Category Archives: Market

SD Ag Summit 2015 Part 1: State of Agriculture Address from SD Ag Secretary Lucas Lentsch

SD Ag Secretary Lucas Lentsch speaking in Deadwood. Photo by Ken Santema 07/10/15
SD Ag Secretary Lucas Lentsch speaking in Deadwood. Photo by Ken Santema 07/10/15

On July 9th and 10th I attended the SD Governor’s Agricultural Summit in Deadwood, South Dakota. This will be first of several posts examining the various portions of the Ag Summit. For this post I will focus on the State of Agriculture Address from SD Ag Secretary Lucas Lentsch.

Before going on I probably should mention I did a series of posts about the Ag summit in 2014 as well. Those posts were:

With that out of the way, it is time to focus on the 2015 Ag Summit. The whole event can be watched on YouTube. Secretary Lentsch’s State of Ag speech begins at about 5:30.

Challenges in Ag in SD

Sec Lentsch began by talking about challenges facing SD agriculture. In particular he spoke about federal policies that were creating challenges. The Waters of the United States (WOTUS) rule was finalized by the Environmental Protection Agency (EPA) and the Army Corp of Engineers under the Clean Water Act (CWA) of 1972. Lentsch had this to say about WOTUS:

The WOTUS definition is important because it subjects land owners to a number of significant restrictions and permitting requirements for farming activities in or around these designated areas; as well as potential substantial liability for Clean Water Act violations. The map here shows water that could be regulated under the new WOTUS definition. If an area is red the body of water could be regulated by the EPA and the CORP. Without a doubt this rule will significantly impair the ability of South Dakota producers to do their job each and every day.  Whether  because of the uncertainty of the status of water on their land, or because they have to go through a potentially long and expensive permitting process. This rule is bad news for Ag producers.

Here is the map provided by the secretary showing what portions of SD would potentially be impacted by the new definition of WOTUS:

WOTUS impact on SD
WOTUS impact on SD

It is quite clear that very little of SD would be untouched by the new WOTUS definition. Lentsch noted that his office and the Governors office have tried urging the EPA to the agricultural industry and work with them. However he notes the EPA chose to ignore such comments and moved ahead, while ignoring most of the agricultural communities concerns about the new WOTUS definition.

Lentsch noted Congress is now trying to stop the EPA from proceeding. Sen Thune actually has an interactive map on his office website showing the portions of the state that would likely be impacted. Back in May of this year the US House passed H.R.1732, an act “To preserve existing rights and responsibilities with respect to waters of the United States”.  Even though that bill passed the House, I don’t see it passing the Senate; or withstanding a veto if it did pass the Senate.

Lentsch also mention that SD Attorney General Marty Jackley joined a coalition of Attorney Generals from 12 other western states to stop the new definition of WOTUS. Agri-Pulse has a good story about the lawsuit.

Before moving on, I am glad to see Lentsch and Jackley fighting the new WOTUS definition. I don’t necessarily agree with either of them on a lot of issues. But for this issue I believe they are right and would urge them to continue their fight against the EPA’s power grab.

From there Lentsch spoke about the Renewable Fuel Standard (RFS) set by the EPA. He noted the standards have not been aligned to what Congress passed. Lentsch presented slides showing that RFS helps the agricultural industry in South Dakota. This is an area I will pass on writing about at this time. Personally I don’t believe the federal government should be trying to coerce the free market into favoring certain products, which is what RFS does.

Lentsch also listed misuses of the Endangered Species Act and honey bee pollination as challenges faced by agriculture in SD with federal implications. But most of his time spent on federal challenges was spent talking about WOTUS.

Avian influenza was brought up as a regional issue. One interesting step taken to stop the spread of avian flu was to keep poultry exhibitions away from fairs this year. I had no idea that was being done.

Another challenge mention is row crops have had falling prices. But that led to the first opportunity mentioned.

Opportunities in Ag in SD

While row crop prices have been falling, cattle prices have been going up. Over the last couple of years, since Atlas, the prices have gone up consistently.  That will be covered in greater detail in a different session of the Ag summit.

