ObamaCare and America's Global Competitiveness, ctd.

It's been a while since I last checked in on the effects of ObamaCare (a moniker that the President supports, btw) on American companies' global competitiveness.  As you may recall, one of the administration's more, ahem, creative arguments in support of passing health care legislation was that it was absolutely essential to securing American companies' continued economic domination (no, seriously).  I, of course, provided the blatantly obvious rebuttal to this silly argument by noting (repeatedly) that it was utterly impossible that 1200 pages of new taxes, spending and regulations were going to somehow supercharge the global competitiveness of US manufacturers and service providers, and that it was far more likely that the new regulations would hurt, not help, American businesses.  Now comes a fantastic depressing new video of CKE Restaurants CEO Andy Puzder explaining just how devastating ObamaCare, and other regulatory adventurism practiced by the executive branch, have been for American businesses (i.e., the people who, you know, create jobs):



The stuff on health care starts at about 1:20, but the entire video is worth your time.  It provides a very clear an concise explanation of how bad regulations and their awful implementation by the agencies like the EPA and the NLRB hamstring America's job creators (something I've also lamented).  My favorite line:

It's very hard to model the costs [of ObamaCare] because the bill was so complex.... We have a national healthcare advisor... that we use, and the range that they gave on our health care costs increasing at CK Restaurants was between 7.3 and 35.1 million dollars.... Their [new] estimate was that it would increase our health care costs by about 18 million dollars.  We spent about 9 million dollars last year building new restaurants; that would be totally wiped out.

Yikes.  Although Pudzer's company operates US restaurants (and thus isn't directly facing foreign competition), the regulatory pains he discusses are similarly felt by American manufacturers and service providers who do regularly compete in, and in some cases rely upon, the global economy.  And until the US government provides a less burdensome and uncertain regulatory environment, all US companies will continue to suffer.

And so will their current - and potential - employees.

Wednesday Quick Hits

Lots of interesting reading over the last few days, so let's spare the pleasantries:

• If you want to know how China's efforts to control the nominal RMB-USD exchange rate lead to serious inflation (and thus an increase in the real exchange rate) read this.  (And then ask yourself this: "Hmm, is this really indicative of a sound economy that will inevitably overtake the United States in the very near future?")  AEI's John Makin has more good data on China's inflation problem here, although I think his solution is a tad simplistic.

• In a great NYT op-ed Harvard's Mark Wu provides three indisputable reasons why China's currency policies aren't the problem for the United States that many, like Sen. Chuck Schumer, breathlessly claim.  My favorite part: "I recently did an analysis of the top American exports to our 20 leading foreign markets, and found little evidence that an undervalued Chinese currency hurts American exports to third countries. This is mostly because there is little head-to-head competition between America and China. In less than 15 percent of top export products — for example, network routers and solar panels — are American and Chinese corporations competing directly against one another. By and large, we are going after entirely different product markets; we market things like airplanes and pharmaceuticals while China sells electronics and textiles."  Cato's Dan Griswold also pens a nice summary on the same issue, and NRO's Rich Lowry broadens the view a little.  [UPDATE: Fresh from Worldtradelaw.net's indispensable trade headlines comes a new CNN report on a debate between Fred Bergsten and Jim Chanos on whether the yuan is undervalued or overvalued.]

• Meanwhile, China's selling US Treasurys again.

• HotAir's Jazz Shaw provides an excellent example in the Ecuador-Chevron kerfuffle of why trade agreements' investor-state protections - such as the mandatory resort to third-party dispute settlement - aren't (as many misguided trade critics claim) pernicious and instead encourage foreign investment (and thus economic growth and, of course, jobs).

• At the request of the Chinese government, "China's five largest banks have pledged to lend more to government-subsidized housing projects in 2011."  What could go wrong?  Oh, right, that.

• Green trade disputes are suddenly a hot topic!  First, Sen. McCain tells Brazilians that US ethanol policies are ripe for a WTO challenge.  Then, Reuters wonders if a "solar trade war" is on the horizon because so many governments are subsidizing the heck out of their solar industries.  Finally, former WTO Appellate Body chair James Bacchus proposes that the US and China negotiate a pre-emptive ceasefire on gree trade disputes in order to avoid a serious conflagration.  If only someone had been warning us about all of these problems for, oh I don't know, the past 20 months or so.  If only....

• The Economist provides our super-cool graphic of the day, which shows that the key to cleaner energy consumption is economic development, not top-down government control.  Shocking, I know:

• The Seattle Times' Bruce Ramsey provides an excellent Korean history lesson which shows that Korean opposition to KORUS and other FTAs is pretty silly.

• Doug Holtz-Eakin, James Capretta and Joseph Antos write a must-read op-ed systematically debunking the liberal/Democrat talking point that repeal of ObamaCare will increase the US budget deficit.

• Finally, this is hilarious, and so is this.

Enjoy!

Sunday Quick Hits

Lots going on over the last week, and I'm traveling today, so let's just get right to it:

• Economist Ray Fair explains in detail why he believes that RMB appreciation will be a net negative for the US economy.

