Healthcare Setback?

If you haven't heard, Obama's healthcare reform law has been appealed to the Supreme Court:

WASHINGTON, Sept 28 (Reuters) - The Obama administration on Wednesday asked the U.S. Supreme Court to back the centerpiece of Barack Obama's sweeping healthcare overhaul -- the requirement that all Americans have health insurance.

The appeal was largely expected as a high court ruling against the law could be a fatal blow to the president's signature domestic policy achievement and could have major implications for his re-election bid.

The case is important because healthcare reform has been on of the corner stones of Obama's presidency. Additionally, the ruling will come down only a few months before what should be a heated reelection campaign for the President. Obama supporters are confident:

“We believe that a prompt resolution of the constitutionality and severability of the individual mandate is in the best interest of individuals, employers, states, and the federal government. We are confident in the merits of our legal arguments, and we look forward to presenting them to the Supreme Court.”

What may be more concerning than the constitutionality of the law at this moment, is the rising costs of healthcare:

Even a slow economy can't stop healthcare costs from rising. A new report by the Kaiser Family Foundation and the Health Research & Educational Trust shows that the cost of employer-provided insurance rose 9% this year — even as workers and their families were cutting back on trips to the doctor's office — and has more than doubled over the last decade.

Costs are growing out of control since Obamacare was passed:

The report was based on interviews with more than 2,000 employers between January and May. Researchers found that premiums rose three times faster from 2010 to 2011 than they had the previous year, pushing the average cost of policies for single workers to $5,429 and for families to $15,073.

The Republicans are having a field day:

“As this survey shows, the president’s promise that his partisan health law would lower costs was just empty rhetoric,” Sen. Orrin Hatch (Utah), the top Republican on the tax-writing Senate Finance Committee, said in a statement. “The fact is employers aren’t hiring, in large part, because they have to spend more and more money on health insurance.”

And Paul Ryan is always lurking with a fiscally responsible plan:

“Giving patients and consumers control over healthcare resources would make all Americans less dependent on big business and big government for our health security; give us more control over the care we get; and force health care providers to compete for our business,” Ryan said.

Until there is a ruling on this, healthcare will continue to be a hotly contested issue. In addition, all the Republican presidential candidates have said that if they are elected, they will repeal the law. The shelf law for Obamacare might not be that long anyway.

On a more concerning note, at the moment, it appears that healthcare reform may not reduce the cost of healthcare, thus making the law expensive. This will make it anti-jobs because company growth will be restrained by these costs. Furthermore, with our national debt crisis, it is important that the legislation we pass has a positive effect on our economy. I'm not convinced that this is the right move for that.

The Forgotten Son: Ron Paul

Ron Paul always seems to not be taken seriously. It's unfortunate. After all, he's the one who said governments should have less influence on people's lives. He campaigned hard on it in 2008. Now, it seems everyone else is capitalizing on his original message. He continues to be forgotten:

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The media's ignoring of Ron Paul hasn't gone unnoticed in the mainstream media either:

By now, pretty much everyone agrees Ron Paul was ignored by the media following his second place finish in the Ames straw poll on Saturday. Whether or not the media blackout was justified due to his less-than-favorable campaign prospects is subject to debate.

So what are Paul's prospects? We can judge some of it by his ability to raise money right? Well, he's cash:

Rep. Ron Paul (R-Texas) raised $1.8 million in 24 hours on Saturday and Sunday, a major online "money bomb" timed to coincide with his 76th birthday. This is the fourth time Paul has raised more than $1 million in a day this campaign cycle, and a signal that he will have the money to compete as long as he wants for the Republican presidential nomination.

Paul is still behind Romney and Perry as far as raising money, but the man is raising more money than Michelle Bachmann at this point. He's not going away. And with all that money, he should not go away quietly.

He's also polling well in New Hampshire:

On the ballot Romney remains in a strong position. He leads all candidates with 36% of the vote. However, Perry, making his first appearance in the NH Journal poll, debuts with a strong 18%. Ron Paul continues to impress despite relatively little media attention with 14%. And Bachmann earns 10%. All other candidates were in single digits.

So despite the lack of media attention, Paul continues to raise money and do well in the polls. You've got to still wonder why no one's considering him a serious contender. Is the media attention the only thing keeping him from being a serious contender.

Yet we see all these other candidates that seemingly have no chance getting media attention. Rick Santorum continues to get attention, despite finishing a distant fourth place. Even Jon Huntsman is getting more attention than Ron Paul. What's the deal with that:

Huntsman is challenging orthodoxies of thought that afflict the GOP alone, and taking positions that reflect the conventional wisdom in the media: evolution is a fact, so is climate change, and the debt ceiling had to be raised. In contrast, Johnson and Paul are challenging orthodoxies of thought that are bi-partisan in nature and implicate much of the political and media establishment.

