A rarity....financial sense in Washington

In flipping through the channels I came across an interesting program on CSPAN-2 about the Securities & Exchange Commission Agenda.

The thing that caught my attention on this program was something the main speaker, Dan Gallagher of the SEC, said that to me seemed quite sensible, and illustrates one of the many side-effects of the Federal Reserve's policy of keeping interests rates artificially low:

I think a focus on fixed income especially in a 0 percent interest rate environment.  Right, where we are watching investors chase yield  in crazy places where they don't want to be either.  Right.  They'd rather be in an interest bearing CD but they can't be so they are in junk bonds and munis.

This is exactly the same sort of incentive that helped lead to the financial crisis in 2008.  Government policy led banks and other financial institutions to chase yields in places they would rather not be.  As government agencies like Fannie Mae and Freddie Mac took over more of the mortgage business, banks had to take on more risk to stay in business.  Once those riskier mortgages, which Fannie Mae and Freddie Mac then packaged up and resold in order to comply further government rules that 50% of loans be sub-prime mortgages, began to default the whole system began to break down.  For more on the causes of the financial crisis, check out this presentation by John Allison, who was the head of one of the largest financial institutions in the country during the crisis.  Well worth watching in its entirety.

Later in the program he answered a question regarding the diversity of the American financial services industry and the danger of  "implementing 400 rules is that you will begin picking winners and losers among financial firms" and suffocating the way American entrepreneurs access financial services, he said:

You've touched a cord I've been talking a lot about lately in less formal settings, but to me the issue is capital markets versus the banking markets.  What I fear coming out of the crisis, what you see in Dodd-Frank, what you in the EU directives and international bodies, like FSB here or FSOC domestically is sort of the bank regulatory view of the world taking over the capital markets.  Right the notion of de-risking and safety and soundness.  It sounds great when you come out of the crisis.  When you have seen hell and come back.  the last thing you want to do is engage in risking taking or to encourage risking taking.  As a regulator to allow it to happen at all.  Because you got burned in whatever narrative about the crisis.  But as you know the capital markets are all about risk.  Without risk we don't have the capital markets.  You have to put your capital at risk if you want to get a return.  We can't de-risk them.  Money market funds are a good example, when you start talking about silly things like capital buffer, de-risking something at 50 basis points that might kill the product.  Right at the risk of killing the product it doesn't make any sense.  But this is the mind set that's pervading.  It is something we all have to watch.  Because soon enough, if there are not enough opportunities to take risk and get a return. You know, the economy is bad enough now, lets see how it does after that mind set takes over. [ed. any errors in this transcription are mine.]

It is good to know that at least one person at the SEC realizes that implementing more poorly thought out rules and regulations could and likely will have negative consequences to the nation's economy.  For more of how Dodd-Frank will likely damage the economy, check out this article.

Government Intervention...What Could go Wrong?

So what can happen when the government interferes with the economy?  Let's take a peek at what happened in the case of health insurance, specifically employer provided insurance.

In 1942, in an effort to control costs and prevent disruptions in the labor market, the government passed the Stabilization Act which essentially froze prices, wages and salaries at the level they were at in September, 1942.  Exempted from this was insurance and pension benefits.  So to attract workers, companies began offering health insurance as a fringe benefits as they could not offer higher wages.  The next year, the IRS ruled that employer provided health care was tax exempt, further encouraging the practice.

Towards the end of the war, the War Labor Board ruled that companies could not discontinue these benefits during the life of a contract.  A few years later, in 1949, the National Labor Relations Board ruled, later upheld by the Supreme Court, that insurance and pensions could be considered wages and thus subject to collective bargaining.  During the 1950's when there was little competition for US manufacturing, companies and governments were eager to provide these tax free benefits.  This greatly expanded the number of employees covered by employer provided insurance.  In 1951 100,000 employees were covered by major medical insurance, by 1986 this had reached 156,000,000.