Then Lentsch went into Trade opportunities. In particular he called out the Trans-Pacific Partnership (TPP). The countries that would be involved in TPP would potentially trade even more with the US, and potentially open more markets for South Dakota. I have been blogging against TPP off an on over the last couple of years. Sadly the politicians in SD have decided to put one industry ahead of the free market to promote a behemoth trade policy. In addition Lentsch applauded Congress giving Obama Trade Promotion Authority (TPA) so the secretive negotiations on TPP and the Transatlantic Trade and Investment Partnership (TTIP) can continue without the American people knowing what is going on. More on this topic during the trade portion of the summit.

On the good side of trade, Lentsch did note that relationships are normalizing with Cuba. That would be great. Cuba has been devastated by communism and could use some good old free market partners to help them regain a place in the global economy.

Lentsch then spoke about infrastructure. He noted most grain leaving SD goes by roads or railcar. He noted the passage of SB 1 (SoDakLiberty Posts) , which provides more revenue (tax increases) to the road and bridge infrastructure in South Dakota. Sen Vehle was at the 2014 Ag Summit to promote his infrastructure tax hike. This year Lentsch took a moment to thank him for the passage of SB1, along with the other legislators that voted for the bill.

Lentsch noted there is no competition with railroads in SD. And, unlike many other ag states, SD does not have barges to move agricultural goods. He noted Sen Thune was recently able to get S 808 passed in the US Senate. S 808 is the Surface Transportation Board Reauthorization Act of 2015, and includes reforms to make the STB more accountable. So far this bill hasn’t been taken up in the House. But Thune has been pushing hard for its passage.

Going on about rail, Lentsch noted projects by the State, B&E, and BNSF to continue expanding rail in SD. The goal is to stop the bottle-necks that happen each fall.

Lentsch then went into the statistics of changes in the last year. I would recommend watching his intro for all of the statistics. The more important ones were probably the value of crop and pasture land over the last year. I bring that up because I had heard from a few people in attendance that they would have liked a session focused on how property taxes are done for ag land. That did not happen, and was almost notably avoided. Perhaps in 2016 this can be brought forth as a topic, it will not go away!

Conclusion

During the conclusion of his speech the most notable news was the Ag Summit moving to Brookings for SD Ag Summit in 2016. It will be held in the Swiftel Center on June 1 and June 2.

For me the two big issues brought up by Lentsch was the EPA’s expansion of WOTUS and the trade agreements SD’s Congressional delegation are pushing for. Both of these are topics worth further scrutiny.

Will defense spending ever be fixed in DC

tanque_xilographic_styleDefense spending is always a hot topic in DC. From my point of view there are two different political approaches to the political side of defense spending in DC:

  • There are those that want to increase defense spending.
  • There are those that pretend they want to decrease defense spending.

Very few politicians in DC actually want to reduce defense spending. True reductions in defense spending would mean going against special interest groups that support DC politicians.

As some one who believes in a good defense capability I don’t want our military reduced to a point where it is unable to defend our country. At the same time I believe our military should be efficient in both capabilities and cost. Just last week I listened to top military officials tell Congress there is nothing left to cut without reducing capabilities of our military. Should we believe that? Or were these top military officials telling Congress what they wanted to hear so politicians could keep the status quo for defense spending. Or are these top defense officials saying they cannot make cuts simply because they don’t know where the money is going?

Often when having this debate I will mention military projects that Congress forces upon the Pentagon in order to please special interests. Some examples include

Items like these are “low-hanging fruit” for budget cuts. These cuts could be made immediately without undermining our defense capabilities. When researching defense cuts it is hard to find areas beyond this low-hanging fruit to highlight. An investigation being done by Reuters could explain why:

In its investigation, Reuters has found that the Pentagon is largely incapable of keeping track of its vast stores of weapons, ammunition and other supplies; thus it continues to spend money on new supplies it doesn’t need and on storing others long out of date. It has amassed a backlog of more than half a trillion dollars in unaudited contracts with outside vendors; how much of that money paid for actual goods and services delivered isn’t known. And it repeatedly falls prey to fraud and theft that can go undiscovered for years, often eventually detected by external law enforcement agencies.

The consequences aren’t only financial; bad bookkeeping can affect the nation’s defense. In one example of many, the Army lost track of $5.8 billion of supplies between 2003 and 2011 as it shuffled equipment between reserve and regular units. Affected units “may experience equipment shortages that could hinder their ability to train soldiers and respond to emergencies,” the Pentagon inspector general said in a September 2012 report.

