Friday, April 25, 2014

Fannie And Freddie



Spawn Of Fannie And Freddie


Subprime Scandal: A bipartisan bill to "reform" Fannie Mae and Freddie Mac creates a multibillion-dollar affordable-housing slush fund for Acorn clones who exist to shake down lenders for risky loans.
The devil is in the details of the 442-page Johnson-Crapo housing finance reform bill, set for Senate markup this Tuesday.

Cynically titled "The Housing Finance Reform and Taxpayer Protection Act of 2014," it replaces Fannie and Freddie with a Federal
Mortgage Insurance Corp. that broadly expands the affordable-housing mission that fueled the financial crisis.

This new federal entity will require "equitable access" to mortgage credit for "underserved" borrowers with low income and weak credit — that is, borrowers who normally wouldn't qualify for a loan.

Worse than the affordable-housing quotas that Fannie and Freddie had to meet in the run-up to the crisis, this new entity would impose a stiff affordable-housing fee on private mortgage securitizers who don't adequately serve "the needs of the underserved."

That the bill encourages risky lending is bad enough. But the billions collected each year through these fees are earmarked for affordable-housing advocacy groups that pressure lenders to make subprime loans.

Who will approve these lucky recipients? The Obama HUD, the most radical in the history of the agency.

The fees feed a "Market Access Fund," half of which will go to grants for such shakedown groups "to address the homeownership needs of extremely low-, very low-, low-, and moderate-income and underserved or hard-to-serve populations."

How could this be achieved? One, by "offering additional credit support for certain eligible mortgage loans or pools of eligible mortgage loans, such as by covering a portion of any capital required to obtain insurance from the corporation" — that is, housing subsidies.

And, two, by "grants and loans for research, development and pilot testing of innovations in underwriting."

Such "innovations" in mortgage underwriting are what sank Fannie and Freddie and the entire financial system in the first place. So here we go again.

The authors of this bill — Democrat Sen. Tim Johnson, who happens to be one of the top recipients of pre-crisis Fannie-Freddie campaign payola, and GOP Sen. Mike Crapo — ought to have their heads examined.

But give them the benefit of the doubt. Maybe, like Nancy Pelosi, they have to pass it to find out what's in it.

Perhaps they also don't know that fees collected from private mortgage securitizers will also fund another affordable-housing slush fund controlled by HUD, the agency that ran Fannie and Freddie into the ground with its escalating subprime mandates.
It's called the "Housing Trust Fund," and it, too, will pump subsidies into the "underserved" market.

Tellingly, none of these slush funds is subject to oversight from Congress and could easily be diverted for political schemes. Without such oversight, we can expect more misuse of taxpayer dollars.

Johnson-Crapo is a disastrous bill that doubles down on the mistakes that led to the financial crisis. Senate Republicans would be wise to abandon support for it.

Tuesday, April 15, 2014

American Companies Think The Unthinkable — Leaving The U.S.

American Companies Think The Unthinkable — Leaving The U.S.

Posted 04/14/2014 07:01 PM ET

Taxes: Walgreen, America's venerable drug-store chain, is thinking the unthinkable: relocating to Europe. Not because it sees growth and opportunity there, but because of onerous taxes here in the U.S. It's an ominous trend.

The Financial Times of London calls it "one of the largest tax inversions ever." That is, a company seeking to avoid punitive taxes in one market by moving to another.

No doubt the FT is right. And after its recent $16 billion takeover of Swiss-based Alliance Boots, it would be easy for Walgreen to remake itself as a Swiss company.

If it did, the Democratic Party's liberals would no doubt call Walgreen unpatriotic for wanting to lessen its tax burden. In fact, they are responsible for an economic environment so hostile to capital and investment that companies now find it intolerable.

As we've noted, corporate tax rates in the U.S. are the highest among the developed nations. The average rate in America in 2013 was 39.13%; for all of the Organization for Economic Cooperation and Development nations, it stood at 28.2%.

