All posts by Frugal Ron

Frugal Ron is passionate about numbers. If something can't be quantified, how can it be discussed? He loves questioning those things that others hold sacred.

The Real Conservatives

Not only do we live in an era of fake news, we live in an era of fake logic. Out of control spenders that gleefully give the rich giant tax cuts financed by foreign borrowing are hailed as conservatives. A bigoted president with a record of over a thousand lies in his first year in office that has had three marriages, has 19 women accusing him of sexual misconduct, supports a perverted pedophile for the Senate and defends a wife beater is hailed as a great Christian by his supporters. So, if you are wondering if down is really the new up and up is the new down, perhaps it is time for a reality check with real data.

Conservatives spend less!

I realize the above subtitle is an amazing assertion. Figure 1 clearly points out, there are some spending consistencies related to political party affiliation. Republicans Reagan and George W. Bush came close to doubling federal government spending in their eight year terms.  They increased the budget at roughly 250% of the rate of the Democrats. George H.W. Bush increased the rate of spending more in four years than either Clinton or Obama did in eight years!

Figure 1.

This trend of the conservative party continues with the Republican who presently occupies the White House. Even though US defense spending under Obama was larger than the next six largest defense spending countries combined, Donald Trump proposes increasing that by another $195 billion over the next two years.

Breaking campaign promises, Trump proposes big cuts to Medicare and Medicaid. Yup, take money away from the sick and old people. That seems to be the Republican Christian thing to do. Gotta teach those old people responsibility.

Trump proposes spending $1.2 trillion over the next 30 years to upgrade our nuclear arsenal. Yet, North Korea has proven time and again that it doesn’t make any difference how big a nuclear arsenal you have, the real difference is how you use it. On August 8, 2017, Trump stated, “North Korea best not make any more threats to the United States. They will be met with fire and fury like the world has never seen.” North Korean threats have continued, along with more nuclear and missile tests. North Korea called Trump’s bluff.

North Korea has maybe one or two missiles with nuclear warheads capable of hitting the US. Yet, they made Trump look like a drunken polka dancer playing to their tune. The US now has over 4,000 active nuclear warheads. How many more do we need to waste money on to deter the rational and pragmatic leaders Russia and China have?

Conservatives borrow less!

Yes siree! Those Republicans are a frugal bunch indeed! The only thing they seem to enjoy more than spending is borrowing. While they used to accuse Democrats of tax and spend, Republicans’ motto is “Borrow and Spend”.

Figure 2.

And, things could have been worse. If George H.W. Bush hadn’t weaned himself of the Republican “deficits don’t matter” Kool Aid and implemented a tax hike in 1990, we could have been put through the same debt induced economic crash his son visited upon us 17 years later.

The amazing story is the turnaround Bill Clinton did during his presidency where we actually paid off debt. Of course, George W. Bush reversed that foolish practice with predictable results.

The present  resident of the White House proposes increasing the federal debt by another $194 billion next year and $7 trillion over the next ten years. Yes, in this up is really down world, his supporters actually call him a conservative.

When Congressman Paul Ryan goes through his spiel about how our present safety net programs are economically unsustainable, it would be fun to ask him how fiscally sustainable it is to elect Republicans?

Trade Balances and Foreign Borrowing

A country’s trade balance always equals its net national savings. More technically correct is to say a country’s current account and capital account are always equal.

Figure3.

The US had a -$738 billion net government savings during Obama’s last year in office. This huge negative balance overwhelms our private savings giving us an overall negative net national savings or Capital Account Balance. Currency markets aren’t controlled by anything other than market forces. A big savings deficit means the dollar increases in value making imports cheaper and our exports more expensive. This continues until our trade balance equals our net national savings. Cut off trade with a country like Mexico that we have a big trade deficit with and the deficit just moves to other trading partners.

Figure 3 actually illustrates two things. First is the size of our trade balance and second, how much we borrow from other countries to finance our budget deficit. The net national savings value is also on the Bureau of Economic Analysis site in Table 5.1 Savings and Investment, Line 35.

During the Clinton years, we actually had federal budget surpluses, yet we still had a negative net national savings and trade balances. During those years, consumers added lots of debt. We had a booming economy that attracted foreign investment. This accounted for our savings deficit. Also, we had too much money chasing too few goods. This would normally be a recipe for runaway inflation. Fortunately, foreign trade (imports) were the cure for that problem.

The important point is that the Clinton trade and savings deficits were market driven. A truly conservative government got out-of-the-way of the credit and other markets.

Trump’s proposed huge budget deficits will logically give us a larger net national savings deficit. This will make imports cheaper in the US and make exports (such as agricultural products) more expensive to buyers outside the US as our trade deficit matches the savings deficit. All the trade negotiations and trade delegations that we waste time on won’t affect the driving factor that our Current Account will equal our Capital Account.

Stock Markets Love Republicans!

Well, not really. Republicans continually believe they can buy prosperity. Anyone can figure out from the data above that Republicans use huge tax cuts for the rich along with out of control spending increases to finance a false prosperity like we have now. After several years, the Piper must be paid.

Figure 4.

Ronald Reagan came into office in 1981 and his stock market crash came in 1987. The markets recovered by the time he left office. George W. Bush took office in 2001 and we had a false prosperity until 2008 when the markets crashed and stayed that way into Obama’s presidency.

This contrasted with Clinton and Obama whose limited spending increases coincided with drama free market increases. Especially Clinton, who got the government out of the market’s way by balancing the federal budget and provided the conditions for real economic growth.

We are once again living in a false economy fuelled by foreign borrowing. History indicates that recent stock market gyrations are just that. Since we are following the George W. Bush script of huge tax cuts with out of control spending, the real crash may be a few years off.

One of the real hoots I get is reading social media posts that describe Obama as a socialist and a communist! Lots of African along with Central and South American leaders have fit one of those descriptions. None of those socialists/communists presided over a 163% increase in their stock markets, held government spending increases lower than any of their predecessors and kept inflation at the lowest levels ever recorded. Yup, Obama was a unique president!

Employment

Figure 5.

The interesting thing about this table is that Reagan’s presidency looks pretty good. But, after you add George H.W. Bush’s term in, twelve years of borrow and spend economics leaves you about where things were when Reagan succeeded Jimmy Carter.

Buying prosperity looks good in the short term but Obama and especially Clinton’s true conservatism wins out in the longer haul. If only Republicans could quit criticizing them long enough to learn from the Democrats and mimic their successes.

Healthcare

Figure 6.

Figure 5 really doesn’t need much explanation. Obamacare added 27 million uninsured people in what is one of the greatest legislative accomplishments in my lifetime.

Economic Growth

Figure 7.

One of the Federal Reserve Presidents, Janet Mester, stated last November, “Government needs policies that increase immigration, not reduce it.” Perhaps she was looking at the data in Figure 7 and how it correlates to Figure 6. Arguably, some of the Clinton GDP growth can be attributed to the large increase in immigrants. The much slower growth during the Obama years might also be blamed on the slowdown in immigration.

Figure 8.

If we want more economic growth, logically, we want more people. With an aging Baby Boomer population leaving the workforce, the most obvious source is immigrants.

Summary

After writing this article, I ask myself why I spent as much time as I did on it. Quite frankly, I don’t expect it will have any impact on Trump supporters. Hopefully, in a world where we are inundated with false hoods, it will provide some fodder for rational people.

After the last election, I wrote in a post that we are two worlds living in one nation. This is even more accurate today.

Since then, I’ve tried to listen a lot. What I have learned is that one of the world’s in our nation differentiates themselves by their ignorance. The strange thing is this is an ignorance of choice.

These folks simply refuse to recognize news organizations with decades and centuries long reputations for accuracy. An article that fails to portray their hero as anything but a great Christian valiantly trying to save the nation after eight years of Obama rule makes that news organization only worthy of their scorn. Even when forced to acknowledge facts, their loyalty never wavers. Trump’s supporters don’t give a rat’s behind about the facts and data in this article. All they care about is that he hates the same people they do as much as they do.

What this reminds me of is a WWII documentary filmed toward the end of the war where a near starving German woman wearing rags in a burned out relic of her city staring down the gun barrel of a US soldier was still proclaiming her loyalty to Hitler.

Hitler’s based his power on appealing to German nationalism and focusing hatred on Jews and any other non-German ethnic group. They, of course, were the cause of all Germany’s problems. For Donald Trump, the same nationalism and racism comes through loud and clear. What I’ve learned from my social media forays is that his supporters have a vitriolic hatred of Blacks, Hispanics and Arabs that meters down to anyone that isn’t white and practicing the same form of Christianity they are. Of course, they aren’t racists (by their own measurements).

Are their similarities? Hitler didn’t have to shut down the media, his supporters did. Hitler borrowed wherever he could to finance his military buildup. He loved military parades and Trump is planning a giant one in Washington this year. Hitler never admitted a mistake. Both shared the same disdain for the truth. Trump wants more money and support for the police.

The most disgusting and despicable comments I’ve ever heard a US president make are Donald Trump’s wanting to know why we allowed people from shithole country’s like Africa, Haiti and El Salvador to come into the US and not allow more immigration from places like Norway. This is my litmus test. Anyone still supporting Trump after those remarks is either a racist or condones racism. I have no use for either.

The scariest part is how the Nazis, oh excuse me, the Republicans rally to Trump’s defense and try to delegitimize the world’s most respected law enforcement agency in their blind loyalty to head off his possible indictment. The summary here is simply this. We need to stand up to this bigotry and hatred of facts. Facts may not impact Trump loyalists, but there is hope for their kids.  Rationale people need to unite in the next elections. Roughly 38-40 percent of voters are die-hard Trump supporters. Every one of them will vote. Staying on the sidelines is not an option.


