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Wednesday, December 30, 2009

Making 2010 a great year for America

So we are starting a new year. All of us have our personal aspirations. Some are seeking a new job, others want new business opportunities, others still want to make major purchases for their home or companies. Than there are those who simply want good things for themselves and those they love. I also think that people, more than we have seen in years, have hopes and dreams for this country. That is certainly the case with me. Below are some of my personal desires for the country this year. It is a really small list in light of how great our national need, but it would be an excellent beginning.
  • That members of Congress would get a healthy sense of fear starting right now. The Democrats seem like people in a trance, with no sense of reality or consequence. Their agenda seems more important to them than their careers and, certainly, their constituents. Meanwhile, the Republicans blindly see the conservative revolt as its movement, when many of these angry voters would be likely to vote for a candidate under the "Tea Party" banner than the GOP. The Democrats need to come to their senses and weigh the damage they are doing to both the country and themselves. Meanwhile, the Republican party should be made up of people in repentance because they have been a part of the problem and not the solution.
  • That there is a major shift in the US House and Senate races to candidates who support liberty. This does not seem likely in the US Senate because of the number of states that lean towards smaller government being up for reelection and are more vulnerable. However, I expect the US House to actually have a new Speaker. It is my hope that leader is not just another Republican.
  • That more Americans hold their elected officials accountable. There is an old adage that seems to be true that "people hate Congress, but love their elected member of Congress." For the vast majority of people their members of Congress are the problem. If your member of Congress is not honoring his or her oath of office to defend the Constitution, make that person have to look for other employment.
  • That the states demand for the restoration of its rights. We are seeing more states argue against the national government's rapid and unconstitutional expansion. Thirteen state Attorneys General, led by South Carolina Attorney General Henry McMaster, have recently notified US House Speaker Nancy Pelosi and US Senate Majority Leader Harry Reid and informed them that the Obamacare proposal is unconstitutional and that they intend to fight it every step of the way. Specifically, they warned in the letter to the congressional leaders that legal action may result if they do not remove the unconstitutional "Cornhusker Kickback" Medicaid provision inserted into the senate health care bill to secure the vote of Nebraska US Senator Ben Nelson.
  • That provision allows Nebraska to have the benefits of the socialized health care program without paying for it. We have also had governors cite Article I, Section 8 and the Tenth Amendment of the Constitution to remind the federal government of its proper role. In addition to states fighting back, I would love them to win these battles in the courts.
  • That America's international prestige would be restored and our troops would be protected. As Obama tried to figure out the US strategy in Afghanistan, we saw our troop casualties double last year. This President is far more dangerous to our friends and our armies than to its obvious enemies. I hope that does not remain the case in 2010.
This is a short list, but imagine if we could accomplish these few things alone? 2010 could be remembered as a very good year. One that set the groundwork for the restoration of this great Republic.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Does the GOP Shares Blame for Obamacare?

Besides the occasional Republican either voting for socialized medicine or preventing a filibuster of it, the guilt of the association with the proposal that passed the Senate and the GOP is very deep. In fact the recent bill, without the public option (but will force people into public care) looks increasingly like the failed experiment of Massachusetts.

Michael Tanner, a Senior Fellow with the Cato Institute recently noted that the primary highlights of Obama's health care program as it leaves the Senate mirrors the Massachusetts program that has become a nightmare. In particular, the final bill will likely include an individual mandate, a weak employer-mandate, middle-class subsidies, and increased insurance regulation.

The sweeping legislation passed in Massachusetts in 2006 set the stage for a dramatic shift in the role of government when it comes to health care. Critics warned at the time that the program would become more bureaucratic, more expensive, and less user friendly. Tanner believes that, three years later, that is exactly the case today.

Tanner notes that the problems with the program are significant and numerous:

  • In spite of practically bankrupting the state in order to get maximum participation among residents to get health insurance, 200,000 people remain uninsured.
  • The state requires every resident to have health insurance, yet that mandate seems to play only a small role in the number who get covered (evidenced by those who still remain without coverage). The real force behind insurance enrollment is due to the state's generous subsidies for the middle class.
  • If cost containment was an objective, Massachusetts has failed miserably because health care costs continue to rise much faster than the national average. In fact, since 2006, total state health care spending has increased by 28 percent. An increase in demand that comes with expanded numbers of those covered always leads to either higher costs or greater shortages (or both).
  • Insurance premiums have actually risen by eight to 10 percent annually. This is nearly double the national average. The "lower rates" we hear about in the political debate today are driven by smoke and mirrors and promise to be very short term.
  • New regulations and government controls are actually reducing consumer choice and adding to health care costs. The government found itself in a powerful position once Massachusetts passed this measure. With that power the government only continued to expand controls at the expense of consumers.
  • Program costs have exploded in spite of significant tax increases. To counter this, the state is considering a freeze on insurance premiums, reductions in reimbursements to providers, and even the possibility of implementing a program that would essentially ration health care. This promises to chase insurance companies and doctors out of the state, which only leads to higher prices and more shortages. A vicious cycle for the people of Massachusetts.
  • As a result, there has been a shortage of providers, combined with an increase in demand, leading to increasing waiting times to see a doctor. As physicians find it more profitable to practice elsewhere, this situation will only increase.

