Pavlov and the Progressive Tax

The Green Party has as part of its platform the support of the progressive tax system. The logic behind it is that the progressive tax is based on need. In other words, you need all of the first $20,000 you make. You need a lot less of the last $1 million of the $5 million you make, if you're fortunate enough to make that much.

I am a big believer in the principles of Ivan Pavlov. Pavlov did experiments on mice and dogs that showed that you can influence behavior based on what you punish and reward. The progressive tax system punishes success. In fact, Ronald Reagan, when he first became an actor, got a first hand taste of its corrosive nature. When he was first an actor, many of his colleagues recommended that he only make two movies a year. That's because by making a third he'd wind up in a higher tax bracket and actually take home less.

The progressive tax system is an incentive to make less because the more you make the less of that you keep. We want to encourage everyone to maximize their income and the progressive tax system does the opposite.

Sharron Angle: the Extremist?

With her victory, Democrats are trying to paint Sharron Angle as an extremist. I'm trying to find her so called extremist positions. Let's look at all the craziness.

Sharron Angle is a former school teacher and legislator. She is known as a conservative renegade in Carson City. She wants to phase out Social Security for younger workers, dissolve the Education Department and repeal the 16th Amendment that established the federal income tax.

Wait, she wants to repeal all income taxes. Goodness, what a radical?! We definitely don't want any crazy idea like that in Congress. What makes a lawmaker think that people should keep 100% of what they earn. The Republic will surely crumble if we ever allowed that. Yet, Democrats are licking their chops to take her on this issue. They call it a tax cut for the rich. People are cautioning that she must moderate.

Democrats say Angle’s extremist ideas include eliminating the Education Department and repealing the federal income tax. Manders told his listeners on Wednesday “this hardcore right thing is going to kill her.” He said “it may cost her an election if she doesn’t understand that.”

I would love to see the Democrats running against across the board tax cuts. It's a sign of how far we've come that massive tax cuts are now seen as extremist. Are Democrats really going to spend the campaign telling people that they don't pay enough in taxes and that eliminating income taxes entirely is radical.

It's in fact so radical that our country was founded with no income tax. In fact, it took an amendment to the Constitution only to allow it.

What Angle's so called extremism shows is that when we say we want bold ideas, that's only theoretical. As soon as anyone comes up with a bold idea, they are an extremist. Imagine the horror of someone suggesting eliminating an entire department. After all, our deficit is only $13 trillion. The tens of billions we'd save by eliminating the Department of Education, an idea echoed by Ronald Reagan, is completely unnecessary. After all, our country's finances are in perfect order.

Then, she wants to phase out Social Security. How crazy is that? After all, the unfunded liabilities in Social Security are only about a hundred trillion. That's easily solved right. What exactly would happen if we weren't able to meet our liabilities? Wouldn't that be the same as phasing it out? Angle is definitely a radical and an extremist.

No More I Tunes Tax

Governor Quinn has walked this one back.

Gov. Pat Quinn is backing off a proposal to tax music and video downloads in an effort to plug the state’s massive budget hole, saying he still believes raising the income tax is the best way to generate money for the state.

Quinn floated the idea of taxing downloads from online services such as iTunes in a
meeting with legislative leaders earlier this week, but the proposal received a cold reception in Springfield. Today, Quinn said that he was simply offering suggestions on ways to solve the state’s budget crisis and does not support the plan, which would have generated $5 million to $10 million a year.

“We had a meeting with the legislative leaders the other day, we made a list of all
the possible things that could happen,” Quinn said. “I didn’t advocate that. I’m not interested in doing that, frankly.”

The budget woes in Illinois remain all too real.

Get Ready for VAT

Paul Volcker has spoken.

Acknowledging it would be a highly unpopular move, White House economic adviser Paul Volcker said yesterday the United States should consider imposing a "value added tax" similar to those charged in Europe to help get the deficit under control.

A VAT is a national sales tax that, like state and city sales taxes, would be collected by retailers.

Volcker, at the New-York Historical Society, told a panel on the global financial crisis that Congress might also have to consider new taxes on carbon and energy.

One guy that is likely sticking his chest out is Charles Krauthammer. He's been predicting this for weeks.

That’s where the value-added tax comes in. For the politician, it has the virtue of expediency: People are used to sales taxes, and this one produces a river of revenue. Every 1 percent of VAT would yield up to $1 trillion a decade (depending on what you exclude — if you exempt food, for example, the yield would be more like $900 billion).

It’s the ultimate cash cow. Obama will need it. By introducing universal health care, he has pulled off the largest expansion of the welfare state in four decades. And the most expensive. Which is why all of the European Union has the VAT. Huge VATs. Germany: 19 percent. France and Italy: 20 percent. Most of Scandinavia: 25 percent.

In fact, Krauthammer pretty much nailed it besides its introduction after the election. The VAT is great if you're trying to raise revenues quickly. It would also put us one step closer to a Western Europe style Social Democracy. The VAT is very popular there. It helps to pay for the plethora of government entitlement programs.

It would also mean that President Obama would go back on his most famous campaign promise not to tax anyone that makes under $200,000 in income. He may try and pull some misdirection and pretend as though this won't be that type of tax or that he wasn't talking about this type of tax. It won't work. If he does anything to try and implement the VAT, he will lose significant support and never get it back.

Interview With Dennis Lennox

I first crossed paths with Dennis Lennox more than two years ago. At the time, he was a junior student at Central Michigan University. By the time I first spoke with him, he had engineered a near year long battle with the faculty at CMU over Gary Peters. At the time, Peters was running for the U.S. Congress and concurrently he was holding the distinguished Griffin Chair. (Peters eventually won his Congressional election) The Congressional district was about 400 miles from campus. If, and now when, Peters won, he would have had to give up Chairmanship. Furthermore, the Griffin Chairmanship was supposed to be non partisan and a Congressional candidate was hardly that. Subsequently, emails and other leaked correspondence showed evidence of a corrupt process in choosing Peters for the Chairmanship.

Lennox waged a battle to have Peters choose, the Chairmanship or his Congressional race. By May of 2008, Lennox had effectively won his battle and Peters was asked to resign and he did. Lennox was not unscathed from his battle. The administration threatened sanctions against Lennox on a number of occasions. Eventually, a letter of reprimand was put into Lennox' university records. In fact, the school attempted to hold a number of disciplinary hearings at which the potential punishment of Lennox could have been expulsion. At one hearing, Lennox showed up flanked by no less than six members of the media. The administration quickly cancelled that hearing and held another in secret over Spring break a couple weeks later.