In short, being headquartered here is a major competitive disadvantage for American firms.

According to an analysis by UBS, Walgreen's U.S. tax rate is 37.5% — compared with Alliance Boots' rate in Europe of about 20%.

That's a huge gap, worth billions of dollars a year.

But it's even worse than that. A recent OECD study says the "integrated tax rate" — taxes on capital and income — for U.S. companies is a nightmarish 67.8% vs. 43.7% for the OECD.

Many companies facing steep tax rates and insane regulations in the U.S. have had enough. They're keeping their profits overseas. Last week, Senate Finance Committee chief Ron Wyden, an Oregon Democrat, reported U.S. corporations now hold $2.1 trillion in earnings in overseas accounts — a massive amount, roughly equal to 12% of U.S. gross domestic product.

A total of 547 companies — including Apple, GE, Microsoft and Pfizer — have dramatically expanded their so-called foreign indefinitely reinvested earnings overseas, which let them avoid the punishing rates here at home.

"The new numbers ... certainly highlight what is one of the key challenges for tax reform," said Wyden. No kidding.

Wyden and his fellow Democrats will try to raise taxes even higher or gut foreign tax exemptions. If so, it will backfire. Companies won't invest here if government takes more of their money; they'll just find new ways to put it out of reach.

And why shouldn't they?

Not only are taxes too high, but also new laws such as Dodd-Frank and ObamaCare, a vast expansion of regulation, debt and the size of government, the federal takeover of entire industries, the bullying of Wall Street and demonization of CEOs, and forced CO2 cuts that will hammer manufacturers have made this the least pro-free market U.S. government in generations.

Eventually, a new Congress and president will get wise and reform our tax code, cut regulations, get government out of picking winners and losers, and end the war on entrepreneurs, business and investment.

When they do, that $2.1 trillion will come flooding back as investment in America. And the resulting boom, with millions of new, high-paying jobs, will make our current stagflation-malaise seem like a bad memory.

Sunday, April 6, 2014

Estonia: An American Ally in Putin's Line of Fire

An American Ally in Putin's Line of Fire
Estonia's president, who was raised in New Jersey, on how Crimea has changed 'everything' and what NATO should do now.

