I will turn 60 a few days before the Obama administration’s first birthday.
Let’s examine the financial landscape of my declining years through the prism of government policy.

My wife passed away in mid-2008 after a 28 year struggle with a progressive autoimmune disease.  In her final years, Nancy was plagued by multiple disorders, among them paraplegia, acute spasticity, trigeminal neuralgia, peripheral neuropathy and open wounds.   She endured an assortment of sleep and breathing disorders coupled with impaired cognition and chronic infections.    She moved back home from skilled nursing when she was referred to hospice and inexplicably lived almost 39 months, remaining in a fragile and precarious state throughout.   No amount of planning could have prepared us.

I managed with the assistance of some remarkable friends.  I was her primary caregiver, making a living in my spare time.   My father, sisters, daughter and sister-in-law all contributed financially over and above our own outlays of $250,000 plus.  I still owe about $55,000, but, I have some working years remaining.

My problems, though significant, can mostly be resolved with money.   At least, I regard it as a money problem.  The president sees it more as a social justice issue.  Social justice is also pursued with money, just someone else’s money.  The president lacks enthusiasm for private wealth, as is abundantly clear in his tax proposals.  I have a limited number of working years remaining so my productivity will have to be dramatic in the short run.  A year or two or three of $250,000 earnings would restore my retirement savings, pay for  extensive dental care (deferred during her illness), satisfy my creditors and retire my back-tax obligations.  Frankly, this is very unlikely to happen, but the hypothetical deserves some examination.

Should I manage to defeat the odds and produce incomes in excess of $250,000, what does the president propose?  He wants to raise the top federal income tax bracket to 39.6 percent coupled with a surtax of 1 to 5.4 percent to finance his health care plan.  Our state tax rate calculates out to approximately seven percent.  Self-employed people pay the entire FICA tax (social security and Medicare) on the first $107,000; another 15.3 percent of my hypothetical income.  There is talk of a second surtax to fund the war effort.   Bottom line, a net take-home on the first $100,000 of taxable income;  less than $40,000.  In addition, the Senate is currently considering raising the Medicare tax for high income earners and the Social Security cap will inevitably be
raised if not discarded completely.

And health insurance?  I dropped mine in 1993.  It was as an economic decision and the correct one. Purchasing medical services directly was cash positive for me in sixteen of the last seventeen years.

But now the president also wants to impose a constitutionally questionable mandatory health insurance requirement that would get me either way as a self employed person.      He would not only require me to purchase insurance but will also design the policy parameters.  This will, most likely, remove the option of purchasing low cost major medical coverage with a high deductible or
a long term care policy.  Those options would be preferable for me or any similarly situated individuals.   In addition, it puts the government obligation in line ahead of my creditors.  This effect has not received one word of public discussion but consider the amount of money yet uncollected for medical services already rendered.  It will make the hard to collect accounts often impossible to collect.

It is important to note that my financial picture would not be markedly different had Obamacare been in place at the time.  The
proposed reform would have paid nothing toward the assisted-living and nursing home fees and made only minimal contributions toward the respite and home care expenses.  Nancy had medical insurance.  We incurred debt because Nancy was unable to work for the last fifteen years of her life and because I worked limited hours as she required round-the-clock care.

What policies would help now?

**   A simplified two-tier federal income tax rate, a lowered corporate income and capital gains tax rate.  This would encourage investment, lending and hiring.   A 60 year-old man depends on good economic climate and a fluid job market.
**   We should pass a dollar-for-dollar credit for medical payments (physician, hospital, therapy, medication and insurance) taken as an adjustment against gross income.  The credit would apply whether the taxpayer itemizes or takes the standard deduction.  Each taxpayer would pay for his medical services and insurance with pre-tax income.  

Some people need health insurance more than a new car.  Some need or desire a new car, graduate school or home remodeling more than health insurance.  Others need the dollars more than any of the above.  Everyone should control their personal resources and decision-making.  This administration has made overreaching into high art.   It needs to stop here.

