Quote of the Day: Rush Limbaugh Edition

"This is the president citing the pope, his new best friend, because the pope is ripping America, the pope ripping capitalism,” the radio host explained. “And Obama’s having an orgasm. Jeremiah Wright is beside himself. Jeremiah Wright thought he was Obama’s preacher, now pope somehow has co-opted Obama."

Rush Limbaugh

Charles Johnson made a great comment about Limbaugh's latest rant.

If I never hear Rush Limbaugh talk about anyone (let alone President Obama) having an orgasm again, it will be too soon.

Amen to that.

I wrote yesterday that wages in Florida and America aren't keeping up with productivity. Limbaugh rants that income inequality doesn't exist.

“And I tell you the way he means that, ‘We’ve got too many rich people, we need more people who are poor and lower middle class, that’s the only way we can have equality and fairness.’ This is just — people have got to be cringing that they ever voted for this guy.”

The problem isn't that America has too many rich people. A Congressional Budget Office study found that income inequality has greatly increased.

The top 1 percent have seen a +281 increase in after tax income. The bottom fifth has experienced only a +16 increase. So much for trickle down economics lifting all ships. Considering Limbaugh's history with viagra, he should stick to talking about orgasms and leave economics to others.

Quote of the Day

"Well, you know, to me I find it interesting that you have a lot of the Republicans running around and pushing back on the stimulus money and saying this doesn't create any new jobs, and then they go out and they do the photo ops and they are posing with the big check and they say, 'Isn't this great?'"

Gov. Arnold Schwarzenegger

Contrary to what Mitt Romney said at CPAC, a September 2009 CBO report estimates"600,000 to 1.6 million people were employed" because of the stimulus package.

Republican Health Care Amendment Doesn't Reduce Uninsured

The Republican amendment to the Democratic House bill is a joke that keeps providing laughs. The Affordable Health Care for America Act was nothing more then a legislative attack on the Democrats. The Congressional Budget Office informed Minority Leader John Boehner that the amendment would only insure 3 million Americans and lower the deficit by $68 billion. THe CBO is projecting these estimates for 2010 to 2019. There numbered of insured and fiscal reduction is than CBO estimates for Democratic heath care bills. The CBO states the the Repuublican amedment keep the level of uninsured relatively the same.

By 2019, CBO and JCT estimate, the number of nonelderly people without health
insurance would be reduced by about 3 million relative to current law, leaving about
52 million nonelderly residents uninsured. The share of legal nonelderly residents
with insurance coverage in 2019 would be about 83 percent, roughly in line with the
current share. CBO and JCT estimate that enacting the amendment’s insurance
coverage provisions would increase deficits by $8 billion over the 2010–2019
period.

The amendment's funding structure makes me wonder if there will be enough revenue to fund federal funding for high risk insurance pools. Costs would be $49 billion and additional tax revenue would be $27 billion. The CBO report does not say what these state high risk pools would cost. Not that it matters. Republicans never wrote this amendment with the intention of it becoming law. Boehner and company should not have bothered.

The Baucus Bill Really Is Bad

My post "The Disappearing Public Option" detailed how President Obama was against the public option and allowing Medicare to negotiate drug prices with the pharmaceutical industry. The Max Baucus mandates every American buy health insurance. There are income and religious exemptions. The Wall Street Journal reports there are no provisions to allow Medicare to negotiate with Big PHARMA.

The good news is the Congressional Budget Office reports the Baucus bill would reduce the deficit.

Estimated Budgetary Impact of the Chairman’s Proposal
According to CBO and JCT’s assessment, enacting the Chairman’s proposal would result in a net reduction in federal budget deficits of $49 billion over the 2010–2019 period (see Table 1). The estimate includes a projected net cost of $500 billion over 10 years for the proposed expansions in insurance coverage. That net cost itself reflects a gross total of $774 billion in credits and subsidies provided through the exchanges, increased net outlays for Medicaid and the Children’s Health Insurance Program (CHIP), and tax credits for small employers; those costs are partly
offset by $215 billion in revenues from the excise tax on high-premium insurance plans and $59 billion in revenues from other sources.1 The net cost of the coverage expansions would be more than offset by the combination of other spending changes that CBO estimates would save $409 billion over the 10 years and other tax provisions that JCT and CBO estimate would increase federal revenues by $139 billion over the same period.2 In subsequent years, the collective effect of those provisions would probably be continued reductions in federal budget deficits.

