Saturday, October 31, 2009

The Weekly Bidenism

Today we're introducing a new feature: The Weekly Bidenism. Joe Biden is a liar. He's also perhaps the dumbest politician this country has ever produced. This guy makes Forrest Gump look like Einstein. And we think that such carefully cultivated stupidity deserves a little appreciation. So every Sunday morning from now on (notice we're starting on a Saturday night), we will post a Bidenisms or two for you to enjoy. . . and to make you wonder how this man could possibly ever be put a heartbeat away from the Presidency.

Today we start with a classic in which Joe tells us how smart he is. During the Robert Bork hearings, it was discovered that Slow Joe had been disciplined as a first year law student for plagiarism (something he has a history of doing). On April 3, 1987, at a campaign stop in Claremont, New Hampshire, he was asked about that and a slew of recent reports about other instances of plagiarism. Joe angrily attacked the questioner:
"I think I probably have a much higher IQ than you do, I suspect. I went to law school on a full academic scholarship, the only one in my class to have a full academic scholarship. . . . I went back to law school and, in fact, ended up in the top half of my class. I won the international moot court competition. I was the outstanding student in the political science department at the end of my year. I graduated with three degrees from undergraduate school and 165 credits, only needed 123 credits, and I'd be delighted to sit down and compare my IQ to yours, if you'd like, Frank."
While this is not a very nice (or smart) thing for a politician to say, what makes this a Bidenism is a certain lack of candor here, and Biden's follow up comments.

For example, it turns out that Biden did not go to school on a full academic scholarship. He received a partial scholarship, and it was based on financial need. . . not academic credentials.

Moreover, while Biden claims he ended up in the top half of his class, his law school records show that he finished 76th out of 85. That puts him almost in the bottom 10%.

And while Biden claims he won an international moot court competition, Newsweek noted that he'd never listed this on his resume.

His three degrees also turned out to be a single degree with a double major, and his law degree.

When all of this was exposed, Biden first responded with a true Bidenism:
"I exaggerate when I'm angry, but I've never gone around telling people things that aren't true about me."
So exaggerations are true?

He then responded angrily:
"I don't understand all this. [expletive] I guess every single word I've ever said is going to be dissected now."
No Joe, just the stupid ones. . .

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Friday, October 30, 2009

The Mouse That Called Obama’s Bluff. . .

Want some actual news you haven’t heard anywhere: Honduras just won. Seriously. Funny that the MSM hasn’t mentioned this. Image, the entire world, standing shoulder to shoulder. . . led by the greatest power the world has ever known. . . guided by the greatest leader that country has ever produced. . . a man so compelling and hopeful that he deserves the Nobel Prize just for being. . . and Honduras just humbled them all.

Here’s the set up: In one corner, we have the current government of Honduras. They tossed their former president (Manuel Zelaya) out of the country when he tried to make himself into a Hugo Chavez-like dictator. (If you don’t know the background, or why this was not a coup, then read my prior article: HERE. I’ll wait for ya.)

In the other corner, we have the world. . . literally. Every other country in the world is doing their internationalist best to demand that Honduras allow Zelaya to return to power.

Here’s the twist: On November 29 of this year, there will be an election in Honduras. That election was already scheduled to take place before Zelaya got expelled, and will be between two men who had no involvement in the “coup.” The winner will become the new President, ending Zelaya's term. Democracy at work.

The current government in Honduras hopes that this election will make the Zelaya issue moot, and that the world will leave them alone thereafter. The international community, however, has loudly proclaimed that it will not recognize the results of that election unless Zelaya is first returned to power to serve out his term.

Except. . . Team Obama has now signaled (very quietly) that they will accept the election and move on. Gooooooooooooooooooooooooooaal!!!!!

Honduras wins! Honduras wins! Honduras wins! Honduras wins!

Oh, the humanity!!!

This represents a truly humiliating moment for Team Obama and for the internationalists. For years, the internationalists have told us that international pressure could solve any problem without the need for evil, dirty force. War was history, international law had killed it. Team Obama bought into that hook, line and sinker, and based their entire foreign policy on talk and hope. Now tiny Honduras, with its seven million people, has exposed that policy in all its gloriousless impotence.

** Update: Speak of the devil, this morning they announced a "deal" where Zelaya gets to appeal directly to Congress (which opposes him 5-1) to be restored. In exchange, we, the US, will recognize the election later this month. Annoyingly, but not unexpectedly, the AP is calling this total surrender an "Obama victory" even though it gives the Hondurans everything they wanted and Obama achieved none of his goals!

Here’s a little background on how this debacle developed. . .

From the outset, every single country in the world declared that they would do their able best to force little Honduras to accept the return of then-President Manuel Zelaya. They would (and did) blockade the country in violation of their treaties and their obligations under the World Trade Organization. They would stop sending aid and tourists. They warned that the coup leaders would be arrested. Chavez threatened to invade (he's a little sweet on Zelaya). All unless the evil coup plotters (leftists now described as “conservatives”) promised to immediately restore Zelaya to power and to submit to his terrible wrath.

And Honduras responded, “Bite me.”

Thus began an interesting series of negotiations between Micheletti, Zelaya and the International Community. (As an aside, as you read this, keep in mind the following quote from Zelaya about Micheletti: “I have no confidence in Micheletti. He changes his attitude from one minute to the next.”)
Micheletti’s Position
From the beginning, Micheletti took the position that Zelaya may not return to Honduras, unless he faces charges for what he’s done -- like stealing several million dollars from the Honduras Central Bank. Micheletti also declared that he will serve out the remainder of Zelaya’s term until the election scheduled for November 29.

On August 28, Micheletti changed his position slightly, saying that he would agree to allow Zelaya to return to Honduras under an amnesty if Zelaya renounced his claims to the presidency. Micheletti also offered to step down as President as part of the deal.

That’s it. Funny, I don’t see the attitude changing Zelaya does, perhaps I’m missing something? Let’s see how Zelaya did. . .
Zelaya’s Positions
Zelaya took the initial position that he needed to be restored immediately to serve out his full term and that the coup plotters had to face punishment for their crimes. He then went about making threats.

July 15: Zelaya asserts that “Hondurans have a right to insurrection.” Hey, who doesn’t?

July 18: Zelaya’s foreign minister, Patricia Rodas, says that Zelaya was returning to wage a “final battle” against those who ousted him. Let’s get ready to rumble!

July 21: Zelaya says that he would return soon and that “It is impossible to sustain a regime with bayonets. The world will not allow it, starting with the United States.” Oh oh, is that reliance on Obama I’m hearing?

July 23: Saying that United States sponsored talks have broken down, Zelaya declares that he will cross the border into Honduras. He dismisses concerns about the possibility of violence.

When the United States warns that it does not support this trip to the border (“Any step that would add to the risk of violence in Honduras or in the area, we think would be unwise.”) Zelaya responds: “Defending our rights is not an act of violence. . . we are going to seek dialogue.”

July 24: Zelaya bravely arrives at the border between Nicaragua and Honduras. . . on the Nicaraguan side. He stays only thirty minutes and only symbolically steps into Honduras. He explains: “I am not afraid, but I’m not crazy either. There could be violence and I don’t want to be the cause.” I guess encouraging an insurrection is not promoting violence?

He goes on to note that: “The best thing is to reach an understanding that respects the will of the people.” Though he also calls on the United States to not accept the results of the November 29 election unless he is restored to power first. So I guess “will of the people” doesn’t mean the Honduran people?

July 26: After Hillary “Yoda” Clinton calls his move “reeeeckless,” Zelaya responds that she should “stop avoiding the issue. Secretary Clinton should confront the dictatorship with force.” So much for not being the cause of violence.

July 30: Man of peace Zelaya suggests that the Honduran military should rebel.

August 1: Zelaya vows to return to power through peaceful means and denies that he’s rallying groups of armed supporters. Assures Zelaya: “We do not use arms. I am not forming any armed military force, although I have the means to do it.”