Anyone seriously considering the health care bill navigating through the Congress should do so with great caution in light of the lessons that we have learned from Massachusetts.


Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Saturday, December 26, 2009

Obama's Critics are also in the White House

Criticism for the Obama Administration's economic agenda is hitting very close to home. Martin Feldstein, an advisor to the President on economic issues and Harvard University professor has become openly critical of the President's health care agenda. In a recent article in the Wall Street Journal (aptly titled "ObamaCare's Crippling Deficits"), Feldstein states that "the higher taxes, debt payments and interest rates needed to pay for health reform mean lower living standards."

Feldstein has been an advisor to both Republicans and Democrats, but is known as a proponent of huge "stimulus packages" during economic decline. In spite of this, Obama probably did not make a particularly smart choice in picking the fiercely independent Feldstein. The one time advisor to Ronald Reagan publicly warned that president of the negative implications of the deficits in the 1980s. Those deficits were nothing compared to those provided in Obama's budget. His deficits would last years after the recession is over and in spite of the massive tax increases that promises to accompany them. The Democrats correctly criticized Bush's deficits. Feldstein notes that Obama's deficits, because of its expensive health care agenda will reach $9.3 trillion -- more than twice the amount of the previous administration.

In an earlier article in the Washington Post, Feldstein noted that "For the 85 percent of Americans who already have health insurance, the Obama health plan is bad news. It means higher taxes, less health care and no protection if they lose their current insurance because of unemployment or early retirement." Feldstein also notes that the price of the program is enormous and would cost more than $1 trillion and would raise the current maximum tax rate from 35 to 45 percent.

Barack Obama has fundamentally been dishonest when it comes to the health care debate. Consistency he has been arguing that his agenda would lower cost and expand coverage. The reality is, his agenda would dramatically reduce the quality of coverage for those who currently enjoy the best health care system in the world and would be accompanied by the excessive costs so common in bureaucratically driven programs.
Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Wanted: Another President like Grover Cleveland

One of my favorite Presidents was Grover Cleveland. He is one that is largely neglected by the media and historians today, which are indicators of their own as being someone I would likely admire. He is the only President to not serve his terms sequentially, being both the 22nd (1885 to 1889) and 24th (1893 to 1897) President.

Cleveland was not driven by populist notions, but by principle. He saw serving in office as a sacred responsibility, stating that "Your every voter, as surely as your chief magistrate, exercises a public trust." Cleveland was different in his style and substance. While today's President's were quick to make promises, Cleveland made commitments, stating "Though the people support the government; the government should not support the people." He simply did not believe that philanthropy was the role of the federal government according to the US Constitution.

Cleveland was a stickler when it came to that Constitution and he set a hard standard for other Presidents to maintain. History showed that most would not. Dr. Burt Folsom, in his excellent book, New Deal or Raw Deal, pointed out that "In the 1800s, voluntary organizations such as the Red Cross and the Salvation Army were formed to give food, shelter, clothing, and spiritual help to individuals and groups that faces crises. Sometimes, of course, Congress was tempted to play politics with relief. In 1887, for example, several counties in Texas faced a long drought and some farmers lost their crops. Texas politicians helped cajole Congress into granting $10,000 worth of free seeds for these distressed farmers in Texas. After the bill passed the Senate and House, Cleveland vetoed it, saying, 'I can find no warrant for such an appropriating in the Constitution,' Cleveland said. Such aid would 'destroy the partitions between proper subjects of Federal and local care and regulation.' He added, 'Federal aid, in such cases, encourages the expectations of paternal care on the part of the Government and weakens the sturdiness of our national character.'" Cleveland believed the American people would not abandon its fellow citizens in the Lone Star state. Folsom noted Cleveland's response, "the friendliness and charity of our countrymen can always be relied upon to relieve their fellow citizens in misfortune."


Cleveland could not be more accurate in his predictions. People not only gave, but did so at a level beyond the imagination of the Texas farmers and the politicians who represented them. Fellow Americans from all over the country gave gifts exceeding $100,000. That amount was more than ten times the amount Congress had tried to take from the taxpayers. The Founding Fathers never saw a "charity" role for government, that perspective was validated in both word and deed by Cleveland's courageous veto and his belief in the American people.

Writer Lawrence W. Reed has noted that "Grover Cleveland proved an exceptional president not because of the experience he brought to the federal government but because of two things that matter much more - character and principles." This was seen in his decision to avoid the politically expedient in pursuit of what was right.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Wednesday, December 23, 2009

The Road to Hyperinflation

There is a great deal of discussion about inflation and even hyperinflation, but most are not really aware of what either are and how they come about. Inflation is not, as you have often heard, "high prices." High prices are among the symptoms of inflation. The classical definition of inflation, simply put, is "too much money chasing too few goods." We have a great deal of that going on in our economy today. The result is not only high prices, but outrageously high interest rates (which are right around the corner) and a massive drop in the value of US bonds in the eyes of international buyers. Those bonds are one of the primary vehicles our country uses to avoid bankruptcy, because of the size of our debt and deficits.

