CBO: It Is No Longer Possible to Determine the Fiscal Impact of ACA/Obamacare. No Way! Way!

“For Democratic lawmakers who were hesitant to sign onto the sweeping 2010 health care law, one of the most powerful selling points was that the Affordable Care Act would actually reduce the federal budget deficit, despite the additional costs of extending health insurance coverage to the uninsured.

Four years after enactment of what is widely viewed as President Barack Obama’s key legislative achievement, however, it’s unclear whether the health care law is still on track to reduce the deficit or whether it may actually end up adding to the federal debt. In fact, the answer to that question has become something of a mystery.

In its latest report on the law, the Congressional Budget Office said it is no longer possible to assess the overall fiscal impact of the law. That conclusion came as a surprise to some fiscal experts in Washington and is drawing concern. And without a clear picture of the law’s overall financing, it could make it politically easier to continue delaying pieces of it, including revenue raisers, because any resulting cost increases might be hidden.

Charles Blahous, a senior research fellow at George Mason University’s free market-oriented Mercatus Center, calls the CBO’s inability to estimate the net effect of the law “a real problem.”

“The ACA’s financing provisions were assumed to be effective so as to get a favorable score out of CBO upon enactment, but no one is keeping track of whether they’re being enforced,” says Blahous, a public trustee for Social Security and Medicare. “We receive occasional updates on the gross costs of the law, but none on whether the previously projected savings provisions are producing what was originally projected.”

As a result, Blahous says, “there’s no barrier to continually rolling back the financing mechanisms without the effect on the ACA’s finances ever being fully disclosed.”

When Congress passed the health care law in 2010, the CBO estimated it would reduce the deficit by more than $120 billion over a decade, compared to the agency’s current-law baseline projection of spending, revenue and the deficit. That meant the health care law would, in effect, pay for itself and deliver an additional fiscal bonus.

The CBO based its estimate on the assumption that the law, which included hundreds of billions of dollars’ worth of Medicare cuts and tax increases to pay for health care subsidies, would be implemented as written. Now, after a chaotic start and a series of delays or adjustments in various provisions of the act, including an employer mandate that was expected to bring in new tax revenue, it’s unclear to what extent those promised savings are being realized.” - Fiscal Diagnosis Only Gets Tougher for Health Care Law, rollcall.com, 06/04/2014

Link to the entire article appears below:

http://www.rollcall.com/news/-233551-1.html?zkPrintable=true




Update: CBO throws in the towel on scoring ObamaCare, thehill.com, 06/04/2014

http://thehill.com/policy/healthcare/208314-cbo-to-stop-measuring-certain-o-care-effects

VA Hospitals Appointment Wait Times: 14 Days is 14 Days Except When It Isn’t 14 Days.

'A Veterans Affairs employee at the VA Medical Center in Cheyenne, Wyoming, has been placed on administrative leave after CBS News obtained an email showing an employee directing his staff on how to game the appointments system to make it appear as though veterans were being seen within the VA's 14-day directive.

The email, written by Telehealth Coordinator David Newman, a registered nurse, describes how patients at the Cheyenne VA Medical Center are always listed getting appointments within a 14-day window, no matter when the appointment was first requested, and no matter how long the patient actually waited.

The memo admitted, "Yes, this is gaming the system a bit..." because "when we exceed the 14 day measure, the front office gets very upset, which doesn't help us."

The employee further instructs staff on how to "get off the bad boys list" by "cancelling the visit (by clinic) and then rescheduling it with a desired date within that 14 day window."' - Email reveals deliberate effort by VA hospital to hide long patient waits, CBS News, 05/09/201

Link to entire story appears below:

http://www.cbsnews.com/news/email-reveals-effort-by-va-hospital-to-hide-long-patient-waits/


　


　

ACA/Obamacare: The Latest CBO Price Tag is $53,192 Per Obamacare Insured.

"The small dent in the total number of uninsured, despite the slight cut in CBO’s projections, still comes at a significant cost to taxpayers. The CBO’s new estimate of Obamacare’s cost is $1.38 trillion through 2024.

When the costs of Medicaid and CHIP’s publicly-funded health coverage is set aside, the total cost of private insurance plans and related spending comes in at $591 billion through 2024. At that
rate, the taxpayer cost of each newly added private insurance enrollee would amount to $45,461.
 
