A few thoughts...

Tomorrow morning, I am heading out of town for a week-long vacation of sorts.  Before I left, though, I wanted to jot down some thoughts.  Some of these thoughts have been rattling around in my head for a while and some are reactions to the news of the day.  Anyway, I just feel like verbalizing some of these ideas that have been echoing inside my mind.  Think of this post as a sort of Reader's Digest for political news of the past few days along with some running commentary.

In what was really slightly surprising news to me, a federal court ruled a portion of the health care law unconstitutional.  Specifically, the mandated purchase of insurance "exceeds the constitutional boundaries of congressional power," according to U.S. District Judge Henry E. Hudson.  Of course, this is not the end of the story.  The Supreme Court will ultimately decide on this issue, but it is comforting to know that there is still some respect for the Constitution in federal circles.  Clearly, Nancy Pelosi has no such respect.  When asked where the Constitution authorized Congress to force citizens to purchase anything, she refused to answer and acted like the questioner was crazy.

My concern is that the flaws with the health care law go far beyond the individual mandate, which looks to be the only point of serious constitutional contention.  I am afraid there is really no good outcome to the legal course of action.  Ultimately, the law will be implemented with or without the individual mandate.  While removing the individual mandate would be a positive outcome, it does not make up for the vastly negative impact of this health care law.

The only way to really fix this law is to completely repeal it through Congress and pass a new law which is better suited to fix the problems with our health care system.  Such a law is described in my previous post on the subject. Unfortunately, even if the new Congress had the votes to repeal the health care law, there is no way that Pres. Obama would allow his crown jewel to be destroyed.  He would veto and Republicans simply do not have the votes to override the veto.  The sad fact is we are stuck with this law until Republicans take the White House.

Can the Republicans take the White House in 2012? I think it is a very real possibility, with disapproval ratings above 50% and a hostile Congress that will not allow him any easy victories.  Still, Republicans cannot let their guard down.  The wave of momentum which gave Republicans the House in November could just as easily turn against them or, at the very least, crash down into a valley of disillusionment.

Republicans benefited from a reaction against Democratic liberalism the likes of which had never been seen in this country.  They also benefited from a citizenry that was tired of failed economic policies that were driving our nation into serious debt and failing to jump start our economy in the process.  Republicans now hold at least a share of the power in Washington, D.C. which means that they cannot sit idly by and let the Democrats hang themselves any longer.

Instead, Republicans must use the House as a launching point for conservative ideas.  They have to present a clear alternative for the country to compare with the policies of Pres. Obama.  If they do not, they risk alienating the people that gave them such an historic victory a month ago.  They also risk being labeled once again as part of the problem.  Do not forget that in 2008, one of the Republican's biggest problems was that conservatives had lost faith in the party, not seeing a significant difference between them and Democrats.  If that remains true now, Republicans will lose every bit of the momentum they gained this year and 2012 will see a Democratic revival.

What does the ideal Republican political strategy look like, then? Well, it most certainly does not include making Hal Rogers, the "Prince of Pork," the House Appropriations Committee Chairman.  Republicans absolutely cannot back down on their campaign promises of fiscal conservatism.

Republicans must not compromise that conservatism, either.  Perhaps the most misinterpreted news of the last few days is the announced compromise between House Republicans and President Obama regarding the Bush tax cuts.  While there are some good things in this compromise, and an extension of the Bush tax cuts at all levels of income is absolutely necessary for our economy, this compromise is a very bad thing.

First of all, we simply can't afford it.  Basically, this compromise worked out something like this...

Pres. Obama - "We need to spend more to help our economy out and we need to tax more to pay for it."

Nancy Pelosi - "Yeah!"

John Boehner - "No, we need to tax less to help our economy out and need to spend less so there is less to pay for."

Pres. Obama - "Ok, you know what, we are going to quit all this political bickering and compromise.  I tell you what, let's leave out the part where we pay for it and that way we can both get what we want.  Let's tax less and spend more."

Nancy Pelosi  - "Wait, what?"

Harry Reid - "Are you sure about that, sir?"

John Boehner - "I don't know if I can do that, Mr. President."

Pres. Obama - "I tell you what... Since I am feeling particularly generous today, I will even throw you a bone on the estate tax. Your constituents will really like that."

John Boehner - "Mr. President, you have yourself a deal."

[Boehner walks out of the room]

Nancy Pelosi  - "Mr. President, I don't think I can support that deal.  We need to tax the rich, that's what we have been saying for years."

Pres. Obama - "Well you don't have to support it.  In fact, I'd rather you didn't.  People think I'm too liberal so I need to look like I am willing to compromise for a little while.  If you and your liberal friends will kick and scream long enough people will actually start to think I am on the conservative side on this."

Nancy Pelosi - "You are so smart, Mr. President.  I wish I was more like you."

Harry Reid - "Me, too!"

Pres. Obama - "I love you guys!"

Ok, you get the point.  This compromise is a political stunt.  Pres. Obama is busy remaking his public image.  Republicans are too busy championing the Bush tax cuts to see the dire consequences of what is happening.  If this compromise becomes a reality, it won't necessarily be a terrible thing, but it is indicative of a larger problem.  Moody's has warned numerous times now that the US will soon see its credit rating cut if it doesn't change its ways.

For too long, Republicans have championed tax cuts and Democrats have championed spending increases.  Nobody has championed spending cuts.  At least, not really.  What we get is a series of compromises where we cut taxes and raise spending.  That leads to debt, enormous piles of debt.

A credit rating cut will be disastrous for the American economy.  It will only exacerbate the debt problems we have as U.S. treasuries will no longer be the world's safest investments.  Foreign money which was coming here will stop and go elsewhere.

If Republicans were serious about championing the fiscal conservatism of the Tea Party movement, they cannot allow for this kind of compromise to continue.  Neither can they remain the obstructionist party they were when they had no avenue for generating their own proposals.  They have to actively promote alternatives, alternatives that are actually different.

The new Republican House, as soon as it arrives, should begin passing bills that have no hope of passing the Senate or the President's desk.  Passing the bills into law is not the goal.  The goal is to force President Obama and the Democrats in the Senate to consistently say no to conservative policy alternatives.

Republicans should consider not just extensions of Bush tax cuts, but much more extensive tax cuts that will truly spur economic growth.  They should consider the Fair Tax or at least significant cuts to the income tax on the order of double what the Bush tax cuts were.  Most importantly, these tax cuts must benefit all economic classes equally.  Republicans cannot allow Democrats to corner them as the party of the rich again.

Republicans must also propose cuts to spending, though.  Without that, they have no hope of solidifying the support of fiscal conservatives.  Without it, they risk disillusionment and a return of the belief that Republicans are just political opportunists who are not willing to take the necessary measures to fix the real problem, and that is a federal government too big to support.

Republicans must not just aim to repeal the health care law.  They must propose an alternative that looks significantly different.

This is the key.  Republicans cannot simply say no any longer.  They must propose new ideas, new solutions which can serve as the platform for a Presidential bid in 2012.  Without remaining proactive, Republicans will lose their momentum and any chance they have to overtake President Obama in the next elections.

After all, President Obama is "itching for a fight."  Republicans should give him one.  In particular, I am looking forward to the first budget battle between the new House and Pres. Obama.  That, I believe, will tell the tale on the new Republicans.  Are they really serious about being fiscally conservative? We will find out then .

2010 Midterm Elections Recap

Well, they are still counting votes in Washington and a few Congressional races across the country, but we do now have a pretty good idea of what the final scores are.

Senate
Democrats - 53 (-6)
Republicans - 47 (+6)
** - Washington could still turn, but current totals suggest a Democratic victory there and there is little reason to believe that will change.

House of Representatives
Democrats - 193 (-64)
Republicans - 242 (+64)
** - Like in Washington, there are several House races still tabulating votes across the country, so this number could fluctuate one or two seats in either direction but this is more or less the final tally.

First of all, I would like to say that my projections were nearly spot on in the House. Senate projections were not as good. It appears that polling systematically overvalued Republican candidates in a few key Senate races. Nate Silver presents some interesting ideas for why this was the case on the FiveThirtyEight blog over at the New York Times.

