Friday, August 31, 2012

My View

Random ruminations from your resident curmudgeon...

Medicare has become a flash point for debate as the Presidential campaigns heat up. Vice-Presidential candidate Paul Ryan has been criticized for his proposals to reform Medicare, and the Democrats and their allies in the mainstream press have all been screaming that his plan will gut Medicare and punish seniors.What you won't hear in the press is that the Medicare program has already been gutted. Obamacare, according to the Congressional Budget Office, will pilfer $716 billion from Medicare between 2013 and 2022. Additionally, there are more than 160 new regulations that are written into Obamacare that restrict Medicare. To make Medicare "work" after Obamacare guts the program, payments to health care providers have been slashed. The obvious outcome of that is that doctors and other health care providers are opting out of serving Medicare patients. Oh, yeah...Medicare has a long term unfunded liability of $37 TRILLION according to the CBO. So as you hear that the Medicare program is going to be ended if reform is attempted, know that Medicare has already been ended. The real debate is how are we as a country going to continue to provide health care coverage to our seniors. Do nothing, and Medicare crashes, leaving seniors in dire straits.

Lawyers are like a rhinoceros: thick skinned, short sighted, and always ready to charge.

We have been in an economic recovery since June of 2009 according to most economists. Yet our country still faces high unemployment and poor job growth, and our economy continues to limp along. Why? According to an analysis of Census Bureau data by Sentier Research, income in this country has declined more during this "recovery" than it did during the recession that preceded it. On an inflation adjusted basis, median household income has fallen 4.8% during the recovery compared to a 2.6% drop during the 18 month recession. Household income in this country is 7.2% below the December 2007 level. Add in the fact that the average duration of unemployment has increased to a record 41 months, and you can see why this recovery doesn't feel like a recovery. Incomes for all age groups below 65 fell, with those in the 55-64 age bracket falling the most, losing 9.7%. 25-34 year olds saw their income fall 8.9%. Almost every age group is worse off than it was three years ago, with only those 65 and above seeing their income go up. Since consumer spending accounts for 67% of our Gross Domestic Product growth, you can see why the economy is having trouble getting traction. This perfect storm of high unemployment and falling incomes has made this recovery the weakest in history. Keep these facts in mind when you hear politicians talk about raising taxes and taking more of your money to fund wasteful government spending. It is not a formula to get our economy back on track.

My wife told me I was driving her crazy. Apparently "it's a short drive" was not the appropriate response.

Britain is considering an "emergency tax" on the wealth of its citizens to fund budget shortfalls. The current rate is 50%, although it was recently lowered to 45% since many of the wealthy started to move assets outside the country. Francois Hollande, the President of France has proposed a 75% tax on the wealthy to do the same thing. And the response there has been predictable. The wealthy are taking steps to renounce their citizenship and are moving to more tax advantaged nations. Here in the U.S., you can see the same thing occurring. Companies are fleeing high tax states like California and relocating to states that have a less onerous tax structure. What politicians fail to understand is that those that have accrued wealth, whether individuals or companies, will not sit idly by and let the state confiscate their wealth. There is no doubt that every company or individual enjoys and benefits from the services that government provides, such as police and fire protection. What government fails to realize is that there are limits, both to what these entities are willing to pay and the services that government should provide. Part of the problem is that government programs, once instituted, are never curtailed and continue to grow and consume more resources. Until government recognizes those limits, there will continue to be steps taken by the wealthy to avoid these out sized tax burdens.

The cashier told me, "Strip down, facing me." How was I to know she meant my debit card?

And that, my friends, is my view.

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