August 5: Zelaya tells the Mexican Senate: “The United States is the one that really has the power to impose measures that go beyond diplomacy.” Which begs the question, what lies beyond diplomacy? The answer is usually war, isn’t it?

September 21: Zelaya bravely sneaks across the border in the trunk of a car and beats cheeks for the Brazilian Embassy.

September 27: Uber-Pacifist Zelaya, a virtual modern day Gandhi, declares over the radio: “I call on you to mobilize throughout Honduras, and that everyone who can come to Tegucigalpa to fight in the final offensive.” Thereafter, we get an answer to the old hippie refrain: “what if we had a war and nobody came?” Answer: Idiots end up living in other people’s embassies.
The International Community’s Incredible Shrinking Posture
Finally, we take a look at how the international community, led by Barack “The Second Coming” Obama demonstrated its impotence.

July 21: The United States gets off to a muscular start, declaring that it wants “the constitutional order” in Honduras “restored. . . now.” By this, they meant they wanted Zelaya returned to power immediately.

To make this happen, Obama cut $16.5 million in military aid to Honduras -- that will teach them. Obama also revoked the diplomatic visas of the four top members of Honduras’ government, preventing them from clubbing in Miami on weekends. The United States also sent President Oscar “The Grouch” Arias of Costa Rica to negotiate a resolution with both parties.

July 21: Brazilian Foreign Minister Celso Amorim adds to the pressure, warning that these talks are taking too long. Another Brazilian diplomat warned that “the negotiations must not reward a coup.”

July 22: The United States ups the ante by warning Honduras that it would impose tough sanction if Zelaya is not returned. Harrumph harrumph.

July 23: Then things start to go squishy. Upon learning that Zelaya was planning to return to Honduras from his luxury suite at the Venezuela Hilton, the United States suddenly announces that it doesn’t support this move: “we think [this move] would be unwise.”

Jose Miguel Insulza, secretary-general of the Organization of American States, added his voice of caution: “It’s important to make an effort to avoid a likely confrontation.” Cluck. . . cluck.

July 24: Hillary Clinton states that: “President Zelaya’s effort to reach the border is reckless.” Cluck. . . cluck. . . bwak!

August 5: The United States heroically softens its stance, stating that no further sanctions would be coming. Run away! Run away! Whimpers Richard “The Vermin” Verma, of the State Department, “we reject calls for crippling economic sanctions and made clear that all states should seek to facilitate a solution without calls for violence and with respect for the principle of nonintervention.” Nonintervention? Except of course, when it comes to deciding who should rule Honduras.

September 21: Zelaya sneaks across the border even after Team Obama specifically told him not to do this. The United States responds by warning all sides to exercise caution, but takes no action.

September 27: In response to claims that the dastardly Honduran military surrounded the Brazilian embassy and “blasted music” at the building (like the US did in Panama), the United Nations Security Council condemns the Honduran government, but takes no action.

And now, Team Obama decides to give in to the mean old Hondurans. So much for the magical power of dialogue.

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Thursday, October 29, 2009

The Sound of Theme Music

Do you want to know why Obama hasn't done anything about Afghanistan? Well, we've uncovered the minutes of a secret meeting of Team Obama to discuss "Afghanistan." I warn you, this is distrubing.

(click to enlarge if you can't read the transcript)

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Wednesday, October 28, 2009

Repealing Baucus

Having examined the Baucus bill and explained why it might not pass (and now seen the opposition grow), it’s time to talk about repealing this bill if it does pass. Can this bill be repealed. Yes. . . and I would think surprisingly easily. Here’s why.

From A Technical Standpoint, Repeal Would Be Easy

Technically speaking, repealing a law is simple: you just pass another law that repeals the first one. The government speaks through the United States Code. If you want it to shut it up, or change the way it speaks, you just pass a law that deletes or amends the relevant portion of the code.

Yet, this is often not as easy as it sounds. Some laws work their way into the system like weeds, intertwining themselves with dozens of others. This makes it difficult to repeal the law because of the disruption that would be caused the intertwined laws. Consider, for example, social security. Tax law, identification laws, disability law, employment law, medical record privacy laws, and many others rely on the Social Security Act to make their components work. If Social Security were to be repealed, each of those other laws would need to be amended as well.

The Baucus bill, however, is not like social security. The Baucus bill creates stand alone requirements that can easily be removed without causing significant disruption to any other laws or programs.

From A Political Standpoint, Repeal Should Be Easy As Well

As repeal is technically possible, we must next ask whether repeal will be politically possible. To determine that, one must examine who will fight to save the law and who will fight to repeal it, and then determine whether enough legislators will decide that repeal is in their best interests. In this case, few will defend the law and many (both interest groups and the public) will favor its repeal.

If we assume that Baucus passes largely along the lines of what has been proposed (instead of the harder left version proposed by the House), here are the likely consequences:

First, right out of the gates, the public is going to get rather angry because. . .
Misled Supporters. This bill’s supporters have been misled. Most of the bill's supporters will be shocked to discover that almost none of them will qualify for free health care under the bill. In fact, if you make more than 133% of the poverty level, not only won’t you get coverage, but you will be forced to buy insurance or be fined. Some recent polls suggest that 60% of supporters expect to get free health care from this bill. In reality, less than 1% of the public will qualify for this. That's called disillusionment, a powerful force for killing support.

All Pain, No Gain. Baucus has written this bill in a way that all of the “bads” (tax increases, cuts to Medicare) kick in right away, but the “goods” (subsidies, limits on insurers) don’t kick in for years. For three years, this bill be all pain and no gain to the public.

Increased Costs for Everyone. The portion of the public that has private insurance, 60%, will find their insurance costs going up almost immediately. The insurers have estimated that the new requirements will increase the cost of a typical policy by $3,000 to $4,000 per year.

Benefits Tax. Many members of the public will suddenly find their benefits being taxed at a 40% rate. This is the excise tax on so-called “Cadillac benefits” plans. This will apply to approximately 14% of families and 19% of singles in 2013 (despite indexing, this will increase to 31% and 34% by 2019).

Doctor Shortage (Phase I). Seniors are going to find that the low rates paid under Medicare/Medicaid continue to force more and more doctors out of the system -- the rest will complain bitterly about cuts, as they do now. With further cuts of 21% and another 40% planned, this could drive out a great many more. Also, with the addition of several million freeloaders to the system, seniors will find the system suddenly becoming very crowded and grievance ridden.
Then, the law of unintended consequences is going to kick in as the plan’s elements slowly take effect. These will convert the public’s anger to rage:
Failing Insurers. Profits in the insurance industry average about 6% a year, with last year’s profits being around 2%. Those margins are too low for small insurers to continue under the pricing limits imposed by Baucus. Thus, as Paul Ryan (R-Wisc.) observed, most of the nation’s 1300 insurers will go out of business. So what you ask? Well, chances are that the insurance that you currently have -- the insurance the Democrats promised you could keep -- comes from one of these 1300 insurers. Whoops.

Doctor Shortage (Phase II). Wherever the government becomes responsible for paying for health care, it will pay only the current Medicare rates, which are already causing a revolt among doctors. Expect that doctors will refuse to participate in such plans, causing a serious shortage of available doctors. Essentially, you will have a two tiered system -- one for the rich, with doctors, and one for the rest of us, without doctors.

Doctor Shortage (Phase III). The more the government takes control of the medical profession, the fewer people will go to medical school. This will slowly lead to a doctor shortage, which might become apparent within a few years. Watch medical school entrance exam scores for a drop in quality of applicants.

Hospital Bankruptcies. Hospitals have been going broke all over the country, in no small part because of Medicare/Medicaid rates. The government will now withhold another $155 billion from hospitals under those programs. It will also continue to refuse to provide full reimbursement for illegal aliens. Expect this to result in a significant increase in the number of hospital bankruptcies.

Job Market Changes. As the employer mandates kick in, employers will switch to more temporary workers (in place of permanent workers) and will reduce part time workers’ hours to below 30 hours per week to avoid fines and the need to provide insurance.
Then, right when the effects of the bill are starting to become obvious, the new programs will break the Federal budget. While the Democrats claim the budget can absorb one trillion dollars over ten years, this bill far exceeds that.

