To Accompany the April 24, 2012 edition of Tidbits
Bob Jensen at Trinity Universit
You cannot discover new oceans unless you have the
courage to lose sight of shore.
Admiral Rickover --- http://en.wikipedia.org/wiki/Rickover
"I could end the deficit in 5 minutes," Warren
Buffet told CNBC. "You just pass a law that says that anytime there is a deficit
of more than 3% of GDP, all sitting members of Congress are ineligible for
You Ain't Seen Nothing Yet --- http://silverbearcafe.com/private/04.12/nothingthree.html
CFOs are preparing for a serious EU recession
"Like It or Not, You’re in the Euro Zone," by Randy Myers, CFO.com, April 15, 2012 ---
Sure, you’ve got worries: the fragility of an economic recovery still straining to create jobs, the impossible-to-predict outcome of the Federal Reserve’s expansive monetary policy, and forecasts of trillion-dollar-plus federal deficits stretching out for years, to name just three.
Yet, as serious as each of those may be (not to mention all of them in the aggregate), for many CFOs the European debt crisis, headlined by beggar-thy-neighbor Greece, now tops the list. Even with the bleeding stanched (at press time, anyway) the underlying problems have the potential to trigger a new global recession and throw trade and currency relationships into disarray.
Recession in Europe would weigh on multinationals that do business there, on U.S. companies that export to the Continent, and ultimately on supply-chain partners of all sizes. U.S. banks with exposure to European debt could see their balance sheets and income statements weakened if those debts slip into default. And smaller companies that thought Europe was a comfortable place to begin a global expansion strategy may find their first forays overseas to be disappointing or even disastrous. Even U.S. companies with no direct business connection to Europe could feel the effects of further trouble there in the form of another blow to already shaky consumer confidence.
At $4.6 billion Meritor, a manufacturer of axles, brakes, and wheel assemblies for the heavy-truck market, CFO Jay Craig and his C-suite colleagues are not panicking. In fact, they still expect their company to enjoy increased revenues and profits from continuing operations this year, despite an expected slowdown in their European business. But neither are they waiting passively to see how the latest Greek drama plays out. After all, their 102-year-old company now operates 36 manufacturing plants around the world, sells in more than 70 countries, and counts Swedish truck and heavy-equipment manufacturer AB Volvo as its largest customer. For months, Meritor’s treasury team and other key executives have been working with the company’s investment banks to assess how Meritor could be impacted by the euro-zone crisis, and how they might minimize any potential fallout.
More concretely, the company has cut costs in its European operations, selling one of three axle plants there this year and reducing its hourly workforce. The company also has looked into whether it should change its foreign-currency hedging practices, and is assessing whether it should continue to transact business in euros with suppliers outside the euro zone.
The company is also having plenty of conversations with almost every entity it does business with. It is stepping up communications with customers, for example, in order to get a better handle on demand. It’s talking more often with suppliers, to make sure they retain sufficient liquidity as bank credit tightens across Europe. And it is staying in closer contact with the banks in its revolving credit facility, to make sure they understand the company’s financial condition and business prospects.
Continued in article
Nobel Laureate Paul Krugman's recommends the Zimbabwe solution for the economic crisis in Europe (and the U.S.) ---
Print trillions of Euros and then to fly over bundles of fluttering currency in sufficient amounts to pay pensions, high wages, union excesses, and renewed real estate bubbles in all nations on the brink of hundreds of billions in debt default ---
What amazes me is not Krugman's diatribe but the extent to which his many followers, including Ben Bernanke, believe that Zimbabwe has the answer.
Paul Krugman --- http://en.wikipedia.org/wiki/Paul_Krugman
Economics and policy recommendations
Economist and former United States Secretary of the Treasury Larry Summers (and former top economic advisor to President Obama) has stated Krugman has a tendency to favor more extreme policy recommendations because "it’s much more interesting than agreement when you’re involved in commenting on rather than making policy."
According to Harvard professor of economics Robert Barro, Krugman "has never done any work in Keynesian macroeconomics" and makes arguments that are politically convenient for him. Nobel laureate Edward Prescott has charged that Krugman "doesn't command respect in the profession", as "no respectable macroeconomist" believes that economic stimulus works, though the number of economists who support such stimulus is "probably a majority".
Added Jensen Comment
The last sentence above implies that macroeconomics is more astrology than science --- which is what a Donald Duck cartoon years ago asserted about economics in general. In recent years meteorology increasingly became more respectable in terms of weather/storm forecasting. Economics, on the other had, is still in a sad state in terms of predicting economic storms.
Krugman's solution is to make us all millionaires in the U.S. by printing trillions more greenbacks. In the past five years the Fed has actually printed over $2 trillion in greenbacks following Zimbabwe's economic leadership. Retired folks like me cherish the hope of putting millions into our bank accounts and living lavishly on our way out of this world.. But our great grandchildren will pay the price when a they face the price of over $1 million dollars for one chicken egg --- which is the case Zimbabwe today.
Among other things, the Krugman solution to the Euro Zone crisis throws belt-tightening to the wind, including continued lack of caring about enforcing tax laws in Greece, Italy, Spain, Portugal, etc. Even in the U.S. the proposed cutbacks in the IRS budget scare me, because reduced threats of audits and restraints on the explosion of fraudulent electronic tax returns (for stolen tax refunds) might make the U.S. more and more like Greece in terms of lousy tax law enforcement.
Here is the 2011 1040 tax return of Barack ant Michelle Obama. The 20.5% tax
rate is higher than the 15% rate of Mitt Romney. Both are well short of
President Obama's proposed 30% tax rate ---
The Obama family could've reduced some of their taxes by investing more in the nations towns, counties, and school districts. TaxProf Paul Caron provides the following year-to-year comparisons:
As John F. Kennedy put it in 1963 when he endorsed a
cut in this tax: "The tax on capital gains directly affects investment
decisions, the mobility and flow of risk capital" as well as "the ease or
difficulty experienced by new ventures in obtaining capital, and thereby the
strength and potential for growth in the economy." Today's Democrats in
Washington are no Jack Kennedys. As President Obama told Charlie Gibson of ABC
News in 2008, whether or not a higher capital-gains tax raises more revenue is
irrelevant to him. He wants a higher rate as a matter of "fairness.".
"Obama's Revenue Soup: A History Lesson on Capital Gains Taxes:" The Wall Street Journal, April 9, 2012 ---
I might buy into the "fairness" argument if President Obama would also agree to index the cost basis of long-term capital gains for inflation before applying the higher rate. It's highly unfair, for example, to treat the cost of farm land purchased in 1945 that is sold in 2012 as if the 1945 dollars had the same purchasing power as 2012 dollars. For example, in 1945 you could buy a cup of coffee for a dime and an new Chevy for $1,200. Fairness demands that capital gains taxes be applied to costs and revenues having the same purchasing power.