After this, Lennox flirted with a run for the State Congressional seat in his home district in Michigan. He eventually settled on running for drain commissioner in his home county of Cheboygan. Lennox ran on a unique platform, "Fire Dennis". He was running not only to remove himself as drain commissioner of Cheboygan County but to remove the entire position of drain commissioner in Cheboygan County. Why would he run on such a platform? First and foremost, there are no drains in Cheboygan County. The drain commissioner of Cheboygan County was symptomatic of the problems of governance in Michigan. The state's constitution requires that all counties have the same levels of government service. So, since some counties have a drain commissioner, all counties have to have a drain commissioner, even if Cheboygan County doesn't actually have a drain to commission.

Currently, there's a bill in the committee in the House and in the Senate to change the laws and allow for Cheboygan County to remove the position of drain commissioner.

For the last year, however, Dennis Lennox has been running for the State Legislature's Michigan House Seat in his home district.

To understand Lennox platform, first everyone must understand the economic situation in Michigan. That's where I began the interview. In fact, the state of Michigan has been in a perpetual state of recession/depression since 2001. Whereas most of the rest of the country recovered and boomed in 2002-2003, the state of Michigan continued to flounder. The maufacturing sector in Michigan never recovered, lead so to speak by the automobile sector, and it has kept Michigan in a near perpetual double digit unemployment. Call this past decade it's own lost decade in Michigan.

As a result, the state has seen a max exodus out of Michigan. The state of Michigan loses one family every twelve minutes and the state has lost more than one million people since the beginning of the decade. Some of the problems are structural. The automotive sector is in a state of decline and Michigan is intertwined with that sector. The city of Youngstown was once sprawling when it hosted the steel sector. When that sector depresse, so to did Youngstown.

The problems are also structural in that the government of Michigan, municipal, county, and state, is terribly inefficient, full of red tape, and as Lennox characterized them "crippling taxes". For instance, two years ago GM was looking to build a new plant. They were deciding between Michigan and South Carolina. It turned out that South Carolina could procure the building of this plant in half the time because Michigan carried so much red tape in terms of permits and other requirements. So, GM chose South Carolina. Michigan has its own OSHA (Occupational of Safety and Health Administration). The Michigan OSHA has its own rules and regulations that are stiffer than the national rules and it makes doing business in Michigan that much more difficult. The state of Michigan, between municipal, county and state offices, has more political elected offices than any state in the country. In his home county of Cheboygan, there's one politician for every 156 people.

The overlapping and inefficient government leads to crippling taxes. The state's personal income tax stands at 4.35%, the sales tax at 6%, and the state has recently instituted a privilege of doing business tax, a pseudo corporate income tax. That tax was instituted so haphazardly that forms and instructional materials weren't prepared in time for the tax to be effective. So, not only were businesses made to pay more in taxes, according to Lennox the increase was 200-300%, but business owners were confused by what forms to fill out. In 2007, Governor Granholm instituted a $1.7 billion tax increase. At the time, she promised that this tax increase would once and for all balance the budget and lead to prosperity. It hasn't and things have only deteriorated since. In fact, Lennox scoffed when I pointed out the commercials with Jeff Daniels.



Lennox said that after spending millions on these commercials business hasn't improved in the slightest.

So, to Lennox, to save Michigan the state needs a top to bottom reform of its entire government. Let's start with his position of drain commissioner. This happens because the state requires that every county "provide the same level of services". So every county has a prosecutor, a sheriff, a drain commissioner, etc. This is silly and inefficient. It creates a drain commissioner in a county with no drains. The biggest and smallest counties each have a sheriff. This is also inefficient. By changing the laws, smaller counties can combine some of their services. Other counties can remove unneeded offices like a drain commissioner in a county with no drains.

By changing laws, and in some cases the constitution, school boards can be combined, police departments, and many other government services that are currently being provided in an inefficient manner because that's the way the law requires it. Lennox made sure to stress that he doesn't want to close any schools. Instead, he wants to remove the layers of bureaucracy that govern the schools. For instance, in his county, there are six high schools and each has its own ELECTED school board. If the laws changed, those six school boards could be combined into one and a lot of government waste could be removed.

Lennox is a small government conservative which of course means he believes in lower taxes. The only tax he's committed to cutting is the $1.7 billion tax increase instituted in 2007. He's also taken Grover Norquist's no new tax pledge because as he put it "taxes hurt not help businesses and people". Lennox is focused on reforming government and making it more efficient because he believes a leaner and efficient government leads directly to lower taxes.

As for Lennox' current job, both bills are currently stuck in committee. The Speaker of the House,Andy Dillon, pledged to give his bill an up or down vote but that hasn't yet happened. The budget battle, which happens just about every year, put most other business on hold and the bill hasn't made it out of committee yet in either chamber. Lennox pledged to me that he would continue to pursue having the position of Cheboygan County drain commissioner removed if and when he makes it into the state's legislature.

The primary is in August of 2010. The district is more than 60% Republican and so the winner would be a favorite in November of 2010.

A New Way to Look at Payroll Taxes

If you are an employer you could pay up to 15.3% of your income toward payroll taxes. Those payroll taxes include money set aside for Social Security and Medicare. Both those programs are on the verge of bankruptcy. What if there was a better way to spend that money?

That's what former accountant, now retired, Dick McDonald thought. Imagine if all the money currently taken out of your paycheck for pay roll taxes could be placed into an investment account and that investment account invested in index funds.

An index fund or index tracker is a collective investment scheme (usually a mutual fund or exchange-traded fund) that aims to replicate the movements of an index of a specific financial market, or a set of rules of ownership that are held constant, regardless of market conditions.

Tracking can be achieved by trying to hold all of the securities in the index, in the same proportions as the index. Other methods include statistically sampling the market and holding "representative" securities. Many index funds rely on a computer model with little or no human input in the decision as to which securities are purchased or sold and is therefore a form of passive management.

The S&P 500 index, for instance, has averaged a yearly return of 10% over the last 25 years. So, had you just invested $1000 25 years ago, your total would currently be $10,834.71.So, just imagine a janitor that only makes $20000 yearly. You'd have about $1500 put away for you every year. If you were to work for 40 years, you'd accumulate about $660,000 over the life of the investment.

Currently, if you max out the system, you'd receive just under $2000 monthly from your Social Security check. In fact, Social Security pays out the equivalent of 2% annually and that's only if you live into your 80's.

This program would be entirely voluntary. It would expand upon George Bush's idea of privatizing some of social security. Under George Bush's plan only 4% of your entire Social Security account would be privatized. Under this plan, all of it would be privatized and invested on the stock market. If all goes according to plan, not only would it create enormous retirement wealth for most citizens, but it would expand the economy exponentially, pay off half our debt, and lead to sustained economic growth.

That's the positive. Here's the negatives. Under this plan everyone that pays into social security and Medicare would still get all the benefits promised them. Now the hope by McDonald is that the wealth generated by the plan would create so much in new tax receipts that it would pay for itself. If not, however, that would mean that the U.S. would have to monetize the debt. This means that any shortfall beyond that which McDonald anticipates would be financed through printing money.

