Economics & Taxes Archives

Hollywood "Tea Partiers" (Sort of)

“A conservative is a liberal who’s been mugged by reality”, so the cliché goes. Well, if only it were that easy. Usually, they stay liberal.

Take Hollywood, please. This bastion of liberalism is now trying to get lower taxes to bring business back to California. Turns out that high tax rates have been pushing filmmakers out of the Golden State, into other states that don’t take as much of your gold.

The result is job loss there, and gains in states like Louisiana and North Carolina, with more business-friendly policies. The group Film Works has started a petition to have taxes cut on the filmmaking industry to bring back those jobs and economic development.

Now let’s see; high taxes push out business, and the solution is to cut taxes in order to jump start the economy and bring jobs back. If I didn’t know better, I’d say these folks were prime candidates for inclusion in the Tea Party. But of course, I do know better. One would hope that, seeing this economic reality mugging them, these Hollywood liberals would realize that this works for other industries, or the state as a whole. One would hope.

But hold not thy breath.

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    Since I know there are some folks who deny that ObamaCare is impacting workers’ hours, here’s a NY Times article that notes that even the public sector is feeling the pinch already.

    Cities, counties, public schools and community colleges around the country have limited or reduced the work hours of part-time employees to avoid having to provide them with health insurance under the Affordable Care Act, state and local officials say.

    The cuts to public sector employment, which has failed to rebound since the recession, could serve as a powerful political weapon for Republican critics of the health care law, who claim that it is creating a drain on the economy.

    President Obama has twice delayed enforcement of the health care law’s employer mandate, which would subject larger employers to tax penalties if they do not offer insurance coverage to employees who work at least 30 hours a week, on average. But many public employers have already adopted policies, laws or regulations to make sure workers stay under that threshold.

    Harry Reid recently claimed, ”There’s plenty of horror stories being told [about Obamacare],” Reid said. “All of them are untrue.” Tell that to the workers of this country, Harry.

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      "Doc Shock" Occurs As Predicted

      As predicted, that is, by Megan McArdle:

      In December, I predicted that “doc shock” was going to be a major problem for the U.S. health-care overhaul, as people found out that the narrow networks insurers use to keep premiums low often don’t cover the top-notch doctors you’d like to see if you get really sick:

      And indeed, it’s already started, according to the Wall Street Journal:

      Health-care wonks can insist that narrow networks aren’t news, but clearly, these networks are news to the folks in the plans — and now that they know, they aren’t happy.

      Read the whole thing. They’re trying to fix this by passing laws, but that’s been done before with the whole HMO thing years ago. The result was costs continuing to rise.

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        How Did Wisconsin Run a $1 Billion Surplus?

        Scott Walker, the governor of the state of Wisconsin, survived a recall effort by unions in his state. I’d hope, though I wouldn’t bet, that they are glad that effort failed.

        Because since then, he and the Republicans in his state legislature, have been busy cutting taxes and balancing their budget. The result has been that, over 3 years, they’ve cut taxes by about a billion and a half dollars, and the economy is chugging along a good clip, such that just this year they have almost a billion dollar surplus.

        We ought to be asking our federal government to look at this. How did they do it? Let’s listen to Governor Walker describe it.

        http://www.youtube.com/watch?v=IuzZRgEAw1k

        Tough decisions, predicted by his detractors to destroy the economy, instead turned the economy around, gave them a surplus, more in their rainy-day fund, and which will be returned to the people instead of turned into a slush fund.

        Now, you might not have heard about this from your typical media sources. A Republican governor, hated by the unions, putting conservative policies into place, with the result being a booming economy, just doesn’t fit the narrative. And when it comes time to vote again in Wisconsin, I hope the people there remember who fixed their economy, and who opposed those very policies.

        Heck, I hope the rest of the country remembers that, if they get to hear about it. A state that generated a billion dollar surplus without mortgaging their future is a model that Washington, DC should be following. If they really cared about the economy.