Many Americans believe we have not had a problem with inflation in decades, but the reality is inflation has grown steadily at approximately 4 percent for years. For example, items that totaled $100 in 1988 would cost almost twice that today. Those higher prices did not go up because the items became more scarce or the ability to produce them had declined (in fact, the exact opposite has happened; technology and the ability to easily do business internationally should have drove pricing down), it is due to a reduction in the value of the currency itself. This is a cowardly form of taxation, with the government decreasing the value of all money by printing fiat dollars as a form of paying bills. It is much easier to do that than the government behaving in a fiscally responsible manner.

So we have had inflation for decades, yet it has largely gone unnoticed by millions of Americans who remember the double digit inflation of the 1970s and are too busy trying to make a living to notice the government chipping away at the value of all money today. Now the federal government is going much further in its efforts to devalue our nation's money. We have got into the mode of adding $1 trillion to the deficit annually. Twenty years ago, this was the amount of the entire national debt and took almost two centuries to accumulate. The Obama administration has to do something in order to make this shell game of fiscal insanity work. There is no doubt Obama wants to raise our taxes and has moved aggressively in that direction. However, the US already has the second highest corporate tax rates in the world among industrialized countries according to the G-20. Unless the US wants to shut this economic machine down entirely, they will have to look for strategies beyond tax increases. One of those clearly include more inflation and it has already begun to happen.

On one day earlier this year, the United States took a chapter out of Zimbabwe's playbook by pumping $1.2 trillion into the money supply in an attempt to pay off its bills. Many Americans have (rightly) been alarmed by the more than $1.5 trillion we have seen in bailouts. According to the Washington Post, these inflationary efforts have the potential of being much more far reaching, noting that "combined with the billions already deployed by the Fed, the new money dwarfs even the biggest government bailouts of financial companies."

Historically, this type of monetary policy leads to the kind of inflation that we have seen in history books, where it is cheaper to use money for wallpaper than to buy it or it requiring a barrel of money to buy a simple loaf of bread. One of my favorite photos is a Weimar Republic sanitation worker in the days before World War II literally sweeping money in the gutter because it was both worthless and in excess. Printing worthless money will not sweep our problems away, but make issues we never imagined.
Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Monday, December 21, 2009

Government and Health Care Costs

The most common arguments for government control of health care is making it available to everyone and excluding no one. Studies indicate that US indigent care (those who cannot afford health care of their own) is better than health care for those who have socialized medicine in other countries. Meanwhile, the vast majority of Americans who have private coverage enjoy the best care in the world. One of the other popular arguments I hear most often is about the "cost containment" that can only "come from government."

This is a big part of President Obama's message. In a speech back in September on health care that he delivered to Congress he said "The plan I'm announcing tonight would... slow the growth of health care costs for our families." More than for the President's remarks, this speech is better known for a comment by Congressman Joe Wilson (R-SC) in which he yelled that the President was lying in his speech. The Congressman was referring to the fact that the President claimed his health care bill would not include illegal aliens, but the lack of truth in Obama's "advertising" does not end there.

John Stossel points out in a recent column at FoxBusiness.com that "health care costs have been rising just as fast in countries with government-run health care. Since 1990, per person spending on health care has risen 159% in the US. But in England, with its government-run system, costs went up 210% over the same time period. Spending was up 148% in France and 124% in Canada, according to OECD data." The OECD is the Organization for Economic Cooperation and Development. So we see that government control has not contained costs and the methods used to keep spending down is the use of rationing health care. According to Canada's own health care system, the average Canadian must wait 17 weeks from the time a general physician finds something wrong and a specialist finally sees him or her. In many cases, that is the time frame of an early detected cancer becoming inoperable.

Stossel goes on to note that "It's true that we have always spent more on health care than countries with government systems. But that's partly because we're wealthier, and partly because other countries don't respect our drug patents, free-riding on our medical innovation." That innovation will decline with the undermining of our for profit health care system. I go a step further to mention that doctors in socialized countries do not have the liability issues that American physicians have. Doctors in this country recommend very expensive tests -- even if it is highly unlikely that the patient might have the condition the exam seeks -- in order to protect themselves from being sued by patients later. In socialized systems, it is virtually impossible to sue government doctors.

Finally, Stossel points out something both obvious, but profound, "Someone will ration health care. In America, insurance companies usually do it. In most of the rest of the world, governments do. Costs skyrocket under both systems. Its time we tried the third option: let individuals use their own money to buy health care."

I have been advocating "consumer driven health" long before it became a popular phrase in the insurance industry. The development of such an approach, seen in things like high deductible insurance policies and health savings accounts, have significantly reduced cost increases for businesses and individuals who have pursued such plans. The reason for this is simple, it gives the consumer (or in this case, the patient) a financial interest in the choices that are made in his or her health care. Individual responsibility should be the center piece of the health care debate, rather than abdicating health care to the government.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Friday, December 18, 2009

Corporate Salaries are under Microscope as Federal Wages Explode

You have seen the headlines, "The Worst Unemployment in 25 years," "First Mark of Double Digit Unemployment in Decades," and more. Unemployment is rampant and the American people are rightly concerned. Many US employees are taking salary cuts, hour cuts, and any other type of cuts necessary to stay employed. We live in very trying times indeed.

