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Gruber in 2009: Obamacare is Unaffordable, Has No Cost Controls


The Daily Caller did a great job uncovering more of the information surrounding the writing and passage of Obamacare. Going back to 2009, the chief architect of Obamacare, Jonathan Gruber, made two very specific points about the bill: 1) it is unaffordable because there are no cost controls; 2) in order to control costs, treatment would have to be denied.

Below are highlights from the 2009 policy brief:

* “The problem is it starts to go hand in hand with the mandate; you can’t mandate insurance that’s not affordable. This is going to be a major issue.”

* “So what’s different this time? Why are we closer than we’ve ever been before? Because there are no cost controls in these proposals. Because this bill’s about coverage. Which is good! Why should we hold 48 million uninsured people hostage to the fact that we don’t yet know how to control costs in a politically acceptable way? Let’s get the people covered and then let’s do cost control.”

* “The real substance of cost control is all about a single thing: telling patients they can’t have something they want. It’s about telling patients, ‘That surgery doesn’t do any good, so if you want it you have to pay the full cost.’”

* “There’s no reason the American health care system can’t be, ‘You can have whatever you want, you just have to pay for it.’ That’s what we do in other walks of life. We don’t say everyone has to have a large screen TV. If you want a large screen TV, you have to pay for it. Basically the notion would be to move to a level where everyone has a solid basic insurance level of coverage. Above that people pay on their own, without tax-subsidized dollars, to buy a higher level of coverage.”

However, what the American public was told by Obama is that Obamacare would lower the cost of insurance by $2500. Now we know, even more than ever, that we were told whatever was necessary in order to make the bill palatable enough to eke out passage in Congress despite protestations from much of around the country.

You can read the entire policy brief here.

For more on Jonathan Gruber and Obamacare, go here

How “Obamacare Was Sold on a Pack of Lies”, go here

The IRS and the Practice of Asset Forfeiture


The practice of asset forfeiture by the IRS has been highlighted in recent months due to a high-profile case involving a woman who had roughly $33,000 of her money seized by the IRS. The IRS claimed her “pattern” of depositing the money she earned from her restaurant — typically cash and often in sums under $10,000 — was suspicious enough to warrant the plundering of her account.

Several weeks after the public outcry about this woman’s plight, the IRS dropped the case and agreed to return her funds. But here’s the problem. It’s not enough to just give the money back. The IRS needs, at the very least, to pay civil damages. They took assets from a woman who committed no crime, who wasn’t even charged with any crime.

More importantly, the IRS needs to investigate how this case even came about. There was no preponderance of evidence that any crime occurred. There was virtually nothing. The case occurred because an IRS representative watched her accounts over a period of time, and decided – with no basis, investigation, or even inquiry with the taxpayer – that her method of deposits (for which she had a perfectly valid reason in connection with her perfectly legal, decades-owned business) violated a law typically meant to catch money launderers and drug dealers. That is reprehensible.

A few days after the article came out about the case, the IRS issued a policy change over the practice. The IRS stated, “the agency will no longer pursue asset forfeiture in cases in which the source of the funds is legal except in exceptional circumstances and only with the approval of the director of field operations.” This means nothing and changes nothing — because someone higher up on the IRS food chain can still sign off on cases, or when someone within the IRS deems it “an exceptional circumstance”. It’s not good enough.

If the IRS is sincere about regaining the public trust, it needs to clean house, starting with the agents involved in this and other similar forfeiture cases.

Thinking Ahead For the Twilight Years


They say March comes in like a lion and goes out like a lamb. That expression is also applicable to persons in their 80s — they go in like a lion and out like a lamb. As they start going along in those years, their ability to discern and filter out the problematic elements of society become worn down.

We see the elderly become more vulnerable to Nigeria scams, people selling them bad investments, being taken advantage of on the streets. It is incumbent for children, therefore, to protect their parents. They must think about their parents’ style of living as well as their physical and mental capabilities — preferably in advance.

