Tourniquets and Feces

July 15, 2011
The debt ceiling debate – a false choice fostered by Republicans

He’s Going To Turn Green Next!

 I have opined at length in the previous article and I felt it was way too scattered and didn’t drill down to the point, so I crafted this post to refine it.

 The bottom line is that the Republicans are wrong on this one.  I philosophically agree with their stance on containing big government, but this is not the way you go about it AND they are showing the part of the problem in Washington by being more concerned with politics than what is best for our country.  This is due to:

 1)      Raising the debt ceiling is not a question.  It must be done, it is a foregone conclusion.  To state that raising the debt ceiling itself is a compromise is a false premise.  The consequences of not raising the ceiling are catastrophic and is not an option, hence what they are offering is not a compromise and understandably something the Democrats can not agrree to.  If you disagree with me about what a default would mean, just read a couple of articles from the Washington Post, New York Times, or the Wall Street Journal.  It is very, very bad and unnecessary.

 2)      Which leads us to point #2.  The definition of compromise is that both sides give up things they want to meet in the middle.  You aren’t 100% happy with the end result, but you can live with it and the deal moves forward.  The Democrats offered up their sacred cow of entitlement cuts, the Republicans must offer up their sacred cow of raising taxes. 

3)      Raising those taxes isn’t on middle class or the poor.  It’s on the wealthy and on corporations, both in explicit raises and loophole closures.  Those guys have been getting breaks for years, it is only fair that they pay their fair share.

 4)      It is a false statement to then claim that the Democrats are raising taxes on ‘job creators’.  That is BS because if these ‘job creators’ really needed or wanted to create more jobs, they could.  Small business entrepreneurs are who are getting crunched – and those are the guy who DO hire employees and shouldn’t have their taxes raised.  I’m not saying raise taxes on them.  Large companies have been making record profits of late – they are FLUSH with cash.  They have plenty of money to reinvest in their companies, expand business, and hence hire more employees.  They don’t not because they can’t but because they won’t due to ‘uncertainty in the market’.  If they put their money where their mouth was and expanded their business, they would put more people to work, stabilize local economies, and add more money to government coffers via additional taxes; helping government revenue figures as well. It would create a virtuous cycle instead of a downward spiral, but it is an exercise in the chicken or the egg that no one can force big business to make. 

 5)      Transversely, we should also help small business out any way we reasonably can, even if it means spending money because the return will be far greater than the investment.

 6)       The exercise is as simple as only raising taxes on wealthy individuals and on medium and large companies, but exempt small business (places with 50 employees or less).  Also, redefine wealthy.  The current tax system classifies my father in law as wealthy, but he is simply well-to-do, upper middle class.  However, he has a neighbor who while is not filthy rich, he is wealthy and can afford more taxes because in part, his expenditures have less bang for the buck by having large sums of dollars go into the hands of a certain expensive enterprises.   The neighbor pisses away hundreds of thousands of dollars on unneeded prize llamas and wings to an already huge house in addition to already having two other homes.  The money doesn’t trickle as far or into as many places in the economy.  I am not saying he doesn’t have a right to do this; what I am saying is that he can afford to be taxed more because raising his taxes is not going to negatively impact the economy.  On the other hand, I see my father-in-law spending money in the real economy, just like the rest of us.  He has a budget, retirement, and real financial concerns.  The only difference between him and the average American is that he makes more money, but not to the point where his spending is luxurious, profligate, or wasteful.  He isn’t the one you tax; instead it is his neighbor, Lady Gaga, and the Wall Street bankers are they who you raise taxes on.  Besides, letting my father-in-law keep some of his money instead of going to the tax collector is more efficient.  It is more efficiently spent back into the economy by him directly rather than wasteful, more centralized government control.  Thus the line of proposed taxes on ‘the rich’ is not $250K.  I don’t know if its $350K or $500K or $1MM, but it is somewhere between what my father-in-law earns and what his neighbor makes.