Right now this bill extends insurance to 12 million more people -- five million of whom fall into the highest cost range (uninsurables). Applying the 2007 Medicare rates, this will cost at least $133.2 billion per year. It also provides subsidies to 67% of Americans. How much is not clear because the formula depends on the cost of the policies -- they’re capped at 10% of the cost of the policy. This could be as high as $2,000 per person, but realistically will be only a fraction of that. Let’s assume an average of $200 per eligible person, all 210 million of them. That works out to a yearly cost of $40.2 billion.

Even ignoring all other costs and the inevitable increase in costs that will arise from forcing another 25 million people into a system that has no capacity to take them, these two costs alone come to $173.2 billion per year, or $1.7 trillion over ten years -- double the Democratic estimates. That’s also more than the budget deficit in 2007 ($162 billion) for which Bush was so roundly (and rightfully) criticized.

To offset this, the Democrats have proposed a $12.1 billion per year tax on drug makers, device makers, and insurers. However, most of that will be passed right back to the government in increased costs. Beyond this, the Democrats are still looking for ways to pay for this.

If you want proof of the likelihood of budget disaster, look at the experience of various states that have tried to do what the Democrats are doing now. Hawaii, Oregon, Massachusetts, Tennessee and Maine have all created some version of government-run health care, and all are a mess. Hawaii’s Prepaid Healthcare Act resulted in higher costs, fewer insurers, and doubled the number of uninsureds. Moreover, the program was so expensive, it had to be discontinued for children.

Maine’s six year old “Dirigo Health” plan has managed to cover only 18,800 of the state’s 130,000 uninsured, has cost many people their private insurance, and has run away premium costs.

After three years, Massachusetts’ “universal coverage plan” caused costs to explode, resulted in waiting lists, and still left thousands uninsured. Tennessee’s plan for low-income people, caused insurers and doctors to leave the state and has repeatedly flirted with insolvency. Oregon creates an annual list, based on budget constraints, that identifies which treatments it will cover and which it won’t.

What Should The Republicans Do

Based on all of the above, the public should be quite happy to see this plan repealed. Moreover, there is no constituency to lobby to keep this thing alive. Indeed, the biggest mistake the Democrats made was not merging Medicare into this new program. Thus, opponents cannot be charged with trying to destroy Medicare by trying to destroy Obama/PelosiCare.

But this alone is unlikely to lead to a repeal, the Republicans will need to generate sufficient pressure that even Democrats support repeal. Here’s how to do that:

1. Set up the criticism now. Tell people what is going to happen so that they know where to lay the blame when their health care costs go up, their taxes go up, they lose their insurance because their insurer goes broke, their doctor refuses to take their new insurance, they are told their jobs will be made temporary positions, their part time hours are cut, the budget deficit skyrockets, and they experience massive delays and incompetence in their dealings with the health care system. Pointing this out now, lets people attribute a cause, which focuses anger and will go a long way to selling the arguments to be made later.

2. Don’t talk about repeal, talk about replacement. Come up with a real plan, not the usual Republican garbage about giving more subsidies to insurance providers, and tell people that you intend to replace Obama/PelosiCare with a plan that will work. Start talking about this now, so that Republicans can claim they tried to change this horrid system before it took effect, and keep talking about it.

3. Generate the proof. Don’t rely on the media to investigate the effects of Obama/PelosiCare or on people to come to their own conclusions. Work with the interest groups to do the studies that back up what is happening and attribute it to Obama/PelosiCare. Do studies pointing out how health care costs go up. Point out permanent jobs lost, reductions in the number of doctors or hospitals or nurses or numbers of insurers. And most importantly, keep pounding away at how many people remain without insurance so that people understand that this was all done for nothing. Indeed, point out that Obama/PelosiCare is spending $1.7 trillion to cover 12 million people, whereas we could have bought them all private insurance for $54 billion a year without destroying every else’s health care.

4. Sell the problem. Finally, Republicans need a unified, continuous attack on the program. They need to run on a visible platform of replacing Obama/PelosiCare. And they need to focus on the key themes:
• Obama/PelosiCare is all pain, no gain. Are you better off? Is your health care better or cheaper?

• Obama/PelosiCare was futile: 30+ million people remain unemployed.

• Obama/PelosiCare was an incredible waste of money. Rather than spending $1.7 trillion to cover 12 million people, we could have bought them all private insurance for $54 billion a year.

• Obama/PelosiCare is bankrupting Medicare.

• Obama/PelosiCare is bankrupting the country. Every other government function is being squeezed or ignored to pay for this turkey. And we’re going deeper and deeper into debt every day because of this plan.
With no one supporting this bill, an angry public, and active interest group opposition, Obama/PelosiCare will become an albatross that hangs around every Democratic neck -- particularly if Obama loses in 2012. This will guarantee ever increasing Republican majorities until they either have the numbers to repeal the bill or the Democrats decide to stop standing in the way. Using the “replace not repeal” plan should hasten their abandonment of Obama/PelosiCare.

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Tuesday, October 27, 2009

Harry Reid’s Mistake On The Public Option

Not a full post tonight, but I wanted to update everyone on Harry Reid’s public option mistake and on who is important in the Senate right now (** cough cough call them cough **). As you know, I wrote the other day that I thought they would have a problem passing the Baucus bill. One of the reasons listed was the public option debate. Guess what. . .

You may have heard that yesterday, Harry Reid announced that the Baucus bill would include a public option. In fact, he selected a public option that states could “opt out of”, and that was that -- the end. At the time, the left declared this a victory and their friends in the media trumpeted the coming of ObamaCare.

But as I watched Harry give his press conference, it was clear that he was nervous. Sure, he was angry -- lashing out at Republicans, and he was smug, but he refused to answer whether he was sure that he had the 60 votes he needs for cloture, i.e. to prevent a filibuster. He had clearly gambled.

Not more than five minutes after his lips stopped flapping, CNBC announced that Olympia Snowe was very upset by this. And while she did not say that she would not vote closure, she indicated that she could not support a bill with an “opt out” or “opt in” provision. Whoops. (FYI, Reid then attacked her, commenting that she has been “frightened” into dropping her support. Sounds sexist to me.)

This morning, Joe Lieberman, who is fast becoming my favorite Democrat, announced that he would not support this bill. But even more so, he noted that he would filibuster the bill if it continues to include a public option:
“I’ve told Sen. Reid that if the bill stays as it is now, I will vote against cloture. I can’t see a way in which I could vote for cloture on any bill that contained a creation of a government-operated-run insurance company. It’s just asking for trouble – in the end, the taxpayers are going to pay and probably all people will have health insurance are going to see their premiums go up because there’s going to be cost shifting as there has been for Medicare and Medicaid.”
Honestly, Lieberman’s opposition was unexpected. Don’t get me wrong, I’m thrilled. I just didn’t think he would stand in the way of this.

With Lieberman and Snowe bolting, Reid cannot bring the bill for a vote because he’s only got 59 votes. Even worse for Reid, Lieberman and Snowe’s defections are now encouraging others to start wavering. Sen. Ben Nelson (D-Neb) and Sen. Mary Landrieu (D-La) both had already voiced reservations and have now confirmed their reservations (though they have stopped short of saying they won’t vote for the bill). But now, Sen. Tom Carper (D-Del) says that he is unhappy with the bill and will seek to make changes on the Senate floor. Sen. Evan Bayh (D-Ind) also has voiced concerns over the bill and now will not say which way he will vote on cloture (Bayh is upset about $40 billion in taxes imposed on medical equipment providers).

So while this battle is far from over, it looks like Harry’s declaration proved to be a total disaster. And I suspect that the longer this goes without resolution, the greater the chance that more Democrats will revolt -- not to mention that they still need to merge this with a House bill that is entirely unpalatable to most of the Senate.

