President Obama has been stumping heavily for his “public option” for health care reform.  He wants the both the House and Senate to pass legislation before the congressional summer recess (known officially as the Summer District Work Period) from August 3 – September 4th, 2009.

Health care reform is a gigantic and important issue, as Obama has proclaimed.  However, to expect congress to pass a 1,000 page bill that only a handful of people have read (much less researched) is pure folly.  Now it appears that this legislation will be postponed until after the summer break; that’s a good thing.

There are two reasons Obama wanted to shove a health care bill through congress prior to the summer break.  First, our great narcissist leader would be able to proclaim the ultimate victory for his suddenly wobbly presidency.  Second, when house members go back to their congressional districts, they’re going to get an earful about health care reform and it won’t be pleasant.  House members (including many democrats) are going to be tentative in their support for the Obama health care plan when they return in September.

To show you how absurd this health care debate has become, let me point out some of the nonsense that Obama has been spouting over the past few days.

1.    He claims that his “public option” will increase the quality of health care in the United States.  All of this is coming from a man who won’t shove lawyers, doctors, or insurance companies under the cost-saving bus.  Adding 40 million new participants to the health care system isn’t going to add any quality to the equation.  Government doesn’t promote quality.  US Post Office vs. Federal Express; Public School vs. Private School; Cook County Hospital vs. University of Chicago Hospital…..need I say more?

2.    Of course, in Obamaland (where everyone majored in Kremlinomics), the “public option” will result in lower health care costs.  When asked at press conferences where the cost savings will be found, Obama is mumbles vaguely about administrative costs and inefficiencies, but presents no hard facts.  Unfortunately for Obama, the congressional budget office has looked at the facts.  As reported in the July 16th Washington Post, Senate Budget Committee Chairman Kent Conrad asked CBO Director Douglas Elmendorf if he saw “a successful effort being mounted to bend the long-term [health-care] cost curve,” based on the health reform bills that have been introduced by Democrats in the House and Senate. “No, Mr. Chairman,” the CBO director responded.  In fact, he said, “the [cost] curve is being raised” by the health bills.”  Elmendorf went on to say, “In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount,” Mr. Elmendorf said. “On the contrary, the legislation significantly expands the federal responsibility for health care costs.”

3.    Obama continues to hammer home the idea that those of us who are happy with our insurance and our doctors will not be affected by the “public option.”  He knows that his plan hasn’t a ghost of a chance of passing if those of us who are already insured are threatened.  Mind you, when the government starts running the health care system, all of the rules will be subject to change.  And change they will.  When the income tax was created by the passage of the 16th amendment, the income tax rate was 1 percent!  Once Obama and the democrats get their foot in the door; the crowbar will follow.  As a friend of mine in North Carolina says, “The government will be determining who your doctor is and what treatments you are eligible for in a skinny minute.”

4.    Obama claims that doctors, hospitals, and insurance providers are “all coming to the table” to cooperate with his administration in an effort to reform health care.  This reminds me of the time I visited reptile gardens in South Dakota. There was a mouse cowering in the corner of the python cage, waiting for the fateful time when the python wanted to eat.  I suppose that Obama would say that the mouse was “cooperating” with the python, but hospitals, doctors and insurance companies are coming to the table only to keep the government from fixing their prices and creating more competition.  As British health lobbyist Julian Hobson says, “if you’re not at the table, then you’re on the menu.”

As in any other pursuit of mankind, the only way to really cut costs is to allow more competition in health care, not less.  Government bureaucracy stifles competition and raises costs.  If you want to see an example of government health care, go to any large public hospital or look at the fiscal nightmare known as Medicare.  If you want to see how competition reduces health care costs, go to a walk-in clinic at a CVS or Walgreen pharmacy.  Blue Cross & Blue Shield of Minnesota, which analyzed 22,956 visits by its members to Minute Clinics from June 2004 to June 2005, found the clinics cost about half an office visit — or $43 versus $87 — and less than half for other related costs such as lab services.  That’s not a formula that pleases physicians or insurance companies, but it sure makes sense for consumers.

Serious and sensible health care reforms are needed in the United States.  Unlike 1993, when the Clinton’s sought to reform health care, today even small businesses are looking for rational discourse on health care issues.  However, if we are going to make serious and sensible reforms to American health care, it is going to take time.  Rushed public policy is bad public policy.  Bank bailouts took place over a weekend, resulting in the TARP program.  We can’t afford to “Do Health care” over a weekend.  Health care is too important.  Let’s do it right.