Even more worrying is the fact that not only is Paul getting outshined in media coverage by his fellow candidates, but also by the potential Presidential candidates.

The Tea Party is using a radio blitz for Sarah Palin. Everyone under the sun are waiting for a Paul Ryan or Chris Christie to throw their hat into the race.

It's unbelievable.

In many ways, by not giving Ron Paul fair time or attention, he is becoming a forgotten man in this race. However, the extent to which people are going to ignore him is ridiculous. Palin, Ryan, and Christie aren't even in the race, and attention should not focus on them until they decide they want to serve our country. Huntsman and Santorum are not campaigning nearly as well as Paul, yet they are both getting the mainstream treatment. Whether you like Ron Paul or not, you should agree his voice should at least be heard. The media blackout on Ron Paul is anti-American.

Let the man have a voice.

The Tea Party Candidate

One of the top challenges for any Republican candidate for President is to win the Tea Party vote.

The Tea Party is a grassroots movement that may or may not be misunderstood. When it first emerged, the protests seemed silly because there seemed to be racially motivated, particularly in the way they tried to convince the public that Barack Obama was born outside the United States:

It's been a very controversial movement:

"Given how much sway the Tea Party has among Republicans in Congress and those seeking the Republican presidential nomination, one might think the Tea Party is redefining mainstream American politics," Campbell and Putnam write. "But in fact the Tea Party is increasingly swimming against the tide of public opinion: among most Americans, even before the furor over the debt limit, its brand was becoming toxic."

In spite of this, it has continued to gain political influence amongst Republican presidential candidates.

Rather than discuss the movement, I would like to address in regards to their Tea Party politics.

Michelle Bachmann has been championing herself as a Tea Party Republican, particularly in highlighting her recent voting record in light of the debt crisis. However, she was burned in Friday's Wall Street Journal for some of her stances:

If Mrs. Bachmann is worried that Mr. Ryan's reforms would not address her concerns, then there are other approaches to choose from. But she has declined to offer or endorse any, expressing only vague support for a small increase in the retirement age and greater means testing—neither of which would make a real dent in Medicare's growth, since neither would reform the grossly inefficient payment system that causes costs to explode throughout the health sector. An asterisk is not enough.

The problem is that while the Tea Party has admirable political goals, its politicians may not have the spine to get things done. Providing concrete policies is an important factor:

A posture of bold fiscal conservatism is simply not compatible with timid evasions on Medicare reform. The combination may be politically convenient, but it is substantively incoherent. And it's not just Mrs. Bachmann who has done this—most of the GOP presidential candidates have as well. Virtually every speech they give is laced with promises to tame our deficit and debt, to scale back the size, scope, reach and cost of government. Yet they have little to say when it comes to fixing the fundamental structure of our health entitlements. They want to will the ends but not the means to those ends. And that just won't do.

You can't shy away from strength. By dodging concrete policies, you're building uncertainty for your campaign. One of the main criticisms of Obama was that he didn't provide concrete policies. I think a 2012 candidate will have to provide a much stronger stance on the issues.

Tea Party activists also have concerns about Rick Perry:

The activists and enthusiasts were much more likely to express doubts about a Perry candidacy. Many were dissatisfied with his time as governor and doubted the authenticity of his conservative credentials.

These are the two "front-runners." I discount Mitt Romney only because I think his religion will be an issue and his spotty record is something that he won't defend. Romney is a smart guy, but he's not charismatic and he's not outspoken. I think he genuinely wants to be President and probably would do a good job if elected. However, he lacks those two traits which are prime on the campaign trail. Oh, and he's definitely not a Tea Party favorite.

Interestingly, the two candidates that would probably most appeal to the Tea Party are not even in the race.

Chris Christie of New Jersey had this to say earlier this year:

And let me tell you what the truth is. What's the truth that no one is talking about-here is the truth that no one is talking about: you're going to have to raise the retirement age for social security. Oh I just said it and I'm still standing here! I did not vaporize into the carpeting and I said it! We have to reform Medicare because it costs too much and it is going to bankrupt us. Once again lightning did not come through the windows and strike me dead. And we have to fix Medicaid because it's not only bankrupting the federal government, it's bankrupting every state government. There you go. If we're not honest about these things, on the state level about pensions and benefits and on the federal level about social security, Medicare, and Medicaid, we are on the path to ruin.

Christie is mulling a run as is Paul Ryan, who brought us the Path to Prosperity:

No one person or party is responsible for the looming crisis. Yet the facts are clear: Since President Obama took office, our problems have gotten worse. Major spending increases have failed to deliver promised jobs. The safety net for the poor is coming apart at the seams. Government health and retirement programs are growing at unsustainable rates. The new health-care law is a fiscal train wreck. And a complex, inefficient tax code is holding back American families and businesses.