When Mr. McDonald and spoke last week, he assured me that under his plan there would be no massive inflation. On the other hand, basic economics says that if you print money ad nauseum you will create inflation.

The other problem is political. Such a plan would immediately lead to demonization from the left that "you're jeopardizing people's Medicare and Social Security". For this, McDonald told me he would take his plan "directly to the people". I've heard such statements before, and I wish him well. That said, George Bush was excoriated and demonized for simply suggesting that we move just four percent of the payroll tax into a private account. This plan would call on privatizing the whole thing. While I may agree in principle with such a plan, in practice, unless you have a real media campaign, it has no hope of ever seeing the light of day.

Some Thoughts on Election Day

I haven't said much about this because it's hard to add anything new. The stories are pretty straightforward. In Virginia, Bob McDonnell should win by double digits. That's what Republicans should consider a victory. In New Jersey, it's up in the air and we'll only know who won later this evening. In New York 23, the race is up in the air because the dynamic changed so late with Scozzafava dropping out late. Her endorsement of the Democrat (Scozzafava is technically a Republican) is a slap in the face to the Republican establishment and Newt Gingrich that backed her.

If, and that's still a big if, the Republicans sweep (if you consider Hoffman a Republican), then without a doubt, health care reform does NOT pass this week. Whether or not these three elections are or are not a referendum on President Obama, a sweep will be viewed as such. There's no way moderates will then have any use for the very liberal health care reform. If Corzine and Owens win and Deeds is within single digits, then health care reform will almost certainly pass.

Ironically enough, each of the three races have their own local dynamic which make them a referendum on things other than President Obama. For instance, if you think that the New Jersey Governor's race is a referendum on President Obama, then the Republican candidate, Chris Christie, will vociferously disagree. He believes it is a referendum on Governor John Corzine. He's been running on lower taxes and smaller government platform. Corzine has raised just about every tax he's been allowed to raise in the previous term. New York 23 has been so goofy that it's unclear what it's a referendum on. First, no matter what this seat won't be Republican for the first time since the Civil War. Doug Hoffman is running on the Conservative Party platform. If he wins, that should surprise no one. After all, the district is fairly conservative. If the Democrat wins, what does that say about the Republican Party.

In Virginia, the Democrat Deeds is a bland candidate running an even blander campaign. It's hard to see how that's a referendum on Obama. The dynamics of each race are convoluted with national politics and in the end no one will know exactly how much is a national referendum and how much is a by product of local issues.

Perception, however, is reality. So, what it really is, is not nearly as important as what it appears to be. So, everyone will be waiting breathlessly as the results roll in. My prediction is McDonnell by 12, Christie by 2, and Hoffman by 8.

Here a Tax, There a Tax, Everywhere a Tax

I wonder if the Democrats have any self awareness. To be fair, I often wonder that about a lot politicians. (and likely not nearly enough about myself) Since the health care debate started, I have lost track of all the taxes that one or another has proposed. I hope I remember them all: a soda tax, a cigarette tax, a value added tax, cutting the credit for charitable donations, Cadillac health insurance plans, employer funded health insurance plans, a windfall profits tax on insurance companies, an excise penalty for not having health insurance, an excise penalty to employers for not providing health insurance, an excise tax on those making $350,000 and more. Just this week Nancy Pelosi said she was open to the so called value added tax, or national sales tax, an then today the idea of a windfall profits' tax has been floated. I'm sure I forgot a few. At this pace, the Democrats will have suggested no less than three hundred different tax ideas to pay for their multi trillion dollars worth of spending ideas. Do the Democrats not realize that the worst stereotype against them is tax and spend?

Just try and put this into perspective. Is nothing sacred? The Democrats want to spend in the neighborhood of a trillion dollars in the next ten years on health care reform. That's of course projected and we can all be certain that it will be significantly more. To pay for it, they're ready to raise just about any tax they can think of. Do the Democrats realize that they have the perception of tax and spend?

Talk about reinforcing a stereotype. Since taking over, the Democrats have gone on an orgy of spending. The deficit is up to a whopping $1.4 trillion. That's about three times the deficit they all bemoaned in the last year. To pay for it they're willing to propose a tax on everything from soda, to all sales, to some income, to some health care benefits, to some profits, and everything in between.

The job I want is to be the person that thinks up ads to use against them in the next election. If there was any doubt that Democrats were lead by people that believed in tax and spend, no one should doubt it again. The only thing the Democrats have done since taking over is proposed, and/or enacted, a series of spending measures: the stimulus, the bailout, SCHIP, the foreclosure bailout, the mammoth budget, health care reform, and cap and trade. To pay for it all they've suggested a laundry list of taxes on everyone and everything.

The public rejects tax and spend each and everytime. That's because it doesn't work. Worse yet, it makes things worse. The domestic policy of the Democrats lead by President Obama is nothing more than a laundry list of spending proposals that are paid for by a laundry list of tax proposals. That's all it is. There's nothing else there. It's truly remarkable. Do the Democrats realize that they've spent the last nearly nine months doing nothing but reinforcing the most corossive stereotype of their party? Like I said, I want to be the person that dreams up the ads for all this tax and spending.

Mr. President: Here's My Nickel's Worth of Free Advice

Over the last few days, the media is reporting on growing speculation that the president is considering or even ready to propose a value added tax. In this way, President Obama would share some ideological similarities with Mike Huckabee. Mike Huckabee is also in favor of a value added tax, though he calls it a consumption tax or the fair tax. There is however a huge difference between Mike Huckabe and President Obama. Mike Huckabee proposes that all we have is a value added or consumption tax. Meanwhile, President Obama wants a value added tax on top of all the other taxes.

The idea first gained media attention most recently when it was suggested by John Podesta of the Center for American Progress. that the value added tax was more plausible than ever earlier in the week. Podesta, according to D.C. insiders, is believed to have significant influence over the current White House and was the Chief of Staff to Bill Clinton. His think tank CAP then held a conference in which all the powerful liberal economic thinkers all got on board in support of the idea of the value added tax.

Supporters of the VAT say it is a great revenue generator and they also say it encourages savings. It maybe a great revenue generator but that's because it takes a lot of money out of the hands of the citizens. Taxes affect behavior. So a tax on consumption would reduce consumption which would increase savings. That said, we're in a recession and we need more consumer spending. Now, we're going to have a tax on spending. Does that sound smart now?

Politically, however, the idea is even worse. The president must understand that if he breaks his pledge not to tax anyone earning under $250,000 a year, his presidency is over. That's not a broken promise he recovers from. There is no equivocation or explanation that will help him if there is a broad based tax on those earning less than $250,000. Now, opponents like me were dubious that the president could engage in the sort of spending he has and keep that pledge. This is exactly such a tax.

