Friday, February 24, 2012

Another lot of Obama soulmates getting the gravy

None dare call it corruption

Not content with making the health insurance industry unprofitable, through rules and regulations set out in enacting Obamacare, the Obama administration released the first eight grants/loans under the Consumer Oriented and Operated Plan (CO-OP) program.

The CO-OP program was established under the Obamacare law to put into place one federal government selected group in every state that is supposed to provide an insurance alternative to those few companies that remain after the imposition of the law.

The grants/loans have raised the political antenna of Bill Wilson, the President of Americans for Limited Government who said, “These grants/loans reek of political payola as one group, the Saul Alinsky-affiliated, Common Ground Healthcare Cooperative of Wisconsin was formed in August, 2011 just three short months prior to applying for the taxpayer money. In true, Rules for Radicals fashion, Obama’s administration found this group worthy of receiving $56,416,000 in taxpayer largesse.”

Common Ground is an affiliate of the Industrial Areas Foundation, a group the radical Saul Alinsky founded, as reported by the Journal Sentinel in Milwaukee.

The provision of $56 million taxpayer funds by the federal government for health care organizing comes at a time when Wisconsin’s public employee unions are orchestrating a recall election of the Governor after failing in a retaliatory bid for power in the Senate last year. Wisconsin’s state government moved forward with changes in the state’s collective bargaining rules early in 2011 over the objections of the unions. Ironically, those changes have allowed the state to bring the budget into balance without having to lay off any public employees.

Wilson continued his analysis stating, “Only the most na├»ve would believe that this $56 million injection of money into the political charged atmosphere in Wisconsin is anything more than an attempt to buy votes in favor of the public employee recall election of Governor Scott Walker and to tip the balance in this important swing state in November.

“There are no lengths that Obama won’t go in his attempt to use Chicago-style politics to drive his election bid, and this $56 million to a group with no track record and dubious connections is just one more outrage,” Wilson concluded.

Shockingly, the rules governing the grants issued by Obama’s Health and Human Services Department projected that the CO-OPs would have a 35-40 percent default rate. With $3.4 billion budgeted for the program, the most conservative loss estimate is $1.19 billion, or twice the total cost to taxpayers of the Obama Energy Department funded Solyndra failure.

Other groups receiving grants are the Freelancers CO-OP of New Jersey, Freelancers CO-OP of Oregon, Freelancers Health Service Corporation (based in New York), New Mexico Health Connections, Montana Health Cooperative and Midwest Members Health (Iowa and Nebraska.)

According to Politico Pro, a private subscription news service, the CO-OPs have been termed government funded “venture capital for health care” by the executive director of the Freelancers Union Insurance programs. Ironically, the Freelancers programs have come under fire over the years for inefficient operations and a variety of difficulties regarding member coverage. The CO-Ops will be able to offer health plans starting on January 1, 2014.



If Economy's Improving, Why Is Dependency Growing?

The government is at full throttle to present the economy as improving especially in light of the upcoming election. At the same time, there has been a stunning rise in dependency as most recently presented by the Heritage Foundation.

Heritage defines dependency as significantly depending on the government for help in two of the following basic expense items: housing, food, shelter, income security or higher education.

At the end of 2007, Heritage conservatively estimates there were 59.4 million Americans significantly dependent on the government. By the end of 2010, this number had risen to 67.3 million, an increase of nearly 8 million. It is likely that another two or three million were added in 2011, for a net increase of 10 million to 11 million over the past four years.

It is not a coincidence that the number of people participating in the labor force has comparably declined over the same period.

At the end of 2007, participation in the labor force was 66% of the available working age population, with a labor force of 146.2 million. By the end of 2011, it was 64%, with a decrease of 5.4 million workers to 140.8 million. The official number of unemployed people rose from 7.7 million at the end of 2007 to 13.1 million at the end of 2011, without any accounting for those who were "too discouraged to look for work."

Nevertheless, as the government has included fewer and fewer people in the category of searching for work, the official unemployment rate continues to fall because both the numerator and the denominator used to make that calculation are losing equal amounts.

In fact, the January BLS report that was so joyfully received by the market showed an Unemployment Rate of 8.3% but a decrease in labor force participation to 63.7% because another 1.2 million people left the labor force.

How can we have falling unemployment and falling labor force participation at the same time? I heard a story a while ago about a woman who had been making $50,000 per year who was laid off. After some months of casually searching for a full time job, she was offered one paying $40,000, but she refused it.

Her logic was, I am getting $20,000 per year from unemployment benefits, and I am collecting $18,000 per year from baby-sitting off-the-books three days a week, which, after accounting for my lower taxes, works out to almost the same for less work.

Why should she work harder than necessary to pursue happiness? When 67.3 million other Americans are taking easy money from the government, why should she stand on ceremony? Where is the shame? Where is the stigma? Is she "too discouraged" or just selfish? My fear is that many people will look at her experience and say, how can I work only three days a week and collect the same money?

Certainly, the government is not going out of its way to stop this waste, particularly because her example, repeated over and over again, allows the government to point to a falling unemployment as proof that we are on the road to recovery.

The government imagines that as more people become dependent on it, the official unemployment numbers will look better, and our animal spirits and therefore the economy will revive.

But the corruption of the workforce is utterly corrosive to America in the long term. We are supposed to be the "land of the free, and the home of the brave." But we are drifting closer to the European attitude of "Sauve Qui Peut," or "Every man for himself."

We may have something that looks like a recovery between now and the election, but if it is based on people leaving the workforce to take benefits and work off the books, it will be a Potemkin recovery.



