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Caution: This commentary may cause you to become cross eyed. It’s about accounting. Read with care.
Contrary to the belief of most people, accounting is not a science, it’s an art. Although there are a host of established principles that deal with the way certain types of income and/or expenditures should be reported, the way in which they may be applied can vary widely.
The primary function of accounting is to properly track the assets and liabilities of an enterprise and to report income and expense in the period, that is the time – say month or year – in which they occur.
It sounds simple enough, but unfortunately, that’s where reality can become fiction. As Mark Twain famously said, “Figures don’t lie, but liars figure.”
Everywhere we look in both industry and government, we see evidence of duplicity and manipulation of financial information, but nowhere is it more apparent than in government.
To begin with, government does not maintain books or report financial information in the same way that businesses and individuals do. For example, assets and liabilities are not necessarily reported at all, and it’s not unusual for various government entities to simply not keep track of their check books.
In addition, there are trillions of dollars in liabilities, about $56 trillion to be exact, that are not included in government financial reporting. That’s the estimated total of future obligations for Social Security and Medicare that the current beneficiaries will receive during their lifetimes.
The accounting systems for a lot of government entities are a mess, often so bad they can’t even be audited. Amazingly, in many instances they can’t (or don’t) even keep track of the funds they receive.
In June 2001, a report titled, “Government at the Brink,” issued by the Senate Committee on Governmental Affairs, stated, “The Education Department reported in its financial statements that it had $7.5 billion in the bank, when it actually owed that money to the U.S. Treasury,” a discrepancy of $15 billion. That’s BILLION, with a “B”.
How is it possible to lose billions of dollars without even having a clue as to where it went? Think that’s not possible? Think again! In August 2005, the Sacramento Bee noted, “In 1994, Congress found problems with the Interior Department’s administration of 260,000 Indian trust accounts containing $400 million. The Indians allege the department mismanaged oil, gas, grazing, timber and other royalties from their lands dating back to 1887,” failing “to account for billions of dollars belonging to about 500,000 Indians.”
A July, 2001 article titled, Billions Missing at Education, by Reed Irvine and Cliff Kincaid, stated, “In addition to the $15 billion discrepancy at the education department, the report says that the Internal Revenue Service ‘does not know how much it actually collects in Social Security and Medicare.’”
Yahoo reported that the Government Accountability Office inspected the IRS’s 2009 fiscal year financial statements and found a “few billion-dollar errors,” noting that the agency made a variety of accounting errors last year that “could adversely affect the reliability of its financial statements” and result in “duplicate or erroneous refunds.” Among the mistakes were a “failure to record the receipt of a taxpayer’s $3 million payment” and an $8 billion discrepancy between two accounting systems tracking how much money taxpayers owe. The audit also found an “unexplained variance” of $5.1 billion between the total amount the agency took in last year and the amount it said it took in.
The most chilling aspect of the Irvine/Kincaid report was the observation that “Neither the federal government as a whole nor many agencies can pass a basic financial audit. The books don’t add up, major expenditures are missing, large amounts of property and equipment can’t be located, and often, agencies don’t even know how much they have.”
Mismanagement of money by our political leaders was highlighted by the House banking scandal in 1992, when the public learned that the House Bank permitted 450 members of the U.S. House of Representatives to overdraw their House checking accounts without being penalized. Their checks were honored by the Bank, and twenty-two congressmen and women were singled out by the House Ethics Committee for leaving their checking accounts overdrawn for at least eight months in a period of just 39 months.
Perhaps we should have more CPAs in Congress. At the present time, there are only two, and a third is currently running for office. Unfortunately, given the nature of our political leaders and their lack of understanding of financial matters, more CPAs in government would be no guarantee of honest accounting or accurate financial reporting by the federal government.
It seems that hardly a day goes by that we don’t learn of some aspect of our laws that is determined by the court(s), as opposed to being established by the various legislatures around the country. Why is that?
Is it because we are not able to agree on anything? Or perhaps it’s because issues have become so complex that it’s necessary to have a third party, such as the courts, sort them out for us?
The latest issue to make headlines is a federal court decision that California’s Proposition 8, which defines marriage as being between one man and one woman, is unconstitutional – because it violates the constitutional rights of gay people. Judge Vaughn R. Walker noted, “Proposition 8 fails to advance any rational basis in singling out gay men and lesbians for denial of a marriage license…Indeed, the evidence shows Proposition 8 does nothing more than enshrine in the California Constitution the notion that opposite-sex couples are superior to same-sex couples.”