All of this helped increase the rate at which health care costs rose.  As a report from the Wisconsin Policy Research Institute shows:

The regulatory changes that propelled the rapid expansion of employer-provided health insurance during and after World War II helped fuel the hospital cost spiral by completely removing consumers from any contact with health care costs.

This trend was likely exacerbated by the introduction of Medicare and Medicaid in 1965 which further removed the individual from the real costs of their health care.

All of this has led to recent decades where the only real growth in employee compensation is from the increase in health care costs rather than in an increase in wages.  So the cost to the employer has gone up but the employee has received little direct benefit from it as the services he gets for his insurance likely have not improved, just had their costs increase.  For example, a USA Today report shows that from 2007 to 2011, real wages increased only 1.4% ($777) while benefits increased by nearly twice that amount, $1302.  The article does not mention how much of the $777 growth in real wages went to paying the increased employee contribution to health care.

Enter Obamacare, which was in part intended to help control the spiraling costs which were in part caused by previous government interventions.  With the Obamacare employer mandate, many employers will be compelled to provide health insurance for their employees or face fines.  While some employers already do provide insurance, many will see their costs go up due to the requirements of the new law.  This will likely further erode real wage growth for many employees.  Assuming they keep their full time jobs, which is by no means guaranteed.

Which brings me to the latest step in long chain of cause and effect.  Last week, Investor's Business Daily had an interesting editorial.  In it, Betsy Mccaughey describes a coming change we will be seeing on our W-2 forms this year, namely a box for your health care benefits.  According to the administration this is simply for information purposes so you can appreciate the value of your health care plan. The fear is that this is actually a prelude to employer provided health care benefits being taxed.

The federal government, since it is apparently incapable of actually controlling spending, is always on the look out for new sources of additional tax revenue.  It likely did not take them long to come to the conclusion that the exemption for employer provided health insurance is the single largest "tax expenditure" in the tax code.  (Interesting how a feature of the tax code that allows people to keep more of their money is considered by analysts to be an expenditure to the government.)  In 2012-2013, the CBO estimates this single item has a total "expenditure" of 1.8% of GDP or something approaching $300 billion, making it a likely target for tax reform, especially for the "rich."

If you feel that this is unlikely, I found an article detailing such a proposal in President Obama's 2009 jobs bill.  In this bill the proposal was to exclude employer-provided health benefits from itemized deductions for those making more than $200,000 while at the same time capping the remaining deductions for the same group.  It is not difficult to imagine this notion seeping down to lower brackets.  As I pointed out in "First the "Rich" and the YOU!", it simply isn't possible to fund current government spending by just taxing the "rich."

So thanks to a history of government intervention in the economy, you could end up paying taxes on benefits that government policy helped inflate the price of out of a paycheck that is likely smaller because of those same government policies.

Government intervention, what could go wrong?


Regards

Gun Control, Fiscal Cliff Cronyism and more

Some good links for this week.

Enjoy!

This is perhaps my favorite article of the week, though there were plenty of good ones, and I quite honestly lost track of some.


With Gun Control, Cost Benefit Analysis Is Amoral
Really nice take on the whole gun control issue.  I especially like his statement: "Statistics about how often gun-related crimes occur in the population is no evidence against you. That’s collectivist thinking. The choices made by others are irrelevant to the choices that you will make."


Senators, Representatives—and Americans Who Voted for Them—to Blame for Increased Spending and Tax Hikes

Obama's Debt Problem
Even Politico.com recognizes that the debt is Obama's now, not Bush's (though Bush did his share to start digging the hole.)

Crony Capitalist Blowout
Great write up of all the pork in the fiscal cliff bill.

Rum Subsidies Included in Fiscal Cliff Pork
Still more pork, or in this case rum, in the fiscal cliff bill.

Of Hurricanes, Pork and Subsidies
And yet more pork.

The Spending Cliff
The real issue facing America.  While increasing taxes is bad, not cutting spending is what will sink the country.