Why Republicans Can’t Govern

Republicans have been a dominating election winning machine.  Using a combination of gerrymandered districts, voter suppression laws and a message that resonates with bigots, they have majorities in both the House and Senate and also hold the Presidency. Sadly for the Republicans, never have so many accomplished so little.

Republicans won the presidency with the promise of bringing jobs back to the US. Yet, according to the latest quarterly report, here we are with the biggest quarterly trade deficit since George W. Bush was in office. (Source: Bureau of Economic Analysis, Table 1.1, U.S. International Transactions, Line 30). After failing to overhaul the health care system, Republicans  moved on to adding $1,0 trillion in additional deficits over the next ten years with their tax cut plan. A reasonable person might ask,”What in the heck is going on here?” There are three  reasons for this unprecedented incompetence.

The first reason…

First is Donald Trump. in an earlier column written after his electoral victory , Frugal Ron wrote “Never before has such an unqualified and ill prepared president assumed office”. He’s been all of that and more.

Soon to be Ex-Secretary of State Rex Tillerson describes Trump as a “f____ing moron”. Although a bit course for this website, Frugal Ron finds himself at a loss to produce a more accurate, concise and eloquent description.

Besides being a moron, Trump’s biggest liability to Republicans is his inability to keep his word.  He’ll reach a deal and turn around a few days later and demand financing for his wall or some other moronic idea and halt the legislative process.

On international trade, Trump claimed he could eliminate our perpetual trade deficit by renegotiating unfair trade agreements. Not having the intellectual capability to understand that a nation’s Merchandise and Trade Balance equals a country’s Net Savings is a major limitation for Trump.

The second reason…

Although Trump is a huge liability to Republicans, the second and bigger reason for their failure to govern is an out of touch Republican establishment This includes everything from the Republican Congressional leadership, the majority of Republican office holders and  their major donors.

Republican orthodoxy calls for ending government programs and cutting taxes for the rich. Making the Affordable Care Act their first target was a huge mistake. Perhaps the most successful government program in the last 50 years, Obamacare had slashed the rate of health care increases, added 20 million more people to the ranks of insured and did all this for about the same government cost as the previous hodge podge of programs.

Polling by Hart Research Group found that 54% of Americans wanted the Affordable Care Act (Obamacare) kept and fixed and only 40% want the law repealed and replaced. Faced with these numbers, what would you expect Republicans to do? Of course, they went full steam ahead to undo Obamacare.

No sane person would possibly think that pricing health insurance out of reach for 20-30 million US citizens (depending on which version of Republican dogma was being voted on) is a good thing. Besides the people priced out of the health insurance market, millions more will have to forego saving or spending money to support other parts of the economy because their health insurance costs skyrocketed.

There was a time, before Ronald Reagan, when Republicans were actually conservatives. Back then, Republicans refused to vote for bills until the repercussions of the repercussions of a specific bill were discussed and addressed. No more.

Without a thought, today’s reckless Republicans plunge ahead to jeopardize the entire healthcare industry that represents 18% of the US’s GDP. Do these fools expect the 20-30 million people that would have lost their health insurance because of Republican legislation  will all magically enjoy perfect health and never get injured or pregnant? It probably never occurred to these Republican zealots that if  people can’t afford insurance, maybe they won’t be able to pay five figure and higher medical bills if they do wind up in the hospital? I never heard one Republican in favor of repealing Obamacare  describe where the money to cover the uninsured’s medical cost was going to come from.  Before Obamacare, 30% of these costs were absorbed by Medicaid. However, Republican plans call for cutting back those funds also.

Republicans seem to be the only people with IQs over 70 that can’t grasp that if the healthcare industry is treating 20-30 million more patients that aren’t providing an insurance income flow and can’t pay for their treatment, many hospitals and clinics will close. Consequently, even wealthy Republicans will die because healthcare is too far away.

Out of touch takes on new meaning when you look at how Republicans intended to spend their ill gotten domestic savings. Savings from shutting down after school programs that allow working parents to keep their jobs while their children are safe, meals on wheels and a myriad of other programs that keep seniors alive were to go for defense spending increases. Never mind that current defense spending is higher than the next six highest defense spending countries in the world COMBINED. Other savings were pegged to go for tax cuts for the wealthy. Never mind that today’s wealth is the most concentrated in our country’s history.

The third reason…

The third reason Republicans can’t govern is because of a very small minority of their members  that throw wrenches into the party plans. While most Republicans live in their private fantasy land, a very small minority see things much more clearly. Perhaps unwilling to repeat the same mistakes when lemming like Republicans followed President George W. Bush down the path to a calamitous war and a devastating recession, Senators McCain, Collins and Murkowski stood up to the Republican establishment and their twittering president.

Republicans lie

Making governing more difficult, Republicans seem to pick up from their president. They flat-out lie when describing the tax cuts for the rich and their effects on the rest of us.

Perhaps pictures work better than words, although I expect even these will not sway Trump supporters. The proposed Republican tax cut will increase federal budget deficits an average of $100 billion per year over the next ten years over present levels.

Table 1

Sources: Bureau of Economic Analysis, Table 3.2 and Table 1.1.5 and Department of Labor, Quarterly Census of Employment and Wages.

Republicans claim the tax cuts will increase jobs. History tells us this simply won’t happen. The red line is the annual federal budget balance as a percent of Gross Domestic Product(GDP). The federal budget is expressed as a percent of our nation’s total economic output to eliminate inflation’s impact. Notice how job creation mimics the budget deficit. President George W. Bush’s tax cuts and huge spending increases ballooned the deficit and President Barack Obama’s even bigger tax cuts devastated job creation. As the deficit became a smaller percent of the economy, job creation increased.

Who were the winners of the Bush/Obama tax cuts? Only the rich people who got the cuts. (Note, the Quarterly Census of Employment and Wages only measures full time jobs, not part time.)

Table 2

Sources: Bureau of Economic Analysis, Table 3.2 and Table 1.1.5

Republicans also argue that their tax cuts and associated bigger deficits will lead to more economic growth. The red line is identical to Table 1. Again, the annual percent change in GDP (economic) growth mostly mirrors the federal budget balance.

An interesting point is that after the initial Bush tax cuts in 2001, GDP grew. This is the effect of Republicans using high government spending increases combined with tax cuts paid for with government borrowing to buy prosperity. It simply doesn’t work. The Piper was paid in 2008 when the country was plunged into the deepest economic downturn in a generation.

History tends to repeat it self for those who don’t pay attention to it. Clearly, most Republicans don’t pay attention to history.

The blame game

While this column singles out most Republicans for this mess, they aren’t the real problem. If anything, Republicans are consistent. They get elected, they pass big tax cuts for the rich using the same tired trickle down economic arguments over and over, they spend money like crazy, run up huge deficits that send our net national savings (Capital Account) spiraling into an abyss, causing our Merchandise and Trade Balance (Current Account) to go into an equally huge deficit and then the whole economy goes into another boom to bust recession.

This scenario happened with Reagan and both Bush’s and will repeat itself again. Most anyone should have been able to figure this out long ago. And, this leads us to the real culprits of this mess, anyone who voted for these misfits. We didn’t get a moron for president by accident and we aren’t getting an incompetent Republican Congress more interested in following dogma and their financial backer’s wishes by accident.  There’s a lesson to be learned here.


Racism and More In Our Times

Donald Trump and his supporters actions and words after the deadly riots in Charlottesburg, Virginia illuminated their racism for the world to see.  Yet, the real story is bigger than their racism. It is that their philosophy is all about conformity and conformity to their standards.

To fit into Trump’s America, you not only need to be white and Christian, but also heterosexual. To Trump supporters, Mexicans threaten our safety and jobs, Muslims are terrorists, we need more police to enforce law and order in cities because of black people’s propensity to commit crimes, Gays are a threat to our children and transgenders are a threat to little girls using the restroom, And, of course, all these groups threaten our American culture (whatever that is) because they are “different”.

As with almost everything else, Republicans don’t let peer-reviewed scientific research get in the way of what they “know” is the truth. The reality is that terrorism is committed almost exclusively by native-born citizens and not immigrants. Crime rates for immigrants are lower than for native-born Americans. Toddlers with guns kill many more US citizens annually than Muslim terrorists do.

In their quest for conformity, Republicans demand transgenders accept the gender listed on their birth certificates. Gays, well we “know” their sinful lifestyles are  their choice, so they must give up their same-sex attractions. Muslims, Hindus and other heathens must give their hearts to Jesus to become real Americans. African-Americans are crap out of luck in this era of conformity. They can probably find some level of acceptance if they dress, act and sound like former Republican presidential candidate Ben Carson.

The point here is that Donald Trump supporters are terrified that their culture is under attack by people who are different. Perhaps, if they had more confidence in their culture, they wouldn’t be so paranoid.

The symbolism (actually racism)

Trump supporters aversion to facts complicates meaningful discussions. Instead, they have shifted the argument to one about symbolism. The symbolism in this case are glorified statues of Confederate generals and leaders long overdue for removal.

Trump supporters claim removing these statues is an attempt to re-write history. This is absurd. Over 50,000 books and pamphlets have been written about the Civil War. Not one has been or will be re-written as the statues are taken down. Countless textbooks contain information on the Civil War. None of these are being re-written.