We are told that the government is concerned about the disparity between employers and employees and we see additional headlines that reflect this fact. "Retro TAX on AIG Executives," "Corporate Salaries need to be brought to Earth," and "New Czar will Tackle Outrageous Salaries.” The Obama administration has responded by hiring a "pay czar" who wants to put limits on how much CEOs make. What we are not seeing much of in the news is that while millions are unemployed, the government has its own salary issues that have created a scandal of its own.

According to a recent article in USA Today, the number of federal workers earning six-figure salaries has exploded during the last year and a half. Leary taxpayers are not very comfortable with reports such as this in the best economy, it is even more disconcerting as we navigate through one of the worst recessions that we have experienced in a quarter of a century.

The growth in the number of people who work for the government and earn six digits is significant. Federal employees that are earning salaries of $100,000 or more jumped from 14 percent to 19 percent of civil servants during the recession's first 18 months -- and that does not include overtime pay and bonuses. Federal workers are enjoying an extraordinary boost at this time -- in both pay and hiring -- during a recession that has cost 7.3 million jobs in the private sector. Remember, every new job that comes from taxpayer dollars cost significantly higher than one created by the free market. These jobs are always more expensive because the average government salary is virtually always higher than a job in the private sector and they come with bureaucratic and other costs that are not found in the market place.

According to the USA Today article (depending on the Congressional Budget Office), the highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, according to the most recent figures available. When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more; 18 months later and you will find 1,690 employees with salaries above $170,000. The trend towards six-figure salaries is occurring throughout the federal government, in virtually every agency and in virtually every job type. What are the reasons for the huge jump? There have been substantial pay raises and new salary rules.

The growth in six-figure salaries has pushed the average federal worker's pay to $71,206, compared to only $40,331 in the private sector. Each one of these jobs, paid for with taxpayer dollars, would create two truly profit making jobs outside of government. Congressman Jason Chaffetz (R-UT) is quoted by USA Today as noting that "There's no way to justify this to the American people. It's ridiculous." I believe that the vast majority of Americans would agree whole heartedly.

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Thursday, December 17, 2009

Finally, Someone is Discussing the Constitution

The term "crisis" is thrown around rather liberally today, but there should be no question that our nation is in a desperate situation today. Our problem is not merely fiscal, but political and cultural. Our deficits and growing debt are driven by a government that is no longer constrained by the rule of law.

Generally speaking, most politicians are on the bandwagon of supporting an increase in government power and spending. On the political left, the argument is that the government's spending should be unchecked, it is the people and business that needs to be watched. For the vast majority of those on the right in Congress, the answer is a sad response of "yes, government can spend where it wants... the only question is how much." They fight back with pleas of, "this amount of spending may be dangerous," when they should be declaring that we are committing economic and political crimes.

On the political landscape today, it is hard to find members of Congress who are willing to speak with honesty about the direction our nation is going, one of the few exceptions is Ted Poe of Texas. Poe has been a frequent guest on my radio show and he voted against bailouts and TARP even when the conventional wisdom was that they were necessary. Recently, he has become aggressive in his disdain for a government that is out of control.

Congressman Poe has introduced House Resolution 959 which expresses the sense that many member of Congress "challenge the authority of the federal government to require by law that Americans purchase health insurance, or any goods or services." Substantively, bills like this have little importance. If a majority pass it, there will be no actual change in the law. However, there has been little discussion of all on what the limits of government are, so I find this action very refreshing.

Congressman Poe notes that "Any bill that requires Americans to buy something under the guise of a tax or pay a fine, violates House procedural rules. This legislation is based on the premise that such a bill is an unconstitutional exercise of legislative taxing authority. Thus any such bills brought to the floor would be ruled out of order."

There is a growing movement towards the restoration of the federal system established by the Founding Fathers and it is based on Article 1, Section 8, Clause 1 of the U.S. Constitution, which states: "The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States."

The Congressman goes on to describe the direction this nation is drifting towards: "It is a very slippery slope to allow Congress to expand this authority for the purpose of forcing American citizens to buy health insurance or anything else," Congressman Poe continued. "We must heed the confines of our Constitution, not ignore it in a mad rush to expand the federal government or reinterpret its meaning to serve a political purpose."

I, for one, am only interested in supporting candidates of Congress who share a similar view. The Constitution is the law of the land and every member who swears to defend it should be bound to that reasonable standard.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Tuesday, December 15, 2009

Reimportation of Drugs Promises to Destroy Innovation

Innovation in health care, particularly in the area of developing new drugs, is one of the crowning achievements of US health care. According to Forbes Magazine, 80 percent of all new drugs are developed in the United States and one of the primary reasons for this is because companies still have an incentive to do such in this country. The profit motive creates the desire and provides the incentive to over come the fear of risk that comes with bringing new medicines to market.

"The fully capitalized cost to develop a new drug, including studies conducted after receiving regulatory approval, averages $897 million," according to a study by the Tufts Center for the Study of Drug Development. The expenditure of almost $1 billion to bring a product to market can only be done with some hope of reward. Thr hope businesses are looking for is a period of time of being able to sale that medicine without competition. Seven years is the standard period of time for such intellectual property to be protected. During that time, medicines can vigorously pursue recouping the cost of bringing a drug to market before other players can legally come along. This may be expensive, but that is a small price to be paid for innovation.

