American Elephants

Obama Promised Your Premiums Would Go Down $2,500. Uh huh. by The Elephant's Child

Back in 2008, three eminent Harvard economists who were advising the Obama campaign on matters economic — David Cutler, David Blumenthal, and Jeffrey Liebman — wrote a memo claiming that Senator Obama’s health-care plan could reduce national health spending by $200 billion a year.

Candidate Obama had already claimed that health care costs were spiraling out of control, were going to destroy the economy, wreck the budget, so reducing the out-of-control cost of health care was a very big deal indeed. The advisers took that figure and divided [it] by the country’s population, multiplied by four—for a family of four, and using economist math, rounded it down a little to a nice round number: $2,500. Mr. Obama, delighted, then took that number out on the campaign trail:

And he said he’d lower premiums by $2,500 in his first term as President of the United States. Avik Roy writes the Apothecary blog at Forbes magazine about health care, so with new numbers from the experts working for Medicare’s actuary, he used the same economist math. He took the latest year-by-year projections, divided by the projected U.S. population to determine the added amount per person and multiplied by four—for a family of four. With the best economist math Obamacare will increase health spending by $7,450 for a typical family of four. He even included a dandy graph:CostperFamily

Health care costs have been going down since 2006. New diagnostic tools are in place and paid for. Important new drugs like Statins are saving lives and a lot of heart surgery. It was the president’s claim of $2,500 savings that was completely wrong, but that was the basis on which ObamaCare was sold.

I can make a firm pledge under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”

This is a touchy point among progressives. But you might remember that George W. Bush’s Medicare Drug plan is the only government program known to have come in under estimates and under budget. That is because it had a built-in incentive to encourage seniors to select generics when they had the opportunity to, in order to avoid the “donut hole” where they wouldn’t get a subsidy unless they really needed it. Democrats, of course, thought that was mean, (they don’t do incentives) and eliminated the “donut  hole.”

On the other hand, Andy and Amy Mangione of Louisville, Kentucky and their two boys are just the family of four that should be helped by ObamaCare. They recently got a surprise in the mail.

The insurance charges for the Mangione’s policy was going to almost triple — from $333 a month to $965 a month.

The notice from their insurance company carried this paragraph:

If your policy premium increased, you should know this isn’t unique to Humana — premium increases generally will occur industry-wide.

“Increases aren’t based on your individual claims or changes in health status,” it continued. “Many other factors go in to your premium including: ACA compliance, including the addition of new essential health benefits.”

People who currently choose to purchase a high deductible, low premium policy that’s more affordable for them, are now being required to add all these new benefits to their policy. (Even if they don’t want them).

This tells you how government bureaucrats do economic estimates, and why everything always doubles and triples in cost.  (or more) And why you should never believe their numbers.

Federal Department of Smoke and Mirrors: by The Elephant's Child

The prediction by that infamous “consensus” for job growth in March was 200,000. In fact it was 88,000. Those not in the labor force grew by over 660,000. The total civilian non-institutional population grew by just 167,000 to 244,995, meaning that the actual labor force declined by 496,000. This is the issue.

The Obama administration has managed (Federal Department of Smoke and Mirrors) (FDSM) to maintain the myth that the economy has grown under his leadership for the past 4+ years. It hasn’t.  Zero Hedge explains:

If one renormalizes for the recent long-term average participation rate of 65.8%, one gets a very different number. a “renormalization process indicates a massive and record 4% difference between the reported unemployment rate of 7.6% and what the real unemployment rate is assuming normal growth of the labor force, which in March was 11.6%, up from 11.3% in February, and the highest since August 2012 when it was 11.7%. More importantly, as the real unemployment chart shows, the economy has not improved by one bit since 2009:

(click to enlarge)
Douglas Holtz-Eakin
, former Drector of the Congressional Budget Office, now with the American Action Form writes:

The March jobs report was awful: jobs weak, labor force down, hours flat, and earnings flat. The jobs report is important not because of any single month, but because it is the leading indicator of a break away from the new normal: bad growth and weak opportunity.  No break to be found today. The Administration has slavishly adhered to the economic doctrines of Jimmy Carter.  They should not be surprised they are getting his results.”

Senator Jeff Sessions released this statement about today’s jobs numbers:

Today’s jobs report reveals that 90 million Americans are now outside the labor force. We need to be getting Americans back to work, helping people move off of food stamps and welfare, and find good jobs with steady incomes. But the comprehensive immigration bill being drafted right now would provide nearly immediate work authorization to millions of illegal immigrants while substantially increasing the future flow of workers. Our first priority must be to help American citizens, and current legal immigrants, find good employment. What we cannot have, and what is not sustainable, is an economic system where a large and growing share of our population is permanently unemployed while jobs are filled by a constant supply of foreign workers.

If you pay attention, you will notice that as the president visits some manufacturing plant and declares that manufacturing is coming back; at the same time some new regulation will be imposed by the EPA or HHS that will require new employees to cope with the paperwork, or reworking their processes, or shifting suppliers, or just letting people go to cope with  new costs.Or the cost of energy goes up from a new ethanol requirement, or the Keystone XL pipeline is denied.

Or Obama announces that he wants to raise the federal minimum wage to $9. The “Minimum Wage Law” is more correctly called the Youth Unemployment Law. Beginners need a place to start, but they also need a lot of training and help. If it gets too expensive, the fast food places hire senior citizens who know what they are doing.


