The debt ceiling stuff makes me sick to my stomach. Despite the fact that the warnings about default are clear and dire, our elected leaders seem to be only interested in political showmanship and not actually solving the problem.
On the one hand you have the Republicans who are the party much more responsible for our unwieldy debt, refusing to raise the debt ceiling unless all of their suddenly austere measures are met without any inkling of desire to compromise on any issue. They are the major cause of the problem, are completely hypocritical about government debt and size now that they believe it is politically advantageous, and are unwilling to negotiate like responsible adults to avoid the catastrophe they precipitated. They are more interested, it seems, in pleasing their corporate overlords than doing what is right for the American people. Here is one graph, among many many many, that illustrates the level to which Republicans are at fault for the debt:
On the other hand you have the Democrats who seem to only care about reelection, not solving problems, caving on almost every issue because they think the more they move to the right the more electable they will become. Every time they make a move towards a compromise, without anything offered in return, the Republicans pull the chair out from under them and move it a little further to the right. The Democrats get up, brush themselves off, offer fresh cuts to Social Security or offer trillions in cuts without any increases in revenue (e.g. raising taxes on the wealthy), without any compromises from Republicans in return, and go to sit back down again only to come crashing to the ground as the chair is pulled out from under them yet again. Too stupid to learn, I guess.
Meanwhile, the public is overwhelmingly in favor of raising taxes on the rich; closing huge tax loopholes for corporations; keeping Social Security, Medicare, and Medicaid intact; and raising the debt ceiling to avoid another economic downturn. Somehow the Democrats have turned all that into a losing hand and seem destined to weaken the liberal legacy in return for some non-existent political victory.
I am all for big cuts in spending in order to get the debt under control. I'm all for cutting out some of the enormous amount of fat in government. But it has to be done responsibly, and that means raising taxes on the rich and corporations and not gutting the social safety net for millions of poor and elderly Americans. It mostly means doing everything we can to make the economy strong again, which hinges mostly on creating local and sustainable jobs for average Americans and not showering the wealthy and corporations with more tax breaks and kickbacks.
No one wins no matter what happens in the next few days. What a miserable time to be a political partisan.
As part of the economic recovery/stimulus package of 2009, Congress approved in increase in federal funding levels for Medicaid. Unlike Medicare, which is funded entirely by the federal government, Medicaid is jointly funded by the federal and state governments. The increased levels provided bumped the federal portion of payments up to ~65% of the total burden. It's hard to pinpoint the numbers because it varies from state to state with wealthy states receiving less support and poor states receiving more.
These increased levels drop back down to the pre-stimulus levels at the end of the June forcing states to adjust. The extra aid was originally scheduled to end last December, but Congress extended it for six months after being petitioned by both the White house and state officials. Now that the extra ~10% is ending thanks to political posturing and focus on national debt, individual state's must now find a way to compensate.
One method for California is to cut payments to recipients and physicians. Of course, these beneficiaries took the American way and sued the state to block the cuts. The case made it to the Supreme Court, but the Justices sided with the state. The 10% nibble might just be the beginning with enormous deficits (and incumbents' seats) causing turmoil. The long-term implications from such cuts are much more frightening. More physicians will likely refuse service to medicaid patients, forcing the latter to visit the ER as a sole means of care. By law, an ER can't refuse a patient even if they have no insurance or means to pay. Likely the shift from visiting general practitioners to showing up at the hospital means a couple of things: longer lines in the ER and in increase in hospital premiums to compensate for the costs (losses) associated with an overrun ER.
In addition to, or instead of, reducing Medicaid payments to providers, some states are finding other options. New York is imposing a cap on Medicaid spending. Connecticut is proposing more precise cuts and is only setting limits on vision and dental coverage. The rest of the states are reporting some combination of truncating payments to providers, reducing beneficiaries services while increasing co-payments, and shifting funds from other state-funding programs (like education) to offset the changes.
