Cowboy Confessional

economist, n. An expert who will know tomorrow why the things he predicted yesterday didn’t happen today.

When a politician tells you that targeted government spending will revive an economy, grab your wallet and your shotgun.

When Obama’s economic experts (if I may abuse the phrase) said last spring that His stimulus plan was targeted, I saw it for what it was – political payoff to election supporters, people who suckle on Uncle Sam’s sagging nipples (if that mental image did not horrify you to the point of setting your PC on fire, then you may be strong enough to stand the rest of this missive).

The recent jobs report is a study in clarity and calculation – the private sector lost jobs while government hired more people. Obama, who claimed during the campaign that his objective was to make “government cool again”, certainly has made having a government job cool. Government workers voted for Obama in droves because he intended to use federal tax dollars to inflate the state. It you run a store, style hair, program computers, generate electricity, manufacture anything or in some way add to our gross domestic product (GDP), Obama’s message is “Tough. The people at the Department of Motor Vehicles are more important than you.”

While the U.S. economy dumped 11,000 non-farm jobs, 7,000 of those people became wards of the state (i.e., your non-resident and non-tax deductable dependants). This does not bode well for the economy going forward. People in government – with only very rare exception – add nothing to economic activity. They do not convent raw materials into component parts. They do not assemble component parts into products. They do not drive trucks that get those products to your local store. They don’t even make boring infomercials to sell the products. In terms of real GDP and wealth, government workers individually produce bubkes, and collectively produce less.

Construction is still suffering (-27,000 jobs) because only public employees can afford houses, and government already has all the office buildings it needs. People who manufacture products (41,000 fewer than before) can only sell them to people with jobs, which includes fewer construction workers these days. This lack of potential market explains why wholesales (-11,700 jobs) and retailers (-14,500 jobs) aren’t eating as well as they once did. In fact, one of the only bright spots in the private sector is health services (+28,000 folks), because someone needs to treat all of us who are feeling ill from Obama’s incompetency.

Worrying is warranted. Economies are amazingly complex. Cost-to-coast and border-to-border economic revival requires more than a faux preacher in the White House chautauqua tent. Because we are all economically interconnected, everybody must get goosed. Every sector, every job classification, every income level and in every county needs a bump. Because every person saves, spends and invests differently, the only way to get all the cogs of the economic machine turning is to structurally reduce the burden people carry. Since taxes suck away more than 28% of America’s GDP (i.e., everything non-government workers produce), across the board tax cuts are necessary.

Which is amazingly difficult when you are trying to spend an extra trillion greenbacks.

The good news is that unemployed people understand that government workers got the gold mine (you know what you got). Some will conclude Obama is incompetent (he is) on matters of economics. Others will surmise he is corrupt (he is) by using tax money to bribe governments and their workers. Others will concluded he is clueless (not quite, but this may be splitting semantic hairs). The net effect is that people’s various perceptions accelerate Obama’s drive to be a one term president.

On January 20, 20012 the government sector unemployment rate will rise by one, and the rest of us can get back to work.

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I’m worried. The leader of the free world apparently flunked economics 101.

In a show of political desperation before a rare joint session of an even more desperate Congress, Obama glued together several months of rhetoric and even less meaningful details into a façade of a plan for rearranging American health insurance. Despite recurring failures to pass legislation, the Pol from Palatine insisted that within the body he addressed there was “agreement on 80% of what needs to be done” (while half of the assembled legislators sat on their hands throughout).

That 80% in agreement are all Democrats. The missing 20% are the Blue Dogs Democrats.

Obama deftly demonstrated that economics was not in his Harvard law school curriculum. Be he did show that he knows how to read political tea. Polls show that the economy is the top concern of Americans. Barack broached his bombast yammering about the same, then artfully parlayed his opening gambit into health insurance reform, noting that “we have to curb health care costs to save the Federal budget.”

There’s a two-fer for you; a transient moment of honesty that proceeds flagrant deceit. Obama would make a fortune in the used car biz.

Yes, Medicare is slatted to go fiscally belly-up in a few years, which speaks poorly about government’s ability to supervise health insurance. It surprises only Barack that the public is increasing doubting him when he proposes that the same body that created and is sending Medicare into the seventh ring of financial Hell should intervene further into the health insurance business. Obama admitted his ‘plan’ would collectively set us back about a trillion clams, claiming it would not cost “a single dime” while also boasting that his design would be deficit neutral.

In simpler language, he promised the impossible. In the medical trade this is called ‘snake oil’.

Here is an example of Obama’s lack of understanding of microeconomics or other reality. Barack backs burdening insurance companies with a myriad of new restrictions while telling us that we will not have to change our coverage. It is a given that your coverage will change when your rates rise to utter non-affordability. To wit (a commodity Obama lacks) he wants your insurance company to:

* Insure you even if you have pre-existing conditions (rates to rise as insurance companies costs rise)

* Eliminate caps on coverage (rates will balloon)

* Limit your out-of-pocket expenses (rates will skyrocket)

* Require coverage for routine procedures (more services means higher premiums)

* Offset Medicare shortages by charging insurance companies a fee for certain policies (rates will rise to cover all new fees+)

In other words, he will remove controls on expenses and knows that insurance companies will not raise premiums to cover the extra expenses. After all, he heard it directly from the Easter Bunny.

