Archive for April 19th, 2010
Why It’s Crucial We Overturn Obamacare’s Individual Healthcare Mandate NOW
(This guest post previously appeared at the Congressman’s site)
Last week I introduced a very important piece of legislation that I hope will gain as much or more support as my Audit the Fed bill. HR 4995, the End the Mandate Act will repeal provisions of the newly passed health insurance reform bill that give the government the power to force Americans to purchase government-approved health insurance.
The whole bill is rotten, but this provision especially is a blatant violation of the Constitution. Defenders claim the Congress’s constitutional authority to regulate “interstate commerce” gives it the power to do this. However, as Judge Andrew Napolitano and other distinguished legal scholars and commentators have pointed out, even the broadest definition of “regulating interstate commerce” cannot reasonably encompass forcing Americans to engage in commerce by purchasing health insurance. Not only is it unconstitutional; it is a violation of the basic freedom to make our own decisions regarding how best to meet the health care needs of ourselves and our families.
The new law requires Americans to have what is defined as “minimum essential coverage.” Some people may claim that the requirement to have “minimal essential coverage” does not impose an unreasonable burden on Americans. There are two problems with this claim. First, the very imposition of a health insurance mandate, no matter how “minimal,” violates the principles of individual liberty upon which this country was founded.
Second, the mandate is unlikely to remain “minimal” for long. The experience of states that allow their legislatures to mandate what benefits health insurance plans must cover has shown that politicizing health insurance inevitably makes it more expensive. As the cost of government-mandated health insurance rises, Congress will likely respond by increasing subsidies for more and more Americans, adding astronomically to our debt burden. An insurance mandate undermines the entire principle of what insurance is supposed to measure – risk.
Another likely response to rising costs is the imposition of price controls on medical treatments, and limits on what procedures and treatments mandatory insurance will have to reimburse. This is happening in other countries where government is intrinsically involved in these decisions and people suffer and die because of it.
This will only increase the bottom line of the very insurers the legislation was supposed to control. Meanwhile, alternate methods of healthcare delivery and financing, such as concierge doctors, alternative medicine, or physician owned hospitals will be greatly harmed, if not put out of business altogether, when the entire country is forced into the insurance model. It will be difficult for families to come up with extra money to pay for alternate healthcare of their choice when their budget has been squeezed by this mandate to buy insurance. This will in turn reduce competition for healthcare dollars. Health insurers, like many other corporations in other industries, have now used the legislative process anti-competitively to corner the healthcare market. Instead of calling this socialized medicine, we should call it corporatized medicine, since the reform is to force us all into being customers of these corporations, whether we like it or not.
Congress made a grave error by forcing all Americans to purchase health insurance. The mandate violates fundamental principles of individual liberty, and will lead to further government involvement in health care. It is time for legislation that fights back for the freedom of the people on this issue. It is time to End the Mandate.
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The Strangest Photo Of Vikram Pandit You’ve Ever Seen (C)
This is a photo of Vikram Pandit and Prince Alwaleed, whose company owns a large portion of Citi (~4%).
We’re speechless, but we’ll try to piece together what might have happened here. (Scroll down for the big photo or click here.)
Pandit was visiting Prince Alwaleed in Saudi Arabia back in February.
Today the Prince put out the photo alondside a press release on his company’s website: Kingdom Holding Company.
The release says “Citigroup has demonstrated its ability to overcome the recent economic obstacles.”
“I commend Citigroup’s performance and the management of Citigroup under the leadership of Vikram Pandit who has my firm backing.”
Attached to the release is this photo of Pandit uncomfortably holding a falcon.
The two are friendly and they definitely get together. Here (left) is another photo, which is from the archives when Citi invited the Prince to their New York offices in January.
Kingdom Holding company has since taken the falcon photo off their website. All that’s left is this thumbnail:
We emailed Citi PR and asked for more details.
Until then, the big photo is worth another look.
Here it is:
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Financial Reform Is Good, Firing Bernanke Would Be Better
The financial reform bills moving through Congress offer some hope for a more stable financial system. While there is still much up for grabs, it is likely that whatever gets through Congress will improve regulation of derivatives, increase regulators’ ability to restrict leverage and establish a consumer financial products protection agency. It could also lead to a separation of trading from commercial banking. This will decrease the risk of taxpayers subsidizing risky deals.