"The Buffett Tax Loss: It turns out this Obama proposal will cost
federal revenue," The Wall Street Journal, April 13, 2012 ---
The case for the Buffett tax keeps eroding. When President Obama announced the idea, he said it would help "stabilize our debt and deficits over the next decade." Then came the inconvenient revelation that the new 30% millionaire's tax would raise only $46.7 billion over 10 years, and would leave about 99.5% of the deficit intact in 2013. It was a far cry from "stabilizing the debt."
Now we learn that the Buffett tax the Senate is expected to vote on early next week will make the deficit worse. That's because both Mr. Obama and Senate Democrats have made it clear that their new "fairness" tax is to offset the revenue loss from another provision related to the Alternative Minimum Tax.
That measure would exempt more than 20 million middle class Americans with incomes as low as $80,000 a year from getting nailed by the AMT. This year's Obama budget clearly describes their intent: "The Buffett Rule should replace the Alternative Minimum Tax, which now burdens middle-class Americans rather than stopping the richest Americans from paying too little as was originally intended."
The Joint Tax Committee—the official scoring referee on tax bills—calculates that the combination of AMT repeal for the middle class and the Buffett tax would add $793.3 billion to the debt over the next decade. As Mr. Obama has said, "This isn't politics, this is math."
The Buffett tax is losing any serious rationale by the day. Mr. Obama's position now is that we need a new fairness tax, because the old AMT fairness tax that was targeted at millionaires and billionaires isn't raising much money from the Warren Buffetts of the world. Instead it's siphoning income out of more and more nonmillionaires. So they argue it's time for a new Buffett rule, that is almost identical to the old Buffett rule, and no doubt in time will have the same unintended consequences.
The Buffett rule itself may die, but the name will live on as a metaphor for pointless public policy.
Case Studies in Gaming the Income Tax Laws ---
Trying to Tax Away Inequality is Naive and Dysfunctional
"Lead Essay:: What to Do about Inequality," by David B. Grusky, Boston Review, March/April 2012 ---
Why must there be punishment without any purpose other than punishment?
"Henninger: Demolishing Paul Ryan: The Left launches on warning against any challenge to its ideological fortress," by Daniel Henninger, The Wall Street Journal, April 11, 2012 ---
With the presidential battle begun, the Obama campaign has revived the Cold War nuclear strategy of launch on warning. At any suggestion that a conservative idea might be threatening its ideological fortress, the American left now launches ICBMs of rhetorical destruction.
So it was after the Supreme Court's hearings on the Obama Affordable Care Act, which put in jeopardy the federal command to buy health insurance. After the president green-flagged the assault, the Supreme Court's "legitimacy" was in play. The Roberts Court, wrote one blogger, is "on trial."
On current course, House GOP Budget Chairman Paul Ryan himself may exhaust their entire thermonuclear arsenal before November. Once again, the Campaigner in Chief threw the switch himself, calling the Ryan House budget "social Darwinism," "a Trojan horse" and "antithetical to our entire history." Rev. Samuel Rodriquez of the Hispanic Evangelical Association said the poor would be "budget-war collateral damage."
On Tuesday, Mr. Ryan pushed back. In an interview with the Christian Broadcasting Network, he said that in fact the Catholic Church's "social magisterium" had informed his House budget. One goal of that teaching, he said, is to prevent the poor from staying poor. Nor, he added, should individuals become lifelong dependents of their government.
Just as the left thought the regulating reach of the Commerce Clause was beyond serious challenge, it long ago decided that none dare question the moral case for public spending. That social Darwinism speech Barack Obama is giving now in defense of federal programs isn't merely a public-policy statement. It's a Democratic encyclical. Paul Ryan's ideas are worse than wrong. They are heresy.
Within the hour of the Ryan CBN interview, the blogospheric left went ballistic. "Ryan is shilling for the Catholic Church," said Democrats for Progress, folding in another recently identified group of ObamaCare heretics. And: "Mr. Ryan has drunk the libertarian Kool-Aid." A pro-spending religious coalition, the Faithful Budget Campaign, emailed, "The differences in what the organized religious community is calling a Faithful Budget and what Rep. Ryan refers to could not be more stark."
What Mr. Ryan actually said is worth quoting, because it should revive the debate over the proper relationship between individual citizens, including the poor, and the national government:
"A person's faith is central to how they conduct themselves in public and in private. So to me, using my Catholic faith, we call it the social magisterium, which is how do you apply the doctrine of your teaching into your everyday life as a lay person?
"To me, the principle of subsidiarity . . . meaning government closest to the people governs best . . . where we, through our civic organizations, through our churches, through our charities, through all of our different groups where we interact with people as a community, that's how we advance the common good. By not having big government crowd out civic society, but by having enough space in our communities so that we can interact with each other, and take care of people who are down and out in our communities.
"Those principles are very, very important, and the preferential option for the poor, which is one of the primary tenants of Catholic social teaching, means don't keep people poor, don't make people dependent on government so that they stay stuck at their station in life. Help people get out of poverty out onto a life of independence."
Subsidiarity—an awful but important word—attempts to discover where the limits lie in the demands a state can make on its people. Identifying that limit was at the center of the Supreme Court's mandate arguments.
The first major use of subsidiarity as a basis for public policy was in Pope Leo XIII's famous 1891 encyclical "Rerum Novarum" (though the word itself doesn't appear). Leo was seeking a way to protect the dignity of human beings caught during those years in the tension between unfettered capitalism and unfettered government. "The State," he wrote, "must not absorb the individual or the family." Arguments over where the balance sits have raged since.
The American left thinks this debate is settled. So, for example, any hint of Supreme Court dissent from settled doctrine justifies questions about its "legitimacy."
Continued in article
Personally I hope that President Obama wins the Presidency for another four years without getting a liberal majority back in Congress. I've truly enjoyed the relative calm that he holds over the vicious liberal press. Over the past four years the New York Times has not, to my knowledge, leaked any classified military and diplomatic documents. The progressive press has not hounded us daily to close Gitmo. Keith Olbermann can't keep a job, and Chris Matthews just makes it more and more obvious that MSNBC is a one-sided headquarters for the Democratic Party.
More importantly, President Obama might accomplish more than in the correct direction than a press-tied Mitt Romney can accomplish. It's analogous to how the Democratic Party legislature in Rhode Island can accomplish more in reducing entitlement obligations than any Republican Party legislature in any other state. However, President Obama is scary if we give him a spendthrift Congress for the next four years that will pay for pork by cranking out another $2 trillion of printed greenbacks to pay bills in lieu of taxing the middle class --- which is what really needs to be done because 98% of the taxpayers paying no income taxes earn less than $100,000 per year. There just aren't enough rich people to make up the difference. So welcome to Zimbabwe Economics in North America.