If you feel like calling or writing anyone in Congress, these would be the people. Tell them that you see a vote for closure as a vote for the public option. . . and you don’t want a public option.

In the meantime, get some popcorn, kick back, and watch the fall out from Harry’s bomb.

** UPDATE: Olympia Snowe has now said that she will vote against cloture. Thus, Reid does not have the sixty votes he needs.

(FYI, I will put up an article outlining why the Baucus bill can be repealed tomorrow night. Thanks for your patience.)

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Monday, October 26, 2009

The Problem Of College Costs

The American college system is the best in the world. Eight of the top ten, nineteen of the top twenty-five and thirty-eight of the top fifty universities are in the United States. But there is a problem: college costs too much. And guess whose fault that is. . .

As a people, we want to encourage our fellow citizens to go to college. Not only do we need more doctors and engineers, but study after study shows that people who go to college contribute more to our economy than those who don’t. The greater the level of education, the lower the likelihood of unemployment and the greater the income. (See chart below).

In fact, studies show that people who complete college are likely to earn as much as $800,000 more in their lifetimes than those who don’t go to college. The Organization for Economic Cooperation and Development (OECD) claims that even after considering tuition fees, lost earning during college and increased taxation on future income, college graduates are still as much as $82,000 better off in net present value terms than people who only obtain a high school diploma. That means completing college is like having your bills paid for, receiving an amount equal to what the high school grad has earned while you were in college and still being handed $82,000 today.

So far so good. But there is a problem. This value keeps dropping because the cost of college is spiraling out of control in the United States.

Since 1985, the average cost of college tuition has risen 412%. At the same time, the consumer price index (a gauge of inflation that actually overstates the inflation rate) rose only 100%. In other words, while that cheeseburger or stereo or car that you bought in 1985 would cost you twice as much today as it did in 1985, college would cost you four times as much. Take a look at the graph on the right to see how college costs have far outstripped inflation.

College tuition, at a four year public school, will average $7,020 this fall. That’s $31,000 in four years once you factor in the continuing effects of price inflation. Average tuition at private colleges is $26,273 a year. This works out to more than $110,000 after four year. (And none of this includes room and board.)

This is a problem.

As college becomes less valuable, fewer people will attend. That means fewer doctors, fewer lawyers, fewer engineers. It means that jobs need to be sent overseas (or overseas workers brought here). That means fewer support jobs, a smaller economy, and less tax revenue. It means our economy will become more dependent on foreign countries and that the things that give us an advantage (particularly technology) will soon be lost with the advantage being shifted overseas.

So what is causing this? The government.

In 2009, $180 billion will be spent on college tuition in the United States. Sixty-five percent of that, $117 billion, comes from the federal government via grants and loans. And if you look at college tuition over time, you will see an amazing correlation between the amount of aid made available by the federal government and the price of tuition. Look at the chart on the left. Compare the rise in financial aid with the rise in college tuition costs -- it’s absolutely correlated. Now it’s true that correlation does not mean causation, but there are no other realistic factors to explain this correlation. The truth is that colleges have simply raised their fees to eat up the available aid.

Interestingly, if you eliminated federal aid, the amount spent on college tuition today would be roughly 200% the amount spent in 1985. In other words, college tuition would be at the same level as the inflation index for other consumer products and services if you excluded the federal government’s involvement.

What does this tell us? It tells us that all of the financial “aid” that the federal government has given is a chimera. It’s a trap. Every penny of financial aid given to help students afford college gets eaten up by higher tuition costs the moment it is given!!

Basically, while the feds claim to be helping people afford college, they are in fact subsidizing colleges with loans that work like a long term tax on students. Consider it a “professional tax.”

Think of it this way. Imagine that you could buy a cheeseburger in 1985 for $1. But in 1985, the federal government decided that it would start “helping you” to afford that cheeseburger. Thus, the government loaned you money to buy the cheeseburger. But each year, the burger joint raised the price of the burger dollar for dollar with the amount the feds made available for loans. Today, the burger costs $11. The feds will loan you $10 to “help you.” But is that really help? You are still paying the original $1 yourself, only now you are being saddled with a $10 loan just so that you can buy the same burger.

So it will come as no surprise that Obama is proposing to increase the amount of federal aid available again. Liberals will congratulate themselves for helping people go to college. Colleges will rejoice that their subsidies will continue. And college grads will find themselves under an ever increasingly, crushing debt load. College grads are already leaving college with an average debt load of $20,000, with grad students (lawyers and doctors in particular) averaging $91,700 last year. (And don’t forget that with interest, students will pay back far more than the amount of the loan.)

In fact, most of what the government does to help you is counter-productive. Have you ever heard of these programs where you put money into an account now so that your kids can go to college in the future? These are called 529 Prepaid Tuition Plans. If you’re thinking about one, look into it carefully. These accounts can have various traps -- from the funds being lost if not used for college to requiring that the recipient go to school in a particular state. More interestingly, while this sounds like a great way to save for college because these plans are usually tax free, you may actually not be better off. Depending on the school and how the fund is set up, any amount in the fund may end up merely offsetting need-based grants. Thus, you will turn over that money, but your kids will still end up with the same amount of loans. (Public schools may not do this, but private schools can.)

Every time the federal government ups the financial aid limits, all we do is put students further in debt. It strikes me that it’s time to cut off the federal spigot for a while and see if that brings the cost of this cheeseburger back in line.

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Sunday, October 25, 2009

Why The Baucus Bill Probably Won't Pass

For some time now, I have doubted that Obama would get ObamaCare. I did think, however, that he would get some face-saving version. The Baucus bill is that face saving version. But now I’m not so sure even that will pass. And even if it does, a Republican majority should be able to repeal it fairly easily. Let’s take this in two parts. Today is part one: why the Baucus bill might not pass.

There are five primary reasons that the Democrats might not be able to garner the support they need to pass this bill: (1) the lack of a natural constituency supporting the bill, (2) the cost, (3) disputes over how to pay for the bill, (4) disputes over the public option and (5) abortion.

1. The Lack Of A Natural Constituency Supporting The Bill

Before we delve too deeply into the Democrats’ errors, it is important to point out that legislation does not pass on its merits. Legislation passes when enough Congressmen/Senators think it is in their interests to support it.

It is difficult to support a bill that the public hates, and the public hates the Baucus bill: only 42% support the bill. Yet, widespread public opposition can usually be overcome in the legislative process by a motivated constituency. The Baucus bill, however, has no such constituency. Indeed, each of the attempts to create a constituency have failed:
(1) The Public. From the beginning, the Democrats promised to subsidize the cost of health care for nearly everyone in the country. They intended to undercut the public’s fears that this legislation would increase the cost of their health care. But they made two mistakes. First, while the Baucus bill promises subsidies to approximately 67% of Americans, individuals won’t see that money -- it will go directly to the insurers. That makes this a meaningless bribe because the public doesn’t know they will be getting it.

Secondly, the public does not believe this will help. They believe the subsidy (likely less than $200 a year) will not offset the increase in insurance cost (several thousand dollars a year). In fact, they don’t believe any part of the bill will be good for them.

If you examine the chart below, from Gallup, you will see that only 19% of the public believes this bill will improve the quality of the health care they receive, whereas 39% think it will make it worse. Only 22% think it will control the health care costs they pay, whereas 49% think it will make them worse. And only 20% think it will improve their coverage.
Even the bill’s supporters don’t think it will work:
Those numbers are guaranteed to scare every Democrat who faces reelection in the next cycle -- most of whom are already skittish.

(2) The Insurance Lobby. The Democrats blamed the insurance lobby for killing HillaryCare in 1992. So this time, they set out to make the insurance lobby an ally by promising insurers they would get to write policies for another 46 million Americans. This worked at first, until it became clear that the Democrats intended to create a public option or health care co-ops. This would be a disaster for most insurers.