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          Wal-Mart Out-ObamaCares ObamaCare

          One of the big promises of ObamaCare was that, with a much larger pool of insured people, the cost to the average individual or family would go down. That’s how insurance works, right? You spread out the risk over a bigger population, and the required payouts become less than the premiums taken in. More people, less risk, lower costs.

          You’d think so. But as it turns out, the insurance offered by one of those eeevil corporations, Wal-Mart, beats the equivalent ObamaCare plan handily. David Todd, an independent insurance agent based in Little Rock, Ark., compared the health plans.

          Todd looked at a 30-year-old woman who could qualify for the government subsidy. “The nonsubsidized premium is $205 a month for this 30-year-old. If they get a subsidy, then the premium is zero. But that person has to come up with $6,300 if something catastrophic happened,” he said.

          The Walmart monthly premium for the same 30-year-old woman would be about $40. Her deductible would be $2,750, minus $250 in cash advance, for a total net deductible of $2,500.

          Todd said some Obamacare exchange family plan deductibles can go as high as $12,000 before benefits kick in.

          This is what the government considers “subsidized”; pay thousands up front and get your money back, depending on when you spent it, over a year from now. OK, but what is the actual coverage like? Very good question. Let’s take a look at some of the particulars.

          Walmart also offers a free preventive health plan that mirrors the Obamacare plan. Its employees can take advantage of a wide range of free exams and counseling, including screenings for colorectal cancer, cervical cancer, chlamydia, diabetes, depression and special counseling for diet and obesity.

          Their children can get more than 20 free preventive services, ranging including screenings for genetic disorders, autism and developmental problems to obesity, lead poisoning exposure and tuberculosis. There are also 12 free vaccinations, and free hearing and vision testing.

          Walmart employees pay as little as $4 for a 30-day supply of generic drugs and only $10 for eye exams through a separate vision plan.

          Oh, and in Chicago, where this comparison was done, Wal-Mart employees have access to about 2 ½ times as many doctors than those with ObamaCare do. What does it say about ObamaCare that doctors and hospitals would rather do business with a private company than with the government?

          Well, it says that we’re going about this all the wrong way.

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            Live By the CBO, Die By the CBO

            Dana Milbank explains that the Congressional Budget Office issued glowing reports years ago about how ObamaCare was going to save money. The Obama administration trumpeted those findings far and wide. I noted at the time that the system was gamed because the administration knows the rules by which the CBO comes up with estimates, and wrote the bill to get the best looking numbers at the start. It wouldn’t matter that later estimates would be worse; it would have already been sold to the American people.

            But now, things are looking much worse.

            The congressional number-crunchers, perhaps the capital’s closest thing to a neutral referee, came out with a new report Tuesday, and it wasn’t pretty for Obamacare. The CBO predicted the law would have a “substantially larger” impact on the labor market than it had previously expected: The law would reduce the workforce in 2021 by the equivalent of 2.3 million full-time workers, well more than the 800,000 originally anticipated. This will inevitably be a drag on economic growth, as more people decide government handouts are more attractive than working more and paying higher taxes.

            This is grim news for the White House and for Democrats on the ballot in November. This independent arbiter, long embraced by the White House, has validated a core complaint of the Affordable Care Act’s (ACA) critics: that it will discourage work and become an ungainly entitlement. Disputing Republicans’ charges is much easier than refuting the federal government’s official scorekeepers.

            The President’s spokesman, Jay Carney, tried to spin it as people who would "spend more time with their family", or perhaps become entrepreneurs. The latter guess is just that; a guess trying to make it sound wonderful. The former is a euphemism for living off the dole because the benefits are better.

            Carney noted that these were "personal choices", but he conveniently neglects to mention that they are personal choices spurred on by the government. People respond to incentives; that’s why things like tax deductions work the way they do. ObamaCare is pushing people to dependency.

            The CBO numbers prove it.

