Obama Continues to Show Immaturity

President Barack Obama has plenty of enemies and they flank him on both the left and the right. He is oblivious to the interests of voters and consistently interprets political events in a manner completely contrary to the facts. His presidency is barely a year old and it is in serious trouble.

While the rest of the nation sat in awe of the events that took place in a special election in Massachusetts that put a Republican in a Senate seat held by a Kennedy for a half of century, President Obama concluded that such was a result of policy makers going too slow on health care reform. He came to this conclusion in spite of the following:

The state of Massachusetts had been under a socialized health care system since 2006 and it has led to higher prices and rationed care.

In spite of the fact that Massachusetts is 3 to 1 Democrats, it still chose a Republican for the Senate.

If the voter rage in Massachusetts was due to Republican resistance to reform, why would they elect a member of the GOP to this office?

As I read these obvious facts it seems like the need for an explanation is laughable. These points should be clear to the most casual observer, but Obama is building a policy strategy that is contrary to these facts. This indicates that either he questions the intelligence of his constituents or his constituents should worry about the "Emperor's new clothes" or, in this case, strategy. This approach to governing may work with petty dictators who are not accountable to voters or other branches of government, but it is still highly questionable in the United States.

In regards to the branches of government, Obama has developed this knack of attacking the Legislative and Judicial branches as if they are not necessary in accomplishing his policy objectives. In a special joint session of Congress in September 2009, Obama claimed that members of Congress who stated that the President's health care bill would include illegal immigrants were distorting the facts. Members had seen enough of the bill to know that the President was misleading the audience and compelled Cong. Joe Wilson (R-SC) to exclaim out loud, "You lie!" We have rarely seen such a reaction from a member of Congress, then again, we have rarely seen such an attack by a president on the Legislative branch. In the President's State of the Union address, the President again went on the war path at another branch of power. In this case it was the Judicial branch and the Supreme Court.

During the President's speech, Obama openly criticized a recent Supreme Court decision on corporate and other group funding of judicial races. The President claimed that the Court reversed a century worth of opinion on the subject by allowing for such funding. The reality is, there was very little court opinion on the subject until a few decades and virtually all of that was without precedence. In spite of this, it was still surprising than that one Justice (Samuel Alito), actually shook his head and said something to the effect of "not true." This was another demonstration we have not witnessed during an event such as this, but we have never had a president quite like Obama. All of these incidents point to problems in his future when it comes to governing.

Obama's last job was US Senator, which he did not finish one term. Before that he was a part time State Senator from Illinois and community organizer, neither of which are typical springboards for the highest office of the land. What we do know from his experience and temperament is that he does not bring the necessary skills and understanding to serve in the highest office of our land.

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.

Obama's New "Tax Cuts" are Designed to Create Votes and Not Jobs

When it comes to income taxes there are basically two ways you can cut them. You can either have taxes that benefit consumption (geared primarily towards the large middle class in modest amounts and are designed to encourage consumer purchases) and those that are across the board (the same percent for each income group) and encourage production (also known as a "supply-side" tax cut). President Obama favors the former because he considers them more "fair" and they have the ability to help him with the middle class which has become increasingly unhappy with his policies. Rumor has it, he is considering such cuts as we approach the 2010 mid term elections. Someone needs to teach him some history.

For decades Republicans have resisted Democrat attempts to provide small and modest tax cuts for the middle and lower class at the expense of those with higher incomes, simply because such polices do not work. In 2008, as Republicans were fighting for their political lives, President Bush passed just such a consumption tax cut package of his own with very weak results. Most Americans received checks that were designed to make them go out and buy a new TV, maybe take a vacation, or even use it towards the down payment on a car. However, because of the rampant economic fear that our country has been suffering from, people used those checks to pay off credit cards, to make a payment on their mortgages, or to do other things to reduce debt.

These demand side, or consumption tax cuts, are very different from those on the supply side. Supply side cuts are usually long term (multi-year in scope) and proportional (giving as big of a percentage to the affluent as those in lower income brackets). The amount of savings for the affluent -- who pay the vast majority of all the revenues the government acquires annually -- are typically significant enough to lead to the creation of new jobs, the expansion of businesses, and to stimulate the economy. History has repeatedly proved this to be true.

Calvin Coolidge passed a huge tax cut that led to one of the greatest expansions of the economy in US history during the 1920s. In the 1960s, presidential candidate John F. Kennedy eloquently stated that it was imperative to "get the economy going again" and believed that tax cuts would lead to a "rising tide that will lift all boats" (rich as well as those who wish to be rich). Those tax cuts, which were predicted to lead to a depletion in revenue, led to one of the last balanced budgets the US enjoyed for decades and economic expansion. In 1980 Ronald Reagan inherited one of the worst economies since the Great Depression (similar to the one today) and he attacked taxes with a plan that was largely modeled after the Kennedy tax cuts. That tax bill was called a "jobs creation act," which is exactly what supply side tax cuts achieve, and it contributed to one of the strongest periods of economic growth in US History. Finally, following the technology bubble burst at the end of the Clinton Administration and the tragedy of September 11th, President George W. Bush used supply-side tax cuts to create an economy that sustained the lowest unemployment for the longest period of time since the early part of the 20th century (in terms of years of full employment). He followed that up with the ridiculous consumer tax cut of 2008 that did nothing to move things in the right direction (including voters that he was trying to appeal to) and has left many scratching their heads. We have learned that all tax cuts are not alike.

