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Myths Exposed: President Obama is Responsible for Historic U.S. Federal Debt and Spending Levels

The far right in the U.S. has been desperately trying to convince the electorate that President Obama is spending the U.S. into oblivion and driving up the debt.

Here are the facts…

The Washington Post and Center on Budget and Policy Priorities compiled this chart:

This chart shows the debt directly attributed to President Bush and President Obama. Much of the recent debt came from the Bush tax cuts.

Let’s look into the debt further…

This blog post states the following:

During 20 years of the presidencies of Reagan, Bush I and Bush II, the federal debt as a share of GDP increased by a cumulative 43% of GDP. During the 4 first years of the Obama presidency, it has increased by 36% of GDP.

This is how the Presidents rank in terms of development of the Debt/GDP ratio per year of tenure:

1. Clinton -1% per year
2. Reagan, Bush II: +2% per year
3. Bush I: +3% per year
4. Obama: +9% per year.

This following data comes from this (xls) Office of Management and Budget (OMB) source:

I re-plotted the data since, you could say, I have trust issues on the internet. It is similar to the data in the post.

The following is “The Budget and Economic Outlook: Fiscal Years 2012 to 2022” from the Congressional Budget Office.

What the blog post above did not state is that the historical years since the Bush tax cuts and the recession that started prior to President Obama taking office, have been the major contributors to the rise in spending as a percentage of GDP. Also, the future years the OMB graph shows is a worst case scenario that includes the CBO Alternative Fiscal Scenario which assumes the Bush tax cuts are extended. President Obama did not create the recession, he inherited it. The Bush tax cuts were not enacted into law by President Obama. It is a lie to blame the recession and the Bush tax cuts on President Obama.

Let’s dig down a little more.

This following is historical and projected outlays from The Office and Management Budget by agency. Outlays are the total amount of money spent including authority from prior years that obligates outlays in the current year. The source data from the following charts comes from this (xls) OMB data. The data lines and the legend descriptions are in the same order. My graphics file can be downloaded here (xls). This chart shows that the Federal debt has accumulated from previous years going back to 1962.

OUTLAYS BY AGENCY: 1962–2017

(in millions of dollars)

This chart shows that the Federal debt has accumulated from previous years going back to 2000.

OUTLAYS BY AGENCY: 2000–2017

(in millions of dollars)

There is no huge increase in spending starting in 2009 when President Obama was inaugurated. The estimates include the Affordable Care Act. The chart shows that all the major increases in spending started ramping up more quickly in the decade of 2000. The spending is chiefly in the Department of Health and Human Services, Social Security Administration (off-budget), Department of Treasury and the Department of Defense (Military Programs). The Department of Health and Human Services increase comes chiefly from the middle class falling closer towards the federal poverty level as discussed below in more detail. The Social Security Administration increases have to do with baby boomers getting older and rising health care costs. The Treasury Department increases come basically from paying interest on the national debt by financing it with government bonds. The Department of Defense increases have to do with the wars in Iraq and Afghanistan and the costs of gearing up for war. It is interesting to note that the U.S. spends 41% of the world’s total military expenditure. China, the next highest in the world’s total military expenditure, only spends 8.2% (see this).

The baseline scenario in the graph below shows current law and the effect of continuing certain programs that are scheduled to expire.

If you really want to raise the debt go ahead and repeal the Affordable Care Act according to the Center for Medicare and Medicaid Service (CMS) according to this publication:

Mandatory budget items are not optional year to year. It takes an act of Congress to change a mandated budget item. These requirements were made by Republicans and Democrats over the years. President Obama did not create the vast majority of mandatory budget requirements. The Affordable Care Act is mandatory but as already shown will lower the debt unless it is repealed. Discretionary budget items are voted on each year by Congress in 13 appropriations bills. Here is a chart showing mandatory and discretionary spending for 2010:

Mandatory and discretionary budget items are further explained in this:

Discretionary spending is provided in, and controlled by, annual appropriations acts, which fund many of the routine activities commonly associated with such federal government functions as running executive branch agencies, congressional offices and agencies, and international operations of the government.1 Essentially all spending on federal wages and salaries is discretionary.

Discretionary spending is often contrasted with mandatory, or direct, spending. Mandatory spending includes federal spending on entitlement programs, the Supplemental Nutrition Assistance Program (formerly known as the Food Stamps program), and other spending controlled by laws other than appropriation acts.3 Spending levels for mandatory programs are generally controlled by eligibility criteria and size of the eligible population.

Mandatory budget items have gone up for some time now as this chart shows:

The recession which certainly preceded President Obama has resulted in many more people qualifying for entitlement benefits. President Obama did not change qualification requirements for these programs. As more people fell towards the federal poverty level, more people have received government benefits. This is shown by the Census Bureau and an article in the Wall Street Journal:

All of this data supports the conclusion that President Obama has acted very responsibly in view of the economic catastrophe he inherited. The far right is spinning yet another myth.

Links for further reading:

http://blogs.wsj.com/economics/2012/05/26/number-of-the-week-half-of-u-s-lives-in-household-getting-benefits/

http://useconomy.about.com/od/fiscalpolicy/p/Mandatory.htm

http://useconomy.about.com/od/fiscalpolicy/tp/US_Federal_Budget.htm

http://www.whitehouse.gov/omb/budget/historicals/

http://useconomy.about.com/od/healthcarereform/f/Patient-Affordable-Care-Act.htm

http://useconomy.about.com/od/candidatesandtheeconomy/f/Healthcare_Reform_and_Budget.htm

http://super-economy.blogspot.com.au/2011/08/obama-hockey-stick.html

http://super-economy.blogspot.com.au/2011/12/american-federal-debt.html

http://www.cbo.gov/publication/21203

http://www.washingtonpost.com/business/economy/adding-to-the-deficit-bush-vs-obama/2012/01/31/gIQAQ0kFgQ_graphic.html

http://www.cbpp.org/research/index.cfm?fa=topic&id=121

http://www.gao.gov/special.pubs/longterm/pdfs/spring2012_update_slides.pdf

http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/108xx/doc10871/01-26-outlook.pdf

http://www.nytimes.com/packages/html/newsgraphics/2011/0119-budget/index.html

http://www.kaiserhealthnews.org/Stories/2011/February/14/President-Obama-Proposed-HHS-Budget-2012.aspx

http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/health.pdf

http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/downloads/HR3200_2009-10-21.pdf

http://www.cbpp.org/cms/index.cfm?fa=view&id=3450

http://www.cbp.org/documents/120224_CalWORKs_KeyFacts.pdf

http://www.nytimes.com/2012/04/08/us/welfare-limits-left-poor-adrift-as-recession-hit.html?pagewanted=all

http://www.kff.org/medicaid/upload/7985.pdf

http://www.ssa.gov/history/BudgetTreatment.html

http://www.epi.org/publication/bp156/

http://www.socialsecurity.gov/history/InternetMyths.html

http://www.nytimes.com/2009/05/13/us/politics/13health.html

http://www.usgovernmentspending.com/year_spending_2012USbn_13bs1n_3031#usgs302

http://www.globalissues.org/article/75/world-military-spending

Fundamentalism in Market Economy: The Austrian School and the Problem of Suffering

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This is the next part in a series on the Austrian school of economics. The previous part is here.

Thus, when critics direct their efforts against the Austrian School they frequently do so within their own analytical framework, which is completely inadequate to accurately interpret the Austrian contributions to the science. They attack part of the theory without realizing that the various parts that make up the Austrian understanding of the market process are all interconnected within the “whole.”

There is a tendency toward the uniformity of profit and prices, both geographically and intertemporally. This tendency is interrupted by the dynamic nature of the market, due both to changing preferences and to technological progress, as well as any permanent cost inequalities, such as differences in the cost of transportation over varying distances. (Catalan, The Foremost Austrian Contribution to Economic Science, 2011)

The consequences of government spending can only be properly assessed within the framework of market coordination. If socialized investment is truly warranted, then the results of the investment must be better than the result that would have occurred had those same resources been economized by individuals on the market.

In other words, the government’s method of deciding on investments would either have to enjoy the same characteristics as the market’s, and the government a better entrepreneur, or the government’s method would itself have to be in some way superior. We can rule out the latter option on the grounds that we know that the only method of economic calculation is by individuals through the pricing process. Therefore, government investment is inherently inferior to free-market investment.

