Francois Hollande lurches Right in historic U-Turn to save French economy

The U.S. Democrats have a love affair with Europe in general and France in particular. Will they absorb the French lesson below?

French president François Hollande has bowed to massive pressure for business tax cuts to pull France’s economy out of slump and stave off industrial decline, ditching a core element of his socialist platform.

Company taxes will fall by €20bn a year equal to 1pc of GDP, to be phased in gradually by 2015 under a convoluted system of rebates.

Premier Jean-Marc Ayrault said it amounted to a 6pc cut in unit labour costs, enough to close the gap with eurozone rivals. "France is not condemned to a spiral of decline, but we need a national jolt to regain control of our destiny," he said.

The mid-rate of VAT for restaurants and services will jump from 7pc to 10pc. The top rate will rise slightly to 20pc. Spending cuts will plug the revenue gap in order to meet the EU’s 3pc deficit target.

Critics call it the most humiliating U-turn in French politics since François Mitterrand abandoned his disastrous experiment of "Socialism in one country" under a D-Mark currency peg in 1983.

Mr Hollande came to office vowing lower VAT rates to protect the buying power of workers, and called business tax cuts a "gift to the rich". He imposed €10bn of fresh taxes on firms just weeks ago in his 2013 budget, a move that set off a revolt by business leaders.

The French National Assembly was in uproar on Tuesday as Gaulliste deputies derided the volte-face as a confession of misrule for the past six months.

His plan comes a day after French industrialist Louis Gallois delivered a report calling for "shock therapy" to halt the relentless decline of France’s eurozone export share, and the loss of 60,000 industrial jobs each year. He recommended deep cuts in payroll levies to bridge the gap in labour costs with Germany.

"President Hollande is finally starting to back away from some of his economically dangerous campaign promises," said Christian Schulz from Berenberg Bank.

Mr Schulz said the French leader has faced his "Schröder moment", reaching out like Germany’s Social Democrat Chancellor Gerhard Schröder a decade ago to a respected businessman to provide cover for reform.

Less clear is whether Mr Hollande will try to tame the Leviathan state, now Euroland’s biggest at 56pc of GDP. Such a move would entail a head-on clash with the socialist party base. "The new measures do not come anywhere close to what France would need to do to arrest its trend decline. He will need to go much further to end the maladie française," said Mr Schulz.

Pressure is mounting from all sides. The International Monetary Fund warned this week that France risked being left behind by Italy and Spain as they embrace root-and-branch reforms.

Mr Hollande appears to have been stung by accusations that his government is "anti-enterprise". The corporate lobby MEDEF said last month that investment was collapsing, and warned of capital flight in tones reminiscent of attacks on Leon Blum’s leftist Popular Front in 1936.

The new plan adopts most of the 22 proposals in the Gallois Report, including a state bank to steer cheap credit to exporters, though it falls short of Mr Gallois’ call for a €30bn cut in payroll levies.

Jean-François Copé, the Gaulliste leader, said the Hollande package was "hyper-complex, bureaucratic, and wholly inadaquate". Business leaders said it helps but comes too late reverse a collapse in profit margins as recession looms.

The tax reform aims to switch the burden from wealth creation to consumption, a trick used by Germany to carry out its "internal devaluation" within EMU. The policy was pioneered by Margaret Thatcher, a detail that France’s socialists prefer to keep quiet.

For Mr Hollande, it has been a painful wake-up from the utopian reverie of his first months in office. "Exercising power today is very hard. You don’t get any breaks, of any kind," he confessed.

 SOURCE

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Cyprus has finally killed myth that European Monetary Union is benign

The punishment regime imposed on Cyprus is a trick against everybody involved in this squalid saga, against the Cypriot people and the German people, against savers and creditors. All are being deceived.

It is not a bail-out. There is no debt relief for the state of Cyprus. The Diktat will push the island’s debt ratio to 120pc in short order, with a high risk of an economic death spiral, a la Grecque.

Capital controls have shattered the monetary unity of EMU. A Cypriot euro is no longer a core euro. We wait to hear the first stories of shops across Europe refusing to accept euro notes issued by Cyprus, with a G in the serial number.

The curbs are draconian. There will be a forced rollover of debt. Cheques may not be cashed. Basic cross-border trade is severely curtailed. Credit card use abroad will be limited to €5,000 (£4,200) a month. “We wonder how such capital controls could eventually be lifted with no obvious cure of the underlying problem,” said Credit Suisse.

The complicity of EU authorities in the original plan to violate insured bank savings – halted only by the revolt of the Cypriot parliament – leaves the suspicion that they will steal anybody’s money if leaders of the creditor states think it is in their immediate interest to do so. Monetary union has become a danger to property.

One can only smile at the denunciations of Eurogroup chief Jeroen Dijsselbloem for letting slip that the Cypriot package is a template for future EMU rescues, with further haircuts for “uninsured deposit holders”.

That is not the script. Cyprus is supposed to be a special case. Yet the “Dijssel Bomb” merely confirms that the creditor powers – the people who run EMU at the moment – will impose just such a policy on the rest of Club Med if push ever comes to shove. At the same time, the German bloc is lying to its own people about the real costs of holding the euro together. The accord pretends to shield the taxpayers of EMU creditor states from future losses. By seizing €5.8bn from savings accounts, it has reduced the headline figure on the EU-IMF Troika rescue to €10bn.

This is legerdemain. They have simply switched the cost of the new credit line for Cyprus to the European Central Bank. The ECB will have to offset the slow-motion bank run in Cyprus with its Emergency Liquidity Assistance (ELA), and this is likely to be a big chunk of the remaining €68bn in deposits after what has happened over the past two weeks.

Much of this will show up on the balance sheet of the Bundesbank and its peers through the ECB’s Target2 payment nexus. The money will leak out of Cyprus unless the Troika tries to encircle the island with razor wire.

“In saving €5.8bn in bail-out money, the other euro area countries will likely be on the hook for four to five times more in contingent liabilities. But, of course, the former represents real money that gives politicians a headache; the latter is monopoly central bank money,” said Marchel Alexandrovich, from Jefferies.

Chancellor Angela Merkel will do anything before the elections in September to disguise the true cost of the EMU project. It has been clear since August 2012 that she is willing let the ECB carry out bail-outs by stealth, as the lesser of evils. Such action is invisible to the German public. It does not require a vote in the Bundestag. It circumvents democracy.

Mrs Merkel can get away with this, provided Cyprus does not leave EMU and default on the Bundesbank’s Target2 claims, yet that may well happen.

“I wouldn’t be surprised to see a 20pc fall in real GDP,” said Nobel economist Paul Krugman. “Cyprus should leave the euro. Staying in means an incredibly severe depression.”

“Nobody knows what is going to happen. The economy could go into a free fall,” said Dimitris Drakopoulos, from Nomura.

The country has just lost its core industry, a banking system with assets equal to eight times GDP, and has little to replace it with. Cyprus cannot hope to claw its way back to viability with a tourist boom because EMU membership has made it shockingly expensive. Turkey, Croatia or Egypt are all much cheaper. Manufacturing is just 7pc of GDP. The IMF says the labour cost index has risen even faster than in Greece, Spain or Italy since the late 1990s.

What saved Iceland from mass unemployment after its banks blew up – or saved Sweden and Finland in the early 1990s – was a currency devaluation that brought industries back from the dead. Iceland’s krona has fallen low enough to make it worthwhile growing tomatoes for sale in greenhouses near the Arctic Circle.

If Cyprus tries to claw back competitiveness with an “internal devaluation”, it will drive unemployment to Greek levels (27pc) and cause the economy to contract so fast that the debt ratio explodes.

The IMF’s Christine Lagarde has given her blessing to the Troika deal, claiming that the package will restore Cyprus to full health, with public debt below 100pc of GDP by 2020.

Yet the Fund has already been through this charade in Greece, and her own staff discredited the doctrine behind EMU crisis measures. It has shown that the “fiscal multiplier” is three times higher than thought for the Club Med bloc. Austerity beyond the therapeutic dose is self-defeating.

Some in Nicosia cling to the hope that Cyprus can carry on as a financial gateway for Russians and Kazakhs, as if nothing has happened. RBS says the Russians will pull what remains of their money out of Cyprus “as soon as the capital controls are lifted”.

The willingness of the Cypriot authorities last week to seize money from anybody in any bank in Cyprus – even healthy banks – was an act of state madness. We will find out over time whether this epic blunder has destroyed confidence in the country as a financial centre, or whether parts of the financial and legal services sector can rebound.

Yet surely there is no going back to the old model, even though the final package restricts the losses to the two banks that are actually in trouble. Savers above €100,000 at Laiki will lose 80pc of their money, if they get anything back. Those at the Bank of Cyprus will lose 40pc.

Thousands of small firms trying to hang on face seizure of their operating funds. One Cypriot told me that the €400,000 trading account of his father at Laiki had just been frozen, leaving him unable to pay an Egyptian firm for a consignment of shoes.

The Cyprus debacle has taught us yet again that EMU has gone off the rails, is a danger to stability, and should be dismantled before it destroys Europe’s post-War order.

SOURCE

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Repeal Obamacare

Liberals had hoped, and some conservatives had feared, that the legislative Frankenstein’s monster known as Obamacare would become more popular as its sundry measures were implemented. But the Patient Protection and Affordable Care Act is no more popular now than when it was passed, as Americans have come to realize that it will neither protect patients nor provide for affordable care. While full repeal of the law is not within the realm of short-term political reality — the presence of Barack Obama in the White House and a Democratic majority in the Senate ensures that — repeal should nonetheless remain the end goal, either one piece at a time for now or root and branch.

