Mister President, thank you for taking the time to meet today.
POTUS: You're welcome
Today, your approval ratings sit at near lows and the economy is still in the doldrums. Do you see things turning around soon?
POTUS: I still believe that the stimulus package saved us from catastrophe and will help the economy gain strength.
Mr. President, I would argue the stimulus package hurt you in two big ways: your poor approval and the birth of the Tea Party movement.
POTUS: How can you make that argument? They are not related.
I believe they are. First, One of the biggest criticisms of you when you were a candidate was that you had little executive experience. In all honesty, even Gov. Palin had a lot more experience than you in executive positions and your campaign operatives hammered her endlessly about being inexperienced. But the stimulus package is where the narrative was reinforced: I believe that when your economists advised you that if you didn't put $750 billion into the economy it would tank, so you tried to do it in good faith. However, you made a rookie mistake; you trusted Speaker Pelosi.
POTUS: Rep. Pelosi is a strong and loyal public servant.
I know you believe that but she went to Rep. David Obey, Chairman of Appropriations, and said "spend $750 billion". He, in turn, went around to every Congressman he could find and asked them what pet projects they wanted to spend money on. That is how you ended up defending $789 billion of crap.
POTUS: I wouldn't put it that way. A lot of those projects were very worthwhile.
Maybe so, but you ended up defending stuff that even you had to turn your nose up at. An experienced executive would have crafted a bill with projects that had to be paid for anyway: bridges, schools, roads, the electrical grid, etc. and sent that bill to Congress. All that would have happened was you'd be moving necessary projects forward. You got boxed in and embarrassed by your Democratic Congress despite good intentions.
POTUS: That may be how you see it but how does that have anything to do with the Tea Party?
There was a lot of unrest with the government during the last years of the Bush administration with rising spending and the wars. You ran on a promise to change things. Many people who knew that you were no where near as qualified as Senator McCain voted for you because of the ideal you represented: no more status quo, transparency, change, etc. When your administration started doing things without transparency, sneaking through unpopular bills by bending rules, spending even more than the Bush Administration, doing almost everything for the benefit of labor unions, the people had finally had enough. Because you had represented yourself as different, and turned to be a larger version of the same old politicians, there was a lot more disappointment with your administration than there would usually be. Because the Republicans were big spenders and Democrats turned out to be even bigger spenders, along comes the Tea Party.
POTUS: You seem to forget that I ran on green jobs, ending the Iraq War, closing Guantanamo Bay, and bringing a different tone to Washington.
Mr. President, the Iraq War was won when you came into office. That was a done deal. If anything, the Democratic Congress made the tone in Washington much worse. Republicans weren't even able to present ideas on any of the major bills. You know you can't close Guantanamo Bay and send those prisoners back into the fight. And until technology improves, green energy will destroy our economy. Besides, this winter is making Al Gore look a little foolish.
POTUS: Climate change is an important issue. We need to be the leader in this regard.
True, but you and everyone else knows that until India and China sign on, anything we do here will not only be futile, it will give those two countries a competitive advantage. Beside, real data contradicts the UN's computer models about the effect of carbon dioxide on the atmosphere.
Moving on, the biggest controversy in Washington these days is the health care bill. Admit it, you could not have possibly known all the junk that was in that bill and it certainly wasn't written in a few weeks.
POTUS: There are some things in the bill that need to be adjusted, like the 1099 requirement for small business. But a lot of other parts of the bill are monumental achievements, like the pre-existing conditions section.
Since you bring that up, let's take two scenarios: 1) A 55 year old man has been working for the same company since he was 18. He has always paid his taxes, never been in trouble, a stellar citizen. He has hypertension and mild diabetes. His company goes out of business. He can't get insurance at his new job. Clearly that is wrong.
POTUS: That is exactly the person we are trying to help. This bill prevents that from happening.
Fair enough. Scenario 2: We have a 32 year old male. He has never worked a day in his life. He is perfectly healthy. He chooses not to work. He never pays taxes. He even sells a little bit of crack to school children to get by. One day, he has a pain and goes to his emergency room for some free care. He finds out he needs a major operation and long term postoperative care. He has a pre-existing condition. What obligation do the people who have been paying into the system their whole lives have provide him insurance?
POTUS: That is a little extreme for an example.
No. They are both pre-existing conditions. Wouldn't it have been better to allow all people to purchase across state lines and to own their own policy so they can carry it from job to job?
POTUS: I have said anyone with good ideas can bring them to me.
Those ideas were brought to you before the bill was passed and the Republicans were not allowed to offer amendments. That is why people are fed up.
POTUS: I agree there are adjustments that have to be made.
Moving on, we have massive debt now. You offered to freeze spending. But that was after you raised spending for most domestic programs by about 24%. That is like curing binge drinking by not drinking more than you did when you were drinking the most alcohol.
POTUS: We are trying to reduce the rate of growth.
That doesn't make sense. You don't reduce the first derivative. You have to make the amount go down, not how fast it gets bigger.
One last question: You work closely with Sen. Reid. How can you possibly put up with that guy?
POTUS: Senator Reid is a great public servant who worked hard to get many of my agenda items passed.
True, but it is one thing when a politician lies to you. It is another when he is lying, you know he is lying, he knows that you know that he is lying, but still lies to you anyway.
POTUS: Lying about what?
You know as well as I do that the set of suppositions and nonsense that was given to the Congressional Budget Office about the health care bill, such as ten years of taxes to offset six years of benefits and a separate bill to fix reimbursement for physicians in Medicare, was garbage just to make the numbers turn out in your favor. Sen. Reid always talks about how the bill will bring down costs when he knows it isn't true.
POTUS: He and I believe that it is true.
That just about says it all. Thank you Mister President.
Showing posts with label Stimulus Package. Show all posts
Showing posts with label Stimulus Package. Show all posts
Saturday, January 29, 2011
Monday, March 16, 2009
The Unions Get Paid Off by the Democrats
There is a disturbing trend in the actions of the Obama administration when it comes to how they spend the money. There are at least four different examples which will highlight the trend.