“But it is necessary to the happiness of man that he be mentally faithful to himself.  Infidelity does not consist in believing or in disbelieving;   it consists in professing to believe that which he does not believe”.  Thomas Paine


Paine highlighted a failing of human nature in the “Age of Reason.”  He narrowly ascribed that weakness as endemic to religious belief.    'Professing to believe in what one does not' is a calculated, intentional act. (Think Al  Gore)  It may occur, rarely, in the context of religious belief, but is far more prevalent in other pursuits.   Consider the recent revelations about climate researchers and their email correspondence.

Any scientist, when confronted with inconsistent or contradictory data has several avenues of response available.  He or she can re-examine his previous conclusions.  He might scrutinize the new data to assess its validity;   perhaps, design a new study to resolve the conflicts.   He could acknowledge the new findings while disputing the conclusions drawn from them.  Or, he could discredit and distort the new information, suppress its publication and impugn the integrity of the other researchers.  Simply put, he could behave like a scientist or a politician.

A scientist can only legitimately seek the correct answer.  He can’t conspire to produce a particular result..  The global warming proponents are interested in a single conclusion and it is not,simply, the ego-driven investment of people who don’t like to be contradicted.  The financial weight and academic opportunities are dense on the global warming side of the debate.  It is more difficult to see what’s in it for the skeptics.  Aside from professional vindication, what benefit attaches to being right?   Cyclical changes in the makeup of the sun’ is hardly a career-enhancing position to take. 

“When a man has so far prostituted the chastity of his mind, as to subscribe his professional belief to something he does not believe, he has prepared himself for the commission of every other crime.”
 
With persuasive objective evidence in hand, most professionals would embrace the opportunity to debate,   The global warming proponents don’t want to debate the evidence.  They are content to preach to the converted.  The behaviors reported this past week are childish by political standards, unimaginable by scientific standards.  It is becoming increasingly clear how the global warming ‘consensus’ was achieved.    The referees bet on the game.  This is scientific point-shaving.

No one wants to be wrong but scientists are trained to confront the possibility.  The universe is expanding, not contracting.   We swung 180 degrees on that.   We once believed that Wonder bread was integral to good health.   Wrong again.

This debate has real world consequences.  An expensive remedy, Cap and Trade, was fashioned in response to the warming scenario.  It will be paid for with real money.   The money allocated will not be available for other purposes.       It will probably result in additional unemployment.

If the remedy of Cap and Trade were to be pursued based on my conclusions, I would need to hear the other voices and answer their arguments.  This isn’t just insufficient curiosity.  We are making policy, based on the judgments of men “prepared for the commission of every other crime.”

Nancy Pelosi recently responded to a reporter who asked whether the proposed requirement to purchase health insurance was constitutionally permissible. She mocked the reporter by asking derisively “Is that a serious question?” She then moved on to the next question without deigning to answer.

The constitution dedicated two of the first ten amendments specifically to the question that Nancy Pelosi views as ‘not serious’. In Washington, the operative questions rarely concern limitations, “Is it within our authority?” or “do we have the money?” or “when does life begin (or end)?” The questions are mostly tactical “what do we want?” and “can we be stopped?”
 
I wonder. Could today’s politicians pass the civics and history classes that I took in the eighth grade, about 45 years ago? Sarah Palin gives a nice speech and she is probably a competent administrator. But she doesn’t know John Locke from Jon Bon Jovi or Thomas Paine from Tom Hayden. Nancy Pelosi knows of the separation of powers, the commerce clause and the tenth amendment (she is older than Palin). And she considers them historical trivia, irrelevant to the current debate.

Several years back, Thomas Sowell wrote that the proper context for interpreting the constitution is the public meaning of the words. What did the citizens understand it to mean at the time it was ratified? Had the Congress decreed that all the citizen’s would be required to purchase health insurance or pay a fine to the treasury, the first Americans would have had no trouble finding the constitutional answer in the ‘public meaning of the words’. And yes, the commerce clause remains unamended.

