7/30/2009

It Takes a Villain


My absolute favorite quote machine, Speaker Pelosi (D-CA), upped the voltage on the health care debate by calling health insurers "immoral" and "villains" in a press conference today.

Now, the mind that believes in fairy tales, unicorns and cost caps with no corresponding benefit caps is not ordinarily prone to self-doubt. And if she truly is "in the fight of our lives" why should she be? Truman knew he was in the fight of his life, he didn't hesitate to go nuclear (literally and figuratively).

For all the lobbying, advertising, campaign donating and public relating these villains do, unchanged is the simple fact that Speaker Pelosi's party controls the House, the Senate and the Presidency. Lobbyists don't get a vote. If the policies of Speaker Pelosi, et. al, are so undeniably correct then why don't they use their unmitigated muscle to pass them into law? If she was genuinely courageous, genuinely "in the fight of our lives" she'd execute her views, fully confident in the political bounty sure to follow. If she's so damn right, and everyone else is so damn wrong then she should put our money where her mouth is, fearless of political repercussions.

But she won't. Because she's not courageous and power matters more than principle.

7/29/2009

She Said What?

After you've watched this short video a few times you'll want to bang your head against a wall to knock your brain back in place.

Only then will you realize how large the threat to your wallet is if Speaker Pelosi and the woman from this post ever meet.

7/27/2009

Extending Our Nuclear Umbrella


On her recent trip to Thailand, Secretary of State Hillary Clinton made several statements that taken together should concern every citizen of the Western World. First, she said, “We want Iran to calculate what I think is a fair assessment: that if the US extends a defense umbrella over the region, if we do even more to support the military capacity of those in the Gulf, it is unlikely Iran will be any stronger or safer.” She then went on to say that, “The Iranians won’t be able to intimidate and dominate as they apparently believe they can once they have nuclear weapons.” emphasis added.

The Secretary of State is apparently saying that because it is a foregone conclusion that the rogue Iranian regime will obtain nuclear weapons, the United States must extend its nuclear umbrella to Israel and the other “friendly” Persian Gulf Arab states. If this is true, we are all in grave danger. The United States must take all actions necessary to prevent Iran from developing (or obtaining) nuclear weapons.

Mrs. Clinton’s (and the Obama Administration’s) belief that the extension of our nuclear umbrella will somehow calm the fears of those in the Middle East is incorrect. And, unfortunately, her assumption that the extension of our nuclear umbrella to that region will deter Iran’s use of nuclear weapons is fatally flawed. The reason our extension of our nuclear umbrella to our Western European allies during the Cold War was successful was because the Soviets could be deterred by the certain knowledge that we had the power and the willingness to destroy them, if necessary (the exact term was mutually assured destruction or “MAD”). As Soviet leader Nikita Khrushchev told his Chinese counter part, Mao Zedong, “The US may be a paper tiger as you call it, but that paper tiger has nuclear teeth.”

The Islamists who run Iran do not possess the rationality of the former Soviet leaders. They believe that they are fulfilling a Koranic prophecy and are being dictated to by Allah. They do not care if Iran is destroyed in an Israeli or US retaliatory strike, just so long as Israel is destroyed too.

The fundamental flaw in the Obama Administration’s thinking toward Iran comes from the President himself. President Obama does not understand the nature of the adversary that we face. By stating in his Cairo speech in June that under the Nuclear Non-Proliferation Treaty, Iran has the right to develop nuclear power, Mr. Obama conceded that the Iranians have the right to go nuclear. This is despite the fact that Iran is the world’s number one sponsor of terrorism.

For some reason, the President of the United States (and, by extension, his entire administration) feels the need to coddle the Islamic extremists who currently control Iran. Whether it is continuing the folly of stating that he wants to meet with Mahmoud Ahmadinejad, or refusing to speak out in support of those protesting the results of the Iranian presidential election for fear of meddling or refusing to allow his Secretary of State to say that the Iranian government is an illegitimate regime, the President is showing our enemies that the United States will not act to protect its own security, let alone that of its allies.