First, the automobile industry bailout: Money was given to General Motors and Chrysler instead of allowing the companies to reorganize under a Chapter 11 bankruptcy. Therefore, public money was taken from auto workers in the south whose average salary is about forty three dollars an hour and given to United Auto Workers members in Michigan whose average salary is about seventy one dollars an hour. The Obama administration portrayed the action as helping the General Motors and Chrysler corporations. In fact, a chapter 11 bankruptcy would have been much more advantageous as it would have allowed renegotiation of the labor contracts and would have relieved the pressure of legacy costs to the companies. The money was really a bail out of the United Auto Workers, not the companies. It hasn’t worked and the two companies have shown no signs of changing fortunes.
Second, the school voucher program in Washington, DC: The voucher program in Washington, DC cost about $7600 per student. The schools at which the voucher students attended had 90% higher scores in language tests and 95% higher scores in mathematics testing. The interesting paradox is that the Washington, DC public school system spends about $13,000 per student. The omnibus spending bill removed funding for the school voucher program. The Democrats, in their infinite concern for children, cancelled a program which cost taxpayers half as much and resulted in markedly better school performance. Why would they do that? The answer is easy. The teachers union has been paid off for supporting Democratic candidates in the election. The Democrats are willing to screw over poor children and their families in order to pay off the union.
Third, the stimulus construction projects: The stimulus bill passed by the Democratic Congress and the Obama administration has a provision that stipulates that stimulus construction projects have to pay union wages to workers on stimulus projects. Why would that provision be in the bill? After all, it would result in less money to do projects and the ones that are completed would cost more. The reason is easy. Governments don’t build roads and bridges, private contractors do. Those contracts are awarded by bid. A non-union company can submit a lower labor cost bid than a union company. The raw materials cost will be the same. Therefore, the non-union bid will generally be lower. This provision in the bill is expressly for the benefit of union contractors to receive stimulus money contracts for infrastructure. The unions will receive money but the taxpayers will get less infrastructure projects completed for their money.
Fourth, the “Employee Free Choice Act”: This piece of legislation is close to criminal. The rules would change and take away the right of workers to a secret union election ballot. To organize a union, all that organizers would need is 51% of employees to sign a card and the union would be installed. The cards would be public and the period of time to have them signed in unlimited. This is like the mob in Chicago in the 1930s. Union thugs intimidating workers is not progress. The intimidation may not even be the worst part of the bill. In the event of non-resolution of a union contract, after a set period of time the federal government will set wages. Hmmm… with the Democrats in power, I wonder whose side would be favored? Therefore, people who are intimidated into a union will have their wages set by the federal government. This is an economic disaster of the highest magnitude just waiting to happen. It will lead to companies closing because they are no longer profitable and revival of the union thugs who have essentially gone away due to people's reluctance to embrace unions.
In all four examples, it is easy to see the pay off to the various unions by the Democratic Congress and the Obama administration. It is brazen and open. It is also going to massively harm the United States economy and prevent recovery. A recent poll which asked people if they desired to have their jobs converted to union jobs had only 9% say yes and a resounding 83% say no. This is the Democratic version of the organized crime “protection” rackets and is disgusting.
First, the automobile industry bailout: Money was given to General Motors and Chrysler instead of allowing the companies to reorganize under a Chapter 11 bankruptcy. Therefore, public money was taken from auto workers in the south whose average salary is about forty three dollars an hour and given to United Auto Workers members in Michigan whose average salary is about seventy one dollars an hour. The Obama administration portrayed the action as helping the General Motors and Chrysler corporations. In fact, a chapter 11 bankruptcy would have been much more advantageous as it would have allowed renegotiation of the labor contracts and would have relieved the pressure of legacy costs to the companies. The money was really a bail out of the United Auto Workers, not the companies. It hasn’t worked and the two companies have shown no signs of changing fortunes.
Second, the school voucher program in Washington, DC: The voucher program in Washington, DC cost about $7600 per student. The schools at which the voucher students attended had 90% higher scores in language tests and 95% higher scores in mathematics testing. The interesting paradox is that the Washington, DC public school system spends about $13,000 per student. The omnibus spending bill removed funding for the school voucher program. The Democrats, in their infinite concern for children, cancelled a program which cost taxpayers half as much and resulted in markedly better school performance. Why would they do that? The answer is easy. The teachers union has been paid off for supporting Democratic candidates in the election. The Democrats are willing to screw over poor children and their families in order to pay off the union.
Third, the stimulus construction projects: The stimulus bill passed by the Democratic Congress and the Obama administration has a provision that stipulates that stimulus construction projects have to pay union wages to workers on stimulus projects. Why would that provision be in the bill? After all, it would result in less money to do projects and the ones that are completed would cost more. The reason is easy. Governments don’t build roads and bridges, private contractors do. Those contracts are awarded by bid. A non-union company can submit a lower labor cost bid than a union company. The raw materials cost will be the same. Therefore, the non-union bid will generally be lower. This provision in the bill is expressly for the benefit of union contractors to receive stimulus money contracts for infrastructure. The unions will receive money but the taxpayers will get less infrastructure projects completed for their money.
Fourth, the “Employee Free Choice Act”: This piece of legislation is close to criminal. The rules would change and take away the right of workers to a secret union election ballot. To organize a union, all that organizers would need is 51% of employees to sign a card and the union would be installed. The cards would be public and the period of time to have them signed in unlimited. This is like the mob in Chicago in the 1930s. Union thugs intimidating workers is not progress. The intimidation may not even be the worst part of the bill. In the event of non-resolution of a union contract, after a set period of time the federal government will set wages. Hmmm… with the Democrats in power, I wonder whose side would be favored? Therefore, people who are intimidated into a union will have their wages set by the federal government. This is an economic disaster of the highest magnitude just waiting to happen. It will lead to companies closing because they are no longer profitable and revival of the union thugs who have essentially gone away due to people's reluctance to embrace unions.