As an accountant, I typically see three styles of living for older folks:

1) Independent — As parents get older, they try to work out a simple living situation. They will find a small, basic home to live in, usually comprised of one floor and no stairs, and relatively inexpensive. The parent wants to live on his or her own which opens the person up to some vulnerability, but hopefully the parents have a decent support network

2) Shared space — Here is the situation where a parent moves in with one of their children. Depending on the capacity of the parent, he or she can either contribute as a grandparent, or else carry along medical issues that will impact the household.

3) The independent living facility — This is a growing movement, which, in many ways, is also starting to become the best choice for many. With this type of facility, costs are not exceedingly expensive, and the ability to have medical help nearby as needed is usually seen as a huge benefit.

Whatever the case may be for choosing a particular living situation over another, it is imperative for everyone involved to plan in advance. Often it becomes too late and untenable to move a parent out into a home or an independent living facility because the parent, in their advanced age, does not or cannot make such a life altering change without difficulty, resentment, and confusion.

As people are living longer and more productive lives, the need to plan for the advanced years is best done early on, with everyone involved in conversations and calculations. There is no one-sized-fits-all approach, but whatever decision is made, should be a well-thought out plan that takes into account both dignity and finances.

Gov. Shumlin Admits High Taxes Hurt Businesses, Families, and the Economy


Peter Shumlin, a Democrat governor from one of the most liberal states, made a jaw-dropping admission when he released his much-awaited plan for a single payer health system in Vermont. Shumlin’s proposal called for massive tax increases to pay for the system, which Shumlin himself called “detrimental to Vermonters”. Shumlin stated,

“These are simply not tax rates that I can responsibly support or urge the Legislature to pass. In my judgment, the potential economic disruption and risks would be too great to small businesses, working families and the state’s economy.”

Support for this proposal was tepid at best. His plan, which he eventually submitted after missing two financing deadlines, called for “businesses to take on a double-digit payroll tax, while individuals would face up to a 9.5 percent premium assessment.” Shumlin also stated that federal funding for the transition into such a health system was now expected to be $150 million less than originally planned, a huge amount of money at stake for such a tiny state.

Perhaps feeling the heat from the extremely narrow election in November (which he actually hasn’t officially won yet), Shumlin basically denounced his own proposal as soon as it was released. What’s more, Obamacare is particularly odious in his state right now as well, as Vermont shelled out some $400,000 in taxpayer funds to Jonathan Gruber, for health care “consulting”.

Shumlin is finally learning that, with socialism, you eventually run out of other people’s money.

Quickly Noted: Insurers Allowing Extra Grace Period to Pay January Premiums For Obamacare


From Fox Business:

“The health insurance industry says companies will give consumers more time to pay January’s premiums under President Barack Obama’s health care law.

The move is an attempt to head off potential problems as the Obama administration renews millions of current customers, while trying to accommodate new ones as well.

Renewing coverage each year is standard operating procedure for private insurance plans.

But 2015 is the first renewal year for the health law, and the process involves a massive electronic data transfer from the government to insurers, happening right around the holidays. Last year, many files had errors.”

The grace period was just announced after health insurance enrollment ended Monday, December 15th. Insurers are also aware for the potential problem of “double billing” from a consumer who switched plans, and will work to rectify any issues in a swift manner. So, if you purchased an Obamacare plan this year, you’ll have a little extra time to be certain that you were billed correctly, and only once.

Sebelius Blames $400M In Ads For Obamacare’s Unpopularity — Except the Administration Spent Nearly $700M to PROMOTE It


Last week, Kathleen Sebelius peddled the idea that Obamacare is merely “a very bad brand” and blamed misinformation via “a lot of paid advertising” for it; she also calculated spending on anti-Obamcare ads to be around $400 million:

“So Obamacare no question has a very bad brand that has been driven intentionally by a lot of misinformation and by a lot of paid advertising and I think we may need to call it something, in the future, different. But it’s working and now people are getting coverage. I think by the time that the enrollment started in 2013, clearly we had a terrible eight weeks of website disaster, which didn’t help. But by that time there had been $400 million worth of ads that had been run against the law”.

