Robert Samuelson – Blame It On The Seniors

This morning my son and I were discussing the prevalence of misleading economic data out there. Robert Samuelson is one of the few economists that I have respect for. Samuelson in his article, Health 'reform' that burdens our young presents yet another set of reasons why the Health Care Bill is bad legislation. He is correct, the lions’ share of Medicare is going to be sucked-up by the retiring hoards. But if you paid into the system for 40+ years wouldn’t you expect to get what you have paid for and have been promised?

He also has issue with the proposed rate structure that is part of the Health Bill for MANDATED coverage. Insurance pools work because they spread the costs of a few over a much larger group of people, most elderly are going to require more services but they have also been the ones that have paid into those pools for 30 years covering the higher rate of usage by their elders. If you accurately price coverage for each person’s age then people could never afford coverage and would end up either without coverage or on the government dole anyway. Having small risk pools that are tightly grouped by age only exacerbates the problem.

If the cost of health coverage increases as someone ages then employers would be much more reluctant to hire someone over forty strictly on the cost factor. One of the big problems with medical care is that those, even with good insurance, often find themselves with medical bills that exceed coverage and wipe out a lifetime of work and can be forced into bankruptcy after just a few months of illness.

His argument about AARP is good except that AARP by supporting the Health Care Bill is also supporting the $500 billion in cuts to Medicare. He criticizes their support for subsidizing premiums for the elderly but fails to recognize the fact that they have been paying that subsidy for most of their lives.

He also fails in his comparison of health insurance to auto insurance. Auto insurance is competitive, you can buy it from a local company or from a company in another state, you’re free to drop one coverage and pick up another. Auto insurance is not employment driven, when you change or lose your job you do not lose your auto insurance and if you have coverage for a health condition you may not be able to get covered for that condition ever again. Nor is auto insurance subsidized by the government, . A worker who pays into a health insurance pool making it possible for older workers to receive lower rates also expects a similar benefit when they reach their fifties.

The only solution to the health care problems plaguing the U.S. he presents is that seniors should pay premiums in accordance to their age. This is not an expectable solution and is much less than I expect from him.

DIH – Democrats In Hiding, Why This Is Hurting Real Health Care Reform

THE PEOPLE DON’T TRUST THE GOVERNMENT AND ARE EVEN MORE SUSPICIOUS WHEN THEY ATTEMPT TO RAM THEIR PROGRAMS THROUGH WITHOUT DISCUSSION.

The dems’ claim that the resistance to Health Care Reform is being orchestrated by private interests and fringe groups is untrue. As someone who does not belong or support any group or party, I resent that our elected officials are erecting blinders to a majority of their constituents concerns. It doesn’t matter which side you’re on, both Democrats and Republicans have concerns with this Bill and their representatives stonewalling blocks both the reasonable and the unreasonable. This tactic just detracts from any real discussion of the issues in the Health Care Bill.

There have been numerous attempts to create a system for universal health care in the U.S. and all have failed because the overhaul was too large and unwieldy. People are willing to let the politicians play at politics but this Bill is too much of a change. All we’re getting is promises that it will be revenue neutral and our taxes won’t increase, that our level of care will not be managed by cost control committees and that over-all, life-is-good and things will not change. And you wonder why people aren’t falling in line behind the Bill?

This Bill creates preferential treatment to certain groups such as unions, mandates intrusion into families that use the system and penalizes those that don’t. There are a thousand pages of new bureaucracy’s, new rules and regulations that are open ended and tons of unintended consequences. Most of us agree that health care needs reforms but this is just too big and too expensive to pass with no real and open discussion.

I am against government run health care but favor serious and well thought out programs of reform, most of the average Joe’s and Jane’s out there would also support intelligent reform. Here are a few issues to start with.