Both of these candidates fit the Tea Party agenda so far as cutting government spending and reducing taxes. More importantly, they have a strong record for entitlement reform. They have a strong stance against it and would provide the spine that the Republicans that the other candidates lack.

While the Bachmanns and the Perrys may have the charisma to appeal to the Tea Party supporters, they lack the record to bring about changes the Tea Party activiists can get behind. There's hope that one of these men will run for the presidency. However, until then, the Tea Party activists will have to settle for less.

What is Entitlement Reform?

On my Twitter, I tweeted that if there's anything you're unsure about or you want to learn about, you should let me know. A lot of my own posts start that way. I look at things that are in the news that I want to learn more about, so I research them. I try to apply it to what's going in the world, why it's important etc.

Today, let's talk about entitlement reform.

So what is it? Yahoo! Answers has this:

Entitlements are like government handouts..Welfare, Medicare, and social security are all considered entitlements. The entitlements make up about 56% of the federal budget, so most conservatives believe that they should be reformed.. like raising the age to claim Social security.

So as one would suspect, they have to do with spending initiatives.

With the deficit crisis, entitlement reform has been in the news a lot lately. The cost of a lot of these programs are spiraling out of control and making it hard to control the deficit. Some legislators believe that these costs must be controlled in order to give our country a chance at financial survival.

Let's start at the top with Obama:

"There have been times when our side, when Democrats aren’t always as flexible as we need to be," Obama said. "Sometimes I do get frustrated when I hear folks say, 'You can't make any changes to any government programs.' Well, that can't be right."

This isn't a soft issue. This is something that is going to challenge many people's political ideologies and go against what they stand for. Obama has been a champion of liberal doctrine, but he understands that this is a growing issue:

"We will not be able to sustain that program no matter how much taxes go up," he said in late July. "I mean, it's not an option for us to just sit by and do nothing."

You cannot keep raising taxes to make these things happen. You're taking away the competitiveness of the country if you're taking everything from people and giving it back in the form of entitlements.

These entitlements are a cost driver and are one of the main reasons that the US recently had it's credit downgraded:

"The key thing is, yes, entitlement reform is important because entitlements are the biggest component of spending, and the part of spending where the cost pressures are greatest," Beers said.

So the people responsible for downgrading our debt are cognizant of the fact that entitlements are going to continue to be an issue going forward.

So what's the significance of this?

Well, the debt crisis has created uncertainty and volatility in the markets. There are worries about a potential default in the future. Companies aren't hiring. Much of the problems associated with economic worry are tied to growing debt problems, so tackling and controlling entitlements are going to be one of the top issues of the next election. While the economy will most likely be the top issue, one of the paths to bettering the economy should come through reducing the deficit and reducing uncertainty.

Paul Ryan has been one of the most outspoken politicians on entitlement reform:

Ryan added that he's willing to discuss tax reforms in a way that would promote economic growth and job creation, including addressing "special interest-driven loopholes," but qualified any reforms by adding, "if you're just raising revenues to chase ever high spending, that's not good policy."

Ryan said ultimately the U.S. has to fix its entitlement system.

"The president just created two brand new health care entitlements, expanded Medicaid, a third, and then put this new rationing board in charge of Medicare," Ryan told "Fox News Sunday." "So they're unwilling to open up and restructure these entitlements, which according to S&P are the primary drivers of this debt."

Wall Street agrees:

Bill Miller of Legg Mason Capital Management, who appeared with Ryan, said the markets are looking to see a "reduction in uncertainty," which means both fundamental tax reform and changes to the entitlement structure.

"Discretionary spending doesn't matter at all in this thing except that it'll be a little bit of a drag on the economy. It's pro-growth policies and fundamental entitlement reform, especially on health care, that are the key things for to our long-term fiscal health and therefore the long-term confidence in the markets toward our country," Miller said.

The debt crisis is a top down concern for the markets and for the economy. If we address this debt crisis through entitlement reform, we can help ensure the fiscal safety of our country and work towards suring up our markets' confidence.

So while the election will focus on the economy, entitlement reform should come up. Ryan is one of the most outspoken politicians on entitlement reform and if he decides to run, I will surely profile him. Regardless, his Path to Prosperity will be a topic of discussion.

The question is whether the rest of the candidates take his cue and make it a primary talking point or they try to focus solely on the economy without tackling the debt issue, attacking each others' records and Obama's record. In the meantime, it will be interesting to see if Obama follows through on what he has already said. If he does make the move and extend his hand to implement entitlement reform, will that give him a leg up in the race? These questions will be answered in the weeks or months to come.

The Other Side

Quite recently, in the eye of this debt deal, President Obama has been lambasting oil companies and other corporations for avoiding taxes through loop holes:

He also goes after corporate jet owners. It's been going on like a broken record. I get why he wants them to be burdened with more taxes, considering they can probably afford it, but I don't know if it's "fair" or "equitable."

