Insurance for people with pre-existing medical conditions

• Can you buy new fire insurance to cover house that has already burned down?
• Can you buy new life insurance to cover somebody after they already died?
• Can you buy new auto insurance to cover a car that has already been in an accident?

Of course not! If you could buy insurance after an event happened then nobody would elect to pay monthly premiums before an event happened. Insurance is designed to protect you from something that hasn't happened but might happen.

It doesn't make sense to force insurance companies to cover pre-existing medical conditions because if people know they would be covered for pre-existing medical conditions then there is no reason to buy insurance before they get a medical condition.

Of course if you forced everybody to buy health insurance then you could cover pre-existing medical conditions. However, forcing somebody to buy something just to be a citizen is unprecedented and unconstitutional. The likely way to legally force people to pay for health insurance would be for the government to tax people and then use the tax revenue to buy insurance.

In this tax and spend scenario the government would essentially control the money paid to insurance companies and this would give the government tremendous power over insurance companies. This power over insurance companies would give the government tremendous influence on the monies paid out for healthcare services. This would give the government a lot of power and control over healthcare providers.

There is nothing wrong with wanting to help people with pre-existing medical conditions and there are plenty of ways to do this. However, trying to help these people by the government forcing insurance companies to cover pre-existing medical conditions will naturally lead to government run healthcare.

This One Sentence Can Create Millions of Green Jobs Overnight Without Spending Any Taxpayer Dollars

You are about to read one sentence that has the ability to create millions of green jobs overnight without the government spending any money. After you read the sentence I will explain why this sentence would be so effective.

The government should implement a gradually increasing revenue neutral tax on all crude oil consumed in the US such that within ten years it is guaranteed to cost a consumer more to consume oil than to consume green alternatives.

For example let's suppose it costs $5 to produce a gallon of biofuel made from algae. If people know that gasoline would slowly ramp up in cost to be $7 in ten years then jobs would sprout up in the algae biofuel industry overnight. Similarly, if electric car manufacturers know they would be extremely competitive against $7 gasoline then jobs would sprout up in the electric car industry overnight as well. Anything that can compete with $7 gasoline would flourish and jobs would be created. You would be crazy not to invest in a company that will be profitable filling the void created by $7 per gallon gasoline.

Don't be fooled by the word "tax" but instead focus on the "revenue neutral" part of it. With the revenue neutral tax all the additional tax revenue collected from oil consumption will go directly back to people in the form of credits. If you consume less oil than average you come out ahead. If you consume more oil than average then you just have to pay a bit more for your consumption habits.

The revenue neutral tax would be ramped up over time. This ramping up of taxes could be delayed a couple years to give certain industries some time to plan how to address the imminent changes. This delay wouldn't really hinder the investments in alternatives as these projects will take years before anything significant comes to market anyway. The key is a long term trajectory that clearly guarantees that alternatives to oil will win and dependence on oil will lose.

In reality the price of oil will naturally go up over time because it is a finite resource that keeps getting more and more costly to extract from the ground. In ten years gasoline will probably be more expensive than alternatives regardless of this revenue neutral tax idea. However, it sure would be tremendously beneficial to our country if it were extremely clear to everybody that this will happen soon. It is better to come up with a methodical plan to deal with this inevitability now than to be in a mad scramble when oil rockets up to $200+ per barrel.

I am calling "cash for clunkers" a failure!

I have heard many people claim the cash for clunkers was a huge success, but it troubles me when I hear this because cash for clunkers was flawed in many ways. In fact I think cash for clunkers was a huge failure and I will tell you why.

A big giveaway to the programs intrinsic flaw is it involves a physical destruction of value. In theory there is incentive for a car valued at $4,499 to be destroyed. This is even worse than digging ditches and filling them to create jobs.

Another giveaway to the intrinsic flaws is that government is stepping in and picking winners and losers. It is worth pointing out that since the net result is a destruction of value, there will actually be more losers than winners.