Part of the dramatic decline in the economy is actually linked to the end of the Bush supply-side tax cuts that had to be approved each year by the Congress in order to stay in effect. In 2006, pro supply-side Republicans were beat by Democrats who opposed those policies. The businesses that largely drive the economy knew their days were numbered. Hostility towards a pro-business view of taxes has become even worse following the election of Obama. After a few years since the 2006 elections unemployment went from 4.5 percent to around 7 in no time (and is now pushing double digits), consumer confidence reached a record low. 2008 should have been a Referendum on the Democrats. Instead, Americans decided to consume more of the poison that is destroying the economy.

Americans need to know the difference between consumption and supply-side tax policies, and remind their representatives of those differences in the up coming election cycle. Meanwhile, pro-growth candidates for Congress should use 2010 as a year to remind their constituents of what works and to use this as a wedge issue for Obama and his Democrats who seem to hate wealth (and, thus, job) creation.

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.

Barack Obama's Anniversary

It seems much longer, but it has only been a little over 12 months since Barack obama became the President of the United States. For those who oppose the radical shift in the way our country is governed, this administration has been frightening to watch. President Obama has pursued a fast track for socializing the greatest health care system in the world, has used government subsidies to control major parts of the US economy (even firing CEOs), has added to the deficit at levels equaling our entire national debt just a couple of decades ago, and has created international instability due to a foreign policy based on indecision.

In recent months, the bad dream suffered by Obama's critics has become the President's nightmare as well. There are numerous examples:

In spite of the speed that the Democrats have applied in its pursuit of "health care reform," White House Adviser David Axelrod has declared that the Scott Brown win in Massachusetts was a result of "going too slow." Reality check: Massachusetts has been under this type of care when it passed its own bill under Romney for the past five years and the people want less and not more of that type of medicine.

The governor's race in New Jersey -- a solidly blue state -- has fallen into the hands of the GOP.
Virginia's governor has been "purple" for years and is open season to either party, but is now in the GOP's hands.

Two leaders of the Democratic party in the Senate -- Dorgan of North Dakota and Dodd of Connecticut -- have decided to retire rather than face a serious GOP challenge. One Democratic Congressman, Parker Griffith of Alabama, has actually switched parties.

The mainstream media does not seem to get it. Esquire magazine wrote an article about Obama that read like a teen magazine of its favorite celebrity. In the January issue there is an article entitled "Papa in Chief," in which the President's frequent indecisions are praised as deliberateness while many Americans see it as nothing short of dangerous. The article essentially sees Obama as a very paternal character indeed. Meanwhile, US deaths in Afghanistan doubled in 2009 as the President spent most of the year determining what -- if anything -- he would do about the insurgents' growing violence. I doubt our troops would consider this the "thoughtfulness" of a fatherly figure.

This administration spent much of 2009 scrambling in many different directions in an effort to get some of its sweeping legislation passed. As a result, many Americans saw the President's agenda as more political than practical and more about ideology than people. With Senators retiring, and seats changing parties even before the off-year election takes place, Obama is in serious trouble. Politically, this president is looking more and more like a "dead man walking."

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.

Warren Buffett on the Business and Government Connection

Warren Buffett rolled up his sleeves on the Fox Business Network in a very candid interview with the channel's Liz Claman, in which he discussed CEOs of failing banks, reconfirming Ben Bernanke, and his Berkshire company.

On the Bank Situation

"You'll always have banks that are too big to fail. We can't operate in this world without very big banks…If they are toppling the government will have to do something about it." This is contrary to conventional wisdom and of this writer. After a year we see that banks had more money than expected (witnessed in the pace in which they paid off their bailouts) and these government programs have done little to increase the pace of loans, since banks have found a way to get "money for nothing." Why risk their resources if they are washed in capital from Uncle Sam?

Furthermore, these policies have only undermined moral hazard at a time it is so greatly needed. The US cannot be in the business of rewarding bad decision making."If I were running things if a bank had to go to the government for help, the CEO and his wife would forfeit all their net worth…I think you have to change the incentives. The incentives a few years ago were try and report higher quarterly earnings. It's nice to have carrots, but you need sticks. The idea that some guy who's worth $500 million leaves and only has $50 million left is not much of a stick as far as I'm concerned." This was actually the highlight in the Buffett interview. We need a restoration of moral hazard in banking and that will only come when those responsible for bad decision making suffers for those choices."The CEO has to be the chief risk officer for a bank." This is a great observation and a view that needs to be restored. This is best achieved, in my opinion, by letting banks fail. Any executives behind such will find themselves looking for something else to do for a living.