Indeed, according to Republican Paul Ryan (R-Wisc.), who gave an impressive interview about this bill, this bill is likely to lead to the collapse of all but the largest insurers. He notes that the Baucus plan prevents insurers from using underwriting techniques to set rates (e.g. they can’t adjust policies to account for certain conditions). Because insurers need that flexibility to account for different expected costs, he reasons that most of the nation’s 1,300 insurers will be unable to issue profitable policies. Thus, they will be forced out of the business, leaving only a handful of large insurers to occupy the field.

Because of this potential disaster, the insurance industry has now abandoned their support and turned against the plan. Consequently, the Democrats are now threatening to attack the insurers with anti-trust laws, thereby guaranteeing the vehemence of the insurers’ opposition.

(3) Hospitals. The Democrats wanted to get hospitals on board (i) by increasing federal reimbursement for the “unreimbursed expenses” hospitals incur in treating the poor and illegal aliens and (ii) by cutting hospitals’ medical malpractice costs.

In 2008, hospitals provided $35 billion worth of uncompensated care (for the uninsured); 80% of this was reimbursed by the government. Most of this went to cover illegal aliens. But illegal aliens won’t be covered by Baucus, thus nothing will change for the hospitals. What’s worse, in July 2009, the White House announced (supposedly after reaching an agreement with hospitals) that it would be cutting the amount it reimburses hospitals under Medicare/Medicaid by $155 billion, to pay for ObamaCare. That’s a $190 billion loss from what hospitals had expected.

Moreover, while the GAO now confirms that medical malpractice reform could save $54 billion over 10 years, and while hospital groups including the American Hospital Association have been shopping malpractice reform plans, the Democrats have offered nothing more than a minor “demonstration project” to study the issue.

(4) Doctors. Democrats hoped to get doctors on board by promising increased reimbursements. But that has turned into a disaster. Here’s why. Medicare/Medicaid do not pay doctors enough to make it worth their time to treat those patients. Indeed, there are thousands of stories of doctors literally going broke trying to treat Medicare/Medicaid patients, and many now refuse to take such patients. In 2003, Congress tried to fix this by providing a temporary boost in the payment amounts until the system could be reworked. That boost runs out next year. If nothing is done, doctors (who already can’t afford to take such payments) will have their reimbursements cut by 21%, with a 40% cut following the year after. To prevent this happening, i.e. not fixing the problem but merely keeping the current reimbursement scheme, Congress must spend another $247 billion over the next 10 years.

However, if that amount is added to the bill, the budget promises made by the Democrats will collapse. So the Democratic leadership tried to sneak this change through as a separate bill. But that was voted down last week. It is not clear whether or not the Democrats will be willing to include these amounts in the current bill. Either choice could kill the bill.

(5) Old People. The Democrats proposed increasing the prescription drug benefit in Medicare to win over seniors. But they ended up scaring the heck out of seniors instead. And things are only going to get worse. Obama and Baucus have proposed cutting Medicare Advantage to save $10 billion. But this would cut the benefits of nine million seniors. Moreover, to pay for this bill, the Democrats are proposing an estimated $250 billion in Medicare/Medicaid cuts, which threatens the existence of both programs. Seniors remain very angry. . . and they vote.

(6) Big Business. The Democrats wooed employers, particularly big business and their union friends, by promising that the cost of employee health care would suddenly be covered by the government and that their smaller, more nimble competitors would be required to pay for benefits. None of that happens in the bill. At best, this bill will be neutral for employers.

(7) Illegal Aliens. This group was treated like a punching bag by the Democrats and gets nothing out of the bill. They are annoyed.

(8) The Hard Left. The hard left has been agitating for the Democrats to socialize medicine since forever. This bill doesn’t even come close to making them happy. In fact, this bill isn’t even a down payment on that. They are very upset.

(9) The Winners. There are only two groups that win under this legislation. The first group are people in the income range between 100% and 133% of the poverty level. They will now be eligible for Medicaid. This is approximately seven million people. The other group are the nation’s five million uninsurable persons. However, these groups lack financial muscle and already are loyal Democratic voters. Thus, their support is not comforting to the Democrats -- it’s like having your mom tell you that she likes your bill.

With no real constituency to support this bill, it will be difficult to pull together the votes needed to pass it.
2. The Cost

In addition to a lack of support among the rank and file, the bill is hemorrhaging support in Congress. The first cause of this falling support is the cost of the bill.

To get political cover, the Democrats have been working to convince everyone that the bill will cost less than one trillion dollars. Obama even set that limit in his daffy health care speech. But the Democrats now admit privately that the bill is understated by at least $150 billion. Moreover, the bill includes assumptions about cost cuts that won’t occur -- particularly the $247 billion in cuts to reimbursements to doctors under Medicare/Medicaid mentioned above. If these things are added back in, the bill will cost $1.268 trillion.

Going above the $1 trillion figure will lose the Snowe Rino and may lose many of the Blue Dogs.

More importantly, the bill was priced using the new (post-$247 billion cut) Medicare/Medicaid rates. Factoring those back out will cause the price tag to creep toward $2 trillion as the Republicans have been claiming. That would be a public relations nightmare, as it would have been cheaper just to buy everyone in the country private health care.

3. Disputes Over How To Pay For The Bill

In addition to the problem with the bill’s cost, there is a serious dispute among Democrats over how to pay for the bill. There is a currently a $200 billion shortfall, even in the fantasy numbers. To cover this, the House wants an income tax surcharge on the rich. The Senate, on the other hand, wants an excise tax on “Cadillac” benefits. And according to Paul Ryan, this could be the biggest problem for the bill because the surcharge “cannot” pass the Senate and the excise tax “cannot” pass the House.

Moreover, neither of these plans has strong support. In the House, the Democrats kept having to cut the rates to keep nervous Democrats in line. In the Senate, Baucus had to carve out exceptions to the excise tax for coal miners to get the support of Sen. Jay Rockefeller (D-Deliverance), unions to get the support of Sen. Debbie Stabenow (D-UAW) and John Kerry (D-Masshole), and for people in certain “hard hit states” to get the support of Sen. Chucky Schumer (D-Wall Street), Sen. Ron Wyden (D-Forrest Industry), and Harry Reid (D-SEIU), with others now demanding their own exemptions.

This could become the greatest challenge.

4. Disputes Over The Public Option

The most public dispute between the Democrats is whether or not (and to what extent) to include a public option. The Democrats furthest left have stated that they will not vote for a bill that does not include a public option. The Snowe Rino will not support a full public option, but will support a triggered public option. Sen. Ben Nelson (D-Neb) strongly opposes the public option. A few others have refused to commit.

This issue is significant because of the 100% (minus 1) Republican opposition, which means that Democrats will need Snowe and 59 of 60 Democratic Senators to pass this thing. It is unclear whether the current proposed solution of a public option that states could opt-out-of will satisfy enough Democrats to get that. I suspect it ultimately will, but it will be close.

5. Abortion

The Democrats also need 217 of the 256 Democrats in the House to support this bill. That’s where abortion comes in. Apparently, House Democrats have hit a wall on the issue of abortion. Rep. Bart Stupak (D.-Mich.) claims that he has organized a group of “about 40 likeminded Democrats” who will vote to kill the health-care bill over the issue of abortion. He says that the bill’s language that specifies that someone obtaining an abortion must use their own money, not money from federal subsidies, does not go far enough because it is impossible to segregate funds in that way. He wants to bar federal money from going to insurers who cover abortion. But other Democrats say they will not compromise any further on this issue. This standoff could kill this bill.


This bill faces widespread opposition in the public. There is no interest group left that supports this bill, most now angrily oppose the bill. The bill costs more than the magic number stupidly established by Obama, and the Democrats can’t agree on how to tax us to pay for it. All of this may make this bill impossible to pass. Add in the dispute over the public option and the abortion standoff, and this bill is rife for a surprise failure. The only question is, will the Democrats be more afraid of not passing this bill than they will be of passing it? Right now, I suspect they gut it deeply before passing it, i.e. they will pass a face saver version of the face saver bill.

Next time, why this bill can be repealed.

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Thursday, October 22, 2009

It’s Because Your Leadership Sucks. . .