· Tort Reform – Just look at John Edwards, the main beneficiaries of medical malpractice suits are the attorneys.
· State Regulation – Eliminate the system of state boundaries, they reduce competition and drive up costs.
· Insurance Mandates - All physicians should have to accept all legitimate forms of insurance eliminating insurance directed and managed medical care.
· Portability – COBRA is a joke, if someone loses their job they cannot afford $1,000 a month or more for health insurance.
· Pre-existing conditions – Too many people pay into a system for twenty/thirty years and if anything should happen to that job they can lose coverage for serious and expensive conditions.
· Generic Drugs and Drug Pools – Twenty years is too long of a window and drug pricing could be reduced if pooling were allowed.
· Medical Training – Offer serious subsidies for people to enter the medical field. Do not lower standards allowing less qualified people in, but make it possible for lower income people with sufficient aptitude to enter.

Any one of these would be a massive undertaking but trying to do them all and more is just too much.

The Honeymoon Is Over And I Want A Divorce - Obama’s Interest Rate Quagmire

He lives in Fairy Land and The White House has become His Magic Kingdom.

My last article talked about the quagmire that our economy will be in if Obama's uncontrolled deficit spending, in His attempt to reshape America, is not brought under control. Two days ago He made a speech where He stated the same thing. Bloomberg published this article: Obama Says U.S. Long-Term Debt Load ‘Unsustainable’.

Yes, higher interest rates would devastate the budget causing astronomical deficits – beyond the enormous ones already in the pipeline. But the problem is NOT HIGHER INTEREST RATES, it’s that He will not stop spending money He does not have. It’s the spending that is causing us to borrow in the first place. He will not give up his dreams to reshape the American economy. Here is another campaign speech (oops, Presidential Address) He made a couple of days ago. He recognizes the danger of increased borrowing but places His vision for health care, energy and the environment at a higher level of importance than mere monetary concerns.

The implication is that we will have to raise our level of commitment to society, lowering the level of our bank accounts.

If He will not stop deficit spending then the only way to reduce the governments’ need to float Treasury Notes is to find different ways of raising taxes. He loves hidden taxes; a dime on a coke or candy bar, a quarter on a gallon of gas, a buck a six-pack, 10% on anything plastic. He’ll nickel-dime-quarter us to death but will not raise our taxes.

His carbon tax could devastate the lower income portion of our society, severely curb the spending habits of the middle class and we already know what He plans for the upper class. His health plan would eventually dictate everything that impacts our health. People that are considered over-weight will have restrictions put on them because they are now a burden to the health care system. We will be told what foods we’re allowed to eat, what doctors we will see and our health care will be monitored for our own welfare. The majority of a person’s medical expenses come in the last few years of life, euthanasia would be the single biggest money saver.

He said today that people should pursue fulfilling careers such as volunteering their time or working for a non-profit. That the American People should aspire to higher level of commitment to the society. That leaves government work out, their all about the money. If He thinks He can dictate salaries in the private sector then the next logical step is to dictate salaries of Physicians, Nurses, procedures, medicines and hospital costs. All would benefit society. Doctors should aspire to a higher level and donate their time.

He lives in Fairy Land and The White House has become the Magic Kingdom.

Government, SCHIP And The Sin Tax Revisited

Follow-up to: Government Loves Cigarettes

The problem, as I see it, is that government feels that the pool of American tax dollars is bottomless and it is their “responsibility” to create a new tax to fund every altruistic concept. I just don’t believe that government has unlimited authority to take every noble motive and make it theirs. The government has to be given parameters and it’s those restraints that will always cause controversy.

My argument isn’t with the issue of smoking, it’s with the government. I’m just tired of the back door tactics they use to get programs funded and going that will not make it through the front door.

Our government is contentious on purpose; if an issue can’t gain consensus then it should not be ready for prime-time. By providing $35 to $40 billion in initial funding for the SCHIP program we’ll have another huge bureaucracy formed over night that will be in the order of Medicare and Medicaid. It’s the American way to build and grow and the SCHIP would become a launching platform for nationalized healthcare.

Since it’s the implied goal of these “taxes” to further the cessation of smoking, it’s also reasonable to assume that the programs funding will also dry-up. Exactly what form of funding will take place as the sin tax revenues disappear? What are the SCHIP mandates and how are they going to be implemented. How many children will be covered, what will be accomplished by this funding and what will their needs be 5 or 10 years out.