Here's a tax unfairness that President Obama will never call "unfair":
April 11, 2012 message from Barbara Scofield
I am a Tax Aide in the AARP Foundation tax preparation program at a senior center in Odessa. My final client was an atypical senior because he had social security income plus retirement pay plus interest plus dividends. In addition, he had sold two stockholding positions during the year with capital gains in both positions, one for about $11,000. His dividends were also substantial, about $6,000.
After entering all of the information, he had about $35,000 in adjusted gross income and after exemptions for filing jointly with taxpayer and spouse over 65 and standard deduction, his taxable income was about $14,000.
Some of you already know the bottom line of this tax return, but it greatly surprised me.
He owed no taxes at all because his dividends and capital gains have a 0% tax rate for 2011 and exceeded his taxable income.
While he appreciated not paying taxes, I don't think this senior felt it was "fair." It was inscrutable.
Barbara W. Scofield, PhD, CPA
Chair of Graduate Business Studies
Professor of Accounting
The University of Texas of the Permian Basin
4901 E. University Dr. Odessa, TX 79762
Case Studies in Gaming the Income Tax Laws ---
The American Dream ---
PAYING TAXES TO THE BOSS: HOW A GROWING NUMBER OF STATES SUBSIDIZE COMPANIES
WITH THE WITHHOLDING TAXES OF WORKERS
By Philip Mattera, Kasia Tarczynska, Leigh McIlvaine, Thomas Cafcas and Greg LeRoy
Thank you Paul Caron for the heads up
Across the United States more than 2,700 companies are collecting state income taxes from hundreds of thousands of workers – and are keeping the money with the states’ approval, says an eye-opening report published on Thursday.
The report from Good Jobs First, a nonprofit taxpayer watchdog organization funded by Ford, Surdna and other major foundations, identifies 16 states that let companies divert some or all of the state income taxes deducted from workers’ paychecks. None of the states requires notifying the workers, whose withholdings are treated as taxes they paid. ...
Why do state governments do this? Public records show that large companies often pay little or no state income tax in states where they have large operations, as this column has documented. Some companies get discounts on property, sales and other taxes. So how to provide even more subsidies without writing a check? Simple. Let corporations keep the state income taxes deducted from their workers’ paychecks for up to 25 years. ...
The five most scandalous states are New Jersey, Indiana, Ohio, South Carolina, and Missouri. But 11 other states are allowing this terrible deed of making workers themselves pay to keep their jobs.
"Joel Kotkin: The Great California Exodus A leading U.S. demographer and
'Truman Democrat' talks about what is driving the middle class out of the Golden
State," by Allysia Finley, The Wall Street Journal, April 20, 2012
'California is God's best moment," says Joel Kotkin. "It's the best place in the world to live." Or at least it used to be.
Mr. Kotkin, one of the nation's premier demographers, left his native New York City in 1971 to enroll at the University of California, Berkeley. The state was a far-out paradise for hipsters who had grown up listening to the Mamas & the Papas' iconic "California Dreamin'" and the Beach Boys' "California Girls." But it also attracted young, ambitious people "who had a lot of dreams, wanted to build big companies." Think Intel, Apple and Hewlett-Packard.
Now, however, the Golden State's fastest-growing entity is government and its biggest product is red tape. The first thing that comes to many American minds when you mention California isn't Hollywood or tanned girls on a beach, but Greece. Many progressives in California take that as a compliment since Greeks are ostensibly happier. But as Mr. Kotkin notes, Californians are increasingly pursuing happiness elsewhere.
Nearly four million more people have left the Golden State in the last two decades than have come from other states. This is a sharp reversal from the 1980s, when 100,000 more Americans were settling in California each year than were leaving. According to Mr. Kotkin, most of those leaving are between the ages of 5 and 14 or 34 to 45. In other words, young families.
The scruffy-looking urban studies professor at Chapman University in Orange, Calif., has been studying and writing on demographic and geographic trends for 30 years. Part of California's dysfunction, he says, stems from state and local government restrictions on development. These policies have artificially limited housing supply and put a premium on real estate in coastal regions.
"Basically, if you don't own a piece of Facebook or Google and you haven't robbed a bank and don't have rich parents, then your chances of being able to buy a house or raise a family in the Bay Area or in most of coastal California is pretty weak," says Mr. Kotkin.
While many middle-class families have moved inland, those regions don't have the same allure or amenities as the coast. People might as well move to Nevada or Texas, where housing and everything else is cheaper and there's no income tax.
And things will only get worse in the coming years as Democratic Gov. Jerry Brown and his green cadre implement their "smart growth" plans to cram the proletariat into high-density housing. "What I find reprehensible beyond belief is that the people pushing [high-density housing] themselves live in single-family homes and often drive very fancy cars, but want everyone else to live like my grandmother did in Brownsville in Brooklyn in the 1920s," Mr. Kotkin declares.
"The new regime"—his name for progressive apparatchiks who run California's government—"wants to destroy the essential reason why people move to California in order to protect their own lifestyles."
Housing is merely one front of what he calls the "progressive war on the middle class." Another is the cap-and-trade law AB32, which will raise the cost of energy and drive out manufacturing jobs without making even a dent in global carbon emissions. Then there are the renewable portfolio standards, which mandate that a third of the state's energy come from renewable sources like wind and the sun by 2020. California's electricity prices are already 50% higher than the national average.
Oh, and don't forget the $100 billion bullet train. Mr. Kotkin calls the runaway-cost train "classic California." "Where [Brown] with the state going bankrupt is even thinking about an expenditure like this is beyond comprehension. When the schools are falling apart, when the roads are falling apart, the bridges are unsafe, the state economy is in free fall. We're still doing much worse than the rest of the country, we've got this growing permanent welfare class, and high-speed rail is going to solve this?"
Mr. Kotkin describes himself as an old-fashioned Truman Democrat. In fact, he voted for Mr. Brown—who previously served as governor, secretary of state and attorney general—because he believed Mr. Brown "was interesting and thought outside the box."
But "Jerry's been a big disappointment," Mr. Kotkin says. "I've known Jerry for 35 years, and he's smart, but he just can't seem to be a paradigm breaker. And of course, it's because he really believes in this green stuff."
In the governor's dreams, green jobs will replace all of the "tangible jobs" that the state's losing in agriculture, manufacturing, warehousing and construction. But "green energy doesn't create enough energy!" Mr. Kotkin exclaims. "And it drives up the price of energy, which then drives out other things." Notwithstanding all of the subsidies the state lavishes on renewables, green jobs only make up about 2% of California's private-sector work force—no more than they do in Texas.