President Obama and Secretary Clinton are putting the Israelis in a position where they will have to act alone. Since Mr. Ahmadinejad has repeatedly said that he intends to wipe Israel off the map, the Israeli government cannot sit back and allow Iran to develop the weapons that can destroy their entire population.

The security of the entire Western World is at stake. The President and the Secretary of State should have a better understanding of our enemies before they extend our nuclear umbrella. If they don’t, that umbrella has far too many holes for it to make any difference.

Why Is Democracy So Difficult?

Because people like this can freely assemble, express themselves and seek redress of grievances.

And there are a lot of them. And they vote.


7/23/2009

Some Rough Health Care Math

Today I looked at the aggregate EBITDA of all publicly traded companies in the medical industry, from medical products, dentistry, biotechs, pharmaceutical companies, health insurance, distributors etc. I used a database from Zacks Investments and can email a spreadsheet to anyone interested. From giant money machine Abbott Labs to tiny money loser Vision Sciences.

There are some meaningful flaws in the dataset (these are only public companies traded on a domestic exchange and not every company reports EBITDA info to Zacks). Nevertheless, roughly a thousand companies, on average, earn before interest, taxes, depreciation and amortization about $300,000,000/year. The highest absolute profits were earned by Johnson & Johnson ($19B), the biggest loser was Celgene (-$1.2B). One standard deviation is $1.6B, which means roughly 66% of the companies earned somewhere between -$1.3B and +$1.9B.

As a rough guess to include all private companies, let's double the pretax earnings, then take out ITDA and I'm comfortable saying industry net profits are around $300,000,000,000/year. None of this includes private physicians or adjusts for how they view profits (is the salary of a physician who owns her practice profit or tax deductible compensation?).

If my estimates are reasonably accurate, and we strip all the profit out, we're still spending over $2T a year on health care.

Is profit the problem with health care?

Yet Another Post I Wish I'd Written

Steven L. Baerson's post on Obama's blatant intimidation of CBO got me all ginned up to post on what I consider the great health care myths. But Clifford Asness beat me to it.

It's a long post, but well worth it.

7/22/2009

A Case of Presidential Intimidation


During an interview on the Today Show, President Obama disclosed that he had an unusual meeting. He met with the director of the Congressional Budget Office (“CBO”), Doug Elmendorf (who, by the way, was appointed by the Democratic leadership in Congress). This meeting comes on the heels of a recent report that said that the President’s health care proposal would not result in any cost savings and other reports that say that the Congressional healthcare proposals would be in excess of one trillion dollars.

The CBO was created by Congress as a means to provide oversight over the executive branch and the executive branch’s use of the budget. The CBO is responsible for producing for Congress an annual economic forecast, reviewing the President’s annual budget submission, and scoring all spending legislation. The CBO, therefore, exists to be independent from the executive branch.

Why, then, would the President of the United States feel the need to meet with the director of the Congressional Budget Office? Maybe it was a blatant, inappropriate, and unprecedented attempt to bully what is supposedly an independent and nonpartisan body that does not report to the executive branch of government with the intent that it become submissive to the Obama Administration. There has been no prior report of a sitting American President meeting with an incumbent CBO director.

If President Obama needed clarification on CBO scoring, he should have worked through Congress to get it. Alternatively, he could have asked his Office of Management and Budget for an analysis of the CBO scoring (in fact, the current OMB director is the immediate past director of CBO). The demanding of a face to face meeting with the CBO director is inappropriate at best and outright intimidation at worst. The President’s actions compromise the entire process of legislative oversight and threaten the independence of the CBO from the current Administration. You would think that an independent CBO is essential for Congress, at least if it is interested in independent analysis.

In giving Mr. Obama the benefit of the doubt, I would like to think that this meeting was called out of ignorance of our constitutional system of checks and balances. Unfortunately, it appears more like an attempt to browbeat the Congressional Budget Office into a more sympathetic scoring of his ambitious, and misguided, agenda. Congress has an obligation to all of us to quickly and forcefully to remind the President about the boundaries of executive power.