• Ever wonder why so many politicians campaign with impunity against free trade in Democrat primaries?  Well, this fun new survey suggests that they're just playing to their target audience. (Snicker snicker.)

• Chinese officials assert that American legislation (or administrative action) to attack China's currency policies through US anti-subsidy laws would violate WTO rules.  As I've already noted, they are probably right.

• In one quick little blog post, Paul Krugman finally admits that (a) he doesn't understand global trade rules; and (b) he just doesn't care about them.  Krugman disregarding the rule of law?  Shocking, I know!  Of course, he could've read this helpful blog entry and saved himself the embarrassment.

• The Bush Institute's Jim Glassman hosts an interesting video debate on "Doubling Exports - Rhetoric or Reeality?" between Cato's Dan Ikenson and Public Citizen's Lori Wallach.

• Speaking of Ikenson, he provides the "Charts of the Week" - maybe even the month - which clearly and concisely demonstrate just how critical import competition is for American families and businesses.

• And then Ikenson's colleague Dan Griswold unpacks the most recent US trade data to explain how - assuming you're a sane, apolitical person (I know, I know) - the stats argue against attacking China's currency.

• More on ObamaCare and America's global competitiveness: here's a handy listing of all the US companies that have announced tax hits (and the amount of the hit) because of the new US healthcare law.  Ouch.

• The Peterson Institute's Gary Hufabauer and Theodore Moran explain how the recently-passed American Jobs and Closing Tax Loopholes Act will destroy American jobs and hobble US exports.  They show that the legislation's "tax measures would cost $14 billion over 10 years for the foreign operations of US-based multinational corporations."  Awful.

• And speaking of awful American fiscal policy, Art Laffer explains how the seemingly-inevitable tax increases in 2011 (when the Bush tax cuts expire) will crush any US economic recovery, while Mark Calabria shows that Obamanomics is already doing a number on the struggling US labor market.  Oh, goody.

• Finally, the Atlas Institute's Tom Palmer explains free trade in under 3 minutes in the following video.  A little basic for readers of this blog, but a nice thing to share with family/friends who don't obsess about this stuff like I do.

ObamaCare and America's Global Competitiveness

As part of my ongoing examination of the effects of American healthcare "reform" (aka ObamaCare) on the United States' global economic competitiveness comes this interesting news out of Raleigh, North Carolina:

Blue Cross and Blue Shield of North Carolina is testing a plan that would outsource some information technology work to India.

The state's largest health insurer is looking for ways to reduce costs as the recession has slowed membership growth and health reform looms. This week, Blue Cross started a "small pilot project" with Keane, a Boston-based information technology firm, to extract and analyze data from the insurer's massive electronic repository. Some of the work will likely be handled at a Keane facility in India, said Blue Cross spokesman Lew Borman.

"It does not affect any current jobs, but I can't speak to down the road," Borman said. "We're looking at a variety of ways to operate more efficiently and keep premiums affordable. It's about costs and cost savings for North Carolinians."...

Outsourcing or offshoring has been a trend in corporate America for years, but has come under fire from lawmakers and other critics as unemployment remains stubbornly high. When any company does it for the first time, there's the potential for a backlash from consumers and others, said Jim Johnson, a professor of strategy and entrepreneurship at UNC's Kenan-Flagler Business School....

[H]ealth reform is forcing many medical companies to find ways to cut costs, Johnson said. Reform will also bring a host of data-management challenges. Last year's federal stimulus bill included billions of dollars to entice physicians, hospitals and others to adopt electronic medical records, which can improve efficiency and reduce errors.

As some companies hire outside firms to handle that work, they have to look to global information technology providers with operations in cheaper countries. "The cost differential is just too wide," Johnson said....

What's most interesting about this news is that, unlike those billions in new tax costs that US companies were forced to incur (and report) after ObamaCare became law, the moves by BCBS are not in response to actual higher costs, but only the threat of such costs in the future.  Yet each demonstrates a clear pattern: ObamaCare is placing more artificial burdens on American companies and workers - already some of the most heavily burdened in the world.  These tax and regulatory burdens reduce America's global competitiveness and, where those costs outweigh the benefits of staying onshore (i.e., the "tipping point"), companies and/or jobs are forced offshore.

Of course, one of the biggest criticisms of the US healthcare "reform" legislation was that it would actually increase costs for health insurers and American businesses, so BCBS' response here is totally and utterly expected - it's what good businesses do to, you know, stay in business.  Nevertheless, you really must wonder how many other insurers and other companies are already researching and or/employing similar cost-saving measures in order to absorb ObamaCare's current or future burdens and remain operational. 

And it's all to the detriment of American companies, workers and the overall economy.

Reality Destroys Rhetoric, in Record Time

REMARKS OF THE PRESIDENT AT THE EXPORT-IMPORT BANK'S ANNUAL CONFERENCE,  MARCH 11, 11:30 AM EST:

We’ve got some of the most innovative companies in the world –- and we should be advocating on their behalf to boost local economies and create jobs here.