In all four examples, it is easy to see the pay off to the various unions by the Democratic Congress and the Obama administration. It is brazen and open. It is also going to massively harm the United States economy and prevent recovery. A recent poll which asked people if they desired to have their jobs converted to union jobs had only 9% say yes and a resounding 83% say no. This is the Democratic version of the organized crime “protection” rackets and is disgusting.
Sunday, March 15, 2009
Now That They Get It, They Can’t Fix It
I have written a number of times previously about the source of the current economic crisis in the United States. To briefly review, the Congress and Clinton administration created policy which encouraged loans to low income individuals because they thought more home ownership would be good for the country. Freddie Mac and Fannie Mae bought a lot of the loans from primary lenders therefore leading the primary lenders to make more poor loans. The real problem came when Fannie Mae and Freddie Mac created securities based on the value of those bad mortgages and sold hundreds of billions of dollars of the securities to investment banks around the world. The current problem with fixing the problem is that there is no way to determine which mortgages are associated with which securities. Because there is no association, no one can determine how much each security is worth. Therefore, banks who own billions of dollars in those securities don’t have any idea whether they own securities of value or not. They are holding onto the solid money they have because they don’t really know how much they have in those securities. The US government is discussing how to get those “toxic assets”, as they are now known, out of the financial system to try to restore normality to the system. The administration and the Congress are still trying to figure out how to do it.
There are several possible ways to try to value those assets. The grindstone way is to look at every single mortgage which was bought by Fannie Mae and Freddie Mac to determine the value of the mortgage (solid, just getting by, or in default). Even if that monumental task was done (and it would take a long time), the question then becomes how to assign the individual mortgages to the securities. None of the owners of the securities want the worthless mortgages assigned to the securities that they own. In fact, the owners of the securities are looking for the government to get them their money back. That is patently ridiculous. The idea that taxpayers should make up money to speculators who greedily and hungrily bought those securities is insane. If I buy a stock and the value tanks, I don’t expect the government to refund my money. One way to assign mortgages which would seem fairer is to evaluate them all and to use the average value to calculate the value of the securities. That way, every institution that bought those securities will share proportionately in the pain of the downturn of the real estate market and none will be assigned entirely worthless mortgages. The problem with that approach is that a vague average is assigned and not the actual value of the individual mortgage. When assets are not based on a real value, there is a lot of uncertainty in the system. It is that very uncertainty which keeps financial institutions from freeing funds for lending.
The government solution currently seems to be to buy those “toxic assets” from the owners of the securities to resume normal operation of the financial system. There are several problems with this solution. The first is that by spending $750 billion on the first TARP (toxic asset relief program), a $760 billion “stimulus program” which had nothing to do with correcting the problem, a TARP II program, and then a $410 billion omnibus spending bill, the American public has caught on to the fact that the money has to come from somewhere. There is little, if any, patience left for another huge spending bill in addition to President Obama’s proposed 2009-2010 budget. The President is continuing to propose huge spending on social programs which are liberal politics and have nothing to do with fixing the problem. The cost of buying the “toxic assets” is staggering. I believe the current administration has misspent the political capital from the election on the huge liberal spending programs and now will have to deal with the resentment to their spending. The resentment and potential political backlash will likely prevent the spending which should have been the first priority, fixing the mortgage crisis. If the mortgage security problem had been originally addressed, the markets would have fixed themselves and several trillion dollars in government "stimulus" could have been saved. By taking political advantage of the crisis to put liberal social programs in place, there is nothing left with which to fix the crisis. The only option is to borrow from foreign countries and tax the people who actually earn money, therefore leaving them nothing to invest in the markets. It is self-defeating.
My guess is that they will inevitably screw the taxpayers by paying way too much for the assets in order to appear to be doing something and gain political points. The actual value of the assets will eventually declare themselves and the government (taxpayers) will be left holding the empty bag. The government will once again reward the speculators and failures at the expense of the prudent and safe investors. The same congressional representatives who screwed the pooch on oversight, regulation and then on spending will be the ones trying to fix the problem. When the government negotiates with people who are actually smart about financial matters and do it for a living, the government will always get hosed.
There are several possible ways to try to value those assets. The grindstone way is to look at every single mortgage which was bought by Fannie Mae and Freddie Mac to determine the value of the mortgage (solid, just getting by, or in default). Even if that monumental task was done (and it would take a long time), the question then becomes how to assign the individual mortgages to the securities. None of the owners of the securities want the worthless mortgages assigned to the securities that they own. In fact, the owners of the securities are looking for the government to get them their money back. That is patently ridiculous. The idea that taxpayers should make up money to speculators who greedily and hungrily bought those securities is insane. If I buy a stock and the value tanks, I don’t expect the government to refund my money. One way to assign mortgages which would seem fairer is to evaluate them all and to use the average value to calculate the value of the securities. That way, every institution that bought those securities will share proportionately in the pain of the downturn of the real estate market and none will be assigned entirely worthless mortgages. The problem with that approach is that a vague average is assigned and not the actual value of the individual mortgage. When assets are not based on a real value, there is a lot of uncertainty in the system. It is that very uncertainty which keeps financial institutions from freeing funds for lending.
The government solution currently seems to be to buy those “toxic assets” from the owners of the securities to resume normal operation of the financial system. There are several problems with this solution. The first is that by spending $750 billion on the first TARP (toxic asset relief program), a $760 billion “stimulus program” which had nothing to do with correcting the problem, a TARP II program, and then a $410 billion omnibus spending bill, the American public has caught on to the fact that the money has to come from somewhere. There is little, if any, patience left for another huge spending bill in addition to President Obama’s proposed 2009-2010 budget. The President is continuing to propose huge spending on social programs which are liberal politics and have nothing to do with fixing the problem. The cost of buying the “toxic assets” is staggering. I believe the current administration has misspent the political capital from the election on the huge liberal spending programs and now will have to deal with the resentment to their spending. The resentment and potential political backlash will likely prevent the spending which should have been the first priority, fixing the mortgage crisis. If the mortgage security problem had been originally addressed, the markets would have fixed themselves and several trillion dollars in government "stimulus" could have been saved. By taking political advantage of the crisis to put liberal social programs in place, there is nothing left with which to fix the crisis. The only option is to borrow from foreign countries and tax the people who actually earn money, therefore leaving them nothing to invest in the markets. It is self-defeating.