History tells us is that none of these generals or Confederate political leaders ever deserved any type of statue or immortalization. First of all, all the Confederate generals were traitors.They all were active officers in the US Army before joining the Confederacy and had signed the following oath:

“I, _____, appointed a _____ in the Army of the United States, do solemnly swear, or affirm, that I will bear true allegiance to the United States of America, and that I will serve them honestly and faithfully against all their enemies or opposers whatsoever, and observe and obey the orders of the President of the United States, and the orders of the officers appointed over me, according to the rules and articles for the government of the Armies of the United States.”

Confederate officers broke their oaths and deserted their posts. Worse, not only did they refuse to defend the United States of America, they fought against the nation they swore to protect. There is no better definition of a traitor.

Second, Generals Lee, in particular was an incompetent military leader. Although he won some early battles before the Union identified  their top generals, when crunch time came, Lee’s recklessness, overconfidence and  poor judgement came to the forefront.

If you have any doubts, make a trip to the Gettysburg Battlefield. Great generals deserving immortalization don’t order 15,000 troops to march three-quarters of a mile across open fields punctuated by fences to attack a dug in force on high ground. Standing on top of Little Round Top, where Union forces turned the area below them into a killing field, one realizes that Lee cost the Confederacy the war with his blunder.

On July 4, 1863, the day after Lee’s Gettysburg debacle, Vicksburg, Mississippi fell to Union forces commanded by General Ulysses Grant, This victory gave the Union full control of the Mississippi River, effectively splitting the Confederacy into two.

Lee knew his efforts to win the Civil War and preserve slavery were lost, but he kept the carnage going for almost two more years. Even after General Sherman took Atlanta in September of 1864 and Savannah in November, Lee kept the war going.  His soldiers figured this out and the “brave and proud wearers of the Gray” deserted in such droves that even Lee admitted the desertions made it impossible to field an effective army.

Third, another myth about General Lee was his gallantry and honor. Yet, Lee’s chain of command of all Confederate forces included the Rebel prison camp in Andersonville, Georgia.

Robert H. Kellogg, sergeant major in the 16th Regiment Connecticut Volunteers, described his entry as a prisoner into the prison camp, May 2, 1864:

“As we entered the place, a spectacle met our eyes that almost froze our blood with horror, and made our hearts fail within us. Before us were forms that had once been active and erect;—stalwart men, now nothing but mere walking skeletons, covered with filth and vermin. Many of our men, in the heat and intensity of their feeling, exclaimed with earnestness. “Can this be hell?” “God protect us!” and all thought that he alone could bring them out alive from so terrible a place. In the center of the whole was a swamp, occupying about three or four acres of the narrowed limits, and a part of this marshy place had been used by the prisoners as a sink, and excrement covered the ground, the scent arising from which was suffocating. The ground allotted to our ninety was near the edge of this plague-spot, and how we were to live through the warm summer weather in the midst of such fearful surroundings, was more than we cared to think of just then.”

Of the about 45,000 Union prisoners that entered Andersonville, almost 13,000 died. Most died due to disease brought on by starvation and no shelter from the Georgia sun and rain. So much for Confederate gallantry and honor.

While Trump supporters claim that Confederate memories are not being properly honored, it is worthwhile looking back in history to see how other unsuccessful rebellion leaders were treated.

Typically, they were beheaded, their heads were jammed onto a stake and left to rot in public view. Another variation was hanging, again leaving their carcasses to rot in public view. Even in the enlightened 20th Century, 50 years after the Civil War, results were similar. After the British put down the 1916 Easter rebellion in Ireland, they had a one day court-martial for the rebel leaders and executed them the next day.

So, did these Confederate traitors ever deserve statues built-in their honor?  Not hardly. If they had resigned their commissions to fight for a just cause like ending slavery, history might look at them differently. But, to knowingly lead thousands of men to their slaughter in a vain attempt to defend and preserve an unforgivable sin like human servitude, may their souls and statues rot in Hell together.

More than symbolism

As repulsive as it is for black families to go to a public park overshadowed by a statue of a general who sought to keep their ancestors, them and their future generations  in slavery, that’s not what Black Lives Matter and their supporters are focused on. There are bigger issues here for them.

An article in Vanity Fair,  https://www.vanityfair.com/news/2016/07/data-police-racial-bias,  cites 18 academic studies , legal rulings and media investigations chronicalling police brutality to blacks. Two of those studies are summarized below.

study by a University of California, Davis professor found “evidence of a significant bias in the killing of unarmed black Americans relative to unarmed white Americans, in that the probability of being black, unarmed, and shot by police is about 3.49 times the probability of being white, unarmed, and shot by police on average.” Additionally, the analysis found that “there is no relationship between county-level racial bias in police shootings and crime rates (even race-specific crime rates), meaning that the racial bias observed in police shootings in this data set is not explainable as a response to local-level crime rates.”

An independent analysis of Washington Post data on police killings found that, “when factoring in threat level, black Americans who are fatally shot by police are, in fact, less likely to be posing an imminent lethal threat to the officers at the moment they are killed than white Americans fatally shot by police.” According to one of the report’s authors, “The only thing that was significant in predicting whether someone shot and killed by police was unarmed was whether or not they were black. . . . Crime variables did not matter in terms of predicting whether the person killed was unarmed.”

Further, Department of Justice investigations in Baltimore, Maryland; Ferguson, Missouri and Cleveland, Ohio all found a “pattern and practice” of discrimination against African-Americans that targeted them disproportionately for traffic stops, use of force, and jail sentences.

Yes, there is racism in the United States. Black people have every right to call it out and try to bring about change. Along with them, other minorities, Gays, Transgenders and everyone else threatened by the Trump Administration needs to make their voices heard. Most important, they need to vote.

The enemy

Frugal Ron’s mother often told him while he was growing up that Negroes were all lazy, shiftless and always carried knives to cut up the white people they robbed. Frugal Ron figured because he was much less racist than his parents and his children are even more color blind, that eventually racism would die away. Charlottesburg ended that dream.

A cure for racism
Reason for hope…

Most of the violent Nazi and white supremacists in pictures are young. Hate is reinventing itself. Worse, Donald Trump, because of the office he holds, gives legitimacy to their prejudice and racism.

To the 39% of voters, including the 80% of Republicans ,who still support Donald Trump after his Charlottesburg fiasco, I genuinely offer you my sympathy. You’ve closed your eyes and souls to the beauty and diversity different cultures and religions bring to the United States. Your dark vision of our country  runs completely contrary to reality. Most pointedly, although you love to blame Barack Obama and liberals for all your problems, your miserable bigoted lives are all on you.

 


Progressive Taxation, A Few Kind Words

Progressive taxation is the concept that the wealthiest among us should pay the most taxes. This makes sense since the rich have the most to gain from a strong national defence to protect their way of life, a strong police force and criminal justice system to protect their wealth and a world-class education system  providing the skilled workers they need to keep their companies growing.

In 2010, some states elected Republican governors and legislators that disagreed with the idea of progressive taxation. These people believed that if their states cut taxes for the rich, that these people would turn around and create more jobs. “Trickle down” for the masses, so to speak. In 2017, Republicans want to apply these tax cuts across the entire U.S. in hopes of creating many more jobs and stimulating the economy.

Republicans like to call states “laboratories for democracy”. Logically, we should look at the data from these laboratories before jettisoning progressive taxation. We should also apply lessons learned by the states.

For this analysis, four states were picked. In addition, United States data is also included and used as a benchmark. California and Kansas are chosen because they took diametrically different directions from 2011 forward in addressing their futures. California implemented the country’s biggest tax increase and Kansas implemented the country’s biggest tax cut. Minnesota and Wisconsin are included because they are adjacent and similar in many ways. However, their elected representatives followed completely different tax policies.

Information on individual taxpayer rates used below are found at http://www.tax-rates.org/. State income tax estimates used below utilize 2016 tax rates. The numbers provide a consistent means of comparison between states.

California

  • In 2012, voted to raise taxes on people making over $1 million annually, bringing the top tax rate to 13.3 percent, the highest in the U.S. This means that all income over $1 million for a single person are  taxed at a13.3 percent rate.
  • An individual making $30,000 annually or a couple making twice that will pay $594 in state income tax.
  • An individual or couple making $1,500,000 annually will pay $175,562 in state income tax
  • California’s sales tax rate is 7.5 percent and can be as high as 9.75 percent

Kansas

  • The most dedicated adherent to the tax cut philosophy is Kansas Governor Sam Brownback. With the aid of his Republican legislature, he passed huge tax cuts that were signed into law in May, 2012. They were implemented in 2013.
  • Brownback promised that state tax revenues would grow and replace the lost revenue from tax cuts. He also predicted a surge in hiring as new businesses moved to Kansas and established businesses flourished and expanded. None of these happened.
  • Because of continued tax revenue shortfalls and Kansas burning through their financial reserves, bond rating agencies continually downgraded Kansas’s credit rating.
  • Brownback blamed the revenue problems on lower agricultural and oil prices. Numerous studies have shown this is not true.
  • Because of tax revenue shortfalls, school funding formulas were changed and some schools simply shut down early when they ran out of money.
  • After finding the state with a $900 million budget shortfall, the Republican led Legislature passed veto proof tax revisions in 2017 rolling back earlier tax cuts.
  • An individual making $30,000 annually will pay $854 in state income tax.
  • An individual making $1,500,000 annually will pay $68,474 in state income tax.
  • Kansas’s sales tax is 6.5 percent.

