Tuesday, March 31, 2009

Dear President Obama:
Taxing Charity? Is nothing sacred?

President Barack Obama signaled last week that he wouldn't back down in seeking to raise the taxes of the wealthiest Americans in order to pay for his colossal domestic policy agenda. He believes a proposal included in his budget request to reduce the tax deductions for charitable donations of the wealthiest Americans, thus raising their taxes, was the right thing to do.

"This provision would affect about one percent of the American people," Obama said. They would still be allowed to claim deductions, he noted, they would just not be able to claim as much as they currently do.

Some in Congress have expressed doubts about the tax increase, worrying that it could lead to lower charitable donations by the wealthy. Mr. Obama rejected this claim, saying there was "very little evidence" to suggest there would be a significant drop in donations as a result of the tax increase, and he then chastised the wealthy just in case they might use the deductibility factor in deciding how much to give to charity. After all, he stated, tax deductions aren’t supposed to be the reason that someone contributes to charity in the first place.

Just how much does the targeted group contribute each year? The Indiana University Center on Philanthropy released the following data in the summer of 2007 for charitable giving in seven categories. The data for two of those are:

Basic Needs giving: Of households with an annual income between $200,000 and $1,000,000, 74.5 percent give an average household gift of $3,076, cumulatively making up 27.9 percent ($5.30 billion) of the funds raised to help meet basic human needs.

Of households with an annual income equal to or above $1,000,000, 76.4 percent give an average household gift of $12,673, cumulatively making up 10.2 percent ($1.93 billion) of the funds raised to help meet basic human needs causes.

Health Related giving: Households with an annual income between $200,000 and $1,000,000, 74.1 percent give an average household gift of $2,805, cumulatively making up 21.9 percent ($4.81 billion) of the funds raised by health organizations.

Of households with an annual income equal to or above $1,000,000, 70.4 percent give an average household gift of $92,289, cumulatively making up 59.1 percent ($12.97 billion) of the funds raised by health organizations.

In summary, those in the two highest earning quartiles give 38 percent of all charitable giving for Basic Needs, a total of $7.23 billion, and 81 percent of all charitable giving to Health Related needs, totaling $16.78 billion. And, when it comes to charitable giving in all seven categories the wealthiest 2.3 percent of Americans are responsible for 56 percent of the total.

Why would the President of the United States want taxes raised on the charitable contributions of the wealthy, or of anybody? Wealthy people are the ones whose charitable giving comprises a majority of charitable donations year after year; they are the ones with the most to give.

Mr. Obama says that putting a limit on the amount of these donations that can be deducted won’t make that much difference. But why wouldn’t the President want to encourage everyone to give as much as possible to charity, so that those in need will have as much private sector money to assist them as possible, particularly at a time when the economy is under stress and more Americans are out of work than at any time in the last 30 years? And, more to the point, why shouldn’t every dollar of charitable giving be deductable?

So, what is behind Mr. Obama’s desire to make giving to charities less attractive for the people who are the greatest supporters of charities?

Does he dislike wealthy people, and seek to punish them at the expense of America’s neediest citizens?

Is he so hungry for money to fund his plans to increase the size and scope of government to gargantuan proportions that he would jeopardize private funding for the nation’s charities?

Barack Obama is a statist who believes in a centralized government in control of economic planning and policy, who believes that government is the answer to all questions, the solution to all problems. History teaches, however, that central planning always fails.

Statism is the opposite of capitalism, which in contrast to statism supports the principle of individual rights, the very foundation of the American ideal. Capitalism, not statism, observes the rights of the individual to live his own life as he chooses, without needing government permission to do so. This includes giving to charity, which supports a long-standing tradition of our great country for people to take care of each other. Our Founders believed government's sole responsibility is to protect those unalienable rights, and never violate them.

However, Mr. Obama is determined to achieve his statist goals, and if in doing so he must cripple private charities, take control of private businesses, and impose government’s judgment over that of the people, well, that’s just the way it has to be.

And so he is working to engineer the most ambitious and dangerous seizing of power by government in our history, and using an economic crisis to cover his tracks.

