The Freedom Minute

Lessons from the Massachusetts Special Election

To a large extent, the special election to fill Ted Kennedy’s Senate seat was a referendum on the Democrats’ legislative ambitions in general and the current health care reform bill in particular. There are lessons to be learned from Scott Brown’s defeat of Martha Coakley to become the 41st Republican in the Senate, and one hopes the President and Congress are a quick study.

Contrary to what some liberals (oops, I mean “progressives”) like Michael Moore would wish to believe, the Democratic base did not desert those in power because they weren’t liberal enough. On the contrary, Brown won because independents and many moderate Democrats are unhappy with what appears to be this administration’s preference for big government solutions and the resulting increases in taxes and debt.

The health care bill is a good case in point. The President and the Democratically controlled Congress are attempting to foist upon the American people a trillion dollar health care plan, bought and paid for with backroom deals, and loaded with giveaways to the health care and health insurance industries. The President campaigned on “change”. But if this health care bill doesn’t prove that it’s still business as usual in Washington, nothing does.

So what should the President do? First, he should abandon the health care reform bill in its current form. Make no mistake, neither the House nor Senate bills address the real reasons for out of control heath care costs and would do little more than force everyone to purchase the health insurance industry’s flawed product; most likely at a higher cost. Pushing this catastrophically flawed bill through Congress, especially if the effort appears to involve any appearance of political gamesmanship, would be political suicide for the Democrats. Instead, the President and Congress should concentrate on only those reforms upon which most everyone can agree. It’s likely that with a scaled back, targeted approach to health care reform a few Republicans could be brought on board. (I’ll provide details in another post.) Not only would this be a huge win for the American people, but politically it would show that Obama is not only interested in bringing about change, he’s capable of change himself.

Second, the President should recognize that you can’t win elections without the backing of moderate and independent voters, and in Massachusetts they voted for a course correction. In his first year in office, Obama made the same mistake Bill Clinton made in 1992. Clinton beat Bush by appealing to independents and the so called “Reagan democrats”. But once in office, he pushed a classically liberal democratic agenda, the centerpiece of which was a big government health care reform bill. His approval ratings tanked and in the 1994 mid-term elections the Democrats lost control of both Houses of Congress. But Clinton learned his lesson, and for the rest of that term he chose to govern from the center, rather than the liberal left. He handily won re-election and by all accounts left office a popular and successful president. (Except, perhaps, for that impeachment thing.)

President Obama is actually lucky in that he’s had some early warning signs of the impending political disaster headed his way. If last November’s Republican gubernatorial wins in Virginia and New Jersey didn’t wake him up, certainly what happened in Massachusetts should do the trick. If he’s smart, he’ll make it clear that he’s heard the will of the people. He’ll become more fiscally conservative and dial back on his ambitious agenda. He’ll try to truly usher in an era of bipartisanship by repudiating ideas that would lead to bigger government intrusion in our lives and he’ll take a more market oriented approach to the reforms he wants to implement. He’ll steer clear of job killing legislation like Cap and Trade and he’ll consider options for reducing the deficit, not increasing it.

Hopefully, President Obama has gotten the message sent by the voters of Massachusetts. If not, in the 2010 midterm elections, it will be, as Yogi Berra used to say, deja vu all over again.

If you want to be notified the next time I write something, sign up for email alerts or subscribe to the RSS feed. Thanks for visiting!

January 20th, 2010 Posted by freedomminute | Election, Federal Government, Health Care | 4 comments

Thanks, 60 Minutes

It’s really gratifying when your analysis of an issue is validated on a respected national news show. On last night’s broadcast of 60 Minutes, Steve Kroft had this to say about why health care costs, especially for end of life care, are spiraling out of control:

In almost every business, cost-conscious customers and consumers help keep prices down. But not with health care. That’s because the customers and consumers who are receiving the care aren’t the ones paying the bill.

In fact, as Kroft reveals, 85 percent of health care bills are paid by the government or private insurers, not by patients themselves.

If this sounds familiar, you might be remembering that I basically made the same case in part two of my series on health care reform.

