The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Politicians and bureaucrats are notorious for manufacturing euphemisms -- clever but deceptive substitutes for what they really mean but don’t want to admit. That’s how the phrase “revenue enhancement” entered the vocabulary. Some of our courageous friends in government couldn’t bring themselves to say “tax hike.”
“It is difficult to make predictions, especially about the future,” says a proverb often attributed to Yogi Berra. Imagine the world of freedom, or lack of it. Who could foresee the technologies that make our lives so rewarding and convenient? The same technologies have us all under the government’s giant microscope. Thankfully, the brave have turned the microscope around.
In the months since Edward Snowden revealed the nature and extent of the spying that the National Security Agency (NSA) has been perpetrating upon Americans and foreigners, some of the NSA's most troublesome behavior has not been a part of the public debate.
National Treasury Union President Colleen M. Kelly recently described the 2014 IRS budget allocation as “woefully inadequate.” But the agency has not proven itself to be an efficient steward of taxpayer dollars. Here are ten ways the IRS lost the trust of the American people.
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Given how poorly states like California and Illinois have funded the pension funds for their own employees, one would think that this would stop dead in its tracks any plan to have the government assist in managing private sector funds too. The spate of recent activity, however, suggests otherwise.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The problem for NSA apologist is that when guys like Snowden disclose that the government conducts comprehensive surveillance in ways that would have made 1984’s O’Brien drool, it puts the entire progressive agenda in jeopardy.
The east coast and parts of the southern U.S. were to varying degrees paralyzed by blizzards a few weeks ago. The snow as expected rendered the roads treacherous, and in anticipation of slick streets, shoppers flocked to the grocery stores in advance.The rush into grocery stores, and its aftermath, offers worthwhile lessons in economics.First up, […]
The financial world is plodding along like a drunken sailor avoiding debt collectors by keeping no cash in his wallet. It’s not the kind of calm that’s going to last or end well. But the storm will have to wait until after the Olympics.What a game! We’ve never watched ice hockey closely before. But watching […]
“When they come for my gun, they will have to pry it out of my cold, dead hands,” is a common refrain I often hear from the Neo-Cons when there is a threat, credible or otherwise, that the U.S. government is going to take their firearms.And, when I hear this crazy talk, I agree with […]
The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self-sufficient.But our systems of state charity — aka welfare — have too frequently had the opposite effect: They have actually created dependency. It is time to rethink the way we help people.I’m going to […]
In times of war and national emergency, it’s sometimes necessary to sacrifice civil liberties to secure vital gains in public safety. In those cases, we may have to accept a loss of privacy or freedom rather than invite mass slaughter of Americans.The National Security Agency’s domestic phone records collection is not one of those.Never have […]
President Obama crowed in his State of the Union speech about the economy, even mentioning “a rebounding housing market.” Maybe he was referring to friends in high places, like the seller of Penthouse One in New York, which just closed for $50.9 million, all cash. Millions of mere-mortal homeowners likely wanted to throw something at […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the HealthCare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor supply issues. Given the mounting difficulties with and growing concerns about the […]
Amidst all the revelations about how the American people, many of whom are absolutely convinced they live in a free society, have their telephone calls, emails, website visits, and who knows what else under surveillance by their own government, let’s not forget the massive infringements on financial privacy that have gone on for decades.Consider, for […]
Image: ShutterstockBitInstant CEO Charlie Shrem, along with alleged co-conspirator Robert Faiella, was arrested by federal authorities last week for allegedly laundering more than $1 million worth of Bitcoins. This is a tiny amount compared to the largest drug-and-terrorism money laundering case ever. Yet when British bank HSBC was found guilty in 2012 of laundering billions, […]
Do you trust your doctor? Most patients assume their doctor is working in their best medical interests whenever he or she orders a diagnostic test or recommends a particular treatment. Customers might wonder whether an unscrupulous auto mechanic is being truthful when he recommends a brake job or a new transmission. But most patients trust […]
The exercise had an awesome name, inspired by the movies: “Quantum Dawn 2.”On July 18, scads of U.S. banks, stock exchanges and government agencies took part in a digital fire drill — a practice run in the event all of Wall Street came under massive cyberattack.This isn’t the first time banks have come under an […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
So you’ve maneuvered the Obamacare website, plugged in your top-secret information and found out how much you are forced to pay to avoid a fine.And for some of you, it turns out you qualify for a government subsidy — making the premium sound like a bargain. But signing on that line to accept the government’s […]
“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”As the inequality gap grows, there is an ideological battle unfolding in the West.On the one hand, there are those who think government can fix things. It must do more, tax more, […]
On Feb. 7 the United States will once again reach its statutory debt limit, meaning it cannot legally borrow any more money. Since the obvious option of cutting spending to match the amount of revenue that the government collects is off the table for some inexplicable reason, Congress will have to pass a new, higher […]
The New York Times published an interminable article on health care recently. Plenty of facts — how scrupulous are these journalists! — but the article displayed absolutely no comprehension of the basics of cause and effect. I was left wondering about the whole point.The article details how the health care system rewards specialists to an […]
For critics of the surveillance state, it is tempting to see President Obama’s speech a few weeks ago as a partial victory: Prompted by Edward Snowden’s leaks and the public pressure for National Security Agency reforms, he announced significant changes to the program that collects and stores information about all telephone calls. And he promised […]
Most of America has suffered since the crash of 2007. Property values plummeted, unemployment soared and remained stubbornly high, the use of food stamps continues to set records. Pension plans are going broke and municipalities around the country are teetering on the edge of bankruptcy. All this five full years after the crash.
