Obamacare and False Claims

March 7, 2014

Kevin Short over at the Huffington Post produced a wrongheaded post this week titled, “Obamacare Just Made Americans Richer Without Anyone Noticing”.  Citing a report issued by the Commerce Department’s Bureau of Economic Analysis and calculations made by the Wall Street Journal, Short claims Obama’s so-called Affordable Care Act (ACA), better known as Obamacare, was responsible for three-quarters of the rise in Americans’ spending and income growth in January.  Thus, according to Short, the ACA in its first month of operation has already made Americans richer.

The problem with Short’s analysis and the reason why Americans didn’t notice they were richer is because they aren’t.  Short’s claim is nothing more than typical Keynesian bunk.

So, how did the ACA make Americans’ richer in January according to Short?  Well, the expansion of Medicaid funding to the tune of about $19 billion and $15 billion in subsidies received by Obamacare enrollees did the trick.  The logic goes, because some Americans received a combined $34 billion in federal largess, that money will be spent in the economy providing new jobs for countless Americans.

Of course, what Short fails to mention is where the money for those welfare benefits (Medicaid and subsidies) came from.  Did they come from an increase in worker productivity?  Did they come from an expansion of business and employment?  No.  In fact, according to the Institute for Supply Management  its employment gauge in February declined for the first time in 25 months and currently stands at its lowest reading since March 2010.

Obviously, the money came from taxpayers, either through direct tax payments or debt monetization by the Federal Reserve.  Neither approach represents an expansion of the economy or wealth production.  What has happened is akin to taking money from one pocket and transferring it to the other.  Only in Short’s world and the world of Keynesians everywhere is this considered prosperity.

But, what is even more troublesome is how that $34 billion was spent in January.  Again, according to the Bureau of Economic Analysis, Obamacare handouts may have been responsible for a $29 billion increase in health care services.  Besides utilities, all other spending categories experienced a decline.

What this means is if Obamacare further increases government spending on health care, then the cost of health care will rise even higher.  All of that new money entering the health care industry will bid up prices to heights never seen before.  This is precisely the reason health care costs have been on the rise for the last 50 years.

Over the last few years, there have been many false claims made about Obamacare.  From “you can keep your coverage and doctor” to health care costs will decrease to more Americans will have health care coverage, there has been no shortage of mistruths.  And now we have the outrageous claim that the ACA is making Americans richer.  Not only does taking from one citizen and giving to another not make us richer, increased government spending on health care will surely make us poorer.


Young Voters Betrayed by Obama Policies

December 21, 2013

Barack Obama, in large part, owes his presidency to young voters.  In two presidential elections he has garnered 66 percent and 67 percent of their vote respectively.  Many of those votes proved pivotal for him in winning key states like Florida, Virginia, Pennsylvania, and Ohio.  And yet the President apparently feels no loyalty toward this group of voters that has given him so much.  In fact, it has become second nature for him to run roughshod over their interests.

To begin with, the economy Obama has produced for young people in close to five years of his leadership is horrendous.  His policies of regulate and spend have not permitted the economy to recover from the Great Recession that began in 2008.  Unemployment for 15 to 24 year olds is more than double the national average.  Many college graduates, unable to find a job, have returned to their parents’ nests to wait for better days and brighter employment prospects.  African-American teenagers face a jobless rate of more than 40 percent!

And while the President was attempting to “stimulate” the economy back to good health with profligate spending, what he did instead was run up a tab that young folks will have to pay back for many years into the future.  What’s more, when interest rates rise to their historic average and interest payments on the national debt more than double, paying back that debt will have to include much higher taxes or enormous cuts in government services.

Lastly, there is Obamacare.  The President is relying on young folks to make his health care scheme work.  He is counting on millions of them to purchase high cost plans to offset costs for the sick and elderly.  Of course, many will not accommodate the President’s wishes, thereby causing health care premiums to skyrocket for all consumers.  By the time the current crop of 18-30 year olds is interested in purchasing health care coverage the costs will be astronomical.  Thus he has put them in an unenviable position.  They are damned if they do, damned if they don’t.

Young people made a serious mistake giving Barack Obama their overwhelming support in the last two presidential elections.  But, what choice did they have?  John McCain and Mitt Romney weren’t much better alternatives.  What young people need are free market policies – sound money, a balanced federal budget, and deregulation.  It doesn’t appear this is going to happen anytime soon.


Obamacare is Mostly a Wealth Redistribution Program

November 1, 2013

President Obama has long held the view that wealth redistribution is good for America.  His most famous proclamation of that position came during the 2008 presidential race when in Ohio he told “Joe the Plumber”, “When you spread the wealth around, it’s good for everybody,” But, perhaps the best indicator of how he would govern as president came in a 1998 speech he gave to students at Loyola University.   Then, Illinois state Senator Obama said, “The trick is figuring out how do we structure government systems that pool resources and hence facilitate some [wealth] redistribution — because I actually believe in redistribution, at least at a certain level to make sure that everybody’s got a shot.”