This is an effort I will personally lead as President. Next week, I’ll take my second trip to the Asia Pacific –- a region that will be fundamental to America’s ability to create jobs and to thrive in the 21st century. We can’t be on the sidelines -– we have to lead, and our engagement has to extend to governments and businesses and peoples across the Pacific. So while I’m there, I’ll visit Indonesia and Australia, two vibrant economies and democracies that will be critical partners for the United States. And in both countries, I’ll highlight the role that American businesses play there, and underscore how strong economic partnerships can create jobs on both sides of the Pacific while advancing both regional and global prosperity. Going forward, I will be a strong and steady advocate for our workers and our companies abroad.

THE WASHINGTON POST, MARCH 12, 2010, 9:04 AM EST:

President Obama will leave for Indonesia three days later than planned, departing March 21 rather than March 18, in an effort to move stalled health-care legislation through Congress, the White House said.

"The President will delay leaving for Indonesia and Australia - will now leave Sunday - the First Lady and the girls will not be on the trip," tweeted Press Secretary Robert Gibbs Friday morning.

The White House had set a March 18 deadline for the House to complete work on the health-care bill, so it could be finished by the time Obama left the country. But Democratic leaders in the House and Senate have refused to commit to that date.

DURATION OF COMPLETE RHETORICAL DISINTEGRATION: 21 HOURS, 34 MINUTES.

A new record!!

Wednesday Quick Hits

A few housekeeping items to note today:

• US to Canada: "Dude, don't sweat that silly anti-NAFTA legislation (H.R. 4759)."  Per the Toronto Sun: "U.S. Ambassador David Jacobson says a move by a bi-party group of U.S. congressmen to repeal the North American Free Trade Agreement is nothing to worry about.... 'I believe that in the NAFTA agreement, every five years, there is a possibility of withdrawal,' said Jacobson. 'Every five years we go through this and every five years there are a handful of members of congress that support this initiative but I don’t think it’s going anywhere.'" 

• Canada Right Back:  "Dude, No S**t."  Per the CBC: "Fresh off a recent skirmish over "Buy American," some Canadian cabinet ministers are expressing confidence that a new protectionist push from some U.S. politicians won't succeed....  [International Trade Minister Peter] Van Loan said NAFTA was important for job growth and development both in Canada and in the United States, 'and as such we’re optimistic that [the bill] will not come to pass.'" 

• Reuters Columnist: "Hey, have you noticed that ObamaCare is, like, totally screwing US trade policy?"  I enjoy Reuters columnist James Pethokoukis' work a lot, but he's a little slow on this story.  (See, e.g., my discussion of this very serious problem from back in October.)  But hey, I'm not complaining.  Really.  At least Pethokoukis is talking about it at all.  That's a lot more than I could say about most mainstream economics columnists (outside of the Wall Street Journal, natch). 

• WSJ: "This Mexican trucking dispute, and those $2.4B in retaliatory tariffs on US exports, are a real mess!"  Per (of course) the WSJ:  "The Obama Administration's top trade negotiator said the U.S. was working quickly to resolve a damaging trade spat with Mexico, one of several obstacles to the president's goal of doubling U.S. exports within five years.... [wait for it... wait for it]...  He didn't specify what measures the White House was taking to resolve the Mexico issue."

Aaaaaannnnd scene!

Will ObamaCare's Failure Doom America's Global Economic Influence?

Over at RealClearWorld's blog, the Compass, Kevin Sullivan questions two recent articles - one by the Times' Anatole Kaletsky and the other on recent statements by Sec. Hillary Clinton - that boldly argue that the death of current US healthcare legislation will mean the death of America's influence around the world.

Clinton's argument is that ObamaCare's failure will signal to the rest of the world that American government is broken, and that this perception will adversely affect foreign countries' views on whether America still has the capacity to "move forward" and lead on international issues.  Money quote: "Their view does color whether the United States — not just the president, but our country — is in a position going forward to demonstrate the kind of unity and strength and effectiveness that I think we have to in this very complex and dangerous world."

Kaletsky takes an even harsher line and argues that the demise of ObamaCare will dismantle the American economy, and by extension, America's influence in the world.  He says:

If nothing is done to change the US healthcare system, it can be stated with mathematical certainty that the US Government and many leading US companies will be driven into bankruptcy, a fate that befell General Motors and Chrysler largely because of their inability to meet retired workers’ contractually guaranteed medical costs....

Gridlock over healthcare would imply similar stalemates on taxes, public spending, the budget, macroeconomic stimulus and financial reform.  As a result, an active response to any future financial crisis might become impossible.  Even worse, any important action to control US government borrowing could be ruled out.

Alrighty then.  Kevin does a great job dismantling these arguments from the foreign policy angle by providing some excellent historical perspective on the issue, so I'm just going to weigh in from the international trade and economics angle.