Individuals economize resources based on their own preferences and their own ends and based on the expected preferences of others, which are partly reflected through the price mechanism and oftentimes predicted through other means of information as well. Even producers of capital goods removed from the final consumer by one or more phases derive their profits from consumer satisfaction, since the demand for their products is decided by the entrepreneurs who are directly supplying the consumer. (Catalan, 2011)

It seems that in the Austrian School, there appears to be a kind of social myopia that refuses to acknowledge that the free market in its purest, non-government interventionist form could be the source of human suffering. They exhibit a kind of myopic belief that the unfettered market will best solve deficiencies which result in human suffering. The myopia comes in when the temporal aspect of the market is considered. Even if the market is the most efficient means for solving deficiencies in real need such as shelter, clothing, health care, etc. what is meant and governed by ‘efficiency’ needs to be made explicit. From my reading, the Austrian School’s notion of efficiency is thought and governed by the lowest possible market pricing. This is very reminiscent of Adam Smith:

“The price of monopoly is upon every occasion the highest that can be got. The natural price, or the price of free competition, on the contrary, is the lowest which can be taken, not upon every occasion indeed, but for any considerable time together. The one is…the highest which can be squeezed out of the buyers…The other is the lowest which the sellers can commonly afford to take…. The monopoly price is most often sustained by “the exclusive privileges of corporations (65)” (Smith, 1776)

The Austrian School believes that the government acts as a monopoly. I have yet to find writings about how that market itself can generate monopolies without government involvement as Adam Smith believed. It would be interesting to find their position on market monopolies that do not involve the government and central banking. In any case, the myopia seems to stem from their fascination with free market pricing as the lowest possible and thus, the most efficient. What is lacking when market pricing governs that equation is the temporal aspect of the pricing mechanism.

Human need is certainly addressed by pricing and availability but it is also essentially related to a critical temporal window wherein pricing and availability themselves become relevant. If pricing and availability are thought in a-temporal terms then, human need gets addressed in whatever time frame the market dictates. This time frame has no direct obligation to interim suffering and death. Of course, the point could be made that given enough suffering and death while waiting for pricing and availability to meet demand, the market would eventually answer the call. However, the gap in time to meet the need and ongoing suffering appears to have no place in market fundamentalism.

If the government is analyzed from the perspective of pure investment only, the Austrians make the point:

Overall, we can safely conclude that government spending causes more harm than good; it redistributes the means of production toward the attainment of ends considered inferior by the individuals who make up the society that government is allegedly acting to improve. (Catalan, 2011)

However, the ‘overall’ pronouncement blindly assumes that government spending is only about investment. This assumption completely leaves aside the possibility that government spending may also occur in order to address needs that the market has not yet found a pricing solution for but must be addressed immediately to stop human suffering which cannot wait. While any government spending could be analyzed as an ‘investment’ and its effects on the economy, there are clearly times when that analysis must be put aside for more immediate concerns. War is one case in which market pricing is irrelevant to action. If a war is considered just, it implies that the justification for war is to stop human suffering that cannot wait for the market to decide. It may be the suffering of non-citizens or the defense of the country which implies the suffering of citizens. In any case, war is a situation where government spending gets a reprieve from a strict market analysis. Likewise, other immediate needs that trump market analysis have traditionally been issues surrounding food, shelter and health care. In 1986 Ronald Reagan, certainly a free market Republican of sorts, enacted the Emergency Medical Treatment & Labor Act which required hospitals “to ensure public access to emergency services regardless of ability to pay”. There is no discussion here of emergency rooms waiting for the market to decide. These examples circumscribe bounds of government spending that cannot simply be constrained to a market investment analysis.

In light of pressing human needs that cannot wait for the appropriate market response, it would be really interesting to hear from the Austrians on what their solution would be. Would Austrians push their market analysis to the point that would prohibit ANY government intervention in these kinds of ‘extraneous’ issues and instead, advocate waiting for market solutions? Would their analysis allow government intervention in case of war but none other? It seems to me that the silence has always been deafening with fundamentalist free market advocates. It is like pulling teeth to get them to concede any of these exceptions. They seem to approach it like a slippery slope argument where one concession means the whole abnegation of free market capitalism. This kind of silent treatment gives the impression of unreasonableness. It looks as if they would protect market dynamics over pressing human needs. It is understandable how this myopia can be taken as a protection mechanism for those that do not have immediate needs at the cost of those that do have immediate needs. This is a very ugly portrayal that gets its life from the silence of fundamentalists, free market advocates. It seems to me that there are two possible reasons for their deafening silence. If they are pressed into silence because their answer would not even be palatable to them, they demonstrate a self-defeating ideology that can only succeed under the cover of denial, secrecy and elitism. If they lack the courage to address the issues of immediate human need at the risk of their fundamentalist, market certainty, they appear to ignore human suffering in favor of unmediated fanaticism. It seems to me that this kind of market conservatism is a definite and discrete step away from the older conservatives that would not force their ideological purity this far.

As I mentioned in the note to the last part of this series, the system of Austrian economics seems to derive its essence from a continual and circular deferral. It functions as a whole or nothing at all. Any criticism must be deflected by deferring to the whole. Its telos, its completion is never piecemeal but integral to the entire system. As mentioned at the top, “various parts that make up the Austrian understanding of the market process are all interconnected within the “whole.”” This reminds me of Hegel’s Logic where Hegel states:

Each of the parts of philosophy is a philosophical whole, a circle rounded and complete in itself. In each of these parts, however, the philosophical Idea is found in a particular specificality or medium. The single circle, because it is a real totality, bursts through the limits imposed by its special medium, and gives rise to a wider circle. The whole of philosophy in this way resembles a circle of circles. The Idea appears in each single circle, but, at the same time, the whole Idea is constituted by the system of these peculiar phases, and each is a necessary member of the organisation. (Hegel, 2010), Part 1, Section 15

Philosophy misses an advantage enjoyed by the other sciences. It cannot like them rest the existence of its objects on the natural admissions of consciousness, nor can it assume that its method of cognition, either for starting or for continuing, is one already accepted. The objects of philosophy, it is true, are upon the whole the same as those of religion. In both the object is Truth, in that supreme sense in which God and God only is the Truth. (Hegel, 2010), Part 1, Section 1

Further, the refutation must not come from outside, that is, it must not proceed from assumptions lying outside the system in question and inconsistent with it. The system need only refuse to recognise those assumptions; the defect is a defect only for him who starts from the requirements and demands based on those assumptions. (Hegel, 2010), Part 5, Section 1288

Likewise, the circular and self-correcting fundamentalist, mechanism of the Austrian, free market seems to depend on the whole that cannot be criticized individually and only on its own terms. There isn’t much daylight between this and what is commonly called ‘dogma’.

Catalan, J. M. (2011, March 31). Government Spending Is Bad Economics. Mises Daily .

Catalan, J. M. (2011, January 06). The Foremost Austrian Contribution to Economic Science. Mises Daily .

Hegel, G. (2010). Science of Logic. Cambridge, UK: Cambridge University Press.

Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. London: Methuen and Co., Ltd.

A Thought Experiment with God’s Particle

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I have been trying to understand what all the fuss is about with the Higgs-Boson. In college, my Electrical Engineering curriculum did include three classes in physics and three classes in calculus. However, this has not been of much use to me with my research into the Higgs field. The lay person’s articles I have read try to use metaphors but I have found them a bit trite so I thought I would take a whack at it with my own thought experiment. If you are a serious minded person I would advise you not to read this as, at best, it is probably a geeky, feeble attempt at entertainment so save yourself the aggravation.

Let’s suppose there is a bubble. This bubble is not anywhere or at any time since the bubble itself creates time and space. For old times’ sake, let’s suppose this bubble is called ether. The ether is not consistent through the entire bubble. It has irregular pockets of more concentrated ether, less concentrated ether and even pockets of no ether at all. The ether is a very odd substance. It can be very different depending on what you are. It can be quite sticky and gooey or it can be quite thin like air or like the vacuum of empty space or even not noticeable at all depending on who you are. Let’s suppose you are moving infinitely fast. You would not see the ether at all and nothing in the ether would see you. You would have no footprint in the ether, no mass, and no noticeable effect whatsoever. From someone’s perspective in the ether, you would not exist; you would be nothing. From your perspective, the ether would be totally unified in everything else that you saw. Any and all forces in the ether or outside the ether would be unified, the same force. We could say that everything was totally symmetrical, super-symmetry. Of course, an observer in the ether would see various forces. Perhaps the observer in the ether might have an intuition of the nothing outside of the ether but it would only be at best a hunch with absolutely no objective evidence.