Ill content with intimidating only insurers, he threatened young people. Saying that the bankrupt Medicare system was a legacy “passed down from one generation to the next,” he put on notice current college graduates – who can’t yet find a shovel-ready job – announcing that they would pay for $32 trillion of projected red Medicare ink.

Right after they pay off their student loans.

Most interesting in all of Obama’s oration was that he never once addressed the causes of higher health insurance costs, not did he propose anything that cured premium pumping. For example, he mentioned tort reform – halting lottery litigation – but evaded the issue by proffering non-specific government experiments. In other words “we’ll work on finding another scheme right after you buy this one!”

There are approximately 800,000 doctors in the U.S. and their malpractice insurance starts at about $80,000 a year (premiums get much higher depending on the quack’s specialty). Assuming half of current premiums are litigation inflation, there is $32 billion in waste that could be instantly recovered if the trail lawyer’s didn’t have a lien on the Democrat party and Obama’s soul, which is actually quite handy since trial lawyers don’t have souls of their own. That is about $121 per currently insured person in America, or about what I pay a month for coverage. Not a lot of dough but a good place to start.

But let’s make a conservative assumption that unnecessary CYA medical tests double that, and would largely be eliminated by eliminating ambulance chasing (and by proxy eliminate John Edwards). We are now up to $242 per person, or nearly a grand per household, and it didn’t take one nickel of tax money, require a single government or force anybody to do anything against their will. You know, that whole American freedom thing.

Obama’s lack of understanding about economics is eclipsed by his ignorance in civics. He supports forcing you to buy insurance even it you do not want it (and patently fibbing that taxpayers are obligated to pick-up the cost of uninsured medical care) comparing that obligation to getting auto insurance. But you don’t need auto insurance if you don’t drive or if you pilot your ride on your own property. It is only when you as an individual venture onto publicly owned roads that you are required to be covered. Obama demands that you buy health insurance even if you are not indigent. His analogy lacks an analog.

There is much more of his canards to pick apart, but the game is too easy. His assertions are apocryphal, his schemes shaky and his governmental arrogance audacious. He is rapidly burying himself and his party …

Made I should stop. Wouldn’t want him to see his mistakes too soon.

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When should government reverse itself? Evidentially never (it was a trick question).

According to a few sources, about one half of one percent of Barack Obama’s so-called ‘stimulus’ plan has made its way to the streets. The odds that 0.5% of even a trillion dollars would have any effect on an economy that constitutes nearly 25% of world GDP … well, the odds are lower than congressional approval ratings or Paris Hilton’s kickers.

This should trouble the current and blessedly temporary administration. Subtle signs are emerging that the economy has bottomed out and is beginning a recover. Housing prices have stopped falling and in some markets have bounced upwards. New housing starts are rising. The stock market has leapt upwards in anticipation of a revival. Unemployment appears to be peaking.

Zero of this is due to government spending. Well, maybe not zero. Perhaps 0.5% of the recovery can be blamed on Obama.

It is no secret that government produces nothing once hot air, reneged promises and humorous scandals are discounted. It is the better half of the marriage of The People and government that does all the real work. The government as an entity would perish if the people simply declined to sell to the government, work for it, or pay taxes to it.

In short, the turning economic tide is due to 306,786,088 Americans adjusting their work, spending, savings and investments. As always, it works durn well.

Ignore for a moment that Obama’s ‘stimulus’ bill never was one. It was merely the largest patronage package ever emitted out of the sphincter know as The Beltway. Given that the economy is reversing and that almost none of Obama’s billions are being spent, the need for stimulus is gone or greatly diminished. For economic reasons there is no need for this trillion dollar deflowering of the American worker to continue.

Yet it will. Nobody with their hand in the public pocket, picking it to promote their party and patrons, will reverse course and end a stupidity in progress. Which will be Obama’s downfall he has little option in the aftermath of fiscal folly but to raise taxes, pump-up inflation and launch the ‘misery index’ to stratospheric levels. With his party in power pervasively, there will be no excuses … no Republicans to blame. The yoke will soon enough be his to wear.

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With Obama’s help I could be wearing a solid gold cast. That is what my share of $1.6 trillion dollars would buy.

Sadly, I am currently sporting a plain plaster variety, having cracked a fibular while in combat with a larger opponent. For all my martial arts training, it is irony personified that that I was broken during a light sparing session. A lesson to other roughnecks: never allow a larger opponent to stay in a head-to-head position where they can charge forward like a blind bull.

Like 85% of Americans, I have private health insurance. For whatever maladies Americans face, our capitalist system has assured that the vast majority of Homo sapiens roaming the American tundra and in the concrete canyons of our big cities have coverage. Contrast this with any third world country or Compton, where people are allowed to die in the streets, this accomplishment of capitalism is compelling.