But there are good grounds for questioning whether the reform proposals will lead to fundamental changes in the financial system and prevent the recurrence of the sort of speculative bubble that wrecked the economy. With the exception of proposals coming out of the Senate Agriculture Committee, which would prohibit commercial banks from being involved in trading derivatives, there is little in the bills before Congress that would change the fundamental structure of the financial industry. The enormous consolidation that has taken place over the last two decades would be left in place with huge “too big to fail” (TBTF) banks still dominating the sector.
This is important for two reasons. First, a TBTF bank enjoys an inherent advantage over its competitors because of its implicit guarantee from the government. If investors believe that the government will ultimately step in and bail out investors because the economic consequences of letting them take a big hit is too great, they will be willing to lend money at a lower cost to TBTF banks than their competitors. I calculated that the size of this implicit government subsidy to TBTF banks could be as much as $34 billion a year.
The bills before Congress include provisions that are supposed to convince investors that the government will not stand behind TBTF banks. The deal is that the government will stand behind insured deposits, but, after that, investors will be on their own. That’s a great principle, but will investors believe that the government will let the collapse of a TBTF bank wipe out hundreds of billions of dollars of unsecured debt? If not, then the TBTF subsidy will persist, even with all the politicians’ protestations about no more bailouts.
However, the bigger problem with TBTF banks is their political power. The TBTF banks have pushed their tentacles deep within the regulatory structure. They have important contacts at the Fed, the Treasury, the FDIC, and other regulatory agencies. In fact, many of the top officials at these agencies were formerly high-level executives at the TBTF banks. This means that, at the very least, the big banks can count on a full hearing of their position when any issue comes up with the regulators. Of course, in the less generous view, we can expect the regulators to bend the law to help their friends.
This brings up a basic point that cannot possibly be repeated enough. Any regulation is only as good as its enforcement. It will never be easy for regulators to enforce rules against large banks. By definition, regulation means preventing banks from earning higher profits. Banks will, therefore, use whatever political power they have to prevent the enforcement of a rule they view as costly. They will use all their contacts in the regulatory agencies, the White House and Congress to stop a regulator whom they view as an enemy.
Regulators are not generally selected for their courage. This means that it will usually be easiest for them to ignore abuses in the major banks, even if they perceive them as dangerous. Remember, the banks will always have a story as to why their actions are perfectly safe and within the law. The banks pay very smart people lots of money to develop these stories.
For this reason, Ben Bernanke’s reappointment as Fed chair was a huge setback for the cause of regulatory reform. Bernanke, in his role as Fed chair and a Fed governor since 2002, was as guilty as anyone could possibly be of ignoring financial abuses. The Fed had all the power necessary to prevent the buildup of a dangerous housing bubble. It looked the other way with disastrous consequences. The Obama administration and Congress then patted Bernanke on the back, said “heckuva of a job, Ben,” and gave Bernanke a second term. This move certainly does not give regulators a lot of incentive to incur the wrath of the big banks by clamping down on risky dealings.
There is still hope that the financial industry can be fixed. An amendment put forward by Ohio Sen. Sherrod Brown will cut the biggest banks down to size, although they will still be TBTF by any reasonable measure.
The better route involves a downsizing of the industry as a whole. This can best be accomplished through a modest financial speculation tax (FST) like the 0.5 percent tax on stock trades that the United Kingdom has imposed for decades. Such a tax would quickly eliminate many risky deals by making them unprofitable. It would also reduce the size of the industry, making it less politically powerful. And a FST could easily raise more than $100 billion a year.
Congress is not going to include an FST in this round of reform, but bills for such a tax have been introduced by Peter Defazio in the House and Tom Harkin in the Senate. With Congress becoming obsessed with deficit reduction, the public should insist that an FST be at the center of the agenda.
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Morgenson: The SEC Is Definitely Looking At Other Firms And Is Going To Act
Gretchen Morgenson of the New York Times spoke with Bloomberg Television about the Goldman Sachs SEC charges. She had quite a bit to say about where the story is headed next and what it is going to take to take down Goldman.
- 0:40 The SEC is definitely looking at other firms, and they’re going to do something about it
- 1:40 There are likely other transactions like this, and the big question is whether or not this is a material fact, that Paulson was short, which should have been disclosed to buyers
- 2:40 Were these assets picked to fail? That selection is at the center of things
- 3:05 Barbara Jones, a judge in this case, handled the WorldCom case with great ability
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Wall Street Journal managing editor Robert Thomson had more to do with the “girly man” prank on NYT publisher Arthur …
Wall Street Journal managing editor Robert Thomson had more to do with the “girly man” prank on NYT publisher Arthur Sulzberger than he is willing to admit.
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