Americanly Yours

Tags: bernanke, congress, federal reserve, obama, ron paul, senate, transparency

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Why Democrats Health Care Plan Means Rationing

July 27, 2009 By: admin Category: Uncategorized

President Obama has proposed universal health care in a new bill, yet given the law of supply and demand, it will result not only in lower quality of health care, but also in rationing. Let us just suppose that President Obama’s health care proposal sails through Congress today and is signed into law this evening.

Tomorrow morning we will all wake up in a world where everyone is covered with some form of medical insurance, including the approximately 50 million Americans currently without health coverage. Yet, the number of doctors, nurses, and medical staff will be the same tomorrow as it is today. Likewise, there will be the same number of hospitals, doctors’ offices, and medical care facilities as there is today.

It is worth remembering that our medical professionals are already strained, waiting rooms are crowded, emergency rooms are already plagued by long waiting times, and it often takes days to get an appointment to see a doctor.

Giving an additional 50 million Americans immediate access to the same number of medical professionals and facilities will flood our health care facilities and doctors with new patients, putting further strain on an already strained system. The result will be longer waits, more crowded doctors’ offices and hospitals, and a general decrease in the level of care.

Increasing the number of Americans with health care is a noble goal and is being pursued with the greatest of intentions. But as it is said, the road to hell is often paved with good intentions. There is no way around the fact that adding an additional 50 million people to the health care system will decrease the level of service being offered.

The current health care bill will succeed in giving more people health care, however it will result in much worse care for the over 80% of Americans who are currently covered.

This is an excellent example of the law of supply and demand. No matter what is done about health care, tomorrow’s supply of health care –the number of doctors, medical facilities, etc. – will be the same as today. Yet, implementing a nationalized health care system requires that tomorrow’s demand for health care increases dramatically. A sudden increase in demand without an increase in supply always leads to a shortage of the product in question.

In the free market, a shortage of goods causes prices for that good to increase to a level where those who cannot afford them are ‘crowded out’ of the market. The profit earned by the producers of the good encourages additional producers to enter the market. This creates an increase in supply and drops the price of the goods for all consumers. Under the President’s plan, however, demand will be raised without an increase in supply, whereby the government will be forced to allocate health care. When government bureaucrats make decisions on how goods and services should be allocated, rationing occurs.

Under the new government run health care system, the government will need to take measures to “keep costs low” in an effort to save American citizens money and prevent negative political fallout. While this also seems like a noble goal, the consequences will be devastating. Government mandated cost cutting measures also necessarily mean less profit for those who operate medical facilities.

Taking away the profit motive, will result in fewer people being willing to take risks and opening new medical facilities. Medical supply companies will be less willing to produce life saving medical devices, and the benefits of taking a medical education will diminish. The loss of profit motive will result in fewer services being shared among more consumers. This will lead to further rationing, rather than allowing market forces to make corrections.

Even the best of intentions can’t change facts. If Americans want to continue to have a decent health care system without government rationing, they must oppose universal health care coverage.

Americanly Yours,

Phred Barnet

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Tags: congress, health care, healthcare, insurance, obama, pelosi, private, ration, rationing, senate

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Health Care In Georgia VS. Massachusetts (Massachusetts Is The Model For The Obama Plan)

July 07, 2009 By: admin Category: Uncategorized

This is an interesting and humerus video on health care. It compares the health care systems in the State of Georgia and Massachusetts.

You may recall that the health care plans being pushed by the Administration and Democrats in Congress are very similar to the provisions passed in Massachusetts’ 2006 health care reform bill.

While it may sound good to pass a bill that will subsidize a scarce resource (in this case health care), doing so always has consequences. In this case, dropping the price of health care has led to an increase in the number of people taking advantage of these services, resulting in a massive shortage in services. This in turn results in an increase in the price of services for those who are notable to take advantage of the government subsidy. Watch:

What a great video! Please pass that along to your friends.

Americanly Yours,

Phred Barnet

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Tags: administration, congress, georgia, health care, healthcare, massachusetts, obama

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Why Income Tax Rates Should Be Lower

April 13, 2009 By: admin Category: Uncategorized

[I wrote this article earlier and WordPress messed up and deleted most of it. I had to rewrite the final 2/3 of this article. I think I wrote it better the first time, but enjoy.]

I am not going to get into the philosophical reasons why I am opposed to income taxes in this piece article. I am however going to explain why lower tax rates are better than higher tax rates.

Here is a chart that was sent to me by Mike at The Young Conservative Blog. It shows the highest federal individual income tax rate. It also shows the tax receipts received by the federal government as a percentage of GDP.

[Check out Mike's blog, theres a lot of interesting stuff there. Also, here is a Wall Street Journal article about Hauser's Law.

I think this is pretty remarkable. While the highest individual income tax rates in this country dropped from 91% down to 28%, and then rose back up to the current 35%, tax receipts as a percentage of GDP has remained at a fairly stable level of 19.5%. Cutting the rates from 91% to 70% in a few years didnt really affect the receipt rate, nor did increasing them from 28% to 40% in a few years.