Apparently over 50% of California’s voters thought so at the time Proposition 8 was passed in 2008, but the federal court has now stepped in to tell us they were wrong. The case is now on a path to the U.S. Supreme Court, which will make the final determination.
However, this is just one of many legislative actions that now find their way into the courts to be resolved.
The ink was hardly dry on Obama’s health care bill before it was being challenged in the courts on a variety of grounds. The most recent is the state of Missouri, which is taking the position that Obamacare is unconstitutional because it requires American citizens to buy health insurance. The state claims this is an overly broad interpretation of the “Commerce Clause” in the U.S. Constitution.
Another issue that may ultimately be decided by the courts is the dispute over Arizona’s SB 1070, which the Obama administration claims is discriminatory. Many states have been lining up on both sides of the issue, and Department of Justice has already entered the fray by filing an action in the federal courts.
It also looks as though the 14th Amendment to the U.S. Constitution, which is the basis of the so-called “anchor babies” may soon be challenged in the federal courts. The issue is based on the fact that anyone who is born in the United States automatically becomes an American citizen.
Ann Coulter noted, “In fact, this alleged right derives only from a footnote slyly slipped into a Supreme Court opinion by Justice Brennan in 1982. You might say it snuck in when no one was looking, and now we have to let it stay…The 14th Amendment was added after the Civil War in order to overrule the Supreme Court’s Dred Scott decision, which had held that black slaves were not citizens of the United States. The precise purpose of the amendment was to stop sleazy Southern states from denying citizenship rights to newly freed slaves — many of whom had roots in this country longer than a lot of white people.”
Other issues we are seeing decided by the courts include the right of eminent domain. Government over-reach in taking such actions as exercising the right of eminent domain was exemplified by the Kelo case, in which the city took private property for the benefit of a private developer for the sole reason that a proposed project would generate significantly increased tax revenues for the city.
There are many more examples of the growing power of our courts, too numerous to detail in this short commentary, but the result of all the litigation over the meaning or intent of legislators and/or government officials is placing ever more of the decision making in this country in the hands of the courts.
Of the three branches of our government: executive, legislative and judicial, it would appear that the courts have been steadily assuming increased authority over much of the decision-making that our Constitution contemplated would be made by the other two branches. If this is allowed to continue, we may eventually find ourselves in the position of being “ruled” by the nation’s judges, most of whom are not elected and therefore are not accountable to the people. Since many judges are appointed for life, it is impossible to remove them.
It would seem that many of the judges in our courts are now beginning to believe that they know what it best for the American people, but they are wrong. If we do not recognize this threat to our liberties, we may eventually find ourselves ruled by our courts. The fix is relatively easy, if our legislators are willing to do it. Congress has the authority to act and must do so before they completely surrender the power that is vested in them.
The headline on a recent article, “Family sues teacher in recorded attack on student,” caught my attention – and set me to wondering just how many lawyers are there in the U.S.
According to the American Bar Association, there were 1,143,358 resident and active attorneys in the United States in 2007. There is one lawyer for every 265 Americans. Brazil is a close second with a total of 571,360 lawyers but a higher per capital ratio of one for every 326 Brazilians.
Looking at the statistics for other nations, the per capita numbers indicate that Spain and Italy do not “by far” have the most lawyers, although their respective per capita numbers are very high. Following are the total number and per capital head count for other countries:
New Zealand has a total of 10,523 lawyers or a ratio of one lawyer for each 391 citizens.
Spain: Total, 114,143 lawyers, one per 395 citizens.
Italy: Total, 121,380 lawyers, one per 488 people.
UK: Total, 151,043 lawyers, one per 401 people.
Germany: Total, 138,679 lawyers, one per 593 people.
France: Total, 45,686 lawyers, 45,686, one per 1,403 residents.
Among the Top 7 “lawyerly countries” listed above, the US has about 50% of the total, with 37 percent of the population of this group. Approximately 300 members of the U.S. Congress are lawyers (no surprise there).
India, however, has about one million lawyers, roughly the same absolute number as the U.S., although its per capita number is only a quarter or a fifth that of the U.S. This means the U.S. has a much smaller portion of the overall total than 70 percent, or even 50 percent. (The lawyer number for the U.S. was taken from the active ABA list for 2007)
On the other end of the spectrum, Japan has 5,800 people per lawyer. Putting it another way, Japan, with a population of approximately 147 million, has only 22,000 licensed attorneys.