When the CBO’s estimate total net amount of newly insured — whether customers have private coverage, Medicaid or CHIP — are compared to the health care law’s total cost over the next decade, the cost per person is slightly higher at $53,192." - ANALYSIS: Obamacare will cost taxpayers $53,000 per newly insured, dailycaller.com, 04/24/2014

Link to the entire article appears below:


http://dailycaller.com/2014/04/24/analysis-obamacare-will-cost-taxpayers-53000-per-newly-insured/

U.S. Federal Budget: the un-balanceable budget!

March 45,000 Low Volt Shocker: GM Halts Production Of Chevy Volt… Again

When oil prices climb in a constant fashion [rising oil prices vs. oil price shocks] the consumer has time to adjust consumption patterns. That is to say, James and Jane Goodfellow can change the composition of their basket of goods consumed to accommodate rising oil prices. As the story goes, the Goodfellow’s delay a purchase, substitute goods, and put off some purchases all together (skip a night out for dinner) to accommodate the rising energy price.

A phenomena expected to occur during a constant oil price increase would be the price of gasoline rising hence signaling consumers to increasing car pooling, more combining of trips and one would expect an increase in consumer interest and consequential purchase of electric vehicles and/or hybrid vehicles. That is, consumer preference may change regarding solely gasoline powered vehicles, in that, electric or hybrid vehicles would garner some additional consumer preference even if the increase is at the margin.

Enter the Chevy Volt. General Motors announced today that Chevy Volt production will be halted with 1,300 idled and are anticipated to be recalled April 21^st. 


' "Even with sales up in February over January, we are still seeking to align our production with demand," GM spokesman Chris Lee said.

The car company had hoped to sell 45,000 Chevy Volts in America this year, according to the Detroit News, but has only sold about 1,626 over the first two months of 2012.' (1)

"The news comes just one day after GM announced that the Volt sold 1,023 vehicles in February, up from just 603 in January.” (2)

“General Motors has told 1,300 employees at its Detroit Hamtramck that they will be temporarily laid off for five weeks as the company halts production of the Chevrolet Volt and its European counterpart, the Opel Ampera.” (3)

“It will be the third time that Volt production has been stopped for at least a month since the car first went on sale in December 2010.” (4)

Therefore we do see marginal consumer preference change from  603 Volts sold in January climbing to the astounding sales rate of 1,023 albeit the assumed sales rate is 3,750 per month (45,000 unit goal/12 months). Hence January production rate was 16% of goal and February sales was 27% of goal. Wow!

When considering rising gasoline prices pushing Chevy Volts to the astounding sales pace of 1,023 per month, one must not overlook an additional incentive: a $10,000 tax credit! Yes, your tax dollars are at work!

“The White House intends to boost government subsidies for wealthy buyers of the Chevy Volt and other new-technology vehicles — to $10,000 per buyer.


That mammoth subsidy would cost taxpayers $100 million each year if it is approved by Congress, presuming only 10,000 new-technology autos are sold each year.” (5)

Despite rising gasoline prices, despite the massive tax subsidy, the Chevy Volt must be contrasted to total vehicles sales for the month of February which spiked upward.

“For the second month in a row, U.S. auto sales came in much higher than the consensus expected in February and reached a four-year high of 15.1 million units at a seasonally-adjusted annual rate. Despite higher gas prices, total February light vehicle sales came in an impressive 15.7% above a year earlier, led by a 40.4% increase for Chrysler and 34% increase for Volkswagen. Sales of the Ford Focus doubled over the last year, and the company overall had a 14.4% increase. GM highlights included a 28% year-over-year sales increase for the Chevrolet Silverado truck and a 20% annual gain for the GMC Sierra truck.” (6)

Is there a lesson to be learned? Has this lesson been learned before in the US auto industry? The basic lesson is that consumer preference is revealed by the market place. The producers then need to match the demand revealed by the preference. However, if from the supply end producers create a supposed preference item, most times the item does not match the consumers revealed preference as a centrally planned preference rarely matches a spontaneous/emergent order preference of millions of freely choosing consumers. If one recalls, in the early 1970’s Detroit built vehicles they considered vehicles that customers wanted. Sales slumped as low quality non-demand vehicles would not sell and a flood of imports came into the US market that more closely matched consumer preference. Ah, the evil of it all.....history repeats itself yet again.

Moreover, there is likely a third lesson. If a bailed-out producer, beholding to politicos who bestowed taxpayer money onto such producer, is coerced into producing a supposed preference item merely reflecting the vision of particular politicos and their preference for “the way things ought to be”, the plans of the few end in not matching the plans of the many.