Now, suppose you could slow down enough so that the ether barely existed for you, a bit like the vacuum of space. At this point, the perfect symmetry you were in would be broken by the bare existence of the ether. Suppose you were still going fast enough so that the ether offered no resistance to you but there was a bare distortion of the time and space in the space you were in. However, remember that the ether is not uniform and consistent in the bubble. Therefore, whenever you contacted more sparse ether or none at all, the minimal distortion of time and space of the ether would disappear and you would be going infinitely fast again. The distortion of the ether would have an effect on anything in its reach. However, since you a traveling through pockets of sparse ether or not ether the minimal distortion of time and space would be effected. Since the lack of ether you moved into was nothing, the ether could not follow you into nothing. No trail of ether into the nothing that you entered could be seen from inside the ether since ether cannot be ‘in’ nothing. You would look like the starship Enterprise going into warp drive as you entered the boundary of the nothing, hyperspace or better yet hyper-inflation [big bang]. What someone inside the ether would see of you would look like a hole, not even a dark hole, just a hole. Now let’s suppose you had a whole lot of friends doing the same thing you were doing. Someone inside the ether might look at you and your friends and see something like holes but without darkness in the hole merely many distorted pockets of time and space that effected things in the ether. The holes would have no color that could distinguish it. The observer would just see the uniform color of the ether at its boundary. The only way the observer might notice the holes would be to detect odd behavior around the holes. They might call this odd behavior dark energy. It would be noticeable because it would not attract anything in the ether into the hole but repel everything away from the hole. Since things can only exist in the ether, things would be pushed away from the lack of ether. It might even have a counter effect to big objects that sink into puddles of ether and pull things behind them such that it would oppose this attraction and keep things in relative equilibrium so something massive would not pull the universe into the miry ether bog along with it.

Now, let’s suppose you slowed down more so that as you moved through the ether, the ether acted more like air. You would make air waves of sorts as you transverse through the ether. These waves would be more severe distortions of time and space. However, while the ether boundary reacted to your motion with waves, these waves do not act like normal waves. Because you were still moving very fast, much faster than 186,282 miles per second, you would look from inside the ether as if you were accelerating if you could be seen [which you can’t]. The waves or more severe distortions of time and space would not be equally spaced as they reached the boundary of the ether, sort of like a shore, they would catch up to each other as they neared the shore. However, the observer in the ether could not see this. What the observer can see is the shore, the boundary of the ether, where all the incoming very odd waves would finally converge and reinforce each other’s wave amplitudes infinitely such that they would appear to actually stop just at the ether boundary. Because you looked like you were accelerating from someone observing within the ether, the effect of this would be to allow the waves to catch up to each other and pile up from your motion at the ether boundary. The piling up of ether waves at the boundary would not have any mass at your current speed only severe distortions of time and space. It would be limited by the ether to 186,282 miles per second at the boundary. If someone were watching this from within the ether it would look like light. The wave would be time and it would be stopped at the boundary, the speed of light, but started again as the wave slowed more and moved toward the observer in the ether.

Now, let’s suppose that you slowed down even more while still moving faster than the speed of light. However, now infinitesimally small waves would crest over the light barrier and make tiny ripples in the ether that an observer in the ether could detect. These tiny ripples showed up as very small amounts of mass. To the observer in the ether, the mass would look like a particle or a wave depending on what the observer was looking for but, this is weird so let’s take a step back. Remember that you have a whole lot of your friends doing the same thing as you are doing. This means that all these spillover waves are clashing into each other producing a very frothy, bubbly mix of ether waves. Since some of your friends are shaped differently than you, the infinitesimally small, spillover waves would have different masses, shapes, spins, colors, strange characteristics, etc. as they chaotically crash into each other. Let’s say that you and your friends were really string shaped. The strange little masses that resulted from your slower speed waves in the ether might be perceived as a little piece of the string. The observer in the ether might think the resultant wave was a very tiny, sub-atomic particle like a quark or a lepton. Of course, you would know that you were not a tiny dot. You would know that the tiny particle representation of you that the observer saw was really only one little, tiny part of the string that you were. However, the observer in the ether could not see outside of the ether, outside of time and space so the observer would just think you and your friends were just tiny dots the observer called particles, tiny masses moving with momentum through the ether.

Let’s also say that you and your friends went right through the more dense part of the ether so that the observer would only see tiny particles come into and out of the ether existence. The observer would think that these tiny particles were rather quirky and random. However, let’s suppose some of your friends that had other shapes and sizes got stuck in the ether. Your stringy friends might get stuck at their ends or in the middle somewhere. They may even get stuck in two places so that the observer would see two dots or particles that appeared to be entangled with each other. The observer would see that whatever happened to one particle would instantly happen to the other particle even if the particles where on opposite sides of the ether universe. Whatever happened to one particle would happen to the other particle much faster than the speed of light. If your string friend was spinning one direction, the observer would see one particle spin clockwise and the other particle spin counter clockwise from the same string. If the observer changed the spin of one particle, the spin of the other particle would instantly change direction. If one particle was annihilated, the other particle would also instantly be annihilated. What the heck? They must be part of the same thing even though they look like two or more different things to the observer. If the observer looked for the tiny mass being moved around with momentum the observer would see it. However, if the observer was trying to see the waves in the frothy, gurgle of ether they could see the waves produced by you and your friends but the particle mass moving with momentum could not be observed at the same time. It is almost as the ether ‘knew’ what you were looking for and gave it to you. This would be one of those goofy characteristics of the ether. Some have even suggested that there might be other ether bubbles that behave very different from the ether in the observer’s bubble that you and your friends, these strings, might also move through…weird, huh? They call them parallel universes.

Now, remember the holes, the dark energy? What if our string friends that the observer sees as dot particles that punctuate the ether does something odd at the boundary of the more dense ether and the less dense ether. What if the strings, hyper-accelerated at the boundary where the ether gets thin or there are pockets of no ether, invert the mass the observer sees of the particle into a negative mass? In other words, instead of a tiny portion of the waves spilling over into the observer’s ether, the inability of the wave to spill back over into the nothing would create a kind of mass hole, a mass that is not positive but negative. Negative mass would be the trail of hyper-expansion just before the string particle passes out of existence at the boundary of the ether. The negative mass might repel rather attract inside the ether. Positive mass in the ether is an attractive force. Perhaps we could call this negative mass ‘dark mass’? Perhaps the dark mass would look like scaffolds, a trellis that the vine of the universe grows on, because it demarcates the thinning of the ether and even the lack of the ether at the pockets of nothingness.

The ether also has some other odd behavior. Remember the waves that created time and space? Let’s suppose that nothing could ever be lost in the ether, no information could ever be lost. Therefore, everything that had ever happed was still stored somehow in the ether. Now, let’s say that the ether had the very odd effect of only allowing some waves to combine. Remember that all your string friends have different shapes and sizes that result in waves with different masses, shapes, spins, colors, strange characteristics in the ether. Well, the ether has this strange but very specific ability to let certain very exact and particular waves combine to form combinational sub-atomic particles. Once combined, the ether might allow some of these combinational sub-atomic particles combine to make ever bigger particles called atoms. Moreover, atoms could also combine to form things; things like stars, planets, galaxies, animals, humans, trees, rocks…you know. Perhaps one way to understand the way the ether does this is to think about cells and viruses. Cells have keyholes that only very specific viruses have the key to open. If there is a key/keyhole match the virus is allowed to combine with the cell. What makes them combine?…a force. Different forces are also part of the key/keyhole match. Some particles are held together with very strong forces while others are held together with weaker forces. As things get bigger from quirky sub-atomic particles to atoms to very large things like solar systems different forces act on the different bodies with attractions that are electric and magnetic and also repulsive as when opposites do not attract. As bodies get really large the very large masses settle into the ether and make massive ruts and bogs in the ether that smaller masses tend to fall towards with an attraction that is absolutely gravitational. However, since everything is wanting to move where its own momentum is moving it, some bodies such as planets may not fall directly into the very large mass but circle around them as planets around a sun or moons around a planet. Of course, since ether is wacky by definition some masses are so extremely large that they poke a hole in the ether and other masses fall right into them like a nasty black hole. They might go out of existence as defined by the ether and into nothing.