One obvious loser is the taxpayer. The program was $3 billion so each taxpayer had to pay $20 on average for this program. The person getting $4,500 for scraping their car is essentially receiving this privilege because the government is basically making 225 people each give this person a twenty dollar bill.

Those 225 people would have surely spent their $20 on something better for the economic welfare of our society than what amounts to providing someone incentive to scrap something of value.

Very poor people were actually hurt by the cash for clunkers program. Think of a mother who needs a car to get to the grocery store, Wal-Mart, and the clinic. A $4,000 car that got 10 miles per gallon car would be very effective at taking her a mile down the road and back. Unfortunately, taxpayers had to pay $4,500 to scrap a car like that.

There will be winners and losers with every government decision. Whenever the government picks winners and losers I get worried because the government tends to be extremely inefficient and illogical. Please don't be fooled into thinking it is a success when taxpayer dollars are used to benefit certain groups by paying them to destroy something of value.

For those who are interested I had a plan that would be far more effective and efficient at increasing the fuel efficiency of cars in America. You can read about it here.

Barack Obama's Approval Index Reaches New Historic Level

For the first time in history, Barack Obama's presidential approval index fell into negative territory. The Rasmussen Obama Approval Index for June 21, 2009 has 32% strongly approve and 34% strongly disapprove which equates to an approval index of negative 2.

Obama's negative presidential approval index is still quite impressive when compared to the dismal final days of the Bush Administration. However, the amazing thing about Obama's new presidential approval index is that less than five months ago on January 22, a whopping 44% strongly approved of Obama and only14% strongly disapproved of Obama giving him an approval index of plus 30. Wow! The strongly approve to strongly disapprove ratio went from more than three to less than one in under five months!

Of course Rasmussen numbers should be taken with a grain of salt because they are generally not as favorable to Obama as many of the other polls out there like Gallup or CBS News/NY Times. Regardless, the majority of polls agree there is a strong trend of less people approving and more people disapproving. 

Rasmussen still has Obama with a positive overall presidential approval rating with 53% approve and 46% disapprove, but I have a hunch this number won't last because extrapolating the data suggest the downward slide to continue. The question isn't really IF the approval rating goes negative but rather WHEN. My best guess is for Obama to have negative approval some time during the third quarter of 2009.

Please share your comments here on Reddit, or here on PoliticalWatercooler.com or twitter me  @oscarcan.

Interpretations of the April 29th FOMC Statement

There are a number of ways to interpret the April 29, 2009 FOMC Statement. Below is the first paragraph of the FOMC Statement followed by two different translations. The literal translation is perhaps the most accurate.

First Paragraph of the April 29th FOMC Statement:

"Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability."

A rosy interpretation of the FOMC Statement:
The contraction of the economy has slowed. Household spending is stabilizing. The economic outlook has improved since March because of easing of financial market conditions. The committee anticipates a gradual resumption of sustainable economic growth.

A literal interpretation of the FOMC Statement:
The economy has continued to contract. Household spending remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Economic activity is likely to remain weak for a time.

When criticizing the FairTax plan, be sure to avoid these nonsensical arguments

I have heard a lot of arguments against the FairTax plan. Some of the most common arguments are so nonsensical they can make you come across as being either uninformed or unintelligent. Below are some arguments you want to avoid when criticizing the FairTax.

Don't criticize the FairTax for being tax revenue neutral. The FairTax system doesn't necessarily have to be tax revenue neutral. Criticizing the FairTax for being revenue neutral is as nonsensical as criticizing a new thermostat because it can be set to the current room temperature.

Don't complain that the FairTax is not progressive. The prebate makes it so the FairTax plan is highly progressive. The prebate makes it so people spending less than the poverty level will pay zero federal taxes. It is also interesting to point out that one of the taxes the FairTax is designed to replace is the highly regressive payroll tax.