Still, this was a monumental election for Republicans. A pick up of 6 seats in the Senate, though somewhat less than what some forecasters foresaw, represents a doubling of typical mid-term pickups for the out-party. Additionally, the 2010 electoral map was very unfavorable to monumental shifts, considering roughly half of the seats (18 out of 37) up for grabs were already in Republican hands. Compare that to 2012 elections where 21 of the 33 seats up for election are Democrats, and 2 more are Independents who currently caucus with the Democrats. Imagine if that had been the case this year! We would have seen a shift unlike any in the modern era.

Victory in the House cannot be overstated, though. As predicted, Republicans picked up more seats than any party in any single election since 1948 when Democrats picked up 75. For a moment, let's look at where those pick ups came from. The first map shades states based on the absolute number of seats gained for Republicans or Democrats (Delaware and Hawaii both actually saw a net pick-up for Democrats). The second map shades states based on percentage of the delegation from each state that switched parties.





As you can see, pick-ups came from across many regions of the country. The biggest gaps are in the Midwest which is most likely because those delegations were already Republican. New England is also blank, with the important exception of New Hampshire where the Congressional delegation completely switched over to Republican hands. This represents the first Republican foothold in New England in several years. New Hampshire and Connecticut had been Republican until 2006 when Democrats took over the Congressional delegations of both states. 2008 saw the complete extermination of the New England House Republican. Many believed this was the end of the Republican Party in New England. New Hampshire Republicans have proven them wrong.

Overlooked in a lot of this is the unbelievable victories by Republicans in state governments across the country on Tuesday. According to NCSL, Republicans have now reached their greatest strength in State Legislatures across the country since 1928!

The following map shows party control of state legislatures prior to the election:


Here is the party control of state legislatures after the election:


Republicans also did well in Governor's races.

Here is party control of the governor's office prior to the election:


Here is party control of the governor's office after the election:


Why does this matter? Aside from a significant amount of policy that effects everybody's daily lives taking place at the state level, including the implementation of the new health care law, these elections were especially important this year for one reason: REDISTRICTING!

As you most likely are aware, the government has been busy carrying out the census this year. That means that, before 2012, we are going to have a new electoral map. That map is shaped by state governments. There is considerable research that has shown that redistricting can lead to significant seat swings, some even suggests that Southern redistricting was one of the key components to the 1994 Republican Revolution.

Republicans now have more control over those state governments than they have since 1928! That is sure to impact future elections in a huge way.

And, finally, I would like to discuss one of the most popular talking points of pundits on election night, that the Tea Party had a bad night. They point to the failures of Joe Miller, Christine O'Donnell, and Sharron Angle in taking down their Democratic opponents after taking down the Republican establishment candidates. They do not consider, however, the success of Marco Rubio and Pat Toomey. Even more, they treat these races as if they are in a vacuum. The historic nature of this election, with historic victories that you have to go deep into the record books to find comparable results, cannot simply be attributed to the economy. This election was, at least in party, a direct result of Tea Party enthusiasm for this new Republican Party. These candidates provided hope for a giant group of people that had become disillusioned with the Republican party and Washington politics.

Whether or not a few particular candidates won, the Tea Party was not even close to a failure, it was the primary catalyst behind Republican gains on Tuesday! Anger over government mandates, soaring national debts, and an unwillingness to jump start the economy with much needed tax cuts were channeled into Republican support by the Tea Party movement.

Now, we move on. Elections are over. Governing commences. My blog will shift focus to party strategies moving forward. I will, from time to time, cast an eye towards 2012, but will for the most part stay in the here and now for a while.

Final Projections... Tea Party Revolution

Election eve for the 2010 Midterm elections is finally here.  I have tweaked my calculations a bit to reflect the nearness of elections.  First of all, I have reduced the margin necessary to classify races.  Now, if a candidate's polling average is 3 to 7 points ahead of the opponent(s), they are classified as a lean.  A margin of 8 or more points, is classified as a solid lead.  This tweak is meant to account for the reduced possibility for change between now and the election.  Additionally, while most races have utilized an average of 3 or sometimes even 2 of the most recent polls, the relative abundance of polling data as we draw nearer to election day has allowed for the inclusion of 4 polls in all Senate races.  This should provide a more accurate measure of how races stand.  With these tweaks in mind, here are my final projections for the 2010 Midterm elections, assuming leans go as projected and dead heat races (those with a margin of 2 or less in the Senate or categorized as Toss-Ups by RealClearPolitics) split 50-50:

Senate
Democrats - 50.5
Republicans - 49.5

House
Republicans - 245.5
Democrats - 189.5

The tidal wave of momentum in the House over recent weeks and months has crested at the perfect moment and it appears House Republicans are poised to have an electoral victory of historic proportions.  These projections show Republicans picking up 67.5 seats.  The Republican Revolution of 1994 only awarded Republicans a pick up of 53 seats.  You have to go all the way back to 1948 when Democrats picked up 74 seats to find a larger seat swing than is currently projected for Republicans.  Keep in mind, this is a very modest projection, splitting the toss-up races 50-50.  In fact, there are 43 toss up races which indicate a a potential range of seat pick-ups from 46 to 89 seats for Republicans! Another important milestone that Republicans have passed is that every single toss-up race can go to the Democrats and Republicans will still gain control of the House.  At this point, the question is not whether or not Republicans take control, but just how strong that control is.

In the Senate, the Republican momentum seems to have hit a plateau right at a 50-50 split.  As it stands, Democrats are poised to win 50 and Republicans 49 with the Senate race in Washington being the one race too close to call.  If Washington does go the Republican's way, a split Senate could make Joe Lieberman one of the most powerful people in Washington, D.C.  He will be courted very strongly by Republicans to caucus with Republicans, which would give Republicans a 51-49 advantage.  Still, as Democrats have demonstrated over the past year, a simple majority in the Senate is nearly meaningless.  At the very least, nothing will be able to pass through the Senate.

Well, the time for projections is over.  I will be back tomorrow night to compare the results that are in to these final projections and see just how accurate they are.  Stay tuned, folks.  It's going to be a wild night!

October Update.. Senate in play?

We are one month away and Republicans are surging forward.  In fact, for the first time, I am really beginning to think a Republican control of the Senate is entirely feasible.  Based on current polls, with toss-ups (any race where the polling is within 5 points either way) going 50-50, party control of the House and Senate should look like this:

Senate
51-49 Democrats

House
226-209 Republicans

Since a month ago, a few of the races have really started to take shape.  Both Republicans and Democrats have increased their number of solid leads by 2.  The real shake-up, though is in the leaning category.  Only one race remains in the "Lean Democrat" category.  6 are in the "Lean Republican" category.  If they all go the direction they lean, that puts it at 48 Democrats and 46 Republicans with the following races deciding party control (with the latest average polling numbers):

California
(D) Barbara Boxer - 48%
(R) Carly Fiorina - 44%

Colorado
(R) Ken Buck - 48%
(D) Michael Bennet - 44%

Illinois
(R) Mark Kirk - 41%
(D) Alexi Giannoulias - 41%

Nevada
(D) Harry Reid - 45%
(R) Sharron Angle - 44%

Washington
(D) Patty Murray - 50%
(R) Dino Rossi - 47%

West Virginia
(R) John Raese - 47%
(D) Joe Manchin - 43%

Obviously, any of these races could go either way.  They are close enough that any slight last-minute change in momentum could make the difference.  Most are within the margin of error for the polls, anyway.  But, considering these are averages, let's just pretend that they are more accurate than a single poll.  Let's narrow down our window of interest from 5% being too close to call to 2%.  That would put California and Washington in the Democrats' column and Colorado and West Virginia in the Republicans' column, making it now 50-48 with Illinois and Nevada needing to both go Republican to split the Senate.  If you consider both of them 50-50, then that would be about a 25% likelihood.

Ok, now why has this month been a good one for Republicans? Well, that is most likely a very difficult question to answer.  It is also difficult to say whether that momentum will continue for the next month.  If it does, though and the same change that took place over the last few months continues over the next month, Republicans will be right on the verge of taking the Senate.