Those estimates are all subject to substantial uncertainty. Furthermore, although we understand that the published document describing the Chairman’s mark was intended to reflect the specifications provided to us, CBO and JCT have not reviewed that document to determine whether it conforms in all respects to those specifications.

There is nothing in the Baucus bill that will bring down drug or private insurance costs. If anything, the Big PHARMA and private insurers come out stronger than before. The Baucus bill kicks Co-Ops to the state level. Can we get anymore cynical?

Howard Dean and Chris Van Hollen on the Public Option

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Howard Dean guest hosted for Keith Olbermann. Dean described the Max Baucus compromise bill as "watered down." DCCC Chair Chris Van Hollen discussed the public option with Dean.

DEAN: Chris, I know the House is doing a great job on this. But why haven’t we seen — why haven’t we seen Democrats in the Senate take a stronger bargaining position with the Republicans? Why give away something as fundamental as health care reform as the public option?

VAN HOLLEN: Well, you’re absolutely right, Howard. We’ve got to have a public option in the plan that we send to the president’s desk. We’re all still hoping that the Senate Finance Committee bill will have a public option.

If they don’t, we’re going to press hard. This has got to be in the bill that we send to the president’s desk. We’ve got to create more choice for consumers and more competition for the insurance companies.

I don’t think anyone was surprised to learn that the insurance companies are fighting this. These are the same companies that have seen their profits go through the roof over the last seven years. In fact, if you look at just the top 10 insurance companies, their profits have gone up about 430 percent over the last seven years, while everyone’s income stayed flat and while their premiums were going through the roof.

So, we’ve got to have a public option to create that competition and to give Americans more choice.

DEAN: Some Democrats are saying that there needs to be compromise on the public option in order to get the bill passed. But 72 percent of Americans say they want the choice of a public option. Does that mean that what the American people want is already dead in the Senate?

VAN HOLLEN: No. I certainly hope not. It’s certainly not dead with respect to the bill that we’ll send to the president’s desk.

The American people are exactly right. If you want more choice, you want to bring down premiums, you need that competition. There are parts of the country where the private insurance companies have huge monopoly lock over the markets. We need to provide that competition. As the president said, we need to start keeping these insurance companies honest.

You know you’re getting somewhere when you get a lot of resistance. And as you get closer to making this happen, you get more and more fight from the insurance companies, and we have to stick up for the consumers. And it’s pretty clear that the Republicans support the status quo, and there’s a good reason for that, which is their allies, the insurance industry, that has provided huge amounts of campaign contributions, supports the status quo, with respect to not providing for a public option.

Republicans had 8 years and did nothing to reform health care. The Congressional Budget Office found current entitlement spending is unsustainable.



A CBO letter to Republican Rep. David Camp estimated only 9 million people would switch from private health care to the so-called public option.

In 2016, nearly 3 million people who would be covered under an employment-based plan under current law—and who could be covered by that plan under the proposal—would choose instead to obtain coverage in the exchanges because the employer’s offer would
be deemed unaffordable and they would therefore be eligible to receive subsidies through the exchanges. In addition, some part-time employees, who could receive subsidies via an exchange even though they had an employer’s offer of coverage, would choose to do so. All told, we estimate that, in 2016, about 9 million people who would otherwise have had employer coverage would not be enrolled in an employment-based plan under the proposal.

The CBO estmates public health insurance will 10 percent lower than private insurance. What isn't making news is the letter notes hospitals spent $35 billion for uninsured care. The uninsured won't seek medical care until they need to visit an emergency room. From a humanitarian perspective: this is horrible policy. The cost factor will increase with more uninsured people. Hospitals will be forced to pass on the expenses to patients with health insurance. The status quo is increased cost and more uninsured people. Excuse me if private insurance companies aren't my first concern.

NoQuarterUSA Obama Bashing

I had an anonymous commenter linking to a post by Larry Doyle. I wrote how TARP was making a profit and major financial institutions were repaying their loans. Doyle wrote a post that dramatically claimed "The TARP Has a $159 Billion Loss !!" Apparently, one exclamation point wasn't enough. Doyle pounded on a single point in the Congressional Budget Office report. The CBO revised their numbers because Sec. Tim Geithner has lowered subsidy rates from 45 percent to 36 percent.. Lowering the interest on loans is always a good sign.

From the CBO Report.

By the CBO's estimates, actions taken through June 17, 2009, have an overall cost for the TARP of $159 billion and a subsidy rate of 36 percent. That rate is lower than the 45 percent recorded in CBO's March baseline, which reflected actions undertaken by the Treasury as of February 27, 2009. The decrease in subsidy costs assigned for existing programs reflects an improvement in market conditions and the earlier-than-expected repurchase of preferred stock, partly offset by higher subsidy costs in new transactions.

