OBAMA HOGWASH!

By James Craig Green


Cafe Hayek posted the following article about the Obamacare debacle - especially the President's deceitful handling of it - on November 15, 2013:

11-15-2013 CAFE HAYEK Article


I especially liked the question by Major Garett, followed by Obama's long-winded non-response:


GARETT'S QUESTION:

Q: Thank you, Mr. President. You say, while the law was being debated, if you like your plan you can keep it. You said, after the law was implemented or signed, if you like your plan you can keep it. Americans believed you, sir, when you said that to them over and over.

Do you not believe, sir, the American people deserve a deeper, more transparent accountability from you as to why you said that over and over when your own statistics published in the Federal Register alerted your policy staff — and, I presume, you — to the fact that millions of Americans would in fact probably fall into the very gap you’re trying to administratively fix now? That’s one question.


OBAMA'S RESPONSE:

With respect to the pledge I made that if you like your plan you can keep it, I think — you know, and I’ve said in interviews — that there is no doubt that the way I put that forward unequivocally ended up not being accurate. It was not because of my intention not to deliver on that commitment and that promise. We put a grandfather clause into the law but it was insufficient.

Keep in mind that the individual market accounts for 5 percent of the population. So when I said you can keep your health care, you know, I’m looking at folks who’ve got employer-based health care. I’m looking at folks who’ve got Medicare and Medicaid. And that accounts for the vast majority of Americans. And then for people who don’t have any health insurance at all, obviously that didn’t apply. My commitment to them was you were going to be able to get affordable health care for the first time.

You have an individual market that accounts for about 5 percent of the population. And our working assumption was — my working assumption was that the majority of those folks would find better policies at lower cost or the same cost in the marketplaces and that there — the universe of folks who potentially would not find a better deal in the marketplaces, the grandfather clause would work sufficiently for them. And it didn’t. And again, that’s on us, which is why we’re — that’s on me.

And that’s why I’m trying to fix it. And as I said earlier, my — I guess last week, and I will repeat, that’s something I deeply regret because it’s scary getting a cancelation notice.

Now, it is important to understand that out of that population, typically, there is constant churn in that market. You know, this market is not very stable and reliable for people. So people have a lot of complaints when they’re in that marketplace. As long as you’re healthy, things seem to be going pretty good. And so a lot of people think, I’ve got pretty good insurance, until they get sick, and then suddenly they look at the fine print and they’ve got a $50,000 out-of- pocket expense that they can’t pay.

We know that on average over the last decade, each year premiums in that individual market would go up an average of 15 percent a year. I know that because when we were talking about health care reform, one of the complaints was, I bought health care in the individual market, and I just got a notice from the insurer they dropped me after I had an illness or my premiums skyrocketed by 20 or 30 percent; why aren’t we doing something about this?

So part of what our goal has been is to make sure that that individual market is stable and fair and has the kind of consumer protections that make sure that people don’t get a rude surprise when they really need health insurance.

But if you just got a cancelation notice and so far you’re thinking, my prices are pretty good, you haven’t been sick, and it fits your budget, and now you get this notice, you’re going to be worried about it. And if the insurer is saying the reason you’re getting this notice is because of the Affordable Care Act, then you’re going to be understandably aggravated about it.

Now, for a big portion of those people, the truth is, they might have gotten a notice saying, we’re jacking up your rates by 30 percent. They might have said, from here on out we’re not going to cover X, Y and Z illnesses. We’re changing the — because these were all 12- month policies. They — the insurance companies were no — under no obligation to renew the exact same policies that you had before.

But look, one of the things I understood when we decided to reform the — the health insurance market, part of the reason why it hasn’t been done before and it’s very difficult to do, is that anything that’s going on that’s tough in — in the health care market, if you initiated a reform, can be attributed to your law. And — and so what we want to do is to be able to say to these folks, you know what, the Affordable Care Act is not going to be the reason why insurers have to cancel your plan. Now, what folks may find is the insurance companies may still come back and say, we want to charge you 20 percent more than we did last year, or we’re not going to cover prescription drugs now. But that will — that’s in the nature of the market that existed earlier.

OBAMA'S PRETZEL LOGIC

On April 5, 2012, Peter Schiff wrote an excellent article explaining why President Obama is so confused, befuddled and so completely WRONG about how economies work. While spouting leftist dogma that resonates with most Democrats and many Republicans, the President continues to display his ignorance of economics shared by many, if not most, Americans. It's called OBAMA'S PRETZEL LOGIC.

Here's an excerpt:


While it is true that the American middle class rose in tandem with her economic might, it was the success of the country’s industrialists that allowed the middle class to arise. Capitalism unleashed the productive capacity of entrepreneurs and workers, which brought down the cost of goods to the point that high levels of consumption were possible for a wider cross section of individuals. While Henry Ford, as Obama noted, paid his workers well enough to buy Ford cars, those high wages would never have been possible, or his products affordable, if not for the personal innovation he, and other American industrialists, brought to the table in the first place.


The economists that Obama follows believe that business will only create jobs once they know consumers have the money to buy their products. But just as wet sidewalks don’t cause rain, consumption does not lead to production. Rather, production leads to consumption. Something must be produced before it can be consumed.

 
Once again, I encourage you to read Peter Schiff's excellent article in its entirety, OBAMA'S PRETZEL LOGIC.
 
I hope you enjoy reading it as much as I did, because it is spot on.