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Monday, March 30, 2009

Selected Items From the “You Must Be Joking” Files

Sometimes, we hear of behavior that is so weird and senseless that we think it must be a joke, but find out that, no, it’s not a joke: Someone, or some group actually did it.

Here are two examples of such behavior.

Item 1 - A 14-year-old New Jersey girl has been charged with child pornography after posting a number of explicit nude pictures of herself on The girl was arrested and charged with possession of child pornography and distribution of child pornography. She was released to her mother's custody.

If convicted of the distribution charge, she would be forced to register with the state as a sex offender under Megan's Law, said state Attorney General Anne Milgram. She also could face up to 17 years in jail, though such a stiff sentence is unlikely.

The case comes as prosecutors nationwide pursue child pornography cases resulting from kids sending nude photos to one another over cell phones and e-mail.

Some observers — among them the New Jersey mother behind the creation of Megan's Law — oppose prosecuting teens who text sexual messages or post nude photos of themselves. Here in America, the home of the free, wouldn’t one’s pictures of himself or herself be their property, and wouldn’t they be able to do pretty much what they please with their own property?

Child pornography, sexual abuse, rape and other such crimes are serious problems in our society and worldwide, and the perpetrators of these crimes should be harshly punished and removed from society. However, misapplying laws designed to address real crimes to things like this is just goofy and tends to make the crimes they were created to fight seem less important.

What this young girl did was stupid, maybe even monumentally stupid, but it wasn’t criminal. Surely, the prosecutor in this misapplication of the law could have thought of some other charge for this girl that would not make a mockery of a law aimed at real and serious crimes.

Item 2 - East Shore Middle School in Milford, Connecticut has laid down the law: No touching among and between students. Period. The new policy means no high-fives, hugs, shaking hands, friendly pats, or horseplay of any kind. And if you break the rule, you will be punished, perhaps expelled. No joke.

A violent incident that put one student in the hospital has officials at the school implementing the no-touching policy, according to a letter written by the school's principal, Catherine Williams, who sent out the letter telling parents that recent behavior has seriously impacted the safety and learning at the school.

"Observed behaviors of concern recently exhibited include kicking others in the groin area, grabbing and touching of others in personal areas, hugging and horseplay.

Physical contact is prohibited to keep all students safe in the learning environment," her letter said.

Here, again, we have a situation where common sense and balance are missing. If some children are misbehaving, apply appropriate discipline to those youngsters, but don’t punish everyone in the school for the actions of a few, and don’t impose goofy rules because you won’t address the real problem.

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Sunday, March 29, 2009

The Blogging Life

I finally found a little time today to do a little blogging, something I used to do pretty regularly, but of late have had precious little time for. Used to be that I would post at least every two or three days, and even every day for short periods. I would visit the blogs of those on my list, leave comments, and respond to comments on Observations.

What changed? Well, one thing was the election came and went, and as I got more and more involved in writing and communicating about the campaign, when it was all over, I just didn’t have the energy or the wherewithal to continue at that pace.

Another thing was that somehow my time for such “personal” things has shrunk, partly due to the time I spend researching and writing my newspaper column and posting that on several sites. Sometimes, the weekly column is the only thing I put on Observations in a week.

I always wanted Observations to be a site with heavy traffic, but for various reasons it never got there. The biggest reason is that it takes a lot of time and energy and attention to keep fresh material on the site, and I just didn’t have enough of what it takes. Then there’s that matter of putting things up that a lot of people want to read.

Today, I managed to visit my list of blogs to see what everyone was up to, and found that two of my blogger buddies have decided within the last few days to suspend, or perhaps to completely quit posting, and another one has cut way back, due to having decided to continue her education. This is actually the third time my list has has gone through such a transformation. I guess it’s just the way things go. Each time it has happened, I rebuild the list, adding new blogs to replace the inactive ones.

And, come to think of it, this period of relative inactivity of mine might have been interpreted as me doing what my three buddies have done.

It is my hope to return to my former posting habits, both the frequency and the variety of posts.

Time will tell.

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Saturday, March 28, 2009

Black rage at the heart of anti-police demonstrations in Oakland

In Oakland, California the other day, a violent young punk who was being sought for breaking provisions of his parole on a charge of assault with a deadly weapon killed four police officers and wounded two others in separate shootings that began with a traffic stop and ended with a gun battle.