Minnesota

  • Minnesota Governor Mark Dayton (D), raised the tax rates in 2011 on singles making over $150,000 annually and couples making over $300,000 to  generate $500 million in extra revenue to fund schools and infrastructure.
  • An individual making $30,000 annually will pay $1,065 in state income taxes.
  • An individual making $1,500,000 will pay $142,571 in state income taxes.
  • Since the tax increases were implemented, Minnesota has had continual budget surpluses.
  • Minnesota’s sales tax is 6.875 percent and can be as high as 8.375 percent.

Wisconsin

  • According to an April 2017 Brief published by the Public Interest Institute, “Over the course of six years and three biennial budgets, a wide variety of changes to Wisconsin tax laws have generated a total taxpayer savings of $4.756 billion, the LFB [Legislative Fiscal Bureau] estimates.” http://www.limitedgovernment.org/brief24-12.html
  • Besides the aforementioned tax cuts, according to the Wisconsin Budget Project, “The Manufacturing and Agriculture Credit, which lawmakers passed in 2011, nearly wipes out income taxes for manufacturers and agricultural producers — at a very steep price. The tax credit reduces state income tax revenues by $284 million a year in fiscal year 2017 and in subsequent years.” The Manufacturing and Agriculture Credit (MAC) provides tax credits to companies and individuals that purchase eligible equipment. The average tax credit for individuals with annual incomes over $1 million is $27,632. A very small percentage of these tax credits went to agricultural producers with manufacturers receiving the great majority.
  • Wisconsin Governor Scott Walker (R) proclaimed that between lowering taxes and “getting government out of the way of employers, who will then help Wisconsin create 250,000 jobs by 2015, and as we create those new jobs, we will be able to add 10,000 new businesses.” As of December 2016, the latest period data  is available, Wisconsin has still not added the 250,000 jobs Walker promised.
  • An individual making $30,000 annually will pay $927 in state income taxes.
  • An individual making $1,500,000 will pay $110,266 in state income taxes.
  • Wisconsin’s sales tax rate is 5.5 percent and can be as high as 6.0 percent.
The results

All of the above states elected new governors in 2010 and began implementing new policies in 2011 when they assumed office. Because of this, the following analysis compares performance to 2010, the year before they took office. Three measures are used to analyze what has happened in the above states. Job growth, measured using the Quarterly Census of Employment and Wages compiled by the Bureau of Economic Analysis, is the most accurate measure of full-time jobs added to the economy.

A second measure is the change in wages, again using the very accurate Quarterly Census of Employment and Wages. The third measure is Gross Domestic Product, which analyzes total economic output.

Frugal Ron acknowledges some  shortcomings in this analysis. The period being studied is short. Added to that, the 2016 data is marked “Preliminary”. Rather than trying to measure correlations and determine statistical significance, consider this an observational study and look at trends.

Job Growth

Figure 1

Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages June/2017.

Many factors impact job growth in a state. Figure 1 tells us in no uncertain terms that lowering taxes DOES NOT positively outweigh those other factors.

California, with its mega tax increases and in spite of previously being a high tax state is pulling away from the rest of the country insofar as adding jobs is concerned. Minnesota, the maroon line,  is almost perfectly aligned with the U.S job growth.

The states that sacrificed their education systems, their roads and infrastructure for the holy grail of having low taxes for the rich have the poorest job gains to show for it. While the differences between Minnesota and Wisconsin are relatively small (compared to Kansas and California), the difference is widening. There is no evidence that the rich, after getting their taxes cut,  turn around and create jobs.

Figure 2

Source: Bureau of Labor Statistics, Quarterly Census of Employment and Wages June/2017

Figure 2 illustrates Kansas’s problem dramatically. While Figure 1 is cumulative , Figure 2  illustrates how the wheels are falling off the bus in Kansas and highlights why the Republican led Legislature had to step in with some fiscal discipline.

People want their children to have a better life than they have. The secret to attaining this goal is education. When schools are in as much trouble as the ones in Kansas are, their students will have trouble competing in a global economy. this is not the environment that draws companies to relocate or expand in Kansas.

Wages

Figure 3

Source: Department of Labor, Quarterly Census of Employment and Wages June, 2017

The Wage graph shows many of the same trends one sees in Figure 1. California and Kansas are widely separated. Minnesota is outpacing Wisconsin again.  One of the interesting takeaways from this graph are how closely the states and the U.S. average were in 2014 and how dramatically they have separated as their divergent tax policies take affect. Over the last two years, the gap has widened considerably with the states that invested in their schools taking a big lead.

Both California and Minnesota went out of their ways to tax rich people at high rates, yet their average wage increases are outstripping Wisconsin and especially Kansas. Clearly, companies that pay high wages have not flocked to Kansas and Wisconsin. Even though someone making over $1.5 million annually could save over $10,000 by moving to Kansas, this isn’t enough enticement to get them to actually do it.

Gross Domestic Product (GDP)

Figure 4

Source: Bureau of Economic Analysis., GDP Regional/State June, 2017

GDP is a big picture look at an economy. If our Congress and president had any common sense at all, they would be copying California’s progressive tax and spending policies instead of Kansas’s.

Frugal Ron has reached the breaking point of hearing Republicans complain about President Obama’s economic policies and results while in the same breath lauding Wisconsin Governor Scott Walker policies. Pay attention to results people! If Walker’s policies worked, shouldn’t Wisconsin’s redline in the above three graphs be far above the U.S.’s black line?

Logic and Republicans

Kansas and Wisconsin made tax cuts benefiting businesses and high income individuals. Clearly they did not work. The degree of failure was proportional to the level of tax cuts each state made. Governors in both  states made unrealistic promises that raised expectations and actually magnified their failures.

Without a doubt, there is no logical reason to pursue tax cuts nationally with any expectation that they will better the lives of anyone but the rich. Adding in the recent experience of President Bill Clinton raising taxes on the wealthy, balancing the federal budget and bringing on the greatest and longest economic growth in our history with President George W. Bush and his tax cuts and resulting deficit bringing about the worst economic downturn since the Great Depression and all we can do is shake our heads in disbelief at Republican attempts to repeat their disasters.

Yet,  this madness of ignoring data and logic are Republican trademarks. From ignoring the impact of fossil fuels on climate change to ignoring data on increasing birth control access’ impact on lowering abortion numbers, Republicans rejoice in their blissful ignorance.  In their protective group think cocoon, anyone explaining the science of carbon dating is part of the attack on Christianity. Republicans may not be stupid but that doesn’t stop them from acting that way.

 

 


The Case Against Impeachment

Impeaching President Donald Trump is justified. Attempting to coerce the head of the FBI to end an investigation and firing him when he refused are obstructions of justice. Trump’s bragging  that he fired the FBI head because of his refusal to end the Russian investigation are icing on the cake. While many want an immediate impeachment, Frugal Ron suggests patience.

There are four good reasons to let Trump stay in office for the time being. First, if we impeach and successfully throw Trump out of office now for  obstructing justice, guilty people will go free. We need to know what Trump is trying to hide about his Russian connections. We need to identify and prosecute supporting players. Was the Republican National Committee and Reince Priebus involved? These are questions we need answered. Punishments need to be so severe that successors will never accept help from foreign governments.

Second, besides identifying other guilty parties in the US, a vigorous investigation will uncover the Russian side of the equation. We need to know what the Russians did, why they did it and how they did it. We need to know if Trump’s associates were directly involved in the hacking. These investigations might go by the wayside if Trump is removed from office and people lose interest. While getting rid of Trump is a noble goal, we need to understand what the Russians did and make sure we prevent their interference in future elections,

Third, Trump is the perfect person to not enact the dangerous Republican agenda. Besides being the biggest liar in our political history, Trump is incredibly incompetent. He has so far proven incapable of accomplishing much of anything. Considering the Republican agenda of huge spending increases, unfathomable tax cuts  and out of control deficits while taking from the poor and middle class and giving to the rich, Trump is the perfect president to not get anything done.  A President Pence might have some hope of passing these atrocities.

For those innocents that think after removing Trump from office  we’ll suddenly start preparing to mitigate climate change  and  we’ll drop plans to defund Planned Parenthood, I have a reality check for you. Ignoring climate science and data on the relationship of more available contraception and fewer abortions are Republican agenda ideas. Trump just happens to buy into them.  Again, because of his incompetence and weak standing in polls, impeaching Trump increases the odds of Republicans enacting their agenda.

Impeach
Think of them as Trump associates getting used to confined spaces with bars.

The only downside to keeping Trump in office is that he could blunder us into a war. This is definitely a risk, yet impeaching him while he still has a high level of popularity among Republicans presents other problems.

Let Trump twist in the wind, then impeach him

Fourth, throwing Trump out of office while he still has approval ratings in the upper 30’s is a mistake. Let his lies, arrogance  and actions bury him. Then impeach him.

There are some parallels in history. Voters knew about the Watergate break-in and that President Richard Nixon couldn’t be trusted, but re-elected him in a landslide in 1972. The slow, methodical investigation into the Watergate burglary, cover-up and Nixon’s obstruction of justice eventually wore his popularity down to almost nothing. No one was sad to see him go and there was no divisiveness about his fate.

The Republican dilemma, post impeachment

What happens after Trump’s impeachment must make forward thinking Republicans (granted, not many of these exist), nervous for their party’s future. Gerald Ford’s  (Nixon’s Vice President),  first act after assuming the Presidency was to pardon Nixon for all of his crimes. Ford instantly became a lame-duck president. He passed no meaningful legislation during his term in office and lost the next election to Jimmy Carter. If Carter had been half as successful a president as he was as an ex-president, Republicans would probably have been out of office for at least 12 years.

