(Reuters) – Virginia Governor and possible Republican presidential candidate Bob McDonnell used taxpayer money to pay for sunscreen and dog vitamins, the Washington Post reported on Monday, adding to other improper spending the paper says the FBI is investigating.
McDonnell and his wife also used state employees to run personal errands for their adult children and billed the state for deodorant, shoe repairs and a digestive system “detox cleanse,” the newspaper said, citing spending records it obtained under the Freedom of Information Act.
The Washington Post previously reported that the FBI and a grand jury were investigating a $15,000 catering bill that a campaign donor paid for McDonnell’s daughter’s wedding in 2011.
A McDonnell spokesman, Paul Shanks, told Reuters by email the “reimbursement process that is followed today is the same as the one followed in past years” by previous administrations.
Shanks said the Washington Post article “completely misstates the process and misinforms readers as to how it functions.” He said the governor’s family gets invoices and then reimburses the state for any personal expenses.
The governor has acknowledged that he stayed at the Roanoke, Virginia, home of the campaign donor, Jonnie Williams, and drove Williams’ Ferrari sports car back to Richmond.
Health and Human Services Secretary Kathleen Sebelius. (Image credit: Getty Images via @daylife)
Sen. Max Baucus (D-Mont.) raised eyebrows across the country last month when he publicly fretted about an Obamacare “train wreck” as the Administration rushes to implement the many provisions of the law that take effect in 2014.
President Obama has attempted to assuage Sen. Baucus’s concerns, saying that his staff was “pushing very hard to make sure that we’re hitting all the deadlines.”
But an Obamacare train wreck isn’t a distant possibility. It’s actively happening. Delays, wasteful spending, and cost overruns have already popped up. And it’s becoming increasingly likely that the exchanges won’t be ready by October 1, when they’re supposed to open for enrollment. Mass confusion and excessive costs will result.
The federal government is set to operate exchanges in 27 states and to jointly run them with state officials in another seven. Seventeen states will create and administer exchanges on their own.
At least, that’s what’s supposed to happen. Gary Cohen, who’s in charge of the implementation of Obamacare’s exchanges, said in March that the federal government will likely end up running some of the exchanges in the 17 states that elected to set them up on their own because they won’t be ready in time.
Even the states the administration has paraded around as “pioneers” are having trouble creating government-run insurance marketplaces out of whole cloth. Connecticut, the first state approved to set up an exchange, is now struggling to get it up and running. Colorado is “stripping its opening-day goals to a minimum.”
Federal officials have struggled to come up with a comprehensible application form. Their first effort reached 15 pages. After a round of criticism, they came back with a form that’s three pages for individuals — and seven pages for families.
Henry Chao, a senior federal official working on the information technology that will run the exchanges, said in March that he was “pretty nervous” about meeting the October 1 deadline and was reduced to hoping that the exchanges don’t end up being “a Third World experience.”
And it’s not as if the feds and the states have been short on money. The Department of Health and Human Services (HHS) will have spent $4.4 billion on state exchange grants by the end of this year. That’s more than double what the Department said would be necessary just last year, despite the fact that fewer states than the feds anticipated agreed to establish their own exchanges.
The agency has also asked for $1.5 billion to help fund the exchanges it’s setting up in states that have refused to do so on their own next year. California is planning to use $673 million in federal money to deploy 21,000 people, known as “navigators,” to sign people up for its exchange, Covered California. Those folks get a bounty of $58 for every person they sign up — and $25 for every annual renewal.
HHS can’t even account for all the grant money it’s throwing at the states, since the money comes with little or no restrictions, guidelines, or accountability.
President Obama will travel to sub-Saharan Africa and the price tag for the trip clocks in between $60 and $100 million. The Post’s Carol Leonnig got access to classified documents outlining the trip. Update: The White House has cancelled the safari for this trip.
President Obama and his family will be going to Africa later this month. But the trip won’t be cheap; it’s expected to cost American taxpayers $60 to $100 million, according to the Washington Post.
“When President Obama makes his first extended trip to sub-Saharan Africa later this month, the federal agencies charged with keeping him safe won’t be taking any chances. Hundreds of U.S. Secret Service agents will be dispatched to secure facilities in Senegal, South Africa and Tanzania. A Navy aircraft carrier or amphibious ship, with a fully staffed medical trauma center, will be stationed offshore in case of emergency,” reports the Post.
“Military cargo planes will airlift in 56 support vehicles, including 14 limousines and three trucks loaded with sheets of bullet-proof glass to cover the windows of the hotels where the first family will stay. Fighter jets will fly in shifts giving 24-hour coverage over the president’s airspace so they can intervene quickly if an errant plane gets too close.
Remember when President Obama’s 20-day Hawaiian family vacation cost taxpayers an estimated $4 million? As it turns out, that was chicken feed.
The Washington Post is reporting that the First Family’s upcoming trip to Africa could cost the government — and ultimately us taxpayers — between $60 million and $100 million dollars.
Fiscally irresponsible? You bet. But before you get too upset, consider this: According to WaPo, the Obamas had originally planned to go on safari in Tanzania, but when the newspaper started asking questions about the cost, the White House put the kibosh on that. So, you see, the Obamas are making sacrifices, too! Well, sort of:
As the nation searches for the proper peaceful remedy to the crisis known as Obama, good people of good intentions often research a common subject and arrive at a different conclusion. Such has been the case on the topic of whether or not Barack Hussein Obama can be impeached.
In a WND column dated July 14, 2011 titled Why Obama Cannot be Impeached, the writer states, “Rage continues to build across this country over the obvious forged birth certificate Barry Soetoro, aka Barack Obama, released April 27, 2011, as do calls for his impeachment. However, Obama cannot be impeached.”
The author’s position is based upon statements from Dr. Edwin Vieira, a Harvard trained attorney, who’s works are focused primarily on land rights and militias. Dr. Vieira issued his position in a 2008 piece written and released before the 2008 election, Vieira suggests that once Obama takes office via fraud, he cannot be impeached, on the basis that impeaching a usurper of the office would somehow validate his tenure in office. Is he right?
To be sure, the Obama Crisis presents a highly unusual set of circumstances, rising to the level of constitutional crisis in a number of ways. The proper peaceful remedy is indeed worthy of research and debate. Only once the people agree on a proper course of action, can action be taken… so, it is imperative that the people reach agreement on this matter.
Who is right in the debate is much less important than reaching an actionable position of agreement. The endless debate on the subject only leaves all concerned citizens paralyzed by confusion and lack of coherent direction in how to solve the crisis.
It is for this reason that I have returned to historical data on the subject of impeachment in search of the foundations for impeachment remedies found in Article II – Section IV of the U.S. Constitution.
“The President, Vice President and all civil officers of the United States, shall be removed from office on impeachment for, and conviction of, treason, bribery, or other high crimes and misdemeanors.” – Article II – Section IV of the U.S. Constitution
I fully understand and even agree with the claim that Barack Hussein Obama (aka Barry Soetoro) gained access to the Office of President via massive fraud, including identity fraud, campaign fraud and campaign finance fraud, just for starters.
I further agree that Mr. Obama’s acts during his unconstitutional and illegal seizing of the Oval Office, as well as his unconstitutional acts while in office, rise to the level of impeachable offenses, high crimes, usurpations and likely even treason.