 7)      Given dedicated time on the issue, the size and scope of government could be cut way back while also finding the common-sense and fair places where taxes can be raised.  There are so many loopholes and people and institutions that take advantage of the tax code that it needs reform to reduce the overall tax rate while actually raising revenue.  Savers should be rewarded and not punished for their long-term outlook

 8)       On the other side of the house, the government is so large and has so much fraud, waste, and abuse in it, that there are plenty of ways to cut government across the board, save hundreds of billions of dollars, and get the same result because government becomes more efficient.  ABUSE:  How many times have you heard of overpaid, lazy government workers who do not fear for their jobs?  Fire those people, pay their replacement a fair wage, and expect more out of them.  If not, fire them too.  Real unemployment is somewhere around 16.5%.  WASTE:  How many times have you heard people in government spend money because it’s there to spend?  If they don’t use it, they lose it.  It is that mentality of ‘other people’s money’ that leads to the waste.  Break that cycle through alternative incentives – possibly shared monetary compensation for efficiency.  FRAUD:  How many people scam the federal government on rigging their welfare, healthcare, and other forms of government assistance to both the states and individuals?  Root those people out, stop the bleeding of money, and throw those people into jail to show the rest of the cheats a lesson.

 9)      If anyone is serious about reigning in government AND getting the country’s fiscal house in order, they know that a 4 trillion figure in deficit spending cuts is just the beginning.  Anything less that is proposed is an insult when $4 trillion in cuts is on the table.  I believe the President because of the mantle that he has assumed in trying to solve this problem.  I do not believe the Republicans.  The Republicans don’t want to give the President the political advantage of having a solution to make real inroads into solving this problem.  Like they say, he owns the economy.  Republicans are more worried about politics than what is right for the country, thus they wouldn’t want the President to get the credit since he owns the economy for good just like he would for the bad. 

 10)    Lastly, a grand bargain of $4 trillion dollars in cuts over 10 years is a great start to getting the country’s debt problem in order, but it is just the beginning.  That still means deficit spending, just slowing the growth of it.  To get to a budget that actually has money left over at the end to pay down the national debt means you have to have cuts to spending programs AND you will have to raise taxes.  THERE. IS. NO. OTHER. WAY.  We have already gone too far down the path of fiscal irresponsibility to only have cuts.  We need both.  Anyone who tells you either is not looking at the long term trend nor are being honest with you.  As we have seen, taxes can be cut, but not until the books are back in the black.  There is nothing saying taxes increases have to be for perpetuity.

  I am a true libertarian, I am told in the auspices of Jeffersonian Liberalism.  I am a conservative, but not a Republican, and certainly not a partisan fool.  It is better to ‘tear the band-aid off and eat your peas’ now, then do it later when the country is in a true survival situation (because this is an optional crisis) and the analogy shifts to applying a tourniquet and eating your own feces…

– G.S.

A Game of Chicken

July 13, 2011


I will take a break from my ‘solutions’ series and interject an article about the current politics of the nation and the game of Chicken that quite frankly, my Republican friends are playing.  Yes, you heard me right, I am siding with the Democrats on this one, but just in political substance, not policy.

You see my fellow citizens, the Republicans are giving a false choice to you.  They say that their ‘compromise’ is the raising of the debt ceiling at all.    They will raise the debt ceiling and the Democrats have to enact entitlement program cuts.  Taxes per Grover Norquist are OFF THE TABLE for the Republicans.  That is a red-herring fallacy.

Not raising the debt ceiling is not an option.  It has to be done because there isn’t any time left to make a problem that would truly stem the tide of rising costs.  They haven’t done the legwork to truly figure out how to pare the federal government down without ripping the country apart since its presence is felt everywhere.  I agree it needs to be done, but you don’t cut out cancer with a broadsword, you use a laser scalpel.  Since the Republicans have frittered away the MONTHS of time that they had where they could have made such a plan, they now posit the untenable position of simply targeting entitlement programs and not the huge amount of fraud, waste, abuse, cronyism, and special interests that actually make government so large, expensive, and inefficient.

Not raising the debt ceiling is also not an option because of the  completely unnecessary financial and economic crisis that would descend upon this country.  We saw it before in 2008 – the markets are all a confidence game.  You lose confidence and the bond-holders go running.  Even if it is voluntary, the costs to further debts in the future due to rising interest rates would be long-term and real.  It would cost more to borrow money.  It will even sit worse with the electorate if the US pays its debt holders first (China) and doesn’t send Grandma her Social Security check.  For political reasons of voter wrath, there is no way that a politician thinks that is a good way to get re-elected.

