America’s Founding Fathers thought of everything. They wanted to establish several centers of power in Washington rather than just one. They wanted the occupant of the White House to be strong, but Congress was to have the power to check that strength. The friction between Capitol Hill and the White House — a product of this system of checks and balances — was to make the decisions of America’s leaders cleverer, wiser and better.
Hardly original, but a good system. Served Rome reasonably well.
But the system only works when all branches of government play the role designed for them. For almost 235 years, the system worked reasonably well. But, about a year ago, things started to go wrong in the US capital; the system began to melt down. The friction is no longer propelling the country to greatness, rather it is hastening its decline. Members of the right-wing conservative Tea Party movement, which is well represented in Congress since the last elections, want friction. But at the expense of results.
The system is actually working well. Sure it’s uncomfortable. Why is that though? Is it the disagreement, or is it really that the major problem is being unveiled?
These lawmakers no longer view themselves as part of the political system. Instead, they identify themselves as its enemy. They see themselves as outsiders, even as they sit in Congress and enjoy the kinds of job benefits they would like to strip from their fellow Americans.
They were elected by an electorate who are finished with kicking the can down the road. An electorate willing to suffer now, to prevent an even larger problem in the future.
All Take, No Give
They are, as has become clear during the ongoing debt debate , calling the entire system into question. And they have turned the system of checks and balances into a tool of obstruction.
Which as you described earlier, was built into the system for precisely this point.
Experts agree that America can only reduce its vast mountain of debt by both cutting expenditures and raising taxes — at least a little. Tea Party politicians are eager to slash spending, but they are adamantly opposed to allowing the government to increase tax revenues. Their refusal to compromise has led economists to warn of ” Armageddon ” should the US become insolvent.
Which experts? The problem can be solved through spending cuts alone. No question. It won’t be pleasant, the subsidised never like to give up their free money and advantage.
In response to such “fear mongering,” the Tea Party group Campaign for Liberty wrote on its blog that, even if the debt ceiling isn’t raised, “the sun will still rise in the East and set in the West, as it has for all time.” What, after all, do the experts know?
Yes it will. The cuts can, and need to be made. To an extent, totally the fault of government certain injustices exist and will be exposed by severe cuts. Social Security, Medicare and Medicaid. The population will need to be weaned off of the expectation that daddy will always pay. Daddy is the taxpayer. The taxpayer no longer either wants to, nor can afford to pay.
As a result, America has come to a standstill . The branches of government were designed to both exercise and yield power. More than anything, though, they are supposed to work together. But working together would appear to be contrary to the Tea Party movement’s creed. Members aren’t interested in making Washington better, they want to annihilate it. Their Holy Grail is a stripped down state
A total elimination of the State would be better. However, the smaller and weaker the State, the better for everyone.
President Barack Obama wants to improve schools, whereas the Tea Party would prefer to see many state-run schools eliminated. Obama wants to invest in clean energy; the Tea Party denies the existence of climate change. The president wants to make trillions in cuts; but the Tea Party refuses to approve a dollar more in taxes, even on the very rich.
State schools are a total failure. They are nothing more than a method through which the State indoctrinates. The population grows gradually ever more ignorant. State schools and their entire, 100% expenditures can be ended. There is $80 billion right there. Teachers work on merit. The tenure system goes with State funding. If you can’t teach, too bad, start digging ditches.
Indeed, after talks with Republican leaders broke down last Friday, a visibly annoyed Obama asked reporters: “Can they say yes to anything?” The answer is no, and the blame lies with the new system.
Or, Obama, get with the program son. Stop making mealy mouth speeches. Get cutting. The more government has grown and intervened, the worse it has got. You’ve had 2yrs of trying your way, spending unbelievable sums of money. Where are you? Nowhere. Let the free market take over.
When a Corporation goes bankrupt, they enter Chapter 11, management are replaced, common stock holders are wiped out, debt is usually given a haircut, and converted to new equity capital. Time for you to go old chap.