Unfortunately, the health care reform plans favored by the President and Congress will only make matters worse since they further insulate consumers from the cost of their medical care decisions by forcing more Americans to buy basic health insurance and covering more of the population under government paid for health care programs. This is exactly the opposite of what we should be doing. Instead of making people more responsible for their decisions, the government is drafting legislation that will make people less responsible for the cost of their health care. As Dr. Elliot Fisher says at another point in this 60 Minutes segment, “In medicine we have turned the laws of supply and demand upside down”.

But don’t take my word for it, watch the 60 Minutes report here or read the transcript.

November 23rd, 2009 Posted by freedomminute | Health Care | one comment

The Problem with Health Insurance

In part one of this series, we looked at the underlying reasons why healthcare is so expensive. We now focus on health insurance and the role it plays in causing our health care system to be more dysfunctional than it need be. We’ll see that the health insurance system which has evolved here in the United States both contributes to the high cost of medical care and creates additional impediments to providing health care to the population as a whole.

An Historical Perspective

In order to understand health insurance in the United States, it’s necessary to know a little about how the system evolved into what we have today. An excellent history can be found here and I encourage you to read it.

To summarize, the modern health insurance system has its roots in the 1920’s. Around this time, costs for medical care began to rise due to advances in technology and a subsequent increase in demand. In addition, increased requirements for physician licensure, education and the accreditation of medical schools restricted physician supply, putting upward pressure on the costs of physicians’ services. Continue reading “The Problem with Health Insurance”

November 2nd, 2009 Posted by freedomminute | Federal Government, Health Care | 4 comments

Why is Health Care So Expensive?

This is a multipart series on health care reform. You may find it easier follow the discussion from the beginning. If you haven’t already read the introduction, you can find it here.

First, we need to define what we mean when we say that health care is too expensive. Do we mean that it costs too much to visit the doctor for a checkup, or an x-ray, or a flu vaccine? Do we mean that the average person can’t afford any type of health insurance? Do we mean that if you get cancer or some other major disease or need major surgery you can’t possibly afford to pay for all the medical bills you will incur? Or are we talking about the fact that the percentage of the nation’s Gross Domestic Product (GDP) spent on heath care continues to increase every year and is much greater than what is spent in other Western countries?

When we break it down this way, we can see that in some cases, heath care is not “too expensive” for the average American. Most people, even those without health insurance, can afford to visit the doctor for minor or routine medical care. Sure, it might cost more than we’d like, but then again it cost me more than I’d have liked to replace the clutch in my Toyota, but I accept that as the normal cost of owning a car. If you take on the responsibility for anything, be it a car, or a house, a child, or your body, eventually you will have maintenance costs and you just have to plan for such things. Although the price of a doctor’s visit is actually more expensive in real dollars today by about a factor of two than it was in the early sixties (later we’ll discuss the reasons for that and the fact that it’s not an apples to apples comparison) the cost is still not out of reach for the average person. Likewise, while the cost of what we call health insurance (I’ll explain later why it isn’t really “insurance”) continues to increase, almost 85% of the U.S. population is able to obtain health insurance either on their own or through their employer. True, there are huge problems with health insurance that need to be addressed, but generally health insurance is still somewhat affordable for most people. Of course there is a small percentage of the population, the very poor, who can’t afford any health care or health insurance, though many of them can obtain some basic health care through existing Federal and State programs.
Continue reading “Why is Health Care So Expensive?”

September 30th, 2009 Posted by freedomminute | Federal Government, Health Care | 11 comments

Health Care Reform – Introduction

I considered avoiding this topic since there’s so many others writing and talking about it, but with all the misinformation on all sides of this issue, I feel I need to bring some sanity to the conversation. Health care reform is a complicated issue and there’s no way I can cover everything that needs to be said about it here at the Freedom Minute. Countless books, research papers, college courses and articles provide volumes of information for anyone who wants to look for it. Yet most people don’t look for it. They continue with their pre-conceived ideas, certain in the correctness of their “facts”. I’ll attempt to distill down the vast amount of information available and present it in a clear and concise manner, free as much as possible from ideology and rhetoric.

