The Court Upholds Free Speech

Today’s Supreme Court ruling removing overall limits on contributions to candidates for federal office by individuals restores some measure of freedom, and specifically freedom of speech.

Let’s get something straight. Money equals speech. I can write all day long on this blog and nobody reads it unless energy is expended trying to attract readers. The more money I spend, the more energy I can exert, and the more readers I can attract. The same is exactly true for political candidates.

The crazies (including four Supreme Court Justices) will scream that the ruling increases the likelihood that those with money will have an advantage and potentially use that money to corrupt politicians. Baloney!

The fact is that the ruling keeps in place the $2,600 per candidate per election limitations on individual candidate contributions ($5,600 per election cycle, per candidate, split between primary and general elections). The ruling means that some rich guy like George Soros is now free to give $5,600 per election cycle to every left wing progressive growth destroying candidate he can find running for federal office. He can now, for example, directly contribute a total of $560,000 to 100 different candidates for Federal Office as well as contribute $32,400 per year to each of the three  Democratic national committees.

OK, great, the Koch Brothers can do the same on the other side of the ledger and, taken together, more money will be legally available to candidates and political parties to get their message directly to the voters. Further, this change likely means more money directly supporting candidates and less money for PACs and Super PACs who cannot speak directly for candidates. MORE SPEECH IS ALWAYS BETTER.

Another factor needs to be understood here. Every voter has a vested interest in sending money to candidates and parties they support AND EVERY VOTER SHOULD DO SO!

In my small town I hear constant whining about how developers are the ones who contribute to local political candidates, supposedly swaying their decisions as elected officials. Funny thing is that my town has 17,000 voters, only about 300 people who contribute any amount to political campaigns, and typically less than 5,000 people who actually vote in local elections. If just 1,000 voters here gave $25 to a particular candidate it would make a significant difference in both who would want to be a candidate, how much they could communicate to the voters, and whose interest they would actually represent at city hall.

We need to thank our Supreme Court for affirming our right to free speech in elections. Our democracy needs to be a competition of ideas if it is to remain credible in the eyes of all voters. Let the games begin and may the best man or woman win. More speech! Please!

Regards, Pete Weldon

Obamacare Is Near Death

You now have the choice not to buy health insurance.

The foundation of Obamacare is the individual mandate. That is, without the mandate it was presumed that millions of healthy people would choose to remain uninsured, driving up the cost of insurance for everyone else.

The mandate was the core issue in a case brought before the US Supreme Court. The Court upheld the mandate as constitutional.

But now, the Obama administration has effectively waived the mandate through administrative rule making.

These new rules provide waivers for almost all of Obamacare until October 1, 2016. That’s right! The one year waiver previously put in place in late 2013 is now a three year waiver.

Further, there are now 14 reasons you can avoid paying the tax (see page 9) (“the Shared Responsibility Payment”) for not complying with the mandate (not buying health insurance). I love this one, “You experienced another hardship in obtaining health insurance. – Please submit documentation if possible.”

Current 2013-2014 Obamacare Marketplace sign up statistics show insufficient participation of the young and healthy to establish a self sustaining risk pool.

Now, the waiver of most of the insurance requirements until October 2016 plus the effective waiver of the “Shared Responsibility Payment” will further bias that risk pool toward the old and sick, increasing the cost to those actually purchasing health insurance. In other words, there will be little or no “shared responsibility” and the government (taxpayers) will be forced to further subsidize health insurance pricing to keep insurance companies in business (through direct payments to the insurance companies unless the Obamacare law is changed by Congress with the President’s signature). Similarly, the government will experience ever increasing pressure to control actual health care costs, limiting patient choice and disincentivizing medical professionals and health care facilities.

Obamacare is near death and it is time to pull the plug. What we now have is a comatose political contraption on life support that is costing hundreds of billions of dollars a year to provide health insurance to a few million people. By any objective measure Obamacare is a complete disaster.

The challenge now is to stop complaining and start building a truly competitive national health insurance market supplemented by taxpayer support of those in financial need through Federal catastrophic coverage and direct tax credits.

Regards, Pete Weldon

Prioritizing: Charity or Investment

I consider myself a compassionate person who wants to help other people suffering economic distress. We have reached the point, however, where we are increasing charity dollars (transfer payments) at the expense of work, investment, and economic growth.

The responsible policy tradeoff that serves the long term interest is jobs over charity with an understanding that a safety net serves our best long term interest and that a safety net is not the same thing as perpetual charity. Mr. Obama’s rationalization that such charity is an economic stimulus ignores the question of where the money comes to pay for it as well as ignores the social costs of the dependency resulting from it.

The honest political question is whether we are prepared to forgo work, job creation, and economic growth in exchange for increases in perpetual charity. Mr. Obama’s response to the February 4, 2014 CBO report that notes an expected reduction in work expected from Obamacare/ACA subsidies is, “yes;” promoting the notion that being subsidized to the extent that we can choose not to work more or not to work at all is a good thing for our society.

University of Chicago economist Casey Mulligan clarifies reality near the end of this video clip (be sure to watch the balance of the clip from its starting point):

Transfer payments are not purchases. Charity is not work.

This issue focuses the essential political choice before us. More charity, dependency, and debt or more jobs, opportunity, and economic growth. We may be able to elect people who offer us a free lunch now but this is at the expense of our children’s future.

It is my personal hope that Americans, with the implications our President’s policies and priorities now clearly before us, will change direction.

