ACA/Obamacare: California Proposition 45

"Californians are split over a high-profile voter initiative that opponents say could complicate the future of President Barack Obama ’s health-care law in one of the states that has gone furthest to embrace it.

Proposition 45 would grant California’s insurance commissioner new powers to veto health-insurance premium increases for individual and small-group policies, a popular sentiment in a state that has seen large rate jumps in the past, though they have recently moderated.

Some prominent Democrats, including Sens. Dianne Feinstein and Barbara Boxer, have endorsed the measure, which would also grant citizens and outside groups the power to delay health-insurance rate increases by requesting a government review.

The measure is strongly opposed by health insurers, who have donated tens of millions of dollars to defeat it. Opponents say the measure could hamper efforts to further implement the health-care law in California, which spent more time and money than any other state building its insurance exchange, Covered California. They say Covered California’s power to negotiate with insurers on behalf of consumers would be weakened, and that federal subsidies could be hard to price for many of the low-income people who dominate the exchange.

“It starts to raise very serious questions about the certainty of what Covered California will be able to negotiate with the insurance companies…and even whether some plans will be available,” said Rep. George Miller (D., Calif.), one of the Affordable Care Act’s co-authors. “The problem is Prop 45 was written before we got to the final stages here” of the ACA.

Prop 45 was originally drafted for the 2012 election, but the measure failed to qualify for the ballot in time. Since then, Covered California has become the most robust exchange in the country, signing up 1.4 million people during the last enrollment period.

The new powers under Prop 45 would broadly enhance the influence of Dave Jones, the Democratic state insurance commissioner. Since taking office in 2011, he has said that a missing piece of the health law was the lack of authority to reject insurance rate increases."

- Californians Split Over Letting Official Veto Insurers’ Rate Boosts, WSJ, 10/09/2014
Link to the entire article appears below:

http://online.wsj.com/articles/californians-split-over-letting-official-veto-insurers-rate-boosts-1412803775?KEYWORDS=california+health


　

　


　

Hillary Clinton 2007 Presidential Candidate: "If you have private insurance you like, nothing changes — you can keep that insurance." No Way! Way!

“When former President Clinton this week critiqued President Obama's broken promise that Americans would be able to keep their health insurance plans under the Affordable Care Act, Clinton was also knocking a similar plan once proposed by another politician: his wife.

"I personally believe, even if it takes a change in the law, the president should honor the commitment that the federal government made to those people and let them keep what they got," Clinton said in an interview with OZY.

The remark came across as a stern rebuke of current White House policy — but it could also prove tricky for former Secretary of State Hillary Clinton, who is moving toward a bid for president in 2016.

When she was last a candidate for president in 2007, Hillary Clinton unveiled her own health care proposal, which, like Obamacare, included beefed-up benefits and a catchy pitch: "If you have a plan you like, you keep it." Obama went on to defeat Clinton, but he adopted her tag line to help win support for his own health care plan -- making the same promise, for which he recently apologized.

You can keep the doctors you know and trust. You keep the insurance you have," Clinton said on Sept. 17, 2007, at the Broadlawns Medical Center in Des Moines, Iowa. "If you have private insurance you like, nothing changes — you can keep that insurance."

Clinton's campaign website echoed that claim. "If you have a plan you like, you keep it," it read.” - Hillary Clinton in 2007: 'If you have a plan you like, you keep it', Washington Examiner, 11/15/2013

Link to the entire article appears below:

http://washingtonexaminer.com/hillary-clinton-in-2007-if-you-have-a-plan-you-like-you-keep-it/article/2539118


　


　

ACA: The Self-Interest of the Cancellation Makers and the Visible Hand of Politicos

“WASHINGTON — Anxious congressional Democrats are threatening to abandon President Obama on a central element of his signature health care law, voicing increasing support for proposals that would allow Americans who are losing their health insurance coverage because of the Affordable Care Act to retain it.

The dissent comes as the Obama administration released enrollment figures on Wednesday that fell far short of expectations, and as House Republicans continued their sharp criticism of administration officials at congressional hearings examining the performance of the health care website and possible security risks of the online insurance exchanges.

