Monthly Archives: October 2013

The Tree of Liberty: 10/22/2013

0

Posted on by

What Would Thomas Jefferson Do?
Tree of Liberty: 10/22/2013

R.H. Lee
All Americans are Immigrants.
Barack Obama has called for Immigration reform by the end of this year. What is the big hurry?  Let’s take our time and get it right, not “pass the bill so we can see what it says.”
http://www.whatwouldthomasjeffersondo.com/?p=303


Politics
McConnell’s thirty pieces of pork
http://reason.com/blog/2013/10/17/what-mitch-mcconnells-deal-and-frank-lau

Pelosi’s reaction to McConnell’s pork
http://www.washingtontimes.com/news/2013/oct/17/pelosi-pork-project-what-difference-does-it-make/

Apparently the cupboard’s are NOT bare, Congresswoman
http://www.politico.com/blogs/politico-live/2013/09/pelosi-the-cupboard-is-bare-173214.html


Economy

More debt ceiling illusions
http://www.breitbart.com/InstaBlog/2013/10/16/Senate-Debt-Deal-Includes-Provision-Taking-Away-Congress-Power-To-Increase-Debt-Ceiling

Obama’s economic agenda pushes relentlessly
http://www.cbsnews.com/8301-250_162-57607996/obamas-priorities-for-the-year-budget-immigration-and-farm-bill/


Featured Column: Thomas Sowell

Thomas Sowell provides a biting criticism of nominated Fed Chairman Janet Yellen, exposing her economic philosophy to a biting historical criticism
http://townhall.com/columnists/thomassowell/2013/10/15/a-return-to-keynes-n1723516

Crazy Corner: An insight into the warped liberal mind

Candy Crowley being a total nut at Rand Paul
http://newsbusters.org/blogs/noel-sheppard/2013/10/13/candy-crowley-asks-rand-paul-if-he-d-consider-becoming-democrat

If you are interested in a certain topic, or would like either RH Lee or Austin Heller to offer their opinions by addressing it in one of their articles, please let us know either by commenting on our website or through email. We are happy to feature articles covering topics of interest to our readers.

For more articles go to WhatWouldThomasJeffersonDo.com
To contact The Austin Heller Project email AustinHeller@WhatWouldThomasJeffersonDo.com
To contact RH Lee email RHLee@WhatWouldThomasJeffersonDo.com

The purpose of this newsletter is to bring to your attention ideas, philosophy and facts that we believe will contribute to freedom and liberty in America. It’s being sent to you because we think you’ll like it. If you don’t want to receive future issues, please email us and we’ll take your name off the list. We don’t want to be ‘spam’ to anyone.

We are not now nor will be ever be asking for or accepting contributions or donations. We don’t want to take your money – the government does far too much of that already. The biggest compliment you can offer, if you like what you see here, is to forward this to any and all of your friends, relatives, and associates who you think would appreciate it.

The United States of America came into being because people talked to one another about freedom and liberty. Good things, great things can still come from people talking together. You can help by spreading the word.

10 22 2013

 

 

All Americans are Immigrants

0

Posted on by

Associated Press, October 23, 2013:
“Man discovered in attic; lived hidden for five years eating food, wearing clothing belonging to homeowners.  US District Court rules homeowners must allow him to stay and must adopt him into their family!”

Did you raise your eyebrows at that?  I hope so, though it’s not a real news report.  Yet isn’t this what America is really doing with illegal immigrants?

They have come to our country against our laws, are further violating those laws every day that they are here, yet the courts insist that we provide them free medical care (as cited here  and here), food stamps, in many states drivers licenses (California, Colorado, Illinois, and Connecticut among others), and in other states college tuition assistance.


What is the Cost to Taxpayers?

Obviously, since no one knows for sure how many illegal immigrants there are in the US, it’s impossible to pin down precisely the true cost, but it is generally accepted that there are approximately 11.5 million people here in the US without proper legal status.

The Heritage Foundation issued a report earlier this year which estimated that the US currently provides nearly $25,000 a year in assistance to the average illegal immigrant but gets less than $11,000 in tax revenue in return. Heritage further estimates that if we grant citizenship to all of those 11.5 million, the annual expense will leap to an average of $43,900 in giveaways while tax income from those same folks will increase to only $16,000 per person.  So we increase our income by a mere 45%, while our costs go up a whopping 76% to $504 billion per year. Not exactly a recipe for financial success.


Good or Bad for the Economy?

There is much discussion about whether illegal immigrants help or harm the US economy. The New York Times makes the point that since illegal immigrants are often willing to work for lower wages, they create more competition for lower paid jobs, and hence result in lower wages for those American citizens in that sector of the workplace.

The same Times article goes on to suggest that the presence of more lower paid, non-specialized workers actually benefits more highly skilled workers since employers then hire those skilled workers for highly skilled positions which pay more.  It’s a two-sided coin, with many proponents arguing each point of view.

On one site alone, ProCon.org, there are twelve different articles posted, six from each side, while a Google search for “economic impact of illegal immigrants in the United States” returned 735,000 hits. Clearly, with that much debate and such a plethora of data it is not within the scope of this article to arrive at an inarguable conclusion to the question.


The Key Word is “Illegal.”  

As most of us know, illegal means “not sanctioned by or according to the law.” In a nation of law, which the US is supposed to be, things that are illegal are not supposed to be allowed. I would suggest that to intentionally condone illegal activities because of the belief that such activities might be good for the economy of the nation is, on the very face of it, a bad thing to do, and can set a very negative precedent.

Some might argue that this an unfair comparison, but would anyone suggest that it is appropriate to teach a child that doing something that’s against the law is okay because it brings financial benefits to the child’s family?  I would hope not.

The law is the law, and we should either obey or change it. Yes, there are laws that are unjust, and when we feel that they are, we must change them through the proper legislative procedures of our nation.  But before we go about changing the existing law we must first take powerful steps to prevent the massive abuse of whatever changes are implemented.

Illegal immigration costs taxpayers billions. Granting citizenship to the 11.5 million who are here in the US now will increase the cost to taxpayers by billions more. When a person comes to the US and lives here without following the proper legal procedures that person is breaking the law.


What Can We Do?

The first step – before we even begin to start thinking about changing America’s immigration policy – is to stop future illegal immigration.  Before we even begin to address the problem of how to deal with the 11.5 million who are already here illegally (which is really the point of the current Immigration Reform Bill put forth by the so-called Gang of Eight) we have to make absolutely, positively, unerringly certain that we have secured our borders for all time to come. We cannot allow that number to continue to grow, now or ever.

On October 17, President Obama said that he wants to pass an immigration bill by the end of the year.  That’s two months, nine days from now. Two months, nine days. That is not a lot of time to calmly, carefully analyze a massive and immensely complex issue that has perplexed our nation for decades.

We’ve been down that path before!  During the Reagan years we first “fixed” illegal immigration with “amnesty” and a promise to secure our borders, than six more times in the ensuing years followed it with other similar legislation.