On members of Congress who feel Ben Bernanke should not be reconfirmed:

"They ought to get down on their knees every night and thank the Lord that Bernanke was there through this. He took some unprecedented actions…He took the actions that were necessary to prevent panic from paralyzing this country." "Unprecedented" often means unconstitutional and has led to the expansion of government like we have never seen in our history, even in the Great Depression. What he has done is created instability in our monetary policy by pumping dollars into the economy at a pace we have never seen. Furthermore, his bailouts of large corporations have undermined the normal functions of a free market economy, such as moral hazard. He has created an economy without risk, which is far from free market in design. What he has done is criminal...two thumbs up for those members of Congress who wish to see him go.

On the future of Berkshire Hathaway's business acquisition

"We'll keep buying businesses, as long as I'm alive we'll keep buying businesses…we'll try to buy them for cash, sometimes we may have to use some stock, but we'll use as little stock as possible." If the US economy continues to reel from the unstable monetary and fiscal policies of the Obama administration, large corporations like Berkshire Hathaway will continue to benefit from them. It should be no wonder that, when questioned about Tim Geithner, he replied "I think he's terrific." Maybe for Buffett, but not the rest of the country.

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.

The less observed consequences to government health care

Socialized medicine through out the world has the following characteristics:

• It leads to delays where, as in the case of Canada, patients wait for 17 weeks on average from the time a general practitioner says indicates that something is wrong until one visits a specialist

• It leads to rationed care, where people not only wait for years for things such as hip replacements, but often find themselves forced to pay for such out of their own pockets in foreign countries

• It has a negative effect on mortality rates, as we see those who suffer from certain diseases such as cancer, surviving half as long in countries like England compared to patients in the United States

• It has been linked to "economic euthanasia," in which individuals are allowed (or even encouraged) to die because they are no longer economically viable since they no longer pay taxes. That is exactly what happened to my own grandfather in England • It leads to no recourse, as government officials "apologize" for their negligence or horrible mistakes, but there is no viable way of pursuing damages

These are fairly obvious and well known and observed by medical and policy professionals around the world. In spite of how horrible they are, their proponents tell us that "socialized medicine is better than nothing." In fact, House Majority Leader Steny Hoyer used those words recently. Our indigent population is provided for better in our current and flawed system than those under socialized medicine, so the reasoning simply does not make any sense.

To make matters worse are those effects that are less noticeable. I do not want to sound like a conspiracy therapist, but their implications are far reaching and threaten to undermine both our robust health care system and, historically, the most vibrant economy in the history of the world.

Socialized medicine is part of a "cradle to grave" approach to governing that puts enormous financial strain on individuals and undermines individual responsibility. The mega rich can be taxed to pay for the cost of such programs and still have plenty of resources to do what they want with their money. They can still start enterprises, buy additional businesses, buy new toys, and more. But for the vast majority of individuals in the upper middle class and lower, such excessive costs can literally drive people into a lower income bracket in terms of quality of life and spending power purposes. Such costs make it all the more difficult for people to invest in new tools, to transition from employee to self-employed, and to pursue the climbing of the rungs of the ladder towards economic success.

In essence, these types of programs actually protect the very wealthy from aspiring entrepreneurs that are attempting to achieve economic success of their own, this is among the reasons the rich support big government programs. They might be an inconvenience to them, but are devastating for those who want to be rich. It should not be a surprise then that, in the last presidential election, the highest income group supported Obama 3 to 1 over McCain. It is not only because they can afford to support it, but because it is a small price to pay to stay "competitive."

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.

Massachusetts Senate Race: A Referendum on Health Care Reform

Who would have guessed that a seat held by the Kennedys since the 1950s may find itself in the Republican column? A state wide seat in which registered Democrats out number Republicans 3 to 1? The news media is attributing these amazing turn of events -- with the Republican challenger leading in some polls -- to the general discontentment towards the party in power in both the White House and the Congress. Maybe, but I do not think so. I think it is much more personal than that.

One of the main reasons why voters are entertaining turning over one of its Senate seats to a Republican is that the people of Massachusetts have seen the future of socialized medicine and they know it doesn't work. They have been under a health care bill since 2006 that mirrors, in many respects, the Obama plan navigating through the Senate.

Forbes magazine has pointed out that many of the voters of Massachusetts are unhappy with the plan and for several good reasons. In an article titled "MAss Disaster," writer Sally Pipes exposes some of the ugly truths surrounding the socialized health care bill that has plagued the state.

Pipes reminds the reader of some words that have haunted then Governor Mitt Romney. "'Will Commonwealth care cost taxpayers more? No!' So wrote Massachusetts Gov. Mitt Romney in November 2004, the economy then still in full bloom. 'Neither the state nor the taxpayers can afford to pay more.' She goes on to point out that "It's worth pondering ex-Gov. Romney's promises just over three years after he crossed partisan lines to reform health care in the Bay State. The Obama administration and congressional Democrats are modeling reform on the Massachusetts model, promoting bureaucratic health exchanges, increased restrictions on health insurance and vastly expanded taxpayer-subsidized care. Like Romney, they promise more coverage at lower cost, even as the evidence suggests otherwise."

So what do the people of Massachusetts think about the socialized health care experiment they have been a part of? The Forbes piece notes that "Only one in four considers the reform a success. Just one in five thinks it has made health care more affordable." I'm sure that many of the one-fourth work in government or they are among those that had no health insurance before and do not know quality care when they see it. They certainly are not seeing it in their own state.