A few things to keep in mind...  The advantage on election day tends to go with the candidate who is surging.  They generally outperform their polling numbers.  Momentum is very important in elections.  Additionally, Republicans have been outperforming Democrats dramatically in polls that use a likely voter rubric as opposed to a voting age rubric.  This is because Republicans are much more excited about these elections than Democrats and are more likely to show up to vote.  Has this been overestimated or underestimated in these polls? That is hard to know, but I tend to think that general excitement and enthusiasm is hard to measure and will generally be underrepresented in polls.  Rasmussen has caught a lot of flack for over-representing Republicans because of their reliance on likely voters.  Indeed, if Rasmussen was the only polling agency used, Republicans would have much better projections than I present here.  Still, I think that they may be more accurate than many are wanting to admit.

All in all, Republicans should be excited about the elections coming up in a month.  Democrats should be shaking in their boots.  The House is going Republican.  It is going to go hard Republican.  The Senate, on the other hand, is going to be tight.

Updated predictions...

Finally, I have taken the time to plug all of the latest polls and primary results into my spreadsheet and have come up with some new November predictions!

Republicans are looking healthier than ever for the midterms.  My prediction now shows Republicans leading in 45 Senate races with 6 races too close to call.  Obviously, that leaves Democrats with leads in 49 races. 

The 6 toss up states are:

California (Boxer-D up by 2)
Colorado (Buck-R up by 1)
Illinois (Kirk-R up by 2)
Nevada (Reid-D up by 2)
Washington (Rossi-R up by 1)
Wisconsin (Feingold-D up by 1)

Obviously, any of these races could go either way.  If they were to split 3-3, we would have a very interesting situation on our hands with Democrats taking a 52-48 edge in the Senate.  Remember, though, that Joe Lieberman is technically an Independent and he is counted in that 52.  Additionally, there are several blue-dog Democrats that the Republicans could pull their way in close votes.  If you thought it was tough for Democrats to get things passed with a 59 seat majority, just wait until it's 52!

And, then you have the House.  This is where Republicans are looking really, really good.  We are very realistically looking at an historic election in November in the House.  Based on RealClearPolitics categorization of the House elections, Republicans lead in 205 races.  Democrats lead in 193.  That leaves 37 toss-ups.  If those 37 toss-ups go 50-50 in November, which is frankly generous to Democrats due to the momentum Republicans are building up across the country, we are looking at a new majority of 223-212 for the Republicans. That would be a pick-up of 45 seats! For perspective, the Republican Revolution in 1994 saw Republicans pick up 54 seats.  With those 37 toss-ups, though, Republican could potentially gain anywhere from 27-64 seats.

At this point, I feel pretty comfortable in saying that Republicans will gain control of the House.  Many things could happen between now and November, but it is hard to imagine a scenario in which Democrats turn things around before then.

I am not the only one who thinks so, either.  Nate Silver, who has taken his FiveThirtyEight blog over to the New York Times, recently estimated that Republicans have a 2-in-3 chance of taking the House.

Stay tuned as I continue to evaluate the polls as November draws closer.  I will also be working on some other thoughts to post over the next few weeks regarding Republican strategy and maybe even an early round-up of the 2012 Presidential field.

It's been a while...

I have not updated my blog in a couple months, but I promise I have a good excuse! I got married, went on a honeymoon, moved to Mississippi, got a part-time job at Blockbuster, and entered graduate school at Ole Miss.

Needless to say, it's been a busy couple of months.  I will attempt to get back on a regular routine of updating this blog.  I have updated my election predictions and will put the new numbers up tonight.  I also have a couple other ideas for posts that have been rolling around my brain for a while.  Hopefully, I will be able to put them together soon.

Anyway, I will do my best to make this blog a good source of up-to-date political information with a health dose of common sense discussion.  I hope that you will revisit this site regularly and let me know your thoughts!

Technorati Tags: politics, conservative, election, prediction

2010 Elections: Update

I have finally gotten all moved back in here in Jackson and was able to update the polling numbers for my projections in the House and Senate. Things are definitely looking better and better for Republicans.

Senate

Arkansas polls have moved slightly in the direction of Republicans since the last update. This has led to me moving Arkansas from Lean Republican to Solid Republican.

Florida, on the other hand, is throwing a monkey wrench into everything. Crist's announcement of running as an Independent has put this seat more in play than previously thought. Still, Rubio and Crist are both running slightly ahead of Meek, the Democratic challenger, even when all three are included in one poll. I am going to treat this race like it is a Republican victory whether Rubio or Crist wins. While there is certainly an ideological difference, I think it is safe to say Crist would caucus with the Republicans in 2011 which is what we are really concerned about when it comes to majority control in the Senate. With all of this in mind, my new projections have Florida as a Lean Republican. It's still looking good for Republicans, but not as solid as it was before Crist's announcement.

New Hampshire has moved from Lean Republican to Solid Republican. Ayotte appears to be pulling away from Hodes.

Washington is now too close to call. I have categorized it as a Dead Heat. It appears that Rossi, a Republican candidate, is catching up to Patty Murray in the polls. In the most recent SurveyUSA poll, Rossi is actually beating Murray by 10 points! Other Republican candidates are pulling closer as well in recent polls, but not like Rossi. This race is still very tough to gauge, though, because there are 5 significant Republican contenders with no polling data available on the Republican primary. My calculations assume that Rossi's surge in popularity among general voters is reflective of support among Republicans.

With these new projections, the Senate projection now stands at 49-46 in favor of Democrats with 5 races too close to call.

House

This is where the really good news for Republicans can be found. Since my last update, things have really begun to fall apart for House Democrats. According to RealClearPolitics, the projections now break down like this:

Democrats: 175
Lean Democrats: 28
Dead Heat: 35
Lean Republicans: 23
Republicans: 174

My new projection, therefore, splitting the Dead Heat races 50/50 is Democrats 221, Republicans 215.

It just keeps getting closer and closer.

The Fair Tax

The Fair Tax is an idea that has gained a lot of momentum in recent years. It all started with The FairTax Book by Neal Boortz and Congressman John Linder. Published in 2005, the book caught on like wildfire among the most conservative elements of the American political scene. It was so popular that Mike Huckabee made it one of the cornerstones of his campaign in the Republican primary in 2008.

I am always skeptical of other people's ideas. I guess I am just used to people having a completely different view of what it means to be a conservative. So, before I jumped on the FairTax bandwagon, I wanted to see what it is all about.

First of all, the Fair Tax would eliminate all "federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes." Great start!

For federal revenue, it instead relies on "one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities."

This would allow for us to completely eliminate loopholes in the tax structure and the IRS.

Questions?


How can one sales tax raise revenues equal to what all of those other taxes bring in?


Multiple independent economists have reviewed the Fair Tax proposal and determined that a national sales tax of 23% (or 30%... more on the difference in a minute) would produce revenue equal to current federal revenues once all factors are considered.


But isn't a sales tax regressive?

The Fair Tax takes that into consideration. That's why, as part of the proposal, they suggest a universal "prebate" which would send every household a check at the beginning of every month. This check would be equal to the estimated necessary expenses for the household, adjusted for the number of people in it. Here's a chart that demonstrates what this would mean to families of different sizes:



This prebate ensures that the amount of taxation never exceeds what a person is able to pay and that a person living at or below the poverty line would pay no net taxes.

Why a sales tax?

Sales taxes make the most sense for a lot of reasons. First of all, it removes the disincentive to work more by taking the government's hand out of our paychecks. It removes the heavy burden on businesses that the highest corporate taxes in the world present.

Plus, from a purely economic standpoint, sales taxes are far more reliable than income taxes as a source of revenue.



This graph depicts personal income and personal consumption in the United States since 1973. While they both very closely follow the overall trajectory of the economy, if you look closely you can see that the red line, denoting expenditures, does not dip as far down or jump as far up.

This has also been demonstrated to be reflected in tax revenue. States that rely more heavily on the income tax tend to have far more of a boom or bust cycle with the economy. This leads to an expansionary government during good times and large amounts of debt during bad times.