In addition, a vote is scheduled Friday in the Republican-controlled House on a bill that would allow Americans to keep their existing health coverage through 2014 without penalties. The measure, drafted by Representative Fred Upton, the Michigan Republican who is the chairman of the Energy and Commerce Committee, is opposed by the White House, which argues that it would severely undermine the Affordable Care Act by allowing insurance companies to continue to sell health coverage that does not meet the higher standard of Mr. Obama’s health care law.”

“In a closed-door meeting Wednesday of House Democrats and White House officials, tensions flared as several lawmakers upbraided the administration, saying that the president had put Democrats in a tough political position by wrongly promising consumers that they could keep their existing health care plans. In fact, hundreds of thousands of Americans have received cancellation notices from their insurers because their health care coverage does not meet the minimum standards dictated by the new law.

“I’m frustrated in how it rolled out, and I let them know in no uncertain terms,” said Representative Mike Doyle, Democrat of Pennsylvania. “The point I was making in caucus to the administration is don’t give us this techno-babble that you’re going to do some administrative fix down the road. There’s a bill being put on the floor on Friday.”

The overall message of the meeting, said several attendees, was that the White House and the House Democratic leadership have until Friday to come up with a satisfactory alternative, or House Democrats may be forced to support Mr. Upton’s bill, which already has two Democratic co-sponsors: Representatives John Barrow of Georgia and Mike McIntyre of North Carolina, who represent more conservative districts.” - With Enrollment Slow, Some Democrats Back Change in Health Law, NYT, 11/13/2013

Link to the entire article appears below:

http://www.nytimes.com/2013/11/14/us/politics/democrats-threaten-to-abandon-obama-on-health-law-provision.html?pagewanted=all&_r=0



Updated: Sen. Cornyn: Democrats in 'Near Panic' Over Obamacare, newsmax, 11/13/2013

http://www.newsmax.com/NewsmaxTv/cornyn-obamacare-healthcare-panic/2013/11/13/id/536493?ns_mail_uid=11826812&ns_mail_job=1545926_11142013&promo_code=15977-1








　

　

　


　

Model Cities or Model Mess? Harrisburg, PA, Politico Culture on the Skids

Director's law

Observations on Political Self-Interest

Gordon Tullock and James M. Buchanan wrote The Calculus of Consent, Logical Foundations of Constitutional Democracy which is the book that, in the main, launched Public Choice Theory.

In another book by Tullock, Government Failure, he makes an interesting point that up until Hobbs and Machiavelli (circa 1500) the concept of "self-interest" did not exist in any formal way, that all social and private issues were discussed on moral and ethical grounds with self-interest not a player or formal concept.

“Until the days of Adam Smith (1723-90) most social discussion was essentially moral. Individuals - whether they were businessmen, civil servants, politicians, or hereditary monarchs - were told what was the morally correct thing to do and urged to do it.” (1)

With David Hume and Adam Smith in the 1700’s the concept of self-interest became mainstream but only in private endeavors whereas "government" issues were still discussed on moral and ethical grounds with self-interest not a player. That is to say, government and the politicos that make up government, the issues thereof, continued in the realm of moral/ethical until the late 1940's and mid 1950's when political science was doing a poor job of explaining the inner workings and resulting output of "democracy" which prompted the application of economics to the study of political science and the advent of Public Choice Theory - which clearly shows politicos do function in their own self-interest.

Tullock points out that politicos today still try to dupe the public per talking points such as public servant, working in the public interest and doing the people’s work as they desperately try to convince James and Jane Goodfellow that they, as politicos, are not at all self-interest oriented and are merely working in James and Jane Goodfellows best interests. That is, politicos continue to sell the 16th century in the 21st century.

Which then reminds one of Milton Friedman's famous quote which summed it all up very nicely: "Is it really true that political self-interest is somehow nobler than economic self-interest?"

Notes:

(1) Government Failure, Tullock, Seldon and Brady, 2002, CATO Institute, pages 3 - 4.

Providing a Public Good or a Public Bad?