A plan that was touted as a way to increase coverage without excessive government spending has had the exact opposite effect:

• Medicaid has increased by 76,000 enrollees and the subsidized plans by 177,000.


• Forty-six percent pay no premium, and


• another 12% are highly subsidized.


• A mere 19,000 have signed up for the non-subsidized private plans offered through the Commonwealth Health Insurance Connector. These were the plans that Romney and others said would help contain costs.

To make matters worse, the bill is very costly. Most citizens are looking at spending 10 percent of their incomes on premiums or face impressive fines. So high, in fact, are the premiums, 20 percent of the state's residents have become exempt from the coverage. Many of these moved to Medicaid (as seen above), but at least 3 percent of the population are still without coverage. Instead of reducing costs, like the politicians promised as the bill navigated through the legislative process, it has significantly increased costs and has the government scrambling for revenues. Recently the state has taken a page out of Obama's book and has put a hit on smokers at the tune of $1 a pack.

So how will the state fight the growth in health care costs? The same way socialist health care systems have fought such runaway costs for years; through a bureaucracy that will cut doctors' income, moving patients into manage care, and the establishment of price controls. In other words, through the development of the same type of rationed care that dominates much of the world today. These are the exact type of approaches Massachusetts is pursuing.

The people of Massachusetts already know this type of health care does not work and that is why they are so close to electing a Republican like Scott Brown to the US Senate.

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.

Three cheers for Chile

This month Chile became the first South American country to join the Organization for Economic Co-operation and Development (OECD). This elite organization is not based on geographic or language similarities, but by meeting the highest economic standards in the world. The OECD is, effectively, the club of the world's 30 developed nations and Chile has reached an important benchmark in its economic development, an achievement built on growth and freedom, according to Ryan Streeter, a Senior Fellow with the London-based Legatum Institute. Streeter goes on to note that Chile was nothing short of a bold experiment in economic liberalization. This experiment has made it among the most affluent in Latin America.

For around a decade in the 1970s and early 80s, 30 Chileans who had studied under the University of Chicago's Milton Friedman transformed their economy. Later known as the "Chicago boys," these economists instituted policies of free trade, stable monetary policies, and deregulating the markets. They essentially de-politicized the economy and put Chile on the fast track of development.

As a result of these policies and the incredible economic turn around of this country, Chile is now poised to join the OECD. It struggled for years in the political and civil liberties front during the Pinochet years (although he drove, in a dictatorial fashion, the policies of economic reform that the nation enjoys today); but Freedom House now gives the country its top rating when it comes to political and other freedoms.

According to the Legatum Institute's Prosperity Index, Chile tops the list of South America's largest countries (those with populations over 10 million), supported by its high scores in governance, safety and security, and the contribution of its policies to economic growth. When you see the combination of change towards both political and economic freedom, you see a country that has created a situation in which the economy is significantly depoliticized, it is one ruled by law, and one in which the people are free to choose their destinies.

Chile has become a beacon of hope for countries that have suffered for generations under despots and demagogues and is a source of inspiration for Western countries that longed enjoyed freedom, but are now choosing a path towards serfdom. Chile could be a country to watch in the 21st century.

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.

The Results of a Complicated Tax System

The Obama Administration loves to sing the praises of "transparency," but finding such in any aspect of our government is difficult to say the least. Recently the Internal Revenue Service started to bang the drum on the importance of reducing errors and fraud by placing pressure on tax preparation services like H & R Block. These companies are taking the blame for poorly filling out forms that really need to be simplified. Steve Malanga, editor for Real Clear Markets and a senior fellow at the Manhattan Institute believes that the end of errors could be found in the act of simplicity.

There is, of course, the old joke where we get a two line tax form. The first line asks, "How much did you make last year?" Second line, "Send a check or money order for that amount." That would be simple, but it would also not work because we would all either stop working or become liars about how much we make. However, this joke does put us in the right direction, according to Malanga.

The vast majority of the modern economies are moving rapidly towards a "flat tax" as a way of guaranteeing a predictable amount of revenue coming in, avoiding the punishment of individuals for earning more income (with a flat tax people pay more if they make more, but it is not in punitive way), and to eliminate the problems of complexity.

How complex is our tax code? According to Malanga, some 80 percent of households now use tax preparers or software to complete their tax returns. Furthermore, we spend 7.6 billion hours on tax compliance, according to the IRS Taxpayer Advocate, which in turn costs nearly $200 billion a year.Over the past decade (since 2001), Washington initiated 3,125 changes to the tax code, or more than one a day. Malanga refers to one recent study that ranked the U.S. tax code 122nd in complexity among 175 nations worldwide. This happens because political forces have decided to use our tax code for social engineering rather than for raising revenue. Any time a politician says he or she wants to promote policies that encourage home ownership or energy savings, they want to do so in the context of changing the tax code to encourage such. This only makes the tax system more complicated.