Smartest Man Ever Doesn't Understand Supply and Demand

From an interview with Katie Couric (emphasis mine):
What I think is important, at this stage, is not trying to micromanage what benefits are covered. Because I think we're still trying to get a framework. And my main focus is making sure that people have the options of high quality care at the lowest possible price.
From a speech on the Federal Family Education Loan program (emphasis mine):
And yet, in a paradox of American life, at the very moment it's never been more important to have a quality higher education, the cost of that kind of that kind of education has never been higher.
The highest quality care will clear at the lowest price but not at a low price. The lowest price can easily be far more than any one person can afford. The nicest stuff at the nicest store trades for a willing seller's lowest price, but still for far more than a Wal-Mart shopper can afford. But of course, politicians don't see it that way. What they mean by lowest price is the price they want to pay and if such a price overcomes the seller's costs, great. If not, well, that's the seller's problem.

As for his comment about education, if a good or service has never been more important, then of course its price will have never been higher.

Don't they teach this stuff at Smartest Man Ever College?

7/20/2009

Down in the Polls


With President Obama's popularity slipping on an almost daily basis, these new poll numbers should be of concern to him. I don't believe that potential match ups three and a half years in advance have any predictive value for an election, but rather, they do tend to show the current popularity of those mentioned in the poll. The fact that the incumbent President of the United States is tied with the last election's Republican runner-up does not bode well for Mr. Obama's agressive agenda durning the two remaining weeks prior to the congressional summer recess. Of course, we here at RSP think that is a good thing.

7/15/2009

Hail to The Confiscator


Of course, Barack Hussein Obama was giddy in the clubhouse at last night's All Star Game. The Jock Sniffer in Chief must have sensed the potential tsunami of tax revenue in the presence of all those rich Major League professionals. Those guys, and non All Stars alike, ultimately are paying for Obamacare. As reported Monday by Reuters:

WASHINGTON - A sweeping overhaul of the U.S. healthcare system to be announced on Tuesday in the U.S. House of Representatives will include a surtax on millionaires of 5.4 percent, congressional sources said. The tax rate is higher than the 3 percent surtax lawmakers had been discussing earlier and would be imposed on those making more than $1 million a year, the sources said.

But what I can not understand is all of the fawning by these players or, for that matter, millions of their fellow Americans, over this Radical Socialist POTUS amid mounting evidence that Obama's agenda specifically seeks to confiscate billions of dollars from productive citizens, be they pro athletes, business owners, educated professionals in fields such as law and finance, or others justly compensated based on exemplary performance.

If you want a sense of where household earning power is headed, watch replays of that limp-wristed first pitch Obama tossed from the pitcher's mound at Busch Stadium. It was delivered on a strictly downward trajectory. In addition to the new looming surtax, a higher ceiling on income tax rates is forthcoming as well as the return of the crippling 55% death tax.

In fact, the pitch looked a lot like some of the softball questions Obama entertained during an interview by Fox Sports' Joe Buck when he joined Buck and commentator Tim McCarver in the booth Tuesday night.

Buck opined that the poor sleep deprived POTUS must have been happy to attend a baseball game, recounting Obama's recent trip to Russia, Italy and Africa. Had Buck been able to reel in his tongue from the floor, he might have chosen a different line of questioning for the peculiar looking world leader, he of the White Sox jacket (on a 79-degree night), blue jeans and sneakers.

Buck: "You've just come back from Russia, where you made dangerous concessions on missile defense, and from the G8 in Rome, where you met with the Pontiff, and later checked out the backside of a 16-year-old Brazilian girl while photographers feasted, before going to Africa because, well, Michelle and the girls thought it would be fun".

White Sox pitcher Mark Buehrle, in a later on-camera chat, lamented he had not had a chance to pose for a photo with the former Chicago street organizer and occasional Illinois Senator. "That's OK," Buehrle said. "He has a lot more important things to do."