Robert Higgs of the Independent Institute published a very insightful essay recently regarding “hatred” in politics and hatred among politicos entitled The Systematic Organization of Hatreds:

“In view of the foregoing, we are well advised to consider that whenever we seek to move a type of decision-making from private life to the realm of politics and government, we are very likely moving it from a world in which hatred is incidental and avoidable to a world in which hatred is central and inescapable. Because a government imposes one rule, one outcome, one state of affairs on everyone subject to its rule, the hatreds that go into the making of that outcome become generalized and infused throughout the entire society. Thus, what economists label a “public good” is often, in the most substantive way, a “public bad.” Even if a person does not share any of the component hatreds that politic actors express and deploy, no one can avoid living in a politicized world fashioned in such large part by the organized expression of hatred. It is, therefore, small wonder that some of us view the entire apparatus of politics and government as the living embodiment of evil.”

The link to the entire essay appears below:


http://blog.independent.org/2012/05/05/the-systematic-organization-of-hatreds/

Barney Frank on ObamaCare 04/15/2012: A Political Mistake

“You think Obama overinterpreted his mandate with health care?

 The problem with health care is this: Health care is enormously important to people. When you tell them that you’re going to extend health care to people who don’t now have it, they don’t see how you can do that without hurting them. So I think he underestimated, as did Clinton, the sensitivity of people to what they see as an effort to make them share the health care with poor people. I think we paid a terrible price for health care. I would not have pushed it as hard. As a matter of fact, after Scott Brown won, I suggested going back. I would have started with financial reform but certainly not health care.”

- In Conversation: Barney Frank, by Jason Zengerle, nymag.com, 04/15/2012 http://nymag.com/news/features/barney-frank-2012-4/

The Blue Goose: Property Tax and Why Its Not Going to be Reduced After the Housing Bubble Burst

Post World War 2 US private residential real estate markets, in the main, have experience a long steady increase in values albeit punctuated by periods of mild decreases or periods of stabilization. Obviously there are outliers on both the high and low ends [San Francisco vs. Detroit]. However, over this post WW2 cycle several clear trends emerged regarding the long steady increase in values:

(1) private residential real estate became the largest investment on the consumer's balance sheet,

(2) private residential real estate became the largest debt on the same balance sheet,

(3) the mantra of “…buy real estate as they are not making anymore of it…” [i.e. what goes up, always goes up] emerged,

(4) private residential real estate became part of "the American dream” mantra. Some kind of social collective “dream” that in essence does not exist except in the abstract,

(5) politicos through the mechanism of government found more and more ways to create tax preference items to incentivize private residential purchases. That is, large amount of resources were purposely directed into the private residential real estate market by politicos,

(5a) not so incidentally politicos viewed the value of the private residential real estate as a tax revenue stream [local, state, and federal] regarding property tax and consequential sales above capital gains exemption [which has varied over the years] and estate tax calculation [which has varied over the years], not to mention the taxes associated with original construction and future renovations.

Note: the chicken and the egg. In this case the egg came first, then the chicken was given a mantra, and the chicken morphed into the tax goose.

Hence politicos incentivize a particular sector, mantras are attached, taxes are extracted and the underlying private residential real estate market eventually bubbles-up and like all good bubbles, it burst.

Problem is, during the long steady increase in values ending with a bubble, the associated tax revenue was also viewed by politicos as “what goes up, always goes up”. Politicos not satisfied with limited government piled on layers and layer of spending for assorted and asundry pet programs, projects, and political constituency building exercises. Over time public sector workers, through the both sides of the table phenomena, make more total compensation than their private sector counter parts. Then the bubble bust! Oh no! The consciously and purposefully groomed tax goose is on the skids! The goose is blue!

However, politicos being politicos, politically frame current spending levels as needed, necessary and required. Stated alternatively, spending levels are framed as needed, necessary and required as without the tax revenue the politico’s purposely built political constituency will find another politico to fund their needs -or- tax revenue equals reelection and/or perpetuation of a greater social vision supported by such politicos and their associated special interests.