Lovelle Mixon was killed in a shoot-out with police after he ran from the scene of the first shooting and holed up in a building.

Mixon was a black man, who was thought to have raped four women, and was upset that he couldn’t find a job because he was a convicted felon, and feared going back to jail.

Of course, that’s a good enough reason to shoot and kill the two police officers who stopped your car because it had expired tags, and then kill two more who were then going to arrest you for killing the first two.

If you believe the militant blacks who defended Mixon and vilified the police who were shot and killed for doing their job, the other “Africans” like Mixon who live in that “African” neighborhood are oppressed by police, and are therefore fair game for their misplaced rage at their circumstances.

Such idiotic protestations are perhaps what some predicted would result if Barack Obama was elected President, as that event would embolden some radical blacks to believe they can now do pretty much what they want, since one of their own is President of the United States.

Question: Will President Obama speak out specifically against this militant behavior and provide needed leadership to like-thinking black people in America?

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Wednesday, March 25, 2009

Conflicting policies cloud the future
of domestic energy production

The Obama energy philosophy focuses on achieving two broad goals. First, the nation must move away from burning dirty fossil fuels like coal, oil and natural gas for our energy needs, and second, it must reduce our dependence on foreign oil.

Accomplishing the first of those two goals depends upon how long it takes to develop renewable and alternative energy sources to the point where burning fossil fuels will no longer be necessary, and the best estimates indicate that point is many years, or perhaps a few decades, down the road.

According to the U.S. Department of Energy (DOE), “the Solar America Initiative is [an] effort to accelerate the development of advanced solar energy technologies. The goal is to make solar electricity from photovoltaics cost-competitive with conventional forms of electricity from the utility grid by 2015,” but it doesn’t say how long before cost-competitive solar will actually provide a significant amount of electricity. The DOE also reports the possibility of “producing 20 [percent] wind energy or 300 GW of wind generating capacity by 2030.”

Developing alternative-powered vehicles is also going to take years, and the DOE says that “advances in fuel cell power systems for transportation could substantially improve our energy security and air quality. However, few fuel-cell-powered vehicles are in use today; even fewer are available commercially.”

Obviously, alternative sources will not be able to replace conventional sources any time soon, and while these new sources of energy are being developed we must rely on fossil fuels, and government policies must support that reality.

While achieving the first of the two goals is a long way off, achieving the second one could be a shorter term task: we can reduce the amount of foreign oil we purchase by developing the abundant reserves that lie offshore and/or within US borders, and that can have an impact in relatively short order if red tape and over-regulation are removed. The American Petroleum Institute (API) says that we have enough oil and natural gas resources to power 65 million cars for 60 years and heat 60 million households for 160 years. All that is required to reduce this dependence, which threatens not only the price of fuel, but also our national security, is to remove existing obstacles to increasing domestic production, and resist the temptation to put new obstacles in the way.

This is precisely opposite to the policy now in effect, and of future actions being proposed.

In addition to reducing our dependence on foreign oil and promoting “the responsible production of domestic oil and natural gas resources,” the Administration says it wants to create millions of new jobs in the energy sector.

That’s a wonderful set of goals. But other policies are at cross-purposes with the energy goals. reports that the administration is proposing up to $400 billion in new taxes for the oil and gas industry.

API president Jack Gerard believes that “raising taxes in a time of economic decline is a recipe for disaster. Hoover did it in the 1930s, Carter did it in the 1970s and President Obama wants to do it now. Higher industry taxes could result in less, not more, job security, and be felt throughout the entire economy, discouraging business expansion, investment and job creation. Historically, new taxes have hurt businesses, threatened jobs and resulted in higher prices – stealing money from every American household.” It will likely also reduce the value of retirement plans that hold stock in U.S. energy companies.

Does it make any sense at all to raise the cost of business for the companies upon whom we rely for current energy needs, and upon whom we rely to increase domestic oil production to reduce the dependence on foreign oil? Does raising taxes on oil and gas companies make sense at a time when the Administration’s preferred sources of energy are virtually non-existent?

