47 Million Uninsured

President Obama says 47 million Americans lack health insurance. One breakdown of that number is:

• 9.5 million people are illegal aliens


• 8.3 million uninsured people earn between $50,000 and $74,999 per year and choose not to purchase insurance


• 8.7 million uninsured people earn over $75,000 a year and choose not to purchase insurance


• 6 million are estimated to be eligible for Medicaid but have not signed up


• That leaves 14 million "at risk" Americans lacking health insurance

There is a significant debate going on about these numbers; their accuracy and their implications. One aspect of the numbers that's being overlooked is that coverage of illegal aliens will absolutely encourage the number of illegal aliens to grow.

Already pregnant Mexican women cross the border solely for the purpose of giving birth in the United States and guaranteeing their off-spring United States citizenship.

Legally paying for all the health care for illegal aliens will surely encourage many to cross the border just to go to the doctor or get a prescription. It will encourage still more to cross into the United States to live permanently.

Even if you think illegal immigration is a good thing, and I do not, you can't possibly believe that paying for the health care of an ever-growing number of illegal aliens will reduce overall health-care costs.

Well, maybe if your name is Obama, you might believe that - or say you believe that. But one no else could.

Links to Other Topics in the Special Report: Universal Health Care

Cap & Trade (Carbon Tax) – Part 2 – The US Goes It Alone

In the 100 years from 1900 thru 1999 the average temperature of the Earth reportedly increased by 1.0 degree Fahrenheit.

Recently, the G8 would not agree to set carbon limits or time-tables. They did, however, agree to try to limit global warming to 3.7 degrees Fahrenheit. That’s 370 years worth of warming at the 20th Century rate of increase.

Some will retort that the 21st Century rate of warming will be higher, so far though, the 21st Century rate is negative – we’ve experienced global cooling since 1998.

China and India will have nothing to do with capping carbon emissions. Developed countries embraced the Kyoto Treaty early and then failed to keep it. They never met any of its targets or timetables though they spent a lot of money trying. It’s just too expensive and too anti-growth.

Spain has lost 2.2 jobs for every “green” job created by building wind turbines. Plus, every one of those “green” wind turbine jobs cost the Spanish government $1.4 million in subsidies.

Enron’s Key Lay, since indicted and deceased, was a strong, 1990’s, proponent of “cap and trade”. He said it could "do more to promote Enron's business than almost any other regulatory initiative.”

In addition, to being a potential bonanza for the next Enron, “cap and trade” is expected to cost as many as 2.3 million American jobs by raising the cost of doing business and pushing even more manufacturing overseas.

All this to achieve a miniscule 0.07 degrees Celsius supposed reduction in the Earth’s temperature by 2050, an amount too small to verify.

Economic Stimulus: Part 6 – Unintended Consequences

Where I live roads are being repaved early; years before they need to be. We received some “stimulus” money and we’re spending it.

Eventually, these roads would actually need repair. So, in a sense, the money is not being wasted. It’s just being spent early. Of course, value is lost because repaving early wastes the remaining value of the previous paving; it becomes a sunk cost. I’m sure VDOT knows what the sunk cost is.

Beyond the sunk costs there are now traffic jams where there were none before the repaving started. Now, I don’t know any of the details or costs of these projects. I’m just thinking and wondering so I’ll just make up some numbers to play with – let’s say 50 people are employed who wouldn’t be employed if not for the “stimulus” financed repaving projects. I think that estimate is ridiculously high, but I’m going with it just for the mental exercise.

So, if 50 people are employed for a year at $40,000 per year in total wages – again I’m just making up these numbers – then $2,000,000 in direct wages would be added to the local economy (plus the cost of material which would be spread out over the state economy and perhaps further).

$40,000 per person per year in wages equates to $19 per straight time hour (I’m rounding all of these numbers to the nearest whole dollar). If repaving related traffic jams reduce a person’s daily productivity by 10 minutes and the people in the traffic jams also earn $19 per hour then the value of the lost 10 minutes is $3.