The system is complex, both for the taxpayer and those who prepare forms for them. A flat tax would be an improvement, although it is still a tax on wealth creation, which makes no sense for any country interested in promoting opportunity and growth. A sales tax would be better still, because it would be a simple tax on consumption. If our government did the things it is allowed to do in Article I, Section 8 of the Constitution, a very modest tariff, like our Founders intended, would be sufficient. But simplicity with either a flat or sales tax would move us in the right direction.

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.

In Heavily Taxed States, People Vote with their Feet

Major news sources like to monitor migration trends among states. The Census Bureau has been watching these trends also and what you find "between the lines," is really quite interesting.

The fastest growing states for population are (in order) Wyoming, Utah, Texas, Colorado, Alaska, Arizona, Washington, North Carolina, Georgia, and South Carolina.
There are several unique characteristics about these population shifts:

• They are often huge. Texas gained over 500,000 in one year. This is largely attributable to the huge number of businesses that have relocated to the state.
• All of these states lean Republican or are very Republican. Republican strategists’ lips salivate when they think of these population shifts to their state. This means more Congressional seats moving to their states and away (as you will see later) from Democrat states. However, they may be surprised by the long term results, as I will explain later.
• They tend to be in the West or (even more so) the South. This has been a trend that has persisted for decades and continues to be the case. Politically, the implications of this are significant. All of our Presidents since John F. Kennedy have been from Texas, California, Georgia, and Arkansas (with the exception of our sitting President and Gerald Ford.
  

What about states that have seen a decline in population? They are, starting with the biggest loser, Michigan, Maine, Rhode Island, Ohio, Vermont, New Hampshire, West Virginia, Pennsylvania, New York, and Mississippi.

• They are in overwhelmingly liberal states. With the exception of Mississippi, these states are all "true blue." This, again, makes conservatives excited and liberals concerned, but the long term implications could prove different.
• With the exception of Mississippi, all of these are in the East Coast and Midwest, which have also suffered when it comes to political prestige and power.
  

What are the lessons learned?

I believe that the political and economic environment of many of these states have become so hostile to entrepreneurship and economic growth, people are voting with their feet in a quest to find better jobs and opportunities. Michigan has taken a pounding for decades (my family was among the "Michiganders" who flew South to flee the rust belt in the 1970s) and continues to face economic pressures due to unions that international competitors never have to encounter. New York and Connecticut are noted for their constant regulatory pressures they apply on business, forcing many to have little choice but to leave. The list goes on; people are leaving these states on the quest for economic prosperity.

I believe Republicans, who appear to be the long term winners in these shifts, should be cautious in their enthusiasm. I remember when I worked as an aide for US Senator Gordon Humphrey of New Hampshire. That state had become extremely Republican by the 1980s and was enjoying growth as people fled the disastrous political and economic situation in Massachusetts just to the South. Eventually New Hampshire became increasingly liberal as people moved who knew there were things wrong with their home state -- taxes, crime, etc. -- but didn't realize that the people they were voting for were the source of their problems. So once they moved to a new promise land, they brought the same terrible policies with them. Today, New Hampshire is now a major population loser as the migrants from Massachusetts wonder what happened to the Granite State. It is a vicious cycle.

The future looks bright for conservative friendly states on paper, but this will only be the case if new voters support the very policies that have made these states so attractive in the first place.

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.

Obamacare's attack on families

The news continues to be disconcerting when it comes to the impact the President's health care bill will have on average Americans and families in particular. In addition to leading to health care shortages, waiting lists, and the squeezing of individuals out of private care into the government program, this bill takes particularly harsh aim at married couples.

In fact, the Wall Street Journal is reporting that "Some married couples would pay thousands of dollars more for the same health insurance coverage as unmarried people living together, under the health insurance overhaul plan pending in Congress"

In light of the bigger issues surrounding the bill -- quality of care, concern for shortages, disruption of the patient and doctor relationship, abortion funding -- many are not noticing the economic discrimination that is taking place against people based on their marital status.

The "marriage penalty" that is being "built in" to both the House and Senate health care bills has largely gone under the radar screen, but many low-income and middle-income couples could find themselves with an increase of $2,000 or more in annual insurance premiums the moment they tie the knot.

How will this discrepancy be demonstrated between the married and singles? The Wall Street Journal article points out that "because subsidies for purchasing health insurance under the plan from congressional Democrats are pegged to federal poverty guidelines. That has the effect of limiting subsidies for married couples with a combined income, compared to if the individuals are single. People who get their health insurance through an employer wouldn't be affected.
Only people that buy subsidized insurance through new exchanges set up by the legislation stand to be impacted."

Here are the facts surrounding the House and Senate measures, according to the Journal:

• About 17 million people would receive such subsidies in 2016 under the House plan


• The bills limits the annual amount people making less than 400 percent of the federal poverty level must pay for health insurance premiums, ranging from 1.5 percent of income for the poorest to 11 percent at the top end
  
• Under the House plan: For an unmarried couple with income of $25,000 each, combined premiums would be capped at $3,076 per year. If the couple gets married, with a combined income of $50,000, their annual premium cap jumps to $5,160 -- a "penalty" of $2,084. The "crime" that generates this penalty is simply being married


• The difference is less in the Senate version of health care legislation, chiefly because premium subsidies in the House bill are more targeted towards low-wage earners


• Under the Senate bill, a couple with $50,000 in combined income would pay $3,450 in annual premiums if unmarried, and $5,100 if married. This difference of $1,650 is again due to the marital status.
  