If Trump is impeached after a long investigation and his popularity is at Nixon levels, Republicans are in a no-win quandary. A criminal trial could drag on for years with Trump possibly joining his associates in jail. Pardon him, and the damage is immediate and perhaps equally long lasting.

 

 

 


Legalizing Drugs

It is time to make some fact based decisions about drugs. The War On Drugs is every bit the failure Prohibition was. Want some heroin? If you live in a rural or urban setting, it is available. That brings us to the five reasons we need to rethink our strategy on illegal drugs,

  • Hypocrisy runs rampant in the selection of which drugs are illegal.
  • Everything we thought we knew about addiction has been turned upside down.
  • The War On Drugs created an economic system where African-Americans especially are incentivized into becoming criminals.
  • Sentencing disparities contribute to the breakdown of black families and to distrust of our criminal justice system.
  • And last but certainly not least, the US’s insatiable appetite for illicit drugs and our War On Drugs has killed thousands, devastated economies and destabilized the justice system in Mexico and other Central American countries.

It is time to admit a costly mistake and move on.

Dangerous drugs, there is some confusion here…

Cocaine usage was blamed for about 6,500 deaths in 2015 according to National Institute for Health data. Cocaine is illegal in all 50 states.

The Center for Disease Control estimates that excessive alcohol use is responsible for 88,000 deaths in the US each year, shortening the lives of those who died by an average of 30 years. Further, excessive drinking was responsible for 1 in 10 deaths of adults aged 20-64 years. Alcohol is legal in all 50 states.

According to the US Drug Enforcement Administration drug sheet, no deaths from marijuana overdose have ever been recorded. This could be because the lethal dose for marijuana is 1,000 times higher than the effective dose, or the dose required to have a noticeable effect.  In contrast, alcohol can become lethal at only 10 times the effective dose. Marijuana is legal in only a handful of states.

According to the Center for Disease Control, cigarette smoking causes about one in five deaths in the US annually. Tobacco causes more than 480,000 deaths annually in the US (including deaths from secondhand smoke). Tobacco is legal in all 50 states.

The National Institute for Health estimates the number of deaths from heroin overdoses at over 12,000 annually. This is a 6.2 fold increase from 2002 to 2015. Heroin is illegal in all states.

The National Institute for Health also estimates that almost 18,000  US citizens died in 2015 from Prescription Opioid Painkillers. These painkillers (with a prescription) are legal in all 50 states.

Methamphetamine, also known as Meth,  is responsible for 19,500 deaths per year in the US. Meth is illegal in all 50 states.

Most addictive?

Duffy’s NAPA Valley Rehab is a drug rehabilitation center in north central California. They have put together a ranking of the ten most addictive drugs along with a dependency ranking. http://www.duffysrehab.com/blog/articles/10-most-addictive-drugs-in-the-world/

Drug                                       Dependency Ranking

  1. Heroin                                   2.89
  2. Crack cocaine                   2.82
  3. Nicotine                               2.82
  4. Methadone                         2.68
  5. Methamphetamine        2.24
  6. Alcohol                                  2.13
  7. Cocaine                                 2.13
  8. Amphetamines                 1.82
  9. Benzodiazepines              1.89
  10. GHB (Designer drugs)   1.71

If you are looking for marijuana, you won’t find it on the above list. Also, nicotine and crack cocaine are tied with the second highest Dependence Rankings. Alcohol and cocaine are also tied in sixth place.

Many people perceive heroin having an almost unbreakable dependency. This is not correct. During the late part of the US’s ill-fated involvement in Vietnam,  soldiers deployed in Vietnam accessed extremely high-grade heroin at a very low price. Consequently, we brought thousands of heroin addicts back to the US. in the late 1970’s.  There were all sorts of dire predictions of rampant heroin addiction in the US. Fortunately, it just didn’t happen.

An economics professor I had used the concept of “mutual exclusivity” to explain what transpired. In this case, it is almost impossible to be a heroin addict while holding a job and caring for a family. Mutual exclusivity means something has to go, either the heroin or having a job and family. For the majority of these returning soldiers, it was the heroin that went.

Addictive personalities and non-randomness

Many people believe we need to keep illicit drugs illegal because if a person tries a drug like heroin, they will immediately become addicted. This simply isn’t true!

There is a predisposition to being addicted and this includes people with addictive personalities. According to studies, about 10-15% of the population falls into this category. The difference between those with addictive personalities and the rest of the population is the difference between abusing and using.

While most of the population can enjoy a drink now and again, someone with an addictive personality will want to enjoy 10 or more drinks. Many people  enjoy going to church once a week. Someone with an addictive personality will want to go every day. And, while most people can enjoy cocaine on an occasional basis, someone with an addictive personality will need it every day.

Getting back to the War On Drugs, someone with an addictive personality will go to any lengths and pay almost any price to feed their addiction. Trying to make drugs more difficult to obtain by imposing longer prison sentences on sellers and stepping up border enforcement are a waste of time. Much more cost-effective to treat the individual addictions.

It is also important to recognize that having an addictive personality is not random in the population. People in the lowest income brackets (who can least afford it), are almost three times more likely to be cocaine or marijuana addicts than those in the highest brackets. Although not as dramatic, they are also much more likely to be addicted to nicotine and alcohol.

This also begs the question, are these people poor because of their addictions or are they addicted because of their economic state? For the majority, drugs are a way to escape their reality. According to  Stanton Peele, Seven Tools to Beat Addiction (2004), “Addiction is an intense involvement people fall into for solace when they cannot find better gratifications in the rest of their lives.”

Besides socio-economic status, some other predictors of addictive personality are youth, lower intelligence, mental health issues, pathological gambling and  compulsive sexual behavior. Again, the point to re-emphasize is that a person that tries cocaine has roughly the same chance of addiction as if they tried alcohol. The determinant of their reaction is if they have an addictive personality.  http://suburra.com/blog/2011/10/05/addictive-personality/

Perverse economic stimulants create drug dealers

Imagine yourself as a poor African-American kid living in a run down, segregated neighborhood.  While many white kids at your school started out way ahead of you because their parents made the time to read to them at early ages and provided them with a range of travel and activities. In other words, school has never been easy for you.

Now, in middle school, you have two different alternatives for your life. One alternative is to escape the ghetto and become a teacher. You’ll work harder than you ever dreamed at school to turn your grades around. Consequently, you’ll probably be abandoned by your friends for acting white. If you actually graduate from high school, get accepted at a college and manage to survive all the forms to get financial aid, you’ll more than likely move from the only world you’ve ever known into a white college town.  If you beat the odds (again) and  graduate from college, you’ll maybe make $35,000 a year and pay taxes on that.

Or, you can say screw it to school, start selling drugs now, dropout at 16 and become a full-time drug dealer.  You’ll make more money in a week than the teacher makes all year. Move up the hierarchy and you have unlimited earnings. Flashy cars, cool clothes, sex and prestige, all there for the taking.

These are the perverse incentives the War On Drugs created. Throw one kid in jail or kill another one in a shootout and you have a dozen more minority kids without other great choices wanting to take their places.  In areas with little hope, the opportunity to make unlimited money in a discrimination free industry stifles incentive to succeed legally.

The color of justice

The U.S. has the highest incarceration rate in the world, dwarfing the rate of nearly every other nation, according to the International Centre for Prison Studies.  Many of these inmates are in jail because of drug crimes.  A study published in The Journal of Law and Economics, vol. XLIV (April 2001), authored by David B. Mustard at the University of Georgia found, “An individual sentenced in the same district court, who commits the same offense, and has the same criminal history and offense level as another person receives a different sentence on the basis of race, ethnicity, or gender. The percentage difference is greatest for those convicted of drug trafficking, where blacks are assigned sentences 13.7 percent longer than whites.”

Longer drug sentences for blacks undermines faith in our criminal justice system. This is another byproduct of the War On Drugs.

Far more important, drug laws remove the most ambitious black men from their communities. This has a severe destabilizing impact on their families and communities.

Undermine other governments

The US’s insatiable demand for drugs internationalizes our War On Drugs. Mexico’s War On Drugs, waged at our behest, has resulted in over 160,000 deaths and about a 19% drop in their GDP. It has almost completely eliminated Mexicans faith in the integrity of their criminal justice system.

One of the most basic human rights is safety, If Mexican families can’t feel safe in their homes, they will leave and guess where they are going to go?  We will never be able to build a wall high enough or thick enough to keep them out. If the US wants a secure border with Mexico, the best thing we can do is to legalize all illicit drugs and make Mexico a safer place to live.

Summing-up

There is also a philosophical argument for legalizing drugs. Those of us who are true conservatives believe in laissez-faire, which simply means that if what you are doing doesn’t adversely affect anyone else, government has no right to regulate your activities.

So, if you and your partner want to use cocaine at a local nightspot, that should be your right. However, there are limitations. If your senses are altered by the cocaine and you decide to drive home, you have now become a danger to everybody else on or near the roadways you intend to use. That is a problem.

The differentiation is pretty simple. Use whatever drug you want, don’t bother anyone else and that is just fine. Endanger the safety of others and expect the full force of the law applied to you.

While the United States suffers through one of the darkest leadership crises in our history, the chance for meaningful drug law reforms on the federal level are non-existent. However, it is time to start meaningful discussion, ask tough questions and educate ourselves.

