tag:blogger.com,1999:blog-42041245192358369432024-03-13T09:03:52.738-05:00Regulatory FolliesRegulatory attorney analyzes government regulation, points out follies and fallacies, and sometimes comments on general government policy.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.comBlogger69125tag:blogger.com,1999:blog-4204124519235836943.post-22563620435041757322017-08-06T18:39:00.000-05:002017-08-06T18:39:05.311-05:00Walls Street Journal Agrees with Me on Problems of Charging Electric CarsOn July 15, I published a post on the weaknesses of al the forecasts about electric car growth -- the inability of many to but cars because of lack of access to chargers. Today, the Wall Street Journal had an interesting <a href="https://www.wsj.com/articles/the-problem-with-electric-cars-not-enough-chargers-1502017202" target="_blank">article</a> on another aspect of the problem -- the lack of public charging locations and the immense strain that might be placed on the electricity network if electric car users try to charge at the wrong time. It also refers to an article in the <a href="https://www.technologyreview.com/s/518066/could-electric-cars-threaten-the-grid/" target="_blank">MIT Technology Review</a> about the problems that electricity utilities will have with high speed chargers that may overwhelm neighborhood grids. I am glad to see that some of the practical problems with electric cars are being aired.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-69327418380093339172017-08-03T19:28:00.000-05:002017-08-05T12:27:36.455-05:00DC Circuit Ignores Economics in Ordering FAA to Reconsider Denial of Rulemaking on Seat Pitch. On July 28, the <a href="http://www.reuters.com/article/us-usa-planes-idUSKBN1AD28Y" target="_blank">DC Circuit ruled </a>on the denial by the FAA of a request by a non-profit to promulgate rules governing the minimum requirements for seat sizes and spacing (seat pitch) <a href="http://caselaw.findlaw.com/us-dc-circuit/1869197.html" target="_blank">on passenger aircraft.</a> It used colorful language that implied some sympathy with the petitioner's arguments, and rejected the FAA's argument that the case should be dismissed. However, it also rejected the petitioners' request that FAA be required to institute a rulemaking proceeding. It is unlikely that, in the end, the court will require the FAA to regulate seat size and spacing. The Court did not, as some alarmist headlines proclaimed, order the FAA "to solve the case of the incredible shrinking airline seat."<br />
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The petition argued that over 20 years, seat pitch had decline from 35 inches to 31, or even, in some cases, 28 inches, that seats had narrowed from 18 1/2 to 17 inches, and that passengers had grown heavier. The FAA did not argue about passenger weight -- in fact, over 20 years, average weights had increased <a href="http://www.cbsnews.com/news/americans-weight-gain-since-1980s-startling/,%20August%203,%202016" target="_blank">by 15-17 lbs.</a> However , it did claim that the petitioners' concerns did not warrant action because the issues raised related to passenger health and comfort, and did not raise an immediate safety or security concern. It noted that seat pitch numbers were not directly comparable with earlier data because modern, thinner seats at lower seat pitch provided more space than older seats at higher pitch, and that the emergency evacuation tests it had conducted showed that reduced seat pitch did not affect safety.<br />
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However, the court found that the FAA did not provide acceptable evidence on evacuation tests because it had relied on confidential, non-public information. The Agency had, therefore, relied materially on information it had not disclosed and had pointed to that information as the basis for affirmance. It remanded the case to the FAA "for a properly reasoned disposition of the petition's safety concerns". However, it did not require the Agency to undertake a rulemaking proceeding.<br />
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Thus, the remaining work on this case is basically a lawyer's job -- write a better opinion. Put some emergency evacuation evidence into the public record. Emphasize that narrower seats invalidate comparison of historic seat pitch changes. And make the economic argument that the petitioner's proposed rule would reduce seats on the aircraft, requiring higher prices for the remaining seats. This would, in turn, divert some passengers to lower cost forms of transportation which have poorer safety records than airlines.<br />
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An aside -- in researching I found a very useful aviation website. <a href="https://www.seatguru.com/" target="_blank">Seat Guru</a> has seat maps, seat pitch and width,by aircraft type for almost all the major airlines in the world.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com1tag:blogger.com,1999:blog-4204124519235836943.post-74985184690187312672017-07-15T15:59:00.000-05:002017-07-15T15:59:14.429-05:00The Push for Electric Cars -- the biggest folly of allThe Wall Street Journal had an excellent <a href="https://www.wsj.com/articles/electric-cars-are-the-future-not-so-fast-1499873064" target="_blank">article</a> this week on the future of electric cars without massive subsidies . Basically it noted that, without subsidies, such cars are simply not competitive with gas-powered vehicles. It also noted the results when subsidies are eliminated, Thus:<br />
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1. When Hong Kong eliminated subsidies, Tesla sales in the following quarter fell to Zero.<br />
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2. <span style="color: #333333; font-family: "chronicle ssm" , serif; font-size: 16px;">In Georgia, e</span>lectric vehicle sales <span style="color: #333333; font-family: "chronicle ssm" , serif; font-size: 16px;">plummeted 80% the month after a $5,000 tax credit was repealed.</span><br />
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<span style="color: #333333; font-family: "chronicle ssm" , serif; font-size: 16px;">In order to become competitive with gasoline engines, electric battery costs will have to decline substantially and gasoline prices would have to increase substantially. Battery costs have decreased substantially -- from $1,000 per kilowatt hour in 2010 to $273 per kwh in 2016 -- but they still have a long way to go to match the advantage of gasoline. A typical electric battery adds $20,000 to the cost of a car. One article estimates that. at the current battery cost of $270 per kwh, oil would have to cost more than $300 per barrel to make electric and gasoline equally attractive.</span><br />
<span style="color: #333333; font-family: "chronicle ssm" , serif; font-size: 16px;"><br /></span><span style="color: #333333; font-family: "chronicle ssm" , serif; font-size: 16px;"> I have always thought that one basic problem with the idea of electric cars is that a substantial portion of possible purchasers don't have garages in which to charge them. I must admit that I haven't seen any literature on this, but it seems logical that electric cars will not be able to compete for a significant portion of the market. I live in a 85 year old house with a garage that was built for Model -Ts. Modern cars do not fit in it. Many other people may use garages primarily for storage, and park cars in their driveways. Many other American live in apartments -- 17% of the <a href="http://www.builderonline.com/money/economics/80-percent-of-americans-prefer-single-family-homeownership_o" target="_blank">population.</a> Most of these are served by parking lots, and those in multi-story garages are unlikely to have access to electric plugs. And many apartment dwellers in cities simply park on the street.</span> None of these people are candidates for electric car ownership.<span style="color: #333333; font-family: "chronicle ssm" , serif; font-size: 16px;"><br /></span><br />