Policy makers who do not understand the economic dynamics of drug innovation want to fight the problem through reimportation, which is the US purchasing medicines from countries that receive them at a lower cost because they have less personal incomes and the drug companies change the cost accordingly. With reimportatin the drug companies would have to compete against themselves. Although the practice is currently illegal, many states have pursued the policy and now it has become front and center of the current health care debate.

Jack Calfee of American.com observes "This week, the Senate is expected to vote on an amendment to the healthcare overhaul bill that would incorporate the chief features of Senator Byron Dorgan’s drug importation bill. The Dorgan amendment would essentially require U.S. pharmaceutical manufacturers to supply importers from foreign nations with unlimited quantities of low-priced drugs, which could then be resold in the U.S. market." It is interesting because I am sure the foreign companies that resale it to the US will do so for a profit, so our policy makers are sending these jobs to foreign countries. The question is, for how long? With these companies being forced to compete against themselves, the development of new drugs will be hindered. Simply put, there may not be new drugs to export in the future.

The economics of this are bizarre, Calfee notes 'The central feature is 'forced sales,' not in the sense that any sales are literally required, but because a manufacturer that sells to any particular nation has to sell as much as buyers want at whatever price those buyers pay in that nation. The implications are bizarre. If Lipitor is 40 percent cheaper in Germany, a German importer could order enough to supply not only Germany but also the entire U.S. market. The manufacturer (Pfizer) could try to meet domestic German demand and no more, but the Dorgan bill includes provisions to make that difficult. But why worry about Germany? Prices are certainly cheaper in, say, Greece, Portugal, or one of the Eastern European nations (the Dorgan bill includes a list of acceptable nations). A lot of drugs could flow through Portuguese seaports, assuming that anyone bothered to ship them back and forth instead of directly to the United States.

"US health care certainly has problems. Most of them are created by excessive legal rewards, government mandates, and bureaucracy. Innovation is one of the crowning achievement of our system. If this amendment passes, innovation will certainly suffer.


Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Saturday, December 12, 2009

Tim Geithner Plays with Words on Fox Business

Liz Claman of the Fox Business Network is one of my favorite interviewers in media today. She is warm and cordial, which also means her guests are easily disarmed and she follows that up with some of the tougher questions in business news.

Recently Treasury Secretary Timothy Geithner was a guest of Liz Claman on the Fox Business Network and said that we will be able to “solve this financial crisis at a dramatically lower cost than we initially anticipated," he goes on to actually claim that the U.S. taxpayers have made money on banks paying back TARP.

On whether the US taxpayer made money on banks paying back TARP:

Geithner: “Absolutely. Just on that particular investment (Bank of America) the taxpayer got probably more than $2.5 billion even before we sell our warrants…We’re going to be able to solve this financial crisis at a dramatically less cost than we initially anticipated.” On the flip side, our financial industries have developed a new type of "freezing effect" as banks stop making investments because they have huge reserves to sit on and are paid for by taxpayers. Loans are risky; government subsidies have allowed banks to avoid that type of risk. Furthermore, this does not even address the bigger issue of nationalization and the inappropriate use of government power.

On the opposition to government tax credits to small businesses:

Geithner: “There’s a pretty good case for looking at targeted tax incentives to encourage investment and new hiring.” Unfortunately this administration seems to "target" tax cuts or subsidies to political allies, be it political organizations that support its agenda (e.g., ACORN) or corporations that they are trying to win favor (first Wall Street and now a "new" bailout for Main Street).

On what it will take to create jobs:

Geithner: “It will not be one thing. It’s going to have to take a mix of approaches, and you’re right, we have limited resources.” What happened to the money we "made" from TARP? This type of political double talk is common for Obama and his team. With the highest unemployment in a quarter of a century, it is difficult to stomach watching this President spending close to $1 trillion just to launch a health care program that is unconstitutional, promises to create a systems of rationing, and will not event go into effect for almost a half of a decade. Allowing the states to determine its own minimum wage, eliminating taxes on corporations (since those taxes only undermine competitiveness), and making it easier for employers to hire should be on the top of Geithner's priorities.



Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Tuesday, December 08, 2009

Questions that Should be Addressed by Environmentalists

The world is about to meet in Copenhagen about the future of Global Warming. In spite of chilling news of the revelation of thousands of emails that indicate that the alarmists have distorted information about climate change, world leaders seem to be on pace to move on with an aggressive agenda designed to massively expand government control in virtually every industry. The environmental agenda includes heavily taxation and increased regulation of many industries.

With this agenda, it is time to ask some serious questions.

What kind of impact have these policies had on other countries?

Although most European countries have been passionate in its environmental activism, one of the most aggressive has been the country of Spain and the results have been disturbing for any country considering a similar approach.

A study (by Gabriel Calzada Álvarez PhD) about Spain's efforts provides an insightful view of the negative impact the pursuit of green jobs have had on the economies of Europe. The chasing of "green jobs" is nothing new, according to Calzada. He points out that European countries have lived under regulations and subsides for the development of such industries since 1997, and the economic impact has been both impressive and very negative.