A sales tax does a better job of flattening out government revenues which is much better for public policy.


How would this effect international trade?

This was probably my biggest question concerning the policy of a sales tax only system. If we suddenly jacked up sales tax rates by 20-30% across the board, wouldn't that increase the cost of domestic goods and therefore encourage people to import more and lead to fewer exports?

It turns out they came up with a solution to that too. Apparently other countries have been handling this for years. What they do is they tax based on consumption, not production. An item is only taxed at the retail level. Therefore, if you are a consumer in the United States, you would pay the US sales tax on any item purchased here or abroad. If it is imported, then you will pay a Value-Added tax. If you are a consumer abroad, you will pay your nation's tax on the good once it arrives.

Apparently, the way the system works right now, American goods are already at a significant disadvantage in international trade. Because we tax every item at every point along the way, the prices of our goods are already inflated. By consolidating taxes to the point of retail, some estimates show that initial prices would drop by 15-20% across the board. That means that this would actually equal the playing field and help businesses in international trade. If anything, it would help the nation balance its trade deficit and, by eliminating corporate taxes, help to reverse the trend of businesses moving out of the country.


So what's with the 23% or 30% thing?

Well, this is where it gets a little complicated. Basically, there are two ways to describe a tax: inclusive tax rate and exclusive tax rate. Let's say you have $10 and I take from you $1. Well, that would be an inclusive tax rate of 10%. Basically, the tax of $1 is 10% of the total amount, including what was taken away.

Now, what you have left over is $9. That means that you lost 11.1% of what you now have, which is the exclusive tax rate. Sales taxes are typically described in this way because you see the before tax total and add a percentage of that number. This creates some confusion in this debate.

So what would the Fair Tax propose? It would propose a 30% exclusive tax rate, which comes out to 23% inclusive tax rate. The 23% number is a better comparison for income taxes which we tend to use inclusive tax rates to describe. The 30% number is better for comparing to other sales tax rates.

Let's say the Fair Tax is enacted and you want to buy a $100 item at the store.

You would pay $130.

$30 = 30% of $100
$30 = 23% of $130

In the end, you get something worth $100 and pay $30 in taxes.

Now, for an income tax you have to work backwards. The best comparison is how do you wind up with $100, paying $30 in taxes?

With an income tax rate of 30%, you will have $100 left if you earn $142.

With an income tax rate of 23%, you will have $100 left if you earn $130.

That is why it is best to use the 23% number when you are comparing the sales tax to the income tax.


Anything else?

All of this information and so much more is available at the FairTax web site which I have provided a permanent link to over on the sidebar to the right---->

Also, I think an additional point for why this Fair Tax would be so great is how simple it is. It's good for so many reasons, not the least of these is transparency. People have no clue how much of their money right now goes towards taxes. Everything we purchase is taxed at every stage of production and everything we make and spend is taxed at every point along the way. Our entire economic system is mired in taxes everywhere and at all times. We have just grown accustomed to it. Imagine a simple system, instead, where the government can't hide its tax increases. Nobody can hide in loopholes and suddenly our tax system isn't subject to special interests. Also, people will suddenly be able to make a clear connection between increases in taxes and its effect on their pocketbook. There is something refreshing about the idea that people will be reminded every time they go to the grocery store exactly how much the tax rate is and immediately know whenever Congress decides they need to bump up their taxes to pay for some new program. Can anybody say return of fiscal responsibility?

Well, if you have any further questions, go to the web site yourself and look around.

They did a lot of research and put a lot of work into it. I think they have covered all of their bases and I truly think this would be the ideal tax system.

I wish I'd thought of it first!

2010 Election: Senate and House Projection

Ok.  I got tired of projecting states one at a time with full write ups.  Instead, I decided to do all of my projections at once.  So, here it goes!

Senate

Connecticut – Solid Democrat
Delaware – Solid Republican
Florida – Solid Republican
Illinois – Dead Heat
Indiana – Solid Republican
Kentucky – Lean Republican
Louisiana – Solid Republican
Missouri – Lean Republican
Nevada – Solid Republican
New Hampshire – Lean Republican
New York (Gillibrand) – Solid Democrat
North Carolina – Solid Republican
North Dakota – Solid Republican
Ohio – Dead Heat
Pennsylvania – Lean Republican
Washington – Lean Democrat
Wisconsin – Solid Democrat

Body Count
Democrats – 48
Lean Democrats – 2
Dead Heat – 4
Lean Republican – 8
Republicans – 38

Or, counting leans…

Democrats – 50
Dead Heat - 4
Republicans – 46

That leaves California, Colorado, Illinois, and Ohio up for grabs.  Republicans must hold onto all of their current leans and sweep these four states to get to 50.  Even then, Democrats would hold a virtual majority with Joe Biden serving as the tie breaker.  That is, unless Joe Lieberman fools around.  You never can tell with ole Lieberman.  In any case, Republicans could definitely make it interesting, but they have a long way to go.

House of Representatives

Based on RealClearPolitics classifications:

Strong Democrats – 197
Lean Democrats – 15
Dead Heat – 30
Lean Republicans – 19
Strong Republicans – 174

If you count the leans and split the dead even districts 50-50…

Democrats – 227
Republicans – 208

There is still wiggle room, though.  Republicans could take a majority in the House by picking up 83% of the seats that are locked in a virtual tie in the polls and holding onto their leans.  While it is certainly still a long shot at this point, it is definitely within the realm of possibility.

2010 Election: Reset

In case you noticed, I have added a new feature over there ----------------------------->

I am going to be regularly updating these charts to depict my latest projections in the Senate and the latest RealClearPolitics classifications of House races.  Hopefully, this will allow you to see, in a quick glance, how party control of Congress is shaping up for both parties.

Right now, this is how it stands:

In the Senate, I am currently projecting (including leans) 46 Democrats(counting Independents) and 35 Republicans with 2 races too close to call and 17 with no projections as of yet.

In the House, RealClearPolitics shows Democrats up 212 to 193 including leans with 30 toss-ups.  That means, with a completely 50-50 share of toss ups, the final tally would be 227 Democrats and 208 Republicans.

Republicans have good reason to think, though, that they will get significantly more than 50% of those toss-ups should their momentum continue at the current pace.

It’s certainly going to be a fun ride.  Keep up to date here at PVR.

2010 Election: Arkansas

Incumbent: Blanche Lincoln (D)
Challengers: Lt. Gov. Bill Halter (D)
Rep. John Boozman (R)
Jim Holt (R)
Sen. Gilbert Baker (R)
Sen. Kim Hendren (R)
etc…
Key Dates: Primary – May 18, 2010
PVR Projection: Lean Republican

Summary

Arkansas is just plain complicated.  I mean, a Congressional race where the incumbent is running for re-election just isn’t supposed to be this complicated.  You have Blanche Lincoln (D) running for re-election.  She is opposed in the primary by a couple different opponents, primarily Lt. Gov. Bill Halter.

On the Republican side, it gets really messy.  I am not even sure who all is running.  Out in front is the sitting Congressman for the 3rd District, John Boozman.  No Republican primary polls are available, as far as I can tell, but judging by comparative success in head-to-head matchups, Jim Holt is right on his tail.  Holt lost the Senate race in 2004 to Lincoln, receiving 44% of the vote having only spent $151,000 compared to Lincoln’s $6.4 million.  He seems to be giving it more of a go this time around.  Then, there is Gilbert Baker, a member of the Arkansas State Senate since 2000.  Behind him is Arkansas Senate Minority Leader Kim Hendren.  The list goes on, but I would be willing to bet the nominee comes from that group.

Polls

Because of the complexity of the race, there are lots of numbers to look at.  Rasmussen and Daily Kos have actually done a good job of providing a lot of good head-to-head polls.  Unfortunately, primary polls are scarce – nonexistent for Republicans!

So, I will do the best I can do with what I’ve got.  One thing that seems very clear is that there is a strong support for the Republican, whoever it is.  In fact, none of the matchups featuring Republicans I list here show Democrats in the lead.