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              Who Really Killed the Incandescent Light Bulb?

              This year, the traditional incandescent light bulb is becoming extinct. There was a big push by environmentalists to force the change to higher efficiency bulbs, like Compact Fluorescent bulbs, or CFLs. The idea was that they light with less energy, and so everyone should use them. Never mind the market; coercion was necessary.

              And one of the things they like to trumpet about this was that the light bulb industry supported this move. The thought is that if even they think it’s a good idea, government ought to force the issue. But not one of those environmentalists ever considered this:

              Competitive markets with low costs of entry have a characteristic that consumers love and businesses lament: very low profit margins. GE, Philips and Sylvania dominated the U.S. market in incandescents, but they couldn’t convert that dominance into price hikes. Because of light bulb’s low material and manufacturing costs, any big climb in prices would have invited new competitors to undercut the giants — and that new competitor would probably have won a distribution deal with Wal-Mart.

              Basically, with a low-cost light bulb, the major players in the market couldn’t just jack up the price on their wares. Someone else could step in and, with a low cost of entry into the light bulb market, build a better mousetrap, so to speak, and the world would beat a path to their door.

              Unless. Unless the light bulb companies could push government regulations that would make the bare minimum light bulb incredibly more expensive. They’d get their price hike, and they’d further their hold on the industry by keeping out competition, because start-up costs are now much higher.

              Now, you may be saying, “See, Doug? Eeevil corporations are to blame for this! And you’re always defending them!” Two things. First, the law itself is the problem, and the blame for that comes, not from corporations, but from a big government with the power to pass such a law, and which is more than willing to stick its hand into your wallet. Government did this, not corporations. And I’ll reiterate that, if you don’t like a corporation, you can stop buying from them immediately. If you don’t like your government, you’ll have to wait for the next election cycle, and hope there are enough people who agree with you.

              Second, I don’t blame corporations at all for trying to lobby the government for things that will benefit them. If I did blame them, then I’d have to blame every single grassroots organization that does the same sort of lobbying, even those environmentalists. Is lobbying the government an evil thing to do? Not at all! But government should know its boundaries and should stay within them. That’s why we have a constitution. But these days, the Constitution has been reinterpreted to say, for example, that you must buy a particular financial instrument. If the government can force you to buy something, I think it’s gone far beyond what the framers of the Constitution ever intended, and that power is for sale to the highest bidder.

              Oh, and consider this. If anyone claims that certain government policies are required because the free market has failed, just let them know that we really haven’t had a “free market” in decades. Light bulbs and ObamaCare are only the two most recent examples.

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                How World Poverty Fell 80% in Less Than 40 Years

                In 36 years, from 1970 to 2006, the world poverty rate fell 40%. 40%! This is huge news, but you probably didn’t hear about it anywhere else. I certainly didn’t until I saw the link someone posted. But the rest of the story, as Paul Harvey would have put it, is how this happened. For the explanation, I defer to Arthur Brooks.

                http://www.youtube.com/watch?v=ss80iuEBC6A

                It turns out that between 1970 and 2010 the worst poverty in the world – people who live on one dollar a day or less – that has decreased by 80 percent. You never hear about that.

                It’s the greatest achievement in human history, and you never hear about it.

                80 percent of the world’s worst poverty has been eradicated in less than 40 years. That has never, ever happened before.

                So what did that? What accounts for that? United Nations? US foreign aid? The International Monetary Fund? Central planning? No.

                It was globalization, free trade, the boom in international entrepreneurship. In short, it was the free enterprise system, American style, which is our gift to the world.

                I will state, assert and defend the statement that if you love the poor, if you are a good Samaritan, you must stand for the free enterprise system, and you must defend it, not just for ourselves but for people around the world. It is the best anti-poverty measure ever invented.

                Not aid, not handouts, and not a government interfering with the economy; capitalism and free enterprise are the poor’s best friend. Remember this the next time a politician has a “bold new approach” to income inequality and poverty.