The Seven Amnesties Passed by Congress

1. Immigration and Reform Control Act (IRCA), 1986: A blanket amnesty for some 2.7 million illegal aliens
2. Section 245(i) Amnesty, 1994: A temporary rolling amnesty for 578,000 illegal aliens
3. Section 245(i) Extension Amnesty, 1997: An extension of the rolling amnesty created in 1994
4. Nicaraguan Adjustment and Central American Relief Act (NACARA) Amnesty, 1997: An amnesty for close to one million illegal aliens from Central America
5. Haitian Refugee Immigration Fairness Act Amnesty (HRIFA), 1998: An amnesty for 125,000 illegal aliens from Haiti
6. Late Amnesty, 2000An amnesty for some illegal aliens who claim they should have been amnestied under the 1986 IRCA amnesty, an estimated 400,000 illegal aliens
7. LIFE Act Amnesty, 2000A reinstatement of the rolling Section 245(i) amnesty, an estimated 900,000 illegal aliens

 

Sadly, the promise to secure our borders failed to come true, and now we find ourselves once again facing the same massive and incredibly challenging problem all over again.

We need to make sure that when we finally wrestle this highly emotionally charged and controversial issue to the ground and gain control over it, we don’t find it reemerging like some horrific phoenix from its own ashes, five, ten, or twenty years hence.

Let me repeat:  Secure the borders, then make whatever changes we, as a people, deem appropriate. Secure, then explore change; not make changes, then secure. And it would then follow as the day the night that whatever changes we may deem proper will be implemented looking forward, not back into the past.  The past is immutable, unchangeable, and we should only move forward, not fall backwards.


Americans are All Immigrants

Let me pause to emphatically stress that I am not at all even remotely opposed to immigration. If America didn’t welcome immigrants to her shores, I’d be living somewhere in Germany or Ireland right now.

In the 1850s my maternal great-great grandparents came from Germany.  In the 1890s, two other sets of great-grandparents came, one pair from Germany and one from Ireland.  None of them were welcomed with open arms by all of their new neighbors. The Germans were often called “Dutch,” the Irish usually “Paddy,” neither of which was a term of endearment.  But they all were immigrants, and they all eventually settled in and became part of the “Melting Pot” that is America today.

In actuality, all Americans are descended from immigrants. Some are from families that came to our shores as long as 25,000 years ago from the other side of the Bering Land Bridge in northeast Asia.  Others came in the last decade or two and will add their children to the wonderful panorama of American life, but all are either born of immigrants or are immigrants themselves. No other nation on Earth boasts such a widely varied, such a magnificently diversified heritage. America today welcomes immigrants from every nation on the face of our planet: we always have, we always will.

But we must never forget that America is a land of laws, and in order to remain true to our heritage, we must adhere to our laws, not ignore them when some find them inconvenient. That’s the American Way.


What is the Big Hurry?

In late August of this year  the Obama Administration expressed the urgent, immediate need to launch a missile strike by US naval forces “within the next two to three days” against Syria.  The problem that was so time critical was to punish the Syrian leader, Bashar al-Assad, for his egregious use of chemical weapons in an attack upon the rebel forces vying against his government.

In an article on August 28, this author asked the question, “What is the Big Hurry?”, counseling patience and the hope for unity with our allies in spite of the urgency to move ahead on our own cited by Mr. Obama and his advisers.

Now, nearly two months later, no strike has been launched. Great Britain decided there was no big hurry.  France said they’d prefer to wait for the UN analysis. As the international consensus that Mr. Obama and his team had thought existed for his “immediate strike” evaporated, his “Big Hurry” did so too.  Perhaps Mr. Obama read our work and was inspired to a more rational and reasoned approach than his rampant calls for warlike action.

That’s what he should do now with regards to the immigration issue. Slow down, take the time to explore all options and all possible outcomes, not rush into it because he wants to get it done by December 31.  As previously mentioned, this is a problem that has existed in our nation for decades, and while we should most definitely address it, there is no “Big Hurry.”

Three and a half years ago, then-Speaker of the House Nancy Pelosi, referring the fledgling Affordable Care Act, told Americans “we must pass it in order to see what’s in it.”  That was another time when Mr. Obama’s administration proclaimed that we were in a “Big Hurry.”  Sadly, the ACA was passed, and we are day-by-day finding out that it contained much that Americans found to be…less than what they had promised.

“If you have a plan that you like, you can keep it.  Period.  No matter what.”  Barack Obama, July 16, 2009.

“My plan will save Americans $2,500 a year on health care.”  Barack Obama, July 20, 2009.

As pointed out last week in this space, neither of those promises has proven to be true.

Was the hurry to pass the bill really because that was the best way to find out what was in it?  That seems an unlikely methodology to really understand anything; adopt it, then figure out what it means.

I would suggest that the real reason for the “Big Hurry” to pass Obamacare was either or both of the following: (1) that there were provisions the administration didn’t want us to know about, or (2) because the 2010 mid-term elections were rapidly approaching and Mr. Obama was afraid that he was about to lose his majority in the House. If it were this latter point that scared him, he was right to be afraid. The Republicans did wrest control of the House from the Dems, and Obamacare would almost surely never have made it out of the newly reconstituted Congress in 2011.

Maybe this time we should look inside the Immigration Bill that he’s in such a hurry to pass and find out what it really says before we let it come to a vote.

With any luck, leaders like Rand Paul, Mike Lee, Ted Cruz, and others who stand for reason, logic, and the values defined in the US Constitution, values expressed by men like Thomas Jefferson 250 years ago, will fight for that well thought out approach.

All Americans are Immigrants

The Tree of Liberty: October 15, 2013

0

Posted on by

 

What Would Thomas Jefferson Do?

 

The Austin Heller Project
Phantoms & Lies of Hitting the Debt Ceiling.
Would it surprise you to learn that the Obama administration’s cries of “The Sky is Falling!” are unsupported by the facts? Financial analysis and constitutional law combine to explode the “Doom & Gloom” cries from the White House and its cronies.
http://www.whatwouldthomasjeffersondo.com/?p=287

R.H. Lee
Obamacare: The Reality Sets In.
This article needs no introduction; the name says it all.
http://www.whatwouldthomasjeffersondo.com/?p=282


The Week’s Best from Around the Nation:

Politics
Harry Reid dismisses Washington D.C.’s pleas.
http://www.washingtontimes.com/news/2013/oct/9/reid-dc-mayor-im-your-side-dont-screw-it-up/

Outrageous Obama Veto of piecemeal funding.
http://dailycaller.com/2013/10/10/president-obama-to-veterans-and-military-families-we-want-you-to-feel-the-pain/

Economy
Next Fed Chairman’s shoddy record on predicting bubbles.
http://www.weeklystandard.com/blogs/did-janet-yellen-predict-recession_742354.html

Crazy priorities!  Obama choice for Fed Chairman, the “most powerful central banker in the world” and all this NPR article can do is wonder whether to call her: Chair, Chairman, or Chairwoman?
http://www.npr.org/blogs/itsallpolitics/2013/10/09/230999838/what-to-call-the-most-powerful-central-banker-in-the-world

Featured Column: Ann Coulter
This week featured Ann Coulter’s courageous defense of Republican effort during the government shutdown. She proceeds from a biting analysis of Obamacare to an even harsher analysis of Democrat strategy.