As a result of political impotence, combined with the alleged public outcry, there is no universal health care, nor is there any legitimate replacement for Medicaid anywhere on the horizon. Like Senator Rockefeller IV said about the beneficiaries, "Seniors vote. But if you are poor or disabled, you might not vote, and if you are a child, you do not vote - that's a lot of Medicaid's population. They don't have money to do lobbying." I'm concerned that this is the beginning of the end for Medicaid. My advice? Don't get born, don't get poor, and don't get old.
That, or you can go rob $1 from a bank to get a better life.
On the one hand I tip my hat to Republican Paul Ryan for actually submitting a proposal for the federal budget which addresses some of the important issues that are looming. On the other hand he did a really bad job. So it's a mixed bag.
The fundamental problem is that he puts fiscal responsibility squarely on the backs of the poor and elderly, mostly by slashing Medicare and Medicaid and lowering taxes on the rich. Nor does his plan address "defense" spending, which is a subject we've addressed before here. We pretty much exhausted the health care debate here last year, but it bears mentioning once again that there is a very good argument that a single payer system would do more to solve our entitlement-budget problems than anything else. A single-payer system would save costs in a few of ways. First, you would immediately slash most of the administrative overhead that is currently a massive drag on the system. Second, you remove the perverse profit motive that skews the system and leads to appalling results. Third, by covering everyone the risks are spread evenly and fairly amongst all Americans and the uninsured can no longer crash the party without paying in. Fourth, since everyone is covered preventive care is universally available. Fifth, bankruptcies as a result of medical emergencies no longer exist.
There are otherpoints, and counterpoints, but that gives a pretty good idea of where health care savings might come from in a single payers system.
The United States currently pays more per capita for health care than developed countries which have a single payer system, without the benefits of actually better health. We should have no problem studying those systems and creating one that works for us. I understand that there trade-offs for universal health care, but none I'm not willing to pay.
A single payer health care system is a nice, elegant way of both fixing the broken health care system and taking a huge step towards fixing the federal budget.
I was at scouts last night and couldn't watch the State of the Union Address, but as I've browsed through it there are several items that I believe are worth highlighting. The theme was Win the Future, which I guess is the new Hope and Change. In both cases, President Obama wants to exude optimism, which is something, as I've said before, we dearly lack around here. So with optimism in mind, here are a few things worth looking at.
As some of you know, I'm a proud and moralistic environmentalist, so I appreciated the renewed emphasis on renewable energy:
Already, we're seeing the promise of renewable energy. Robert and Gary Allen are brothers who run a small Michigan roofing company. After September 11th, they volunteered their best roofers to help repair the Pentagon. But half of their factory went unused, and the recession hit them hard. Today, with the help of a government loan, that empty space is being used to manufacture solar shingles that are being sold all across the country. In Robert's words, "We reinvented ourselves."
That's what Americans have done for over 200 years: reinvented ourselves. And to spur on more success stories like the Allen Brothers, we've begun to reinvent our energy policy. We're not just handing out money. We're issuing a challenge. We're telling America's scientists and engineers that if they assemble teams of the best minds in their fields, and focus on the hardest problems in clean energy, we'll fund the Apollo projects of our time.
At the California Institute of Technology, they're developing a way to turn sunlight and water into fuel for our cars. At Oak Ridge National Laboratory, they're using supercomputers to get a lot more power out of our nuclear facilities. With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have a million electric vehicles on the road by 2015.
We need to get behind this innovation. And to help pay for it, I'm asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don't know if — I don't know if you've noticed, but they're doing just fine on their own. So instead of subsidizing yesterday's energy, let's invest in tomorrow's.
Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they're selling. So tonight, I challenge you to join me in setting a new goal: By 2035, 80 percent of America's electricity will come from clean energy sources.
Some folks want wind and solar. Others want nuclear, clean coal and natural gas. To meet this goal, we will need them all — and I urge Democrats and Republicans to work together to make it happen.