Obama could not agree with you more, young man. It is very important that he and his Socialist disciples get their hands on an additional 5.4% of your $14,000,000 salary, just as soon as possible.

With BHO in the house, Buehrle needed a bodyguard and a safe, not a camera.

Dare to Dream

Since the press is salivating over the Pennsylvania swim club story, here are a few pointers from the cheap seats. There are a handful of moments/images race and class obsessed reporters should touch upon to ensure the club is overwhelmed by the cost of defending itself.
  1. Talk about the damage to the children's self-esteem, over and over and over.
  2. Make sure the person defending the club is a preppy white guy.
  3. Go to great lengths to find historical significance in the events. Ignore the possibility of an avoidable misunderstanding.
  4. Give enormous credence to claims of Jim Crow in exact proportion to the scorn given to Tea Party protesters. Also, don't doubt or mock the unenforceable penalties thought police activists demand (see third paragraph of linked story) .
Hopefully, if the press adheres to these short, simple steps a large media frenzy will break out, relevant facts will be ignored and reputations will get ruined. Even better, someone will get prosecuted and wiped out financially.

The Duke lacrosse players story serves as a workable model.

7/13/2009

Knowing When to Meddle


Within hours of the ouster of Honduran President Manuel Zelaya, President Obama denounced the actions by the Honduran military. It is curious that the President of the United States was worried about meddling in the aftermath of the fraudulent Iranian Presidential election, but felt no such angst in regard to the removal of a close Communist ally of Venezuelan President, Hugo Chavez.

It is important to know that the actions of the Honduran military were not that of a coup d’├ętat. Mr. Zelaya’s removal was the result of a direct order of the Honduran Supreme Court. It was also approved by both the nation’s Attorney General and its Congress. In fact, the Honduran Congress had declared their President unfit for office. And, President Zelaya was not replaced by a general as the head of a military junta, but rather the head of the Honduran Congress (who happens to be a member of Mr. Zelaya’s political party). Upon assuming office, the new President immediately called for new national elections.

What would force the other branches of government in Honduras to act in such a manner so as to remove their President? How about the fact that President Zelaya had tried to follow in Hugo Chavez’s footsteps by overturning Honduras’ constitution by staging an illegal referendum that was the prelude to eliminating term limits on his office. Evidently, Mr. Zelaya was envious of dictators all over the globe who are given the title of “President for Life”. When the Army Chief of Staff refused to cooperate in this illegal act, Zelaya fired him. The Supreme Court declared the firing illegal. It is fair to say that the actions of the Honduran military, Attorney General and Congress all acted to save Honduran democracy and not to subvert it.

As is its modus operandi, the United Nations called for the reinstatement of this leftist dictator. Not to be outdone by the UN, the Organization of American States threatened to suspend Honduras’ membership unless Zelaya was reinstated. This isn’t surprising in light of the fact that the OAS had tried to readmit Cuba after a 47 year suspension. There are no finer dictators in the Western hemisphere than the Castro brothers!

Why would President Obama choose to support a Communist strongman, while at the exact same time standing idly by while grassroots democratic protesters are being slaughtered in the streets by Islamists in a police state? I wish I knew the answer. But it certainly calls into question the much discussed “competence” that Mr. Obama’s supporters were yelling about during the 2008 presidential election. It’s just another case of this administration demonstrating weakness on the world stage. As I’ve said many times before, the perception of American weakness in the eyes of our enemies presents a danger to every one of us. There is truth to the adage “Peace through strength”. Despite President Obama’s denial last week, it did win the Cold War for the United States.

It’s bad enough that Mr. Obama doesn’t know when taking sides constitutes irresponsible meddling. What’s even more troubling is that when he does choose sides, he choose the wrong one.