My conclusion in short: Clinton's and Kaletsky's arguments are nonsense.  In particular, I see three major problems with them:

(1) Basic factual errors.  Kaletsky argues that a failure to enact ObamaCare will lead to a rash of domestic bankruptcies like those of GM and Chrysler because of companies' failure to meet rising health and pension costs.  This is dead wrong for two reasons.  First, the idea that GM and Chrysler are the paradigms for the modern American company is silly.  Those companies died because they (i) made crappy cars for decades and (ii) long ago ceded control of their economic fates to their unions (through insane labor contracts which guaranteed pay and benefits far above what the market could bear).  These bad labor deals disadvantaged Big-3 automakers vis-a-vis their US-based foreign competitors by about $2000/car - a recipe for immediate economic oblivion.  Kaletsky mentions such suicidal deals ("inability to meet retired workers’ contractually guaranteed medical costs") but bizarrely assumes that most US companies have them.  They don't.  Indeed, only 7% of the private workforce in America is unionized.  Thus, the idea that "many leading US companies" will succumb to the same union-caused fate as GM and Chrysler defies reality.

Second, for those few US companies that do have serious problems with union labor contracts, bankruptcy (i.e., Chapter 11 reorganization), merger or acquisition will be a blessing, not the deathknell for the American economy.  Reorganization will allow these companies to dump their loser labor contracts, ditch inefficient capacity and again become globally competitive.  Indeed, this is precisely how the US Steel Industry became healthy again in the 2000s - bankruptcies, mergers and streamlining of their workforce and production. This process turned a moribund industry of almost 50 inefficient players into an efficient and profitable sector with under 10 major producers.  As such, the "bankruptcies" that Kaletsky describes would actually allow the US economy to become stronger and more efficient. (Assuming that the US government didn't stupidly bail-out every sector like it did with GM and Chrysler, natch.)

(2) A disconnect between the current healthcare "solutions" and the "crises" described.  Just as importantly, Kaletsky's and Clinton's statements suffer a tragic disconnect between the problems they describe and their only solution - passing ObamaCare.  Kaletsky first claims that the Democrat healthcare bills (or some mythical other version of healthcare reform supported by the President) must be passed because a failure to reform the healthcare system would cause the bankruptcy of the American government and many leading companies.  While it is certainly true that America's current healthcare entitlement programs are crippling state and federal budgets, and that rising healthcare costs are harming American businesses, none of the President's current healthcare plans would actually do anything to solve these problems.  On the budget, the bold claims that any of the Democrat health plans actually decrease the budget deficit rely on the smarmiest of budget trickery.  And while rising healthcare costs are indeed an issue for US businesses, the latest estimates show that ObamaCare will increase burdens on US employers, not reduce them - hence why both the US Chamber of Commerce and National Federation of Independent Business vehemently oppose the current bills (and why Wal-mart sneakily supports them). 

Clinton, on the other hand, seems to believe that the success of her Party's healthcare dreams will somehow end the gridlock that pervades America's political system (or at least the world's perceptions of that gridlock).  Leaving aside the fundamental question about whether political immobility is actually good or bad for the US economy, anyone who has spent more than a few years in Washington knows full well that partisan gridlock isn't going anywhere, regardless of what happens with healthcare (or which Party is in power).  And as Kevin ably pointed out last week, "little-d" democrats in most other countries, not just Iran and Russia, would "love to have our tedious deliberation and onerous amounts of free speech in their respective countries." So it's quite doubtful that foreign perceptions of American governance will be greatly harmed by the current health care morass.

(3) The mistaken belief that only ObamaCare's passage will enable the United States to advance international economic policy.  It is certainly true that foreign countries are watching the United States, and that they do care about the US healthcare drama.  But it's wrong to assume that just because foreign countries are paying attention, they'll react differently based on whether ObamaCare succeeds or fails.  In fact, most foreign countries couldn't care less whether the drama ends with success or failure.  They care only that it ends, and thus that the Obama administration will finally cease subordinating international economic matters to securing passage of health care legislation.  This is especially true on trade, where the White House has refused to engage in any major trade liberalization efforts out of fear of angering congressional protectionists and their anti-trade supporters (domestic labor unions, environmentalists, etc.).   This disangagement has led to complete paralysis - pending US FTAs with Colombia, Panama and Korea remain untouched, the WTO's Doha Round negotiations remain comatose, and bilateral trade conflicts (like the US ban on Mexican Trucks) remain unresolved - despite our trading partners' loudly pleading for the United States to get back in the game.

Given this reality, ObamaCare's failure would not, as Kaletsky and Clinton claim, lead to stagnation and impotence on trade and other international economic matters.  Indeed, failure would actually liberate US policymakers to once again act beyond the narrow interests of securing a few rust-belt votes.  As such, failure would mean exactly the same thing to America's trading partners as would passage - that the paralysis caused by the US healthcare debate would finally end.  America's trading partners are dreaming for that day, and when it finally comes, they'll welcome us back with open arms.

Shocker: $24 Billion of ObamaCare Revenue Is Fake?