Oh, and by the way, it is the oil and natural gas industry that is doing most of the development of new energy technologies.

Raising taxes on oil and natural gas companies at this point in time is not so different from letting all the air out of your tires just before you start on a long road trip. The reasoning for this seems to be: “We think the oil companies are making too much money, and people don’t like that. And, the government needs (wants) more money, so we’ll raise taxes on the oil companies. Bam! Two problems solved with one easy action.”

Raising taxes on oil and gas companies is an example of stage-one thinking, beyond which politicians rarely progress. They want solutions that can be put into effect quickly, and what results are politically expedient policies that please voters even as they produce disastrous results, because their consequences weren’t fully considered before being implemented.

It may satisfy some people that the “greedy” oil companies will be punished for making profits that they mistakenly think are excessive, but the reality is that the American people are the ones that will be punished when these taxes raise energy prices, lower production levels and cause a scarcity of goods that they want and need.

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Saturday, March 21, 2009

Derivative markets:
An understandable explanation

Heidi's Bar

Heidi is the proprietor of a bar in Detroit. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Heidi's drink now pay later marketing strategy and as a result, increasing numbers of customers flood into Heidi's bar and soon she has the largest sale volume for any bar in Detroit.

By providing her customers' freedom from immediate payment demands, Heidi gets no resistance when she substantially increases her prices for wine and beer, the most consumed beverages. Her sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes these customer debts as valuable future assets and increases Heidi's borrowing limit.

He sees no reason for undue concern since he has the debts of the alcoholics as collateral. At the bank's corporate headquarters, expert traders transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then traded on security markets worldwide. Naive investors don't really understand the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, their prices continuously climb, and the securities become the top-selling items for some of the nation's leading brokerage houses.

One day, although the bond prices are still climbing, a risk manager at the bank (subsequently fired due his negativity), decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi's bar.

Heidi demands payment from her alcoholic patrons, but being unemployed they cannot pay back their drinking debts. Therefore, Heidi cannot fulfill her loan obligations and claims bankruptcy.

DRINKBOND and ALKIBOND drop in price by 90 %. PUKEBOND performs better, stabilizing in price after dropping by 80 %. The decreased bond asset value destroys the banks liquidity and prevents it from issuing new loans.

The suppliers of Heidi's bar, having granted her generous payment extensions and having invested in the securities are faced with writing off her debt and losing over 80% on her bonds. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 50 workers.

The bank and brokerage houses are saved by the Government following dramatic round-the-clock negotiations by leaders from both political parties. The funds required for this bailout are obtained by a tax levied on employed middle-class non-drinkers.

Finally an explanation we understand.

Author Unknown.

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Tuesday, March 17, 2009

Measures will prolong the recession and
fundamentally change America

Our government is on the wrong track in its efforts to stabilize the economy. It has chosen the wrong mechanism to fix it, and the repercussions from the measures it proposes as solutions are downright dangerous.

Until very recently President Barack Obama was unnecessarily negative about the economy, as he attempted to lower expectations for his performance as President. His constant negativity raised the anxiety of Americans at a time they needed reassurance and leadership from their President, and adversely influenced their economic behavior, worsening the problem.

Spending in the private economy is the way to improve things, and the federal government needs to shore up the banking industry and make it possible for people to spend their own money on the things they need and want. The way to enable people to spend their own money is to make sure they have as much of it as possible to spend by suspending income and payroll taxes for a time.

Two of the principals upon which our nation was founded are individual freedom and limited government, and applying them to the current situation means that people, not the government, are the mechanism to turn the economy around. As Abraham Lincoln said at Gettysburg, ours is a government of the people, by the people, and for the people.

But the government that the Founders so wisely created and which has served us so well for so long is being dramatically changed right before our eyes from a government of, by and for the people, to a government increasingly controlled by elected officials who seem unconcerned with government’s proper role, and who actively work to increase its authority over the people from whom its power is derived.

This is not a new development; we have been moving in that direction for decades, as Congresses and Presidents added to the growing list of authority our government exercises, but to which it is not constitutionally entitled. It is difficult to look at the events of the last few months and not be astounded at how our government is attempting to usurp control from, or increase its control over, its citizens in so many areas.