The price tag for Obamacare has gone from shocking to preposterous. In March 2010, the Congressional Budget Office estimated the ten-year cost of the law at $898 billion; by February 2013, that number had climbed to $1.6 trillion, and it is likely that further revisions will be in the upward direction. That is a very high price to pay for a system that will, by the admission of its own supporters, leave some 30 million Americans uninsured. Long gone is the fiction pronounced by President Obama and repeated by his media enablers that the law will not add “one dime” to the deficit; the latest estimate is that Obamacare will add as much as $6.2 trillion to the long-term national debt, according to the Government Accountability Office. No thinking person takes President Obama seriously on fiscal questions, but those alleged experts and pundits who argued for Obamacare on fiscal grounds should be regarded as thoroughly discredited.

As mind-boggling as its price tag is, expense is not the main reason to repeal Obamacare. What is not sufficiently understood is that Obamacare does not reform or regulate health insurance: It effectively abolishes health insurance. Health insurance functions by creating pools of beneficiaries large enough that the incidence of particular health-care expenses — for everything from heart attacks to injuries in car accidents — can be predicted by actuaries with some statistical reliability, thus enabling costs to be distributed among beneficiaries over time. Obamacare demands that all insurance beneficiaries be offered identical rates regardless of health-related variables, and severely restricts the kinds of plans that may be offered. The most important variable is, of course, the question of whether somebody already is sick. Under Obamacare, an uninsured person who develops a serious illness can demand that he be insured at a rate no different from that of a person who had been purchasing insurance for decades before he became ill.

The “individual mandate” was supposed to prevent that problem by requiring all Americans to purchase health insurance, but it is a mandate that manages to be both too invasive and too lax at the same time: The mandate will invite the micromanagement of individuals and businesses by the federal government, but Americans will in many cases find themselves financially better off paying the tax for not getting insurance (as Chief Justice Roberts has reformulated the mandate) until they become sick and need insurance. Because of that defect, the main rationale for Obamacare — bringing all Americans into a large insurance market that can then be regulated and subsidized to bring it into accord with the tastes of the central planners in Washington — will prove impossible to realize.

Obamacare proposes to control health-care costs by empowering a small panel of unaccountable political appointees — the Independent Payment Advisory Board (IPAB) — to keep a lid on medical costs by imposing price controls. We have two relevant bodies of experience from which to draw insight on how this is likely to play out: Medicaid payments are subject to similar price controls, and doctors have responded to low rates of reimbursement by refusing to see Medicaid patients. Medicare is supposed to be subject to similar price controls, but, because the elderly are more politically influential than the poor, Congress has declined to actually cut payments to Medicare doctors, year after year after year, knowing that doing so would make doctors just as unwilling to take Medicare patients as they are to take Medicaid patients. The result in the former case is price controls that work by hurting Medicaid’s intended beneficiaries, who often have worse health-care outcomes than those with no coverage at all; the result in the latter case is price controls that do not work, period.

During the debate over Obamacare, the president and his supporters promised that enacting the law would cause insurance premiums for the typical family to decline by some $2,500 a year. In fact, premiums have continued to go up, now at an accelerated pace. In 2008, the year Barack Obama was elected president, health-insurance premiums rose by 0.6 percent. In 2009, the year Obamacare was passed, they rose by 1.3 percent. In 2011, they rose by 9.6 percent, or 16 times as quickly as they did the year before the law was passed. Expenses are expected to rise the most severely for young and healthy people. Because of the perverse incentives the law creates, the CBO estimates that the number of people insured through the subsidized health-insurance exchanges will begin to decline quickly after 2018 as the young and healthy realize that paying the fine is more economical than paying ever-higher insurance premiums. That means that those remaining in the insurance pool will be on average older and sicker, which is why the CBO estimates that the cost of subsidizing them will grow by almost 6 percent a year. Put another way, the cost of subsidizing the exchanges is expected to double every twelve years.

In short, the system created by this ill-advised law would prevent the emergence of normally functioning markets in medical services and health insurance. Instead, it establishes a top-down system of price controls and subsidies that will discourage healthy people from buying insurance in the first place, reward those who exploit the system’s defects, and discourage doctors and other health-care providers from extending their care to those who most need it.

Obamacare is too flawed in in its basic conception to be improved through reform. It must be replaced, either all at once or step by step. Replacement remains a viable option because the law is still unpopular and still unlikely to work. Indeed, the next phase of its implementation promises to be a chaotic enterprise that will further undermine the standing and credibility of the law and its architects. Republicans can and should begin taking it apart and building something better on the ruins.

 SOURCE

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For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC,  AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena .  GUN WATCH is now mainly put together by Dean Weingarten.

List of backup or "mirror" sites here or  here -- for when blogspot is "down" or failing to  update.  Email me  here (Hotmail address). My Home Pages are here (Academic) or  here (Pictorial) or  here  (Personal)

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Devout Jews detained for attempted animal sacrifice

This is thoroughly obnoxious.  By what strange logic are Jews to be denied equal rights in Israel? Muslims can do whatever they like on the temple mount.  Animal sacrifice is clearly commanded in the Torah.  Is the Bible the book of the Jews or is it not?  If Jews renounce continuity with the Israelites of old, their entitlement to the land of Israel becomes very shaky



A lamb and two humans were detained by police in Jerusalem on Monday as they were making their way to the Temple Mount.

The humans, hard-right political and religious activists Noam Federman and Arye Sunnenberg, intended to go to the Temple Mount and carry out the Jewish ritual of the Passover Sacrifice, involving the slaughter of a lamb.

The sacrifice is an important commandment within Jewish law, which some religious authorities argues does not require the existence of a Temple for its performance.  It must, however, be conducted on the Temple Mount.

Federman and Sunnenberg are both associated with several Temple Mount organizations that insist on the right to Jewish prayer and worship at the holy site.

Both men were released a short time later although as of Tuesday night, the lamb remained in police custody.

Federman was stopped by the police close to the city center with the lamb in his car.

He said that since he had not been conducting any criminal activity, the police had detained him for infracting an Agriculture Ministry ordinance prohibiting the transport of livestock without a permit from a veterinarian.

Federman claimed that since he had made public his intentions to perform a Passover Sacrifice on the Temple Mount, the police had conducted a search in the city for his vehicle.

The Joint Association of Temple Organizations said it was concerned that the police intended to keep the lamb in administrative detention for another month, to prevent it from being brought as a sacrifice at the latest possible date, a month after the first day of Passover.

Although the Supreme Court has upheld Jewish prayer rights on the Temple Mount, the court allows the police to prevent prayer and other forms of worship if they believe that such activity will cause a disturbance of the public order.

The Wakf Muslim religious trust which administers the Temple Mount is fiercely opposed to any non-Muslim prayer there.

Speaking to The Jerusalem Post, Federman said that for the police to prevent Jews from carrying out a central Jewish commandment like the Passover Sacrifice was extremely troubling.

“It’s unbelievable that Arabs are allowed to do whatever they feel like on the Temple Mount, yet Jews are forbidden from doing a mitzva which, according to Jewish law, if someone doesn’t perform incurs the punishment of spiritual excommunication,” he said.

Yehuda Glick, the association spokesman, said the Temple Mount organizations felt that that there needed to be some kind of protest at the infringement of the freedom of religion that prohibiting the performance of the Passover Sacrifice constitutes.

Asked whether the concern for public disturbance was reasonable given Muslim sensitivities, Glick said that the police exaggerate the threat and impose a de facto blanket ban on prayer and worship regardless of the situation.

He added that the police considerations should not come at the expense of freedom of religion.

SOURCE

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The day the Euro banks became bank robbers

By Robert Romano

How can deposits in Cyprus be unavailable for withdrawal, and yet somehow available for taxation?

This has been a burning question for me as I have observed the banking crisis in the Mediterranean island nation — where banks have faced heavy losses on Greek sovereign debt, European officials proposed a levy on Cypriot bank deposits, and all the while banks were shut down to prevent withdrawals.

So I asked an expert, Mike “Mish” Shedlock of Mish’s Global Economic Analysis fame to reconcile the seeming contradiction. If there’s no money in the banks, how can deposits in them be taxed?

Mr. Shedlock even kindly created a blog post to answer the question publicly, wherein he wrote, “I believe that’s a rhetorical question. Robert knows the answer. Even with the EU kicking in 10 billion euros (a loan not a gift), the money is not there. If the banks were sufficiently capitalized, there would not be a need for capital controls.”

To be fair, when I wrote my letter, I was legitimately baffled. But as it turned out I was simply in denial. I had answered my own question.

So, now that Cyprus has agreed to confiscate up to 30 percent of the savings of those with uninsured deposits over €100,000, many from Russia, where did the money go?

Technically, it went nowhere — as it had already been lent out by the Cypriot banks. It was lost the moment they lent the money to Greece by purchasing their bonds. When Greece defaulted, it put the Cypriot banks who lent them the money effectively into default as well.

What is occurring now is that the banks are writing off a liability — some €4.2 billion of uninsured deposits they owe — effectively defaulting on their obligations to those depositors. A move that in reality does not require any funds to be transferred anywhere.

If it makes it simpler to think about, the money is effectively being destroyed. The Cypriot banks will no longer show losses on Greek debt, and the uninsured depositors’ account statements will be now €4.2 billion lighter.

In fact, in this latest deal, there was no deposit tax levied by the Cypriot parliament. There was no vote to do so. The legislation that did ultimately pass Cyprus’ parliament provided for the restructuring of the banks there.

As German finance minister Wolfgang Schauble explained, “The Commission informed us today that the necessary legislation to implement these points has already been passed… Additional legislation would only have been necessary if a levy on uninsured deposits would have been raised but (not) for restructuring of the banks in question.”

Such a move was a necessary precondition for those banks to receive €10.7 billion of recapitalization loans from the so-called Troika: The European Commission, the European Central Bank, and the International Monetary Fund.

In short, to “avert” a bank collapse in Cyprus, the banks there are defaulting on depositors’ savings. Which, basically means they collapsed anyway — and will be reconstituted using new Troika loans.

A similar result occurred in Iceland in 2008 when the Icesave bank collapsed and British and Dutch depositors were not covered under Iceland’s deposit insurance regime. The reason that had to be so was because the banking system — which was up to 10 times larger than Iceland’s economy — was too big to save.