Scarily, it is the President that is actually showing leadership on this one.  He recognizes what compromise is and if people are serious about curbing national debt, then they’ll take the current opportunity to take a real chunk out of future spending.  he honestly proposed touching liberal third rail issues and give on them and expected the Republicans to do the same.  I believe he is generally misguided in what he thinks is best for the country, but he looks like a centrist who appeals to centrist nature of the country more than the Republicans who truly believe are posturing at this point.  I honestly do not believe the Republicans are sincere on wanting to really make the best effort possible of curbing debt because we have dug a hole that is way too deep for ourselves as a nation to not have tax increases and even reasonably expect us to get out of this mess.  It is a combination of loyalty to Grover Norquist and his pledge for fear of what a negative endorsement will do, and it is also due to the fact that a failure on the President’s part is good for them.  Maybe so, but it’s certainly not good for the country – just like a default scare or wasting a bunch of time on a scare good for the country.  There are plenty of problems to solve – unemployment, energy, trade deficits, etc and this is basically all Washington has done for months.  Absolutely pathetic.

Also, don’t tell me that raising taxes and closing loopholes on the riches of Americans and corporations will hinder growth.  Major companies are reaping record profits and are sitting on the cash.  They are not expanding their businesses or re-investing it.  They claim uncertainty and weakness in the markets…but what comes first, the chicken or the egg?  People won’t feel good about the economy or spend money if they continue to see layoffs.  BUT, if a company took some of the those record profits and reinvested into a local economy and opened up a new division…  The same argument can be said for the richest of Americans as well.   They as a percentage of income pay less than the average American.  There is a point where their wealth doesn’t efficiently go back into the economy.  For every yacht that a fortune 500 company CEO owns, how much could the livable wage be raised for the rank and file hourly workers making $10 an hour whose empire is based upon their work.  You know that $10 an hour is not a livable wage, so those people have to get a second (or third job) sometimes.  Undue taxation for wealth-creators is un-American, but also is not paying your fair share back to a system that you have greatly benefited from while also semi-victimizing the same people who enable your empire.  I’m the furthest from a socialist that you’ll find, but this is a country based upon freedom and having to work 80+ hours a week just to scrape by at $10 an hour is just a form of economic bondage and is also un-American.  There has to be a balance and asking the most vulnerable in our society to have cuts to the programs that help support them while not asking the richest of institutions and individuals to give up a dime is simply wrong on top of bad policy and economic fantasy.

Thus, I propose finding that line where a business is no longer small and an individual ‘has more money than they know what to do with’.  At that point and higher, that is where you raise taxes.  You are getting the most economic bang for the buck as you are not hindering the real engines of economic growth – small business, but you are also not taking bread out of the mouths of people who actually put the money back into the economy versus just pissing it away of opulent, foreign-made luxury items.

So, with all that said, you can see that I am yet again proud of my libertarian stance.  Its shit like this that makes me glad I am not a Republican.  I disagree with Democrats philosophically in most ways, but they make the sound and correct argument in this case. 

Lets just say the US does default and the government has to pick and choose what obligations it pays.  How will it look to the voters (especially the most active block – seniors) when we dutifully make our interest payments to the Chinese, but Grandma’s social security check doesn’t go out in time?  The Republicans would get blamed and they’d get washed out in the tide of the 2012 election, Obama would get re-elected, and then the country would be set up for even worse things to come with an emboldened and empowered Democratic legislative and executive branch.

I weep for my country and the lack of leadership that we have.  I’d be kicking somebody’s ass if I was the President.  It would be time to pull out the weapons-grade, Ross Perot style charts and insultingly lucid Jon Stewart interviews that show all the holes and fallacies in the opponent’s argument.

–  G.S.

Solution 1B) Entitlement Reform – Social Security, Medicare and Medicaid

July 6, 2011

"Well now your back's going to hurt!"

