Weekend Music Chill

A little nostalgia from my youth for this weekend's music. Mellow ear candy from Blondie.

Unacceptable Tax Hikes in California

A few days ago, I read Richard Rider's detailed post about how truly awful the California tax burden is.  A quick refresher.

California has the 3rd worst state income tax in the nation. 9.3% tax bracket starts at $46,766 for people filing as individuals. 10.3% tax starts at $1,000,000 http://www.taxfoundation.org/files/bp59_es.pdf (election likely later this year to again raise these rates)

Highest state sales tax rate in the nation. 7.25% (as of 1 July). 7% is next highest (does not include local sales taxes) http://www.taxfoundation.org/files/bp60.pdf Table #15.

California corporate income tax rate (8.84%) is the highest west of the Mississippi (our economic competitors) except for Alaska.
http://www.taxfoundation.org/files/bp59.pdf Table #8 — we are 8th highest nationwide.

So imagine my surprise disgust, when I picked up this morning's paper to see this headline (article not yet available on line).

BROWN TO SEEK TAX-HIKE INITIATIVE

Not only is this a tax the rich scheme, but everyone will suffer with a half-cent sales tax increase. Apparently not content to be merely third worst in the nation for income tax rates, state politicians appear to want to be number one in both income taxation and sales taxation.  Further tax increases are proposed:

• Additional 1.0% for filers over $250,000 income.
• Additional 1.5% for filers over $300,000 income.
• Additional 2.0% for filers over $500,000 income.

Meanwhile California continues to lag in job creation.  Who is going to have the money to invest in new jobs?  For example, a single small business owner who makes $1.5 million per year would see a tax increase of $23,500.  That is the entire salary of one minimum wage worker, and it is small business owners who are usually the millionaires who create jobs. 

The sales tax is only going to hurt businesses as well, as all consumers will get less for their money and will end up spending less.  The end result is always that such increases end up generating less revenue than static analysis would indicate.

Meanwhile, Governor Brown and the legislature have done nothing to reform California pensions.  So here are my demands regarding state employees and their pensions before such a proposal should even make the ballot.  The Governor has proposed pension reform, but has not delivered.  Any tax hike is dead on arrival until more cuts are implemented, starting with pension reform.  Some key issues:

Brown wants to ask voters to increase the retirement age for future state and local government workers and require all employees to contribute at least half of their annual pension costs. And that's just for starters.

Some other reform proposals can be found here.

• Anti-spiking provisions, including a tighter definition of “base pay” to eliminate all the abusive overtime and non-recurring and special pay features that bloat pensions, plus a three-year averaging process which is conventional in many other states.
• No more retroactive benefits increases -- a hot button for pension reformers, because such ‘retros’ never actually “attract and retain employees” which has been the traditional baloney we’ve been fed for years about those giveaways. SB 400 in California was the millennial poster child for the failure of this selfish gambit which has since been discredited by the professional associations. . . .
• No more employer pension-contribution holidays. Just look at Illinois for proof positive on this one. When politicians cut corners in pension funding, the results are predictably disastrous. Californians need only look at CalSTRS, the state teacher’s system, for a classic example of the systematic failure of legislative underfunding.
• Felons would be ineligible for public pensions related to their government employment. This feature will win votes every time after Bell, Calif.’s compensation scandals.
• No more “air time," or purchasing service credits for time never worked in the first place.

Further, the state needs to implement a pay freeze, like the federal government has done, for all state  employees.  The state has a long way to go before they should be asking the tax payers for more money.  This ballot measure will be spark another surge in activism by those sympathetic to tea party goals in this state.

Losing the "War on Drugs"

The U-T is reporting on the discovery and shut down of an elaborate tunnel between Tijuana and Otay Mesa as a great victory in the war on drugs.   The tunnel ran 612 yards from Mexico to the United States and dropped 40 feet underground with wood shoring and a rail and elevator system.  Here is some video.

The tunnel “took massive resources and massive amounts of time to construct and plan and build, and we were able to shut it down before it became operational,” Benner said at a news conference.


This week’s 32.4-ton marijuana seizure was the largest confiscation associated with a single tunnel, Benner said. Its estimated street value is $65 million.

Look at the resources available to the drug runners and the value of their product. It seems obvious that we have done little as a nation to stem the flow of drugs.  Law enforcement happened to find this tunnel and seize some pot, how much more was missed?  I would like to reiterate what I wrote earlier about the negative impact of the war on drugs and the case for legalization.