Bureaucracy and Budget Cuts: Humbuggery and Hooey. by The Elephant's Child


When Republicans go on (and we do) about “Big Government,” many assume we’re just talking about size, and don’t understand what all the fuss is about. It’s the falsity. Nothing is real, it’s all lies and pretense. Government is a bureaucracy, an enormous bureaucracy and so big that nobody really knows what is going on.

The federal budget in 2011, according to the Washington Post, included an undisclosed amount of money allocated for projects and programs already completed or already cancelled. In some cases, Congress removed these funds and counted them as “cuts” instead of actual reductions in real projects:

Late on the night of April 8, 2011, Washington’s leaders announced that they’d just done something extraordinary. They had agreed to cut the federal budget — and cut it big.

“The largest annual spending cut in our history,” President Obama called it in a televised speech. To prevent a government shutdown, the parties had agreed to slash $37.8 billion: more than the budgets of the Labor and Commerce departments, combined.

At the Capitol, Republicans savored a win for austerity. There would be “deep, but responsible, reductions in virtually all areas of government,” House Appropriations Committee Chairman Harold Rogers (R-Ky.) promised a few days later, before the deal passed.

Well, promises, promises.  There were a few real cutbacks in federal spending. but the bill turned out to be an epic kind of Washington illusion. There were gimmicks that made cuts seem bigger than they were and the politicians more responsible than they were.

  • The Transportation Department got credit for cutting a $280 million tunnel that had been cancelled six months earlier.
  • The Census Bureau officials got credit for a huge $6 billion cut for promising not to hold the expensive 2010 census (that was not due to be repeated for 10 years) again in 2011.
  • The Department of Defense got credit for $6.2 billion in cuts which represented $5 billion for base closing and relocation that the Pentagon had already decided not to spend. The remaining $1.2 billion came from “cutting programs that were already cancelled. The Pentagon did cancel one project that it wanted to keep, a $25 million building project in Qatar.
  • The Federal Transit Administration took credit for $680 million” for cutting” programs that had already been canceled for other reasons. One was a project to build a new train tunnel between New York and New Jersey that was cancelled by Gov. Christie.
  • The Department of Energy got credit for $638 million, but the loss of the money was made up for with funds appropriated in the stimulus bill. No federal employees lost their jobs.
  • The Department of the Interior produced a $529 million phantom cut when Congress took back unused money from Interior’s reserve funds. Congress replenished what they had used. The only impact in the real world was that the department had to delay work for hazardous fuels reduction, rural fire assistance and burned area rehabilitation.

When Obama starts talking about all the severe budget cuts that he has made — this is a guide to what they are. The “cut” from not continuing to spend the same amount of money in Iraq as we were before our troops pulled out was well publicized.  The same gimmick has covered Afghanistan.

Big Government is a problem because it becomes too big to understand what is happening and how taxpayer money is being wasted, and how taxpayer’s lives are being diminished by what is, after all, just government fraud and corruption. And under the Obama administration with its Chicago style brand of politics, that is just the way things are supposed to work.

The White House Understands Your Anxiety! They Will Cut The Budget By an Infintesimal Amount, to Make Obama Look Good. by The Elephant's Child

Public anxiety about government spending is becoming noticeable. Or at least, the White House  has finally noticed.  They are directing governmental agencies to develop plans for trimming a whole 5 percent from their budgets by identifying programs which “do not advance their missions or President Obama’s agenda.”

Peter Orzag and Rahm Emanuel are sending a memo to federal agencies, asking them to find spending cuts.  The memo says, gracefully, according to the Washington Post:

“The American people deserve a government that spends every taxpayer dollar with as much care as taxpayers spend their own dollars — where money is spent not out of inertia, but only when it contributes to achieving a clear national priority,” Emanuel and Orszag write in the memo, according to an early draft.

Oh my. Read that one again.  This is the government that spent $862 billion in a stimulus bill that did not stimulate, on Keynesian multipliers that didn’t multiply, on shovel-ready projects that weren’t shovel ready, and on projects that resulted in new jobs only by the mysteries of double and triple counting of imaginary people.  “Spends taxpayer dollars with as much care,” oh my.

To encourage cooperation, Obama also will ask Congress for new authority to let agencies keep half the savings they identify, administration officials said. The agencies could then put the cash toward higher priorities rather than surrendering it all for deficit reduction, as is typical.

Economist Veronique de Rugy puts it in terms that we can all understand:

Basically, it’s as if I tell my bank “I am massively in the red, I know, and from now on I will be reasonable. See, my plan is to cut $5.00 out of the $100 I spend per week. $2.50 will go to reducing my $300,000 deficit and $2.50 I will spend on more stuff. I need a little incentive after all my efforts.”

This is absurd, a joke.  Congress is attempting to pass a “jobs bill” or stimulus 3.0.  It won’t create any jobs either.  Then they want to ram through a cap-and-trade bill, and just before the election they want to send out another check for the seniors who always vote, and seem to be well represented at the Tea Party rallies — at least if the grey hair in the crowds is accurate.  Of course you can never tell with those violent tea-party activists. “Clear national priority indeed!”

This is a feel-good pretend effort to sway the masses, whom they think are too dumb to grasp the complicated details of budget trimming. The very painful exercise that millions of families are having to go through at the kitchen table as a result of President Obama’s agenda.

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