So here is where the hard part begins when I specifically start talking about entitlements.  Before I begin on how to actually fix them, I must point out two oxymoronic aspects of entitlements in general.  The first is that everybody is generally for a getting the nation’s fiscal house in order by fixing the budget and the deficit.  Everyone generally knows that the government spends too much, even if it admittedly does a poor job at collecting taxes from entities that should be paying them.  Secondly, everyone generally also knows that it is the big three entitlement programs (Social Security, Medicare, Medicaid) are really what imperils our nation fiscally.  The liabilities in the future for the same level of care and money provided to more and more aging baby boomers is completely unsustainable.  Why then, does everyone know these two facts but just continue to stick their head in the sand?  The longer you wait, the worse the problem will get!

With that set of observations out of the way, I am prepared to tell you the hard, ugly truth about entitlements.  It is not meant to be offensive, critical, or an attack.  This is simply the blatant truth.

Entitlements create the false choice of promising something this nation, as great as it is, cannot deliver.  Every year, we spend more and more money that we do not actually have on an elderly population that has a disproportionate sway on government (because they actually vote unlike other demographic groups – but good for them!) and that money/healthcare is seen as a something the elderly population is entitled to collect.  That money goes to a generally unproductive strata of society that was over-promised a system of support in their waning years and underpaid into it due to bad government programs and policies of the past.  It hurts to say it but its true.  Its also highly unpopular and not fair to just pull the plug on Grandma.  Meanwhile, that same money that is keeping her alive but giving her years of sub-standard quality of life standards at a retirement home could have been reinvested in education, energy development, infrastructure, or co-opting domestic business development; all things that yield a return on the money spent.  Outside the fact that some of the money is spent outright on consumption in this consumption-drive economy, money spent on entitlements just goes up in smoke .  This is not to say that we leave the elderly on the streets, but it is a painful amount of federal and state monies being spent on the past, not the future.

The problem and difficulty with entitlements is that it is really, really easy to promise something that was cheap 40 years ago, but really hard to pay for it today or claw it back when the expenses have greatly gone up.  The rules have changed.  People are living longer, more complex medical procedures cost more and then they keep people alive longer as a form of double whammy.   A great example of how things have gone awry is the Social Security retirement age.  Social Security benefit ages have not risen as fast as life-expectancy in this country.  FDR’s administration originally designed it with an age bracket in mind that most Americans never lived to see.  Many paid into the system, but didn’t collect from it.  That is how it was sustainable.   Society today is also far more likely to ship parents and grandparents off to the expense of a home rather than have the ‘burden’ of them living with family once they get too old to take care of themselves.  Hence, the tax-payers pay for the greater cost of care than the cheaper alternative of the elderly staying with family…even if further subsistence payments were available for family-based care.

The same general principle can be applied to health-care for the poor.  “It’s not my money, it’s the governments so why do I care?”  Well it is your money in a very direct sense every April 15th.   Indigent care, unneeded ER visits, and other forms of “disinvested” spending are ways that great sums of money are wasted.  And that is a problem my friends – we spend way too much money to get substandard results of an impoverished elderly class, expensive health-care, and a culture of dependency in welfare.

My statements do not mean that the poor should die in the streets, that the elderly should just hurry up or die, or that you have to pass a ‘contributing to society test’ in order to get help should you fall on hard times.  My statements are aimed at how we strive for noble social goals to take care of our most vulnerable citizens and we yer fail both them and our future citizenry grandly by continuing to contribute to the fraud, waste, and abuse of the current system.  Good enough just won’t cut it much longer.

The Solution(s) –They are actually very hard, but amazingly simple.

1) The first and the greatest is the solution I proposed to make medical care cheaper and more effective from the previous article.  By following that program, you lower everyone’s costs and it makes it a lot cheaper to care for the elderly, the poor, and everyone in between.  That right there has a direct effect on how wealthy a person actually is from the social security check when only a fraction (instead of 2/3rds) goes to prescription, co-pays, and medical charges.  And obviously, cheaper healthcare means cheaper Medicare and Medicaid costs.

Such reforms only get us treading water however.  There are still too many promises and IOUs in the accounts of these programs.  Instead of making a patch that will last for 25 – 30 years, like the US did in  1983 for Social Security before it needs to get fixed again, lets put the problems to bed once and for all.