My guess is that they will inevitably screw the taxpayers by paying way too much for the assets in order to appear to be doing something and gain political points. The actual value of the assets will eventually declare themselves and the government (taxpayers) will be left holding the empty bag. The government will once again reward the speculators and failures at the expense of the prudent and safe investors. The same congressional representatives who screwed the pooch on oversight, regulation and then on spending will be the ones trying to fix the problem. When the government negotiates with people who are actually smart about financial matters and do it for a living, the government will always get hosed.
Wednesday, February 18, 2009
Another Day, Another Stimulus Hose Job
Well, here comes another “stimulus package”. This time it is $75 billion for troubled mortgages. Of course, there is no reduction in mortgage rates for anyone who is currently paying their mortgage on time. Is anyone else seeing the trend in all of these stimulus and bail out packages? Let’s see if we can spot a common theme in these packages.
In the case of the bank bail out, the Treasury Department takes money from the general revenue fund and “infuses it” into banks that are in trouble. Banks that did not engage in questionable lending practices do not receive any help and just get to pay their taxes on time. The successful banks are having their money taken to support the unsuccessful banks. It seems a little counterproductive. With the Federal Deposit Insurance Corporation guaranteeing that depositors would not lose money, banks that go under would be replaced by other successful banks rapidly and individuals would not lose any deposits less than $250,000.
In the case of the automobile manufacturers, there is no help for any of the successful companies in Tennessee, South Carolina, or Texas. The provision to give tax credits for all automobile purchases was stripped from the bill. Therefore, the only help is going to the automobile manufacturers in Michigan which have United Auto Workers Union plants. What a coincidence. Therefore, tax money from auto workers in the south who earn about $45 an hour is being used to prop up wages for union auto workers in Michigan who earn about $71 an hour. The successful companies are having their money taken away to support the unsuccessful companies. If the Michigan-based automobile companies stopped making cars, would everyone stop driving? I think not. People would buy cars and trucks from the more successful and better-run companies. The Democrats say the answer is more union involvement when the very millstone around the neck of the auto industry is the United Auto Workers.
In the case of the bail out to the states, tax money from states with responsible governments like Texas is used to bail out irresponsible state governments like California and will only encourage more bogus spending and will delay the state legislature making the appropriate decisions to balance their spending and income. California refuses to secure the Mexican border and continues to provide free health care and public education to illegal aliens. Should it surprise anyone that their budget is screwed up? The successful states are therefore being screwed to reward the unsuccessful states. Irresponsible governors like Schwarzenegger are not held responsible for their actions.
In the case of the mortgage bail out, tax money is being used to refinance mortgages of people who, in many cases, should have never qualified for a mortgage in the first place. Will those people suddenly be flush with money? What is always failed to be mentioned is that the mortgage lenders will have to make their money back somehow. Let’s see… how will they do it? They will increase the rates on newer mortgages. Who will receive those mortgages? Only those people who are well-qualified will receive them because the mortgages lenders have been burned once and won’t do it again. Therefore, money will be taken from successful home buyers to bail out unsuccessful home buyers. At least this one has a logical argument in that preventing foreclosures reduces inventory of existing homes and stabilizes home prices. It does hurt the rental market. In listening to President Obama today, to his credit, it seemed that at least someone has put some thought into this package. That is a refreshing change from "You have to sign it now or the Earth will explode" spending packages.
Did anyone notice that Senator Harry Reid snuck a hand-written amendment of five billion dollars in the stimulus bill for a light rail system from Los Angeles to Las Vegas? Bernie Madoff is a small-time operator next to Harry Reid. The worst part is that no other Senator will point out how crooked that is. Five billion dollars without a hearing, without oversight, without anything but a pen. It makes you want to vomit.
The common thread throughout the processes is obviously to reward the unsuccessful and sometimes criminal at the expense of the successful and responsible. It is economic redistribution which rewards bad behavior. In time, people who are responsible will either stop producing because it won’t be in their best interest to produce or everyone will jump on the bandwagon and just start behaving badly to get on the gravy train. The problem there is that someone has to pay for that gravy train because it is a government-sponsored Ponzi scheme. When enough people stop putting money in, the whole thing will crash. That is where we are heading with these “stimulus” packages. All they had to do was stabilize the housing market and let people keep more of their money and the problem would have corrected itself. Every time the new administration interferes, the stock market dips lower because smart business people recognize where this is headed. It is nice to finally see some effort to do something about housing. In this case, it seems the right thing to do.
In the case of the bank bail out, the Treasury Department takes money from the general revenue fund and “infuses it” into banks that are in trouble. Banks that did not engage in questionable lending practices do not receive any help and just get to pay their taxes on time. The successful banks are having their money taken to support the unsuccessful banks. It seems a little counterproductive. With the Federal Deposit Insurance Corporation guaranteeing that depositors would not lose money, banks that go under would be replaced by other successful banks rapidly and individuals would not lose any deposits less than $250,000.
In the case of the automobile manufacturers, there is no help for any of the successful companies in Tennessee, South Carolina, or Texas. The provision to give tax credits for all automobile purchases was stripped from the bill. Therefore, the only help is going to the automobile manufacturers in Michigan which have United Auto Workers Union plants. What a coincidence. Therefore, tax money from auto workers in the south who earn about $45 an hour is being used to prop up wages for union auto workers in Michigan who earn about $71 an hour. The successful companies are having their money taken away to support the unsuccessful companies. If the Michigan-based automobile companies stopped making cars, would everyone stop driving? I think not. People would buy cars and trucks from the more successful and better-run companies. The Democrats say the answer is more union involvement when the very millstone around the neck of the auto industry is the United Auto Workers.