In other words, when financial institutions bet everyone’s savings on the roulette wheel landing on red, and it lands on black, somebody has to end up holding the bag. In that case, Iceland guaranteed domestic depositors, devalued its currency, and utilized some capital controls. And then when the United Kingdom and the Netherlands came looking for their citizens’ money, the Icelanders told them to go pound sand. As well they should have.

What made the original deposit tax in Cyprus so outrageous — and even the latest deposit write-off — is that although it falls on foreign depositors, any Cypriot with more than €100,000 in savings is taking it on the chin, too.

At least Iceland protected its own citizens, who were the government’s primary concern there. It let the banks fail themselves. Whereas in Cyprus, the banks are being saved — and the euro itself — at the expense of the wealthy.

Both cases underscore something that everyone should have already known: Uninsured deposits are, well, uninsured. If the bank that holds them goes kaput, so do the savings.

The key takeaway now is that anyone who keeps uninsured deposits in the Eurozone — or anywhere else for that matter — is doing so at their own risk.

Already, this “one-off” is being discussed as a template to resolving the sovereign debt crisis across Europe.  Dutch Finance Minister Jeroen Dijsselbloem said after the Cyprus episode that if a bank cannot meet capital requirements, “then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute to recapitalizing the bank, and if necessary the uninsured deposit holders.”

Can you say, “bank run”? Why should any depositor keep their funds in Eurozone banks if they are subject to seizure at any moment?

Dijsselbloem’s comments have since been walked back by the Eurogroup which stated “Macro-economic adjustment programmes are tailor-made to the situation of the country concerned and no models or templates are used.”

Nonetheless, even the prospect of deposit seizures raises serious questions about the nature of bank deposits and the relationship between depositors and banks. No longer an asset to be protected, deposits — especially large deposits — can readily be seized and converted into bank capital at will at any time without warning.

That would be bad enough. But this episode also raises troubling questions about property rights. Whether officials care to admit it, the door is now open even for insured deposits to be seized as well.

And since it is practically impossible to live in today’s society without participating in the banking system, this exposes a fundamental shift in the social contract. The fruits of our labor can be taken from us without a moment’s notice at the state’s whim in order to shore up the solvency of a financial institution.

This turns the notion of the government as the protector of property rights on its head. There can be no property rights if the people do not even have a right to keep their own money after taxes.

How can the people trust the government or the banking system to protect their assets when the Cyprus precedent turns the government and the banks into bank robbers with an open vault. Something to think about.

SOURCE

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Why Harry Reid is ashamed of the Senate budget

By Rick Manning – Hell must have frozen over this past weekend as the U.S. Senate broke a four year record of intransigence and failure as it unleashed a blizzard of votes that culminated with the passage of a budget document that reveals the plans and priorities of the 50 Democrats who supported it.

It was no mistake that the big reveal by Senate Democrats was that they had no plan whatsoever to ever bring the budget into balance came on Friday evening going into pre-dawn Saturday morning.  Harry Reid and crew clearly were embarrassed by their budget and hoped to avoid widespread media coverage by scheduling votes when they would receive the least amount of attention.

Ironically, Democrat Senator Bob Menendez (D-NJ) actually had the audacity to complain that it was irresponsible for the Senate to be considering major foreign policy decisions at 3 am on Saturday, referring to a budget amendment that passed putting the Senate on record as opposing the United Nations Small Arms Treaty which the Obama Administration is currently negotiating.

Menendez’s complaint should have been with Majority Leader Reid who deliberately scheduled the vote-a-thon in the wee hours of the morning to keep the results cloaked from real time reporting as much as possible.

But the rationale behind Reid’s Hide the Budget Act makes perfect sense.

The Senate Democrats claimed that their budget was “balanced” a grand total of 230 times as noted by Senator Jeff Sessions (R-AL) in spite of their voting for a budget that never even gets close to balance.

In spite of these rhetorical claims, every Democrat Senator with the exception of West Virginia’s Joe Manchin voted against sending the budget back to Committee with instructions that it balance within ten years.  The motion to recommit by Sessions was defeated by a 46–53 margin with Frank Lautenberg (D-NJ) not voting.

The significance of this admission by 53 Democrat Senators — 50 of whom voted for final passage of the budget — that they have no intention of ever bringing the budget to balance cannot be overstated.

No matter their orchestrated protestations to the contrary, and their attempts to spin the American people by perverting the definition of balancing the budget, their votes do not lie. The budget that was passed by the Senate Democrats creates $7.3 trillion in new debt over the next ten years despite a $1.5 trillion tax increase.

It immediately increases the budget deficit and grows federal government spending by 60 percent over the next ten years.  Even more stunning, the growth of means-tested spending increases by 80 percent — i.e spending on those who are the poorest amongst us.

This last point is a bald admission that the Democrats who voted for this budget do not believe that their big government policies will work. Nor do they think their budget will grow the economy or ween people away from government dependency, but instead they project that the very dependency that sucks the self-respect from the least of these, will dramatically increase. Incredibly, the Senate Democrats actually budgeted for the failure of their policies.

To put an exclamation point on the devastating impact that the Senate Democrat vision for federal government taxing and spending would have on American’s who want a job, the Heritage Foundation found that if passed into law, it would cost our nation an average of 853,000 jobs per year for the next ten years.

That’s 8.5 million jobs that either won’t be created or would go away entirely if the Senate Democrats’ vision for America became a reality.

That’s 8.5 million Americans consigned to perpetual dependency rather than developing the kind of sustainable careers that our nation’s workers have traditionally been able to depend upon.

That’s 8.5 million disappointments, tears and putting off a vibrant future for another day as American workers are stuck in a cycle of Democrat Senate induced dependency rather than being able to stand on their own two feet to determine their own futures based upon their ability and hard work.

That’s simply unacceptable and inexcusable.  Yet, it is the consequence of a Senate Democrat vision that dramatically increases government, puts another $7 trillion onto the national debt, all the while sucking an additional $1.5 trillion in new taxes out of the economy.

Thankfully, one of the positives from the Senate budget debate is that our U.S. Senate went on the record on a number of other issues, producing mixed results.

Beyond the UN Small Arms Treaty vote, another of these was the vote of support by 56 Senators in favor of illegal immigrants having access to free taxpayer funded health care should they become legal under a future immigration reform bill.

Another vote that is good news for those who believe in free markets but bodes ill for those in the Obama Administration who hope to pass a carbon tax, as 53 Senators rejected this holy grail for the environmental left on a bi-partisan basis.

This past weekend was indeed momentous for not only the Senate Democrats being forced to actually do their jobs and lay out their budgetary vision for the country, but also for the 47 votes taken that put every Senator on record on many of the other critical issues facing our nation.

It is just too bad that Harry Reid was so ashamed of the product his Budget Committee produced that he attempted to hide their work behind a late night curtain.

SOURCE

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For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC,  AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena .  GUN WATCH is now mainly put together by Dean Weingarten.

List of backup or "mirror" sites here or  here -- for when blogspot is "down" or failing to  update.  Email me  here (Hotmail address). My Home Pages are here (Academic) or  here (Pictorial) or  here  (Personal)

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Bipartisanship

I have received a mailout from the Boston Globe asking me to comment on one of their articles ("A lesson for Bob Dole: old rules no longer apply"  by  Michael Kranish).  I am not quite sure why I deserved that honor but I do indeed have something to say about the article concerned.

The article claims, rightly I think, that Congress has become intractably polarized.   It goes on to give an example. It says that the Senate recently refused to ratify an international treaty  giving rights to the disabled.  All the votes against were cast by Republicans.  A two thirds majority is needed to ratify treaties.

The article portrays the GOP opposition to ratification as irrational.   It was not.  Once ratified, a treaty becomes legally binding.  And once you've got a law it is in the hands of the courts.  And it is an old, old, strategy in America to get the courts to impose what no legislature would.

If America's legal system were simply judicial and not political it might have been reasonable to give the courts a new set of rights to chew on but America's courts are an abomination right from the Supreme Court down.  SCOTUS has "found" rights in the constitution that are not even mentioned there (a right to abortion) and denied rights that are explicitly set out in the constitution (allowed "affirmative action" despite the 14th amendment requirement for equal treatment).  The GOP senators were right to be leery.

A bigger question, however, is why there is little or no bipartisanship in Congress these days.  The article I am discussing is persuasive that in the not too distant past there was substantial bipartisanship.

I think much of the fault lies with Obama and his Senate henchman, Harry Reid.  Obama came to power floating on a promise of bipartisanship and "reaching across the aisle".  It was soft-soap.  He has done the opposite.  His idea of compromise is getting people to agree with him.  The GOP have got nothing from him.

And Obamacare exemplifies the Reid/Obama axis of intransigence.  They got that legislation though without a single Replublican vote and by way of gigantic arm-twisting of their own congressmen.  The small group of anti-abortion Democrats that stood in the way were bought off by a meaningless promise from Obama that has been breached virtually from the get-go.  The fear that Obamacare would affect the rights of abortion opponents has been amply justified, with a ruling that church bodies and others must pay for health insurance that includes a right to abortion. Catholics are particularly affected and are in court trying to get the ruling overturned.

So when the Donk establishment will go to any length to get its way, they have got to expect the GOP to dig in its heels too.  It takes two to tango.

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Republicans must be aggressive to secure smaller government

 Republicans in Congress have a problem reducing the size and scope of the federal government. Far too often, they introduce watered-down legislation that they hope will not be torn to shreds by the media. This strategy has failed to pay off.

Instead of continuing down this road of failure, Congressional Republicans should focus on big ideas and craft their message around big plans. This is what Democrats have done to pass their own proposals and continue to do while they run circles around Republicans.