Consequently, regardless of real estate value reassessments associated with the now burst bubble, tax rates will be adjusted to cause the same or even greater revenue to flow into politico directed tax coffers as the revenue is actually required to extend the politico’s needed, necessary and required spending levels in order to perpetuate their particular political constituency building exercises and/or a greater social vision supported by such politicos.

Who pays? You pay! Ah, the evil of it all!

　

　

　

Sentimentalists, The Old Order, The Middle Ages, Custom and Prescription into Associations, Ranks, Guilds vs. Realistic, Cold, and Matter-of-Fact Social Structure Based on Contract with Status of Least Importance

“No doubt one chief reason for the unclear and contradictory theories of class relations lies in the fact that our society, largely controlled in all its organization by one set of doctrines, still contains survivals of old social theories which are totally inconsistent with the former. In the Middle Ages men were united by custom and prescription into associations, ranks, guilds, and communities of various kinds. These ties endured as long as life lasted. Consequently society was dependent, throughout all its details, on status, and the tie, or bond, was sentimental. In our modern state, and in the United States more than anywhere else, the social structure is based on contract, and status is of the least importance. Contract, however, is rational - even rationalistic. It is also realistic, cold, and matter-of-fact. A contract relation is based on a sufficient reason, not on custom or prescription. It is not permanent. It endures only so long as the reason for it endures. In a state based on contract sentiment is out of place in any public or common affairs. It is relegated to the sphere of private and personal relations, where it depends not at all on class types, but on personal acquaintance and personal estimates. The sentimentalists among us always seize upon the survivals of the old order. They want to save them and restore them. Much of the loose thinking also which troubles us in our social discussions arises from the fact that men do not distinguish the elements of status and of contract which may be found in our society.

Whether social philosophers think it desirable or not, it is out of the question to go back to status or to the sentimental relations which once united baron and retainer, master and servant, teacher and pupil, comrade and comrade. That we have lost some grace and elegance is undeniable. That life once held more poetry and romance is true enough. But it seems impossible that any one who has studied the matter should doubt that we have gained immeasurably, and that our farther gains lie in going forward, not in going backward. The feudal ties can never be restored. If they could be restored they would bring back personal caprice, favoritism, sycophancy, and intrigue. A society based on contract is a society of free and independent men, who form ties without favor or obligation, and co-operate without cringing or intrigue. A society based on contract, therefore, gives the utmost room and chance for individual development, and for all the self-reliance and dignity of a free man. That a society of free men, co-operating under contract, is by far the strongest society which has ever yet existed; that no such society has ever yet developed the full measure of strength of which it is capable; and that the only social improvements which are now conceivable lie in the direction of more complete realization of a society of free men united by contract, are points which cannot be controverted. It follows, however, that one man, in a free state, cannot claim help from, and cannot be charged to give help to, another. To understand the full meaning of this assertion it will be worth while to see what a free democracy is“. - William Graham Sumner, What Social Classes Owe to Each Other, 1883

Manufacturing Jobs Peaked, On a World Wide Basis, Years Ago: Not a Singularly US Phenomena

Talking heads, pundits, and media types supporting current public policy [more accurately termed politico policy], are always in search of a statistical data point, holding forth statistics as fact, then making the leap that the data point constitutes complete evidence of an open and shut case…..have recently latched onto the data point of an increase in manufacturing jobs.

One must realize that the mantra of “manufacturing job” is a panacea. That is, implicit to the “manufacturing jobs” mantra of the politico and their intelligentsia following is that this particular job category, the rise and fall thereof, is the fix all. If manufacturing jobs are falling then this is the key to economic woes and the falling jobs number is due to some evil exogenous force. The rise in manufacturing jobs is a key to economic success and, of course, any rise thereof is directly due to politico policy.

Obviously the panacea and the political wrangling around this particular panacea is political dupery. However, the greater political nitwitery is that manufacturing jobs, the decline thereof, is a world wide phenomena and not singularly a US phenomena. Manufacturing jobs on a world wide basis peaked years ago yet overall output continues to increase. Technology and automation, as in the agricultural sector of the past, are supplanting the need for human workers. This technology and automation supplanting the need for human workers results in better more innovative product at a lower real cost.