Projection

The PVR projected probabilities of victory for each party in the Arkansas Senate race are as follows:

Republican Projection Score: 47%
Democratic Projection Score: 38%

This makes the Arkansas Senate race a Republican +9, or a Republican Lean.

 

http://www.politico.com/2010/maps/

http://lincoln.senate.gov/

http://billhalter.com/

http://www.boozman.house.gov/

http://jimholt2010.com/bio/

http://senatorgilbertbaker.com/biography-senator-gilbert-baker

http://www.arkleg.state.ar.us/assembly/2009/R/Pages/MemberProfile.aspx?member=Hendren

2010 Election: Update

It’s been a while since I looked at my Senate projections, so I decided to go back to my previous projections and update to the latest polls before moving on to further projections.  Sure enough, there have been some changes.

California

Previous Call: Lean Democrat
New Call: Dead Heat

As I had suspected, the polls do show that the race in California is tightening.  So much so, in fact, that I am now calling this race a Dead Heat.  My predictive calculus now gives this score:

Republicans: 42%
Democrats: 44%

Obviously, there is still lots of room to work.  It appears as though Tom Campbell gives Republicans their best shot in November.  He has pulled even with Boxer in the polls.  He also leads the latest Republican primary polls.  It is all still too close to call, though.  This will be a very interesting race to watch.

Colorado

Previous Call: Lean Republican
New Call: Dead Heat

It appears the same is happening in Colorado, which is slightly less expected.  Here is the new score:

Republicans: 42%
Democrats: 41%

Republicans still hold the lead, but is certainly within the margin of error.  Jane Norton appears to give Republicans their best chance with a slight edge over both Democratic candidates in head to head matchups.  None of the other Republicans can say that.

*Update* John Paul Stevens retiring

With the latest announcement of Supreme Court Justice John Paul Stevens's retirement, Republicans across the country should celebrate. First of all, John Paul Stevens was called the "leader of [the court's] liberal bloc" by the AP in its article announcing his retirement. That is an understatement. He was a liberal who was the best friend to Democrats on the court. They really can't do any better than him. Now, just to match him on the court, they must face a nasty confirmation process in the Senate that will give Republicans yet another opportunity to present Democrats as liberals out of touch with mainstream America. Democrats' best hope in 2010 was to pull back and go with non-controversial financial regulation and hope for the beginning of economic recovery before November. That option is eliminated now. It's time for Republicans to do their happy dance.

2010 House Elections

The 2010 House Elections are looking better for Republicans by the day. First of all, it is always good to see Nate Silver over at FiveThirtyEight.com talking doom and gloom for Democrats. He is a pretty biased liberal, but he does good statistical analysis so I follow his blog pretty regularly. I was delighted to see his post today suggesting that a loss of 50-70 seats in the House was very possible based on the latest generic ballot polls. He did a linear regression model (statistical term for finding a pattern) for Democratic seat gain/losses depending on percentage of the popular vote nationally. What he found was not good for Democrats. If Democrats were to lose by the 2.3 points projected by the current Real Clear Politics average, he found that Democrats would lose 30 seats. Even worse was that, typically, due to a number of reasons, Democrats over-perform in the polls. Since 1992, Democrats perform at around 3.4 points worse in the actual Congressional vote than they do in the polls. This would mean that the 2.3 points projected might more likely be a loss in the national vote of around 5.7 which would mean a loss of 51 seats.

So why does all of this matter so much? Well, in order to hold onto a majority in the House, Democrats can only afford to lose 40 seats. A loss of 50 seats would give Republicans a solid majority in the House. For perspective, the Republican Revolution in 1994 only saw Republicans pick up 54 seats.

Now, Nate Silver clearly points out that this is all a worst-case scenario assuming that there is no change in the momentum back towards Democrats. Well, I think that it actually could be worse than he lets on. I decided to look at the numbers myself. I went to Pollster and analyzed the Generic Ballot polls.



I tweaked their default chart by eliminating an internet poll that has consistently been off the charts in support of Democrats. I also selected high sensitivity which highlights recent trends. Interestingly, this leads to an even worse picture for Democrats. Notice the steep decline in Democratic support very recently. Interestingly, the turning point is March 21st. Anything ring a bell about that date? It is the day that the health care bill passed the House. Remember all the supporters of the bill saying that once it was passed there would be a big boost in the polls for Pres. Obama and Democrats? Well... it hasn't happened. Pres. Obama's numbers have stayed remarkably steady along with Congressional approval. Democrats, though, have seen their generic ballot numbers plummet.

So, what would it mean if the best, most recent polling numbers indicate closer to a 5% advantage for Republicans on the Generic Ballot? Well, by Nate Silver's calculations, that means an actual election day advantage closer to 8.4 points. That would be around a 65 seat loss for Democrats.

I think that we are about to see the biggest pickup in House seats by an out-party in a long, long time. It may outperform the Republican Revolution of 1994. Certainly, the current projections look incredibly gloomy for Democrats and there is no reason to believe that anything will change that. Passing health care legislation was supposed to turn their numbers around simply by showing they got something done. Well, it turns out passing unpopular legislation may be even worse than not passing anything.

The only remaining hope for Democrats is that the economy shows signs of economic recovery. Well, the chances of that happening before November are looking worse and worse. The Labor Department announced on Thursday that new jobless claims rose unexpectedly and all of the latest talk has been that significant reduction of unemployment figures aren't expected at any point this year.

So... everybody looking forward to the budget battle between Pres. Obama and a Republican House in 2011?

Health Care: The Debate that Never Was - Part 3

The Alternative That Never Was
“Liberals tend to put the onus of your success on society and conservatives on you and your family.” – Dennis Prager

There is indeed a problem in the health care industry. Very few would argue that reform is not needed in some fashion. Costs are incredibly high and far too many lack access to the preventative health care that they need.

This bill is not the answer. It is the result of failed leadership. That blame can be equally distributed to Republicans and Democrats alike. Democrats passed this bill under enormous political pressure and Republicans failed to provide a coherent alternative.

Sure, Republicans tried to suggest ideas like tort reform and interstate competition but they provided no clear definition of how that would look. More than that, they framed their argument around the notion that this bill was just too much too fast and that they simply preferred a little less of the same basic thing.

It must be made clear that the conservative solution to the health care market is entirely different from this bill and all of the suggestions made in Congress in recent months. It is the result of a different way of thinking altogether. The federal government, already lost in debt, cannot and must not interfere in private industry. It cannot and must not create new entitlements and expand the already far too large dependent class in this country. The responsibility to purchase and provide health insurance must rest not with the bureaucracy of Washington but with individual citizens who should be able to choose as freely as possible.

The problem with the health care industry is not that it is filled with greedy capitalists wishing to make a profit. The problem with the health care industry is that it is already overregulated and subject to unreasonable lawsuits. Those are the fundamental problems in the system that must be fixed.

To solve this problem, I propose the Liberty in Health Care Act.

Provisions of the Liberty in Health Care Act
This act would utilize the interstate commerce clause of the Constitution to require that individual states permit its citizens and businesses to purchase insurance from any state across the country under no additional regulation. This would vastly increase competition in the health care insurance market place which would inevitably drive down costs. This would lead to massive deregulation of the health care insurance market place as states would compete in order to provide the best business environment for health care companies. Deregulation means that individual citizens and businesses decide what matters to them and purchase health care insurance that fits them, not the desires of politicians in state capitals. No longer would we have a one-size-fits-all insurance market. Ultimately, some benefits would be too costly for individuals and businesses to purchase, but that decision would be made by them, not by bureaucrats.

This act would also utilize Congress’s express duty to uphold contracts to require that all insurance providers and customers disclose to each other prior to the purchase of insurance their terms and agree to those terms. This agreement then has the force of any contract. This provision would deal directly with pre-existing conditions. Pre-existing conditions should be an optional provision in any contract with a price attached to it. Insurance companies may determine the cost of insuring pre-existing conditions and the customer may determine the price they are willing to pay for that protection. Once they sign their agreement, though, that contract is binding and insurance companies may not back out of a pre-existing condition agreement no matter what health concerns are later uncovered.