However, according to Business Week, this gap is about to narrow. Faced with the effects of globalization - international patent disputes, cross-border mergers, activist overseas shareholders - Japan has launched a program to increase the number of lawyers in its citizen population.
With some 2.2 million people in US prisons, there is about one lawyer for every inmate.
Of the total U.S. work force of more than 157 million people in 2010, only 7 percent are lawyers. Yet 46 percent of the members of Congress are attorneys, 63% of the Senate and 42% of the House of Representative (total 247).
The U.S. federal government employs more than 40,000 attorneys, with approximately eleven thousand of them working in the Department of Justice. State and local governments employ many times this number and, given the scope of the administrative activities in government, nearly every lawyer in the United States has dealings with government lawyers.
Just about everyone dislikes lawyers, that is, in the professional sense. But, in the U.S. they are employed as the modern equivalent of “hired guns,” dueling in court for their employer at the drop of a complaint or potential complaint.
Shakespeare’s character, Dick the butcher, famously said in Henry The Sixth, “The first thing we do, let’s kill all the lawyers…”
Thirty-five of the nation’s 55 Founding Fathers were lawyers or had benefited from legal education, though not all of them practiced law for their livelihood. Some had also become judges.
We tend to think of lawyers as generally practicing the same type of law, largely I suspect because most of us don’t have any exposure to the full scope of the wide range of legal specialties. We are most familiar with such legal specialties as business law, criminal law, tax and estate planning, family law (divorce), litigation and personal injury. But, there are actually 260 areas of legal practice, some of which are quite esoteric, and within the fields with which we are most familiar, such as criminal law, there are a wide range of specialties, i.e., DNA, homicide, gang activity, and death penalty cases. Types of law that are not as commonly known are such fields as admiralty and maritime law, patent law, unfair competition, ethics and professional liability, and education law, to name a few.
Generally speaking, at some point, for good or ill, there is bound to be a lawyer in your life. Whatever we may think of them, we can’t do without them.
Thirty plus years ago, in 1978, California state senator H.L. (Bill) Richardson) wrote a small book with the intriguing title, “What Makes You Think We Read The Bills?” in which he describes how politicians are actually elected by a very small percentage of the voters in their district, about one or two percent, and as a result, officeholders really listen only to that small constituency. The title of Senator Richardson’s book also aptly describes the way the U.S. Congress functions today in writing and voting on new legislation.
The surge of bills that have been disgorged by Congress since Obama was elected further illustrates Richardson’s thesis, as a succession of major new laws have been approved without being read by most of the legislators who voted on them.
Legislation that moves through Congress without any legislative language is called a “vapor bill.” The term was derived from the word Vaporware, an expression coined during the dot-com era to describe all-singing-all-dancing software that had not yet been written.
A recent example of a “vapor bill” is the Senate’s 2,000 plus page Health Care Reform act, which had no legislative language and was amended in the Senate Finance Committee, where none of the committee members had read the actual bill. At the time, the Washington Post reported that “President Barack Obama’s push for a sweeping health care overhaul is going to be voted upon in the Senate Finance Committee…and nobody has read the actual bill yet.” The Washington Post also headlined, “Senate Finance Committee Releases Its Final Text of Health-Care Bill,” but if you clicked on a link to the “Bill” that was referenced in the Post article, all you got was a 262 page description of the legislation…no actual legislative language (was) being given to Senators, Staff or the American Public.”
Aside from the obvious inappropriateness of having legislators vote on bills they have not read, one of the most significant problems with vapor bills is that the Congressional Office of Management and Budget (OMB) can’t “score” the legislation, that is, estimate what such bills are likely to cost. The fiscal impact of any bill cannot be evaluated without the actual legislative language, and the health care bill that was approved by Congress was over 2,000 pages of what was essentially nothing more than an outline of the proposed law.
Vapor bills are not submitted to Congress by accident. They have actually been a key element of the current Democratic Leadership’s strategy, which has been to put incomplete proposed legislation before the members of Congress without having to disclose the details, which made it possible for just a few insiders to write the actual language of the bill behind closed doors.
Having successfully shepherded the president’s health care law through Congress with a vapor bill, the Democratic leadership continued this strategy for other major legislation, such as the A.I.G. Insurance Bonus Bill and more recently the new Banking and Finance legislation. Lawmakers were also given just hours to examine the $789 billion stimulus plan, sweeping climate-change legislation and a multi-billion dollar bailout package before final votes were taken.