The president has added a cigarette tax. He's added several credits for low income folks. He wants to add a penalty for not getting health insurance. He wants to cut some credits for charitable giving. He also wants to complicate the tax code regarding corporate taxes. If the VAT were all part of a tax overhaul that simplified the tax code, that would be something most would applaud, however it's clear that the president has no use for simplifying the tax code. Everything he's done has complicated the tax code. Now, he's thinking about adding a VAT on top of it. If the president were to officially support such an idea, that would be it. It would be the George HW Bush equivalent of a promise broken. So, my advice is to stop listening to the far left on this. This tax is a bad policy idea and a much worse political idea.

It Depends on Your Definition of a Tax

I confess that I didn't see much of the president this weekend. So, I won't make any large assessments of his performance and its effect on the health care debate. That said, what I have read and heard so far spells serious trouble for the president. I already analyzed the president's comments on ACORN. Now, Politico has a good article analyzing the mandates within the Baucus plan.

At issue is whether or not these mandates are in fact a tax increase. The president, of course, denies this, however this assertion is countered by the language in the bill. Here's the relevant language.

Page 29, sentence one of the bill introduced by Senate Finance Committee Chairman Max Baucus (D-Mont) says: “The consequence for not maintaining insurance would be an excise tax.”

And the rest of the bill is clear that the Finance Committee does, in fact, consider it a tax: “The excise tax would be assessed through the tax code and applied as an additional amount of Federal tax owed."

There is a long exchange between President Obama and George Stephanopoulos in the article. I will let the audience click over and read it there. Also, here is full coverage of the interview from ABC.

The president's assertion that these excise taxes on anyone that doesn't get health insurance aren't really a tax goes like this. First, those without insurance cost those with insurance money and so there's already a tax in the system. Second, health insurance premiums are going up and so there's already a tax. Third, by forcing this mandate, we will have a healthier people and so that will bend the cost curve on health care and thus everyone will wind up saving money.

There is absolutely no way to test most of the president's assertions. Sure, health care premiums are going up. There's no way to know that the president's plan will stop that. Sure, those without health care are a strain on the system when they show up and get free health care services. Yet, there's no proof that the Obama plan will have any effect on health care costs. None of his statements can be tested. The only way we would know is by having the plan take effect and seeing what happens.

There is no doubt that his plan calls on an excise tax on both health insurance providers and those with the means but no insurance will be taxed if they continue that way. Those are taxes. Everything else is a theoretical point that can't be proven one way or another. In other words, the president would like us to disregard the tax that is clearly in the bill because in theory, there will be savings that the president hopes will happen as a result of the plan.

Furthermore, the President continues to compare this health insurance mandate to car insurance mandates. That's just silly. No one forces anyone to have car insurance. They merely force you to have car insurance if you have a car. No one is mandated to have a car. In fact, driving is a privilege and not a right. If you drive you must have car insurance, but no one is mandating that you drive. Health insurance is a mandate simply for living.

The president continues to get in trouble with this kind of language. He continues to lose credibility when he claims one thing and has a different outcome. He promised no more earmarks and then signed an omnibus bill with eight thousand earmarks. He promised no more lobbyists in his administration and then proceeded to exempt dozens from that rule. He promised to be open and transparent and then proceeded to block the release of numerous White House minutes.

In this case, he is guilty of promising something he simply has no hope of achieving. The president is determined to spend an unprecendented amount of money. Yet, he also proclaims that only the superwealthy will have their taxes rise. He also promises to tackle the deficit, sometime. Well, you can't spend unprecendent amounts of money, tackle the deficit, and also only tax the really rich. This isn't his fantasy but reality. The math doesn't add up. So, he's forced to claim that an excise tax is really not a tax. The public isn't buying and that's why opinion continues to slip.

The Soda Tax?

The talk appears to be heating up over imposing a soda tax.

AS CALLS mount for soda to be taxed because of its link to the nation’s obesity epidemic, Coca-Cola CEO Muhtar Kent tried this week to tar the tax as socialist, taking a page from the Republicans single-word playbook against health care reform, bailouts, and even President Obama’s back-to-school speeches.

Kent told the Rotary Club of Atlanta that proposals to tax sugary drinks and trash food were “outrageous’’ because “I’ve never seen it work where a government tells people what to eat and what to drink.’’ Kent added, “If it worked, the Soviet Union would still be around.’’

Kent is clearly worried because Obama, in the current issue of Men’s Health, said soda taxes should be explored. “There’s no doubt that our kids drink way too much soda,’’ Obama said. “And every study that’s been done about obesity shows that there is a high correlation between increased soda consumption and obesity.’’

The logic behind taxing soda is that it's bad for you. It leads to obesity and so an extra tax on soda would discourage drinking more soda. Now, I don't doubt that drinking soda would be bad for you. I don't even doubt that an extra tax would discourage drinking soda.

The problem with such a tax is there are all sorts of things that are bad for you. Unless the government is prepared to tax red meat, junk food, McDonald's and a whole host of other foods that are also bad for you, then the problem of obesity won't be solvedIn fact, it won't make anyone more healthy. It will just slow down people in drinking soda and more often than not, those people will find another activity that's bad for you. If we're really serious about solving obesity, maybe every television will have a transmittor and if you watch more than a certain number of hours, you'll be taxed as well. Sitting on your couch for too long contributes just as much to obesity as drinking too much soda. Maybe we can have a similar device for you computer, cell phone, and I Pod.

If the government is going to tax ever single thing that's bad for you, then you're looking at an awful lot of taxes. An extra cigarette tax was imposed to pay for SCHIP. That tax affects the poor and middle class overwhelmingly. First, they smoke more than wealthy. Second, wealthy can afford to pay more for cigarettes.

It's the same thing here. It will be the poor and middle that will be most affected by this tax. It's their budgets that will be most affected. A wise man once said that you can't legislate stupidity. If people insist on drinking on too much soda, that's their business. Trying to regulate that behavior with punitive taxes rarely works. Those that want to live an unhealthy lifestyle will live an unhealthy lifestyle. You can tax soda all you want but it will do little to solve the obesity problem. It will only hurt those that can little afford the extra tax now.

Desperate Dems Recycle Tired Ideas

I'm trying to think of the best metaphor to describe this. In my head, I see a car stuck in the mud. The wheels are spinning but the car goes nowhere. In any case, here's the latest rumor coming out of D.C.

Senate Democrats are revisiting proposals to raise taxes on high-income people to help pay for an overhaul of the health-care system.

The main proposal getting renewed attention is one by President Barack Obama that would limit the federal tax deductions for higher-income families for mortgage interest and other widely claimed purposes, said two senior Senate Democratic aides.

Now, all I can say is that the Democrats need to be more self aware. The most potent attack on them, historically, on domestic issues, is the label of tax and spend. What are they proposing here? They want to spend at least one trillion dollars over the next ten years. They want to pay for it by increasing taxes.