Are we just going to provide funding and then answer these questions based on Congresses directive to go forth and spend. No one wants to deny uninsured children healthcare, but this situation is far from critical and shows no signs of becoming one. There is plenty of time to do it right.

Chicago Transit Gives 1,000 A Free Ride To The Unemployment Line

From an Associated Press article reported on WQAD web site, the CTA took a shot at the Illinois legislature by threatening layoffs and service disruption if the state doesn’t fork over additional funds.

“In announcing the layoffs, CTA officials said the job cuts were part of a contingency plan that would take place in September if the Illinois legislature fails to increase transit funding.”

When digging through the CTA web site I found the “2007 Contingency Plan” (pdf and very slow). The plan offers five paths that the transit authority may take; Option A is a service cut only contingency illustrating total layoffs of 10,833. Evidently this plan calls for a combination of layoffs in August, and fare increases in September, to provide the board with time to determine how to cover the $110 million anticipated shortfall.

What I find of special note is that the first graph illustrates that “pension and health care cost increases” are identified as the principle cause for the anticipated shortfalls. There was no mention of the cost of fuel or the escalated cost of maintaining the 9.6 year old fleet.

Pensions should not be a problem if they were properly funded when the commitment is incurred. This is a significant problem in America today, businesses and organizations, like the CTA, have failed to adequately fund pensions and have put the problem off to-a-later-date.

Inadequate funding of pension responsibilities is going to become a major problem, you will see company after company shift the blame for poor performance on to their older employees.

Greenspan May Have Had It Right

Two weeks ago, just prior to the coaster ride the market took, Greenspan addressed a business conference, via satellite, of Hong Kong businessman. Part of that speech from a Martin Crutsinger article on the AP:

"When you get this far away from a recession invariably forces build up for the next recession, and indeed we are beginning to see that sign,… While, yes, it is possible we can get a recession in the latter months of 2007, most forecasters are not making that judgment and indeed are projecting forward into 2008 ... with some slowdown,"

The average Jason or Jennifer judge the economy from their own direct environmental input, their personal situation and that of those around them. As in everything American there is a rift growing between economists, on one side is the doom seers and the other are the “contemporary” wisdom crowd. The pessimistic group look at the cancers of our economy, the trade deficit, the breakdown of the housing market, the extraordinarily high levels of credit by consumers and government, the outpouring of American manufacturing jobs, health care costs rising at three times inflation the upcoming Social Security dilemma and governments inability to effectively react to these risks. On the other side are a group of highly educated economists and leading financial engineers, some of which are responsible for hundreds of billions of dollars in our retirement accounts, and they claim that since everything looks healthy (our economy), then the patient must be healthy.

Each of the potential detriments are a study in themselves, and some of the contemporary arguments are convincing, but we urge all to take a conservative approach in making any decision that might be affected by a recession in the next 24 months.

Coke Is It, It = 3,500 Lost Jobs

From the Atlanta Business Chronicle: Coke Enterprises posts $1.1B loss, job cuts coming

“results for 2006 include a $2.9 billion non-cash impairment charge, restructuring charges, expenses related to expensing of stock options and net favorable tax items.”

There seems to be two common threads among quite a few of the current slew of restructuring announcements being released. After four years of strong growth companies have gone on a buying and expansion spree, part of the growing pains is the accumulation of some hefty costs and charges. And when these “charges” do hit the books, resulting in poor quarterly financial performance for the company, they can pull a restructuring plan out and site job cuts as the answer. That’s the easy way of saying they’re on top of things.

Last years explosion of ethanol plants has pushed the cost of corn up 50%, that along with a significant rise in the price of aluminum will result in a 9% increase to the cost of producing a case of Coke.

Since inflation has hit Coca-Cola Enterprises Inc. along with other bottlers and the employees must pay. I can only imagine how many jobs it will take to cover the “expenses related to expensing of stock options” .