The USA is already in the same boat as Europe

With seemingly every day bringing more bad news from Europe, many are beginning to ask how much longer the United States has before our welfare state follows the European model into bankruptcy. The bad news is: It may already have.

This year, the fourth straight year that we borrowed more than $1 trillion to support the U.S. government, our budget deficit will top $1.3 trillion, 8.7 percent of our GDP. If you think that sounds bad, it’s because it is. In fact, only two European countries, Greece and Ireland, have larger budget deficits as a percentage of GDP. Things are only slightly better when you look at the size of our national debt, which now exceeds $15.3 trillion, 102 percent of GDP. Just four European countries have larger national debts than we do — Greece and Ireland again, plus Portugal and Italy. That means the U.S. government is actually less fiscally responsible than countries like France, Belgium, or Spain.

And as bad as things are right now, we are on an even worse course for the future. If one adds the unfunded liabilities of Social Security and Medicare to our official national debt, we really owe $72 trillion, by the Obama administration’s projections for future Medicare savings under Obamacare, and as much as $137 trillion if you use more realistic projections. Under the best-case scenario, then, this amounts to more than 480 percent of GDP. And, under more realistic projections, we owe an astounding 911 percent of GDP.

Meanwhile, counting both official debt and unfunded pension and health-care liabilities, the most indebted nation in Europe is Greece, which owes 875 percent of GDP. That’s right, the United States potentially owes more than Greece. France, the second most insolvent nation in Europe, owes just 549 percent of GDP. Even under the most optimistic scenario, we owe more than such fiscal basket cases as Ireland, Italy, Portugal, and Spain.

So far we have been able to avoid the consequences of our profligate ways because the very public turmoil in Europe has helped prop us up as the world’s safe haven for foreign investment. Compared to the euro’s problems, the dollar looks pretty safe. This means that others are still willing to lend us money at absurdly low rates. But that won’t last forever. In fact, already seven European countries, including Germany and Sweden, have better credit ratings than the U.S.

Perhaps we can take some solace in the fact that our welfare state is not yet as big as Europe’s. But the key word here is “yet.” Today, our federal government spends more than 24 percent of GDP. Throw in state and local spending, and government at all levels consumes over 43 percent of everything produced in this country over the course of a year. As bad as that is, it’s still less than Europe, where the average of government spending at all levels is slightly more than 50 percent of GDP. But the Congressional Budget Office projects that federal-government spending in this country is currently on a path to exceed 42 percent of GDP by 2050. Government spending at all levels will exceed 59 percent of GDP. And CBO assumes state and local spending will decline in the future, which seems unlikely.

By way of comparison, today, Ireland is the only country in Europe with a bigger government than the U.S.’s will be in 2050. That’s right, one can look at countries like France and Greece, or even Denmark and Sweden, and realize that we will eventually have bigger governments than those quintessential welfare states have today.

At that point does the United States cease being the United States as we have known it? At the very least, can our economy survive such a crushing burden of government spending, and its attendant level of taxes and debt?

Given this looming disaster, President Obama has just submitted a budget that explicitly rejects “austerity,” avoids any reform of Medicare or Social Security, and adds some $7 trillion to the national debt over the next ten years. And Republicans? They are busy debating the pros and cons of birth control. What is wrong with this picture?




White House economic team never believed ‘stimulus’ would work: "Former White House Council of Economic Advisors head Christina Romer apparently never thought the $800 billion “stimulus” that was supposed to turn the economy around would work, a new book shedding light on the early days of the Obama Administration says. A memo brought to light in “The Escape Artists” by Noam Scheiber shows Romer originally proposed a spending plan that totaled $1.8 trillion, but the figure was dismissed as politically infeasible by Larry Summers, Director of the White House Economic Council. Romer came back with a watered down proposal of $1.2 trillion, but that was left out of the final proposal brought before Barack Obama himself. Nonetheless, even though the final proposal was a full $1 trillion short of what she thought would work, Romer penned the political document that justified the $800 billion figure."

IAEA: Latest Iran talks a failure: "The UN nuclear agency has declared its latest inspection visit to Iran a failure, with the regime blocking access to a key site suspected of hosting covert nuclear weapon research and no agreement reached on how to resolve other unanswered questions. The statement from the International Atomic Energy Agency was issued shortly after an Iranian general warned of a pre-emptive strike against any nation that threatens Iran."

The third-party payment problem: "Taking out insurance (or paying taxes) so that some third-party pays when a big-ticket, catastrophic health expense comes your way is perfectly rational. But paying someone else to take responsibility for your predictable, routine, run-of-the-mill health costs is crazy. It introduces huge dead-weight administrative costs and seriously distorted incentives, and is one of the key drivers of out-of-control healthcare inflation."

Politicians fiddle while fiscal crisis looms: "Imagine this family budget: Last year, you earned $24,700. But you spent $37,900, incurring $13,300 in debt, and you were already $153,500 in debt. So you say, 'I promise I'll spend $300 less this year!' Anyone can see that your cutback is pathetic and that you need to spend much less. Yet if you add eight zeroes, that's America's budget."

IN: Lawmaker opposes Girl Scout honor: "An Indiana lawmaker won't support a resolution celebrating the 100th anniversary of the Girl Scouts because he believes it is a 'radicalized organization' that supports abortion and promotes homosexuality. Rep. Bob Morris of Fort Wayne has sent a letter to fellow Indiana House Republicans explaining why he opposes the nonbinding resolution."



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