Buffet rule - Class Warfare or Simple Math?

I received this today from the Obama administration after President Obama announced the "Buffet rule" at a Rose Garden ceremony today:

This morning, the President proposed the "Buffett Rule," which would require those earning more than $1 million a year to pay the same share of their income in taxes as middle-class families do.

This proposal makes sure millionaires and billionaires share the responsibility for reducing the deficit. It would correct, for example, the fact that Warren Buffett's secretary currently pays taxes at a higher rate than he does.

The other side is already saying it's "class warfare" -- that's their rhetorical smokescreen for providing millionaires and billionaires special treatment.

As the President said this morning, "This is not class warfare -- it's math."

The wealthiest Americans don't need further tax cuts and in many cases aren't even asking for them. Requiring that they pay their fair share is the only practical way forward. The Republican alternative is to drastically slash education, gut Medicare, let roads and bridges crumble, and privatize Social Security. That's not the America we believe in -- but many in the Republican leadership actually prefer those policies, which explains their refusal to act.

That's why they'll say "tax increase" over and over again, trying to muddy the waters and trick ordinary Americans into thinking the Buffett Rule will hurt them. And if we don't speak out right now, they just might get away with it.
Of course, the Buffett Rule won't really touch most Americans -- only 0.3% of households will even be affected.

And without it, the only way to reduce our debt is to savage the programs that seniors and middle-class families rely on.

That's exactly what the President refuses to do -- in fact, he's said he'll veto any bill that changes benefits for folks who rely on Medicare but doesn't raise serious revenue by asking the wealthiest Americans or biggest corporations to pay their fair share.

This isn't just a commonsense approach to cutting the deficit -- it's the only way to make sure we can provide security to people who work hard and play by the rules.

So right now, I'm asking you to say you'll stand with the President on something that won't be easy. Get the President's back today:

http://my.barackobama.com/Buffett-Rule

Thanks,

Messina

Jim Messina
Campaign Manager
Obama for America

My question is why do we distorting the facts? It is true the Warren Buffet effective tax rate is less than his secretaries nominal rate but if his secretary is making under $60,000 there is a very good chance that she pays 0% in an effective tax rate. So why don't we all get on the same page when talking about these rates. That being said it is widely accepted that our revenue, no matter the tax rate, ranges between 16-18% of GDP historically. The other widely accepted truth is that our current spending is north of 22% of GDP.

To get a handle on our deficit spending is not to raise revenue as President Obama would like for us to think; rather we need to get our spending under control. Notice that President Obama is not out there trying to defend the $535M given to Solyndra from the last Stimulus package that has now gone belly up! Perhaps we could use that money to help fix Medicare, Medicaid or SSN. Instead the notion is to raise taxes on the wealthy and claim it is not class warfare.

If we want to get serious about our deficit then start with the tax code. Flatten the tax code to 8% and eliminate all tax credits and deductions for everyone. Eliminate the corporate tax rate, and all tax credits and incentives, as corporations simply pass along those taxes onto the consumer. Then on investment income - raise short term capital gains to 55% while putting long term capital gains at 15% - this will curb some of the hedging that exists and encourage people to think long term as well.

A different way to obtain a health care mandate

President Obama will be announcing his idea, again, for health care reform today. The plan is rumored to include the constitutionally debate mandate on all Americans to have insurance. Obama is missing a great opportunity to get a mandate implemented. The Constitution does prohibit the government to dictate citizens to purchase any item. Now, some will attempt to argue that car insurance is required to drive a car. Correct, in order to have the privilege to drive a car in Minnesota one must carry car insurance. This is not true of the rest of the United States as I am learning in my insurance classes. If Obama really wants to implement a mandate on health care he can easily accomplish it through Medicare and Medicaid.

To move closer to a mandate on health care, the President will need to come out with a plan that phases out Medicare and Medicaid for those younger than 55 years of age. As he phases out these two entitlement programs they are replaced by a Medical Savings Account (MSA). The MSA will become a bookkeeping change on our paychecks as the amount currently being deducted would go into our own MSA versus the big pool of Medicare and Medicaid. After the switch is made, President Obama can enact the second half of Universal health care. The second half is to have Americans use that MSA to purchase inexpensive health care option offered by the Federal Government.