According to Calzada, Obama's "model country" of Spain has lost 2.2 jobs for every job created. That translates to 9 jobs lost for every four new jobs provided. Calzada goes on to extrapolate the numbers and points out that, if the US was "fortunate" enough to create 3 to 5 million green jobs, it would do so at the lost of at least 6.6 to 11 million jobs that already existed. For most Americans, this is simply too big of a price to pay.

What is also disturbing is how much these green jobs cost. According to the study, each job cost an incredible $800,000 each. This for jobs that often only pay approximately $15 an hour. In a situation where the US unemployment rate is growing at a rapid pace, this type of cost for employment and the trade off of pre-existing jobs is a difficult sale.

The technology/prosperity question.

The countries with the worse environments, generally speaking are poor and have primitive technology. The countries who have made the biggest strides in the environment are economically rich. When countries are poor they simply have fewer resources to improve the environment or to make better technology.

I remember an encounter I had while conducting seminars on Free Market economics. When I traveled to Eastern Europe and the former Soviet Union, I was in shock at the pollution levels. Poland was particularly bad. I remember escaping to a local park because of the trees there made it easier to breathe. Much of the time my eyes simply watered and I coughed. It was miserable. I had a meeting with an economist in the Polish government and he noticed my distress and he quickly concluded it was due to pollution levels. He said that Poland did not lack regulations and in fact "we have the toughest environmental laws of any country in the world." Sure enough, I did my homework, and that was true at the time. This gentleman became quite philosophical about the problem, stating "the problem was recognized long ago by Aristotle who said 'What is common to the greatest number gets the least amount of care. Men pay most attention to what is their own; they care less for what is common; or at any rate they care for it only to the extent to which each is individually concerned. Even when there is no other cause for inattention, men are more prone to neglect their duty when they think that another is attending to it.'" The economist went on to say that he hoped that the efforts the country was taking towards free markets would lead to more ownership and better care of the environment.

Later, in another meeting he said, "the answer to these environmental problems are found in technology, not regulation." I liked the sound of that, so I asked him to go on, he said"as we recover economically and have more ownership, we will enjoy greater capital formation, which will lead to better and more efficient technology. That, more than anything else will reduce pollution." I casually responded, "I have never seen a poor country that was not polluted" he shrugged his shoulders, lifted his hands in the air and said "neither have I."

The rhetoric coming from Copenhagen seems to be ignoring the scandalous emails that have rocked the environmental movement, the negative impact this agenda has had on jobs, and the linage between prosperity and technology. Watch carefully what comes out of this event.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Monday, December 07, 2009

The Popular Disdain for the Constitution

At one of her recent press conferences, Speaker Nancy Pelosi's was asked by a CNS News reporter, "Madam Speaker, where specifically does the Constitution grant Congress the authority to enact an individual health insurance mandate?" the Speaker was clearly agitated by the question and responded, "Are you serious? Are you serious?" The reporter said, "Yes, yes, I am." Without commenting further, Pelosi shook her head in disgust and took a question from another reporter. Later on, the Speaker's press spokesman Nadeam Elshami told CNSNews.com about its question regarding the constitutionality of socialized medicine that "You can put this on the record. That is not a serious question. That is not a serious question."

Like every member of Congress, Pelosi takes this sacred oath: "I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God." She swears to defend the Constitution, but does not take this question seriously? The arrogance or ignorance is amazing. The question is legitimate, Article I, Section 8 of the Constitution lists the enumerated powers of Congress and there is no provision for health care. Furthermore, the Tenth
Amendment makes it explicitly clear that the powers not listed in the Constitution are to be left to the states and the citizens.

For decades government has gone well beyond it Constitutional responsibility and has become more cavalier about the role of government. Essentially our government is on auto-pilot and simply picks up new duties as it deems fit.

I have said often on my radio show that to be for the Constitution is simply not "cool" and you will not be taken serious in Washington. I have had friends -- both Democrat and Republican -- smugly smile at me and say that arguments about the Constitution are laughable. Discussions about a "strict constructionist" view can only be academic.

I must ask the question, by what standard than are we going to judge government? If not the Constitution, what will be our measure of whether government is serving us properly? It cannot be popular opinion, because the masses can be convinced to believe anything. That is why the Founding Fathers put such safe guards against pure democracy.

This is why I have grown frustrated by the "liberal" versus "conservative" debate. All these two views argue is the pace towards socialism. Liberals ask why we are not fully under government control while conservatives want to argue to slow down the pace. What is there to "conserve" any more? Massive deficits and debts? Taxation out of control? A regulatory system that is hostile to freedom? If we are serious about the Constitution we should drop the conservative label and state we wish to restore the Constitution.

Until we have a serious debate about the Constitution we can only expect our freedoms to further disappear while are political leaders show extreme joy on the left or slight discomfort on the right. The leaders in Washington believe there is nothing government cannot do and they intend to only prove that in the years to come.

Economist Walter Williams recently noted that "in each new session of Congress since 1995, John Shadegg, (R-Ariz.,) has introduced the Enumerated Powers Act, a measure 'To require Congress to specify the source of authority under the United States Constitution for the enactment of laws, and for other purposes.' The highest number of co-sponsors it has ever had in the House of Representatives is 54 and it has never had co-sponsors in the Senate until this year, when 22 senators signed up. The fact that less than 15 percent of the Congress supports such a measure demonstrates the kind of contempt our elected representatives have for the rules of the game -- our Constitution."