In the case of the bail out to the states, tax money from states with responsible governments like Texas is used to bail out irresponsible state governments like California and will only encourage more bogus spending and will delay the state legislature making the appropriate decisions to balance their spending and income. California refuses to secure the Mexican border and continues to provide free health care and public education to illegal aliens. Should it surprise anyone that their budget is screwed up? The successful states are therefore being screwed to reward the unsuccessful states. Irresponsible governors like Schwarzenegger are not held responsible for their actions.
In the case of the mortgage bail out, tax money is being used to refinance mortgages of people who, in many cases, should have never qualified for a mortgage in the first place. Will those people suddenly be flush with money? What is always failed to be mentioned is that the mortgage lenders will have to make their money back somehow. Let’s see… how will they do it? They will increase the rates on newer mortgages. Who will receive those mortgages? Only those people who are well-qualified will receive them because the mortgages lenders have been burned once and won’t do it again. Therefore, money will be taken from successful home buyers to bail out unsuccessful home buyers. At least this one has a logical argument in that preventing foreclosures reduces inventory of existing homes and stabilizes home prices. It does hurt the rental market. In listening to President Obama today, to his credit, it seemed that at least someone has put some thought into this package. That is a refreshing change from "You have to sign it now or the Earth will explode" spending packages.
Did anyone notice that Senator Harry Reid snuck a hand-written amendment of five billion dollars in the stimulus bill for a light rail system from Los Angeles to Las Vegas? Bernie Madoff is a small-time operator next to Harry Reid. The worst part is that no other Senator will point out how crooked that is. Five billion dollars without a hearing, without oversight, without anything but a pen. It makes you want to vomit.
The common thread throughout the processes is obviously to reward the unsuccessful and sometimes criminal at the expense of the successful and responsible. It is economic redistribution which rewards bad behavior. In time, people who are responsible will either stop producing because it won’t be in their best interest to produce or everyone will jump on the bandwagon and just start behaving badly to get on the gravy train. The problem there is that someone has to pay for that gravy train because it is a government-sponsored Ponzi scheme. When enough people stop putting money in, the whole thing will crash. That is where we are heading with these “stimulus” packages. All they had to do was stabilize the housing market and let people keep more of their money and the problem would have corrected itself. Every time the new administration interferes, the stock market dips lower because smart business people recognize where this is headed. It is nice to finally see some effort to do something about housing. In this case, it seems the right thing to do.
Friday, February 13, 2009
Centralized Medical Records, Behavioral Modification and Security
The currently debated “stimulus” bill has about $300 million in it for establishment of an electronic medical record system for the government. I mentioned this briefly in a previous post but think it should probably be explored in more depth.
The idea of a central repository for all medical records has great merit in an ideal world. Information would be available, no matter where a patient was located, about past medical history, allergies, current medications, and past surgical history. Since everyone is altruistic and no one would access information that was not required, the system would be wonderful in an ideal world. We don’t live in an ideal world.
A central repository of any information of value is a hackers dream. That information would be so valuable to obtain that it could be sold surreptitiously to potential employers, insurance providers, for personal motives, etc. by anyone with access and enough temptation. Miscreants could erase or modify the records for profit or for malicious reasons. The government would counter with a back up system of records. That just provides a broader target to access the information. Even without hacking through computer safeguards, the records could be compromised by individuals through bribes or other personal motives. This is a relatively common occurrence when it comes to national security issues in the United States. People with agendas or personal political philosophical differences with the government pass information to liberal publications like the Washington Post and New York Times which routinely publish classified information. Even more recently, out of one hundred forty anonymous screening tests for baseball players concerning steroids, only the name of Alex Rodriguez was leaked to the press. Someone clearly had an agenda against Alex Rodriguez. It is easy to see similar leaks for candidates for office, other sports figures, celebrities, and for personal vengeance. A history of a sexually transmitted disease, elective abortion, or potential debilitating disease could be used for extortion or political blackmail.
The breadth of the system is inherently a security and bandwidth problem. In order to be effective, the records will have to be available to any medical facility in order to care for patients wherever they present for care. That means that tens or even hundreds of thousands of facilities will have access to the system. A system that large will be similar to the AHLTA military system which is slow, unwieldy, and crashes regularly. A system with that kind of capability probably doesn’t exist outside of the military or National Security Agency anywhere in the world. An electronic health record system which is undependable would be a danger to patients as necessary patient information would not be available when required. Additionally, with the many thousands of access points to the system, there is no practical way to adequately maintain the security of the system. It is like a fence with thousands and thousands of gates, any one of which when breeched makes the entire system accessible.
As a physician, I am well aware of the tendency of health care administrators to now view patient care as a “product line”. In a group of physicians, I have once actually been instructed by a senior administrator to increase patient throughput even if it increases risk of inadequate diagnosis. The reason I bring this up is that there is a tendency for anyone under a time constraint to avoid “reinventing the wheel”. Errors in records in a central repository will propagate because the information will convey authority and go unchallenged. Errors will be like bad tattoos and go with patients everywhere.