Delphi Blames American Workers

Quoted from an AP article by Tom Krisher, “Delphi Loses $2B in Third Quarter Due to Cost of Paying About 20,000 Workers to Leave Company”

In the first nine months of 2006 Delphi lost $4.6 billion attributed $2.9 billion of the loss to costs associated with the work force reduction. The parts supplier plans to close or sell 21 of its 29 U.S. plants and has moved most of the lost U.S. production to lower cost labor markets.

As previously posted in: This Ain't Your Daddy’s Oldsmobile, Delphi needs to have some of their production near their primary customer, GM, and has replaced nearly 40% of their U.S. workers with lower wage workers.

Why Are Prescription Drugs So Expensive

As previously posted in my article Pfizer Has No Cure For Michigan’s Headache and Health Insurance The Wild Card the health care industry is operating outside of any economic realities. Costs have consistently raised at 2 to 3 times inflation, medical coverage has gone up so much and has become such a problem, that in a recent CNN survey 43% of company CEOs consider health insurance premiums the #1 threat to their companies future.

So it came as no surprise when I read Insiders article Pfizer's decimation - will the lobbyists be cut? On his/her blog PharmaGossip:

“According to the Centre for Responsive Politics, in 2005 there were 2,326 registered pharmaceutical lobbyists. That amounts to 4.3 lobbyists for every member of Congress, and the drug companies spent $146,783,853 on their efforts.”

”And the Center for Public Integrity reports that between 1998 and 2005, the industry spent over $675 million on federal lobbying”

What Makes Employees Happy

Every year Fortune Magazine features the 500 Best Companies To Work For. What makes these businesses so popular with their staffs? The perks vary greatly but there are two noticeable consistencies; first would be wages, since two of the top five are grocery stores with managers salaries under $50k and hourly under $12, it’s not amount but that it is in the upper 20% of comparable positions and second are the perks, not that they are overwhelming, but that they are special enough to make the staff members feel special.

If you want to see the top 100 list click here. After reviewing all the companies, the only common threads, as to why these companies were chosen, are low turnover rates and an extraordinarily high number of applications to available job openings. Both of which can have outside influences such as being located in an area with few available openings or an aggressive online presence that produces a large volume of applications.

Take a look, some are predictable and others, well I would need to see more evidence.

Constructive Opinion On The Harley Davidson Strike

Now, you Harley people don’t get me wrong. I think you deserve a much better contract and with the company making record profits, they should show their appreciation. BUT…

From the companies press release and confirmed by Harley employees:

“The company said its proposal included annual wage increases of 4 percent over three years. But part of the increase depended on the union agreeing to contribute toward health insurance coverage. Unionized employees currently pay no premium. It also would have doubled the company's 401(k) retirement plan contributions.”

...BUT. A four percent annual increase and doubling your 401s is more than fair, the two parts that everyone is having problems with are the takeaways. First and most important is the charge back for you health insurance, since I’m not privileged to what the charge back is, I’ll guess it’s equivalent to two percent or half of the raise. The second is the $2.50 reduction is starting salary. If that part is true, then a starting salary of $18.25 per hour just isn’t as bad as you guys are making it sound. My guess is that it’s the union trying to earn some of their keep. Unfair, yep but there is another side.

If you’ll look further down in this blog there are numerous articles about communities and States that make huge concessions to draw companies to their areas. Google just received over $18,000 per employee per year for 30 years, in reduced taxes, from North Carolina to get their 215 jobs. That’s over 100 million dollars. I feel that the union should get on the phone to Governor Rendall and every local and state Commissioner, Representative, Senator along with the BBB and all Development Groups in the area, to see what incentives local, county and state governments will throw into the kitty for Harley. Then they might feel like the union is working with them and more willing to take care of the crew at York.

The doors open for you to show everyone in the country how companies, unions and their people can work together.

Employees Locked Out At Harley Davidson

As of Thursday morning the 2,700 employees of the York, Pa. Harley Davidson Plant was locked out. According to articles, written by Andrea Maria Cecil in Sunday’s and today’s York Daily Record, 98% of the members of International Association of Machinists and Aerospace Workers Local 175 voted on Wednesday to reject Harley’s latest proposal and initiate a strike at 12:01 am. Friday.