Has the Kyoto protocol done more harm than good?
Did the effort to fight global warming via the Kyoto Protocols contribute to "outsourcing" of manufacturing to undeveloped or developing countries?  Seems like it could very well have had a part to play.  Also, the countries where manufacturing moved too use less efficient fuels so likely have higher emissions, so overall global emissions are up.  Great example of unintended consequences.

My Boys Like Shootouts. What's Wrong With That?
Ah, the craziness regarding guns.  And apparently butter knives.

So What's Next, Mr. President?
And still more on the failure of the fiscal cliff deal to actually deal with the country's real problems: debt and out of control spending.

No Regulation, No Problem
Stossel on the need (lack there of) for government regulation.

Farm Bill Extension Better Than Trillion-Dollar Bill
Repealing the old "permanent" law regarding dairy price supports would make too much sense.  Much easier to be able to scare the public with the thought of doubling or tripling milk prices.  The government really has no place in the economy other than making sure that force and fraud are removed from it.

It’s a Spending Problem
More support for my contention in an earlier blog post that we can't tax our way out of the financial problems we have in this country.

Closing the Jobs Gap
Great little calculator for seeing how long it would take to recover all the jobs lost during the recession based on average monthly job gains.  Interesting fact is that 88,000 is the average number of new workers entering the job market each month from population growth.  So when you see 155,000 new jobs as we did in the latest jobs report, that is actually only about 67,000 net jobs recovered.  Something to keep in mind when the government claims to have created X million jobs in Y years.  Subtract 12*Y*88,000 to see how many people who lost their jobs might have found new ones.

Libertarian Purity Test
Interesting "libertarian purity" test.  My score was 98 out of a possible 160.  A number of the high value questions I didn't agree with, such as privatizing law or the police for example.

Climate Impact of the Keystone XL Pipeline
Just how little impact the Keystone Pipeline would have on the environment.

Regards

You Cannot Compromise Principles

I've always had a hard time with the concept of compromise when it comes to government. For reasons I could never really define, I was uneasy by the concept that you should accept something you fundamentally did not agree with in order to obtain something you wanted, or in the case of government, in return for a promise to vote for something you wanted in the future.

Of course I would always be told that government was all about compromise and look at how the Founding Fathers had to compromise in order to write the Constitution. Still, it did not make any sense to me and despite this "explanation", it didn't seem right.

Recently I came across the writings of Ayn Rand and things started to become clearer.  In regards to compromise, the following quotes struck home for me:

"It is only in regard to concretes or particulars, implementing a mutually accepted basic principle, that one may compromise. For instance, one may bargain with a buyer over the price one wants to receive for one’s product, and agree on a sum somewhere between one’s demand and his offer. The mutually accepted basic principle, in such case, is the principle of trade, namely: that the buyer must pay the seller for his product. But if one wanted to be paid and the alleged buyer wanted to obtain one’s product for nothing, no compromise, agreement or discussion would be possible, only the total surrender of one or the other."

"In any compromise between food and poison, it is only death that can win. In any compromise between good and evil, it is only evil that can profit."

 
To me this made perfect sense to me.  It helped me realize that it was on principles where I did not want to accept that compromise was valid.  Pretty much every issue in government, major ones at any rate, involve principles.  So for example, if on principle you believe it is wrong for the government to use its coercive power to redistribute wealth from one segment of the population to another, then it would be immoral  and evil to do anything that increases the burden of taxes as this would be compromising your basic principles.
  On the other hand, on issues where there is not a difference on basic principle, national defense for example (at least I hope everyone in government agrees we have a right to protect our interests), it is perfectly moral to compromise (to a point) on how to go about that task, how much to spend and how to fund it and so forth.