The problem with the narrative is that the Administration spend nearly $700 million during the same time frame touting the law. What’s more, even the government’s own advertising used the term “Obamacare”, which completely dispels the idea that Obamacare is “a very bad brand”.

Three days after the close of the first enrollment period, Washington Free Beacon gave a rundown of various federal and state costs associated with advertising Obamacare. The amount, compiled by the AP, was calculated to be $674 million for TV, radio, social media, and print advertising. The Obama Administration also took some some unconventional approaches to reach various audiences, including cartoons, a hippie playing the guitar, “doge” memes, cat GIFs, and paying NFL teams. You can read the detailed breakdown here.

And what about those government advertisements? Most of the ads paid for by the federal government with your tax dollars used the term “Obamacare” in them. For instance, remember the particularly visual ads run for the Colorado exchange? You can still view them here, at the catchy “Do You Got Insurance” website (can we at least use proper grammar?) EVERY single one of the ads has “thanks Obamacare!” emblazoned on them. That is the very definition of “branding” right there.

The Obama Administration embraced the term Obamacare because it was supposed to be the signature policy of Obama’s presidency — until disaster after disaster occurred: the website went awry, enrollment was under projection, Jonathan Gruber spoke out; you name it. Ad nauseum, ad infinitum.

Just how much as the Obama Administration paid to advertise Obamacare? No one actually knows. In September, 2014, the Government Accountability Office (GAO) explicity reported that the Department of Health and Human Services Centers for Medicare and Medicaid (CMS) “did not provide estimates of fiscal year 2014 obligations for certain categories of Center for Consumer Information and Insurance Oversight-related transactions, such as advertising and other public relations activities.”

And that’s not all the GAO report found, with regard to Obamacare spending. The report also stated,

“GAO was unable to consistently verify the reliability of the data received from CMS. Specifically:
GAO was able to determine the reliability of CMS’s estimates for total obligations for fiscal year 2014, which was $3.7 billion; the number of staff as of September 30, 2013, which was 347; and total salary expenditures from March 2010 through fiscal year 2013, which were $79.8 million.

GAO could not determine the reliability of any of the other financial information CMS provided because CMS’s core financial system did not produce totals for much of the CCIIO-related information requested. For example, the system did not produce expenditure totals for CCIIO-related polling, focus groups, or advertising and other public relations activities because of how these activities are captured in the system.

Similarly, information related to reassignment of staff to CCIIO from other CMS and HHS units was not readily available. Consequently, the staff reassignment information provided to GAO was not complete, was not supported by documentary evidence, and could not be verified.”

So, $3.7 billion was spent on Obamcare for Fiscal Year 2014 alone — we just don’t know where. For Kathleen Sebelius to whine about $400 million in advertising against Obamacare just goes to show the depth of desperation for the Obama Administration to blame someone, anyone, for the failure that is Obamacare. And that the most toxic part of the brand Obamacare is “Obama”.

Picking Winners and Losers in Higher Education


Friday before Election Day, the Obama Administration via the Department of Education released a “gainful employment” rule applicable to higher education, which singles out a particular type of learning institution: the for-profit school. The new regulation will prohibit students from being able to receive federal student aid “unless the program can show that their graduates’ annual loan payments do not exceed 20% of discretionary income, or 8% of total earnings.” The Department of Education essentially surmises that for-profit schools do not produce quality programs.

Basically this new rule will throw many for-profit colleges out of business. It’s not the first time a regulation of this kind has been issued, either. A federal court struck down the first attempt put forth by the Administration back in 2012. And yet, this newer version is more stringent — with 7 times as many programs likely to not pass standards/criteria for “gainful employment” now. The estimate is that around 1,400 programs educating 840,000 persons will fail the new magical threshold.

The Administration has stated that the goal of the new rule is to “protect students”, and that the rule is necessary “to ensure that colleges accepting federal funds protect students, cut costs and improve outcomes.” However, the rule is not applicable to public and nonprofit institutions. When pressed for the double standard during a congressional hearing on the topic last spring, Education Secretary Arne Dune said that “development of the college rating systems would address the rest of higher education”. That is a cop-out.

