Today I celebrate a birthday and I’m almost old enough to throw my hands up and say everyone else can worry about their messes. To my friends who are celebrating a glorious victory for our exalted leader, I love you. Enjoy the moment, much as a young man would after marrying a woman he hardly knows. As my grandfather used to say, marry in haste, repent in leisure. She may seem beautiful the day after, but give it a few years and you might be trying to slit your wrists with a rusty tin can lid. If you don’t believe me that our elected representatives haven’t read the bill just search youtube for Jason Matera who has interviewed a number of congressmen and asked them about specific paragraphs in the bill like rehabilitation for sex offenders. There have also been admissions of this being socialism and our president, while mocking the opposition, said it was a step toward universal health care. You might like the idea but I don’t see why I should be forced to do what you want and I certainly think our president should be our president, not your president mocking me. I wouldn’t mock you. Mocking presidents is a long tradition made easier when they demean the office.
Right after this bill was signed we found that the pre-existing conditions for children is not an immediate benefit even though the president repeatedly said it was. Oops. I guess they didn’t read that. This last week we found out that various companies are going to be out some money because of the bill. Mark Steyn does a nice piece which leaves me feeling ill and wishing he were not so damned smart and perceptive. The key factor here is a footnote adjusting a tax incentive to help companies cover retirees for prescriptions. It costs us $665 per person and they decided to bump it up to the 35% corporate tax rate. Hell Sweden only has 26.3%. Sweden! If these companies dump these people into medicare the cost per person for us jumps to $1,200. AT&T estimates it will cost them $1 billion but the total first-quarter hit to S&P 500 firms will be $4.5 billion according to the Wall Street Journal. Companies are considering what to do. One company that produces medical equipment is looking at laying off as many as 1,000 people. In case you don’t know, companies aren’t really designed to absorb all new costs. They either minimize them or pass them on to us.
This is where I point out a big problem with the congressional budget office when they scored this bill for cost. You see they do what congress asks them and they use something called static scoring. What’s that you ask? Well it assumes that no matter what you do tax wise it will have no effect. For instance let’s say you asked them to tell you how much money you would get raising the top marginal tax rate 25% on everyone making $1 million a year. That’s $250,000 more in revenue per person, right? Suppose at $1.5 million a year you are at 75% but at $800,000 a year you are at 50% Nearly doubling your income nets you $375,000 instead of $400,000 for a loss of $25,000. The argument for soaking the rich is that they can afford it. Let me ask you a question. If you could make more money producing half as much why would you hire the extra people and bust your ass? This is why the Laffer curve explains optimal tax revenues are obtained well below the soak the rich level.
And here is where out problem gets ugly, because if companies want to save that $4.5 billion in taxes they dump those people into medicare and that makes over $4 billion in additional costs. That spread is over a $9.5 billion dollar error due to the insane premise of static scoring. So why use it? Well with dynamic scoring you have to make additional judgments and it’s more work with supposedly less certainty. However any rational person understands the truth. If this kind of error is showing up while we’re still in the honeymoon and the CBO needed to multiply their original estimate for medicare by nine times things aren’t so good. Especially when we are in so much debt that by 2018 our interest will be more than we spend on defense, $800 billion. Of course that assumes that somebody will still be loaning us money and that our AAA rating won’t be gone which will more than double that interest payment. By 2020 America will look like a 1971 Oldsmobile pinging, surging and trailing the think white smoke of motor oil leaving everyone watching wondering when it will seize up and stop. It’s already not looking so great.
If you are still drunk on the thrill of making us into a European disaster you might be angry at those companies for crashing your party. After all they can afford to lose money… lay people off, things like that. I can tell you that representatives Henry Waxman and Bart Stupak are upset. So upset in fact they have written to the heads of these companies with an invitation to appear at congressional hearings. That’s never fun, but hey… Here’s what you need to keep in mind. Those companies are required by law to publicly declare such losses when they are aware of them. Yeah, it’s called Sarbanes Oxely and ironically it has made it so expensive and complex to do business that the next year after it was advanced tech companies going public nearly stopped. In fairness it was right after the dot com bubble burst, but it added substantially to the cost of going public. The point is, people are now going to be harassed by congress for adhering to a law congress wrote that makes it more expensive to do business over exposing another law congress wrote makes it more expensive to do business.