Notes:

(1) GM Laying Off 1300 Due to Low Volt Sales, Washington Examiner, 03/02/2012

http://campaign2012.washingtonexaminer.com/blogs/beltway-confidential/gm-laying-1300-due-low-volt-sales/406771


(2) GM shuts down Chevy Volt production for five weeks, temporarily lays off 1,300, Torque News, 03/02/2012


http://www.torquenews.com/1081/gm-shuts-down-chevy-volt-production-five-weeks-temporarily-lays-1300


(3) GM Halts Production of Chevy Volt, Lays Off 1,300 Workers, Zipwire, 03/02/2012


http://weaselzippers.us/2012/03/02/heartache-gm-halts-production-of-chevy-volt-lays-off-1300-workers/

(4) G.M. Again Pauses Production of Chevy Volt, NYT, 03/12/2012


http://www.nytimes.com/2012/03/03/business/gm-suspends-production-of-chevrolet-volt.html?_r=1

(5) More than one way to sell a volt, Edmonds.com, 02/13/2012


http://townhall-talk.edmunds.com/direct/view/.f157543/920

(6) Car Sales Shift Into High Gear, 4-Year High in Feb., Carpe Diem, 03/01/2012


http://mjperry.blogspot.com/2012/03/car-sales-shift-into-high-gear-4-year.html

2013 Obama Budget Accounting Vignette: post cards from the alternate universe of accounting -or- when deficit reduction means spending increase.

“Spillover into the local community": Politico Mantra and Politico Reality

Spillover effect: a secondary effect that follows from a primary effect, and may be far removed in time or place from the event that caused the primary effect”. (1)

In the Foreground

 The politico and spillover effects

Spillover effects are positive or negative externalities [neighborhood effects] of a particular action e.g. burning coal for electricity has the positive externality of power-on-demand while soot is depicted as a negative externality. Other times political proponents of proposed private sector investment or proposed public sector spending co-op the concept of “spillover” to mean some positive external economic activity that arises from a primary economic activity e.g. a computer maker builds a new assembly plant which then attracts suppliers to situate nearby or a downtown revitalization plan based on X causes businesses associated with X to be attracted to the downtown area as well. The phenomena are many times termed/framed as "spillover into the local community".

Note: "spillover into the local community", in the main, is a politico proposition-phrase that frames only the positive aspect of spill-over effects and purposely leaves out any negative externalities of such spillover effects such as traffic congestion, the taxpayer cost of additional social overhead capital, tax relief for the attracted primary event and hence taxpayer cost for attraction by low or zero tax rates for a specified period, etc.

Failure to diversify an economy’s portfolio of primary effects

A potential as well as real life reoccurring long-term problem with the depicted spillover effect is the concentration of particular spillover activities associated with the primary event. That is to say, the first stage spillover effect as described/depicted is many times a concentrated single end result. For example, a natural gas find, a valuable coal seam, the opening of a large auto assembly plant, or the attracting of an entire sub-sector such as textiles becomes associated with a concentrated first stage spillover effect that lacks diversification within the economy at hand. For example, the primary effect described above is followed by a first stage item which is generally the primary event’s direct suppliers. The primary and the first stage secondary effect create a robust economy that causes no perceived need to diversify the economy further. That is, the robust economy is concentrated around the primary first stage and secondary events.

 Over time ancillary items pop-up regarding the primary and first stage secondary events such as additional housing, auto dealer, grocery stores, retail strip centers, etc. However these items are not additional primary events. Hence we have an economy based on one prime event and the prime events suppliers. Occasionally the economy seems so well situated that the need to diversify and find additional and alternate primary effect and associated spill over effect items are put aside in favor of additional duplicates of the initial primary and first stage secondary events e.g. Buffalo as a steel center, Detroit as an auto assembly center, greater North Carolina as a textile center.

Hence the primary driver and first stage secondary events create such a robust economy that the mind-set becomes “what goes up continues to go up”. Over time exogenous events such as aggregate regulation, taxes, technology, changes in demand preferences, etc. can cause a decline in the concentrated primary event which causes the reverse process of the primary first stage secondary events. The economy begins to deteriorate, deterioration increasing at an increasing rate e.g. Detroit.

In the Background

Spillover effects and politicos through the mechanism of government

From the discussion above it becomes obvious that diversification is very important within an economy’s portfolio of primary effects. However, regardless of the amount of diversification, the politico’s mantra of “spill over into the local community" comes with a lesser known phenomena that empowers the politico and simultaneously drives away the very primary effect, secondary primary suppliers, and ancillary items that the politico trumpets with the manta "spillover into the local community".

