Friday, July 19, 2013

My View

Random ruminations from your resident curmudgeon...

We all know about the law of unintended consequences- where one action has a surprisingly unexpected reaction, most often in the negative. Congress is a case study of the law of unintended consequences, and  one of the most glaring and painful examples of unintended consequences has been the reaction of small businesses to Obamacare. Ostensibly, this program of socialized medicine was designed to provide healthcare coverage to all Americans (it didn't in its original design or its final version) and one of the ways to do that was to require small businesses to cover their full time employees. Seems simple enough- small business have to have employees to keep their doors open so make them provide healthcare coverage. Obamacare rules state that any employee that works more than 30 hours weekly (instead of the nationally accepted 40 hours) is considered a full time employee. So small businesses have reacted to this massive expense that has been thrust on them by doing what is necessary to survive. And what is necessary is to reduce the number of full time (over 30 hour per week) employees. According to a survey by the U.S. Chamber of Commerce, 74% of small businesses (by definition, a company that employs up to a maximum of 50 workers) plan to either cut their full time work force; move more employees to part time status; or will freeze hiring. Now you and I both know that this is not what the administration wanted as a response to Obamacare. It is that dreaded unintended consequence that is having a dramatically negative impact on the creation of jobs and is reducing wages and hours for the existing work force. What looks good on paper or in the halls of Congress often does not translate well to the real world. Now that Washington is seeing the negative effects of the unintended consequences of this horrific law, it is time to undo and re-think how we provide health care coverage using real world experience and perspectives. Maybe then we would not be experiencing such negative unintended consequences.

The furniture store keeps calling me to come back and buy more furniture, but really all I wanted was a one night stand.

How about this for unintended consequences? We all know the Federal Reserve has been printing money and pursuing a zero interest rate policy in a vain attempt to stimulate the economy. While those extremely low rates have benefitted individuals that are buying or refinancing a home, there are some seriously negative effects to those low rates. In June, the Social Security Administration saw $94 billion in bonds mature with an average yield of 5.25%. Those bonds were replaced with Treasury bonds that had an average yield of 1.75%, which costs the SSA $3.3 billion per year in lower interest income. Now consider this: more bonds will be maturing in the near future as the SSA has varying maturities of bonds. Those higher yielding Treasuries will be replaced with significantly lower yielding bonds, costing the SSA even more in annual income. It is estimated that by the time the SSA re-prices their bond portfolio (going from the redeemed higher interest rate bonds to lower interest rate bonds), the annual loss of income will be over $300 billion from current levels. Also consider that the SSA is facing a massive demographic group- the baby boomers- who are beginning to move into the "pay me" years where they are no longer paying into the system but will be drawing out of the system their benefits. The unintended consequence of the lowest interest rates in the history of our nation is the hastening of the cash shortfall for the Social Security trust fund. And the longer we wait to fix the problem, the more difficult it becomes.

I have a good friend who is an optometrist. Unfortunately, he fell into his lens grinder and made a spectacle of himself.

Of all the scandals that plague the Obama Administration, the one that should worry every American the most irrespective of their political leanings is the use of the IRS to target individuals and groups that have a differing view from the administration in power. As we are finding out, the IRS was directed by higher ups in Washington to make life difficult for conservative groups through an unduly rigorous application and now we are finding out that private files have been accessed and security breached. Christine O'Donnell, who won the Republican primary for a Senate seat for the state of Delaware, was informed that her records were accessed on the very day that she planned to run for the Senate seat. If we have a government agency that has the capability of making life miserable for anyone in this country, who has access to our most private financial information, and which is being used by incumbents to punish their political opponents or perceived enemies, then we have made a giant stride toward becoming a more totalitarian nation. This bears watching by every citizen, and justice must be sought in this situation.

I asked my wife why she spends so much money on food. She said, "Well, you and the kids won't eat anything else." She has a point.

And that, my friends, is my view.

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