“When you look at government policies, there’s a massive transfer of wealth from the young and relatively poor members of society toward the old and relatively members of society,” says Veronique de Rugy, a Reason magazine columnist and economist at the Mercatus Center at George Mason University.

In 1970, de Rugy notes, transfers from the young to the old took up about 20 percent of the federal budget. In a few years, that figure will break the 50 percent barrier as the population ages and Social Security and Medicare ramp up. Those programs are paid for by payroll taxes that suck up around 15 percent of every dollar most workers will ever make.

Yet the #Occupy movement spends most of its energy railing against “the 1 Percent” richest Americans, whose wealth is not gained at the expense of the “99 Percent.” Rather, it comes from providing goods and services that people want to consume.

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Former Illinois Gov. Rod Blagojevich was sentenced this week to 14 years in prison, but the real sentence is the one taxpayers will serve many years after. He mastered the art of pairing populist rhetoric with expensive new programs directed toward his core constituencies.

To pursue his highly visible programs and agendas, Blagojevich needed money. He found it by diverting billions from the state’s pension system. By taking “holidays” from required pension system contributions and by nearly doubling Illinois’s debt, he burdened future generations to support favored groups in the present.

Perhaps worst of all, as CEO of Illinois, Blagojevich institutionalized a culture of deficit spending. He accomplished this so effectively that Blagojevich’s successor, Gov. Pat Quinn, and today’s lawmakers feel comfortable perpetuating the ruinous habits of spending and borrowing more than the state can afford. Fiscal ineptitude is the new norm.

The Illinois Policy Institute has a new report out that details Blagojevich’s lasting effect on Illinois’ fiscal condition. Read it at www.illinoispolicy.org/blago. Here’s the “top ten” list:

No. 1: Disregarded obligations to state pensioners

Policy: Blagojevich diverted billions of dollars from the pension funds of future government retirees to pay for his own spending priorities.
Problem: Blagojevich ballooned existing spending programs, ignoring his responsibility to ensure the health of the state’s pension systems. Retirees and taxpayers are on the hook for his political expediency.
Program cost: Excess of $3 billion for future taxpayers

No. 2: A culture of deficits

Policy: Grow spending to appease Blagojevich’s core constituencies.
Problem: While Blagojevich was creating and expanding unaffordable programs, the state’s financial position deteriorated year after year.
Program cost: Worst rating of net assets in the nation.

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From time immemorial—from Etienne de la Boitie to David Hume to Ludwig von Mises—political analysts have noted that because the number of those in the ruling elite amounts to only a small fraction of the number in the ruled masses, every regime lives or dies in accordance with “public opinion.” Unless the mass of the people, no matter how objectively abused and plundered they may appear to be, believe that the existing rulers are legitimate, the masses will not tolerate the regime’s continuation in power. Nor need they tolerate it, because they greatly outnumber the rulers, and hence whenever they become subjectively fed up, they have the power—which is to say, the overwhelming advantage of superior numbers—to oust the regime. Even if the regime possesses a great advantage of coercive power, its employment avails the rulers nothing if they must kill or imprison 90 percent of the population, because such massive violence would reduce them to the status of parasites without hosts.

This consideration long seemed to make sense as a critical element of political analysis, and even today one often encounters it. Something akin to it seems to motivate the current Occupy Wall Street movement and its spin-offs in other venues when they represent themselves as members of the (exploited) 99 percent, in opposition to the (exploiting) 1 percent.

Certain long-established trends in the welfare state, however, have progressively weakened the force of this analysis. The main element of these trends is the tremendous growth in the number of people (and in their proportion in the population) who are directly dependent on government benefits to a substantial degree. Researchers at the Heritage Foundation have been tracking this development for several years and have pushed their analysis back for several decades. An index of dependency based on this research increases from 19 in fiscal year 1962 to 272 in fiscal year 2009.

The Heritage index uses information on almost three dozen important federal programs on which Americans depend for cash income and other support—including housing assistance, Medicaid, Medicare, Social Security, unemployment insurance benefits, educational benefits, and farm-income supports—but it is scarcely a comprehensive measure, inasmuch as the total number of federal programs with dependents is gigantic at present. Of course, each such program has government employees and contractors who run it and hence depend on it to earn much, if not all, of their income. Government civilian and military retirees add millions more to the ranks.