When politicos want to attract a primary effect and sing the praises of “spill over into the local community" caused by the primary effect, the politico also sees the entire exercise as potential tax revenue the politico can use for political constituency building purposes. That is, the politico rejects the concept that all capital and all human capital is mobile, and most capital and most human capital migrates to the lowest environment of tax and regulation. The politico substitutes mobility with “fixed”. That is, the politico sees the primary effect, primary suppliers, and ancillary items as tax revenue generators that can fund political constituency building exercises.

The politico, with the mind set of primary effect, primary suppliers, and ancillary items as tax revenue generators, begins a long march of raising taxes on the very concept of “spill over into the local community" and the revenue is used for political constituency building. The politico thinks they can raise taxes and further raise taxes, and raise tax even more as the taxed entities are perceived as “fixed”. That the “fixed” entity will not/cannot move and hence is a constant target of tax. The politico then takes increased tax revenue and builds politico monuments [public structures that supposedly benefit the greater public], increases redistribution to build a dependent constituency base, and increases size and scope of government to create yet another dependent constituency base of the public sector dependent on the politico to maintain funding.

The fallacy of “fixed” entities and escalating taxes on such entities ends by the entities merely following the economic phenomena that: all capital and all human capital is mobile, and most capital and most human capital migrates to the lowest environment of tax and regulation. Over time, most capital and human capital migrate away leaving the locale with no tax base yet the associated cost of maintaining prior build politico monuments, a redistribution system with politico build constituency dependent on continue redistribution of a tax dollar stream and a bloated public sector. That is, the economy begins to deteriorate, deterioration increasing at an increasing rate. A phenomena that can be in place of or in concert with the failure to diversify primary effects as discussed above.

That is, purposely, the politico creates a situation that causes the primary source to pass like the wind through the trees.

Notes:　

(1) http://www.businessdictionary.com/definition/spillover-effect.html

The repeal of ObamaCare's subsection C.L.A.S.S.: entitlement repeal -or- repeal of a budget gimmick entitlement?

“The Republican-led House on Wednesday voted to repeal a financially troubled part of the 2010 health care law that was designed to provide affordable long-term care insurance.

The House vote comes months after the Obama administration suspended the Community Living Assistance Services and Support program, known as the CLASS Act.


Health and Human Services Secretary Kathleen Sebelius in October said she was unable to find a way to make the program financially solvent.

Still, the White House has said it does not support repealing the program, under which workers would pay a monthly premium during their careers and collect a daily cash benefit if they become disabled later in life.

Republicans have targeted the program as part of their overall goal of dismantling the health care overhaul law. Action on the bill in the Democratic-controlled Senate is uncertain.

“Republicans are committed to repealing and defunding it, piece by piece if necessary,” House Speaker John Boehner (R-Ohio) said of the health care bill after the CLASS Act vote.

The House vote was 267-159, with 28 Democrats joining all 239 voting Republicans in support.”

 - CLASS Act Repeal Passes House, Politico, 02/01/2012



However, to understand why-what-where-when-how of the repeal vote one needs to examine this news story from October, 2011:



Budget Shenanigans - Wall Street Journal Political Diary, 10/18/2011, Joe Rago

　

“Congressional Republicans spent yesterday debating their political strategy options now that the Obama Administration has euthanized the Affordable Care Act entitlement program known by the acronym CLASS. The next question is how much of the rest of the law, as a practical matter, they should try to take out too. But they did receive a gift from the Congressional Budget Office, which showed unusual common sense in ruling that formally repealing the CLASS spending program for long-term care would not increase the deficit.

Welcome to the wilderness of mirrors that is the budget process. During the health-care debate, CBO scored the CLASS entitlement as a fiscal benefit because of a Democratic gimmick: The program would have collected $81 billion more in premium taxes over the next 10 years than it would have spent on home health aides and the like -- even though this huge new liability would then have started draining the federal fisc in the following decade. Under these rules, getting rid of Class "costs" $81 billion, which Republicans would have to offset.

　

But then the white smoke rose up from CBO, and in an email to staffers it ruled that it would adjust its baseline to "assume that the program will not be implemented," since the Administration itself junked CLASS. "Beginning immediately, therefore, legislation to repeal the CLASS provisions in current law would be estimated as having no budgetary impact," the message continued. In other words, repealing what is now a vestigial program merely ensures that the CLASS program remains vestigial, while actually preventing future taxpayer dollars from being spent would have also erased the fake deficit reduction.

This kind of non-logic shows why the budget process is so in need of reform. But anyway, CBO's blessing makes it much easier for House Republicans in particular to do some practical good. The White House let it be known yesterday that it opposes a formal repeal of the CLASS program even as it says that the program would be a disaster. Perhaps that's because it may try to revive CLASS in the future, as the Hill newspaper reported it was telling its political allies.