The most notable decrease in subsidy rates stems from capital purchases. In CBO's March baseline the estimated subsidy rate for those transactions was 35 percent, a figure that has since fallen to 18 percent. Reductions of similiar magnitude have been recorded for investments made through the TIP and for AIG. Furthermore, the repurchase of preferred stock before the five-year mark lowered the estimated subsidy rates for those transactions because they were outstanding only for a short time. In contrast, the addition of funding for the Administration's foreclosure mitigation plan, a 100 percent subsidy, raises the average subsidy rate for TARP activities.

Contrary to Doyle's claims, THE CBO report states $159 billion is the cost of TARP. The lowering of subsidy rates is good news. Loss and cost are two entirely different things. Doyle worked Bear Stearns as a mortgage trader and was the National Sales Manager for Securitized Products at JP Morgan. Doyle is a hard right conservative with a lack of economic understanding. Doyle is best known for blogging at NoQuarterUSA. The top blog post, on Google, is Larry Johnson's "Michelle Obama and Louis Farrakhan Take On Whitey."

I learned over the weekend why the Republicans who have seen the tape of Michelle Obama ranting about “whitey” describe it as “STUNNING.” I have not seen it but I have heard from five separate sources who have spoken directly with people who have seen the tape. It features Michelle Obama and Louis Farrakhan. They are sitting on a panel at Jeremiah Wright’s Church when Michelle makes her intemperate remarks. Whoops!! When that image comes out it will enter the politcal ads hall of fame. It will be right up there with the little girl plucking daisy petals in the famous 1964 ad LBJ used against Barry Goldwater.

Johnson did a great deal of flip flopping and the tape of Mrs. Obama and Farrakhan never materialized. Johnson also wrote a piece how America is more likely to face a nuclear than terrorist attack. You won't be surprised to learn Johnson once worked in the CIA.

How much credibility do you want to give Larry Doyle's misinformed piece? NoQuarterUSA is a stomping ground for Obama bashing and birther conspirary theories.

CBO Reports Health Care Reform Will Save Money

The Congressional Budget Office reports the America's Health Choices Act will save the federal government. Contrary to what Republicans are saying, the cost saving will add $239 billion to the budget.

According to CBO’s and JCT’s assessment, enacting H.R. 3200 would result in a
net increase in the federal budget deficit of $239 billion over the 2010-2019 period.
That estimate reflects a projected 10-year cost of the bill’s insurance coverage
provisions of $1,042 billion, partly offset by net spending changes that CBO
estimates would save $219 billion over the same period, and by revenue provisions
that JCT estimates would increase federal revenues by about $583 billion over those
10 years.

The CBO breakdown where the cost savings will come from.

• Permanent reductions in the annual updates to Medicare’s payment rates for most services in the fee-for-service sector (other than physicians’ services), yielding budgetary savings of $196 billion over 10 years (excluding interactions—namely, the effects of those changes on payments to Medicare Advantage plans and collections of Part B premiums);

• Setting payment rates in the Medicare Advantage program based on per capita Medicare spending in the fee-for-service sector, providing savings of $156 billion (before interactions) over the 2010-2019 period; and

• Changes to the Medicare Part D program that would establish a new prescription drug rebate program for some people who are eligible for both Medicaid and Medicare, while expanding drug coverage to beneficiaries that are currently subject to a gap in coverage (often referred to as the Part D “doughnut hole”), saving $30 billion over the 2010-2019 period.

The doughnut hole was the result of President Bush's horrible Medicare overhaul. 2004 was an election year and the Bush White House pushed for changes in Medicare. The Medicare package went $400 billion over what the Bush administration projected. The White House told Richard S. Foster, the chief actuary for the Centers for Medicare and Medicaid Services, he would be terminated if he revealed the true cost.

"This whole episode which has now gone on for three weeks has been pretty nightmarish," Foster wrote in an e-mail to some of his colleagues June 26, just before the first congressional vote on the drug bill. "I'm perhaps no longer in grave danger of being fired, but there remains a strong likelihood that I will have to resign in protest of the withholding of important technical information from key policy makers for political reasons."

The problem with the $2,510 doughnut hole coverage is it costs the government money without providing coverage. Patients are left to go to private insurers or pay for prescription drug out of their pockets. The House bill is smart policy. It's is fiscally and morally responsible. Republicans continue to pitch how great the status quo is.