It used to be that politicians would campaign on anti-Washington platforms, but would still be proud of being in Congress once elected. But the representatives who road the Tea Party wave into Washington do things differently. As a recent article in the New York Times noted, several of them actually live and sleep in their offices “so as to pronounce themselves detached from the culture in Washington” and then fly back to their constituencies on Thursdays. It’s a matter of principle. They view themselves as being on a mission and proudly claim to not think about their re-election chances. They are focused on their principles.
Politicians are supposed to represent those that elected them. Clearly, some are. Their voice has a right to be heard. Add to that, the fact that they are essentially correct, and what’s the problem?
Yet, in so doing, they are betraying the principles of democracy. It is in the nature of democracy to think about re-election. It means politicians remain in touch with their voters — and it keeps them open to compromise.
Wow! Are you showing your true colours. Utter nonsense.
But the Tea Party is opposed to compromise, that lubricant of all legislative bodies. They practice a form of democracy, but in its rawest, most aggressive form.
Selling out their mandate. They were elected to create change. To force the government to cut spending. Spending can be cut, massively. Cut it. After all chaps, if you hadn’t wasted so much money and still had some debt ceiling left over, you wouldn’t have this problem. But no, you chaps couldn’t manage a biscuit tin. Too bad, now you have a problem.
They have, for example, repeatedly and publicly humiliated Republican Speaker of the House John Boehner. Boehner had hammered out a deal with President Obama involving $4 trillion (€2.8 trillion) in federal spending cuts, including a long-overdue reform to the overburdened social system. In return, Boehner agreed to some tax increases. It would have been a genuine reform — a rather major one.
Taxes are theft. There is no need to steal more money. Simply cut back on the amount of money you already steal. Simple. Social Security doesn’t need reform, it needs to be ended.
The Tea Party, though, saw the deal as a betrayal. Taxes, after all, are poison according to their doctrine. It is an extremely fundamentalist doctrine, and they have used it to take the Republican party hostage.
Good. Quite right too.
The Republican Party “has been infected by a faction that is more of a psychological protest than a practical, governing alternative,” writes conservative New York Times columnist David Brooks. He says the movement is driven by protest reflexes and “do not accept the logic of compromise, no matter how sweet the terms.”
The logic of compromise? How so? Show me the syllogism that results in this compromise.
With its stubbornness, the Tea Party is betraying its own idols. They like to quote Ronald Reagan, famous for saying that “government is not the solution to our problems; government is the problem.” But even he didn’t shy away from governing. He raised taxes 11 times and upped the debt ceiling 18 times. The Republican icon spoke often about his dislike for government, but he never made it into a religion.
Ronald Reagan was a cretin. A hypocrite to boot.
Stoking Voter Ire
The Tea Party, on the other hand, is the Congressional outgrowth of “you’re either with us or against us,” the maxim that former President George W. Bush espoused as he launched his “war on terror.” And the movement wants to drive the state into bankruptcy, consequences be damned.
Bush is a large part of why the US government is where it is. Possibly a more stupid President could not be found.
Tea Party lawmakers themselves will ultimately have to pay the price for this strategy. Polls indicate that many Americans are put off by the radicalism of these wild new politicians and want to see a compromise reached on the debt ceiling. A majority backs a deal that includes lower expenditures and more taxes. It makes people nervous that Tea Party adherents acts as though America can choose whether or not to pay back its debts.
When you are bankrupt, you just have to accept that fact. The US, like most Western governments is bust. They have overspent and consumed the built up wealth and capital that had accumulated over hundreds of years. It is over. Reality. What are you going to do…cry about it, or man up and start again?
Most Americans, after all, are also familiar with the Founding Fathers that the Tea Party movement is so fond of citing. And what did Jefferson, Washington, Madison and the others say when their young republic was forced to borrow money? The state, they said, had to pay its debts. On that point, they knew no compromise.
Who is the State, and where does their money come from? The State is the small group that wield coercive power over the majority and spend tax revenues as if they had earned it themselves. They produce nothing, earn nothing. They have no say in anything, unless the population is stupid enough to allow them to do as they will.
This is my mate SC’s quantitative tool. I’ve been looking at it for about an hour. Some observations. First off, you need to look for correlations and confirmations. It is not a one trick pony. You can visit his blog here or go to my blogroll, his blog appears under spydercrusher.
