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Time Out –A Look at the Republican Non-budget

March 12th, 2013 · No Comments · ALEC, Capitalism, Corporations and Industry, Economics, Health Care, Politics, Populism, Social Security, taxes, The Budget

Before we can return to the Failure of Conservative Economics, we must address a current issue on today’s Neo-Conservative agenda…the Paul Ryan Republican Budget for 2013.

We need to examine the premises here and debunk the stuff that is simply wrong. Paul Ryan announced the Republican Budget on March 12, 2013 and it fell with a clank on the floor of the House. We will take it, point-by-point, but it is very clear at the outset that this is less of a budget than it is a political statement to the rich, Right-Wing backers of the Republican Party. It is a budget designed to be a failure. It is merely a political statement to its financial supporters.

First Ryan point:
– A balanced budget achieved in a decade by not allowing the government to spend more than it collects in revenue, which Republicans set at 19.1% of gross domestic product. By their measure, the federal government will spend $4.6 trillion less over the next decade.

Response:
Two strong revenue sources are missing in this budget to balance any budget in the next decade. The first is higher taxes on everyone…to achieve a 20.5 or higher revenue base. We need to virtually double income tax revenues. That’s just the way it is. It is the result of electing a President (Bush) who was an irresponsible idiot and a Vice President who was a world-class criminal.

The second is that we need full employment (5% or less unemployment.) Only those two things will start to balance the budget. The next thing we need to do is get our trade policies and our policies on natural resources under control. Billionaires who are trying to destroy the American Middle Class now have control of our vital resources. We need to take our natural resources away from billionaires and return them to all the people.

Second Ryan point:
– Authorizes construction of the Keystone XL pipeline.

Response:
This is somewhat laughable. Why this would even be in the Ryan-Republican budget shows how shallow and political a statement it is. Why not developing oil in ANWAR? Whatever happened to that? Well, it is simply not a current political argument. The Keystone Pipeline, whether it is developed or not, will never be a major factor in our economy unless it ruptures and somehow seeps into our water system in the West. Only then will it be a major factor. It creates only temporary jobs. It creates jobs in an industry which ten years from now will be on its way out or we will all be too busy with the effects of climate change to notice.

Third Ryan point:
– A full repeal of Obama’s health care law.

Response:
First, this is not going to happen. So it is irrelevant. Second, the Affordable Care Act has already begun to bring health care costs down. While the implementation has new costs, startup costs, the actual cost of health care, partially because of some of the already initiated provisions of the ACA (which does not start until next year, 2014) has come down. Some estimates are that insurance costs dropped this year to something like a 5% increase over 2012, which would be the lowest rate of increase in at least ten years, maybe more. Remember that Medicare and VA administrative costs are at the very least 10% lower than private industry.

That means that once health insurance exchanges are fully in operation, your health insurance costs will drop by something like 15% wherever there is a public option available. In other words, if you now pay $5,000 as your share of health insurance annually, it should drop to something like $3,750 relatively quickly, if not immediately. Free market competition will also be a factor in dropping prices.
Eventually, as is happening in Vermont, waivers for the implementation of single-payer health care delivery will demolish the for-profit business. Why would anyone pay $8,000 a year for the same doctors, same hospitals, same treatments and same prescription drugs that they can get for $4,000 which—based on experience of every other country—will be the case.

Next Paul Ryan point:
– Support for new laws to limit medical malpractice liabilities.

Response:
Again, a point so laughable that it begs the question…is this a serious proposal? In malpractice suits, which comprise only .4% of all medical transactions, only 42% of the cases are won by the plaintiff and the average settlement is less than $500,000. Once the Affordable Care Act is fully in place, there will quite likely be an amendment that will take care of all medical disputes.

This is what has happened in all other countries with universal health care. When the financial considerations have changed, that part of tort law will change also. Tort law is about compensation. Once compensation begins to ameliorate, so will the tortious aspects.

Finally, it should be pointed out that, in a report by all state insurance commissioners, malpractice awards were determined to have no relation whatsoever to insurance rates for doctors. So, apparently, this is a battle between doctors and lawyers that lawyers are winning and doctors seem more interested in trying to beat the wrong enemy than actually lowering their malpractice insurance costs.

Next Paul Ryan point:
– A fundamental overhaul of the Medicare system for future retirees. Starting in 2024, seniors would be given a federal subsidy to purchase health care from the
private market, instead of the guaranteed benefit system that currently exists. It also calls for wealthy seniors to pay more for premiums.

Response:
Ryan’s plan would shift 68% of the costs of Medicare to patients from the current cost, which is about 25%. (Medicare is not only a payroll item; it is a cost to seniors after they retire as well.) So, even if there were some plan to change Medicare into a private health care delivery system again…dropping the Affordable Care Act and dissolving Medicare…it won’t happen either.