You could draw some eerie parallels between the repeated injuries suffered at the hands of the king and the extra-constitutional actions coming out of Washington today.

Speaker Pelosi clearly thinks that she can backspace the question about constitutional limits by treating the reporter like a child, a mere nuisance. The conversation should start right here. The brazen soul who asked the question should do so again, loudly and repeatedly. We should help. Speaker Pelosi and some of her associates have gotten “too big for their congressional britches".

If the government can order you to purchase health insurance and punish you if you don't comply, what are they prohibited from doing?

 The Wall Street Journal ran the following excerpt from a speech that Margaret Thatcher gave in 1981.

 

To me, consensus seems to be the process of abandoning all beliefs, principles, values and policies in search of something, in which, no one believes but to which no one objects -  the process of avoiding the very issues that have to be solved, merely because you cannot get agreement on the way ahead.  What great issue would have been fought and won under the banner of “I stand for consensus.”   October 6, 2009 Notables and quotables

 

This statement lays out the dilemma facing Republicans on healthcare.  On the very same day the preceding appeared, Bob Dole counseled Republicans to seek consensus, to get on board with the inevitable passage of some bill.  In short, to be on the right side of the politics.

 

I have considerable respect for Bob Dole, but he has it completely wrong.  The President needs a bill, any bill.  It provides a platform from which further expansion can be fashioned.  Given Mr. Obama’s extra-constitutional proclivities, the reform will then be implemented off the books, so to speak.  Czars, regulators and an overly generous reading of executive power will limit the congressional role to appropriations from this point forward.

 

This bill will provide the president his “Lincoln logs.”  He will build the house later on, away from the scrutiny and troublesome oversight.

 

This reform is a hodgepodge of ill-conceived strategies thrown together almost randomly.  As Thatcher pointed out, there are issues that need to “solved.”  A small sample of those follows.

 

**  Guaranteeing affordable coverage without exceptions for past and pre-existing conditions can only be paid for by raising the premiums of those with better medical histories and lower foreseeable risks.  There is no money in the pantry to finance this.

 

**  The inclusion of a public option at a cost of 8 to 9 percent of gross payroll is an inducement for employers to dump their current coverages. 

 

 

This bill is not a carefully developed strategy based on a thoughtful analysis of trends, needs and capabilities.  The Democrats are correct.  Reforms are needed, but they are not ready. 

 

 

We will learn a lot about the convictions of the Republican party in the near future.  Don’t expect profiles in courage.

 

 

 

A good American died this week, one, with whom I disagreed about almost everything. 

 

His worst moments were many and public.  Ted Kennedy will be remembered for his drinking, the unconscionable treatment of his first wife, the tragedy of Chappaquiddick and his unkind remarks during the Bork confirmation hearings.   Character weakness and circumstance often conspire to prevent us from making sufficient amends for our sins.  Long after the sinning, we still try to atone.   Few tried harder than Senator Kennedy.

 

Politics today is peopled by shallow actors tethered together in some Hollywood-style mutual admiration society. The Pelosis, Reids and Dodds are convinced that by co-opting the government to dispense favors, everyone will see that they are not just empty suits in search of love.  Like Presidents Nixon and Carter before them, many legislators are small men, longing for significance and hoping that power will magically transform them.

 

What did I like about Senator Kennedy?   He didn’t legislate to solve his self esteem problems.  He proposed legislation that he believed in and fought for.  When he advocated a position, he knew the argument for, the argument against and the counter-arguments for and against.  The senator could talk the details. He wasn’t a phony.  He made friends across the ideological divide, but remained religiously partisan.

In the late eighties, Kennedy responded to criticism from Democrats by acknowledging his personal shortcomings, characterizing them as “faults in the conduct of my private life.”   He went on to take responsibility and promise to do better.  Smaller men say “Even presidents have private lives.”