Even when a young man in the early 80’s I believed then that the federal government was too big and taxes were too high. In those days the Republican Party was known as “the party of small government” and Democrats were considered “the party of big government.” Time has shown us that neither party has been able to resist the temptation to grow the federal government. Election after election I’ve gone to the polls knowing that it didn’t make a darned bit of difference whether I voted for a Republican or a Democrat; the federal government would get bigger and bigger. Moreover, along with that size, the federal government has intruded increasingly into the private lives of its citizens and business owners, while at the same time taxing them excessively.

If I believed that the federal government had too many employees, too many programs, and spent too much money back in 1980, can you imagine how I feel now? For years I’ve suffered under the assumption that I’ve got to “vote for the least of two evils.” I don’t like democrats and I don’t like republicans. I can vote for a libertarian or a guy like Ron Paul, but those guys don’t stand a chance of being elected. So what is a fellow to do?

This week, while contemplating the frustration of the “vote for the least of two evils” dilemma, I thought of a new way of looking at this. Maybe all of us who believe the federal government is too big and too repressive ought to look at elections as a method to enforce “term limits” on those who continue to grow the federal government. We’ll take as a “given” that neither Republicans nor Democrats are prudent or reasonable. Meanwhile we’ll put candidates from both parties on notice that if they vote to grow the federal government, they will have only one term in office.

For example; while “Wierd Al” Franken (my new senator) has nearly six years before he can be voted out of office and President Obama has three and a half years left before he can be voted out of office, I’ve got a representative in Congress, Tim Walz, a Democrat, who will come up for re-election next year. I have nothing against Tim Walz personally, but he just voted for the cap and trade bill, which will grow the government and unnecessarily increase utility bills (an indirect tax) for every business and citizen in this country. Therefore, my message to Mr. Walz is as follows: “Mr. Walz, I don’t care who the Republicans put up against you in November of 2010, I’m going to vote for that Republican and thereby end your congressional career. Likewise, if the Republican who beats you next year continues on the path toward bigger government, then I’m going to put a two-year “term limit” on his congressional career and elect the next Democrat who opposes him.”

This week I’ve freed myself from the hopelessness of the “vote for the least of two evils” dogma and have declared myself an enforcer of “term limits” for any candidate that continues to grow the government. So go ahead Democrats and Republicans! Continue to grow the government, but if I have anything to say about it, you’ll serve only one term. After a few years, someone will get the message; instead of bigger government, it’s time for fewer entitlements, smaller government, more individual responsibility, and increased freedom for businesses and individuals. Those who move us away from the Nanny State and toward a society where people may pursue their personal goals while creating prosperity and jobs, will have a chance at a second term. Those who don’t will be out on their tails after only one term. AHHHHHH! I’m feeling better already! Bye bye, Mr. Walz!

For nearly 40 years I’ve listened to people who have blamed or praised the President of the United States for the state of the economy. I’ve told them over and over again that the President of the United States has little (if any) influence over business cycles.

When Jimmy Carter was President we had double digit inflation. Jimmy didn’t cause that inflation; the Federal Reserve printed too much money. As the Fed tightened the money supply starting in late 1979 the inflation was wrung out of the economy, but in the first two years of the Reagan administration the country was in an inflationary recession (double digit inflation and double digit unemployment). That wasn’t Reagan’s fault, nor should he have gotten credit for the remaining 6 years of prosperity during his administration. The economy was great when Clinton was President and it was booming during most of George W. Bush’s time in office, but this has nothing to do with who occupies the oval office.

Likewise, Obama is not responsible for the mess that we are currently experiencing. Our current problems have been caused mostly by an over extension of credit in the real estate market. In 2003, Democrats in Congress defeated proposals to bring Freddie Mac and Fannie May under tighter regulatory control, mainly to allow their low income constituents to afford housing. You can hang this one on Barney Frank, but not on Barak Obama.

The administration is now proposing another government agency to supervise financial markets, arguing that we need more regulation. Some regulatory reform might be needed, but we don’t need another government agency. The big problem has been that government doesn’t even enforce the laws already on the books. For example, many in Congress now claim that it was difficult to recognize problems that lead to the housing crash. I’m not buying it. All the regulators had to do was turn on a radio and hear some guy hawking “no doc” easy credit home loans. Any moron would have known that this wasn’t going to work; a person with a $60,000 year job simply can’t afford a $500,000 mortgage payment. Congress didn’t do its job. Like anyone who has lost money invested with Bernie Madoff knows, the government doesn’t do anything well; why would we expect anything different from the Securities and Exchange Commission.