More likely, the veto threat comes because the White House knows that a repeal bill would also be a vehicle for also repealing some of the health-care laws more unpopular and harmful elements that Democrats would find it difficult to oppose -- which is why Republicans should use this new lever to the maximum extent“.

　

Buffaloed in Buffalo -or- The Home of The Public Employee Face Lift

“This is an old story for Buffalo. Ever since the city began losing its manufacturing base in the 1950s and gradually declined into one of America’s poorest cities (the poverty rate today is nearly 29%), the federal and state governments have poured hundreds of millions of dollars into subsidized redevelopment schemes that have yielded few tangible benefits.

Buffalo may be the paradigmatic example of why expensive government revitalization efforts often fail. Back in 2004, the Buffalo News estimated that the city had garnered more federal redevelopment aid per capita than any other city in the country, a total of more than half a billion dollars since the 1970s. Yet, the paper noted, the city had virtually nothing to show for the money.

Officials squandered millions granting loans and subsidies to projects that went bust. There was a proposed trade center near the famed Peace Bridge that was never completed even after the city granted it federally backed loans; a failed shopping plaza on William Street; and several hotels that defaulted on their government loans. Among the past three decades’ failures have been a dozen or so businesses in the theater district—”one of Western New York’s most heavily subsidized stretches of real estate,” said the Buffalo News.”

“But Buffalo also struggles because it remains among the highest-taxed localities in the country. According to Cato Institute scholar Dean Stansel, a Buffalo resident pays 25% more in income taxes than does the average resident in America’s 100 largest metro areas. Buffalo’s 8.75% sales tax, according to the Tax Foundation, is the fifth highest among the country’s 120 cities with more than 200,000 residents. And the property-tax burden in Buffalo and surrounding Erie County ranks in the top 10% nationwide.

These taxes have gone to support a spendthrift local government that nourishes itself at the expense of the private sector. In 2003, then-Gov. George Pataki appointed a financial control board to audit Buffalo’s finances. The Buffalo Fiscal Stability Authority accused city government of financial mismanagement, inadequate oversight, and fragmented record keeping. It detailed numerous wasteful practices in city government, including loading employee contracts with expensive provisions.

The city’s virtually insolvent school district, for example, paid for elective cosmetic surgery for its teachers and other staff. “Buffalo must have the best looking teachers in the country,” says John Faso, a former member of the control board, which lobbied unsuccessfully to have the perk ended. It continues today, to the tune of some $6 million a year.

The city also struggles to cut spending because of expensive state-imposed mandates, including a union-friendly binding arbitration law that results in rich public-employee contracts, and a state law that allows unionized public workers to continue receiving the benefits of a contract—including pay increases—even after the contract has expired. Good luck getting concessions from union leaders in new contract negotiations under such conditions.”

“In the Empire State, the official version of Buffalo’s decline is that the city lost its manufacturing jobs to cheap overseas competitors. But the flight of blue-collar jobs from upstate New York began in the late 1950s when businesses and investment bolted to more competitive American states, not to foreign countries. Today, business executives consistently rank New York one of the least desirable states in which to open or expand a business.” (1)

Read the entire essay, How Stimulus Spending Ruined Buffalo, at either of the following links:

http://online.wsj.com/article/SB10001424052970204409004577156603296740624.html




http://newyorklibertyreport.com/?p=4717



Notes:

(1) How Stimulus Spending Ruined Buffalo, The Wall Street Journal, weekend edition, 01/14-15, 2012, Steven Malanga

DEBT LIMIT - A GUIDE TO AMERICAN FEDERAL DEBT MADE EASY.

Political Constituency Building in Fail-Safe Mode

Public debt in percent of GDP (2010), CIA fact book 09/2011


Particular politicos that champion more or constant spending in the face of unsustainable debt loads point out that their particular political constituency recipient groups enjoy their particular taxpayer funded transfer payment and do not want benefits cut. Go figure.

Its an interesting argument in that the politico points to their own purposely politically built constituency group, funded through taxpayer dollars, and state the recipient group enjoys their taxpayer funded benefit. Problem being the benefit would not exist without the purposeful creation of the benefit by the politico to garner political constituency. Go figure x 2.

In essence, the politico purposely created a dependent recipient class and now points to the purposely created group in its “constituency form“ i.e. in its voting block form. Stated alternatively, the political constituency building episode is a fail-safe, in that, the politico purposely built a dependency class through political promises all the while knowing that the dependent political constituency class will never give up its dependency benefit and hence act as purposely designed and call for supporting the particular politico for more or constant spending.