By
Matthew Kaminski
April 4, 2014 7:25 p.m. ET
Tallinn, Estonia
From the pinkish presidential palace here, the Russia border lies 130 miles due east across a flat coastal Baltic plain. Toomas Hendrik Ilves took up residence in 2006, two years after his small Baltic state joined the European Union and NATO. At the time, most people assumed that any Russian threat had been buried with Peter the Great, who first brought Estonia into Russia's empire.
Not so fast. "Everything has changed," President Ilves says almost as soon as we sit down for a Thursday afternoon coffee.
"The post-Cold War order. Peace, love, Woodstock. Everyone gets along—sure we have minor problems here and there, human rights not always so good, but there are no more border changes." After last month, he says, "that's out." Russia annexed Crimea, massed forces on Ukraine's eastern borders, and prodded "Russian speakers" to rise against the government in Kiev. Moscow also pointedly complained about the treatment of Slavic kinsmen in the Baltic states, the same charge used to justify the invasion of Ukraine.
"An aggressive, revanchist power," in the Estonian leader's words, makes the unthinkable thinkable. "We were already caught off guard with Crimea," he says. "Once you lose the predictability factor, you can't be 99% sure they won't do something." The most dramatic something would be a Russian military incursion into NATO's front-line states.
Perched alone up in eastern Baltic are Lithuania, Latvia and Estonia. Their fear of Moscow propelled them to become the first and only former Soviet republics to seek the refuge of NATO. But now doubts are appearing. The West has responded tepidly to the Crimean aggression. Military budgets are at historic lows as a share of NATO economies. The alliance, which marked its 65th anniversary on Friday, has never faced the test of a hot conflict with Moscow.
In this new debate over European security, Mr. Ilves plays a role out of proportion to Estonia's size (1.3 million people) and his limited constitutional powers. A tall man who recently turned 60, he has the mouth of a New Jersey pol—he grew up in Leonia—and wears the bow ties of a lapsed academic. Americans may recall his Twitter feud two years ago over Estonia's economy with economist Paul Krugman, whom Mr. Ilves called "smug, overbearing & patronizing."
Mr. Ilves was born in Sweden to Estonian refugees who fled there after the Soviet annexation of the three Baltic states in 1940; the family subsequently moved to America when he was a boy. He first set foot on Estonian soil in his early 30s and returned for good after the Soviet collapse. Previously the country's foreign minister, he is a brash presence on the trans-Atlantic policy circuit.
To say the least, Mr. Ilves and his Baltic colleagues were outside the post-Cold War and pre-Crimea NATO mainstream. At every opportunity, the alliance had repeated that it "does not view Russia as a threat." It honored a "three nos" pledge made in the 1990s to Moscow that NATO has no need, no intention and no plans to deploy troops or nuclear weapons in any future new-member states. The 67,000 U.S. forces in Europe are based west of the Elbe River, mostly in Germany. The alliance refused for years even to draw up contingency plans to defend the Baltic states, considering that an unnecessary provocation to Moscow.
The Russian attack on Georgia in 2008 set off alarms in the Baltics, which renewed their push to strengthen their defenses. Germany vetoed them and the U.S. concurred. An American diplomat in 2009 called Estonia "paranoid" about Russia, in a confidential cable released by WikiLeaks. Since the outbreak of the Ukraine crisis, Estonian leaders have steered clear of the I-told-you-so's. "I don't get any, unfortunately, thrills out of vindication," says Mr. Ilves. "But we have been told by some of our friends, 'We did think you were paranoid and overreacting and now we think you're right.' "
Estonia's relations with Moscow were always fraught, but the security alarm bells rang only recently. In 2007, after President Ilves ordered the relocation of a Soviet war memorial in Tallinn, the country was hit by a massive cyberattack, presumably from Russia. Mr. Ilves, a champion of "E-stonia" (birthplace of Skype), calls the episode "an own goal" for Estonia and a blessing in disguise.
"We've been far ahead of everyone in terms of the Internetization of society, and we knew all along we were vulnerable," he says, adding that Estonia's allies had dismissed the country's fears of cyber's military potential as "science fiction stuff." Soon after the attack, NATO put a cyberdefense center in Tallinn.
In recent years the Baltics have watched the modernization of Russia's military up close. Unhappy with the performance of his troops in Georgia, Vladimir Putin has poured resources into the military. The Russian defense budget is set to grow 44% in the next three years and account for a fifth of all central government spending, according to Jane's Defense.
Russia has doubled the number of troops in the Baltic region since 2009, says Kaarel Kaas of Tallinn's International Center for Defense Studies, and it has focused on improving special rapid-reaction forces, long-range missiles and air-defense capabilities. Kaliningrad, a militarized Russian enclave between Poland and Lithuania, is "like a giant aircraft carrier," he says.
As NATO cut budgets and sought to reassure Russia about its peaceful intentions, Mr. Putin put his new might on show. The "Zapad" ("West") biannual military exercise that began in 2009 involved tens of thousands of troops in practice attacks on Baltic countries, culminating in a faux nuclear strike on Warsaw.
The Crimean operation was the coming-out party for Russia's modernized military. Highly professional and well-equipped special forces were the core of the lighting-quick invasion. Russia used jamming technology and cyberwarfare to neutralize the Ukrainian troops' communications. Russian soldiers mixed with local militias and evaded notice by Western military intelligence until it was all over. "The change in the way that Russia does things is quite astounding," says Mr. Ilves. "The old Finnish Winter War model of a million people coming across the border and just swamping, that's long gone."
President Ilves says the EU"response is going to be economic fundamentally," and limited by concern over the cost to business, which explains the bloc's reluctance to impose stronger sanctions on Russia. Yet at NATO, "they have woken up to the new reality." He declares Estonia "quite satisfied" with the decision by its foreign ministers this week to suspend contacts with Russia and rethink eastern defenses.
The rethinking within NATO has only begun. The U.S. and the rest of the alliance stopped short of the demands from Poland and the Baltic states to forward deploy NATO troops. Estonia managed on Thursday to get NATO's blessing to turn the brand-new Amari military airfield near Tallinn into the first NATO base in the country. This small Balt tends to be proactive. While European governments axed some $50 billion from military budgets in the last five year amid fiscal belt-tightening, Estonia is only one of four NATO allies to devote at least 2% of gross domestic product to defense, supposedly the bare minimum for security needs.
"It lessens your moral clout if you have not done what you have agreed to do," Mr. Ilves says of defense budgets. His barb hits directly at neighboring Lithuania and Latvia, which both spend less than 1% of GDP on their militaries.
To Mr. Ilves, the alliance's most urgent need is "increasing deterrence in the region." He won't get drawn into discussing a wish list, but with deliberate understatement says, "boots on the ground is kind of a good idea." The Estonians have told U.S. officials that American boots are best. The presence of U.S. soldiers in the Baltic states and Poland, the other front-line state, would become the most reliable tripwire for a NATO response to any Russian encroachment. Mr. Ilves offers a different formulation: "I wouldn't say a tripwire but a sign that we're serious here."
As many officials at NATO's Brussels headquarters admit, the Russian military could today roll over Estonia, Latvia and Lithuania in hours. The countries' indefensibility was an argument made against their membership. "Berlin was never defendable," Mr. Ilves shoots back, referring to the Cold War-era. "Ever. There was no concept of defending the allied sectors of Berlin. But what defended it was the idea that if you come in, there is gonna be a whole lot of smoke and ashes elsewhere."
Even though an invasion of former Soviet satellites by Russia would confront NATO members with trying to stop a nuclear power, Mr. Ilves says he has been assured that the alliance's Article 5—a pledge to regard an attack on any member as an attack on all—isn't in danger of being ignored or watered down. "In terms of Article 5 coming into force," he says, "even when we don't ask, we've reassured at the highest levels."
Europeans farther away from Russia are reluctant to confront Mr. Putin, and Barack Obama has not been interested in Europe for most of his presidency. That raises a question: What if NATO balked? Then "everyone in NATO comes under existential threat," Mr. Ilves says. "Then every country is on its own. As soon as that happens NATO no longer exists as an alliance. It's simple."