 


Frugal Ron Gets It Right – Again

While rational people celebrate the Republican failure to replace Obamacare, it is worth a trip back in time when Frugal Ron got it right and accurately predicted the mess Republicans would have replacing the Affordable Care Act (ACA).

In 2015, the U.S. Supreme Court was preparing to rule on the constitutionality of the ACA. If the Court had struck down Obamacare, Republicans who controlled both the House and Senate, would have been forced to come up with a replacement. On March 14, 2015, Frugal Ron published “The Supreme Court and Obamacare”. Some quotes from this prescient article predicted what would happen if Republicans had to re-write a health care law instead of just complaining …“Republicans seem under the illusion the Affordable Care Act will simply go away. We’ll go back to pre Obamacare and all will be well with the world. Unfortunately, this scenario is naïve at best and blatantly stupid at worst .”

Getting it right.
Mayo Clinic,; Rochester, Minnesota. They got it right. U.S. medical technology at its best.

“The insurance industry won’t allow efforts to re-engineer the Affordable Care Act without the insurance mandate. The insurance mandate is the requirement that everyone must have health insurance or they will have a penalty fee added to their taxes.  One Obamacare criticism is that not enough people have signed up to keep the system solvent. Take away or weaken the health insurance mandate and the problem is exasperated. Under intense time pressure from all directions, Republicans would be forced to re-write the Affordable Care Act to include the federal exchanges and with no other substantive changes.” Or, as happened recently, simply leave Obamacare in place.

What happened?

The Republican plan to replace Obamacare unravelled for a number of reasons. Even many Trump supporters figured out their health insurance costs were going up dramatically without the ACA subsidies. Furthermore, the subsidies were immediate relief where with the Republican plan, they would have to wait a year to get the tax credits.

Ultimately, the argument boiled down to how this was going to affect the middle class and the working poor. The Congressional Budget Office projections found that the Republican’s American Health Care Act  would dramatically increase individual’s health insurance costs while lowering federal spending minimally.  Frugal Ron  hit another home run in October, 2013 with “A True Conservative’s endorsement of Obamacare”.

“Without Obamacare, costs borne by people with health insurance will become more onerous. For individuals, the logical decision for a young, healthy person is to not buy health insurance. Odds are, they won’t need to use it. If something catastrophic happens, they’ll get treatment and if worse comes to worse, they’ll declare bankruptcy. This raises insurance premiums even higher and the next year more healthy young people opt to take their chances without health insurance.”

“How big a problem is this? An Employment Policies Institute study found 43% of the uninsured – about 20 million people – earn more than 2.5 times the federal poverty level, or $55,125 for a family of four. The authors – who include June O’Neill, the GOP-appointed head of the Congressional Budget Office from 1995 to 1999 – write “because most people at that income level are able to get insurance, (they) thus may be classified as ‘voluntarily’ uninsured.””

What Frugal Ron missed

While Frugal Ron basks in the sunlight of his accurate prediction about the nightmare Republicans would have if it ever came to replacing Obamacare, he gets a heavy dose of humility for predicting a Republican Congress would give Trump everything he wanted.

In an August 1, 2016 posting titled “A Donald Trump Presidency”, Frugal Ron wrote, “If Trump wins the presidency, it is logical to assume Republicans will maintain control of the House and Senate. Because of his electoral mandate, Congress will give him pretty much of what he demands.”

Thankfully, enough Republican Congressmen are showing resolve, independence and some common sense to wreck Trump’s agenda. The cause is certainly aided by the ultra right-wing Freedom Caucus, who seem to hate anything that helps U.S. citizens lead more productive and enjoyable lives.

For many elected Republicans, the bottom line was simply job survival. Women’s’ marches of hundreds of thousands and belligerent town hall meetings where Republican members of Congress had to do the impossible of defending their American Health Care Act all contributed to the bill’s downfall. It certainly didn’t help the Republican cause that according to a Quinnipiac University poll, only 17 percent of voters wanted Obamacare replaced. https://poll.qu.edu/national/release-detail?ReleaseID=2443. In another poll by Hart Research, 68 percent of respondents wanted to keep what works of Obamacare and fix the rest.

What next?

President Donald Trump predicts, “ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE. Do not worry!” Hopefully, President Trump will hold his breath waiting for the Obamacare explosion.

The Congressional Budget Office and the Kaiser Family Foundation (KFF) are considered the most accurate sources of unbiased health cost information. The Congressional Budget Office projected that Annual Average Benchmark Premiums would be $5,200 in 2016. The KFF estimates the average annual premium in 2016 was $4,583. http://kff.org/health-reform/perspective/how-aca-marketplace-premiums-measure-up-to-expectations/  This is important because  if Obamacare is to meet its goal of having no effect on the federal budget (compared to before the law’s enactment), average premiums need to be at or below the Congressional Budget Office’s  projection.

While the The Affordable Care Act has successfully kept health care cost increases low, it is flawed.  It is too easy for citizens to either pay a tax penalty or claim an exemption to avoid buying insurance. There are 14 different exemptions enabling people to  avoid buying insurance. In addition, the tax penalty for not buying health insurance is too low. This results in 20 million US citizens without health care insurance. Both of these problems need a fix to maintain a large pool of insured healthy people.

The weak mandate requiring everyone have approved health insurance drives up the cost of insurance dramatically in thin, mostly rural, markets. Right wing Republicans argue that by removing the mandate completely,  that costs will go down. This is completely illogical.

Summing-up, Frugal Ron got it right, Republicans didn’t

After seven years of listening to Rep.(R) Paul Ryan and other Republicans complaining about the Affordable Care Act, it is fun watching them twist in the wind while trying to  put together a replacement bill. They claim to be on the verge of passing a  bill in the House. But even if they do this,  it will experience a quick death in the Senate.

Republicans can’t seem to escape their dogma. Never before has a party with the presidency and solid majorities in the House and Senate blundered so badly and accomplished so little in their first 100 days in office.

No wonder they are such failures. Trump and his minions try to end extremely popular veteran and elderly programs along with Obamacare. Republicans try to use the savings to fund tax cuts for the rich, build walls and enact Executive Orders to cut off the lifeblood of our economic growth (immigrants) and enact out of control defense spending increases. Past administrations blamed gridlock on opposing parties controlling Congress. Donald Trump and Republicans only have their own incompetence to blame for their lack of accomplishment.

 


Republican Tariff Salvation?

Republicans aren’t able to contain their giddiness over their plan to slap a 20% tariff on all goods and services imported into the United States. In 2015, the total value of all imported goods, services and income payments brought into the U.S. was $3.6 trillion. Multiply this by 20% and you have the federal government collecting an extra $720 billion annually. This covers the U.S. government’s current $580 billion spending deficit, Donald Trump’s $100 billion tax cut for the rich and a good chunk of his $54 billion defense spending increase. Even better, any negative consequences of the tariff (which might cut demand for their goods and services) falls on foreigners. And, if demand for imports drops because of the tariff, then the slack will be made up by new US factories coming online with more high paying manufacturing jobs. What could possibly go wrong with this stroke of genius?

The answer is plenty. First, this plan is highly inflationary. Second, it will start a trade war and third, it will lower economic growth. This scheme, with various renditions, has been tried before. Most notably by economic basket cases like Argentina, Brazil and Venezuela.

Inflation

If you were raised after President Bill Clinton signed the General Agreement on Tariffs and Trade (GATT) in 1994, you probably don’t know what inflation is. Price inflation simply means the erosion of your buying power as prices rise faster than your wages while the value of savings plummets. People quickly learn not to save since the buying power of $10,000 is much less six months from now. Without savings, companies can’t borrow for new technology and a country’s worker productivity and relative wages fall.

Lowering and getting rid of tariffs with the GATT Agreement and opening our markets to more open trade put the final dagger into inflation in the US. At a time like now when we are at a full employment economy, too much income would be chasing too few goods and leading to inflation; open trade acts like a pressure valve. Now, goods from other nations can flow into the US holding inflation in check. Add in a 20% tariff on imports and the pressure valve becomes much less effective.

Besides upsetting the balance described above, the tariffs themselves are highly inflationary. While Republicans try to make the point that tariffs are a cost to the exporting country, that is not correct. In almost all cases, retailers will treat tariffs just like any other cost. Assuming a retailer works on a 40% profit margin (which is conservative), the 20% tariff is now a 28% increase in the retail price.

Much of economics is defining who are the winners and who are the losers resulting from a given economic policy. In this case, it is a no-brainer that the biggest losers are US consumers whose buying power will be sharply diminished by the Republican tariffs. Lower income Trump supporters will be hit disproportionately hard.

Republicans want us to believe that tariffs will make US made goods competitive, spurring a frenzy of factory building here. This is highly unlikely to happen. Building factories is an expensive long-term commitment and the longevity of Donald Trump’s Administration does not appear to be a good long-term bet. A new administration and Congress could wipe away the Republican tariffs with a swipe of a pen.

More likely, domestic competitors will simply raise their prices to the new tariff enhanced levels and reap extra profits.

Trade wars

The nasty thing about unilateral tariffs is that they don’t exist in a vacuüm. Countries hit by our tariffs will reciprocate. Just because we pick a number like 20% for our tariffs doesn’t mean other countries will use the same level. China and Japan could slap a 30% tariff on agricultural goods and deal a particularly hard blow to a vulnerable industry that also happens to comprise Trump’s main base of support.

The future of post tariff global commerce?