I’m going to divide this up into a bunch of different posts, partly because I don’t want to have to write it all at once and partly because dividing it up will make it easier to follow. Much of what follows is not simply my opinion, but rather the result of countless hours of research and investigation. I use mostly verifiable, independent, peer-reviewed sources and if I make an assertion, I’ll attempt to cite those sources so you can check them out yourself. Mostly I’ll be paraphrasing the relevant data, but when I quote another source directly, I’ll use italics so you know when that’s happening.
Continue reading “Health Care Reform – Introduction”

September 30th, 2009 Posted by freedomminute | Federal Government, Health Care, Libertarian Philosophy | no comments

Cash for Clunkers: Success or Failure?

As the “cash for clunkers” program came to a close this past week, government officials fell all over themselves declaring what a huge success the program has been. “This is one of the best economic news stories we’ve seen, and I’m proud we were able to give consumers a helping hand,” gushed Transportation Secretary Ray LaHood. The positive spin is certainly not surprising considering the federal government just spent $3 billion of your tax dollars (or more correctly, added $3 billion to the national debt which will have to be paid back, with interest, from future tax revenues). And when they pony up that kind of coin, we’re certainly not going to hear anything coming from Washington other than the sound of our elected officials patting themselves on the back. True, if you’re one of the roughly 700,000 who were able to take advantage of the government’s largess, it’s likely you consider the program a success as well. And who’s to blame you. It’s not often you can get the government to reallocate $4500 of someone else’s money to you so you can buy a new car.

But those of us who understand that there is no free lunch realize that when the government engages in this kind of economic sleight of hand, there is always something on the other side of the equation, hidden from view, which balances out all the “benefits”. Plus, we’ll have to deal with all those pesky unintended consequences which always occur. So let’s take a look at the entirety of the cash for clunkers program and see whether or not it really was a good deal for America.
Continue reading “Cash for Clunkers: Success or Failure?”

August 29th, 2009 Posted by freedomminute | Federal Government, Libertarian Philosophy | 6 comments

A Little Less Hypocrisy Please

As the debate on health care reform heats up, a familiar tactic is once again at the forefront. Rather than taking a principled stance against an opponent’s arguments and countering with reason and logic, an attempt is made to marginalize them by accusing them of being kooks, racists, hate mongers or pawns of the special interests.

So it’s a bit amusing to watch republicans/conservatives getting all apoplectic over being labeled in this way as they voice their opposition to the Democrats’ proposals. “Unfair!” they claim, “We’re not all shills for the insurance lobby and big pharma. We don’t oppose the President simply because he’s a Democrat and we want him to fail. We have real, valid concerns that need to be heard”. And in all fairness, their outrage at the Left’s tactics are generally valid. Being the target of demagoguery is never a fun position to be in.

Yet I do love irony… and this situation certainly qualifies. Aren’t these the same people who used these very same tactics against those that opposed the Iraq war, or the Patriot Act, or various other abuses of power by the Bush administration? False claims of anti-Americanism and unpatriotic behavior came fast and loose. They told disenters to shut up and support the President’s policies. They accused them of “giving aid and comfort to the enemy”. And now the shoe is on the other foot. And these folks don’t like it very much. Though I doubt they can see their own hypocrisy. Hypocrites rarely can.

But let’s not let the other players in this political battle off too easy. The democrats/liberals are just as bad. They certainly felt it unfair to be falsely labeled as unpatriotic for questioning the deeds of the Bush White House, yet they seem to have no problem demonizing their opponents this time around. For example, last week on “Hardball,” Chris Matthews painted town hall protesters as racist by opining, “I think some of the people are upset because we have a black president.” One universal truth about hypocrisy is that it’s not the domain of any one group.