First, there is almost nothing so offensive, in my mind, as the billions of dollars in tax relief that we give to oil companies. Those should end immediately. Second, I've been contemplating a post about the world's population crisis, and one of the most important points in that discussion is energy. Where are the billions of people we are going to be adding to our world's population going to get their energy? How can we add billions more people to the Earth and not completely destroy the environment in the search for and consumption of cheap energy? Renewable energy, of course, is the answer, and the longer we wait to make the President's goal a reality the harder it will be. We simply have no choice but to invest aggressively in renewable energies. And it will be good for our economy in the long-term, as well.
As to education, and to allay concerns that liberals are masked communists who want to destroy the family:
That responsibility begins not in our classrooms, but in our homes and communities. It's family that first instills the love of learning in a child. Only parents can make sure the TV is turned off and homework gets done. We need to teach our kids that it's not just the winner of the Super Bowl who deserves to be celebrated, but the winner of the science fair. We need to teach them that success is not a function of fame or PR, but of hard work and discipline.
As a parent of children who are starting to make their way through school, I simply could not agree more that the most important factor in determining whether our schools are successful is the efforts of the home. We wouldn't be talking about failing schools and teachers if families bore more of the burden and responsibility of education. That is nearly impossible, however, when parents are facing foreclosure, unemployment, insurmountable medical bills, neighborhood violence, and the like, and where the stresses of oppressive poverty crowd out most other concerns. The stability of the family is one reason why it is so important to build and maintain a robust social safety net.
Finally, one point that I wish was hit more forcefully. When the president spoke about reducing the deficit he spent quite a bit of time talking about reducing non-discretionary domestic spending, which he acknowledged made up only 12% of the nation's budget. Then he blithely stated, concerning the deficit commission:
And their conclusion is that the only way to tackle our deficit is to cut excessive spending wherever we find it — in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes.
I believe I've linked to this before, but take a look at the a visualization of the budget found at the New York Times. What jumps out immediately? National Security and Social Security. Those are certainly worthy of a lot of money, and we talk all the time about ways to control Social Security costs. What we never talk about is controlling National Security costs. It is virtually unheard of for a politician to seriously suggest bringing defense spending down in any meaningful way, which is a travesty. Here are an assortment of charts to help put our military spending in context
From the Center for Arms Control:
From Think Progress:
From the Daily Mail:
If we want to seriously get the budget under control, we should cut defense spending, which is filled with corruptions, special interests, and waste. Pres. Eisenhower correctly predicted this in his farewell speech where he warned:
This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.
In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.
I thought the State of Union was good. I think it had the right tone and struck the right balance between government waste and government investment. A focus on families, peace, and renewable energy, among other things, is the kind of liberalism I support.
The Bush tax cuts are set to expire at the beginning of the year and the bombs are starting to fall in the political war over this issue. Democrats want to let them expire for those making over $250,000 while extending them for everyone else. Republicans want to extend them for everyone. So, essentially, the argument is whether or not to extend the tax cuts for the very wealthy. The two top marginal tax rates would go from 33% and 35% to 36% and 39.6%, respectively.
A second area of disagreement also has to do with taxing the wealthy, this time in the form of capital gains, which are disproportionally slanted towards the rich. Those rates would go from 15% to 20%, and eventually to 23.8%.
Read up on the issues from both sides here, here, here, and here. Another excellent resource is the Center on Budget and Policy Priorities, which lays out the argument for how letting the tax cuts expire for the wealthy and extending them for everyone else will reduce the deficit ($300 billion per year), almost universally benefit small businesses, and spur the economy and job growth. President Obama has come out forcefully with a plan to allow the tax cuts to expire for the wealthy and to extend them for the poor. Here is the best and simplest argument I've seen for his plan, from Salon:
Not only did the wealthiest Americans benefit the most from the anything goes Wall Street boom years, but they paid the smallest price for the economic collapse. While millions of Americans lost their jobs and their homes, they sailed right through. By calling for the repeal of the Bush tax cuts for the wealthy, Obama is putting down a political marker, and declaring that the rich must pay their fair share of the burden. Here's a message anyone can understand: I'm going to raise taxes on the rich and spend money directly creating jobs through infrastructure investments.