Crazy Corner: An insight into the warped liberal mind
Liberal Think Progress links shutdown to Racism; uses historical “analysis” to argue that small-government and free-market mentality is a result of racial prejudice.

 

For more articles go to WhatWouldThomasJeffersonDo.com
To contact The Austin Heller Project email AustinHeller@WhatWouldThomasJeffersonDo.com
To contact RH Lee email RHLee@WhatWouldThomasJeffersonDo.com

The purpose of this newsletter is to bring to your attention ideas, philosophy and facts that we believe will contribute to freedom and liberty in America. We are not now nor will be ever be asking for or accepting contributions or donations. We don’t want to take your money – the government does far too much of that already. The biggest compliment you can offer, if you like what you see here, is to forward this to any and all of your friends, relatives, and associates who you think would appreciate it.  The United States of America came into being because people talked to one another about freedom and liberty. Good things, great things can still come from people talking together. You can help by spreading the word.

oak tree 1

Phantoms & Lies of Hitting the Debt Ceiling

1

Posted on by

On Oct. 17, the United States will reach a deadline to raise the debt ceiling. At this time, Congress will have to authorize the federal government to continue accruing debts to fund our massive deficit spending. Naturally, the Obama administration has pursued a concerted policy of fear mongering by predicting default on Social Security checks and interest payments on the national debt. The US Treasury Department declared that a default would result in a recession, and President Obama told Wall Street that they should be concerned about the mere possibility of default.

The mantra continues quite simply that “We must borrow money to pay the interest on money that we already borrowed.”

These doomsday predictions are, quite bluntly, complete fabrications. If the debt ceiling is not increased, the United States will not default on its debts and Social Security checks will remain intact. Unless President Obama willfully chooses to defy the Constitution and bring about the apocalypse he envisions, there will be no government default.

If the debt ceiling is reached, the United States has certain obligations which it must pay. A failure to pay these obligations would result in default. The media and government claim that there is no law in place to prioritize these obligations, but they clearly have not read the Constitution since the 1860s.

The Fourteenth Amendment to the Constitution states: “The validity of the public debt of the United States… shall not be questioned.” This clause referred to the debts the United States incurred during the Civil War. Under this provision, the administration would be legally obligated to make payments on its debts even if we reach the debt ceiling.

What exactly are these debts? What qualifies as a legal obligation by the United States government? Interestingly, the answer comes from the very liberal Paul Krugman, as he attempts to widely construe our debts. He identifies both interest payments on bonds and Social Security payments as debts which must be paid. Krugman admits that the Treasury Department could “pay off bonds in full,” but he argues that “Social Security benefits have the same inviolable legal status as payments to investors.”

Bonds

First, let’s examine the situation with regards to bond payments. Obama’s fear mongering over default involves the declaration that our credit rating would be down-graded if we do not raise the debt ceiling. This would result in higher interest rates on the debt in future. However, Moody’s Investors Service, a major credit rating agency, disputes that claim. They assert: “The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt.”

The Fourteenth Amendment makes clear that the government must service its debt. Since the US has approximately $222 billion in monthly revenue, with debt service payment obligations of only $35 billion suggestions that the American government might fall into default are patently absurd, unless Barack Obama willfully ignores the 14th Amendment in order to make his “gloom and doom” projections come true.

Social Security

Second, Social Security would not be destroyed by the debt ceiling. Shocking as it may be to many of you, the Social Security Administration actually runs on a surplus. According to Reuters, payroll revenue (what those of us with paycheck deductions see marked as FIFA on our paystubs) will bring in $38.8 billion more than the SSA must pay in benefits. I recognize that this is incredibly unintuitive and deserves some explanation.

Social Security payroll revenue is held by the Treasury Department in the Social Security Trust Fund. Generally, this money is raided by the Treasury Department to pay for other programs, which is why there is such uncertainty in the stability of the Social Security system. However, if the debt ceiling is reached, and the administration does not intentionally violate the 14th Amendment, all Social Security revenues must be paid out to recipients as Social Security benefits.

Given that the program takes in more revenue than it pays, it is again ridiculous to suggest that payments from the Social Security system to recipients would default, unless, of course, President Obama deliberately ignores the 14th Amendment to transform his scare tactics into reality.

The Debt Ceiling

This is not to say that the debt ceiling would not have an impact on our government spending or the economy. The government would have to make drastic cuts to its spending very quickly, but this would not result in a default.

What we’re doing is borrowing money to pay interest on our debt. That’s similar to a family whose credit cards are maxed out applying for a new credit card to pay the interest of their debt. That is not a long range plan for financial sanity, for the family in our example or for America.

Imagine that that family throws a fit when they are denied their credit card, and you will have a pretty good understanding of the administration’s debt ceiling argument.

Capital dome and new $100 bill

Obamacare – Reality Sets In

0

Posted on by

President Barack Obama, July 16, 2009, in a speech to the American Medical Association, said:

“If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”

Sadly, the truth has turned out to be vastly different. Literally millions of Americans, by one report 22 million of us, have been told that they cannot keep their current health care plans, nearly 800,000 of them in New Jersey alone. The long awaited and much ballyhooed launch of the Health Care Exchanges across America came and went two weeks ago, and far too many people find themselves wondering what the heck is going on.

Where are we today with Obamacare, and what can we expect?

This article will examine that question in four ways:

1) We will present an overview of Obamacare news from across the nation as reported in the mass media.

2) We’ll explain something that almost no one has heard from any source, be it newspapers, internet articles, radio and television talk shows, or any of the politicians.  You’ll almost surely be stunned to discover that the way Obamacare charges families to cover their children will create massive premium increases, and the larger the family, the larger the premium increases will be.

3) We’ll analyze plan benefits and premiums by comparing 2013 plans with the new “post-Obamacare” plans that 2014 will bring, and see how that stacks up against Mr. Obama’s July 11, 2009 statement that his plan “would save everyone in America an average of $2,500 in Health Care costs each year.”  Here’s a hint: Don’t get your hopes up!

4) We’ll discuss the launch itself, the ease of access for consumers across America, and the leadership that has brought the President’s “signature law” to where it is today.

An Uproar Across America

San Jose: The San Jose (California) Mercury-News, the only major newspaper in the nation’s 10th largest city, ranks among the most liberal papers in the US, right up there with the NY Times, the LA Times, and the Washington Post.  But the first weekend after the Obamacare launch, even the Merc’s front page reported problems.  They featured Cindy Vinson and Tom Waschura, both of whom said they were big believers in the Affordable Care Act, and were proud that they had helped elect and re-elect President Barack Obama.