How has your member of Congress stood on this important first step in restoring Constitutional government? Instead of arguing with politicians on specific policies, let us make them defend their view of the document they swore to defend .

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Saturday, December 05, 2009

If Obama was serious about Unemployment...

Unemployment is devastating on both people and governments. Not only do people feel the stress of wondering how needs will be met, they often take serious efforts of curtailing spending ,which has a direct impact on consumer spending. Governments suffer too. Local, state, and federal governments find unemployment is a drain on them as they are often unable to collect as much revenue as they could in more prosperous economies and those who are unemployed will often depend on agencies to help through these difficult times.

With that, President Obama recently had a Job Summit and he told those in attendance if there is "anything" the government can do to help increase employment, let him know. With US unemployment at the highest levels in a quarter of a century, "anything" should be taken quite seriously. Our situation has become urgent and steps should be made to act quickly. These include:



  • Eliminating barriers between people and jobs. This isn't through temporary government jobs that will run out with the recent bailouts, but through real jobs that create revenue for them to grow in number and in quality. Although I oppose a federal minimum wage, you are not going to make one go away. However, the federal government could mandate the states have a minimum wage law in each state of the union and allow them to set it based on the needs of the people and the cities. This would not cost the federal government a penny, but would spur economic activity immediately. Certain cities, such as Camden (New Jersey), East St. Louis (Illinois), and Detroit each suffer from an unemployment of around 20 percent. they need help like this immediately.

  • Eliminating taxes on corporations because they do not pay taxes, they are only tax collectors (through higher prices). Taxes are simply a fixed cost for doing business, plain and simple. If taxes are too high, businesses have no choice, but move to other countries where the rate is less so they can lower prices and be more competitive. Businesses do not take this actions because they are not patriotic. In the words of The Godfather, "it isn't personal, it's just business." This action would have a profound impact on high quality job creation. This policy would also encourage an increase in productivity and soften the blow of inflation.

  • Ending taxes on wealth creation and replace income tax with a sales tax. This would eliminate the economic genocide against job creators we are seeing today and would more fairly spread the financial burden of government on all economic groups. If every economic group shared the burden of funding the government, that would encourage all groups to make government fiscally accountable.

Our situation is dire, the answers to our problems are in the market place and not in the halls of government or in job creation summits. These type of actions would have the government give the type of "stimulus" the nation really needs.



Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Thursday, December 03, 2009

Federal Government will Pressure States in Health Care Revenue Collecting

As the states desperately try to pass legislation to protect itself from the many potentially adverse effects of the President's health care proposal, the federal government is working all the harder to make sure state governments do the heavy lifting for the bill's funding.

According to a recent article by Dick Morris and Eileen McGann, the amount of spending required for the new Medicaid package is so staggering, it requires state as well as federal funding. Southern states have tended to try to contain costs by keeping Medicare spending in check. The Obama administration is planning on forcing states to bring more dollars to the table.
The authors cite the following examples:


  • My home state of Texas will be hit the hardest ($2.8 billion in additional state spending), Pennsylvania will be second ($1.5 billion), followed by California ($1.4 billion), and finally Florida ($909 million).

  • The amount is so high, financially strapped Florida may believe it has no choice but to impose an income tax. This is a practice the state has long tried to avoid.

  • The impact may include political tones, since for many of the states represented by swing senators in the health care debate, the required increases in state spending are likely to be quite high, say Morris and McGann:

  • In the state of Arkansas, where swing Senators Mark Pryor and Blanche Lincoln live, the increased spending required under the Obamacare bill would come to over $400 million (not counting the federal share). This adds up to a 10 percent increase in state spending. Lincoln is considered one of the most vulnerable Senators in 2010, so this debate has particular meaning to her.

  • In Louisiana, Senator Mary Landrieu is literally being accused of selling her vote in return for more Medicaid funding, the increase would come to $432 million (a 5 percent hike in state spending), more than wiping out the extra funds she got in return for her vote. What is so myopic about this is that, not only will the amount of dollars she got be offset due to the costs on the state from day one, the "pay off" will only benefit for a limited period of time. The new cost on the state will be annual and without an expiration date.

  • In Indiana, where the more moderate (by Democrat standards) Evan Bayh is senator, spending would go up by $586 million. This is a significant increase of 4 percent.
    Ben Nelson of Nebraska has been one of the health care bill's stronger Democrat critics. His state will require an additional spending under the bill of $81 million, a 2 percent increase.

  • The pain continues to other states, as North Dakota, home of Senators Kent Conrad and Byron Dorgan, will face a spending increase of $14 million, and in South Dakota, represented by moderate Democrat Tim Johnson, Medicaid spending would have to rise by $33 million.

These increases in spending do not include the direct cost that will have to be carried by Americans in federal tax. This bill remains complicated and the extent of the financial injury it provides only grows daily.


Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Wednesday, December 02, 2009

The War on Job Creation

Back in the Dark Ages, doctors were known for bleeding patients to reduce fever and cracking skulls to relieve headaches. Everything old is new again as the Obama Administration pursues excessive taxes on job creators on both Wall Street and Main Street in order to create new jobs.