But I do not agree that Obama/Soetoro cannot be removed from office via impeachment. In fact, I believe that Obama can only be removed from office via impeachment. Here’s the basis for my belief…
James Madison explained the requirement for impeachment during the debates of the Constitutional Convention of 1787: “Some provision should be made for defending the community against the incapacity, negligence, or perfidy of the chief magistrate. He might pervert his administration into a scheme of peculation or oppression. He might betray his trust to foreign powers.”
In Federalist Paper No. 65, Alexander Hamilton explained that “impeachment of the president should take place for offenses which proceed from the misconduct of public men, or in other words, from the abuse or violation of some public trust. They are of a nature which may with peculiar propriety be denominated political, as they relate chiefly to injuries done immediately to society itself.”
And indeed, in Commentaries on the Constitution, Supreme Court Justice Joseph Story (1811-1845) explained: “The offenses to which the remedy of impeachment has been and will continue to be principally applied are of a political nature… What are aptly termed political offenses, growing out of personal misconduct, or gross neglect, or usurpation, or habitual disregard of the public interests.”
Common throughout historical references to the impeachment process is the concept that a violation or breach of public trust, or habitual disregard for the public interest is the fundamental definition of other high crimes and misdemeanors, as it relates to the Founders intended use of the impeachment clause found in Article II.
The legal debate over use of impeachment concerning immunity from criminal prosecutions of any individual occupying the Oval Office is covered quite extensively here. In conclusion, seizing the Oval Office by way of fraud, usurpations of the office, and acting in a manner at odds with public interests, constitutional authority or in breach of the public trust, are all impeachable offenses.
In Federalist Paper No. 70, Hamilton further explained: “Men in public trust will much oftener act in such a manner as to render them unworthy of being any longer trusted, than in such a manner as to make them obnoxious and subject to legal punishment.” – “Judgment in Cases of Impeachment shall not extend further than to removal from Office, and disqualification to hold and enjoy any Office of honor, Trust or Profit under the United States: but the Party convicted shall nevertheless be liable and subject to Indictment, Trial, Judgment, and Punishment, according to Law.”
In short, the Oval Office (not the individual occupying the office) has protections against criminal charges or prosecutions during the tenure of office, be it legitimate tenure or not.
“In 1973, the Justice Department concluded that the indictment or criminal prosecution of a sitting President would impermissibly undermine the capacity of the executive branch to perform its constitutionally assigned functions. We have been asked to summarize and review the analysis provided in support of that conclusion, and to consider whether any subsequent developments in the law lead us today to reconsider and modify or disavow that determination. We believe that the conclusion reached by the Department in 1973 still represents the best interpretation of the Constitution.” – Full legal reference here…
This means that before any occupant of the Oval Office can be charged with or prosecuted for crimes, they must first be removed from office via impeachment, so that the business of the people can continue while the individual is being prosecuted for criminal activities.
PETITION URGENTLY REQUESTING THAT CONGRESS LAUNCH AN INDEPENDENT AND COMPREHENSIVE INVESTIGATION INTO UNCONSTITUTIONAL AND IMPEACHABLE OFFENSES ON THE PART OF PRESIDENT BARACK OBAMA
To: All members of the U.S. Congress:
Whereas, President Barack Obama not only failed to aid U.S. personnel under lethal and prolonged terrorist attack in Benghazi, Libya, on Sept. 11, 2012, resulting in the deaths of a U.S. ambassador and three other Americans, but also led an outrageously deceitful cover-up for weeks afterward, rivaling the Watergate-era cover-up that ended the presidency of Richard Nixon;
Whereas, the IRS under Obama – in accord with direct instructions from congressional Democrats – has engaged in the most egregious and widespread attack on conservative groups in modern history, with the knowledge of top agency officials;
Whereas, the Obama Justice Department, on top of its many first-term scandals, has spied on and harassed journalists at Fox News and the Associated Press, prompting widespread, bipartisan condemnation of the DOJ for “criminalizing journalism”;
Whereas, top constitutional attorneys from across the political spectrum now agree that Obama has committed certain specific offenses that unquestionably rise to the level of impeachable “high crimes and misdemeanors”;
Whereas, one of these offenses – that of illegally conducting war against Libya – has been deemed by a bipartisan panel of constitutional experts to be “clearly an impeachable offense” and “gross usurpation of the war power”;
Whereas, Obama’s policy of targeted assassinations of U.S. citizens without any constitutionally required due process – including the drone assassination of an American-born 16-year-old as he was eating dinner – is unanimously deemed by experts, both liberal and conservative, as “an impeachable offense”;
Whereas, Obama’s Justice Department has presided over the disastrous “Fast and Furious” operation in which approximately 2,000 firearms were directed from U.S. gun shops across the U.S.-Mexico border and into the hands of members of Mexican drug cartels, resulting in the deaths of as many as 100 people, including U.S. Border Patrol Agent Brian Terry – a scandal that constitutional experts agree constitutes, at a minimum, clear grounds for impeaching Attorney General Eric Holder;
Article 2, Section 4, of the U.S. Constitution reads as follows: The President, Vice President and all civil officers of the United States, shall be removed from office on impeachment for, and conviction of, treason, bribery, or other high crimes and misdemeanors.”
In 1998, President Bill Clinton was impeached for perjury and obstruction of justice for matters arising out of the Monica Lewinsky sex scandal.
If perjury and obstruction of justice constitute high crimes or misdemeanors, then doesn’t it seem rather obvious that the murder of an American citizen by the president would also constitute a high crime or misdemeanor, especially if the citizen is a child?
That’s precisely what President Obama, acting through U.S. national-security state agents, did on October 14, 2011. He murdered a 16-year-old American boy who was traveling in Yemen. The boy was Abdulrahman al-Awlaki, who was the son of accused terrorist Anwar al-Awlaki, who the CIA had assassinated two weeks before.
Why did President Obama and the CIA or the military kill Abdulrahman? The president, the CIA, and the Pentagon have all chosen to remain silent on the matter, refusing to even acknowledge that they killed the boy. But White House Press Secretary Robert Gibbs implicitly provided the justification: “I would suggest that you should have a far more responsible father if they are truly concerned about the well being of their children. I don’t think becoming an al Qaeda jihadist terrorist is the best way to go about doing your business.”
So, there you have it: the boy was apparently killed because he was considered to have the wrong father.
But if that’s a legitimate justification for killing a child, there are obviously a lot more children at risk in this country.
Proponents of the war on terrorism argue that the killing of the teenager wasn’t really a murder but rather an assassination. But isn’t that a distinction without a difference?
After all, compare Obama’s killing of Abdulrahman with Chilean Gen. Augusto Pinochet’s killing of Orlando Letelier. Pinochet took power in 1973, during the time that the Cold War and the war on communism were being waged. Pinochet, who the U.S. national-security state had helped install into power, not only began rounding up, incarcerating, torturing, abusing, and executing suspected communists without any judicial process, he also embarked on an program to assassinate Chilean communists found overseas.
Agents of Pinochet’s counterpart to the CIA, a secret police force called DINA, planned and orchestrated the killing of Orlando Letelier on the streets of Washington, D.C. Why was Letelier targeted for death? He was a socialist, a Chilean citizen who had served in the administration of President Salvador Allende, the democratically elected Marxist president whom Pinochet, President Richard Nixon, the CIA, and the U.S. military ousted from power and replaced with Pinochet’s military dictatorship. Therefore, as part of the war on communism, Letelier was considered to be a legitimate target for assassination.
On September 21, 1976, an assassination team headed by a man named Michael Townleyexploded a bomb that the team had planted under Letelier’s car. Letelier was killed, along with his American assistant who was also in the car, 25-year-old Ronni Moffitt.