• Cost. Effectively winning a war on an inanimate substance requires huge resources that we just don't have. Drug legalization would simultaneously put the drug kingpins out of business while vastly reducing the need for law enforcement spending on interdiction, etc. Those resources could be split between returning the money to the taxpayer and more effective policing elsewhere.
• Control of the Border. The steady flow of narcotics across the border makes securing the border much more difficult. While the bandits that traffic in human beings are violent enough, adding the military paraphernalia of the drug cartels has made border enforcement a nightmare. The nation needs to solve the border security issue, the cross-border flow of drugs makes this that much more difficult.
• Death. Americans keep dying in the war on drugs. Either innocent bystanders or government agents are regularly dying at the hands of the drug cartels. The money to pay for their weapons would dry up if drug manufacture were normalized.
• Freedom. This is the ultimate Tea Party issue. We believe in free markets, except when we don't, like in the case of drugs. But drug use is not different in any significant way from alcohol or tobacco use (or Four Loko use) for that matter. We don't interfere with Americans' rights to recreational activities, even if some of them overindulge. When people overindulge, we hold them accountable and get them help, if necessary (and I don't mean government help, I mean the kind of help you give to friends.)

Note to those who fear that kids will be able to get drugs more easily if legalized.  Drugs are illegal now, and as a consequence are easier for the youngsters to obtain than booze, where businesses seek to keep their licenses by limiting sales to minors.

Dealing With the Illegals Already Here

It is commonly believed that there are about 11 million illegal immigrants in the U.S. today.  Dealing with that in a rational manner is worth discussing, and I'm glad that Newt Gingrich brought up the subject.  I would like to caveat all discussions with my belief that securing the border is the down payment necessary by the Congress and the President to allow any other discussion to occur.  Depending on whom you believe, the number of border crossers may have already significantly decreased.  From the LA Times.

Arrests of illegal crossers along the Southwest border dropped more than two-thirds from 2000 to 2010, from 1.6 million to 448,000.

The article goes on to describe bored border patrol agents falling asleep on the job because there's "no action." The hyperbole leads me to believe that the article might be propaganda, and fellow tea partyers have anecdotal evidence that the border is not so secure. It seems likely that the increase in border patrol agents and the fewer border crossers are verifiable, but even at 448,000 apprehensions, and who knows how many get away, we can't really say the border is secure. Thomas Sowell takes exception to Newt Gingrich's ideas, and doesn't so much rebut them as make the case for securing the border. His key points.

When you import people, you import cultures, including cultures that have been far less successful in providing decent lives and decent livelihoods. The American people have a right to decide for themselves whether they want unlimited imports of cultures from other countries.
. . .
Moreover, in an age of terrorism, everyone who comes across the border from Mexico is not Mexican. It is the height of irresponsibility to leave that border open and the people who cross it a protected group.

Fair enough, and even true.  But Sowell doesn't really address the issue of what to do with the illegals already in the country, which is what Gingrich was addressing.  

Pushing back against the charge that he supports “amnesty” for illegal immigrants, Newt Gingrich outlined another immigration reform proposal that would have “citizen juries” to decide whether illegal immigrants are fit to be granted legal status—but not citizenship.

On the trail in Florida on Friday, Gingrich explained that he would grant “path to legality” to upstanding illegal immigrants with deep family ties who could prove they could support themselves without federal welfare or other benefit programs.

I like two things about Gingrich's plan.  First, there will be no citizenship for those who have come here illegally.  Second, those here illegally will have to show their ability to support themselves and their families.  Gingrich's full immigration plan is here, like me, he starts with "secure the border."  He has sensible ideas that are worthy of examination by those in the tea party movement.

I'm not sure what those who oppose Gingrich's plan would do with the current illegals.  They need a legal status and deporting 11 million people is frankly impracticable.  Do conservatives really want a government powerful enough to round up 11 million people for deportation?  Do we really want the federal government getting practice at interning that many people?  If not, then we better deal with the situation at hand.  We need these people out of the shadows and paying taxes and drawn into a law abiding culture.  Isn't that a worthwhile conservative or libertarian goal?

Finally, from a political perspective, getting this issue fixed is in the long term interests of the Republican party.  When Hispanics see that we are willing to allow legal immigration, with proper controls, for workers from Latin America, the belief that Republicans are racists will disappear.  Peter Skerry has this to say in yesterday's WSJ.