The Heritage researchers found that in 1962, 21.7 million persons depended on the programs they included in their index for benefits. By 2009, the corresponding number of dependents had grown to 64.3 million. Adding dependents not included in the Heritage study might easily increase the number to more than 100 million, or to more than a third of the entire population. Thus, the parasites verge ever closer to outnumbering their hosts.

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We are currently having a rather asinine federal tax rate debate – how to offset on the federal ledger the one year extension of the payroll tax diminishment.

Lost, sadly, is the discussion of whether or not we should be so doing.

This is in fact not a “tax cut” at all – not in the income tax sense of the word.  It is a reduction in the payments made to the Social Security program (SSI).

A reduction which – definitively – does nothing to create jobs or “stimulate” the economy.

Because no one in the private sector makes any permanent decision based upon temporary government policy.

If they can’t afford to permanently hire you, a temporary tax cut doesn’t make it any more feasible.  A part of why our egregious unemployment problem has persisted under the current, temporarily lower payroll tax rates.

This lack of policy permanence – which has been rampant throughout the Olympic-ly overactive Obama Administration – is a large contributor to the uncertainty that has plagued us and our economy lo these last nearly three years.

Meanwhile, the per person Social Security payment reduction is tiny – about $20 a week.

Keynesian dreams aside, government spending doesn’t “stimulate” the economy.  2009’s $787 billion – plus inordinate interest – didn’t.  Twenty bucks a week per employee certainly won’t.

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Photo credit: Bill Clark/Roll Call

Rep. Paul Ryan (R-WI), chair of the House Budget Committee, also leads the Prosperity PAC, a political action committee devoted to supporting his ideas for reform and to helping candidates who share them.

As the 2012 election approaches, Rep. Ryan is focuing his Prosperity PAC on grassroots education initiatives designed to change the terrain of national debate about the country’s fiscal future, and to elect reform-minded candidates to Congress.

Recently, the Prosperity PAC released a new memorandum on health care policy. It shows that health care costs are the primary cause of rising national debt, and proposes patient-centered, market driven solutions to reduce those costs.

Specifically, the Prosperity PAC advocates premium support for Medicare, block grants to states for Medicaid, and tax reform that will enable patients to buy portable insurance plans.

I spoke with Rep. Ryan this morning about the Prosperity PAC’s latest effort.

Tell us about what the Prosperity PAC is doing about health care policy.

We’re trying to get activists informed and educated about what it takes to repeal and replace the President’s health care law, how health care costs are a driver of debt, and how health care policy is an indicator of economic and personal freedom in the future.

Our purpose is to get activists motivated, to bring people to Congress who will fight for these reforms–not those who will go wobbly when things get tough. We want to get committed reformers to Congress to help stave off a debt crisis, and to get grassroots activists informed about what changes are necessary.

The Supreme Court is going to rule on ObamaCare this term. If all or part of the law is repealed, would that change your agenda?

Even if we assume that in June 2012, the whole thing goes down, we are not going to get an agreement on new legislation with this President and this Senate in the fall of a presidential election. What we have to do is get Republican candidates to commit to an agreement on reform so that when we win next November, it will be a win for limited government and economic freedom. We believe that health care is the lynchpin of it all, and so during the campaign season is when you want make sure we have men and women running for Congress who know the stakes, who are ready and willing to do the right thing, and who are committed so that when they get to Washington they follow through.

Let’s consider several scenarios. Suppose President Obama wins re-election with a Republican Congress– (more…)

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech discuss the need for entitlement reform, Barack Obama’s government centered plan, and the solutions proposed by each of the Republican Presidential candidates.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

My chat with Jon Huntsman about his economic plan
Huntsman, the Moderate, Endorses Ryan Medicare Plan
Jon Huntsman’s Bold Plan for Health Care Reform (but not Entitlements)
Perry’s Economic Agenda
Mitt Romney’s Vaguely Promising Plan for Entitlement Reform
Cain Shows He’s Savvy on Health-Care Policy
Newt Gingrich’s 21st Century Contract with America
Coming down on the fair side of federal tort reform
Mitt Romney Loves Medicare Very Much And Won’t Ever Let Anyone Take It Away, No Matter What
Cain-Gingrich Debate Highlight Reel