Unfortunately it appears that government today is all about compromising on both details and principle and the mainstream media agrees, and tends to support the view of the Democrats.  In this week's Time magazine there is an article, "Cliff Dweller" by Michael Grunwald which has the following quote:

"if Senate Republicans had decided to work with Obama in his first term instead of fighting him, they could have helped shape Obamacare and other Democratic legislation."

 So apparently the feeling in the media, and I think in large parts of the population, is that the Republicans should compromise their principles and go along with the Democrat agenda to help "shape" the legislation. In the case of Obamacare, this is essentially saying that if Republicans are opposed on principle to allowing the Federal government to compel citizens to purchase a product, they should set aside that principle and work with those feel it is proper for the government to do so.  To do so is not a compromise, but an abdication of your principles.

Sadly, I don't believe many Republican members of Congress actually hold the principles they claim to hold.  As one example, the individual mandate in Obamacare has roots on the Republican side.  One need only take a glance at this article on Fox News to see it has a long history of Republican support. In the final debate between Mitt Romney and President Obama, my main impression was there was no principle difference between the two in many areas.  Many of Romney's answers appeared to me to be variations on "I agree with the President, but I think I can do it better."  So it is merely the details, not the underlying principles, that they differed on.

It should be obvious that most members of Congress hold the same statist and altruistic principles, though the details vary.   Very few would argue for reducing and eventually eliminating the welfare/regulatory state we live in, only how to fund it and run it more efficiently (i.e. look at the expansion of regulation under Sarbanes-Oxley which had no dissenting votes in the Senate and only 3 in the House).  Even Paul Ryan's so-called "radical" budget plan doesn't cut government spending, rather it simply slows the growth so that the budget will balance, at a higher level, in 20 years or so.

The main difference between the two parties is that the Democrats present a more consistent message of these principles.  They openly state that it is the government's job to provide cradle to the grave economic security for everyone and take whatever steps required to achieve that whether that be higher taxes, banning large soft drinks, compelling companies to provide nutrition labels and so forth.  The Republicans tend to say the opposite, talking of personal freedom and individual rights, while pursuing many of the same goals.

I think one final quote from Ayn Rand perfectly sums up how we have arrived at the situation we find ourselves in as a country:

Consider a few rules about the working of principles in practice and about the relationship of principles to goals . . . .

1.     In any conflict between two men (or two groups) who hold the same basic principles, it is the more consistent one who wins.
2.     In any collaboration between two men (or two groups) who hold different basic principles, it is the more evil or irrational one who wins.
3.     When opposite basic principles are clearly and openly defined, it works to the advantage of the rational side; when they are not clearly defined, but are hidden or evaded, it works to the advantage of the irrational side.

Regards

Perhaps there is Hope for Change

Sometimes it can be disheartening looking at the direction the country appears to be going.  Hardly a day goes by when we do not hear news of some new program or regulation or law that is supposed to make us "safer" or "healthier" or to promote the "common good."   When we note that these laws and programs and regulations restrict our individual liberty and limit our rights (or take them away altogether), we are told that we all have to make sacrifices to make this country great or for the "public good."*

Sadly the majority of Americans seem intent on electing officials, in both parties, whose opinion of the people is essentially "you are too ignorant or easily misled to make good decisions about <insert whatever issue they want to control this time>, so just let us tell you what to do and think."  The only difference between the parties often appears to be little more than which issues we are too stupid to make decisions about or the best way the government can make those decisions for us.

Sometimes though, there can be a little glimmer of hope that things can change to a more positive direction.  On Reason.com today I was reading a review of "Iron Curtain: The Crushing of Eastern Europe, 1944–1956," by Anne Applebaum.  In the midst of the review was the following quote that was one such glimmer of hope for change, and especially relevant today:

"Even when they seem bewitched by the cult of the Leader or of the party, appearances can be deceiving. And even when it seems as if they are in full agreement with the most absurd propaganda—even if they are marching in parades, chanting slogans, singing that the party is always right—the spell can suddenly, unexpectedly, dramatically be broken."