Liberals may advocate the maximalist position of full citizenship rights for illegals, but they're content with the status quo. They know that keeping illegals in limbo works to the political advantage of liberals and Democrats. Republicans ignore this at their own peril. 
. . .
Whatever the plight of individual illegal immigrants, the problem of 11 million of them constitutes a blemish on the body politic that taints us all—and one that certainly won't be healed by the draconian policies most Republican candidates seem to advocate. Mr. Gingrich's proposal, or something like it, could actually address this genuine dilemma while acknowledging the legitimate anxieties that many Americans have about illegal immigration.

From Gingrich's web site.

1. No “comprehensive” plan can work. President Bush could not pass one during six years with a Republican Congress.  President Obama could not pass one with a Democratic Congress. Immigration reform can be outlined as a complete proposal but has to be passed in a series of steps, with each one understood and passed on its own merits.
2. Under no circumstance can a path to citizenship be created which would allow those who have broken the law to receive precedence over those who patiently waited to become residents and citizens via the legal process. Those who adhered to our immigration law cannot be usurped by those who violated it.
3. We must reconcile the goal of legality with the reality that there are millions of immigrants currently here outside the law, some with a long set of family and community ties, and some with no ties. A system has to be established that establishes legality but no citizenship for those with deep ties, repatriates those with no family or community ties in a dignified way, and quickly sends home those who have committed criminal and other destructive acts.

Internet Takeover at Behest of Big Entertainment

After writing that I would be glad to work with the left in fighting corporate welfare, an email from DailyKos founder Markos Moulitsas arrived in my inbox about the effort by big entertainment industry to destroy internet freedom to protect their intellectual property.  I am in favor of protecting copyright and intellectual property, but the so called SOPA (Stop Online Privacy Act) goes way, way too far in allowing bad acting to shut down web sites.  Sadly, tea party favorite Marco Rubio is a cosponsor.  The idea is too force internet search engines and internet service providers to prevent their customers from reaching sites that promote online piracy.  However, the proposed law makes it far too easy to abuse the system.  Just an accusation, without proof, could trigger the death penalty for a blog or web site.  Obviously, the opportunities for abuse are wide open.  Don't like the politics of your opponent's web site?  Find where they quoted some copyrighted material, even if legal under fair use doctrines, and make a complaint. Voila, they are shut down.

The Economist had this to say about the dangers of this bill.

The loose definition of infringement in SOPA could include sites that unwittingly carry comments linking to pirated material. That would make it too easy to launch spurious claims and too onerous for intermediaries to deal with them, and could discourage entrepreneurs from setting up new sites allowing users to post things (which, in the era of social media, is almost all websites). Large firms can cope with the extra hassle, but the fear of lawsuits could stifle smaller companies and start-ups.

A second big drawback is that SOPA obliges ISPs to put filters in place to prevent their customers reaching pirate websites easily. That risks damaging the internet’s vital internal addressing system, which lets people use words instead of numbers to access websites. It also clashes with DNSSEC (don’t ask), a protocol that America has long championed to increase internet security. Messing with DNSSEC could create loopholes for hackers by allowing rogue websites to pose as legitimate ones.

The email from DailyKos said this.

In short, this proposed law would allow corporate copyright holders the ability to cut off funding and compel the government to shut down websites they deem infringing, without the need of a court order. 

 And Neil Stevens, at the Daily Caller, opposes the bill as well, saying this:

This portion of the bill has little to do with protecting American interests abroad or with punishing lawbreakers. Instead, this portion of SOPA regulates the Internet at home. It is a framework for domestic censorship only tangentially related to intellectual property rights.

Giving government the power to censor the internet seems like a bad idea, to me.  Its bad enough that Google sees fit to use software to shut down blogs in a seemingly random manner.  You can bet that the government won't do so randomly. 

Recommend that you contact your Congresscritter to oppose this legislation.

Note: Since you did ask, DNSSEC stands for Domain Name System Security Extensions, a protocol designed to protect the integrity of the routing of internet traffic against attacks against the servers that translate and authenticate packet routing requests.

Housing Prices Continue to Decline

As predicted here and here, housing prices continue to fall, because the administration has not allowed this bubble to burst and housing is still overvalued when compared to rental values. Zero hedge has the news.

I need to find the update to this chart, which shows that the correction isn't quite complete.

2012 Presidential Election: Electoral Map

2012 Presidential Election: Electoral Map: This map displays my guess of the final make up of the 2012 Presidential election. It's a fun little game to play. But it shows how difficult a Republican victory might be, when one considers entrenched electoral votes in big deep blue states like New York and California.