Because of its persistent inability to tally its accounts, the Pentagon is the only federal agency that has not complied with a law that requires annual audits of all government departments. That means that the $8.5 trillion in taxpayer money doled out by Congress to the Pentagon since 1996, the first year it was supposed to be audited, has never been accounted for. That sum exceeds the value of China’s economic output last year.

It is kind of hard to determine where to make cuts when there is no good data to work from. It is believable that top defense officials cannot make more cuts simply because they don’t know where the money is going. Perhaps now is the time to look at prioritizing its ‘accounting readiness’. The Pentagon should make it a top priority to update and streamline accounting policies and technology used by the military. Then perhaps we could get real data to find out where defense cuts can be made. Better yet streamlining the defense accounting may actually save millions (or billions) of dollars that are currently being misappropriated or otherwise ‘lost’.

Now the bigger question is if the military-industrial complex would allow such a move to happen? Can we trust DC politicians to reduce spending on defense, even if that would make for a more efficient military? Personally I don’t believe the military-industrial complex and the DC politicians enabling the current defense spending system will allow that to happen.

Actually, the US has defaulted on its debt at least twice

johnny_automatic_worried_about_a_billI came across an interesting AP story this week titled Historians Put An Asterisk on US Debt Claim. The whole story is worth reading. Here is a snippet briefly explaining two times the US had defaulted on its debt:

Once, the young nation had a dramatic excuse: The Treasury was empty, the White House and Capitol were charred ruins, even the troops fighting the War of 1812 weren’t getting paid.

A second time, in 1979, was a back-office glitch that ended up costing taxpayers billions of dollars. The Treasury Department blamed the mishap on a crush of paperwork partly caused by lawmakers who — this will sound familiar — bickered too long before raising the nation’s debt limit.

The whole story is worth reading. Maybe someone should pass this story on to President Obama, he really seems to think the US never has defaulted on is debt. Personally I don’t think defaulting will be as big of a deal as the Keynesian economists and media make it seem like; however I think those opposed to defaulting should at least try to be historically accurate.

American’s are worried about government over-spending according to Reason-Rupe poll

gringer_Piggybank-pinkThe results from a recent Reason-Rupe public opinion survey has just been released (PDF). There are some interesting results from this poll, which happen to mirror what I hear from many people. Just as with any poll I would say these results are interesting, however polls should never be used as proof of anything. One change of a word in a poll question can change the numbers dramatically. Having said that I would like to highlight some interesting government spending results from this poll.

Here is the first question:

1. Generally speaking, would you say things in this country are heading in the right direction or in the wrong direction?
• Right direction………………………………..28%
• Wrong direction………………………………61%
• Neither (VOL.)…………………………………..7%
• DK/Refused………………………………………3%
• Total…………………………………………….100%

Question 1 was not necessarily a government spending question. However it can be assumed that most Americans consider the economy is an important factor in the direction of the country. In this poll almost 2/3 of respondents believe the US is headed in the wrong direction. That is a large amount of people!

Question 6 has an interesting question relating to government spending:

6. For every dollar you pay in federal taxes, about how many cents do you think are wasted by the government? (OPEN-END; RANGE 0 TO 100)
• MEAN………………………………………….$0.60
• MEDIAN……………………………………….$0.60
• DK/Refused………………………………………9%
• Total…………………………………………….100%

Wow. Americans feel 60% of taxpayer dollars spent by the government is wasted. No wonder there has been a surge of populist libertarianism lately. If people feel over half of their taxpayer dolalrs are being wasted during an economic downturn they are likely to reevaluate the role of government spending.

Question 7 expands upon Question 6:

7. In your view, does the federal government spend too much money, too little money, or about the right amount of money?
• Too much……………………………………….76%
• Too little…………………………………………..7%
• Right amount………………………………….11%
• DK/Refused………………………………………6%
• Total…………………………………………….100%

This result is even more interesting. 3/4 of respondents feel the government spends too much money. Taken together, questions 6 and 7 show a majority of respondents feel the government is wasting too much taxpayer dollars. These results seem to show that Keynesian ‘spend until you drop’ economic policies are starting to be rejected by the American people.