Interestingly, the U.S. Justice Department did not consider the assassination to be legitimate under the concept of war and enemy combatants, notwithstanding the fact that the Cold War and global war on communism were still being waged. The Justice Department treated the killings of Letelier and Moffitt as murders. Townley and his team were indicted and prosecuted for the murders of Letelier and Moffitt.
How is Obama’s killing of Abdulrahman any different from Pinochet’s murder of Orlando Letelier and Ronni Moffitt? In the one case, a 16-year-old boy has had his life snuffed out because he had the wrong father. In the other case, a man had his life snuffed out because he had the wrong philosophical beliefs. Given that the Letelier and Moffitt killings were treated as murders, why shouldn’t the Abdulraham killing be treated as murder too?
Republican-controlled states argued before the supreme court that the ACA law’s expansion of Medicaid is unconstitutionally coercive. Photograph: Justin Sullivan/Getty Images
If you want to get a sense of the enfeebled and wanton state of the modern Republican party, there really is no better place to start than on the issue of Medicaid, the federal program that provides healthcare coverage for the poor.
In a desperate effort to undermine the law they hate, Obamacare, Republican governors and state legislatures in half the states have either rejected or intend to reject a key part of the president’s signature domestic initiative – namely, billions in federal dollars to extend Medicaid coverage to their poorest citizens. While Republicans argue they are acting out of highminded fiscal rectitude, the reality speaks to something else altogether – petulance and hyper-partisanship.
Accepting billions in federal dollars and expanding care to the uninsured would mean tacitly accepting the reality of Obamacare. And that is tantamount to treason in the Republican party. So, as a result, when the law goes into full effect next year, millions of Americans will be left on the outside looking in, denied coverage for no other reason than the misfortune of residing in a red state.
If we lived in a country where both major political parties shared a sense of social empathy, the Medicaid expansion piece of Obamacare would be among its least controversial provisions. Under the law, Medicaid coverage would become available for those living below 138% of the poverty line. The federal government would fully pick up the bill for the first few years of the law, and then eventually cover 90% of the costs.
But when the US supreme court upheld Obamacare last year, it overturned the provision of the bill that gave the federal government authority to penalize states that did not agree to expand Medicaid coverage. Though this decision gave states the right potentially to reject the expansion, few at the time thought this would be an issue. Ron Pollack, director of the consumer group Families USA, expressed the views of many:
“I think the states are going to pick this up. It would be an act of fiscal malpractice for states to turn this down.”
Considering the billions of Medicaid dollars that would be pumped into state coffers, it was hard to disagree. But what liberals had not fully countenanced was the continued refusal of Republicans to come to grips with Obamacare.
Indeed, a year after the supreme court ruled on the legality of the law, congressional Republicans are continuing their futile struggle to scrap it. Earlier this month, House Republicans voted for the 37th time to repeal Obamacare. Beyond such peevish symbolic gestures congressional Republicans are trying to put as many roadblocks as possible in front of the healthcare law’s rollout. They refuse to consider any technical corrections to the bill in order to assist with its implementation.
Prominent Republicans, such as Senate minority leader Mitch McConnell, claim the bill is simply too broken to be fixed and repeal is the only option. But the unlikely possibility of repeal is a figleaf for the GOP’s real interest: sabotaging the bill in order to gain a political advantage in the 2014 midterm elections. The more Obamacare is seen as a disaster, the better chance of voters punishing Democrats at the polls, or so the political argument goes.
The problem is that this obstructionism is having real and enduing consequences. According to a survey maintained by the Kaiser Foundation (pdf), fewer than half the states have agreed to fully partake in the Medicaid expansion, with 20 not moving forward at this time.
What do all these states have in common? Either a Republican governor or a legislature controlled by Republicans. In some states, even the support of a GOP governor has not been enough to bring along recalcitrant legislators. In Arizona, Governor Jan Brewer – no friend of the Obama administration – is locked in a heated battle with her state legislature over the issue and has threatened to veto every bill that comes to her desk until the Medicaid issue is resolved.
Arizona Gov. Jan Brewer, shown here greeting delegates Aug. 28, 2012, at the Tampa Bay Times Forum in Tampa, Fla., is one of several Republican governors pushing state legislators to approve Medicaid expansion allowed under the federal Affordable Care Act.
By Sandhya Somashekhar, The Washington Post
Posted June 02, 2013, at 9:52 p.m.
Republican fissures over the expansion of Medicaid, a critical piece of the 2010 health-care law designed to provide coverage to millions of uninsured Americans, continue to deepen, with battles in Arizona and elsewhere showing just how bitter the divisions have become.
Despite expressing distaste for the new law, some GOP governors have endorsed an expansion of Medicaid, and three — Jan Brewer of Arizona, John Kasich of Ohio and Rick Snyder of Michigan — are trying to persuade their Republican-controlled legislatures to go along. The governors are unwilling to turn down Washington’s offer to spend millions, if not billions, in their states to add people to the state-federal program for the poor. But they face staunch opposition from many GOP legislators who oppose the health-care law and worry that their states will be stuck with the cost of adding Medicaid recipients.
In one of the most explosive of the internal Republican battles, Brewer, a firebrand tea party favorite who once famously wagged her finger at President Barack Obama, has declared a “moratorium” on all other legislation until her Medicaid plan, which would add 300,000 Arizonans to the program, is approved. She has backed up her threat by vetoing five unrelated bills.
In Ohio and Michigan, the governors are pressing for last-minute compromises before their legislatures adjourn this summer. In Florida, the legislature, which has adjourned, rejected Republican Gov. Rick Scott’s plan to expand Medicaid.
These conflicts over the health-care law illustrate a larger divide within the Republican Party over an array of issues, including immigration and automatic budget cuts.
The Medicaid expansion is one of the two main ways the health-care law would provide coverage to the uninsured. The other is through health insurance exchanges, which will sell policies to individuals whose incomes are too high for Medicaid; many of those people will receive subsidies to buy the health plans.
Medicaid eligibility varies from state and to state and depends on income and other factors. The health-care law, in an effort to make eligibility uniform, mandated that anyone earning up to 138 percent of the poverty level, or $15,856 in 2013 dollars, be eligible for the program. But last June, the Supreme Court, while upholding most of the health-care law, ruled that states could refuse to expand their Medicaid programs. That set the stage for bitter debates — ones ruled as much by ideology and politics as by financial realities — that have been occurring in state capitals nationwide.
Under the law, the federal government will pay 100 percent of the cost of newly eligible Medicaid recipients for the first three years, beginning in January. After that, the federal contribution will taper, leveling off at 90 percent for 2020 and beyond.
Twenty-three states and the District have agreed to the Medicaid expansion. Nineteen states have decided against the expansion and eight are debating it, according to Avalere Health, a consulting firm. States that decline to expand Medicaid now could still sign up in later years.
The debate over Medicaid has been emotional and vitriolic in many states. In Texas, Gov. Rick Perry, R, was heckled during a recent speech for opposing an expansion. In Montana, chaos erupted after a lawmaker accidentally voted against expanding the program, causing the measure to fail. Pro-Medicaid advocates in some states, frustrated by inaction from their elected leaders, are working to put the matter to voters in the form of ballot initiatives.
The hostility is evident in Arizona, where authorities are investigating a threatening phone call and emails directed at lawmakers who support expanding the program. Opponents of the expansion have condemned the alleged threats.