I suppose this is the problem with having leadership as far left as the Dem leadership is now. They must not realize just how perfectly this proposal fits the tax and spend stereotype. Frankly, it shows that the Democrats are out of ideas. They have nothing of substance to offer and so they bust out an idea that has been put out there and soundly rejected by the public.

Are the Democrats really so tone deaf that they don't realize how corrosive the image that they are the party of tax and spend is to them? This the subject of a plethora of potential advertisements all over the country. So, why would they recycle this idea? If this had any political legs, it would have passed by now. This sort of class warfare politics works when you are attacking someone else's policies. In other words, attacking the Republicans for policies that benefit the rich is effective. Yet, when your policies tax the rich to spend on the poor, you are just tax and spend. It appears the Democrats haven't figured this out yet.

Point Counter Point Weekly Addresses

Not surprisingly, the President focused the majority of this week's address on health INSURANCE reform. It appears their new marketing strategy is to focus on the word insurance. The president, surprisingly, only spent about 30 seconds talking about the positive economic numbers. The jobs report came in much better than expected. That followed a better than expected 2nd quarter Gross Domestic Product number along with mostly better than expected earnings. The president said this is a sign that the worst is over and that we are on our way to recovery. He also made sure to mention that this is of little comfort to anyone who lost their job in July, and that's why he "won't rest until everyone in America that wants to find a job can".

He spent the other roughly five minutes talking about a health insurance utopia. In this utopia, everyone would be covered. All procedures, including check ups, would be covered. The co pay would be reasonable. No one could be dropped if they got sick or had a pre existing condition. Insurance companies wouldn't be able to dictate how much treatment an individual got in a year or a lifetime. In this utopia, "no one would go broke dealing with an illness". I understand that a lot of people go broke dealing with divorce as well and so hopefully the president can after creating this health insurance utopia can create a divorce utopia as well.

Ironically enough, the president's philosophy would only contribute to the skyrocketing health care costs. That's because one of the biggest problems now is too many "third party costs". In that, your insurance covers too much of your health care. In so doing, you stop acting like a health care consumer and gets all the tests and procedures without even asking. Insurance should be used to pay for things you can't afford yourself. Check ups are usually affordable and yet President Obama would have even those be covered. That's the equivalent of having an oil change covered by your car insurance. Can you imagine how expensive insurance and oil changes would be if those were covered?

Meanwhile, Bob McDonnell, candidate for Virginia Governor, was the speaker for the Republican response. McDonnell used the very same jobs report to bemoan the struggles of "American families and small businesses". McDonnell then railed against cap and trade. He talked about a packaging plant in Western Virginia that he visited. At that plant, the VP, Mark George, told him that the 1500 people that worked there would all have their jobs threatened if this legislation passed. McDonnell then extolled the virtues of conservatism: small government, less regulation, and lower taxes. He pushed back against the president's "nationalized health care" plan. McDonnell ended the video with agreement. He said he supported the president's goals of bringing more choice in education and merit pay.

Both addresses sounded an awful lot like a long campaign commercial. Both were short on detail, long on broad ideas, and full of carefully selected talking points.

Middle Class: When They Raise Your Taxes...

They will blame the Bush administration for it. How many times have you heard the president claim that he inherited a $1.3 trillion deficit? How many times have you heard the president proclaim that he inherited the worst economy since the Great Depression? How many times have you heard the president proclaim that the massive stimulus was absolutely necessary in bringing the economy back from the brink? How many times have you heard that TARP was necessary for bringing banks back from the brink?

Politicians blame their predecessors in order to justify their own failings. Often, it's not about justifying their actions to the voters but to themselves. Middle class tax increases are coming. It's not a matter of if but when. It may not be soon but at some point they are coming. The tax increases may not be in the form of marginal tax rate increases. It might a "value added tax" which is a national sales tax.

Here's the reality however. President Obama's economic advisors, folks like Secretary Geithner and Larry Summers, know that the deficit is unsustainable and it has to be reduced. No one seems to want to suggest cuts in spending and you can only soak the rich so much.

So, when the time is right, like when the economy has recovered enough, the tax increases will come. Let's remember that the president has already raised taxes on cigarettes to fund SCHIP. The president is a tax and spend liberal. He's taken good care of the second, and at some point, the first will take hold. When he does it, you can bet that he will blame Bush for breaking his pledge. He'll bemoan the massive deficits he inherited. He'll bemoan the horrible economy he took over and take credit for the recovery whatever form that will look like. He'll proclaim that all of the massive spending increases were necessary. Yet, it will then be time to settle up so to speak. Then, he'll tell the country that it's time for more sacrifices and the tax increases will come.

Of course, he'll be convincing himself more than the voters. The voters aren't going to accept that taxes must be raised and it's all Bush's fault. If and when the president raises taxes that will be the unofficial end of his presidency. That's because that will be his "read my lips" moment. Once that promise is broken, Obama will have no electoral support and so no legislative support either.

So, when he's trying to convince America that having to raise taxes will be Bush's fault, what he'll really be doing is trying to convince himself. I doubt he'll succeed in convincing either himself or the country.

The Lasting Legacy of the Tea Parties

I just received this email from American Liberty Alliance.

Fellow Illinois Patriots,As you might have seen, Patriots are popping up all over the country to counter protest pro-socialist Government healthcare rallies.

Well, we have a chance to do so right here in Chicago tomorrow evening in downtown.There is an astroturf, union fueled pro-Obamacare rally happening tomorrow evening.

The details can be seen on this PDF.
http://ericjodom.com/obamacare.pdf

When: Tuesday,

August 4th, 4:30PM to 6:00PM

Where: Federal Plaza (Adams & Clark)

Who: US Rep Jan Schakowsky

American Liberty Alliance is headed by Eric Odom who organized the first two Chicago Tea Parties. This email is also indicative of where the tea party movement has headed.

The real legacy is of the tea parties is that it woke up millions of activists that were mostly watching the politics from the sidelines with great cynicism. The tea parties gave those folks an outlet not to merely bemoan in silence but to come out and voice their opposition.

That energy has not gone away and it continues to percolate with every new policy that the folks feels benefits the few at the expense of the many. In reality, neither of the two parties represents the will of the masses. Right now, neither party has much of a redeeming value. Some have called the tea parties a Republican tool. That's not accurate. There's plenty the Republicans have done tha the tea parties have problems with. It's just that the Democrats are in power and it is their policies that are now in the spotlight.

Over the last couple months, we have seen more and more viral videos that have shown citizens showing up to public events and giving politicians a piece of their mind. Here's one example of Rep Carnahan getting an earful when he claims that health care reform will save money.



There's been more videos of a townhall meeting with Arlen Specter and Secretary Sebelius that has attracted attention. In fact, it has become a bit of a custom to refer to these sorts of confrontations as giving the "tea party" treatment.