Of course, there are plenty of jobs to be had in energy, just not the type the new California regime wants. An estimated 25 billion barrels of oil are sitting untapped in the vast Monterey and Bakersfield shale deposits. "You see the great tragedy of California is that we have all this oil and gas, we won't use it," Mr. Kotkin says. "We have the richest farm land in the world, and we're trying to strangle it." He's referring to how water restrictions aimed at protecting the delta smelt fish are endangering Central Valley farmers.
Meanwhile, taxes are harming the private economy. According to the Tax Foundation, California has the 48th-worst business tax climate. Its income tax is steeply progressive. Millionaires pay a top rate of 10.3%, the third-highest in the country. But middle-class workers—those who earn more than $48,000—pay a top rate of 9.3%, which is higher than what millionaires pay in 47 states.
And Democrats want to raise taxes even more. Mind you, the November ballot initiative that Mr. Brown is spearheading would primarily hit those whom Democrats call "millionaires" (i.e., people who make more than $250,000 a year). Some Republicans have warned that it will cause a millionaire march out of the state, but Mr. Kotkin says that "people who are at the very high end of the food chain, they're still going to be in Napa. They're still going to be in Silicon Valley. They're still going to be in West L.A."
That said, "It's really going to hit the small business owners and the young family that's trying to accumulate enough to raise a family, maybe send their kids to private school. It'll kick them in the teeth."
A worker in Wichita might not consider those earning $250,000 a year middle class, but "if you're a guy working for a Silicon Valley company and you're married and you're thinking about having your first kid, and your family makes 250-k a year, you can't buy a closet in the Bay Area," Mr. Kotkin says. "But for 250-k a year, you can live pretty damn well in Salt Lake City. And you might be able to send your kids to public schools and own a three-bedroom, four-bath house."
According to Mr. Kotkin, these upwardly mobile families are fleeing in droves. As a result, California is turning into a two-and-a-half-class society. On top are the "entrenched incumbents" who inherited their wealth or came to California early and made their money. Then there's a shrunken middle class of public employees and, miles below, a permanent welfare class. As it stands today, about 40% of Californians don't pay any income tax and a quarter are on Medicaid.
It's "a very scary political dynamic," he says. "One day somebody's going to put on the ballot, let's take every penny over $100,000 a year, and you'll get it through because there's no real restraint. What you've done by exempting people from paying taxes is that they feel no responsibility. That's certainly a big part of it.
And the welfare recipients, he emphasizes, "aren't leaving. Why would they? They get much better benefits in California or New York than if they go to Texas. In Texas the expectation is that people work."
California used to be more like Texas—a jobs magnet. What happened? For one, says the demographer, Californians are now voting more based on social issues and less on fiscal ones than they did when Ronald Reagan was governor 40 years ago. Environmentalists are also more powerful than they used to be. And Mr. Brown facilitated the public-union takeover of the statehouse by allowing state workers to collectively bargain during his first stint as governor in 1977.
Mr. Kotkin also notes that demographic changes are playing a role. As progressive policies drive out moderate and conservative members of the middle class, California's politics become even more left-wing. It's a classic case of natural selection, and increasingly the only ones fit to survive in California are the very rich and those who rely on government spending. In a nutshell, "the state is run for the very rich, the very poor, and the public employees."
So if California's no longer the Golden land of opportunity for middle-class dreamers, what is?
Mr. Kotkin lists four "growth corridors": the Gulf Coast, the Great Plains, the Intermountain West, and the Southeast. All of these regions have lower costs of living, lower taxes, relatively relaxed regulatory environments, and critical natural resources such as oil and natural gas.
Take Salt Lake City. "Almost all of the major tech companies have moved stuff to Salt Lake City." That includes Twitter, Adobe, eBay and Oracle.
Continued in article
Fox and MSNBC School of Etiquette
"The Lost Art of the Live Interview: Some commentators hardly let guests get a word in edgewise. Others ask questions and then supply the answers," By Peter Funt, The Wall Street Journal, April 8, 2012 ---
Electronic news media have made enormous strides when it comes to speed, volume and diversity, but technology has not improved everything in the information marketplace.
There are more live interviews on television than ever before, but the content is remarkably weak, due primarily to the personal agendas and sloppy efforts of interviewers. This is regrettable, because interviews remain a distinctive feature of electronic journalism and, when done well, provide content that significantly supplements our understanding of issues and individuals.
Consider a recent interview Lawrence O'Donnell conducted on MSNBC with the filmmaker and activist Michael Moore. Mr. Moore spoke a total of 1,034 words, while Mr. O'Donnell—whose job, after all, was to ask questions—spoke almost as many: 900.
The host was so intent on both asking and answering questions that at one point Mr. Moore said jokingly, "Thanks, Lawrence, for coming on the show tonight."
I happen to be a fan of Mr. O'Donnell. Yet like the interviews of many cable-TV hosts, his often seem designed to showcase his own views rather than to draw out interesting opinions from guests. Chris Matthews of MSNBC and Sean Hannity of Fox News Channel do the same irritating thing, making it hard for guests to get a word in edgewise.
During one interview with Mitt Romney, Mr. Hannity asked 10 questions, one of which was 172 words long and lasted 51 seconds, while two others went on for over 100 words. It was as if the host were filibustering his own guest.
Not long ago, television journalists preferred to pre-record interviews whenever possible—still the norm on magazine programs such as CBS's "60 Minutes"—while politicians and other newsmakers favored going live. That's because editing allows reporters to clean up and even re-record questions to their advantage, while making cuts that are sometimes to the guest's disadvantage. As Barbara Walters once told me when I interviewed her about interviewing, "Whoever holds the scissors ultimately controls the message."
Nowadays, cable news programs favor live interviews because they add immediacy and are a natural byproduct of improved technology. This gives politicians and other guests more power, while exposing interviewers' ineptitude.
Newsmakers have taken advantage of the live interview format to work in more talking points and even to scold hosts when the questions are tough. In an interview on CBS, Rick Santorum pounced on host Charlie Rose when Mr. Rose asked about statements by a major campaign donor regarding contraception. "This is the same gotcha politics that you get from the media," said Mr. Santorum, "and I'm not going to play that game."
Continued in article
LIBOR --- http://en.wikipedia.org/wiki/Libor
This is Crime, Not Capitalism
"Wall Street con trick," by Ellen Brown, Asia Times, March 24, 2012 ---
"Far from reducing risk, derivatives increase risk, often with catastrophic results." -
Derivatives expert Satyajit Das, Extreme Money (2011)
*****************Swaps and Derivatives Association was called into question, when a 50% haircut for creditors was not declared a "default" requiring counterparties to pay on credit default swaps on Greek sovereign debt.
Derivatives are great contracts to manage risk if their markets are efficient, fair, and transparent.