By phasing out Medicare and Medicaid through the implementation of a MSA it will achieve the mission of Obama in regards to health care reform. The reform will be easier as well and would not see the same Constitutional fight that an outright mandate will. Plus, going this route will be less expensive and more subtle to the average citizen. Then in his final year of his term in office Obama can launch a federally run health care option that people can use with their MSA. This way we will all have some money in the MSA and in comparing the costs of escalating premiums in the interim; Americans will be more accepting of Universal health care.

Does the Nebraska Compromise secured by Sen. Nelson make Senate health care reform bill unconstitutional?

Sen. Graham (R-SC) and Sen. DeMint (R-SC) have requested State Attorney General Henry McMaster to look into "concerns about the constitutionality of this Nebraska compromise as it results in special treatment for only one state in the nation at the expense of the other 49" (http://www.msnbc.msn.com/id/34551523/ns/politics-health_care_reform/). The Nebraska Compromise is in reference to the deal that Sen. Nelson (D-Neb.) was given to exempt citizens in Nebraska from the cost of the $45M, annually, expansion of Medicaid program in exchange for his vote on the Senate health care debate. Other states working with Attorney General McMaster include Alabama, Colorado, Michigan, North Dakota, Texas and Washington. Just a few seconds ago on MSNBC McMaster announced two more states have joined the effort as well.

Texas Attorney General Greg Abbott defended his decision to join the discussion by saying, "The Nebraska Compromise, which permanently exempts Nebraska form paying Medicaid costs that Texas and all other 49 states must pay, may violate the United States Constitution, as well as other provisions of federal law. In light of this unprecedented and highly questionable backroom deal, Texas will join South Carolina and other states in an effort to thoroughly review the constitutionality and legality of the Nebraska Compromise" (http://www.fortbendnow.com/2009/12/23/42918). While "backroom" deals are nothing new to the political but the difference between traditional "backroom" deals and the Nebraska Compromise is that traditionally the deals result in a onetime influx of money for a pet project. That is the core of the argument being made with the Nebraska Compromise is that it unfairly benefits one segment of the population. Other states were involved in getting special funding as well for Medicaid expenses which include Louisiana, Massachusetts and Vermont.

Obliviously this will play out but does the deal that Sen. Nelson secured violate the Constitution? Is it fair to the rest of America to pay for all Medicaid costs of Nebraska going forward?

Beware of China’s Role in the Health Care Debate

Americans stay on your toes this weekend as the Democrats in the Senate look to vote this Saturday to bring Sen. Reid's health care reform bill to the floor for debate. In order to open debate, on the bill, the Senate will need 60 votes to bring the bill to the floor. Republicans are looking to stall the process by requiring the bill be read word-for-word which is something typically motioned waived and accepted without objection. Normally I agree with dispensing of the reading but in this case it is extremely important that the entire bill be read. By reading the entire bill, Americans can be assured that our elected officials are not voting, again (Stimulus Bill), without reading the bill in its entirety. Per Senate rules all bills are to be read three times on three separate legislative days. Reading the bill once is sufficient and I hope that Republicans do not use this procedure to delay a vote.

The CBO scored the Senate bill and put the price tag at $849B over ten years. The Senate version, according to the CBO, would reduce the deficit by $127B. The CBO report can be seen here: http://cbo.gov/ftpdocs/107xx/doc10731/Reid_letter_11_18_09.pdf. Part of the scoring includes the belief that 1/3^rd of States will opt-out of the program and the start of the public option is push backed to 2015. A few concerns here: 1. What if no States opt-out? 2. If reform is needed, why are we waiting until 2015?

I understand that if a public option is passed and a Health Benefits Advisory Committee is established it will take time to iron the red tape out but 6 years? Do our elected officials believe that we are naïve and stupid? I think so. During those six years it will give the government an opportunity to tie the public option, Medicare, and Medicaid to the States in a manner that if they opt-out it will cost them Federal funds much in the same manner the transit dollars were tied to the lowering of the DWI limit, speed limit, and drinking age. The States need to learn, and the citizens of those States, that we cannot continue to allow the growing beast in Washington D.C. to exert so much power over our lives. Thomas Jefferson sums it up best, "Dependence begets subservience and venality, suffocates the germ of virtue, and prepares fit tools for the designs of ambition."

