Category Archives: Debt

Higher Rates And Hussein’s Healthcare Go Hand In Hand

Debt, Healthcare, Political Economy, Reason, The State

“You know what the insurance companies are like,” I was told by a statist neighbor, who adores Obama but concedes her healthcare premiums have gone up. How does the irrational individual solve the cognitive incongruity of rising prices and her undying love of the state?

She blames markets.

But even the stupid statist press can deny no longer that “insurance is at dramatically higher rates,” and some of the reasons are these:

First, the Affordable Care Act (ACA) sets minimum standards for benefits, including mental-health and substance-abuse treatment, maternity care, prescription drugs, and rehabilitative care, which were not included in many of the old plans. Also, insurance companies are now required to take all comers, regardless of their health status, and so rates are rising to cover their costs as well.

MORE.

Here The Heritage Foundation is forced into explaining the economically obvious:

…Contrary to a key intention of the legislation, the combination of mandates and taxes will not help to reduce the deficit. In fact, the PPACA will likely increase the deficit by an average $75 billion per year, and as a result, the nation’s publicly held debt will be $753 billion higher at the end of 2020. Such astronomical debt crowds out other productive investments and will lead to an estimated 670,000 lost job opportunities per year. …
he policy combination of spending and taxes alters the macroeconomic performance of the economy and feeds back onto the budget. A dynamic simulation shows that the higher initial costs are not an investment that pays off with a higher return in later years. Indeed, these front-loaded costs slow economic growth with higher inflation and higher interest rates, which overwhelm the benefits the proposal hoped to gain in later years.
The bill’s taxes, penalties, and fees on investors and businesses will decrease the amount of investment in the economy. This reduced investment will in turn lead to a decline in productivity, causing the economy to produce $706 billion less worth of goods and services. A smaller economic pie means that workers earn lower wages and salaries. Higher taxes on investment also put upward pressure on interest rates as investors seek to achieve their after-tax desired rate of return. …
…Lower wages reduce the amount of taxable income that could otherwise have been achieved. This will both increase the deficit and grow the total debt—which in turn puts upward pressure on interest rates and crowds out some savings that could have gone to new productive business investments.
Higher interest rates mean that more American tax dollars will go toward paying the interest on the federal debt rather than paying down the principal. Simulations using dynamic analysis estimate that the government would spend an average $23 billion more per year on interest rate payments over the 2010–2020 year window than it would without the PPACA.

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And from “Obama’s Politburo Of Proctologists”:

The pit of perverse incentives Papa Obama is engineering includes leveling the insurance industry, which by definition must discern and discriminate between applicants based on their health status (largely under individual control). Under his benevolent rule, private insurers will be subjected to a host of new regulations, “including a requirement to insure all applicants and a prohibition on pricing premiums on the basis of risk,” in the Cato Institute’s Michael Tanner’s rendering.
This means one thing: moral hazard. Writes libertarian economist Walter Block: “The greater the protection from the random expenses of sickness the greater the potential over-consumption of the item in question.”
We currently labor under “a seeming patchwork of indemnity insurance arrangements, managed care, private payment, and charity.” Yet the fewer the intermediaries interfering with the primary, patient-doctor relationship, the better the patient’s prognosis. The president’s prescription for too little freedom, however, is even less of the same!

MORE.

UPDATED: The Debt Default Ruse (Obama Banana)

Barack Obama, Debt, Economy, Government, Media

The threat of a default on the debt is a political ploy and an extension of a crook’s book keeping. (The crook is the government.)

Failure to raise the debt limit would not necessarily precipitate a default by the United States–not unless the politicians orchestrate such a default, which they invariably do.

The U.S. government has debt obligations and other expenditures. It raises sufficient revenue from We The suckers to discharge its obligations.

The federal government raises trillions of dollars in tax revenue each year, though there are many different kinds of taxes. Some taxes fund specific government programs, while other taxes fund the government in general. … Total federal tax revenues in fiscal year 2014 are projected to be $3 trillion.

(National Priorities Project)

As PAT TOOMEY pointed out 2 years back, when the same “debate” was being rehashed, “If Congress refuses to raise the debt ceiling, the federal government will still have more than enough money to fully service our debt.”