To use the hackneyed Orwellian analogy, all health care information in the hands of the government is not a good idea. I will point out that while the government will be a problem, it may not be the biggest problem. With a records system that will inevitably leak like a sieve, it is only a matter of time before private insurance providers get their hands on the information. With that information in hand, insurance companies will begin to modify their actuarial tables depending on your private information. If they note a minor injury while surfing, skiing, sky diving, playing contact sports, riding, etc. you will have the option of stopping the activity, not being covered while doing it, or paying higher premiums. This type of focus will eventually lead to widespread financial behavioral modification. The analogous government scenario is to force behavior modification by denying benefits for activities, diet, etc. that are not approved by some group of “experts” who decide what they want you to do and not do. This is not a new argument. There was a suggestion years ago that in states with motorcycle helmet laws, if you didn’t wear a helmet, there would be no government funding for your health care should you be injured on a motorcycle. The idea was fairly popular. The same has been suggested for bicycle riding for children and cigarette smoking. The idea being that the government says out of one side of the mouth, “We aren’t forcing anyone to change their behavior” while making the behavior so financially untenable that no sane person would engage in it. It is a slippery slope that eventually leads to only government and insurance approved lifestyles being covered. Anything else leaves you on your own.
One advantage proponents will claim is the ability to gather data about treatment options and outcomes. Former Senator Daschle has already written in his book about using those data to determine which treatments will be available. In other words, the financial behavioral modification will not only be used on patients, it will be used to force physicians to become robotic in their prescribing and treatment patterns. Once again, it will be “Treat the patient in the way you see fit, but we will only pay you if you do it the way we want.” If patients cannot be treated individually, we might as well scrap the entire health care system and have everyone use a site like WebMD to treat everyone. There is no reason to talk to patients and examine them if it isn’t going to make any difference in what you can do for them.
My counter proposal, which I have actually sent to Senators Graham and DeMint, is to not have the government establish an actual computer system but rather to establish national standards for the electronic medical record. The format of the record, type of computer storage file, and transmission protocols could be specified and monitored by the Department of Health and Human Services. In the past, similar standards have been established for radio and television transmission, automobile safety, food safety, air traffic control systems, and other systems. My suggestion is that a commission or committee of overpaid top notch experts to establish standards has miniscule costs compared to establishing and building a huge overpriced ineffective system of computer networks. Additionally, in a free market economy, software developers will come out of the woodwork in droves to develop and market commercial versions of software to make new electronic records and convert existing records. To paraphrase Field of Dreams, “If there is money to be made, they will definitely come”. Having private companies supply the software will create many high-paying jobs and result in substantial tax revenue to the government, instead of costing huge amounts in government payroll. Additional jobs will be created all across the country when people are hired by health care facilities to convert existing records into the standardized electronic format. The government virtually never gets the appropriate value for its contracts, there is no reason to assume that it will on this one. Therefore, in the spirit of the American entrepreneur, to save hundreds of millions of dollars in taxpayer money and to avoid the Orwellian consequences, I believe the system I am proposing is superior to the current thinking.
The idea of a central repository for all medical records has great merit in an ideal world. Information would be available, no matter where a patient was located, about past medical history, allergies, current medications, and past surgical history. Since everyone is altruistic and no one would access information that was not required, the system would be wonderful in an ideal world. We don’t live in an ideal world.
A central repository of any information of value is a hackers dream. That information would be so valuable to obtain that it could be sold surreptitiously to potential employers, insurance providers, for personal motives, etc. by anyone with access and enough temptation. Miscreants could erase or modify the records for profit or for malicious reasons. The government would counter with a back up system of records. That just provides a broader target to access the information. Even without hacking through computer safeguards, the records could be compromised by individuals through bribes or other personal motives. This is a relatively common occurrence when it comes to national security issues in the United States. People with agendas or personal political philosophical differences with the government pass information to liberal publications like the Washington Post and New York Times which routinely publish classified information. Even more recently, out of one hundred forty anonymous screening tests for baseball players concerning steroids, only the name of Alex Rodriguez was leaked to the press. Someone clearly had an agenda against Alex Rodriguez. It is easy to see similar leaks for candidates for office, other sports figures, celebrities, and for personal vengeance. A history of a sexually transmitted disease, elective abortion, or potential debilitating disease could be used for extortion or political blackmail.
The breadth of the system is inherently a security and bandwidth problem. In order to be effective, the records will have to be available to any medical facility in order to care for patients wherever they present for care. That means that tens or even hundreds of thousands of facilities will have access to the system. A system that large will be similar to the AHLTA military system which is slow, unwieldy, and crashes regularly. A system with that kind of capability probably doesn’t exist outside of the military or National Security Agency anywhere in the world. An electronic health record system which is undependable would be a danger to patients as necessary patient information would not be available when required. Additionally, with the many thousands of access points to the system, there is no practical way to adequately maintain the security of the system. It is like a fence with thousands and thousands of gates, any one of which when breeched makes the entire system accessible.
As a physician, I am well aware of the tendency of health care administrators to now view patient care as a “product line”. In a group of physicians, I have once actually been instructed by a senior administrator to increase patient throughput even if it increases risk of inadequate diagnosis. The reason I bring this up is that there is a tendency for anyone under a time constraint to avoid “reinventing the wheel”. Errors in records in a central repository will propagate because the information will convey authority and go unchallenged. Errors will be like bad tattoos and go with patients everywhere.
To use the hackneyed Orwellian analogy, all health care information in the hands of the government is not a good idea. I will point out that while the government will be a problem, it may not be the biggest problem. With a records system that will inevitably leak like a sieve, it is only a matter of time before private insurance providers get their hands on the information. With that information in hand, insurance companies will begin to modify their actuarial tables depending on your private information. If they note a minor injury while surfing, skiing, sky diving, playing contact sports, riding, etc. you will have the option of stopping the activity, not being covered while doing it, or paying higher premiums. This type of focus will eventually lead to widespread financial behavioral modification. The analogous government scenario is to force behavior modification by denying benefits for activities, diet, etc. that are not approved by some group of “experts” who decide what they want you to do and not do. This is not a new argument. There was a suggestion years ago that in states with motorcycle helmet laws, if you didn’t wear a helmet, there would be no government funding for your health care should you be injured on a motorcycle. The idea was fairly popular. The same has been suggested for bicycle riding for children and cigarette smoking. The idea being that the government says out of one side of the mouth, “We aren’t forcing anyone to change their behavior” while making the behavior so financially untenable that no sane person would engage in it. It is a slippery slope that eventually leads to only government and insurance approved lifestyles being covered. Anything else leaves you on your own.