There's a Politico article today that needs to be addressed. This article talks about the problem Republican leaders are having with “the flamboyant rhetoric and angry tone of conservative activists and media personalities.” Let’s diagnose the problem, point some fingers, and present the solution.

What The Article Said

Before we delve into the contents of the article, let me say that I dismiss the article itself. This is just another one of those typical articles written by a leftist who wants to “help” us by suggesting that the evil Republican Party is captive to the far right and blah blah blah move left to find voters. I neither care about the author nor their wrong advice.

But what I do want to talk about is what the Republican establishment says in this article. According to the article, many Republican officials and operatives are concerned (1) that the angry tone of conservative activists will turn off the middle-of-the-road voters that the party must attract to regain power, and (2) that radio personalities like Glenn Beck and Rush Limbaugh are making life miserable for senators and House members by egging on the activists, so that the elected officials must pander to these activists at the expense of turning off moderate voters (particularly in moderate districts).

Here are some of the quotes and points from the article that you should note:
• House Whip Eric Cantor, described as “one of the party’s up-and-coming leaders” says: “We need more voices. Our party’s challenge has been that we need to be more inclusive -- we need to attract the middle again.” He then adds, “[Obama’s nastiness] gives us an opportunity now to try and harness the energy and point it in a positive direction, so that we can attract the middle of the country to the common-sense conservative views that we have been about as a party.”

• Minnesota Gov. Tim Pawlenty implies (though he doesn’t quite say) that the activists are playing into the media’s hands by letting the media portray the party as narrow-minded. “The commentators are part of the coalition, not the whole coalition. The party needs to be about addition, not subtraction -- but not at the expense of watering down its principles.”

• Mitt Romney, apparently, is keeping a low profile and is sticking to speeches on specific policy issues to avoid (according to the author) “the trade off between placating party activists and appearing presidential.”
Diagnosing The Problem

Let me start off with a surprise. I agree with them about the problem. The Republican Party cannot win if it does not attract people beyond its hardcore base. Despite what you may see in the polls, both parties have a hardcore base of around 43% of the electorate. Beyond that, you get into the leaners and the self-described moderates. If you can’t attract more than half of the leaners and self-described moderates, you can’t win an election.

Yet, the activists, the bloggers, the callers, and the talk radio hosts are making it very hard for the Republican Party to attract those people. Like you, I have visited many other blogs, read many political journals, listened to talk radio and visited web boards. The truth is that right now, the right is not very appealing. So much of what you find is angry, ignorant, beset by paranoia and, frankly, whiny.

And this has many causes. Part of this stems from the fact that the people who are the most upset are the most likely to speak their minds. Part of this stems from the fact that to get noticed in a saturated world, you need to be more bombastic than the rest. Part of this stems from the collapse of journalism and the ease with which the internet allows opinion and rumor to be turned into fact and spread like wildfire -- hence, people no longer know what is true. Part of this stems from the fact that in times of great upheaval, many nuts come out of the woodwork to hide among the normal people, trying to lure them into their little cults.

That’s all true. But there is one more key ingredient: a vacuum.

If the Republican Party leadership had not been notably absent from the field, none of this would have mattered. A vibrant, trustworthy party that addresses issues as they arise, debunks rumors, and takes a clear stand that people can rely upon could have prevented this stew of anger, fear and resentment from ever coming into existence in the first place. But by remaining silent on issue after issue, and by failing to give people something to believe in -- the comfort that they would be represented, the party leadership let the noxious concoction boil away and the wounds it created fester. In other words, my dear Republican Party, your failure caused this.

So don’t whine about it, fix it.

But whine is what they are doing. Cantor is right that we need to attract the middle and that we can do it with conservative principles -- polls show over and over that “the middle” is actually rather far right. But read his quote again. He doesn’t know how to do this. He’s hoping that it all works itself out. Do you see any hint there that he could even enunciate what those principles are?

Look at Pawlenty. He seems to think we’re in a coalition rather than a party. Coalitions are a combination of divergent groups hoping to achieve their own interests through the support of others within the coalition. A party, on the other hand, is a group of like-minded individuals working toward certain goals that they all share. That may sound like nitpicking, but it’s not. This quote tells me that he doesn’t see the party as a collection of like-minded people who believe in conservative ideas, he sees us as a collection of interests.

Look at Romney. Now is the time Mr. President-wannabe to step up and lead. Difficult times forge leaders. Consider again Monday's quote from Abigail Adams:
"These are times in which a genius would wish to live. It is not in the still calm of life, or the repose of a pacific station, that great characters are formed."
A leader does not hide and hope not to get noticed.

The Solution

The solution is simple. Stop whining about it and do something. Lead. How do you do that? Easy:

First, come up with a conservative agenda. Outline the conservative principles for which you stand. Tell us what those are and show us that you intend to stick with them. If you need help, which apparently you do, read our on-going Rebuilding the Republican Party series. In fact, why not start with this:
I am a Republican because...

I believe in limited and accountable government. I believe in the Constitutional separation of powers between the branches of the government, between the federal government and the states, and between the government and its citizens. I believe in state’s rights. I believe in the protection of civil liberties enshrined in the Bill of Rights. I reject judicial activism and the shift of power from the legislature to the executive. Concentrated power has always been the enemy of liberty.

I believe in fiscally responsible government. I reject deficit spending, unfair and excessive taxation, and unnecessary and irrational regulation.

I believe in free market economics and the protection of property rights. I reject government ownership of private business and the confiscation of private property. I believe in free and fair trade.

I believe in a strong national defense, and in promoting the values of democracy, freedom, and human rights around the world. I reject isolationism, but I also reject adventurism. Walk softly, but carry a big stick.

I am the Republican Party. I believe in freedom, liberty, and responsibility.
Then take those principles and apply them to the issues of the day. Show us how you plan to use conservative ideas to solve the nation’s problems -- and don’t just wait for the public to tell you something is a problem. It’s time to remake the country, issue by issue, along conservative lines.

Next, start introducing legislation to implement that agenda. If it passes, take the credit. If it fails, make an issue out of it.

At the same time, start taking a firm PUBLIC stand against the things Obama does wrong and supporting him openly on things he does right (if any). And don’t just criticize, tell the American people what you would have done differently and point to the legislation you’ve introduced to do that.

The American people want solutions to problems, not just finger pointing. And they hate cowards and they hate whiners.

Which brings us to the final point: stop whining about the activists and the guys on talk radio. Nobody trusts a “leader” who whines that his followers make things difficult. Gain our respect and this whole problem goes away.

** Update: Mike Pence (R- Indiana) calls the Politico story "hogwash."

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Wednesday, October 21, 2009

The Baucus Bill Decoded

This is a long one, but probably kind of important to you. During the Bronco/Charger game on Monday night, the Senate Finance Committee finally released its health care bill (S 1796 -- the “Baucus Bill”) for public review. It’s 1502 pages, but I reviewed it. . . every twisted, confused word. In all my years of reading legislation, I’ve never seen anything as hopelessly complex and bizarrely written as this little ditty. Nevertheless, I think I broke the code. Here’s what you need to know.

Before we begin, remember that this turdburger still needs to be merged with the Health Committee version, no doubt behind closed doors. That could change this bill significantly, particularly by adding more goodies for Harry Reid’s vassals in Nevada and for whoever else is up on their bribes. . . er, campaign contributions.

1. General Impressions

Here are some general impressions:
(1) MicroMax Baucus
First, like all good socialists, Max Baucus loves micromanagement. He dedicates page after page to mind-numbing minutia, everything from coding for wheel chairs to ordering studies of how much medication is given in long term care facilities.
(2) Non-Solution Solutions For Cost Control
Baucus has clearly been reading CommentarmaCare. Yep. He didn’t understand it, but he’s been reading it. At various points, Baucus mentions many of the thing that we pointed out as needing to be fixed to get costs under control. Sadly, rather than fixing them (or changing the incentives as we suggested), Baucus punts to the Comptroller General or the Secretary of Health and Human Services to study how to fix them.