Yet there's perhaps no greater Putin fantasy than the destruction of NATO, and this would be the biggest called bluff in military history. A robust forward deployment to NATO's eastern front lines is to its proponents the best way to make the Kremlin think twice before trying.
The Estonian president refuses to read Vladimir Putin's mind. He says NATO should arm Ukraine immediately with defensive weapons to deter any further incursions. Although the aggressive rhetoric from Moscow went down a notch this week, "the directions don't look good," Mr. Ilves says. Russian propaganda and some 50,000 troops along Ukraine's eastern border are on a war footing.
"But I would say in the West 'hope springs eternal.' " Mr. Ilves invokes Alexander Pope in a subtle parting jab at his allies' blinkered view of their giant eastern neighbor.
Mr. Kaminski is a member of the Journal's editorial board.

Saturday, April 5, 2014

Koch Warning on Collectivism Echoes Slow Jobs Growth

Is Atlas Shrugging?
Koch Warning on Collectivism
Echoes Slow Jobs Growth

By LAWRENCE KUDLOW, Special to the Sun | April 4, 2014
http://www.nysun.com/national/is-atlas-shrugging-brkoch-warning-on-collectivism/88655/
Is it too farfetched to connect the dots between a brilliant Wall Street Journal op-ed  by Charles Koch, the chairman and CEO of Koch Industries, and the continued sluggish recovery in jobs, business investment, and the overall economy? I don’t think so. 