7/09/2009

The Illinois Senate Race and Cap and Trade


Maybe my Congressman, Mark Kirk (R-IL), is smarter than I (and a lot of my fellow conservatives) thought. Last week, in being one of eight Republican Congressmen to vote in favor of the Cap and Trade Bill, Rep. Kirk angered every one of his Republican constituents that I know. We feel that this was an abdication of his previous fiscally conservative pronouncements.

I have been hot and cold on Mark Kirk for many years (mostly cold, however). Prior to his vote against the surge, he had always been strong on military issues, he is the Congress' leading supporter of Israel and he was fiscally responsible. But, in fact, he is what we call a RINO. Unfortunately, the 10th district of Illinois does not lend itself to a true conservative, such as myself, being elected. Therefore, conservatives in the district supported and voted for Rep. Kirk.

In the past 4 years, Congressman Kirk has made two key votes that, in my opinion, undermine his credentials as a Republican - voting against the surge and voting in favor of Cap and Trade. If a Republican casts these votes, he is not a Republican at all (I am well aware of the big tent theory, but these are two core issues that every Republican should agree on, or he's just not a Republican).

Well, yesterday we find out that Illinois Attorney General, Lisa Madigan, has decided to seek re-election and not run for either the Senate or the Illinois governorship. This shocked most political observers, including me. Ms. Madigan was under heavy pressure from Rahm Emanuel to run for the Senate. She was probably the Democrats best hope of retaining that Senate seat (which has nothing to do with Sen. Ronald Burris deciding not to seek election to a full term).

Coincidentally, yesterday, Fox News confirmed that Rep. Kirk will seek election to that Senate seat. And, as good luck would have it for Mr. Kirk, earlier today, Brazil, China and India tell the leaders of the G-8 that they will not impose any carbon emissions reduction plans on their citizens. At the same time, the G-8 leaders refused to make any real commitments to reducing emissions as well.

During his Senate run, Congressman Kirk now has a plausible out for his vote for Cap and Trade. Conservatives will be skeptical, but we will be forced to vote for him anyway. He will start telling the people of Illinois that his vote for Cap and Trade was well intentioned, but that it is not good public policy to impose this type of regulation on our economy when no one else in the world is willing to do the same. He will be able to tout that he showed leadership on the so called climate change issue and the rest of the world failed to act. Therefore, he can no long support such a plan because it would be economic suicide or unilateral economic disarmament.

Maybe Rep. Kirk saw this all along and it was a well orchestrated political plan. If not, he is one lucky fellow. Either way, he will hopefully see the error of his ways and start opposing Cap and Trade now!

How Uncynical of You

Thoughts on the rhetoric of the smartest, least cynical, least partisan head of state in the history of the Republic, maybe even in the history of self-determination. From his speech to the AMA (emphasis mine):
Let me also say that -- let me also address a illegitimate concern that's being put forward by those who are claiming that a public option is somehow a Trojan horse for a single-payer system. I'll be honest; there are countries where a single-payer system works pretty well. But I believe -- and I've taken some flak from members of my own party for this belief -- that it's important for our reform efforts to build on our traditions here in the United States. So when you hear the naysayers claim that I'm trying to bring about government-run health care, know this: They're not telling the truth.
When elected officials speak in public they speak for the Government of the United States. They are perfectly free to ignore or disagree with critics all they want, but claiming oppositional views are illegitimate is actual squelching of dissent, which the left prattled on about from exactly 1/18/01 until noon, 1/20/09 (yes, W. did it all the time, too. When he did it the left went bat shit. Now, silence).

Moreover, he positions his as the honest view, and explicitly states the opposition is lying, i.e. saying something they know to be factually incorrect. Since PBO hasn't documented an actual health care plan how could criticism be factually wrong (in his defense, putting a plan in writing is pointless. It's not like Congress actually, you know, reads this stuff)? Critics are expressing an opinion, which by definition can't be a lie. What's more, the criticism is entirely valid. Government funded programs routinely expand beyond their original scope and intent. It's the politician's natural path: if a plan works, it should be larger. If a plan doesn't work, it's because it wasn't large enough.

