socialism

Awhile back, I posted a memo forwarded to me from a friend on Wall Street, wherein one of his firm's senior analysts saw the nation being a bunch of boiled frogs as the Obama adminstration gradually remade the nation in a socialist image.

Of course, the whole "boiled frog" plan was dependent on one thing.

The frog not seeing the thermostat getting turned up. 

Unfortunately for the wee-wees in the White House, the frog noticed.

Now the Obama team is left trying to argue:   

a) The frog really didn't see the thermostat being turned up

b) The frog shouldn't complain about the heat of the water

c) The water really isn't as hot as he thinks it is

d) The frog is a fool and listening to people who want it to freeze to death

e) Hot water is really good for the frog

  Needless to say, the frogs aren't in a buyin mood

HEALTH CARE - SO EASY A CAVE MAN CAN DO IT

1 - Restrict punitive damages in malpractice suits to $750,000.2 - Enact a federal coding standard... require all medical insurance companies to use the same system. If the industry won't standardize itself, this is an appropriate role for the federal government.3 - Repeal all laws that restrict which companies can operate in certain states.4 - Prohibit employers (including government) from providing health insurance for employees. Instead, require them to provide a cash amount consistent to what they are currently paying for the policy today.

This allows all insurance companies to operate anywhere, with no protected territories.This eliminates unnecessary overhead due to proprietary legacy billing systems.This eliminates the motive for trial lawyers to jack claims to get rich. Trial lawyers can't sue someone for 85 bazillion dollars for having a sponge sewn up inside them. Consequently, malpractice insurance is cheaper.Employers no longer have the overhead associated with administering a health care benefit.Each person/family can now go out and buy their own policy.

5 - Abolish Medicaid and Medicare.6 - Establish a reasonable income limit (use current Medicaid eligibility guidelines + 20%) and give the poor a voucher to go buy their own policy.

Cost to enact? The government will need a small bureaucracy to administer the voucher program. This would best be handled at the state or county level and should be funded federally with some of the money that we no longer spend on Medicaid or Medicare.

Benefits: Former state dependents (Medicaid recipients), now become empowered consumers. They probably can't add more cash to the amount of their voucher to buy an upscale policy. Many of them will become ruthless price hawks, trying to get the most coverage for that money.

A basic flaw our current system is that my health insurance does not work for me. They work for my employer. If they don't give me the service I want, I have no recourse. Under the plan I listed above, every insurance company will be responsible to every customer. They will be forced to compete in a market that they had previously not. If Single Mom has Allstate health insurance, and Geico offers free dental, don't you think she'll switch? If Busy Businessman is getting hassled trying to get his claims paid by Nationwide, don't you think he'll find a hassle free company? It's self policing.

Stigma - Do you know how hard it is to find a dentist that takes Medicaid? Some folks are also embarrassed having to tell someone that they are on government assistance. This plan removes that stigma. No health care provider will know how you paid for your insurance.

Some government oversight is in place because insurance companies will have to justify rate increases (affects the cost of vouchers) to Congress.

Oftentimes I have an idea, let it sit,  and then I see someone has written it up better than my first draft would have been

Such is the case with the Washington Post's Robert Samuelson, who compared Barack Obama's economic vision with the failed strategies that led to General Motors' collapse

Broadly speaking, the U.S. welfare system divides into two parts -- the private, run by firms; and the public, provided by government. Both are besieged: private companies by competitive pressures; government by rising debt and taxes. GM exemplified the large corporation as private welfare state. In contracts with the United Auto Workers, GM promised high wages, lifetime employment, generous pensions and comprehensive health insurance. All this is ancient history: New workers get skimpier benefits. .......

Pressures on private and public welfare won't abate. The economic conditions that encouraged corporate welfare have long since vanished. In 1955, GM, Ford and Chrysler accounted for 95 percent of U.S. light vehicle sales, reports economist Thomas Klier of the Chicago Federal Reserve. With market dominance and technological leadership, the Big Three assumed they could pass along to customers the costs of job guarantees, high wages and fringe benefits........

In theory, expanding public welfare could offset eroding private welfare. President Obama's health-care proposal reflects that logic. The trouble is that the public sector also faces enormous cost pressures, driven by an aging population and rising health costs. The Congressional Budget Office projects the federal debt will double as a share of the economy (gross domestic product) to 82 percent of GDP by 2019.