For example, the stimulus bill was 1,100 pages long and made available to Congress and the public just 13 hours before lawmakers voted on it. The bill failed to provide the promised help to the job market, and there was outrage when it was discovered that the legislation included an amendment allowing American International Group, a bailout recipient, to give out millions in employee bonuses.
Four major pieces of legislation have been passed by Congress using the same procedure:
House Energy and Global Warming Bill: passed June 26, 2009, 1,200 pages. Available online just 15 hours before vote.
$789 billion stimulus bill, passed June 26, 2009, 1,100 pages. Available online just 13 hours before debate.
$700 billion financial service sector rescue package, 169 pages, passed October 3, 2008. Available online just 29 hours before vote.
USA Patriot domestic surveillance bill, passed October 23, 2001. Not available to the public before debate.
The Sunlight Foundation, which lobbies Congress to bring more transparency to government, has begun attempting to get Congress to post bills online, for everyone to see 72 hours before lawmakers vote on them. Lisa Rosenberg has noted that “It would give the public a chance to really digest and understand what is in the bill and communicate whether that is a good or a bad thing while there is still time to fix it.”
Good suggestion, but as the oft-quoted saying advises: “Don’t hold your breath.”
Poet/Philosopher George Santayana is credited with saying: “Those who do not remember history are doomed to repeat it.”
Many, perhaps most people are disinterested and bored by history and consider it a waste of time. Yet, sports enthusiasts devote hours of their time and grey matter to memorizing the records of their favorite football, basketball, hockey, soccer and baseball players and teams. Baseball, for example, is a game in which statistics are meticulously maintained, compared and quoted. But talk about history in human events and they couldn’t be less interested.
However, history does repeat itself, and we would do well to pay attention to the mistakes of the past in order to avoid making them again, or at least try. Case in point: Obama’s health care bill that was recently passed by Congress. In the run-up to the Congressional vote, the issue was hotly debated, and both sides trotted out statistics and projections to buttress their arguments, both pro and con.
Perhaps the most compelling argument against Obama’s health care bill is the federal government’s own record in managing the various major social programs that have been adopted in the past. The following summary (circulated on the Internet) highlights the gap between government promises and delivery:
The U.S. Post Service was established in 1775. The government has had 234 years to get it right and it is broke.
Social Security was established in 1935. The government has had 74 years to get it right and it is broke.
Fannie Mae was established in 1938. The government has had 71 years to get it right and it is broke.
War on Poverty started in 1964. The government has had 45 years to get it right; $1 trillion of our money is confiscated each year and transferred to “the poor” and they only want more.
Medicare and Medicaid were established in 1965. The government has had 44 years to get it right and they are broke.
Freddie Mac was established in 1970. The government has had 39 years to get it right and it is broke.
The Department of Energy was created in 1977 to lessen our dependence on foreign oil. It has ballooned to 16,000 employees with a budget of $24 billion a year and we import more oil than ever before. The government has had 32 years to get it right and it is an abysmal failure.
Every “government service” that has ever been shoved down our throats has failed. Three additional examples illustrate the point:
The Post Office lost $3.8 TRILLION in the 2009-10 fiscal year.
Social Security and Medicare have a combined unfunded liability (deficit) of $107 trillion. That’s seven times the size of the entire U.S. economy and ten times the amount of the nation’s outstanding national debt.
Robert Rector of the Heritage Foundation has pointed out that “welfare spending today is 13 times greater than it was …(when the War on Poverty was initiated). Means-tested welfare spending was 1.2 percent of the gross domestic product (GDP) in 1964; by 2008, it had reached 5 percent of GDP.”
AND PEOPLE WANT US TO BELIEVE THE GOVERNMENT CAN BE TRUSTED TO RUN THE NATION’S HEALTH CARE SYSTEM?
IT’S NOT ABOUT THE NEED FOR GOOD HEALTH CARE, IT’S ABOUT TRUSTING THE GOVERNMENT TO RUN IT.
No government program ever operates on or under budget and none ever will.
The latest question being debated in the media is, “Can we kill an American who is working for al Qaeda overseas?” It may be rhetorical, but it clearly demonstrates the confusion in America today about our status, that is, whether we are at war or not?
The nation is divided over the issue. If we are at war, why aren’t we trying war criminals in military tribunals as opposed to giving them the same rights that our citizens enjoy in civilian courts?
