Tag: deficit

–Sabotaging health care

An alternative to popular faith

It has been a disgrace that the world’s leading, industrial nation, the proudest, most powerful nation in world history, has not provided health care for all its citizens.

Yes, I have voted more often for Republicans than for Democrats, because I felt they were better economists. But today I must give the Democrats credit for doing what is morally right, while taking the big political risk to start the ball rolling.

My Republicans, left to their own devices, would have done nothing. They never have been leaders for social improvements, whether Social Security, Medicaid, Medicare or human rights. While Republicans traditionally have been strong for business, they always have had to be dragged, kicking and screaming, into anything that smacks of human benefits for the less fortunate.

That said, the health care plan is far from ideal. Way too many questions to be answered. Consider it only a start, a prototype; you can expect hundreds of changes. My only hope is that the nay-sayers will not try to gut the bill for political advantage.

The question is, and always has been, who will pay for it? I believe the federal government should, and there exists massive evidence on this blog and elsewhere, to prove the government can afford huge deficit increases that will stimulate the economy, and without inflation.

But what if, despite all the evidence, taxes are increased? Economically, a bad idea, no matter what taxes they are. But, which Americans are willing to say, “I’ve got mine and I’m not willing to help those less fortunate than me?” If that’s your attitude, you’re not really an American, although ironically, it seems those who boast loudest about their patriotism often are least likely to extend a hand.

Now we need to see how the program can be improved for the benefit of all. We’ve taken two hundred years to get this far, because that first step always is the hardest. My Republicans, by trying to do everything to sabotage the plan, are on the wrong side of history.

I say now is the time to work with the plan, not against it. Our best minds, cooperating toward on goal, can make the improvements that will protect Americans for decades.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

–Health care: The tragic misunderstanding

An alternative to popular faith

On March 20, the Wall Street Journal’s editorial, “The ObamaCare Crosswords” said, “The Congressional Budget Office estimates ObamaCare will cost taxpayers $200 billion per year when fully implemented and grow annually at 8% . . . Soon the public will reach its taxing limit . . . medicine will be rationed by politics. . . “

On March 22nd, the Chicago Tribune editorialized, “The health care reform legislation would raise, not lower, federal deficits by $562 billion . . .(there is time) to craft a more sensible compromise that extends health care coverage to more people without breaking the bank.”

Which bank? Do you mean the federal government, which has increased its debt in the past 30 years an astounding 1,400%, from $800 billion to $12 trillion, yet never has had, and never will have, any difficulty whatsoever in servicing its debt? Or do you mean the taxpayers, already suffering, but whom debt hawks will require to send additional money to a federal government that neither uses nor needs the money?

The Tribune’s solution: “Our choice would require insurers to take all comers but give them a big new customer base: American who now don’t have health coverage but who don’t need an overhaul this expensive in order to get it.” And who are these Americans? They fall into two main categories: Lower income people who can’t afford health insurance and people who have pre-existing health problems.

To assist the former would require insurers to lower rates, thus increasing premiums for everyone else. To cover the later would require insurers to accept greater risk and provide greater payouts, thus again increasing premiums for everyone else.

The strange belief that a federal government, which repeatedly demonstrates it has the unlimited ability to create money without inflation, suddenly would have difficulty servicing additional debt, has caused otherwise intelligent people to lose their ability to reason. Though our government continuously has proved it can service a debt of any size, taxpayers are limited in what they can service. So, why do respected media editors prefer tax increases to federal debt increases, especially when increasing federal debt stimulates the economy?

Contrary to media demagoguery and popular faith, taxpayers do not pay for federal spending. When the government spends, it merely reaches out and credits the bank accounts of its creditors. There is no limit to the government’s ability to activate these credits, which are not in any way affected by tax receipts. If all federal taxes were eliminated today, the federal government’s future ability to spend would not change by even one penny.

The confusion comes because the federal government is unlike you, me, companies and state, county and local governments. We all must obtain money to spend money, and we are limited in our ability to obtain money. By contrast, the federal government creates money out of thin air, with no limits. Taxpayers are not involved in the process.

Astute politicians are aware of the disconnect between taxes and spending, which is why Vice President Cheney, in an unguarded moment, famously said, “Deficits don’t matter.” But politicians, knowing the public believes taxes pay for spending, and not wanting to appear imprudent, go along with the myth.