Nobody wants to pay taxes because they have no say into what the way that government is going to spend it. Government is inefficient both with layers of bureaucracy and wasteful programs such as Medicare, Welfare, and now ObamaCare. I'm not saying these programs aren't necessary, but rather that these programs aren't efficient.

On the other end of the spectrum, you have Republicans like Paul Ryan, who have consistently criticized the Democrats' irresponsible spending habits. Ryan was extremely pleased with the spending caps put on by the new debt deal:

But that did not stop him from writing a scathing op-ed in the WSJ regarding Obama's budget inadequacies:

Since then he has offered a lot of rhetoric but no real plan to avoid a spending-driven debt crisis. His speeches and press conferences are no substitutes for actual budgets with specific numbers and independently verified projections of future deficits and debt. Meanwhile, it has been over two years since the Democrat-controlled Senate passed any budget at all. This is a historic failure to fulfill one of the most basic responsibilities of governing.

The necessity of controlling federal spending is better illustrated by these graphs:

Needless to say, this problem isn't going to go away. In fact, it's only going to get worse unless we find a solution to this problem. ObamaCare was unnecessary bloated program that compounds the already horrible spending practices of our government.

When you have government handouts with lax rules, people are going to take them. Why wouldn't you want free money? If you can get it, why not? It's costing governments millions of dollars as a result.

To illustrate this problem, I'll use the Michigan Bridge Card program as an example. This program had very lax rules, so many people, in particular, students took advantage of this program. Although their parents were paying for their school and housing, they used the fact that they had zero income to get these cards and to get free groceries. As a result, the state had to make tighter regulations (From MLive):

"We're ready to extend a helping hand to any citizen who is truly in need — including college students who care for young children and are taking the right steps toward becoming self-sufficient," said Maura D. Corrigan, Michigan Department of Human Services director. "Those who don't meet federal guidelines won't be able to take advantage of what is meant to be a temporary safety net program."

It turns out that certain government programs have the same type of loopholes as the corporate tax loopholes that Obama has so vehemently argued to close. The whole system is creating a sort of reverse incentivization to work less and get more for the government. That's not a driver for growth, that's not a driver for productivity, that's not a driver for innovation. You have to wonder whether part of the reason the unemployment rate is so high is because the benefits of being on unemployment is so good. Now Obama wants to lengthen unemployment benefits again:

A top goal for Obama and congressional Democrats is to extend both unemployment insurance and a payroll tax break. These measures were enacted at the beginning of the year. Obama could not achieve those extensions in the budget deal with Congress.

I understand why we have unemployment insurance, but at what point are we going to cut this off? If we keep extending these benefits, why should anyone try to get employment? Where is the incentive to work?

Right now, we have more benefits offered to people than ever before, yet we sit at 9.2% unemployment. It's hard to say the economy is struggling when companies' earnings are generally beating estimates. Part of this might be from job cuts, but even with these stronger earnings, companies like Cisco and Merck are still cutting jobs.

Closing corporate loopholes are just going to cut into these companies' profits. The time honored solution to increasing costs is job cuts. This will only serve to exacerbate the problem. I'm not saying that these loop holes should not be closed, but closing them now might not be the best solution.

The first response for these companies will be to protect their profits and margins in their shareholders' best interests. You have a difference between what Obama thinks sounds reasonable and what will actually happen. We are already in risk of another economic recession. It is important to wait until the economy shows real signs of health before taking constrictive measures like increased taxes.

In the meantime, you should incentivize people to get back in the work force. The extension of unemployment allows people to take their time getting back into the field and pick and choose jobs. Jobs should not be something that people should be picky about right now. The government is shouldering a burden of costs that it needs to pass on to the private sector. As a result, they need to push people to get jobs and remove the uncertainty of future taxes.

In doing so, the government will alleviate the pressure of future costs on companies, while providing a sense of urgency at the bottom of the work force to be more aggressive in the labor markets.

Whereas the threat of taxes casts uncertainties over the overall economy, incentivizing the job market has the opposite effect. With more people employed and less people claiming benefits, you're automatically going to see a shift in revenues and costs. If you tighten up the loopholes or the ease with which people can get other government benefits in order to reduce unnecessary government handouts, you will see savings there too.

The best way to economic recovery and solving this debt crisis is not through taxes, but the other side. We are spending way too much on all of these programs. We need tighten up the restrictions of these programs and provide incentives for growth. The government isn't going to spend its way out of this recession, but rather, they are going to stunt a potential recovery with these backwards measures.

I would urge President Obama to take measures that actually work rather than to get into the weary debate on revenues versus spending cuts. His best path to reelection in 2012 is not by playing party lines, but rather by making a strong effort to right this country's economy and to make positive strides on the issue of debt.