Obama’s big win of 2010:extending Bush’s biggest win of 2001

Victory, Immortal Fame!  So cries the last warrior standing, ironically right before he himself dies, after defeating his surrounding army.  The warriors of the mythical army, raised from serpent’s teeth planted in the ground, are tricked by Jason into battling each other.  So ends this humorous battle in Argonautica.

Not so different was the media coverage of the passing of the Bush tax cut extension.  After Obama defeated his fellow Democrats in passing this extension, the media hailed it as a much needed victory for the White House.

Wait.  What?

If you read Obama’s Tax Cuts of 2010, you shouldn’t be too  surprised.  In fact, the only thing that should surprise you is exactly how much of the Republican agenda Obama acquiesced to in this tax rate extension.  I predicted back in October, 2009 that Obama would extend the Bush tax cuts for at least the middle class, and that he would herald them as tax cuts instead of merely extensions of the Bush tax rates.  But at the time I figured it would come at the cost of no estate tax fix, higher rates for upper income earners, and other built in tax hikes.  Instead, this “White House victory” looks more like something from the last 8 years that supposedly “got us into this mess in the first place”.

The question then, if this is truly a White House victory, is if Obama has become a born again Capitalist.  The tax extension doesn’t just extend Bush tax rates for two years, it also gives a generous estate tax system that increases the exemption from $1 million to $5 million and lowers rates to 35%.  It also gives businesses of any size 100% bonus depreciation on new asset purchases in a tax gift to huge corporations.  And lastly, it replaces the Making Work Pay Credit with a 2% across the board cut in Social Security taxes.

The 2% Social Security cut was Obama’s answer to the expiring Making Work Pay Credit and is perhaps the greatest evidence of either a change of heart on Obama’s part, or a total victory on the Republican’s part.  In 2010, the Making Work Pay Credit will give families making less than $40,000 a credit of $800, while denying families making more than $175,000 any credit.  It was a perfect Liberal tax cut.  It was even poorly administrated.

On the other hand, the 2% Social Security cut is an across the board flat cut that is easy to administer and has no AGI cap.  So in 2011 a family that makes less than $40,000 will actually be paying more taxes, while a family with  a working husband and wife who make $200,000 combined will get a tax cut of $4,000.  This year they would have no tax break.  This non-progressive change is a White House victory?

The 2010 tax rate extension was an acknowledgment by the left that the policies of the last 8 years did not get us into this mess.  The Bush tax cuts got us out of the last mess and just might work this time too.  How they can claim that this Republican victory was anything else is beyond me.

The only thing the Democrats got out of this deal was not having to pay for the next unemployment benefits extension.  But in the end, Obama found it easier to defeat his own majority party than to take out the minority Republicans.  The result?  Your taxes aren’t going up next year no matter who you are.  And just as expected, Obama is saying it is because of him.

A Loser for Doctors

There’s something Humana wants you to know about the Baucus Healthcare plan.  The administration is making sure they can’t tell you.

The Baucus plan is a loser for doctors, clinics, medical suppliers and patients.  The problem with the Baucus plan is that it does not deal in reality.  In the minds of the crafters of our new health scheme, if you raise taxes on healthcare providers that is not a tax increase on healthcare consumers.  For Democrats, if you cut payments to doctors and healthcare providers that does not result in a cut in service.

This is exactly what the Baucus plan does.  You may have been asking yourself how Obama plans to cut hundreds of billions of dollars out of the Medicare system without cutting benefits.   If you are like me, you were probably thinking that if it’s so easy to cut waste out of the Medicare system we should have done it already.  Here is the magical plan to cut Medicare waste, ready?

Cut Medicare payments to doctors and healthcare providers.  Obama’s reasoning is that if you cut the amount the government pays to doctors and healthcare providers, they will put in the work to cut waste.  After all, would you treat someone who didn’t deserve it if you weren’t getting paid as much to?  Would you treat someone who did?  The Congressional Budget Office says probably not.  In fact, the Finance Committee is projecting $500 billion in cuts to Medicare providers over the next 10 years.  Humana believes this will result in service cuts and tried to tell their clients so, but the White House has shut them down and has ordered investigations into their claims.