They don't reduce risk in most instances because it's impossible in hedging to reduce risk in most instances. Rather hedging entails shifting risk. For example, a company that has cash flow risk due to variable interest rate debt can hedge that cash flow risk. However, elimination of cash flow risk creates fair value risk. The issue is not one of reducing risk. Rather it is a shift in risk preferences.
The "toxic culture of greed" on Wall Street was highlighted again last week, when Greg Smith went public with his resignation from Goldman Sachs in a scathing oped published in the New York Times. In other recent eyebrow-raisers, London Interbank Offered Rates (or LIBOR) - the benchmark interest rates involved in interest rate swaps - were shown to be manipulated by the banks that would have to pay up; and the objectivity of the International
Interest rate swaps are less often in the news than credit default swaps, but they are far more important in terms of revenue, composing fully 82% of the derivatives trade. In February, JP Morgan Chase revealed that it had cleared US$1.4 billion in revenue on trading interest rate swaps in 2011, making them one of the bank's biggest sources of profit. According to the Bank for International Settlements:[I]nterest rate swaps are the largest component of the global OTC derivative market. The notional amount outstanding as of June 2009 in OTC [over-the-counter] interest rate swaps was $342 trillion, up from $310 trillion in Dec 2007. The gross market value was $13.9 trillion in June 2009, up from $6.2 trillion in Dec 2007.For more than a decade, banks and insurance companies convinced local governments, hospitals, universities and other non-profits that interest rate swaps would lower interest rates on bonds sold for public projects such as roads, bridges and schools. The swaps were entered into to insure against a rise in interest rates; but instead, interest rates fell to historically low levels.
This was not a flood, earthquake, or other insurable risk due to environmental unknowns or "acts of God". It was a deliberate, manipulated move by the Federal Reserve, acting to save the banks from their own folly in precipitating the credit crisis of 2008. The banks got into trouble, and the Federal Reserve and federal government rushed in to bail them out, rewarding them for their misdeeds at the expense of the taxpayers.
How the swaps were supposed to work was explained by Michael McDonald in a November 2010 Bloomberg article titled "Wall Street Collects $4 Billion From Taxpayers as Swaps Backfire":In an interest-rate swap, two parties exchange payments on an agreed-upon amount of principal. Most of the swaps Wall Street sold in the municipal market required borrowers to issue long-term securities with interest rates that changed every week or month. The borrowers would then exchange payments, leaving them paying a fixed-rate to a bank or insurance company and receiving a variable rate in return. Sometimes borrowers got lump sums for entering agreements.Banks and borrowers were supposed to be paying equal rates: the fat years would balance out the lean. But the Fed artificially manipulated the rates to the save the banks.
After the credit crisis broke out, borrowers had to continue selling adjustable-rate securities at auction under the deals. Auction interest rates soared when bond insurers' ratings were downgraded because of subprime mortgage losses; but the periodic payments that banks made to borrowers as part of the swaps plunged because they were linked to benchmarks such as Federal Reserve lending rates, which were slashed to almost zero.
Continued in article
Bob Jensen's fraud updates ---
On November 22, 2009 CBS Sixty Minutes aired a video featuring experts
(including physicians) explaining how the single largest drain on the Medicare
insurance fund is keeping dying people hopelessly alive who could otherwise be
allowed to die quicker and painlessly without artificially prolonging life on
"The Cost of Dying," CBS Sixty Minutes Video, November 22, 2009 ---
What is hypocritical is that most families only want to keep Granny alive only when Medicare will pay. The instant Granny's estate will have to bear the cost these hypocrites instantly agree to pull Granny off life support.
What is really sad is the way Republicans are standing in the way of making
rational cost-benefit decisions about dying by exploiting the "Kill Granny"
political strategy aimed at killing a government option in health care reform.
See the "Kill Granny" strategy at --- www.defendyourhealthcare.us
Dartmouth University Professor's Suggestions for Reduced Costs of Health Care in the United States
"Health Care for 1% of the Cost," by Vijay Govindarajan, Harvard
Business Review Blog, April 9, 2012 ---
This blog post is written with Pepijn Veling, Utrecht University, Netherlands.
There is a general consensus that U.S. healthcare needs major reform. Can reverse innovation — innovations originating from poor countries — provide one important answer? Most definitely.
In the U.S., the approach is to spend more money on major technological advances and come up with innovative products and solutions. In poor countries, the innovation paradigm is just the opposite: spend less and innovate new business models. Poor countries face severe resource constraints. They just cannot afford to spend a lot. Constraints need not be limiting, they can actually be liberating.
The ultra low-cost, high-quality prostheses innovation of Dr. Therdchai Jivacate and the Prostheses Foundation of Thailand is an inspiring example of this. Over the years, they have developed and delivered over 25,000 affordable and appropriate artificial legs to amputees in remote areas of Thailand and surrounding countries. In the U.S., an artificial leg costs about $10,000 and the delivery time is 7-10 days. The Prostheses Foundation of Thailand is able to do it for less than $100, about 1% of the U.S. cost, and their delivery time is 1-3 days.
Though Dr. Jivacate spent four years as a resident of physical medicine and rehabilitation in Northwestern University, he understood that conventional artificial legs were unaffordable and inappropriate for the majority of Thai amputees. There are several reasons. First, customers in rural Thailand simply cannot afford to pay a high price. For the poor making $2 a day, a $10,000 product would require 5,000 days of income. (With 200 working days a year, that amounts to an incredible 50 years). Second, the context and functional requirements for amputees in Thailand are vastly different from those in the U.S. Thai people do many of their daily activities with bare feet, sitting squat on the floor or cross-legged, and many work in wet paddy fields. Furthermore, while many roads in the U.S. are paved, Thai people walk on uneven roads. Finally, the expensive artificial legs are only available in Bangkok, thus making it virtually inaccessible to the rest of the population.
Dr. Jivacate defined the most essential customer problem: to be able to walk without pain. He set out to develop a solution. His mission was not just to reduce costs — but to shift the price-performance paradigm. Actually, the artificial leg has to be higher-quality than in the U.S. to meet the more demanding functional requirements in Thailand, yet it has to be ultra low-cost. How did he achieve such an impossible goal?
There are two major cost drivers in an artificial leg — raw material cost and the cost of technicians.
Dr. Jivacate realized that he could not achieve his goal with expensive materials such as titanium, which is used in rich countries. One of his technological breakthroughs was to make artificial legs from recycled plastic yogurt bottles. These artificial limbs were extremely cheap. Raw material cost was close to zero since he used waste. More importantly, the limbs were lightweight, durable and comfortable. Dr. Jivacate converted waste into wealth.