  

Critics of the plan say that married couples whose combined income makes them ineligible for subsidies is even greater -- possibly as high as $5,000 or more -- depending on the price of the insurance policy.

The obvious concerns surrounding this bill are getting a significant amount of attention. There are many less obvious stories that surround this bill that should be of equal concern to the American people.

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.

Ben Nelson can Feel the Heat

The Wall Street Journal reports these headlines: "Heat Rises on Nebraska's Nelson...Senator Launches Ad Campaign at Home to Defend Key Vote on Health Bill." On the surface, this seems like odd headlines for a person who just figured out how to permanently provide "free health insurance" for his constituents.

The article points out that "Mr. Nelson, who faces re-election in 2012, backed the Senate health-care bill only after lengthy talks in which he won agreement that the federal government would permanently cover the full cost in Nebraska of expanding Medicaid, the federal-state health program for the poor." His vote was crucial in getting the controversial bill through the US Senate. Nelson's vote has drawn criticism from around the country and close to home. Sen. Lindsey Graham, a moderate Republican noted for his tolerance of liberal actions called Nelson's vote "sleazy." The Senator's own governor, Dave Heineman, has been critical of the circumstance behind the bill's passage, stating on Fox News that "The responsibility for this special deal lies solely on the shoulders of Senator Ben Nelson." He is now said to be considering running against Nelson in 2012.

The damage for the bill has been significant. In Nebraska, a Dec. 28 Rasmussen poll showed Heineman, who opposes the bill, soundly beating Mr. Nelson in a theoretical 2012 match-up, 61% to 30%. This is devastating to Nelson, who is 68 years old and was last re-elected in 2006 with 64% of the vote.

The Democrats are in trouble when it comes to the health care bill in general and that legislation will likely serve as a referendum in the 2012 elections. A Wall Street Journal/NBC News poll in December found that 44% to 41% of Americans prefer the health system as it is to the Democrats' health overhaul. The bill is so bad that they cannot even give it away for free in Nebraska.There will be much debate over the sudden decline in Nelson's popularity. It could be because the people of Nebraska are like the rest of the nation who are opposed to rationed or socialized care. Some of them may understand the Constitutional obligations of a US Senator and believe he violated his legal mandate by supporting this bill that is without legitimacy. I believe that Nelson should have learned a lesson from George McGovern, the candidate who lost the 1972 race for the Presidency by a landslide. In the early part of 1972 McGovern was doing very well in his race against Richard Nixon, until he placed on his platform the redistribution of $1,000 to individuals who made less than $5,000 a year. $5,000 does not seem like much now, but at the time it was a huge sum of money. In fact, that described a majority of Americans at the time. But the vast majority of them believed they would make more than that some day. Furthermore, in spite of the weak morals of our elected officials and deep seated cynicism in the way they judge their constituents, I believe most Americans are not mere free loaders eager to get on the welfare dole. The people of Nebraska are hard working and do not want to be seen as dependents on the rest of the country. Nelson's dim view of his voters will likely provide grim results for him in 2012.


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.

What Health Care Reform Should Look Like

You have heard the old saying about the "cure being worse than the disease" and that definitely seems to be the case when it comes to the health care reform debate. Virtually every reform suggested will make health care more expensive and reduce the accessibility of quality care for the vast majority of Americans who are already covered. This will happen because they will have to pay for both the private system and the public system. This will likely have the same effect that the government has had on education...sure, every one can use private schools, but you are going to have to still pay for the government schools. The result of this type of policy is that 90 percent of all young people go to public, rather than private, schools.

This is a shame, considering that the US has the best health care system in the world. The life expectancy of the average American has increased by over a third in the past sixty years - from 57 to 78 years. The US is the health care capital of the world, with hundreds of thousands of people traveling here for consultations with our physicians and treatment in our hospitals. Furthermore, the U.S. has the highest cancer survival rate in the world. According to the American Cancer Society, two out of three American cancer patients are alive five years after diagnosis. This stands in stark contrast to the situation in Britain (which is under a national health care system) where barely one half of cancer patients survive five years. Over time, almost half of those in Britain with breast cancer will die (48 percent), while only one fourth with die in the US (25 percent). It is not surprising that the majority of Americans prefer their health care over a government model, according to Fox News.

To make matters worse, the biggest issues when it comes to health care are not being addressed. One of the most important of these is role of the states. The federal government does not have a proper role when it comes to health care reform. According to Article I, Section 8, the Congress has seventeen powers, none of them include forcing people to buy something they do not want to purchase. With that, the states should continue to pursue various approaches in an effort to find a better way to pursue health care reform, including:

• Restoring competition among companies nationwide. Right now you can only buy insurance from companies that are in your state. Every effort should be made for individuals to be able to buy plans around the country and for states to reduce and eliminate mandates that essentially prohibit such.
  