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An interesting <a href="https://www.masterresource.org/electric-vehicles/ev-batteries/" target="_blank">blogpost</a> this week discussed real world issues in electric vehicle driving -- for example that the range of electric cars is substantially reduced in cold weather. Also, to maximize range, drivers really can't go over 60 mph. Try doing this in Texas.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-41618068870883128912017-06-30T17:04:00.000-05:002020-07-25T15:43:09.164-05:00Resuming publicationIt has been three years since I last posted in this blog. Much has happened since, In particular, President Trump has been making major changes in the structure of regulation. I find that I now have the time and the interest to start publishing this blog again. I have started to accumulate material and hope to post my first article of substance within the next two weeks.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-66258513383624073512014-12-01T15:28:00.001-06:002014-12-01T15:30:57.985-06:00Steven Pearlstein column on Net Neutrality gets close to real issues in debate.Steven Pearlstein, a professor at George Mason University, has published a column in the Washington Post Sunday that penetrates the phoney issues in the current debate. All the noise at present is about neutrality, with claims that Internet Service Providers (ISPs)are discriminating and that they will destroy the Internet as we know it. <a href="http://www.washingtonpost.com/business/shades-of-complexity-dominate-the-debate-over-net-neutrality/2014/11/27/bde4f2de-74ef-11e4-9d9b-86d397daad27_story.html" target="_blank">Pearlstein's column</a>, entitled " Shades of complexity dominate the debate over "net neutrality", turns the debate to economics. which is where it belongs.<br />
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Pearlstein says:<br />
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<span style="color: #333333; font-family: Georgia; line-height: 32.3999977111816px;">"This is a debate that has come to be dominated by hypocrisy, half-truths and impenetrable complexities. </span><span style="color: #333333; font-family: Georgia; line-height: 32.3999977111816px;">At one level, net neutrality is a solution to a problem that, for the moment, doesn’t exist.</span><span style="color: #333333; font-family: Georgia; line-height: 32.3999977111816px;"> ... </span><span style="color: #333333; font-family: Georgia; line-height: 32.3999977111816px;">At another level, what the net neutrality debate is really about is deciding who will pay the considerable costs of building out the infrastructure to handle all those bandwidth-hogging videos and games that we’ll be downloading from the Internet. The content providers and start-up app creators, naturally, think they shouldn’t have to pay because that would discourage their economy-disrupting innovation. The ISPs, naturally, think they will only have the money and incentive to expand their network if they can levy an extra charge on the Netflixes and the Googles who have sucked most of the value out of the Internet."</span><br />
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<span style="color: #333333; font-family: Georgia;"><span style="line-height: 32.3999977111816px;">Pearlstein is correct that the fundamental issue is economic. However, it is not merely related to the cost of building out additional infrastructure. Rather, it relates to the manner in which the cost of the entire Internet will be recovered. Like many other networks, the Internet is a joint product in economic terms – it has substantial fixed costs which must be recovered either from suppliers of information, or from consumers. At present such costs are recovered from consumers. However, there are proposals to recover some of those costs from suppliers in the form of higher charges for greater speeds. These are certainly reasonable proposals, but, obviously, shifting part of the burden to suppliers who had a free ride has generated opposition. To win the argument, suppliers have camouflaged their economic interest with claims about equity, unfairness to small vendors, etc. But remember, underneath all the propaganda is the fundamental economic issue of who should pay for the Internet.</span></span><br />
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<span style="color: #333333; font-family: Georgia;"><span style="line-height: 32.3999977111816px;">25 years ago, I was involved in antitrust litigation with respect to how the cost of airline computerized reservation systems would be recovered. The CRSs were the essential link between travel agents and the airlines upon which they made reservations. The vendors, who were all airlines themselves at that time, initially recovered the costs from travel agents, but competition among the airline vendors reduced charges to them. Therefore, with the help of government regulation requiring nondiscrimination in booking fees, they imposed substantial fees on other airlines. Outraged, other carriers sued for over $4 billion, claiming that each CRS was a monopoly After a three-month trial, a jury rejected this claim.</span></span><br />
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<span style="color: #333333; font-family: Georgia;"><span style="line-height: 32.3999977111816px;">The current debate has many similarities that long-ago controversy. I will write more about net neutrality and joint products in the future. I may also devote another post to Pearlstein's bizarre solution to the problem – he proposes to grant local monopolies to ISPs based upon competitive bidding. The winning ISPs would then be able to charge monopoly prices.</span></span><br />
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<span style="color: #333333; font-family: Georgia;"><span style="line-height: 32.3999977111816px;"><br /></span></span>Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-82233784597758628302014-11-18T15:50:00.000-06:002014-11-18T16:00:30.000-06:00Washington Post Columnists Attack Jonathan GruberI don't know if the Washington Post has taken an official position on the veracity of Jonathan Gruber, but its columnists are having a field day attacking President Obama and the entire Obamacare structure, They rely on Gruber's straightforward, cynical explanations of what the administration was doing to get the bill passed. Yesterday's newspaper (November 17) contain an interesting column by Marc Theissen, entitled "<a href="http://www.washingtonpost.com/opinions/marc-thiessen-thanks-to-jonathan-gruber-for-revealing-obamacare-deception/2014/11/17/356514b2-6e72-11e4-893f-86bd390a3340_story.html?wpisrc=nl_politics&wpmm=1" target="_blank">Thanks to Jonathan Gruber for Revealing Obamacare Deception.</a>" He suggests that "The reason Democrats are running from Gruber is the same reason conservatives should be thanking him: Gruber has exposed what liberals really think of the American people". Last week, Charles Krauthammer wrote on "<a href="http://www.washingtonpost.com/opinions/charles-krauthammer-the-gruber-confession/2014/11/13/474595bc-6b6b-11e4-9fb4-a622dae742a2_story.html" target="_blank">The Gruber Confession</a>." His view was that"Gruber's admission that, in order to get it passed, the bill was made deliberately obscure and deceptive constitutes the ultimate vindication of the charge that Obama care was sold on a pack of lies".<br />