What we see today is our elected leaders in the White House and the Congress moving rapidly and decisively to increase government’s involvement in the day-to-day functioning of our society, more aggressively than at any time in the nation’s history. Although the Obama presidency is in its infancy, there have already been several such steps taken and there are plans for more government intervention in education, healthcare and the relationship between employers and workers.

For example, the Card Check mechanism that favors labor unions over employers is supported by both the Democrats in Congress and the Obama administration, and would take away the secret ballot method of voting for or against union representation.

And, among the education initiatives are one to make college affordable to all Americans through a new American Opportunity Tax Credit worth $4,000 in exchange for community service, and an early childhood education plan that will provide support for children and their parents.

These things have repercussions that must be recognized and understood, but the most ominous and most important aspect is the degree to which they will erode the ability of individual citizens to act in their own best interest, and to determine their own course in life, which is the very foundation of the American ideal.

Some say the administration is simply trying to do too much too soon, as it takes full advantage of the economic crisis to push through its leftist programs. But the reality is that there is never a time when these proposals will be acceptable. I challenge readers to find for me that part of the Constitution of the United States that empowers either the Congress or the President to control education or to affect the relationship between employers and workers.

Some may point to the “general welfare clause” in Section I, Article 8, but that argument falls far short of the mark. Using the general welfare clause to try to justify these initiatives requires an interpretation so broad that no serious person would assert that such an interpretation was what the brilliant men who wrote our Constitution had in mind. But that is not to suggest that such absurdly broad interpretations and twisted rationalizations of language have not occurred previously. However, honest people do not attempt to justify one mistake by citing another.

More to the point, the general welfare of all the people of the United States is not advanced through the special treatment of labor unions, young children or those of college age. The general welfare is advanced, however, from a strong defense of our country and its borders, and a government that does not control the lives of its citizens.

If we are not very careful we will allow the Congress and the administration to make material changes to our form of government from which we may not be able to recover, and our form of government, designed with the blood and courage of our forebears, will be lost forever.

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Saturday, March 14, 2009

American Royalty: Arrogance on Display

The term “entitlement” can be used to describe the thinking of an increasing number of Americans who believe that their country owes them a living, or a job, or food, or something else. And it can be used to describe the thinking of a large number of elected officials at every level of government from the small town mayor to members of the U.S. Congress.

There is something about being elected to certain positions that seems to convey to at least some of those elected to them a sense of superiority, the idea that they deserve deference, subservience and our undying respect.

Such people are always around and they represent no particular political affiliation. I’m allowing that there are plenty of Republican boobs, too, but right now, with the Democrats in control of Washington, the most prominent and numerous boobs are Democrats.

Leading this short list of the many in the Hall of Shame is Rep. Charles Rangel. Mr. Rangel leases a Cadillac DeVille, for $774 per month paid for by you and me. When a reporter had the temerity to ask Rep. Rangel why he leased such an expensive car, he was told, “Why don’t you mind your own [expletive deleted] business.”

This little perk is available only to members of the House of Representatives. And it's not just the car, but gas, registration, and insurance, too. Furthermore, there is apparently no limit to the privilege. John Conyers leases a Lexus that comes in at $998 a month.

Then there is Sen. David Vitter, who got to the gate 20 minutes before his plane was set to leave only to find the security door closed. He is said to have opened the door anyway and then engaged in a "do-you-know-who-I-am” tirade that apparently grew quite heated, according to media reports.

House Speaker Nancy Pelosi’s recent cavalier misuse of the transportation she is allotted from the U.S. Air Force epitomizes this shameful characteristic. She apparently “treats the Air Force like her personal airline," said Judicial Watch President Tom Fitton. "Not only does Speaker Pelosi issue unreasonable requests for military travel, but her office seems unconcerned about wasting taxpayer money with last minute cancellations and other demands."

Congressman Barney Frank’s behavior in the mortgage banking crisis is perhaps the most dangerous and damaging behavior by an arrogant lawmaker. He opposed efforts to regulate mortgage banks, especially Fannie Mae and Freddie Mac, and he was a strong supporter of making loans to non-credit-worthy borrowers. He also received substantial campaign contributions from Fannie and Freddie, and now attempts to shift blame that he rightfully earned to Republicans.