H/T Left Coast Rebel.

Bracing for Stormy Economic Weather - UPDATE

Update at bottom.

The leader in the most recent issue of the Economist questions Europe's collective will to defend the euro.  The result of failure would be catastrophic, in that august publication's opinion.  I am not so sure, but it would be bad in the short term.  They recommend a number of steps in the unsigned editorial, most notably, printing more euros, although that's not how it is phrased of course.

That is because much looser monetary policy is necessary to stave off recession and deflation in the euro zone. If the ECB is to fulfil its mandate of price stability, it must prevent prices falling. That means cutting short-term rates and embarking on “quantitative easing” (buying government bonds) on a large scale. And since conditions are tightest in the peripheral economies, the ECB will have to buy their bonds disproportionately.

It is an open question whether the euro will survive in its present form, but regardless of the outcome, we can expect turbulence ahead.  Even if the euro is saved by the aforementioned actions, it will set in motion long term inflationary pressures as the euro loses value against the dollar.  This will have a negative impact on U.S. exports, putting more pressure on our tepid recovery.  However, if the euro zone can't be saved, and widespread defaults on government bonds outside of Greece get started, then a real liquidity crisis could trigger a second global recession.  America would not be immune to this outcome either.

Either way, we are going to see real pressure on our own government's deficit situation, as economic headwinds deprive governments at all levels of revenue.  At the same time another recession increases outlays due to unemployment payments and increased use of food stamps, medicaid and other parts of the social safety net. 

The silver lining is that Obama is unlikely to be re-elected in such a climate.  But many Americans and people all over the world are going to suffer.  The root cause of our troubles is clear; all over the western world, politicians have made promises that were going to be impossible to fulfill.  This is the central appeal of Chris Christie; he is the politician who has best articulated this truth.  The end result is that those dependent on the government, whether retired employees, social security recipients, or others, will not have the standard of living they thought.  Governments will not keep their promises, either through bankruptcy, inflation or abrogation, because the collective promises can't be met. This will lead to lowered consumption as the reality of reduced lifetime income sets in and long term re-adjustment in the economy.  We are not going to have a full recovery for a decade, in my humble opinion.  But the tea party movement is correct in focusing on getting the spending under control now, because the sooner we come to grips with the spending problem, the sooner the economy will recover.

UPDATE

Over at Zero Hedge, Phoenix Capital Research has this to say:

Indeed, with Europe’s entire banking system insolvent (even German banks need to be recapitalized to the tune of over $171 billion) the outcome for Europe is only one of two options:

1) Massive debt restructuring.

2) Monetization of everything/ hyperinflation These are the realities facing Europe today (and eventually Japan and the US).

Either way we are talking about the destruction of tens of trillions of Euros in wealth. The issue is which poison the European powers that be choose.

Personally, I believe we are going to see a combination of the two with deflation hitting all EU countries first and then serious inflation or hyperinflation hitting peripheral players and the PIIGS.

Programming Alert

For reasons unknown, brother Dean's blog had disappeared from blogger, Google's blog product, but is now back up. His blog address is http://beerswithdemo.blogspot.com/

Outreach to Occupy - A Fool's Errand? UPDATE

I probably should have come to this conclusion before, but yesterday's tomfoolery at WalMart is really the last straw for any thoughts that the tea party could make common cause with #ows.  From Free Republic via Gateway Pundit.

Meanwhile, the San Diego occupiers stormed into a Wal-Mart, filled 75 carts with merchandise, disrupted shoppers by chanting their nonsense for several minutes at the cash registers, then fled the store leaving behind 75 full carts for the employees to put away.

The occupiers have been compared by the President to the tea party, but there is really no comparison.  Some friends pointed out that the fundamental difference accrues to respect for every individual and their rights that forms the basis of tea party principle, but is absent from the occupy movement.  In this occupy action against Walmart, no such respect is present.

• The occupiers presume to speak for the employees, as if they can't speak for themselves.  I know that Walmart employees can't speak out at work, but they have other avenues of protest available.
• By leaving the shopping carts filled with junk, they just create more work for those same employees, with whom they profess solidarity.
• They presume to inconvenience the shoppers at the store, infringing their opportunity to shop.
• They try to make the point that corporations aren't people, so they feel free to trespass on Walmart property.  But Walmart's stockholders are real people who own stock in the company, and as owners, they have rights too.