So, in addition to Obama just being logically wrong, the critics he tries to delegitimize and accuses of lying have a perfectly valid justification for their views. Yeah, it's one paragraph in one speech. But hardly the work of post-partisan, non-cynic.

7/07/2009

Crapulus Pt. 2

Let me state for the record I believe this is a reasonable idea that, once in the grubby hands of the Congress of these United States, will be long on one time expenses (but referred to as "investments") that won't stimulate aggregate demand appreciably. Why? Because politicians believe more inputs equal better outcomes and activity is synonymous with progress. They want headlines and the appearance of doing something, anything, to help. Moreover, they believe complex, undirected systems can be easily controlled, provided they are the ones in control.

Those who believe in central planning always think they should be the central planner.

7/06/2009

Socialized Medicine




President Obama is attempting to push us to one of the ultimate dreams of the left – socialized medicine. He even claims that he can pay for it. That would be quite an accomplishment considering that the Congressional Budge Office has estimated the cost over the next ten years to be $1.6 trillion. Of course, this doesn’t include the inevitable cost overruns that occur every time the government proposes a new program. For example, when Medicare was introduced in 1965, the estimated cost in 1990, as adjusted for inflation, was $12 billion. The actual cost in 1990 was $98 billion. Not exactly within the margin of error.

Every one an a while, Congress attempts to rein in the costs of Medicare by reducing the payments to doctors and other health care providers. This creates an incentive on the part of these providers to schedule unnecessary tests or to send patients from specialist to specialist in order to increase revenue. This also forces these providers to charge more from private insurance companies in order to offset the low rates of Medicare.

This causes damage to the entire society. Those covered by Medicare are hurt because the medical profession is less efficient. Those not covered by Medicare are hurt because they are charged more to offset the lower rates paid by Medicare.

The American norm of having employers pay for their employees’ health insurance is a relic of the 1940s when the federal government imposed wage controls. In order to attract employees, businesses were forced to offer non-cash benefits, such as health insurance. The government allowed the businesses to deduct these insurance payments without a corresponding inclusion of these payments in the taxable income of the employees. This, of course, distorted the traditional fee for service system. It also created the incentive to get medical care through employers rather than each person obtaining it on his own. As RSP founder and managing editor, The Daily Pander, points out, employer provide health insurance has really become employer provided pre-paid health care. The insurance component, as traditionally defined, has been lost.

Think about government provided health care as a large buffet in Las Vegas. You pay a relative small fee compared to the amount that you are allowed to consume. Sure, if everyone eats a lot, the cost will increase, but it will be defused over all of the customers at some point in the future. It has no effect on the cost that you are going to pay now. Therefore, you are incentivized to consume as much as you possibly can. Once small passing twinge in your chest, go see a cardiologist. Your nose is running, you’ve got to the infectious disease specialist. There is no incentive to compare costs among providers.

In order to control costs, the government will impose rationing. This has happened in both Canada and the United Kingdom. In Canada, the rates of death from colon cancer is 25% greater than in the US. In the UK, Her Majesty’s government recently announced that they will not make state of the art breast cancer drugs available to those women suffering from that disease because of the cost.

Government imposed rationing sacrifices quality and innovation. It also imposes long wait times. There is no way to control costs without long lines and a lack of incentive to innovate. Can anyone name the last major medical breakthrough or new drug that occurred in either Canada or England?

If our medical system is so bad, why to foreigners come here for treatment that is unavailable in their home countries. Canada can ration its health care in large part because we act as their safety net. Remember all of the royals that have come to the US for treatment when they are sick – Jordanian and Saudi kings ring a bell?

President Obama’s plan will eliminate all that is best with our health care system. We must ask ourselves if this is worth covering the relatively few who are truly uninsured. I think not.

7/01/2009

The Joys of Forcible Equality (Plus a Cheap Shot)

"Socialism is a philosophy of failure, the creed of ignorance, and the gospel or envy, its inherent virtue is the equal sharing of misery."
Winston Churchill

Happy Independence Day!!!