Our elected representatives often forget one very important thing: They are public servants. They have been elected by the people to provide a service to the people. They are paid by the people. They work for us.

Many of them misuse their positions, and in fact seem to have forgotten why they have been elected, and the phenomenon tends to worsen with tenure; the longer someone has been in high office, the more entitled they become.

Two words define the best solution to this display of hubris: Term limits.

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Tuesday, March 10, 2009

Nationalizing American Healthcare
is the Wrong Prescription

The cost of healthcare has been a major concern for a long time, and though Americans benefit from the large investment of money through advanced medical technology and new and improved medicines, these costs pose problems for consumers and businesses. Over the years, efforts to hold costs down haven’t succeeded.

In 1993, First Lady Hillary Clinton proposed a plan to address the healthcare cost situation that included a national health board, regional health alliances, employer mandates, government imposed budgets and spending caps. Her plan was so broad and intrusive that the federal government would have been making healthcare decisions that you and your doctor ought to be making. Fortunately, that plan was defeated. Unfortunately, healthcare costs are still a problem for many Americans, and a government solution is still a possibility.

President Barack Obama told a joint session of Congress recently “in the last eight years, [health insurance] premiums have grown four times faster than wages. And in each of these years, one million more Americans have lost their health insurance. It is one of the major reasons why small businesses close their doors and corporations ship jobs overseas. And it’s one of the largest and fastest-growing parts of our budget. Given these facts, we can no longer afford to put health care reform on hold.”

In bringing reform to fruition Mr. Obama proposes a system that might actually be worse than Ms. Clinton’s. Modeling a system proposed by former Senator Tom Daschle, who almost became Secretary of Health and Human Services, but for an income tax problem, the Obama plan calls for the National Coordinator for Health Information Technology to monitor what your doctor prescribes for you to make sure he does what the government deems "appropriate" and "cost-effective."

Mr. Daschle suggests that doctors would have to learn to operate less like doctors and more like government bureaucrats, who know nothing about medicine, but are experts in red tape and over-regulation.

Ultimately, such a government-run system will produce inefficiencies like those found in Canada and Sweden, where healthcare systems require no direct financial contribution by the patient, which encourages overuse of the system, which in turn jams the system up, and causes unacceptably long wait periods for treatment.

In Canada, gynecological surgery is a four- to 12-week wait, a tonsillectomy is a three- to 36-week wait and neurosurgery is a five- to 30-week wait. It has gotten so bad that Toronto area hospitals now ask patients to sign a release that they will hold the hospital blameless if delays in treatment jeopardize their health, and the Canadian government spends over $1 billion each year when Canadians opt to come to the U.S. for care, where wait times are virtually non-existent.

An article published in the Journal of American Physicians and Surgeons last year relates the plight of a Swedish man, Mr. D., who suffered from multiple sclerosis. His doctor prescribed a new drug for him, but the Swedish government refused to pay for it because it was more expensive than existing medicines. When Mr. D. offered to pay for the medicine out of his own pocket, he was prevented from doing so because the bureaucrats said it would set a bad precedent and lead to unequal access to medicine.

But Mr. Obama seems unaware of, or perhaps unconcerned with, these problems and the trade-offs the proposed system would produce.

To support his case he told the lawmakers that healthcare “is a cost that now causes a bankruptcy in America every thirty seconds. By the end of the year, it could cause 1.5 million Americans to lose their homes.”

However, Mr. Obama’s data are wrong; there weren’t 1.5 million bankruptcies last year, and medical bills did not cause all bankruptcies.

His statement is likely based on a widely cited 2005 Harvard University study that said health expenses caused a lot of the bankruptcies in 2001. As MSNBC reported in a story about the study, “illness and medical bills were cited as the cause, at least in part, for 46.2 percent of the personal bankruptcies in the study.” Notice it says that medical bills were a factor, not the proximate cause of the bankruptcies. The study’s author said “the figure rose to 54.5 percent when three other factors were counted as medical-related triggers for bankruptcies: births, deaths and pathological gambling addiction.”