2) Social Security:  Raise the retirement age.  Early retirement 64-66.  Standard retirement 66-70.  Delayed retirement 72-74.  Something like that.  I purposefully put a range in as this is nt supposed to be hard and fast, but give you an idea of what I’m thinking.  You see, there is some misconception in this country that you work for X years and then you don’t have to anymore.  THE WORLD DOESN’T WORK THAT WAY IF YOU DON’T PROACTIVELY SAVE FOR THAT DAY.  Solely depending upon social security is what keeps over 40% of our elderly citizens out of poverty…and even then it’s not like they have a lot of money to work with.  This country needs to get off the mindset that someone will be there to take care of you, so you don’t have to make financial sacrifices now in the form of an IRA or a 401(k) to ensure your financial security in the future.  Too few people save and its the savers who get punished by low interest rates (like today’s environment) or possibly later.  All it will take is Congress’s writ and things like ROTH IRAs could be taxed despite already being taxed as regular income when the money was deposited.  Platitudes like ‘shared responsibility’ and ‘helping your fellow American’ are all to easily thrown out when times are depression level tough and money has to be raised.  While this is mere conjecture, look at the current batch of charlatans in Congress, look yourself in the mirror, and try to lie to yourself and say they wouldn’t do it today if push comes to shove.

Lastly, if you’re one of the lucky few who have a retirement program, good for you…but you are in a dwindling minority.

3)  Social Security:  After a certain lifetime income, benefits decrease until they are gone altogether.  Call it a ‘success tax’ if you will.  This program doesn’t affect the middle class or even the well-to-do, but the actual truly wealthy people in this nation who have millions in brokerage accounts, have yachts, a home in the Hamptons, and in retirement, could maintain a middle class existence on the interest payments from their assets alone.  These guys don’t need the help of the American tax-payer.  Yes, they paid into a system they never get to benefit from…but they did benefit – from ree market, American style capitalism.  Their success, their profits, come from the people whose hard work made them money and their wages bought their products.  They directly and indirectly benefitted from people who were monetarily less successful than them but buoyed their success.

4)  Medicare:  Make the free market the cost standard – not the other way around.  Today everything is based upon what Medicare bills.  In my solution from the previous article, it is the market…and that is what medicare pays.  It is just another way to dampen bubbles and pay fairly for services as Medicare would still be a large buying block of patients in any market.  The rest of solution 1 addresses the directly reduction of Medicare costs.

5) Medicaid as a subset of the welfare system:  It’s the carrot or the stick.  The truly poor, helpless, underaged, and defenseless sectors of society need to be protected no matter what, no strings attached.  Solution 1 at least makes it cheaper.  However, there is a portion of the populace that abuses the system, to include their health care.  They choose to be ‘poor’ because it actually enriches them.  Why work at a crappy job, make $400 a week and have to pay food, rent, day-care, and health insurance costs and not have ends meet because you are lazy and have no other opportunities for employment other than working at a McDonalds when instead you can be on welfare, do nothing, and get food stamps, WIC, child-based welfare checks, and a Medicaid card?  Then you may only get a check for $300 a week, but its all discretionary as the government pays the rest of your bills?  A self-interested person would of course choose the second option, especially if they have no qualms of not contributing to society.  The welfare state for the unworthy and the willingness to take advantage of it are both un-American and I take a very dim view.  We need both the carrot and the stick.  Those who can’t pass drug tests, keep jobs, and generally be contributing members of society despite being able-bodied need to be cut off.  It is not government’s responsibility to subsidize their sloth.  However, if we are to take such a hard approach, we must have a carrot as well.  Workers must be given a living wage.  This is a combination in  a raise in minimum wage, a reduction in costs of life’s necessities where possible (food, energy, etc – I’ll cover in another segment), and more investment in social services that teach job skills, place jobs, and dust people off and get them back on their feet.  If they are willing to work hard and contribute, then the welfare system is working how it should.  This section was much larger than just Medicaid, but that program is a subset of a much larger issue that is hard to separate Medicaid from, so I covered the major points while admittedly going off topic.

Finally, I don’t admit to having all the answers.  I probably have more in my head and there are more out there.  This article was designed to give you some specific solutions, but also take 3 steps back and evaluate entitlements and how they are viewed in general.  If you can come at them from a fiscally sustainable obligation that is fair while not stealing from the future of the next generation of Americans, then you’ve arrived at the same conclusions I have.

