Thursday, July 14, 2011

The Debt Ceiling, Government Spending, Waste in Government Spending, and Insanity

From my July 27, 2009 post:

“Price, Cost, and Supply and Demand—Economics 101 overly simplified for the Congress and the President

In my first economics’ class in college, my instructor said that, if we learned the material presented, we would know more economics that 95% of the public. From what I can tell from the “Nationalized Healthcare” bill before Congress, we also will know more economics than any member of the libertine Democrats in Congress and the President.

First, Congress and the President can NOT change economic realities by pronouncement! Thus, the title of the bill is “America’s Affordable Health Choices Act of 2009.” The stated purpose of the bill is “to provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes.” (Both quotes are from page 1 of H.R. 3200 which is 1017 pages long.)

If Congress names it AFFORDABLE, it most be affordable? And yet, the bill establishes a massive, NEW bureaucracy that has, according to Republicans, 32 new agencies—NONE of which will provide a whit of healthcare. Has Congress and the President ever heard of the concept of K.I.S.S.? Perhaps they can’t keep it simple when they are planning to CONTROL 16-17% of the American economy. And they are planning to pass the laws necessary to establish that control in about seven months.

In general, supply and demand—NOT Congressional edicts or pronouncements—determines price/cost. Price is what we as consumers must deal with. Cost is what a business (or the government trying to act like a business) must deal with. (For our purposes, we will primarily concentrate on price.) When supply and demand are in equilibrium, the price of the product and the quantity of the product are determined. Also, demand moves more quickly than does supply since, for example, it takes time to educate citizens to be doctors.

Thus, it takes time for supply to adjust to new demand equations. New electronic gadgets in the market begin at a higher price (It costs more per unit to produce a few units rather than thousands of units.) and as demand increases, the supply tends to catch up resulting in lower prices. One of the tricky aspects of a business is determining the original price for a new product—eventually the price is determined by supply and demand. (Some products can’t be given away; some have people lined up at the door.) Over the long run, the price of a product can NOT be lower than the costs to produce that product. (Duh! THINK GM which has now become Government Motors!)

In general, supply and demand is now in equilibrium and thus the price of healthcare at this point in time is determined. One does not have to agree with the price to have it in equilibrium. If now in equilibrium, what must happen to change the price of healthcare?

Demand side of supply and demand:

In general, if demand goes up, the price goes up. Greater demand means that people are willing to pay more for the same product. Conversely, if demand goes down, the price goes down. Over time, if demand goes up and price goes up, the supply will also increase as the increasing price means greater profit and this pulls more quantity into the equation. At some point, a new equilibrium is established.

Supply side of supply and demand:

In general, if supply goes up, the price goes down. Greater supply means that people are dedicating more resources for the same product. Conversely, if supply goes down, the price goes up. Over time, if supply goes up and price goes down, the demand will also decrease as the decreasing price reaches a saturation point. Healthy people don’t have as much need for a physician. JESUS, the SON of GOD, recognized this obvious truth when HE declared in another context, “On hearing this, Jesus said, ‘It is not the healthy who need a doctor, but the sick.’” (Matthew 9: 12 [NIV]) At some point, a new equilibrium is established.

So, economically according to general supply and demand concepts, what will the economic results be of the proposed bill before the House of Representatives? A DISASTER! Providing “affordable” healthcare insurance will automatically increase the demand for healthcare as it did when Medicare was first initiated. Low prices will generate greater demand—basic economics. (Here, the price is pulling demand instead of demand pulling prices because the government’s goal is “affordable” healthcare. They want to control price instead of allowing supply and demand principles to operate.) If demand increases, then price increases—the exact opposite of what the government intends!!!

Consequently, the government will eventually start setting prices to meet there alleged mandate of “affordable health choices.” But the price is set NOT by increased supply or decreased demand but by government edict. The demand remains high but there is NO incentive for supply to increase on the PRODUCTION side because their COSTS are TOO HIGH. The end result: RATIONING of services, WORSE healthcare not better, and HIDDEN COSTS because of government inefficiencies, bureaucratic red tape, increased taxes (but only on the rich supposedly!) and the attempts to CONTROL prices outside of supply and demand principles.