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On the other hand, the New York Times in an editorial yesterday entitled "<a href="http://www.nytimes.com/2014/11/18/opinion/the-impolitic-jonathan-gruber.html?emc=edit_ty_20141118&nl=opinion&nlid=1124270" target="_blank">The Impolitic Jonathan Gruber"</a> laments the ammunition he has provided opponents of Obamacare, and claims that he really wasn't that important, and his frank statements are "largely wrong". Its basic point is don't believe him, even if what he says was correct. However, it is very difficult for it to show that we shouldn't believe our "lying eyes."<br />
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Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-90136913872796823382014-11-17T18:09:00.000-06:002014-11-17T18:09:40.181-06:00The Gift that Keeps on Giving: Gruber tells the truth about the Cadillac Tax<div style="text-align: justify;">
For the last couple of weeks, debate about Obama care has been inflamed by revelations about comments by Professor Jonathan Gruber of MIT, an architect of the Affordable Care Act, who gave several speeches disclosing details about the creation of Obama care. The latest information that has come out involve the "Cadillac" tax that will start in 2017 upon more expensive healthcare plans. This is well covered in an article today on the opinion pages the Wall Street Journal – <a href="http://online.wsj.com/articles/tevi-troy-another-obamacare-deception-1416179540" target="_blank">Another Obamacare Deception</a>, by Tevi Troy, <span style="background: 0px 0px rgb(255, 255, 255); border: 0px; color: #333333; font-family: 'Chronicle SSm', serif; font-size: 16px; line-height: 28px; margin: 0px; outline: 0px; padding: 0px; vertical-align: baseline;">president of the American Health Policy Institute and a former deputy secretary of Health and Human Services. I will let you read it, rather than summarize it myself.</span></div>
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Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-30438841823927765702014-11-11T17:50:00.000-06:002014-11-11T17:52:32.715-06:00Obama Proposes Regulation of the Internet to Achieve Net NeutralityOn November 10, President Obama called on the FCC to adopt regulations that would require net neutrality, or non-discrimination, in the operation of the Internet. The Wall Street Journal today has an<a href="http://online.wsj.com/articles/andy-kessler-the-department-of-the-internet-1415665771" target="_blank"> interesting column</a> by Andy Kessler suggesting that this proposal would result in full-scale traditional utility-style regulation of the entire Internet. According to Kessler, the President's call to regulate under Title II of the Federal Communications Act would give the FCC the power to regulate all aspects of Internet service, including prices.<br />
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My initial reaction was that this was an exaggeration – in order to achieve net neutrality, all that is required are anti-discrimination regulations. For example, when airlines were deregulated in 1978, the statute eliminated pricing regulation for domestic air transportation, but retained the statute permitting discrimination in air transportation. I would suggest that this is probably the goal of the administration – not full-scale regulation of the Internet. <br />
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However, it seems clear that regulation under Title II would encompass much broader forms of regulation than those required to achieve net neutrality. This was explained in an <a href="http://time.com/3575950/obama-internet-net-neutrality/" target="_blank">excellent brief summary </a>of the issue in Time Magazine. Mr. Kessler may have a point.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-28102770421471640962014-11-11T17:14:00.001-06:002014-11-11T17:14:37.869-06:00The Blog ResumesFor several reasons, I have done nothing with this blog for almost two years. I have no great excuses – I just was busy on a lot of other things and it not see much benefit from publishing a blog that had few readers. However, things have slowed down a bit, which is to be expected at my age, and I have decided to resume publishing.<br />
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This time around, I will limit the areas I cover, both to give me a focus, and to perhaps attract readers who are particularly interested in those areas. For now, those areas will be regulation of the Internet, and the medical regulatory issues enveloped in Obamacare. President Obama announced yesterday that he fully supports "net neutrality", and this week's news reports that the actual sign-ups for Obamacare are far less than reported. I am certain there will always be something of interest to post, and I hope readers will find Regulatory Follies a useful resource.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-45333738634080692342013-07-24T11:03:00.000-05:002013-07-24T11:06:46.938-05:00Obama's false claims on savings in New YorkIt's time to start on this blog again. I've just been too busy most of the last year on other projects, including serving as President of a service club, to devote any time to the blog. However, that project is winding down, and the Obama administration provides more and more examples of disastrous regulatory policies.<br />
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I will ease into this by simply bringing attention to an<a href="http://online.wsj.com/article/SB10001424127887323993804578615760275211052.html?mod=WSJ_hps_sections_opinion" target="_blank"> excellent Wall Street Journal editorial today</a> about the Obama administration's misleading claim that insurance premiums for New Yorkers will actually be reduced by 50%, compared to last year. This may be correct, but the reason is that New York insurance rates are so heavily regulated that Obama care will actually deregulate some of the rates. 20 years ago, New York adopted regulations for "community rating" which eliminated the ability of insurance companies to adjust rates on basis of the risk presented by individual insurance candidates. As a result, New York rates are so absurdly high that there is almost no personal insurance market. Under Obamacare, the administration is proposing to transfer much of the New York system to the other 49 states, resulting in increased premiums for individual medical insurance all over the country.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-2210699401283484162012-10-06T15:07:00.000-05:002012-10-06T15:08:10.617-05:00Medicare Is Too Good a Deal<br />
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I have had two
experiences this week that suggest that the government is providing too much
subsidy for Medicare. In one case, I received my 2013 plan materials from my
Medicare Advantage plan. In the other, I had a medical episode that required
extensive testing with high-technology equipment, and consultation with
professional medical staff, for which I paid $20.<o:p></o:p></div>
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Under my Medicare
Advantage plan, the amounts I pay for various services will actually be
reduced. The maximum “out-of-pocket” amount that I will pay for all hospital
and doctor services during the year is $3900 – a reduction of $1000 from this
year’s $4900. For visits to my primary care physician, I now have a copayment
of $5.00. Next year they will be free – no copayment. The cost of visits to
specialists will be reduced from $35 to $20, and numerous other medical
services will have a similar reduction.<o:p></o:p></div>