The Bush administration seemed to be clear that we are at war, and that enemy combatants should be tried in military courts. However, although Guantanamo Bay was established as the place to hold people who were picked up on the battlefield or otherwise captured and known to be terrorists, such as Khalid Sheikh Mohammad, in the eight years following the World Trade Center attack, the government never completed the job of updating our laws to deal with such prisoners.
Most of the public seems to believe we are at war and that it is a war on terrorism. However, the Obama administration apparently does not agree.
This leads to confusion and weakens our nation’s defenses. Obama’s position that the word “terrorism” is not to be used by his administration and being unwilling to acknowledge that we are at war is directly at odds with his authorization to send an additional 30,000 troops to Afghanistan and his approval of attacks by military drones in both Afghanistan and Pakistan.
The confusion is further exemplified by the administration’s handling of incidents like the Fort Hood shooting, promising to close Gitmo without thoroughly considering the consequences, and moving the trials of Khalid Sheik Mohammad and the Christmas Day bomber to civilian courts. For the most part, the reasoning behind these decisions is not clear and the public appears to strongly object to them.
Article One, Section Eight of the U.S. Constitution says, “Congress shall have power to…declare War,” so perhaps the question should be, “Why not declare war al Qaeda and any other group that attacks us?”
We seem to be overlooking the fact that Osama bin Laden declared war on the United States in August 1996. His declaration was published in a London based Arabic language newspaper and followed a long list of attacks on U.S. properties and personnel overseas dating back to 1979, when Iran took U.S. embassy employees hostage. It continued from there with the 1983 attack on the Marine barracks in Lebanon and a succession of other attacks thereafter, the most notable of which were the attacks on the World Trade Center in September 2001 and the attempt to bomb a Northwest Airlines flight from Copenhagen to Detroit on Christmas day 2009.
So, what’s the problem? Are we at war or not? And, if we are, why don’t we formally declare war and move on from there? The obvious question is, “against whom?” There is no easy answer to this, but how about starting with al Qaeda and any nation or group that gives them support or allows them to use their territory for training and staging attacks on other nations?
As for declaring war, that’s the province of Congress, not the president, so why not move the process directly to the legislature where the issue can be openly debated, regardless of what the president may want? Ultimately, the decision is up to them, not him.
My guess is that the American people would strongly favor debating and settling this issue once and for all. We should eliminate any confusion about holding enemy combatants until the war ends and trying them in military tribunals or civilian courts, or killing an American who is openly waging war against his own country.
I know it’s a complicated and confusing issue, but no more than many others that are taken up by Congress. Let them get everything out on the table for all to see and discuss, then decide – so we can go forward with a clear understanding of the alternatives, good and bad, which hopefully would unify the nation behind a single, clear-cut policy.
The problem with the current situation is that it allows our enemies, al Qaeda, Muslim fundamentalists and others, such as Iran, to capitalize on our confusion and adapt their strategy accordingly, while we can’t seem to agree on how to respond.
As long as we continue to allow our enemies to exploit our vacillation and indecision, there are sure to be more attempts to attack our homeland, some of which are bound to succeed. To succeed, they only have to be right once, while to prevent them we must be right 100% of the time.
I believe we should push Congress to debate the issue and vote up or down for an open declaration of war on our enemies.
Is the health care reform constitutional? How about taking over General Motors and Chrysler, insurance giant A.I.G., the banks, or any of the other myriad actions taken by Obama and his administration and Congress since he became president?
The number of lawyers in Congress varies over time, but in general, it is a high percentage of the membership, ranging from 55 to 80 percent of the House of Representatives and approximately 60 percent of U.S. Senators. That translates into 60 Senators and 250 plus Congresspersons, a total of something over 300.
With all the lawyers in Congress, one wonders how it is that they manage to pass legislation that violates the U.S. Constitution. Or, could that possibly be the reason? That is, because they are attorneys, they believe they can ignore the Constitution with impunity.
Senator Orrin Hatch, former Ohio Secretary of State J. Kenneth Blackwell, and Kenneth A. Klukowsi, a fellow and senior legal analyst with the American Civil Rights Union, made the case in a Wall Street Journal editorial that the health-care bills currently working their way through Congress are unconstitutional for the following reasons:
“First, the Constitution does not give Congress the power to require that Americans purchase health insurance. Congress must be able to point to at least one of its powers listed in the Constitution as the basis of any legislation it passes. None of those powers justifies the individual insurance mandate.”