In his piece, Mr. Koch seems to make a plea for a big dose of free-market capitalism. He argues, “The central belief and fatal conceit of the current administration is that you are incapable of running your own life, but those in power are capable of running it for you. This is the essence of big government and collectivism.”

Charles Koch and his brother David have been vilified by the left for fighting hard to get political candidates with free-market points of view elected. Protected from risk of a libel suit by U.S. Senate rules, Democratic Majority Leader Harry Reid has called the Kochs virtually every name in the book — including “un-American.” But now the Kochs are fighting back. And I hope they do more of it.

Charles Koch’s op-ed reveals a consistency of thought. He writes, “I have spent decades opposing cronyism and all political favors, including mandates, subsidies and protective tariffs — even when we benefit from them. I believe that cronyism is nothing more than welfare for the rich and powerful, and should be abolished.”

Koch concludes that the current batch of administration policies “destroys value, raises costs, hinders innovation and relegates millions of citizens to a life of poverty, dependency and hopelessness.”

This is strong stuff. And spot on. 

Think of Obamacare as the ultimate central-planning, collectivist, big-government approach. The government is mandating what health-care insurance to buy, and taxing you if you don’t buy it. You may lose your favorite doctor or hospital or insurance plan, all while job hiring and work effort are undermined. These intellectual eggheads tell you what you can and cannot do, and where you can and cannot do it. And they prescribe a multi-trillion-dollar government expansion of spending and taxing while they’re at it.

The good news here is that Obamacare is incredibly unpopular. The bad news is that it’s going to be incredibly difficult to rewrite or replace this law.

But Mr. Koch’s big fear is that collectivism can’t and won’t stop with Obamacare. He has a point. The Obama machine continues to roll out poverty-trap incentives, paying people not to work. Obama’s EPA is aiming to obliterate the entire coal industry and all the blue-collar workers in it. The president can’t even give the okay to the Keystone pipeline, which is favored by all but the far-Left environmental radicals.

Obama’s National Labor Relations Board now wants to unionize college football players. Our corporate tax rates are the highest in the world. And the entire IRS tax system is so corrupt and complex, it has become a major hindrance to growth. I could go on and on.

So why is it surprising that the economic recovery is happening at only half the rate of a normal expansion? Sure, there was some decent news in the March jobs report. But it took nearly five years for private jobs to regain the peak reached in January 2008. In fact, this jobs recovery is the slowest on record since the Labor Department started tracking the data in 1939. And we are at least 5 million jobs below potential.

I don’t want to be too pessimistic. The March employment report of 192,000 new jobs is at least keeping pace with the monthly changes of recent years, sluggish as that may be. And there was good news with a lengthening private workweek and a big jump in the small-business household-employment report.

However, wages were flat in March, and only 2.1% higher than a year ago. And the so-called U-6 labor-impairment unemployment rate — which includes people who have jobs they don’t like—is stuck at a high 12.7 percent. A full 10.5 million Americans are unemployed, and 7.4 million are working part time.

One huge reason for the tepid jobs recovery is that long-term business investment in new plants, equipment, warehouses, office buildings, and so forth remains very soft. Only recently, in last year’s fourth quarter, did so-called cap-ex get back to its prior peak of early 2008.

High taxes are causing firms to deploy profits overseas. The president keeps bashing business with the threat of even higher taxes and regulations. And no one knows what Obamacare regulatory costs are ultimately going to be.

So with the economy only crawling toward recovery, the solution is not character assassination or more government collectivism. Mr. Charles Koch has it exactly right: We need more liberty and freedom to restore American values and economic prosperity. Politicians and regulators can’t do it. Only hard-working and innovative people can.

So let’s let them do it.

King Barrack Treats Toyota Differently Than GM: Shame on Him

The General Motors Scandal May Be Worse Than You Think

David Harsanyi|Apr. 4, 2014 

In February 2010, the Obama administration's transportation secretary, Ray LaHood, told America, without a shred of evidence, that

Toyota automobiles were dangerous to drive. LaHood offered the remarks in front of the House subcommittee that was investigating reports of unintended-acceleration crashes. "My advice is, if anybody owns one of these vehicles, stop driving it," he said, sending the company's stock into a nose dive.