Think before you complain about how the FairTax hurts certain groups. Keep in mind that the FairTax would be introduced as revenue neutral so for every hurt you complain about there is an equal benefit given somewhere else. Also, groups that currently get special treatment in the current tax code are most likely to be among those who make out slightly worse. Do you really want to defend the special interest groups politicians have catered to in the current 60,000 page tax code?

Don't complain about how people will cheat the FairTax system. There will be people who cheat the FairTax system just as there are people who cheat the current system. The real question is which system will result in less overall cheating and easier monitoring. Strong arguments can be made that the FairTax system will be superior in this regard because the number of tax collection points to guard against cheating would be reduced from all people and all businesses down to just businesses selling retail.

Don't debate whether the consumption tax rate is 23% or 30% unless you side with the FairTax position. The FairTax logic is correct on this issue. Find the smartest and most honest mathematical mind you know and give them the task of fairly comparing a federal tax on income to a federal tax on consumption and they will confirm this for you.

Example: With income tax, if someone has $100 of their income taxed at 23% they give $23 to the government and have $77 remaining to buy something. Similarly, with the FairTax, if someone has none of their income taxed and then pays $100 for the same $77 something mentioned above and the government gets $23 then these two scenarios amount to the exact same amount of taxation. If income tax in this example can be referred to as 23% then so should the FairTax.

Don't criticize the FairTax by saying it will never pass. The merits of the FairTax do not depend on whether or not politicians pass it. Instead of thinking about whether or not it will pass, I believe it is better to think about why some politicians might not want to pass it. Why might politicians cling to all 60,000 pages of our current tax code? It probably has a lot to do getting votes, contributions, and appeasing lobbyists.

Logical Reasons Against The FairTax

OK, so what then is a logical and intelligent argument against the FairTax?

I do have one pretty major problem with the FairTax proposal. I believe people who currently have a lot of money will be hurt by the implementation of the FairTax plan. These people paid income taxes when they earned all that money and then under the FairTax plan they would also have to pay consumption taxes when they spend that same money. I have read arguments by FairTax proponents as they try to tap dance around this issue, but I would prefer if they would just admit that existing wealth will take a slight hit with the FairTax plan. It will probably help their cause to admit this especially since nobody seems to care if the rich are financially hurt. I don't feel sorry for rich people, but it is worth acknowledging that what rich people can consume with their wealth will be taxed more heavily with the FairTax plan.

I also have another problem with the FairTax plan and it has to do with exports. One key component in the FairTax plan is to make businesses pay no federal taxes so that exports are free from embedded taxes that otherwise would hinder the competitiveness of American exports. The FairTax cheerleading theory is that the FairTax plan will make American exports competitive which would create jobs and encourage both foreign and domestic investments in America production. I don't mind jobs and increased investment in productivity, but I have a problem with how zero taxation on exports isn't representative of the costs that went into producing the products being exported. For example, the products being exported benefit from various federal expenditures such as roads, electric grids, education, security, regulation, etc. Selling these exports to foreign countries without factoring in any of our nation's federal expenses seems to me like America taxpayers giving to the world through exports. However, since America has had a massive trade deficit for decades, my concerns about zero federal export taxation is a mute point because it looks like will benefit more from collecting taxes on imports.

Conclusion

This blog entry is motivated out of a genuine belief that I don't want people to cling to nonsensical arguments especially with regard to a proposed system with the potential of the FairTax plan. This blog entry does not specifically focus on the positives of the FairTax plan, but you can read many positives about the plan at FairTax.org. In my opinion, that site does cheerlead a bit much, but it is forgivable because many of cheers in favor the FairTax plan are justifiable.

Just How Bad is Our Government's Spending Problem

At the time of writing this our national debt is $11.2 trillion (and counting). Another way of looking at this is to realize that the share of debt for each man, woman, and child in our country is over $36,500 each. For a typical family of four this amounts to $146,000 of debt. A sizable portion of your tax dollars go to paying interest on this debt.