For those people who lament we are losing our manufacturing base and jobs are being shipped overseas I submit to you it is not greed causing this. Why the hell would you leave the most educated and talented workforce in the world where you can maintain complete control unless you had to do so for fiscally defensive reasons? So let’s consider the issue of static scoring and ask ourselves the simple question. How many other stupid decisions made by congress are making it more difficult for business. You can say they are all evil and to be honest I’m not overly fond of the big faceless corporation. In fact I’d rather get a root canal without anesthetic than try to fit into the corporate world… But I do understand economics.
Recently we got some growth numbers, but it looks like our projected growth for the remainder of the year is around 3%. Ordinarily that would not be bad, but to realize a 1% drop in unemployment this year we would need 5%. Oops! And in some places over a third of home mortgages are under water. Remember how we got here? So skipping over the debt rant and going to jobs we need to see about 100,000 hires a month to stay even with population growth and we’re still negative. If we were to see a 1% decline it would still leave us between 8% and 9%, closer to 9%. When we sunk $860 billion into a stimulus that Joe Biden keeps telling us is working we were approaching 7% and we were told we wouldn’t go over 8%. The presidents office of management and budget says… no appreciable decline in unemployment for the next 2-3 years. What are we doing?
One of the most amazing things I’ve heard in the last year is our president saying that jobs and the economy are tied to health care. This week we find out he is right. Clearly we can already see more jobs going away, more debt being accrued and more doctors leaving the profession, with something near 80% less excited about medicine. Do you even want to know where they said they would get the rest of the money or how much it would really cost? Remember your household owes something like $400,000 for entitlements right now next to the $60,000 in government debt. If you have children this is where you look at them and hang your head in shame and apologize… then tell them to get a good job and pay your medicare!
The thing that strikes me as most blatant is the hypocrisy of calling in head of companies reporting losses under SOX as they must by law simply because the Democrats in those house committees don’t like what they are saying… that they have to say by law. Gut check. Do those representatives care about the truth and how it affects ordinary Americans, their jobs and our economy… Or are those representatives just throwing a hissy fit over someone exposing the trail of bovine excrement coming from their sacred cows?
This entry was posted
on Sunday, March 28th, 2010 at 12:00 AM and is filed under Satire, social commentary.
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Both comments and pings are currently closed.
Too Much Economic Static
Today I celebrate a birthday and I’m almost old enough to throw my hands up and say everyone else can worry about their messes. To my friends who are celebrating a glorious victory for our exalted leader, I love you. Enjoy the moment, much as a young man would after marrying a woman he hardly knows. As my grandfather used to say, marry in haste, repent in leisure. She may seem beautiful the day after, but give it a few years and you might be trying to slit your wrists with a rusty tin can lid. If you don’t believe me that our elected representatives haven’t read the bill just search youtube for Jason Matera who has interviewed a number of congressmen and asked them about specific paragraphs in the bill like rehabilitation for sex offenders. There have also been admissions of this being socialism and our president, while mocking the opposition, said it was a step toward universal health care. You might like the idea but I don’t see why I should be forced to do what you want and I certainly think our president should be our president, not your president mocking me. I wouldn’t mock you. Mocking presidents is a long tradition made easier when they demean the office.
Right after this bill was signed we found that the pre-existing conditions for children is not an immediate benefit even though the president repeatedly said it was. Oops. I guess they didn’t read that. This last week we found out that various companies are going to be out some money because of the bill. Mark Steyn does a nice piece which leaves me feeling ill and wishing he were not so damned smart and perceptive. The key factor here is a footnote adjusting a tax incentive to help companies cover retirees for prescriptions. It costs us $665 per person and they decided to bump it up to the 35% corporate tax rate. Hell Sweden only has 26.3%. Sweden! If these companies dump these people into medicare the cost per person for us jumps to $1,200. AT&T estimates it will cost them $1 billion but the total first-quarter hit to S&P 500 firms will be $4.5 billion according to the Wall Street Journal. Companies are considering what to do. One company that produces medical equipment is looking at laying off as many as 1,000 people. In case you don’t know, companies aren’t really designed to absorb all new costs. They either minimize them or pass them on to us.