Irvine, California, where health insurance premiums for the average 25-year-old who purchases insurance for himself will nearly double under Obamacare. (Photo credit: Wikipedia)
Well, it’s been an interesting week in health care land. For a while now, independent analysts—and conservative critics—have raised concerns that Obamacare will dramatically increase the cost of individually-purchased health insurance for healthier people. This would, of course, contradict President Obama’s promises that “if you like your plan, you can keep it” and that the cost of insurance would go down “by $2,500 per family per year.” What’s new is that liberal columnists, facing reality, are conceding that premiums will go up for most people in the individual market. But they’re justifying it by saying that “rate shock” will help a tiny minority of people who can’t get insurance today. If they had said that in 2009, would Obamacare have passed?
Last month, progressive pundits were trumpeting news out of California that the cost of health insurance under Obamacare in that state was surprisingly low. “Well, the California bids are in,” wrote Paul Krugman on May 27. “And the prices, it turns out, are surprisingly low…So yes, it does look as if there’s an Obamacare shock coming,” the shock that Obamacare will work just fine.
It turns out, however, that Krugman was uncritically regurgitating California’s misleading press release. In fact, the average 25 and 40-year-old will pay double under Obamacare what they would need to pay today, based on rates posted at eHealthInsurance.com (NASDAQ:EHTH). More specifically, for the typical 25-year-old male non-smoker, the average Obamacare “bronze” exchange plan in California will cost between 64 and 117 percent more than the cheapest five plans on eHealth. For 40-year-old male non-smokers, it’s between 73 and 146 percent more.
Democrats now: It’s ok if premiums double for average people
Ezra Klein of the Washington Post, in response to my article on this topic, checked out the eHealth rates for plans in his hometown of Irvine, California, and compared them to a similar website sponsored by the government at healthcare.gov. He found that the third-cheapest plan there cost only $109 a month, “if they’ll sell it to you for that price.” According to the government, Ezra notes, 14 percent of people who tried to buy that plan—Health Net’s IPF PPO Value 4500—were turned away. Another 12 percent were asked to pay more than $109.
To Ezra, it’s galling that three-fourths of his compatriots can pay $109 for health insurance, because 12 percent were not eligible for the plan, and another 14 percent had to pay somewhat more. This is why Obamacare is a great achievement, he says, because Health Net will have to serve all comers, regardless of prior health status.
And I appreciate Ezra’s perspective. I, too, am a supporter of universal coverage, so I understand Ezra’s passion for providing health insurance to the sick. But what we didn’t know last week—and we do now—is how much more the healthy will have to pay for that insurance, under Obamacare. In Orange County, where Irvine is located, the three-fourths of the 25-year-old population that is in good health will have their premiums jacked by 95 percent.
And that’s for Obamacare’s “catastrophic” coverage; the more comprehensive “bronze” plan increases premiums by 130 percent. For the fraction—one-eighth of the total—who, under the old system, would have been charged more, the premium increase due to Obamacare will be somewhat less.
And the vast majority of those who were turned away are able to find insurance—albeit at a higher price—elsewhere. Based on enrollment in Obamacare’s high-risk pool program, the number of people in America who are truly uninsurable is closer to 150,000. That’s a pretty small number in a nation of 300 million. Previous estimates of the uninsurable population came in around 2 to 4 million people, but it’s likely that for many of these individuals, the principal problem is not that they’re denied coverage, but that the premiums are high.
Ezra makes another accurate point that is important to emphasize: these increased premiums affect people who shop for insurance on their own. If you get insurance through your employer, especially if your employer is large, you should be significantly less affected. But an increasing number of people shop for insurance on their own, because fewer and fewer employers are sponsoring health coverage. According to the Congressional Budget Office, in 2022, around 25 million people will be purchasing coverage for themselves, and another 25 million will be enrolled on the exchanges. That’s a lot of people. And it doesn’t include the 30 million that will remain uninsured.
Universal coverage, done right, can address these problems in a way that makes insurance affordable for everyone. But Obamacare’s sops to special interests—from the various services all plans are required to cover, to the fact that the law forces young people to pay more to subsidize well-established older people—is not the right way, because it makes insurance too costly.
Democrats then: Rate shock is a right-wing myth
The key thing to remember is that back when Obamacare was being debated in Congress, Democrats claimed that it was right-wing nonsense that premiums would go up under Obamacare. “What we know for sure,” Obamacare architect Jonathan Gruber told Ezra Klein in 2009, “is that [the bill] will lower the cost of buying non-group health insurance.” For sure.
In 2009, was Ezra saying that it’s ok that premiums will double for the average person, because a minority of people will pre-existing conditions will benefit? No.
Earlier that year, AHIP, the private insurer trade group, commissioned a report from PriceWaterhouseCoopers to analyze the impact of Obamacare on health insurance premiums in the individual market. That report, which I reviewed here and elsewhere, found that the version of Obamacare then being considered by the Senate Finance Committee would increase premiums by 14 to 32 percent, depending on the year you looked at. In retrospect, the PwC report was a bit optimistic.
But Ezra described the PwC analysis as “the insurance industry’s deceptive report,” comparing it to sham research put out by the tobacco industry and Big Oil. Ezra did concede at the time that “buying better insurance will cost somewhat more,” because insurers would no longer be able “to sell a deceptive and insufficient product.”
But high-deductible, catastrophic insurance isn’t cheaper because it’s dishonest. It’s cheaper because it’s more efficiently designed. And it’s precisely that sort of efficiently-designed insurance that Obamacare abolishes.
Businesses in competitive markets can’t survive by cheating
This idea that high-deductible insurance, freely purchased in a voluntary exchange, is a “dishonest” product is an article of faith in some quarters. My good friend and Forbes colleague Rick Ungar recently dedicated an entire blog post to the subject. The numbers that come out of eHealthInsurance.com, Rick says, are lies. What data does Rick cite to prove this? He doesn’t cite any actual numbers. Instead, he cites…anonymous reviews on the internet.
Rick went to epinions.com, and pulled out quotations from people who were unhappy with eHealth’s customer service. And eHealth should certainly do what it can to address customer’s complaints. (The company, however, isn’t directly responsible for the customer service of the insurers whose products it sells.) Remember that, unlike with Obamacare, eHealth is a private business. No one is forced to use their services. Those who do have a bad experience on eHealth can go elsewhere, like healthcare.gov. eHealth, unlike the government, has an economic incentive to make its customers happy. Indeed, the default setting at eHealth is to sort the listed plans by customer popularity.
Conservative Republican legislators in major states are trying to block efforts by more pragmatic governors of their own party to accept health insurance for more low-income residents under President Barack Obama’s health care law.
Unlike their congressional counterparts, who’ve misfired in repeated attempts to torpedo the law, state Republicans may well sink the expansion of Medicaid in populous states such as Florida and Michigan.
That would mean leaving billions of dollars in federal matching funds on the table and hundreds of thousands of the poor uninsured. Expansion opponents say it’s an issue that goes to their core beliefs.
“It’s an ideological principle piece to us on the conservative side,” said state Rep. David Gowan, majority leader in the Arizona House of Representatives. “We don’t believe in the expansion of Medicaid itself – it’s within the process of mandating health care. We don’t believe it’s the government’s duty to do that. It should be open for people to go get their health care.”
Nine Republican governors supported or accepted the Medicaid expansion, a major component of the health care law taking effect Jan. 1. It’s designed to provide coverage to about 20 million uninsured people if all states accept. Washington would pick up the full cost for the first three years and 90 percent over the long haul.