Questions 8 and 9 ask about the budget:

8. It is estimated that the federal government will spend about $750 billion more than it collects in tax revenue this year. Do you think Congress should…
• Balance the budget immediately……….40%
• Balance the budget over 5 years……….32%
• Balance the budget over 10 years……..16%
• Or not worry about balancing the
budget?…………………………………………..7%
• DK/Refused………………………………………5%
• Total…………………………………………….100%

9. What percentage of federal spending, from zero to 100 percent, would you cut across the board to help balance the budget? (OPENEND; RANGE 0 TO 100)
• MEAN……………………………………………37%
• MEDIAN…………………………………………30%
• DK/Refused…………………………………….18%
• Total…………………………………………….100%

If you add the amount of respondents that want to balance the budget immediately with the amount that want to balance the budget over the next 5 years it is almost 3/4 of the overall respondents. This happens to almost align with the amount of respondents that believe the government spends too much money. Another sign that Keynesian ‘spend now and make your children pay’ economic policies are being rejected by Americans. I actually expected question 9 to show greater amount of dollars to be cut balancing the budget. However this question is harder to answer without actually knowing what percent would actually help balance the budget.

Finally Question 10 is a good debt ceiling question:

10. The federal government is expected to hit its debt limit – which is the legal limit on how much the federal government can borrow to pay its bills – in the next few months. In general, do you favor or oppose raising the debt ceiling?
• Favor……………………………………………..24%
• Oppose………………………………………….70%
• DK/Refused………………………………………6%
• Total…………………………………………….100%

Again, almost 3/4 of the respondents would oppose raising the debt ceiling. This to me is the best result of the poll. President Obama and his followers often tout  that not raising the debt ceiling is the same as ‘not paying your bills’. Respondents are rejecting this misdirect of a message from Obama. Responsible fiscal policy would require lowering these bills and cutting non-essential services the government is paying for. It is obvious from the earlier results that Americans feel too much money is being spent already. Using the argument that the debt ceiling has to be raised ‘to pay the bills’ is a really hard sell for Americans that have had to cut services in their own life to balance their personal budgets.

The poll had a lot more questions (72 total) and has some interesting results. And, as I said before, the results shouldn’t be taken too seriously. However these numbers do give hope that Americans are rejecting the Keynesian economic theory that government cannot spend too much money. Perhaps now we can work on getting an agile and useful government; as opposed to our current bloated and economic-hampering government.

United States has $58 Trillion of debt that isn’t on the official balance-sheet

Recently James D Hamilton, an economist from University of California, published a paper bringing off-balance sheet federal liabilities to light (PDF). I find it astounding how much debt is simply not acknowledged by official government accounting practices. Currently the national debt held by the public is $11.9 Trillion. Of course if the intragovernmental holdings of $4.8 Trillion is added to the public debt there is a total acknowledged public debt outstanding of $16.7 Trillion! (These figures were current as of 8/16/2013 on treasurydirect.gov). Whether you use the $11 Trillion or $16 Trillion figure, it is hard to dispute our national debt is out of control.

However Mr Hamilton brings to light federal liabilities that don’t get included in the official national balance-sheet. Here is the abstract from his paper:

Much attention has been given to the recent growth of the U.S. federal debt. This paper examines the growth of federal liabilities that are not included in the officially reported numbers. These take the form of implicit or explicit government guarantees and commitments. The five major categories surveyed include support for housing, other loan guarantees, deposit insurance, actions taken by the Federal Reserve, and government trust funds. The total dollar value of notional off-balance-sheet  commitments came to $70 trillion as of 2012, or 6 times the size of the reported on-balance-sheet debt. The paper reviews the potential costs and benefits of these off-balance-sheet commitments and their role in precipitating or mitigating the financial crisis of 2008.

Wow, $70 Trillion! Below is a table provided by Mr Hamilton showing where this $70 Trillion is coming from.  Social security and Medicare are huge chunks of this $70 Trillion; making up a little over $54 Trillion of the national debt. As our country ages and more enter retirement it is important to keep an eye on these numbers.