Medicare privatization is not going to happen. What is going to happen is this: Medicare, Medicaid and VA health care will eventually be drawn into the Affordable Care Act over a longer period of time and we will have national, non-profit health care for everyone. The problem with health care costs is very simple.
CEOs of health insurance companies are making an average of $14 million a year, and their senior executives are making similar wages. Other similar wages are being paid to hospital CEOs, pharmaceutical CEOs and others in what is a business that, to be successful, depends on your being ill. This, as Nobel Prize winning economist Kenneth Apple said many years ago, is not a good recipe for an ongoing business…that when your customers do well, you make less profit.

Elevated wages in the health insurance industry amounts to about 40% of health insurance costs which are 30% of your bill. Sooner or later there will be a Democratic House and Senate and President. When that happens, health care costs will drop by about one-third and health care will cease to be a profitable business.

Health insurance is a profitable business now only because they pick and choose custormers. It is profitable now because of lobbyists and huge campaign expenditures. Once Republicans in Alabama and South Carolina realize that they are being treated like peasants or simply like a statistic on a spread sheet, things will change. No health care proposal from any Republican will ever see the light of day again.

Next Ryan point:
– A transfer of power to states to determine how Medicaid and other funds should be spent on programs, including food stamps.

Response:
We already have fundamental federal-state relationships that work very well. The changes that might be needed in some cases from a fiscal standpoint are done through waivers in rules. The only time they are not done is when some ideological Governor wants to prove a point by depriving his citizens of their rights to something like a vote or a medical procedure or an educational opportunity.

This is a purely political point again, designed to placate the now 30 Right Wing governors and their desire to help the corporations, who through ALEC, have helped them hoodwink the hicks and gain political power. This point is not even worth discussing. It is purely a political Neo-Fascist attempt at more political power for Republican state legislatures. If Democrats take back more state legislatures, Ryan will disavow this point immediately if not sooner.

Next Ryan point:
– An increase in defense spending over current law.

Response:
Another reason to wonder if this is a budget or a “non-budget” political gesture.

We already spend more than the combined military budgets of all other countries in the world…all of them…combined! By a wide margin. This point is so idiotic that it doesn’t bear any further discussion. We have over 70 different military locations around the world. We cannot even get rid of a military fighter aircraft—that the military does not want–because the manufacturer deliberately put the manufacture of its components in every single Congressional district or state.

Next Ryan point:
– A plan to transform the tax code to simplify it from seven individual tax brackets to two, as well as a repeal of the Alternative Minimum Tax and a 25% corporate tax rate.

Response:
We do need tax reform. And here it is. Tax any personal income over $500,000 at 50% on the next dollar and up. That is the first Reagan tax cut only on incomes starting at a much higher level than under Reagan. That is where things should stay. It makes the effective tax rate for millionaires and billionaires about a third of income over half a million.

If you have a billion dollars in income, you will pay about 300 million dollars in taxes. But you’ll keep 700 million. That should be enough for you to live on until next year. And we’ll protect you from the Arabs and the North Koreans, by creating a civilized society so that you can make even more money and buy even more things without being kidnapped or murdered.

Next, U.S. corporations should pay one dollar for every ten dollars they make as American corporations from money that they earn here in the U.S. Market. In addition, they should pay at least a 5% import tax on any product they make abroad and import back into this country for sale. Capital gains should be at 25% and inheritance tax should be a standard 25% on everything over $5 million for singles and $10 million for couples. No deductions.

Those tax changes plus just the current pending budget cuts, no more, will move the U.S. back into surplus. If we do not hire another bumpkin like Bush, we should be good to go for another 50 years without budget cuts.

Next Ryan point:
– A requirement that the president and Congress offer respective proposals for the long-term solvency of Social Security.

Response:
We do not need to make complicated changes to Social Security. Social Security can be made solvent by simply raising the payroll deduction limit to those making $200,000. That will fix Social Security for 75 years. What we need to do is take a small tax on investments or a small tax on natural gas and use it to fill the gap in Social Security to convert it to a retirement program. That tax, which could be expired when the Social Security fund is full and paying forward, would allow individuals to actually pay into their own retirement account, a annuity on retirement, but one that would not be passed on as part of their estate.

As a result, within 30 years, not only would Americans have annuities that would pay at least 50% more than current Social Security adjusted for inflation, but the United States would have the strongest bond market ever known, would be the richest and fiscally strongest government in the world, more than China, Europe or any other country per capita, oil rich or not, in the rest of the world.

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