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss the October unemployment report, the high jobless rate among young adults, and a piece that says the left and the right are both wrong on how to fix the economy.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Boehner on supercommittee: Tax increases are out, revenues could be in
Economy Wobbles to 80,000 New Jobs, Rate Slips to 9%
October Unemployment Report
U.S. Stock Futures Fall as Europe Funding Concern Offsets Jobless Rate
Tight Budgets, Loose Money: Why Both Liberals and Conservatives Are Wrong About How to Fix the Economy

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In the months between George W. Bush’s first Inauguration in January of 2001 and the terrorist attacks of 9/11, Republicans in both Houses of Congress were busily patting themselves on the back for retaining control of Capitol Hill and gaining the White House.

The conservative public policy community and its health care scholars were delighted that after years of economic and practical analysis, market-based, patient-centered reforms that expand choice, increase access to care and stabilize costs would be achieved.

After 9/11, our leaders focused on keeping our nation safe – and rightfully so.   The domestic policy agenda was largely ignored and little attention paid to passing meaningful health care reform.  When Democrats re-captured majorities in the House and Senate in 2006, contributing to their success was anger and disappointment by voters who felt the GOP squandered its chance to pass health care and entitlement reform.

Democrats, however, did not make the same mistake.

From the moment Barack Obama became president, they pushed for big government health care and passed ObamaCare over the objections of the American public.  Many aspects of ObamaCare were presented dishonestly, with several line items removed after proponents claimed they weren’t there in the first place.

“Here,” said ObamaCare supporters, “is your long awaited health care reform.”

ObamaCare is not health care reform.  It is a massive tax increase of at least $500B to be paid by Americans over the next ten years. It is expected to increase federal spending by one trillion dollars in its first decade and nearly three trillion when fully implemented – adding to America’s already mind-numbing debt.  It adds a myriad of regulation and new bureaucracies to an already bloated system that will result in yet another unsustainable government entitlement program for taxpayers while limiting health care choices for patients at a personal, private and painful level.

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Sally Pipes, President of the Pacific Research Institute, has written an important article in Forbes analyzing new survey results demonstrating that 87% of medical physicians in the United States no longer view the American Medical Association as representing their views and interests.

Ms. Pipes states: “Much of that dissatisfaction stems from the organization’s support for President Obama’s contentious health care reform package.” The survey, conducted by physician recruitment firm Jackson & Coker, discovered that more than three times as many doctors believed that the quality of American health care would “deteriorate” rather than “improve” under ObamaCare; and nine of ten physicians think ObamaCare will have a negative impact on their profession. Most member driven organizations would collapse with such negative trends; but the AMA survives by collecting up to $70 million from its exclusive relationship with the federal government to provide CPT Codes in direct conflict with medical doctors.

The Current Procedural Terminology (CPT) code are maintained by the Chicago-based American Medical Association to describe medical, surgical, and diagnostic services and is designed to communicate a uniform set of information about medical services and procedures to physicians, patients, accreditation organizations, and payers for administrative, financial, and Medicare and Medicaid billing coders. These codes have been designated by the U.S. Department of Health & Human Services to be published for treatment guidelines and billings.

Federal and state spending on health care is $1.1 trillion; about 42% of all healthcare spending in the U.S. last year. CPT codes set average physician and hospital reimbursement rates. For example the average physician rates for treating Medicare beneficiaries is 81% of the rate private insurers pay and for Medicaid patients the reimbursements are just 56% of the private rate.

American Medical Association 2009 revenue according to “Hoover’s Company Profiles” was $248 million; with $70 million of income coming from “publishing”. This is an especially large percentage of revenue, considering that the AMA membership dues were only $42 million.

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On September 21, 2011, Sen. Tom Harkin (D-Iowa) spoke to a crowd gathered in Washington, D.C., outside of the Capitol and said, “We need some of you probably getting arrested for doing things you shouldn’t be doing” to save Medicaid.

Also, Sen. Bernie Sanders (D-Vermont), who is a self-avowed socialist, told MRCTV’s Joe Schoffstall he was at the rally to ’save’ Medicaid and that Republicans care more about representing the ‘wealthiest people in the country’, large campaign contributors and ‘hedge fund people’ than working and low-income families.

