Economics & Taxes Archives

(This is part of the script for the latest episode of my podcast, “Consider This!”. You can listen to it on the website, or subscribe to it in iTunes, Stitcher Radio, Blubrry, Player.fm, or the podcast app of your choice.)

Sometimes people ask what the real difference is between the Republicans and Democrats, and sometimes, for certain issues, I’m inclined to agree; not much. However, when it comes to promoting economic growth, there’s certainly a trend that favors one over the other.

It’s been said that the states are the laboratories of American democracy. Though more and more autonomy has been taken from them by the federal government, there is still enough that one can look across the country from sea to shining sea and see what works and what doesn’t. So what has the government’s Bureau of Economic Analysis told us about the year 2013?

Here were the top 10 states in GDP growth:

  • North Dakota — 9.7 percent
  • Wyoming — 7.6 percent
  • West Virginia — 5.1 percent
  • Oklahoma — 4.2 percent
  • Idaho — 4.1 percent
  • Colorado — 3.8 percent
  • Utah — 3.8 percent
  • Texas — 3.7 percent
  • South Dakota — 3.1 percent
  • Nebraska — 3.0 percent

This was all while the nation’s GDP growth was just 1.8 percent. Tom Blumer writing at the NewsBusters website noted that only Colorado and West Virginia could be considered something other than deep-red states — and despite having several prominent Democrats in statewide and national office, they both arguably lean red.

And let’s not forget, as I covered back in February, that Wisconsin, under Republican Governor Scott Walker, went from running a deficit to a $1 billion surplus by cutting taxes.

In all of this, you’d think that someone would have predicted such an economic outcome from these policies. Oh wait, they did, and those people are called “conservatives”. So if you indeed see what works and what doesn’t, and still ignore it, you might be a Democrat.

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    More Money for Medicare?

    One of the alternatives to ObamaCare that the Left suggested is that Medicare should just be expanded to cover everyone. It “worked”, so they said, and thus that would be a simpler way to get health care coverage expanded.

    But an investigation by the inspector general of the Department of Health and Human Services said that the program spent $6.7 billion (with a “b”) too much for office visits and other services. And that’s just in 2010; just one year’s worth of fraud, abuse and/or incompetence.

    We keep hearing about how this politician or another wants to save the government and the taxpayer money by eliminating this kind of waste, but it never happens. Here’s one reason why. The Centers for Medicare and Medicaid Services, which runs Medicare, said it doesn’t plan to review the excess billing payments that account for this because it isn’t cost-effective to do so. Essentially what they’re saying is that it would cost more than $6.7 billion to save that $6.7 billion. Really? Is…is that job opening available? Because if it is, I think I could do it for half that cash. Or, at least I’d like to try.

    See, this is a prime example of the problems of big government. It can waste billions – billions – and then claim that it’s not cost effective to deal with the waste. And then the recipients of that fraud have nothing to worry about. Their scam is safe within the walls of a massive bureaucracy. Oh sure, it’s helping the poor and elderly, but really, is there no way at all for that to happen without flushing away billions every year? Really?

    This is also a prime example of what happens to centralized government programs. They become bigger and costlier, and, as Ronald Reagan observed, they wind up being the closest thing to eternal life we’ll see this side of heaven. They are a power unto themselves, and any attempt to rein them in has to deal with that inertia, not to mention that, as I said earlier, any attempt to curb such waste gets those attempting it the injustice of being considered hateful, racist, and whatever else the Left can come up with today.

    There’s a trend here on the issue of big government programs, both in the money they cost, and the way they’re defended in spite of their results. And yet, we just keep adding to their numbers. If one definition of insanity is doing the same thing over and over but expecting different results, it’s time to have the government committed.

    It has been a tenet of the Left that government can be a force for good, and no one’s really denying that. It’s just that there are places for it, and places where it shouldn’t be, and if you overextend government’s reach, prepare for these very consequences. The Constitution was written to keep those kinds of folks in check. Unfortunately, there’s not been enough pushback, and now too many Americans expect this sort of overreach, but they want others to pay for it.