This perspective is not discussed by Obama. Politicians avoid perspective because it has the nasty habit of preventing legislative larceny. Thus they rely on large, scary sounding numbers routinely amplified with words like ‘crisis’. Barack and other capital courtesans have of late been repeating the sound bite that ‘there are 45 million uninsured Americans.’

Obama’s cure costs a mere $1.6 trillion dollars.

(A brief aside. Long ago a sitting senator joked “A billion here, a billion there, and soon we’re talking real money.” In the last year we have routinely talked about trillions, thanks to a series of government interventions into non-catastrophes. Obama is capitalizing on our collective fiscal desensitization. After all, what’s a trillion dollars between friends and future serfs?)

A trillion and a half bucks is a big investment even by beltway budget standards. Since this is coming out of your pocket, it might be worth examining who these 45 million uninsured people are. You deserve to know – you are their financier (click the chart to get a bigger picture of the fraud de jour).

According to the Census Bureau, there is a little north of 300 million head of humans in The States. Subtract Obama’s alleged 45 million uninsured individuals and you can calculate that 85% have coverage. Various governments insure or repair roughly another 5% through existing programs like Medicare or through prison infirmaries (these estimates are based on government statistics concerning safety net healthcare programs and national incarceration rates).

There are also a significant number – about half – of young adults who can afford to buy insurance but opt not to. Young men and women have other priorities, namely stylish clothing and copious alcohol consumption. The alcohol is a primary tool to get other young adults to remove their stylish clothing.

As interesting as the mating habits of the young and inebriated may be, their uninsured status is completely voluntary. In California, one of the more expensive states in which to be insured, a twenty-something specimen in their vertical and clothed condition can walk into any insurance office and buy a major medical policy for $100 a month. Unclothed applicants might receive a discount. That young adult’s priorities are slightly misplaced is predictable, amusing but not a public policy issue.

This leaves about 5% American residents – as opposed to Americans – uninsured and not covered by existing government programs. This five percent is approximately 16 million mortals, which oddly enough is roughly the number of assumed illegal aliens in residence.

Divide a few of these numbers and you discover that over the ten year budget horizon, Obama plans to purchase insurance for structurally uninsured individuals at a rate of $833 per person per month, or about eight times the going commercial rate. Oddly this speaks well of Obama’s plan given most government run programs are not nearly this financially efficient.

Nobody is accusing Obama of trying to pick the national pocket to support and encourage illegal immigrants and immigration. We have to take Obama on his word the he intends to have the government underwrite 45 million folk. To do so would require insuring those who can afford it, effectively transforming independent and self-sufficient young citizens into a dependant class. Minting disciples among the young is an effective means to manufacture loyalty.

Just ask Nicolae Ceauşescu, though his final outcome was not entirely to his liking.

Let’s assume for a moment that the structurally uninsured could skim by on major medical coverage and that their rates are not much different than most middle aged men. Sixteen million mammals could be covered for the relatively low sum of $19 billion over a ten year stretch, or about 1% of what Obama wants to squander.

A trillion here, and a trillion there. Pretty soon we’re talking about Obama’s budget.

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California is quaking once again. In this instance it has nothing to do with plate tectonics.

California is like a functional drunk. It sips, then swills, then gulps, then passes out, waking and swearing off the juice until the next time. Government spending is California’s whiskey, and when the lush – also known as the state legislature – has sucked on the budgetary bottle too long, the state’s slightly more sober side kicks some collective rump.

Like any empire, California employees people to do its dirty work. The more employees, the larger the empire. Aside from having a lot of them, Cal state employees enjoy pay scales and benefits unknown outside of the Saudi royal family. Working for the State of Emergency is one of the best ways to not earn a living.

Yet like both drunks and empires, things tend to get out of control when unchecked. The Golden State grows in spurts like a teenager on steroids. When it grows too fast, the slightly more sober side kicks the collective’s posterior a bit harder.

California citizens instinctively feel when government has grown too big, and together they take corrective action and inaction. In the 1970’s the state grew to such Gulliver proportions that the people passed Proposition 13, restricting the flow of blood to the cancer called Sacramento. At that time the state was employing nearly one in every one hundred residents, and that doesn’t include the dozen or so illegal aliens each legislator kept on hand for personal hygiene purposes.

(click chart to enlarge)

A couple of decades after Howard Jarvis smite the state, and under the expert mismanagement of Gray Davis, California’s employee roles and budget ballooned yet again, retaining nearly one percent of the population for no discernable performance. Davis was summarily dismissed and replaced by an intellectual teenager on steroids.

Six years later the employee roles have expanded yet again, popping back above the seemingly magical one percent barrier, assisting the inevitable bankruptcy of the State of Disaster. The people revolted by denying the legislature’s request to raise taxes. Since California’s credit rating is slightly below Zimbabwe’s, there is little choice but to cut costs, and the obvious place is an over packed payroll.

The open question is if anyone in Sacto gets sacked as they should.

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