Those helped would mainly be low-income adults with no children at home, people working jobs that pay little and don’t come with health insurance. For uninsured adults below the poverty line, expanded Medicaid is the only way to get coverage under the new law. But middle-class people will be eligible for subsidized private insurance.
Overall, 23 states plus the District of Columbia, are planning to expand their Medicaid programs. About a dozen are undecided.
The nine GOP governors supporting expansion are Jan Brewer in Arizona, Rick Scott in Florida, Terry Branstad in Iowa, Rick Snyder in Michigan, Brian Sandoval in Nevada, Chris Christie in New Jersey, Susana Martinez in New Mexico, Jack Dalrymple in North Dakota and John Kasich in Ohio.
Initially, some observers saw a shift toward pragmatism among Republicans and predicted the governors would get their way. Now experts are not so sure.
Four of the GOP governors have run into real battles. Expansion prospects are flickering in Florida and Michigan. In Ohio, Kasich’s legendary deal-making abilities are being tested. In Arizona, Brewer is trying to stare down Republicans in the state House, and the coming week may determine who prevails.
An internal watchdog claims the IRS spent $50 million on ‘inappropriate’ conference funds during a three-year period – news that serves to further embarrass the agency in wake of its targeting of conservative groups.
The Internal Revenue Service allegedly spent nearly $50 million on about 200 employee conferences between 2010 and 2012, during which it frequently provided its workers with presidential hotel suites and allowed them to take dance classes and attend baseball games, according to excerpts from an inspector general’s report slated to be released Tuesday.
An August 2010 conference in Anaheim, Calif., cost the IRS $4 million. About 2,600 managers attended the event and stayed in presidential hotel suites that usually cost $1,500 to $3,500 per night. About 15 outside speakers were paid $135,000 each, one of which was hired to discuss “leadership through art”, according to the House Oversight and Government Reform Committee, which released the excerpts.
The IRS also failed to negotiate lower room rates, which is a standard practice for federal government agencies. Employees who attended the conference also received a number of costly benefits, including baseball tickets at taxpayers’ expense.
“They ended up with free drinks, they ended up with tickets to games – basically kickbacks,” Rep. Darrell Issa (R-Calif.), chairman of the House oversight panel that released the excerpts, told NBC News.
Report: Treasury finds IRS spent $50M on conferences in 3 years
By Meghashyam Mali – 06/02/13 08:25 PM ET
A review by the Treasury Department’s inspector general found that the Internal Revenue Service (IRS) spent $50 million dollars on conferences for employees between 2010 to 2012, according to reports.
The audit, set to be released on Tuesday, says the agency spent the funds on more than 200 employee conferences, including an August 2010 meeting in Anaheim, Calif., which cost taxpayers $4 million.
According to a statement from the House Oversight Committee, 15 outside speakers at the event were paid a total of $135,000 and many attendees were given perks including baseball tickets and suites at the hotel, the AP reported.The new report comes as the tax agency already faces congressional anger over its targeting of conservative political groups and will likely bring further scrutiny on Capitol Hill.
Oversight Committee Chairman Darrell Issa (R-Calif.) is set to hold a hearing on IRS conference spending on Thursday.
Danny Werfel, the acting IRS commissioner Photographer: Tom Williams/CQ Roll Call
IRS Gift Rule Turned on Politics as Crisis Prompts Reform
By Richard Rubin – Jun 2, 2013 11:00 PM CT
The last time the Internal Revenue Service waded into a fight on politically active nonprofit groups, the agency capitulated quickly and let people make undisclosed, untaxed payments to groups financing campaign ads.
In 2011, under pressure from Republicans, the IRS shut down an attempt to impose gift taxes on donations to so-called social welfare organizations. The move led to a “free-for-all” by donors while clearing up decades of ambiguity on how it would enforce the law, said Ofer Lion, an attorney at Hunton & Williams LLP (1130L) in Los Angeles.
The new controversy surrounding IRS scrutiny of small-government groups focuses attention again on how the agency handles politically sensitive issues. Lessons from the 2011 episode were obvious and yet recurred in 2013, as a lack of clear rules and management left the agency vulnerable to employee misconduct, open to charges of bias against Republicans and their allies and flat-footed when confronted with an outcry from lawmakers.
“It took a crisis to get reform, and I think that’s where we are now,” Greg Colvin, a partner at Adler & Colvin in San Francisco, said of the gift tax case. “It’s going to take a crisis like this to cause the IRS and Congress to realize that you can’t keep tolerating this kind of inadequate supervision and have the IRS refereeing what is and is not political.”
The IRS’s enforcement of tax laws on nonprofit groups re-enters the spotlight this week as Congress returns from a one-week recess, intent on searching for evidence of partisan motivations or senior executives’ involvement in targeting anti-tax Tea Party groups. The IRS revealed May 10 that some small-government groups got extra attention because of their names. Since then, six congressional committees have started inquiries, the Justice Department began a criminal probe, and three employees left their jobs early or were placed on leave.
First Appearance
Danny Werfel, the acting IRS commissioner, will make his first public appearance at a House hearing today since taking over May 22. Tomorrow, the House Ways and Means Committee is asking groups singled out for tougher scrutiny to testify about their experiences. The House Oversight and Government Reform Committee will meet June 6 to review an audit of spending on IRS conferences, including parody videos.
Congressional investigators are interviewing IRS employees and seeking past-due answers to lists of questions they sent the agency. The IRS says it is trying to be “exceedingly thorough” as it prepares responses.
The 2011 gift-tax flap and the new controversy over applications for tax-exempt status both stem from the same corner of the tax code.
Social Welfare
Groups organized under section 501(c)(4) are required to operate “exclusively” for the benefit of social welfare and don’t have to disclose their donors. Contributions aren’t tax-deductible and the groups don’t have to pay taxes on their investment income.
The IRS interprets that law to let 501(c)(4) groups engage in political activity, as long as that’s not their primary purpose. Many of those groups, including the Republican-allied Crossroads GPS and the Democratic-allied Priorities USA, spent heavily on campaign ads last year.
Such groups spent $256 million during the 2012 election cycle, according to the Washington-based Center for Responsive Politics, which tracks campaign finance issues.
The controversy for the past month has revolved around the scrutiny applied to groups applying for tax-exempt status.
Five Donors
The gift-tax issue is different because it involves donors to the groups. In 2011, the IRS sent letters to five donors, opening audits on whether their contributions to the groups should count as taxable gifts.
The Wall Street Journal reported May 31 that all five donors had given to Freedom’s Watch, which was formed to support President George W. Bush’s policies in Iraq. One of the group’s main backers was Sheldon Adelson, chairman and chief executive officer of Las Vegas Sands Corp.
The IRS was on solid legal ground, according to a 2012 analysis by the Congressional Research Service. The tax code specifically exempts contributions to charities under section 501(c)(3) and political groups under section 527 from the gift tax. The IRS hadn’t been enforcing the gift tax for contributions to 501(c)(4) groups although it had, in effect, said in a 1982 revenue ruling that the tax could be applied.
Senators Near Plan to Abolish Fannie Mae, Shrink Government Role
By Clea Benson – Jun 3, 2013 3:45 PM CT
Bloomberg
According to the draft, Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac would be liquidated within five years and the U.S. Treasury would assume responsibility for their existing mortgage guarantees. Photographer: Andrew Harrer/Bloomberg
A bipartisan group of U.S. senators are putting the final touches on a plan to liquidate Fannie Mae (FNMA) and Freddie Mac (FMCC) and replace them with a government reinsurer of mortgage securities behind private capital.