So here we have an Administration interfering with the ability of adults to pursue the educational path that best fits their needs by limiting their choices through the deliberate withholding of financial aid assistance from certain schools or programs that the government deems unfit. The government has chosen to redefine the term “gainful employment” in such a way that many career pathways will now be closed at a myriad of institutions that have previously educated many — especially a large number of poor and/or minority persons. These students quite often lack parental financial assistance anyway, and now removing the option for financial aid adds another barrier to upward mobility.

This ridiculous regulation was opposed in a signed letter by 18 members each of both the Republican and Democrat parties last spring, many of whom are minorities, citing their concerns for its adverse affect on low income students and those from non traditional backgrounds. However, their non-partisan approach fell on deaf ears.

Our country has many options for education — some students thrive a four year public institution; others, a community college or small private school and still others, a for-profit institution. Though Obama has consistently championed college education, this rules changes will make it harder, not easier, for a segment of the population to become a college graduate.

Another troubling aspect is how the rule measures debt. The WSJ points out that, “if the department were merely trying to protect students, then Mr. Obama’s “Pay As You Earn” plan that caps loan payments at 10% of discretionary income would make the rule moot. This is why the rule doesn’t measure graduates’ actual loan payments, but rather the median amount of debt they incur amortized over 15 years for bachelor’s degrees. Many students take up to 25 years to repay their loans.”

And more: “This economic reality is why the Administration is steering students toward loan forgiveness plans like Pay As You Earn. Grads who find non-gainful employment in government or at a nonprofit can get their loans forgiven after 10 years of modest payments. So the White House is encouraging graduates to pursue low-paying jobs in “public service” even as it punishes for-profit colleges whose graduates do precisely that.”

The Administration is once again picking winners and losers, this time in the realm of education. The new rule essentially encourages students to pursue their education — but only at places whose programs and operations are subsidized by taxpayer dollars.

The IRS-White House-Koch Brothers Link Comes Full Circle With The TIGTA Docs


Well, now we know something that has been long suspected for the past four years: the IRS and the White House are sharing taxpayer information.

That has certainly been the suspicion since at least 2010, when a senior White House official, Austan Goolsbee, made a comment about the Koch Brother’s business practices in August 2010. The Weekly Standard was one of the first to cover this indiscretion as part of an article about the growing practice of attacking the Koch Brothers by liberals. From TWS back then:

While the attention is unwanted for the Kochs, if somewhat expected, a lawyer for Koch Industries now tells THE WEEKLY STANDARD that the administration may have crossed a line by revealing tax information about Koch Industries. According to Mark Holden, senior vice president and general counsel of Koch Industries, a senior Obama administration official told reporters at an August 27 on-the-record background briefing on corporate taxes:

“So in this country we have partnerships, we have S corps, we have LLCs, we have a series of entities that do not pay corporate income tax. Some of which are really giant firms, you know Koch Industries is a multibillion dollar businesses. So that creates a narrower base because we’ve literally got something like 50 percent of the business income in the U.S. is going to businesses that don’t pay any corporate income tax. They point out [in the report] you could review the boundary between corporate and non-corporate taxation as a way to broaden the base.”

Holden tells THE WEEKLY STANDARD that this quotation from a senior administration official “came to our attention from different avenues. We are very concerned about why this would be said about us, particularly in this setting. We are concerned where this information would have been obtained from. We also are concerned in light of recent events that we have been singled out by the government and others as a campaign against us because of our political views.

Additionally, Austan Goolsbee further this very line of thought on an interview shortly thereafter on September 12, 2010 with Chris Wallace.

During that fall of 2010 right before midterms, the Obama Administration started targeting small businesses and the way they pay taxes, as part a push for higher individual rate margins/repeal of the Bush Tax Cuts. The Administration began specifically trying to discredit Koch Industries and a plethora of small businesses by implying that not paying corporate taxes is somehow wrong or underhanded — while omitting that fact many businesses structure themselves as non-corporate entities to avoid the scourge known as double taxation. The White House used the Koch Brothers’ tax structure in an attacking anecdote, and openly discussed tax information that was not publicly available, in order to bolster their own talking points.