Remember, even with the expiration of the tax cuts for the wealthy they will be paying a lower tax rate than during the Reagan years, so save the cries of socialism. This country became great because of the work of the lower and middle classes. If we want to regain some of that greatness we have to secure them first by creating jobs and opportunities for them, and this move is a way to do that. We've covered this issue a little bit before here.
Over the past 30 years, however, after decades of convergence in income distribution, the gap between the rich and poor is getting bigger and bigger. That means America is less free because those poor have fewer and fewer meaningful opportunities to make their lives, and the lives of their families, better. It also means America is much less righteous. That might seem like a statement out of crazy land, but look at these principles from the Book of Mormon:
2 Nephi 9:30 - But wo unto the rich, who are rich as to the things of the world. For because they are rich they despise the poor, and they persecute the meek, and their hearts are upon their treasures; wherefore, their treasure is their god. And behold, their treasure shall perish with them also.
2 Nephi 9:42 - And whoso knocketh, to him will he open; and the wise, and the learned, and they that are rich, who are puffed up because of their learning, and their wisdom, and their riches—yea, they are they whom he despiseth; and save they shall cast these things away, and consider themselves fools before God, and come down in the depths of humility, he will not open unto them.
Jacob 2:13-14 - And the hand of providence hath smiled upon you most pleasingly, that you have obtained many riches; and because some of you have obtained more abundantly than that of your brethren ye are alifted up in the pride of your hearts, and wear stiff necks and high heads because of the costliness of your apparel, and persecute your brethren because ye suppose that ye are better than they. And now, my brethren, do ye suppose that God justifieth you in this thing? Behold, I say unto you, Nay. But he condemneth you, and if ye persist in these things his judgments must speedily come unto you.
Helaman 6:17 - For behold, the Lord had blessed them so long with the riches of the world that they had not been stirred up to anger, to wars, nor to bloodshed; therefore they began to set their hearts upon their riches; yea, they began to seek to get gain that they might be lifted up one above another; therefore they began to commit secret murders, and to rob and to plunder, that they might get gain.
3 Nephi 6:10-12 - But it came to pass in the twenty and ninth year there began to be some disputings among the people; and some were lifted up unto pride and boasting because of their exceedingly great riches, yea, even unto great persecutions; For there were many merchants in the land, and also many lawyers, and many officers. And the people began to be distinguished by ranks, according to their riches and their chances for learning; yea, some were ignorant because of their poverty, and others did receive great learning because of their riches.
There are many, many others just like this. One of the overarching themes of the Book of Mormon is that when a society becomes stratified between the rich and the poor, the rich will become prideful and wicked and push the poor down further and further until they are ripe for destruction. This is where we are inevitably headed unless we make the decision, as a society collectively, to narrow that gap voluntarily. Extending the Bush tax cuts for the poor and letting them expire for the wealthy is a step in the right direction.
In the wake of the recent Tea Party Convention, I infiltrated the Tea Party Nation website by obtaining a username and password. My life may or may not be in danger if I am found. You have to be a member to poke around and see what they are up to. I've made my feelings known before, and I renew those sentiments now, that I will not sully the good name of the original Boston Tea Party with this movement. I fully support the current government protesters' right to organize and protest, but don't equate it with the original Boston Tea Party, they are not similar.
One of the things that I don't understand about the government protesters is how they were overwhelmingly likely to support huge government expenditures to rebuild a foreign, non-threatening nation, but protest like mad against government expenditures to rebuilt our own nation in the worst economic collapse since the Great Depression. The Iraq War has now cost over $700 billion, with much of the cost deferred to where the total cost will end up in the trillions. And yet when a similar amount is spent by our government to shore up the financial system, assist the millions that have lost their jobs, and spur new growth, Sarah Palin has to show up and read off her hand that government is destroying our liberties.