The President’s signature legislative accomplishment as chief executive, the Patient Protection and Affordable Care Act, more widely known as Obamacare, is one of those government systems he spoke about whose purpose is to redistribute wealth to help everybody.

All along, it’s been clear that Obamacare’s goal was to provide health care coverage to the millions of Americans who could not afford their own coverage.  Its purpose was never to lower health care costs in general.  In order to accomplish the goal, Obamacare must take from some (the young, healthy, and responsible) and give to others (the not so young, unhealthy, or irresponsible).  At the end of the day, this amounts to nothing more than a program to redistribute wealth on a vast scale.  And that is exactly what is happening under the law so far.

CBS News has reported that more than two million Americans have recently been notified that their current health care policies do not meet the higher minimum standards mandated by Obamacare.  Therefore, they will lose their coverage on January 1, 2014.  It’s been estimated that about half of those who have lost coverage will pay more while the other half will pay less.  But, Obamacare is not based on actuarial science like other insurance schemes.  Those paying higher premiums in the future aren’t going to be paying more because they smoke or guzzle booze or participate in risky sexual practices.  They will pay more to subsidize those who pay less or nothing at all.  This defies the very essence of insurance – shared risk.  What incentive do the poor have to live a healthier lifestyle if those with more resources will always pick up their bill?

And watching Secretary Sebelius testify before the House Energy and Commerce Committee, I learned that single men, who have never given birth, are required under Obamacare to have maternity coverage!  Really?  Is this fair or is this a means to transfer wealth from men to women by using the income of the former to reduce the costs of the latter?  After all, the Administration believes women only earn about 70 cents of every dollar that men make.  Perhaps, the Administration is trying to achieve through Obamacare what it can’t through legislative action?

No matter the case, Obamacare is doomed to failure.  Yes, more Americans will be covered but the costs will overwhelm the system and those that are footing the bill.  As more and more high risk applicants sign up for health coverage through the exchanges, the premiums of those paying the bill will continue to rise.  The incentive for these folks will be to find a way to have Uncle Sam subsidize at least a portion of their coverage.  More Americans will become impoverished.  That is always the result of wealth redistribution policies.  The president is a learned man.  He should know this.


Obamacare is Contributing to Jobs Leaving America

October 16, 2013

One major defect (there are many) of the Affordable Care Act (Obamacare) is the provision of the law which institutes an excise tax on medical device manufacturers.  Totaling a paltry $29 billion (in relation to what Obamacare will cost overall) over the next decade, the purpose of the new tax is to finance some of the subsidies the federal government will pay to expand Medicaid coverage to the uninsured.

Now on the surface, this sounds like an admirable goal, namely, providing health care coverage for those who can’t afford it on their own.  But, upon closer inspection, this is another example of what the famous French political economist Frederic Bastiat wrote about in his 1850 essay, “Ce qu’on voit et ce qu’on ne voit pas” (“What is Seen and What is Unseen”).

You see while the president and other advocates of Obamacare boast that they will expand coverage for more Americans through provisions like the medical-device excise tax, they fail to realize or refuse to acknowledge that other Americans will lose their jobs on account of the same provision.

Consider just two of the bigger players in the medical device industry.  Minneapolis based, Medtronic (NYSE: MDT), the world’s largest spinal device maker, announced it would soon hire 1,500 new workers, but because of Obamacare most of those hires will be overseas.  Then there is Massachusetts based Boston Scientific (NYSE: BSX).  The large cardiovascular device maker announced it would lay-off between 1,200 and 1,400 workers worldwide with a majority being American workers while at the same time announcing a $150 million investment in China that would create 1,000 new jobs there.  So, while Obama claims that more Americans will have health coverage under Obamacare, others will lose their jobs or not be hired because of it.

To be sure, companies do not move their operations overseas without careful consideration.  It is expensive and even risky for them to relocate all or the bulk of their workforce outside the United States.  There are a lot of costs involved with moving facilities and setting up shop abroad.  Corruption, political instability, and unskilled labor forces in most developing countries provide an enormous amount of risk for American companies.  Yet many of them make the move anyway.  And that is the question which has baffled Obama and his ilk for some time now. Why have American companies and the jobs they provide gone overseas these last several decades?  The answer is simple:  because the money saved in taxes, many times in the hundreds of millions of dollars annually, more than compensates them for their relocations abroad.  Medtronic and Boston Scientific are just the latest examples.