Another Great Win for Tea Party Patriots! This time in Philadelphia!

I think we'll look back at the Tea Parties as a political Network "we're mad as hell and we're not gonna take it anymore" moment. It was the moment that millions of citizen activists stopped merely cynically criticizing our political apparatus and took their frustrations to the streets. Since then, they've organized, gotten involved, and they've taken every opportunity to tell their politicians how they feel.

We hear this loud and clear with the high profile confrontations that wind up on You Tube. Yet, what we don't see are the phone calls, emails, and faxes. Politicians said they saw an enormous response in voter contact on both health care and cap and trade. We will now see it with well attended and townhall meetings and protests and counter protests like the one I referenced.

It used to be the left and far left that organized and protested well. Now, the conservatives and libertarians have found their protesting and activist legs and they are just getting started. That's the lasting legacy of the tea parties.

Summers' Political Gift To Republicans

I suspect that Republican strategists all over the country are salivating right now. That's because White House advisor, Larry Summers, Treasury Secretary Geithner just handed them a political gift. Secretary Geithner said this about the deficit.

Treasury Secretary Geithner told George Stephanopoulos a smaller federal deficit is vital to sustaining an economic recovery. He said doing that is going to require what he called hard choices. He was asked directly whether he would rule out new taxes and he said, "the country must understand the administration will do," in his words, "what is necessary."

In responding to a question based on this characterization by Treasury Secretary Geithner about whether the president would raise taxes on the middle class White House advisor Larry Summers answered like this.

...of this economy. There is a lot, though, there is a lot that can happen overtime. But the priority right now, so it is never a good idea to absolutely rule things -- rule things out no matter what.

But what the president has been completely clear on is that he is not going to pursue any of his priorities -- not health care, not energy, nothing -- in ways that are primarily burdening middle-class families. That is something that is not going to happen.

Now, actually the president said that 95% of the people would NOT see a tax increase. He didn't say they would primarily not see a tax increase. He was cut and dry. This is a classic Kinsleyan gaffe. Michael Kinsley once famously said that a gaffe is when a politician tells you what they're really thinking.

We all know that Obama's spending priorities can't be financed strictly on the backs of the wealthy. For a while, the president will finance them by borrowing. That's until the enormous debt doesn't become merely an economic albatross but a political one as well. Then, the president will have no choice but to raise taxes on those besides the wealthy.

It was always an absurd dichotomy for the president to propose the biggest increase in government spending since FDR and also proclaim that he would manage to increase taxes only on the wealthiest. Yet, that's what he did and he rode that assertion to the White House.

Of course, now Larry Summers and Secretary Geithner have shined some light on the reality of that assertion just a bit. You can also bet that Republican strategists will be scheming all weekend to figure out just how to use this admission most effectively. With health care reform heading into the crucial month of August, this is exactly the sort of gaffe that can change the dynamic of a debate. In this case, the Republicans already have the upper hand on the debate. So, watch for Republicans to use this gaffe to bury health care reform and wipe out the Democrats' plan entirely.

In fact, they've even telegraphed how they are going to justify this tax increase. They will blame Bush of course. Both Summers and Geithner bemoan the massive deficit they inherited. All their spending will be justified as a response to the recession. Since we can't sustain the massive deficits, they will claim that the middle class will have to bear a burden by having their taxes increased as well. They will bemoan this tough choice but say it's necessary because it is a response to the economic situation they inherited. That's exactly what both Geithner and Summers said today, and you can bet that it's what they will say when taxes really will be raised.

Deconstructing Cash for Clunkers

Rarely has a program as small as cash for clunkers received so much attention. Yet, the cash for clunkers program has received more attention than much bigger programs like the Public Private Investment Program which started out as a $1 trillion program. So, how does it work and is it a good idea?

Cash for Clunkers (Cash Allowance Rebate System) works like this. An individual brings in their older car and trades it in for a new car that meets new mileage standards. The mileage standards are 22 miles per gallon for a car and 18 miles per gallon for a truck. The dealer checks with the National Highway Transportation Safety Administration to make sure your vehicle qualifies under the program. There are all sorts of rules like the car or truck you trade in can't be more than 25 years old. When you come into the dealership, you will receive a credit of $3500-$4500 toward the payment of your new car. Then, the dealer fills out all the necessary paperwork and then receives the credit amount back from the government. That process was supposed to take no more than ten days. Then, the car you traded in gets scrapped immediately and becomes unusable for anything including spare parts.

The problems with the program are several. First, the one billion dollars that was set aside was clearly not enough. The program was supposed to run through November 1st and it's already run out of money. Yet, dealers and car makers have already made commitments for advertising that was supposed to run through the fall. Second, the paperwork for this program has turned into a nightmare.

CARS provided the rebates in the form of electronic funds transfers to dealers, to repay them for the clunker discount they gave buyers. Buyers never saw the cash and didn't have to deal with the federal website.

Rules governing the program totaled 135 pages. They required dealers to register, then to fill out electronic forms after each transaction. Dealers had to guarantee that they gave the customer the appropriate discount, that they wrecked the engine in the clunker so it never could be reused, and that the non-running junker went to a scrap dealer.

"They keep coming up with new forms to sign," says Churchill.

In the Queens borough of New York City, Paragon Honda already hauled away nearly 60 clunkers to a junkyard before it found the rules require them to be disabled on the auto lot. Now they have to be brought back, have their engines destroyed and hauled back.

"Killing cars is not something that I'm used to doing," says Brian Benstock, the dealership's general manager.

Furthermore, by destroying cars that can still run they're not only taking cars that run off the road but destroying parts that could be used in junk yards and by resellers.

But one of the most asinine parts of the plan is that they take old cars, many of which were being used as functional day-to-day transportation the day before, and destroy them. A perfectly good and useful machine destroyed for political reasons.

In a normal world, you take your trade-in to the dealer, he buys it from you, and then he resells it at the auto auction. It is the most efficient allocation of resources for the product. In this case, the government buys your trade-in and, instead of using it for its full value, it destroys the vehicle.

All this does is create less supply in the used car market, used parts, and used metals. That increases the prices in all those markets.

Finally, any stimulative program should be measured by whether or not it increases the velocity of money. Now, by giving an incentive to buy, it certainly creates business. Yet, the dealers are losing money until they receive the credit back from the government. So far, that has turned into a nightmare. Not only does it require filling out more than 100 pages of paperwork but at least for now, that process lasts a lot more than ten days. Without that credit, dealers are losing money. As such, for now at least, all it's done is create a short term cash crunch for dealers. Furthermore, by creating mountains of red tape, dealers must use up resources on bureaucratic paperwork rather than on selling more cars. So, it's really unclear if the initial transaction will lead to more transactions which would increase the velocity of money. Instead, the bureaucratic nightmare of this program only bottlenecks business.