2006 2008 2010 2012
Treasury debt held by public 4,867 5,837 9,052 11,299
Housing-related commitments 6,386 8,036 7,594 7,520
Student and other loan guarantees 468 547 419 325
FDIC 4,154 4,975 6,575 7,406
Federal Reserve -773 360 -1,136 -1,128
Social security 16,500 18,700 21,400 26,500
Medicare 28,500 33,200 24,900 27,600
Other government trust funds 1,308 1,487 1,646 1,862
Total off-balance-sheet commitments 56,544 67,305 61,398 70,085
Treasury debt held by the public and combined federal off-balance sheet liabilities. Source: Hamilton (2013).

It should be noted that these numbers are kept off the “official” debt tally for various reasons. There are valid arguments both for and against whether these numbers are bad. However since these numbers never seem enter debate it is hard for the average person to determine if an extra $58 Trillion dollars of public debt is dragging our economy down. I would recommend reading the full paper (PDF) to see some of the potential impacts from this high amount of public debt.

h/t The Independent Institute”s MyGovCost.org blog for bringing attention to this paper.

Fiscally conservative politicians need to focus on reducing waste

Small government advocates have many fronts to fight when it comes to reducing the size and scope of the Federal Government. Like many I understand how high and uneven tax rates can hinder economic growth. However, I don’t think going after a simplified tax code is where DC politicians that claim to be fiscally conservative should look at this time. Instead fiscally conservative politicians should focus upon reducing government waste.

Below is an interesting infographic provided by Master of Accounting Degrees. Notice how public opinion on government waste has changed dramatically over the last half-century. Back in 1958 43% of Americans believed the government was wasting tax dollars. In 2012 73% of Americans believed the government was wasting tax dollars. That is a huge increase over the last half century.

Looking further down the infographic it can be seen that most Americans care more about how taxes are used; as opposed to how much they are taxed. I believe both issues to be equally important. However most Americans simply don’t care about over-taxation. Most Americans care about their taxpayer dollars being wasted. This is where fiscally conservative politicians need to focus their attention! If DC politicians can put the needs of their constituents over the wishes of lobby groups (that is a big if), real fiscal progress can be achieved. Lets worry about the cumbersome tax system after making headway on reducing waste. By making headway on reducing waste, fiscally conservative politicians can gain enough taxpayer confidence to actually support reducing taxes.

Here is the infographic provided by Master of Accounting Degrees:

No Confidence: America's Declining Opinion of Tax Policy
Source: No Confidence: America’s Declining Opinion of Tax Policy

h/t to Alex Gauthier over IVN for bringing attention to this infographic

Will Governor Daugaard mention the beef plant corporate welfare when Aberdeen is ‘Capital for a Day’?

Angus Cow, Curious by Kim Newberg
Angus Cow, Curious by Kim Newberg

Next week it is Aberdeen’s turn to be “Capital for a Day”. Here is a portion of the news release posted on the South Dakota website:

Activities for the day include a main street walk, tours around town, meetings and a fair walk. Citizens are encouraged to attend the community roundtable meeting to discuss workforce, recruitment and training. This will be held at the Brown County Fairgrounds Clubhouse from 1 – 2 p.m. CDT.

The day concludes with a fair walk at 2:00 p.m., where constituents can talk with Gov. Dennis Daugaard.

The beef plant laying off its workforce last month is a large and recent enough issue to bring up at this community roundtable. As the release says this community roundtable will be used to “discuss workforce, recruitment and training”. This may be a good chance for Aberdeen as a community to bring forth answers (although if I goes like most townhall meetings I’ve been to it won’t really accomplish anything).

But after the townhall meeting Governor Daugaard will be going for a walk and talking with constituents. This would be the perfect time to find out if the Governor understands the dangers of large operations such as the beef plant being completely supported by taxpayer and greencard dollars.

However, I do not expect that to happen. As a true backer of corporate welfare I expect Governor Daugaard will find non-government issues to blame the failed beef plant on. He will also fail to share the blame with bad business decisions made at the plant (why make good business decisions when its the taxpayer dollars your playing with). Instead I expect the Governor to channel the favored progressive economist Paul Krugman. A couple of weeks ago Krugman had this to say about Detroit:

…for the most part the city was just an innocent victim of market forces.