“A second constitutional defect of the Reid bill passed in the Senate involves the deals he cut to secure the votes of individual senators.”
“A third constitutional defect in this ObamaCare legislation is its command that states establish such things as benefit exchanges, which will require state legislation and regulations.”
According to the Congressional Budget Office: “A mandate requiring all individuals to purchase health insurance would be an unprecedented form of federal action. The government has never required people to buy any good or service as a condition of lawful residence in the United States.”
Steve Elliott, President, Grassfire.org Alliance, noted: “Never before in U.S. History has such a federal mandate been imposed on the people of the United States! Why? Because the individual mandate is unconstitutional.”
Michael Connelly, a retired Constitutional Attorney, observed: “The law does provide for rationing of health care, particularly where senior citizens and other classes of citizens are involved, free health care for illegal immigrants…”
Mr. Connelly also stated: “If this law or a similar one is adopted, major portions of the Constitution of the United States will effectively have been destroyed. The first thing to go will be the masterfully crafted balance of power between the Executive, Legislative, and Judicial branches of the U.S. Government…This legislation also provides for access, by the appointees of the Obama administration, of all of your personal healthcare information (a direct violation of the specific provisions of the 4th Amendment to the Constitution), your personal financial information, and the information of your employer, physician, and hospital…The 4th is supposed to be a protection against unreasonable searches and seizures. You can also forget about the right to privacy. That will have been legislated into oblivion regardless of what the 3rd and 4th Amendments may provide.”
As the health care legislation is currently proposed, Mr. Connelly further notes: “If you decide not to have healthcare insurance, or if you have private insurance that is not deemed acceptable to the Health Choices Administrator appointed by Obama, there will be a tax imposed on you. It is called a tax instead of a fine because of the intent to avoid application of the due process clause of the 5th Amendment. However, that doesn’t work because since there is nothing in the law that allows you to contest or appeal the imposition of the tax, it is definitely depriving someone of property without the due process of law.”
Finally, led by South Carolina Attorney General Henry McMaster, the Attorneys General of at least 10 states are already lining up to contest the health care bill on constitutional grounds. Questioning the permanent exemption granted to the state of Nebraska to pay for an expansion of Medicaid, Mr. McMaster asks, “Why is it that Nebraska pays no taxes, pays no money as a state while the other 49 states do?”
So, with such a high percentage of attorneys in the Congress, how is it that they can create and adopt legislation that is so clearly unconstitutional? Do they actually believe that no one will challenge the health care bill in federal court? Or, is the legislation as it is currently proposed merely a tactical maneuver in a larger strategic plan to get health care passed in any form, lock it in, then continue to modify it over future years – ala Social Security and Medicare?
Just about everyone, left, right and center, seems to be weighing in on the health care debate: nationalize the health care system (as in Canada and the UK), require health insurers to provide coverage for everyone, merge Medicare and Medicaid into one common health care plan for everyone, provide health care to the immigrant population, reduce costs by cutting Medicare payments to doctors and hospitals, etc.
The arguments rage back and forth, many anecdotal, others statistical or numbers based, but they all boil down to one basic issue: less government involvement vs more government involvement in health care.
Having run a hospital for seven years, I have given this problem a lot of thought and would like offer the following observations:
First, I must admit that my bias is against any form of universal or nationalized health care, “public option” or otherwise. My experience is that a major part of the cause of the problems in health care today is the extent of government involvement, federal and state, that already exists. For example, the costs that hospitals are forced to absorb as a result of government regulation, mandating everything from details of construction and maintenance to cleanliness to the ratio of nurses to patients. One of the principal reasons for high hospital costs is government mandates, all of which drive up costs.
Some simple things could be done that would go a long way toward improving the health care situation in the U.S.: Tort reform, removing barriers that prevent health insurance companies from insuring people across state lines, allowing insurance companies to offer a wide-range of policies, fewer government mandates on health insurance policies (such as pre-existing conditions), and Medical Savings Accounts, for starters.
ABC’s “20/20″ co-anchor John Stossel, noted: “‘Choice, competition, reducing costs — those are the things that I want to see accomplished in this health reform bill,’ President Obama told talk-show host Michael Smerconish last week. Choice and competition would be good. They would indeed reduce costs. If only the president meant it. Or understood it. In a free market, a business that is complacent about costs learns that its prices are too high when it sees lower-cost competitors winning over its customers. The market — actually, the consumer — holds businesses accountable and keeps them honest. No ‘public option’ is needed. So the hope for reducing medical costs indeed lies in competition and choice. Today competition is squelched by government regulation and privilege. But Obama’s so-called reforms would not create real competition and choice. They would prohibit it.”