Indeed, this bill is full of non-solution solutions. For example, it proposes:
• Implementing a “hospital value-based purchasing program,” once HHS figures out how to do that. (§ 3001)

• Improving the “physician quality reporting system,” once HHS figures out how to do that. (§ 3002)

• Creating “incentives for healthy lifestyles,” once HHS figures out how to do that. (§ 2103)

• Funding a childhood obesity demonstration project, presumably to figure out how to cut childhood obesity. (§ 2105)

• Studying “barriers to appropriate utilization of generic medicine,” with the idea of switching to generics some day. (§ 1654)
FYI, there’s not a peep about medical malpractice reform.

I am concerned that some of these reports require recommendations by the Comptroller General, which will be considered by the committee -- then acted upon outside the normal Senate rules, i.e. no filibuster.
(3) Harm To The Job Market: Temporary Workers
This bill has the potential to do some serious harm to the job market -- enter the law of unintended consequences. To avoid destroying small business, Baucus creates a scheme that allows employers to avoid the damaging consequences of his bill by eliminating permanent jobs and replacing them with temporary or part time positions. . . as they do in Europe. Moreover, the part time work will need to be cut off at less than 30 hours, as compared to less than 40 as is currently done.

Thus, it is likely that employers will replace permanent jobs with temporary jobs and reduce the number of hours given to part time workers.

FYI, in 1997, about 33% of workers in Spain and 37% in Denmark were temporary workers, compared to 2.2% in the USA. Companies in those countries did that to avoid the hassle of workplace laws. Expect that to happen here.
(4) This Bill Is Made For Sellin’
Baucus wrote this bill to reduce political resistance, not to be effective. He chose key constituencies and took out the things they might disagree with, e.g. no fine on small businesses, subsidies for “the poor” (67% of Americans), no illegal aliens, etc. However, by doing this, he’s set up the incentives just mentioned that will warp the job market and he’s jamming a time bomb into the heart of the federal budget.

Incidentally, nothing really applies until 2013, except for the taxes, which begin immediately. Maybe the Mayans were right?

2. Your Obligation To Get Coverage

Beginning on June 30, 2013, after Obama is safely re-elected, you will be required to obtain “essential health benefits coverage.” (§ 1301)

“Essential health benefits coverage” means (1) your current health insurance (“grandfathered health benefits”), (2) an employer sponsored plan, (3) a qualified health benefits plan, (4) Medicare/Medicaid or military coverage, or (5) federal employees coverage.

There does not appear to be any prohibition on you obtaining additional non-qualified coverage, but it will not count to satisfy your obligation under this bill.

(1) Existing Forms of Coverage
As noted, you can keep your current plan as a grandfathered plan. (§ 2221)

Federal employees also get to keep their plans. . . of course.

Medicaid coverage will be expanded to cover anyone with incomes as low as 133% of the poverty level. However, anyone between 100% and 133% of the poverty level can instead elect to get coverage from the “Exchange” (see below) rather than Medicaid.

(2) An Employer Sponsored Plan
Coverage can also come from an employer plan.

Baucus has dramatically changed the requirements on business from those in the House bill. Unlike the House bill, which requires all employers to provide health insurance, Baucus seems to have limited that requirement to any company with 50 or more full time employees. There is a $400 fine per employee if coverage is not offered. (§ 1306) (The employer must report your coverage to the IRS. (§ 1307)).

When it comes to small business, I cannot find a requirement that they provide you with health care, nor can I find a fine if they fail to provide such health care. Hence, you can see the incentive to reduce the number of full time employees. A small business has fewer than 50 full time employees. “Full time employees” includes any employee who works 30 or more hours per week, but does not include temporary workers or seasonal workers (which may include construction workers and farm workers).

For small businesses with fewer than 25 “full time equivalents” (any employee who works 30+ hours a week), there will be a subsidy to provide health insurance. (§ 1221) This subsidy will equal 50% of the employer’s contribution less (1) the amount of the credit multiplied by the number of full time equivalent employees above 10 divided by 15; and (2) the amount of the credit multiplied by the average annual wages of the employer above $20,000 divided by $20,000. Simple huh?

(3) A “Qualified Health Benefits Plan”
If you aren’t offered employer coverage, you can buy health care directly from an exchange.

The exchanges will be set up by the states, which remain responsible for regulating the insurance industry. (§ 2225) Exchanges can be set up within states or within regions by groups of states.

The exchanges must offer coverage in four levels. Each of these levels is designed to provide a level of benefits equal to a certain percentage of the actuarial value -- basically, the percent they intend to pay: Bronze (65% of actuarial value); Silver (70%), Gold (80%) and Platinum (90%). (§ 2241, § 2243)

There can also be a catastrophic plan, but only for people under the age of 26.

(4) Fines On You For Non-Compliance
If you fail to get the required coverage, you will owe a tax, which you must include with your income tax return. (FYI, you will also be fined for dependents and for spouses who file jointly.) Though, interestingly, the government cannot take collection action against you for not paying, except to offset tax overpayments or benefits payments. There can be no penalty or interest charged for non-payment.

This tax will be equal to $200 per person without insurance in 2014, but will rise to $750 per person who lacks insurance by 2017, and will thereafter increase using a cost-of-living adjustment. (§ 1301)

Thus, unlike the House version of this bill, the fine is significantly lower and there are no criminal penalties.

For those who can’t afford the premiums, there is a hardship exemption. If the premiums charged by your employer’s plan or the premiums charged by the cheapest plan in the state exchange exceed 8% of your income, then you are excused from the requirement to get health care. Of course, you won’t have coverage, but at least you can rest assured that your higher taxes are delivering health insurance to people who can afford to buy it now, but have refused to do so.

(5) Subsidies To You: “Premium Assistance”
There is also a subsidy (“premium assistance”) for people in certain income groups (§ 1205) -- this will be paid directly to the insurers (§ 2247).

The amount of the subsidy is determined using a ratio of the portion of your income that exceeds 100% of the poverty level divided by 200% of the poverty level. That is multiplied by 10% and added to 2% and then the whole thing dissolves into gibberish. If I read this correctly, the subsidy will cover most Americans, making it unsustainable. The amount of the subsidy seems to be capped at 10% of the cost of the policy.

Illegal aliens don’t qualify for the subsidy.

Low income persons (read: 67% of Americans) also can expect some reduction in their co-payments as follows 2/3 reduction for anyone at 100-200% of the poverty level; 1/2 reduction for anyone between 200-300% of the poverty level; and 1/3 reduction for anyone between 300-400% of the poverty level. (§ 2247)

3. Requirements To Be Considered “Qualified Health Benefits Plan”

To be considered a qualifying plan, the insurer/plan must agree to the following rate restrictions, must provide the following benefits, and must comply with certain restrictions/requirements.
(1) Rate Restrictions
The Baucus bill limits the factors that insurers may use to adjust the rates charged under the plan. Under Baucus, insurers can only adjust your rate for the following factors (§ 2204):
• Family size. Two adults may be charged twice what one adult can be charged. An adult with a child may be charged 1.8 times what a single adult may be charged. A family of any other size may be charged a maximum of three times what a single adult may be charged.

• Age. The highest-charged group may be charged as much as four times what the lowest-charged group gets charged.

• Tobacco use. Tobacco users may be charged up to 1.5 times what a non-user gets charged.
It is not clear if these can be cumulative, e.g. can you charge an old smoker four times as much as a young non-smoker or six times as much? In any event, these can still lead to significant differences in premiums.
(2) Required Benefits
The Baucus bill also requires that any qualifying plan provide the following “essential benefits package” (§ 2242):
• Hospitalization
• Outpatient clinics and emergency services
• Professional services (physicians and other health professionals)
• Surgical care
• Services, equipment, supplies incident to providing health care at hospitals, physicians offices, or patient homes
• Prescription drugs
• Rehabilitation services
• Mental health and substance use disorder services
• Preventative services, including vaccines
• Maternity benefits
• Well baby, well child, oral health, vision and hearing for children under 21
However, what this means is left up to the insurer, so don’t expect that there won’t be huge variances between policies or fights over what is and what isn’t covered.
(3) Limitations On Insurer
Insurers must also accept the following limits/requirements:
• There can be no co-pays or other “cost sharing” on preventative medicine.