In any case, forces are not some spooky action at a distance but might have very little, tiny sub-atomic carrier particles that carry the force through the frothy, gurgly mix of ether. The forces and their carriers are also part of the key/keyhole that helps things combine or keeps them apart. For example, cooper atoms have particles called electrons in shells. In the most outer shells electrons are held together with a weak force so they are easily knocked out of the shell. In a cooper wire, the electrons can be knocked out with an electric of magnetic field at one end of the wire. The electrons bump into atoms further in the wire and knock out their electrons. A chain reaction is setup that propagates all the way through the wire at a very high speed. This is called current. All forces are thought to have carrier particles that allow forces to move through the ether. Even the ether is thought to have carrier particles. The carrier particles are called the Higgs-Boson. When these odd combinational waves in the ether break down, masses become energy. When the waves combine, energy becomes masses.

Ok, remember that the ether remembers ALL. Let’s say that the observer in the ether has partially discovered how to decipher some of the information in the ether. The observer has figured out that by looking back to the beginning of the memory, very far out into space, towards the beginning of the universe, the observer can see forces merging into each other. As the observer looks into the stored memory, the observer sees that the way key and keyholes worked to combine things changed with the way forces changed as they combined with each other. Very odd things like quasars that could never exist in the observer’s time were massive accumulations of particles and energy that could not exist in the observer’s time or space. Even further back, some kind of particle plasma made spooky shapes sort of like the Northern Lights. Even further back some empty space where the ether was super concentrated seemed to propel everything out in hyper-expansion from a single point. Some have called this point a big bang but since no one was around to hear it…well, you know. In any case, remember the beginning of this silliness? Remember, “Any and all forces in the ether or outside the ether would be unified, the same force. We could say that everything was totally symmetrical, super-symmetry”? Well, that is where we started, isn’t it?

God and Other

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Since, as humans, we are composed of atoms and star dust it may be that we have a bare hunch, a non-specific intuition, about the limit of time and space, the end of reason, perhaps as Heidegger might suggest, death as the possibility of the absolute impossibility of me. The notion of me as limited gives way to a kind of feeling of existential suspension, of an ‘other’ to me, to mine, to all. Let’s suppose that this feeling or vague awareness provides a sort of blank field for humans, a tabula rasa, that calls for content, a projection onto nothingness. For some that content could be God. For others it could simply be natural end. For others it could be angst. In any case, this field lends itself to a kind of volitional creation, Desire for the eternal, filling the gap, personal responsibility for one’s ultimate meaning. Faith, as thought by the religious person, might be the positive projection in this void that wishes to hope in their notion of absolute meaning as eternal life, the Good, perfection, love, etc. In any case, the ability to project without any basis, any logic, and any rationality certainly opens the way for error and the inability to be able to understand, to know with absolute certainty, to know that we do not know; yet, to live in this projection as if it is. This is a hypothetical that gathers up more than just logic or truth propositions but essential meaning. However, another aspect of this personal dynamic is how it works for communities, how we are as together with others. A fundamental transformation from the personal to the communal takes place that displaces the personal projection into this active nothingness. A kind of attributed certainty that is not felt in the strict personal Desire acquires a kind of momentum of its own that displaces the bare standing before one’s end. This certainty with others is a kind of diversion from the bare me, the recognition of the not-me…the other. The feeling of the question of essential meaning gets filled in with an answer, a Logic. Even if the Logic addresses existential Desire, it can lose the impact that is rooted in my inability to be able to finally ground me, to identify apodictically with absolute certainty. This homelessness cannot be overcome with Logic but always remains a gap. In this gap the face of the other is brought back once more without my certainties, my schemes, my logic. For Emmanuel Levinas this is what opens up, each time, the possibility for Ethics.

Fundamentalism in Market Economy: The Austrian School

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This is the next part in a series on the Austrian school of economics. The previous part was here.

The previous discussion comes more from a philosophical orientation. I do believe that philosophy does not follow theoria but precedes it as a necessary and determining factor. However, a philosophical argument of this type should not stand on its own but should be obligated to demonstrate how the enactment participates in the philosophical paradigm. To this end, I will begin a series of discussions that will deal with specific Austrian economic literature and issues. This is the first of that series…

On ‘savings’ and loans Jonathan Catalan, and Austrian economist states:

Production is derived from consumer preference. The explanation of the price mechanism above, however, simply assumes that the entrepreneur commands the necessary capital to invest and meet consumer desires. It is important to bear in mind that this capital, and the capital goods (producers’ goods) that it represents, does not simply appear ex nihilo; rather, it is the product of prior accumulation (savings). Savings can only be described as consumption deferred to an unknown future point in time, allowing temporary use of said capital for investment.

…

What triggers the revelation of this incomplete investment, oftentimes described as “malinvestment,”[40] is a consequent rise in the price of consumer goods relative to capital goods. That capital deepening did not come at the expense of consumer demand but instead was made possible by an artificial increase in loanable funds, suggesting that the initial fall in the price of consumer goods that should have otherwise taken place did not actually occur. Consumer-goods prices will also rise as a factor of an increase in the price of labor, a product of an increase in the demand for labor as a factor of production, and as a result of a possible diminishing in the stock of capital goods, as some nonspecific goods are used in earlier stages of production. The rise in the price of consumer goods catalyzes the abrupt shortening of the structure of production, revealing a mass of malinvestment.

“The Foremost Austrian Contribution to Economic Science”, Mises Daily: Thursday, January 06, 2011 by Jonathan M. Finegold Catalan, http://mises.org/daily/4924

It is perfectly understandable how loans could introduce artificial price supports on the capital side. However, the juxtaposition of ‘savings’ and ‘loans’ seems a bit archaic. Most businesses today would never get off the ground with ‘savings’. If ‘savings’ are defined as “consumption deferred to an unknown future point in time, allowing temporary use of said capital for investment” then, an implied capital base for investment is assumed. However, if most capital is always in flux, not sitting around waiting to be invested, but leveraged, then debt, as loan obligation, must be thought together with the notion of capital not in opposition to ‘capital at rest’. Capital as leveraged not ‘saved’ is the functional notion of business origination. I suspect that without loans, modern business, as we know it, would not exist. Capital works for the investor by balancing the service debt of leverage with anticipated profit. If pure ‘savings’ were used for investment then the notion that loss would get more effectively communicated to consumer pricing would have merit.

However, since capital as ‘savings’ is almost always leveraged with debt obligation, there will be some compression/expansion effect on consumer pricing. If economic fundamentalism does not take this compression/expansion effect into consideration as valid modifiers of market dynamics it will get forced into a fictional regression of ‘capital at rest’. Loans and leverage are not simply correlated to central bank liquidity. The compression/expansion effect would happen apart from a central bank influence. It may be true that central banks can influence this compression/expansion effect with monetary liquidity but a simple cause and effect relationship would have to be proven empirically. While the logical case that Catalan espouses could be true, it could also be that the private market could quite handily demonstrate the same lag between capital goods and consumer pricing with the leverage effect as well. So private sector loans, capital at work, would produce the same shielding effect of capital goods and consumer pricing. This, in itself, does not indict central banking.

If the Catalan’s argument wants to establish an exaggerated and aggravated relationship to the shielding from monetary policy, a purely logical argument will not prove whether this happens in the real word. In my opinion, economics should deal with the situation at hand and not a logical, hypothetical situation that could be. If Catalan wants to make a further point that private investors would more directly suffer the effects of private malinvestment than central banks and therefore be governed more by market risk than the central bank I think this is cogent. However, central banking in the U.S. came into existence not to protect the institutional investor from risk but to protect smaller deposits in banks. Consumers make up the lion’s share of the U.S. economy. Banks leverage consumer deposits to fund institutional investors. Banks also make it possible for institutional investors to push risk down to the consumer. Therefore, when institutional investors lose from malinvestment the effects of the risk are felt primarily by the consumer not the entrepreneurial investor.