And, economist Walter E. Williams commented, “President Obama and congressional supporters estimate that his health care plan will cost between $50 and $65 billion a year. Such cost estimates are lies whether they come from a Democratic president and Congress, or a Republican president and Congress. … At its start, in 1966, Medicare cost $3 billion. The House Ways and Means Committee, along with President Johnson, estimated that Medicare would cost an inflation-adjusted $12 billion by 1990. In 1990, Medicare topped $107 billion. That’s nine times Congress’ prediction. Today’s Medicare tab comes to $420 billion with no signs of leveling off. How much confidence can we have in any cost estimates by the White House or Congress? Another part of the Medicare lie is found in Section 1801 of the 1965 Medicare Act that reads: ‘Nothing in this title shall be construed to authorize any federal officer or employee to exercise any supervision or control over the practice of medicine, or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer, or employee, or any institution, agency or person providing health care services.’ Ask your doctor or hospital whether this is true.”
I’m always struck by the disconnect that seems to exist when people complain about how ineffectively the government runs programs, yet they are willing to trust that same government to manage something as big and complex as health care. President Obama summed up the inefficiency of big government organizations pretty well when he said, “Fed Ex and UPS are doing just fine, it’s the post office that’s always having problems.”
The following commentary on the health care plan that recently circulated on the Internet sums up the situation rather neatly: “Let me get this straight. We’re going to maybe have a health care plan written by a committee whose head says he doesn’t understand it, passed by a Congress that hasn’t read it but exempts themselves from it, signed by a president who also hasn’t read it and who smokes, with funding administered by a Treasury chief who didn’t pay his taxes, overseen by a surgeon general who is obese, and financed by a country that’s nearly broke. What could possibly go wrong?”
In the final analysis, perhaps the biggest problem with health care reform is that Americans do not trust the politicians who are trying to reform the system.
Now that Congress has passed another increase in the minimum wage, I assume we can all march into the future together, arm in arm, singing Kumbaya.
Once again feel good politics triumphs over logic and facts, spending other people’s money by increasing the cost of doing business for everyone, aided and abetted by the unions, creating a solution to a problem that can’t really be solved by legislation.
By increasing the floor for wage rates, the compensation for every other position in those firms that employ people at the minimum wage will also have to be increased, in order to maintain appropriate differences between the various positions in the organization, while the unions use the increased minimum wage as the rationale for arguing that it should be used as the basis for increasing the wages of all workers.
Here are some questions for those who support the continuing minimum wage boondoggle:
Does raising the minimum wage for a few low wage workers actually make it possible for them to live? Raising an employee’s compensation, say by $5.00 an hour, would increase their gross pay about $200 a week, or $866 a month. If you add that to the approximately $1,733 a month they may already be earning (at say $10 per hour), their total gross will be about $2,600 a month. Does that make it possible for them to buy a home or live in the affluent communities where many of them are employed?
If a minimum wage can be created by fiat, why not make it $20 an hour, or even $40 or $50? Why not take it to the max and legislate the rate of pay for all jobs? How about $100 an hour for everyone? Sounds good to me.
If paying a minimum wage is a responsible way for government to do business and municipalities, should government money be used to buy goods and/or services from vendors who pay poverty-level wages? How does any city or county avoid paying higher fees to outside contractors, whose bids will necessarily factor in the higher wage mandates? Contractors will certainly not absorb increased labor costs for the privilege of doing work for the government. Obviously, more costly contracts for the government work will have to be absorbed in the budget, which ultimately falls to the taxpayers.
Does anyone know how much the minimum wage should really be? After all, one man’s minimum wage may be another’s poverty wage.
The wage rate that would qualify as an adequate living is clearly in the eye of the beholder and will also vary between different geographic regions and local costs of living. Most people would probably agree that it costs more to live in some communities than others, but we would probably find little agreement on the amount that is needed to support a reasonable lifestyle in any community.
So, just what amount of compensation is necessary to provide an adequate living and who should make that decision? It appears that the federal government, state legislatures and city or county governing bodies are becoming the decision makers in such matters, rather than the free market.