Concerns are already being raised by Governors over the Senate health care bill because it will shift responsibility to paying for the expansion of Medicare and Medicaid onto the States. My hope is that the States will now finally use this abuse of Federal power to exert their 10^th Amendment rights. The trouble is that too many States have become drunk on the Federal tit and may not be sober enough to fight for their rights. Granted we are the United States but our Founding Fathers wrestled with the concept of a central government leading to tyranny. In just over 200 years we have seen the central government of the United States grow in power and stature.

We hope that all elected officials are looking out for the best of all Americans but let's face it, what is good for California may not be applicable for Minnesota and vice versa. Government ought to be local. The role of our Federal Government is a growing beast that must be tamed before it consumes us all and ruins the great land we have all come to cherish. The mounting debt and unchecked actions by the Federal Reserve already have our biggest benefactor worried about repayment of debt. China is not looking favorably on the actions of the United States and is looking to replace the American dollar as the standard world currency.

The health care reform being proposed by Congress will only exasperate the problem. We can achieve reform without $900B bills. The Federal Government needs to be reminded of their limited role and I hope citizens of the different States realized that too. More is at stake than reform of the health care system with the two bills floating through Washington D.C. Our future as a country rides on the shoulders of our States to exert the power granted them in the United States Constitution to stand up the tyranny of central government that resides in Washington D.C. Or fear the wrath of the debt collector.

Whether you agree or disagree with actions being taken on health care reform be wise to the beast that grows in Washington D.C. Be wise to the mounting debt and the day of reckoning when the debt collector comes calling. It is not too late to stem the tide. Call your local representatives and Governors to lit the fire of defending the 10^th Amendment and reclaim what is rightfully the States.

State Budgets to be pushed over the brink by Medicaid expansion.

President Obama declared before the joint session of Congress, a few weeks back, that he will not sign a health care reform bill that adds one "dime" to the National Debt. Both the H.R. 3200 and the Baucus Bill have language to expand Medicaid to cover more low-income people. State budgets are already stressed and one of the provision under current Medicaid programs is that states cannot cut benefits instead states must cut other aspects of their budgets. "If the federal government wants to expand health care to everybody in the country, they should not force the states to pay part of the bill. If they want to do that, the federal government should pay for it," said Gov. Haley Barbour of Mississippi (http://www.hattiesburgamerican.com/apps/pbcs.dll/article?AID=2009909150314).

Rep. Shelley Capito (R-W.VA) echoes the concerns governors have when she said, "We're talking about legislation with a staggering trillion dollar price tag, and now we're hearing from the governors about how this will hit state budgets as well. The reality is that funding Medicaid is tough for every state right now and there are real bipartisan questions about the way this legislation is moving forward in both houses of Congress" (http://www.dailymail.com/News/200910050806). While many in Congress, along with the Governors, see the benefits in the expansion of Medicaid the fear comes in the expansion of their already taxed budgets.

California just had a "garage sale" to raise funds to help payback some their IOU's. In Minnesota, Governor Pawlenty had to use unallotment to balance the budget. The federal government has for years been overstepping their Constitutional role by mandating legislation unto the states. It is time for the governors of each state to stand up and defend State Rights from the tyranny of the federal government. The promise made by President Obama as to not raising taxes on those making less than $250,000 will go out the window if Congress passing health care reform that expands Medicaid coverage. Granted the tax hike will not come from the federal government; rather it will come at the state level. This portion of the health care reform is a Ponzi scheme and violates the Constitutional rights afforded the States.

CBO Warns Obama's Plan will increase costs not reduce them

I wasn’t going to discuss Health Care today but in watching the House Energy & Commerce committee and heard that the 75 page amendment that is being discussed is also being discussed by the Ways & Means and the Judiciary committees at the same time. Many of the provisions in the amendment not specifically funded while other elements are funded only for 2010 with a blank check for 2011 and so forth. The amendment being discussed as well has not been scored by the CBO.