This has come back to light now four years later. Last week, TIGTA acknowledged the existence of about 2500 documents that fit the FOIA request, from a group called “Cause of Action”, asking for communication between the IRS and the White House.

Then on Tuesday, TIGTA retreated from its openness by withholding the bulk of the documents. A letter from TIGTA counsel to the group suing for the information, noted that there were 2,509 pages of documents “potentially responsive to your request”, and of those, 2,043 were in fact responsive. However, TIGTA cited tax code and privacy as the reason not to disclose those documents, saying “All of the 2,043 pages of documents we have determined to be responsive were collected by the Secretary of the Treasury with respect to the determination of possible liability under Title 26 of the United States Code. These pages consist of return information protected by 26 U.S.C. § 6103 and may not be disclosed absent an express statutory exception.”

Clearly, even without knowing the substance of the information, we do now know that the IRS and White House have shared some taxpayer information (roughly 2500 documents worth), which is a stunning breach of impropriety. The Koch Brothers were definitely in the crossfire back in 2010, and have been a concerted target of liberals ever since. Everyone questioned how the White House could know about their confidential taxpayer information. Now we know how. We just don’t know how deeply. Or who else.

The act of the IRS sharing the information is in itself a violation of federal law 26 U.S.C. § 6103, which is the very same law they are using to shield themselves from releasing the information now, citing “privacy”. The fact that the IRS and White House teamed up to share taxpayer information, and in at least one instance, used it to target American business owners while pushing their own economic agenda is thoroughly atrocious.

Update: Washington Free Beacon corroborates the Austan Goolsbee link, as the original FOIA request from “Change of Action” was specifically related to how the White House appeared to possess private taxpayer information of the Koch Brothers.

Treasury Issues $1 Trillion in New Debt to Pay Off Old Debt, Despite Record Revenue

Even though the government is bringing in record revenue, its spending is still outpacing its intake. CNS News did an analysis of Treasury Statements, and revealed that the Department of Treasury is currently operating like a Ponzi scheme:

“The Daily Treasury Statement that was released Wednesday afternoon as Americans were preparing to celebrate Thanksgiving revealed that the U.S. Treasury has been forced to issue $1,040,965,000,000 in new debt since fiscal 2015 started just eight weeks ago in order to raise the money to pay off Treasury securities that were maturing and to cover new deficit spending by the government.

During those eight weeks, Treasury took in $341,591,000,000 in revenues. That was a record for the period between Oct. 1 and Nov. 25. But that record $341,591,000,000 in revenues was not enough to finance ongoing government spending let alone pay off old debt that matured.”

During the 8 weeks since the start of the fiscal year, the Treasury brought in revenue of $341,591,000,000. However, old debt was maturing. In order to cover the old debt plus finance the government, it was forced to issue new debt. There was $942,103,000,000 in old debt. To cover its obligations, the government had to “roll over the old debt into new debt and issue enough additional new debt to cover the new deficit spending”.

CNS News explains how the debt occurred so quickly. “The vast amount of debt that the Treasury must roll over in such a short time frame is driven by the fact the Treasury has put most of the debt into short-term “bills” and mid-term “notes”—on which it can pay lower interest rates—rather than into long-term bonds, which demand significantly higher interest rates….If the Treasury were forced to convert the $1.4 trillion in short-term bills (on which it now pays an average interest rate of 0.056 percent) into 30-year bonds at the average rate it is now paying on such bonds (4.919 percent) the interest on that $1.4 trillion in debt would increase 88-fold.”

If the private company operated in this manner, you can be sure the Securities and Exchange Commission would be after them for fraud. But when its the government, all bets are off.

State Budgets: Big (Empty) Promises

Many states continue to bamboozle their citizens by obfuscating the true depth of their debt that is occurring in the form of unfunded liabilities. Those liabilities are mainly state public pension plans, and they continue to routinely promise pie-in-the-sky returns, even after years of bleak economic growth and investment.