“The state is the great fiction by which everybody seeks to live at the expense of everybody else“.

- Frederic Bastiat

The PIIGS: Austerity Upon Further Review.

One argument you hear from talking heads is that economic growth in Italy and Greece (the PIIGS in general) will be very low in coming years, even negative, due to "austerity". Austerity is used in terms of reduced government spending. That reduced government spending will reduce growth.

In regards to the above argument an item worth considering is how did one arrive at Z amount of public sector spending/promises/workers/tax rates? Stated alternatively, the constant rise in tax-types and tax rates coupled with rising debt lead to level Z.

We now know, for certain, that the PIGGS, in the main, engaged in rising tax-types and rising tax rates coupled with ever growing debt leading to the ever increasing role of politico promises through the mechanism of government. The phenomena then became a disincentive nightmare on one hand and politico promised pipe dreams on the other hand. Its exactly what F.A. Hayek explained as late stage socialism implosion.

Hence Z is/was a false number. Z-1 is the true number. Therefore, reducing to Z-1 is not “austerity” its merely returning from a false/bubble number. Any reduction in growth associated with the movement from Z to Z-1 is not a reduction in true growth.

Matter-of-fact, "austerity" is the incorrect term. Austerity would mean doing without. How can you "do without" something you could not afford in the first place? Hence the talking head argument is: living within one's means equates to low or no growth.

Living Standards and Economic Freedom

H/T: Cafe Hayek

Obama’s proposed Tax Increase aka “Jobs Bill”: political science vs. public choice theory

Obama’s shallow debate points/talking points regarding his “Jobs Bill” and its funding through additional taxes find their basis in the political science concepts of “society” [actually existing rather than merely an abstract idea] and the greater good of politics [the altruistic supposed end game of politics according to political science]. Leaving the realm of political science and entering the realm of public choice theory, Obama's tax proposal and consequential rhetoric is really based on the concept that an individual will support more public goods when not confronted with a cost [the cost borne by others aka millionaire tax].

The economist does, normally, attribute precise meaning to the terms "more" and "less." Moreover, if a similar model of rational behaviour is extended to the collective-choice process, we are able to derive propositions about individual behaviour that are parallel to those contained in economic theory. If the hypotheses are valid, the representative individual should, when confronted with relevant alternatives, choose more "public goods" when the "price" of these is lowered, other relevant things remaining the same. In more familiar terms, this states that on the average the individual will vote for "more" collective activity when the taxes he must pay are reduced, other things being equal. On the contrary, if the tax rate is increased, the individual will, if allowed to choose, select a lower level of collective activity. In a parallel way, income-demand propositions can be derived. If the income of the individual goes up and his tax bill does not, he will tend to choose to have more "public goods."  - James M. Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy, 1958

Solyndra: The Final Government Failure Frontier, Where No Failure Has Gone Before

"Ex-employees of the failed solar panel company Solyndra have applied for aid under the federal government’s Trade Adjustment Assistance program, the Labor Department has confirmed.

If approved, the employees of what was once touted as a leading exemplar of the White House’s green jobs program will be eligible for more federal funds to enable them to be retrained for other jobs.

It would be an ironic coda to the saga of Solyndra, which manufactured solar panels and received $527 million in loan guarantees from the Energy Department and praise from President Obama during visits to the firm’s California headquarters. Now those green workers will be seeking the government’s help to find work again and not necessarily in the conservation jobs sector". (1)

"So to recap: massive government subsidies created 1,100 "green jobs" that never would've existed but for those massive government subsidies. And when those fake jobs disappeared because the subsidized employer company couldn't compete in the market, the workers blamed China (instead of what's easily one of the worst business plans ever drafted) in order to receive... wait for it... more government subsidies." (2)

Update 09/28/2011:

The Daily Show
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Notes:

(1) Ex-Solyndra Employees Now Applying For Trade Adjustment Assistance, Sean Higgins , Capital Hill, IBD's Politics and Markets Blog    http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/2763-ex-solyndra-employees-now-applying-for-trade-adjustment-assistance

(2) Behold, The Circle of Government Life, Dr. Mark Perry, Carpe Diem blog http://mjperry.blogspot.com/2011/09/chart-of-day-detroit-home-prices-vs-new.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+blogspot%2FmmMP+%28CARPE+DIEM%29

No Bail Out for This U.S. Assembled Vehicle Purchase!