Any sober examination of figures like these suggests that the system has promised more than it can realistically deliver. We are borrowing not to finance investment in the future but to pay for today's welfare -- present consumption. Sooner or later, the huge debt will weaken the economy. Nor would paying for all promised benefits with higher taxes be desirable. Big increases in either debt or taxes risk depressing economic growth, making it harder yet to pay promised benefits.

The bottom line is that if the Fortune 500 couldn't provide free health care to all their workers and dependents, it's hard to see how governments are going to do it--that is--without tradeoffs which politicians aren't going to disclose up front.

I also find it interesting that the most vocal Congresional proponents of "public option" health care are those politicians who came of age at the tail end of the Great Society---Ted Kennedy, Chris Dodd, Henry Waxman,  et al.---all of whom would like to pretend that big government never really failed--it just got bad press. And we all know Barack Obama "missed the 1980's"

Roger Smith may seem to be a light year away from our suave , metrosexual President. But maybe not.  When Smith took the reins at GM, the firm was challenged, but huge. Smith thought by sheer force of revenue he could buy GM's way out of trouble.  He spent profligate sums on his vision--buying Hughes Electronics, buying Ross Perot's EDS, building huge new assembly plants like Poletown and Buick City even when GM had plenty of old plants, starting the new Saturn brand to compete with Toyota.

Ironically, when American business was in the process of reinventing itself by becoming nimble, flexible and customer-oriented, Smith remade GM into even more of a command and control organization than he inherited--removing divisional autonomy. 

And a time when GM should have been trying to right-size itself with future demand, establish a realistic labor-management relationship and build its own organic resources, Smith brought his version of "Hope and Change"

Michael Moore depicted  how it worked out. By 1992 GM was shutting plants and taking charges against earnings. And with free cash flow later spent to gain temporary labor peace instead of new products, the cycle once started never really ended.  

How exactly is Barack Obama's economic vision different than Roger Smith's. He is trying to buy off the old labor establishment and spend his way past the problems we face--instead of forcing the painful but necessary reforms we will need to be competitive in a cutthroat global economy. And he is trying to impose centralized management upon a dynamic economy. 

Let me make one other point. If we adopt "cap and trade" much of the heavy industry left in the Midwest will give up the ghost and move to Asia. Then the workers will be retrained for health care. But "health care reform" is supposed to cut costs. In practice, that means closing hospitals and firing employees.  Out of the frying pan, into the fire.  Jobless recovery, anyone...or "Player Piano"

I fear that when "Buzz Lightyear economics" plays out we will have more vacant cities in the Rust Belt bereft of any hope. Perhaps a more conservative and thinner filmmaker will have at our President about it. He'll have as much luck getting an interview, I'm sure. 

Dear Leader Zero force fed America a Pie in the Sky with his Recovery and Reinvestment Act. He claimed it would save or create nearly 3.7 million jobs by the end of 2010 compared to the projections for doing nothing to stimulate the economy at all. In fact, it has already caused the destruction and loss of over 2 million jobs beyond what we would have lost if NO Recovery and Reinvestment Act had been passed and will destroy nearly 9 million by September of 2010.

The Chart he used to claim the Recovery and Reinvestment Act showed that with his plan, unemployment would be leveling off by now and be under 8%. Without the Recovery plan, we would be at about 8.2% unemployment right now. Dear Leader ZerO's experience in economics and business assured the Obamabots in Congress that they would save America from a peak of 9.1% unemployment without the Recovery Plan and keep America under a peak of 7.9% unemployment.

The document his Economic team prepared which includes the chart is at:

http://otrans.3cdn.net/45593e8ecbd339d074_l3m6bt1te.pdf Of course, this was all just a shame to sell the Progressives wish list of projects and programs as well as to pay off the organizations that helped him obtain the Presidency. $8.5 Billion for Community Organization Groups like his beloved ACORN and it's 220 front companies, and the like minded entities such as Americorps. Of course, we can't have any Inspector Generals actually investigate wether that money is being wasted or not and possibly bring criminal charges up for any of Dear Leader ZerO's friends and supporters ( http://blogs.abcnews.com/politicalpunch/2009/06/president-obama-fires-controversial-inspector-general-.html , http://www.foxnews.com/story/0,2933,526650,00.html ).

The actual unemployment numbers tell us the real story. May 2009 unemployment of 9.4%. Not only is he NOT saving or creating jobs with his Recovery Plan, but he is destroying them, to the tune of over 2 million so far. The red dots are the actual unemployment rates for the months since the passage of the Recovery Plan. Now we get into a whole new chart, because reality is going to be off of Dear Leader ZerO's chart. Based on the actual unemployment rate and projections, we add a 3rd line to the graph and we have a new chart. Now we are looking at a peak of 14.8% unemployment in September of 2010. We also see we are going to do much worse WITH the Recovery Plan than if we had not spent $787 Billion on Progressive boondoggles.

