Obama claims stimulus pork free?

Yesterday I was riding along in my gas guzzling pickup truck, content and happy in the knowledge I was destroying the environment for future generations. While I contemplated various evil, capitalistic thoughts, I heard the following quote from the Leader of the Free World, while at a town hall meeting in Raleigh, NC:

“Less than one month after taking office we enacted the most sweeping economic recovery package in history. And by the way, we did so -- (applause) -- we did so without any earmarks or wasteful pork barrel projects, pet projects, that we've become accustomed to. Not one was in there.”

A few things happened at the moment I heard this. My head exploded, my jaw dropped, and my brain went into instant lockdown. No thought was permitted as I carefully repeated in my mind what the President had just stated. Then, like a small frightened child, one lone thought entered my brain: “Did he just say…What I think he said?” I couldn’t believe it. We are all used to politicians lying to us. The right, the left, the center; they do it all the time. What I am not used to is a politician being so bold about it.

It was later that I realized the malfunction. Normally, in a bill, you’ve got the beefy portion of the bill that does what the bill is supposed to do. Attached to it you’ve got the pork, extraneous projects designed to benefit constituents. The reason he isn’t seeing the pork in this bill is because there is so much, it blends in! What we have here is a case of chameleon pork, or porkeleon spending.

The GOP leaders published this list of projects they are dubbing pork. Some of it can be debated. Let’s pull a few highlights though:

• $75 M for “smoking cessation activities”
• $25 M for tribal alchohol and substance abuse reduction
• $1,200 M for "youth activities," including youth summer job programs
• $100 M for reducing the hazard of lead-based paint.

Golly, I was worried about that recession, but now I can rest safe and secure in the knowledge that there will be no more Indian Whiskey and Weed nights at the reservation. Summer camp for kids, now that’s economic stimulus!

This is all to say absolutely nothing of the massive chunks of the bill that are “discretionary”, which have yet to be decided. These portions will be given out to various localities to spend, and the usefulness of those monies will depend entirely on the goodwill of the local politicians.

CBO, now with Chuck Norris deadliness!

I’m not quite sure when the transformation took place. Were they there all along? Did they just get hired? Did they experience a sudden uptick in their consumption of Holy Ambrosia (AKA Dr. Pepper)? Regardless of the cause, the end result is the same: The CBO (Congressional Budget Office) is officially a BAMFs. They recently delivered a Chuck Norris strength roundhouse kick to the collective face of the Galactic Healthcare bill, and by extension, President Obama.

I took it upon myself to read the 18 page report published by the CBO. As you can imagine, it is about as thrilling a read as the instruction manual to your toaster. Fortunately, I also found this analysis by Keith Hennessy, which is a much easier read.

I’ll start with my impressions from the toaster manual. They begin tamely, by analyzing the effect on private coverage. It starts to really heat up around page 12. Check out these bullet point impacts on the labor market (Emphasis mine):

• Requiring employers to offer health insurance – or pay a fee if they do not – would be likely to reduce employment, though the effect would probably be small.
• Providing new subsidies for health insurance that decline in value as a person’s income rises could discourage some people from working more hours.

The first one is pretty self explanatory. Higher cost of employment = Less employment! The following paragraph states that this would be an “8% increase in the cost of hiring a worker making the minimum wage”. That’s right. All those poor working mothers we’re supposed to feel sorry for are hereby getting the shaft. Thanks, Uncle Sam!

The second one is clearly bad, but how bad? It functions off a principle they call the “implicit tax”. Basically, the subsidies you get for working decrease the more you make. The withdrawal of those benefits increase your costs, effectively “taxing” you the difference. How much is this implicit tax? Roughly 20%, they say. This means that every extra hour you work is effectively “taxed” at an additional 20% rate, because that same hour is causing you to lose healthcare benefits.

Of course our friends at the CBO save the best for last: Budget deficits! This is where Keith Hennessy focuses his article. Rather than throwing numbers at you, here’s a handy graph so you can see it all at once.


From the blog: “The House bill raises $87 B of taxes in 2019, compared to the $151 B net spending increase in that year. The area between the light blue and yellow lines is the deficit impact. Up to 2013, the bill collects more in taxes than it spends, so the bill actually reduces budget deficits in the early years. After 2013, the light blue net spending line is above the yellow tax line, so the bill adds to the deficit. In 2019, the bill increases the deficit by $151 B – $87 B = $64 B. The net of the deficit-reducing and deficit-increasing areas is the $239 B deficit increase over 10 years from the first table above. Again, all of these are CBO and Joint Tax Committee numbers.

Now we turn to the long run, relying on that key CBO paragraph. Here are the key numbers:
The net cost of the coverage provisions would be growing at a rate of more than 8 percent per year in nominal terms between 2017 and 2019; we would anticipate a similar trend in the subsequent decade. … Revenue from the surcharge on high-income individuals would be growing at about 5 percent per year in nominal terms between 2017 and 2019; that component would continue to grow at a slower rate than the cost of the coverage expansion in the following decade.”

What happens when your spending grows faster than your revenue? You get this:

Did you hear that sound? That’s the sound of the CBO curb stomping the Obamacare plan. Of course, there is a simple solution to the entire problem. We can just tax the rich into oblivion! They won’t mind, they’re evil anyway. They certainly would never see such taxes as an incentive to leave America and do business elsewhere.

The plan was terrible because it attacked your liberty. The plan was horrible because it expanded government. Now the plan can be shown to be ridiculously expensive. Think on that, and then ponder this: We were told by our Commander-in-Chief that the plan you saw above had to be passed by August. Be warned if it is tried again: You will need this knowledge to defend your liberty from an ever growing power hungry Federal government, hell bent on mortgaging our futures.

Returning from hiatus

Almost a month ago I noticed that people were reading my blog. Suddenly I had people come up to me, asking questions about my latest position or rant, as if it were normal and natural.

Strange, I know. I'm not quite sure how this happened. Regardless of the cause, I had a solution. I said to myself, "Self?" "Yes?" I answered. "How about we go on a completely unannounced and unplanned hiatus, not post anything at all for almost a month, then come back like nothing happened?" Yep, that oughta do it.

So, here I am again. In all seriousness, I did not plan to be away this long. Life got the better of me for a while. Fear not, eager reader (and Fluffy the imaginary monkey, of course), for I am returned. I will likely not be as active as I once was, but I will endeavour to provide the same mediocre quality of opinions and comments as always! We aim to please, here at Just Another Capitalist.