You can also buy Peter's recent book, HOW AN ECONOMY GROWS AND WHY IT CRASHES (which I have recommended here before) on Amazon.com. Earlier this year the book stimulated a multi-week discussion on market economics in my friends Ari Armstrong and Amanda Muell's LIBERTY IN THE BOOKS monthly discussion group in Denver (scroll down to see Peter's book).

Yours in Liberty,

Craig

PLEASE STOP HELPING, MR. PRESIDENT

by James Craig Green


Please, Mr. President, stop trying to "help" the economy or create jobs. Your obsolete paradigm of increased government spending, more taxes and creating money instead of wealth only forces valuable resources away from those who make good use of them in favor of those who don't. That paradigm never did work, but those whose careers were nurtured by it will be the last to know.

After attempting to administer the U.S. Ship of State for two-and-a-half years, you continue to blame your predecessor, Europeans, speculators, wealthy Americans, the Tea Party and other Republicans for the fact that the economy is much worse now than when you first took command of it. By previous Bureau of Labor Statistics standards, today's artificially low inflation and unemployment rates hide their true, higher-than-published values because these terms have been conveniently re-defined.

Now you've said you'll unveil a new jobs strategy right after Labor Day. However, if it is anything like your previous failed attempts, it will almost certainly include raising taxes, which of course sounds better when called revenues. One of the most disturbing aspects of your likely plan will perpetuate your one-sided and incorrect assumption that government building more infrastructure will somehow create jobs. For professional politicians who don't have to pay for the wealth redistribution schemes they promote, it's easy to take credit for the flashy and obvious benefits of government spending, while ignoring their costs and tradeoffs. If a business owner intentionally tried to sell a business by promoting revenues while hiding true costs, that person could be sued for fraud.

Apparently you never learned that every dollar government spends has to come from the productive (not subsidized) private sector sooner or later. Dollars spent on public works come from some combination of 1) taxes, 2) "printing" money, whether on rag paper or computer bits, 3) increasing public debt, or 4) by simply commanding valuable resources away from other parts of the economy, combining all three of these costs without admitting them. Therefore, creating government jobs or government-subsidized private sector jobs always comes at the expense of other, existing jobs (think Haliburton). I explained this in June's blog post CONTRASTING GOVERNMENT AND MARKET INCENTIVES and earlier in April's SOLAR JOBS post which refers to my 2009 ARTICLE on the subject published by the INDEPENDENCE INSTITUTE and several Colorado newspapers. In short, over a recent decade, Spain, the world leader in creating "green" jobs, was found to have destroyed more than two existing jobs for every new one created. This is the cruel reality of your policies, which have more to do with politics than economics or sound public policy.

In fairness to you, the economy was already in bad shape when you took office. An estimated 45 to more than 100 TRILLION DOLLARS of future promises (mostly Social Security, Medicare and Medicaid) for which there are no assets to fund them are projected by the Congressional Budget Office, the Office of Management and Budget and several other studies for future planning. But, like all presidents in the last century, you don't know how to command an economy, nor does anyone else. As grand, "progressive" social experiments in the now-defunct Soviet Union, North Korea, the "People's Republic" of China, Cuba, Venezuela, North Vietnam and some South American banana republics have so powerfully demonstrated, an economy simply cannot be commanded over an extended time without bankrupting the country. This always corrupts the morals of its citizens (who learn sloth, irresponsibility and gaming the system instead of producing useful goods and services).

From Woodrow Wilson to Herbert Hoover to Franklin Roosevelt to Lyndon Johnson to Ronald Reagan to Bill Clinton to both Bushes, each of your predecessors over the last century, with one or two possible exceptions, demonstrated an extreme ignorance of economics. One of the best sources to understand this is Lawrence Reed's excellent booklet, GREAT MYTHS OF THE GREAT DEPRESSION, which correctly assigned responsibility for the Great Depression to BOTH Republican President Hoover and Democrat President Roosevelt and their Congresses, while clearly explaining the perverse incentives that preceeded them by the creation of the Federal Reserve in 1913.

Before you, Republicans were responsible for greater increases in government spending than Democrats, but now you seem to be reversing that trend, as shown in my previous blog post HERITAGE ON GOVERNMENT SPENDING AND REVENUE (see Debts and Deficits Chart 5). It is ironic that the conservative Heritage Foundation produced a graph showing that, except for you, Republican presidents have presided over larger deficits (as a percentage of GDP) than Democrat presidents. However, that paradigm no longer works, because the U.S. Government's debt is now well beyond its ability to pay back. This, and not the hobgoblins you blame, is why Standard and Poors belatedly downgraded U.S. Treasury notes and bonds. They should have done it much earlier, as should have the other credit rating agencies which continue to ignore it.

Mr. President, I don't expect you to gain a better understanding of market economics overnight and understand its chronic, ongoing destruction by government. This is because few, if any, of your predecessors understood this either. However, I do hope you will see that commanding real, productive resources toward some politically-desirable sectors can only remove them from other, more productive sectors. If your only concern is your re-election, which any honest and objective citizen must assume, I will understand as you continue on your present destructive path even more aggressively than your predecessors. But, if you really care about America, I respectfully suggest that you stop inhibiting the unbounded creativity, innovation and self-interested private enterprise that sustained America's economy before government started promising everyone everything for free.

Government never furthered any enterprise but by the alacrity with which it got out of the way

-- Henry David Thoreau