If one person loses $3 per day in productivity and the repaving related traffic jams occur 250 days out of the year then the $2,000,000 in direct wages would be countered by the lost productivity of 2,496 people at 10 minutes each per day. It’s not a big stretch to believe that this could happen. Even if my fictional example overstates the effect by twice it still suggests that half of the direct wage portion of the “stimulus” might be totally ineffective. In fact, considering that people losing productivity in traffic jams are probably engaged in work that others are actually willing to pay for without the “stimulus” their $19 is probably more valuable to the real economy than the $19 earned by the paving workers.

Now, suppose someone is injured in a repaving related auto accident. One could coldly calculate that the cost of repairing the damaged vehicles adds to consumption, but more likely it just redirects consumption to the repairs from some other part of the economy. If someone is injured, however, their productivity could be impaired for weeks or months, or even the rest of their lives.

If two people suffered permanent loss of their productivity through injury or death and each effectively lost 25 productive years the $2,000,000 in direct “stimulus” wages would be counterbalanced; again assuming $40,000 per year in productive value per person injured; Not counting the possibility that a permanently injured worker could find himself on public assistance for the rest of his life. And not counting the possibility that his children may be unable to go to college, or to the college of their choice.

Like I said before, all of these numbers are made up. But I wonder if the value of the sunk cost of repaving early, plus the value of productivity lost in repaving related traffic, plus the productivity lost because of any repaving related auto accidents is really less than the “stimulus” money being spent; borrowed money that must be repaid by taxing our productivity

Links to Other Topics in the Special Report: Economic Stimulus

Pat Ryan Coleman

Wednesday we buried a dear friend. She was our miracle lady.

Twelve years ago or more she was dying with advanced diabetes and total kidney failure. She was on dialysis and her husband was engaged in adultery. Her situation seemed hopeless, but Pat Ryan Coleman was not hopeless. She was a woman of strong Christian faith and a powerful spirit.

I didn’t know her then. It was several years later after a kidney and pancreas transplant; after a messy divorce; and after a divorce recovery program that brought a special group of people together, that I first met Pat.

I was at a singles dance for the first time in twenty-five years and I was alone. I sat at an empty table in the front right corner of the room next to the D.J. watching the dancers on the floor. I didn’t know how to dance and it worried me. But my confidence increased as I watched. Most of the people on the floor didn’t know how to dance either. So, figuring that no one would notice I started working my way counter-clockwise around the room inviting women I didn’t know to dance with me. It was a bit scary, especially at first, but after the fourth or fifth dance I felt better. No one had laughed at me after all.

I continued working my way around the room inviting women to dance if they made eye contact with me. I danced with many but didn’t dance with anyone twice.

Near the front left corner of the room, directly opposite from where I’d started, I made eye contact with a pretty blond. As I approached her she smiled big and warm and agreed to dance with me.

We talked on the dance floor, of course, and she told me she was there with a group. She was friendly and warm and her name was Pat Coleman. I don’t know what got into me. It was totally out of character, but I asked Pat if I could join her group at their table. She was un-offended by my request and readily led me back to her table. She introduced me to her friends – all women that night. I soon learned that a number of single men were members of the group but they were not present.

I talked and dance with the three of them at the table. Off and on throughout the conversation Pat and her friends talked about “their leader,” Linda. The ladies said Linda organized and motivated them. I was curious about Linda and looked forward to meeting her.

I met Linda briefly that night but then she was immediately whisked back onto the dance floor.

There is a great deal more to this story than can be told. I was adopted into the group and it remains close after more than ten years and the deaths of two charter members. Linda became my wife and the love of my life.

Others, men and women, were later adopted into the group; some have paired off and married. One man adopted into the group became Pat’s special friend. Pat and Billy blessed each other’s lives for four years. We were happy for them.

My life was blessed by Pat Coleman and her smile. Pat is gone now. She and Roger are relocating our group to a new and better place. We’ll all eventually join them and see Pat smile again. In the meantime, we’ll periodically stop by Pat’s gravesite to let her know what’s going on with the group and to reassure her that we continue to care for her love, Billy.

Sarah Palin: Preparing for Battle

Did they hear the same speech I did?

Talking heads are abuzz over Sarah Palin’s resignation as Governor of Alaska effective at the end of July. They buzz that she is burned out; that she is quitting politics; that she is withdrawing from public life because of attacks from the socialist press and comics. Some buzz that her resignation may be the jumping off point for a 2012 Presidential campaign.