If Republicans Love America They Must Keep the Government Closed Down

October 5, 2013

The current government shutdown has statists all in a tizzy.  Democratic congressmen and mainstream media pundits have been blabbering all week about how we are doomed because Republicans in the House of Representatives refuse to approve more wasteful federal spending thereby allowing the government to continue to function.  For these folks, it is the end of the world if Washington is not the center of decision making and the purveyor of all of life’s provisions for the American people.  The incessant chatter of how a small group of “extremists” in the House is holding the whole country hostage got old pretty darn quick and I found myself reaching for the remote to quell the noise on more than one occasion.

I mean what is so extreme about attempting to change the disastrous course the country is currently on?  Can the federal government continue to rack up enormous deficits each month with no end in sight?  Are we able to take on another massive entitlement program?  Finally, after five years of managing the economy and producing no economic recovery, is it not time to admit failure and try something new?  If Republicans love America, they must stick to their guns and demand changes before any budget deal is agreed to.

For one thing, it is no secret that Washington wastes billions of dollars each year and a lot of the spending has nothing to do with the welfare of the American people.  It includes everything from $10 million  to create a version of “Sesame Street” for Pakistani television to $2.6 million to train Chinese prostitutes to drink responsibly.  None of it is constitutional and none of it enriches the lives of ordinary Americans.

But, that spending is just the tip of the iceberg.  The national debt is quickly approaching $17 trillion and unfunded future liabilities for Social Security and Medicare equals another $84 trillion.

Then there is Obamacare – the president’s signature legislative accomplishment.  The increased costs that come with that scheme will be enormous.  Much of the costs will be covered by federal subsidies which will further exacerbate the national debt.  Because it is another entitlement program, future lobbying for protection of the system and increased benefits will rival that of Social Security and Medicare thereby causing huge unfunded liabilities of its own.  Yet, Democrats refuse to even consider delaying the law for one year.

In the final analysis, the way to get America back on the path to economic prosperity is not through big government programs supported with huge budget deficits.  That has been proven over the last five years.  The road to a bright economic future is through small government and balanced federal budgets.  The greatest period of economic growth in our nation’s history came when deficits were low and the largest federal program was the U.S. Postal Service.  Between 1869 and 1879 America’s economy grew 6.8 percent (NNP equals GDP minus capital depreciation) per year.  When the 20th Century began, America was the world’s leader in per capita income and industrial production.  Real wages increased greatly and prices of goods and services remained steady.

We have spent over $7 trillion in the last 5 years and what has it gotten us?  Lagging wages, continued high unemployment, and higher prices are the result.

An immense fiscal and monetary crisis is eventually going to engulf America. It is already too late to prevent it.  Over 40 years of profligate federal spending and monetary recklessness is quickly coming to a head.  If Republicans back down to the big spenders and pass a budget which increases the debt ceiling and funds Obamacare the collapse will be that much worse.  If they really love America, they must keep the government closed down.  Maybe we can salvage some of our doomed economy?


Obamacare Must Go!

April 5, 2012

Let’s get right to the point:  the Affordable Care Act also known as Obamacare needs to go away.  Far away.  It doesn’t matter if the Supreme Court rules it unconstitutional or if Congress can come to its senses and repeal the legislation.  One way or another, it must go.

The record of our federal government providing services outside of its constitutional jurisdiction is atrocious to say the least.  It includes big wasteful bureaucracy, questionable accounting practices, and massive cost overruns.  Speaking of cost overruns, Social Security, Medicaid, and Medicare alone face 10s of trillions of dollars in unfunded future liabilities.  So it was no surprise this past week when Republican Senator Jeff Sessions’ office reported that it discovered the long-term funding gap of Obamacare to not be $1 trillion as the President has claimed all along, but a whopping $17 trillion.  Nancy Pelosi was right all along – they had to pass the bill to see what was in it.  And boy we are now beginning to see what a rook job has been pulled over on the American people.

Now, I suppose that costs don’t matter if you think government debt is irrelevant.  After all America could never end up like Greece, Spain, Portugal, Ireland, or Hungary.  And the Japanese, Chinese, and Arab nations will continue to buy up our debt allowing us to borrow cheaply for everything we no longer make but still need.

Unfortunately government debt is not irrelevant and the day of reckoning is coming.  All Federal Reserve induced financial bubbles (dot.com, housing, etc…) burst eventually.  The Fed’s U.S. debt bubble is no exception.  It is likely that at some point our lenders stop buying our debt.  Interest rates will have to rise dramatically to entice foreign investors to service our debt again.  The Fed will print even more money to cover the shortfall increasing our debt further and devaluing the dollar to the point where exponential price inflation of goods and services will result.  Life savings will be wiped out and Americans’ standard of living destroyed.