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      More Money for the VA?

      (This is part of the transcript of my latest podcast episode, "Consider This!")

      In an opinion piece at the Huffington Post by H. A. Goodman, he argues that Republicans have been complaining about how bad the VA is, but hypocritically voted against a bill for various funding for the VA back in January.

      Here’s a problem with that, and it’s not something you’ll hear on most newscasts. For the last 5 years, the VA has not spent its full health care budget; as much as $1.163 billion extra to as “little” as $450 million in medical-care funding from this past fiscal year. And still vets have been waiting too long for care, some paying with their lives. Clearly, clearly, throwing more money at the problem has done nothing whatsoever to fix it.

      The Republicans, back in January, said that if the huge catch-all bill were split up into separate bills, there were plenty of items they would vote for. The issue was fiscal responsibility. Democrats, on the other hand, really do have the mindset that enough greenbacks will solve any problem, especially if the problem is one that makes liberalism look bad. And the single-payer VA medical system absolutely fits that particular bill. Creating a single source of a particular product or service (in this case, health care) inevitably leads to scarcity (in this case, waiting lines). If vets could choose any hospital they wanted, and if the government still picked up the tab, would we have this problem? No. But this would be an indictment of a system that Democrats want to see implemented all over, and so it cannot be seen to fail.

      Remember this when Democrats like Mr. Goodman accuse Republicans of “hating the poor” or of being “racist” because they don’t want to throw more money at programs that are similarly flawed. Since the mid 60s, when the “War on Poverty” began, the poverty rate has been bouncing around between 10 and 15% of the population. Nothing has changed. Prior to that, the poverty rate had been steadily decreasing, from 30% in 1950 to 15% when we went to war on it. We were gaining ground, but since “going to war”, it’s been nothing but a stalemate, even though the programs have been costlier every year. But just look askance at the programs, just try to reign in some of that continue rise in cost, and you get accused of all manner of hate and villainy. For nearly half a century we’ve been pouring more and more money into it, just like the VA. And, just like the VA, it is not doing what it is supposed to be doing, or doing it incredibly inefficiently.

      But if you want to change the flat tire and try to get things done better, you’re accused of hating the car. The flat’s got us this far, it can go further, right?

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        The Real Issue With the VA

        (This is part of the script for the latest episode of my podcast, "Consider This!". You can listen to it on the website, or subscribe to it in iTunes, Stitcher Radio, Blubrry, Player.fm, or the podcast app of your choice.)

        Presidential candidate Barack Obama, back in 2007, gave a speech titled “A Sacred Trust”. It was a speech about the military; his plans for it, and for the veterans who came home from it. Here is one thing he said in it, “No veteran should have to fill out a 23-page claim to get care, or wait months – even years – to get an appointment at the VA.”

        How was he going to fulfill that goal? Here was his promise, “It’s time for comprehensive reform. When I am President, building a 21st century VA to serve our veterans will be an equal priority to building a 21st century military to fight our wars. My Secretary of Veteran’s Affairs will be just as important as my Secretary of Defense.” He followed that with specific changes he was going to make. But, whether he made those changes or not, whether or not vets are means-tested for care, whether or not VA budgets were passed on time every year, the result is still the same; long waits, and deaths due to them.

        Obama knew of the problems in the VA before he became President. At least 5 years ago, he was warned about the specific wait time issue. What has changed? Nothing. And now he claiming he was shocked to hear about it; not from his advisors, but from the media. Let’s not forget that he was shocked about the IRS targeting conservatives, up until the point where he claimed that there was “not a smidgen of corruption”. I guess his views on that “evolved”.

        There is another line from that speech that I think bears considering. His plans for the VA were a blueprint for something else. “The VA will also be at the cutting edge of my plan for universal health care, with better preventive care, more research and specialty treatment, and more Vet Centers, particularly in rural areas.” That’s right. ObamaCare was the next step, and what’s happening now with the VA is the future of what’s going to be happening with you. Centralized health care, or passing laws to create facilities and doctors out of thin air, doesn’t work.