This act would create a system of special medical courts to handle medical malpractice suits and institute a cap on punitive damages. These special courts would be based in the states and try cases brought against doctors and medical institutions in front of panels of specialists on medical codes. This would provide a stiff check on the rising costs of medical malpractice suits in this country which are one of the primary factors in rising medical costs. It would also allow for a system to remain which would handle true cases of medical malpractice while sorting out frivolous ones.

This act would abolish federal standards for Medicaid and free up state governments to take necessary measures to resolve the fiscal crises that the programs are creating at the state level. This would also allow for the federal government to cut costs by eliminating significant portions of regulatory agencies such as the Centers for Medicare and Medicaid Services.

This act would repeal the Medicaid Drug Rebate Program which requires pharmaceutical companies to register through the Department of Health and Human Services and the Centers for Medicare and Medicaid in order for their products to be eligible for Medicaid coverage. Instead, an emphasis would be placed on shifting state Medicaid programs toward Medicaid managed care which allow states to contract their Medicaid out to private insurance companies at a fixed price per enrollee. These companies focus on generic brands and minimize costs for drugs more efficiently than state-run Medicaid programs even with the Drug Rebate Program.

This act would repeal the Medicare Part D program passed in 2003 under President George W. Bush which provided coverage for prescription drugs for seniors. Instead, in order to drive down the costs of prescription drugs, all pharmaceutical companies would be granted tax-exempt status which would eliminate more than 15% of the cost of production.

This act would also establish a Business Health Insurance Incentive Plan which would allow for a deduction in taxes for all businesses regardless of size equal to the amount spent providing health insurance to their employees under a reasonable cap. This would allow for businesses to provide top notch health insurance to its employees directly in a way that suits their own needs without the transfer costs associated with collecting and distributing tax dollars.

Summary
This is the kind of reform that this country’s health care industry needs. It vastly increases competition, reduces regulatory burdens, and eliminates taxes. These great reductions in cost would lead to an inevitable drop in prices and also help to rejuvenate a lapsing economy. The act would encourage efficiency by reducing government obligations and increasing reliance on private business. The program would renew individual freedom and liberty in the health care marketplace by truly providing options that may be personalized to each and every individual under no federal regulations. If enacted, it would also substantially reduce the negative impact of medical malpractice suits that plague the industry and drive up costs and hurt doctors across the country.

Ultimately, the difference in this plan and the bill that recently passed in Congress is that this plan focuses on freeing up business and individuals to do the most they can with what they have. This plan says that the way to increase access to affordable health care is to drive down the costs of producing that health care through competition and allowing as many choices to the consumer as possible. Instead, the bill that passed mandates access to a heavily regulated system with limited choice. It manages to reduce cost only in the imaginations of those that created it and CBO officials who only see what they are told to see. It moves responsibility from individuals in offices and homes to bureaucrats in state capitols and Washington, D.C.

Clearly, these are two entirely different views on how to fix our nation’s health care system. There is room for debate between the two views and reasonable minds may disagree. The problem is that only one of these views was clearly presented to the public in the recent health care debate. One side proposed a lot of it and the other a little less of it. Meanwhile, the conservative ideals of liberty and freedom were hardly presented at all as a solution. When it was, it was presented in bits and pieces, not as an entirely separate alternative to the sweeping change presented by President Obama.

What Now?
“So what Republicans have to do is to make the 2010 and the 2012 elections referenda on Obamacare, win those elections, and then repeal Obamacare.” – Bill Crystol

This fight is not over. Of course, there will be Constitutional challenges to the process and attempts to demonize the trio of President Obama, Speaker Pelosi, and Majority Leader Harry Reid as the three horsemen of the apocalypse reigning over us all with absolute power and forcing socialism into our country. As Admiral Ackbar might say, “It’s a trap!”

This is an opportunity. It is an opportunity for Republicans to return to the conservative ideals of liberty and freedom by presenting a clear alternative to this healthcare bill. They must run their campaigns focused on what this healthcare bill, and all the legislation that has preceded it, has done to focus control in Washington, D.C. They must focus on the damage that this has done and will continue to do to our economy. They must focus on the real ideological difference between them and their opponents by proposing to do more than “repeal Obamacare” but to replace it with something different, something better.

They must focus their efforts on winning the country back for liberty. They must focus on individual responsibility.

The people want to hear it from somebody. The Tea Party is but a subset of a vast group of Americans yearning to believe that somebody still trusts in the American people and their ability to help themselves when given every opportunity to. They want leaders who have the vision to propose ideas that lead to long-term solutions, not inevitable debt and decline.

That is the path for a Republican take-over of the House. That is the path for a Republican majority in the Senate. That is the path to the White House. Republicans must only stand beside the principles of freedom and use liberty as the bedrock of their policy proposals to return this nation to a prosperity not seen for a long, long time.

Health Care: The Debate that Never Was - Part 2

The Essence of the Bill
“The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.” – Winston Churchill

The health care bill, in its final form as House Resolution 4872, includes many different proposals to manage the health insurance market. A summary of these reforms can be found on the web page for CBS at http://www.cbsnews.com/8301-503544_162-20000846-503544.html. I will analyze each of these portions of the bill and their impact.

Health Insurance Exchange
The bill creates state-based exchanges so that those who do not have health insurance provided through their job have access to a competitive market of healthcare providers. Separate exchanges are also created for small businesses. This initiative aims to cut costs by increasing competition within states between health insurance providers. While this is certainly moving in the right direction, the effort short-arms the goal.

The exchanges are heavily regulated. The reason that the exchanges are state-based is that insurance companies are already heavily regulated at the state level. The reason most people cannot currently buy insurance from out of state is that each health insurance provider must meet the very specific requirements of individual states. Republicans hoped that the bill would establish inter-state exchanges which would serve to increase competition further, but the final bill fell short of this goal.

The bill does provide for funding to states to set up these exchanges, however many question whether or not this funding is sufficient to maintain the programs as it only guarantees money through 2014. This has led many to question whether or not the bill is in fact an unfunded mandate, forcing the states to operate expensive programs which they cannot afford in the current budgetary crises most of the states find themselves in.

Subsidies
The program aims to extend access to healthcare by subsidizing the purchase of private insurance plans. This differs from the “public option” plan that was originally supported by President Obama and was shut down in the Senate. It means that the government will not provide insurance itself. It is not an expansion of Medicare. It is funding for private access to health insurance.

The subsidies themselves are significant. Any family with an income of 100-400% of the Federal Poverty Level will have access to subsidies and these subsidies can cover as much as 98% of the premium, although that is uncommon. This means that a family of four making up to $88,200 per year will be eligible for a federal subsidy.

All of this sounds great until you realize the money has to come from somewhere, which I will get to later.

Medicare
The bill aims to close the “donut hole” which is a gap in Medicare coverage for seniors (more information here… http://en.wikipedia.org/wiki/Medicare_Part_D_coverage_gap). They do this by providing a $250 rebate to seniors who hit the donut hole in 2010 and providing a 50% discount on drugs to seniors after that.

At the same time as providing these drastic expansions in Medicare coverage, the bill cuts $500 billion from Medicare. This is part of the effort to make the bill deficit neutral; however, Medicare on its own is already bankrupt. Part of the rationale for this is that expanded coverage should lower costs for Medicare recipients by promoting access to preventative care, but it is hard to fathom how this combined with efforts to curb Medicare abuse will allow an already bankrupt system to withstand cuts of $500 billion.

Medicaid
The bill expands Medicaid to include families which make up to 133% of the Federal Poverty Level which is $29,327 for a family of four. It also forces states to expand their programs to include childless adults in 2014.

This is paid for by the federal government through 2016, but after that it is noncommittal. Once again, this has been viewed potentially as yet another unfunded mandate. It is another drastic expansion of a program that is bankrupting states across the country.

Insurance Regulation
The bill mandates that no insurance providers can deny coverage to children with pre-existing conditions starting 6 months after the bill’s passage. Starting in 2014, nobody with pre-existing conditions can be denied coverage regardless of age.

Also, parents’ plans must cover children up to age 26.