One advantage proponents will claim is the ability to gather data about treatment options and outcomes. Former Senator Daschle has already written in his book about using those data to determine which treatments will be available. In other words, the financial behavioral modification will not only be used on patients, it will be used to force physicians to become robotic in their prescribing and treatment patterns. Once again, it will be “Treat the patient in the way you see fit, but we will only pay you if you do it the way we want.” If patients cannot be treated individually, we might as well scrap the entire health care system and have everyone use a site like WebMD to treat everyone. There is no reason to talk to patients and examine them if it isn’t going to make any difference in what you can do for them.
My counter proposal, which I have actually sent to Senators Graham and DeMint, is to not have the government establish an actual computer system but rather to establish national standards for the electronic medical record. The format of the record, type of computer storage file, and transmission protocols could be specified and monitored by the Department of Health and Human Services. In the past, similar standards have been established for radio and television transmission, automobile safety, food safety, air traffic control systems, and other systems. My suggestion is that a commission or committee of overpaid top notch experts to establish standards has miniscule costs compared to establishing and building a huge overpriced ineffective system of computer networks. Additionally, in a free market economy, software developers will come out of the woodwork in droves to develop and market commercial versions of software to make new electronic records and convert existing records. To paraphrase Field of Dreams, “If there is money to be made, they will definitely come”. Having private companies supply the software will create many high-paying jobs and result in substantial tax revenue to the government, instead of costing huge amounts in government payroll. Additional jobs will be created all across the country when people are hired by health care facilities to convert existing records into the standardized electronic format. The government virtually never gets the appropriate value for its contracts, there is no reason to assume that it will on this one. Therefore, in the spirit of the American entrepreneur, to save hundreds of millions of dollars in taxpayer money and to avoid the Orwellian consequences, I believe the system I am proposing is superior to the current thinking.
Wednesday, February 11, 2009
Killing an Insect with a Nuke and Missing
I cannot figure out who is giving financial advice to the Congress. Everyone knows, or at least they say they do, that the current United States financial crisis began with the issuing of sub-prime mortgages. I have written about that previously. Once those mortgages were bundled into securities by the securities fraud folks at Fannie Mae and Freddie Mac and sold to investment banks world-wide, the trap was sprung. Now, there is a lot of talk about how the credit market froze. They talk about it like it is unrelated. Why did that happen? It happened because all of those securities based on mortgages are bundled groups of mortgages. Some may be full value and some may be worth squat. Therein is the problem. Banks holding billions of dollars in purchases of those securities don’t know what they are worth. Worse yet, there currently seems to be no way to determine how much they are worth. Therefore, the banks don’t know whether they have money or not. Just like anyone else, they don’t lend money if they don’t know if they have any. And they certainly won’t lend to another bank holding a lot of those same securities. So, once again, we are back to mortgages and securities fraud.
In order to “stimulate” the economy, the Democratic congress has come up with a bill to spend almost $800 billion dollars on a lot of projects. No where in that bill is the mortgage crisis addressed. Thus, the title of this writing. They are trying to use an incredibly large program (nuclear weapon) to kill a pest (mortgage securities) which they should have just stepped on with their shoe (address the mortgage problem). Worst yet, they missed. If they took care of the uncertainty in the mortgage securities, banks would know how much money they have and the economy would begin to function normally again. Surely, it would take some time to recover but the base cause would be addressed. Making the next few generations bear the brunt of this by spending money we don’t have on things that should at least be discussed, not jammed through, is immoral. You don’t spend $800 billion dollars in slush funds without at least having some hearings on the content of the bill. This is Congress doing their best Bernie Madoff impression.
In order to “stimulate” the economy, the Democratic congress has come up with a bill to spend almost $800 billion dollars on a lot of projects. No where in that bill is the mortgage crisis addressed. Thus, the title of this writing. They are trying to use an incredibly large program (nuclear weapon) to kill a pest (mortgage securities) which they should have just stepped on with their shoe (address the mortgage problem). Worst yet, they missed. If they took care of the uncertainty in the mortgage securities, banks would know how much money they have and the economy would begin to function normally again. Surely, it would take some time to recover but the base cause would be addressed. Making the next few generations bear the brunt of this by spending money we don’t have on things that should at least be discussed, not jammed through, is immoral. You don’t spend $800 billion dollars in slush funds without at least having some hearings on the content of the bill. This is Congress doing their best Bernie Madoff impression.
Wednesday, February 4, 2009
How the Economy Doesn't Work and More Fabrications
A collection of thoughts about the last couple of weeks:
The "stimulus" bill now being considered in the Senate which passed in the House is being talked about non-stop by all the talking heads on television. As it continues to languish, someone described it as a rotting corpse. The longer is is exposed to the sunshine, the more it begins to stink.
Rep. Nancy Pelosi was just on television yesterday saying that "every month that the stimulus package is not passed, 500 million Americans will lose their jobs". I find that statistic interesting in that the population of the United States is just over 300 million people. How she can say something like that with a straight face means that she must have had a stroke or slow virus brain disease. It is not possible for what she said to be true and any middle schooler could tell you that it was not possible.
Spending by the government is a revolving door and does not stimulate the economy. You take taxes in, pay them out, and take them in again. It doesn't produce anything. It is money that is just being printed by the government and being covered by borrowing from foreign countries. In order for the economy to function, private industry must generate wealth and pay taxes into the government. The workers who are employed by those private industries must earn wages and pay taxes into the government. It is private industry that generates revenue, not the government. To think that the economic crisis will be resolved by just printing more money is idiotic and not very reassuring about the competence of those advocating that course. It has never worked in the past and is silly.