A thorough review of the Harvard study’s data showed in fact that only 17 percent of bankruptcies in 2001 were due to medical costs, even though it’s a safe bet that most of those who filed for bankruptcy had some outstanding medical bills. Someone who is having trouble paying the mortgage and the electricity bill likely can’t pay the doctor, either.

Healthcare costs comprise approximately one-sixth of the U.S. economy, and for many Americans they can be a serious problem. But high costs are not a reason to nationalize the healthcare system. Indeed, government regulation and intervention are to blame for the problem as much or more than any other single factor.

The most effective action Mr. Obama could take to lower healthcare costs is to have less government involvement in it, not more.

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Friday, March 06, 2009

A Little Levity for a March Friday

A long overdue update has been posted to A Little Levity.


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Wrecking The Economy:
Your Government and the Media at Work

It’s all gloom and doom, if you believe President Obama. He’s so busy talking down the economy that if you aren’t careful, you’ll fall for his line. The worse he can make you believe things are, the easier time he’ll have explaining why he hasn’t been able to fix it.

The mainstream media is just as bad, for entirely different reasons: They need readers, viewers, and listeners. So every headline is portrayed in the direst language. And, they are all guilty of it, to some extent, even the best, most objective and balanced news outlets.

I’m not arguing that things are sunny and bright, but a little perspective is a useful thing.

For example, we hear the media trumpeting the latest job-loss figures each month, and the overall unemployment rate. In January The New York Times reported that “the unemployment rate, meanwhile, jumped to a 16-year-high of 7.2 percent, the Bureau of Labor Statistics reported on Friday. The growing army of the unemployed, at 11.1 million, is nearly 50 percent bigger than at the start of the recession a year ago.”

Okay. But a year ago unemployment was at its lowest point in years, below 5 percent, and 5 percent is considered full employment.

Is there good news in this situation? Unemployment in January was 7.2 percent. But you know, if 7.2 of every 100 people don’t have a job, that means that 92.3 do have a job, and that is worth noting.

We shrink in horror when we hear that so many people can’t pay their home loans. The Associated Press reported Thursday that “a stunning 48 percent of the nation's homeowners who have a subprime, adjustable-rate mortgage are behind on their payments or in foreclosure … A record 5.4 million American homeowners with a mortgage of any kind … were at least one month late or in foreclosure at the end of last year, the Mortgage Bankers Association reported.”

When you look a little deeper into this, you find that the 48 percent with a subprime loan were risky borrowers to begin with. Should we be surprised that many of them are behind in their payments? Especially after the Clinton administration bullied banks to make more of those bad loans in the early 90s, and the Congress bullied the regulators who tried to blow the whistle on this idiotic situation back in 2004?

Then there is the “5.4 million people.” Notice some of them are only one month late, and only some of them are actually in default. This story would benefit from more information, and so would its readers.

Is there good news in this? Well, 5.4 million is less than 12 percent of total mortgage loans, which means that 88 percent are doing just fine keeping their payments up.

Mr. Obama has said "The cost of health care now causes a bankruptcy in America every 30 seconds.”

Is there good news in this situation?

Yes: It isn’t true.

At that rate there would be 1,051,200 bankruptcies caused by healthcare costs in a year. The number of bankruptcies in November of last year was 931,873, and was estimated to be about 1,000,000 by the end of the year, and that is short of Mr. Obama’s scenario. So even if every one of those bankruptcies was caused by high medical bills, the President was wrong. And when you consider that there are a few other reasons for people declaring bankruptcy, such as loss of employment and poor resource management, his figure was grossly wrong.

Healthcare costs are definitely too high, but they don’t cause as many bankruptcies as Mr. Obama said they do. They are a reason for action, but not a reason to nationalize the healthcare system.

Whether Mr. Obama’s people did a poor job of research or are just lousy mathematicians; whether Mr. Obama stretched the truth to make political hay or whether he just out and out lied to the American people, is difficult to say. But regardless, his statistics are wrong.

The combination of an opportunistic media and a president that either doesn’t understand what is going on around him, or doesn’t really care, so long as he achieves his narrow political goals, has created a perfect storm.