I am betting if Daugaard will answer questions about the beef plant failing (after being built and supported with corporate welfare) the answer will involved the “free market” and make it sound as if nobody could have foreseen this tragedy. Sadly that may sound like the “truth” to someone who loves to use taxpayer dollars for subsidizing favored special interests. However, those of us that care about fiscal responsibility can see this situation, just as with Detroit, has nothing to do with “market forces”. In this case an inept management team being supported by government bureaucrats (backed by elected officials coming with gifts of taxpayer dollars) were the only real “forces” that are to blame..

If Daugaard does not start to become the conservative Republican he pretends to be (although honestly he doesn’t try too hard) maybe it is further proof South Dakota needs a libertarian Governor. I could be wrong. He might have good answers. But I think it more likely he will find ways to avoid touching any real corporate welfare topics. Maybe I’ll have to leave my fair booth for a while next Friday afternoon.

PS. He could try blame this on Rounds because that is who was governor when this beef plant fiasco started. But that doesn’t excuse Daugaard’s continued support of Rounds actions at the beef plant. It is also unlikely he will attack Rounds going into the election season.

Celebrating Milton Friedman’s birthday with 5 great quotes

mfcafToday would be the 101st birthday for economist Milton Friedman. Friedman is considered an important economist for those of us that don’t treat Keynesian Economic Theories as fact. That doesn’t mean we agree with all of Friedman’s theories either. But, that is an important lesson to be learned from Friedman: using economic theories as an excuse for politicians to intervene in the economy will never provide the fertile conditions needed for true innovation or economic expansion. To celebrate this event I thought it would be worthwhile to share five great Milton Friedman quotes:

  1. “Keynes was a great economist. In every discipline, progress comes from people who make hypotheses, most of which turn out to be wrong, but all of which ultimately point to the right answer. Now Keynes, in The General Theory of Employment, Interest and Money,set forth a hypothesis which was a beautiful one, and it really altered the shape of economics. But it turned out that it was a wrong hypothesis. That doesn’t mean that he wasn’t a great man!”
  2. “The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy.”
  3. “Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.”
  4. “So that the record of history is absolutely crystal clear. That there is no alternative way, so far discovered, of improving the lot of the ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.”
  5. “Every friend of freedom must be as revolted as I am by the prospect of turning the United States into an armed camp, by the vision of jails filled with casual drug users and of an army of enforcers empowered to invade the liberty of citizens on slight evidence.”

It is also worth watching this two-minute video from Milton Friedman being interviewed by Phil Donahue in 1979. In this clip Friedman takes on the topic of “greed”. This clip also includes quote number 4 from above.

* h/t to Andrew Coulson at CATO for bringing attention to this great clip.

Hey DC Republicans! Forget defunding Obamacare, you need a healthcare vision to sell first!

lijenhsin_head_mirrorRight now Republicans in Congress are posturing to block any budget or continuing resolution (because of a lack of budget) that includes funding Obmacare. It seems like a good path to go from a fiscally conservative anti-Obamacare perspective. But reality is a lot different from something that “sounds good”. Over at Reason there is an excellent post by Peter Suderman about The GOP’s Unworkable Plan to Defund Obamacare. Suderman’s whole article is worth reading, however I would like to focus on what he has to say about healthcare policy and the GOP:

This is the problem for the GOP when it comes to health policy: It has no idea what it really wants, except repealing Obamacare, and maybe protecting Medicare for today’s seniors. (Mitt Romney’s primary health policy message, you may recall, was that Obama should not have cut Medicare to pay for Obamacare.) Which is probably why the party is having such trouble fighting a law that’s clearly having more than its share of bureaucratic troubles, and why GOP legislators are finding it so difficult to harness the very real public frustrating and confusion with Obamacare. Republicans, having never made the issue a priority, can offer no real alternative of their own except: not this. On health policy, Democrats may not have something that people like, exactly, but they have something. And they have that something because they spent the time to build it. As a party, and as a political institution, Republicans have never spent the time and effort required to unite the bulk of the party, and enough of the public, around a workable alternative. Instead, it has unworkable plans to fight the president’s policy.

This is exactly why Republicans are known as the “party of no“. I agree it is important to defund Obamacare. But while doing so the Republicans must set forth a vision as to what they plan to do instead. There is no semblance of a vision coming from the GOP.