 

In politics, the small men call for changes in other men, other parties.  We see them, the “sorry I got caught" Republicans and the “didn’t know how I got such a favorable mortgage” Democrats.  Kennedy, like Reagan, campaigned against an incumbent president from his own party all the way to the convention.  You don’t risk political suicide for self-aggrandizement.  You do it for ideological conviction.   Reagan was about principle.  You should read the text of his GE speech for Goldwater in 1964.  1980 was hardly the perfect political storm for Kennedy.   If Kennedy had tunnel vision for the Presidency, he would have run in 1984.  To save the party from Carter, he had to run in 1980.

 

I think Senator Kennedy’s political philosophy was misguided to put it charitably.  But our lives are ultimately about more than political philosophy.  This man loved his family and his country and he worked hard for ideas he truly believed in.

 

Johnny Carson once interviewed a 95 year-old America Indian (if memory serves, he was a Spanish American war veteran).  The guest noted that he was so old, that he remembered when the men were made of iron and the ships were made of wood.  Kennedy was made of iron.  Few of his colleagues will be so remembered.

 

 

 

There is rumor afloat that the administration is contemplating a comprehensive reform of the piano moving industry.  I spent 36 years in this special niche as both an employee and employer.  I thought we were sufficiently regulated and this news came as a surprise.

 

A well-connected political friend has clued me in on some of the details.  The government will mandate that movers visually inspect the instrument and the pickup and delivery sites prior to the move and provide the customer with a binding written estimate of the charges.  I told my friend that would be silly and wasteful since sufficient information can be gleaned from a phone conversation to accurately quote all but 3-4 percent of all moves.  Only those require on-site estimates and usually only at the delivery location.

 

My friend explained that there will be a net savings from all the information collected and the improved customer relations resulting from the binding estimates.  Despite the additional time demands of the regulation and higher short term costs, the reform will generate profit over time.

 

The piano moving czar has further determined that since a tuning is necessary following every move, it will be included as part of the service.  I said “A tuning is not always necessary and why should I be responsible for providing it?”  My friend replied that Speaker Pelosi had met with some lobbyists for the piano tuners guild, who assured her that it was necessary and it was simply more efficient to include it as part of the moving service.

 

“What’s next, Medicaid for indigent piano owners?” I groused.  “There is some growing concern that separating owners from their instruments at a time of such economic uncertainty could be detrimental to the pianist’s psyche.  If we subsidize the owners during the economic downturn, we could sidestep the consequences of the ensuing, widespread depression." my friend advised me. "A small tax on the surtax on the tax on the top 1 percent of wage earners will assure that no musician loses his piano during the recession.  Combined with a small contibution from the medical marjuana people, the crisis can be averted."

 

“What about my reimbursement?” I inquired.  My friend comforted me that while some sacrifices need to be made, I should be grateful that mine were only financial.  “Besides, every detail will be addressed in the piano owner bill-of-rights that Congress is hard at work on.”

 

“Do we need all these regulations, the mandates, the subsidies and a customer’s bill-of-rights, – all this oversight to produce what used to be negotiated by the buyers and sellers of services.   I’m skeptical.”  My friend sighed knowingly “Relax, it worked for health care, didn’t it?”

 

 

The Community Reinvestment Act and subsequent policy coerced lenders into making mortgage loans to individuals who would not qualify for them otherwise.  The lenders, forced to comply, wrote the loans.  Then, they packaged them with some higher quality loans and sold off the unacceptable risk, immunizing their investors from the forseeable consequences of making inadvisable loans.  This outcome seems utterly predictable.

 

When the consequences of mandating these bad loans ultimately reverberated through the economy, only the politicians were shocked.  Even now, some proponents believe that the sale of these loans, not the unsustainable loans themselves, caused the banking crisis.  When 2 plus 2 turns out to be 4 yet again, only in Washington, is the outcome shocking.