Sadly, like many other citizens across the US, they were shocked to discover that their in-force policies were being replaced with new Obamacare plans that will see their costs skyrocket.

Ms. Vinson, of San Jose, will pay $1,800 more a year for an individual policy, while Mr. Waschura, of Portola Valley, will be forced to pay almost $10,000 more to cover his family of four.

“I was laughing at Boehner – until the mail came today,” said Waschura, referring to House Speaker John Boehner, who is leading the Republican charge to defund Obamacare.

“Of course, I want people to have health care,” Ms. Vinson said. “I just didn’t realize I would be the one who was going to pay for it personally.”

Guess what, Cindy: “There ain’t no such thing as a free lunch!”

New Jersey: Bad news arrived in mailboxes across the Garden State this past week, as people discovered that many of their existing health insurance plans had been wiped out by Obamacare because they didn’t meet the provisions of the new law.

How many folks in New Jersey were hit by these cancellations?  Oh, only about eight hundred thousand or so.

Maryann White, 74, of Toms River said she was frustrated by the news. She liked the plan she had and is worried that whatever new plan she buys will cost more. Though she is engaged in the process, she said, many seniors find it difficult to understand their options.

“This is really a shame,” said Ms. White. “I’m not criticizing. I’m just saying, ‘Give us a break.’”

Funny, sounds like criticism to me!

Alabama: Alabamans got slammed with a double whammy!  First came a letter to customers from Blue Cross Blue Shield that premiums would leap upwards by 300 percent, then Blue Cross followed up by announcing that they were canceling the vast majority of their plans because they weren’t in accord with new requirements imposed by Obamacare. New plans are expect to carry a much heftier price tag than the old ones.

WSFA-TV in Montgomery reported, “[we] talked with [a] customer on one individual plan today, he’s been paying $523 a month for his family of four, but starting in January his premium is going up to more than $1,100 a month.  One of the big problems is [the new law requires] rating family costs by the number of people, so large families have to pay more.”

Rating Changes = Extra Costs for Families

One of the big problems indeed. Americans are now discovering something that has been studiously ignored by almost everyone for the past 3 ½ years. Under the new rating methodology of Obamacare, the way children’s premiums is going to be calculated from now on has changed dramatically, and that change is going to smack a huge number of families right in their bank accounts.

The current rating system for small group plans in almost all states charges the same rates for children’s coverage regardless of the number of children in a family. For individual plans, some carriers currently adjust rates upward for those with more children, but not as much as they will come January.

A couple with one child pays the same to cover their kid as does a couple with two kids to cover both of theirs.  Three, four, five…the more the merrier; no matter how many kids you have, the price to cover them is the same.

And of course this deal got even sweeter when the ACA said “you can keep your kids on your medical plan up until their 26th birthday.” The insurers couldn’t even charge more for those extra children as dependents, because of the “cheaper by the dozen” rating system described above.

But that all comes to a screeching halt on January 1.  From then on, any children from 21 to 25 will cost their parents the same as any single adult of their age.  Children under age 21 will pay a child’s rate for each child up to a total of three (over three is free!).

As we said above, the rating system for children will also impact costs for individual coverage.

We’ll examine how this can impact a small family, then a large family, in both cases comparing real Anthem Blue Cross plans currently available with real Anthem Blue Cross plans currently available on the CoveredCalifornia Exchange website for effective dates of January 1, 2014 and after.

First let’s look at Wade and Suzan, both age 45, with a 23-year-old son and an 18-year-old daughter. Bob is a programmer for an electronics firm making $90,000 a year; Suzan is a teacher earning $60,000 a year.

Let’s suppose they were to buy a plan today, October 14, 2013, from Anthem Blue Cross (the largest private health care provider in California).  The plan they select has a $1,500 deductible and a $30 copayment for office visits to a non-specialist, a $50 copayment for specialists.  They would pay $1,174 to cover the four of them, of which $380 is the cost for their kids.

But under the new system, their total cost for a $2000 deductible plan (there are no $1,500 deductible plans available from Anthem for 2014 and after) with a $45 copay for non-specialist office visits and a $65 copay for specialists will $1,478. Instead of costing $380 for their kids, it will cost them $435, $266 for their son and $169 for their daughter, because the new system charges for each child.  (Note that the per child rate will is lower than the current “one price for all” rate, so for those who have only one child, the cost to cover that child will go down.)

Nonetheless, here’s a quick summary of the costs and benefits – you tell me whether the new Obamacare plan is better and cheaper than what they could buy today.  Granted that these two plans are not identical, but they’re as close as we could come given the new requirements and guidelines of the Obamacare post-2014 plans:

2013

2014

Deductible

$1,500

$2,000

Office Visit copayment:

Non-specialist

$30

$45

Specialist

$50

$65

Maximum Out of Pocket per person

$4,500

$6,350

Premium

$1,174

$1,478

Everything is higher in 2014.  Their deductible is $500 higher, their office visit copayments are $15 higher per visit, their maximum out of pocket expense is $1,850 higher, and their premium is $304 higher per month, $3,648 per year; a 25% increase even with all the benefit reductions. Such a deal!

But Wade and Suzan are going to be the envy of their next door neighbors, Sean and Sonya, who have five kids – a son age 23, a daughter 22, a daughter 18, a daughter 15, and their youngest, a 12-year-old son.

Sean and Sonya, also both age 45, have income identical to their neighbors, Wade and Suzan. Their cost to cover their family is currently $1,343, slightly higher than Wade and Suzan because in the individual market they are charged more for additional children on their plan.  Their cost for the five kids is $549, $169 more than their neighbors.

But they now have to pay for all five of their kids, two times $266 for those over 21, and three times the per child rate of $169 for the ones under 21.  Imagine their “sticker shock” when they discover that their monthly medical insurance cost for their youngsters has just jumped from $549 to $1,039.

Their monthly premium change from Obamacare:  $738 higher every month, $8,856 per year, a 54% increase. My goodness!  And for their $8,800 more a year they get the same benefit decreases, higher deductible, higher office visit copayments, and a higher maximum out of pocket for the year.

What happened to that “my plan will save Americans $2,500 a year on their health care costs”?

The Truth About Plan Costs

Our original intent for this section of the article was to explore plan rates in several states:  California, Texas, New Jersey, and Louisiana.  One of those, California, has its own state-run Exchange, dubbed CoveredCA, while the other three, Texas, New Jersey, and Louisiana all have defaulted into federally-run Exchanges since the states themselves were uninterested in creating their own. We chose these four because of the 50 states mandated by Obamacare to have Exchanges up and running by 1/1/2014, 35 are federally run while 15 are operated by the states in which they will operate. A 3:1 ratio hence seemed reasonable for our analysis.

Interestingly, and perhaps coincidently, we were able to easily access the state operated Exchange in California and will present our findings herein.  Unfortunately, and perhaps purely by chance, the three states which are dependent on the Feds for their operation were all ultimately inaccessible via their websites.