There have been plenty (and I mean plenty) of stories documenting the budgetary shenanigans in the various Democrat health care bills that are roaming, zombie-like, the halls of Capitol Hill.

But this one might take the cake.

From the paper industry blog Dead Tree Edition comes pretty shocking news that President Obama's latest health care "reform" proposal expressly relies on $24 billion in "subsidy cuts" that literally do not exist.  And just so we're clear here, when I say that they "don't exist," I'm not talking about the standard timing tricks, the unrealistic assumptions, or any of the other budgeting tricks that have become commonplace in this ridiculous healthcare debate.  No, I'm talking about silicone-fake, bright-orange monopoly money.  Here are all the gory details (emphasis mine):

The Obama Administration announced today that it wants to close the non-existent "Son of Black Liquor" loophole to help "pay" for new healthcare legislation.

A few hours later, Senate Democrats won a key vote on jobs legislation that, in some versions, would be paid for partly with the "savings" from closing the same mythical loophole.

Meanwhile, the watchdogs of the news media acted more like lapdogs, taking Administration and Congressional statements at face value without bothering to check the facts...

"Current law provides a tax credit for the production of cellulosic biofuels," notes the Obama Administration's summary of its new healthcare bill. "The credit was designed to promote the production and use of renewable fuels. Certain liquid byproducts derived from processing paper or pulp (known as 'black liquor' when derived from the kraft process) were not intended to be covered by this credit.  The President’s Proposal adopts the House bill’s policy to clarify that they are not eligible for the tax credit."

As Dead Tree Edition has explained previously, black liquor is already ineligible for the Cellulosic Biofuel Producer Credit program, so there is no loophole to close. No money has been budgeted to provide such credits for black liquor, so there is no savings to be budgeted for healthcare, creating jobs, or anything else.

Only in Washington would people try to use the same fake money to pay for two different programs. 

Read the whole thing here (cross-posted on a reputable industry website here).  The author goes on to provide oodles of evidence (including original source documents) demonstrating that the mythical "black liquor loophole" was actually closed on December 31, 2009, and thus any 2010 legislation relying on that "revenue raiser" is not just misleading, but intentionally and patently false.  He also documents how the original, now-closed loophole was used to "knowingly allow[] pulp and paper companies to receive billions of dollars in original black liquor credits, apparently to help get a healthcare bill out of committee."

Pathetic.

Rahm: Passing ObamaCare Just Like Passing NAFTA

The health care debate has produced oodles of moronic statements by advocates of ObamaCare, but this latest one by White House Chief of Staff Rahm Emanuel has got to rate up there as one of the dumbest:

White House Chief of Staff Rahm Emanuel has been telling Democrats a win on the health issue will reverse the slide in public opinion, just as passage of another controversial proposal, the North American Free Trade Agreement, lifted President Bill Clinton in the polls.

In one narrow sense, Rahm's analogy is apt: NAFTA was controversial at the time of its passage in 1993, just as ObamaCare is today. But beyond that, this is one horrendous comparison. First, most polls show that approval of NAFTA among US citizens actually declined after its passage, and it remains low today. For this reason, many politicians - including the one currently residing in the White House - have used NAFTA demagoguery (often successfully, unfortunately) as a campaign tool. So if ObamaCare ends up polling like NAFTA after passage, the Dems are going to choke on it for decades, regardless of how successful it ends up being (which it won't be, of course).

That basic reality aside, comparing ObamaCare to NAFTA is flat-out absurd on pretty much every other level.  Consider just the following few examples:

• NAFTA's passage was a very bipartisan effort: it passed the House with 102 Democrats and 132 Republicans, and had similar bipartisan support in the Senate.  By contrast, it is likely that the final version of ObamaCare passes the House and Senate with no more than 1 or 2 Republican votes.  (This further supports the idea that if ObamaCare ends up polling like NAFTA, the Dems alone will suffer for it.)
  

• On a similar note, NAFTA also wasn't rammed through the Senate in the middle of a Sunday night just a few days before Christmas.  ObamaCare... well, we all know how that went down, now don't we?

• NAFTA cut taxes (i.e., tariffs on Canadian and Mexican products) for all Americans, and thus reduced costs for basic necessities like food and clothing.  ObamaCare, on the other hand, is projected to increase taxes on targeted classes of Americans and to increase health care costs across the board.
  

• NAFTA was fundamentally about expanding Americans' freedom - by lowering barriers to trade - to enter into voluntary, mutually beneficial transactions with their Mexican and Canadian counterparts.   By contrast, ObamaCare dramatically restricts American freedoms - for example, through forcing individuals to carry insurance, or mandating insurance policies' coverage and prices, or dictating doctors' fees.  The list goes on and on.  (As such, even if NAFTA were passed against Americans' will, it was appropriate: it was increasing their freedoms and reducing government intervention, not taking liberty away and dramatically extending the reach of the State.)
  

And these are just the differences off the top of my head!  So spare me, Rahm, your ridiculous parallels between ObamaCare and NAFTA.  The Senate's latenight, snowbound disgrace is beyond any sane comparison.