Government Mysticism

"The bottom-line, fundamental reason I endorse markets over government direction of the economy – the essential reason I support extensive and vigorous private property rights and the consequent decentralization of decision-making that this institution brings – is that I cannot tolerate the mysticism that motivates too much reliance on government.

Too many people, including otherwise very smart people, believe in secular magic. They believe that words written on paper by people, each of whom receive a majority of votes on certain days of the year of adult citizens living in certain geographic areas, and who utter ritualistic pronouncements under marble domes in buildings conventionally called “capitols,” are somehow endowed with greater understanding of society’s complexities and with superhuman capacities to care about the welfare of strangers. These priests preach devotion, dedication, and sacrifice to the One True State (your own government), even while each recognizes that legitimate disputes about the details of the dogma divide various cliques of the secular clergy. When they speak and act in their official roles, they expect – usually correctly – that the laity pay their words special heed as if these words have extraordinary power." - Don Boudreaux, Cafe Hayek

Below is a link to the entire post by Don Boudreaux:

http://cafehayek.com/2011/08/reventing.html

Promises and Base Line Promises: off the map where the monsters live.

“Base line budgeting” by Congress basically boils down to taking a current budget and increasing that budget by 5.5% every year. That is, built in budget escalators such as Social Security cost of living adjustments [COLA] , the increasing cost of health care paid by government, increases in inflation adjusted procurements, etc. cause the budget to be adjusted upward from a present level, to the next (future) budget level, then being reset at a 5.5% increase and so on.

Hence the base line budgeting concept leaves you with an ever increasing budget to account for ever increasing under lying budgetary items. The concept has several explicit and implicit assumptions:

(1) that Gross Domestic Product (GDP) increases,

(2) that tax revenue as a percentage of an increasing GDP also increase,

(3) therefore government spending baseline budgeting increases but the increases are matched by an increased tax revenue associated with a percentage of a growing GDP number.

The concept of baseline budgeting and an ever increasing revenue stream working in tandem sounds viable but the non-viable result is a $14 trillion dollar national debt and a current $1.5 trillion annual deficit. That is, the U.S. is current borrowing 41 cents of every dollar spent. In other words, the baseline budget and increasing revenue stream as a concept is one item, the result is yet another item. Why? Because its not a budget!


Budget defined:

1. an estimate, often itemized, of expected income and expense for a given period in the future.

2. a plan of operations based on such an estimate.

3. an itemized allotment of funds, time, etc., for a given period.

4. the total sum of money set aside or needed for a purpose: the construction budget.

5. a limited stock or supply of something: his budget of goodwill. (1)


Upon Further Review

One glaring point is that “budget” and “baseline budgeting” assume a budget is based on sound and known economic axioms. In other words, the entire concept is based on business and economic principles.

When is a budget not a budget? Stated alternatively, when, if ever, was a cabal of politico promises referred to as a budget? How can the U.S. federal budget even remotely be considered a budget? A collection of politico promises past, present and future is not a budget!

Hence the argument at the puzzle palace on the Potomac is not a budget battle rather it’s a politico promise battle. There is no “base line budgeting” its merely base line politico promises.

Politico promises is completely off the budget map.... where the monsters live.

Notes:

(1) http://dictionary.reference.com/browse/budget

A Ten Minute Primer Regarding Politicos Framing the Tax Increase Argument: “The Required, the Needed, and the Necessary”.

Ruling Through Talking Points

Many politicos begin debate positions regarding Medicare and Social Security with the phrase “the government promised” or “government promises”. Other politicos begin debate propositions regarding Medicaid, welfare, food Stamps, and unemployment benefits with the phase “social safety net”.



What About Those Talking Points?

First and foremost, as pointed out long ago by Milton Friedman, government does not think, discuss, nor take action. Politicos through the mechanism of government think, discuss and take action. Hence government does not promise. Only politicos promise.

Next we have the proposition of the “social safety net”. There is a massive difference between a social safety net based upon the collectivist welfare state and the social safety net proposition being based upon a temporary nonrecurring stop gap measure.


Politico Promises, The Mechanism of Government, Political Time Horizons, Dependency Politics, and Other Peoples’ Money

One must explore the politico argument based upon required, needed, and necessary in relation to politico promises delivered through the mechanism of government based upon the welfare state dependency proposition. The politico proposition of required, needed and necessary is related to the concept of spend then tax. It is also very much related to politico promises made through the mechanism of government in conjunction with short term politico election time horizons. Finally the proposition does have an insidious long term politico horizon of developing a dependent constituency, through the use of other peoples’ money, that perpetuates the politico class aka ruling class.