I’m not minimizing the problem of 40 million Americans without health insurance, but the consequences of the federal government being all things to all people will eventually destroy the economy for everyone.  In fact, the reason health care costs are so high is precisely because of government involvement in the industry.  In the first place, government limits competition through licensing laws and the drug approval process thereby eliminating an important mechanism in controlling costs.  Secondly, increased government spending on health care bids up the price of care.  If Obamacare is allowed to exist it will quicken our economic downfall.  Insuring 40 million more Americans for a short period of time is little consolation for destroying our way of life.

At the end of the day, it is more likely the Supreme Court will void the law rather than Congress repealing it.  Even if the Republicans were capable of intestinal fortitude, when January 2013 rolls around at the very least the Democrats will be able to prevent a cloture vote in the Senate and at the most a veto wielding Barak Obama will still be occupying the White House.


What’s Good for the Goose is Good for the Gander

March 2, 2011

Last week the Justice Department announced that it would no longer enforce the Defense of Marriage Act (DOMA).  Passed by huge bipartisan majorities in both chambers of Congress and signed into law by President Clinton in 1996, DOMA defines a legal marriage as one between a man and a woman.  Additionally, the act shields each state from having to legally recognize same sex marriages permitted in other states.  In making the announcement, Attorney General Holder said the decision was based on his and the president’s opinion that the law was unconstitutional.

Now, naturally, the Obama Administration’s announcement has angered many on the right.  Newt Gingrich, one of the right’s main moral barometers, thinks Obama has a constitutional duty to enforce the law and if he doesn’t he hinted that he possibly should be impeached.  The former Speaker of the House was quoted recently as saying,

“I believe the House Republicans next week should pass a resolution instructing the president to enforce the law and to obey his own constitutional oath, and they should say if he fails to do so that they will zero out [defund] the office of attorney general and take other steps as necessary until the president agrees to do his job.  His job is to enforce the rule of law and for us to start replacing the rule of law with the rule of Obama is a very dangerous precedent.”

It’s a big surprise that Gingrich would come out against the president like this.  Of course I am kidding.  It is not a surprise at all given Newt’s interest in the office Obama currently occupies.  What is also not a surprise is that Gingrich is way off base in his analysis.  Under our separation of powers, Congress really can’t tell the president what to do.  What Gingrich is doing harkens back to the impeachment of President Andrew Johnson in 1868.  Johnson, a Democrat, disagreed with the fascist policies of the Radical Republicans toward the South after the Civil War.  The last straw was his firing of Secretary of War Edwin M. Stanton in violation of the newly passed (over Johnson’s veto) Tenure of Office Act.  The Act denied the president the power to remove anyone from office who was appointed by a previous president without the advice and consent of the Senate.  In the end, Johnson was acquitted by the Senate and the Supreme Court ruled the Tenure of Office Act unconstitutional in 1926 consequently upholding the separation of powers between the Executive and Legislative branches.

To even hint that by not enforcing an act of Congress Obama is committing an impeachable offense is producing a dangerous precedent.  Article 2 Section 4 of the U.S. Constitution is clear about what grounds must exist in order for the House of Representatives to undertake impeachment proceedings against the president.  They include acts of “treason, bribery, or other high crimes and misdemeanors”.  In other words impeachment is for crimes committed not for not carrying out one’s duties.  In our system of governance the American people can vote the president out of office at the next election.  That is the beauty of Democracy.

Thus, the president is within his right to refuse to enforce or “nullify” an act of Congress.  But what is interesting is the two-faced position of the president in this circumstance.  For, while he clearly believes that as president he has the right to nullify an act of Congress, he surely would not agree that juries and states have the same right.

Recently in a Manhattan federal courtroom 78 year old Julian P. Heicklen was arraigned for violating a federal law against jury tampering.  Since 2009, the retired Heicklen has stood outside courthouses handing out pamphlets to potential jurors informing them that they have the power to ignore laws they deem unconstitutional and render verdicts based on their conscience.  This practice is known as jury nullification and usually applies to so-called victimless crimes dealing with guns, drugs, gambling, etc…

Of course, then there is the much hated Obamacare.  At least 7 states, Idaho, Maine, Montana, Oregon, Nebraska, Texas, and Wyoming have either started the process of passing laws nullifying Obamacare or are considering such laws.  Essentially these laws state that Obamacare is unconstitutional and will not be enforced.  If Obama was consistent he would pardon Heicklen and if the time comes recognize the states’ right to nullify his beloved health care boondoggle.

Because what it really comes down to is the old saying, “What’s good for the goose is good for the gander”.  If the president is going to claim the right to ignore a law passed by Congress then he ought to also recognize the right of other entities to do the same.  Double standards in government must end.  Nullification is another mechanism of checking the power of government.  It is an important safeguard against tyranny of the majority.  It is a means to snuff out unconstitutional laws like the one President Obama is nullifying.

Article first published as What’s Good for the Goose is Good for the Gander on Blogcritics.