Called “insurance reforms,” these are more accurately titled regulations. They force all insurance providers to meet certain criteria that are not necessarily needed by a large portion of the populace. Still, because no insurance providers will be able to deny these specific forms of coverage, the cost will be distributed to everybody, even perfectly healthy 30 year olds who just want the most basic form of health insurance. This will force insurance premiums to rise as all people are forced to purchase more coverage.

Still, the argument can be made that this is worth the price because these are people that, at no fault of their own, are denied coverage. That is not the argument that has been made, though. The argument has been that this is a cost-cutting measure, when in fact it increases regulations and mandates higher expenses.

Abortion
The whole issue of abortion in this bill is highly complex and clouded in the remnants of a fierce battle that took place over the possibility of federal funding. If the executive order is to be taken at face value, no federal funding will be provided for coverage of abortion except in the cases of rape, incest, or health of the mother. That doesn’t necessarily end the debate but I am going to avoid it simply because I think it distracts from the real issue of health care which has plenty of things to criticize on its own.

Mandates
And now we get to the crux of the issue. All citizens of the United States must purchase health insurance. Starting in 2014, any individual without insurance will face an annual fine of $695. This is justified by those on the left by saying that it will increase the efficiency of the system by expanding coverage. The uninsured are a drain on the healthcare system as it stands today. They must be paid for by somebody and they simply can’t afford it without insurance. They are free loaders on the system. This is why, they say, it is right to force people to insure themselves; but, this is exactly the kind of affront to individual liberty that infuriates people.

First of all, when did government get into telling people what they had to buy? I know, they force you to purchase car insurance, but that is in order to purchase a car. This bill forces you to purchase health insurance in order to live here. There are some out there who simply choose not to have health insurance, many of them young people who just graduated and are willing to risk the chance of not incurring significant health care costs. Not all of them put those costs entirely on the public. Sure, it forces some of them to mound piles of debt and possibly even bankruptcy but isn’t it just as much our right to fail in this country as it is our right to succeed?

Even if that argument of liberty doesn’t get you, President Obama had his own reasons to oppose such a plan. That, in fact, was the primary point of difference highlighted between the President and Hillary Clinton in the Democratic debates during the campaign. President Obama felt that individual mandates were wrong because they forced unnecessary expenses on the American public.

“[Senator Clinton] believes that we have to force people who don't have health insurance to buy it. Otherwise, there will be a lot of people who don't get it. I don't see those folks. And I think that it is important for us to recognize that if, in fact, you are going to mandate the purchase of insurance and it's not affordable, then there's going to have to be some enforcement mechanism that the government uses. And they may charge people who already don't have health care fines, or have to take it out of their paychecks. And that, I don't think, is helping those without health insurance.”

Perhaps of even more dire consequence is the mandate for companies to provide insurance. All businesses which employ more than 50 people are forced, under this bill, to provide insurance to all of their full time employees. If they fail to do so, they face a penalty of at least $2,000 per full time employee who remains uninsured. This, in effect, raises the cost to business of employing people. In effect, it is exactly the same as raising the minimum wage. It will lead to lay-offs. Businesses are already struggling in this economy, so now we are going to increase the cost of business.

This bill will encourage businesses that are close to the 50 person cut-off to lay off individuals above that cut off so that they do not have to meet the requirement. For companies that this is impossible for, they will be forced to lay off individuals proportionally to the increased cost to employ everybody else.

Paying for the Bill
So, with all of these expansions of coverage and subsidies, somebody has to foot the bill. Here is just a subset of some of the ways the bill plans to pay for itself.
In 2012, the Medicare Payroll Tax will be expanded to include unearned income (investment.) So, once again, as our economy struggles, we are going to tax investment. This tax amounts to a 3.8% tax on investment income for families that make more than $250,000 per year.

In 2018(this was delayed as part of a compromise in the reconciliation bill), the “Cadillac Tax” will be imposed on insurance companies which will pay a 40% excise tax on high-end insurance plans worth more than $27,500 for families or $10,200 for individuals. This tax will inevitably be transferred to the consumer and will drastically increase the cost of having a high-end insurance plan. This is a perfect example of the liberal mindset of “steal from the rich and give to the poor.” In order to provide more coverage for the uninsured, your ability to get better insurance will be prohibited.

The plan also institutes a 10% excise tax on tanning salons.

It taxes pharmaceutical companies by establishing an excise tax on medical devices.

It also doubles the fees taken by the government from insurance companies.

Summary
The bill will ultimately be one of the most expensive bills to ever become law. The CBO’s projection of a price tag around $940 billion is only the beginning. It double counts the $500 billion taken from Medicare, assuming that comparable savings can be found. It also underestimates the actual price tag of the bill’s policies because most of the expenses do not kick in for another three to four years.

The most insidious omission of the report, however, is that it does not account at all for the loss of jobs that the bill will produce. All CBO projections of the budget over a long time period assume moderate economic recovery in the near future. This bill puts that future deeply into question.

Let’s play a quick game. I will list some facts about a certain President and you will try to guess who it is.

I created the Veterans Administration to handle the healthcare and payments due to veterans. I signed into law the McNary-Mapes Amendment which expanded the role of the FDA in regulating the food industry. I announced a plan to hand over federal money to the states to provide relief to individuals and businesses affected by the recession. I formed the Committee for Unemployment Relief and created federal construction projects which, after the passage of the Davis-Bacon Act, were required to pay very favorable wages. I held a conference in order to address “discontentment” among Americans who felt “short-changed” by the labor market. As a result, I created a jobs program and slashed prices. I established the Reconstruction Finance Corporation, an agency dedicated to funding (or bailing out) the nation’s banks, railroads, insurance companies, and other major businesses. I signed into law the Glass-Steagall Act expanding the role of the Federal Reserve to extend credit and release gold to businesses. I signed into law many new taxes, including the first gasoline tax.




I am Herbert Hoover, the President most often blamed for the Great Depression.
My point is that the policies of President Obama very closely mirror exactly what was done following the stock market crash in 1929. In that instance, just as today, the role of federal agencies was expanded substantially and money was provided to businesses and individuals in the name of relief. That money was raised through new taxes and tariffs which harmed the economy far more than any of these efforts helped.
This health care bill does the same thing. In the name of helping those who “can’t help themselves” as was said during the floor debate leading up to the vote on the bill, we substantially fine businesses across the country, including those in the medical industry itself. This will inevitably lead to lost jobs. These lost jobs mean more people qualifying for unemployment benefits, Medicare, and (with this bill) insurance subsidies. These lost jobs also mean fewer people paying fewer taxes. This whole line of thought is completely excluded from CBO projections. According to them, economic recovery is just around the corner. Hoover thought the same thing.

“Definite signs that business and industry have turned the corner from the he temporary period of emergency that followed deflation of the speculative market were seen today by President Hoover. The President said the reports to the Cabinet showed that the tide of employment had changed in the right direction.” – January 21, 1930

President Hoover was wrong then and, under the current policies of President Obama, CBO projections of economic recovery seem as unlikely as ever.

In the end, this bill is a massive expansion of federal entitlements in healthcare. It drastically expands the liability of Medicare and Medicaid without addressing the basic flaws that brought those programs to the brink of bankruptcy. It mandates that all people purchase insurance and that all employers provide insurance. It heavily regulates the insurance industry and increases the cost of business. It pays for subsidies to low-income individuals and families by taxing pharmaceutical companies and applying fees to insurance companies. The fact that it was passed under budget reconciliation rules under the guise of reducing the deficit is the greatest farce in the history of American government.

On top of all of that, the high costs and remarkable strain on the economy, the bill is bad for American healthcare. The President likes to tout this bill as returning the freedom to choose to the American people and not insurance company executives. Well, you won’t have the freedom to choose whether or not you want insurance. You won’t have the freedom to choose insurance companies except the few that qualify to compete in your state’s exchange.

Even if this bill is by some miracle paid for and the cost does not harm the overall economy in any way, the mechanisms of this bill will harm the health care market. The bill removes personal responsibility from the health care marketplace. As it stands, the health care market is inclined toward innovation and high-end treatment. Cutting edge technology is where the American health care system excels in world competition. This bill will change that.

