American Elephants


Politicians Expertise is in Saying the Things that They Think You Want to Hear. This Has No Relationship to Truth. by The Elephant's Child

America’s Health Insurance companies have now recognized the threat that the Baucus bill constitutes for them.  Finding the CBO estimates for the concepts expressed in the “bill” in the Senate Finance Committee a little unbelievable, they commissioned PricewaterhouseCoopers to produce a study, which reached the conclusion, hardly surprising, that forcing insurers to take all comers will increase the cost of insurance.

The most damaging part of the study is the conclusion that while the average cost of family coverage is approximately $12,300 today, it can be expected to increase to approximately:

$15,500 in 2013 under current law and to $17,200 if these provisions are implemented.
$18,400 in 2016 under current law and to $21,300 if these provisions are implemented.
$21,900 in 2019 under current law and to $25,900 if these provisions are implemented.

Individual insurance rates are approximately $4,600 today.  By 2019 they would reach about $9,700 in the same gradual progression.

This is what happens when legislators begin with the idea that it is good when government controls people and their health care, and then works backwards from that flawed idea trying to come up with enough mandates and regulations.

These lobbies should have known better.  The insurers, the doctors and the hospitals are only now beginning to wake up to find out that they have been taken for a ride by ObamaCare.  It may just be too late.



There is Nothing New in the Obama Administration, Just More of the Same Old Tired Ideas. by The Elephant's Child

President Obama seems to have much the same view of money as some of his most ardent supporters.  The government has money, and he gets to spend it, with the help of Congress.  And where does the government get the money?  The government takes the money from undeserving rich people, and it needs to be spread around to people who need it more.

The White House is finally beginning to realize that in spite of their well-intentioned Stimulus Plan, somehow it isn’t working.  The jobless rate keeps going up.  Teenage unemployment is over 50% (we told you that would happen if you insisted on raising the minimum wage).  California’s great Central Valley has unemployment rates reaching 40% in some areas.  Michigan has double-digit rates of joblessness. Christina Romer and Jared Bernstein, White House Economists, estimated that the spending of the Stimulus plan would keep the jobless rate below 8%, but that was then and this is now.

Alarmed by the rising rates, Democrats are rushing to “do something;” after all, there are elections next year.  The White House solution seems to be to bribe employers to hire new workers — only for a couple of years.  The current rate is 9.8% and may well continue to rise or at least stay high well into the election campaign of 2010.

Few things so concentrate the minds of politicians as the threat of very angry voters.  The Wall Street Journal reports:

The tax credit would also inevitably go to some employers already planning to hire, or reward companies that lay off some workers only to hire others to take advantage of the tax credit. And it would reward parts of the country that are growing, such as Texas, at the expense of those that aren’t, such as Michigan. In other words, it is a very inefficient business subsidy.

We know all this because a new jobs tax credit has already been tried—in the Carter Administration. In 1977 as he entered the White House, Jimmy Carter proposed a jobs credit and a Democratic Congress passed it. Its unfortunate history was recounted in 1980 by then-Treasury official Emil Sunley in a chapter of “The Economics of Taxation,” a book edited by Henry Aaron and Michael Boskin for the Brookings Institution.

The lack of job creation is a huge problem.  The misconceptions of the White House about America’s small business job-engine are really quite astounding.  When you keep imposing financial burdens on hiring, you are not going to get very much of it.  When government is imposing new taxes, raising health care costs, raising energy costs and at the same time demonstrating government’s interest in controlling business, taking over companies, imposing new mandates and regulations that limit what a businessman may do; any desire to expand, hire, take new risks is dampened down by cold hard fear.

A small temporary bribe is really not going to help.  Don’t Democrats ever learn from history?



Obama/Democrats seek to EXPAND policies that caused crisis. by American Elephant
October 12, 2009, 2:39 am
Filed under: Economy, News, Politics, Progressivism | Tags: , , ,

Must-read from Forbes:

…Liberals pooh-pooh the idea that a 30-year-old law could have contributed to the current subprime crisis and credit crunch. But what they ignore is the massive expansion of CRA-commitments forced on banks in the run-up to the 2008 financial crisis.

According to the National Community Reinvestment Coalition, in the first 20 years of the act, up to 1997, commitments totaled approximately $200 billion. But from 1997 to 2007, commitments exploded to more than $4.2 trillion. (Keep in mind this is more than four times the size of the current health bill being debated in Congress.) The burdens on individual banks can be enormous. Washington Mutual, for example, pledged $1 trillion in mortgages to those with credit histories that “fall outside typical credit, income or debt constraints,” and was awarded the 2003 CRA Community Impact Award for its Community Access program. Four years later it was taken over by the Office of Thrift Supervision. In 2004 Bank of America agreed to provide $750 billion in CRA loans to applicants with poor credit who had previous difficulty obtaining a mortgage. By 2008 Bank of America was reporting that CRA loans represented only 7% of its portfolio but 29% of its losses. Numerous large banks are now in the middle of enormous CRA commitments. In 2004 J.P. Morgan Chase agreed to provide $800 billion of such loans over the course of 10 years.

For all the talk of unsold condos in Miami and foreclosed McMansions in California, the epicenters of the mortgage crisis are inner-city urban areas–precisely those areas where the CRA was most applicable. As the Boston Federal Reserve put it in a massive 2008 study, “In the current housing crisis foreclosures are highly concentrated in [urban] minority neighborhoods.” The study found that borrowers in these areas were seven times more likely to be foreclosed on than the general population. Analysis by the Pew Research Center and another by The New York Times found that mortgage holders in these areas had foreclosure rates four times higher than the national average.

In short, the CRA is compelling banks to make trillions in loans to individuals who have poor credit and who often can’t or won’t make their payments.

Now comes Rep. Eddie Bernice Johnson, D-Texas, and 50 other co-sponsors (all Democrats) of H.R. 1479 the “Community Reinvestment Modernization Act of 2009,” who want to expand the CRA to include not just banks but also credit unions, insurance companies and mortgage lenders. Congressman Barney Frank, chairman of the House Financial Services Committee, has supported the idea in the past. The SEIU and ACORN, along with a host of other activist groups, are also behind the effort. [read the whole thing here]




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