So if, let’s say, you’re considering boycotting Whole Foods because you didn’t like the CEO, John Mackey, giving his honest opinion about the best way to reform our health care system, if you think he betrayed his customers because he doesn’t support the Democrats’ plan, try to remember how the Dixie Chicks were treated when they spoke out against George Bush. Try to remember how they were vilified and their concerts boycotted simply because they dared to publicly express their opinion. Try not to be a hypocrite too.

And if you were one of those people who criticized the Dixie Chicks as un-American or felt that those opposed to GW Bush and his policies were just a bunch of left wing wackos, try to remember how it feels to be derided and marginalized simply because you don’t agree with those in power. Try not to be a hypocrite the next time you’re tempted to do the same.

So to anyone who engages in this type of behavior, but then complains when it’s done to them, let me simply say this — a little less hypocrisy, please.

August 21st, 2009 Posted by freedomminute | Miscellaneous | 3 comments

Wrong Again, Michael Hiltzik

In his column in Thursday’s LA Times, Michael Hiltzik attempts to draw some conclusions about the voters’ rejection of Props 1A-E while again extolling the virtues of higher taxes. Unfortunately for Mr. Hiltzik, as usual, he’s wrong about virtually everything. This doesn’t particularly surprise me considering my critique of his previous column where he couldn’t keep his facts straight. This time around, Hiltzik draws the wrong conclusions and uses specious statistics to back up his argument.

Are Californians Highly Taxed?

Hiltzik claims that it’s a lie that Californians are burdened by the highest state taxes in the nation. To prove his point, he writes,

The truth, according to 2006 figures derived from the U.S. census, is that, as a percentage of all personal income, California’s tax and fee schedule ranks 18th in the country.

But that’s a misleading statistic. The reason that California comes out 18th, is that we have a few very wealthy citizens and a large percentage of our tax revenue comes from the sales tax which is a flat tax on purchases. This skews the ranking, because when you calculate taxes as a percentage of personal income (taxes divided by personal income), the incomes of our wealthy citizens increases the denominator and lowers the overall percentage. In low income, sparsely populated states, it takes a higher proportion of their incomes merely to provide a basic level of government and infrastructure. More densely populated and higher income states, like California, spread those costs over a greater tax base, allowing the appearance of a lower tax burden. So why use this one statistic to determine whether Californians pay the highest taxes in the nation? I suspect Hiltzik chose this number because it seems to prove his overall point that Californians aren’t taxed enough. However, Hiltzik ignores other, more valid statistics that prove him wrong. For example, in the same report referenced in Hiltzik’s column, California ranks 11th in per capita taxes (total taxes divided by the number of people). Again, this statistic may or may not tell us anything about our personal tax burden, for if there are a large number of people who pay little or no tax, then those that do pay taxes might pay a lot, but the per capita tax rate is lower. Furthermore, it’s unclear whether the above numbers include such things as local levies or other fees imposed on the populace. The point is, measuring the tax burden as a percentage of personal income is only one consideration of the tax environment for any jurisdiction, and not a particularly good one at that. Taking this one statistic out of many and using it as the sole evidence to prove your point is intellectually dishonest and I’m sure Michael Hiltzik knows it.

So let’s set the record straight about how heavily Californians are taxed. California has the highest state sales tax in the nation, the highest tax on motor fuels, one of the , highest corporate tax rates in the country, the second highest top income tax rate (Hawaii just jumped to #1, but not by much) and higher personal tax rates that kick in at some of the lowest income levels. For example, California imposes a 9.55% income tax on individuals earning over $47,000. No other state has such a high rate for those earning such a low salary. Finally, according to the Tax Foundation, for 2008, California ranked 6th highest in the nation in overall state tax burden. And in their 2008 report, the Pacific Research Institute ranked California 47th in overall economic freedom. Considering these numbers, Californians appear to shoulder a very high tax burden as compared to residents of other states. I leave it to the reader to decide whether we should be paying more as Hiltzik suggests.

Continue reading “Wrong Again, Michael Hiltzik”

May 24th, 2009 Posted by freedomminute | State Government | no comments

Recommendations for May 19th Special Election

Local Races

City Attorney – Vote for Carmen Trutanich. His opponent, Jack Weiss, was our council member and was pretty much the worst representative you could imagine. He’s in bed with all the political elites in City Hall and has waged a deceptive smear campaign against Trutanich. Don’t reward him. Trutanich will be an independent prosecutor and work best for the people of Los Angeles.