UPDATE (9/30): OBAMA BANANA. There once was an African “leader” by the name of Canaan Banana. Truly. He was far and away a better man than Obama. Just free associating.

Here is Mark Steyn on Obama Banana’s attitude to debt:

This is the United States of America,” declared President Obama to the burghers of Liberty, Mo., on Friday. “We’re not some banana republic.”

He was talking about the Annual Raising of the Debt Ceiling, which glorious American tradition seems to come round earlier every year. “This is not a deadbeat nation,” President Obama continued. “We don’t run out on our tab.” True. But we don’t pay it off either. We just keep running it up, ever higher. And every time the bartender says, “Mebbe you’ve had enough, pal,” we protest, “Jush another couple trillion for the road. Set ’em up, Joe.” And he gives you that look that kinda says he wishes you’d run out on your tab back when it was $23.68.

Still, Obama is right. We’re not a banana republic, if only because the debt of banana republics is denominated in a currency other than their own — i.e., the U.S. dollar. When you’re the guys who print the global currency, you can run up debts undreamt of by your average generalissimo. As Obama explained in another of his recent speeches, “Raising the debt ceiling, which has been done over a hundred times, does not increase our debt.” I won’t even pretend to know what he and his speechwriters meant by that one, but the fact that raising the debt ceiling “has been done over a hundred times” does suggest that spending more than it takes in is now a permanent feature of American government. And no one has plans to do anything about it. Which is certainly banana republic-esque.

Debt-Ceiling Derangement

Debt, Democracy, Economy

Here are some salient points I’ve picked from Anthony de Jasay’s essay, “Shall We Borrow from the Children?”:

* Government expenditure rises first, “with revenue seldom if ever catching up. The money never runs out, for unlike households, the government can always borrow whatever it needs to cover the deficit, almost regardless of how large it is. It owns a sort of widow’s curse whose magic lies in the state’s power to raise the taxes in the future that it has no stomach to raise in the present. The day of reckoning need never come, for old borrowing is always refinanced from new borrowing.”

* “… the markets tolerate high ratios for unsecured government borrowing whilst they would demand individual debtors to put up some security.”

* “Governments buy support by spending money, not by siphoning it away in taxes. Spending now and deferring the matching taxes to an indefinite future is dictated by the most elementary political know how and it should not surprise nor shock anyone to see it happen again and again, especially when elections approach and politicians start getting desperate. They are not wicked [I disagree], they are just playing by the democratic rules. That the electorate is quite content with these rules, or at least does not try to alter them is perhaps more difficult to explain. It may be that the bulk of the electorate just does not see the connection and cannot be bothered to think about it.” [Or perhaps they are “wicked”?]

* “The US has tried to stem [the deficit and public debt problem] by placing a ceiling on the federal debt, a measure whose only effect is to oblige the Congress to raise the debt ceiling every time the rising debt catches up with it.”

[SNIP]

The “contrast between [the electorate’s] collective and private behavior” is evident in the polls, if they are to be believed. “Americans strongly oppose government shutdown,” yet “the majority of Americans [also] oppose President Obama’s demand that Congress raise the debt ceiling without any spending cuts—by a margin of nearly two to one.” [Heritage]

Like A Shark, Government Never Stops Moving

Debt, Economy, Government

The State never stops. Like a shark that must keep moving to keep breathing, the governmental predator never really stops.

“Here’s the truth about a government ‘shutdown,'” writes ANDREW TAYLOR of the Associated Press:

Social Security checks will still go out. Troops will remain at their posts. Doctors and hospitals will get their Medicare and Medicaid reimbursements. In fact, virtually every essential government agency, like the FBI, the Border Patrol and the Coast Guard, will remain open. Furloughed federal workers probably would get paid, eventually. Transportation Security Administration officers would continue to man airport checkpoints. … shutdowns … happened every year when Jimmy Carter was president, averaging 11 days each. During President Reagan’s two terms, there were six shutdowns, typically just one or two days apiece. Deals got cut. Everybody moved on.

Sad but true.