The proposed legislation, which could be introduced this month, would require private financiers to take a first-loss position adequate to cover price declines as steep as those seen during recessions over the past century, according to a draft obtained by Bloomberg News.
According to the draft, Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac would be liquidated within five years and the U.S. Treasury would assume responsibility for their existing mortgage guarantees. Photographer: Andrew Harrer/Bloomberg
The bill, which is being written by Tennessee Republican Bob Corker and Virginia Democrat Mark Warner with input from other senators, is still being drafted. As the first serious bipartisan effort to shape a new housing finance system, it could frame a discussion that is heating up as the housing market rebounds.
“A bipartisan bill that’s thorough becomes, at a minimum, a good baseline to begin the process of the full debate that could go through Congress,” David Stevens, president of the Mortgage Bankers Association, said in an interview.
According to the draft, Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac would be liquidated within five years and the U.S. Treasury would assume responsibility for their existing mortgage guarantees. The two companies, which have been under U.S. conservatorship since 2008, package mortgages into securities on which they guarantee payment of principal and interest.
18 Signs That Massive Economic Problems Are Erupting All Over The Planet
By Michael, on June 2nd, 2013
In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing. Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer. Just look at what is happening in Europe. The eurozone is now in the midst of the longest recession that it has ever experienced. Just look at what is happening over in Asia. Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control. One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have “kicked the can down the road” by recklessly printing money and by borrowing money at an unprecedented rate. Unfortunately, the “sugar high” produced by those foolish measures is starting to wear off. We are going to experience a massive amount of economic pain along with the rest of the world – it is just a matter of time.
But for the moment, there are a lot of skeptics out there.
For the moment, there are a lot of people that are declaring that the problems of the past have been fixed and that we are heading for incredibly bright economic times ahead.
Unfortunately, those people appear to be purposely ignoring the economic horror that is breaking out all over the globe.
The following are 18 signs that massive economic problems are erupting all over the planet…
#1 The eurozone is now in the midst of its longest recession ever. Economic activity in the eurozone has declined for six quarters in a row.
“I’ve sent CVs everywhere, I come to the unemployment agency every day, for 3 or 4 hours to look for work as a truck driver and there’s never anything,” said 42-year old Djamel Sami, who has been unemployed for a year, leaving a job agency in Paris.
#7 Unemployment in the eurozone as a whole has just hit a brand new all-time record high of 12.2 percent.
#8 Youth unemployment continues to soar to unprecedented heights in Europe. The following is from an article that was recently posted on the website of the Guardian that detailed how bad things are getting in some of the worst countries…
In Greece, 62.5% of young people are out of work, in Spain it’s 56.4%, then Portugal with 42.5%, and then Italy with 40.5%.
#9 Youth unemployment is being partially blamed for the worst rioting that Sweden has seen in many years. The following is how the Daily Mail described the riots…
Sweden is reeling after a third night of rioting in largely run-down immigrant areas of the capital Stockholm.
In the last 48 hours violence has spread to at least ten suburbs with mobs of youths torching hundreds of cars and clashing with police.
It is Sweden’s worst disorder in years and has shocked the country and provoked a debate on how Sweden is coping with youth unemployment and an influx of immigrants.
#10 An astounding 10 percent of all banking deposits were pulled out of banks in Cyprus during the month of April alone.
#11 Economic growth in India is the slowest that it has been in an entire decade.
#12 Suddenly Australia is experiencing some tremendous economic challenges. The following quotes are from a recent Zero Hedge article…
The seasonally-adjusted rate for April was 12.2%, up from 12.1% the month before.
An extra 95,000 people were out of work in the 17 countries that use the euro, taking the total to 19.38 million.
Both Greece and Spain have jobless rates above 25%. The lowest unemployment rate is in Austria at 4.9%.
The European Commission’s statistics office, Eurostat, said Germany had an unemployment rate of 5.4% while Luxembourg’s was 5.6%.
The highest jobless rates are in Greece (27.0% in February 2013), Spain (26.8%) and Portugal (17.8%).
In France, Europe’s second largest economy, the number of jobless people rose to a new record high in April.
“We do not see a stabilisation in unemployment before the middle of next year,” said Frederik Ducrozet, an economist at Credit Agricole in Paris. “The picture in France is still deteriorating.”
‘Social crisis’
Youth unemployment remains a particular concern. In April, 3.6 million people under the age of 25 were out of work in the eurozone, which translated to an unemployment rate of 24.4%.
Figures from the Italian government showed 40.5% of young people in Italy are unemployed.
Europe’s already dismal jobs situation has deteriorated further. If we needed a reminder of the lingering effects of the eurozone financial crisis, it is to be seen in the jobs data.
The general pattern is that the largest increases in unemployment over the last year were in countries at the centre of the crisis – Greece, Cyprus, Spain and Portugal. There was also a sharp increase in Slovenia, a country seen as a possible future candidate for a financial rescue.
The main exception to the pattern was Ireland, another country receiving a bailout, where unemployment nonetheless fell by almost one and half percentage points in twelve months.
The figures also highlight the “lost generation” concern that is, or should be, causing some lost sleep for political leaders. Unemployment among young people is approaching one in four across the eurozone and it is 40% or higher in a few countries – Greece, Spain, Portugal and Italy.
“We have to deal with the social crisis, which is expressed particularly in spreading youth unemployment, and place it at the centre of political action,” said Italy’s President Giorgio Napolitano.
In the 12 months to April, 1.6 million people lost their jobs in the eurozone.
While the jobless figure in the eurozone climbed for the 24th consecutive month, the unemployment rate for the full 27-member European Union remained at 11%.
The eurozone is in its longest recession since it was created in 1999. At 1.4%, inflation is far below the 2% target set by the European Central Bank (ECB).
Consumer spending remains subdued. Figures released on Friday showed that retail sales in Germany fell 0.4% in April compared with the previous month.
Greece’s young: Dreams on hold as fight for jobs looms
By Mark LowenBBC News, Athens
Mark Lowen looks at the toughest equation Greece has to solve
Greece’s school exam season has arrived. But for many now facing the final-year tests known as the Panhellenics, the stress is twofold: last-minute cramming and the knowledge that they’ll soon enter the worst jobs climate in Europe.
At 64.2%, youth unemployment in Greece is the highest in the continent. Those between the ages of 16 and 25 are now the crisis generation.
At the Spoudi school in Athens, dreams have been put on hold. The school leavers longed for a stable job, for a future full of opportunity. But instead, unemployment and uncertainty beckon.
The economy won’t recover because the educated ones will go abroad and only the older people will stay here”
Christina ZahagouLaw graduate, 23
In a final maths class, students pore over complex algebra problems. But how to stay positive in today’s Greece might just be the most difficult equation to solve.
“I’m not sure about my future,” says Nathalie Scholden, an 18-year-old who hopes to study economics. “I think I won’t stay in Greece because there’s high unemployment and bad salaries. A lot of kids my age feel the same. If we’re here and nobody gets the life they want, why should we stay?”
Among the other students, few are optimistic. One thinks of leaving Athens for the countryside, another of going into farming because of a lack of opportunities.
“In Greece today you can’t do what you want,” says Alexandros Delakouras, 17. “It will be very difficult to get a job in my country but I will try hard.” He adds with a smile: “Maybe, with God’s help, I’ll succeed.”