The Baucus plan raises taxes on doctors and clinics, cuts Medicare payments to doctors and clinics, and forces more people on to government approved insurance plans. The insurance companies will be negotiating for the lowest prices possible to pay for their own tax increases from the Baucus bill.  But while insurance companies get 40 million new clients who will be forced under penalty of the law to buy health insurance and given the money to buy it, doctors will see little benefits from the market interference.  Emergency Rooms will be happy to see more patients carrying insurance, but they will still be required to treat illegal aliens.  Also, ERs will still have to treat those who are too poor to get insurance.  Many of these people have not taken advantage of plans that their states offer for the poor so they are not likely to seek Federal help either.  In addition, they do not file taxes, so they won’t have to worry about the Baucus penalty tax for not buying insurance.

In the end, the money makers in the Baucus plan are the insurance companies and the government. The next step in the process is seeing how much it takes in pork barrel bribes to get 60 votes.

Obama’s Tax Problem

During the campaign, Obama sought to defeat the old Liberal label of “tax and spend”.  He swore fiscal responsibility and pay-go.  $1.58 trillion in red ink later and here we are.

He promised something else.  Obama promised no tax increases on people who make less than $250,000 a year.  That number fluctuated, but in the end it was between $150,000 and $250,000.  Now Obama is in trouble.

It shouldn’t come as a surprise.  All throughout the campaign, Conservatives kept saying you can’t have fiscal responsibility, buy whatever you want, and give 95% of Americans a tax cut.  We said even if you don’t balance the budget, if you spend as much as Obama was promising, you will have to raise taxes.  Some of us even predicted that Obama would seek to redefine the word tax in order to get around it (e.g. raising government fees, licensing costs, and other such things).

On Sunday with George Stephanopoulos, that is exactly what Obama did.  First he argues that private insurance companies raising rates because people use the ER for free is a tax increase.  Then he argues that adding up to $3,800 to a family’s tax bill for not buying government approved insurance is not a tax increase.

This issue is about to get even worse for Obama.  The White House has recently admitted that Conservatives were correct in their estimates of what Cap and Trade taxes would cost the average family in the US.  When the administration said it would cost families the equivalent of a postage stamp a day, they meant if you were mailing bricks.  The final White House number comes to $1,761 per family in new Cap and Trade taxes.  Considering how well they’ve done with their other estimates lately, like how high unemployment would get, I am not too optimistic that the number will be so low.

If Democrats stick with the Baucus plan, they will have a new tax issue to answer for.  The Baucus plan pays for itself through taxes on medical equipment, clinics, insurance companies, and medical savings accounts.  A rational person might think that if you wanted to cut medical costs, you would actually cut taxes on all these things.  After taxing these things and making them more expensive, the Baucus plan gives you tax credits so that you can afford to buy insurance at the pretax rates.  It generously gives you up to 13% of your income back to buy health insurance, if you don’t make too much.  Will that be enough to pay for health insurance when the Baucus plan increases healthcare costs by 30% with his new embedded taxes?  By the way, in case you were wondering, I am assuming that some of the cost of the Baucus plan actually will be paid for by Medicare cuts like they promise.  But seriously now, what are the odds of that happening?

Consider this, to pay for his trillion dollar deficits, Obama is considering raising the top tax bracket to 39% (a 4% increase) and tacking on a 5% “surcharge” for a total tax increase on the richest Americans of 9%.  At the same time, he is going to increase your family’s utility bill through Cap and Trade taxes by $1761 and fine you $3,800 if you don’t buy government approved insurance.  By my calculations, if you have a family of four making 300 times the poverty level, that’s a tax increase of 9%.  Now don’t get too upset, the rich will be paying embedded Cap and Trade taxes too.  Their taxes will still go up more than yours.  Feel better now?