When Nancy Pelosi and Congressional Democrats launched their efforts to pass Obamacare, their initial message focused on a single-payer health care plan. While their dream health care plan was not what ultimately passed Congress, the end result moved them much closer to their end goal of making government the sole entity that distributes health care. Their strategy was to ask for a lot knowing you will get a big part of it.

Republicans do not do this. They play in to the media’s hand each time a major debate is occurring. Instead of laying out broad plans for reducing the role of government, they endorse plans that should be the compromise deals Democrats would seek if the President were a Republican. The GOP does not have the same fire in legislating that Pelosi does.

With the upcoming debt ceiling debate — Republicans supported suspending the debt ceiling in January effectively allowing Obama to spend and borrow without a limit — the GOP has a chance to turn the page and finally push for a real plan to cut spending and force the federal government to spend within their means.

If Republicans in the House want to be the party of limited government, they will have to start legislating like it. If they cave to the same old media and Democrat pressure that calls Republican ideas “radical” and “out of touch”, they will have effectively signaled to those who want leaders in Washington to champion limited government issues that they are not up to the job.

Instead of caving, Republicans should lay out a broad plan, tied to something such as a vote on the debt ceiling, that finally begins to rein in the mountain of debt and out-of-control spending that Congressional Republicans have allowed to continue. Rhetoric without action must not be allowed.

If Congressional Republicans are not aggressive in fighting the downward debt spiral, then who will be? That answer is probably no one.

SOURCE

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Cyprus:  Can It Happen Here?

 Thomas Sowell

The decision of the government in Cyprus to simply take money out of people's bank accounts there sent shock waves around the world. People far removed from that small island nation had to wonder: "Can this happen here?"

The economic repercussions of having people feel that their money is not safe in banks can be catastrophic. Banks are not just warehouses where money can be stored. They are crucial institutions for gathering individually modest amounts of money from millions of people and transferring that money to strangers whom those people would not directly entrust it to.

Multi-billion dollar corporations, whose economies of scale can bring down the prices of goods and services -- thereby raising our standard of living -- are seldom financed by a few billionaires.

Far more often they are financed by millions of people, who have neither the specific knowledge nor the economic expertise to risk their savings by investing directly in those enterprises. Banks are crucial intermediaries, which provide the financial expertise without which these transfers of money are too risky.

There are poor nations with rich natural resources, which are not developed because they lack either the sophisticated financial institutions necessary to make these key transfers of money or because their legal or political systems are too unreliable for people to put their money into these financial intermediaries.

Whether in Cyprus or in other countries, politicians tend to think in short run terms, if only because elections are held in the short run. Therefore, there is always a temptation to do reckless and short-sighted things to get over some current problem, even if that creates far worse problems in the long run.

Seizing money that people put in the bank would be a classic example of such short-sighted policies.

After thousands of American banks failed during the Great Depression of the 1930s, there were people who would never put their money in a bank again, even after the Federal Deposit Insurance Corporation was created, to have the federal government guarantee individual bank accounts when the bank itself failed.

For years after the Great Depression, stories appeared in the press from time to time about some older person who died and was found to have substantial sums of money stored under a mattress or in some other hiding place, because they never trusted banks again.

After going back and forth, the government of Cyprus ultimately decided, under international pressure, to go ahead with its plan to raid people's bank accounts. But could similar policies be imposed in other countries, including the United States?

One of the big differences between the United States and Cyprus is that the U.S. government can simply print more money to get out of a financial crisis. But Cyprus cannot print more euros, which are controlled by international institutions.

Does that mean that Americans' money is safe in banks? Yes and no.

The U.S. government is very unlikely to just seize money wholesale from people's bank accounts, as is being done in Cyprus. But does that mean that your life savings are safe?

No. There are more sophisticated ways for governments to take what you have put aside for yourself and use it for whatever the politicians feel like using it for. If they do it slowly but steadily, they can take a big chunk of what you have sacrificed for years to save, before you are even aware, much less alarmed.

That is in fact already happening. When officials of the Federal Reserve System speak in vague and lofty terms about "quantitative easing," what they are talking about is creating more money out of thin air, as the Federal Reserve is authorized to do -- and has been doing in recent years, to the tune of tens of billions of dollars a month.

When the federal government spends far beyond the tax revenues it has, it gets the extra money by selling bonds. The Federal Reserve has become the biggest buyer of these bonds, since it costs them nothing to create more money.

This new money buys just as much as the money you sacrificed to save for years. More money in circulation, without a corresponding increase in output, means rising prices. Although the numbers in your bank book may remain the same, part of the purchasing power of your money is transferred to the government. Is that really different from what Cyprus has done?

SOURCE

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25 Examples of Liberal Racism in Quotes

1) "(Obama’s) a nice person, he’s very articulate this is what’s been used against him, but he couldn’t sell watermelons if it, you gave him the state troopers to flag down the traffic." -- Dan Rather

2) “White folks was in the caves while we [blacks] was building empires … We built pyramids before Donald Trump ever knew what architecture was … we taught philosophy and astrology and mathematics before Socrates and them Greek homos ever got around to it." -- Al Sharpton

3) "‘Hymies.’ ‘Hymietown.’" -- Jesse Jackson’s description of New York City while on the 1984 presidential campaign trail.

4) "A few years ago, (Barack Obama) would have been getting us coffee." -- Bill Clinton to Ted Kennedy

5) "The Israeli puppeteer travels to Washington and meets with the puppet in the White House. He then goes down Pennsylvania Avenue and meets with the puppets in Congress. The Israeli leader then 'brings back millions of dollars' in aid to Israel." -- Ralph Nader

6) "(Harry Reid) was wowed by Obama's oratorical gifts and believed that the country was ready to embrace a black presidential candidate, especially one such as Obama -- a 'light-skinned' African American 'with no Negro dialect, unless he wanted to have one." -- Harry Reid's comments reported by Mark Halperin and John Heilemann

7) "I do not think it is an exaggeration at all to say to my friend from West Virginia [Sen. Robert C. Byrd, a former Ku Klux Klan recruiter] that he would have been a great senator at any moment. . . . He would have been right during the great conflict of civil war in this nation." -- Former Democratic Senator Christopher Dodd (D.,Conn.)

8) “Civil rights laws were not passed to protect the rights of white men and do not apply to them.” -- Mary Frances Berry, former Chairwoman, US Commission on Civil Rights

9) "Tainting the tea party movement with the charge of racism is proving to be an effective strategy for Democrats. There is no evidence that tea party adherents are any more racist than other Republicans, and indeed many other Americans. But getting them to spend their time purging their ranks and having candidates distance themselves should help Democrats win in November. Having one’s opponent rebut charges of racism is far better than discussing joblessness." -- Mary Frances Berry, former Chairwoman, US Commission on Civil Rights

10) “Well, because the Arabs who were involved in 9/11 cooperated with the Zionists, actually. It was a cooperation. They gave them the perfect excuse to denounce all Arabs. It’s a racist sort of thing, really racist – you know, picking out these 19 or 20 terrorists – they were terrorists – and saying all the Arabs are like them.” — Former Democratic Senator James Abourezk on Hizbullah TV

11) "Let me see one of you adopt one of those ugly black babies." -- Abortionist Ashutosh Ron Virmani

12) “There’s no great, white bigot; there’s just about 200 million little white bigots out there.” -- USA Today columnist Julienne Malveaux

13) "Them Jews aren’t going to let (Obama) talk to me. I told my baby daughter, that he’ll talk to me in five years when he’s a lame duck, or in eight years when he’s out of office. …They will not let him talk to somebody who calls a spade what it is.” -- Jeremiah Wright

14) "There’s white racist DNA running through the synapses of his or her brain tissue. They will kill their own kind, defend the enemies of their kind or anyone who is perceived to be the enemy of the milky white way of life." -- Jeremiah Wright

15) "The white man is our mortal enemy, and we cannot accept him. I will fight to see that vicious beast go down into the lake of fire prepared for him from the beginning, that he never rise again to give any innocent black man, woman or child the hell that he has delighted in pouring on us for 400 years.” -- Louis Farrakhan

16) “White people shouldn’t be allowed to vote. It’s for the good of the country and for those who’re bitter for a reason and armed because they’re scared.” -- Left-wing journalist Jonathan Valania

17) "(Joseph Lowery) said that when he was a young militant, he used to say all white folks were going to hell. ...'Then he mellowed and just said most of them were. Now, he said, he is back to where he was.’" -- The Daily Mail quotes Joseph Lowery, who gave the benediction at President Obama’s inauguration

18) "We are owned by propagandists against the Arabs. There’s no question about that. Congress, the White House, and Hollywood, Wall Street, are owned by the Zionists. No question in my opinion. They put their money where their mouth is…We’re being pushed into a wrong direction in every way." -- Helen Thomas

19) “You cannot go to a 7-11 or Dunkin Donuts unless you have a slight Indian Accent.” -- Joe Biden

20) “I mean, you got the first mainstream African-American who is articulate and bright and clean and a nice-looking guy. I mean, that’s a storybook, man.” -- Joe Biden

21) "I give interracial couples a look. Daggers. They get uncomfortable when they see me on the street." -- Spike Lee

22) “I want to go up to the closest white person and say: ‘You can’t understand this, it’s a black thing’ and then slap him, just for my mental health.” — New York City Councilman, Charles Barron

23) "We got to do something about these Asians coming in and opening up businesses and dirty shops. They ought to go." -- Marion Barry

24) “The point I was making was not that Grandmother harbors any racial animosity. She doesn’t. But she is a typical white person…” -- Barack Obama

25) “That’s just how white folks will do you. It wasn’t merely the cruelty involved; I was learning that black people could be mean and then some. It was a particular brand of arrogance, an obtuseness in otherwise sane people that brought forth our bitter laughter. It was as if whites didn’t know that they were being cruel in the first place. Or at least thought you deserving of their scorn.” -- Barack Obama

SOURCE

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For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC,  AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena .  GUN WATCH is now mainly put together by Dean Weingarten.