She and her family have been under attack alright. But I think she is unbelievably misunderstood. This woman is a fighter, a hunter, a life member of the NRA, a commercial fisherman, a committed Christian, and the mother of a special needs child. She battled her way to the Governor’s office and she might have dragged the unpopular John McCain across the finish line last year if the economy had not collapsed.

She is a lioness. Her children and her values and her integrity are under attack. What does a lioness do when her cubs are attacked?

Below are some direct quotes from the transcript of her resignation announcement.

“… it may be tempting and more comfortable to just keep your head down, plod along, and appease those who demand: “Sit down and shut up”, but that’s the worthless, easy path; that’s a quitter’s way out. And a problem in our country today is apathy. It would be apathetic to just hunker down and “go with the flow…”

“… only dead fish “go with the flow.”

“And there is such a need to BUILD up and FIGHT for our state and our country. I choose to FIGHT for it! And I’ll work hard for others who still believe in free enterprise and smaller government; strong national security for our country and support for our troops; energy independence; and for those who will protect freedom and equality and LIFE… I’ll work for and campaign for those PROUD to be American, and those who are INSPIRED by our ideals and won’t deride them.
I WILL support others who seek to serve, in or out of office, for the RIGHT reasons, and I don’t care what party they’re in or no party at all. Inside Alaska – or Outside Alaska.”

“My choice is to take a stand and effect change…”

“…we know we can effect positive change outside government at this moment in time, on another scale, and actually make a difference for our priorities – and so we will, for Alaskans and for Americans.”

“In fact, this decision comes after much consideration, and finally polling the most important people in my life - my children (where the count was unanimous… well, in response to asking: “Want me to make a positive difference and fight for ALL our children’s future from OUTSIDE the Governor’s office?” It was four “yes’s” and one “hell yeah!” The “hell yeah” sealed it…”

“I think much of it had to do with the kids seeing their baby brother Trig mocked by some pretty mean-spirited adults recently…”

“…we can ALL learn from our selfless Troops… they’re bold, they don’t give up, they take a stand and know that LIFE is short so they choose to NOT waste time. They choose to be productive and to serve something greater than SELF…”

“…we NEED hardworking, average Americans fighting for what’s right! And I will support you because we need YOU and YOU can effect change, and I can too on the outside.”

“We need those who will respect our Constitution where government’s supposed to serve from the BOTTOM UP, not move toward this TOP DOWN big government take-over… but rather, will be protectors of individual rights…”

“We are not retreating. We are advancing in another direction.”

Her kids said “yes” and “hell yeah!” This is a frontier family with guts, motivation, and determination. They may be course. They may not be polished speakers. They are unlikely to receive invitations to Manhattan cocktail parties – they’re even less likely to go if invited. But, they’re bold, they don’t give up, they take a stand and know that life is short so they choose to not waste time. They choose to be productive and to serve something greater than self.

Sarah Palin may or may not run for high public office in the future, but I expect Sarah to soon become one of the most effective opponents of Barack Hussein Obama and Nancy Pelosi. I expect her to attack like the lioness she is; defending her children, her state, and her country.

She told us that 80% of her time and that of her staff has lately been consumed defending against frivolous ethics charges plus $2,000,000 of public money and $500,000 of her own money. She has, then, been doing her job as Governor in only 20% of her time. She rightly said that Alaska is not being served properly under these conditions and, since it costs nothing to make frivolous ethics charges, Alaska can expect this situation to continue.

She wants Alaska to be properly served so she’s turning the Governor’s office over to another while she focuses. In the parlance of the old sail-powered navy, she is clearing the decks, she is preparing for battle. Sarah Palin without the responsibility, and the distraction, of running the state of Alaska, will be seen and heard quite a lot more in the coming months. I think we’ll see her on talk television, hear her on talk radio, see her at book signings, and during the 2010 Congressional campaign I think we’ll see her stumping for conservatives across the country.

Will Sarah Palin run for President in 2012? I don’t know and I don’t think she knows either. Running for President is not the point. She will go on offense. She will be a powerful voice for conservatism. And, unless others join with her on the field of battle, she may become the leader by default.