Government control of supply and demand has never succeeded in the long run under any government run system including our Medicare and Medicaid programs. These two government “run” programs are two very important reasons WHY healthcare costs are so high today! And yet, the Barack Hussein Obama administration wants to drastically INCREASE government CONTROL over supply and demand. IT WILL NOT HAPPEN SUCCESSFULLY!

Have we learned nothing from the past? Is it possible to repeat the same mistakes and get different results? One supporter of “Nationalized Healthcare” claimed we are the only advanced economy that does NOT have “Nationalized Healthcare.” My response is: SO WHAT! If other nations have chosen to drive over a cliff, should we also?

Ultimately, government CAN NOT CONTROL supply and demand. Therefore, ultimately, government CAN NOT CONTROL price. The Supreme Court early in its history ruled that the power to tax is the power to destroy. Thus, States can not tax the federal government and the federal government can not tax the State. However, the power to CONTROL is also the power to destroy. This insane desire to control supply and demand can NOT succeed. It will, however, make our healthcare system worse NOT better and NOT more cost efficient.

The Barack Hussein Obama administration is an ARROGANT administration! Within the last six months, it has declared that it thinks it has the power to control CLIMATE with its “Cap and Trade” bill. IT DOES NOT! Now, it thinks it has the power to control supply and demand. IT DOES NOT!”

I repeated this post from 2009 because the COSTS that are inevitable with this ill conceived, insane program are coming in the future. The debt ceiling will need to be increased almost yearly just to cover the increased costs that this program will assuredly bring. There is an old saying “You can’t fool mother nature.” The true saying, of course, is “You can’t fool GOD!” And you also can NOT “fool” or “control” supply and demand. All one needs to do is look at Europe—think Greece, Spain particularly—to see the end results. However, we have been incrementally going farther and farther into debt WITHOUT this catastrophe yet being in force! AND OUR PRESIDENT WANTS TO INCREASE THE DEBT CEILING SO THAT HE CAN INCREASE SPENDING!!!

Stimulus Program Costs

From: National Center for Policy Analysis

“Tax and Spending Issues
July 7, 2011

How Effective Was the 2009 Stimulus Program?

The stimulus—the so-called American Recovery and Reinvestment Act of 2009 or ARRA—is starting to wind down. What are the results? Depends on whom you ask, of course, says Nick Schulz, the Dewitt Wallace fellow at the American Enterprise Institute.

But the debate over whether the stimulus worked or didn’t is too abstract to be of much help. It’s a better use of time to look at some specific stimulus programs and projects and see how they did. Take stimulus funds for broadband. President Obama campaigned on expanding access to broadband Internet, and the stimulus afforded him an occasion for doling out federal dollars to that end.

In an important and eye-opening new paper, Jeffrey Eisenach and Kevin Caves of Navigant Economics, a consulting firm, recently examined ARRA’s American Recovery and Reinvestment Act—my addition) subsidization of rural broadband. An explicit goal of the program was to extend broadband access to homes currently without it.

1) Eisenach and Caves looked at three areas in Southwestern Montana, Northwestern Kansas and Northeastern Minnesota that received stimulus funds to expand broadband access.

2) How much did it cost per unserved household to get them broadband access? A whopping $349,234.

It’s actually worse than that. Take the Montana project.

1) As many as seven broadband providers, including wireless, operate in the area.

2) Only 1.5 percent of all households in the region had no wireless access.

3) If you include 3G wireless, there were only seven households in the Montana region that could be considered without access.

4) So the cost of extending access in the Montana case comes to about $7 million for each additional household served.

Source: Nick Schulz, ‘How Effective Was the 2009 Stimulus Program?’ Forbes, July 5, 2011.

For text:

For study:

For more on Tax and Spending Issues:

From: National Center for Policy Analysis

“Economic Issues
July 7, 2011

Foreign Buyers Lifting U.S. Home Sales

Foreign buyers are helping to stoke home sales in U.S. vacation hot spots decimated by the real estate crash, especially in southern Florida, says USA Today.

1) For the 12 months ending in March, 31 percent of Florida’s home sales were to foreign buyers, up from 10 percent in 2007, according to a survey by the National Association of Realtors.

2) In Arizona, 6 percent of sales in the same period were to foreigners.

3) That was down from 11 percent last year but still up from 5 percent in 2007.

Foreign buyers are being enticed by low U.S. home prices, down 30 percent nationwide since peaking in 2006, and the weakened dollar, which makes their money go further. Since the start of 2006, the Canadian dollar has soared 18 percent against the U.S. dollar, while the euro has gained 22 percent, says data tracker Oanda.