A federal government stimulus armada led by Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner hurled trillions of dollars at the meltdown. Instead of green shoots, main street seems to be in the middle of seven lean years while Wall Street’s short memories inflate bubbles in junk bonds and government debt.
Left to its own devices, the economy’s healing powers are extraordinary. For instance, the depression of 1920 was a doozy. Unemployment jumped that year from 4 percent to nearly 12 percent, and GNP declined 17 percent.
Had the likes of Tim Geithner taken over as Treasury Secretary, who knows for how long the pain would have dragged on. But it was not a career bureaucrat that took the job but instead a 66 year old industrialist, Andrew Mellon.
By the summer of 1921, recovery was already underway. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923. By 1926, Treasury Secretary Mellon was able to say, “We are now at a very high tide of prosperity.”
Instead of bailouts, Mellow agitated for lower taxes and immediately went to work on peeling away America’s bloated post WWI debt. Mellon had built industrial dynasties in oil, steel, shipbuilding, construction, and banking. To take the Treasury job he resigned directorships at 60 companies.
His first day, as Mellon biographer David Cannadine relates, Mellon arrived for work at 8am, an hour before the staff. “Such a thing had never happened in the memory of any of the Treasury’s night watchmen.”
Mellon knew that if tax rates were lowered on businesses and individuals that money would be reinvested in the economy, creating jobs and promoting economic recovery. But he didn’t immediately get all he wanted. The farm bloc stood in the way of most of his tax agenda, but taxes were reduced and over time Mellon succeeded.
At the same time, Mellon was able to whittle down the federal debt that stood at $24 billion when he took office. By 1929 he had reduced it to $16 billion, saving the government millions a year in interest payments. He believed the domestic debt would be extinguished by 1942. A goal the Great Depression postponed.
The Pittsburgh industrialist believed countries like individuals should pay off their debts. To let debts linger was “a sign of debility and denoted an absence of the essential vigor and foresight which insure future success,” Mellon said. “It was the policy of the thriftless, the ne’er do-well.”
So while Mellon was a financial prodigy, Geithner, is a product of government. He began his career at Kissinger Associates, and then joined the Treasury Department in its International Affairs division. He worked under Larry Summers and Robert Rubin at Treasury and there is some dispute as to which man was the primary mentor to Geithner. Next it was on to the Council on Foreign Relations and then to the International Monetary Fund.
At age 42 he was made President of the Federal Reserve Bank of New York, and then he was nominated to be Secretary of the Treasury. In his public life, Geithner has developed a knack for being in the center of financial crisis, whether at the IMF, NY Fed, or at Treasury.
In March 2008, he arranged the rescue and sale of Bear Stearns. In the same year, he played a supporting role to Henry Paulson,Treasury Secretary and former CEO of Goldman Sachs, in the decision to bail out AIG just two days after deciding not to rescue Lehman Brothers from bankruptcy. Some Wall Street CEOs subsequently expressed the opinion that decisions in which Geithner participated, especially the failure to rescue Lehman, contributed to worsening the global financial crisis. As a Treasury official, he helped manage multiple international crises of the 1990s in Brazil, Mexico, Indonesia, South Korea, and Thailand.
Having never worked in the real world of commerce, Geithner is able act out his inner-sociopath at government posts. In his book Bailout, TARP Special Inspector General Neil Barofsky explained that he could get Geithner to meet with him only by threatening to report the secretary’s behavior to Congress. When they did meet, Geithner was hostile:
As we parried back and forth, Geithner repeatedly reached a pitch of anger, regaling me with detailed expletive-filled explanations that established my apparent idiocy. He would then calm himself down and give me a forced, almost demonic smile.