Before Greece’s first bailout three years ago – and the spending cuts that ensued – unemployment in the country was under 12%. Now it’s at 27%.
And among the youth, it’s more than doubled from around 31% in May 2010. Recession has hit hard but it’s the austerity demanded by the country’s international lenders that has had such a devastating impact.
Brain drain
Doing the sums
In Greece, 64.2% of 16 to 25-year olds are out of work
This has risen from 31.2% three years ago when Greece received its first international bailout
The economy is expected to stay in recession for the sixth consecutive year in 2013
Unemployment continues to rise and is not expected to start falling until 2015, the Greek central bank says
And so the brightest, like 23-year-old law graduate Christina Zahagou, are leaving. Greek emigration to Germany jumped by more than 40% last year. She is now following suit after failing to find work.
Sweden Riots Put Faces to Statistics as Stockholm Burns
By Niklas Magnusson & Johan Carlstrom – May 27, 2013 2:25 AM CT
A week of riots in Stockholm has torn a hole in Sweden’s image as a beacon of social harmony.
In Husby, a suburb north of the capital where 60 percent of residents were born outside Sweden and unemployment is twice the national average, youths torched cars, schools and other buildings in a show of anger that has unsettled one of Europe’s richest nations. The riots spread to more than 10 other suburbs in Stockholm.
A burning car set on fire in the Stockholm suburb of Kista after youths rioted in several different suburbs around Stockholm for a third executive night, late May 21, 2013. Photograph: Fredrik Sandberg via AP Photo/Scanipx Sweden
People exit Husby subway station to attend a demonstration against police violence and vandalism in the Stockholm suburb of Husby on May 22, 2013. Sweden’s youth unemployment rate was 23.6 percent last year– about three times the national average — according to the statistics office. Photographer: Jonathan Nackstrand/AFP/Getty Images
“Exclusion, poverty and unemployment” are the main causes of the riots, Yves Zenou, a professor at Stockholm University who has done research on urban economics and migration issues, said in a May 24 interview. “They feel excluded from Swedish society. Many are not in employment, many because of discrimination, and many have low education levels.”
The unrest has shocked Sweden, where the economic policies of Prime Minister Fredrik Reinfeldt helped the AAA rated nation emerge as a haven from the debt crisis raging across southern Europe. Yet Sweden’s aggregate wealth has hidden rifts in the economy as polices have failed to catch a demographic now taking to the streets to show its desperation.
Young people need “jobs as well as something to do in their spare time,” Iqra Siddiqui, a 16-year-old living in Hallunda, a suburb in south Stockholm, said yesterday in an interview outside the Skaerholmen subway station. “Another problem is that parents don’t know what their kids are up to.”
Police Detentions
Sweden’s youth unemployment rate was 23.6 percent last year — about three times the national average — according to the statistics office. A report this month by the Public Employment Services showed that about 77,000 people between 16 and 29 years haven’t studied or worked over the past three years, suggesting even larger hidden unemployment. By comparison, youth unemployment was about 153,000 last year, according to the agency.
Police, who as of May 24 had detained 29 people since the riots started on May 19, say most of those involved are about 20 years old. Their plight underscores how Europe’s economic pain is hitting young people hardest. According to Luxembourg-based Eurostat, youth unemployment in the 27-nation European Union reached 23.5 percent in March, versus 16.2 percent in the U.S.
Scenes outside Stockholm this week replayed images of youth unrest across Europe since the global economic crisis started. In 2011, riots that started in north London also spread to Manchester and the Midlands, in the worst youth unrest in the U.K. since the 1980s. Paris has seen similar violence.
‘Ordinary Night’
While unrest also spread to other towns over the weekend, including Oerebro and Linkoeping, violence in the Swedish capital have started to subside.
Last night was like “an ordinary night,” according to police spokesman Kjell Lindgren. Fewer than 10 cars were set on fire and there were no reports of stones being thrown at emergency services and no major vandalism. Between Saturday and Sunday, about 20 cars were set on fire and a school in a southern suburb was vandalized. Rocks were also thrown at police in the Vaarberg neighbourhood.
Reinfeldt, who gained power in 2006 on promises of bringing more people into the labor market, has struggled to carry that pledge over to immigrants and young adults. In Husby, an area dotted by concrete high rises, the number of people relying on state assistance is more than triple the average for Stockholm.
Sweden has suffered similar episodes of violence before, including in the southern city of Malmoe in 2008 as well as Gothenburg.
The Cause
Megafonen, a Husby advocacy group, traces the outbreak of Stockholm’s riots to the police shooting of a local 69-year-old man originally from Portugal. Police brutality and racist slurs have exacerbated tensions, the group says.
Dagens Nyheter, Sweden’s largest daily newspaper, has questioned those claims, as a columnist asked for specific examples of brutality and proof of racial insensitivity. The newspaper reported on May 24 that about half the people arrested on suspicion of rioting in Husby came from outside the neighborhood, and half of them had criminal records.
In response, the advocacy group posted witness accounts of police brutality and racism on its website.
“Megafonen doesn’t start fires, we don’t believe this is the right method for long-term change,” said the group. “But we know that it’s a reaction to deficiencies in society. Unemployment, inadequate schools and structural racism are reasons behind what we are seeing today.”
Small Group
The largest immigrant group in Sweden is from Finland, followed by Iraq and Poland. In Husby, of residents with a foreign background, those who were born abroad or have two non-Swedish parents, 80 percent have heritage from either Asia or Africa, according to city statistics.
Residents are quick to point out that the violence is being carried out by a small group that doesn’t speak for most people living there. Community groups have taken to the streets to help ease tensions and restore calm, which was successful over the weekend.
The mainstream media never talks about that. They are much too busy covering the latest dogfights in Washington and what Justin Bieber has been up to. And most Americans seem to think that if the Dow keeps setting new all-time highs that everything must be okay. Sadly, that is not the case at all. Right now, the U.S. economy is exhibiting all of the classic symptoms of a bubble economy. You can see this when you step back and take a longer-term view of things. Over the past decade, we have added more than 10 trillion dollars to the national debt. But most Americans have shown very little concern as the balance on our national credit card has soared from 6 trillion dollars to nearly 17 trillion dollars. Meanwhile, Wall Street has been transformed into the biggest casino on the planet, and much of the new money that the Federal Reserve has been recklessly printing up has gone into stocks. But the Dow does not keep setting new records because the underlying economic fundamentals are good. Rather, the reckless euphoria that we are seeing in the financial markets right now reminds me very much of 1929. Margin debt is absolutely soaring, and every time that happens a crash rapidly follows. But this time when a crash happens it could very well be unlike anything that we have ever seen before. The top 25 U.S. banks have more than 212 trillion dollars of exposure to derivatives combined, and when that house of cards comes crashing down there is no way that anyone will be able to prop it back up. After all, U.S. GDP for an entire year is only a bit more than 15 trillion dollars.
But most Americans are only focused on the short-term because the mainstream media is only focused on the short-term. Things are good this week and things were good last week, so there is nothing to worry about, right?
Unfortunately, economic reality is not going to change even if all of us try to ignore it. Those that are willing to take an honest look at what is coming down the road are very troubled. For example, Bill Gross of PIMCO says that his firm sees “bubbles everywhere”…
We see bubbles everywhere, and that is not to be dramatic and not to suggest they will pop immediately. I just suggested in the bond market with a bubble in treasuries and bubble in narrow credit spreads and high-yield prices, that perhaps there is a significant distortion there. Having said that, it suggests that as long as the FED and Bank of Japan and other Central Banks keep writing checks and do not withdraw, then the bubble can be supported as in blowing bubbles. They are blowing bubbles. When that stops there will be repercussions.