And as for the Democrats in the House and Senate who are dumb enough to fall for this nonsensical spin, let's hope that NAFTA is similar to ObamaCare in only one sense: that the American public never grows fond of this monstrosity, and thus that the Dems are forced to eat their votes in 2010 and for many, many years thereafter.

UPDATE: John Fund points out another mistake in Emanuel's comparison: Clinton's approval ratings actually declined post-NAFTA.

ReidCare Compromise Could Produce "Insurance Death Spiral"

No, that's not the latest quote from Sarah Palin's Facebook page or the name of a new punk band. Instead, it's the opinion of the President's own Department of Health and Human Services (in particular, Office of the Actuary, which does long-range cost estimates for Medicare). Here's the AP with the stunning news:

A new report from government economic analysts at the Health and Human Services Department found that the nation's $2.5 trillion annual health care tab won't shrink under the Democratic blueprint that senators are debating. Instead, it would grow somewhat more rapidly than if Congress does nothing.

More troubling was the report's assessment that the Democrats' plan to squeeze Medicare for $493 billion over 10 years in savings relies on specific policy changes that "may be unrealistic" and could lead to cuts in services. The Medicare savings are expected to cover about half the nearly $1 trillion, 10-year cost of expanding coverage to the uninsured.

In still more bad news, the report starkly warned that a new long-term care insurance plan included in the legislation could "face a significant risk of failure" because it would attract people in poor health, leading to higher and higher premiums, and eventually triggering an "insurance death spiral."

Wow. Of course, for anyone paying attention, these conclusions aren't exactly "stunning." Medicare's been hemorrhaging cash for decades (as noted in the HHS report). But what's completely mind-blowing is that these statements came from Obama's own Executive Branch!

You know, with friends like these....

Health Care Quote of the Day

Ok, this is kinda long to be called a "quote," but I think it sums up quite well the absurdity of the cost projections for the ObamaCare monstrosity that passed the House late last night:

Maybe the bill passed by the House on Saturday night will stay within its cost projections. Of course, you have several cost projections to choose from. The Democrats’ cost claims are all ridiculous lies, designed using accounting techniques that would land private businessmen in jail, just in time to save them from being drawn and quartered by stockholders. The Heritage Foundation’s estimate of $2.4 to $2.6 trillion over 10 years, beginning when the House bill transitions from front-loaded tax hikes to full Daffy Duck freak-out spending in 2014, is the most logical projection of its true costs I’ve seen.

Even this will likely prove to be an underestimation of the true long-term costs. No other Big Government program has ever stayed within an order of magnitude of the promises made when it was signed into law. Medicare originally cost about $3 billion, when it began in 1965, and was projected to cost about $12 billion by 1990, adjusted for inflation. The actual cost in 1990 was nearly ten times that figure, $107 billion. It was up to $440 billion by 2007. The architects of the program would have been run out of town on a rail, if these future costs had been known to the voters of 1965.

The difference between promised benefits and expected revenues for Social Security and Medicare amounts to about $107 trillion dollars, which Doug Bandow of the Cato Institute points out is double the annual Gross Domestic Product of the entire world. The most strident opponent of the New Deal would never have dreamed of predicting this level of cost overrun. Name any government program that has been around for more than five years, and the odds are good it costs at least triple what its opponents originally said it would cost.

In other words, whatever budget number the President, the CBO, Nancy Pelosi, Harry Reid or even John Boehner give you for ObamaCare, it's wrong.  Exponentially wrong.  So when the folks in DC start arguing over a few billions of deficit here or there, just stop listening because it's going to be a lot worse than even the worst of the projections.  It always is.  Always.

Read the whole thing here.

This Would Be Funny, If It Weren't So Sad

BNA (subscription) reports on the Obama administration's latest public speech on trade, and the article would be pretty darn funny if it weren't so unsurprisingly depressing (emphasis mine):

Reforming health care is a big part of the U.S. trade strategy because businesses and workers cannot be crippled by the rising costs of the U.S. health care system, U.S. Trade Representative Ron Kirk said Nov. 4.

If the administration can lower health care costs, it can give every business in America and U.S. exporters a shot in the arm, Kirk said. Kirk and Commerce Secretary Gary Locke spoke at the 2009 District Export Council Conference held in Washington, D.C.

President Obama is focused on building the U.S. economy, and he recognizes that a fundamental part of growing the U.S. economy is a robust trade policy, Kirk said....

Kirk said that USTR was focused on educating U.S. small businesses on export opportunities, and that the United States needed to open foreign markets to its goods.

However, Kirk did not reference pending free trade agreements with Panama, Colombia, and South Korea, World Trade Organization Doha Round negotiations, or prospective negotiations on the Trans-Pacific Economic Partnership, all elements of the trade policy of the previous Bush administration.