Additionally, institutional investors do not invest equally and randomly over the entire breadth of the market. Institutional investors invest more heavily in businesses and market segments with proven track records. This has a congealing effect on capital investments in less risky, more certain returns on investment. To the degree that this occurs larger businesses with larger capital resources become the instrument of new business start ups and venture capital gets diverted from unaffiliated [with larger corporations] start ups to market conglomeration dynamics. This natural pocketing of capital resists the notion that a randomized investment pattern offsets risks/loses in the market and therefore exercises the least possible negative effects on individual parts of the market making booms and busts not likely [or less likely] to occur. It is quite possible that because of market conglomeration and even more, market monopolizing, apart from central banking concerns, booms and busts would still occur and their impact might not be mediated by the idealized, random effects of the pure free market, the fundamentalist’s dream.

If the consumer could absorb loss by pushing it further down, the hypothetical lesson learned from the brute market might salvage the market fundamentalism of Catalan. However, the dynamics change when the largest investor, the consumer, is also the bedrock of the market. The Great Depression and now the Great Recession are examples of what happens when the consumer loses on the free market. When consumers recoil en masse, the market suffers a catastrophic distortion that effects the normative operation of the market to recover. True, given enough time, even if the market and government totally collapse, the market will re-spawn perhaps with different rules from a different government but the question that should come to the fore is how much human suffering and regime change are we willing to endure before a recovery takes place? This decision is not an economic decision. It is a political decision. A devout faith in market fundamentals cannot break the tendency for capital to be leveraged, institutions as the instrument of leverage to push risk down and fund itself from the consumer, market busts to occur from natural market conglomeration, and the largest investor [in terms of sourcing capital] and least able to absorb loss, the consumer, take hits that produce social suffering, upheaval and regime change. All this can happen quite independently from the central banks issue [and I think could be historically demonstrated]. The question then becomes, can central banks worsen this situation? I am not going to address the whole issue of central banks now but I will bring up a few points for consideration.

I certainly think that central banks could worsen the situation. It is also possible that as I have already discussed that even if they did not exist the situation could get worse of its own free market accord. However, I also think that central banks can soften to impact of catastrophic market failure. The central banking system is not and should not be used as an instrument of market fine tuning. However, economies do not turn on a dime. Large economies are much like large cruise ships. You cannot head full steam into a slip and expect to throw a cruise ship into reverse for a soft impact. The central bank has to look far ahead and make changes in the economy with rather crude tools to try to forestall foreboding bubbles and busts in the normative operation of the market. When the economy stalls monetary liquidity can make more money available for loans, business start up and spur consumer spending. However, when central banks follow the philosophy that if some is good more is better, inflation and deflation is the inevitable outcome. I agree, historically speaking, inflation is more likely. The market fundamentalists appear to think that central banks can only either create or grossly aggravate booms and busts in the economy. They do not seem to believe that central banks can exercise an effective governor type effect on the economy. Consider this interview with Alan Greenspan, a Republican, a professed market fundamentalist, and Brian Naylor:

BRIAN NAYLOR: The man once known as the maestro for his direction of the nation’s economy as Fed chairman sat for four long hours yesterday, watching lawmakers who once cheered his performances turn into harsh critics. Testifying before the House Oversight Committee, Greenspan didn’t down play the severity of the crisis in the nation’s markets.

Mr. ALAN GREENSPAN (Former Chairman, Federal Reserve): We are in the midst of a once-in-a-century credit tsunami. Central banks and governments are being required to take unprecedented measures.

NAYLOR: Under questioning from Democrats on the panel, Greenspan conceded he might have been, as he put it, partially wrong in not moving to regulate trading of some derivatives that are among the root causes of the credit crisis. He also admitted his free market ideology may be flawed. This exchange with committee chairman, Democrat Henry Waxman of California, verged on the metaphysical.

Representative HENRY WAXMAN (Committee Chairman, Democrat, 30th District of California): You found a flaw in the reality…

Mr. GREENSPAN: Flaw in the model that I perceived is a critical functioning structure that defines how the world works, so to speak.

Rep. WAXMAN: In other words, you found that your view of the world, your ideology was not right. It was not working.

Mr. GREENSPAN: How it – precisely. That’s precisely the reason I was shocked, because I’ve been going for 40 years or more with very considerable evidence that it was working exceptionally well.

Additionally, there are practical considerations that the purist, market fundamentalists are not adept at addressing. In particular, I will repeat some points I previously made in another post on international realities and the U.S. Federal Reserve. Whether we like it or not, believe in a ‘free-market’ or not, the reality is that almost all other countries (and the Euro political conglomerate) manipulate their currencies. They subsidize businesses and whole market segments to their advantage. If we cannot or will not play that game we will lose. We live in a world economy where such historical and simpler models such as the gold standard would put us at a huge disadvantage relative to the rest of the world. If you are playing with dirty poker players you better be up on your dirty game or you will lose the majority of the time. For this reason we need a Federal Reserve that can devalue our currency relative to other large economic powers such as the Euro and Chinese Renminbi. This makes our exports more attractive and stimulates growth in our country. The Fed has multiple functions historically but some of these like overnight deposits for local banks are not as important as they used to be and others like the ‘elasticity’ of money, the money supply available at a given time in the economy, is much more important than it used to be. The Fed has to strike a balance between putting too much money into circulation and increasing inflation or not putting enough in and driving the cost of money up with higher interest rates thereby making credit harder to come by and growth slower. The flip side of putting more money in circulation is that our currency gets devalued relative to the rest of the world and our exports are stimulated. The Fed achieves the elasticity of money through buying and selling U.S. securities from the Treasury department (which is the agency actually responsible for ‘printing’ money). If we got rid of the Fed our currency would be at the mercy of the rest of the world economic powers. Therefore, we can control our monetary destiny or hand it to over to other powerful economies. This is where the real debate over the Fed needs to be centered. For this reason, I believe we need the Fed and our central banking system. Those that would get rid of the Fed in favor of the unfettered ‘free market’ would be sacrificing the elasticity of our money supply relative to other country’s un-free market like behavior.

Theoria and Austrian Economics [from what I can see]

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First, I want to state that I think vehement argument is somewhat akin to what, I have surmised, the Austrian School could have some commonality. An artifice of insular, academic jargon could be thought as a kind of intellectual credit bubble. It provides certain sheltered, intellectual framework where truths can be maintained or dismissed, careers can be made, artificial ‘bubbles’ of certainty can be maintained that would not be possible without the academic organizational structure. Interdisciplinary argument is a bit like heterogeneity of intellectuality in the ‘free market’ of ideas. When argument is stripped of rigid boundary conditions that defines various traditional paradigms (i.e., Austrian, Keynes, Freidman, Frieburg, etc.), the raw force of the argument is brought to the fore. The tendency for the argument to rely on justifications within its tradition is deemphasized as it must rely more on its own logic and empirical backing. To the degree that an academic discipline sets up its own internal language, unfalsifiable assumptions, barriers to entry and relevancy is to the same degree that it becomes a dogma and not a science (I use dogma and science here more are pure ideals or poles and not any implied designation or a particular discipline). To the degree that academic rigor becomes mesmerized with itself and encrusted in its professional (and economic) certitude is the same degree that it fails to respond to intellectual ‘market’ risk and uncertainties with agility and relevance. On a personal note, I love the free, no holds barred, market of ideas and never mean anything personal or hold personal feelings about the enterprise. I am a bit of an iconoclast and do not recognize artifice or title; only a good, backed up argument. In my opinion there are no ‘educators’ except in sophistry (i.e., paid academicians), -only better students. I am a student most of all and value learning above all no matter if I prevail or fail in the argument. I have learned most when I failed. I make no pretense to knowledge of Austrian economics. I only point out, in a rather nag fly ‘internet’ manner, the problematic issues I perceive.

