What is the Republican “Nuclear Option”?  That’s simple, – the “unlimited amendment” provision of the Reconciliation Process.  Use it to turn the Obamacare Bill into a real Budget Bill – you know, the kind of bill Reconciliation was really meant to be used for.  Let’s help them by turning this Health Care Bill into a true budget bill and take the opportunity to dismantle the tax-and-spend programs of this administration.  Put every aspect of current spending on display as an individual amendment – use the Cloward-Piven strategy against them.  Overwhelm the process and use this opportunity to expose this administration’s out-of-control spending for what it is.

What an opportunity for Republicans!   Take advantage of this wonderful opportunity to not only force the Democrats to “own” this massive new entitlement, but we can force them to “own” every single aspect of this administrations liberal agenda by fileing an individual amendment for every earmark currently in the budget and require an up-or-down vote on each and every one.  Attach an individual amendment for every single unspent provision of Stimulus and TARP and require an up-or-down vote on that as well.  Attack the funding of every Czar and require an up-or-down vote.  Put Speaker Pelosi’s federally funded family travel plan on display and require an up-or-down vote on that.  Make individual amendments regarding the funding of every expenditure of the National Endowment of the Arts.  Go through the entire budget of the EPA and require up-or-down votes on them.  Go after all the funding for ACORN and their affiliates as well as Planned Parenthood and their affiliates.   Let there be no “sacred cows” - go after it all, but do it with small, clearly worded, amendments – each requiring an up-or-down vote.  Attach so many budgetary amendments to this bill that it would be physically impossible to finish the debate and vote on them before the end of the decade.

Why wait for reconciliation, I’d start to put the list of amendments together now and put them up on a web site.  Let the Dems know  now that there is no way a Reconciliation process is gong to “fix” the Senate Bill they are about to accept on the pretense it will all be fixed with a Reconciliation process.  Show them we really want to help them make this a bipartisan budgetary bill worthy of the Reconcilliation Process and that no stone will be left unturned in making that a reality.  If the President wants to lead his party over a cliff on this, I say we help him out.

You seem Mr. President, we know how to read Saul Alinsky as well.  Let’s get it on!

Now that we have the attention of the main-stream media and have shaken the foundations of the socialist/status-quo agendas of the politically entrenched, many voting citizens are taking note and wondering – what exactly does a “Conservative Leader” look like.  For those of us who are old enough to have witnessed the leadership of President Ronald Reagan, we have the benefit of our witness.  However, many voters only know of President Reagan from news reports or perhaps text books.  More likely, they learned about him from a source with a liberal bias that paints a rather unflattering portrait.  Reagan was president over 20 years ago.  Since then, our youth have experienced the extreme-left (Pres. Obama) and the middle-left (Pres. Clinton), and the middle-right (Pres. George W Bush); all of which to some extent had domestic policies that increased the size of government and helped raise a generation of people that look to the government for their provision

Fortunately for those who are now asking the question, “What does a Conservative Leader look like?” we have a living example.  On February 11^th, recently elected New Jersey Governor Chris Christie called an emergency joint session of the New Jersey legislature to address the states $2.2B deficit – in a state where the constitution requires a balanced budget no less.  If you are wondering what a true “conservative” leads-like, have a listen to his speech.

Keep in mind that the relatively small state of New Jersey has a $2.2B deficit.  They got that deficit by playing “shell games” with the state budget – like forecasting state revenue increases when everyone knew that revenues would decrease.  The same kind of shell games our leaders in the U.S. Senate and House of Representative play when they send legislation off to the Congress Budget Office for scoring with a set of “assumptions” with which the CBO is required to constrain their analysis.  ”Assumptions” everyone knows have a near zero probability of coming to fruition. 

To further develop your understanding of how a “conservative” leads, I’m providing you with an example of how socialists and defenders of the status quoe lead for contrast.  Have a look at the response of democrats in New Jersey legislature as they try to defend spending money the citizens of New Jersey – one of the most heavily taxed states in the union – don’t have:

It’s time that our government officials, at all levels of government, come to terms with the same thing that every head-of-household knows – You need to live within your means.  And living within your means does not mean printing more money, borrowing more money, and spending your children’s money.   If you believe in these principles, if you believe in the power of the individual – not the provision of the government – then you are a Conservative.  Now, vote like one.

I came across this site today, the Kaiser Family Foundation site,  that has couple of really nice tools to help a taxpayer consider the various health care reform bills currently working their way through both the U.S. House and the U.S. Senate.

One tool is the cost calculator and the other is a side-by-side health reform comparison tool. 

On the cost calculator, select the “No” option for the question “Is Employer Coverage Available?”  This will show you what the selected legislation will cost those individuals or families who will be required by law to purchase health care insurance.  It will also show you how much you will have to pay if/when your employer drops your health care insurance coverage as a result of this legislation. 

I compared the results from the calculator with an analysis from Heritage Foundation of the Baucus bill and found the results to be consistent.

Think your employer paid health care is safe… think again.  For example:  Why is it that unions throughout all sectors of the economy are supportive of this health care reform?  The answer to that is simple and self-serving.  For over a decade now, wages have pretty much been stagnant with many increases being at or below the cost of living.  One reason is that it is difficult, if not impossible, to negotiate higher wages as the cost of providing health care insurance has risen sharply.  Unions would like nothing more than to see health insurance be taken over by the Federal Government and dropped by employers.  This way, they can improve their bargaining position for higher wages.  Higher wages for union employees equals higher dues for the unions.  Of course, the employee then has to pick up the cost of health care insurance.  This may or may not be off-set by higher wages and, depending on your level of income, some government subsidies.  But at the end of the day, the union employee will pay higher dues, higher taxes, more out-of-pocket health care costs, etc.  This is not a win-win scenario for the union and the union employee.

In a perfect world, the employment rate would be high enough where employers would have to be highly competitive in the wages and benefit packages they offer in order to attract the most qualified employees.  But, the current economic climate is such where employers are not having to compete for the best talent.  And with higher deficits, higher taxes, and higher costs due to more regulation and mandates (cap-and-trade for example) it does not appear that we are in for an economic climate improvement anytime soon.  Employers looking to cut costs to survive would be crazy not to look at dropping health care insurance coverage.

I would encourage you to consider the “what could this cost me” scenario if your employer was to drop the employer based health care insurance coverage to determine not only what this will cost you today, but what it could cost you tomorrow.  Then, formulate your opinion based on the realities of your family budget and contact your Senator and Representative to let them know your position.

This health care insurance reform is a massive new federal entitlement, with massive subsidies that are funded by massive tax increases and the gutting of Medicare.  By all measures, this is a bad idea that will have both long and short-term implications.  I firmly believe that people want to do the compassionate thing here, but it is not prudent to allow our desire to be compassionate to blur our vision of reality and blind us to unintended consequences.

In his book “Money, Greed and God – Why Capitalism is the Solution and Not the Problem”, author Jay W. Richards points out that for much of U.S. history, “the federal government cost every citizen about twendy dollars a year” – and that is in “today’s” dollars.  He goes on to say, “Now it costs every one of us, on average, about then thousand dollars.”  You would think that with the trillions of dollars we have spent on the war on poverty through entitlement programs, we would have something to show for it.  Well, we do – according to Richards, studies have shown:

• Welfare benefits have resulted in reduced work hours (9% less for husbands, 20% less for wives, and 43% less for single males)
• One study shows that for every dollar spent on subsidised income results in 80 cents reduction in labor earnings.
• Another study shows that 10% increase in welfare benefits resulted in a 12% increase in out-of-wedlock births.
• Yet another study showed that a 50% increase in AFDC and food stamps led to a 43% increase in out-of-wedlock births. 

The single leading indicator for children being raised in poverty is children that are born out-of-wedlock. 

These studies reveal the unintended consequences of “government mandated compassion” – the term itself is an oxymoron.  Compassion implies we suffer alongside – massive federal programs do not suffer alongside.  Instead, they replace people closest to the concern with bureaucratic programs that can not consider the individual need – instead they paint with a broad paintbrush grouping people into ”classes” based on certain criteria.  The further we remove compassionate efforts to lend a helping-hand from the individual and individual responsibility, the more likely it is that there will be unintended consequences.  Aristotle put it this way – “If you want to encourage something, reward it.  If you want to discourage it, punish it.”

To limit the unintended consequences, it is best that assistance come through those that have the best understanding of actual, real needs of an individual or family.  This means that the first line of help is the individual in need (what are they doing to help themselves), followed by the family, then by local charities/churches, then the larger communities of city, county, state, federal, and international organizations.  The further you get from the individual, the effectiveness of assistance drops because the understanding of individual needs also drops.  When effectiveness and understanding of needs drop, the likelyhood of unintended consequences will increase.  This is one reason I financially support organizations – like World Vision – that put people in the community to help those in need.  They don’t simply throw money at a problem, they put boots on the ground, build community, and work to raise the standard of living through real compassion – suffering alongside for the purpose of lifting up.

Here in Detroit, the Federal Government dropped a $15.2 million of federal tax dollars through the T.A.R.P. legislation for the purpose of helping those who were about to lose their homes.  Over a couple of days, some 65,000 people lined up outside Cobo Hall to apply for a grant – ultimately only about 3,500 are expected to receive one.  Ken Rogulski of WJR Radio in Detroit interviewed a number of applicants.  One such applicant responded to his questions this way:

ROGULSKI: “Why are you here?”
WOMAN #1: “To get some money.”
ROGULSKI: “What kind of money?”
WOMAN #1: “Obama money.”
ROGULSKI: “Where’s it coming from?”
WOMAN #1: “Obama.”
ROGULSKI: “And where did Obama get it?”
WOMAN #1: “I don’t know, his stash. I don’t know. (laughter) I don’t know where he got it from, but he givin’ it to us, to help us.”
WOMAN #2: “And we love him.”
WOMAN #1: “We love him. That’s why we voted for him!”
WOMEN: (chanting) “Obama! Obama! Obama!”

Now, I realize that in that crowd of 65,000 people there are many who need and deserve assistance.  At the same time, one can not ignore the reality either.  This program does little or nothing to attack the real problems facing those in line.  Essentially, the Federal Government borrowed $15.2 million dollars from foreign governments (that we and our children will have to pay back) to drop into this program where only a handful of people will receive any assistance.  Of that hand-full, there is no real chance of the Federal Government truly understands the individual needs of the family they are trying to help.  Perhaps that real help is not throwing thousands of dollars at a housing problem.  Perhaps the real problem is the need for real accountability on a drug addiction, or a real need for job training, or a real need for medical assistance.  My point is that this is not compassion at all.  Instead this is a cold-hearted bureaucratic process assuming it knows best how to meet the needs of a hand-full of individuals.

Massive federal entitlement programs are the least effective way of addressing real need.  They take billions and billions of dollars out of the hands of taxpayers to fund these programs.  These dollars are filtered through layers and layers of bureaucracy – each one syphoning off more and more funds to pay for the bureaucracy itself.  In turn, the taxpayer now has less of the money they earned, money they could have used to help family members or to fund local charities that are closer to the people and therefore closer to the problem.  Money that could be applied directly where the rubber hits the road.

Families will be subsidized on a sliding scale based on the Federal Poverty Level (FPL).  As an example, a family of four with total combined income of $30,000 (100-150% of FPL) will receive total subsidies of $13,600 a year to pay for health care insurance and related out-of-pocket expenses.  This is tax dollars being taken from one family and given to another.  The table below shows how that sliding scale would work.

A family of four earning just $66,000 a year are required to pay out-of-pocket $13,300 a year.  That works out to be over $1,100 a month.  That is after they get help from the government.  Earn more than 350% of the FPL and you can expect to pay the full $16,500 a year and more.

Refuse to anti-up, and you will face a fine of up to $3,800 a year.  Refuse to pay the fine and you can be fined an additional $250,000 and imprisoned for 1 year.

I raised a family of four at one point we had a combined income in the $66K a year range.  I can tell you, we did not live extravagantly.  We rented for housing, we had a used car, and we had no credit cards.  There was no way that I could have found an additional $1,100 a month to pay for health care insurance – no way!  Let’s be clear – $66,000 a year is $5,500 a month.  From this, the family can expect to pay taxes, food, housing, utilities, transportation, clothing… the usual expenses.  Under the Baucus Bill, the family in this category is mandated by this legislation to pay approximately 20% of their income towards health care insurance and related expenses.

How out-of-touch are our elected officials?  How does reducing a family’s income by 25% make health care affordable?  This is going to kill those families running small businesses; the independent contractor, the accountant, the mechanic.  This is nonsense at a scale that has been unseen in this nation’s history.  It’s nothing but a huge transfer of wealth on the backs of the middle-class.

This new entitlement program is going to suck out whatever life is left in this economy.  This bill must be killed!

[1] Congressional Budget Office Report, An Analysis of Premiums Under the Chairman’s Mark of the America’s Healthy Future Act, Sept. 22, 2009

[2] The Heritage Foundation: Baucus Bill – a big cost for taxpayers by Dennis Smith Oct. 6, 2009

This report is detailed and has a lot of “finance speak”. It includes a couple of tables with valuable information. I’m providing  portions of the tables here that cut through all the calculations and get to the heart of the matter… What’s this going to cost me? If you currently don’t have insurance from your employer, here is what you can expect to pay in insurance premiums, co-pays, and uncovered medical expenses before you would qualify for any federal assistance:

                                              Congressional Budget Office Report [1]

These expenses are calculated based on the second lowest “Silver-Plan” insurance coverage as outlined by the Baucus bill.  Of course, you can choose not to purchase coverage. That will cost you anywhere from $750 – $3,800 a year in a new Federal Excise Tax [2] plus any out-of-pocket medical expenses you might have that year.

Look, numbers don’t lie. Let’s look at a family of four making $66K a year. What we are talking about here is an out-of-pocket expense of 20% of their income or $13,300 a year. I don’t know of any four person households at that income level that can find an additional $1,100 a month in their budget. The only option they really have is to pay the new Excise Tax of $750-$3,800 a year and hope that no serious illness hits the family.

For those of you who currently have health insurance coverage through your employer don’t get comfortable! The incentive is there for employers to drop your coverage. The reality is that the penalty for not providing employer based coverage is in many cases less than what employers pay for coverage. What this means is that there is a real incentive for some employers to drop health insurance coverage telling their employees that there is now a co-op for them to buy their coverage individually.

Additionally, consider the potential impact on our economy in general. If the family of four making $66K a year is going to have to spend 20% of their income on health care, then they are not going to be spending it on housing, appliances, clothing, automobiles, entertainment, etc. The impact on other segments of our economy will be devastating.

Furthermore, this is an incentive killer for people to improve themselves and therefore improve their income.  What is the motivation for the head of a household who currently earns $30,000 a year to improve their skills and add another $12,000 a year to their families income.  NONE!  By doing that, the out-of-pocket medical related expenses jump from $2,900 a year to $6,100 – more than double!

I know that people are hurting, that unemployment is high, and costs are up.  But, numbers don’t lie.  There is no relief in this bill for the average American family.  The burden on the middle-class is very high and the downside is quite real. 

This is a bad bill.  This is a bad idea.

Footnotes:

[1] An Analysis of Premiums Under the Chairman’s Mark of the America’s Healthy Future Act http://www.cbo.gov/ftpdocs/106xx/doc10618/09-22-Analysis_of_Premiums.pdf

[2] Preliminary Analysis of Specifications for the Chairman’s Mark of the America’s Healthy Future Act http://www.cbo.gov/ftpdocs/105xx/doc10572/09-16-Proposal_SFC_Chairman.pdf

Today, the Treasury Dept., in response to a Freedom of Information Act (FOIA) request by the Competitive enterprise Institute released demonstrates that the Obama administration calculated the potential cost of Cap and Trade to be over $1700 per a family per a year. [3][4]