The Baucus bill is a gift to the insurance lobby.    Think about it from the insurance company’s perspective.  Yes, you pay higher taxes as an insurance company, but then that money is given to your potential clients and they are told they must buy your product or they will pay government penalty taxes.  30 million new customers, whether they need insurance or not.  In addition, the government takes everyone who can’t afford you or is high risk and puts them in a government co-op (totally different than a government option).

Count on Obama to claim credit for giving 95% of Americans a tax cut when you get your health insurance credits.  Don’t count on him admitting that Cap and Trade, embedded healthcare taxes, tax penalties for not buying government approved insurance, taxes on your employers and taxes on your employee and health savings accounts are actually tax increases on those of us who make less than $250,000.

The Glass Isn’t As Empty As It Could Be

AP source: White House projects lower deficit

This is one of the headlines on Yahoo.finance.com this morning.  And it’s true, by canceling $262 billion in additional bailout aid that was originally in the budget as a “place marker”, Obama has lowered the deficit to only $1.58 trillion for 2009.  So already he is cutting the deficit and being fiscally responsible.  Nevermind that Bush’s cumulative budget deficit for 8 years was only $2 trillion.  So congratulations to Obama.

If you want the real truth about debts and deficits, beyond the misleading headlines, read my post: Debts, Deficits, and the Myth of the Clinton Surplus.  By the time you’ve read this much of this blog, our national debt has increased another $1,000,000.

Of course, this is no different than when we learn that 350,000 jobs were lost and Obama came on tv and said he saved or created 150,000 jobs because otherwise the total loss would have been 500,000.  The next month when job losses were 554,000, he had no comment.

After today’s election in Afghanistan, it will be interesting to see if our President takes credit for those who did show up, or blames the low turnout on the last 8 years.

Barack and a Hard Place

We learned early on in the healthcare debate that if Obama did not need the Right to pass his reform, that was ok with him.  Unforatunately, Obama does need the Right.  With HR 3200 promised to be dead on arrival in the Senate, the House couldn’t even pass their version before the August recess.  Now, many House members are refusing to hold Town Hall meetings since their constituents have already made it clear they are opposed to Obama’s universal healthcare plan and team Pelosi and Reid have alienated the average American by calling them un-American and accusing them of carrying around swastikas.  The main stream media has gone as far as to say that anti-Obamacare reform people are “white supremacists” and are “building up militias” apparently because they don’t want healthcare reform.

After Pelosi’s House voted down 500 Republican amendments to HR 3200, including amendments that make it so that pro-life taxpayers won’t be forced to pay for abortion, Obama is beginning to offer more of a conciliatory tone.  At least he was over the weekend.  In Colorado he made it sound like they might be on the verge of dropping the ‘public option’.

Sibelius stated over the weekend that the ‘public option’ was not essential.  Other White House spokes people have suggested a government initiated private co-op.  It appears that Obama knows that he needs the Right.  But we are not impressed.  The idea of a government initiated private co-op begs the question: why don’t private American citizens just start their own co-ops?  In fact, many already have.  Religious co-ops boast of $100 a month premiums while still covering everything.  The problem is that HR 3200 makes private co-ops illegal.  A government initiated co-op, especially one that provides free care to the poor, must also be a government sustained co-op.  We know this, and we suspect that Obama does too.

Liberals are not any more  satisfied with compromise than Republicans are.  As much as Obama needs the Right in order to pass healthcare reform, he needs the Left even more, and they are not biting.  Even though a government sponsored private co-op and the intense regulatory restrictions put in place by HR 3200 would eventually necessitate a single payer system, the far Left either doesn’t trust Obama or isn’t willing to take the symbolic loss of dropping the ‘public option’.

Liberal activists, reports AP, are fed up with Obama.  And they have a good point.  Democrats won the House, Senate and White House.  But the majority of Americans are still conservative.  Democrats had to run Blue Dogs in order to win conservative areas and gain their majority, and now those Blue Dogs are hanging by a thread and they know it.

Obama is stuck between his party and his country.  Either one can ruin him.  The Blue Dogs are in the same boat, but are rowing in the opposite direction.  2010 should be interesting.