For the Texas site, we three times got onto their login page after rather lengthy delays and submitted the information to create an account. After clicking “submit,” we eventually received the message, “Your account cannot be created at this time. Please try again later,” three separate times and eventually gave up.

For the New Jersey site, we successfully created an account, verified the account by clicking on a link sent to our email address, then returned to their site and attempted to log in.  The account was not recognized as active, and we were referred to an 800 number for service. Unsurprisingly, that number placed us on hold until we finally gave up.  We repeated the “create account, verify account, return to login” procedure twice more, only to suffer the same “account is not recognized” error both times and eventually gave up.

For the Louisiana account we thrice completed the account information and submitted it for processing, and all three times got the same message as we had on the Texas site, “Your account cannot be created at this time. Please try again later.” We surrendered to the vagaries of the Federal program signup efforts and gave up on Louisiana as well.

California’s site, in contrast, was easily accessible, easy to navigate, quick to respond and all-in-all a pleasure to work with.  We jumped back and forth between entering family data such as names, dates of birth, income, and zip code, making plan choices, examining plan benefit descriptions and plan costs with literally no lag, no delays, no time outs, and no problems. Might have had something to do with Silicon Valley being in California? Who knows…

The proverbial bottom line, however, wasn’t great news for those looking to CoveredCA for coverage. The following two spreadsheets break down rates for the same fairly standard PPO plan which we used in our analysis of increased children’s costs earlier in this article.  We looked at six different regional areas of California (there are 19 across the state) both for a single person, and then for a family of four.

The plans versions, 2013 vs. 2014 are as close as we could come to equivalent due to the new Obamacare plan categories, but are not identical.  As previously mentioned during our discussion of the children’s rates, the benefits provided by the new 2014 plan are significantly inferior to the 2013 plan, as the following chart illustrates:

2013

2014

Benefit Reduction

Deductible

$1,500

$2,000

33%

Office Visit copayment:  

Non-specialist

$30

$45

50%

Specialist

$50

$65

30%

Maximum Out of Pocket per person

$4,500

$6,350

41%

Premium

$241

$245

 

Given the 33% to 50% benefit reductions, one might anticipate at least a 33% to 50% cost reduction for the 2014 plans. Unfortunately, that is not the case.  Of the 12 plans analyzed, nine show cost increases in 2014, in spite of the benefit cuts. Three show cost reductions, one of 10%, two of 5%, but compared to the 33-50% benefit cuts, those slight cost drops seem pretty insignificant:

Anthem

CoveredCA

Rate

Anthem

CoveredCA

Rate

2013

2014

Change

2013

2014

Change

Male, 54, single – San Jose Family of 4 (both 54) – San Jose
Premium

$500

$568

14%

Premium

$1,174

$1,478

26%

Female, 28, single – San Jose Family of 4 (both 28) – San Jose
Premium

$227

$289

27%

Premium

$803

$926

15%

Male 43, single – Pasadena Family of 4 (both 43) – Pasadena
Premium

$264

$273

3%

Premium

$759

$794

5%

Female 48, single – San Francisco Family of 4 (both 48) – San Francisco
Premium

$381

$482

27%

Premium

$1,472

$1,404

-5%

Male 38, single – San Diego Family of 4 (both 43) – San Diego
Premium

$337

$303

-10%

Premium

$1,023

$970

-5%

Male 25, single – Eureka Family of 4 (both 25) – Eureka
Premium

$241

$245

2%

Premium

$789

$801

2%

 

Leadership, or the Lack Thereof

  • March 23, 2010 – President Barack Obama signs the Patient Protection and Affordable Care Act (ACA) into law.
  • October 1, 2013 – ACA Health Insurance Exchanges go live across America
  • Three years, six months, nine days – time to prepare
  • Grade Awarded – You be the judge!

Unless you’ve been in a time warp, or crossing the Atlantic by yourself in a rowboat, you’ve surely heard the complaints, stories, and glitches that have been widely reported, including here, here, here, here, and here, about the less-than-perfect October 1 launch of Obamacare.

One amazing experience came to me from a young woman who lives in New Jersey.  She went on her Exchange website, created an account, logged in and entered her personal information; date of birth, address, social security number and so forth.  Then – to her astonishment! – the system told her that she was ineligible because…she was dead.  Kind of leaves you wondering, doesn’t it? I mean, where do you go from there?

One wonders how the Obama White House, which during the 2012 Presidential Election Campaign was repeatedly lauded for its “tech savvy,” could have allowed this to happen.  One possible explanation (which is actually a compilation of four reasons) was advanced by Julien Eilperin of the Washington Post, but rings hollow in my mind.  In essence, Ms. Eilperin said that the problems were:

  • There was no Chief Technological Officer and they had a “hard launch date” of October 1, which didn’t give them enough time to get things right;
  • They couldn’t hire the same people who worked on the Obama campaign a year ago;
  • The “nuts and bolts” of the Exchange fall under the Department of Health and Human Services, not the White House, and;
  • Constructing a national Health Care Marketplace is more complex than orchestrating voter turnout.

Seriously? She has to be kidding, right?

“There’s no CTO.” Not anywhere in the US government? As of December 2012, the US government had over 21,900,000 employees. Yes, that’s right – almost twenty-two MILLION employees.  And we couldn’t find anyone who could be the CTO?  And the 3 ½ years between passage of the law and the launch date wasn’t enough time?  This woman should be on The Daily Show or Saturday Night Live – the liberals on those programs would love her humor.

“They couldn’t hire the same people who worked on the campaign.” Again, can she possibly be serious?  There are these tiny little companies called Google, Apple, Microsoft, Oracle, HP, IBM, Cisco, Amazon, Intel, and just a few others scattered about the landscape that operate in the United States. Are we really expected to believe that nowhere in any of those companies are there any people who are as qualified in website design and implementation as the people who worked on Obama’s 2012 campaign?  Initial estimates for the creation of the Federal Exchange website were just over $98 million but as we stand today, costs have surpassed $600 million. Surely for $600 million we could have recruited a few of those tech geeks to work for Obamacare.

“The ‘nuts and bolts’ are in HHS, not the White House.” So what? Obama is the President of the United States, not the President of the White House. He’s supposed to be in charge – of the entire United States!  And last time we checked, the entire United States includes the Department of Health and Human Services.  Maybe he should have kept his finger on the pulse of the development of the website and other launch mechanics to make sure that his “Signature Bill” didn’t do a belly flop on launch day.

“Constructing a national Health Care Marketplace is more complex than getting voter turnout.” Duh! Didn’t the administration know that?  Obama’s supposed to be in charge of HHS, of the entire government, and most particularly, he most certainly could have been expected to keep track of how Obamacare was proceeding towards the starting gate.  It seems he should have kept his eye on the ball a little more closely, instead of trusting Kathleen Sebilius to mind the store.  Or does “keep your eye on the ball” only apply on the golf course?