U.S. home prices, meanwhile, have fallen far more than the national average in some places—down 55 percent from their peaks in Miami-Fort Lauderdale and Phoenix and 36 percent in Los Angeles, according to

1) The number of U.S. homes sold to foreigners dropped to 288,000 in the 12 months ending in March, from 224,000 a year earlier, the Realtors survey shows.

2) The largest share of foreign buyers, 23 percent, comes from Canada.

3) China followed at 9 percent.

Source: Julie Schmit, ‘Foreign Buyers Lifting U.S. Home Sales,’ USA Today, July 6, 2011.

For text:

For more on Economic Issues:

Stimulus Waste


“Bob Beauprez

Obama’s Stimulus Waste: $7 million per House on Internet Access

In our blog post

of July 5, 2011 we cited analysis of the recently release quarterly summary report of Barack Obama’s Stimulus that concluded the Administration spent $278,000 per job they claimed to have ‘saved or created’ with the $666 billion the White House has spent thus far of the more than $800 billion authorized by the legislation approved in 2009.

The Administration used the Stimulus as a private slush fund to funnel vast amounts of money to programs and industries favored by the President.

One of his campaign pledges was to expand broadband internet access, particularly to rural areas, and with the Stimulus check book in hand, Obama proceeded to deliver on that promise spending a total of $7.2 billion, with $2.5 billion specifically allocated to ‘Rural Utilities Service’ (RUS).

Jeffry Eisenach and Kevin Caves of Navigant Economics,

a financial and economic analysis and consulting firm looked at the results of Obama’s rural broadband expansion efforts. The results aren’t very pretty.

The Navigant analysts evaluated programs in three areas: Southwestern Montana, Northwestern Kansas, and Northern Minnesota that received Stimulus funds to extend broadband access to homes currently lacking service.

According to their report,

it cost on average $349,234 per household.

But, it gets worse.

In the Montana region, there were actually a number of providers, including wireless, that already provided service in the area.

Eisenach and Caves found that if 3G wireless was included, only seven households in the entire region could be considered to be without any option for access. Thus, the cost to extend access to those seven homes was about $7 million each.

Like Einstein said of insanity, this was doing the same thing over again and expecting different results.

According to the Eisenach and Caves, ‘Prior investigations have shown that RUS’ broadband subsidy programs were not cost effective, and often funded duplicative coverage in areas already served by existing programs.’

But, Obama funded it anyway—and sent American taxpayers the bill.”

And the Obama Administration now faced with a debt ceiling that is designed to STOP excess government spending wants to raise the debt ceiling which means RAISE spending—NOT CUT SPENDING—and RAISE taxes so that the Administration can WASTE MORE of OUR MONEY!!! What was that definition of INSANITY? Certainly, it is economic INSANITY to raise the debt ceiling so that government can borrow MORE money so that they can SPEND more money so that they can WASTE MORE money!!!

That’s not all though. The federal government has still not approved a budget for the 2011-2012 fiscal year. The new fiscal year begins October 1st. That’s less than THREE months away!!! Three months away and no budget so we have NO IDEA how much the next budget will contribute to the growing deficit. The House of Representatives passed a budget that cut back on spending. The Democratic controlled Senate rejected it. The Democratic controlled Senate then also rejected the President’s budget which would have increased spending. Even though the President now claims that he is for cutting “some” spending. The Democratic Senate is NOT close to passing a budget for the coming year. Isn’t a budget for the coming year more important than raising the debt ceiling. It is IF the President and HIS party are serious about cutting spending. The problem is, the President has NO DESIRE to CUT SPENDING!!! NONE!!!!! HE IS A LIAR!!! AND HE THINKS WE ARE IDIOTS!!! AND SO DOES THE MASS MEDIA THAT PARROTS HIS LIES!!!

WARNING to the Republican leadership: The debt ceiling DOES NOT NEED to be RAISED. OUT-OF-CONTROL government SPENDING needs to be STOPPED NOW!!! Fall for the Obama Administration LIES and the Republican Party, as you know it, is DOOMED!!!

It’s time, it is past time to TAKE BACK THE NATION!!!
It’s time, it is past time to TAKE BACK THE NATION!!!
It’s time, it is past time to TAKE BACK THE NATION!!!