It seems to me that Austrian economics is too focused on pure capital and not the underlying value dynamic (or better, referent in linguistic philosophy) of capital. To illustrate this, let’s look at this case. There is a tendency for monopolistic endeavor to initially reduce the cost of goods from consolidation, economies of scale, domination of suppliers and systemic abolition of competition through lower pricing and de facto regulation. Once a monopoly has effectively eliminated competitors, created a bubble, there is nothing to stop it from using its position to maximize profits by increasing pricing for some time, effectively regulating the market either with public or private market regulation. Private market regulation would mean prohibiting market entry by, for example, the monopolist requiring ‘compatibility certification’ (by you guessed it) or imputing any kind of standard on the market that requires monopolistic approval. This effectively sets up barriers to market entry and competition and ‘regulates’ the market by its own internally generated rules. A monopoly can effectively produce a lower expectation of cost in the market. This can artificially effect the perception of entrepreneurial investment and perceived cost of entry for production requiring consumption of monopolistically produced goods or services. Furthermore, if market entry is determined and controlled by monopolistic concerns, bubbles can result that the Austrians appear to reserve for central banking. Empirically, these kinds of monopolistic bubbles has occurred the U.S. with railroads and energy to name a few. Monopolistic entities will push risk down to their suppliers, consumers and end producers. As monopolies succeed, this will effectively shift the damage of the inevitable bust to suppliers and consumers. Monopolies effectively become economic ‘governments’. While they may dominate the market, produce the conditions for bubbles and busts, they will eventually become bloated, diluted and dispersed from sheer size. Of course, this assumes that they do not literally become the government as in a monopolistic ‘planned’ economy. It seems that making an essential distinction between private business and public ‘government’ may have some ideological underpinnings and historical, economic artifice. However, the critical dynamics that produce bubble and burst in an economy may be more effectively diagnosed from an analog continuum of small to large organizational dynamics resulting from within the organization, its environment and its market footprint. This would seem to take account of market heterogeneity better than starting with the a priori notion of ‘kind’ (as in public versus private). Certainly there are legitimate differences between public and private that should be part of an economic analysis but when unsustainable assumptions become the ‘economy’ of an intellectual enterprise, inefficient analysis becomes authorized and perhaps, other, more efficient models are dismissed. Why is it that “boom and bust” seems to be only reserved for government intervention (i.e., central banks) and dismissed entirely from the possibility of anything that could happen strictly in the private market?

Additionally, if the ‘government’ or even the central bank system is assumed to be homogenous as opposed to the heterogeny of the ‘free market’, a certain kind of over-simplification seems to prevail. The U.S. government is comprised of states each with constitutionally protected and at times, somewhat ambivalent powers from the Federal Government. The electorate also introduces much uncertainly and heterogeny into the ‘government’. The central bank is not so central. In the U.S., it is comprised of Board of Governors, the Federal Open Market Committee, twelve regional Federal Reserve Banks, and privately owned U.S. member banks with various advisory councils. However, relatively speaking, the U.S. central bank is probably more homogenous than the U.S. Government. The same could also be said of large corporations with board members, executives, management and employees. When the U.S. Government is thought as a monolith, a certain kind of “internet” thinking is imputed on its heterogeneity. These issues need to be thought in terms of the dynamics of relative size, organizational diffusion and market impact not in terms of ‘nouns’ that carry pre-understood connotations.

In contemporary philosophical terms, if the referent of capital (or value) is thought to END in adjectives like ‘free’, ‘unhindered’, ‘just’ [proper function of the] market as opposed to the ‘distorted’, ‘boom and bust’, ‘unjust’ [improper interference] market of government intervention, the referent points to nouns (‘ends’ as determinates) and not verbs. The value of capital is sustained and maintained vis-à-vis an ideal of real and artifice, free and not-free, natural market dynamic as opposed to forced and destructive market regulation, private versus public and authentic versus illegitimate. This is what contemporary philosophy refers to as a meta-language; a language that contains its own terms for what constitutes relevance and minimizes externality. To the degree that externality, the dynamic that faces us, is filtered as already understood theoria is to the same degree that market activity is NOT largely a product of emergent order. I would also add that this will always be a matter of degrees. Theoria is not optional; it is ‘seeing’. However, when it tends towards static, encrusted academic ‘job security’ it shuts down the process of emergence and replays the error of ordination. As Thomas Kuhn would suggest the received beliefs become the normal science that often suppress “fundamental novelties because they are necessarily subversive of its basic commitments”. Thus scientific revolutions are required as “tradition-shattering complements to the tradition-bound activity of normal science”. In Austrian economics I would think this could be coined as ‘boom and bust’.

Lorenzo and Marxism

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This is in response to Lorenzo’s comment here concerning Marxism:

In a smaller economic system, relatively speaking more closed system, the socially necessary abstract labor time would be more closely aligned with the crude labor time. Value in a barter system would be argued between folks that were more intimately acquainted with the effort it took to create the products. If the crude labor value and the socially necessary abstract labor diverged widely then the ‘bid’ and ‘ask’ values would not create a market. To the degree that they converge is to the degree that a market is made. In capitalism where a third party is typically assumed and the ‘value’ of capital (of money) has varying degrees of severance from the crude labor required to make the product, a sort of free floating uncertainty about the variation between crude labor and socially necessary abstract labor time certainly opens the door for exploitation where value is not ever realized by the laborers, the means of production or even more, the owners of production assuming they are not the laborers. For example, the transformation of value from a house to a mortgage to mortgage backed securities to credit default swaps represent multiple opportunities for values to be reassessed, sliced and diced, to the point where the market can actually be thoroughly confused about who owns what underlying asset (or what percentage of the underlying asset). When this much flexibility is driven by market mechanisms, there is every opportunity for exploitation. Even more so, a good capitalist would not be worth their salt if they could not find a way to exploit the uncertainty in this system of value.

Health Care in Louisiana and Massachusetts-Bobby Jindal and Bill Cassidy (updated note below)

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On Monday, July 2, Bill Cassidy(R), a congressional representative from Baton Rouge (LA), attacked President Obama’s Health Care Reform Act on MSNBC’s “MSNBC Live”. Thomas Roberts, the interviewer, tried to compare the Romney based health care system in Massachusetts with Louisiana’s health care system. Bill Cassidy referred to the Kaiser Family Foundation’s web site where statistics on health care are stored. Cassidy told Thomas that Massachusetts had the highest monthly premium rate in the country for health care. This is certainly true as this link from the Kaiser Family Foundation shows:

Link

However Bill has only told part of the story. Louisiana has one of the worst health care systems in the country. “Louisiana Medical News” reports:

A coalition of healthcare providers is hoping to convince the Jindal administration to use federal stimulus funds to dollars to prevent crushing Medicaid healthcare cuts.

…

The situation, as laid out in DHH’s report “A Road Map for a Healthier Louisiana” is this:

The state spent $7.4 billion on healthcare in 2009 but squandered the opportunity to improve people’s health, the report says. The fragmented delivery system – almost exclusively fee-for-service – resulted in uneven quality of care, inequitable access to care and unpredictable costs.

The system was designed to provide episodic and acute care not to promote and maintain health, the report says. Louisiana has to move to a system of care that will improve health outcomes and move the state from its perpetual ranking at or near the bottom of the nation’s health rankings while dealing with multi-billion dollar budget shortfalls and government downsizing.

“The Institute of Medicine (of the National Academy of Sciences), says it best,” according to the report. “The current system cannot do the job. Trying harder will not work. Changing systems of care will.”

Considerable evidence shows that managed, coordinated care can improve health outcomes and lead to savings; in some cases, the savings can be 20 percent, the report shows.

In a prepared statement, Greenstein said Louisiana has been on the predictable path to poor health outcomes and high healthcare costs for too long.

“It’s a path that we follow, guided by systems that are inefficient at best, and broken, at worst,” Greenstein said. “Without change, it will only worsen.”

Governor Jindal’s FY2012 budget states:

The FY 12 budget also preserves provider rates by incorporating $49.5 million State General Fund to cover the carryover increases in utilization costs from FY 2011 that are now part of the base needs of the Medicaid budget.

The Associated Press reports:

As the state’s Medicaid rolls continue to climb, Louisiana’s health agency will have $280 million less in this new budget year to cover the cost of care for patients.

That fact spells trouble, according to Louisiana’s health chief, physician and hospital groups.

The Medicaid budget for fiscal 2011, which began last week, stands at $6.5 billion, down from $6.78 billion for the fiscal year that ended June 30.

The budget requires reduced payments to physicians, hospitals and other health care providers for the 1.28 million residents enrolled in Medicaid, the state and federal government’s partnership that provides health care for the poor and uninsured.

The Associated Press also reports:

Louisiana’s health department is working on how to cut $859 million from the state’s Medicaid program for the poor and uninsured, stripping 11 percent of the funding for health services.

…

On the chopping block are charity hospitals, hospice care and Medicaid providers.