Besides the lack of respect for individuals, this stunt is just childish.  Chanting slogans and interfering with the workings of a business and leaving a mess?  Certainly you can do better.

That said, I will continue to make common cause with those on the left who want to oppose corporate welfare and crony capitalism, nationally or locally.  The purchase of the Union-Tribune by Doug Manchester, with the selection of John Lynch as new President and CEO, brought to light a case in point.  As has been reported here and here, the U-T will now shill for a new Charger stadium, presumably with taxpayer funding.  I will certainly make common cause with the left of center VOSD  for example, to prevent a taxpayer fleecing in support of the big business known, currently, as the San Diego Chargers.  But as for the occupiers themselves, their movement seems to have gone off the rails.






UPDATE

 SarahB at Lipstick Underground offers an assessment of the disrespect shown to the mothers shopping at Walmart.

And, as a mother, what horrifies me most, is how they boxed in families during the stunt. One mother with a stroller, a small boy and a baby in her arms, has no where to go. If that was me, I would have been angry and terrified. One wrong move by anyone in that crowd and things would have turned dangerous in a flash.

Thanksgiving 2011 - Beers With Demo re-post

Beers With Demo re-post. As an experiment while Dean's blog is down, I am re-posting his Thanksgiving day post from Google reader. Here is Dean's post from November 24.





.

Consider it done. Thanksgiving has surpassed our former favorite holiday, Christmas. No gifts, no lame office parties, no tacky sweaters.


Just food, football, family and friends... Box that superfecta in any order you prefer.


We hope everyone is enjoying a safe and blessed Thanksgiving with their loved ones today.


We'll see you all tomorrow.

Programming Alert - Beers With Demo "Off the Air"

Brother Dean's blog is back up.

Thankful

Happy Thanksgiving to my American readers; and to for my readers in other countries, I hope you find in America a country that the world should be thankful for.

A few things that I am thankful for personally.

• That God, through Jesus, asked me to follow Him, and it changed my life and its trajectory.
• For a wife who loves me fiercely and keeps my attention.
• For two sons with whom I am closer than I ever thought possible.
• For my parents who loved me and held me to high expectations.
• For my brothers, sister and my in-laws, that I have the love of so many.
• That I live in a country blessed by freedom.
• That I have meaningful work. That my federal job is not at risk every election.
• That I have met fellow patriots who are now my friends.
• That I have the opportunity to make a difference in this world, and leave my little part of it better than I found it.

Happy Thanksgiving, may God bless your day. Now we are off to put together the traditional celebration spread, so I hope to write something relevant and worthwhile tomorrow.

No Wonder People Hate Big Pharma

Eli Lilly is shilling for Medicare Part D, the better to receive government dollars in the form of medicare reimbursements. Their scare campaign is shameless hucksterism and favor-currying with a corrupt Democrat White House and members of Congress. This is the evil of too much government; your tax dollars go to government programs that fuel profits that get recycled into expanding these same programs to take more of your tax dollars. Boycott Eli Lilly. They can have their freedom of speech, I can avoid their products.

Patriot Act Debate - Gingrich vs Paul

Well this is unfortunate. Ron Paul and Newt Gingrich debate the Patriot Act in tonight's debate. I agree with Paul's position, but Gingrich gets the best of him, in my opinion. The use of Timothy McVeigh undermines Paul's argument, but the Patriot Act would not have prevented the Oklahoma City bombing. If we are serious about the War on Terror, we will pay for the judicial oversight to issue warrants and supervise the executive branch's prosecution. This doesn't have to be an either/or proposition. My objection to the Patriot Act is the unsupervised powers given to the executive branch. Some of the powers granted were already available, they just required warrants, so the Act seemed like a sneaky way to expand government power.

Occupy the Mall?

The Drudge Report alerted me to the latest "occupy" plan, to Occupy Black Friday. I cruised over to their Facebook page to find this unhelpful rant:

This Black Friday, we will boycott all of the corporations that corrupt our government, and put profits before people.

Any holiday shopping we do this day will be at independent shops to support local economies and the 99% as a whole!

How do I figure this out? I guess I'm supposed to look up which of my shopping destinations are publicly traded corporations. Guess I'll have to buy that copy of today's Wall Street Journal after all.