Council District 5 – Vote for David Vahedi. Between Vahedi and his opponent Paul Koretz, there is no doubt that Vahedi is the better choice. Koretz is a career politician and would simply be a continuation of the status quo. He moved into the district just so he could run for the open council seat being vacated by Jack Weiss. I’ve listened to both men at various candidates forums and I’m convinced that Vahedi will be a much more independent voice and bring the possibility of real change. I also believe he will be more open to input for the constituents. He’s also a real grass-roots candidate having served on his local neighborhood council for many years.

Here’s what you need to know about the Propositions
Continue reading “Recommendations for May 19th Special Election”

May 18th, 2009 Posted by freedomminute | Ballot Initiatives, Election, Local Government, State Government | no comments

Why Can’t LA Times Columnists Get it Right?

In a recent column entitled, “California Budget Fixes On May 19 Ballot Are Mostly Shams and Frauds”, Michael Hiltzik of the LA Times rails against the six propositions, 1A through 1F, that will appear on the ballot for the May 19th special election. He’s right that the propositions are all fraudulent and misleading. They deserve to go down in defeat. But Hiltzik’s column is mostly wrong as to his analysis of our current budget crisis as well as what’s actually contained in the propositions themselves.

First, Hiltzik gets the facts wrong about Proposition 1A’s effect on the budget. He wrongly states that 1A “limits budget growth to a formula based on population growth and inflation”. If only this were true. Unfortunately it’s not. Prop 1A limits future spending to historic revenues and economic growth. This means that there really is no spending limit, because all the legislature need do to continue their runaway spending is continue to increase revenue, i.e. increase taxes. That’s a big difference from limiting spending to population growth and inflation. One would think that a columnist for a major newspaper would be able to get this simple fact right. Granted, the actual text of the proposition is so convoluted as to be almost incomprehensible, but all Hiltzik had to do was read the analysis written by the state’s independent legislative analyst which appears here, just like I did. But perhaps that was just too much trouble.

Or perhaps Hiltzik simply likes tax increases so much that he’s intentionally misleading his readers. What other explanation could there be when he calls the largest state tax increase in the history of the United States, “modest tax increases”. Or when he suggests that California’s budget woes come not from legislative over spending but rather from the 2/3 supermajority requirement for budget bills, which is pretty much the only thing standing in the way of even greater state fiscal irresponsibility. In fact, Hiltzik goes so far as to claim that eliminating this 2/3 supermajority requirement will somehow magically solve all our budget problems. Of course that’s only true if you believe we can simply tax our way out of this mess and “a tiny cadre of legislators”, as Hiltzik calls them, are standing in the way. But anyone with even a basic knowledge of economics knows this to be a fallacy. Ever increasing spending coupled with ever increasing taxes to pay for it, drives away the tax base, reduces revenue in the long run and eventually destroys an economy. Not to mention, it’s inherently unfair. But again, Hiltzik disagrees since he believes “there’s nothing inherently wrong with tobacco taxes or surcharges on the wealthy”. With an attitude such as this, it’s no wonder Hiltzik didn’t bother to do his homework.

But, Michael Hiltzik’s most egregious error is that he fails to mention anywhere in his analysis of the propositions that if 1A passes, the massive tax increase recently passed by the legislature will be extended an additional one to two years. That translates into an additional $16 billion in taxes levied on the people of California. But apparently, Michael Hiltzik didn’t think this fact important enough to make anything more than an obscure tangential reference buried deep in his text. Nor did he, in a column about the propositions being “shams and frauds”, mention that 1A’s official title and summary, written by our illustrious elected officials, as well as the TV and radio ads promoting its passage, also fail to mention this important fact. And that’s the biggest sham and fraud of all.

April 28th, 2009 Posted by freedomminute | Ballot Initiatives, Election, State Government | one comment