Roughly half of our national debt was accumulated under the Bush Administration. Some notable expenses were the war on terror and the wars in Iraq and Afghanistan. Bush inherited a budget surplus and left office with the largest federal deficit ever.

One key number I am fascinated by is the federal deficit as a percentage of the GDP. I think it is a good number to compare deficit spending for different years. To get this percentage I take the federal deficit divided by the GDP using this data from usgovernmentspending.com.

Over the course of the Bush presidency the worst year for this number was in 2004 when the federal deficit was 3.5% the GDP. In 2008 the federal deficit was 3.2% the GDP which is not as bad but close to it. How does Obama compare?

Under the Obama administration the 2009 federal deficit is planned to be a whopping 12.3% of the GDP. This insane deficit spending of 12.3% GDP is more than double the worst value from any year from 1947 through 2008. The closest comparable year for excessive spending was 1983 where the federal deficit was 5.9% of the GDP. Another way of putting this is to say deficit spending is twice as bad now as it was in the worst year over the past six decades.

At the rate of spending planned by the Obama Administration our national debt is becoming a good bet to double during Obama's watch. Perhaps even more alarming, our national debt is on pace to exceed our GDP in a few years. The last time America's national debt exceeded its GDP was during World War II. Fortunately back then we were able to overcome this debt burden because our economy was in a position to significantly outgrow our debt. Our debt still grew back then but our economy grew faster, a lot faster.

Unfortunately for us now, however, our economy is not well positioned to outgrow our debt. We have an aging population with baby boomers already starting to collect social security. Our GDP growth rate in 2009 is looking to be lower than any year over the past six decades. Our economy is addicted to foreign oil which will likely hinder our economic growth because oil prices will surely rise and create a downward pressure as the economy starts to shows signs of any significant growth. Unfortunately, spending money at levels not seen since WWII does not guarantee we will get the economic growth we saw after WWII.

Instead of comparing our current situation to ourselves back in the 1940s, I believe it would be more appropriate to compare ourselves with another highly developed economy that has many similarities to us. The recent economic history of Japan offers us a crystal clear window into what our future might look like if we continue to try and spend our way out of the current economic situation.

Japan's Nikkei average peaked in 1989 and the peak was followed by a major correction. Similarly, the Dow peaked in 2007 and that peak was also followed by a major correction. Japan tried to spend their way out of their economic crisis just as we are trying to do now. How did all this spending work for Japan? Well, in 2009, two decades after the Nikkei peaked, Japan's Nikkei hit a new 26 year low. Also, in 2010 Japan's debt as a percentage of GDP is estimated to be 200%, a massive burden on their economic future.

Japan is a crystal ball that shows where excessive government spending will lead us. Our economic situation now is similar to Japan's situation back in the early 1990s. Unfortunately, our government response to spend, spend, and spend is hauntingly similar as well.

AIG Bailout - The Great Misdirection of Outrage

The AIG bailout is estimated to cost over $170 billion and yet the media is in a frenzy over the $165 million paid in bonuses to AIG executives. This is more than a 1,000 to one ratio.

A perfect analogy for this situation is to imagine you had a wallet filled with ten hundred dollar bills (i.e. $1,000) and one single dollar (i.e. $1). Next imagine the entire $1,001 was stolen from your wallet with one person stealing $1,000 from you and the other person stealing $1 from you.

The way I see it, the government who bailed out AIG is analogous to the person who took $1,000 and the executive bonuses is analogous to the person who took $1. What is happening now is the government (i.e. the $1,000 taker) is directing all attention toward the executive bonuses (i.e. the $1 taker).

It is absurd but people seem to actually believe the government (i.e. the $1,000 taker) when the government says something like the following: "Just look at that greedy person who stole $1 of your hard earned money right from your wallet and is now thumbing their finger at you. You need me, the government, to protect you from greedy people". It is unbelievable that people are actually buying into such a misdirection of outrage.