Barofsky’s psychiatrist wife told her husband Geithner might suffer from narcissism, “and therefore might be psychologically incapable of truly admitting that he made a mistake.”
Geithner did all he could to shovel money to Wall Street in the wake of the crash in the form of TARP, TALF, PPIP, and who knows what all, and wanted taxpayers to step in to cover bondholders. In her book Bull By the Horns, ex-FDIC Chair Sheila Bair, writes, the Treasury Secretary, “did not want creditors, particularly bondholders, in those large, failing financial institutions to take losses.”
Although Geithner circulated rumors to the press that he wanted Bair out as FDIC chair, he never said anything to Ms. Bair to her face. “Tim seldom engaged with me directly, she writes, “the main exceptions being when he was advocating for Citi and needed my help.”
Bair admittedly is not a fan of Geithner. She describes the news that Geithner was appointed Treasury Secretary as “a punch in the gut.” She “did not understand how someone who had campaigned on a ‘change’ agenda could appoint someone who had been so involved in contributing to the financial mess that had gotten Obama elected. Tim Geithner had been the bailouter in chief during the 2008 crisis.”
If Geithner is the bailouter in chief, Andrew Mellon was just the opposite. As the country sank into depression, Treasury Secretary Mellon told President Herbert Hoover to,
liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.
And while Mellon spent most of life in the banking business, he didn’t want to prop up bankers, he advocated letting weak banks fail in order for the banking system to rebound and prosper.
While Geithner’s bailout riot has gone a long way to weaken the dollar, when called on it he has the gall to say. “We will never seek to weaken our currency as a tool to gain competitive advantage or to grow the economy,” Geithner told the press in 2010, toeing the government line. “It’s not an effective strategy for any country, and it’s not for the US. We’ll never do that.”
While the 59th Treasury Secretary advocated for the gold standard and balanced budgets the current version advocates unlimited government borrowing.
On Bloomberg TV, “Political Capital” host Al Hunt asked Geithner if he believes “we ought to just eliminate the debt ceiling.”
“Oh, absolutely,” Geithner said.
“You do? Will you propose that?” Hunt asked.
“Well, this is something only Congress can solve,” Geithner said. “Congress put it on itself. We’ve had 100 years of experience with it, and I think only once–last summer–did people decide to use it to threaten default on the American credit for the first time in history as a tool for political advantage. And that’s not a tenable strategy.”
Hunt then asked: “Is now the time to eliminate it?”
“It would have been time a long time ago to eliminate it,” Geithner said. “The sooner the better.”
The good news is that Geithner is moving on and you might say, “the sooner the better.” But, is there a Mellon-like candidate in the wings to champion sound money, lower taxes, and reducing the federal government’s $16 trillion debt?
The current consensus pick, Jack Lew, is currently the White House Chief of Staff. Treasury employee Lael Brainard is supposed to be underconsideration. She’s an ex-academic who once worked in the Clinton administration. Neal Wolin is also Treasury employee whose career has “mostly been spent in public service.” Gary Gensler and Sheila Bair have both been regulators. Erskine Bowles and Roger Altman have worked in and out of Washington D.C. for decades.
Even Facebook’s Sheryl Sandberg is an ex-Chief of Staff at Treasury. Larry Fink’s resume looks to be unblemished by government service. However, The U.S. government contracted with his company BlackRock to help clean up after the financial meltdown of 2008 and according to Wikipedia, “Fink’s longstanding relationships with senior government officials have led to questions about potential conflict of interest regarding government contracts awarded without competitive bidding.”
None of these prospects has the stuff of Andrew Mellon, a man who took the job reluctantly but perhaps stayed too long. While technology marches onward and upward, the value of the dollar and the character of Treasury Secretaries continues to digress apace.
Investors are getting no help for Washington and the “change” candidate isn’t changing anything. The government doesn’t provide instructions to build wealth in these troubled times.
Addison Wiggin saw all of this coming years ago, writing a New York Times bestseller, Demise of the Dollar and recently followed that up with The Little Book of the Shrinking Dollar. Inside, Addison suggests dozens of ways to protect your retirement from the shrinking dollar.
Both books are available for sale, here.
By now, you know the new Treasury Secretary will take care of Wall Street just as Geithner did. Make sure you take care of yourself, nobody in Washington is.