Finally, the government has already bailed the auto makers to the tune of nearly $100 billion. The president said that the government would be a passive owner in GM and Chrysler and then they immediately created a government program that would help their sales. This program isn't free. That $1 billion has to be borrowed or taxed. As such, all taxpayers that don't take advantage of the program will end up paying for everyone that does take advantage. All this program does is redistribute wealth yet again. This time from all those not in the auto industry or has a clunker to all those that are.

Obama's Failing Domestic Agenda = Improving Economy?

If you're a conservative, there probably is no question mark at the end but an exclamation point. Is this correct? Let's examine the situation.

First, there's no doubt that the disintegration of health care reform, in its current form, will be a blessing for our economy. Right now, about 11 million small business owners are facing the prospects of either a new tax or being forced to provide health insurance for their employees. There are roughly 27 million small businesses in this country, any business with 500 and less employees. About 40% of those don't currently provide health insurance to their employees. So, about 11 million small business owners are facing increased costs one way or another from health care reform, in its current form.

On top of this, everyone making $350,000 and more is facing a tax increase to pay for it. Also, any individual that currently doesn't have health insurance will be mandated to get it. If they don't, they will face a penalty. Most of these folks will qualify under Medicaid, but about 11 million won't and currently don't have health insurance. All those folks will face the equivalent of a tax increase. We are now looking at nearly 25 million people that will see their taxes increase as a result of health insurance increases.

Furthermore, while the president claims that health insurance reform will pay for itself, there's never been a government program that has come in at budget. As such, most people expect deficits. Not least of this are the U.S. Treasury bond markets. There's no doubt that the spector of another massive government program is putting upward pressure on Treasury Bond rates. With that spector gone, you can bet that rates will see at least some improvement. With better Treasury bond rates, we'll see all borrowing rates improve: mortgages, commercial paper, car loans, and student loans. Better borrowing terms are of course quite stimulative.

Cap and trade is another contractionary policy. It's unclear just how much, if any, it will add to the deficit but companies having to scramble to figure out new manners in which to create energy will increase business costs, energy costs, and people's energy bills. All of these are contractionary. So, if health care reform gets killed, that will make it almost certain that cap and trade will go the same way.

The most important battle for the economy though is going to be on the budget. It is the bloated budget in particular that is putting the most upward pressure on all interest rates. If the Blue Dogs kill health care reform, they will likely become emboldened and take a hammer to the budget as well. If they show a backbone on the budget, we might see a much smaller budget come fiscal 2010. That would mean that the deficit would be nowhere near the $2 trillion it is estimated. Treasury bonds are both long term and forward thinking. If health care reform is defeated, that bodes well for a much tighter budget. That will mean that Treasury bond rates will likely improve. This, in turn, will reduce borrowing costs across the board since almost all interest rates take their cue from the U.S. Treasury Bond.

The defeat of President Obama's massive health care overhaul will likely lead to a battle within the Democratic Party over the nature of their spending. If the Blue Dogs win on health care, they are much more likely to win on the budget. Then, the country is much more likely to see tighter and leaner budgets. We might even see legislation that outlaws future bailouts though that has significantly less chance of passing.

All of the things I mentioned would be excellent for the economy, but we'd also see a weakened and wounded president. We'd have a president that is unable to do much of anything. He'd essentially be dictated to by the moderate wing of his party and the other party. There are still many dangers ahead. We still have another round of foreclosures starting sometime in the next six months. If, and more likely when, they happen, rather than being able to respond, the president will merely be blamed and his political clout further diminished. So, as our economy goes through another dip, the president will be impotent to do anything. While some may cheer that, it's not a good place to be to have another economic disaster while the president has no political capital to act.

So, while I believe that in the short term, Obama's failed domestic agenda would equal a better economy. In the long term, it might spell disaster. Much better of course would be to have a president who's agenda would help the economy and so we wouldn't have to root for its failure.

Fun With Numbers: The Chatham Walmart Proposal

I have a stimulus proposal. It's a 150,000 square foot superstore. The construction would require 500 UNION contractors, electricians, construction workers, etc. The construction project would keep these 500 employed for about a year. Once built, the superstore would employ another 400 employees to operate it. This project would be entirely privately financed and would require absolutely no public funds. In fact, this private entity has all the cash available. This is important because in the current commercial mortgage market trying to finance such a project is very difficult. For instance, my mayor's (Richard M. Daley) nephew, Robert Vanecko, attempted to fund a similar, though much smaller, project and was unable to secure financing in this market. That won't be an issue here because this private entity has cash on hand to fund the entire project themselves. This project is SHOVEL READY. In fact, as soon as the city council approves the project, all that needs to happen is securing the proper permits and then they'll break ground on the superstore. In fact, several project managers would be hired immediately even while the permits are gathered. So, this project would produce jobs immediately. Finally, the area where this superstore would be built is currently occupied by dirt.

Of course, I am describing the proposal by Walmart to build its second superstore in the city of Chicago. Chicago's latest unemployment rate is 10.3% and climbing. So, a project that would employ 500 UNION workers to build a superstore and then 400 more people would be hired to manage and operate the store is one that would have plenty of takers. There's more. This store would be placed on 83rd and Steward in the Chatham neighborhood. According to Walmart's records, which measured the receipts from credit cards and checks, the three zip codes that surround this proposed location spent $80 million at Walmart stores in the suburbs, In fact, according to the same records, Chicagoans spent $500 million last year in suburban Walmarts. (keep in mind the real receipts are much higher because cash payments can't be measured)

Chicago has one Walmart currently. That store is on North Avenue and Cicero. (4600 W. North Avenue) In the two years since that store was completed, a Menard's, Bank of America, Dunkin Donuts, among several strip stores have since been built. That store, slightly smaller and without groceries (like what would be proposed), has generated $10.3 million in tax revenues for the city, county and state.

The reason that I love to use a plethora of numbers in my stories is because numbers don't lie. The numbers are clear and they are unmistakable. Walmart would create jobs. It would create revenue for the city. In fact, it would keep revenue in the city that is currently moving to the suburbs. If you don't believe the numbers, then just think about this. In order to believe that Walmart wouldn't stimulate the Chicago economy you would have to believe that a plot of dirt is more economically stimulative than a 150,000 square foot super store.

So, why aren't the folks at Walmart not working right now to gather the proper permits to begin building? It's because powerful Alderman Richard Mell has buried their proposal in his rules committee. Chicago politicians have a long history of connections to the unions. That's why Chicago politicians hate Walmart. Walmart employees are NOT unionized. Yet, that's why I capitalized unions in pointing out that constructing the superstore would employ strictly union employees. In other words, the same people that are trying to protect union jobs are, ironically enough, costing 400 union jobs that would be needed to construct the project. As such, even protecting the unions becomes a lot more perception rather than reality. Ultimately, this is nothing more than demonizing Walmart.