The last time we engaged in a trade war was after the Smoot Hawley Act signed by President Herbert Hoover in 1930 that raised tariffs on over 2,000 products. Canada was the US’s biggest trading partner at the time. Mackenzie King was the Canadian Prime Minister and had cut tariffs in the 1920’s. He warned Hoover that Canada would retaliate if Hoover signed the Smoot Hawley Act. Two months after the act signing Canada raised tariffs on US goods and lowered tariffs on imports from British Empire countries, consciously giving Canadians inducements to buy from England instead of the US. Believing he had done enough to stand up to the US, King called for a general election. He was wrong. His Liberal party was crushed by the Conservatives who promised and passed even higher tariffs on US goods. This is a lesson that won’t be lost on foreign leaders as they craft their responses to the US tariffs.

Lower productivity

A nation’s productivity is generally closely correlated to wage growth. What unrestricted trade does is force a nation to focus on expanding its most productive industries and contracting the ones it doesn’t do so well in. This increases productivity and hence wage growth.

Unfortunately, as covered in many other posts on this website, the US’s reliance on huge government budget deficits that overwhelm private savings and result in behemoth Capital Account deficits negate many of the advantages we should be getting from more open trade. Nevertheless, things could be worse.

If Republicans enact their 20% tariff, things will get much worse. China is a big time buyer of US corn. If China imposes a large tariff on US grain, Chinese farmers will start growing more corn, even though they are better at growing other crops. They will also import more corn from South America and other countries that are less productive corn producers than the US. They may even find it advantageous to feed Canadian or Australian wheat to their cattle. All of these are distortions caused by the US tariffs will lower the productivity of Chinese livestock producers.

tariffs
High tariff corn, who needs it?

Extrapolate these costs over the entire global economy and the lower productivity will lead to slower or no growth, which is defined as a recession.  And, this is global recession we are talking about.

Summing-up

For the first time in many decades, Republicans have come up with a plan for reducing the federal budget deficit. We should commend them for this. We cannot go on indefinitely borrowing $trillions from foreign entities.

Unfortunately, their plan comes with huge costs. Make no bones about it, this proposed tariff is a mega tax increase. Rather than the actual tax increase that President Bill Clinton balanced the budget with, this tariff increase will have far-reaching negative global growth results.


Two Worlds, One Nation

Ever since election night 2016, Frugal Ron has been in a state of depression. No election and very few events in his life have had the impact of Donald Trump winning the presidency. The world simply isn’t as bright as it used to be.

Over and over, this writer has tried to rationalize how anyone, let alone a nation, could vote for as reprehensible a person as Donald Trump. He’s cheated and humiliated all three of his wives, during his six bankruptcies he’s wiped out the savings of countless small investors that made the mistake of trusting him, he ridicules the disabled, he attacks Gold Star parents, he lies about his charitable giving and his charitable foundation broke laws by taking money donated by others to pay Trump’s legal expenses.

His statement that, “The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive,” makes one wonder,  just how stupid is this guy?  A compulsive and very poor liar, Trump continually denies his own statements. When the press comes up with video or audio of him saying these things, he vilifies reporters for their “vendetta” against him.  And yet millions of people voted for this person.

If things were going badly, this might be an explanation. However, the unemployment rate is 4.75%, wages are increasing at record rates, inflation is non-existent, the stock markets are at record levels and  the country is at peace. Millions more people are covered by health insurance and the government is finally out of determining who can marry who. Perhaps best of all, President Barack Obama did all this while increasing annual government spending at less than one-third the rate of his three Republican predecessors. The economy has only one direction to go under Trump. The question is, how bad will things get?

Even crazier, Trump and Republicans promise massive spending increases, huge tax cuts for the rich and financial deregulation; the same formula that gave us the George W. Bush Super Recession. Don’t be fooled by Republican promises of “change”. To a Republican, change means making things like they used to be.

So, is this column sour grapes from a sore loser? Absolutely. Whether we like it or not, Donald Trump is our president. When he mucks up the economy and sends markets spiraling downward, this doesn’t just affect those that voted for him, it affects all of us.

Two worlds, one nation

The 2016 election taught us how divided our nation is. People with college degrees voted overwhelmingly for Hillary Clinton. Voters without college degrees voted overwhelmingly for Donald Trump. Clinton voters get their news from mainstream sources, Over 60% of Trump voters don’t trust government generated data. They prefer Fox News and conservative talk show radio, neither known for accuracy and certainly not balance. Even worse are the alternative reality sites on the internet that simply make up the news that Trump voters desperately want to believe. For example, that Barack Obama is a Muslim.

The two worlds rarely meet. Urban people voted predominately for Clinton and the lower income rural areas went heavily for Trump.

You can chalk this up at least partly to globalization which increases the value,in rich countries of well-educated people and decreases the wages of less educated. Income differences based on education are at record levels. The average high school graduate makes $678 a week. The average college graduate makes $1,227 per week. The unemployment rate for high school graduates is 5.6% and for college graduates it is 2.5%. http://money.cnn.com/infographic/economy/college-degree-earnings/

From 1965 to 2013, the median wages of 25 to 32 year old college graduates working full time grew by $6,700 . During the same period, median wages of high school graduates in the same age group fell by almost $3,400 to $28,000. http://www.usnews.com/news/articles/2014/02/11/study-income-gap-between-young-college-and-high-school-grads-widens

For all of Trump’s promises, this isn’t going to change. The US job classification that the largest number of people belong to is “Truck driver”. This includes everything from semi drivers to delivery people. Yet, Amazon is testing drones for delivering packages while Google is testing driverless trucks. Politically we may be turning the clock back decades, but in the workplace, knowledge is power.

Lessons learned

In snatching defeat from the jaws of victory, Hillary Clinton delivered the presidency to the most uniquely unqualified candidate ever. Not only do we have a President Donald Trump, we have the most spend crazy, out of control big government liberals ever running the House and Senate. We aren’t going to change the election outcome, but there are some lessons to learn from it.

There is no such thing as a perfect candidate. However Democrats do very well when their presidential candidate is what I call a “charismatic genius”.  John Kennedy, Bill Clinton and Barack Obama all fit this category. They each had vision and more important, they could articulate their vision in a way ordinary people could relate to and buy into.  They inspired voters and voters genuinely liked them. Not to be ignored, all three were tall, handsome and looked like what people envisioned a president should look like.

Hillary Clinton lost the election because she couldn’t get the Obama voters to vote for her. Give part of the blame to vote suppression laws passed in Republican controlled states. Yet, the bigger picture is, Hillary Clinton didn’t inspire voters.  in fact, she was disliked so much, Democrats used surrogates to campaign for her.  Not a sign of charisma.

While Trump continually portrayed Clinton as crooked, she is far more honest than Trump and changed positions less often than most politicians. Her real problem is poor judgement. In her most important vote as a senator, she voted for the Iraq War. Poor judgement caused her to overrule any dissent from her advisors about using a private e-mail server while Secretary of State. People with professional positions have a work e-mail and a private e-mail and never shall the two get intermixed, Not a sign of genius to violate this axiom.

Democrats seem intent on breaking the glass ceiling and electing the first woman president. This is a wonderful goal, yet the more important goal is to nominate the most electable candidate.

What to expect from a Trump presidency

Barnum & Bailey are shutting down their circus, though it never was competition to the Donald Trump transition circus. Whether it is dismantling the Affordable Care Act before they have any idea what to replace it with or Melania Trump making cyber-bullying the focus of her time as First Lady. (One wonders if she could be so naïve that she doesn’t realize  her husband is the world’s most prolific cyber bully? Or, is she a lot smarter than we give her credit for and she is using this to get back at Trump for his philandering during their marriage that was revealed during the campaign?) At any rate, the Trump transition has been great entertainment. Unfortunately, once this clown act took office, the laughing stops.

Draining the swamp

Trump’s promise to end the influence of money in Washington took a detour. Betsy DeVoss, Trump’s nominee for Education Secretary, does not have an education degree and has no education experience. She has never attended public school, nor have any of her children. She supports public funding for Christian for profit schools over public ones. Not qualified you say? Well, she did give $9.5 million to Trump’s campaign.

Remember during the campaign when Trump was attacking Hillary Clinton for her close ties to Wall Street?  Trump has six Goldman Sachs executives in high places in his administration and his cabinet is the  wealthiest in history. Just think of how loud the wailing would have been if Clinton had won the election and installed these executives.

Trump’s inauguration committee sold packages for $1 million that included four tickets to what’s billed as an exclusive “leadership luncheon”. According to a document detailing the “58th Presidential Inaugural Committee Underwriter Benefits.” they will have a luncheon with “the ladies of the first families,” an “intimate dinner” with Vice President-elect Mike Pence and his wife and a “candlelight dinner” with “special appearances” by Trump and incoming First Lady Melania Trump as well as the Pences. If a woman put together a package like this, she’d be arrested for prostitution.

Trump, who is not known for doing anything unless it benefits him personally is true to form. The tax cut he is pushing most consistently is to end the estate tax. In 2015, you got to exempt the first $5.43 million of your estate before starting to pay any tax. Joe Sixpack,  if you ever expected to have a place at this table, you really are a fool.

International trade

Trump promises to bring manufacturing jobs back to the US by renegotiating trade agreements.  He won an election with this nonsense, but it will fail miserably in the real world. Here is the reason.

A  country’s trade balance has to equal its Net National Savings. If a country imports more than it exports, it can’t just create money to pay its bills. After running out of domestic lending sources, it has to borrow money from foreigners to pay for the extra imports. Or, if a country borrows from foreigners to pay its bills, the Terms of Trade (prices on exports and imports) are adjusted by the market  to make sure extra imports closely equal the Net National Savings deficit.