CBO director Douglas Elmendorf said before the Senate Budget Committee that “sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount” in regards to reducing public spending on health care. CBO director Elmendorf went on to say that the bills floating through Congress “significantly expands the federal responsibility for health-care costs.” President Obama and Democrats are trying shove Health Care reform upon Congress as a means to reign in Medicaid and Medicare costs but Elmendorf retorts, “the cure is being raised” by the legislation being pushed in both houses of Congress.

The concerns by Elmendorf are echoed by Rep. Mike Ross (D-Ark.), as reported in the Washington post today, chair of the House Blue Dog Coalition’s health care task force, “There’s no way they can pass this bill on the House floor. Not even close.” Why, again I ask, is the President trying ram through health care reform and not allow Congress to read all the legislation prior to voting on it. An amendment by Rep. Sullivan is being discussed by the House Energy & Commerce committee even though it has not been fully read by all members of committee; which is the second amendment discussed this morning not been read prior. WHAT!!!!!

We all saw and heard the haste given to passing the Stimulus Bill earlier in the year when not one member of Congress read the bill prior to passage. The issue of Health Care is a large complex issue and the President wants to ram it through. Once again I ask why? What is he afraid of? Is he afraid the CBO numbers will just get worse or is he hoping for swift passage so the CBO cannot properly score the reform?

With that said, I’d like to update my readers on the topic of Maj. Cook and his lawsuit. Judge Clay Land dismissed the case after defense argued that Maj. Cook’s suit is “moot” because orders of deployment were previously revoked. While the logic applied by Judge Land is sound, it does not put to rest the central issue of the lawsuit; Obama’s eligibility to become President of the United States. A point was raised after I posted the discussion on the lawsuit as to how the Army acted so quickly to revoke deployment, I pose this question: What hand did the White House have to play in the quick revoking of deployment of Maj. Cook?

Health Care Industry: Control costs before establishing a public plan!

The Senate’s Health committee passed along a bill that would bring health care to more people than any other bill in the past 15 years. The trouble is that the bill does not focus solely on controlling costs. As I read the newspapers on the health care debate there is one controlling issue; need to reduce costs. Since cost of plans are increasing and the share of employee premium payments continue to rise, why are we focused on an all or nothing public option?

The president is back on television in interviews and advertisement to tout the need and press upon the American public that, “Make no mistake the status quo on health care is not an option for the United States of America.” While I agree with this stance, the simple notion that a public option will suffice and bring done costs is insane. Sen. Charles Schumer, D-NY, stated, “Our broken system is working very well for private health insurers but not for American consumers.”

The answer from the Obama administration and many Democrats is a public option. Medicare and Medicaid are going to be bankrupt. Many will point to the escalating cost of health care as the root issue. I beg to differ. The root cause is beaurocratic involvement. The Government does do some things well, which may be way the Framers looked to limited the size of government, but they do not do entitlement programs well. Our Congress has mismanaged social security by allowing it to be part of the general fund and not leaving it in the special fund it was originally established in.

I agree something needs to change. The change needs to take place with costs. Before any public plan can be established or even discussed, we need to control the costs of health care. Government can influence cost control, not by offering a public option, by regulating the industry.

First, allow any citizen in any state to be able to purchase a health care plan from any state in the union. By opening up the options it will increase competition and through increase competition American’s will see the cost of the programs become less expensive.

Secondly, mandate that every American purchase catastrophic health insurance and stipulate that insurance companies cannot reject insurance due to pre-existing conditions. While I am not a big fan of being told that I must have the insurance, I am also not a fan of a government public option that would do more harm than good.

Finally, establish guidelines for medical lawsuits with the AMA in exchange that all hospital, clinics, and doctors must take all forms of insurance. The establishment of lawsuit guidelines will assist in driving down one of the biggest expenses for the industry; medical malpractice insurance. By requiring the acceptance of all forms of insurance it will force hospital and clinics to focus on preventative care to keep people healthy.

By moving in this direction the cost to the American public will be minimal compared to the potential $2.2T that we will be looking at under the Obama plan. Contact your Senator and Representative to concentrate on cost cutting measures in the health care industry instead of establishing an expensive entitlement plan.