Regards

*oddly, it often appears that the definition of "public" in this usage is "everyone but you."

My 2 percent...I mean cents

I had a little interaction on Twitter the other day that got me thinking.  A dangerous thing as my brother might tell me.

I had posted to Twitter:

Ah, first paycheck of the year, first view of my higher taxes. And people say the government can't work fast.

The difference in my paycheck was just the ending of the so called "payroll tax holiday."

This garnered a decent number, for me, of favorites, retweets and even a few new followers.  It also drew one direct reply:

This was a two year tax holiday; would you like to have it made permanent? Why not lower the rate to 0%, and borrow 100%?

Implicit in this reply is that Social Security is a fact of reality that is not subject to change and that the only choice open to us is how we fund it.

This is a pretty common assumption, or at least not uncommon.  A quick search revealed any number of similar reactions a year ago when the payroll tax holiday was extended.  For example:

Investor's Business Daily (one of my favorite newspapers) said, "Result: cash for pizza now — and smaller Social Security checks later."
Truth Sandwich's headline read: "Raiding the Social Security Piggy Bank for Pizza Money"
CNS News reported, quoting Rep. Frank Wolf (R-VA), "Wolf called the payroll tax extension a "raid on Social Security, which is already going broke," and he noted that the money paid into the system now -- through payroll taxes -- pays benefits for existing retirees."

This was pretty much my reaction at the time.  I felt that if we have a Social Security system that is by all accounts already looking at trouble down the road it is foolish to knowingly take in less money.  For those that don't believe that Social Security is on shaky ground, here is a quote from Social Security Administration that they used to send out when they mailed statements to people:

"Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2037, the payroll taxes collected will be enough to pay only about 76 percent of scheduled benefits.”

There are a number of philosophical issues with a Social Security system.  The first is that it essentially requires that you work/live for the benefit of someone else.   To whatever extent you are living for someone else's benefit you are NOT living for your own.  Given that we are forced to live for others, as opposed to choosing to do it for your own reasons, we are not free.  As Ayn Rand put it, "Living for others is slavery -- and nothing else whatever -- and no names, ends or excuses can alter the fact."

Contrary to popular belief, the government is not saving and investing your contributions in order to give you income during your retirement.  Rather, money paid in today is used to pay benefits to those collecting them today.  In the past, more revenue was collected in payroll taxes than was needed to pay the current benefits and the surplus was used to fund other parts of the government in return for IOUs (Treasury bonds) which  were put in the "Trust Fund."  Now that payroll taxes are no longer covering current benefits, bonds from the "Trust Fund" need to be redeemed.  Which means the cash needed to pay shortfall is coming from general tax revenues further burdening current tax payers.  This latter problem will worsen as demographics catch up with us and there are fewer and fewer workers paying taxes to support retirees.  In the 1930s it was about 17 workers for 1 retiree and now it is approaching 2 to 1.

There have been a number of models for privatizing Social Security which would appear to remove the issue of requiring people to work for the sake of others.  Two of the more often mentioned systems are those of Chile and Galveston, Brazoria and Matagorda counties in Texas.

Chile converted their system from an untenable government run system to a privately invested system where the individuals can decide how their money is invested.  So far this seems to a lot of improvements over the government run system.  One interesting side effect is that savings rates are higher than before the private system which certainly helps long term growth.

The three counties in Texas took advantage of a since-closed loophole in the law and opted out of Social Security in 1981 and convert to a privately invested system.  These counties pool the contributions and then money management firms bid to manage this money with certain restrictions on guaranteeing rates of returns. Even the report from the Social Security Administration indicates that in many ways the private program is as good and often better than Social Security.  In the areas where it appears Social Security is better it is unclear whether the figures given for Social Security include the reduction in benefits that would appear to certain to occur around 2037 (the examples given in the report are for workers retiring in 2045).  Assuming the government doesn't increase payroll taxes by about 1/3, at current estimates, then benefits as noted above would be reduced by 24% making the private plan in these counties better in pretty much all areas.