Even at the time, LaHood's comments were reckless at best. Assailing the competition reeks of political opportunism and cronyism. It also illustrates one of the unavoidable predicaments of the state's owning a corporation in a competitive marketplace. And when we put LaHood's comment into perspective today, it's actually a lot worse. The Obama administration not only had the power and ideological motive to damage the largely nonunionized competition but also was busy propping up a company that was causing preventable deaths.

No one is innocent, of course, but not everyone is bailed out. So Toyota, after recalling millions of cars and changing parts and floor mats even before LaHood's outburst—and after years of being hounded by the administration—recently agreed to pay a steep fine for its role in the acceleration flap. This, despite the fact that in 2012, Department of Transportation (DOT) engineers determined that no mechanical failure was present that would cause applying the brakes to initiate acceleration. The DOT conducted tests that determined that the brakes could maintain a stationary car or bring one to a full stop even with the engine racing. It looked at 58 vehicles that were supposedly involved in unintended acceleration and found no evidence of brake failure or throttle malfunction.

Attorney General Eric Holder kept at it, though, and Toyota finally agreed to a $1.2 billion settlement (it has about $60 billion in reserves) to make it go away. Though it looks as if the company doesn't think the fight is worthwhile, for all I know, it's guilty. I'm certain, though, that General Motors (GM) is. It announced this week that it was recalling over a million vehicles that had sudden loss of electric power steering. This, after recalling nearly 3 million vehicles for ignition switch problems that the company had known about since 2001 and are now linked to 13 deaths.

GM has apologized. But does anyone believe that the Obama administration took as hard a look at GM as it did Toyota?

As early as 2007, the National Highway Traffic Safety Administration (NHTSA) knew that there may be problems with air bags but never launched a formal investigation. The NHTSA's acting chief, David Friedman, testified that GM never told the agency that faulty switches were at the root of the air bag problem. Fine. Before plowing billions of tax dollars into saving the United Automobile

Workers, did the car czar or any other Obama officials take extra care to review DOT records to ensure that taxpayers would not be funding the preventable deaths of American citizens? Would DOT and Holder exhibit the same zealousness for safety with GM as they did when it came to Toyota?

In the midst of the bailout debate and subsequent "turnaround," news of a cover-up and major recall would have been a political disaster.

So it's difficult to understand why this isn't a huge scandal. If every obtuse utterance by an obscure Republican congressman gets the media juices flowing, surely the possibility of this kind of negligence is worth a look. Can anyone with access to the administration ask some of these questions? Because if you take credit for "saving" a company (actually, an "industry," as no one would have ever driven again if Obama hadn't saved the day), you also get credit for "saving" the real-life unscrupulous version of the company.

"I placed my bet on the American worker," Obama told union workers in 2012. "And I'll make that bet any day of the week. And now, three years later, that bet is paying off."

Betting $80 billion of someone else's money to prop up sympathetic labor unions isn't exactly fraught with political risk. Unless it turns out that your administration is less concerned about the safety defects of the company you own than it is about the company you dislike.

That would be corruption.

Wednesday, April 2, 2014

5 Reasons Obama's 7.1 Million Number Is Meaningless

 

5 Reasons Obama's 7.1 Million Number Is Meaningless

 

On Tuesday, President Obama triumphantly announced that, with the power of the mainstream media, Hollywood, and the threat of the IRS, the mission had been accomplished: 7.1 million Americans had selected an Obamacare plan. 


Obama’s tone was nothing short of exuberant: “7.1 million Americans have now signed up for private insurance plans through these market places. 7.1! Yep!” He then went on to criticize those who had expressed objections to Obamacare for its deprivations of plans, doctors, drugs, and liberty: “Why are folks working so hard for people not to have health insurance?”