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From the Associated Press:

Obama promised Medicare beneficiaries that he’d veto any legislation asking them to sacrifice without also raising taxes on upper-income earners. But he didn’t issue them a complete pass.

Instead, he’s proposing to raise a range of costs for future retirees, while mostly shielding Medicare’s 48 million current beneficiaries. Under the president’s plan, starting in 2017:

_Upper-income beneficiaries would pay higher monthly premiums for outpatient and prescription coverage. Eventually about a quarter of all Medicare beneficiaries would be hit with the higher income-related premiums that only a small share of seniors now pay.

_Newly signed-up beneficiaries would pay a penalty if they also purchase private insurance that covers all or most of Medicare’s copayments and deductibles. Administration officials say such insurance encourages over-treatment.

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Demanding higher taxes on the “wealthy” and condemning Republican plans to reform entitlements, a crowd of protesting loudly gathered in the Cannon House Office Building on Capitol Hill this afternoon.   Protesters then streamed into Representative Dave Camp’s office.

As chants of “My Medicaid matters” echoed through the typically peaceful congressional halls, police officers warned the protesters such conduct fell outside the bounds of acceptable conduct and stood guard at the congressman’s door to prevent a security problem from developing.

Who organized this group of people to engage is such poor behavior?

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Ed Koch was one of the first prominent New York Democrats to break ranks and endorse Republican Bob Turner in this week’s election to fill the vacancy left by the resignation of disgraced Congressman Anthony Weiner. Koch’s early endorsement of Turner set in motion of a chain of events, culminating in the election of a Republican to represent parts of Queens and Brooklyn. Turner is the first Republican to represent this area since the 1920s. Today, I spoke with the former mayor about the campaign.

BG: Given that Israel is a “national” issue, why did you get involved in the race in New York’s 9th district, in particular?

Koch: There were only two special congressional elections in the whole country–here and in Nevada. The election in the 9th congressional district was the only election in the City of New York. And I thought, and I expressed myself publicly, that it would be a good place, being the largest Jewish district in America–something like 300,000 Jews lived in that district, and the Jewish vote would be somewhere around 30% or more–it would be a good place to have a referendum on whether the President’s position on Israel, which I have described as hostile to Israel, was one representative of the voters of that district.

And I got a call from Bob Turner, who wanted to see me. I had never met him before. We talked, and I said, “I want to send a message to the President on Israel,” and he agreed, and I also said, “I want to send a message to the Republicans in Washington that you disagree with their effort to privatize Social Security and Medicare.” He said, “I do disagree.” I said, “Let’s put it in writing.” And we did, and I endorsed him, and I framed the issues carefully so people could understand them.

Bob Turner was a marvelous candidate. Without a good candidate, you can’t prevail, even if you’re on the right side. He’s honest, intelligence, courageous, and he’s got a good sense of humor.

So we went out there. I campaigned for him, and the Democratic Party took the district for granted up until the last, probably, ten days, and then they realized from the polls that Turner had turned it all around. He was now six points ahead, a week before the election. So they brought in Bill Clinton, Charles Schumer, and Governor Andrew Cuomo to do robo-calls. And we did robo-calls–myself, and Assemblyman Dov Hikind–and clearly, we prevailed, since Bob won with an eight percent message.

Was that a challenge, to frame that dual message? (more…)

From Reuters:

The powerful healthcare industry hopes a congressional “super committee” tasked with slashing America’s debt will fail and is lobbying instead for automatic spending cuts that will kick in if the panel deadlocks.

Much of the health sector believes the spending cuts, which will be triggered if the committee fails to find at least $1.2 trillion in savings over 10 years, will be less draconian than any deficit-reduction deal, according to lobbyists and healthcare groups interviewed by Reuters.

Under the trigger mechanism — a process called sequestration — automatic spending cuts of $1.2 trillion will begin in 2013. But programs such as the Medicaid healthcare program for the poor and the Social Security retirement program are totally protected from cuts, while Medicare, the healthcare program for the elderly, would face only a 2 percent cut to providers.