Politico Promises through the Mechanism of Government

The democracy will cease to exist when you take away from those who are willing to work and give to those who would not. - Thomas Jefferson

Politicos have long known that they can promise one group that poses a special political interest a benefit by extracting value from a highly diffused group of tax payers. One dollar from a million tax payers, taxpayers that will not lobby against a one dollar tax increase, can then be easily bestowed upon a group that is of special political interest to the politico or group of politicos. Hence we immediately create the politico promise by means of the government mechanism by merely having the mechanism of government extract tax and have the mechanism of government bestow a benefit elsewhere.


Politico Time Horizons

Politicos have a very short political time horizon which is known as the next election. Three basic strategies present themselves to politicos in relation to their short term political time horizon: (a) exactly what well organized political constituency [rent seekers] can be bestowed a benefit that will result in votes, campaign contributions, and campaign volunteers? (b) what prior politico produced dependency group can be framed as though the politico is protecting or enhancing the group all the while to gain votes [prior politicos producing a dependency groups for current and future politicos], (c) create a new dependency group.

Since the politico’s political time horizon is short, any promises must have an immediate effect to fit the short time horizon. Hence long run cascading economic unintended consequences of politico promises are of no interest to the politico as short term first stage economic consequences are the quest. One might go on to say that the politico has no real interest in the benefits or costs of such promises to the affected recipients or taxpayers financing such a plan, the only benefit of interest is to the politico is votes leading to election or re-election.


Dependency Politics and Other Peoples’ Money

Politicos long ago discovered the ability to generate dependency constituency by promising other peoples’ money. Stated alternatively, through notional propositions and verbal virtuosity the redistribution of income and wealth are championed by politicos to help the have-nots and build a vibrant middle class. However, the redistribution of income and wealth has nothing to do with helping or building. Rather, redistribution of income and wealth is merely a spending conduit for politicos. Stated alternatively, politicos need other peoples’ money in order to finance spending promises.

With the spending conduit in place politicos coercively, through the mechanism of government, take monies from one group and promise the monies to another group. The receiving group, known as the recipient class, is given the money based on two concepts: (1) build a government bureaucracy to distribute the money hence creating a dependent bureaucracy [employment-dependent and hence politico-dependent upon the continuation of the promise to distribute to the recipient class], (2) a recipient class that grows dependent on the promised money and hence dependent upon the continuation of the promise. The politico then creates two dependent political constituency groups.


The Required, the Needed, and the Necessary

The summation of politico promises past and present are now framed as required, needed, and necessary. Speeches, rallies, commercials, and essays are presented regarding the dire need for the promises. That the promises are required, needed, and necessary or else ominous consequences await.

In essence the required, need, and necessary politico argument is really an argument for the continuation of the politicos’ exercise in political constituency building with other peoples’ money. The dire and ominous consequences are in fact the particular politico or group of politicos defeat at the polls as the end of the spending means the end of the promise leading to the end of the political constituency purchased though other peoples’ money.

Summary

James and Jane Goodfellow and John and Jane Q. Public have long complained that politicians are crooks. What the Goodfellow’s and the Public’s need to do is finish the thought and confess they have been systematically duped.

The state is the great fiction by which everybody seeks to live at the expense of everybody else. - Frederic Bastiat, 1850.

Government promises?

In the coming debate regarding major reductions in federal spending certain politicos will frame “spending” as “government promises”. That a reduction in spending is somehow a reduction in a promise.



There were never any “government promises“. You see, governments don’t think nor make decisions. Any promises were exactly made by politicos, with other peoples’ money, through the mechanism of government.



The reduction in spending, meaning a reduction in politico promises, creates a basic problem for politicos: they have spent the better part of eight decades spending other peoples' money to build dependent political constituency. They have constructed, maintained, and perpetuated spending as a political constituency building exercise and could care less about the actual outcome of the particular spending. Spending focus by politicos is primarily on the dependency factor to built and maintain constituency. They also grant rent seekers (special interests) benefits (taxpayer money) as a further extension of political constituency building.


The result is: reducing/eliminating other people (politicos) ability to spend other peoples' money (taxpayer) on other people (recipient class) is in fact a threat to politicos’ constructed, maintained, and perpetual political constituency building exercise. Hence reducing spending is a threat to their supporting political constituency (votes, political donations, campaign volunteers, etc.).


Therefore, perpetuating spending is paramount to the politico. Framing the argument that spending equals government promises is an attempt to portray reduced spending as broken promises. The Orwellian phrase “government promises” is merely new speak for “politico promises” as governments don’t think or decide, only politicos think and decide.