In hindsight it is always easy to spot the confirmations. I’m not going to insult you by pointing out the bleedin obvious. What about the far right edge? This is the only place that we can make money after all.
First off, there is the initial trigger or move in price. The TT signals distribution. In this context distribution is bad. This is confirmed in both the breadth signals. So we know the following, don’t buy long currently. Will the trend lower continue? The interesting question.
At this point you might start following the newsflow, debt ceiling debates, drawing conclusions etc. This can be done, but it really has no impact on the signal that will eventuate. Again looking for confirmation, you want participation with breadth, that quantitatively indicates that the bulls are gaining ascendancy. Thus the top bar, the buy signal needs to be confirmed via price and participation.
Price is a funny one. Price confirmation can take two forms. Positive confirmation, viz. price moves higher, or, negative confirmation, where price is lower, but all other signals contradict price. Indicative of the market makers playing games, or these HFT algo’s playing with the bid/ask quotes.
Who is this for? Swing traders. No doubt at all. I’m sure you could work a Short based system off of it as well, but currently it is used predominantly by SC as a Long only system. I’m assuming this updates live, but even assuming it didn’t, as you wait on confirmation, it is still valid to take positions the following day based on a signal trigger based on today’s close.
Using Options, rather than stock, would provide a couple of advantages: [i] increased leverage [ii] stoploss not dependant on being placed in the market [iii] minimise time value decay.
Interesting. Watch this space for some trades that I’ll base on my interpretation, possibly with SC’s help, and place utilising the quant methodology, a trade, probably using Options. After all, we can’t have flippe-floppe claiming all his SHOMP nonsense unanswered.
So the conclusion is: sit and wait. Do nothing at this point. The signal is developing, damn your eyes, but that sounds familiar. Essentially wait, watch, and when confirmation is lined up with a buy signal, that green bar that lights up, we go long. Till then, chill.
The Department of Health and Human Services administers the huge and fast-growing Medicare and Medicaid programs. The department will spend $910 billion in 2011, or $7,710 for every U.S. household. It employs 68,000 workers and runs more than 420 subsidy programs.
So we can see how the money, the $910 billion dollars annually is allocated. We can see how Medicare and Medicaid are the two elephants in the room. If we could eliminate them, we have moved substantially close to saving our proposed $910 billion each year. So what do they actually consist of that makes them so sacrosanct?
The federal government subsidizes medical care for more than 45 million elderly and disabled Americans through Medicare. Medicare is the third-largest federal program after Social Security and defense, and it will cost taxpayers about $430 billion in fiscal year 2010.1 Medicare is one of the fastest-growing programs in the federal budget, with spending likely to double over the next decade and to surpass Social Security spending by 2028.2 Numerous studies suggest that about one-third of Medicare spending is wasted.
So we are picking on the old folk and the disabled. It’s easy to see why politicians immediately recoil in horror at the merest suggestion of cutting their benefits. So immediately we confront an ethical question, that suggests our moral compass is dysfunctional. This moral question is raised by Lyndon Johnson
At the signing ceremony for the new Medicare program in 1965, President Lyndon Johnson declared, “No longer will young families see their own incomes, and their own hopes, eaten away simply because they are carrying out their deep moral obligations to their parents.
Let us look at the problem. [i] I have a responsibility to look after myself. I cannot ethically expect others to look after me. [ii] therefore to look after myself into the future, or in the immediate future, I need to take steps to do so. My options include [i] saving and investing on my own behalf [ii] purchasing insurance, whereby I pass that responsibility onto the investment professionals.
There is no ethical or moral responsibility for complete strangers, who may be in a worse financial position than I am, to fund the money required. With regard to family over strangers, family may well feel an obligation, but no obligation can be passed onto strangers for my failure to provide for myself.
Polling data that show public support for Medicare do not prove that the program is a success. Such polls reflect the fact that the government has made enrollees dependent on Medicare by taking away their freedom to choose better health insurance options. It is only natural that Medicare enrollees would want to protect the only source of health insurance coverage they have left to them.