Where the political dupery and political nitwitery merge is: if one is successful in attracting manufacturing jobs and builds upon the panacea, and if one looks forward considering that the current batch of dupes and nitwits being long gone twenty years hence, then one finds themselves in a 20 year future economy that has attracted an economic sector that’s worldwide employment opportunities have peaked years ago and which the unemployment is decreasing at an increasing rate while output increases at an increasing rate.

How does one frame the panacea at this 20 year future point? That is to say, how does one explain to the people alive 20 years hence that dupery and nitwitery purposely attracted an economic sector that was in decline in relation to human employment? How does one explain that nitwits attracted a sector akin to 1920’s and 30’s agriculture declining employment, and now its 1950 and agriculture is shedding jobs at a maximum rate while output skyrockets. And when manufacturing runs its course and becomes the agriculture of today, employing 3% of the employed work force yet producing mass abundance, how does one frame the panacea?

Public Policy or Politico Policy?

How does one define public policy and what in the world does the “public” have to do with “public policy”?

Public policy eludes to grass root, spontaneous order/emergent order policy that the public demands. Nay, nay. Public policy doesn’t exist. On the other hand, politico policy does in fact exist. The vast majority of “policy” appears, and is due to, the "vision" of a group of politicos and/or appears due to special interests through politico enablers. Stated alternatively, public policy eludes to the plans of the many whereas, in reality, politico policy is the plans of the few.

Political science, at the end of the day, is the altruistic notion that a well informed voter, a voter completely abreast of all issues, votes for the best political candidate that in turns makes public policy decisions in the public’s best interest. Politicos desperately want the public to believe this fairy tale. Does one perpetuate such nonsense -or- does one explain public choice theory which examines special interests, politico enablers of special interests, crony capitalism, and economic rent seeking of taxpayer dollars. That is to say, public choice theory examines how politicos through the mechanism of government build constituency through taxpayer dollars. -Or- as defined by James M. Buchanan of George Mason University: public choice theory is politics without the romance.

Does one really add insight using the phrase "public policy"? -Or- is insight gained with the use of the phrase “politico policy”?


Is it public policy that awards E. Gordon Gee, president of The Ohio State University, over $1,500,000 per year in compensation? -Or- is it politico policy that awards such compensation? Is it public policy to award Solyndra millions of dollars in the form of taxpayer financed subsidies or is it politico policy that awards such monies? Is it public policy that causes the existence of lobbyists or is it politico policy that causes the existence? Does a firm receive tax subsidies to locate in a particular state due to public policy or politico policy? (1)

Notes:

　

(1) College Presidents' Salaries, The Chronicle of Higher Education, 02/03/2010

http://chronicle.com/article/College-Presidents-Salaries/63874



































　

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

Class Warfare Politics: upon further review, poverty is the best policy

Each time class warfare politics raises its ugly head in regards to taxes, the rich are vilified and the vilification is used to argue for an increase tax on the so called “rich“. The argument put forth by politicos is the general and usual notional argument with concepts such as “fair”, “just”, “fair share” and so on. Purely political notional concepts that only have absolutely no meaning except in the context the politico presents e.g. fair is merely what you are doing and the other guy is not doing. That is to say, its an argument with no arguments. Vilification and notional concepts do not make for empirical underpinnings of any policy be it public or private.

Moreover, when the dust clouds of class warfare politics settle, everyone ends up paying more taxes. Stated alternatively, if one climbs on the magical bus of class warfare to tax the rich, at some point one has their very own class warfare bus ticket punched and ends up thrown under the bus of higher taxes. Odd huh?!?

Its not really that odd at all. You see, in a system of “some people” politicos want/need more money to spend. Why? The conduit of taxpayer dollars must increase at an increasing rate allowing the politico to use such funds for political constituency building exercises. Special interests and dependency constituencies [recipient class] are built with taxpayer money. The existing taxpayer-dollar-funded-constituencies, as well as any newly proposed constituency building targets, require vast amounts of taxpayer dollars flowing into the sphere of the politico. The flow must increase at an increasing rate in order for the politico to “grow their constituency”.