I doubt if many of those reading this article are big video game players, but this kind of problem – website overload – is not exactly unknown in that world where massive launches, and the avoidance of massive launch screw-ups is critical.  For those who think we’re still talking about financial peanuts here, let me take a quick moment to bring you up to speed.  In 2012 the video game industry generated $66 billion in revenue.  One game, Diablo 3, released by Blizzard Entertainment, sold over $150 million worth of product in its first four months on the shelves; 3.4 million copies at $50 apiece.

In the first 30 minutes after the game’s initial launch, over 200,000 people logged in from the UK alone.  200,000 in 30 minutes! Maybe Ms. Sebilius should have hired some gamers to set up her websites and run her servers.

What the game industry knows, and the White House should have known, is that when you spend months pumping up the public to go to your website, you need to be ready for the rush.  Early adopters make up a huge percentage of long-time clients.  When people like this try to register, try to join, and can’t, many of them give up and walk away forever.  What is worse, and this is something that the movie industry knows full well, word-of-mouth advertising is more impacting, more valuable to the success of a production than anything on TV, the internet, or anywhere else.

All those disillusioned, frustrated people who sighed and logged off, giving up on Obamacare in those first few days, maybe for a few days, maybe forever, are going to pass along their feelings to their friends and neighbors. Those friends and neighbors will listen to them, and many will delay or avoid going to the websites for their own exercise in futility.

The Only Thing Worse Than No Leader is A Leader You Can’t Believe

As mentioned at the start of this article, on July 16, 2009, Mr. Obama said:  “If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”

Two days later, in another speech in another city, he said: “My plan will save everyone in America an average of $2,500 in health care costs each year.”

I don’t know whether he was intentionally saying things that he knew to be untrue at the time that he made these two statements. Perhaps not.

Perhaps somehow, in some way, he lost control of events.  Perhaps as the law progressed it evolved into something beyond his ability to manage so that what he said to America, what he promised to Americans, eventually, against his initial intent, turned out to be lies.

I don’t really care. When the President says something that firmly, that unequivocally, he should stand by it, come hell or high water, and make sure it comes true.  It’s called ethics, integrity, commitment; those are the things that make a good leader.

The reality of Obamacare is upon us, and it is most emphatically not pretty.

health care emergency

Courageous Leadership?

0

Posted on by

In time of crisis, do we want a leader who offers courageous leadership, or one who cautions “we should be worried?”

Early on, during the American Revolution, one of our greatest naval heroes, John Paul Jones, found himself and his ship, the Bon Homme Richard, in dire peril. Locked in battle with the much larger British ship, the HMS Serapis, Jones, his ship in flames and near sinking was taunted to surrender by the British captain. His reply:  “I have not yet begun to fight!”  He didn’t say, “Oh, I don’t know, maybe we should be worried.”

Constitutional Compromise

The United States Constitution says “all bills for raising revenue shall originate in the House of Representatives”. What exactly does that mean?  It means that when it comes to raising and spending money, the House must begin the process.  Why? Because at the time of the framing of the Constitution, the founders deemed that it was the House that was closest to the people since it was directly elected by the people.

The Senate was elected by the respective state legislatures until the passage of the 17th Amendment in 1913 gave the power to elect senators directly to the people. The President then and to this day is not elected by the people directly, but rather by the members of the Electoral College.

And so the signers of the Constitution, believing that the one body elected directly by the people would be most understanding of, and responsive to, the will of the people gave the House control over the nation’s purse strings.

That has not changed. The House is still closest to the people as its members are elected every two years, not every six as are Senators.  It is the House, not the President, not the Senate, which is responsible for initiating all bills having with raising and spending money.

But is there not, you might ask, a provision in the Constitution that says, “If the President urgently believes that certain specific financial measures are necessary for the proper conduct of the Government, shouldn’t the House appropriate such funds as the President so desires?”

Of course not! The entire theme of the division of powers lies at the heart of the foundation of our country. When the Constitution was ratified one of the provisions that made America so unique is that the President cannot dictate to the House and the Senate what they should do.

They have to act together.  That is the essence of our system; checks & balances, compromise, working together for the common good.

Compromise was evident time and again throughout the four months of debate and discussion that preceded the adoption of our Constitution.  One of the first major differences of opinion, and one quintessentially recognized by any student of the history of the Constitution, was between the larger states and the smaller over how legislative representation should be allocated. As we all know, this was resolved by what is sometimes called the “Great Compromise” of the Convention. The constitution created a bicameral legislature, two bodies with different means of selecting their members.  In the House of Representatives population is the determiner, but in the Senate each state is represented equally with two members, regardless of its population.

We’ve been compromising for two and a half centuries.  That’s the way it works here in the US – we work together, and we compromise. Our leaders manage to find ways to solve our problems together.

At least they’re supposed to.  And they’re supposed to hold in their hearts, as what Americans have always believed to be of the utmost importance, the cherished commitment to do what is best for America, and Americans.

American Leaders

The United States has surely had its share of great leaders.  No, let me correct that.  I believe we’ve had far more than just “our share” of great leaders, we’ve had blessed with a plethora of great leaders, year after year, decade after decade, century upon century.  Our leaders have been men and women of courage, of heroism, often genius.

From our earliest times, America’s leaders throughout our history have counseled courage in time of fear, confidence in times of uncertainty, and both resolve and determination in the face of danger.

Admiral David Farragut, leading US Naval forces at the Battle of Mobile Bay on August 6, 1864, was warned by his staff of deadly explosives lying between him and a possible victory over the enemy fleet.  He gave the immortal command:   “Damn the torpedoes, full speed ahead!” and his ships won the day.

President Franklin Delano Roosevelt, newly elected in the fall of 1932, facing the greatest economic depression in the history of America and speaking at his inauguration, called for bravery in the face of uncertainty, rallying our citizens to rebuild our country with a cry to courage:  “The only thing we have to fear, is fear itself!”

In January of 1960, President John Fitzgerald Kennedy, a decorated veteran who fought to defend American in the Second World War energized America with the words:  “Ask not what your country can do for you, ask what you can do for your country!”

We now find ourselves again in crisis. Though perhaps not quite so dire as those times cited above, still America is faced with a “government shutdown”, with the coming “debt crisis”, both of which are because  the Executive and Legislative branches of our national government cannot compromise and formulate a concerted and cohesive financial plan for the ongoing future of the United States of America.

Barack Obama – Leadership or Fear Mongering?

Facing the lack of funds necessary to continue to provide vast numbers of government services to our citizens, and the further uncertainly created as we approach the legal ceiling on our mounting national debt what does America’s leader, Barack Obama have to say? What words of courage, inspiration, and resolve does the President of the United States offer to the American people?

We are in trouble,” said Mr. Obama, speaking to CNBC’s John Harwood on the evening of October 3.

When Mr. Harwood made the point to Mr. Obama that Wall Street didn’t seem concerned about the ‘shutdown’ and asked whether that was the way they should be thinking, the response was:

No, I think they should be concerned”.