Elizabeth MacDonald brings the Administration's current efforts to light in a column at FoxBusiness.com. She points out that "A House bill now being drafted would raise $150 billion each year to pay for new manufacturing jobs by taxing securities transactions such as stocks, options, derivatives and futures...But the effect here would be the polar opposite-it would hurt job creation and even though Congress says they'll exempt trades made for retirement savings, chances are slim that will happen, and the fees will get passed along. And jobs in the finance sector, already flattened, will fly overseas if the US is the only country with this taxing regime."

MacDonald's article points out the obvious. Politicians develop and implement policies as if we were trees. They believe we will take a tax, regulation, or other cost of doing business without blinking. Unfortunately for government, we are not trees. I do not know about you, but if someone attacks me with an axe I am either going to fight or take flight. That is the same thing that happens in public policy. When government attacks with a tax on job creation, that job creator is either going to fight (which in this country requires a long term strategy that includes changing the people in power) or they are going to run (which is much easier to do in our current political environment and our abilities thanks to technology).

Where and how do people run? We have many examples of this in recent years and the Internet makes it very easy for people to move their money and the rest of their lives, wherever they need to go to do business.

For example, A recent study from the Empire Center for New York State Policy is showing that the state is suffering from a similar fate. The authors of the studies -- E.J. McMahon and Wendell Cox -- point out that between the years 2000 and 2008 and following massive tax increases for those with higher incomes, the families that have been leaving have income levels that were 13 percent higher than those arriving to the Empire State. In Manhattan and the New York County area, the impact was even more profound. Those leaving the Big Apple had an average income of $93,264, which was approximately 28 percent higher than those who were arriving (which made $72,726 on average).

What is most ironic about these type of policies is that they not only fail to create jobs, but also fail to generate new revenues. They simply do not work. The old saying remains true, "the more you tax something, the less you get of it." If you heavily tax job creators, you will lose them and the jobs they create. MacDonald believes that the bill being argued in this Congress will actually force some job creators out of the country. They, in turn would likely take the jobs with them. It is time to abandon ancient practices that do not work and pursue policies that simply make sense.
Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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Tuesday, December 01, 2009

Global Warming Campaign Proves to be Expensive Joke

Conspiracy theorists have argued for years that government officials who support the massive regulation of industry in the name of environmentalism, do so in order to pursue even greater government control It is not about a cleaner environment, but a more powerful government. Meanwhile, scientists who have advocated Global Warming have often been accused of being professional "Chicken Littles," who make a living predicting that the sky is falling. After all, if research studies had indicated that things were fine or temperature changes were cyclical, there would be no need for future research and the funding that comes with it. There is a business side to everything, including environmental research, and fear has proved to be a successful element in obtaining increased funding.

The media has been quick to defend those in government and science in the alarmist camp, creating a powerful and effective troika supporting an ambitious agenda. They have apologized for the many exaggerations and have gone to great lengths to defending the most outrageous of claims. The recent release of some rather incriminating emails are embarrassing to the media, scientists, and government officials behind the Global Warming movement. Forget embarrassing, the movement is now on life support.

The Wall Street Journal discusses the content and the implications of the emails in question, quoting several including one stating that "The two MMs have been after the CRU station data for years. If they ever hear there is a Freedom of Information Act now in the U.K., I think I'll delete the file rather than send to anyone. . . . We also have a data protection act, which I will hide behind."

"So apparently wrote Phil Jones, director of the University of East Anglia's Climate Research Unit (CRU) and one of the world's leading climate scientists, in a 2005 email to 'Mike.' Judging by the email thread, this refers to Michael Mann, director of the Pennsylvania State University's Earth System Science Center. We found this nugget among the more than 3,000 emails and documents released last week after CRU's servers were hacked and messages among some of the world's most influential climatologists were published on the Internet."

"The 'two MMs' are almost certainly Stephen McIntyre and Ross McKitrick, two Canadians who have devoted years to seeking the raw data and codes used in climate graphs and models, then fact-checking the published conclusions-a painstaking task that strikes us as a public and scientific service. Mr. Jones did not return requests for comment and the university said it could not confirm that all the emails were authentic, though it acknowledged its servers were hacked."
The emails in question are in the thousands and the thread demonstrates a similar theme and are most enlightening. The Wall Street Journal article goes on to point out that "In them, scientists appear to urge each other to present a 'unified' view on the theory of man-made climate change while discussing the importance of the 'common cause'; to advise each other on how to smooth over data so as not to compromise the favored hypothesis; to discuss ways to keep opposing views out of leading journals; and to give tips on how to 'hide the decline' of temperature in certain inconvenient data."
In essence, the world has been duped by scientists driven by the desire of prestige and funding, politicians driven by a lust for control and power, and a media that makes a living by creating alarm. The cost of pursuing a battle plan against these false problems has cost countries like Spain millions of jobs in its "cap and trade" style legislation and countries through out Western Europe and the United States billions of dollars in regulations to date. What will these false prophets receive for their crimes against economies? Probably Pulitzers and Nobels. What a strange world indeed.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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