The Kaiser Family Foundation also shows these statistics on the uninsured in Louisiana:

Link

The table shows that for adults 18 to 64 years old 26% of the people in Louisiana have no insurance while 6.2% do not have insurance in Massachusetts. The other table shows that for all ages 17% of the people in Louisiana are uninsured as opposed to 5% in Massachusetts.

The monthly poverty level (FPG) for a family of 3 in Louisiana is $2,933. Here is Louisiana’s Medicaid qualification requirement as a percent of the poverty level:

Non-working — 13%

Working — 20%

Medically Needy

Individual — 13%

Couple — 20%

13% of $2,933 is $381.29/month or $4,575.48/year for a family of three.

20% of $2,933 is $586.60/month or $7,039.20/year for a family of three.

Some special cases such as children or pregnant women have better qualification requirements.

In Massachusetts here are the low income guidelines for monthly premiums:

• If your income is 100% FPG or less, you do not have to pay monthly premiums.

• If your income is 150% FPG or less, you do not have to pay monthly premiums if you choose the lowest cost plan offered in your area. If you choose a higher cost plan, you will have to pay a monthly premium.

• If your income is more than 150% FPG but not more than 300% FPG, you must pay monthly premiums that depend on income, where you live, and the plan you choose.

• Everyone must pay copayments for prescription drugs.

When Bill Cassidy makes an argument based on average monthly premiums in Massachusetts he conveniently ignores the fact that Massachusetts’ premiums are income adjusted. In Louisiana they prefer to keeps large portions of their population uninsured. This is an unsustainable path for Louisiana. That cannot afford the lousy system they have.

The table below shows the increase in total spending by percent if Louisiana and Massachusetts were to cover Medicaid to 133% of the poverty line as the Health Care Reform Act requires in order to receive expanded Medicaid funding from the Federal Government:

Medicaid Expansion to 133% of Federal Poverty Level (FPL): Estimated Increase in Enrollment and Spending Relative to Baseline by 2019

Link

These charts clearly show that Louisiana is fighting very hard to have one of the worst health care systems in the country. The system in Louisiana is certainly on the brink of collapse as Bill Cassidy maintains. Bill Cassidy and Bobby Jindal would like to attack Romney-Care in Massachusetts which is a much better program than what Louisiana has to offer. Here is Bill Cassidy’s plan for health care in Louisiana:

•Providing greater flexibility for the use of Health Savings Accounts;

•Reforming the medical liability tort system to reduce frivolous lawsuits that drive up costs by forcing doctors to practice defensive medicine;

•Creating pooling mechanisms, like Individual Membership Associations and Association Health Plans, that provide patients greater flexibility and bargaining power;

•Providing tax credits to cover the cost of health care for low-income families;

•Allowing patients to shop for insurance across state lines;

•Providing patients who wish to opt out of federal programs (like Medicaid) vouchers to purchase private coverage;

•Allowing employers to offer discounts to incentivize participation in wellness programs; and

•Ensuring coverage for those with pre-existing conditions by strengthening high risk/reinsurance pools.

President Obama’s Health Care Reform Act already includes many of Cassidy’s ideas.(1) However, Cassidy’s plan does nothing for the uninsured and people that do not make enough money to worry about taxes. Cassidy’s Louisiana would continue to let substantial portions of people in Louisiana continue to use the emergency room for health care. This will only drive up premiums over the long term as it has in the rest of the country. Even though Louisiana has continued to cut provider reimbursement fees to attempt to make up their tremendous shortfalls, all they have really done is to demonstrate how Medicaid in Louisiana would be great if you could only find a health care professional in Louisiana that would be willing to do the work. When they make Louisiana’s problems, which they have created in Louisiana, an indictment of Massachusetts health care, they conveniently fail to acknowledge that you can find a health care professional in Massachusetts that is willing to do health care work. While criticizing Medicaid, Cassidy even seems to want Medicaid to prop up the poor health care system in Louisiana with Medicaid “vouchers”. Cassidy and Jindal can only remain silent when it comes to addressing the real problems in Louisiana because their ideology prevents them from acknowledging and effectively addressing the fundamental problems. Mitt understood this when he was governor of Massachusetts and with the Heritage Foundation crafted a program that began to acknowledge and address underlying health care problems.

Thomas Roberts should never allow politicians like Cassidy and Jindal to throw stones at Massachusetts’ health care when they live in glass houses.

—————————————————————————————————————————

(1) From the summary of the Affordable Care Act from the Kaiser Foundation:

“Providing greater flexibility for the use of Health Savings Accounts” (Bill Cassidy)

Benefit Tiers – Affordable Care Act (from link above):

“Create four benefit categories of plans plus a separate catastrophic plan to be offered through the Exchange, and in the individual and small group markets:

– Bronze plan represents minimum creditable coverage and provides the essential health benefits, cover 60% of the benefit costs of the plan, with an out-of-pocket limit equal to the Health Savings Account (HSA) current law limit ($5,950 for individuals and $11,900 for families in 2010);

– Silver plan provides the essential health benefits, covers 70% of the benefit costs of the plan, with the HSA out-of-pocket limits;

– Gold plan provides the essential health benefits, covers 80% of the benefit costs of the plan, with the HSA out-of-pocket limits;

– Platinum plan provides the essential health benefits, covers 90% of the benefit costs of the plan, with the HSA out-of-pocket limits;

– Catastrophic plan available to those up to age 30 or to those who are exempt from the mandate to purchase coverage and provides catastrophic coverage only with the coverage level set at the HAS current law levels except that prevention benefits and coverage for three primary care visits would be exempt from the deductible. This plan is only available in the individual market.

• Reduce the out-of-pocket limits for those with incomes up to 400% FPL to the following levels:

– 100-200% FPL: one-third of the HSA limits ($1,983/individual and $3,967/family);

– 200-300% FPL: one-half of the HSA limits ($2,975/individual and $5,950/family);

– 300-400% FPL: two-thirds of the HSA limits ($3,987/individual and $7,973/family).

These out-of-pocket reductions are applied within the actuarial limits of the plan and will not increase the actuarial value of the plan.”

“Reforming the medical liability tort system to reduce frivolous lawsuits that drive up costs by forcing doctors to practice defensive medicine” (Bill Cassidy)

Medical Malpractice – Affordable Care Act (from link above):

“Award five-year demonstration grants to states to develop, implement, and evaluate alternatives to current tort litigations. Preference will be given to states that have developed alternatives in consultation with relevant stakeholders and that have proposals that are likely to enhance patient safety by reducing medical errors and adverse events and are likely to improve access to liability insurance. (Funding appropriated for five years beginning in fiscal year 2011)”

“Creating pooling mechanisms, like Individual Membership Associations and Association Health Plans, that provide patients greater flexibility and bargaining power” (Bill Cassidy)

Creation and structure of health insurance exchanges – Affordable Care Act (from link above):

“Create state-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges, administered by a governmental agency or non-profit organization, through which individuals and small businesses with up to 100 employees can purchase qualified coverage. Permit states to allow businesses with more than 100 employees to purchase coverage in the SHOP Exchange beginning in 2017. States may form regional Exchanges or allow more than one Exchange to operate in a state as long as each Exchange serves a distinct geographic area. (Funding available to states to establish Exchanges within one year of enactment and until January 1, 2015)”

“Providing tax credits to cover the cost of health care for low-income families” (Bill Cassidy)

Tax changes related to financing health reform – Affordable Care Act (from link above):

“• Increase the tax on distributions from a health savings account or an Archer MSA that are not used for qualified medical expenses to 20% (from 10% for HSAs and from 15% for Archer MSAs) of the disbursed amount. (Effective January 1, 2011)

• Limit the amount of contributions to a flexible spending account for medical expenses to $2,500 per year increased annually by the cost of living adjustment. (Effective January 1, 2013)

• Increase the threshold for the itemized deduction for unreimbursed medical expenses from 7.5% of adjusted gross income to 10% of adjusted gross income for regular tax purposes; waive the increase for individuals age 65 and older for tax years 2013 through 2016. (Effective January 1, 2013)”

Also, Small business tax credits related to financing health reform – Affordable Care Act (from link above):

“• Provide small employers with no more than 25 employees and average annual wages of less than $50,000 that purchase health insurance for employees with a tax credit.