To recap: in a major speech before the District Export Council, the United States Trade Representative - America's chief trade advocate and negotiator - spent his entire allotted time cheerleading the President's health care legislation.  He did not, on the other hand, spend a single second discussing pending FTAs, the WTO's Doha Round or new free trade negotiations.

Just about sums it all up, doesn't it?

Lies, Damned Lies and Stimulus* Statistics

[UPDATES here and here]

When the White House announced last week (with a straight face) that the Stimulus* had "saved or created" exactly 640,239 jobs, most "mainstream" media outlets got out their official Hopenchange flatware and ate that raw data up.  And they did it despite the fact that the AP issued a report just a day earlier eviscerating the accuracy of the original Stimulus* jobs report.  But who can really blame the MSM?  I mean, this time, the White House said they had - wait for it - "triple checked" the numbers, so they had to be dead-on, right?

Wrong.

Since the release of the administration's latest jobs report, the reports of inaccuracy have come flying in from all over the nation.  And they are absolutely ridiculous.

First, we have the AP informing us today that stimulus*-caused salary raises were counted as "saved jobs":

President Barack Obama's economic recovery program saved 935 jobs at the Southwest Georgia Community Action Council, an impressive success story for the stimulus plan. Trouble is, only 508 people work there.

The Georgia nonprofit's inflated job count is among persisting errors in the government's latest effort to measure the effect of the $787 billion stimulus plan despite White House promises last week that the new data would undergo an "extensive review" to root out errors discovered in an earlier report.

About two-thirds of the 14,506 jobs claimed to be saved under one federal office, the Administration for Children and Families at Health and Human Services, actually weren't saved at all, according to a review of the latest data by The Associated Press. Instead, that figure includes more than 9,300 existing employees in hundreds of local agencies who received pay raises and benefits and whose jobs weren't saved....

The administration now acknowledges overcounting in the new numbers for the HHS program. Elizabeth Oxhorn, a spokeswoman for the White House recovery office, said the Obama administration was reviewing the Head Start data "to determine how and if it will be counted."

But officials defended the practice of counting raises as saved jobs.

"If I give you a raise, it is going to save a portion of your job," HHS spokesman Luis Rosero said.

The latest stimulus report, released Friday, significantly overstates the number of jobs spared with money from programs serving families and children, mostly the Head Start preschool program. The report shows hundreds of the programs used nearly $323 million to provide pay raises and other benefits to their existing employees....

Many Head Start programs around the country went further, counting everyone who received a raise as a job saved....

The Bergen County Community Action Program in Hackensack, N.J., noted the nearly $213,000 it received went to cover raises for existing staff only, but it also reported saving 85 jobs.

At Southwest Georgia Community Action Council in Moultrie, Ga., director Myrtis Mulkey-Ndawula said she followed the guidelines the Obama administration provided. She said she multiplied the 508 employees by 1.84 — the percentage pay raise they received — and came up with 935 jobs saved.

"I would say it's confusing at best," she said. "But we followed the instructions we were given."...

More than 250 other community agencies in the U.S. similarly reported saving jobs when using the money to give pay raises, to pay for training and continuing education, to extend employee work hours or to buy equipment, according to their spending reports.

I'll let it slide that government employees are getting raises while most of the private sector has experienced pay cuts, pay freezes or outright layoffs.  Instead, I ask you to take a moment to wrap your head around the last example provided: 508 employees got a Stimulus*-inspired raise of 1.84%.  Even assuming that this "pay raise = saved job" logic is correct (and it's obviously not) the "right" number of "saved jobs" would be 9.35 (508*.0184), not 935.  That's an overstatement of 100 times!  Hummina hummina.

Second, we have the Chicago Tribune reporting that the Illinois stimulus* cash saved more school district jobs than actually exist:

More than $4.7 million in federal stimulus aid so far has been funneled to schools in North Chicago, and state and federal officials say that money has saved the jobs of 473 teachers.

Problem is, the district employs only 290 teachers.

"That other number, I don't know where that came from," said Lauri Hakanen, superintendent of North Chicago Community Unit Schools District 187.

The Obama administration last week released the first round of data designed to underpin the worthiness of its economic stimulus plan, which so far has directed $1.25 billion to Illinois schools. That money has helped save or create 14,330 school jobs in the state, the administration claimed.

But those statistics, compiled initially by the Illinois State Board of Education, appear riddled with anomalies that raise questions about their validity, according to a Tribune analysis of district-by-district stimulus spending and other state data. Many local school officials were perplexed by the stimulus data attributed to their districts.

In the official report, Wilmette Public Schools District 39 was credited with 166 jobs saved by stimulus aid. Superintendent Raymond Lechner said the number should be zero.

At Dolton-Riverdale School District 148, stimulus funds were said to have saved the equivalent of 382 full-time teaching jobs -- 142 more than the district actually has.

A similar discrepancy was found in data for Kankakee School District 111, where the stimulus report logged the equivalent of 665 full-time jobs saved. "That's impossible," a top Kankakee school official said, adding that the entire payroll -- full and part time -- is 600 workers....