The House Republican released a four page health care plan. To say their plan isn't wonkish would be an understatement. The plan allows parent whom have their kids enrolled in SCHIP to get a private plan. Of course, Republicans ignore these families are on SCHIP because they are poor. Tax cuts are offered for people on private health care plans. That does nothing for people without health insurance. The meat of the Republican plan is cutting preventive care.

Tax cuts for people whom can afford health care and less health care is what the GOP is offering. Who wants to sign up?

Quote of the Day

"A guy from the northeast did a study on generational accounting. Generational accounting says what is the imputed tax for a young person born in America today? And remarkably, that number is 82, which at all ain’t that far from a thing called slavery. If you’re giving away 82% of every dollar you earn every day and every week and every month, A, it’s not a good deal, B, it collapses the capitalistic system because nobody has any initiative to work at that point, and C, it really isn’t that far from slavery. And what the Republic was originally set up was on the notion that was just talked about a moment ago, which is this larger notion of freedom. And economic freedom is a part of the larger notion of freedom."

Mark Sanford, the formerly missing Governor of South Carolina.

Sanford doesn't cite what economist wrote about generational accouting. The answer is Laurence J. Kotlikoff, Alan J. Auerbach, and Jagadeesh Gokhale. A 1995 Congressional Budget Office report predicted future generations will pay 78 percent flat tax rate. The problem with generational accounting is if you project Medicare, Medicaid and the Defense Department budget; each will all take 100 percent of the gross domestic product. That is impossible.

Conservative economist Herbert Stein served under presidents Richard Nixon and Gerald Ford. Stein was also a member of the conservative think tank the American Enterprise Institute. Stein's law is "If something cannot go on forever, it will stop." Stein created his law for trade deficits. Logic dictates the defense and entitlement expenses will not be 100 percent of the GDP and that they will bottom out. The question is are the expenses put under smart fiscal policies are fall from their own weight?

Generational accouting does not take into effect what kind of fiscal policies future political leaders will apply and entitlement and military expenses being controlled. Which is what Obama has been proposing. What political climate does Sanford foresee where politicians expect to be re-elected with an 82 percent tax rate?

Side note: Ezra Klein wrote a post on health care and Stein's law. Klein believes "the day of reckoning is imminent."

Tax Cuts Are Not Stimulus

The Republican talking point is there is too much spending from states. States are having a hard time paying the bills. Arizona will have to borrow $2.5 billion and $5.7 billion next month. Florida can not even balance it's budget. Florida has to meet the state Constitutional requirements of the class size amendment.

Florida's popular class-size amendment may be put on ice, thanks to a weakening economy and a statewide budget crisis.

Despite strong public support, a broad consensus is forming that the goal of limiting class size is simply too expensive during the current economic crunch.

Even advocates of the amendment told the Orlando Sentinel this week that it might need to be scaled back.

In Maryland: the legislature is trying to shift the cost of teachers's retirements onto the counties. Slot machines were suppose to answer Maryland's budget woes. It never occurred to Gov. Tommy Carcetti Martin O'Malley that people would not want to gamble during an economic downturn and the state having it's highest unemployment in 15 years.

Republicans imagine all this government pork in need of cutting. Americans can hardly afford to buy bacon at the grocery store. The GOP implying government creating jobs (see: Steele, Michael) and repairing infrastructure is the same as a hip hop artist going to the jewelery store. That argument shows a lack of intellectual depth and curiosity in economics. In my adult life, I have never heard the GOP not say tax cuts are the soltion.

Surplus: tax cut.

Deficit: tax cuts

Recession: Tax cut.

Stimulus package: tax cut.

The Congressional Budget Office found without the Bush tax cuts, The United States would have been a surplus in early 2005. Bush billed his tax cuts as a stimulas plan. Republicans are arguing we need to cut taxes to stimulate the economy. For the love of this country, Republicans need to stop trying to stimulate the economy.

Bush: Mr. Big Spender

Is Paul Krugman smoking crack? Federal spending has gone up for more besides Iraq, Medicare, and Medicaid.

But where did that increase come from? Three words: defense, Medicare, Medicaid. That’s the whole story. Defense up from 3 to 4% of GDP; Medicare and Medicaid up from 3.4% to 4.6%, partially offset by increased payments for Part B and stuff. Aside from that, there’s been no major movement.

Behind these increases are the obvious things: the war McCain wants to fight for the next century, the general issue of excess cost growth in health care, and the prescription drug benefit.

The White House hid the true cost of the Medicaid Bill.