– Phase I: For tax years 2010 through 2013, provide a tax credit of up to 35% of the employer’s contribution toward the employee’s health insurance premium if the employer contributes at least 50% of the total premium cost or 50% of a benchmark premium. The full credit will be available to employers with 10 or fewer employees and average annual wages of less than $25,000. The credit phases-out as firm size and average wage increases. Tax-exempt small businesses meeting these requirements are eligible for tax credits of up to 25% of the employer’s contribution toward the employee’s health insurance premium.

– Phase II: For tax years 2014 and later, for eligible small businesses that purchase coverage through the state Exchange, provide a tax credit of up to 50% of the employer’s contribution toward the employee’s health insurance premium if the employer contributes at least 50% of the total premium cost. The credit will be available for two years. The full credit will be available to employers with 10 or fewer employees and average annual wages of less than $25,000. The credit phases-out as firm size and average wage increases. Tax-exempt small businesses meeting these requirements are eligible for tax credits of up to 35% of the employer’s contribution toward the employee’s health insurance premium.”

“Allowing patients to shop for insurance across state lines” (Bill Cassidy)

Health care choice compacts and national plans – Affordable Care Act (from link above):

“Permit states to form health care choice compacts and allow insurers to sell policies in any state participating in the compact. Insurers selling policies through a compact would only be subject to the laws and regulations of the state where the policy is written or issued, except for rules pertaining to market conduct, unfair trade practices, network adequacy, and consumer protections. Compacts may only be approved if it is determined that the compact will provide coverage that is at least as comprehensive and affordable as coverage provided through the state Exchanges. (Regulations issued by July 1, 2013, compacts may not take effect before January 1, 2016)”

“Providing patients who wish to opt out of federal programs (like Medicaid) vouchers to purchase private coverage” (Bill Cassidy)

Medicaid – Affordable Care Act (from link above)…This could provide a basis for Bill Cassidy’s idea:

“Provide states with new options for offering home and community-based services through a Medicaid state plan rather than through a waiver for individuals with incomes up to 300% of the maximum SSI payment and who have a higher level of need and permit states to extend full Medicaid benefits to individual receiving home and community-based services under a state plan. (Effective October 1, 2010)”

“Allowing employers to offer discounts to incentivize participation in wellness programs” (Bill Cassidy)

Wellness programs – Affordable Care Act (from link above):

“• Provide grants for up to five years to small employers that establish wellness programs. (Funds appropriated for five years beginning in fiscal year 2011)

• Provide technical assistance and other resources to evaluate employer-based wellness programs. Conduct a national worksite health policies and programs survey to assess employer-based health policies and programs. (Conduct study within two years following enactment)

• Permit employers to offer employees rewards—in the form of premium discounts, waivers of costsharing requirements, or benefits that would otherwise not be provided—of up to 30% of the cost of coverage for participating in a wellness program and meeting certain health-related standards. Employers must offer an alternative standard for individuals for whom it is unreasonably difficult or inadvisable to meet the standard. The reward limit may be increased to 50% of the cost of coverage if deemed appropriate. (Effective January 1, 2014) Establish 10-state pilot programs by July 2014 to permit participating states to apply similar rewards for participating in wellness programs in the individual market and expand demonstrations in 2017 if effective. Require a report on the effectiveness and impact of wellness programs. (Report due three years following enactment)”

“Ensuring coverage for those with pre-existing conditions by strengthening high risk/reinsurance pools” (Bill Cassidy)

Temporary high risk pools – Affordable Care Act (from link above):

“• Establish a temporary national high-risk pool to provide health coverage to individuals with pre-existing medical conditions. U.S. citizens and legal immigrants who have a pre-existing medical condition and who have been uninsured for at least six months will be eligible to enroll in the high-risk pool and receive subsidized premiums. Premiums for the pool will be established for a standard population and may vary by no more than 4 to 1 due to age; maximum cost-sharing will be limited to the current law HSA limit ($5,950/individual and $11,900/family in 2010). Appropriate $5 billion to finance the program. (Effective within 90 days of enactment until January 1, 2014)”

This clearly shows that every point Bill Cassidy brings up is already addressed. It is almost as if part of the Act was written in response to Bill Cassidy’s recommendations. Yet, Bill Cassidy vehemently opposes the Affordable Care Act. The new Republicans could have done what the older Republicans did and fashion the bill even more in the direction they wanted. Instead, they made a political issue out of it and refused to work with the Democrats. Democracy cannot work with this kind of ideologically based inflexibility. Voters would do well to vote for politicians that produce results not rhetoric.

Mitt and Friends

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All the Republicans screeching about ‘ObamaCare’…They adamantly refuse to go along with the Medicare expansion…good…they can keep their current Medicaid with most states covering folks up to 50% of the poverty line and the Federal Government reimbursing them, on average, 50% of their expenditures or they can have, under the expanded Medicare provision of the Health Care Reform Act, folks covered up to 133% of the poverty line with the Federal Government paying 100% for three years and 95% afterward. They can cover less people for more money or more people for less money…sure it is optional. They can hate Obama more than they care about their constituents. When folks start leaving these idiotic states and voting the radical elitists out, they will come around. It will be funny to see all these self-righteous Obama haters groveling up to the bar…eating crow…looking more and more like their two-faced presidential candidate.

Oh, call it a tax or call it making folks responsible for their own health care…getting the free-loaders out of the system…I thought that was a Republican ideal? Not only will folks already with insurance NOT pay a tax, they will find their premiums going down when it goes into effect due to larger insurance pooling. The whole idea is a simple business idea that even Mitt should get – the larger the market the more the production and overhead costs come down. Mitt even defended the mandatory requirement of “RomneyCare” with this line of reasoning before he found his latest religion on the matter – hypocrite. God forbid that we tax the free-loaders…is that a Republican ideal? In any case, the lie of the Republican elite will be everyone will be taxed. Conveniently, they cannot seem to make fine distinctions. I suppose this has to do with orders from the top – Grover Norquist.

Why is it so hard to find consistency in Republican ideology these days? Even the academic elites in conservatism run from debates when empirical facts that cannot be spun are involved. This is so unlike the Republicans of old…the ones that made Justice Roberts what he is…

An ideology is bankrupt when it is reduced to sophistry and fanaticism.

The Appeaser-In-Dictator

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Here is more proof the current batch of Republicans practice sophistry. Lately, they have been fond of talking about how President Obama is a dictator. Rush Limbaugh recently stated that President Obama’s immigration policy is a “dictator’s wet dream”. They think President Obama is circumventing the constitution with health care. They think that fast and furious is President Obama’s plan to snatch their guns from their cold, dead fingers. Funny, just a few months ago Rush and Santorum were calling President Obama an appeaser. Are appeaser’s dictators? Are dictators appeasers? I actually thought he was trying way to hard the first few years of his presidency to compromise with the Republicans to get things accomplished. They only turned any attempt to compromise into yet another reason to attack him. He was not leading. He was appeasing. Appeasers do not lead, they try to compromise. Well, now that he is leading, he is a dictator. President Obama should have figured out a long time ago that folks that hate you will not compromise with you. Hate is irrational and compromise is rational. If you try to lead them they will call you a dictator. It is an un-winnable situation. The best thing President Obama can do IS lead by circumventing the haters as much as possible. Most folks do not have that kind of hate for President Obama. His biggest strength is to show them up for what they are by leading. They will screech and foam at the mouth, too bad so sad. They will put a spectacle on that turn the vast majority of Americans against the Republicans. President’s Obama’s best political asset is that folks like him. When someone throws a temper tantrum against a person an observer likes, the observer feels sympathy for the person they like and dislikes the brute. President Obama should not let haters set the agenda for his initiatives. He should let the people that got him there set the agenda and we want him to lead until the Republicans are screaming like the zombies in “Invasion of the Body Snatchers”.

Musings

Thoughts on Philosophy, Politics, Physics, Religion, Music and Economics

Author Archives: M D

Myths Exposed: President Obama is Responsible for Historic U.S. Federal Debt and Spending Levels

Fundamentalism in Market Economy: The Austrian School and the Problem of Suffering

A Thought Experiment with God’s Particle

God and Other

Fundamentalism in Market Economy: The Austrian School

Theoria and Austrian Economics [from what I can see]

Lorenzo and Marxism

Health Care in Louisiana and Massachusetts-Bobby Jindal and Bill Cassidy (updated note below)

Mitt and Friends

The Appeaser-In-Dictator