This is where I point out a big problem with the congressional budget office when they scored this bill for cost. You see they do what congress asks them and they use something called static scoring. What’s that you ask? Well it assumes that no matter what you do tax wise it will have no effect. For instance let’s say you asked them to tell you how much money you would get raising the top marginal tax rate 25% on everyone making $1 million a year. That’s $250,000 more in revenue per person, right? Suppose at $1.5 million a year you are at 75% but at $800,000 a year you are at 50% Nearly doubling your income nets you $375,000 instead of $400,000 for a loss of $25,000. The argument for soaking the rich is that they can afford it. Let me ask you a question. If you could make more money producing half as much why would you hire the extra people and bust your ass? This is why the Laffer curve explains optimal tax revenues are obtained well below the soak the rich level.
And here is where out problem gets ugly, because if companies want to save that $4.5 billion in taxes they dump those people into medicare and that makes over $4 billion in additional costs. That spread is over a $9.5 billion dollar error due to the insane premise of static scoring. So why use it? Well with dynamic scoring you have to make additional judgments and it’s more work with supposedly less certainty. However any rational person understands the truth. If this kind of error is showing up while we’re still in the honeymoon and the CBO needed to multiply their original estimate for medicare by nine times things aren’t so good. Especially when we are in so much debt that by 2018 our interest will be more than we spend on defense, $800 billion. Of course that assumes that somebody will still be loaning us money and that our AAA rating won’t be gone which will more than double that interest payment. By 2020 America will look like a 1971 Oldsmobile pinging, surging and trailing the think white smoke of motor oil leaving everyone watching wondering when it will seize up and stop. It’s already not looking so great.
If you are still drunk on the thrill of making us into a European disaster you might be angry at those companies for crashing your party. After all they can afford to lose money… lay people off, things like that. I can tell you that representatives Henry Waxman and Bart Stupak are upset. So upset in fact they have written to the heads of these companies with an invitation to appear at congressional hearings. That’s never fun, but hey… Here’s what you need to keep in mind. Those companies are required by law to publicly declare such losses when they are aware of them. Yeah, it’s called Sarbanes Oxely and ironically it has made it so expensive and complex to do business that the next year after it was advanced tech companies going public nearly stopped. In fairness it was right after the dot com bubble burst, but it added substantially to the cost of going public. The point is, people are now going to be harassed by congress for adhering to a law congress wrote that makes it more expensive to do business over exposing another law congress wrote makes it more expensive to do business.
For those people who lament we are losing our manufacturing base and jobs are being shipped overseas I submit to you it is not greed causing this. Why the hell would you leave the most educated and talented workforce in the world where you can maintain complete control unless you had to do so for fiscally defensive reasons? So let’s consider the issue of static scoring and ask ourselves the simple question. How many other stupid decisions made by congress are making it more difficult for business. You can say they are all evil and to be honest I’m not overly fond of the big faceless corporation. In fact I’d rather get a root canal without anesthetic than try to fit into the corporate world… But I do understand economics.
Recently we got some growth numbers, but it looks like our projected growth for the remainder of the year is around 3%. Ordinarily that would not be bad, but to realize a 1% drop in unemployment this year we would need 5%. Oops! And in some places over a third of home mortgages are under water. Remember how we got here? So skipping over the debt rant and going to jobs we need to see about 100,000 hires a month to stay even with population growth and we’re still negative. If we were to see a 1% decline it would still leave us between 8% and 9%, closer to 9%. When we sunk $860 billion into a stimulus that Joe Biden keeps telling us is working we were approaching 7% and we were told we wouldn’t go over 8%. The presidents office of management and budget says… no appreciable decline in unemployment for the next 2-3 years. What are we doing?
One of the most amazing things I’ve heard in the last year is our president saying that jobs and the economy are tied to health care. This week we find out he is right. Clearly we can already see more jobs going away, more debt being accrued and more doctors leaving the profession, with something near 80% less excited about medicine. Do you even want to know where they said they would get the rest of the money or how much it would really cost? Remember your household owes something like $400,000 for entitlements right now next to the $60,000 in government debt. If you have children this is where you look at them and hang your head in shame and apologize… then tell them to get a good job and pay your medicare!
The thing that strikes me as most blatant is the hypocrisy of calling in head of companies reporting losses under SOX as they must by law simply because the Democrats in those house committees don’t like what they are saying… that they have to say by law. Gut check. Do those representatives care about the truth and how it affects ordinary Americans, their jobs and our economy… Or are those representatives just throwing a hissy fit over someone exposing the trail of bovine excrement coming from their sacred cows?
This entry was posted on Sunday, March 28th, 2010 at 12:00 AM and is filed under Satire, social commentary. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.