List of backup or "mirror" sites here or  here -- for when blogspot is "down" or failing to  update.  Email me  here (Hotmail address). My Home Pages are here (Academic) or  here (Pictorial) or  here  (Personal)

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The double standards never stop<



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Gravy!

It has been federal for three years. It has brought chaos to the labor markets. It has cost people their livelihoods and it is more unpopular than ever.

So why does “Obamacare” (officially known as the “Affordable Care Act”) remain so irresistible for so many of our fellow Americans? Because at its core Obamacare is not about health care, so much as it is about the redistribution of wealth, and for those who are on the receiving end of the redistribution the agenda is completely irresistible.

When the federal government doles-out cash, it’s difficult to say “no.” That’s why many of our nation’s top business consulting firms are cashing-in, as state government officials hire the consulting firms to figure out how to set up the new federal health care bureaucracies, complete with their own state-specific websites and call centers.

How difficult and costly could it be, do you suppose, to set up a website and a call center for the residents of one individual state? In the world of private enterprise, most small to midsize companies doing business within a specific region of the U.S. would be foolish to spend much more than a hundred thousand dollars for their customer service website and the infrastructure for a call center, and in many cases the project could be completed for much less.

But with Obamacare, the “customer service” element has become more of a “corporate welfare” element. Companies, careers, and personal fortunes are being made by people who are the states, as firms bill the individual states millions of taxpayer dollars for the website and call center set-ups (and the Obama administration frequently offers to reimburse the states for the set-up costs).

Take for example a company called Leavitt Partners, LLC. Founded by the former Republican Governor of Utah (and former U.S. Secretary of Health and Human Services) Michael Leavitt, the company describes itself as a “healthcare intelligence business,” and is focused solely on state-by-state Obamacare compliance (they have already completed Utah’s insurance exchange start-up).

We’re talking here about Michael Leavitt, the former Utah Governor who last year endorsed and campaigned on behalf of Mitt Romney, the presidential candidate who pledged to “end” Obamacare. Yes, that Michael Leavitt is making millions advising the states on how to comply with the monstrosity that his pal Mitt wanted to eliminate.

How much money is in play for these companies? Consider that last fall representatives from Leavitt’s company traveled north and proposed to build an exchange for their tiny nieghboring state of Idaho, a state with a population of less than 1.7 million people. Once the Leavitt representatives unveiled their proposed price tag to build an exchange - $70 million-an incredulous member of Idaho’s state insurance task force asked “does Governor Leavitt really believe that this is a good idea?”

Company associate Brett Graham replied with the nuanced explanation that “Governor Leavitt doesn’t like the feds dictating to the states,” however, the Governor also believes that the states should “stand inside the circle with the feds rather than stand outside of it”- which was an artful way of saying “yes, Governor Leavitt likes this and wants to get paid to show you how to do it.”

Leavitt’s proposal was not the most expensive that the sparsely populated Idaho received. The global accounting and consulting firm KPMG weighed-in with a price tag of $77 million, and when a state official asked what the residents of Idaho would get in return for such a large expenditure, KPMG representative Andrew Gottschalk was vague: “It’s hard to explain exactly what you get…It’s hardware, it’s software, there’s infrastructure, there’s people and staffing” he stated. “There would likely be a call center. It’s all kinds of things… there’s a lot of stuff….but it’s hard to be specific.”

States spending millions of taxpayer dollars, and receiving “all kinds of things” and “a lot of stuff” in return. That’s our present-day reality with Obamacare. Along with Leavitt Partners and KPMG, global consulting firms Maximus and Mercer are also cashing-in. These firms employ well educated, highly skilled professionals with JD’s, MBA’s, and advanced degrees in information systems and healthcare management, most of whom would undoubtedly reject the idea that they are welfare recipients. As the Maximus corporate website states, “we leverage our extensive experience and strong commitment to ethics to provide high quality services and solutions.”

This is the reality of Obamacare. It’s wildly unpopular for the masses, but irresistible for those on the receiving end of the money grab.

SOURCE

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Self-Wrecking Pols Take 'Public' Out of 'Republican'

 Paul Jacob

Since the dawning of Obama Nation in 2008, Republicans have made significant gains at the state level — historic victories in 2010, and even small gains made last year, which at the federal level was a debacle for the GOP. Republicans now control both chambers of the state legislature and the governor’s mansion in 25 states; Democrats have such universal control in only 13 states.

“This is significant. While we may expect more of the gridlock in Washington that we have seen over the past two years,” wrote Grover Norquist and Patrick Gleason in Politico, “. . . the states, over three-quarters of which are completely controlled by Republicans or Democrats, are unobstructed from moving in whichever direction the party in power chooses.

Republicans, therefore, have many opportunities to connect with the voters, to show voters their best side.

Or, infuriate.

Right now, in a number of state capitols, Republican legislators are at risk of giving up the game by using their legislative power to enact new laws to frustrate and undermine citizen-initiated ballot measures.

To be blunt, neither Republican nor Democrat career politicians much like the idea of citizens having any involvement in politics — save voting for them or mailing them a big, fat check. And the thought of voters making real decisions by proposing and imposing reforms through the citizen initiative or challenging legislative enactments by forcing a voter referendum is absolutely anathema.

But voters very much like making decisions; they know that even their own favored parties and politicians need the discipline of a independent, democratic check. Without initiative and referendum, the citizenry loses all manner of control over runaway spending and taxes, crony corporate welfare schemes, excessive nannyism and government corruption.

No wonder voters don’t like it when politicians try to silence their voice.

But that is precisely what is happening in several Republican-controlled states — none more critical for congressional and also presidential success than Ohio.

Last week, Senate Bill 47 passed the House of Representatives with every Republican member voting yes and every Democrat voting no. Two weeks ago, the bill had passed the state Senate with one Republican (bless him) joining every Democrat in voting no, with every other elephant approving the legislation.

SB 47 would reduce the amount of time initiatives or referendums have to gather signatures from voters, which makes it tougher for voters to get to decide issues.

And it throws a few other rods into the engine of petitioning, as well. For example, it would re-impose an unconstitutional residency requirement already once struck down by a court and previously deemed unenforceable by state officials.

Why would Republican legislators want to do such a thing? Unions have beaten them at the ballot box on a referendum and some initiatives.

Meanwhile, grassroots conservatives and Republicans and libertarians join liberals, Democrats and independents in opposing this anti-initiative legislation. Not a single person or group, except for the bill’s Republican sponsor, testified in favor of SB 47.

If Kasich signs this bill, will these supporters of basic citizen democracy vote for him for governor in 2014 anyway? And if they don’t, will they be more or less willing to vote Democrat or Libertarian or Constitution Party for president in 2016?

In Idaho, Republican legislators got whupped by the powerful state teachers union on three citizen referendums on last November’s ballot. Voters sided with the teachers. I would have sided with legislators, but in a democratic republic, these are issues the people of Idaho decide.

When we lose a vote, the answer isn’t to end the practice of voting.

Nonetheless, Idaho legislators were busy, last week, passing Senate Bill 1108. Though only three of the 26 states with statewide initiative and/or referendum have a more difficult petition signature threshold than Idaho, SB 1108 would raise it higher yet. In addition to satisfying the current statewide signature requirement, SB 1108 would add a requirement to run 18 additional petition drives to qualify in 18 legislative districts.

Not a single Democrat voted for the bill. Anti-tax and property rights conservatives weren’t with the state teachers union or Democrats on the referendums, but they have been making common cause with them in opposing this assault on a constitutional citizen check on big government.

Maybe it doesn’t matter in a state as red as Idaho. But dissing citizens doesn’t seem helpful to the GOP brand. Or to maintaining a grassroots base of energy for actually mobilizing neighbors and friends for winning elections.

I grew up in Arkansas, which just last November voted Republicans into majorities in both houses of the legislature for the first time since Reconstruction (the century before last). There have been some good bills passed, I trust, but Monday the full state senate will vote on an awful one: Senate Bill 821.

The legislation is designed to attack fraud in petitions, and it appears from reports that there were indeed forged signatures on petitions turned in for a couple of 2012 ballot initiatives. The problem is that no one has been charged with a crime. Instead, legislators are slapping a cumbersome and expensive new state registration and training program on future initiative and referendum petitions.

The frightening result of any transgression of the new Labyrinth of rules and regs embedded in SB 821 is that the perfectly valid petition signatures of registered Arkansas voters would be thrown out and discounted, right along with the bad. A simple technical mistake made by someone working for the campaign — petition circulator, manager, clerk, notary public — can deny voters a signature and, thus, a vote.

Will Arkansas Republicans throw this monkey wrench into Arkansas’s long, proud tradition of initiative and referendum? Will they allow this law to pass on their very first watch?

Republicans have the opportunity to prove to voters close to home that they are different — indeed, better — than Democrats, who haven’t always been very nice to small-d democracy, either. But in Ohio, Idaho and Arkansas (and elsewhere) Republican politicians seem bent on taking whacks at democracy . . . and, in the process, losing future elections.

Politics is a struggle over hearts and minds. The Republican Party now points its weaponry at the hearts and minds of its own supporters.

SOURCE

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Targeting Multinationals, the OECD Launches New Scheme to Boost the Tax Burden on Business

 Daniel J. Mitchell

I’ve been very critical of the Organization for Economic Cooperation and Development. Most recently, I criticized the Paris-based bureaucracy for making the rather remarkable assertion that a value-added tax would boost growth and employment.

But that’s just the tip of the iceberg.

The OECD has allied itself with the nutjobs from the so-called Occupy movement to push for bigger government and higher taxes.

The OECD, in an effort to promote redistributionism, has concocted absurdly misleading statistics claiming that there is more poverty in the US than in Greece, Hungary, Portugal, or Turkey.

The OECD is pushing a “Multilateral Convention” that is designed to become something akin to a World Tax Organization, with the power to persecute nations with free-market tax policy.

The OECD supports Obama’s class-warfare agenda, publishing documents endorsing “higher marginal tax rates” so that the so-called rich “contribute their fair share.”