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca and Congressman Paul Ryan to discuss the latest in the debt ceiling negotiations, the Senate’s Gang of Six plan, and the need to means test entitlement reform.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Paul Ryan: The Gang of Six Budget Effort
Why I oppose the Gang of Six plan
Boehner and Obama Nearing Deal on Cuts and Taxes
Paul Ryan: Debt Negotiations and Taxes
At 15 Federal Agencies, Death More Common Than Job Loss
Congressman Paul Ryan

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Eric O’Keefe to discuss the Health Care Compact, Medicaid and Medicare reform and the financial danger posed by unfunded liabilities.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Why Health Care Compact could be solution to Medicaid crisis
Eric O’Keefe and Getting Rid Of Obamacare With The Health Care Compact
HealthCareCompact.org
The Sam Adams Alliance

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On today’s edition of Coffee and Markets, Ben Domenech is joined by John Garen a professor in economics at the University of Kentucky and adjunct scholar at the Bluegrass Institute to discuss what lessons can be learned from the state of Kentucky where one in five people are enrolled in Medicaid as costs skyrocket and quality of care plummets.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

An Unsustainable Path: The Past and Future of Kentucky Medicaid Spending”
More Medicaid Delusion
Kentucky looks at Medicaid concerns
Beshear close on Medicaid plan but misses deadline
The Bluegrass Institute

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Planned Parenthood’s legal team has been extremely busy these days trying to stop various states from defunding their group. Texas, Wisconsin and New Hampshire joined Indiana, Kansas and North Carolina this week as they decided that taxpayer dollars should not fund the mega abortion chain.

But Indiana is Ground Zero in the fight to strip Planned Parenthood of its taxpayer dollars. After Indiana defunded the abortion group in May, President Obama has threatened to withhold billions of dollars in Medicaid funds from the state of Indiana if the state does not continue to funding Planned Parenthood. To make matters worse, an Obama-appointed judge ruled late last week that Indiana had to reinstate funding to Planned Parenthood because it would not be in the public interest if President Obama withheld billions of dollars from the state of Indiana and consequently hurt over a million patients on Medicaid. Forget the merits of that case!

Planned Parenthood emphatically defends its public funding by arguing that women have no other place to go for their healthcare needs.  According to an official Planned Parenthood press release, the legislation would “take away health care from thousands of women in Indiana, leaving them at greater risk for undetected cancers, untreated infections and unintended pregnancies.”

Oh really? Planned Parenthood in Indiana serves 9,300 Medicaid patients, which only accounts for less than 1% of the total Medicaid patients in the state. And in the counties with Planned Parenthood clinics alone, women can choose from over  800 other qualified Medicaid providers.

Live Action is releasing an undercover video today showing that Planned Parenthood’s claims of Medicaid women losing their healthcare if they are defunded are bogus and unfounded. View here:

Our undercover investigators called 16 of the 28 Indiana Planned Parenthood clinics posing as women on Medicaid concerned about where they could receive services if Planned Parenthood’s funding was not restored.

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This new video from the Center for Freedom and Prosperity explains why Medicaid should be shifted to the states. As I note in the title of this post, it’s good federalism policy and good fiscal policy. But the video also explains that Medicaid reform is good health policy since it creates an opportunity to deal with the third-party payer problem.

One of the key observations of the video is that Medicaid block grants would replicate the success of welfare reform. Getting rid of the federal welfare entitlement in the 1990s and shifting the program to the states was a very successful policy, saving billions of dollars for taxpayers and significantly reducing poverty. There is every reason to think ending the Medicaid entitlement will have similar positive results.

Medicaid block grants were included in Congressman Ryan’s budget, so this reform is definitely part of the current fiscal debate. Unfortunately, the Senate apparently is not going to produce any budget, and the White House also has expressed opposition. On the left, reducing dependency is sometimes seen as a bad thing, even though poor people are the biggest victims of big government.

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Mario Loyola to discuss the court challenge of Obamacare’s expansion of Medicaid, how the Tenth Amendment plays a role in that argument and the growing overreach of the federal government.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

ObamaCare’s Next Constitutional Challenge
Renowned legal scholar Richard Epstein co-authors Wall Street Journal column with Texas Public Policy Foundation’s Mario Loyola
The Texas Public Policy Foundation amicus brief submitted to the 11th Circuit
Mario Loyola at Texas Public Policy Foundation

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