These words do not express confidence in America, do not exhibit the kind of resolve that Presidents Roosevelt and Kennedy expressed in their comments cited above, nor do they reflect the courage and determination shown by the heroic words and deeds of John Paul Jones and David Farragut.

No plan for compromise has been offered by President Obama to end the budget stand-off. In fact, in his brief public statement on September 30 just hours before the government shutdown he neither offered to work to formulate a compromise nor suggested that he would even be willing to accept any kind of compromise.

Is Mr. Obama trying to scare investors and refuse any compromise that might alleviate this crisis?

Could our President, the elected leader of our nation, actually be hoping that the stock market crashes, taking the hopes and dreams, retirement plans and college education funds of millions of Americans down with it?

Because…it might give him a political advantage?  It appears as if a number of financial analysts fear that to be the case.

On October 3, “Squawk on the Street,” CNBC co-anchor Simon Hobbs and senior economics reporter Steve Liesman pointed out the administration’s strategy of trying to scare the markets in order to sway opinion against Republicans. “They’re not scaring the market which is clearly their aim,” and went on to cite a Treasury Department report that makes the extreme claim that a default would result in “the next Great Recession.”

The next day, October 4, Jerry Castellini, co-founder and president of CastleArk Management, said on CNBC, “the administration would love for the markets to be down quite a bit right now to try to amplify their point that this is an area we shouldn’t be playing in and a spot that the markets don’t want to see us in.”

Perhaps part of the reason that this “government shutdown” isn’t as scary as the Obama administration would have us believe is that, in fact, 83% of the government is plowing on full speed ahead with nothing changed. Even the mass media and the Obama administration say that it is not essential government workers who have been sent home, and one could well make the argument that if government workers are not essential, then why do we have them at all!

What is scary is that instead of words of encouragement, a pledge of resolve, and an expression of confidence in the courage of America and the American people to face down this crisis like so many others in our past history, this President of the United States is telling us that we’re in trouble.

There are only two conclusions to be drawn.

The first is that Mr. Obama is truly afraid, and has no solution in sight.

The second is that he’s hoping that if the stock market plummets, it will panic enough people so that he’ll be able to brow beat the House of Representatives into surrendering to his demands.

If Mr. Obama is running out of courage, that is not a harbinger of good things to come.  If he is actually hoping for the sacrifice of the financial holdings of millions of Americans to achieve his own political ends then that is most definitely far worse, and can only be described as despicable.

drafting-declaration Franklin Adams Jefferson

Slouching towards Washington

0

Posted on by

Turning and turning in the widening gyre

There is much chatter about the comings and goings of politicians in Washington D.C. The presidential races are watched with the utmost anticipation, and the media obsess over the bickering and scheming of hundreds of federal congressmen. These politicians, of course, have a great deal of power over our country and our lives, especially in this day and age.

However, standing in the shadows, in firm control of our economy and our wellbeing are the generally faceless controllers of the Federal Reserve. The Fed’s Chairman, currently Ben Bernanke, shows his face occasionally, issuing some incredibly obtuse statement about the state of the economy and his policy plans. Unfortunately, the average American cannot understand such statements and thus ignores them. This is the only sad pretense of transparency that we have come to expect from our central bank.

I am writing today to both underscore the extreme importance of this institution and to expose the increasing power being wielded by the bank. Not only does the Federal Reserve have inestimable power over our economy, but the woman who is generally expected to succeed Bernanke will certainly seek to continue expanding this control.

The Federal Reserve has been tasked with two ultimate responsibilities: inflation and employment. It seeks to both control inflation and to maximize employment through manipulation of the monetary supply. In pursuit of these goals, the Fed seeks to balance a precarious juggling act.

The Federal Reserve primarily pursues these goals by controlling interest rates on bank loans, with the purchase of bonds and other securities. Higher interest rates decrease inflation by reducing the amount of money brought into the economy out of bank reserves. A classic example of a high interest rate policy was the Fed’s policies in the late 1970s when interest rates were increased in order to combat rising inflation.

Currently interest rates are very low, ideally increasing employment under classic stimulus principles: more money in the economy boosts consumer spending and thus hiring. Unfortunately, the Fed cannot decrease interest rates below zero but still wants to pump more money into the economy. Instead, they have opted to pursue a policy of quantitative easing.

Under this policy, the bank pumps billions of dollars into the economy each year by purchasing long-term commercial assets from private banks. Predictably, this policy has two primary risks. First, it can lead to higher inflation. More money in circulation reduces the value of the currency, potentially leading to inflation, and the Fed’s quantitative easing pumps enormous amounts of money into the economy.

In addition, the Federal Reserve runs the risk of creating what is known as an asset bubble. These bubbles, as we have recently seen both with the housing and the internet markets, result from too much money being poured into the economy through credit, hence artificially inflating the productivity and value of the marketplace. The disastrous effects of these bubbles need not be explained, I am sure.

It is the Federal Reserve’s job to determine when to raise interest rates in order to prevent both inflation and asset bubbles. Failure to account for either possibility would have an incredible impact on common Americans who will find that their savings accounts have less real value due to increased inflation or who suffer from the sort of economic collapses that we saw in 2008. We are being forced to trust the judgment of bankers and politicians, whose motives and even identities are known to very few Americans. It is a wonder that the media has so little attention to spare on such matters.

The she-devil of Constitution Avenue

Paul Krugman, the former Enron consultant and current columnist for the New York Times, once ironically dubbed Janet Yellen the “she-devil of Constitution Avenue.” Krugman, with the same judgment he used to advocate the artificial housing bubble and predict the transient nature of the internet, assures us that inflation is not an issue and heralds Ms. Yellen for her extremely “dovish” beliefs concerning inflation. Calling her a dove simply suggests that she is less concerned about inflation than she is about restoring employment.[1] This means that if she becomes Chairman of the Federal Reserve, Yellen will be less likely to raise interest rates to fight inflation and artificial bubbles than many.

This predilection is particularly alarming given that Yellen is in large part responsible for the current quantitative easing policy of the Federal Reserve. Additionally, she was in charge of the Fed’s banks in San Francisco, one of the areas hardest hit by the collapse of the last bubble.

Her tendency towards increased government spending suggests that as Chairman Yellen will continue, if not expand, quantitative easing in order to restore full employment. Admittedly, Yellen does seem to be a very intelligent woman, so it stands to reason that we ought to consider whether she would have the good judgment to cut off the spigot should matters begin to spiral out of control. She has repeatedly stated that the government must spend more to bring our country out of the recession, getting further praise from Krugman by doing so. Furthermore, the Wall Street Journal reports that she has always pushed Bernanke into the current policy of quantitative easing.