Now the bureaucrats have concocted another scheme to increase the size and scope of government. The OECD just published a study on “Addressing Base Erosion and Profit Shifting” that seemingly is designed to lay the groundwork for a radical rewrite of business taxation.

In a new Tax & Budget Bulletin for Cato, I outline some of my concerns with this new “BEPS” initiative.

"…the BEPS report…calls for dramatic changes in corporate tax policy based on the presumption that governments are not seizing enough revenue from multinational companies. The OECD essentially argues that it is illegitimate for businesses to shift economic activity to jurisdictions that have more favorable tax laws. …The core accusation in the OECD report is that firms systematically—but legally—reduce their tax burdens by taking advantage of differences in national tax policies."

To elaborate, the BEPS scheme should be considered Part II of the OECD’s anti-tax competition project. Part I was the attack on so-called tax havens, which began back in the mid- to late-1990s.

The OECD justified that campaign by asserting there was a need to fight illegal tax evasion (conveniently overlooking, of course, the fact that nations should not have the right to impose their laws on what happens in other countries).

The BEPS initiative is remarkable because it is going after legal tax avoidance. Even though governments already have carte blanche to change business tax policy.

So what does the OECD want?

"…the OECD hints at its intended outcome when it says that the effort “will require some ‘out of the box’ thinking” and that business activity could be “identified through elements such as sales, workforce, payroll, and fixed assets.” That language suggests that the OECD intends to push global formula apportionment, which means that governments would have the power to reallocate corporate income regardless of where it is actually earned."

And what does this mean? Nothing good, unless you think governments should have more money and investment should be further penalized.

Formula apportionment is attractive to governments that have punitive tax regimes, and it would be a blow to nations with more sensible low-tax systems. …business income currently earned in tax-friendly countries, such as Ireland and the Netherlands, would be reclassified as French-source income or German-source income based on arbitrary calculations of company sales and other factors. …nations with high tax rates would likely gain revenue, while jurisdictions with pro-growth systems would be losers, including Ireland, Hong Kong, Switzerland, Estonia, Luxembourg, Singapore, and the Netherlands.

Since the United States is a high-tax nation for corporations, why should Americans care?

For several reasons, including the fact that it wouldn’t be a good idea to give politicians more revenue that will be used to increase the burden of government spending.

But most important, tax policy will get worse everywhere if tax competition is undermined.

More HERE

There is a  new  lot of postings by Chris Brand just up -- on his usual vastly "incorrect" themes of race, genes, IQ etc

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For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC,  AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena .  GUN WATCH is now mainly put together by Dean Weingarten.

List of backup or "mirror" sites here or  here -- for when blogspot is "down" or failing to  update.  Email me  here (Hotmail address). My Home Pages are here (Academic) or  here (Pictorial) or  here  (Personal)

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Violence of the Left

The article below is from a couple of years back but still makes some good points -- JR

Most violence and violent rhetoric is leftist in origin. As the left has a firm grip on the reins of mainstream media, it should come as no surprise that the right is the scapegoat for the sins of the left. The irony is that the left is guilty of what its favorite leftist psychologist, Sigmund Freud, coined “projection.” The left denies its own violent actions and rhetoric and instead ascribes it to its chief political opposition—the right.

The left projects its own violent tendencies upon the right through extensive use of media propaganda. “Right-wingers” are immediately blamed for any outburst of random violence perpetrated by isolated and disturbed individuals, yet the entire history of leftist aggression, angry rhetoric, and physical violence is swept into the dustbin of history. Leftist riots, leftist terrorists, leftist serial bombers, leftist calls for genocide—all of these sink down the memory hole, purposefully eclipsed by a barrage of stories about right-wing violence. Reality is quite different.

Worldwide, the left-wing forces of communism are responsible for more than 100 million civilian deaths in the Twentieth Century. Russia, Romania, Yugoslavia, China, Cambodia, Vietnam, and other communist-controlled nations became killing fields in the name of social progress—a favorite term of the left. America mistakenly believes that Marxism and leftism largely died with the fall of the Soviet Union, but the parasite merely changed hosts.

As far as violent and hateful language and calls for White genocide, there is a long list of belligerent quotations by leftists in the media, politics, and academia. The following is a small sample.

Jewish intellectual and leftist activist Susan Sontag snarled, “The White race is the cancer of history.”

Leonard Jeffries, chairman of African-American studies at the City College of New York, said he wanted to leave his children in a “world in which there aren’t any White people.”

Jewish Harvard professor and editor of “Race Traitor” magazine Noel Ignatiev trumpeted, “The goal of abolishing the White race is on its face so desirable that some may find it hard to believe that it could incur any opposition other than from committed White supremacists… Keep bashing the dead White males, and the live ones, and the females, too, until the social construct known as the White race is destroyed. Not deconstructed, but destroyed.”

Mario Obledo, founder of the Mexican American Legal Defense and Education Fund (MALDEF), remarked on radio station KIEV, “California is going to be a Hispanic state and anyone who doesn’t like it should leave. If they don’t like Mexicans, they ought to go back to Europe.”

Miles Davis, famous Black jazz man, quipped in a Jet magazine feature: “If somebody told me I had only one hour to live, I’d spend it choking a White man. I’d do it nice and slow.”

Professor Jose Gutierrez of the University of Texas gleefully boasted, “We have an aging White America. They are dying. They are [expletive] in their pants with fear! I love it!”

Malcolm X described a plane crash in 1962 as follows: “The death of over 120 White people is a very beautiful thing.”

Eldridge Cleaver, former Black Panther leader, explained why he raped White women: “Rape was an insurrectionary act. It delighted me that I was defying and trampling upon the White man’s law, upon his system of values, and that I was defiling his women.”

Even President Barack Obama is not above the use of violent language: “If they bring a knife to the fight, we bring a gun…Folks in Philly like a good brawl.”

Leftists have conducted an incessant and strident media, political, and educational campaign to spread the lie that White Americans are irredeemably racist. This slander and libel has motivated many Blacks to murder, rape, rob, and assault Whites, or at the very least has lessened apprehensions toward doing so. The amount of Black-on-White violent crime overshadows White-on-Black violent crime by such an egregious magnitude that it should enrage any reasonable person. Black men rape White women approximately twenty to thirty thousand times every single year in America. The annual count of White men raping Black women rarely breaks into the double digits.

Instead of pointing out the horrendous amount of Black-on-White violent crime, the left purposefully covers it up by not reporting it in the mainstream media. The silence is deafening, especially for victims and their families. Even worse, the left plays up any examples of White-on-Black violence to warp the public’s perception of reality. Instead of taking steps to reduce or call attention to Black-on-White rape, robbery, assault, and murder, the left clamors for “Hate Crime” laws which only apply to White perpetrators.

Former head of the US Commission on Civil Rights, Mary Frances Berry, explained that “Civil rights laws were not passed to protect the rights of White men and do not apply to them.” When Whites are beaten, raped, or killed in a racially-motivated fashion, the motive is always swept under the rug and described as a “random act of violence.” When Whites speak out against the disproportionate amount of non-White crime in America, leftists cry “racism!” and push for “Hate Speech” laws to silence dissent and sidestep the First Amendment by legislative means. Leftists have encouraged, incited, sanctioned, obfuscated, and defended unspeakably vicious acts of violent crime in America, and will continue to do so in the future—unless the perpetrator is White or conservative. In that case, the incident will become front-page news and transform into an endlessly-repeated “talking point.”

The mainstream right in America stands for traditional moral values, property rights, freedom of association, freedom of speech, and individual liberty—all non-violent ideals. Conversely, the left in America stands for coercive redistribution, forced integration, silence of political opposition, and laws restricting individual liberty—all of which require violence and the threat thereof to enforce. The lion’s share of political violence towards the citizenry emanates from leftist political ideals. The rolling avalanche of violent crime in America resonates from leftist propaganda, leftist social policy, and leftist agitation. The left has the blood of millions on its hands yet dares to point a red-stained finger at others.

SOURCE

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Obama Retreats After High Water Mark

Call it over-reach, hubris, arrogance; call it what you will, but for all practical purposes Obama’s presidency and experimentation in transformative politics is over.

Oh sure; we’ll have four more years of strident rhetoric, of evasions, of ruses and stratagems.

Obama’s nothing if not persistent.  He wants to be the guy who transformed America -in fact, moved it on the path toward the socialist, state-sponsored model of Europe.  He might even be the guy who recognizes that only under a “dictatorship of the proletariat” or some modern version of it, will African-Americans enjoy anything like real power as a minority group that represents only about 13 percent of the population.

But his re-election didn’t change the fact that his power to change things is still limited right now.

Much of his presidency has been the story of Obama not being able to come to grips with that very fact. So instead of using the legitimate mechanisms granted a president to get things done, Obama pushes and bullies from above to try to accomplish what he can’t under the law.    

No nation can undergo a permanent revolution from above. Especially a nation that essentially remains one of the most free, just and tolerant societies ever created. Eventually the 99 percent who aren’t bused-in, paid-to-protest, or paid to act as a political commissariat disguised as government employees, asks to be let alone.

At least that’s the way it works in America.

The United States of America today is not the turn-of-the-Century Russia of 1917.  It’s not even Victorian England.  It’s not even the United States of America of the 1950’s.

While racial and gender equality is not perfect in the US, nobody can argue with a straight face that, in the main, everyone doesn’t have a shot at the American Dream.  Not an equal shot to be sure, but even Franklin Roosevelt understood that government couldn’t or shouldn’t protect everyone from all the circumstances that life brings.

Obama’s problem, then, essentially, is one that he readily recognizes: “This is something I’ve struggled with throughout my presidency,” said Obama in a moment that could have been sponsored by the Contemporary Freudian Society. “The problem is that I’m the president of the United States. I’m not the emperor of the United States.”

Yes, that is his problem, but it’s our problem too.