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In the other
episode, I had to visit a hospital for a barium swallow test after a pill I
swallowed went into my lungs rather than my esophagus. The test required a
speech therapist to feed me various foods and watch the course of the foods
through my throat on a very expensive looking x-ray machine. She will later
write a report that will be sent to my specialist doctor. The process took 40
minutes, used expensive equipment, and included a detailed conversation with the
speech therapist about what I could do to avoid further episodes. The hospital
charge for the test was $180, there was an insurance discount (required by
Medicare) of $80, the hospital billed Medicare for $80, and I paid $20.<o:p></o:p></div>
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These prices are
ridiculous because I can easily afford to pay more. It may be reasonable to provide highly
discounted prices to low-income persons who really don’t have money to pay for
medical care (many of whom would be on Medicaid), but any reasonably affluent
person could afford to pay more than I paid above for important medical
services. The problem is not just that I am getting away with a cheap price; it
is that other people are subsidizing that price through their taxes. With a one
trillion dollar annual deficit, in order to save me $1000 in my annual medical
costs, the government will be forced to borrow money from China.<o:p></o:p></div>
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Subsidization by
the government of such routine medical expenditures as doctor visits or lab
tests subverts the purpose of insurance, which should be to protect against the
costs of major medical events. Earlier in the year, I had a knee replacement
operation, in which I spent three nights in the hospital. The hospital billed
the government $108,000; Medicare disallowed $96,000, but paid $12,000 for the
services provided to me. The initial bill obviously overstates the hospital’s
costs, but the net amount seemed reasonable, if not a little bit less than what
I had expected. The savings to me were substantial and an appropriate subject
for insurance.<o:p></o:p></div>
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The price
reductions imposed by Medicare also have unfortunate economic consequences. The
marginal cost of a visit to my primary care physician is now zero. Now, anyone
with a sniffle can go to the doctor for free, while previously, the minimal
expenditure of five dollars would have dissuaded many people from bothering to
go. I suspect there will be a substantial increase of patients in doctors’ waiting
rooms. This, of course, imposes a noneconomic cost in terms of waiting time
that is probably the equivalent of the five dollar fee. But the fee is much
more efficient as a market clearing mechanism.<o:p></o:p></div>
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There has been
political discussion about means testing Medicare, with even<a href="http://www.huffingtonpost.com/2011/07/15/obama-medicare-means-testing_n_899839.html" target="_blank"> President Obama</a>
supporting the concept. However, these discussions seem to have focused on
increasing premiums for wealthier Americans. I suspect there would be more
impact on Medicare expenditures if we means tested payments by the individual
for medical services. A more affluent person might not be dissuaded from a
doctor visit by a $20 co-pay, but might decide that $100 co-pay makes the visit not
worth the expense. Whichever way it goes, there ultimately should be some form
of means-testing.<o:p></o:p></div>
Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-31193665145439230662012-10-03T14:56:00.003-05:002012-10-03T14:58:16.835-05:00A Clear Explanation of the Budget Deficit Problem<br />
I received from a friend in California a link to a <a href="http://www.youtube-nocookie.com/embed/EW5IdwltaAc?rel=0" target="_blank">YouTube video </a>posted by a retired IBM accountant. Since he actually focuses on the columns in the federal budget, it is very simple, but clear, with the conclusion that Congress can never close the budget deficit. It is worth watching.<br />
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Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-7992920905384110732012-07-24T16:57:00.000-05:002012-07-25T10:17:18.834-05:00Obama's Logical Fallacy on Entrepreneurship<br />
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<span style="background-color: white;"> <span style="font-family: Times, 'Times New Roman', serif;"> </span></span><span style="background-color: white;"><span style="font-family: Times, 'Times New Roman', serif;">President
Obama's statement last week attacking entrepreneurship has received more
notoriety than anything else by any candidate so far in the selection. In case
you have been on vacation in Antarctica, he made two ridiculous statements that
he has been trying to explain away ever since. These were "look, if you've
been successful, you didn't get there on your own" and "if you got a
business – you didn't build that. Somebody else made that happen."
Numerous commenters have noted that these demonstrate President Obama's lack of
understanding of American business and his disdain for people who work hard to
create their own enterprises.</span></span></div>
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<span style="font-family: Times, 'Times New Roman', serif;"><o:p> </o:p><span style="background-color: white;"> </span><span style="background-color: white;">Obama and
the Democrats have been trying to walk these words back ever since, complaining
that they have been taken out of context, and that he was really talking about
the investments made by the government that benefit everybody. So you can
decide on your own, I quote the</span><a href="http://www.whitehouse.gov/the-press-office/2012/07/13/remarks-president-campaign-event-roanoke-virginia" style="background-color: white;" target="_blank"> whole two paragraphs</a><span style="background-color: white;">:</span></span></div>
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<span style="font-family: Times, 'Times New Roman', serif;">“There are a lot of wealthy, successful Americans who agree with me --
because they want to give something back. They know they didn’t -- look,
if you’ve been successful, you didn’t get there on your own. You didn’t
get there on your own. I’m always struck by people who think, well, it
must be because I was just so smart. There are a lot of smart people out
there. It must be because I worked harder than everybody else. Let
me tell you something -- there are a whole bunch of hardworking people out
there.” <o:p></o:p></span></div>
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<span style="border-spacing: 0px;"><span style="font-family: Times, 'Times New Roman', serif;"> “ If you were successful, somebody along the line
gave you some help. There was a great teacher somewhere in your
life. Somebody helped to create this unbelievable American system that we
have that allowed you to thrive. Somebody invested in roads and
bridges. If you’ve got a business -- you didn’t build that.
Somebody else made that happen. The Internet didn’t get invented on its
own. Government research created the
Internet so that all the companies could make money off the Internet.”<o:p></o:p></span></span></div>
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<span style="font-family: Times, 'Times New Roman', serif;">But Obama's explanations
fail to explain why some people become entrepreneurs and others are not
successful. Rather, he has engaged in the "Post Hoc, Ergo Propter Hoc” fallacy.