The problem with both of the above alternatives is that they use government force to compel the workers involved to participate.  (Well, in the case of the counties in Texas, workers are compelled to either participate in the private plan or social security.)   While the government properly should have the monopoly on the use of force in a civilized society, this force should only be used in retaliation against those who initiation the use of force unlawfully.  The government should never be the initiator of force against the innocent.

When the government uses force to compel behavior, or prevent behavior that does not infringe on the rights of others, it effectively takes away our right to use our own mind and reason to decide what the best course of action for ourselves is.  When the government compels someone to save X% of their income towards retirement it precludes the person from using that money for something else.

Maybe the person would like to start their own business but because of such a law they would be unable to save the money needed to begin, or would be so delayed that the opportunity would disappear and the person's future be worse off as a consequence.  Maybe the person would decide to take a trip, buy a new computer or whatever and not bother with saving for the future.  Either way, man's most important right, the one he cannot truly live without, is the right to live his life as he sees fit based on his own reason.

Below is Yaron Brook of the Ayn Rand Institute discussing the entitlement problem in the United States.

So my feeling is the the ultimate answer is essentially the same as what Yaron speaks of in the video.  As I put it in response to the tweet quoted above:

or how about phasing out Social Security all together and let individuals plan for themselves?

After I started writing this post, I noticed I had a reply to my response.  I was a little surprised, but pleasantly so, given my preconception based on the initial reply:

That would be the best idea, since it isn't a "retirement plan" and is nothing more than an entitlement program.

Regards

Life, Liberty and the Pursuit of Happiness?

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

How far we have moved away from these founding principles, the underlying philosophy, of our country.

While researching what may (or may not) become a blog post, I found myself on the website for the National Bureau of Economic Research.  This sounds like a government agency, but according to "History of the NBER" on their website, the NBER is:

a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works.

Private and non-partisan sounds like it might be an organization that would be a good source of information about the economy.   After reading a bit of one article, I have my doubts about the philosophy behind the organization.

Here is a quote from a 2010 report regarding the tax exemption for employer offered health insurance (emphasis is mine):

This tax exclusion is extremely costly - it reduces federal and state tax revenues by $260 Billion per year and is the government's third largest expenditure on health care, after Medicare ($400 Billion) and Medicaid ($300 Billion).

Apparently according to a private, non-partisan organization, any tax that the government fails or chooses not to take is an expense.   This is not an unusual sentiment these days.  Just enter "tax break cost government" or a similar search phrase and you'll get any number of links which reflect the same belief:  tax cuts are giveaways, expenditures and cost the government money.  For example here, here and here.

If you accept this idea, it logically follows that anything your earn rightfully belongs to the government, which simply allows you to keep some portion of it for yourself.   After all, if it is an expenditure for the government to NOT take the money in taxes, it must rightfully be theirs in the first place.

This in turn leads to the idea that you do not work for yourself, but for others and your only reward is what they decide to give you or let you keep.  Another way of putting this is that you are essentially the servant of the government.

If we are the servant to others, we are not free to act in pursuit of our own goals and happiness.  If we are not free to act as we see fit, we do not have liberty.  If we do not have liberty, in essence we do not have life.

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

Regards

Some interesting articles

I tend to read a bunch of articles over the course of a week, so I thought I would share some of my favorites from the past week.  I am going to try and do this every Wednesday.  This is by no means a complete list, but it does include most of the articles that I had particularly made note of, at least since I decided to publish such a list.

The Battle of the Narrative: How Ordinary Americans can Fight Obamacare
While Obamacare has been upheld by the Supreme Court, the fight against it is far from over.  There are a number of lawsuits working their way through the court system.  The big battle for individuals is making sure that as the problems with the law come to light, as they are certain to do, the blame does not get placed on the remnants of the free market system, as the government (and likely the mainstream media as well) will likely try to do.