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                  Did Democratic Dominance Doom Detroit?

                  I posted something on my personal Facebook page about how one of the booming businesses in Detroit is photographing the dilapidated buildings. I labeled my link to the article, “Documenting decades of Democratic dominance.” Can you tell I like alliteration?

                  This bothered one of my Democrat friends who said that my bias was showing, and that blaming Democrats for Detroit was like blaming Republicans for the Katrina response. His contention was that both were unfair. I, and some other friends of mine, had to point out a few differences.

                  • The Republican administration wanted to come into Louisiana before the storm hit to be ready when it arrived, but the Democrats in the state capitol wouldn’t allow it.
                  • The Democrats at the city level in New Orleans failed to use the resources they already had to evacuate their own people.
                  • Democrats have been running Detroit for 50 years. To say that blaming their policies is unfair, is to make one wonder how long one party has to rule a city for their policies to actually affect that city.

                  So no, the analogy isn’t even close. And the devastation in Detroit wasn’t caused by Mother Nature, either.

                  This is yet another example of how Democrats seem to take the stance that it’s never their policies that failed, and in fact the best way to solve any problems they cause is to do the same thing with more money. That has always been Paul Krugman’s solution regarding stimulus spending. That has always been the solution for failing public schools, poverty programs, and every other idea that just isn’t panning out the way they thought it should.

                  Oh, and when ObamaCare drags down our economy, expect the same excuses, because we’re hearing them already. Republicans are being accuses of “sabotaging” it, when all they did was make the Democrats own it by not voting for it. As it is, the need to a revamp of the website, and delaying key parts of the law, are not sabotage by any means. But Republicans will get the blame while the Democrats will throw more money at a program that was sold as a way to reduce the deficit.

                  Blame is useful, if it is honestly applied. Using it, we can find our mistakes, and correct them. Democrats will never accept it, even after a half century track record. Does that give you confidence?

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                    Bill de Blasio was recently elected as the mayor of New York City. De Blasio is a liberal Democrat, as opposed to the liberal Republican Michael Bloomberg, who just left the post. The NY Times wrote a rather hopeful piece on de Blasio just before the end of the year, which included this paragraph.

                    His administration could be a redemptive moment for a national left whose policies were often blamed for the crumbling of urban centers in the 1960s and 1970s, yet has now started to reassert itself in smaller jurisdictions with bold new approaches on issues like income equality and poverty.

                    1960s and 70s? How about the 2010? Detroit anyone? Anyone? Bueller? That city had half a century of Democratic rule, and look where it is now! But the Times conveniently forgets this, preferring to suggest that Democrats only screwed up 50 years ago, and really haven’t had a chance since then. These “bold new approaches” are simply novel ways of destroying the economy, which hurt the poor the most.

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                      Another City Spending Its Way to Bankruptcy

                      I’ve written before about the problems big cities are facing when it comes to Cadillac pensions. San Bernadino, California and Detroit, Michigan declared bankruptcy largely due to this. And now comes word that another California city may follow in their footsteps.

                      Desert Hot Springs , a resort town of 26,000 warned that it will run out of money by March due to burdensome salary and pension costs. That would make it the third California city along with San Bernardino and Stockton to succumb to that. Amy Aguer, the interim director of finance, said nearly 70 percent of the city’s budget was consumed by police costs, most of which were spent on salaries and pension payments.

                      Now, part of this problems is the California public employees’ pension program, Calpers. The cost charged for participating keeps going up. Karol Denniston, a bankruptcy attorney in San Francisco said, "Calpers keeps increasing costs and many of these cities have cut costs down to where there is nothing else left to cut." And I’m sure that contributes to the problem, but I really don’t think it accounts for 70% of Desert Hot Springs’ budget.