At this time the terms of the proposed contract have not been disclosed, but a reader has commented that the company has requested employees accept a higher share of medical costs and reduced pension benefits. There was no reference to wages other than Harley had requested that new hires may be brought in at about ½ the current wage. As quoted by David J. Lynch, published in the Aug. 17, 2006 issue of USA TODAY:

“The venerable motorcycle maker, battered by Japanese rivals, came within an eyelash of bankruptcy in 1985. Harley slashed payroll, overhauled its factories and engineered a remarkable turnaround. The company has been profitable for 20 years and, in a nice irony, now enjoys the largest market share in Japan.”

This is the same plant that President Bush visited:

“Harley-Davidson's example also is something less than a pure free-trade success. In 1983, the company won special trade protection from the Reagan administration that raised tariffs on imported Japanese bikes to 49% from 4%. That gave Harley critical time to retool.”

“The president said such temporary protection is sometimes warranted. And Harley's robust workforce of more than 9,000 — roughly double the 1995 figure — underscores the point.”

In a company statement:

"Because of the union's intent to strike at midnight, not knowing how long that would last, we thought it was in the best interests of everyone to suspend badges and eletronic access to the facility, essentially giving employees a second day off with pay."

As quoted from The Auto Channel:

"Harley-Davidson has no business behaving like they're on the brink of bankruptcy," said Tom Buffenbarger, international president of the International Association of Machinists and Aerospace Workers (IAM). "When Harley was flat on its back in the 1980's, it was union members who refused to let it die. Harley went on to become an international success story but they've obviously forgotten how they got this far."

"They don't respect workers as much as their stock options," declared District 98 Directing Business Representative Tom Boger about company leaders who reported record revenue of more than $1.6 billion for the third quarter of last year.

At this point all parties need to take a step back. There are many communities that would pay Harley mucho buckos to move to their community. Google just received $100 million in tax discounts from North Carolina for a 215 employee server farm. We are in a highly competitive era and companies have more options than ever before. Someone has to give and I seriously hope it’s not the 2,700 workers at the York Harley plant. There just aren’t comparable jobs out there.

Health Insurance The Wild Card

An Associated Press story, no author given, discusses some of the problems presented by governments attempting to mandate solutions to the current lack of health care insurance in this country. The estimates of how many people are currently without any health coverage varies but approximately 60 million would be a fare number. What’s is even foggier and receives almost no media coverage are the numbers that are under insured. As employers and consumers fight to lower costs, insurance companies respond by offering plans that have restricted benefits and coverage.

As illustrated by writer Chris Lindberg article in People's Weekly World Newspaper:

“Recently a young family celebrated the birth of their child but soon received the sad news that the baby needed heart surgery. Their concern escalated when their health insurance company refused to pay for the surgery. Why? Because the heart problem was a “pre-existing condition.” Read on.”

“Tracy Pierce, 37, lived a full life. He grew up with family and faith. He went to a Catholic school, got married, had a son, and he even had the car of his dreams. It was the perfect life,” reported the Frankfort Indiana Times. But then Pierce was diagnosed with kidney cancer. For 15 months he suffered, while every treatment his doctors sought for him was denied by his insurance provider. First-Health Coventry deemed the treatments were either “not a medical necessity” or experimental. Even at the last stages of his life, he went without oral morphine for more than a week, because his insurance would not cover it.”

It been documented that over the last 6 years 11.5% of employers have dropped employer sponsored plans and nearly all have addressed the increase in costs by, either or both, reducing coverage benefits or transferring costs to the employee.

As state and now federal governments try to respond with an array of ideas and programs, solutions will get bogged down with a slew of litigation from health insurers, small business organizations, medical associations, pharmaceutical companies and political opponents which feel their solutions are superior.

In the last twenty years medical costs have increased more than double the inflation rate, and we all have heard or experienced how an illness at the end of someone’s life have wiped out an entire life work. We all should have adequate health coverage but the excesses in the medical system have to be addressed also.