Under the current system, people do not pay for unnecessary treatment. When the responsibility is theirs and they know that they can just sit out a cold for a few days and not pay the money for the cold and sinus medication it is an effective way to reduce their own costs. When they take their baby to the doctor for a runny nose and find out that no treatment is necessary but they could pay for medication if they so choose, they very well might not take that treatment. When they find out that they have a minor case of diabetes and are told the most effective treatment is a disciplined diet but that they could also pay for an expensive shot which will help, they sometimes choose the diet.

This program takes that incentive away by providing insurance at little to no cost to many hundreds of thousands of people across the country. There will be a massive increase in the demand on those kinds of treatments, the unnecessary ones. That means fewer resources, capital, and labor in the health care industry will be available to develop and produce cutting edge treatments.

The United States, today, leads the world in cancer treatment. It regularly hosts dignitaries from across the globe for surgeries on the heart and other organs which require significant expertise. That is because our system encourages a focus on the cutting edge.

But most people don’t have access to that cutting edge treatment in the current system! I know that is what the left is screaming at the top of their lungs. Here’s the problem with that statement. All medical treatments today began as cutting edge treatments. Those simple cold and sinus medications began as cutting edge innovations. That is how the system works. By providing a profit incentive to produce as efficiently as possible, to produce as cheaply as possible to expand the potential base of consumers, those cutting edge treatments in the long run filter down to everybody.

The United States has long been the focal point of medical innovation in the world. That innovation has led to the creation of treatments that save the lives of people everywhere, every day. This bill fosters a system that takes us one step further away from that and inhibits our ability to innovate.
So, this bill is enormously expensive, extremely damaging to the economy, and detrimental to the basic system of health care in this country.

Health Care: The Debate that Never Was

It has passed. House Resolution 4872, the reconciliation bill which “fixes” the health insurance industry and addresses the crisis of out-of-control healthcare costs won passage by a vote of 219 to 212 in the US House of Representatives. We have been promised that the bill will expand health insurance coverage to 95% of Americans, decrease premiums across the board, and save the lives of tens of thousands of Americans every year. On top of that, it will decrease the deficit by more than a hundred billion dollars over the next ten years and more than a trillion dollars over the ten years after that. The bill has been characterized as this generation’s Social Security or Civil Rights Act.

At the same time, we are told that this bill shreds the Constitution. We are told that it defies all logic and reason and that it represents the dawning of a new Socialist America. It will forever consume the nation’s finances which are doomed to eternal red ink and bondage to China and India. Its manifestation will be lines that will lead to the sick dying in the streets outside of hospitals with no access to the healthcare system they desperately need.

So, who is right? How can rational people come to such divergent views of the same piece of legislation? How did it come to this? I hope to touch on the answers to all of these questions as I analyze the process of the healthcare bill, the essence of the bill itself, and the alternative that never was. I will also give my thoughts on where we go from here.

The Process
“Laws are like sausages, it is better not to see them being made.” – Otto von Bismarck

The formation of this health care bill will go down in history as a case study for political scientists and parliamentarians. It is a unique example of legislative behavior in the face of unbelievable pressures from every side. The passions that exist in the mere mentioning of health care forge a debate that is very difficult to win.

Some view access to affordable health care as a basic right which must be protected no matter the cost. They believe that covering the uninsured saves lives and is therefore worthy of any expense.

Others believe that the government is an inefficient manager, guilty of corruption at every level. They see regulation and management as power grabs intent on defying individual choice and liberty, the essence of what they believe to be the soul of America.

When these forces collide, it produces a train wreck with many casualties and Washington, D.C. is where it all went down.

President Obama, Speaker Nancy Pelosi, and Majority Leader Harry Reid represent an ideological bulwark for the first set of people. They believe that the government must facilitate however necessary the complete access to healthcare they deserve. They set their sights on a very high target, a radical and complete overhaul of the United States health care system.

You can see this in the words of President Obama back during the campaign. “I believe absolutely passionately,” he said, “that we must have universal health care. It is a moral responsibility and a right for our country.” He favored a public option that would allow government to provide coverage to those who have no private insurance plan.

With significant majorities in the House and the Senate and control of the White House, this team saw their opportunity to achieve what they had hoped for. They sought to pass the most expansive bill they could.

Then came the opposition. The public option was dropped to gain the support of some who saw the bill as simply too much to swallow. Deals were made and kickbacks were added. The bill grew to a length of more than 2,000 pages.

Constituents began to find buried in these thousands of pages taxes and expenses that were not as advertised. They saw mandates and regulations that reduced their choices in the name of expanding them. They were encouraged by sympathetic members of Congress and media to voice their concerns, but those concerns were always there. This is the second set of people I mentioned earlier, distrustful of government bureaucracy, ever wary of federal expansion.

The Tea Party movement was born as town hall meetings were swamped and rallies were formed across the country. Before long, popular opinion began to indicate a steady and significant erosion of support for the bill. A CNN poll conducted in June of 2008 indicated that 51% of Americans supported President Obama’s health care bill. At the time of the bill’s passage, a new CNN poll indicated that number had fallen all the way to 39%.

This popular unrest helped spark a Republican revival with victories in Virginia and New Jersey. It led to the ultimate victory of Scott Brown in the Massachusetts Senate Race, which sent violent shockwaves through Capitol Hill. It was a new shot heard round the world from Massachusetts.

Though separate bills had already passed the House and the Senate, negotiations broke down and the fate of healthcare legislation seemed dead with the loss of a supermajority in the Senate.

Democratic leadership faced a legislature scrambling for cover, many of their members representing districts that voted for John McCain, even more in districts with significant disapproval of this bill; however, the leadership would not give up.

They found a parliamentary rule that had been passed in order to facilitate budget proceedings and cut wasteful spending: the budget reconciliation. This allows for a bill, after being passed by the chamber, to be amended under strict rules. It eliminates the filibuster which allows for a simple majority to prevail so long as the amendment can be demonstrated to reduce the deficit and all of its parts are germane to that cause.

So, leadership went hard at work to create a reconciliation amendment which would meet these requirements. In the end, they produced a package that the CBO projected to reduce the deficit. Still, there were many parliamentary questions that remained.

The bill was not law and had to become law before it could be amended by the reconciliation. This meant that the Senate bill had to be passed by the House before reconciliation could be acted upon. The Senate bill was loaded with unpopular special deals and questionable treatment of abortion funding which made it incredibly radioactive for many House members.

This is where Speaker Pelosi stepped in with the so-called “Slaughter Solution,” or “deem-and-pass.” It meant that the House would simply deem the Senate bill passed without voting on it. Instead, they would attach a rule to their passage of the reconciliation bill that stated that the Senate bill was passed if the reconciliation bill became law. Ultimately, this idea was scrapped as it did not win the support of people who felt it was just a way to avoid accountability.

Still, a group of Democrats aligning themselves with Bart Stupak, a Democrat from Michigan, threatened the passage of the reconciliation bill which did not keep the original House language on abortion. Uncomfortable with the potential federal funding of abortion the bill could open the door to, the bloc was enough to determine the outcome of the bill.

So, negotiations began. At first, it seemed as though a deal would be struck to amend the reconciliation bill itself. The parliamentary procedure for this is questionable and would only complicate the process even further. Fortunately for parliamentarians, this idea didn’t last long as an even larger contingent of pro-choice Democrats squashed the opportunity by threatening to walk out on the bill should such an amendment be added.

Literally the day of the vote, only a few hours before the final vote was held in the House Chamber, a deal was struck between Bart Stupak and President Obama. An executive order would be issued declaring that the bill shall not be interpreted to indicate that any federal funding should be provided for abortion. The agreement was substantive enough to satisfy Stupak and his allies while also remaining distant enough for the pro-choice Democrats to put up with it.

Finally, the bill passed. With enormous political opposition, the Democratic leadership was able to guide a monstrous bill through a minefield. Public support had completely eroded and numerous Congressmen risked their jobs to vote for the bill. By the end of the process, Congressional approval had dropped from 35% in June to 19%. Still, the bill had passed.