Because someone becomes a successful entrepreneur after the government has
built the roads or the Internet, it does not follow he became successful
because of those roads. The roads or the Internet did not make entrepreneurs successful
– they succeeded because their own individual initiative.<o:p></o:p></span></div>
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<span style="font-family: Times, 'Times New Roman', serif;"> <span style="background-color: white;">The roads or the
Internet are a common good, available to everybody. If they are what is
necessary for someone to become an entrepreneur, then anybody could become
successful. </span><span style="background-color: white;"> </span><span style="background-color: white;">Obviously, it is some other
reason than the availability of government resources, or even the benefit of a
great teacher, that enabled individuals to create success. Most Americans
recognize that their success depends on their own individual ability and
initiative; President Obama's language establishes that he does not believe this.</span></span></div>
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<span style="font-family: Times, 'Times New Roman', serif;">Charles
Krauthammer, in <a href="http://www.reflector.com/opinion/krauthammer/krauthammer-obamas-fallacy-refuted-1147791" target="_blank">his column this week</a>, also recognizes that Obama's argument is
fallacious, although he points to a different fallacy. He states "to say
all individuals are embedded in and the product of society is banal. Obama
rises above banality by means of fallacy: equating society with government, the
collectivity with the state. Of course we are shaped by our milieu. But the
most formative, most important influence on the individual is not government. It
is civil society, those elements of the collectivity that lie outside
government:… The voluntary associations that Tocqueville understood to be
genius of America have the source of its energy and freedom."<o:p></o:p></span></div>
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<span style="font-family: Times, 'Times New Roman', serif;"> <span style="background-color: white;">By the way,
Obama's claim that government research created the Internet generated rebuttal
in an interesting Wall Street Journal <a href="http://online.wsj.com/article/SB10000872396390444464304577539063008406518.html?mod=WSJ_Opinion_LEADTop" target="_blank">column</a>.</span></span></div>
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<br /></div>Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-38641539031068904282012-05-29T13:19:00.000-05:002012-05-29T13:20:16.284-05:00Republicans Start to Attack Obama Public Equity RecordI am glad to see that the Republicans have started to attack Pres. Obama's record on public equity investments – tit-for-tat for Democratic attacks on private equity. Karl Rove's American Crossroads group has published an excellent commercial, to which I was going to link. However, the Powerline Blog beat me to it, and also included an advertisement from the Romney campaign on the same subject. Therefore I will<a href="http://www.powerlineblog.com/archives/2012/05/its-not-just-solyndra.php" target="_blank"> link to Powerline</a>.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-85221301565759353062012-05-25T18:13:00.001-05:002012-05-26T10:23:25.433-05:00How Does Obama's Public Equity Record Compare to Romney's Venture Capital Record?<span style="font-family: inherit;">Yesterday, two major newspapers published columns looking at President Obama's public equity record in li<span style="font-family: inherit;">ght of his attacks on Gov. Romney's record at Bain Capital. In the Wall Street Journal, Kimberly Strassel published "<a href="http://online.wsj.com/article/SB10001424052702304840904577424583779000656.html" target="_blank">Vulture capitalism? Try Obama's Version"</a>. In the Washington Post, a column by Marc A. Theissen was entitled <a href="http://www.washingtonpost.com/opinions/forget-bain-obamas-public-equity-record-is-the-real-scandal/2012/05/24/gJQAXnXCnU_story.html?tid=pm_opinions_pop" target="_blank">"Forget Bain – Obama's Public - Equity record is the Real Scandal.</a>"</span></span><br />
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<span style="font-family: inherit;">Ms. Strassel suggests "<span style="background-color: white; font-size: 14px; line-height: 21px; text-align: left;">Like Mr. Romney, Mr. Obama has presided over bankruptcies, layoffs, lost pensions, run-ups in debt. Yet unlike Mr. Romney, Mr. Obama's C-suite required billions in taxpayer dollars and subsidies, as well as mandates, regulations, union payoffs and moral hazard. Don't like "vulture" capitalism? Check out the form the president's had on offer these past three years: "crony" capitalism." Ms. Strassel focuses on Solyndra and General Motors, particularly the $82 billion put into the car industry, which seemed primarily designed to protect union pensions.</span></span><br />
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<span style="font-family: inherit;"><span style="background-color: white; font-size: 14px; line-height: 21px; text-align: left;">Mr. Theissen's </span><span style="font-size: 14px; line-height: 21px;">Article provides a more comprehensive list of the Obama administration's public equity failures – including at least eight major investments in green energy that have become failures. In fact, his column will make a good reference tool for future discussions of Obama's failures. He concludes: "</span><span style="background-color: white; font-size: 15px; line-height: 22px; text-align: left;">Now the man who made Solyndra a household name says Mitt Romney’s record at Bain Capital “is what this campaign is going to be about.” Good luck with that, Mr. President. If Obama wants to attack Romney’s alleged private equity failures as chief executive of Bain, he’d better be ready to defend his own massive public equity failures as chief executive of the United States."</span></span><br />
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<span style="font-size: 14px; line-height: 21px;">The irony is that while Obama has been throwing money at uneconomic green energy projects, the entire economics of energy in the United States have been transformed. The development of the Barnett Shale and other major shale developments elsewhere in the country has enormously increased the availability of natural gas, and dropped its price from $12 to $2. Competition between oil and gas is more intense than ever. It is clear that the free market has produced a result far superior to President Obama's attempts to force feed new types of energy sources to us at substantial government expense.</span><span style="font-family: inherit;"><span style="font-size: 14px; line-height: 21px;"> </span></span><br />
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<span style="font-size: 14px; line-height: 21px;"><br /></span>Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-56855137939637817802012-05-22T16:49:00.000-05:002012-05-22T16:49:30.200-05:00Republicans Need to Focus on Size of DeficitI have been concerned over the past several months that the Republicans are not adequately explaining the problem of the federal deficit. It is not just that the deficit exists, but that it is so enormous. While the deficit itself may not be the sole or most important issue (that is obviously the economy), it is of vital importance that Republicans clearly explain how large it is, compared to the federal budget, and what it will take to get it under control.<br />
