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We've been Taxed Enough Already!
Limited, Fiscally Responsible, Transparent Government
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Volume 4 Number 4 5 July 2012
Now that it is clear that ObamaCare is a tax and spend program, it is up to the American people to decide what to do about it in the coming election. It is abundantly clear that Federal taxes reflect only about 60% of the cost of the Federal Government as it is, and will need to increase soon just to reflect the cost of what we choose to continue of what the Federal Government is doing now. The fact is that many young people will choose to pay the penalty tax, which is far less than the cost of health insurance, creating a substantial new revenue stream for the Federal Government. Hospitals will still be required to provide a level of basic care to people without insurance, and the Federal Government recognizes no responsibility to use the income from the penalty tax to alleviate the cost of this care to the hospitals.
1. It is difficult to see why any state would choose to get involved in this program, which is going to be an expensive mess if it survives. The Federal Government has no intention of covering the entire cost of this program to the states over time. South Carolina did right to opt out, and should have the courage to stay out, especially now that the threat of sanctions has been removed.
2. ObamaCare needs to become a major issue in the general election in November. Every legislator needs to be required to support either ObamaCare or its repeal.
3. No one has addressed the underlying problem of the high cost of medical care and the predatory billing practices of many hospitals and medical practices. These matters need immediate attention.
4. The cost of medical care for those unable to afford it must be addressed. It is unrealistic to simply require hospitals to provide this care and cover the cost by spreading it over their other customers. If the citizens want these people taken care of, the citizens need to decide at what level and how to pay for the required care.
5. It must be made clear to the American People what Obamacare is actually going to cost and how it is going to be paid for. I understand that the cost of Medicare is going to double for existing retirees. Someone like the Congressional Budget Office needs to get into this and figure it out.
6. An approach similar to that done for Medicare Supplement Insurance in which a number of different plans were defined is certainly worth considering.
7. The Medicare Board that decides how much Medicare will pay for various medical procedures should certainly be preserved. This is the only mechanism currently in place that keeps medical care costs from going through the roof.
From the Editor
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J.R. Wilt, Editor and Publisher
The Meaning of Greece & EuropeThe Europeans have come to a way to stabilize their weaker partners, at least temporarily, and appear to have decided to accept short term economic pain in order to achieve long term economic stability.
Meanwhile, back in the United States, the national debt has expanded to about 1.2 times GDP, up from 1.0 times GDP six months ago. Ordinarily, printing this much money would result in a serious credit crisis as selling the bonds to finance the government debt consumed all the available cash in the entire world.
In this case the Federal Reserve has prevented the destruction of the credit markets by declaring itself credit worthy and purchasing the debt for its own balance sheet. By providing both the cash and the credit to finance it the Federal Reserve has temporarily prevented the effects from reaching the US economy. The average US citizen is not yet feeling any ill effects from this action by the Federal Reserve, and has been fooled into thinking that everything is OK.
Unfortunately, the current reprieve for the US economy is temporary, delayed by the fact that the other principal economies in the world are dealing with their own problems. They are, however, dealing with these problems, not pretending that the problems do not exist as seems to be the fashion in the US.
The world economy is a zero sum game with rules dictated by economics, not governments, even the government of the US. The Federal Reserve can get away with this policy for a short time, but when the other major economies of the world get their problems fixed, the Federal Reserve will find itself unable to sell its debt except at increased interest rates. At this point the US economy will be in serious trouble, just a Greece was, and for the same reason.
The Federal Reserve has been selling shorter term bonds and using the money to purchase longer term bonds ("Operation Twist") in order to postpone the date at which the Federal debt must be refinanced, but there are limits to what the Fed can do here. The fact that this kind of activity is going on provides some insight into just how serious the situation really is. The Federal Government's income from taxes must get a lot closer to its expenditures for programs before the rest of the world achieves that kind of balance, an event not far in the future.
If I were a betting man, I would be guessing that a financial transactions tax proposal will be making the rounds soon. The Europeans have been experimenting with such a tax and are getting the bugs worked out. A tax of a penny added to every brokerage and currency transaction (i.e., every time a commission were charged) would bring in a lot of tax revenue. My own preference would be to begin dismantling large portions of the Federal government, but everyone must agree that if the dogs if inflation get loose with the amount of money presently sitting in the Federal Reserve the result will be catastrophic. To descend to the vernacular, time, maybe past time, to get the old butt moving.
Reading the decision announced on 28 June 2012 provides a lot of insight into the horse trading that must have gone on inside the Court while considering this important matter. Three opinions are presented The first is written by Chief Justice Roberts and represents the opinion of the Court. The second is written by Justice Ginsberg joined by Justice Sotomeyer and in part by Justices Kagan and Bryer. The third opinion is a dissent by Justices Scalia, Kennedy, Thomas and Alito.
The first opinion, written by the Chief Justice, begins by asserting that it is not the responsibility of the Court to pass on the wisdom or need for the law under consideration; wisdom and need are left to the Congress and the citizens to whom Congress reports. The only matters that concern the Court are, according to the Chief Justice, whether or not the Congress has reasonably used the specific powers delegated to it in the Constitution. The Chief Justice also asserts an obligation of the Court to defer to Congress and the people by actively searching for a different way to uphold the constitutionality of a law in the event that the way suggested by Congress is found to be unconstitutional.
The second opinion, written by Justice Ginsberg, begins with a long explanation of how important the Healthcare law is and how important it is that a way be found to allow the law to proceed. The difficulty with this approach is that Article 1 of the Constitution does not contain a "move really important programs forward no matter what" power, as is pointed out in the dissent (opinion 3).
The third opinion is a straightforward dissent - healthcare fails under the Commerce Clause, the justification under the Tax and Spend Clause is an afterthought and not to be taken seriously, the coercion applied to the states is not permissible and it is necessary to go no further. The entire law must fail.
It would have been easy for Chief Justice Roberts to go along with the dissenters and reject the entire law. On the other hand, if Congress really wants to create a new Healthcare Tax and use the money to purchase health insurance for every citizen, it clearly has the authority to do so. Congress went to great lengths in writing the Healthcare Law to avoid using that authority, presumably because it feared the reaction of citizens to such a proposal. By finding the Healthcare Law constitutional under the last minute Tax and Spend justification provided by the Federal Government, the Chief Justice has thrown the situation back to the American People. Congress must now face its decision to impose this extremely expensive program as a tax with a general election only four months away.
Faced with four Justices determined to throw out the ObamaCare law in its entirety and four justices bound to keep ObamaCare in its entirety, and with each side determined to impose its ideology by fiat, the Chief Justice worked out a solution that clearly placed responsibility for the decision back where it belonged all along, on the American People. In so doing he managed to place new limitations on the Commerce Power and on the ability of the Federal Government to impose its will on the states.
Long apathetic in matters political and subject to endless advertising honed on the ability to persuade people to spend triple what they need to for toothpaste, the American People are going to make a decision. Sold this law in one of the great flim-flams of our time and with the true cost still completely under wraps, the American People are going to decide whether or not to keep it. We must do what we can to make sure that they consider the matter seriously and with a full understanding of what it means.