Who benefits from a minimum wage? Certainly not local governments, which have to pay higher prices for goods and services from vendors, who will be required to raise their prices. And, surely not the taxpayers, who will undoubtedly bear the burden of additional taxes to cover the increased costs of doing business that occur every time the minimum wage is increased.
Proponents of the minimum wage argue that it is necessary to provide an adequate standard of living for families. Although it seems pretty clear that the new federal minimum wage, at $7.25 an hour ($11,960 a year), is not an adequate wage on which to support a family, it is not clear how many people who are paid the minimum also have that particular responsibility.
The Employment Policies Institute website notes, “…decades of research have shown that minimum wage hikes take a sledgehammer to the entry-level job market. As employers are faced with higher labor costs, they hire workers who have the most experience or high skill levels. That leaves unskilled applicants, particularly teens, without that critical first job experience. Since Congress began implementing the 2007 wage hike, over 480,000 teen jobs have disappeared across the country.”
Leading the effort to sell his health care plan to the nation, President Obama has been appearing almost non-stop in almost any venue that will have him. There is growing opposition to his proposal, as the details come to light. But he presses on, convinced of his own infallible judgment, that he knows what’s best for the entire nation of 300 million plus people and that only his ideas can possibly solve the problem.
Economist Walter E. Williams noted, “I doubt whether there are many Americans who think Congress has either the right or competency to choose where they live, what clothes they wear or what cars they drive. Yet many Americans stand ready to allow Congress to decide what doctors they can use and what treatments they receive. We forget that once we have government-sponsored health care, it can be used to justify almost any restraint on liberty.”
And, columnist David Harsanyi commented, “The president claims that we must pass a government-run health insurance program — possibly the most wide-ranging and intricate government undertaking in decades — yesterday or a ‘ticking time bomb’ will explode. If all this terrifying talk sounds familiar, it might be because the president applies the same fear-infused vocabulary to nearly all his hard-to-defend policy positions. You’ll remember the stimulus plan had to be passed without a second’s delay or we would see 8.7 percent unemployment. We’re almost at 10.”
If the government is so efficient and capable of running large organizations, how is it that the post office and the railroads have never been able to operate at break even, let alone make a profit? So, why would a gigantic health care system that accounts for an estimated 18 percent of the nation’s total economic output be able to do any better?
Medicare is held up as an example of a government run health care system that covers a major portion of the population (about 13 percent), yet operates efficiently, with only about three percent administrative overhead, while providing almost unlimited care to seniors at a reasonable cost. Unfortunately, the reality is not quite as advertised.
For one thing, Medicare loses money. It is one of the nation’s biggest unfunded liabilities. So, the program may be efficient, but it loses money. The Peter G. Peterson Foundation notes: “… between Medicare’s three programs (hospital insurance, outpatient, and prescription drug), current and future promised Medicare benefits amounted to $36.3 trillion.”
Another little-known fact about Medicare is that the program is able to control costs only because it can dictate the prices it pays for services. In other words, the system employs price controls to keep costs down. However, it’s a well documented historical fact, dating as far back as the early Romans (Diocetianus, 244-301 A.D.), that price controls don’t work. For example, hospital fees for both inpatient and outpatient services are determined by the government, in its sole discretion.
Furthermore, prices are set according to a system established by Medicare, which then pays only 80 percent of the fees that it determines are or should be the proper charges. Still, Medicare loses money.
Another representation of the Obama administration and others who are pushing for national health coverage is that there are 47 million Americans who do not have any health insurance, which provides the basis for their haste to adopt a plan. Once again, however, at best this is simply inaccurate, at worst, it’s a gross misrepresentation. FactCheck.org offers the following information:
“Twenty-six percent of the uninsured are eligible for some form of public coverage but do not make use of it…this is sometimes, but not always a matter of choice.”
“Twenty percent of the uninsured have family incomes of greater than $75,000 per year, according to the Census Bureau.”
“Forty percent of the uninsured are young…many young people lack insurance because it’s not available to them, and people who turn down available insurance tend to be in worse health, not better…”
Star Parker has written, “Pulling immigrants out of the equation, we’re left with an uninsured population that can’t afford insurance that is about a third the size of the widely quoted 47 million. It’s a population that is generally poor, young, uneducated, and not working…We’re already set up to deal with these folks. Either through Medicaid or covering their emergency room visits.”
As usual, statistics are being misused or misrepresented to support a position that is not necessarily valid. In this case, the need for a government run health care program for everyone.
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