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The Congressional Budget Office does an excellent job of issuing monthly reports on the federal budget, showing changes in revenue and expenses, and providing detailed information on the deficit. This month, it also issued a <a href="http://www.cbo.gov/publication/43225" target="_blank">separate report</a> showing that the federal deficit for the first seven months amounted to $721 billion. The <a href="http://cbo.gov/sites/default/files/cbofiles/attachments/2012_04_MBR.pdf" target="_blank">latest monthly report </a>shows that, during the first seven months of the fiscal year, the deficit amounted to 34.25% of all federal expenditures. Thus, more than one third of all federal outlays were paid for with borrowed money. During that time period, the US spent 52.1% more than it took in.<br />
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No country can continue indefinitely with these gaps. Under current federal policies, the deficit will only increase and become an even greater proportion of gross national product.<br />
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When talking about this, I often ask people for their estimate of the size of the deficit, compared to federal expenditures. The general estimate is that it is about 20%, and they are shocked when I tell him that it is over one-third of all federal outlays. It seems to me that discussion of the deficit has a much greater impact when people understand how enormous it is, compared to federal expenditures. I believe the Republican should pound this home every time that they discuss the issue.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-36074215882958210812012-05-22T15:43:00.000-05:002012-05-22T15:59:21.185-05:00The Pan Am Bomber – a Side Effect of his TreatmentThe recent death of Abdel Baset al Megrahi, the convicted Lockerbie bomber, three years after his release from prison in Scotland has drawn an interesting<a href="http://online.wsj.com/article/SB10001424052702303610504577417741083445200.html?mod=WSJ_Opinion_AboveLEFTTop" target="_blank"> Wall Street Journal editorial</a> explaining why he lived so long after the initial prognosis that he only had three months to live.<br />
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According to the Journal, the doctor who made the initial estimate explained that his estimate was based upon the National Health Service medical treatment in Scotland, where certain standard chemotherapy treatments were not available because of their cost. In contrast, Mr. Megrahi undoubtedly obtained excellent treatment in Libya, where he could receive better chemotherapy.<br />
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The Journal draws the obvious conclusion that, unconstrained by government conclusions on cost-effectiveness, Mr. Megrahi lived almost 3 years longer than he would have in the Scottish, highly regulated, medical environment. The potential for similar results to occur in the United States under Obama care is obvious.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com2tag:blogger.com,1999:blog-4204124519235836943.post-39985139691101666752012-01-10T18:25:00.000-06:002012-01-10T18:25:25.748-06:00Romney "Gaffe" Should Strengthen Support for HimIn talking about health insurance yesterday, Governor Mitt Romney commented that "I like being able to fire people who provide services to me." Of course, this was was immediately proclaimed a gaffe by the political reporters and <a href="http://www.washingtonpost.com/blogs/election-2012/post/romney-sees-need-to-be-able-to-fire-service-providers/2012/01/09/gIQAF18alP_blog.html?wpisrc=nl_politics" target="_blank">jumped on by his opponents</a>. <br />
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However, those who realize that there will have to be substantial cuts in government expenditures in order to control the deficit should welcome such an attitude. We can only hope that, when elected President, he will be enthusiastic in chopping government programs, even it it means firing people. We need a hard-hearted budget hawk who will not be dissuaded from making the necessary cuts, and who will not be swayed by the certain howls of outrage from those whose jobs will be lost. We can only hope that Romney truly means it.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-43494281056399344972012-01-10T18:11:00.001-06:002012-01-10T18:11:38.905-06:00Companies Fined for not Using a Biofuel that Doesn't ExistHere is a true regulatory gotcha. The 2007 Energy Independence and Security Act required, inter alia, the use of diesel fuel made from biomass, setting a goal of 250 million gallons in 2011 and 500 million gallons in 2012. However, such cullulosic fuel does not exist. It has never been made commercially. Nevertheless, the EPA will fine refiners for failing to include this product in their gasoline. The <a href="http://www.nytimes.com/2012/01/10/business/energy-environment/companies-face-fines-for-not-using-unavailable-biofuel.html?_r=1&nl=todaysheadlines&emc=tha25" target="_blank">New York Times </a>has covered this folly in detail in today's paper.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-23058282920191230272012-01-10T17:47:00.000-06:002012-01-10T17:47:20.749-06:00Good Video on DeficitI have previously blogged about the enormity of the deficit and the national debt, noting that the deficit in fiscal 2011 was 36% of total federal expenditures and that the government spent 57% more than it took in. Now comes a short video that transposes these figures to the context of a single family. You will like it.<br />
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<iframe allowfullscreen='allowfullscreen' webkitallowfullscreen='webkitallowfullscreen' mozallowfullscreen='mozallowfullscreen' width='320' height='266' src='https://www.youtube.com/embed/Li0no7O9zmE?feature=player_embedded' frameborder='0'></iframe></div>
<br />Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-86805828670934718772011-12-26T17:34:00.000-06:002011-12-26T17:34:05.305-06:00Excellent column about the deficitRobert Samuelson of the Washington Post has written an<a href="http://www.washingtonpost.com/opinions/a-country-in-denial-about-its-fiscal-future/2011/12/23/gIQACLjpHP_story.html?wpisrc=nl_most"> excellent column</a>, entitled "<span style="background-color: white; font-family: Georgia, serif; line-height: 1.2em; text-align: left;">A country in denial about its fiscal future" </span>about the current conflict over government spending. Samuelson notes that:<br />
<span style="background-color: white; font-family: Georgia, serif; font-size: 15px; line-height: 22px; text-align: left;">"From 1960 to 2010, the </span><a href="http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist.pdf" style="background-color: white; color: black; font-family: Georgia, serif; font-size: 15px; line-height: 22px; text-align: left;">share of federal spending</a> <span style="background-color: white; font-family: Georgia, serif; font-size: 15px; line-height: 22px; text-align: left;">going for “payments to individuals” (Social Security, food stamps, Medicare and the like) climbed from 26 percent to 66 percent. Meanwhile, the tax burden barely budged. In 1960, federal taxes were 17.8 percent of national income (gross domestic product). In 2007, they were 18.5 percent of GDP." He claims that we could achieve this because the military share of the budget declined from 52%of federal outlays in 1960 to 20% today.</span><br />
<span style="background-color: white; font-family: Georgia, serif; font-size: 15px; line-height: 22px; text-align: left;"><br /></span><br />