Out of curiosity I chose to look at the 2012 Republican Platform (the one Romney failed under). Here is the relevant portion for this debate:

Our goal is to encourage the development of a healthcare system that provides higher quality care at a lower cost to all Americans while protecting the patient-physician relationship based on mutual trust, informed consent, and privileged patient confidentiality. We seek to increase healthcare choice and options, contain costs and reduce mandates, simplify the system for patients and providers, restore cuts made to Medicare, and equalize the tax treatment of group and individual health insurance plans. For most Americans, those who are insured now or who seek insurance in the future, our practical, non-intrusive reforms will promote flexibility in State leadership in healthcare reform, promote a free-market based system, and empower consumer choice. All of which will return direction of the nation’s healthcare to the people and away from the federal government.

OK? But how are you going to do that. I’m not going to re-post all of the healthcare section here (it is quite large). Most of the actual bullet points are more high-level ideas than policy items. It has been written vague enough that the Republicans can basically do anything they want and still say they are “working within the platform.”

There is also another problem with the Republican approach to healthcare. Here are some of the phrases I see used throughout the healthcare section:

  • We will ensure
  • we will work to ensure
  • We support federal investment
  • We urge a ban
  • We urge enactment of pending legislation

From a libertarian point of view the Republican Platform seems just as interventionist as the Democrat plan (Obamacare). Ironically this phrase is also hidden within the Republican healthcare platform: “To achieve a free market in healthcare and ensure competition…”. So, if I am reading the Republican platform correctly they are going to create a free market in healthcare by implementing the government controls they want; as opposed to the government controls the Democrats want.

Nope, not buying it. The Republicans have no actual plan or vision. I can understand that plans are hard to put into a platform, but an overall vision should be viable. The Republicans simply have nothing to offer that can provide true counter-points to Obamacare.

There is another way. Here is the whole Libertarian Party Platform section for healthcare:

Making Healthcare Safe and Affordable

As recently as the 1960s, low-cost health insurance was available to virtually everyone in America – including people with existing medical problems. Doctors made house calls. A hospital stay cost only a few days’ pay. Charity hospitals were available to take care of families who could not afford to pay for healthcare.

Since then the federal government has increasingly intervened through Medicare, Medicaid, the HMO Act and tens of thousands of regulations on doctors, hospitals and health-insurance companies.

Today, more than 50 percent of all healthcare dollars are spent by the government.

Health insurance costs are skyrocketing. Government health programs are heading for bankruptcy. Politicians continue to pile on the regulations.

The Libertarian Party knows the only healthcare reforms that will make a real difference are those that draw on the strength of the free market.

The Libertarian Party will work towards the following:

1. Establish Medical Saving Accounts.

Under this program, you could deposit tax-free money into a Medical Savings Account (MSA). Whenever you need the money to pay medical bills, you will be able to withdraw it. For individuals without an MSA, the Libertarian Party will work to make all healthcare expenditures 100 percent tax deductible.

2. Deregulate the healthcare industry.

We should repeal all government policies that increase health costs and decrease the availability of medical services. For example, every state has laws that mandate coverage of specific disabilities and diseases. These laws reduce consumer choice and increase the cost of health insurance. By making insurance more expensive, mandated benefits increase the number of uninsured American workers.

3. Remove barriers to safe, affordable medicines.

We should replace harmful government agencies like the Food & Drug Administration (FDA) with more agile, free-market alternatives. The mission of the FDA is to protect us from unsafe medicines. In fact, the FDA has driven up healthcare costs and deprived millions of Americans of much-needed treatments. For example, during a 10-year delay in approving Propanolol Propranolol (a heart medication for treating angina and hypertension), approximately 100,000 people died who could have been treated with this lifesaving drug. Bureaucratic roadblocks kill sick Americans.

Do you see that. Three steps that work around the overall vision of returning the healthcare system back to when it worked the best. There are three separate sections that work towards this vision. First lets work to make sure all healthcare related expenses are before taxes. Instead of killing MSA’s (and HSA’s) like Obamacare does we should instead promote the use of such accounts. Such an approach also keeps employers out of the insurance business. That would be a winning solution for employers and employees alike. Employers would no longer need worrying about insurance regulations or varying costs. Employees would no longer feel they must keep working for bad employers because they don’t want to lose their health insurance.