• Fostering individual choice and competition through Health Savings Accounts. One of the biggest problems with health care is the lack of individual responsibility and freedom. If people had to pay more for certain health care procedures, they would think economically about their health care. One of the reasons why HMOs were largely a disaster is that the cost of visiting a physician was below anything market. People faced lines and had Department of Motor Vehicle treatment. The same is around the corner with socialized health care. With HSAs, an employer could provide for many procedures -- tax free -- directly to the employee. Meanwhile these plans could be bolstered with very high deductible plans (that are quite affordable) to cover major illness or injury.
  
• Encouraging competition and portability. The states should break down the barriers that prevent true competition when it comes to the purchase of health insurance policies. Some states have only one or two carriers because of ridiculous mandates. Freedom of choice should fall on the consumer.
  
• Serious tort reform. One of the single biggest drivers in health care costs is law suits. According to Fox News, many doctors pay as much as $200,000 a year in insurance coverage. Medical malpractice lawsuits add an enormous cost to the practice of medicine. No one is advocating that people should not have recourse for when things go wrong, but if the cost is open ended, the risks are enormous, leading to high insurance premiums and, in turn, the cost of going to a physician. The Democrats, who are driving the health care reform debate, have a very cynical view of the importance of tort reform. Howard Dean, while serving as the Party's chairman, said he "did not want to take on the lawyers," expressing greater concern about one of his party's constituencies than over real reform.
  

This list, of course, is only a beginning. Meaningful discussions on the cost of regulation, the impact price fixing has on physicians who accept Medicare and Medicaid, and many other topics are worthy of debate. What is most important is that we return the discussion where it belongs -- in state capitals around the country -- and we seek solutions grounded in freedom and not in more 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.

Principles, Not Polls, Should Dictate Policy Debate

Every day I see another poll stating support or opposition to policy positions. Some times they are being mentioned by major media -- Fox News, the Washington Post, Newsweek Magazine -- or other source. Other times they are being promoted by major organizations; groups who are for or against guns, groups that are for or opposed to socialized medicine, people who want tax increases and those who want to dump tea because of them. Today, polls dominate public policy debate. I believe that those who live by the polls -- especially people who claim to support liberty -- will die by the polls.

• If a majority of Americans support a massive increase in taxes, do tax increases become a good thing?
• If a majority of Americans want to severely limit access to firearms, is that a good thing?
• If a majority of American want to socialize medicine, should we be supportive of it?

Invariably, polls that do not support "our" position are dismissed as distorted, skewed towards certain population groups, or are simply wrong. It is not the numbers that are wrong, it is the idea of using polls to drive policy debates that is the problem.

Polls are the tools of demagogues and purveyors of mob rule. Polls are tools used by the majority and are designed to bring the minority, or the one, "in line." One of my favorite quotes on the subject is from Ayn Rand who said, "The smallest minority on earth is the individual. Those who deny individual rights cannot claim to be defenders of minorities." The Founders attempted to make a country in which individuals ruled and the elected officials served to protect them (and not “provide” for them).

Our federal government was designed to do very little at all. Its primary objective was to protect individuals from other individuals and our nation from adversaries. Its seventeen enumerated powers in Article I, Section 8, gave the federal government a very modest agenda, with the vast majority of power being deferred to the states and (more importantly) individuals. Furthermore, the Founders created a convoluted form of government that made change difficult to achieve. This was not by accident, but design. While the so-called "French Republic" started years after ours, it has had five different governments over the last two hundred years. The British boast of a "Constitution," but that is simply the evolution of law over centuries. Our Constitution was intended to mean something. It was meant to make government small, but strong. It provided the separation of powers -- the Legislative, Executive, and Judicial branches -- for the primary objective of making it difficult for laws to pass. It was meant to hinder, not foster, change. Our office of the President differs greatly from the Prime Ministers of Europe. The latter are mere extensions of the legislative branches and are meant to facilitate change. The former is meant to represent the interests of all the people and often resist the legislative agenda.

Our Constitutional Amendment process is so daunting; we have only had 27 amendments approved since 1789. Since that time over 10,000 amendments have been introduced and any where from 100 to 200 have been offered annually for the last several years. Of those 27, ten of them were ratified with the Constitution (they are our Bill of Rights) and were a prerequisite for the document being approved. Seventeen amendments over 200 years demonstrates a government adverse to change.

The Founders were opposed to most "change" when it came to government, because such was virtually always done at the expense of individual freedoms. Those who do not share such values continually discount the delays in our founding documents and often try to legislate through courts and bureaucracy. I, for one, believe it is time to go back to the principles that have worked and are found in the Constitution and not public opinion polls.

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.

How to Talk about the Economy

Virtually every economic debate falls into a discussion about parties and politics. This is why most economic discussions do not amount to much. You start discussing parties and politicians and the debate simply goes down hill from there. That is why I love the Ten Pillars of Economic Wisdom. They speak of pure economic truths -- no agendas, just common sense.