Statewide, districts reported using most of their stimulus funds to prevent layoffs, with the equivalent of just 222 full-time jobs added to payrolls....

It appears the state treasury -- not students or school districts -- was the prime beneficiary of the education stimulus jackpot in Illinois. In great measure, funds simply were used to replace general aid payments already owed to local districts by the state. That gave Gov. Pat Quinn breathing room in his struggle to rein in a whopping two-year budget deficit of more than $10 billion....

[O]fficials of several districts contacted by the Tribune insisted they never provided the state with the jobs numbers used in the official tabulation....

Some local school officials suggested that the jobs data sent to the state appeared to have been overcounted in the official tabulation....

Just a handful of the jobs were new, Rafferty said, and he warned that every position propped up by stimulus money would be in jeopardy when the program expires. "Unless there's a guarantee of continuation of (federal or state) money, the vast majority of these will be eliminated because there won't be local resources to fund them," he said.

Of course, this collapse of basic mathematics is even more troubling since our nation's teachers are the ones making the mistakes.  That travesty aside, I think the last paragraph is probably the most distressing part of the story: the few jobs that the Stimulus* actually did create aren't even self-sustaining.  They disappear unless more taxpayer cheese magically appears.  That kind of "job creation" is not a recipe for long-term economic growth.

Third, the Wall Street Journal has dug into the latest report and found that the data are overstated by, at a minimum, tens of thousands of jobs:

Recipients of the government grants and contracts appear to have made mistakes when estimating the number of jobs that have been saved or created, according to the Journal's review. Some recipients said they were confused by forms that asked how they spent the money....

Ed DeSeve, the senior adviser to President Barack Obama on implementation of the stimulus plan, said Tuesday in a statement responding to questions from the Journal that the administration knew the reports were not "100 percent accurate" but that the plan was supposed "to create jobs, not count them." He said that even the "approximate" total pointed to "tremendous progress."

"We are looking at both overcount reports and undercount reports, and continue to ask questions of recipients to try to fix errors," Mr. DeSeve said. "In the end, we think any adjustments to the direct jobs count will be modest as a percentage of the 640,000 jobs total, either raising it or lowering it slightly."...

Some colleges and universities counted every part-time student work-study position as a full-time job, according to their reports, which are published online at recovery.gov.

And some low-income housing landlords whose decades-old contracts with the federal government were funded by the stimulus this year reported a total of 6,463 employees as having jobs linked to the stimulus package.

Most recipients of stimulus money are required to file quarterly reports on how they used it. The government published more than 150,000 such reports late last week. A preliminary review revealed dozens of recipients claiming to have created or saved at least one job with less than $2,000 in stimulus money, to a total of at least 3,300 jobs.

A Kentucky shoe-store owner claimed to have created or saved nine jobs with an $889.60 contract to supply work boots to the Army Corps of Engineers. The owner said he supplied nine pairs of boots and that the mistake arose from confusion over the government form.

In addition, as many as 86% of the jobs estimated by recipients of Head Start grants could have been inaccurately reported, according to the Department of Health and Human Services. The department said 277 of the 1,601 reports it had received were being reviewed after being contacted by the Journal. Those reports claimed 7,753 jobs created or saved out of a total of 8,997 reported.

"Holy moly, that's not right," Teresa Cox, executive director of the Mid-Willamette Valley Community Action Agency in Salem, Ore., said of her organization's report. It indicated that 205 jobs were created or saved with the agency's $397,761 federal grant. The money, she said, was used for pay raises.

Ms. Cox said her agency thought it was supposed to report the number of employees affected by the stimulus money. "And the only way to do that was to create new jobs or retain jobs."

An HHS spokesman, Luis Rosero, said the department had told recipients to report only fractions of a job if the money was being used for bonuses or raises.

Stetson University in DeLand, Fla., counted every part-time work-study position funded by the stimulus, and, in some cases, more than one work-study position held by the same student. That led to the university reporting that it had created or saved 483 jobs with a $193,469 grant for its work-study program.

University spokeswoman Cindi Brownfield said the campus has since realized that the actual jobs number should have been written as the full-time equivalent of the jobs -- probably between 18 and 30.

Holy moly is right, Ms. Cox.  Holy frickin' moly.

And you just gotta love Mr. DeSeve's classic bureaucrat blowoff of "Whatever, dude, it's only billions of unaccounted-for taxpayer dollars.  Not my problem."  Totally, man.

But hey, look, maybe we also shouldn't blame the people who reported the worthless data.  According USA Today (check out Maxine Waters' awesome "look of utter exasperation"), some government subagencies that have accepted hundreds of millions in Stimulus* funds are totally and utterly incapable of accounting for the funds and disbursing them properly.  So cut them some slack: it's not their fault that they don't understand percentages!  Fractions are hard!

And yet, these are the same people - the same architects, advisers, bureacrats and government employees - who are demanding that we trust them with reorganizing and controlling the entire American healthcare system (one-sixth of the whole US economy).

I don't know about you, but I wouldn't even trust them with 1.84 percent of it.