Always have to be careful with polling data, unless it measures demonstrated choice. Regardless, their choices can and should be returned. Remove government 100%. What will be left? [i] the individuals who require medical insurance [ii] insurance companies who already do, or want to enter this market. [iii] a free market. The free market will balance supply and demand via price. Price will fall. Not immediately, but it will fall. Why?
Let us for arguments sake use an aggregate. Ugly I know. Let us suppose that the average dollar amount was $100 that could be spent. Let us say that the average policy currently cost $1000 dollars. A pretty wide gulf. First why such a price gap? The price gap exists because government overpays. It is free and easy with taxpayer money, hence with any subsidy, the demand from beneficiaries, who are the subsidised, far exceeds the supply, and price rises. The subsidised, will claim for anything and everything, simply because it is subsidised, and therefore to them cheap. If they had to pay out of their own savings, or from their own policies, they might choose to claim less.
Assume for the moment that they didn’t. That their demands remained constant, inelastic. The truth of the matter then is that the supply is woefully low. The profit margins would be high. High enough that it would attract increasing resources to the area, which would lower prices. The prices could fall, as there is so much demand at lower prices, that profit margins could be maintained on a volume basis. Thus price will fall to the point where the marginal demander will choose not to purchase care, his ailment is not so bad that it is his highest want on an ordinal scale, he values other things higher.
However, I suspect that the ordinal value scales are different to those that are demonstrated when the taxpayer pays. That many who have a cold, who now book a doctors appointment and demand cold/flu medication, would not do so if they had to pay. Thus much demand, created by subsidy would simply disappear. With a falling off of demand, the high costs, and high profit margins undergo a profound change. They shrink. Over supply to a falling demand, brings falling prices. Falling prices is what the free market creates.
In the 20th century, Congress replaced personal savings, family obligations, and charity with giant centralized programs to support the elderly.4 Congress funds the two main programs for the elderly—Social Security and Medicare—primarily by taxing younger workers. That intergenerational funding structure has set the nation on a financial collision course because the number of elderly people in the nation will grow 75 percent by 2030, while the number of working-age people supporting them will grow by just 11 percent.5
Demographics. Maltheusian economics. It’s doomed. Do not wait for it to implode. Do something now, while there is still time to transition a softer landing. When the economic law forces your hand, there are no choices left. Eliminate the programs now.
Medicare is less a “sacred bond between the generations” than a pyramid scheme allowing each generation to take advantage of the next.8 Since the elderly are a politically powerful group, each generation has been able to secure larger Medicare subsidies at the expense of young working-age Americans. Medicare has spawned an average of one tax increase every three years for the past 45 years.9
Younger workers will face massive tax increases unless Congress cuts Medicare spending. Jagadeesh Gokhale has estimated that Congress would have to increase the Medicare payroll tax sixfold—from 2.9 percent to 17.8 percent of all wages—to pay for all of Medicare’s current promises.13 Martin Feldstein estimates that such a tax increase would so damage the economy that the total burden would equal nearly 25 percent of wages.14
This is the problem. The same demographic change that mandates failure, also mandates the political backing of maintaining the subsidy. Understandably, if you have already paid out to support those ahead of you, and now it’s your turn at the front of the que, you are not going to be happy that now the restaurant is out of food. This is the major problem. Many, will not have saved a dime. Many will have no insurance. Many will have saved up medical problems that they intend to have seen now. In a word, they are screwed.
The proverbial rock and hard place. Welcome to Socialism. Socialism is a miserable failure. It cannot calculate, and eventually, like the Soviet Union, it goes bust. Well Medicare & Medicaid are pure Socialism. It has gone bust. Are some going to be hurt? Yes. Is it fair? No. Whose fault is it? Clearly government.
The only answer is that there is no perfect answer. No happy ending. The faster, and more total the cut, the faster the free market will lower prices. Prices can fall very, very quickly, as anyone in the financial markets knows. Charities will spring up, there are enough really, really rich people in the US who currently try to give away their money to Africa etc, that can pick up some of the worst cases. The free market will adjust supply and demand via price very quickly. Time to bite the bullet.