“Here it may suffice to observe that, on the theories of the social philosophers to whom I have referred, we should get a new maxim of judicious living: Poverty is the best policy. If you get wealth, you will have to support other people; if you do not get wealth, it will be the duty of other people to support you“. - W.G. Sumner (1)


Therefore, the politico promoted class warfare argument purposely plays James and Jane Goodfellow for saps. It sounds great as the politico weaves and frames the argument that you can have some other group of people pay for some crisis or problem. The politico is going to save you from the expense of solving a problem by merely making someone else pay for the problem.

The question one must ask oneself is: the centuries upon centuries of basically the exact same politico promoted class warfare argument has done exactly “what” to solve any and all problems? The politico wants you to judge them by their intentions and not their results. Exactly what results do we have presently? Do we have a tax problem or a spending problem? The politico wants the answer to be that we have a tax problem as they want more tax dollars to “grow their constituency”. The politico must direct the problem away from the spending side of the equation as decreases in spending means the collapse of existing political constituencies built and dependent on taxpayer dollars and disallows the acquisition of newly proposed constituency building targets.

“The good news is that, according to the Obama administration, the rich will pay for everything. The bad news is that, according to the Obama administration, you’re rich.” - P.J. O’Rourke

Notes:

(1) On a New Philosophy: That  Poverty is the Best Policy, William Graham Sumner, 1883

　

　

Politicos Purposely Frame Arguments

'President Barack Obama and the Democratic Party have led increasingly successful efforts to pit Americans against one another through the politics of hate and envy. Attacking CEO salaries, the president -- last year during his Midwest tour -- said, "I do think at a certain point you've made enough money."

Let's look at CEO salaries, but before doing so, let's look at other salary disparities between those at the bottom and those at the top. According to Forbes' Celebrity 100 list for 2010, Oprah Winfrey earned $290 million. Even if her makeup person or cameraman earned $100,000, she earned thousands of times more than that. Is that fair? Among other celebrities earning hundreds or thousands of times more than the people who work with them are Tyler Perry ($130 million), Jerry Bruckheimer ($113 million), Lady Gaga ($90 million) and Howard Stern ($76 million). According to Forbes, the top 10 celebrities, excluding athletes, earned an average salary of a little more than $100 million in 2010.

According to The Wall Street Journal Survey of CEO Compensation (November 2010), Gregory Maffei, CEO of Liberty Media, earned $87 million, Oracle's Lawrence Ellison ($68 million) and rounding out the top 10 CEOs was McKesson's John Hammergren, earning $24 million. It turns out that the top 10 CEOs have an average salary of $43 million, which pales in comparison with America's top 10 celebrities, who earn an average salary of $100 million.

When you recognize that celebrities earn salaries that are some multiples of CEO salaries, you have to ask: Why is it that rich CEOs are demonized and not celebrities? A clue might be found if you asked: Who's doing the demonizing? It turns out that the demonizing is led by politicians and leftists with the help of the news media, and like sheep, the public often goes along.' - Walter E. Williams

Link to the entire essay Pitting Us Against Each Other by Walter E.. Williams appears below:

http://townhall.com/columnists/walterewilliams/2011/10/19/pitting_us_against_each_other

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

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.

National Debt: non-sustainable political promises

Government deficits over the next 10 years were recently revised by the Obama Administration to $9 Trillion Dollars from the $7 Trillion Dollars estimate the Obama Administration made only a few months ago. Amazing! In a matter of months the Deficit has increased by 28%! How in the world did the US Government Deficit arrive at $9 Trillion Dollars?

Further, the National Debt stands at $11 Trillion Dollars with the daily increase in debt currently at $3 Billion Dollars.

A better question is what is the US Government going to do about the approximately $62 Trillion, at present value, of unfunded obligations in the areas of Medicare, Medicaid, Social Security and Military Pensions?

How did all this debt pile up? Why is the debt still piling up? How was all this debt allowed to pile up?