He also knew that professionally-skilled technicians were in short supply and too expensive to hire. Dr. Jivacate therefore instituted training programs for those amputees who showed a special interest in the fitting process. He hired amputees as technicians to do the fitting and help with rehabilitation and training with new patients. This approach had several benefits. First, it dramatically reduced costs. Second, the amputee-technicians approached their work with passion since they personally benefited from the product. Third, it stimulated the demand for the product since these technicians could credibly convince patients that the product works. Fourth, it improved quality since Dr. Jivacate's technicians understood, based on personal experience, how to fit the prosthetic leg without pain and discomfort. Dr. Jivacate's technicians were thus most customer-centric. Fifth, they understood customer feedback, which led to continuous process improvements. Sixth, it created an instant empathy and a high degree of trust between the amputee-technicians and the patients. Finally and most importantly, it created much-needed job opportunities for the poor.
He also re-invented the delivery model. Patients in remote areas of Thailand could not afford to travel to clinics in an urban setting. So, Dr. Jivacate innovated highly-efficient mobile clinics and 27 satellite workshops in local areas. Between 1992 and 2011, the mobile units have made more than 115 trips serving over 16,000 amputees. It has recently broken the Guinness Book of World Records by serving 864 amputees in 13 days.
Finally, Dr. Jivacate tailored the devices to meet unique local needs — for instance, he custom-built artificial legs specifically for farmers who worked in wet fields.
Originally targeting the poor, continuous innovations have drastically improved the quality of the artificial legs over time (ISO certificates pending). The limbs are now also used by more affluent amputees in Thailand and in other neighboring countries such as Indonesia, Malaysia, Laos, and Burma.
In addition to treating humans, Dr. Jivacate fabricated a prosthetic leg for Baby Mosha, a 7 month-old elephant, who was injured in a landmine in 2009 — a remarkable medical achievement captured in the award winning documentary film The Eyes of Thailand.
If we can make an artificial leg for an elephant for less than $100, why does a less complicated procedure for humans have to cost $10,000?
Continued in article
Comment at the end of the article by SVNert
Interesting article, although not particularly any new insight. :) As a patient with emergency needs and proper insurance coverage, it is better to be in the US (maybe Japan or UK are also good places to be....) As a patient with some wealth and no insurance and in need of emergency care, India (and some other countries) would be good places to be ... although in India pre-op/post-op care is currently lacking and slowly improving.
In my opinion, short of socialized care, even these two diametrically opposite US/India situations are primarily driven by capitalism - of course the parameters of population, disposable wealth etc etc will play into the equation.
Whereas lawyers 'run' the US healthcare, countries like India seem to be driven by patient processing factories, and as factories, economies of scale and low cost come into play, whether its the services or locally copied/invented devices/systems. From device (software/hardware/materials etc) invention perspective, the new generation of technological advances and scientific discoveries surely will make some of these innovations cheaper - a lot cheaper.
Comment from Ned Keit-Pride
You do not seem to account for the crippling malpractice insurance costs of most healthcare providers in the US. It is these costs and the fact that their transactions are largely with insurance companies rather than patients that drive much of what physicians charge here. Until healthcare services are sold more directly to patients, I believe comparing the relative practices of US and Indian physicians to be very apples-to-oranges.
"Canadian Malpractice Insurance Takes Profit Out Of
Coverage," by Jane Akre, Injury Board, July 28, 2009 ---
The St. Petersburg Times takes a look at the cost of insurance in Canada for health care providers.
A neurosurgeon in Miami pays about $237,000 for medical malpractice insurance. The same professional in Toronto pays about $29,200, reports Susan Taylor Martin.
A Canadian orthopedic surgeon pays just over $10,000 for coverage that costs a Miami physician $140,000. An obstetrician in Canada pays $36,353 for insurance, while a Tampa Bay obstetrician pays $98,000 for medical malpractice insurance.
Why the difference?
In the U.S., private for-profit insurance companies extend medical malpractice coverage to doctors.
In Canada, physicians are covered through membership in a nonprofit. The Canadian Medical Protective Association offers substantially reduced fees for the same coverage, especially considering that their payout is limited by caps in Canada just as in some U.S. states.
In 1978, the Canadian Supreme Court limited pain and suffering awards to just over $300,000, circumventing the opportunity for a jury to decide on an award depending on the case before them.
Canadian Medical Protective Association
Here’s how it works.
Fees for membership vary depending on the region of the country in which the doctor works and their specialty. All neurosurgeons in Ontario will pay the same, for example. The number of claims they have faced for medical malpractice does not figure into their premium
"We don't adjust our fees based on individual experience; it's the experience of the group,'' says Dr. John Gray, the executive director, "That's what the mutual approach is all about, and it helps keep the fees down for everyone,” he tells the St. Petersburg Times.
If a doctor is sued, the group pays the claim and provides legal counsel.
In the U.S., the push has been on for limiting claims, no matter how egregious the medical malpractice. President Obama was booed in June when, before the American Medical Association, he said he would not limit a malpractice jury award.
"We got a crazy situation where Obama is talking about the cost of medicine but he said, 'I don't believe in caps,' " complains Dr. Dennis Agliano, past president of the Florida Medical Association. "If you don't have caps, the sky's the limit and there's no way to curtail those costs.''
But the importance of limiting jury awards may not play into the big picture on health care reform.
Malpractice lawsuits amount to less than one percent of both the Canadian and the U.S. healthcare system, meanwhile between 44,000 and 98,000 Americans die each year due to medical errors in hospitals alone, while 16 times as many suffer injuries without receiving any compensation, reports the group Americans for Insurance Reform.
In Canada, an injured patient is often required to pay for the initial investigation into his case. In the U.S. the contingency fee basis, usually in the range of 30 percent, allows the injured party to proceed without a financial downside.
In both the U.S. and Canada, the definition of medical negligence is that a duty of care was owed to the patient by the physician, there was a breach h of the standard of care and the patient suffered harm by the physician’s failure to meet that standard of care.
A bad outcome in itself is not the basis of a lawsuit.
The Canadian Medical Protective Association insures virtually all of the country’s 76,000 doctors, as opposed to the U.S. where private for-profit insurance companies cover physicians for medical malpractice.
In Canada, the median damaged paid in 2007 was $91,999 and judgments favored patients 25 times, doctors 70 times.
In the U.S., many physician groups are requiring patients to waive their rights to a jury trial, even though malpractice litigation accounts for just 0.6 percent of healthcare costs.
Public Citizen, the consumer group, charges that the facts don’t warrant the “politically charged hysteria surrounding medical malpractice litigation.”
For the third straight year, medical malpractice payments were at record lows finds the group in a study released this month. The decline, however, is likely due to fewer injured patients receiving compensation, not improved health safety.
2008 saw the lowest number of medical malpractice payments since the federal government’s National Practitioner Data Bank began compiling malpractice statistics. In 2008, payments were 30.7 percent lower than averages recorded in all previous years.