This brings us to the meat of the numbers. Dear Leader ZerO based his 'save or create 4 million jobs' on how many jobs would be in the space between his red line for the Recovery Act and the yellow line for how many jobs would be lost without his Recovery Plan. This space represents jobs 'saved' if he really knew what he was doing and wasn't just giving America a Snow Job to get his Progressive pals their payback. The projected job savings from the Recovery Act would peak in September of 2010 with a savings of 2,946,539. Based on a Civilian Labor Force of 155,081,000 (May 2009 BLS http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?request_action=wh&graph_name=LN_cpsbref1 ).

The benefits of Dear Leader ZerO's Recovery Plan would not even have met his 3.7 million saved or created predictions. Not even close, it would have been just under 3 million. For it to have met the 3.7 million mark, the Civilian Labor Force would have needed to grow from 155 million to 191 million in less than 2 years time and that would be a very generous projection on the Obamabots part. In reality, the truth is that his Recovery Plan has already destroyed or lost an additional 2,171,134 jobs over what we would have had without anything being done at all. That would be the space between the yellow line for what the economy was going to do without his Recovery Plan, and the blue line that shows what his Recovery Plan is actually doing for the Economy. Total unemployment at the end of May 2009 was 14,511,000. Dear Leader Zero's Recovery Plan increased by 15% the amount of people unemployed that would have been without a job if nothing at all had been done. The predicted jobs destroyed and lost from the Recovery Plan will peak in September of 2010 with an extra 8,839,617 unemployed. That is on top of the 14,112,371 we where going to loose anyway from the recession for a total of 22,951,988 jobless in September of 2010! The projections for the future have a margin of error, that gets larger as we try to predict further into the future. All of these projections are slightly more valid than a crystal ball reading, but not by much. The Gray area is the area of uncertainty, where in fact, anything can happen. The margin of error would be a large amount as we try to predict past tomorrow. We can still avoid the 14.8% peak if Congress reigns in the spending on boondoggles that produce only make work and no real jobs. It does not make a strong American economy if the government pays one man to shutdown a water pump and put 80,000 other people out of work ( http://www.foxnews.com/story/0,2933,519818,00.html ). Considering his accuracy with the Recovery Plan, I would not bet much on any predictions for any of his other projects. Dear Leader ZerO will print money to be able to spend the $787 billion for his Recovery Plan and that will lead to huge inflation as that money comes into the economy. Dear Leader ZerO will probably outdo Jimmy Carter's 10.75% peak inflation as he tried to spend his way out of a recession as well. Although Jimmy Carter's peak unemployment was only 7.8%, it was trending up as he left office in 1981 and it took years of tax cuts and government spending cuts to bring unemployment back to a reasonable 5% by March of 1989. I expect we will be in for high unemployment through 2014 and beyond with high inflation for a chaser as Dear Leader ZerO repeats Jimmy Carters mistakes. He is trying to expand his Progressive agenda while claiming to be spending his way out of a recession. He may even meet Franklin D. Roosevelt's record and usher in a new Great Depression.

Video at

http://www.youtube.com/watch?v=BfJjHP8XDQ0

 Cato's Chris Edwards is correct.  Republicans are playing small-ball.  They have no real vision, so they've ended up with policy paralysis.  - Jon Henke

As I note in a recent New York Post op-ed Republicans are fond of implying that President Obama is a big-spending socialist. But the House GOP recently offered a spending cut plan that was able to find savings worth less than one percent of Obama’s budget.

As Tad DeHaven and Brian Riedl have also pointed out, the GOP spending reform effort is rather pathetic. It proposed specific annual budget cuts of about $14 billion per year.

Consider that the center-left budget wonks at the Brookings Institution put their heads together a few years ago and came up with a “smaller government plan” that proposed about $342 billion in annual spending cuts (by 2014). The Brookings authors note:  

These cuts are achieved by reducing government subsidies to commercial activities ($138 billion); by returning responsibility for education, housing, training, environmental, and law enforcement programs to the states ($123 billion) . . . by cutting entitlements such as Medicaid, Social Security, and Medicare ($74 billion); and by eliminating some wasteful spending in these entitlement programs ($7 billion).