In a very broad Marco Economic sense, and in a very broad Political-Economy sense, one clearly needs to examine the inter-relationship between the Political Class, the Producer Class, and the Recipient Class.

The Political Class has been making an argument since the 1930's that the Producer Class has a "moral obligation" to transfer income and wealth to the Recipient Class.

The Recipient Class comes in several varieties. In some instances the Recipient Class collects Welfare, Food Stamps, Tax Credits, Medicaid. In other cases the Recipient Class collects Social Security and Medicare. In other cases the Recipient Class is the Military receiving deferred compensation regarding Military Service Pay. There are also Temporary Recipient Class members such as those receiving Unemployment Insurance.

Its important to point out that the Recipient Class members are in many cases past Producer Class members. That is, a worker or military personnel are within the Producer Class for many years then end up in the Recipient Class in retirement.

Its also important to point out that some Recipient Class members are permanent Recipient Class members such as the extremely unskilled worker and the Welfare Class (those constantly on Welfare through out their working years).

The "wealth" of the Political Class is a factor in this discussion. The wealth of Political Class generally comes in several varieties and needs examined. There are the inherited wealth types such as Rockefeller, Kennedy and Kerry. You have life long Politicians such as Byrd, Rangle and Dodd who accumulate wealth during their extended terms as Politicians. Further, new money wealth Politicians such as Barack Obama and John Edwards exist. The point being, and made by many over the years, is that wealthy Politicians have no financial obligations. They are so wealthy that paying taxes, paying bills, putting children through college, etc., are minor inconveniences.


The wealth of many in the Political Class puts them in a position that money is of no matter and they move into the altruistic/moralization area. It could be argued in the assent to self actualization in the realm of financial resources an additional step exists beyond self actualization regarding finance, which is: the moralistic/altruistic stage.

The wealthy Political Class (sometimes referred to as the Political Elite or Elitists) then begin to moralize to the Producer Class. That the Producer Class must, by moral reasoning, subsidize the Recipient Class.

The wealthy Political Class then enlists other Politicians that have moral/altruistic/collectivism on their agenda.

The Political Class then saddles the Producer Class with obligations to the Recipient Class. The "moral obligations" of the Producer Class to the Recipient Class translate into income and wealth transfers to the Recipient Class. In other words, these supposed moral obligations have a price tag.

At this point there becomes a disconnect.

The Political Class wants to promise so much to the Recipient Class that economic activity of the Producer Class would be so depressed, the economy would constantly be in recession. Taxes would be so high that incentives for the Producer Class would be so low, economic activity would fall. A constantly depressed economy would threaten the electability of the Political Class.

What kind of tax increases would be required to sustain such past and future promises? How about 50%. (1) A 50% tax increase would send the economy into a major tail spin now and in the long run.

Therefore, all of the past and future Moral Obligations that the Political Class has saddled the Producer Class with, as transfers to the Recipient Class, have been "financed". In other words, the wealth and income transfers from the Producer Class to the Recipient Class were promises that were not economically sustainable on a current account basis, hence the obligations were financed.

Its highly likely the financed promises were in fact financed to extend the political careers of the Political Class.

There is an unknown, yet certain point, where the financed promises accumulate to a level that is not sustainable. The unknown, yet certain point of non-sustainable financed promises, that began in the 1930's, has arrived.

Think of this argument for a moment. The argument by Pro Health Care Reform proponents is that Health Care costs are rising too quickly and need reined in via reform. Health Care costs are not rising any faster than Government Debt. However, the Government Debt increase is never mentioned in the same breath as Health Care Cost increases.

The bottom line is that the promises of Politicians to the Recipient Class do not match the ability of the economy and the Producer Class to pay for such promises. Since prior promises are not affordable, and given the unsustainable debt level, future promises have to go on hiatus for years and years to come. Sorry, no more promises. In effect the size and scope of Government needs reversed. Prior promises need reduced to match what is affordable. In the mean time the smaller government and smaller promises yield savings that need directed to reduction in Debt. It may take 20 or 30 years to reduce debt to levels that make financial sense.



(1) http://www.scrivener.net/2009/08/krugman-versus-krugman-on-deficits-and.html