• Deductibles will be limited to $2,000 per person and $4,000 per plan.

• Insurers may not impose annual coverage limits.

• Insurers may not impose lifetime coverage limits.

• Insurers may not impose pre-existing condition exclusions. (§ 2202)

• Insurers may not impose health status limits or terminate coverage because you get sick. (§ 2202)

• Insurers must accept all applicants, without discrimination, up to the capacity limits (i.e. the total number of people the insurer has offered to cover each year). (§ 2203)

• Insurers may not refuse to renew a policy or rescind a policy. (§ 2203)
None of these are particularly surprising.

4. Hot Button Issues

Next we come to the hot button issues. These are surprising.

Illegal Aliens. Baucus forbids covering illegal aliens. (§ 2232) BUT, he knows that they will continue to do what they do now, which is to appear at hospitals without coverage. Thus, the federal government will continue to reimburse those costs through other programs. Basically, this is misleading.

Abortion. (§ 2245). Oh boy. This one is confusingly written, I suspect intentionally so. Let’s cut to the chase. No insurer will be forced to provide abortion services, but they all can.

When it comes to funding, it appears that insurers will fall into one of two categories. In the first category, the use of any federal money for abortions will be prohibited. Thus, you will be able to join an insurer that is prohibited from using federal money to provide abortions. BUT, the insurers in the second category apparently will be allowed to use federal money to provide abortions.

HHS will be required to make sure that there is at least one of each plan available to everyone.

I suspect this is set up so that both groups can be told that they have won this debate.

Abstinence Education. (§ 1804) For reasons unknown, Baucus wades into the abstinence debate, restoring funds for abstinence education. Keep it in your pants kids. . . oh, and stay in school.

Assisted Suicide. (§ 1921) This one is confusing as well. Baucus very clearly states that no provider or insurer who receives funds under this act may participate in assisted suicide in any way. BUT then Baucus says that this prohibition doesn’t apply to withholding or withdrawing medical care, withholding or withdrawing nutrition or hydration. So I guess you can let people die from neglect, but you can’t kill-kill them.

5. No Public Option

There does not appear to be a public option in this bill. It does require HHS to establish co-op plans (of multiple insurers) to make sure that enough plans exist in each market to satisfy the obligations set forth within the bill, i.e. so that there are four levels of plans and/or plans that provide the required benefits. (§ 1401). But as currently written, this does not appear to be a public option.

FYI, Deranged Nancy Pelosi told CNBC today that, "according to the polls", support for the public option "continues to grow, into the 60%" range. Whether she's just lying or deluded, expect her to demand that a public option be added to the Baucus bill.

6. How Do We Pay For This?

Finally, how do we pay for this plan? Baucus imposes a number of taxes that will increase all aspects of the costs of health care:
• A yearly tax on manufactures and importers of branded prescription pharmaceuticals. (§ 6008)

• A yearly tax on manufacturers and importers of medical devices. (§ 6009)

• An annual fee on health insurance providers. (§ 6010)

• Health care providers may no longer deduct certain high salaries. (§ 6014)
Every one of these taxes will be added to the price of the product, which means that most of this tax (at least half) will be charged right back to the government. Stupid huh? The other half will be paid by . . . you.

There are also tax changes aimed at individuals:
• A 40% tax on any “excess benefits” you get from your employer. Excess benefits are benefits that cost your employer more than $8,000 for an individual plan or $21,000 for family coverage (these amounts go up to $9,850 and $25,000 in certain blue states. . . er, high cost states, and for certain “high risk professions” including emergency responders, construction workers, miners, farmers, forestry workers and fishing industry workers ). (§ 6001)

• An increase in the tax penalty on unqualified distributions from your HSAS from 10% to 20%. (§ 6004)

• Further limits on the deductibility of unreimbursed health care expenses when you itemize. You must now exceed 10% of gross income rather than 7.5% to deduct. (§ 6013)
Right now, I can’t price how much these taxes will bring in or what the bill will actually cost. But it's clear that the figures are so false that Baucus should be charged with fraud. My guess is that these taxes will cover the cost of the program until the bill actually kicks in four years later, then all hell will break loose in the budget.

That’s it for now. Go forth and medicate.

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Deranged Fun! ;-)

Sometimes I wonder what it was like to have Bush Derangement Syndrome: angry liberals foaming at the mouth, spewing hate every time they heard Bush’s name, blaming every one of their own failures on Dick Cheney, who apparently hid under a lot of beds in the past ten years. Ah, blame, is there no personal failure you cannot soothe?! Let’s try on a little Obama Derangement Syndrome for fun today, just to see how it feels. How do we do that you ask? Let’s start with this innocuous story. . .

On Monday, the crazed baboons that make up the Iranian government accused the United States and Britain of directly backing a suicide bomber who killed six of Iran’s Revolutionary Guards. Oh, stop snickering. You and I know Obama’s a pansy, but the Iranians don’t, so don’t spoil it for them. Besides, this is the type of story liberals used to run with. So put on your running shoes and keep up!

The Iranian “media” said (via note strapped to a goat that reached an AP reporter) that the Sunni Muslim insurgent group Jundollah (not to be confused with Bobby Jindahl) claimed responsibility for a suicide bomber who set off a bomb in the Sistan-Baluchestan province, killing 42 people including six senior commanders of the IRG. Said guard commander-in-chief Mohammad Ali “the Bumblebee” Jafari, Iran has been presented with documents proving “direct ties” between Jundollah and the United States and Britain, possibly including the IRG’s finding a McDonalds Royale With Cheese wrapper in the debris.

Fair enough. No big deal right? WRONG! Clearly, Obama is waging an illegal war against Iran! How do we know? Because Bumblebee said so dammit! What motive could he possibly have to lie? None! Nothing! Nada! Zip! The Iranians are blameless holy creatures who have suffered too long under the oppressive policies of Obama and his secret corporate friends.

What? Why are you shaking your head. Oh, you don’t think Obama has a motive? I’ll tell you his motive. He hates Arabs. Yep, and children. Granted, no children were killed, but we know he hates children and he clearly was hoping children would die in this explosion. *sniff* I feel so used as an American citizen that my government. . . no, not my government, THE illegal Obama government would try to kill Arab children in Iran.

What do you mean Iranians aren’t Arabs? Whose side are you on? You must work for the Obama administration! Hater. Let’s look it up on the internet, I’m sure there’s some trustworthy blog that will confirm my opinions, and if not I’ll make one. . . fine, I’ll look it up. says. . . Persians. Oh, but they’re part of the system. What does wikipedia say. . . nutjobs. Outrageous! Oh wait, there it is. . .

As I said, Obama hates Persians. . . and children. . . and children of Persians. . . and polar bear genitalia, but that’s a different issue. Clearly he wants to destabilize (more) Iran so that his sneaky friends can impose a world government on Iran and take away the rights they enjoy right now, which are SOOOOOO much more rights than anything we have in this country. They have freedom of speech and freedom from hurtful speech, freedom from most religions, freedom to save the environment and freedom to be free, freedoms we just don’t have here under hateful Democratic administrations!

Where is Hugo Chavez in this? Your Persian brothers are dying Hugo! Where is Frank Murtha to accuse American soldiers of war crimes? Where is Nancy Pelosi to call for hearings? Where is Code Pink to disrupt bake sales? Where is Jimmy Carter to assure us that he knows our government really did this?

You know what? I can’t do this anymore. Sure, I can fake it. But I don’t feel it. We all know that Obama’s no warrior. He’s an indecisive idiot. He probably doesn’t even know where Iran is. There’s no way he has an Iran policy. . . probably just wants to “talk” to them. Yeah, let me know how that works out for ya bud.

I guess you really have to be nuts to suffer from a derangement syndrome.

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