Now that a portion of the Bush tax cuts have been taken away, and withholding taxes have returned to prior rates, the immediate effect is to reduce the deficit.

We need to create a signifcant number of federal income tax paying jobs and bring entitlement costs under control in order to reduce the deficit over the long run.

The Perfect Economic Stimulus; Jump Start America Bonds

My book Perpetuating Greatness After The Fiscal Cliff introduces Jump Start America Bonds. The proposed changes in the federal corporate income tax and estate tax laws which would make the sale of Jump Start America Bonds possible would create the perfect economic stimulus. Why do I reach that conclusion?

1. The sale of Jump Start America Bonds to finance shovel ready state transportation construction projects will create hundreds of thousands of tax-paying jobs and help the middle class.

2. By investing in Jump Start America Bonds corporations will be able to repatriate to the US billions of dollars of cash held offshore for tax reasons at highly discounted tax rates and without risk of loss. If they prefer they can treat the investment in Jump Start America Bonds as remaining offshore and only pay a repatriation tax on the interest received.

3. Corporations will also be able to STEP UP and promote the economic stimulus by floating their own bond issues at the currently low rates and use the proceeds to invest in Jump Start America Bonds. Corporations will profit from the interest rate spread and will be able to use the proceeds from the Jump Start America Bonds to repay their bonds when the principal becomes due.

5. Wealthy individuals will be able to STEP UP and purchase Jump Start America Bonds bearing tax exempt interest and without risk of loss from interest rate increases or investment loss (like previously issued “Flower Bonds”) by using the bonds to pay federal estate taxes.

6. A corporation providing the principle portion of the funding of a bridge or tunnel will acquire naming rights during the term of the Jump Start America Bonds which finance the project.

7. The Jump Start America Bonds will be transferrable.

8. Our debt laden states will be able to finance their needed transportation projects on favorable terms.

9. The federal government will see a serge in tax revenues from the taxes which will be paid (even at reduced rates) from the repatriation of offshore profits and from the income taxes payable by the contractors building the construction projects and their employees. Welfare and unemployment benefits will decline. The federal deficit and the rate of growth of the National Debt will be reduced.

10. The multiplier effect will create tens of thousands of additional jobs and generate billions of additional federal and state income tax revenues.

11. The housing market will benefit from the creation of middle class jobs and economic growth.

12. The federal government will generate the economic stimulus with no cash outlays.

13. Accepting the Jump Start America Bonds if they are tendered in payment of corporate or estate taxes will act much like QE. The Jump start America Bonds will ultimately be converted into cash when they mature.