Thus, the Brookings scholars found cuts more than twenty times larger than the House GOP leadership cuts, and Brookings proposed its plan back when the deficit was about one-fifth of the size it is today. (Note that both the Brookings and GOP plans would also put a cap on overall nondefense discretionary spending, in addition to these specific cuts).

My point in the New York Post piece is that the GOP needs to challenge Obama’s big spending agenda at a more fundamental level. They need to do some careful research, pick out some big spending targets, and go on the offense. Why not propose to eliminate the Departments of Education and Housing and Urban Development? Why not sell off federal assets, such as the Tennessee Valley Authority, in order to help pay down the federal debt? Why not open up the U.S. Postal Service to competition?

Obama won’t agree to these reforms at this point, but they would hopefully open a serious national debate about reforming our massive and sprawling federal government. Ronald Reagan in 1980 and the congressional Republicans in 1994 didn’t win by splitting hairs with the Democrats over 1% of spending. They offered a more fundamental critique.

At least, GOP leaders need to offer up spending reforms as bold as those of the Brookings Institution.

Chris Edwards is the director of tax policy studies at The Cato Institute

I was forwarded this from a friend on Wall Street. It is from the in-house newsletter his firm's senior analyst circulates.

There can be no explanation other than that the US taxpayer is suffering from boiling frog syndrome. As the old story goes (which is totally fantastic, btw), if you throw a frog into a pot of boiling water, he will immediately leap out. However, if you put a frog into a pot of cool water and gradually turn up the heat, you can cook him alive right before your very eyes. Of course, what this visual suggests is that we are being lulled into a cozy state. (I guess any rebate checks or decreased withholding tax, coupled with the regular excoriation of the rich, backed up with promises to raise taxes on those rotten, earning dirt bags … and on those rotten, earning dirt bags alone … will get an Administration a lotta’ brownie points towards this goal of lulling.) By degrees, we are becoming accustomed to the changes that are being made. And as the water in which we are stewing heats up, I fear some kind of desensitizing is taking hold as well. Unfortunately, we won’t realize until it’s too late, that the continuous installments of increasingly hotter water eventually will cause our demise. What’s particularly galling about our situation is that the changes that are being rammed thru are not even being done all that stealthily. The problem as I see it, though, is that the subject matter is a bit too sophisticated or complex for the average, lazy American to want to lift a finger to either educate himself, or better, put a stop to the madness. 

I presume we want to turn down the thermostat--so what's the plan to cause that to happen, folks?

Eric Scheie wonders why everybody is afraid to use the S-word.

A question which has been plaguing me lately is whether it is possible to have a legitimate debate over socialism without sounding like a rabid, hysterical, over-the-top, far-right conspiracy theorist. [...] Unfortunately (as I have pointed out in several posts), the "s" word is so fraught with problems that it might be too contaminated to use. [...]  At what point can nationalization be said to have taken place? By what standard is government ownership of 72% of a company less than "true" socialism?

Andrew Samwick has also wondered the same thing: "People complain that the word "socialist" is being inappropriately used to demonize attempts at restoring economic growth.  That may be true in many cases, but how is the label not valid here?"

The Right's inappropriate and ridiculous over-use of the word "socialism" as an all-purpose bludgeon has made it understandably toxic, but not everybody is afraid to call the thing what it is.   See Open Left's Chris Bowers...

• "...we have reached national consensus on nationalizing industries, which is the literal definition of socialism and big government..." - Sept 06, 2008
 
• "GM bailout: more actual socialism! ... Conservatives have been throwing around the charge of "socialism" a lot lately. However, for those keeping track, the General Motors bailout plan is actually socialist."  - June 01, 2009

NOTE: The fact is, American has always had a mixed economy, as do all modern, developed economies.  The question is not one of category - capitalism or socialism? - but of degree.

UPDATE: At The American Prospect, Tim Fernholz makes a very good point...and a useful distinction.

It's fair to call the General Motors deal or the AIG takeover examples of socialist policy; government is directly intervening in a private concern. But it's not fair to say that the Obama administration is socialist per se because socialism is an -ism, a system, a guiding philosophy, and it's clear that putting the government in charge of private production is not the Obama administration's guiding philosophy.

As I noted above, the real question is one of degree.  Obama is not socialist.  But he is more comfortable with centralizing economic power.  As that centralization proceeds, the focus of public interest will shift from "how do we fix the immediate economic problems?" to "how do we fix the problems we created when we tried to fix that temporary problem?"  That is when the pendulum can swing back towards decentralization and individual empowerment.