Second, Medicare spending grows because the government keeps expanding the list of goods and services that Medicare subsidizes. Congress created the huge Part D prescription drug program in 2003, which has added hundreds of billions of dollars to the federal debt because legislators provided no funding source. Other expansions occur, without any congressional action or approval, when Medicare officials deem new procedures eligible for subsidies. In 2004, the Bush administration unilaterally announced that Medicare would begin subsidizing obesity treatments.
Here we have an example of ordinal rankings. Fat people. Fat people, because the taxpayer is paying, decide that their weight problem can now be addressed. If they, or when they had to pay themselves, it was not such a burning issue for them. This will be found across the board. Cigarette smokers. Smoked for 50yrs. Now they want medical care. Was never an issue to plan ahead, dang, that would have reduced the number of packets they could smoke. If you make the individual choice of “X” and “X” is a bad choice – do not expect me to pay for your medical care. You chose, you pay, or not, your choice.
Taxpayers foot the bill for an alarming amount of fraudulent and improper Medicare spending. Medicare’s massive size and the huge numbers of doctors and hospitals in the system make it very difficult to police. The government processes 1.2 billion Medicare claims each year by computer, generally without human eyes checking them for accuracy.
Eliminated under a free market. If you cannot keep accurate accounts, you my friend, go bankrupt. The free market polices itself.
Other estimates of improper Medicare payments are higher. Malcolm Sparrow of Harvard University, a top specialist in health care fraud, argues that estimates by federal auditors do not measure all types of improper payments. He believes improper payments account for as much as 20 percent of federal health spending, which would be about $85 billion a year for Medicare.2
Government is incompetent. They are throwing your money, and my money, around like it was going out of style. Get a grip.
One area of rampant fraud is Medicare’s medical equipment subsidies.31 One scam occurs when doctors steer patients to purchase (Medicare-subsidized) motorized wheelchairs that they don’t really need, for which the doctors receive “kickbacks” from wheelchair supply companies or other operatives. A 2008 report by Senate investigators found that 30 percent of medical equipment payments that they examined appeared to be fraudulent.3
Dirty doctors. Unfortunate, but true. I have had numerous personal experiences with corrupt doctors, medicine is a dirty business. The free market polices them far more efficiently than government, lost in internal bureaucracy.
Medicare operates 16 different pricing systems for different types of health care services.40 Physician services provided under Part B, for example, use a complex pricing scheme based on the “resource-based relative value scale” (RBRVS). The government assigns each of 6,700 distinct physician services a value, which is then adjusted for each of 89 regions in the United States and converted to dollars. The result is that the government sets about 600,000 different prices for just this part of Medicare. A 29-member board of doctors sets the “relative values” of medical procedures under the RBRVS. The values are based on the inputs to medical care, such as the cost of procedures, but they do not take into account consumer-side factors, such as the quality or outcomes of procedures, or the demand.
Free-market prices are much different from these government-set prices. Market prices emerge through the voluntary and demonstrated interaction of consumers and competing producers, and they guide consumers to use resources wisely and guide producers to make goods and services more efficiently and more widely available.
The compromise. Instead of going cold turkey and cutting off the program tomorrow, how about a fixed dollar value via a voucher?
Congress should end traditional Medicare and give each enrollee a voucher to purchase the health plan of his or her choice. Subsidizing Medicare enrollees through fixed-dollar vouchers would give enrollees more control over their medical care, encourage them to be more cost conscious, spur innovation by eliminating Medicare’s price and exchange controls, and contain federal spending.
These vouchers value are determined by life expectancy. Slightly higher for those closer to death, lower the younger that you are. These vouchers are on a timetable. They will be eliminated over the life expectancy of the youngest users from year “X”. Thus they have a sale by date. All programs cease 100% by year “X”
All taxes for these programs end today. The value of the vouchers must be supplied by cuts in expenditure elsewhere. You become responsible for your own medical care today. Prices will fall. All costs in administration etc are cut. You get your voucher, end of story. You spend it where you will. It is still a subsidy, it will still distort the market, but it is moving, definitely in the right direction. Demand, to some degree is capped. It may not accurately reproduce the totally free market, but it comes far closer than the current system.
More importantly, it has an end date. It lifts the disaster that is the unfunded liabilities cloud. It will force innovation and competition, more so once the voucher system dies out and only the free market remains.