Then lets deregulate the health care industry. As prices fall due to deregulation it will become less important to have great insurance. When prices drop down to their true market rates it would allow people to buy standard medical services directly from their MSA. Americans could then rely more upon the MSA and purchase only catastrophic insurance plans. That puts the insurance industry back to where it belongs: a last-resort method used only in emergencies.

Finally the FDA has to be replaced with something that actually works! To be fair the Republican Platform also included a very similar item to this. However the libertarian approach lets the market determine the best means to achieve drug safety. There are many industries that have private accreditation agencies. A privatized accreditation of new drugs would take politics and government bureaucracy out of the drug approval process.

In the end, the Republican Platform on healthcare and the DC Republicans choice to defund Obamacare with no alternative will backfire on them. It doesn’t matter if a majority hate Obamacare because they will support it over a plan of “we will do something different”. I don’t expect the GOP to take on the Libertarian approach, that would require them to actually be for smaller government. Instead I expect them to mess up the Obamacare debate and cost themselves votes in the 2014 election.

The reason why politicians love Krugman: he tells them they did nothing wrong in Detroit

Ancient Ruins by Svetlana Tikhonova
Ancient Ruins by Svetlana Tikhonova

Yesterday liberal economists Paul Krugman had an OP-ED published in The New York Times. Krugman has been the favored economists of progressive politicians. In Krugman’s eyes there is no such thing as over-regulation or over-taxing. Since Detroit has been the showcase for progressive big government control of an economy I have been waiting to see how Krugman reconciled what has happened there.

When Detroit declared bankruptcy, or at least tried to — the legal situation has gotten complicated — I know that I wasn’t the only economist to have a sinking feeling about the likely impact on our policy discourse. Was it going to be Greece all over again?

He starts out with a sinking feeling that Detroit would be compared to Greece? Why would anyone do that? Detroit has a remarkable similar size economy to Greece. Or as Krugman puts it “the Greek economy is, after all, quite small (actually, about one and a half times as big as the economy of metropolitan Detroit)”. Did you catch that? Since the Greece economy is a little bigger than Detroit’s it proves that the two can’t be used for comparison. Of course that doesn’t stop him from comparing EU policies to US…

So now the deficit scolds have a new case to misinterpret. Never mind the repeated failure of the predicted U.S. fiscal crisis to materialize

Really? You mean there hasn’t been any financial crisis in the US? I guess the millions of Americans out of jobs due to mishandling of the economy by progressive politicians is “nothing”. I guess the consistent devaluation of the US dollar has been “misinterpreted” as bad; in Krugman’s eyes a devalued dollar must be good!

Are Detroit’s woes the leading edge of a national public pensions crisis? No. State and local pensions are indeed underfunded, with experts at Boston College putting the total shortfall at $1 trillion. But many governments are taking steps to address the shortfall. These steps aren’t yet sufficient; the Boston College estimates suggest that overall pension contributions this year will be about $25 billion less than they should be. But in a $16 trillion economy, that’s just not a big deal — and even if you make more pessimistic assumptions, as some but not all accountants say you should, it still isn’t a big deal.

Wow, so Krugman is saying that those with “pessimistic assumptions” of a $1 trillion shortfall should be ignored because “it still isn’t a big deal”. Now who do you think the politicians are going to believe: the populist economist that says “it will be only $25 billion short” or the conservative experts who say it will be $1 trillion short? I bet we all can agree politicians will side with Krugman once again. And even if he is wrong he can say “it still isn’t a big deal”.

So was Detroit just uniquely irresponsible? Again, no. Detroit does seem to have had especially bad governance, but for the most part the city was just an innocent victim of market forces.

Huh? Really? This will have to be the last part of his OP-ED I quote from. While he does acknowledge “bad governance”, he goes on to say Detroit is a victim of “market forces”. Yet again he fails to mention that Detroit is the poster city for a centrally planned and controlled economy. There has been no semblance of a free-market in Detroit for decades. Sadly there likely never will be. I expect one day in the future Detroit will become the largest ghost town in the world; all in the name of progressive politics!

At least we will always a rocking Kiss song to remember Detroit by: