Saturday, April 17, 2010

White House attempts move to the middle

The Obama administration ordered a $50 billion dollar rescue fund be removed from the financial regulatory bill currently making it's way through congress. The House passed a version of the bill that included a $50 billion dollar fund to rescue banks that were "too big to fail." The Senate banking committee had the same wording in a bill that came out after the house version.

It is nice to see the White House make a move to the middle on some legislation.

The rescue fund was ultimately going to be funded by the banks in some sort of tax scheme I'm sure. The American people are tired of bailing out corporations that can not take care of themselves. If a bank is too big to fail, then it's board of directors should make sure it does not.

I am all for aiding countries in dire need of assistance like Haiti, but it is time to let corporations stand on their own. If they want claim success on their own, then they should also claim their own failure.

Friday, April 16, 2010

The Tea Party's leadership problem

Since the passage of the health care bill, leaders in the Tea Party movement have been trying to rid themselves of the R word problem - Racism.

Some black Congressional members made accusations that they were taunted with racial epithets the Sunday the bill passed. There has not been any concrete, video or otherwise, evidence that such taunting occured.

But, now there is this problem. Dale Robertson has become a defacto leader in the Tea Party. Danger, Will Robinson, Danger!

Robertson was photographed at a 2009 Tea Party rally holding a sign with a racial epithet on it, mispelled no less. I really do not believe that there is a significant undercurrent of racism within the Tea Party. But for the movement to keep going forward, other leaders would do well to rid themselves of this scum before the mainstream media latches on and makes him the face of the movement. As many people can tell you, it only takes one person to destroy a movement.

Wednesday, April 14, 2010

Lindsey Graham, not even people in SC like you

Lindsey Graham is at it again. The Republican (supposedly) Senator from South Carolina is behind efforts supporting a national tax in the range of 0.15 cents per gallon. The gas tax is in response to the energy bill currently floating downstream in Congress.

From what I gather from this LA Times article, this is the why: Gas companies (and Lindsey Graham, too, I guess) are afraid the Democrat's energy plan, the cap-and-trade boondoggle, or cap-and-tax, is going to pass. So, instead of fighting horrible legislation, they are proposing a national gas tax in it's place. Here's the quote:
"In this case, though, several oil companies are floating the tax plan because it figures to cost them far less than other climate proposals, including a climate bill the House passed last year."
They (gas companies and Graham) believe that by introducing the tax, drivers will drive less, thus lowering emissions. Hooray, global warming solved!

There are just way to many problems with this legislation for me to go into too much depth, but I'll try to highlight a few items.

This is going to hurt everyone but oil companies and senators with federal gas cards. Everyone is driving less now, or even working at home, because they know it's cheaper to car pool or to simply drive fewer miles. My Nissan Sentra generally takes about 13 gallons a week. At 2.80 per gallon, that is 36.40. Now, by adding only 0.15 to each gallon, that puts my gas costs at 38.35. Not a big jump by any means, only about $2.00 a week. But when you look at the bigger picture, and people do start driving less, the tax is simply going back into the general budget of oil and gas companies, and not doing what it is supposed to do,
"fund a variety of programs that would reduce industrial emissions, including helping manufacturers reduce energy use or boost wind and solar power installations by electric utilities."
Let's assume that everyone continues driving the same. A tax this small really wouldn't hurt families that much. Where you would see some damage is small businesses, especially those with a fleet of vehicles. Imagine you are a small business owner, and you have five company cars that use about 40 gallons a week. This tax now costs you an extra $30 a week. And if you keep a tight budget, that is an extra $1,560 a year. Now we are in business. Your customers start to pay a few cents more for their services, and that big company cookout with steaks just became hamburgers from Wendy's. Any tax that significantly increases the burden on business, big or small, will ultimately be paid for by consumers.

Now let's pretend people start driving less. Since people are driving less, less gasoline is being purchased, and less tax money is being raised. This would, in an ironic twist, hurt the gas companies because people are not buying their products. It also hurts gas station owners since people would not stop in to get gas and their sodas and chips every day. Don't forget, stations are simply distribution points. This would hurt manufacturers and distributors of said products like Coke, Pepsi, Lance, and Frito-Lay.

Any product tax or surcharge has never gone away. I've seen previous employers introduce surcharges on other products to make up for overall revenues lost. It's a lose-lose situation. Customers see an immediate $1.50 hike on their bill, and disconnect service. Those that continue to keep the service, end up paying more because there are fewer people trying to support the company. So, a few months after the surcharge introduction, base rates go up $1.50. Then more people stop being customers. And the cycle continues.

It is unfortunate that Senator Graham and gas and oil executives have already caved in and are not doing anything to stop the Ramdown Cramdown. Public sentiment is a huge wave, and they are paddling away from it instead of riding it into shore.

Tuesday, April 13, 2010

Whoa there, Mr. Reid!

Nevada Senator Harry Reid went off the beaten path over the weekend when his lips, and mind to I imagine, promised to get comprehensive immigration reform done this work period. It was a very receptive audience. Estimates put the crowd at about 6,000, and most of them immigrants.

Unfortunately for Mr. Reid, that message did not jive with White House talking points. Right now, the White House is trying to get moving on financial reform. Not necessarily those greedy pay-day lending pirates, but those that make a whole lot of money, usually in board-approved bonuses.

While The Reid Proclamation may have stirred up immigrants for Democrats, it probably helps Republican opposition as well. During the 2008 presidential campaign, a Pew research poll indicated that immigration reform was not even in the top five issues that voters were thinking about when it came time to vote. The poll, with the results split into McCain voters, Obama voters, and swing voters, indicated that this was not even near the top of their priorities. The highest ranking was among solid McCain voters at 62%, but still seventh in their list of overall priorities. Even among Hispanic voters, immigration reform was seventh in their list of priorities for the new administration.

Methinks Mr. Reid, this is still not a major priority for Americans, considering that national unemployment is still at 9.7%. But you are more than welcome to continue with the Ramdown Cramdown. Ultimately, the voters will decide your fate.

Monday, April 12, 2010

What do you do when the model breaks?

I heard last week the state of Massachusetts's (MA from now on...) health care plan was in need of desperate help. Why should we care? Because this is the model that many universal health care proponents are using.

I'll do my best to summarize what has happened:
  • According to an analysis by the Rand Corporation, “in the absence of policy change, health care spending in Massachusetts is projected to nearly double to $123 billion in 2020, increasing 8 percent faster than the state’s gross domestic product (GDP).”
  • Physicians for a National Health Plan, a doctor’s group that supports a fully socialized, single-payer health-care system, warned in a February 2009 report that the new system had failed to reduce medical spending, and has subsequently drawn funding away from crucial health resources such as emergency room care.

That's right everyone. A group that is in favor of a single-payer system is really unhappy with the results when it comes to reducing medical spending.

Just last week, MA Gov. Patrick denied rate increases that insurers had asked for. As a result, several events of key interest have happened. First, after blocking the rate increases, several insurers just stopped offering insurance to new subscribers. One reason is that they are not sure what the rates would be. In response to that, the state ordered the companies to immediately start selling insurance and posting their base rates on line. Now, the base rates were something that the state and insurance companies settled on in 2009. If you wanted basic insurance, there would be a minimum that you would be able to get, and that's what the base rate refers to. After having their rate increase proposals denied, the insurance companies sued the state.

To the state's credit, much of the proposal increases were in the 8-32% range, which is probably excessive. Each state has an insurance commissioner that is basically in charge of making sure insurance rates and increases are reasonable. Keep this in mind, also. Any increase has to be approved by the state. So, now the question becomes, why are the increases so much?

One reason is that short-term costs are increasing much more than anyone thought they would. Since insurance companies are required to provide service despite pre-existing conditions, customers can get coverage before they need procedures then drop it a few months later when they no longer need it. Or better yet, they may swap insurance companies. Customers that do this may only pay a few hundred dollars for coverage during the few months, but the cost to insurance companies is running in the tens of thousands. Unfortunately, those additional, unexpected costs are now being passed to where they normally go: customers. Data from insurance company Harvard Pilgrim showed that about 40% of the private buyers in their health insurance pool

"kept their insurance fewer than five months and they incurred, on average, $2,400 a month in medical expenses — about six times higher than the monthly spending of
other consumers

The short-termers are also affecting how much small business are paying in insurance costs as well. Those who purchase insurance in the open market are placed in the same pool as small businesses. When crafted, the legislation intended to keep costs low for business by helping private buyers absorb some of their costs and vice versa. What has happened though is a large percentage of those buying on the open market tend to be sicker, account for more doctors visits and prescription drug costs. As a result, small business are bearing a much larger burden than legislators expected.

One reason people are gaming the industry is that it costs less to pay the $93 yearly fine for not having coverage than it does to pay for it. Those opposed to the recently passed national health care act say the same will happen then.

It's clear that many things will need to change in order for the model to operate the way it is designed.

Or they can just scrap it and start over.

Until the "either or" happens, keep an eye on Massachusetts.
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