In the report titled, The 0.6 Percent Bogeyman, the nonprofit watchdog group states, “between three and seven Americans die from medical errors for every 1 who receives a payment for any type of malpractice claim.”
Public Citizen previously reported that about five percent of doctors are responsible for half of the medical malpractice in the U.S. that can result in permanent injury or death. #
Read more: http://www.injuryboard.com/national-news/canadian-malpractice-insurance-takes-profit-out-of-coverage.aspx?googleid=267890#ixzz0W0Z71JOP
"Overpaid Public Workers: The Evidence Mounts Several new government
studies make it harder for unions to deny the need for reform," By Andrew G.
Biggs and Jason Richwine, The Wall Street Journal, April 10, 2012 ---
. . .
The Bureau of Economic Analysis has announced that, beginning in 2013, the National Income and Product Accounts of the United States will calculate defined-benefit pension liabilities—and the income flowing to employees in those plans—on an accrual basis that reflects the value of benefits promised, regardless of the contributions made by employers today.
The bureau's reasoning is a 2009 research paper stating that "if the assets of a defined benefit plan are insufficient to pay promised benefits, the plan sponsor must cover the shortfall. This obligation represents an additional source of pension wealth for participants in an underfunded plan." At current interest rates, this adjustment would roughly double reported compensation paid through public pensions.
The Congressional Budget Office endorsed a similar approach last month in a new report on federal employee compensation. The report—which congressional Democrats reportedly hoped would debunk our 2011 paper on federal pay—found that the federal retirement package of pensions plus retiree health care was 3.5 times more generous than private-sector plans, contributing to a 16% average federal compensation premium.
Even more recently, an analysis by two Bureau of Labor Statistics economists, published in the winter 2012 Journal of Economic Perspectives, concluded that the salary and current benefits of state and local government employees nationwide are 10% and 21% higher, respectively, than private-sector employees doing similar work. This study didn't even factor in the market value of public-pension benefits, nor did it include the value of retiree health coverage.
Basic fairness requires that public employees be paid for their skills at the same market rates as the taxpayers who fund their salaries and benefits. In some states accommodations have been struck, but in others further confrontation remains likely.
Reformers will have more help in those battles ahead. Academic economists, the Federal Reserve, the Bureau of Economic Analysis, and the Congressional Budget Office have all thrown their weight behind proper pension valuation. It will now be that much harder for public-employee unions and their advocates to deny the obvious.
"Non-Financial Data is Material: the Sustainability Paradox," by Eric
Rostin, Bloomberg News, April 13, 2012 ---
You might think any corporate data that helps investors weigh the value of a company would be called "financial information," right? Not so. Welcome to the world of "non-financial information."
Five U.S. companies in 2011 expanded their financial disclosures -- information required of publicly traded companies -- to include data about environmental performance, employee and community relations, and corporate governance. Investors, nongovernmental organizations and even some governments are increasingly seeking this information as it relates to business risks and opportunities. Non-financial information, it turns out, can have a pretty big impact on financial performance.
So here's the paradox: If non-financial data, such as greenhouse gas emissions per dollar of revenue, is included in a financial report for investors, how can it still be called non-financial? Institutional investors and companies aren't yet making the leap to calling greenhouse gas emissions, percentage of female executives or other ESG metrics "financial." But they are increasingly considering them to be material.
Combining this so-called non-financial information with legally mandated disclosures is called integrated reporting, a practice that emerged from the widespread publication of corporate sustainability reports. It requires a deep knowledge of what's strategically important to a company.
A company might disclose data on any of dozens of metrics beyond conventional balance-sheet accounting, whether they are "integrated" or released in a separate format. Practitioners collectively refer sustainability reporting as ESG, for the three major categories of data -- environmental, social and corporate governance.
The amount of non-financial information flying around the marketplace is overwhelming and growing. The main delivery mechanism is the corporate sustainability report, or the corporate responsibility report, or the citizenship report, environment report, corporate social responsibility report "or some title that fits," as Hank Boerner put it. Boerner is chairman of Governance & Accountability Institute, Inc. The group collects and analyzes companies' disclosures, and is the U.S. data partner for the Global Reporting Initiative (GRI), a widely used framework for producing sustainability reports.
Boerner's organization has completed its tally of U.S. sustainability reports for 2011 -- the conventional, feel-good variety, not necessarily integrated with balance sheets. The numbers themselves aren’t as significant as the jumbled snapshot they offer to investors -- who expect standardized disclosures that are generally comparable from company to company and industry to industry.
Companies and nonprofits in the U.S. issued 242 reports last year, 228 of which came from corporations or their U.S. subsidiaries. Thirty-one company reports were assured by an independent auditor.
GRI guidelines were followed by 186 companies, about 44 percent more than in 2010.
The five U.S. companies who combined traditional and sustainability data into one "integrated" report were Clorox, Northrup Grumman, SAS, Genentech and Polymer Group Inc.
Companies considering integrated reporting are determining what information is "material" to their business, according to a recent Deloitte report. The U.S. Securities and Exchange Commission said in 1999 that "a matter is 'material' if there is a substantial likelihood that a reasonable person would consider it important." This definition hasn't changed with the advent of sustainability disclosure and integrated reporting. The rest of the world has.
The Securities and Exchange Commission issued guidance to public companies in early 2010, clarifying the circumstances in which public companies should disclose information related to climate change. Apple is the most recent company to discover that global supply chains and intense public interest make worker conditions, even at far-flung factories, material.
Continued in article
Bob Jensen's threads on triple-bottom reporting ---
"Study: Obama's Health Care Law Would Raise Deficit," SmartPros,
April 10, 2012 ---
Reigniting a debate about the bottom line for President Barack Obama's health care law, a leading conservative economist estimates in a study to be released Tuesday that the overhaul will add at least $340 billion to the deficit, not reduce it.
Charles Blahous, who serves as public trustee overseeing Medicare and Social Security finances, also suggested that federal accounting practices have obscured the true fiscal impact of the legislation, the fate of which is now in the hands of the Supreme Court.
Officially, the health care law is still projected to help reduce government red ink. The Congressional Budget Office, the government's nonpartisan fiscal umpire, said in an estimate last year that repealing the law actually would increase deficits by $210 billion from 2012 to 2021.
The CBO, however, has not updated that projection. If $210 billion sounds like a big cushion, it's not. The government has recently been running annual deficits in the $1 trillion range.
The White house dismissed the study in a statement late Monday. Presidential assistant Jeanne Lambrew called the study "new math (that) fits the old pattern of mischaracterizations" about the health care law.
Blahous, in his 52-page analysis released by George Mason University's Mercatus Center, said, "Taken as a whole, the enactment of the (health care law) has substantially worsened a dire federal fiscal outlook.
