Wednesday, 20 April 2011

On Recent Lies About Taxes, The "Afordable Care Act," and Other Entitlements.

For the most part, I don't want this blog to become about current events for a long, long time. Unfortunately every so often though a politician will say something that I find to be SO outrageous that it deserves at least a little bit of analysis because of the way it lies to or misleads the public. President Obama's recent demagoguery has finally risen to the level where my good conscience can no longer ignore it.

Rep. Paul Ryan of Wisconsin has put forth a budget proposal which structurally reforms entitlement programs which are in their current form unsustainable. These reforms are necessary to debt reduction, for without structural reform, these programs will eat up an ever increasing portion of the budget, until there is NOTHING left for ANY other program. The reductions amount to approximately $4 TRILLION in debt reduction in under 10 years, while lowering the top marginal tax rates to approximately 25%, which will lead to an explosion of consumer purchasing and small business formation and expansion. The reforms are fairly simple in concept, if complex in implementation, and most assuredly desperately needed.

The first is to change Medicaid for the poor into a block-grant system to the individual states, allowing them to structure changes as necessary to their individual circumstances. There is an example and precedent for this, being the Personal Responsibility and Work Opportunity act (aka Welfare Reform) of 1996. Welfare rolls decreased, costs were streamlined and yet, there were no excess lines at soup kitchens nor were there the sensationalized massive lines at homeless shelters. The Statists screamed bloody murder that it would throw women and children into the street. It was a sensationalistic LIE by the Liberal-Statists then, just like it is a sensationalistic LIE now. Will there be some individuals who will be cut off from Medicaid. Most assuredly. In all likelihood, those individuals should not be receiving Medicaid in the first place.

The Second change is to Medicare for the elderly, turning it into a system of subsidized medical care rather than a direct payment provider. This will mean that the seniors will be given a certain dollar amount in subsidy and can then purchase their OWN health care through whatever provider they choose. It changes from an open-ended commitment, which is a DIRECT CAUSE of medical cost inflation to a defined commitment which will then cause seniors to evaluate what services they want and need in a health care plan. That evaluation will, in and of itself, reduce medical insurance inflation costs, because it will restore market forces which have been sorely absent.

The Statists in the government object to the reforms proposed because they realize that once people have control over their own destiny, choices and spending habits, that the Statist loses power to control the life of the individual. They once again make sensationalistic claims that the poor will be denied medical coverage and the plug will get pulled on grandma because she can't pay.

IT - IS - A - LIE - MEANT - TO - KEEP - YOU - IN - FEAR.

In the written word, I can't say it any more deliberately than that. The Statists want the populace in fear and dependent upon the government in order to better control the populace. They believe this is part of the structure necessary to build Utopia, that everyone act in a structured manner and that liberty of self-choice be banished in the interest of "the collective good."

President Obama has stepped into the fray by condemning Rep. Ryan's budget proposal, and claiming that if the wealthiest amongst us, those who can afford to pay, are taxed just a little bit more, that everything will be fine, and no changes need to be made to the entitlement programs. It is IMMORAL to ask those top 1%, who are ALREADY shouldering a Total Income Tax Share of 38.02% to carry MORE regardless of if they can afford it. In fact, the top 5% of earners ALREADY pay for almost 60% of federal income tax revenues (58.72%). If anyone wants to be fool-hardy enough to argue that the top 1% have an Adjusted Gross Income higher as a percentage of wealth you need to be aware that the top 1% make 20% of wealth but, as stated above, pay almost 40% of federal tax revenue. This does not include FICA payments, where the top 10% pay almost 25% of that total burden as well.

Obama's argument is NOT about getting the fortunate few to pay "just a little bit more" but is entirely about redistributing wealth in the form of services and outright payments from those who have EARNED wealth to those who he feels have been denied wealth. If Obama wanted to be serious about funding, he would ask those in the bottom 50% of earners, who currently pay 2.70% of Total Income Tax Share and less than 30% of the FICA share to shoulder the burden they put on the government and pony up to pay for the services that they use. Anything less is simply theft from one group to give to another. The fact that Obama has gone into "campaign mode" by going and demonizing reforms that would shift a small portion of the burden of payment to those who make use of the services shows that he not only understands that this is base theft, but that he knows that if the narrative is anything other that "everything will be fine if we soak the rich" that he will lose BADLY in his reelection efforts.

Also, here we need to address another LIE of Obama, regarding the Affordable Care Act (aka Health Care Reform). During the debate, much fanfare was made by Obama that "If you like your plan, you can keep it." The implication was that the Act would not change the rules so radically that plans would end. In the time since the act was signed, literally THOUSANDS of companies have either ended their coverage, substantially raised their premiums or have threatened to do so and received "waivers" from the requirements in order to continue to provide coverage. The plans in question, called "mini-med" plans were high-deductible, low coverage plans, usually designed specifically to provide coverage to part-time workers. Some of the largest companies receiving waivers I'm sure you've heard of, including McDonalds, WageWorks, Inc., American Heritage Life Insurance, Local 25 SEIU, BCS Insurance, Cracker Barrel, Aetna and the NY United Federation of Teachers Welfare Fund. Had these "waivers" not been granted, over 2 MILLION people would have already LOST their health care coverage from the implementation of the Act. So much for the LIE that implementing the act would increase coverage and help keep premium costs down.

The final LIE that is important to address here is one of slight of hand that is also a part of the Affordable Care Act. The Act itself cut $145 Billion from Medicare Advantage over a period of 10 years. The Act on paper shows savings by "double counting" Medicare "savings" (read: reduction in payments) and moving them over to other health programs to fund health insurance for the currently uninsured. This year, when the first reductions were just about to come due to plans that were rated "average," (as opposed to highly-rated) Medicare got a very nasty letter from some of its providers stating that Medicare Advantage (the part that Seniors PAY out of pocket) were going to have to be increased SUBSTANTIALLY or services SEVERELY cut in order to not lose money. The Obama Administration acted quickly and lo-and-behold, decided to change the criteria for grading by grading on a curve and came up with a payment of $6.7 BILLION dollars (no one knows where from other than to say "the Medicare Trust Fund") to make "bonus" payments to the Medicare Advantage providers in order to prevent the increased premiums or service cuts from taking effect.

There is ONLY one reason for this to have occurred, and that is that Obama knows he would face a public rebellion from senior citizens against his plan if, after being assured that "costs will be kept down," that a massive premium increase suddenly followed just as those opposing the Affordable Care Act warned. What it means though is that Obama was not serious when he said that cuts to other programs would be used to fund the Affordable Care Act expansion of health care to the uninsured. Quoting the AP (which I am ALWAYS loath to do):

Still, the episode could be an early sign that Medicare cuts used to finance much of Obama's coverage expansion for the uninsured will turn out to be politically unsustainable, as have other efforts to impose austerity. For example, Congress has routinely waived cuts in Medicare payments to doctors.

If Obama manages to bamboozle the public into reelecting him in 2012 without electing a REALLY strong Conservative House and Senate (and I mean Veto-Proof), expect for all of this financial slight of hand to come to a nasty, quick end and, with no more political stake in the outcome, for brutal cuts, losses of insurance and premium increases to become the new normal.

The statistics and stories cited above can be found at the following addresses:
The Tax Foundation, Fiscal Facts No. 249:

The Department of Health & Human Services:

The Mother Lode

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