In the 1990s, I was a Senior Fellow at the American Economic Foundation, which was the group that developed the Ten Pillars during the Great Depression. The organization wanted to remind Americans that freedom works. It was my job with the Foundation to teach the same lesson in seminars in the former Soviet Union and how these principles could be a light to a region that suffered from decades of totalitarianism. Today, the US is slipping into a command economy of its own where the government will seek to be in charge of all things. Today, with the Obama Administration, this country needs to be reminded of these principles now more than ever.

1. "Nothing in our material world can come from nowhere or go nowhere, nor can it be free: everything in our economic life has a source, a destination, and a cost that must be paid."

As Milton Friedman use to say, "there is no such thing as a free lunch." Everything has a cost, regardless of promises from politicians. The next time a person says "the government should to that," simply ask them how? At what cost? Why?

2. "Government is never a source of goods. Everything produced is produced by the people, and everything that government gives to the people, it must first take from the people."

Following the two massive bailouts over the last 16 months, 25 percent of Americans who were asked in a Fox survey how the government pays for its programs said it was because the US "has its own money." Those people need to be familiar with this Pillar. The bailouts we have seen cost plenty and will have a profound impact on our economy. They are being paid for through a massive printing of fiat money (essentially counterfeit dollars) and new taxes that will effect every economic group.

3. "The only valuable money that government has to spend is that money taxed or borrowed out of the people's earnings. When government decides to spend more than it has thus received, that extra unearned money is created out of thin air, through the banks, and, when spent, takes on value only by reducing the value of all money, savings, and insurance."

Much of the new spending we have seen by politicians is being financed by fiat money and will result in rampant inflation. Inflation means "too much money chasing too few goods." Government is paying for its programs with "funny money," but the consequences are anything but humorous.

4. "In our modern exchange economy, all payroll and employment come from customers, and the only worthwhile job security is customer security; if there are no customers, there can be no payroll and no jobs."

Labor unions have long tried to create an economic world that is detached from reality. If labor wants job security, they must do what successful employers must do -- make the customer the priority. There is no other way to assure stability.

5. "Customer security can be achieved by the worker only when he cooperates with management in doing the things that win and hold customers. Job security, therefore, is a partnership problem that can be solved only in a spirit of understanding and cooperation."

This simply means that labor often seeks an adversarial relationship with business, but job security can only come if the two are partners. For years Japan's company unions served as a model of labor and employer cooperation. With this model employees and management would work together on strategies to increase customers, foster efficiency, and to build a better business.

6. "Because wages are the principal cost of everything, widespread wage increases, without corresponding increase in production, simply increase the cost of everybody's living."

An example of this is the minimum wage. When it goes up, so do prices, and if the job isn't worth the wage, it will be lost. This solves the mystery as to why minimum wage increases are both rare and devastating. Unemployment had remained extremely low for several years until the summer of 2008 when there was a huge jump, followed by unemployment surpassing the 7 percent level. Another increase in the summer of 2009 has led to double digit unemployment. This is due to cause and effect, not coincidence.

7. "The greatest good for the greatest number means, in its material sense, the greatest goods for the greatest number which, in turn, means the greatest productivity per worker."

Production is the best way to keep an economy strong, and those who participate in it growing financially. The best way to encourage productivity is for a government to keep the costs of production as low as possible. This is done through a stable money supply, low taxes (especially on wealth creation), and few regulations.

8. "All productivity is based on three factors: 1) natural resources (NR), whose form, place and condition are changed by the expenditure of 2) human energy (HE) (both muscular and mental), with the aid of 3) tools (T)."This is straight forward enough. These three factors make up the totality of the economy. As a formula, this is seen as NR + HE x T = Man's Material Welfare."

Economies grew when the labor (human energy) is available in the most efficient way possible, when national resources (oil, wood, etc.) are as accessible and affordable as possible, and through the development of tools (which is technology)

9. "Tools are the only one of these three factors that man can increase without limit, and tools come into being in a free society only when there is a reward for the temporary self-denial that people must practice in order to channel part of their earnings away from purchases that produce immediate comfort and pleasure, and into new tools of production. Proper payment for the use of tools is essential to their creation."

Tools are the only one of these that can increase without limit. An example of this is agriculture, which was the dominant industry in the late 1700s and early 1800s, with the majority of our population working in that area. Today, the number who work in it are in the single digits, yet the abundance of food could not be greater. Technology made this completely possible.

10. "The productivity of the tools--that is, the efficiency of the human energy applied in connection with their use--has always been highest in a competitive society in which the economic decisions are made by millions of progress-seeking individuals, rather than in a state-planned society in which those decisions are made by a handful of all-powerful people, regardless of how well-meaning, unselfish, sincere and intelligent those people may be."

The genius of the many individuals operating on their own when it comes to economic prosperity is always greater than the few or even the majority that would impose its view of "fairness" on them. This is the "invisible hand" that Adam Smith spoke of so eloquently in his, The Wealth of Nations. Government cannot effectively manage economic growth and its efforts to do so only leads to government waste, economic recession (or depression), and devalued currency.

I love the Ten Pillars because they are simple, factual, logical, and without a agendas. They provide excellent benchmarks on what works in the economic system. Pass this tool on to others who are trying to figure out the headlines and share with them the message of economic liberty.

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.