The following month, the administration announced the program would actually cost $534 billion to implement, nearly 40 percent more than advertised. "Had people known that real price, the bill wouldn't have ever made it to the House floor for a vote," says Rep. Rahm Emanuel, D-Ill. (Similarly, the administration refused to even submit an estimate for the war while Congress was debating whether to give the president authorization to use force.)

Then, last month, Richard Foster, the chief actuary at the Centers for Medicare and Medicaid Services, the top independent Medicare cost analyst, revealed he had been threatened by the Bush administration that he would be fired if he told Congress the true cost of the policy. He received orders in June 2003 from his boss, Thomas Scully, the Bush-appointed director of the Medicare program, instructing him to ignore information requests from members of Congress who were drafting the drug bill. In the past, lawmakers had free access to the actuary's estimates. And they assumed they were getting a true statistic as they considered the bill this time.

Iraq, Medicaid and Medicare hardly explains why Bush didn't veto a spending bill until Democrats took over Congress. The chart below shows that nondefense spending went up 28 percent during Bush's first term.



Matters got worse in 2006. Discretionary spending does not count Social Security, Medicare, Medicaid and other entitlement programs. Nondiscretionary spending went up to 35.8 percent from 2001 to 2006.

Defense was taken out of the first numbers I cited. Medicare and Medicaid in the second. Bush's spending increases are still the worst since LBJ's administration.

Here are numbers from the Congressional Budget Office for discretionary spending.

Defense

2001 - 306.1
2002 - 349.0
2003 - 405.0
2004 - 454.1
2005 - 493.6
2006 - 520.0
2007 - 548.6

International

2001 - 22.5
2002 - 26.2
2003 - 27.9
2004 - 33.8
2005 - 39.0
2006 - 36.1
2007 - 34.5

Domestic

2001 - 320.8
2002 - 359.2
2003 - 392.5
2004 - 407.6
2005 - 435.8
2006 - 460.7
2007 - 458.9

Bush has cried for an end of earmarks. During the Republican Congress of 2006, earmarks rose by $16 billion. Krugman is wrong. Budget increases can not by blamed solely on Iraq, Medicaid and Medicare. It is a greater challenge to find where the budget has decreased.

The Iraq War, the Pentagon and Your Tax Dollars

The Congressional Budget Office did a study to figure out how much the Iraq war will cost if it continues until 2017. The answer is 2.4 trillion. Nicole Belle did the math. The cost would be $8,000 for every man, woman and child in the US. A possible way to fund a 2017 Iraq war is an increase in interest payments. The Federal Reserve would have to figure out many ways to squeeze banks and foreign lenders if the war is going to be paid for without tax increases.

The CBO was lowballing the costs because the Pentagon (surprise) does horrible bookkeeping. CBO is projecting that President Bush would make significant cuts in the amount of troops in Iraq. No one believes that.

On the basis of the two scenarios specified by Chairman Spratt, CBO projected the costs of activities associated with operations in Iraq and Afghanistan and the war on terrorism through 2017. Because DoD does not report detailed operational statistics, those projections—which CBO derived by calculating the ratio between current force levels and funding requested by the Administration for 2008—are rough approximations.3

In the first scenario, the number of personnel deployed on the ground for the war on terrorism would be reduced from an average of about 200,000 in fiscal year 2008 to 30,000 by the beginning of fiscal year 2010 and then remain at that level through 2017. CBO estimates that costs to the U.S. government under this scenario would total $570 billion over the 2008–2017 period (see Table 1).

In the second scenario, the number of personnel deployed to Iraq and other locations associated with the war on terrorism would decline more gradually, from an average of about 200,000 in fiscal year 2008 to 75,000 by the start of fiscal year 2013 and then remain at that level through 2017. CBO estimates that costs to the government under this scenario would total $1,055 billion over the 2008–2017 period.

In addition to estimating the costs of the two scenarios over the next decade, CBO recently estimated the potential costs of maintaining a longer-term U.S. military presence in Iraq. The budgetary implications of maintaining such a presence are discussed in Box 1.

The answer is the Iraq war, to run to 2017, would cost much more than the CBO estimate. Republicans would just say it could be paid for with tax cuts.

The study shows that the Pentagon needs serious reform. The reports states "determining how much has actually been spent is difficult." The taypayers don't even know what the DoD is doing with their money. In 2002, the DoD didn't know where 25 percent of their funds went.

"According to some estimates we cannot track $2.3 trillion in transactions," said Former Sec. of Defense Donald Rumsfeld.

Nothing has changed since then.