Now, it was always foolhardy for Republicans and conservatives to stake their objections to Obamacare on the number of sign-ups; Social Security is going bankrupt despite 100% enrollment. The reality is that Obama was always destined to hit his required numbers because, after all, he has the power of government to compel action. The real problem with Obamacare has little to do with the number of people signing up, and a lot to do with the restrictions on insurance companies and reimbursement rates to doctors.



Nonetheless, the 7.1 million statistic is a meaningless one. It’s meaningless for a variety of reasons:



It Doesn’t Measure How Many People Have Actually Paid. Health and Human Services Secretary Kathleen Sebelius admitted yesterday that of the 6 million people who had signed up for Obamacare at the time, “What we know from insurance companies…tell us that, for their initial customers, it’s somewhere between 80, 85, some say as high as 90 percent, have paid so far.” In other words, about five million people were signed up. As Aaron Blake of the Washington Post points out, “If between 80 and 90 percent of the six million have paid premiums, the number who are fully enrolled would be closer to five million than to six million.” With the increased number of sign-ups in the last days, that percentage number has likely dropped. This is not an unimportant distinction; insurance will not cover those who don’t pay.



7.1 Million Enrollees in the Private Exchanges Doesn’t Mean 7.1 Million Who Were Previously Uninsured. Some five million
Americans saw their policies cancelled thanks to Obamacare. Those Americans were forced into the Obamacare exchanges by the government. According to a RAND Corporation study, only 858,000 previously uninsured Americans had actually joined Obamacare.

That’s a far cry from 7.1 million.



The Congressional Budget Office estimated in March 2010 that 37.3% of all uninsured Americans would gain insurance thanks to Obamacare in 2014. That estimate rose to 38.9% in March 2011. In February 2014, the CBO suggested that in 2014, 22.8% would gain insurance through Obamacare. The actual statistic: 12.5%. In other words, the original estimates were off by approximately 66%.



The Chief Beneficiaries of Obamacare Have Been Medicaid Recipients and 26-Year-Old Basement Dwellers. There are approximately 6.1 million people who have gained coverage through Obamacare’s non-private exchange program. 4.5 million were beneficiaries of Medicaid expansion, and another 1.6 million 26-year-old “children” were forced onto their parents’ policies. That far outweighs any supposed gains in the private insurance market. As Chris Conover of Forbes writes, “At the end of the day, we appear to have covered 1 in 8 uninsured, but to get to this point, we have disrupted coverage for millions, increased premiums for tens of millions more and amplified the pain even further with a blizzard of new taxes and fees that will end up cost even the lowest income families nearly $7,000 over a decade.”



The Huge Majority of Those Signing Up Are Getting Subsidies – and Even Those Who Are Subsidized Aren’t Signing Up. In order for Obamacare’s cost structure to work, millions of Americans must sign up to pay inflated prices; that would help pay for the subsidies to cover insurance company costs on those with pre-existing conditions. In March, the Obama administration reported that 83% of those who had signed up were eligible for subsidies. As Robert Laszewski estimates, in the end, just 27% of those who are eligible for Obamacare subsidies nationwide have signed up.



How Much Will The Numbers Drop? These are all preliminary statistics. We now know that somewhere between 2% and 5% of people who paid their insurance bills in January did not do so in February, to go along with the high percentage of people who signed up and never paid at all (that number in Obamacare success story Washington state, for example, was 39% as of early February).



The 7.1 million statistic is not all that important, in the end. Obama will hit his numbers, by hook or by crook. Likely by crook. But conservative opposition to Obamacare should not be predicated on its ineffectiveness in forcing sign-ups. Instead, it should be based on deprivation of liberty and destruction of medical care.




Ben Shapiro is Senior Editor-At-Large of Breitbart News and author of the New York Times bestseller “Bullies: How the Left’s Culture of Fear and Intimidation Silences America” (Threshold Editions, January 8, 2013). He is also Editor-in-Chief of TruthRevolt.org. Follow Ben Shapiro on Twitter @benshapiro.

