Jon
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Joined: 13 Apr 2005
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| Bush plans likely to get little action except damaging ones |
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The President is trotting out more agenda items for his last two years of office, trying desperately to switch the nation’s mind from Iraq and the tough going there. Once more there is talk of converting to more ethanol fuels, restructuring healthcare, reforming a system that guarantees our children negative retirement dollars (social security), and fixing immigration. Some of the ideas are good while others are designed just to get some kind of consensus with the new Congress.
The only ones with any chance of progress are the more dangerous ones, but one thing is certain: Congress will do nothing that will give the appearance that Bush is somewhat effective ahead of the 2008 elections. The Democrats have their eye on the White House in 2008 and they won’t work to get any serious reforms in place that the President and republican party can claim. Just as the Republicans refused to live up to their campaign promises to their constituents in the last election when they opted to ‘play to the masses’ to get re-elected versus take hard, meaningful action, the democrats will kill any serious, meaningful reforms and instead apply feel good bandages to festering problems.
Sounds pretty cynical, but the last elections only underscored that the name of the game in D.C. is keeping or taking power. The republicans broke promises in order to try and hold power. It didn’t work of course, but that only proves the point: they are so power hungry they will break their oaths and forsake their principles in an attempt to maintain power.
Ethanol is again on the stage as some sort of savior to our gasoline and thus oil consumption. Of course we could use every kernel of corn produced in the US (sorry Mr. Redenbacher and Jiffy Pop) and make only about a 3% dent in our gasoline consumption. Of course our food prices would go through the roof because corn prices would soar. Hogs and cattle consume vast quantities of corn as they are prepared for market, and thus the cost of raising livestock surges along with corn prices. Depending upon the process, when you include all of the costs of switching our corn crops to ethanol (and corn is a very poor source for ethanol because it has such low sugar content) you are looking at $12 to $20+ per gallon to produce. That includes the diversion of corn from other uses and the corresponding rise in associated costs of those other uses. Of course the government is going to subsidize the conversion so you won’t see some of the costs directly, just indirectly as another unseen reason the ‘blob’ of federal spending expands further and further.
Healthcare is another issue that will get a lot of talk, and there are some really great ideas here and some really bad ones. Expanding the HAS plans (health savings accounts) further is a great idea. It allows people to save their deductibles tax free in an account that can grow tax free as well. It allows deductions for just about any medical expense. It lets many self-employed actually afford insurance versus the traditional employer provided plans that are simply ridiculously high. Most importantly, it works to break the mindset that ‘insurance will pay for it.’ The individual is put in charge of obtaining the services and it makes a smarter consumer that the healthcare providers have to deal with. We have HSA’s and every care provider we go to has negotiated lower rates with us and is much more responsive in providing accurate information as to procedures. We have much better relationships with our healthcare providers because we know a lot more about the what’s, why’s and how’s with respect to our treatments and fitness plans.
Unfortunately there are fundamental differences between the parties as to who should be in charge. The democrats want nothing short of national healthcare so they malign HSA’s as only catering to the rich. Absurd. They never have an HSA subscriber on the show when they level these complaints against the system. There are now thousands of small businesses with healthcare coverage that would not have healthcare without them. That sounds like a success. It may not be the total answer, but it is filling a huge void in the current system. If everyone was able to take their premiums and deductible and put it in a tax free account and let it build up, they would see what a great vehicle this is to pay for health insurance versus flushing needlessly high premiums down the toilet each month whether you use the plan or not. That would undermine the very need for national healthcare and thus the opposition from much of the democratic party. Not all of it, but the ones that are running it.
Then there is social security. Bush is going to propose in the next few months that the tax cap be raised and that those paying in less receive more in benefits. That removes it from the ‘we are all in this together’ plan and makes it another redistribution entitlement. That won’t fly with most conservatives, republican or democrat, who only tolerate SS because it is at least an equal pay, equal share system. Private accounts are a great idea just as they are in healthcare, but that won’t work because you need to borrow some to bridge the gap to pay the current promises will letting younger workers open accounts. With the pay-go rules passed that is not going to happen. The other step that should be used in conjunction with private accounts is raising the age of receipt for younger workers to match what it was when the program was created over 70 years ago.
That would require raising the age of receipt to 79 versus 65. Back when SS was passed the average US citizen lived to be 62. To receive one dime you had to outlive the statistics by 3 years. We now have an average lifespan of 76. To make the math even close to working you raise the receipt age to 79 (it still is not exact because we are now much older as a nation versus in the 1930’s). That is not going to happen either, so meaningful reform is out the window. Congress and the President will get together and raise the tax cap and saddle us with more taxes. That is the federal answer to any problem.
Immigration reform is on the list, but again, meaningful progress is unlikely. Some say that is the answer to our SS problem: just let them all in and give them a free citizenship pass and then tax them to collect the social security funds. Larry Kudlow is a big advocate of letting what he calls hard-working illegals have citizenship. We are a nation built upon immigrants so you don’t want to close the door to those seeking a better life. But a wide open border is foolish. We are in a war against terrorists who vow to strike us here at home. A wide open border invites some nasty attacks in the future with bio weapons and/or nuclear weapons. In addition, there is the health issue that has been kept quiet. Tuberculosis, small pox, whooping cough, leprosy and even polio are once more showing up in border and many southern states as the illegals walk across the border with no health checks at all. If we are worried about healthcare costs for our legal citizens, we should at the very least demand that immigrants be healthy. It is not uncommon at all to deny access to those that have communicable diseases. Why would we want to put our children at risk with open season on plagues that we had wiped out in the US decades ago? Even in the 1920’s and 1930’s immigrants had to come through central checkpoints to enter the country. Is it now bad policy to require the same now? Of course not.
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