Yellen was president of the San Francisco Federal Bank and, as the Cato Institute argues, she has defended the Fed’s role in regulating the disastrous bubble that hit the Western States in particular in 2008. A review of her 2010 Senate testimony shows that Yellen defends the role she played in trying to prevent this crisis. She states again and again that the bubble would have been prevented if the Fed had more power, ignoring any possible role that Fed interest rates and policies might have had on this crisis. While she may have been unable to stop this catastrophe, we must seriously ask whether she would consider the Federal Reserve’s role in another asset bubble given her refusal to do so during the mortgage crisis.

Let us put together the pieces. There is plenty of evidence to suggest that Yellen would aggressively pursue quantitative easing as Chairman of the Federal Reserve, hence increasing the risk of inflation or an asset bubble. When combined with her less than strong concern over inflation and her refusal to admit that the Fed’s monetary policy contributed to the housing crisis, her tendencies create a very frightening picture indeed.

A Constitutional Remedy

Predictably, the Constitution provides a very clear alternative to Federal Reserve and its increasing power. In 1791, Thomas Jefferson and Alexander Hamilton engaged in a fierce battle over the creation of the first National Bank. Jefferson argued vociferously that the creation of the bank was unconstitutional.

Hamilton, one of the strongest supporters of big government among our Founding Fathers, justified the bank as an implied power under the Interstate Commerce clause of the Constitution, as well as both the General Welfare[2] and Necessary and Proper clauses.[3] He, of course, ignored the fact that no such understanding of these phrases was accepted at the Constitutional Convention. In fact, an attempt to use simple punctuation to expand the General Welfare clause was resoundingly struck down by the Convention.

Thomas Jefferson, in a famous opinion on the Constitutionality of the bank, argued for a much more strict interpretation of the Constitution. His opinion is widely regarded as a crucial tenant of strict Constitutional constructionism, and I recommend reading it even outside of this specific subject matter.

First, Jefferson claimed that the Interstate Commerce clause argument holds no water, because the bank would explicitly impact intrastate commerce, just as our Federal Reserve does today.

Jefferson refuted the implied powers of the General Welfare clause by pointing out that the government only has the right to “lay taxes for that purpose,” rather than “to do anything they please to provide for the general welfare.”

Finally, he attacked the Necessary and Proper argument by pointing out that all the powers of the government can “be carried into execution without a bank. A bank is therefore not necessary, and consequently not authorized by this phrase.”

This is a powerful argument by one of the leaders in constitutional originalism. The existence of a national bank such as the Federal Reserve is as unconstitutional now as then, and for the same reasons. This fundamental discussion has been ignored, however, as we simply debate how much the Fed should pump money into the economy. We have strayed so far from the actual restrictions that the Constitution sets on the powers of a central bank that we would do well to bring the debate back to these fundamentals.

Even if this does not actually end the stranglehold of the Federal Reserve, it cannot help but reduce its influence by shifting the argument from the pragmatic policy decisions of the Fed to the fundamental discussion of whether it ought to even exist. Instead of arguing about whether it should assume more power, we should be arguing whether or not to give it any power at all.

Any liberal reader will be appalled by this notion. They will ask, “But what would we do without a central bank?” I will preemptively say two things on this subject. First, there was a long period of time in the United States where there was no central bank. In fact, one of the most highly regarded banking systems that America has experienced was the privately run and independent Suffolk banking system. This bank provided an alternative to central banking after Andrew Jackson destroyed the Second Bank of the United States, and it ensured market stability and sound currency in New England for almost two decades.

The Suffolk system was distinctly different from the Federal Reserve. It was intended to prevent the inflation of currency, which it did admirably. It is not just libertarians and Austrian economists that admire the Suffolk System. In fact, the Federal Reserve of Minneapolis published a paper analyzing the bank and its successes, eventually asking “is there a need for a government-sponsored central bank?”

Second, we suffer from the same sort of economic collapses that faced America before the Federal Reserve. Don’t take my word for it, though! Janet Yellen herself made that argument in a speech in early 2013. She began this speech on a humorous note, encouraging her audience to remember a well-known incident where a speculative bubble collapsed, leading to economic hardship. She was, however, not referring to 2008 but to 1907. It was not until 1913 that the Federal Reserve was created, in part due to the crisis of 1907, as she explains. Yellen proceeds to state “it is striking how many of the challenges of that era remain with us today.” Does it occur to her that perhaps the answer is not more regulation? Perhaps the Federal Reserve was not the answer to the crisis of 1907? Indeed, if it were the answer to that crisis, then it stands to reason that we would not encounter similar hardships today.

Conclusion

The Federal Reserve demonstrates incredible power which will only expand when Janet Yellen takes charge. How can we trust our economic livelihood to the decisions of a handful of academics and politicians who meet periodically in Washington? Long ago our government abandoned our Constitution, empowering a bank with incredible power over our lives. It is time to push back against the Fed and retake our rights and our freedoms.


[1] It is a commonly accepted fact that Yellen is a dove on monetary policy. Her apologists may attempt to argue otherwise, and I am happy to engage in that debate should any reader wish to.

[2] The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States

[3] [Congress shall have Power to] make all Laws which shall be necessary and proper for carrying into the Execution the foregoing Powers

 Statueof Freedom atop the Capital building smaller

Silliness from South America

0

Posted on by

Ecuador’s President Rafael Correa today said that American exceptionalism is reminiscent of Nazism “before and during World War II.”

Correa added that the United Nation’s headquarters should eventually be moved from New York City:  “The headquarters of the organization is in the US and they finance their activities. This is outrageous and an example of a relationship the US established with developing countries in the form of subordination.”

You’ve gotta love it, he actually complains that we’re giving the UN too much money!

I have to say, moving the UN out of the US can’t happen soon enough to please me.  And on the issue of our financing the UN, I’d be more than happy (as I’m quite certain millions of other Americans would be as well) to see us reduce the amount we send the UN every year even BEFORE we kick them out let them move out of New York.

I sincerely hope that if and when Sr. Correa moves the UN out of NY (or before…) he’ll also be willing to move the major sources of funding somewhere other than the US. Considering that there are 198 members at present, the US is clearly paying way over our fair share of 1/198th of the UN budget with an annual contribution of 22% of the total. I think all Americans would be pleased to see some of the other 197 members step up closer to the financial plate.

After the US in annual UN funding come Japan (12.53%), Germany (8.018%), the United Kingdom (6.604%), and France (6.112%). Conspicuously absent from the top of the list are Russia (1.6%) , Saudi Arabia (0.8%) and China (3%). Ecuador, by the way, comes in lumped together with 165 other countries who contribute a grand total of 7.2%. The full list is quite illuminating.

I was going to say, “Put your {insert name of Ecuadorian currency} where your mouth is”…but I can’t, because their national currency is – wait for it! – the US dollar! How funny is that! He says we’re like the Nazis, and complains that we give too much funding to the UN, but his country uses the US$ as their national currency!

Really, Rafael, if you don’t like us, that’s ok, but maybe you should invest in a graphic artist, buy a printing press or two, and get your own national currency up and running before you start spitting on ours!

GTY_100_dollar_bill_ml_130924_16x9_608