So who do I notice has "liked" their Facebook page? Usual suspects, Al Jazeera English, and Noam Chomsky, Bernie Sanders, . For real? This is mainstream? Obama wants to hook up with such a movement? At a time when his only real chance of re-election is a miracle in the economy, he's down with interfering with shopping? Not that it will make much difference. My money is on the following outcome, 99% of the stores in America don't even notice the campaign, while the media focuses on and glorifies some minor impact at the 1% of stores who get a few protesters.

Super Difficult Draconian Security-Threatening Cuts to Start. . . in 2013

Well, no wonder they failed. In political terms, 2013 is a lifetime away. Obama will probably not be President by then. There is no immediate impact other than to credit ratings. It gives the new President and a new Congress time to deal with the problem. It even gives the current President and Congress time to deal with the problem. If pork barrel spending in their districts was going to end next month, maybe some compromise would have been reached. For all of the press and attention given to the so called Supercommittee, the actual immediate impact will be nil.

Billy House of The National Journal got the important fact correct.

But the nation’s debt crisis will continue – with the deficit now at about $15 trillion. It also is likely no coincidence that the committee waited until the financial markets closed for the day to make the announcement. The Dow Jones industrial average had already tumbled by more than 300 points earlier in the day partly in anticipation of the acknowledgement of failure.

In case you thought that the Supercommittee meeting its goal would be a significant victory for deficit reduction, consider this.

By law, 18 percent of the automatic savings are assumed to come from interest costs the government would save from reducing the debt. If the Super Committee fails completely, out of the $1.2 trillion in automatic savings, $216 billion would be assumed interest savings.

That would leave $984 billion in automatic spending cuts over 10 years. That works out to around $55 billion annually each from defense and domestic programs though a CBO analysis shows that comes out to 10 percent of the Pentagon budget in 2013 alone, a huge hit.

$55 billion annually? Really? The national debt is increasing at a pace of close to $2 trillion per year, with an official budget deficit of $1.5 trillion per year. (I never figured out that discrepancy, the official deficit is always less than the annual increase in debt, go figure.) To put this into household terms, its as if you were borrowing close to $200,000 against your house, year after year, and an adviser came up with bold plan to reduce your expenditures by $5,500 $11,000* per year. Not even a really credible first step. What a game politicians, with the connivance of the press, are playing on us all.

Only serious decreases in spending and increased revenue from a recovering economy are going to fix this. So every job killing, economy destroying decision by this administration starting with Obmacare, the Boeing plant in SC, ending most recently with killing the Keystone XL pipeline, has hurtled the country towards increased and unsustainable debt.

The Democrats were their usual retarded selves in this deal, but I thought the Republicans could have smarter about offering some revenue increases that would accrue to eliminating loopholes/deductions as a step towards comprehensive tax reform, earlier in the process. It appears that Sen. Pat Toomey (R-PA) offered such a plan at the last minute, but it didn't raise enough revenue to satisfy the Democrats.

Toomey’s plan would raise $300 billion in new tax revenues while overhauling the federal tax code. Republican officials say it would drop the top tax rate on personal income to 28 percent from the current 35 percent. It would reduce or eliminate some well-known itemized deductions and reduce the corporate tax rate.

If Republicans had offered the plan earlier, and got agreement to score it with dynamic, not static analysis, it would raise far more revenue than the $300 billion advertised, and we might have been much closer to a deal. The Republicans are right to keep trying to push down marginal rates, but they should be coupled to eliminating deductions to move towards more of a flat tax, because this will also be a reform that reduces corporate influence on Capitol Hill.

Just in case there was any doubt about my discussion on the fact that spending and revenue are both problems, but spending is more of the problem, I offer this chart from the Heritage Foundation.



*Post publication correction. I failed to account for the fact that there are two categories of spending reduction, so the total per year needed to be doubled. However, $11K per year against a household deficit of $200K per year is still pathetic.

Tea Party Health Care Reform

Calivancouver, a liberal commenter on this blog, has published his own health care plan, based on the idea that Obamacare was pretty much a sop to various special interests that included lobbyist insertion of provisions favoring industry. The end result was an unintelligible hash that undermines its own goals. I am paraphrasing here, so he can correct me in the comments. Suffice to say that liberals weren't terribly pleased with PPACA.

People are starting to think again about health care insurance reform because there is a good chance that the individual mandate will be struck down and found non-severable. I think we have the opportunity to propose reform that is truly market based, both on the insurance side of the equation and on the medical delivery side of the equation. My point of departure is the "Freedom Coalition Agenda," that I periodically update (which predates my tea party involvement). However, the debate over Obamacare has brought more detail into focus. Here is the plan that John Mackey of Whole Foods proposed, my comments in italics.