– G.S.

Solutions 1A) – National Debt via Healthcare

July 2, 2011

did you know - that snakes were an ancient sign of healing? Hence why they're in this symbol.

Tell me if I’m wrong, but as broken as government is, it is because of men, not because of the problems being insurmountable.  Yes, hard choices have to be made, but wasting months and months of time arguing over a debt ceiling that we all know is going to get raised is simply irresponsible.

Thus I am making a new segment for a while and offering you a battery of solutions (in brief – I could go much further into depth for each).  I always say, don’t give my problems, give me solutions.  Well here they are.  They would work if the charlatans would get out of the way.

National Debt

To tackle such a huge issue, you must have multiple prongs of attack.  I will address by its various parts that in total, add up to addressing the problem…which is turn also address other issues that need to be solved on a national level.

A – The Health Care Industry

Completely gut the program in a voluntary 4 state test ‘opt-in’ experimental program for 5 years.  Start it in Iowa, Kansas, Nebraska, and Missouri or another block of a couple of contiguous states.

Take away all but the most basic framework regulations at a federal level while also making it so the states cannot interfere with the program to foul it up either.  The bottom line is to make as free a market as possible for all aspects of the industry so that true capitalism, not crony-capitalism rules.  Good business decisions and ethical behavior gets rewarded, and greed and graft fail as customers and the industry goes somewhere else.

Let all current healthcare providers sign up.  Existing insurance companies cannot participate unless they make fully transparent and separate entity spin-off businesses for this experimental market.  Entrepreneurial endeavors are welcomed as well and incentives will be provided to encourage their creation.

Loser pays, common-sense tort reform is enacted to decimate the lawsuit rate in healthcare in this experimental area for all but the most blatant offenses where the case is justified.  Force actuaries to adjust risk premiums for such a new environment for hospitals and doctors so that their malpractice insurance plummets.

Drug companies are allowed to go through an ultra-streamlined FDA approval process for the introduction of new drugs in this market at much quicker and reduced cost, with risks fully disclosed to the patients and the drug-maker being held fully accountable should patients get bad medicine.  At the same time, imports from Canada, generics, and other ways to lessen the cost of medicine is allowed.  The market decides what is best.

Indigent care that is non-emergency can be refused at the Emergency room upon quick, initial professional assessment by a registered nurse or doctor.  Repeat offenders can be fined.  A TV advertising campaign in the test area is conducted during the most popular TV shows – American Idol, Glee, NCIS, etc to advertise the program and the restrictions, like the emergency room refusal policy.  Public clinics should have lower costs with these programs, but they can get extra help in a streamlined fashion from the government when shown that the policy is working and they are seeing more patients.

Finally, any angle that I didn’t cover could be addressed with your input.  The bottom line is that there is enough need and money to go around for government to help be a part of the solution, not part of the problem.  A young doctor, just finished with their residency should want to open their own community practice back home because their small town needs a doctor.  This also would include things like changing how doctors are compensated…whatever works for both the doctor and the insurer.  Heck, if costs were low enough, doctors could charge customers directly without health insurance just like most other transactions.

The best legislation we can make is legislation that gets the legislation out of the way and lets the free market truly be free and let capitalism work.  We still need basic FDA protections and anti-trust protections, but give this program a try for 2 – 5 years.  I believe that it would be wildly successful and the healthcare industry in other states would CLAMOR to have this system adopted.

This system would give better care, be more profitable, and save tons and tons of money for all involved.  Government would spend less on red tape, make more money on taxation of businesses, and the care would be so much cheaper that not only could everyone now afford healthcare, they would have multiple options to choose from, people would WANT to opt-in without being forced to, and the cost of government providing healthcare via Medicare and Medicaid would plummet.

That greatly reduces the ballooning costs of the social contract our government has with its citizenry, especially the elderly.  However, the specifics of Medicare is my next segment.  Most costs associated with health-care come at the end of life, and there are ways to curb those expenditures as well within the system I just outlined here.

Thoughts, improvement, criticism?  I want it all because I know there is a solution but I surely haven’t covered all the angles.

– G.S.