Chris Dodd's effort to change the subject for the 2010 election to health care made a pit stop yesterday at Derby's Griffin Hospital.

Since the Senator got it from both sides, maybe he should have skipped the event and checked himself in.

Before he got there, he was greeted by a picket line of protesters from Dump Dodd. This is a sight he was unaccustomed to seeing in his travels around Connecticut.

Then it got worse, Dodd may have thought he was going to run a pep rally for Obama-style "health care reform", but was confronted with a cadre of militants demanding the immediate adoption of single payer health insurance.

Needless to say, it looks like it was ugly.

DERBY — A “town hall discussion” on health care reform held at Griffin Hospital Saturday became contentious when advocates of a single-payer health insurance system shouted at U.S. Sen. Christopher Dodd to put the plan back “on the table.”.......The two people evicted from the meeting in Derby Saturday were members of the group Single Payer Action. Russell Mokhiber of West Virginia, formerly of Simsbury, was the first to stand and shout at Dodd. He asked him several times, “Why did you take single pay off the table?” Then he added, “Tell us about your corporate connections.”Jerry Kann of New York was the second person to stand and ask Dodd why he had taken the single-payer proposal “off the table.” He, too, was escorted from the building. 

The Democrats in general have a rather large problem on their hands which us poor Republicans can;t solve.  There are millions of lefties out there who actually believed their party's diatribes and think the Democrats are going to hand the Gitmo detainees a plane ticket home and an ACLU lawyer; and implement every social policy pipe dream that got a favorable mention in Mother Jones or the Nation.  

The Obama  Adminstration and folks like Dodd now have to cater to Rachel Maddow's whims as well as trying to run a government. Reap what you sow, folks.

Chris Dodd is a lot of things, but if you think he's going to crush the private insurance industry in CT, which only accounts for 65,000 jobs and is the highest concentration of such jobs in the nation, might I suggest you move on to marijuana legalization.

The internal contradictions of "health care reform" are rather immense; it appears to be the theory that somehow better management will lower costs to consumers; lower costs to the government. cover everybody, and maintain the expected standard of care.  I'm not bright enough to figure out how this is going to work, but then again maybe Peter Orslag has invented a perpetual motion machine in his spare time.  It doesn't seem NY Governor Paterson has had much luck reducing the excess cost of his state's health care system  and closing hospitals and laying off insurance workers is not going to be an easy sell in what is likely to be a jobless economic recovery.

So, the Obama team has decided that rather than engage in the merits of the issue, it will merely accuse skeptics of "swiftboating". To wit.

We knew healthcare reform would face fierce opposition -- and it's begun. As we speak, the same people behind the notorious "swiftboat" ads of 2004 are already pumping millions of dollars into deceptive television ads. Their plan is simple: torpedo healthcare reform before it sees the light of day by scaring the public and distorting the President's approach

 Dunno guys, looks like the more dangerous squadron is coming at you from your exposed left flank, arguing you guys aren;t socialist enough.  Gonna explain why healthcare costs money to the likes of them?

Looks like this prescription isn't going to restore the ailing Dodd back to political health.  Then again, every day he spends on this is a day he isn't socializing the financial services industry.

* Full disclosure: My wife works in the CTICU at a local CT acute care hospital (Not Griffin).

If you can make it through the puerile and prurient ravings of David Shuster, sitting in for the normally oh-so-(mentally)-balanced Keith Olbermann, you find this nugget at 5:50 into the 8-minute-long stream of sexual jokes:

Lawrence O'Donnell, "[Medicare and Social Security] are well-working Socialist programs within the American government.  There's absolutely no other description of them."

Nice to hear a liberal admit this instead of trying to pretend these programs are anything but government taking from some to give to others.

The cause 

A big New York Times story this morning strongly suggests that Team Obama is about to up the ante in an effort to control the banking system for as long as the eye can see.White House and Treasury officials are now talking about turning government TARP loans into common stock for the 19 biggest banks. It’s clearly a backdoor path to nationalization, as Uncle Sam would be the largest shareholder in these institutions. What’s more, it’s not at all clear that the administration will even let certain banks pay down their TARP loans.This is government intervention into the private sector on a grand scale. It is financial/industrial policy. Banks will be kept on a very short leash regarding compensation, loans, credit-card issuance, mergers, acquisitions, and all the rest.Not surprisingly, stocks opened down 200 points today — with banks leading the freefall — and finished down about 300 points. 

The effects

   You can check out any time you want...but you can never leave.....