                      But the main thing is, if they do go under, who gets paid? Do the pensions get cut in order to pay off creditors? That’s a difficult question to answer. It’s a case of competing promises. The root causes of all of this, though, are those initial promises. Russell Betts, a council member, stated the obvious when he sad, "It’s obvious we can’t continue with salaries and pensions that are in the stratosphere, no matter how much love there is for our police department.” Sure, it’s obvious now, when the problems arise. But if you’d said anything like that years ago, you’d have been labeled as someone who “hates” the police, or public workers in general. “We should be paying our police more than our football players!”, some might shout, even though I’m sure that Desert Hot Springs doesn’t have a national football team. But anyway…

                      That’s a nice sentiment until you have no money left. I’m not suggesting what Desert Hot Springs should be paying its cops, nor suggesting that such pensions aren’t deserved. It’s just that when you overpromise, sooner or later someone’s got to pay the piper. And even if it’s shared pain between pensioners and creditors, promises get broken.

                      The solution is to state the obvious before having to break those promises. The problem is that there are too many voters and council members who think that government money is limitless, which is only true until it isn’t. Sure, stating the obvious – that we should live within our means – may get you called ‘heartless’, among other choice adjectives, but it must be said.

                      That’s kind of like how those of us who were against this huge set of promises we often call ObamaCare were treated. We’re stating the obvious, but we’re being called ‘heartless’, all because we don’t want to go bankrupt. We’re already going bankrupt, that much is for sure, but we’re rather not hang another boulder around our neck while trying to stay above water. As I’ve mentioned before, federal pensions and existing entitlements alone cost more than we take in in taxes. Among the many promises that ObamaCare will not fulfill is that it will reduce the deficit. We can’t afford that.

                      I feel like I’m council member Cassandra sometimes, warning of danger that is obvious to anyone who would see, but not being believed, in spite of so much evidence surrounding us. Website glitches are sideshows. Economic realities will bury us.

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                        Is the "Cure" Worse Than the Disease?

                        OK, so let me get this straight. The problem that ObamaCare was trying to fix was this: uninsured people got free healthcare at emergency rooms, but this cost was borne by taxpayers.

                        So the solution is to subsidize their insurance. The subsidies come from their tax refund via the IRS. Where does the money come for these subsidies? The taxpayer. And for those not getting subsidies for their ObamaCare insurance, many are seeing rate increases to also offset these lower cost plans. And since the Supreme Court called this a tax, then again, the money is coming from the taxpayer.

                        And since those subsidized plans don’t really get subsidized until folks get the credits on their tax refund, they have to front both the cost of the plan and the cost of the often huge deductibles, until tax time. How about that? The poor give Uncle Sam a no-interest loan. How compassionate.

                        Here’s the bottom line: The problem was that taxpayers bore the cost of the poor getting free health care. The solution is that the taxpayers bear the cost of insurance for the poor, and the poor bear the full cost of the insurance and thousands of dollars of deductible until sometime the following year. Does that make sense to anyone?

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                          Millions of ObamaCare Broken Promises

                          Yeah, I know I’ve been harping on ObamaCare for quite a while now, but there’s just so much wrong with it. And I’m not speaking of the website. All I’ll say about that is that the oversight that was given to putting that together is the same oversight you’re likely to see on the program itself. How does that make you feel?

                          No, the big deal is the fact that what you were sold is not what you’re getting. You were given some promises about this that were repeated over and over.

                          Well of course no one was saying you’d lose your coverage. Obama couldn’t have sold this particular bill of goods if he’d been honest about it. What we’re getting are millions of Americans whose insurance companies had to—had to—cancel their policies because they didn’t meet ObamaCare’s standards. Yes, you can keep your plan, as long as the government says you can. And then you can’t. Ben Shapiro tweeted, “PolitiFact rated Obama’s ‘If you like your plan, you can keep it’ as ‘half true.’ Which half? ‘If you like it’?”

                          Oh, and you can keep your doctor, as long as he doesn’t leave the practice, or get laid off from the hospital. There are links in the show notes to stories about how the Patient Protection and Affordable Care Act is, for many Americans, not being very protective in this regard.