It is also interesting to point out that $170 billion AIG bailout is literally costing US taxpayers an average of over $1,000 per taxpayer because a $170 billion bailout divided by 150 million taxpayers comes out to $1,133 dollars per taxpayer.

Did Obama Really Inherit This Economy?

Did Obama merely inherit the economy or were his policies and the likelihood of them being enacted an integral part of what shaped our current economy. Below are some key Obama dates and the corresponding Dow Jones Industrial Average numbers.

On January 3, 2008, the DOW closed at 13,056.72. The favorites to be the next president were Hillary Clinton for the Democrats or Mitt Romney for the Republicans. However, everybody knew the Democrats were the heavily favored to win.

On January 4, 2008, Barack Obama, an extremely liberal senator, won the Iowa caucus. The next day the DOW was down 256.54 to close at 12,800.18.

On Super Tuesday, February 5, 2008 Barack Obama won 13 states to Hillary Clinton's 9. The next day the Dow closed at 12,200.10.

On April 29, 2008, the controversy over Obama's Pastor got to a point where Obama felt it necessary to denounce his preacher. The story was hurting Obama politically. On that day the Dow closed at 12,831.94.

On August 23, 2008 Obama selected Biden, another extremely liberal senator, and the next trading day the DOW was down 241.81 to close at 11,386.25.

On September 26, 2008, the first presidential debate took place between McCain and Obama. All the news stations except Fox basically proclaimed Obama the winner. Fox took the view that there was no clear cut winner, but Fox News was quite clear that McCain did not deliver the knock out blow McCain desperately needed. A win or a tie was considered a victory for Obama. The next trading day the DOW was down 777.68 to close at 10,365.45.

On November 4, 2008, Barack Obama was elected the 44th President of the United States. The next trading day the DOW was down 486.01 to close at 9,139.27.

Barack Obama was one of the most active president elects in history. On the night Obama was elected the DOW was at 9625.28. On the day Obama was sworn in the DOW closed at 7,949.09.

Barack Obama and the Democratic controlled Congress have been extremely active and effective with passing their legislation since taking power. In less than 7 weeks of Obama being behind the wheel the DOW is currently at 6,626.94.

If you believe the markets are forward looking, then it is difficult to believe that Obama merely inherited the economy. It appears the probability of Obama's policies being enacted has played a role in shaping our economy.

Digging Ditches and Filling Them Does Not Create Jobs

I am always skeptical when I hear somebody talk about spending taxpayer dollars to create jobs. There are good kinds of spending to create jobs and bad kinds.

The good kind of spending to create jobs involves spending money that creates jobs for people where the results of their labor makes our country more productive and efficient and also helps to stimulate even more jobs. For example, spending money to make our nation's electrical grid more efficient, reliable, safer, etc. is something that will create jobs and also make our nation more productive thereby generating even more jobs. As one would expect, there are some things like this in our new stimulus bill.

The bad kind of spending to create jobs is doing things like paying people to dig a ditch and then paying them to fill it back up again. Sure it will employ a lot of ditch diggers, but the result of the labor does nothing to help the economy. It is essentially just politicians putting taxpayer dollars in the hands of certain people selected by politicians.

I know it sounds difficult to believe but here is how a politician might try and convince us to spend billions to dig ditches and fill them up.

The ditch diggers have been badly hurt by the economy and their jobs are being lost at record rate (insert sad story about an honest, hard working ditch digger who is suffering). This bill provides needed employment for people like one you just heard about. This bill will help keep America's ditch digging industry strong so we won't become dependent of foreign ditch diggers. This bill will have a positive ripple effect and create jobs for all the supporting industries like shovel, work boot, and uniform manufacturers.

Anyway, when you try and debate the politician they will tell you their plan will create jobs and help honest, hardworking ditch diggers. However, under their breath they may be whispering "the stock I own in the shovel company will go through the roof if this thing passes" or "I'll be able to count on the ditch digger vote if this thing passes". Granted, some politicians may not be motivated by votes or profit when they push for things, but it is still depressing if our politicians honestly believe that digging ditches and filling them will help our economy.