His continued negativism and inability to find a proper solution to this problem threaten the nation’s financial security.

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Tuesday, March 03, 2009

Reckless Energy Policy Will Cost Americans
Money and Jobs

With the Obama administration’s oft stated preference for alternative energy sources, what will happen to the industries built around conventional energy sources like coal, oil and natural gas?

The Web site proclaims the following in The Agenda - Energy & Environment: “President Obama and Vice President Biden have a comprehensive plan to invest in alternative and renewable energy, end our addiction to foreign oil, address the global climate crisis and create millions of new jobs.” Notice the only mention of any of the current major forms of energy was getting less oil from foreign sources, and the “millions of new jobs” apparently will not come from expanding the search for domestic oil and gas supplies.

It goes on: “The energy challenges our country faces are severe and have gone unaddressed for far too long. Our addiction to foreign oil doesn't just undermine our national security and wreak havoc on our environment – it cripples our economy and strains the budgets of working families all across America.”

Once you get past the exaggeration, there is a little bit of truth in that statement.

Here is what the administration proposes:

* Help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future.
* Within 10 years save more oil than we currently import from the Middle East and Venezuela combined.
* Put 1 million Plug-In Hybrid cars – cars that can get up to 150 miles per gallon – on the road by 2015, cars that we will work to make sure are built here in America.
* Ensure 10 percent of our electricity comes from renewable sources by 2012, and 25 percent by 2025.
* Implement an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050.

President Obama’s very ambitious energy policy implies that coal, oil and natural gas, staples of American energy production, will simply be phased out. But this plan begs the question “how can we reduce the use of foreign oil as quickly as proposed without increasing domestic oil production?”

Gary Luquett, President of Chevron North America Exploration and Production Company, told the House Committee on Natural Resources recently that “even with the most aggressive development of renewables and alternatives, every major study of our energy future underscores the critical importance of oil and gas in meeting America’s energy needs for decades to come.”

No sensible energy policy can ignore the fact that alternative sources are inadequately developed to make a significant contribution any time soon, and they are expensive, to boot.

We’ve known for years that we must end dependence on foreign oil; the US cannot continue to rely for so much of our energy needs from countries that don’t like us. But on this issue we have been our own worst enemy: the primary reason we still are under the thumb of foreign oil producers is that Congress has blocked the oil and gas industry from drilling in the places where enormous oil and gas supplies are most likely to exist. Therefore, the best way to reduce dependence on foreign oil is to open offshore areas to new exploration, and increase our own oil supplies. We can then continue at a normal pace to develop alternative sources to a point where they are efficient and affordable enough to begin to replace fossil fuels.

But looking to new, undeveloped, unproven energy sources to replace existing, abundant and proven energy sources that already have the infrastructure in place for accessing and using them is foolish and short-sighted.

Reading the administration’s itemized list of goals makes it obvious that the President opposes using fossil fuels because of the wildly popular idea that burning coal, oil and natural gas damages the environment. It is by no means certain that pollution from these abundant fuels is actually harmful to the environment, however, and to use that criterion to determine that national energy policy needs a radical change is unjustified and would unnecessarily subject Americans to economic penalties.

Trying to force under-developed, expensive and unproven new energy technologies on the American people at a time of economic stress is ill-advised and would negate the benefits of the tax breaks of which Mr. Obama is so proud.

Furthermore, the cap-and-trade scheme can be expected to raise the cost of electricity and gasoline, as fossil fuel burning businesses implement costly measures to reduce carbon emissions, buy another business’ excess carbon credits, or pay fines for exceeding their caps. And the more aggressive the reduction in allowable emissions, the higher the costs businesses will encounter and pass on to consumers. Higher energy prices will cost jobs as economic activity slows and manufacturing is forced overseas where energy costs are lower.

Even though burning fossil fuels has been shown to not increase pollution to dangerous levels, it makes sense to move to less polluting technologies. What doesn’t make sense is to rush into alternative energy sources before they are adequately developed, and heap higher electricity and fuel costs, and job losses on the country for no better reason than somebody wants this goal met in a hurry.

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