                          And the “affordable” part? Not so much, either. First there was the promise.

                          And now comes the reality. Supporters of ObamaCare, most notably, are getting acute cases of “sticker shock” as they find out how much their premiums will go up. A writer at the left-wing Daily Kos website was floored that his rates were doubling.

                          I never felt too good about how this was passed and what it entailed, but I figured if it saved Americans money, I could go along with it.

                          I don’t know what to think now. This appears, in my experience, to not be a reform for the people.

                          What am I missing?

                          Well for starters, you’re missing the reality of basic economics. And, as Dave Ramsey says, you’re missing basic math skills. What happening is that non-subsidized premiums are skyrocketing, but even if you get the subsidies, the deductibles are huge, reaching 10-12 thousand dollars. Sure the insurance may be affordable, but the health care is not.

                          But it’s not even so much the broken promises, so much as it is the fact that they knew, from the start of this awful bill, that they couldn’t keep it. Regulations within the bill itself give an estimate that 40 to 67 percent of customers who bought their own insurance will not be able to keep their policy. That’s an estimate right in the bill.

                          But Obama kept parroting that promise, and the media kept dutifully reporting it. From the “Now They Tell Us” Department, NBC News now reports this rather important bit of information, now that the bill has passed the Congress and the Supreme Court, and has started signing people up. And this startling revelation was worth a whopping 21 seconds on the NBC Nightly News.

                          Yeah, you can report on how the administration lied to us, but what about the journalistic malpractice in not doing this digging years ago? I’m looking at all of you, including CBS, ABC, CNN, MSNBC and Fox.

                          Why is it that conservatives saws this coming but liberals didn’t? And why were conservatives who pointed this out called “racists” (and still are)? The truth would have benefited conservatives, liberals and independents. But blind partisanship won the day, and we’ve all been dragged into the same pit.

                          Indeed, dealing with the pre-existing conditions issue and lowering the cost of insurance are admirable goals. But the ObamaCare way of dealing with this is, overall, not the way to do it. The Republicans have had their proposal up on the web for all to see for years; a plan to fix the specific problems without upending the entire industry and forcing government’s choice on the individual.

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                            ObamaCare Proponent Wakes Up

                            Blogger Donald Sensing noted that someone writing at the very liberal Daily Kos website was rather irked that, due to ObamaCare, she’d wind up paying over $8000 a year for what she called “crappy, high-deductible insurance” in New York state. The writer notes, “This means we will all be required to pay steep premiums and deductibles but may not have the financial resources to actually access healthcare.”

                            You mean ObamaCare is not going to be the panacea its proponents claimed it would be? Color me meh.

                            She concludes , “I am reminded on days like today, that President Obama campaigned on the idea that people like me would see something like a $2500 reduction in health insurance costs. What was I thinking?” Don Sensing surmises that thinking didn’t enter into it. I’d say, wow, now who could have anticipated that?

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                              Liberal Magazine Proves Conservatives’ Point

                              The magazine The Nation is a liberal-leaning publication; that much is certain. What’s not so certain is whether or not they really understand the topics they cover.

                              Here’s a case in point. It recently asked it readers to sign an open letter to Wal-Mart demanding that they pay workers at least $12 an hour. However, another web site, ProPublica, reported, as good news, that, this fall, interns at the Nation Institute, who put out the magazine, will be paid minimum wage for the first time in the history of the 30-year-old program. Up until now they’d been paid at less than minimum wage, when all the while they railed against those who did just that.

                              But anyway, that’s good news, right? Those overworked interns will now get the federal minimum wage and have more to spend in our economy. Well, consider this. In a statement to ProPublica on the report, The Nation said that, “We are not yet certain how this will work out long term, but for the fall we are anticipating hiring ten interns rather than twelve.”

                              So they’re raising the pay, but hiring fewer workers in response. Wow, now who could have anticipated that?

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