1. "Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts." Patients who have skin in the game and market knowledge will reduce costs faster than any government program.
   


2. "Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits."
   


3. Allow competition across state lines.
   


4. "Repeal government mandates regarding what insurance companies must cover."
   


5. "Enact tort reform."


6. "Make costs transparent."
   


7. "Enact medicare reform." Medicare policies that are mimicked by the private sector are strangling the medical profession.
   


8. Revise tax law to make it easier to donate to those without insurance.

To expand on these points.

1. The government could help lead this effort by reforming first Medicaid, by turning it into an insurance subsidy program for the poor. But the program would require those in the program to pay a high copay until a low catastrophic cap was reached. Such a system would create a market for a system where people have more incentive to shop for best value in medical care. This system could then be applied to Medicare.


2. The next big issue is that health care is tied to employment. My first impulse is to forbid the offering of insurance through employment, but that would make a conservative social engineer, instead of a liberal one. Removing the tax advantage would at least set a level playing field. To date, the portion of employee compensation that comes in the form of employer health insurance isn't taxed as compensation. This ties employees to their companies and needlessly. You would think that liberals would be opposed to a scheme where tax policy gives corporations leverage over employees. However, I dislike schemes whereby the government imposes on employee relations, so I will settle for leveling the playing field.


3. Interstate competition is not the norm in insurance. Surely the federal government has the right to "regulate" as in "make regular" this portion of interstate commerce, by insuring that any insurance offered for sale in a state would be available in the fifty states. Increasing competition will probably be opposed by the insurance industry, but freer markets benefit consumers.


4. One size never fits all. So mandating coverage should be banned. Insurance is always tricky business, even homeowner's insurance, as Road Dawg can attest to. Along with no mandates will be the need to enforce clear language in policies and communications with policy holders. I am a libertarian, but not so naive as to believe that some insurance companies won't try to wriggle out of agreements to save money. Court is expensive for individual consumers, so regulation that enforces good practices of transparency and clarity will be necessary. But regulation should always aim for simplicity and this also needs to be part of a reform package.
   


5. With regards to tort reform, we have seen positive results in Texas, where access to care increased after passage of reform.


6. Cost transparency is important to enable process improvement and allow patient choice. Most people don't know the true cost of a medical visit, even after the visit is over. Here again, Medicaid reform could lead the way, by insisting that patients receive better notice and understanding of their bill.


7. Medicare policies with regards to reimbursement are arcane and lead to huge misunderstandings on what is covered and unexpected bills. Transforming Medicare to save it for those who truly need it, into an insurance subsidy scheme, will get the government out of the rule writing business and free up insurance plans to compete.


8. Allowing Americans to donate to those who need health care insurance might make little difference, but maybe not. I see lots of do-gooder millionaires wanting to pay more taxes. Maybe they could pay for poor people's insurance in the interim.

Some issues that are not really settled, but requiring discussion. The popular reasons for the health care law could be boiled down to two issues. First, there are many uninsured Americans. Second, many people with pre-existing conditions can't get health insurance. Dissatisfaction with one's own insurance was not an issue. My proposal:

1. The uninsured. It turns out that this group is not as big of a problem as one might think. The widely quoted number of uninsured of 46 million people vastly overstates the problem. Previous posts on the subject here and here. The actual number of poor uninsured citizens is closer to 8 million people. The simplest and least intrusive answer is to provide them a subsidy to buy health insurance. Further, this should be done at the state level. Even if done at the federal level it is a far better answer than the bill passed.


2. Pre-existing conditions. The best answer is to guarantee health care portability, in the same manner that we guarantee phone number portability when we change carriers. This would eliminate the tying employees with difficult health problems to their jobs. Ditto for their dependents. As we move to a system in which individuals pay for their own insurance, because it is not tied to their job, then this problem becomes moot. Children who are on their parents plans should be given the opportunity to convert that plan to their own personal plan as well. This would solve most but not all of the issues with pre-existing conditions. There are already programs such as SSDI to cover those with incapacitating disabilities, although that system also needs reform.

There are a few ancillary issues to deal with. First, Calivancouver likes emergency rooms, as an example, not as a place to visit. We do not refuse treatment at emergency rooms, but not everyone pays, driving up the price for the rest of us. If the reforms I suggest work out, only those with enough money to afford insurance but who don't carry it would become a problem, along with illegal aliens. For those who can pay, we might modify financial regulation to make sure that hospitals have the ability to collect from those who chose not to carry insurance, including head of the line in bankruptcy proceedings. Illegal aliens will have to be the subject of another discussion, as I have previously discussed the need for a comprehensive plan that includes enforcing the border.