If the Chicago economy had 4% unemployment that would be one thing. It doesn't. Chicago's unemployment crossed 10%. Here comes Walmart presenting a SHOVEL READY project that they're willing to finance all on their own. (the city can contribute up to $10 million to encourage business construction) They've even committed to hiring up to 500 UNION workers to build this store. Still, that's not enough. Their proposal isn't allowed to see the light of day while a powerful politician buries the proposal. What does Mell have to say for himself? Not very much, that's what. He ignored my email just as he ignored the call of the Chicago Tribune when we both asked the same question. Why are you against this proposal?

This is what happens when politics trumps policy. There's a plot of dirt there now, and Walmart wants to put a 150,000 square foot super store there. They want to pay each and every dime to build and maintain the store. They want to hire UNION workers to build it. They want to hire hundreds of people to operate the store. Finally, if it's not built, Chicagoans will simply spend $500 million in Walmarts in the suburbs. Talk about a no brainer. That's only if you have the best interest of the citizens of Chicago in mind. I'd like to believe that Richard Mell has the citizens of Chicago's best interest but not only does he refuse to allow this proposal to even receive a vote but he refuses to even explain himself.

Putting to Rest the Myth that Republicans Have No Ideas

Today on Fox News Sunday, in defending the president, Juan Williams again repeated the liberal mantra that the Republicans have come up with no ideas of their own. The president first used this straw man when he proclaimed that opponents of his stimulus plan wanted to do "nothing" and just let the economy work itself out on its own. With the economy in a tailspin and polls turning against both health care reform and cap and trade, it is an effective strategy to proclaim that your opponents are simply without ideas. In fact, that's how Juan Williams framed his attack. He essentially said that while the voters may have doubts about Obama's policies, they also realize that the other side has simply come up with nothing. It's just too bad that this isn't the case.

Stimulus:

In fact, the Republicans did produce a counter proposal to President Obama's stimulus plan. Here are the highlights.

1) a permanent 5% tax cut in all marginal income tax levels 2) cut the corporate tax rate from 35% to 25% 3) no extra spending and no earmarks 4) make the dividend and capital gains tax of 15% permanent 5) repeal the AMT permanently 6) repeal mandatory withdrawals from IRA's at 70 years of age 7) make all withdrawals from IRA's tax free in 2009.

It would have cost half as much as the president's stimulus plan (not debateable), and according to the Republicans, it would have created twice as many jobs. (that of course we'll never know) This plan was totally ignored by the media. The president pretended that it wasn't even proposed. None of the ideas were, of course, implemented. While we can debate its worth, no one can debate that it was proposed. I have the internet link to prove it.

2) Energy

Once again, the Republicans presented their alternative to cap and trade. The bill was billed as an all of the above approach. It called for expansion of nuclear power, drilling for oil, and tax breas for energy innovation. I was not terribly impressed with the bill myself but that is a matter of debate. It is NOT however a matter of debate that a full bill was introduced for energy independence. Once again, the President decided to use NONE of their ideas, and the media all but ignored its existence. Yet, it's there and again I have the link to prove it.

3) Health Care:

There are actually several Republican plans making their way through Congress. One is a plan that was devised by Robert Bennett of Utah with Democrat Ron Wyden. Here are some highlights.

All employers, along with individuals and the government, will share the responsibility of financing health care. During a two-year transition period, employers who provide employee health benefits would be required to convert their workers' health care premiums into higher wages. Employers who don't currently offer health benefits would have to make phased-in "Employer Shared Responsibility Payments," which would be used to provide financial assistance to individuals and families of modest income. After two years, all employers would make "Employer Shared Responsibility Payments." These payments would reflect the relative ability of small and large employers and low- and high-wage industries to make such payments, and would have no direct impact ON the coverage that is available to their employees.


Employees, in turn, would be required to purchase private health coverage with their higher wages. To ensure that it's affordable, the plan would fully subsidize the premiums for those who live below the poverty line. Those people between 100 percent and 400 percent of the federal poverty line would also receive subsidies on a sliding scale to help pay their premiums. Individuals would choose from a variety of private plans offered in their state. State-based Health Help Agencies (HHAs) would guide individuals through the enrollment process. These agencies would also provide consumers with unbiased information about competing private health plans and determine premium reductions that will ensure every American can afford their health plan. HHAs would ultimately lower administrative costs by coordinating payments from employers, individuals and the government.

While the CBO has put the price tag on other plans at a trillion dollars and more, this plan has been scored as revenue neutral by the same CBO. On top of this, this plan has 14 BIPARTISAN co sponsors. Yet, it languishes in the Senate Finance Committee with no hope of passing mainly because its head, Max Baucas, refuses to move it forward.

Meanwhile, in the House, John Shadegg has introduced a bill of his own.

In the era of eBay and Amazon.com, there should be a better way to shop for health insurance. Today, Congressman John Shadegg (R, AZ-3) introduced an innovative bill that empowers consumers to use the Internet and other means to find affordable health insurance policies.

The Health Care Choice Act, which has forty co-sponsors, harnesses the power of the marketplace to allow Americans to compare insurance policies from across the country and pick one that best meets their needs. It would provide every American with more and better health insurance choices. The legislation would also reduce the number of Americans who have been unable to find affordable coverage.

“People should be able to get the health insurance that best suits their needs,” Shadegg said. “Offering people choices in a nation-wide market will reduce the cost of health insurance for Americans, including the roughly 47 million uninsured.”

According to the National Center for Policy Analysis, a 25-year-old male in good health could purchase a policy for $960 a year in Kentucky. A similar policy would cost about $5,880 in New Jersey

These bills focus on competition and choice and NOT the public option. That's why none of their ideas have been incorporated into any of the bills currently being debated. Much like the other pieces of legislation, both the president and the media have ignored their existence. Once again, that some pretend they don't exist doesn't actually mean that they don't.

Financial Regulation Reform:

On financial regulatory reform, again, the Republicans also produced their own plan. The plan includes the elimination of Fannie/Freddie, an end to bailouts, more scrutiny and transparency of the Fed, reforming consumer education, and a merging of financial regulators. Some of these I like, like more scrutiny of the Fed, eliminating bailouts, and ending Fannie/Freddie. Some is very vague like the merging of financial regulators and reforming consumer education. Still, there's no doubt they have developed their own financial regulatory reform plan. It's no different that none will be used and they will be ignored, but again, that doesn't mean they aren't there.

What both the president and the MSM are doing is a very cheap political tactic. It's much easier to compare your plans to nothing, and so they ignore that there are alternatives. Rather than stand up for the merits of his own plan and why it's better than the alternative, the president pretends as though there is no alternative. As such, he offers the public a my way or the highway scenario. There are options out there even if the president, and his allies in the media, choose to ignore them.