A group called State Budget Solutions analyzes the problem of underfunding each year. Its annual report “reveals that state public pension plans are underfunded by $4.7 trillion, up from $4.1 trillion in 2013. Overall, the combined plans’ funded status has dipped three percentage points to 36%. Split among all Americans, the unfunded liability is over $15,000 per person.”

Many people might think, “I don’t work for my state government, so it doesn’t affect me”. It most certainly does. We are facing a generation of Baby Boomers who are getting ready to retire, and expect to have the pension that has been promised to them. Those promises are the unfunded liabilities which must be paid out. Pension costs come from state budgets — you and me — and in order to cover the costs, adjustments must be made. Expect tax increases and/or reduced government services in the coming years because a greater portion of the state budget will need to be dedicated to meeting these obligations.

How did we get here? The most damning factor is that of generous promises.

Ultimately, negotiators — be it union heads, lawmakers, or other bureaucrats — have had a fiduciary responsibility not to pay more than fair compensation, thereby restricting compensation and benefits to amounts no greater than what those skills would command in the private sector. Unfortunately, there are really no such competitive inhibitions in the public sector and therefore the negotiation routine lacks the incentive for restraint. In most cases, the self-interest of the public sector negotiator is more directly aligned with the leader that can get him elected rather than the taxpayer whom he is representing.

Lofty and mythical promises have been made for years now without a care about how it will be paid for — because the negotiator will likely be long gone when obligations come due. This is a true case of the fox in charge of the hen house. Thus runaway financial promises have deeply accumulated in state governments for which it cannot properly budget, while binding future governments not yet in office.

The Great Recession has made the problem more acute in recent years. “As the economy struggles to get back on track, states’ fiscal health also suffers, making it more difficult for state officials to make up for the shortfalls with greater contributions. As bond yields have suffered due to interest rates being held at historic lows, the fair market valuation of public pension liabilities also took a hit.”

Furthermore, most, if not all states, have hidden the vast problem by using accounting tricks — probably hoping the economy or investment will bounce back, or else just passing the buck year after year so it becomes someone else’s problem.

For instance, “state pension funds use a high discount rate. Discounting liabilities is a necessary part of fund management. Fund managers must assume that the current assets will be worth more in the future due to a number of factors, notably the return on investing those current assets. The problem arises because the discount rate is not based on the nature of the assets held by the pension plan, but is rather based on the assumed rate of return.”

The assumed rate of return — herein lies the problem. By continuing to perpetuate and promise rates of return of 5-8% for pensions, state governments show on paper that their liabilities are much smaller than they are. However, for years now, returns have been much closer to 2-3%. Yet state governments fail to make those realistic adjustments because it sounds neither glamorous nor generous to the employee.

What’s more, some states are facing such enormous financial pressures and shortfalls in all sectors of the state budget that they have reduced or skipped the yearly contribution to the pension funds altogether — thereby making the gulf that much wider. New Jersey balanced its budget (again) this year by reducing (again) the payment by $2.4 billion; Virginia skipped its payment back altogether in 2010 — although it did implement a repayment plan over subsequent 5 years to make up for that choice.

In fact, a cursory glance back at these practices reveal that the games have been ongoing for several years now. A Wall Street Journal article on this subject from Spring of 2010 — nearly 5 years ago — discusses how states were reducing and skipping payments and delaying the “day of reckoning”. New Jersey, California, and Illinois were some of the worse offenders then.

Is it any wonder that these three states are in the top ten for the amount of unfunded liabilities? California has the worst, $754 billion. In terms of funding ratios, Illinois leads the list with only 22% of its obligations funded. You can look at the full and various lists here.

The crisis will only continue to worsen unless changes are made. The outlook is gloomy for state governments and, based on past performance, is not likely to get better anytime soon. For most states, the “kick the can” approach allows them to coast while the liabilities fester, letting it become the problem of other future governments at some undefined point in the future. That is reprehensible.