Another big lie is that this current wish list of a bill is a stimulus package at all. It is a laundry list of liberal wishes. Some of the ideas may have merit but they are not stimulative to the economy. As the people have seen more and more of this bill, public opinion has turned against it and rightly so. Fred Smith, CEO of Fedex was on television the other day and pointed out that the United States Tax Code is weighted substantially toward helping financial institutions and inhibiting the manufacturing sector. The Democrats constantly rail against manufacturers relocating facilities overseas yet never admit that their own tax policies are causing the movement. The obligation of any CEO of a corporation is to make a profit for the stockholders. If that CEO can find a more favorable environment to manufacture the companies products, he has an obligation to do so. Since the United States has the highest business taxes in the world, should it surprise anyone that businesses are going elsewhere? We have seen the same phenomenon within the United States with businesses relocating from the industrial north (Michigan, Pennsylvania, Ohio, Illinois, etc.) to the Southeast where the weather is better and the local and state governments are more friendly to business and the tax structure is better for business. That very thing is what has happened to the automobile industry in Michigan where dumb business decisions and liberal policies have whacked the industry. Automobile manufacturers in South Carolina, Tennessee, and Texas are doing fine.
If the Democrats wanted to stimulate the economy, they could have money in the people's pockets in two weeks: reduce payroll taxes. It would only require the stroke of a pen. There are things in the stimulus bill which cost tens of millions of dollars and produce only a dozen jobs. If you are you going to do that, just give me ten million dollars and say it is a job. I won't even tell on you. In every single instance in United States history, reducing the capital gains tax has resulted in increased revenue for the government. Additionally, every single time capital gains taxes are raised, government revenue decreases. Can anyone see what the right thing is to do? Duh.
The Obama people say giving a rebate check to the people is stimulative. Consider this when comparing the rebate check to tax relief: Would you be more likely to make a big purchase (car, washer, refrigerator, computer, etc.) with a single rebate check, or with more money every paycheck for the forseeable future? Anyone can see that tax relief makes more sense and will be more stimulative to the economy. To say otherwise is to show your partisanship and no knowledge of the economy.
The left, in order to pay back the big labor unions for their support in the elections, is trying to pass the goofy "card check" legislation which will take the right to secret ballots away from union elections. Perhaps we can establish a KGB and a Ministry of Propaganda as well. The secret ballot vote is a fundamental right of all Americans in all elections. How anyone can claim it is progress is demeaning to anyone that can think.
If only these guys would start looking out for the people and less about their own butts.
The "stimulus" bill now being considered in the Senate which passed in the House is being talked about non-stop by all the talking heads on television. As it continues to languish, someone described it as a rotting corpse. The longer is is exposed to the sunshine, the more it begins to stink.
Rep. Nancy Pelosi was just on television yesterday saying that "every month that the stimulus package is not passed, 500 million Americans will lose their jobs". I find that statistic interesting in that the population of the United States is just over 300 million people. How she can say something like that with a straight face means that she must have had a stroke or slow virus brain disease. It is not possible for what she said to be true and any middle schooler could tell you that it was not possible.
Spending by the government is a revolving door and does not stimulate the economy. You take taxes in, pay them out, and take them in again. It doesn't produce anything. It is money that is just being printed by the government and being covered by borrowing from foreign countries. In order for the economy to function, private industry must generate wealth and pay taxes into the government. The workers who are employed by those private industries must earn wages and pay taxes into the government. It is private industry that generates revenue, not the government. To think that the economic crisis will be resolved by just printing more money is idiotic and not very reassuring about the competence of those advocating that course. It has never worked in the past and is silly.
Another big lie is that this current wish list of a bill is a stimulus package at all. It is a laundry list of liberal wishes. Some of the ideas may have merit but they are not stimulative to the economy. As the people have seen more and more of this bill, public opinion has turned against it and rightly so. Fred Smith, CEO of Fedex was on television the other day and pointed out that the United States Tax Code is weighted substantially toward helping financial institutions and inhibiting the manufacturing sector. The Democrats constantly rail against manufacturers relocating facilities overseas yet never admit that their own tax policies are causing the movement. The obligation of any CEO of a corporation is to make a profit for the stockholders. If that CEO can find a more favorable environment to manufacture the companies products, he has an obligation to do so. Since the United States has the highest business taxes in the world, should it surprise anyone that businesses are going elsewhere? We have seen the same phenomenon within the United States with businesses relocating from the industrial north (Michigan, Pennsylvania, Ohio, Illinois, etc.) to the Southeast where the weather is better and the local and state governments are more friendly to business and the tax structure is better for business. That very thing is what has happened to the automobile industry in Michigan where dumb business decisions and liberal policies have whacked the industry. Automobile manufacturers in South Carolina, Tennessee, and Texas are doing fine.
If the Democrats wanted to stimulate the economy, they could have money in the people's pockets in two weeks: reduce payroll taxes. It would only require the stroke of a pen. There are things in the stimulus bill which cost tens of millions of dollars and produce only a dozen jobs. If you are you going to do that, just give me ten million dollars and say it is a job. I won't even tell on you. In every single instance in United States history, reducing the capital gains tax has resulted in increased revenue for the government. Additionally, every single time capital gains taxes are raised, government revenue decreases. Can anyone see what the right thing is to do? Duh.
The Obama people say giving a rebate check to the people is stimulative. Consider this when comparing the rebate check to tax relief: Would you be more likely to make a big purchase (car, washer, refrigerator, computer, etc.) with a single rebate check, or with more money every paycheck for the forseeable future? Anyone can see that tax relief makes more sense and will be more stimulative to the economy. To say otherwise is to show your partisanship and no knowledge of the economy.
The left, in order to pay back the big labor unions for their support in the elections, is trying to pass the goofy "card check" legislation which will take the right to secret ballots away from union elections. Perhaps we can establish a KGB and a Ministry of Propaganda as well. The secret ballot vote is a fundamental right of all Americans in all elections. How anyone can claim it is progress is demeaning to anyone that can think.
If only these guys would start looking out for the people and less about their own butts.
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