<span style="background-color: white; font-family: Georgia, serif; font-size: 15px; line-height: 22px; text-align: left;">Samuelson argues that while the economics of federal spending have changed, the politics haven't. "</span><span style="background-color: white; font-family: Georgia, serif; font-size: 15px; line-height: 22px; text-align: left;">Liberals still want more spending, conservatives more tax cuts. (Although the tax burden has stayed steady, various “cuts” have offset projected increases and shifted the burden.) With a few exceptions, Democrats and Republicans haven’t embraced detailed takeaway policies to reconcile Americans’ appetite for government benefits with their distaste for taxes. President Obama has provided no leadership. Aside from Rep. Paul Ryan (Wis.), chairman of the House Budget Committee, few Republicans have."</span><br />
<span style="background-color: white; font-family: Georgia, serif; font-size: 15px; line-height: 22px; text-align: left;"><br /></span><br />
<span style="background-color: white; font-family: Georgia, serif; font-size: 15px; line-height: 22px; text-align: left;">I would argue that, while he is correct about liberals, he misstates the Republican position. Generally, they all recognize that Social Security shouldn't be changed for current recipients or those approaching retirements, but that changes must be made for participants who are not close to retirement. These include raising the retirement age, creating private accounts, and possible </span><span style="background-color: white; font-family: Georgia, serif; line-height: 22px; text-align: left;">means testing. See "<a href="http://www.reuters.com/article/2011/09/26/us-campaign-socialsecurity-idUSTRE78P5V520110926">Factbox: Social Security Positions of Republican Candidates" Reuters, September 26, 2011.</a> The same goes for Medicare and Medicaid. See </span><a href="http://www.kaiserhealthnews.org/Stories/2011/August/26/GOP-candidate-health-care-platforms.aspx?gclid=CLSK0IbxoK0CFWmhtgoddE0DnA" style="background-color: white; font-family: georgia, times, 'times new roman', serif; line-height: 1.1111;" target="_blank"><span style="color: #264884;">GOP Presidential Hopefuls: Where They Stand On Health Care, </span>Kaiser Health News, December 23, 2011</a><span style="background-color: white; font-family: georgia, times, 'times new roman', serif; line-height: 1.1111;">. It is only if Republicans gain control of Washington that substantive changes will be made to these programs.</span><br />
<span style="background-color: white; font-family: Georgia, serif; font-size: 15px; line-height: 22px; text-align: left;"><br /></span>Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-91459718925868858902011-10-19T16:42:00.000-05:002011-10-19T16:42:05.190-05:00To Reduce the Deficit, Eliminate Amtrak<br />
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The Wall Street Journal has an<a href="http://online.wsj.com/article/SB10001424052970204479504576637582056938182.html?mod=WSJ_Opinion_AboveLEFTTop"> excellent editorial </a>today
about the burden of Amtrak on the federal government and the deficit. While
Amtrak announced a new record of 30 million passengers in the last fiscal year,
it also ran up an operating loss of $560 million, which was paid by the federal
government. As the WSJ stated:<o:p></o:p></div>
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<span style="background: white; color: black;">“Amtrak
announced last week to great media fanfare that the national train service
carried a record 30 million passengers last year. A banner year on its 40th
anniversary of government ownership, right? Well, no.<o:p></o:p></span></div>
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<a href="" name="U5030239742276F"></a><span style="background: white; color: black;">Here's what Amtrak didn't trumpet: It lost a near-record
amount of money in fiscal 2011, with some $560 million from the feds required
to cover its operating deficit.<o:p></o:p></span></div>
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<span style="background: white; color: black;">This isn't
an operation that can make up losses with greater volume. The curse of Amtrak is
that its operating costs are so high on most routes, and its fares so
inadequate to cover those costs, that even as more people hop on board it still
can't cut its losses. It currently loses about $54.50 per passenger, and the
Sunset Limited line between New Orleans and Los Angeles loses $390 per ticket,
according to the House Transportation Committee. Since Richard Nixon
nationalized passenger rail service in 1971, Amtrak hasn't made money in a
single year.”<o:p></o:p></span></div>
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I noted last week that the deficit was so large – –
36% of the federal budget – – that the problem could not be solved by cutting
around the edges. Rather, entire departments and agencies would have to go.
Amtrak is a prime candidate for total elimination. Certainly, all routes
outside the Northeast could be eliminated without any damage to the public
interest. On those routes, Amtrak competes with airlines, who offer higher
frequency and lower fares. Most of Amtrak's loss would be eliminated the
cancellation of those routes.<o:p></o:p></div>
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In the Northeast, it is likely that Amtrak could approach
breakeven with its high density routes. If not, it could be subsidized by the
states through which it passes, rather than by the federal government. In fact,
the House Transportation Committee is <a href="http://www.northeastbizalliance.org/2011/06/house-gop-plan-would-privatize-amtraks-northeast-corridor.html">drafting legislation</a> to privatize the
Northeast corridor so that private industry could build high-speed rail.<span> </span>In any event, there is no need for continued
subsidization of train service by the federal government.</div>
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<o:p></o:p></div>Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com4tag:blogger.com,1999:blog-4204124519235836943.post-56947777221500925912011-10-15T19:07:00.000-05:002011-10-19T16:07:02.501-05:00Michelle Bachmann Agrees With My Analysis of the Deficit Problem<br />
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<span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: inherit;"><span class="Apple-style-span" style="font-size: x-small;">I</span> doubt that Michelle Bachmann has read my blog, but
her analysis of the deficit problem is close to mine. At the Republican debate in New Hampshire on October
11, she echoed my theme of several recent posts by quantifying the deficit as a
percent of the total budget. This shows
the size of the deficit compared to total expenditures, a relationship of which
most Americans are unaware.<o:p></o:p></span></span></div>
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<span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: inherit;">The transcript is as follows:<o:p></o:p></span></span></div>
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<span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: inherit;">REP. BACHMAN: -- “Our government right now -- this
is significant. We are spending 40 percent more than what we take in. We
all paid a lot of taxes this year. We paid $2.2 trillion in taxes. That's
a lot of money from all the American people. The American government
spent a hundred percent of that 2.2 trillion (dollars). But the travesty is
they spent 1.5 trillion (dollars) more than that. That's the problem.