 

Well, it's about to happen again.  President Obama's "public option" will have some predictable negative consequences and when they occur, politicians will be shocked and dismayed as they have assured us against these outcomes.

 

There are myriad proposals in varying states of development.  It is clear, however, that a payroll tax is in the works at or about eight percent of gross payroll for those employers who do not provide health insurance through the workplace.   Those who currently provide health insurance that costs more than eight percent against an employee’s gross wages will probably replace their plan with the eight percent solution (public option).

 

A Henry J. Kaiser foundation study in 2007 found the employer’s share of a group policy for family coverage averaged $8825 per year.  Assuming a modest five percent increase per annum, the 2009 employer’s share rises to $9698.  $9698 is eight percent of $121,225.  It stands to reason that most recipients of group health insurance make less than that, maybe $45,000.  What does this tell us?  The employer is already paying 21.55 percent against wages for the $45,000 employee.   What will this employer do when presented with an eight percent alternative.   He or she will dump the private insurance in favor of the public option.  Even if the employer is so dedicated to his employees that he chooses to stay in the private plan, he would put himself at a gross competitive disadvantage against those who select the public option.

 

This employer who is paying $9698 to cover his employee would be competing against a neighbor insuring the same $45,000 employee for $3600.  It is important to note that the insurance "company" for the public option is the government.  They are not reinsuring the risk.  They own it.  So the government promises insurance to a larger pool of people for a fraction of what the private market charges and there will be no rationing of care.

 

The public option will be the death of private insurance and only the politicians will be surprised when it happens.  When the subsequent rationing and tax increases follow, that will no doubt shock them too.

 

Michael Steele spoke recently to the National press club.  He made a thoughtful, if somewhat pedestrian, case against the current health care reform package.  The usually passionate Mr. Steele had a hard time articulating what voters most want to know “Who are these Republicans and given the chance, what will they do?”

 

Mr. Steele:

 

Republicans have presented their opposition to the administration’s health care reform as a choice between government control and the free market.  Many voters believe that the “government control” ship has long since sailed and that Republicans helped to launch it. 

 

Republicans have come to be seen as the proponents of a more modest socialism, a less intrusive nanny-state.  If elected, they will still intrude in the marketplace, but in a more principled and efficient manner than the Democrats.  The Republican alternative will be the party of the 500 billion dollar stimulus package, mini bailouts and reluctant takeovers. 

 

Politics has devolved into talking points, key words and purposeful ambiguity.  It really is less complicated than that.  What do you believe and what will you do if elected?   I’ve taken the liberty of preparing some remarks for you.  Try them out.  I think people could vote for this kind of Republican.

 

Republicans believe every individual has differing medical and insurance needs.  They differ from age-to-age, by occupation, financial circumstance, ethnic and genetic susceptibility and geographic location.  Those needs differ not only from person to person but also change throughout one’s own lifetime.

 

No political body possesses sufficient knowledge or authority to make those personal decisions.  Do you need medical insurance more than graduate school, more than a new house or a truck?   The Republican proposal will make all physician and hospital services, medications and insurance costs dollar-for-dollar deductible from gross income whether you itemize deductions or not.  All medical expenditures will be paid with pre-tax income.  Individuals will choose how much risk to take, how much insurance to buy and what services to contract for directly.  This is as it should be.  Choice, without the trillions.

 

The special circumstances relating to the chronically ill and the indigent will be debated separately from this reform and will be implemented incrementally.  We welcome the President’s embrace of efficiencies and will test them by incorporating them into the Medicare program.    

 

 If the voters are kind enough to return us to the majority, we promise to confine our activities to the responsibilities clearly outlined in the constitution.  The constitution requires change from time to time, but that responsibility falls to the voters, not the politicians.  We promise not to use the vast resources of government to retaliate or to reward.  The ninth and tenth amendments will guide our thinking and restrain our ambitions.  The Republican party will be humble and serve the citizens, not parent or police them.

 

Call me.  I’d love to talk.