While Obama hasn’t caused the current economic crisis, in my opinion he is unknowingly prolonging and exacerbating our misery. Due to the sheer amount of legislative changes he is trying to force through Congress in his first term (cap and trade, health care reform, the TARP banking bailouts, nationalizing General Motors) Obama has created tremendous uncertainty in the US economy. Markets can adjust to bad news, but they remain crippled and dysfunctional when there is too much uncertainty. With Obama we’ve got uncertainty on steroids. Meanwhile the US economy twists in the wind as Obama toys around with the details of his socialist agenda. As Obama’s chief of staff Rahm Emanual once said, “You never want a serious crisis to go to waste.”

Last week I explained a basic “cap and trade” model, using a simple example.  The beauty of such a concept is that those polluters who find it easiest (and cheapest) to reduce emissions can do so, selling their “energy credits” to industries with high emissions abatement costs.  The net effect is a reduction of emissions at the lowest possible abatement cost.  I’ve gotten flak from a few readers accusing me of being in favor of cap and trade.  Last week I only explained the concept; this week we’ll look at cap and trade in the context of the real world.

In my previous blog I said that cap and trade is makes sense only when three conditions are met; (1) there is a need to reduce carbon emissions, (2) all major polluting nations (including China and India) will realistically act to reduce carbon emissions, and (3) the program is structured properly.  In my opinion none of the three above conditions are met, so the congress should kill cap and trade legislation.

The first condition is that there is a need to reduce carbon emissions.  In 2007, the Intergovernmental Panel on Climate Change (IPCC) released to the public its Fourth Assessment Report titled Climate Change 2007 (IPCC-AR4, 2007).  The IPCC is a United Nations sponsored organization.  Its key authors have been appointed by governments.  The chief scientists working on global warming research are funded by government research grants.  The IPCC has been trying to convince the world’s citizens that human activity (CO2 emissions) is the main cause of global warming.  However, there is no conclusive evidence that a long-term global warming trend exists.  In fact, climate change is probably cyclical with the sun (not CO2 emissions) as the main cause of warming and cooling cycles.  There was a significant rise in global temperatures during the middle ages, long before carbon emissions became significant.

The second condition is that all major polluting nations (including China and India) will realistically act to reduce carbon emissions.  Sporting populations of more than 1 billion each, neither China nor India have any desire to choke off economic growth by retarding CO2 emissions.  While Mr. Obama is ready to sacrifice the US economy at the altar of global warming, the Chinese and Indians can’t and won’t make that sacrifice.  No amount of convincing by Europe, the United States, or the United Nations will change the fact that China is already the greatest CO2 polluter, with India soon to follow.  Therefore, no matter what the US does, the amount of worldwide carbon emissions is bound to increase.

Lastly, even if the first two conditions were met, the cap and trade program would have to be properly structured.  The Waxman-Markey bill, which passed last week in the House of Representatives, does not give the country time to re-tool from coal (which provides over 70% of our electrical energy) to other sources.  The Congressional Budget Office estimates that the cap and trade tax will cost the average household only $175 per year by 2020, but those are only the taxes in the early years of the plan.  The CBO doesn’t discuss the fact that the caps will contain large increases over the later years.  Furthermore, the CBO report ignores completely the negative effect of the carbon tax on future GDP.  Virtually every consumer and business will be negatively affected.  A footnote in the CBO study admits:  “The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap.”

Wow, convenient for the CBO to ignore that the cap and trade tax could severely cripple the US economy!  Before this cap and trade gets to the US senate for final passage, you might want to know that according to the Heritage Foundation, Waxman-Markey legislation would cost the economy $161 billion in 2020, which is $1,870 for a family of four. As the bill’s restrictions kick in, that number rises to $6,800 for a family of four by 2035.  The Wall Street Journal calls cap and trade legislation an “energy price tsunami.”  It is time to get on the phone and call your senator about the harmful effects of cap and trade.  While you’re at it, inform your congressman (if he or she voted for the Waxman bill) that you’re going to make sure they don’t get re-elected again for another two year term.