And unfortunately, it is not just the United States that has a bubble economy. In fact, the gigantic financial bubble over in Japan may burst before our own financial bubble does. The following is from a recent article by Graham Summers…
First and foremost, Japan is the second largest bond market in the world. If Japan’s sovereign bonds continue to fall, pushing rates higher, then there has been a tectonic shift in the global financial system. Remember the impact that Greece had on asset prices? Greece’s bond market is less than 3% of Japan’s in size.
For multiple decades, Japanese bonds have been considered “risk free.” As a result of this, investors have been willing to lend money to Japan at extremely low rates. This has allowed Japan’s economy, the second largest in the world, to putter along marginally.
So if Japanese bonds begin to implode, this means that:
1) The second largest bond market in the world is entering a bear market (along with commensurate liquidations and redemptions by institutional investors around the globe).
2) The second largest economy in the world will collapse (along with the impact on global exports).
Both of these are truly epic problems for the financial system.
If you know someone that actually believes that the U.S. economy is in good shape, just show them the statistics in this article. When you step back and look at the long-term trends, it is undeniable what is happening to us. We are in the midst of a horrifying economic decline that is the result of decades of very bad decisions. 30 years ago, the U.S. national debt was about one trillion dollars. Today, it is almost 17 trillion dollars. 40 years ago, the total amount of debt in the United States was about 2 trillion dollars. Today, it is more than 56 trillion dollars. At the same time that we have been running up all of this debt, our economic infrastructure and our ability to produce wealth has been absolutely gutted. Since 2001, the United States has lost more than 56,000 manufacturing facilities and millions of good jobs have been shipped overseas. Our share of global GDP declined from 31.8 percent in 2001 to 21.6 percent in 2011. The percentage of Americans that are self-employed is at a record low, and the percentage of Americans that are dependent on the government is at a record high. The U.S. economy is a complete and total mess, and it is time that we faced the truth.
The following are 40 statistics about the fall of the U.S. economy that are almost too crazy to believe…
#1 Back in 1980, the U.S. national debt was less than one trillion dollars. Today, it is rapidly approaching 17 trillion dollars…
#3 The U.S. national debt is now more than 23 times larger than it was when Jimmy Carter became president.
#4 If you started paying off just the new debt that the U.S. has accumulated during the Obama administration at the rate of one dollar per second, it would take more than 184,000 years to pay it off.
#5 The federal government is stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day.
#6 Back in 1970, the total amount of debt in the United States (government debt + business debt + consumer debt, etc.) was less than 2 trillion dollars. Today it is over 56 trillion dollars…
#7 According to the World Bank, U.S. GDP accounted for 31.8 percent of all global economic activity in 2001. That number dropped to 21.6 percent in 2011.
#8 The United States has fallen in the global economic competitiveness rankings compiled by the World Economic Forum for four years in a row.
#9 According to The Economist, the United States was the best place in the world to be born into back in 1988. Today, the United States is only tied for 16th place.
#10 Incredibly, more than 56,000 manufacturing facilities in the United States have been permanently shut down since 2001.
#11 There are less Americans working in manufacturing today than there was in 1950 even though the population of the country has more than doubled since then.
#13 When NAFTA was pushed through Congress in 1993, the United States had a trade surplus with Mexico of 1.6 billion dollars. By 2010, we had a trade deficit with Mexico of 61.6 billion dollars.
#14 Back in 1985, our trade deficit with China was approximately 6 million dollars (million with a little “m”) for the entire year. In 2012, our trade deficit with China was 315 billion dollars. That was the largest trade deficit that one nation has had with another nation in the history of the world.
#15 Overall, the United States has run a trade deficit of more than 8 trillion dollars with the rest of the world since 1975.
#16 According to the Economic Policy Institute, the United States is losing half a million jobs to China every single year.
China is a country with extremely serious drought problem.
It is also one of the 13 poorest countries for
water resources per head.
The mistakes in the Chinese Communist Party (CCP)
recent strategies and its reckless economic development,
have further exacerbated the water shortage problem.
An article published by British media on this issue wrote that,
water poverty may negatively impact China’s economic growth;
The “China Dream” will become difficult to achieve
if this problem is not solved as quickly as possible.
UK newspaper The Financial Times published
an article which said
in the rapid economic development China seems to be ignoring
the fact it is a huge nation with poor water resources.
It has only one-fourth of the global average amount
of water per person.
The continued decimation of natural resources and polluted
environment has quickly exacerbated the water shortage issue.
Now China’s economic growth is threatened by this issue.
The Financial Times article quoted a report of the World Bank.
This estimated the economic loss due to water poverty
has reached 2.3% of China’s GDP.
Sun Qingwei, head of Climate and Energy Project, Greenpeace:
“A good mode of economic development should
produce short-term GDP growth, and also protect sustainable
development for future generations in the long run.
In my opinion, the (CCP’s) mode of destroying water resources
and environment only for short-term interests is reckless.
Such economic development cannot be viewed as real.”
Dai Qing, observer of China’s political and social affairs:
“The CCP’s GDP is meaningless.
They are simply playing the number game, trying to prove
economic growth and better civil lives with a higher GDP.
However, they don’t care about the environmental cost of
such development, or depriving Chinese people of civil rights “
According to expert analysis, excluding the changes of natural
environment, the main reason for China’s water shortage is
still the massive emission of industrial and agricultural
water and water pollution.
The policy mistakes made by the CCP one after another
have made the situation even worse.
These mistakes include reclaiming lakes into fields, the
Three Gorges Dam project, south-to-north water diversion,
river diversions and other projects that were highly
controversial and opposed by experts.
Dai Qing: “We have investigated the water
shortage problem of Beijing.
There are two big rivers flowing into Beijing
from the countryside.
One is the Yongding River from the west, and the
other one is the Chaobai River from the east.
A number of dams have been constructed on both
rivers upstream, which block the majority of water flow.
For example, over 200 dams are built on
the upstream of Yongding River.
Therefore the river is completely dry in Beijing.
The situation is the same for Chaobai River.
On the other hand, the rivers originating in Beijing
cannot be used due to pollution.
This is one aspect of the water poverty problem.”
Sun Qingwei: “Now we see that the blockage of rivers with
dams and massively extracting groundwater has led to the
destruction of water resources in local regions.”
Statistics show that, since 2012 no less than 10 reports
have been released on China’s water poverty problem,
by HSBC Bank, KMPG, Greenpeace, Chinese Academy of
Sciences and other famous agencies.
Experts warn that, “No available water resource
will be left in China after 20 years.”
As so many research reports on water poverty were released,
the CCP officials seem to realize how serious the problem is.
Some remedial measures have been presented,
but have yet to be implemented.
Sun Qingwei: “Currently there have been some efforts
aiming at improvement of water resource management.
However, we are still far away from solving the problem, as
we haven’t seen any real implementation of those measures;
Especially in adjusting the mode of economic development.
If the style of over-consumption of natural resources and
destroying environment for economic growth does not
change, we cannot have any optimism about the situation.
Till now there has been no real action to make such a change.”
The Financial Times article further commented on the water
shortage problem has shown impact on China’s social, political, and economic affairs;
Without solving this issue, the CCP would never
achieve the “China Dream” they depicted.
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Document: Major resources needed for Obama Africa trip 
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By Michael, on June 2nd, 2013