Every year, we are spending about 40 percent more than what we take in.<o:p></o:p></span></span></div>
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<span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: inherit;">Our answer has to be that we cut back on the
spending so we get to balance. We can't do this because all --<o:p></o:p></span></span></div>
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<span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: inherit;">MR. ROSE: Will cutting back on the spending --<o:p></o:p></span></span></div>
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<span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: inherit;">REP. BACHMANN: -- all around us are young
people that are going to be paying for this burden. And their tax rates
won't be our tax rates. Their tax rates could come at some point, their
overall effective burden -- I'm a federal tax lawyer; that's what I do for a
living. And my background is in economics. Their tax rates some day
in their peak earning years, Charlie, could be as much as 75 percent. Who's
going to get out of bed in the morning to go to work, if they're paying 75
percent tax rates? We've got to get our spending house in order and cut
back on spending.”<o:p></o:p></span></span></div>
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<span style="line-height: 115%;"><span class="Apple-style-span" style="font-family: inherit;">Good work, Michelle.
Keep it up. Maybe we can educate
the American public.</span><span class="Apple-style-span" style="font-family: 'Times New Roman', serif; font-size: 12pt;"><o:p></o:p></span></span></div>Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-75748887859905795592011-10-08T17:31:00.000-05:002011-10-19T16:11:29.838-05:00Debit Card Regulation Has Consequences Unintended by DemocratsEvery now and then, we try to adhere to the purpose of this blog by focusing on some egregious example of the unintended consequences of a regulation. The latest example is the debit card fiasco.<br />
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As you will recall, led by Senator Dick Durbin, Congress included a provision in the Dodd-Frank law that limited the amount of debit card fees that banks could charge to merchants. They had previously been charging about $.48 per transaction, but the law now allows a maximum of $.24. Economist and others warned that, if banks were required to reduce debit card fees, they would offset these losses of revenue by other charges to consumers. That has now come to pass.<br />
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Shortly before the law's October 1 effective date, Bank of America announced that it planning to adopt a fee of $5 per month for depositors using debit cards to make purchases. Other banks are testing similar fees, although at lower levels. The B of A fee, in particular has drawn a tremendous amount of media attention and reported outrage from consumers, who have threatened to take their business elsewhere.<br />
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The response from Democrats has been predictable. Since the didn't believe the warnings that restricting debit fees to merchants would lead to price increases elsewhere, they are shocked, shocked when banks follow through and actually raise such prices. <a href="http://durbin.senate.gov/public/index.cfm/pressreleases?ContentRecord_id=11a1b2ca-6b82-4e18-b39c-60e778ee7df7">Senator Durbin said</a>,<br />
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" After years of raking in excess profits off an unfair and anti-competitive interchange system, Bank of America is trying to find new ways to pad their profits by sticking it to its customers. It's overt, unfair and I hope their customers have the final say. Earlier this year the Federal Reserve determined that the interchange fees Visa and Mastercard fix for big banks grossly exceed the cost of processing a debit card transaction by some 400%. These hidden fees were designed to boost big-bank profits by charging small businesses and merchants every time a debit card was swiped."<br />
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President Obama also criticized the increase, <a href="http://www.washingtonpost.com/business/economy/obama-blasts-bank-of-america-debit-card-fee/2011/10/03/gIQAUGU3IL_story.html">saying,</a> "<span class="Apple-style-span" style="background-color: white; font-family: Georgia, serif; line-height: 22px;">“You don’t have some inherent right just to, you know, get a certain amount of profit, if your customers are being mistreated, ... this is exactly the sort of stuff that folks are frustrated by.</span><br />
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<span class="Apple-style-span" style="background-color: white; font-family: Georgia, serif; line-height: 22px;">The Federal Reserve rulemaking did determine the cost of processing a debit card transaction. But it considered only the costs. <a href="http://www.federalreserve.gov/newsevents/press/bcreg/20110629a.htm">Thus it stated</a> "</span>As required by the statute, the final rule establishes standards for assessing whether debit card interchange fees received by debit card issuers are reasonable and proportional to the costs incurred by issuers for electronic debit transactions."<br />
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Neither the Dodd-Frank Act nor President Obama considered how business actually operate. Businesses earn profits -- there is no basis for determining that they should not include a profit element in their fees to merchants. If the pricing of interchange fees now excludes all elements of profit, the banks must recover those lost profits form the other party to the transaction -- the consumer. Contrary to the President, businesses do have the inherent right to earn a profit -- that's what the whole capitalist system is about.<br />
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Obama's remark betrays a fundamental problem with his presidency -- his distrust, in part based on his years as a community organizer, of the American business system and his effort to restrict its freedom of operation. His response in an informal interview undermines all the grandiloquent language in his teleprompter speeches and demonstrates his fundamental antagonism to American business.<br />
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</span>Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0tag:blogger.com,1999:blog-4204124519235836943.post-12424541013225216652011-10-07T16:30:00.000-05:002011-10-19T16:12:10.489-05:00Final FY 2011 Figures Confirm Enormity of DeficitI have written twice in recent months about the enormous size of the federal deficit and how the political world talks about the deficit but never discussed its actual size. The Congressional Budget Office has now updated its figures to the full fiscal year ended September 30, 2011, and has confirmed the enormity of the amount. According to today's <a href="http://www.reuters.com/article/2011/10/07/us-usa-debt-cbo-idUSTRE7965IA20111007">news reports</a>, the deficit for the full fiscal year amounted to $1.3 billion. The <a href="http://www.cbo.gov/ftpdocs/124xx/doc12461/2011_10_07_MBR.pdf">CBO report</a> is available as a pdf on its website. While the report gives the hard numbers, it fails to provide the percentage figures that would place them completely in context.<br />
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The following table shows the basic numbers:<br />
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<u>Fiscal 2011</u><br />
(in billions of dollars)<br />
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Receipts 2,302<br />
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Outlays <u> 3,600</u><br />
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Deficit 1,298<br />
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Thus, the deficit as a percentage of outlays was 36.06% -- more that one/third of the federal budget was paid for by borrowing money. Another way of looking at the problem is that we spent 56.4% more than our revenue. <br />
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Imagine a family spending $100,000 per year, when its income was $64,000. Obviously, it would have to make substantial cuts in expense in order to survive. The same goes for the federal government. The current discussion of cuts of $1 or $2 trillion over ten years is only nibbling around the edges. To achieve real reductions, entire programs and agencies wil have to be eliminated.Richard Fahyhttp://www.blogger.com/profile/16399307577852621144noreply@blogger.com0