Tuesday, April 1, 2014

Democratic Party's Coming Civil War

Progressive Activist Sees 'Coming Divide for the Democratic Party'

 

 

The mainstream media loves to point out the divide between the GOP establishment and the Tea Party, but the Democratic Party is facing its own civil war over coming elections.

Even the liberal National Journal is admitting that Democrats are in disarray as the 2014 battle for their campaign message is being fought.


As the Democrats envision a possible debacle in the upcoming November elections, Daily Kos founder Markos Moulitsas has been crowing that the hard-line left within the party has prevented the moderates from having any influence. He has been countered by the Democratic think tank Third Way, which has vocalized its displeasure with the hard-line leftist leaders such Sen. Elizabeth Warren and New York City Mayor Bill de Blasio.


And that’s only what is apparent to the public; in private, if the Democrats plunge in 2014, the moderates are planning to blame the leftists because the left eschewed free-trade deals and entitlement reform, while progressives will vilify the centrists for their abandonment of protection of benefits.


One anonymous strategist said, "This is a coming divide for the Democratic Party. Not only about explaining 2014, but laying the groundwork for 2016."


Third Way cofounder Matt Bennett argues that the dwindling popularity of Democrats is due to the harsh class-war rhetoric flowing from the mouths of leftists. He said, "Democrats lost touch with the middle class. We engaged in arguments that have intellectual but not emotional resonance. Income inequality is a problem, but that doesn't make it something that will land in public.”


Alex Lawson, executive director of Social Security Works, shot back that Barack Obama's consideration of a reduction in the growth of future Social Security benefits meant that the Democrats could not attack the GOP for their support of entitlement cuts. Lawson complained, "Now the water is muddy. Nobody knows which side is actually fighting to protect Social Security.”

Top 1% Is REALLY Top 0.01%


How You, I, and Everyone Got the Top 1 Percent All Wrong

Unveiling the real story behind the richest of the rich
 

For years, I've been making the same embarrassing mistake about U.S. economic inequality. Sorry.

I've written, over and over, that the most important divide in our wealth disparity was between the 1 percent and the 99 percent. For example, when I compared the evolution in investment income since the late 1970s, I often imagined a graph like this from the Economic Policy Institute, showing the 1 percent flying away from the rest of the country.


It turns out that that graph is somewhat misleading. It makes it look like the 1 percent is a group of similar households accelerating from the rest of the economy, holding hands, in unison. Nothing could be further from the truth.

A few weeks ago, I shared this graph (from the World Top Incomes Database) showing how the top 0.01 percent—that's the one percent of the 1 percent—was leaving the rest of the top percentile behind.



It's even more egregious than that. An amazing chart from economist Amir Sufi, based on the work of Emmanuel Saez and Gabriel Zucman, shows that when you look inside the 1 percent, you see clearly that most of them aren't growing their share of wealth at all. In fact, the gain in wealth share is all about the top 0.1 percent of the country. While nine-tenths of the top percentile hasn't seen much change at all since 1960, the 0.01 percent has essentially quadrupled its share of the country's wealth in half a century. 



It turns out that wealth inequality isn't about the 1 percent v. the 99 percent at all. It's about the 0.1 percent v. the 99.9 percent (or, really, the 0.01 percent vs. the 99.99 percent, if you like). Long-story-short is that this group, comprised mostly of bankers and CEOs, is riding the stock market to pick up extraordinary investment income. And it's this investment income, rather than ordinary earned income, that's creating this extraordinary wealth gap.

The 0.1 percent isn't the same group of people every year. There's considerable churn at the tippy-top. For example, consider the "Fortunate 400," the IRS's annual list of the 400 richest tax returns in the country. Between 1992 and 2008, 3,672 different taxpayers appeared on the Fortunate 400 list. Just one percent of the Fortunate 400—four households—appeared on the list all 17 years.

Now there's your real 1 percent.