Now, you might say that the reason that the tax receipts as a percentage of GDP remain pretty much the same is that when taxes on the rich are cut, the tax burden falls more heavily on the poor. However, you may recall the chart that I posted regarding tax burden. I was able to find an acrhived copy of the chart that the government removed from its website here. I dont know how long it will stay up.

This chart clearly shows that the rich have paid an increasing portion of the total income taxes collected since 1979.

In 1979, the top income tax rate was 70%. The government collected about 19.5% of GDP through income taxes, and the top 20% of wage earners paid 64.9% of all income taxes. The top 40% of wage earners combined paid 85.1% of all income taxes.

In 2005, the last year for which data is available, the top tax rate was 35%. The government still collected about 19.5% of GDP through income taxes, however, the top 20% of wage earners now paid 86.3% of all income taxes (a higher percentage than was paid by the top 40% of wage earners in 1979), and the top 40% of wage earners paid 99.4% of all income taxes collected.

I know this seems counterintuitive, but cutting taxes on the rich--and all Americans--actually increased the tax burden on the rich. 2005's top tax rate (35%) was exactly half of what the top tax rate was in 1979 (70%). Yet, the rich paid a much higher percentage of income taxes in 2005 under a lower tax rate than they did in 1979 under a higher rate.

As I mentioned in a previous post, I found this spreadsheet when I was trying to prove to someone that President Bush's tax cuts favored the rich and hurt the poor. I was wrong. In 2000, the top 20% of earners paid 81.2%of all income taxes. By 2005, this proportion had grown to 86.3% of all income taxes. The tax burden of the top 40% increased from 94.7% in 2000 to 99.4% in 2005. In fact, every quintile in the "bottom 80%" of wage earners paid a smaller proportion of the total income taxes in 2005 than they did in 2000. Broad based tax cuts benefit all wage earners.

Cutting taxes allows Americans to keep more of their hard earned money. This in turn leads to increased spending, savings, and investment. These three factors lead directly to increased GDP growth. Increased GDP growth means higher tax revenue for the government (which will always collect around 19.5% of GDP through income taxes).

I have already demonstrated that the government will collect roughly the same percentage of GDP--19.5%--through income taxes no matter what the top tax rate is. This is true whether that rate is 92% or 28%. I have also demonstrated that cutting taxes on the rich and all Americans has actually increased the tax burden on the rich. Finally, I have explained that cutting taxes leads to higher GDP (which equals higher tax receipts).

I see no further arguments against cutting taxes on all Americans including the wealthy.

Rather than raising the tax rates on the wealthy back to what they were in 2000, the President and Congress should consider drastically cutting income taxes for all Americans. This will lead to increased economic growth which will in turn lead to higher tax revenues for the government. Most importantly, doing this would allow all Americans to keep more of their hard earned money.

Americanly Yours,

Phred Barnet

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Tags: bush, congress, hauser's law, income taxes, obama, taxes, wall street journal

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Geithner Asks For Power To “Unwind” Financial Companies

March 26, 2009 By: admin Category: Uncategorized

President Obama and Treasury Secretary Tim Geithner have asked Congress to grant the Treasury Secretary the power to “unwind” financial companies that pose systematic risks to our economy.

But, the government already has the power to unwind large insolvent companies which pose systematic risks to our economy. Large financial–or any other type of companies–can be unwound through bankruptcy proceedings. Bankruptcy courts can order the liquidation of a company and the sale of its assets. There is no need to grant this power to the Treasury Secretary, or President Obama, or any one man.

Rather than bailing out companies, and then bailing out our bailouts like we have done with AIG and are about to do with GM and Chrysler, we should send these failed companies to bankruptcy courts and sell of their assets. Rather than pumping TRILLIONS of dollars into failed enterprises, we should have quickly auctioned off these companies, their properties and assets, and anything else related to them. Yes, these companies and their assets and receivables may have only sold for pennies on the dollar, but it would have been done without taxpayer money and would have allowed for the quick return to profits (as the purchasing price would have been low enough so that the purchaser could anticipate earning a profit).

You may be saying to yourself that I have said this on previous posts countless times. You are right. But, our government is not learning from these recent mistakes. Instead of learning, we are repeating them over and over again, making things worse and worse and then blaming capitalism for the failures of the government. For a man who repeatedly criticized President Bush for “staying the course,” Mr. Obama has sure picked a terrible course to stay. So, for as long as Congress and President Obama continue to repeat their mistakes over and over again, I will continue to repeat myself over and over again, hoping that somehow my words reach their eyes and spark a change of direction.

But, back to the new proposal. Look at it like this: the government now controls most of the banking system. Imagine that it creates new “recommended” lending standards to support an administration program–expansion of loans to increase home ownership for example. If a company that is not owned by the government were to decide that these new government “recommendations” are too risky and are not a good investment and decided not to participate, the government could effectively force the company to comply by threatening to “wind it down.”

This is a dangerous, undemocratic, and authoritarian proposal which gives the Federal Government way too much control over the financial industry.

Americanly Yours,

Phred Barnet

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