This is the scenario the US finds itself in. Because of our Net National Savings deficit, our exportable goods are more expensive than they otherwise would be and the things we import are cheaper.

The difference between exports and Imports is a country’s Current Account. This includes trade in goods, services, investment income, wages and anything else traded.

The US, consistently runs a Net National Savings deficit, so that is the driver in this equation. The Current Account will always match our Net National Savings. President Trump can negotiate artificial terms of trade (prices) with China, but at the end of the day, that pesky Current Account will still match our Net National Savings. We will simply wind up trading with other countries until the Current Account deficit matches the Net National Savings.  The Current Account in 2015 was -$478 billion. In this -$478 billion, we are sure to find many boatloads of manufactured goods.

What the Republicans (and Democrats for that matter) don’t want to talk about is: Net National Savings = Government Savings  + Private Savings. In 2015, Government Savings was a negative $782 billion. (The great majority of this was the federal government deficit of $569 billion.) Private Savings was $304 billion. Add -$782 billion to +$304 billion and the sum is -$478 billion. Source: Bureau of Economic Analysis, Table 5.1 Saving and Investment by Sector, Lines 35-41, January 2017. (Note Net National Savings are also called Net Lending or Net Borrowing, NIPAs and Capital Account.)

The important point is President Trump can negotiate all the trade agreements he wants, but until he and his Republican Congress get rid of the the $569 billion federal budget deficit, the US will continue having Current Account deficits, export jobs and mortgage our children’s future to foreigners.

The danger is that if Trump doesn’t get his way in the useless trade negotiations, he’ll start attaching the 35% tariffs he has threatened on our trade partners. This will allow domestic companies to jack up their prices and dramatically add to inflationary pressure. At the same time, other countries will return the favor to us and add similar tariffs to our exports. This will devastate sectors like agriculture that are export dependent. If Trump were to do something crazy in the name of America First and outlaw all foreign trade, the US goes bankrupt.

Again, the US Current Account deficit is our fault, not the Chinese or any other country’s fault.  We have a trade deficit because of our prolific government spending and more important, our inability to raise taxes to match our government expenditures. If voters want a positive trade balance, they made an enormous mistake in the last election.

The economy

Republicans love to spend outrageous amounts of money growing the size of government and they love to cut taxes. Consequently, they borrow money like drunken sailors. While Republicans Ronald Reagan and George W. Bush each raised annual government spending by around 80% during their terms in office, this looks like just a starting point for Trump and his Republican Congress. https://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1#reqid=9&step=3&isuri=1&904=1980&903=87&906=a&905=2016&910=x&911=0

Trump has determined that we need to “hugely” increase defense spending. We have no idea how much “hugely” is, but no doubt with a Republican Congress egging him on, this is mega bucks.

Again, the Republicans are operating without any logic or common sense. According to the Stockholm International Peace Research Institute, which tracks military spending of 170 countries since 1988, the US spends more on defense than the next seven biggest spenders combined! We spend three times as much as China and seven times as much as Russia.

Trump has also called for another program, whose cost could soar to another $trillion, to expand and modernize our nuclear arsenal. Currently, we have 2,000 nukes deployed. According to a 2007 study by the International Physicians for the Prevention of Nuclear War, if only 300 of these warheads hit Russia, 90 million out of Russia’s population of 144 million would die in the first half hour. Those would be the lucky ones. Most of the rest would perish in the following months.

Trump also has a $trillion stimulus/infrastructure program and his tax cuts are expected to add somewhere in the range of another $trillion annually to the deficit. To update one of my favorite quotes from the late Republican Senator Everett Dirksen, “A trillion dollars here and a trillion dollars there and pretty soon you are talking real money.”

The size of the deficits resulting from Trump’s proposed spending increases and tax cuts are mind-boggling.  While Trump lives in his alternate reality that his tax cuts and spending increases will generate an economic boom that will more than cover their costs, history tells us otherwise. The Reagan/Bush tax cuts and 8% annual spending increases bought us the biggest budget deficits in history. The George W. Bush tax cuts combined with his almost 8% annual spending increases brought us even bigger deficits. While Barack Obama kept his spending increases modest, he was history’s biggest tax cutter by keeping Bush’s tax cuts and adding on his own in the form of FICA cuts. These resulted in over $trillion deficits throughout his first term.

The money to pay for these deficits will have to come from someplace. Figure 1 illustrates the source for financing much of past deficits, foreigners. Considering the size of Trump’s projected spending deficit and the possibility Trump might start a trade war with China, our second biggest lender, future availability of  foreign funds is not certain. If we have to rely on domestic sources to fund his deficits, it could lead to some of the highest interest and inflation rates this country has ever seen.

Figure 1

Source: Bureau of Economic Analysis, Table 5.1 Savings and Investment by Sector; Line 35, 1/22/2017
Source: Bureau of Economic Analysis, Table 5.1 Savings and Investment by Sector; Line 35, 1/22/2017
Wishful thinking

Perhaps you expect Congress to do the responsible thing and temper Trump’s fiscal policies? Republican members of the House Freedom Council (these are the Tea Partiers that led government shut-down efforts) say they are ready to vote for a budget that will raise the deficit by a $trillion by the end of the decade, all for the sake of repealing the Affordable Care Act. They’ll need to get used to far bigger deficits than that.

A little background, in 1980 when Ronald Reagan was elected president, the federal government’s spent $534 billion annually. In 2015, federal government spending reached $3.5 trillion. Over 70% of this increase took place while a Republican was president and controlled the budget veto.

Summing-up

The United States  has a long history of divisions. Not since the Civil War has the country been as divided as it is now. And, with Donald Trump, the most divisive president in our history, building walls, dividing families, taking away women’s reproductive rights and making health insurance unaffordable for a large segment of the population, only the most naïve will expect any improvement.

The only thing Trump and his Republican disciples in Congress have going for them are low expectations. If they can somehow avoid melting down the global economy and starting a nuclear war in the next four years, Frugal Ron will hail the Trump Administration as a success.

 


A Healthcare Crisis In the Making

Healthcare is getting more expensive for individual US citizens. Many of the biggest insurers are pulling out of certain markets because of large financial losses. Some consumers will see double-digit increases in their insurance in 2017 following some double-digit 2016 increases. This will hit rural areas having the least competition the hardest.

The healthcare cost culprit – not what you expected

Affordable Care Act (ACA) opponents will seize on health insurance premium increases as proof positive that they were right all along about Obamacare causing insurmountable healthcare costs. Unfortunately for their arguments, they are wrong.

Figure 1 compares health care costs as a percent of Gross Domestic Product (GDP). Health care costs include insurance premiums, deductibles and all other costs associated with health care in the US. Measuring this as a percent of GDP shows how costs are growing compared to the rest of the economy and takes inflation noise out of the picture.

President Obama signed the Affordable Care Actin 2010 following several years of high healthcare cost growth. Some of the ACA cost containments were implemented in 2010 with sign-ups beginning in October 2013.

Health care costs did go up in 2014 from 2013’s value of 17.3% of GDP to 17.4% of GDP. Unfortunately, the 2014 cost data is the latest available from the National Health Statistics Group.

Figure 1

image001
Source: National Health Statistics Group , Office of the Actuary and Bureau of Economic Analysis, Table 1.1.5, Gross Domestic Product

The Milliman Medical Index is another calculation of all healthcare costs that does have 2015 data. Their 2015 cost increase of 4.7% is the lowest in the 15 years they have calculated their index. This is in spite of an almost 10% increase in prescription drug costs in 2015. http://www.milliman.com/mmi/.

What’s going on here?

So, to any logical person, this should make no sense whatsoever! How do we get double digit increases in health insurance costs (along with ever-increasing deductibles) when total healthcare costs are just keeping pace with the economy or rising less than 5%? If you read why large health insurers are leaving certain markets, the mystery starts to make sense.

Over and over, insurers complain they aren’t getting enough healthy young adults enrolled. If they are stuck with older customers who run up 80% of their healthcare costs in the last few years of their lives, insurers are going to lose money. And, if the healthy young people going uninsured wind up having major medical bills they can’t or won’t pay, guess who pays them? Typically, about 70% goes to the private insurers one way or the other. Those costs are incorporated into even higher insurance rates next year.

U.S. medical care, not cheap.
U.S. healthcare, not cheap.

This is the same thing that would happen if the government didn’t require drivers to have car insurance. Safe drivers would logically decide to save money and not buy  insurance. Insurance companies would be stuck with bad drivers that have lots of accidents

So, how do all these people get by without buying insurance? The ACA has a mandate that requires all people to buy health insurance. If someone doesn’t buy insurance, the mandate requires they pay a fine on their federal tax return. They will pay the higher of 2.5% of household income or the total of $695 per adult and $347.50 per child under 18, up to a maximum of $2,075.

Why can't we just go back to the way it was?
Why can’t we just go back to the way it was?

However, it is even easier if they claim one of the 14 exemptions the ACA allows. One of them allows a person to claim they are or were the victim of domestic violence. They do not have to offer any documentation of the domestic violence.

Summing-up

Obamacare supporters stress they do not want health insurance to be a financial burden on anyone, hence their exemptions. Yet, their kindness is jeopardizing the health insurance industry and by extension, the healthcare industry. As sign ups for insurance continue their downward trend, this nullifies the goal of Obamacare, to spread costs out across a wider population. This needs fixing.

For those still foolishly calling for the end of Obamacare, what is happening now should be a wake-up call. A loose mandate is resulting in double-digit rate increases. Imagine if there was no mandate?