As Democrats busy themselves with disarming the population, state by state, to distract from the poor economic record amassed by Obama and his liberal friends, “Americans are still worried about government being a threat to freedom,” reported Gallup. “The 64% of Americans who say big government will be the biggest threat to the country is just one percentage point shy of the record high.”

And this was before Obama’s latest, greatest Big Government push.

In the meantime, something that really makes a difference in all of our lives- gas prices- are again hitting seasonal highs, just prior to driving season ramping up. So expect higher prices still

The result will almost certainly be higher unemployment, as we have correctly demonstrated again, and again.  Add in runaway healthcare costs, which Obamcare - now three years old- was supposed to fix, higher taxes on everyone, and more taxes to come and you get the idea why the job "emperor" seems so much more appealing to Obama, than being a weak, ineffective president.

His tax increase was the high water mark.

Because re-election returns aside, Obama is still much more mouth than magic. Nothing he’s done has actually worked.  And we know from history that it won’t work.

You could give Obama a trillion dollars and he still couldn’t create a credible recovery.

Yes, that’s right we tried that already.  And that’s why it will never happen again.

So, all Obama has left is his desire to be a Napoleon, while trapped in an intellect 5’2’’ tall, a permanent bully from above that truly is beneath us.

SOURCE

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Sorry, GOP, but You Will Never Out-Care the Democrats

Republicans now have a comprehensive "autopsy" report detailing some of the perceived and some of the real shortcomings of the 2012 presidential election. And the rather optimistically named Growth and Opportunity Project's report is jampacked with so many painfully obvious observations that one wonders why it had to be written in the first place.

You may not be surprised to learn, for instance, that a bunch of people find the Republican Party "scary," "narrow minded," "out of touch" and a party of "stuffy old men." Alas, the "perception that the GOP does not care about people is doing great harm to the Party and its candidates," states the report. This theme was in full display at the recent Conservative Political Action Conference, as well. The GOP has to care more, a lot more.

As practical politics go (not to mention personal morality), compassion is never a bad idea. But rest assured, politically speaking, the GOP will never out-"care" the Democratic Party. It will never out-empathize it. Or out-diversify it. Or be able to promise that government can do more. And it shouldn't want to.

For starters, there's no reason to accept the liberal definition of caring -- at all. Conservatives can be as compassionate as anyone else; just look at polls that gauge who gives to charities. It just so happens that conservatives don't like to do their caring with other people's money. If Republicans start holding up government as the principal source of empathy, hope and charity, America can expect an even bigger arms race in spending and dependency -- the kind that, in the end, burdens the young and poor and everyone else.

It's one thing to be more diverse and open-minded, to engage all sorts of people, even to shift your opinions when generational forces or facts demand it. It's quite another to, as Newt Gingrich explained at CPAC, become a "party focused on the right to life and the right to a good life." To begin with, politicians are in no position to offer you a good life -- or a right to it. Secondly, it's a myth that a good life isn't available to anyone who is genuinely seeking it. In any event, liberal populism already has a monopoly on victimhood, so there's scarce room for Republicans in that space.

In many tactical areas, the Growth and Opportunity Project seems to make sense. Modernization and more effective outreach are great ideas. The problem is that too often, the RNC allows Democrats to define the parameters of debate. There's way too much worrying about acceptance and far too little about persuasion.

As a practical matter, let's concede for a moment that conceding issues such as immigration, gay marriage and abortion makes sense -- and that's the implicit message of the project's report. I'm sympathetic on a number of points, but what's the cost-benefit analysis? Folks in Washington are obsessed with winning, and winning is nice. But politics is their livelihood. Average Americans don't participate in the political process to join a team; they knock on doors because -- as surprising as this may be to some -- they believe in something.

And even though social conservatives feel as if they're being swept aside by Republican Beltway types, fiscal conservatism will fare no better under this thinking. The idea of free markets is a moral one -- an American idea -- and a sellable one. Yes, polls show that young Americans are more pro-government than ever. So it'd be nice if there were a plan to convince them of how wrong they are -- as opposed to trying to sound more like the people they already agree with.

SOURCE

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Obama Delivers Recipe For Disaster in Israel

The president’s wish is for Israelis to lose their resolve against Palestinian terrorism, to shrug and just let a Palestinian state sprout in their midst.

For the record, there are plenty of Israelis willing to do just that, which has confounded me for years.

How is it that I, an American Christian, am more vigilant about the security of Israel than some Israeli jews?

Polls show that many young Israelis are more skeptical of the “two-state solution” than their parents. I hope so, but I wonder if Israel has the time for these youngsters to grow up, achieve power, and spread the kind of clarity currently offered by Prime Minister Benjamin Netanyahu.

Meanwhile, I hope Netanyahu is eating right and hitting the treadmill often. At 63, he needs to be around a very long time to awaken some of his own people and educate current and perhaps future American presidents.

To be bipartisan about this, the Bush administration bought into this two-state nonsense, willingly marching Israel toward shared space with a freshly-created country that would surely be peppered with leadership flavored by Hezbollah and Hamas.

This is, as they say in international affairs, crazy.

I know it is hard to tell long-suffering Palestinians that their propensity to elevate leaders of a terrorist bent is a deal-breaker for any group looking for its own country.

It is even harder to deliver the ultimate clarity-- that there is in fact no basis in logic or history for a new nation called Palestine, carved from the soil of Israel.

There is already a Palestinian state in the region. It’s called Jordan. If geography is a sticking point, any Palestinian seeking to remain on Israeli soil can be assured of a life far more promising under Israeli governance than the violent third-world lives they lead in the West Bank and Gaza, lands handed over to them in the most recent phony offer of land for peace.

It’s never enough. if Israel, a tiny slice of land surrounded by millions of square miles of people longing for its extinction, will just give up a little more territory, then, finally, there will supposedly be peace.

So goes the scam. How many times will people fall for this? How many times will Israelis listen to leaders, from America and among their own ranks, who recommend such a suicidal march?

More HERE

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For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC,  AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena .  GUN WATCH is now mainly put together by Dean Weingarten.

List of backup or "mirror" sites here or  here -- for when blogspot is "down" or failing to  update.  Email me  here (Hotmail address). My Home Pages are here (Academic) or  here (Pictorial) or  here  (Personal)

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Fiction that will unfortunately be remembered as fact

Thirteen minutes into the Oscar-winning movie "Argo," CIA agent Tony Mendez asks supervisor Jack O'Donnell what happened to a group of Americans when the U.S. Embassy was stormed in Tehran.

"The six of them went out a back exit," O'Donnell tells Mendez, played by Ben Affleck. "Brits turned them away. Kiwis turned them away. Canadians took them in."

That passing reference to New Zealand is rankling Kiwis five months after "Argo" was released in the South Pacific nation. Even Parliament has expressed its dismay, passing a motion stating that Affleck, who also directed the film, "saw fit to mislead the world about what actually happened."

New Zealand joins other countries, including Iran and Canada, that have felt offended by the fictionalized account of how the six Americans were sheltered and secreted out of Iran during the 1979 Islamic Revolution.

Some in New Zealand have taken those words — "Kiwis turned them away" — as implying the country did nothing to help.

In fact, a U.S. State Department document dated Feb. 6, 1980, says "four Embassies — Canadians, British, Swedish and New Zealand — were involved in their protection and escape." The document was posted online last fall by the Jimmy Carter Library and Museum.

And published interviews indicate diplomats from Britain and New Zealand did help by briefly sheltering the Americans, visiting them and bringing them food, even driving them to the airport when they left.

Yet those interviews also indicate that both countries considered it too risky to shelter the Americans for long. That left the Canadians shouldering the biggest risk by taking them in.

Lawmaker Winston Peters, who brought last week's uncontested motion before Parliament, said New Zealanders are unfairly portrayed as "a bunch of cowards," an impression that would be given to millions who watch the movie.

"It's a diabolical misrepresentation of the acts of courage and bravery, done at significant risk to themselves, by New Zealand diplomats," he said.

Affleck could not be reached for comment this week.

During Oscar media interviews last month, Affleck told reporters: "Let me just start by saying I love New Zealand, and I love New Zealanders." He added that "I think that it's tricky. You walk a fine line. You are doing a historical movie and naturally you have to make some creative choices about how you are going to condense this into a three-act structure."

But Affleck and his screenwriter, Chris Terrio, who won the adapted screenplay Oscar, did catch some flak from critics for taking major liberties, especially a heart-stopping — but fictional — airport finale that had gun-wielding Iranian Revolutionary Guards chasing the Swissair plane down the tarmac, with the plane lifting off just in the nick of time. (In reality, the airport exit went smoothly.)

And after the film was made, Affleck took the step of changing the film's postscript, the Toronto Star reported, to more generously credit Canada and its ambassador at the time, Ken Taylor, who protected the Americans at huge personal risk and was uncomfortable with some details in the film.

SOURCE

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A big story about racial conflict that gets ignored by the media

Unless you read the Los Angeles Times, you probably have not heard much about the Latino-on-black violence that has been plaguing southern California on and off for many years. Most recently, four Latino gang members jumped a black stranger in Compton and beat him with pipes. The man was visiting a black family that had just moved into the neighborhood; the men who beat him called him n*gger, informing him that blacks were no longer welcome in that neighborhood.

For several days after the beating, crowds gathered on the family’s lawn, shouting racial epithets and throwing beer bottles at the house. They disbanded each time the police arrived but returned as soon as they left. They achieved their goal; the mother sent her children to live with relatives and is packing up to move. According to federal authorities, this is not an isolated incident; Latino gangs have been forcing blacks out of particular neighborhoods all over southern California.

Unfortunately, this is nothing new. Last year I wrote of the 2008 slaying of high school football player Jamiel Shaw by gang member (and illegal immigrant) Pedro Espinoza. The court concluded that Shaw, a standout football player recruited by colleges like Stanford and Rutgers, was targeted because he was black. And I can’t help but wonder: if Espinoza had been white, would more of us know Jamiel Shaw’s name?