The New Abolitionism: Why Education Emancipation is the Moral Imperative of our Time
This article from the Objective Standard lays out the case for abolishing the government education system.  I was quite surprised with a lot of the quotes from this article the shed some light on how the originators of the public education system saw children and parents.  One example:

The goal of government schools is not to serve children by teaching them to think and acquire important knowledge, but to serve the state by forcing children to conform to its will. The U.S. Bureau of Education made the point clear in 1914: “The public schools exist primarily for the benefit of the state rather than for the benefit of the individual.”30 More recently, William H. Seawell, a professor of education at the University of Virginia, defended government schooling by stating: “Each child belongs to the State.”31

You do need to be a subscriber to read all the article.

Planning ahead is considered racist?
An article referenced in the above article gives another great example of why government schools need to be done away with.  The article is from 2006 but I don't anything has changed in the meantime.

According to the district's [Seattle Public Schools] official Web site, "having a future time orientation" (academese for having long-term goals) is among the "aspects of society that overtly and covertly attribute value and normality to white people and Whiteness, and devalue, stereotype and label people of color."

Fiscal Cliff Deal Raises Taxes, Delays Sequestration...And Will Cut Spending!
I am not sure that I am convinced that the fiscal cliff deal will eventually lead to spending cuts, but it is a good summary of the deal and its possible effects.  One thing that I think is particularly worth noting is the one year extension of the so-called "doc fix" which was enacted back in the 90's to help control Medicare costs by reducing payments to doctors.  Every year since the law was passed Congress has passed a "fix" that prevents the effect of the law from actually taking place.  If the law had taken effect this year, it would have resulted in a 26.5% cut in payments to doctors accepting Medicare patients.  This would likely have some pretty significant impact on access and timely treatment.

I find this of particular interest because part of ObamaCare is the IPAB, Indpendent Payment Advisory Board, whose job it is to control Medicare costs by reducing payments to providers.  Given that Congress has refused to follow a similar law for almost 20 years because of, presumably, the negative impact on seniors, how popular is Obamacare going to be when the same type cuts are required by the IPAB and the Congress has very limited options to override the cuts?

No Real Cuts in Those Fiscal Cliff "Spending Cuts"
A nice summary of why when the government in Washington (I loved the reference to Mordor on the Potomac) says they are cutting spending, the don't really mean it the way a normal person would think of it.

The Times on Taxes
One of my favorite blogs to read, The Grumpy Economist, goes over a story from the New York Times that perhaps reveals what liberals mean when they talk about tax reform.  This seems to be right in line with comments by the chairman of the Democratic National Committee, Howard Dean, that we all need to be paying higher taxes.  WCAX television from Burlington, VT reported Dean as tweeting:

The cliff bill is a fiscal disaster.  Those under 450k get permanent tax cuts.  The deficit will be fixed entirely by cuts in the future
It is worse than doing nothing.  The easy way out and will be very bad in the long run.  Deficits will grow, and key programs must be cut.

Apparently for many liberals, or at least some, the only answer is to raise taxes and keep spending money.  Also, I am not sure what world Howard Dean is in where anything that Congress does is "permanent."  In this case "permanent" simply means that the tax cuts for those who make less than $450,000 do not need to be renewed periodically.  There is nothing that says they cannot be changed at a later date.

Hugo Chavez's Last Days
This one worries me because my wife and her family live in Venezuela, so the possibility of bad things happening there when/if Chavez is gone is certain to give me some sleepless nights.  Hopefully things will be better than a worse case scenario.

Government Can’t Silence Speech Criticizing Its Actions, Even If That Speech Is 'Commercial'
A nice article of how the government tries to hide the actual extent of their taxes on the public, even to the extent of attempting to limit the First Amendment's Freedom of Speech.  Also another good example of why corporations, which are just groups of individuals who come together for a specific purpose, need to have the same rights as the individuals that make up the group.

Regards