To paraphrase Japanese Admiral Yamamoto shortly after he orchestrated the 1941 attack on Pearl Harbor - socialists will soon fear they have awakened a sleeping lioness – the smart ones already do.

Link to Featured Posts

Cap & Trade (Carbon Tax) – Part 1 – I Wonder

President Obama and Nancy Pelosi, his enthusiastic sycophant in the House of Representatives, are concocting a disastrous bit of legislation. Reportedly, the House passed it while parts of it were still being written.

When they passed the “stimulus” bill earlier this year at least they had a one-thousand plus page document. The ink wasn’t dry, but the ink was on paper. I wonder if the sections written after the bill was “passed” are legally part of the bill. Logically, they couldn’t be, but a lack of logic has never been an obstacle to Congress and it’s been only a minor obstacle to the Supreme Court.

I wonder why Nancy Pelosi and Barack Obama are pushing so hard for this “Cap and Trade” legislation. I wonder why Congress doesn’t have hearings to look at the scientific evidence that supports a global warming trend and also the evidence that refutes it.

I wonder why this is a crisis when global temperatures have cooled over the past 11 years. I wonder how any member of congress can consider increasing the cost of doing business in the United States, and on living in the United States, when the economy remains in recession and the financial crisis may not yet be over.

I wonder why any member of Congress who truly thinks global warming is a crisis could support a bill that is predicted by its scientific supporters to reduce overall global warming by 0.07 degrees Fahrenheit after 50 years.

I wonder if there isn’t some completely different agenda at work here. I cannot believe 218 members of the United States House of Representatives are stupid enough to vote for this job-killing, recession prolonging, retirement damaging, freedom reducing, and completely ineffectual in obtaining its official purpose monstrosity.

I’m not a conspiracy theorist. In general, I think real conspiracies can’t be kept secret and anyway people aren’t smart enough to pull them off. In this case though, I hope there is a conspiracy. To think otherwise one would be forced to conclude that “The Keystone Cops” and “The Three Stooges” have a majority in Congress and a moron lives in the White House.

Economic Stimulus: Part 5 – Government Policy Options

Current United States government policies are inappropriate to the objective of ending the recession and starting a sustainable economic recovery. They are not directed at reducing the private debt-service to income ratio.

So what government policies might help people reduce their debt-service to income levels? The strategy is simple. Debts must be reduced, incomes must be increased, or some combination of the two.

There are three mechanisms to reduced debt service. (1) It can be paid down. (2) It can be refinanced at lower interest rates. Or (3), it can be repudiated. Two mechanisms could increase incomes. (1) Taxes could be cut to increase net incomes after taxes. Or (2), inflation could push up wages across the board.

For government policy to assist in paying down private debt the government would have to directly pay on the debt or provide additional money so people could pay down their own debt.

For government to increase private refinancing, government could reduce interest rates. However, many people who most need to refinance cannot because the value of their homes have fallen below the balance on their mortgages. In this situation, banks won’t write refinance mortgages. So, to affect this objective, government may need to purchase the current mortgages and reissue them at lower fixed interest rates. This might be accomplished through Fanny Mae, Freddie Mac, or even by the Federal Reserve Bank.

In order for government to increase debt repudiation the bankruptcy laws would need to be rewritten loosening the requirements for Chapter 7 bankruptcies. Or, the government might directly purchase bad debt from lenders and simply forgive the borrowers while writing the debt off the government’s books. This would probably be poorly received politically because of the perception of unfairness to all other borrowers.

For government policy to immediately increase incomes across the board tax cuts and tax rebates are the only tools available. Spending is too localized in its affects.

For government to increase nominal incomes broadly and continuously government could inflate the currency in a controlled and consistent manner.

Real government policy options for reducing private debt-service to income ratios are: (1) tax cuts and rebates; (2) buying private debt directly; (3) relaxing the bankruptcy laws; and (4) inflating the currency.

The United States government has cut the payroll tax slightly but is proposing income tax increases on high earners, the establishment of a new European style value added tax, and the imposition of carbon use taxes. These tax increases will have the reverse affect from what is needed. They will reduce net incomes and make private debt service more difficult.