Problems with the $75 Billion Foreclosure Plan

The plan aims to reduce the number of foreclosures by spending taxpayer dollars and essentially giving money to selected people and banks at risk of foreclosures. The cost of this $75 billion plan is equivalent to $500 per US taxpayer (i.e. $75 billion divided by 150 million taxpayers).

Nobody likes people being forced out of their homes. However, it is also not good to reward people and banks that are overextended especially if it involves taking money away from people, taxpayers, who exercised more prudence.

Imagine a community of twenty or so hard working taxpayers where only one of the people is at risk of foreclosure. Imagine if the government forced each of the hard working taxpayers to walk over to their neighbor's house and each give $500 to the one person who is at risk of foreclosure. This is not the recipe for building a prosperous country. This is a recipe for more resentment, entitlement, and failure.

The root problem with a foreclosure is that somebody can't afford to live in the home they owe money on. Giving taxpayer dollars to people so they barely make payments is only going to drag the core problem on into the future.

Abortion and Obama's first few days of office

Today I read an article about a change Barack Obama made regarding U.S. policy on abortion funding. I thought the article has a strong left lean towards it so intend to give it a corresponding lean towards the right. Below are the left version and the right version.

Obama lifts restrictions on abortion funding Complete Reuters article found here	Obama allows taxpayer dollars to fund abortions in foreign countries by Oscar
President Barack Obama on Friday lifted restrictions on U.S. government funding for groups that provide abortion services or counseling abroad, reversing a policy of his Republican predecessor George W. Bush, a spokesman said.	President Barack Obama on Friday turned back the clock so U.S. taxpayer dollars can now be used to fund groups that perform abortions abroad.
The Democratic president's decision was a victory for advocates of abortion rights on an issue that in recent years has become a tit-for-tat policy change each time the White House shifts from one party to the other.	The Democratic president's decision was a blow, literally a skull crushing blow, to the unborn and to people worldwide who support rights for the unborn.
When the ban was in place, no U.S. government funding for family planning services could be given to clinics or groups that offer abortion services or counseling in other countries even if the funds for those activities come from non-U.S. government sources.	Before Obama changed U.S. policy the U.S. government did not fund groups and clinics that were in the business of aborting human fetuses.
Obama signed an executive order lifting the restrictions on Friday, a White House spokesman said.	Obama signed an executive allowing U.S. money to fund abortions on Friday, a White House spokesman said.
It has been called the Mexico City Policy because it was unveiled at a United Nations conference there in 1984 and became one of the centerpiece social policies of the conservative administration of former President Ronald Reagan, a Republican.	Former President Ronald Reagan, a Republican, was not in favor of using U.S. taxpayer dollars to fund abortions and unveiled policy, called the Mexico City Policy, to protect the unborn. In his first few days in office Obama changed this policy that protected the unborn.
Critics call it the "gag rule" because it also cuts funds to groups that advocate or lobby for the lifting of abortion restrictions, so they say it infringes on free speech. They also say it has reduced healthcare for some of the world's poorest women.	Critics call it the "gag rule" because they couldn't think of a better name for a policy that strives to limit the use of U.S. taxpayer dollars to perform and promote abortions.
Former President Bill Clinton, a Democrat, rescinded the rule when he took office in January 1993 and his successor, Republican George W. Bush, reinstated it in January 2001.	In a change back to more of the same, Obama adopted the same policy familiar to those in his administration, the same policy as the last Democrat in office.
Planned Parenthood, a health care provider and advocacy group for abortion rights, welcomed the move. "With the stroke of a pen, President Obama has..."	Planned Parenthood, a billion dollar 501(c)3 company that pays no taxes and receives millions of dollars of government grants and millions of dollars performing abortions was supportive of Obama's decision to use taxpayer dollars to fund abortions abroad.