Regards, Pete Weldon

We Already Have Government Run Healthcare

Obamacare is simply an extension of the government health care system that already controls our medical lives. It may be not technically be a single payer system but it is totally controlled (and politicized) by the government.

There is no choice.

Rough Numbers*:

  • Employer Based: 170 million people covered by employer based health care at any given time during a year. Coverage is limited to what the particular employer offers. 7 million people currently having employer based health care are expected to be forced to buy an Obamacare policy or pay tax in 2015. There is no other choice if your employer offers health insurance.
  • Medicare: 50 million people covered by Medicare. There is no other choice if you are over 64 years of age.
  • Medicaid: 66 million people covered by Medicaid at any given time during a year. There is no other choice if you are poor.
  • Private Individual Insurance: 20 million people covered by private individual health care insurance at any given time during a year. Must now buy Obamacare policy or pay a tax. There is no other choice if you work for yourself.
  • Uninsured: 45 million people not insured at any given time during a year including about 10 million illegal aliens. Must now buy Obamacare policy, pay tax, or enroll in Medicaid. There is no other choice if you are uninsured.

* numbers exceed total population primarily because people move between categories during any given year and the data sources don’t reconcile the totals.

If we had market based health care rather than government based healthcare everyone would have real choices, real competition, and we could still subsidize those in need with direct tax deductions and tax credits.

Our children deserve leadership and common sense on health care.

See the links below for source information.

Regards, Pete Weldon


Note and Sources:

Read the February 4, 2014 CBO report for information on the 7 million expected to lose employer based coverage in 2015, and other implications of Obamacare.

People who work for employers who offer health care coverage get the least expensive health care.  More than half of the U.S. population (about 170 million people) had employment-based health insurance coverage at some time during 2011. The cost of such care is a tax deductible expense to the employer resulting in a 35% subsidy all taxpayers together must pay for. Obamacare mandates certain coverages and implements an “excess coverage” tax for employer based coverage.

People with individual health coverage can only deduct health care costs for tax purposes to the extent they exceed 10% of your adjusted gross income.

At age 65 the only choice available is government run Medicare. About 50 million people were enrolled in Medicare at some time during 2010. While you are free to purchase a “private” Obamacare policy when you reach age 65 there is no reason to do so given the costs and limitations of such policies relative to Medicare. If you do elect not to enroll in Medicare you have to pay a penalty of 10% of the premium for both Part B and Part D cumulative for every month you do not enroll after reaching age 65.

If you are of modest means the only choice available is government run Medicaid. About 66 million people were enrolled in Medicaid at some time during 2010.

If you do not have employer based coverage, are not age 65, or are not eligible for Medicaid you can purchase individual health insurance. Prior to implementation of Obamacare there were about 20 million people covered by private individual health insurance.

About 45 million people did not have health insurance at some time in 2012. Many of these people could not afford insurance and did not qualify for Medicaid. Many also elected to make an economic tradeoff, allocating dollars to other uses (for example, young people not worried about their health). These totals include about 10 illegal aliens and don’t reflect a lower number of people who actually go uninsured for the full year.

Wither Work

Germany, after passing legislation in 2007 that would have increased the retirement age from 65 to 67, is now on a course to lower the retirement age from 65 to 63.

Life expectancy has increased in most developed countries by more than ten years from 1960 to 2011, from slightly below 70 years to over 80 years. New developments in health care technology and knowledge are projected to further increase life expectancy in the US to as high as 86 by 2050, with those reaching age 65 in 2050 perhaps living on average to be 90. For reference, the life expectancy for someone born in the US in 1930 averaged about 60 years.

We may argue about the rate of growth in life expectancy but it would seem foolish to make public policy that seems to explicitly presume a decline in life expectancy. (Hello Germany? Are you there?)

Let’s see what happens based on an average static life expectancy of 85 years. We develop to become productive citizens the first 20 years, we work for the next 45 years to age 65, then retire and live to 85. Each of us, on average, must earn and save enough wealth to both pay for the development of our own children for 20 years and then pay for our expenses in retirement for 20 years, or we as a country will go broke. When you borrow money from future generations to pay these costs you delay the time frame within which you may go broke but you increase the probability you will in fact go broke because you have to generate the income and wealth to pay back the loans with interest as well as pay the costs of developing the young and supporting the old (not to mention the costs of supporting the poor, the unemployed, the hungry, the oppressed masses, etc., etc.). An average of 45 years of work and 40 years of assured dependency can’t work financially in perpetuity.

The preceding example analysis omits a further negative impact resulting from public employee union contracts that provide for retirement benefits including lifetime healthcare after only 20 to 30 years of service (see New Jersey as the poster child).

The point is that devaluing work by reducing the legal retirement age makes no sense given actuarial reality. Such policy destroys value. The opposite policy creates value and we in the US should be implementing policies that encourage work throughout adult life.

Both morally and financially we need policy that rewards work, especially work that defers or avoids socialized costs related to retirement health care and living expenses.Toward this end we should be raising the age to qualify for social security and medicare as a function of increasing life expectancy while providing incentives for employment for those above the qualifying age. Such incentives for continued employment may include a reduction in earned income (W-2 income) tax rates with age beginning at the age of social security qualification. The more people pay their own way through work in their older years the greater the financial incentive they should receive to work even longer.

To create a retirement system that is sustainable across generations we need to restructure virtually all government subsidy programs and priorities to value rather than devalue work while removing the expectation that some anonymous someone else will subsidize our later years of life.

Regards, Pete Weldon