The Federal Reserve has purchased some private debt in the form of mortgage backed derivatives; but they have no stated intention to forgive the debt or rewrite the terms at low fixed interest rates. Freddy Mac and Fanny Mae are offering somewhat helpful subsidized low fixed rate refinanced mortgages to borrowers who meet certain criteria. However, only a small fraction of at risk borrowers meets the criteria.

I’ve heard of no initiative to relax the bankruptcy laws. On the other hand, the government is doing everything possible to inflate the currency. The Federal Reserve is rapidly increasing the money supply and the Treasury is selling government debt overseas, repatriating dollars at rates unimaginable before it actually started happening. So far, the efforts to inflate the currency have been unsuccessful, but they will certainly succeed eventually.

Unfortunately, when the inflation begins it will drive up interest rates, slow the economy, and increase the cost of selling more government debt.

Current government policy is not helping to restart the economy.

Links to Other Topics in the Special Report: Economic Stimulus

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Economic Stimulus: Part 4 – Reducing Debt vs Increasing Consumption

This recession was caused by debt from banks financing their lending operations, from families taking on mortgages beyond their ability to pay, and from individuals financing personal consumption with credit cards, home equity loans, and refinanced mortgages.

When the ratio of private debt to private income shrinks to its historical norm, private consumption will naturally increase from its new lows. Until then, the folks will save and pay down debt and, where they can, defer consumption to make room in their budgets for saving and debt service.

Government policy may be able to reduce the severity and length of the recession if it is directed at helping families reduce their debt and increase their savings. A successful policy would help people restore their personal debt-service to income ratios faster creating the conditions necessary to sustain economic growth sooner.

Stabilizing the banking system was and is necessary to continue financing viable businesses, especially small businesses. But increasing government consumption will not end the recession. Government spending, as opposed to tax cuts or rebates, is necessarily targeted at things government can spend money on.

Projects that receive government money will prosper while the rest of the economy continues to founder because the people still must pay down their debt. Families and individuals must reduce their debt payment obligations and save money for the proverbial rainy day.

For some the rain has already arrived and they were caught without an umbrella. These folks are reducing their debt through bankruptcy and foreclosure. The rest of the folks can see the storm coming and are trying to restore their debt-service to income ratios before the rains reach them.

Links to Other Topics in the Special Report: Economic Stimulus

Economic Stimulus: Part 3 – Why Government Spending Will Not Work

Government spending will not lead us out of the current recession. The economy of the United States will eventually recover but government spending will not “prime the pump” to use FDR’s words. This recession was caused by too much debt. So much debt that it couldn’t be paid back or serviced by overextended borrowers.

Citizens have started saving, paying down debt, and in some cases defaulting on it. This must happen. The level of debt must come down to historically normal levels as a percentage of incomes in order for a recovery to sustain itself.

Since the federal government’s income from taxes is falling, and since the government has zero savings, the expansion of government spending is funded with borrowed money through the selling of Treasury Bonds.

With the yields (the effective interest rate based on the price paid) of Treasury Bonds creeping up past 4.0% there are not enough buyers. The Federal Reserve (Fed) is, therefore, buying Treasury Bonds for its own account in order to keep the yields from rising higher and faster.

However, when the Fed buys Treasury Bonds they don’t use real money. The Fed pretends to have the money. They literally just send data indicating the amount they are supposedly paying for the bonds to the accounts of the US Treasury Department. Individuals who attempt this are guilty of a felony; bank fraud jumps to mind.

The financial press, when referring to this process, say the Fed is “printing money”. The Fed doesn’t actually print it – they make fraudulent accounting entries; Sarbanes-Oxley jumps to mind.

In addition to the purchases of bonds by the Fed, many bonds and the shorter term Treasury Bills are purchased from outside the United States - especially by foreign governments – especially by China. Foreign purchases have the same effect as purchases by the Fed; more dollars become available for circulation in America.

All of these dollars are briefly in the hands of the federal government.