Few have heard of this Latino-on-black crime wave because it doesn’t fit the narrative that many in the media perpetuate. Media elitists would have us to believe that aristocratic whites are relentlessly oppressing all racial minorities and causing all of their woes. (Except Asians, whose high levels of education and economic success they find difficult to explain.) Hence blacks and Latinos are supposedly in the same boat: recipients of the short end of the stick in a white man’s world.

There are several dangerous consequences to this cookie cutter approach to race relations. First of all, the disparity of media coverage for certain crimes implies that justice for the black victim of a Latino (or black) killer is a less pressing concern. The murder of fifteen-year-old Hadiya Pendleton in Chicago by Michael Ward and Kenneth Williams (also black) briefly made national news because Pendleton had sung at President Obama’s inauguration. But how many more Hadiya Pendletons are there whose stories will never be told? Deaths of teens like Pendleton and Shaw speak to a much larger, more complicated problem: lawlessness in many urban areas would never be tolerated in a white, middle class suburb.

The one dimensional understanding of race relations also leads to perilous media inaccuracies. Any event that doesn’t fit the narrative of “white oppressor, black/brown victim” must either be forced into that mold or ignored altogether. This is why, when the Latino George Zimmerman (who grew up in a multi-racial family and modest neighborhood) shot black teenager Trayvon Martin, we were told Zimmerman was a “white Hispanic.” This was only the sixth time in its 160-year history the New York Times had used such a term; would they have used it if Zimmerman had been shot by a white man?

Perhaps the most harmful aspect of an overly simplistic approach to race relations is that it presumes that the power to improve the prospects of blacks and Latinos lies solely with powerful whites. If the plight of suffering blacks and Latinos is due entirely to the racist attitudes of whites, then it follows that only a change in those attitudes will improve their standard of living. This attitude trivializes both the power and importance of the families, churches and community organizations that have been so pivotal in lifting successful blacks and Latinos out of poverty.

It is also easier for a journalist to lament the existence of racism than to report on interventions in areas like education and community development that actually work. The politically incorrect truth is that popular government sponsored programs, such as Head Start, have very little impact on outcomes for lower income black and Latino children. Despite receiving over $150 billion in funding, a 2010 study of Head Start by the Department of Health and Human Services concluded that “the benefits of access to Head Start at age four are largely absent by first grade for the program population as a whole.”

What does have a positive effect on at risk youth? Multiple studies, from institutions including Harvard University, have concluded that regular church attendance, even when controlled for income and parental marital status, has a dramatically positive effect on an at risk child’s likelihood to graduate from high school, avoid crime and become gainfully employed. But don’t expect to read that in the newspaper anytime soon.

SOURCE

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The Obamacare Revolt: Physicians Fight Back Against the Bureaucratization of Health Care

Dr. Ryan Neuhofel, 31, offers a rare glimpse at what it would be like to go to the doctor without massive government interference in health care. Dr. Neuhofel, based in the college town of Lawrence, Kansas, charges for his services according to an online price list that's as straightforward as a restaurant menu. A drained abscess runs $30, a pap smear, $40, a 30-minute house call, $100. Strep cultures, glucose tolerance tests, and pregnancy tests are on the house. Neuhofel doesn't accept insurance. He even barters on occasion with cash-strapped locals. One patient pays with fresh eggs and another with homemade cheese and goat's milk.

"Direct primary care," which is the industry term for Neuhofel's business model, does away with the bureaucratic hassle of insurance, which translates into much lower prices. "What people don't realize is that most doctors employ an army of people for coding, billing, and gathering payment," says Neuhofel. "That means you have to charge $200 to remove an ingrown toenail." Neuhofel charges $50.

He consults with his patients over email and Skype in exchange for a monthly membership fee of $20-30. "I realized people would come in for visits with the simplest questions and I'd wonder, why can't they just email me?" says Neuhofel. Traditional doctors have no way to get paid when they consult with patients over the phone or by email because insurance companies only pay for office visits.

Why did he choose this course? Neuhofel’s answer: “I didn’t want to waste my career being frustrated.”

This model is growing in popularity. Leading practitioners of direct primary care include Seattle, Washington-based Qliance, which has raised venture capital funding from Jeff Bezos, Michael Dell, and comedian (and Reason Foundation Trustee) Drew Carey; MedLion, which is about to expand its business to five states; and AMG Medical Group, which operates several offices in New York City. Popular health care blogger Dr. Rob Lamberts has written at length about his decision to dump his traditional practice in favor of this model.

"Since I started my practice, I seem to hear about another doctor or clinic doing direct primary care every other week." says Neuhofel.

Direct primary care is part of a larger trend of physician-entrepreneurs all across the country fighting to bring transparent prices and market forces back to health care. This is happening just as the federal government is poised to interfere with the health care market in many new and profoundly destructive ways.

Obamacare, which takes full effect in 2014, will drive up costs and erode quality—and Americans will increasingly seek out alternatives. That could bring hordes of new business to practitioners like Neuhofel, potentially offering a countervailing force to Obamacare. (One example, the Surgery Center of Oklahoma's Dr. Keith Smith, profiled for Reason TV in September, is doing big business offering cash pricing for outpatient surgery at prices about 80 percent less than at traditional hospitals.)

Health "insurance" is more than just insurance; it's also "a payment plan for routine expenses," as University of Chicago business school economist John Cochrane puts it in a superb recent paper. The late free-market economist Milton Friedman pointed out that we insure our houses against fire and our cars against major damage, but we don't also insure ourselves against cutting the lawn and buying gas. That's the main reason innovation almost never makes health care cheaper. Most patients never see the bill for an ingrown toenail removal or a glucose tolerance test, so doctors have little incentive to seek ways to offer their services for less. For simple consultations, why bother with Skype when insurance will pay full price for an office visit.

Insurance plans that cover everything, a situation that came about largely because of a quirk in our tax code, have also led to the "bureaucratization of medical care," Friedman wrote in a 2001 essay, in which "the caregiver has become, in effect, an employee of the insurance company or...the government."

Dr. Lisa Davidson had 8 years of frustration while running a successful traditional practice in Denver, Colorado. She had 6,000 patients when she decided to stop taking insurance and adopt the same business model as Neuhofel. Her patient list has dropped to about 2,000. She used to spend about 15 minutes with each patient and now it's more like 45 minutes. "We're on track to make more money and take better care of our patients," says Davidson. "It's a win-win all around."Dr. Lisa Davidson (pictured to the far right) and her staff

Before adopting direct primary care, Davidson was unhappy working at the practice she had built because the insurance system imposed a way of doing business that resembled an assembly line. "It's true that in 2014, many more people will have insurance, so there will be a profound need for primary care doctors," says Davidson. "You might say I've done a disservice by dramatically cutting the size of my practice. However, if we make it desirable again to be a primary care physician more people will want to do it."

Under Obamacare, more and more doctors are becoming employees of large hospitals, where there will be more control over how they practice medicine. Hoover Institution Senior Fellow Dr. Scott Atlas fears this will cause a brain drain in medicine. "Really smart people want autonomy, and when you take that away it's naive to think you're going to get really bright people becoming doctors," says Atlas. "The best doctors could excel at any profession, so why go into medicine if they won't have the opportunity to be their best?"

When she was operating a traditional practice, Davidson witnessed firsthand how our "payment plans for routine expenses" drive up prices and block innovation. She recalls that one insurance company paid $118 for a routine PSA test. Now that her patients pay the bill directly the cost is $18. Insurance used to pay $128 for a bag of IV fluid. Now Davidson doesn't bother passing on the cost of IV bags because they run $1.50 each.

Dr. Eric Bricker is the medical director at Compass, a Dallas-based company that helps individuals with high-deductible insurance plans. In a previous job, Bricker was a finance consultant for hospitals, giving him firsthand knowledge of how health insurance drives up prices. "When insurance companies and hospitals negotiate," says Bricker, "it's an exercise in horse trading." For example, an insurance company might let a hospital get away with charging $2,000 for an MRI, says Bricker. In exchange, the hospital agrees to charge the bargain price of $2,000 to deliver a baby. "You do that mixing and matching," says Bricker, "and at the end of the day it works out about even."

According to Bricker, this horse-trading method provides an opportunity for hospitals to earn windfall profits: If the hospital gets $2,000 for MRIs, it will start encouraging patients to get more MRIs.

Given how prices are set, it's no mystery why in health care high costs often correlate with low quality. Bricker cites one facility in Dallas, where a 3-tesla MRI (the more teslas, the higher the resolution) can be had for $860, while a nearby facility offers a 1.5-tesla MRI for $2,500. The latter facility stays in business only because many of its customers don't know the difference. They pay the same $20 co-pay wherever they go for an MRI.

So Bricker co-founded Compass, which works with about 1,200 firms to guide their employees to those doctors and testing facilities that offer both high quality and low prices. These employees have an incentive to seek out value because they're responsible for paying a large portion of their own routine medical costs before their insurance coverage kicks in.

High-threshold plans are exploding in popularity, which is a promising trend. According to a 2012 report by the Kaiser Family Foundation, about 31 percent of firms now offer health plans in which patients pay most routine costs out of pocket, like a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA), and 19 percent of covered workers have one of these plans. High-deductible plans go a long way towards unbundling our "payment plans for routine expenses" from the catastrophic coverage that should be the sole function of health insurance.

SOURCE

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For more blog postings from me, see  TONGUE-TIED, EDUCATION WATCH INTERNATIONAL, GREENIE WATCH,  POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC,  AUSTRALIAN POLITICS, IMMIGRATION WATCH INTERNATIONAL, EYE ON BRITAIN and Paralipomena .  GUN WATCH is now mainly put together by Dean Weingarten.

List of backup or "mirror" sites here or  here -- for when blogspot is "down" or failing to  update.  Email me  here (Hotmail address). My Home Pages are here (Academic) or  here (Pictorial) or  here  (Personal)

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