The other issue is end of life care. This is where insurance transparency becomes paramount. People are going to have to make tough trade offs between paying higher fees that will cover expensive life extending treatments and thinking through what they leave to their heirs. This is a tough subject, but there is no free lunch. Someone is going to pay for expensive end of life care, we must as well budget for it now.

Sorry this ran long, but I think it necessary to put together real solutions that sustain liberty and keep government size to a minimum. The left's solutions usually fail, but often we have not put together our own policies, so we just get the next leftist solution after the last one fails. After Obamacare is rescinded, whether through the courts or elections, getting to work on real health insurance reform will become necessary. Best get thinking about it now.

SDUSD Mess Update

Erica Holloway, blogging at sdrostra.com, has an update on the fiscal mess of our local San Diego school district. I posted on November 2 on the same subject. A few quotes from Erica's article:

School district officials and board members say that without a serious, life-saving infusion of state revenue or drastic cuts, such as closing schools, the state could take over the district due to fiscal insolvency, or bankruptcy.

After the utter failure of the school closure plan, Sheila Jackson, schoolboard member, takes full responsibility for the board's failure to put together a reasonable process.

It’s not appropriate for people to come to us and be upset. We didn’t even know what the criteria was, we didn’t even tell the staff which direction we wanted.

Good going there Sheila. In any other kind of electoral situation, she would be a shoo in for recall or at least wouldn't get re-elected. But in an electoral system plagued by general voter apathy towards the schools, the teachers unions are able to hand pick the board. VOSD had this to say about her statement.

But the board was highly involved in setting those criteria. The trustees had discussed and voted on the criteria at least three times in the previous two years

Last July, Jackson and her colleagues voted unanimously to approve a 37-page document that precisely lays out the process by which schools would be chosen for closure. The document includes a four-page board policy detailing all the criteria by which schools should be selected.

They also labeled Jackson's statement "huckster propaganda" with a picture of Pinocchio sporting a very long nose.

Business As Usual - FHA Mortgage Limit Raised

What the hell? At a time when we should be getting the federal government out of the housing market, this little gem appears.

President Obama on Friday signed into law a bill that will reinstate higher limits for Federal Housing Administration-backed mortgages in high-cost areas. In expensive housing areas such as Los Angeles and Orange counties, the limit for these FHA-backed loans had dropped to $625,500 from $729,750 on Oct. 1. The change became effective Friday.

Hey occupiers, how do you like that? Loan guarantees for 1%er home loans. How did this excrement make it out of the House? Well, many Republicans must have voted for it, and Democrats provided the margin of victory. Nice to see bipartisan folly in support of the wealthy. In fact only 101 Republicans voted against it out of 242. This comes at a time when we already know that the FHA is going to need more tax dollars to prop up its loan portfolio. From Rep. Scott Garrett (R-NJ) Chair of the subcommittee on GSEs:

". . .an independent audit of the Federal Housing Administration (FHA) revealed that the housing agency’s cash reserves are down 45% from last year and the “chance that future net losses on the current, outstanding portfolio could exceed current capital resources is close to 50 percent,” which could necessitate a taxpayer bailout next year."

Garrett issued this statement in response to the bill.

“This is what happens when the federal government meddles in economic affairs best left to the private market. Because the federal government has played an outsized role in our country’s housing system, the American taxpayers are now at risk of another costly bailout that will put future generations even deeper into debt. Today’s report shows that FHA is overleveraged at a shockingly high rate of 400 to 1, making Lehman Brothers and Bear Stearns, the poster children of the 2008 financial collapse, look like financially solvent institutions. The FHA audit proves once again that, if left unchanged, the reckless policies currently guiding our nation’s housing finance system will threaten the financial solvency of the United States of America."

Amen, brother.

However, I have to admit that this legislation isn't all bad. It is part of a continuing resolution (or CR, as we call it at work) that was also called a minibus bill, as opposed to omnibus. What was good about the minibus? High speed rail is dead. From FireDogLake (please keep the schadenfreude in check.)

The House passed a spending bill today that kills high-speed rail funding for the current fiscal year. The Senate is expected to follow suit, which means California should not expect the billions of dollars in federal aid on which its futuristic plan for bullet trains depends.

We need to alert Dean.