The idea is that since the people are spending less (they are busy paying down debt) the government must spend enough to make up for the lack of private spending. The problem is two-fold. (1) Government is creating public debt faster than people and corporations can pay down private debt so the total debt problem continues to grow. (2) Government borrowing from overseas, and from the Fed’s creative accounting, increases the number of dollars in circulation without increasing goods and services available to buy.

Government is also diverting some economic activity to low priority projects not previously deemed worthy of funding. The people, meanwhile, still must pay down their debt. So, consumer spending will remain suppressed as the excess dollars find their way into circulation. Eventually price and wage inflation will become noticeable - and then alarming.

Inflation will help some people service their debt since fixed debts like 30 year fixed rate mortgages will remain unchanged while wages increase. These people will have more dollars available to make the same monthly payments. Their debt will be a smaller portion of their inflated income.

People with variable debt (adjustable rate mortgages and credit card debt for example) won’t be so fortunate. Their interest rates will rise - perhaps faster than their wages. Inflation will also hurt the banks as their portfolios of fixed rate loans lose value.

Independently of government spending and inflation issues, banks and housing prices are already queued up for another round of mortgage defaults. There is a large group of mortgages out there with balloon payments or major payment resets due in 2010 and 2011.

It’s an open question whether these mortgage payment resets will, by themselves, delay the recovery and the ensuing inflation, or whether the recovery and inflation will start first and the new mortgage resets, and subsequent defaults, abort the recovery and throw us into a double-dip recession.

Another possibility is that the second round of mortgage defaults will join the inflation in progress - resulting in recession with inflation similar to the “stagflation” of the late 1970’s and early 1980’s.

The least likely possibility is a recovery without inflation and without a double-dip recession. The probability of this rosy scenario is slightly higher than a snowball’s chance in Hell.

Links to Other Topics in the Special Report: Economic Stimulus

Economic Stimulus: Part 2 – How We Got Here

Recessions and depressions have triggers. They also have fundamentals. They are always the result of some excess. They are the practical, ironic, and perhaps divine response to academic arguments that markets are efficient and reflect in prices all known facts.

Some recessions are triggered by disasters – natural or man-made. Normal recessions are about reducing excess inventory. When one company cuts back production because its inventories are too high a few people temporarily lose some wages. When many companies cut back at the same time it’s called a recession.

Excess inventories build up because of excessive optimism by some critical mass of producers. When the critical mass cuts production their suppliers see reductions in demand and therefore instant excess inventories. Of course, they respond by cutting production as well.

The current recession is different. It’s not about excess inventory it’s about excess debt. It was triggered by rising interest rates resetting upward the monthly payments of certain classes of mortgages. Fundamentally, far too many people bought homes they could not afford, financed by mortgages with terms that were absurd under any conditions save one – that of continuously and forever raising real estate values.

We should have known we were in trouble when “house flipping” turned into prime-time television entertainment; when 5-year interest only balloon mortgages were resurrected from the their 1930’s graves.

But when mortgages were written allowing borrower’s to “name their own” monthly payment for the first five years while tacking the unpaid interest onto the principle – sirens should have sounded - whistles should have blown.

But no – for fifteen years the nation was “charging it.” Personal credit card debt doubled, tripled, and then quadrupled. Home mortgage debt did the same. Corporate debt, especially bank and finance company debt led the way with banks borrowing cheap from Uncle Sam, lending dear to the public, and raking in leveraged profits for as long as the party lasted.

And government? Government was the cheerleader encouraging and enabling every additional dollar of debt – while simultaneously running up government spending and just “charging it.”

Congress eliminated the wall of separation between commercial banks and investment banks. Congress encouraged writing mortgages to “sub-prime” borrowers. The Federal Reserve reduced bank capital requirements and kept interest rates too low for too long. The FDIC waived premium payments from the bank’s for their deposit insurance. The regulators of Fanny Mae and Freddie Mac stood aside as the two government-sponsored lending agencies purchased and created bundles of high risk loans and called them AAA securities. Congress then stood aside refusing to consider tighter regulation of Fanny and Freddie.

Government enabled and encouraged the conditions that led to the recession but government did not cause the recession. Excessive optimism about real estate values and excessive debt serviced by insufficient income caused this recession

Links to Other Topics in the Special Report: Economic Stimulus