I guess we should not be surprised that a mere $1,660 discrepancy in tax impact to the American family would be overlooked by a democratic party that continues to allow the House Ways and Means Committee – you know, the committee that writes the tax code – to be chaired by Charlie Rangel (D-NY).  Yesterday, the National Legal and Policy Center filed a complaint with the House Committee Standards of Official Conduct to expand its ongoing investigation in Rangel’s under-reporting his income and capital gains by some $2 million dollars. [5][6]

Yet, we are asked to blindly believe Pres. Obama and the Democratic House and Senate leadership when they tell us that the Health Care Reform Act will be “deficit neutral”; that only the Federal Government can provide proper oversight of the health insurance industry; that only the Federal Government can provide meaningful competition to health insurance companies; that only the Federal Government can find waste, fraud and abuse in the system.  So far, the confidence meter in the ability of this administration to get anything right is pegged at zero. 

Footnotes:

[1]  Joint Program on the Science and Policy of Global Change, Massachusetts Institute of Technology, letter to Rep. John Boehner (R-OH) April 1, 2009 

[2] Cap and Trade a ‘Declaration of War’ say Republicans by Josiah Ryan, CNSNews.com Staff Writer May 01, 2009

[3] Global Warming Tax Costs Revealed in FOIA Treasury Dept Documents, CEI Analysis Confirms Massive Tax on Energy by Christine Hall, Sept. 17, 2009  

[4] Dept. of Treasury reply to FOIA request from Competitive Enterprise Institute

[5] NLPC Alleges Charles Rangel Hid More Income in Complaint to House Ethics Committee by Ken Boehm, Sept. 17, 2009 

[6] Complaint by National Legal and Policy Center filed with the Committee of Standards and Official Conduct Sept. 16, 2009 

When it comes to federal spending, the system is Broke² :

• Broke:  No longer functioning correctly
• Broke:  Out of money

As a family, we have been through tough times financially.  We have learned that in order to get the family budget under control you have to ruthlessly control those things you can control such as discretionary spending, borrowing, luxuries, etc. 

As a country, we will never get our financial house in order as long as earmarks are allowed in the legislative process.  You would think that our elected officials would be tightening the federal government’s belt just like our families are doing.  But that is far from reality.  Here are some examples for the latest list of earmarks for the 2010 budget:

• $12 million to monitor sea turtles and monk seals.
• $5 million for a supercomputer to help study planets and fruit flies.
• $8 million for a cultural exchange between villages that once made a living killing whales.
• $24 million for the East West Center, a private think tank even President Obama wants to cut.
• $500,000 for music enrichment programs for Native Hawaiian children — part of $59 million for health and education programs targeted to Native Alaskans or Hawaiians.
• $201 million to his alma mater, the University of Mississippi, including $10 million for programs at the Thad Cochran Research Center (the Senator who earmarked the funds).
• $750,000 Mississippi Biotechnology Association building — an organization that has no members and doesn’t exist, and that got $450,000 last year.
• $4.4 million to build fire stations, $14 million to improve drinking water in local communities (responsibilities typically left to the states).
• $1.6 million for a mobile music lab.
• $650,000 to a private Christian school (Piney Woods) on 2,000 wooded acres where student tuition is $31,400.
• $400,000 to pay overtime for the Jackson Police Department to combat drug use.
• $950,000 for the local Audubon Society, despite national Audubon assets topping $18 million.
• $1 million for a trolley museum.

     (Source:  Fox News )

These are just a handful of earmarks from a three senators; Inouye D-Hawaii, Cochran R-Mississippi, and Murtha D-Pennsylvania.

I find that this kind of “back-door-budget” process violates the trust of the American people.  It demonstrates the kind of aristocratic thinking that led to the American Revolution.  The attitude in Washington is that it’s their money to spend as they like.  If they need more, well they will just come and take it from you and me.

Of course today politicians know that raising taxes on the middle-class is tantamount to political suicide.  So instead they say they are going to tax corporations and other businesses.  Former Fed. Reserve Chairmen Allen Greenspan said it best, “Corporations don’t pay taxes; people pay taxes.”  Some have misunderstood that statement to mean that corporations used loop-holes to get out of paying taxes.  But that is not what he meant.  What he meant was simply this:  Raise a tax on a corporation and the corporation has no choice but to pass that increased cost onto you and me – the consumer – in the form of increased prices.  These cost increases are known as “Hidden Taxes” and they cost you and me plenty every year. 