        And honestly, this has been the issue for decades. It didn’t start when Obama was elected. Presidents from both parties have presided over this long-running debacle, some say as far back as the Kennedy administration, because the fundamental problems are always there. On MSNBC, one of their military analysts, Army Col. Jack Jacobs, spoke on The Reid Report about how Veterans Affairs Sec. Eric Shinseki was a good guy and was doing a good job, but in the end, the VA’s system of health care itself cannot give us what we need from it, regardless of how much money you throw at it.

        Yeah, that really aired on MSNBC. But if the VA is the blueprint for ObamaCare, then the question is this: If we can’t take care of those we are the most indebted to, how is it going to work for all of us? Centralization like this – one of the pillars of the liberal view of government – is a failure. It has been shown not to work, specifically with regards to health care, and yet we just keep doing it bigger and costlier. Vets are dying in service to this social and political experiment. That’s certainly not the war they signed up for.

        And in the meantime, Army Private and convicted felon Bradley Manning has been on the fast-track to get his sex change. Got to have your priorities.

        The White House vowed to withdraw all U.S. troops from Afghanistan by year’s end. That’s if they agree to leave. Comedian Argus Hamilton says, if given the choice between surviving Taliban attacks in the Afghan mountains and surviving VA care when they get home, they like their chances in the mountains.

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          Piecemeal vs. Overhaul

          Part of ObamaCare was the PCIP, the Pre-Existing Condition Insurance Plan. John Lott notes that, at its height, at the beginning of 2013, there were 115,000 enrolled in it. So one big selling point seems to be working.

          Except that dealing with something like this on its own would have been cheaper and less disruptive of the entire health insurance industry. Clayton Cramer did the math, and if you gave those people $20,000 per year to subsidize their insurance premiums, it would cost $2.3 billion. Now, that’s a lot of money anyway, but doing it that way would also allow millions of people to keep their plan if they liked their plan; just one example of the disruption that was caused instead.

          Again I note that Republicans did have their own solutions to the health care problems, but Democrats insisted that the whole industry had to be upended in order to fix it. We’re finding out just how wrong that was. We are. Seems they aren’t.

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            ObamaCare “Savings”

            In spite of all its rollout issues, the glitches, the delays and the special privileges, the promise of ObamaCare was that, in getting more people, mostly the young and the poor, insured, that would spread out the risk and make insurance cheaper overall, even with those subsidies. By how much? Well, there were promises made, over and over.

            Now, in some of those cases he did say “up to” $2500 dollars. And since 0 is technically on the way up to 2500, if you didn’t save anything, he can count you as a promise kept, just like anyone else trying to sell you something on TV. However, what about these folks?

            A recent survey of 148 insurance brokers shows that ObamaCare is sending premiums rising at the fastest clip in decades.

            “For the last, about, five years they’ve been doing this survey, so this was the largest percentage increase in any quarter since they’ve been doing (it),” said Scott Gottlieb of the American Enterprise Institute.

            “But at 12 percent, 11 percent increase on average across all the states — that puts it at the upper end of any increase we’ve seen for decades.”

            I don’t think that “truth in advertising” laws would allow you to claim that saving negative dollars is somewhere “up to” $2500. Now, are some people saving that much? I’ll stipulate to that, but in general, on average, this is costing the American people more, not less.

            And for some states, it’s really bad. Premiums in Pennsylvania went up 28 percent. In Florida, up 37%. In California, up 53%. And those in Delaware have had to deal with a 100% increase in premiums.

            Oh, and this isn’t considering the higher deductibles. That’s just as much a cost as the premium. And the Congressional Budget Office projects that the premiums of the ObamaCare plans are going to continue to rise.

            Of course, those paying the penalty are saving loads of cash. That defeats the purpose, but hey, savings are savings, right?

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              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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