We could have a health care program in which doctors, nurses and hospitals are well paid, pharmaceutical companies are incented to create new drugs, and all Americans receive optimum health care. Instead, wrong-headed budget concerns have taken precedence over human health concerns, leaving us with a crazy-quilt, inadequate health care bill.

The current plan is to take money from Medicare, from doctors, nurses and hospitals, from employers and from those who currently pay for health insurance. What a terrible, unnecessary human tragedy we have created, all because of ignorance about federal budgets.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

–How to cure federal tax loopholes

An alternative to popular faith

The March 15, 2010 New Yorker Magazine contained a piece by Mr. James Suroweicki titled “Special Interest.” The article described a quirk of federal tax law in which private-equity fund managers pay taxes on their share of profits (also known as “carried interest”) at the capital gains rate. Mr. Surowiecki says, “If you manage money for a mutual fund or a public company, you pay regular income taxes; do it for a private fund and you pay capital gains.”

Because capital gains are taxed at a lower rate than regular income, Mr. Suroweicki feels this “loophole” is unfair and should be closed. He probably is right, though his solution is maddeningly typical and wholly wrong. He would close this “loophole” by doing away with the tax break, i.e. increasing the tax on carried interest.

Nowhere does Mr. Suroweicki suggest decreasing the regular income tax, though that step equally would close his hated “loophole,” while additionally providing a tax-relief benefit to the public. Instead he follows the popular faith that all our money really belongs to the government, and should any group find a way to send less than others to the government, the solution is to make them pay more, rather than allowing us to pay less.

The very word “loophole” has pejorative connotations: something that begs to be sealed up. Why can’t the carried interest tax rate be considered the “normal” tax, while the regular tax rates are considered the anomaly. Why must every perceived unfairness in taxes be cured by raising a tax rather than by lowering one?

The federal government does not use tax money to pay its bills. It, in fact, destroys all the tax money sent to it, and it creates new money when it credits the bank accounts of creditors. Federal spending is not limited by federal taxes. When your neighbor finds a way to pay less, this does not increase your own tax burden (though the same cannot be said for state and local taxes, as these entities do not have the unlimited ability to create money).

Yes, there is the pathological, human jealousy the have-nots hold for the haves. But, something more harmful exists: The false beliefs that we are the government, anything taken from the government comes from us, and anything given to the government benefits us.

We are not the government. We pay taxes; the government receives taxes. We are limited in our ability to spend; the government is not. We live, lust, feel, fight, work, worry, conceive and care for children. We dream of the future, but eventually we die. The government does none of these things.

It is a giant machine, a remorseless, monster grinder, only more powerful, because it has the unlimited ability to create its own fuel. Some of us fall into the grinder and lose an arm or a leg. Others escape. Mr. Surowiecki would call that escape a “loophole.” His solution: Close that “loophole” by making sure everyone loses and arm and a leg.

How about making sure no one loses and arm and a leg. How about cutting taxes to address unfairness. Has anyone ever thought of that?

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

–The bottom line on health care insurance

An alternative to popular faith

Despite all the claims and counter-claims, here are the facts about the proposed universal health insurance plan, whatever the specifics:

1. It will cover more people than now are covered by health insurance

2. It will lower rates for people who now pay high rates because of pre-existing conditions.

3. Therefore, the plan will cost money. No sleight-of-hand, no accounting tricks, can change that.

4. Trying to reduce costs by cutting pay to doctors, hospitals and pharmaceutical companies will reduce the number of doctors and hospitals and the amount of drug research – a self defeating idea.

5. Raising taxes also is a bad idea. History shows that higher taxes impede economic growth, while lower taxes stimulate it.

6. Put them all together – higher costs, no tax increases, no penalizing doctors, hospitals and pharmaceutical companies – and what is left? Federal deficit spending.

7. Increased federal deficits (unlike state, county, city, corporate and personal deficits) are infinitely sustainable, because the government has the unlimited ability to create the money to pay its bills. Despite massive deficit growth, no federal check ever has, or ever will, bounce.

8. Federal money creation has not caused inflation. In the past 50 years, the three years of greatest deficit spending – 1976, 1983 and 2009 – resulted in reduced inflation. Data indicates inflation is the result of oil prices, not federal spending

In summary, we should worry more about coverage than cost. To improve the lives of Americans (Isn’t that what this is all about?), the federal government should pay for the best possible health care insurance, and not spend endless hours trying to use magic to balance an unbalanceable budget.

Rodger Malcolm Mitchell