Tonight, President Obama is going to use the “bully-pulpit” of his office to try to convince us that the Federal Government can do the best job in providing healthcare insurance.  Frankly, I don’t see how that is possible when our elected officials cannot control themselves when it comes to spending our money and our children’s money.

Take a positive step Mr. President and demand a Federal Law that will put an end to earmark spending once and for all.  You claim that you are for transparency – well, let’s get transparent in the budget process before you try to re-engineer our society any further.

You will hear accusations about greedy business, those evil corporations, and the evil Wall Street investors. But to understand the real culprit of inflation we need to understand what inflation is and what it is not.

Inflation is NOT the rise in price due to supply and demand of goods. It’s not even the rise in prices of products in a certain market segment (let’s say fuel). In fact, the rise in prices during an inflationary period is a symptom of inflation, not inflation itself.

Inflation is simply this, an increase in the supply of printed/minted money. Money is manufactured just like any other “product”. Under normal circumstances, when the government prints new dollar bills and puts them in curculation, it takes an equal amount of old dollar bills out of circulation at the same time. This one-for-one exchange of old bills for new bills keeps inflation in check because there is the same number of bills in circulation.

When the government prints new money and puts it into circulation without removing old money, the value of money decreases due of the increase in money supply. The result of this decrease in the value of money results in the increase of in the price of goods. Note that I did not say the increase of the value of goods, but the increase in the price of goods – big difference.

For those of you who are visual thinkers, picture this. There is a scale that weighs value. On left side of the scale is a bag of groceries. If we could measure the value of the bag of groceries as weight it might weigh 10 pounds. On the right side of the scale is a stack of ten one dollar bills. The value of the ten dollar bills also weighs 10 pounds. The value of the groceries equals the values of ten dollars so the scale is level. Now, we apply inflation – not to the groceries – but to the dollar bills (inflation impacts the value of money, not products). If inflation is at 10%, now our ten dollar bills weigh 10% less – or 9 pounds. The result is that it would take more money on the money side of the scale to represent the value of the bag of groceries. The scale dips down on the grocery side not because its value increases, but because the value of money decreases.

The drop in the value of money because of increased money supply does not just impact the cost of products, but it applies to every aspect of our economy – it will take more dollars to represent the value of products, services, wages, utilities, taxes, … everything.

So, why did I say at the open of this note that a storm is looming. Lost in all the conversation about our economy and healthcare reform is the fact that on March 19th, 2009 the Federal Reserve said it would flood our financial markets with an additional $1.2 trillion. What this means is the government is printing an additional $1.2 trillion and putting it in circulation without taking an equivalent amount out of circulation.

They did this to try to break what they perceived as a financial log-jam of money that is preventing the circulation of money in our economy. Here’s the problem: there is no “money log-jam”… in fact, quite the opposite is true. A log-jam is because the supply of logs is hung-up somehow in a river preventing the logs from being floated down-stream… so the up-stream logs keep piling up at the point of the jam. Break the log jam and logs will flow unimpeded.

But our credit crisis is not a money-jam… it’s a lack of money because we borrowed, borrowed, and borrowed some more. For decades, we as a country have been borrowing more than we are saving. Because we are not saving, the money is not in the banks to be lent out – hence a credit crisis. People have borrowed money against the “perceived value” of their homes and spent it on other “stuff – a practice that was encouraged by the real-estate bubble nationwide. When the bubble broke, the value of home prices fell – but we spent that perceived value in credit borrowing. Now, we owe more in debt then we own in value. So the current credit crisis is not a result of a money log-jam, it’s a result of overextended credit – we’ve spread our money out too thin.

Simply adding money to the money supply will not fix this problem. It may have a short-term impact – it will be ture that banks will have more physical dollars to lend out. But the long-term impact is INFLATION – and lots of it. Like I said, there is a storm on the horizon, and its name is “Inflation”.