"The (law) both increases a federal commitment to health care spending that was already unsustainable under prior law and would exacerbate projected federal deficits relative to prior law," Blahous said.
The law expands health insurance coverage to more than 30 million people now uninsured, paying for it with a mix of Medicare cuts and new taxes and fees.
Blahous cited a number of factors for his conclusion:
- The health care's law deficit cushion has been reduced by more than $80 billion because of the administration's decision not to move forward with a new long-term care insurance program that was part of the legislation. The Community Living Assistance Services and Supports program raised money in the short term, but would have turned into a fiscal drain over the years.
- The cost of health insurance subsidies for millions of low-income and middle-class uninsured people could turn out to be higher than forecast, particularly if employers scale back their own coverage.
- Various cost-control measures, including a tax on high-end insurance plans that doesn't kick in until 2018, could deliver less than expected.
The decision to use Medicare cuts to finance the expansion of coverage for the uninsured will only make matters worse, Blahous said. The money from the Medicare savings will have been spent, and lawmakers will have to find additional cuts or revenues to forestall that program's insolvency.
Under federal accounting rules, the Medicare cuts are also credited as savings to that program's trust fund. But the CBO and Medicare's own economic estimators already said the government can't spend the same money twice.
Continued in article
"Here’s Why Health Care Costs Are Outpacing Health Care Efficacy," by Stephen J. Dubner, Freakonomics.com, April 18, 2011 ---
In a new working paper called “Technology Growth and Expenditure Growth in Health Care” (abstract here, PDF here), Amitabh Chandra and Jonathan S. Skinner offer an explanation:
In the United States, health care technology has contributed to rising survival rates, yet health care spending relative to GDP has also grown more rapidly than in any other country. We develop a model of patient demand and supplier behavior to explain these parallel trends in technology growth and cost growth. We show that health care productivity depends on the heterogeneity of treatment effects across patients, the shape of the health production function, and the cost structure of procedures such as MRIs with high fixed costs and low marginal costs. The model implies a typology of medical technology productivity: (I) highly cost-effective “home run” innovations with little chance of overuse, such as anti-retroviral therapy for HIV, (II) treatments highly effective for some but not for all (e.g. stents), and (III) “gray area” treatments with uncertain clinical value such as ICU days among chronically ill patients. Not surprisingly, countries adopting Category I and effective Category II treatments gain the greatest health improvements, while countries adopting ineffective Category II and Category III treatments experience the most rapid cost growth. Ultimately, economic and political resistance in the U.S. to ever-rising tax rates will likely slow cost growth, with uncertain effects on technology growth.
This paper strikes me as sensible, explanatory, and non-ideological to the max. It would be nifty if the people who work in Washington read it, and thought about it, and maybe even acted on it. (And it would be nifty if the Knicks beat the Celtics too, but I’m not holding my breath for either outcome …)
Here’s a very good paragraph from the paper:
The science section of a U.S. newspaper routinely features articles on new surgical and pharmaceutical treatments for cancer, obesity, aging, and cardiovascular diseases, with rosy predictions of expanded longevity and improved health functioning (Wade, 2009). The business section, on the other hand, features gloomy reports of galloping health insurance premiums (Claxton et al., 2010), declining insurance coverage, and unsustainable Medicare and Medicaid growth leading to higher taxes (Leonhardt, 2009) and downgraded U.S. debt (Stein, 2006). Not surprisingly, there is some ambiguity as to whether these two trends, in outcomes and in expenditures, are a cause for celebration or concern.
And the authors offer good specific examples of what they built their argument on, noting the …
Continued in article
"The Truth About Health Care Reform and the Economy: Separating economic fact from economic myth," by Veronique de Rugy, Reason Magazine, April 15, 2011 --- http://reason.com/archives/2011/04/15/the-truth-about-health-care-re
Myth 1: Health care reform will reduce the deficit.
Fact 1: Health care reform will increase the deficit.
The Patient Protection and Affordable Care Act includes many provisions that have nothing to do with health care: the CLASS act, a student loan overhaul, and many new taxes. These provisions don't change the health care system. They just raise money to pay for the new law. Strip them away and the law’s actual health care provisions don't lower the deficit—they increase it!
The chart below uses data from Congressional Budget Office (CBO) to clarify the fiscal consequences of health care reform.
. . .
As you can see, from 2012 to 2021, the Congressional Budget Office estimates that the health care act will reduce deficits by $210 billion (note that this estimate differs from the widely cited $143 billion figure used during the lead-up to the passage of the act). During this same time period, however, the actual health care reform provisions of the law will increase deficits by $464 billion.
Of course, one should not evaluate the health care legislation on its fiscal impacts alone. In theory we should get some fiscal benefits. But the key question is how they net out. Still, no matter what you think about the benefits of the health care legislation, it is incorrect to claim that health care reform will save money. It won’t.
Myth 2: The U.S. health care system is a free-market system.
Fact 2: Roughly half of all U.S. health care is currently paid for by the government.
. . .
Even in the absence of the health care reform law, government programs including Medicare and Medicaid already fund almost half of American health care. Roughly a third of the remaining expenditures are funded by private insurers—mainly through subsidized and highly regulated employee plans. Not exactly a free market.
As this chart shows, state and federal entities make up over half of the health insurance market. Of course, the Patient Protection and Affordable Care Act will only increase the share of government involvement in the health care market.
Myth 3: Medicare spending increases life expectancy for seniors. Reductions in Medicare spending will therefore reduce their life expectancy.
Fact 3: Increases in life expectancy for seniors are due to increased access to health care, not to Medicare.
While Medicare spending has certainly decreased seniors’ out of pocket health care expenses (by 1970, Medicare reduced out of pocket expenses by an estimated 40 percent relative to pre-Medicare levels), the program’s effect on mortality is much less clear.
. . .
Continued in article
Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm
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Summary of Major Accounting Scandals --- http://en.wikipedia.org/wiki/Accounting_scandals
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Current and past editions of my
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Enron --- http://www.trinity.edu/rjensen/FraudEnron.htm
Rotten to the Core --- http://www.trinity.edu/rjensen/FraudRotten.htm
American History of Fraud --- http://www.trinity.edu/rjensen/FraudAmericanHistory.htm
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Bob Jensen's threads on
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Against Validity Challenges in Plato's Cave ---
· With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier
· With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams
· With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR
· With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses
Against Validity Challenges in Plato's Cave ---
By Bob Jensen
wrong in accounting/accountics research? ---
The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most
AN ANALYSIS OF THE EVOLUTION OF RESEARCH CONTRIBUTIONS BY THE ACCOUNTING REVIEW:
Bob Jensen's threads on accounting theory
Tom Lehrer on Mathematical Models and Statistics
Systemic problems of accountancy (especially the vegetable nutrition paradox)
that probably will never be solved
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