It may surprise you to learn, though, that I am concerned about the spending and debt of the federal government. I don't think this is an ideological concern, I think most Americans are at least uncomfortable with our national debt. Some Americans are downright angry about it, which I don't understand, but I think it is important to understand the problem and react appropriately. Unfortunately, the government protesters, with all the vitriol and hyperbole, have made it difficult to discuss the issue intelligently.
And as far as I'm concerned, here is the problem: Americans don't want to pay for what we demand. As a result, politicians from both parties promise the benefits of government without requiring the requisite sacrifices from the public. This is no shocking revelation, of course, but consider the following facts, taken from a Washington Post article from last year:
The average family pays only nine percent of its income to taxes (down significantly from previous decades).
The middle fifth of taxpayers pay only three percent of their income to taxes (again, down significantly).
A majority of Americans considers their tax burden either too low or about right.
About a third of all taxpayers pay no taxes at all (excluding Social Security and Medicare).
Here is a nifty image from wikipedia which shows the marginal income tax rate over the years, demonstrating that it is about at its lowest since the years leading up to the Great Depression.
Also note that, contrary to popular belief, corporations in America actually pay less taxes than in the average developed country (average 16.1%, US 13.4%), largely due a graduated tax rate and generous business deductions.
I am among the many Americans that want health care insurance for all Americans, programs to help low and middle income Americans pay for college, Social Security for low income retirees, a safety net for the poor that cannot find any work or cannot find work that pays for the basic necessities of life, etc. I'm a liberal, therefore I want programs that help level the playing field. That is not to say that everyone should make the same amount of money or that we should pay for people to be lazy, but that everyone should have equal opportunity to get ahead if they so desire.
Remember, as we've pointed out here many times in the past, only a very small, minuscule fraction of Americans are intentionally lazy and living off the government for years on end. Most Americans are hard-working and have self-respect and pride, and try their best to survive on their own. But the system (i.e. market) is set up for poor people to become more poor, no matter how hard-working or talented they are, and for the rich to become more rich, no matter how lazy and incompetent they are. The rags to riches story is a heart-warming exception to the rule. So we turn to the government to make some new rules which are more equitable.
But we stopped paying for it. We give corporations huge tax breaks and promise the middle and upper classes lower and lower taxes until they are hardly paying any at all. And then we borrow money to pay for the things we want. So we have two choices to lower the debt: we eliminate those playing-field-leveling programs or we require more taxes from Americans.
Liberals and conservatives alike can agree that we should require more accountability and efficiency from the federal government. Pres. Obama has said that he is going through the government now and looking for ineffective programs to eliminate, and I hope that this is true. There should absolutely be pressure on him, once the economy is righted, to balance the budget and eliminate waste, like Pres. Clinton did. But Pres. Obama is right that we first have to stabilize the economy, and that requires spending. Then, in prosperous economic times we should have every expectation that government will scale back its spending, again, like what Pres. Clinton did.
We shouldn't let the government protesters hijack a meaningful and important conversation about government spending and deficits by injecting vitriol and absurd arguments about how government spending equals a lack of personal liberties. Everyone can agree that fiscal responsibility is best in the long term, but right now is the time for the government to build our country up again after a terrible economic disaster. If we are committed to doing it in Iraq and Afghanistan, we should be committed to doing it in America.
When all through the House, Act'lly it was the Senate, sorry for the rouse; With congress in session for the first time in years The parties were separate, sitting only with peers Healthcare was the debate, as long it had been, Still no common ground, no mutual win; Conservatives scoffed at everything brought, Democrats trimmed away things that they sought; Amid cries of "redneck" or "you lame communist" Nobody would bend, to what others wished. In the end there was a vote, along party lines The bill "IT HAS PASSED" despite all the whines.
So, obviously I'm not lyrically gifted, but considering the season, I thought I'd try for a little parody. Maybe it comes from my complete disgust of popular media's relentless moaning over healthcare reform. Regardless, I think a couple of things need to be made clear - an insane number of people do not have healthcare coverage; the current healthcare system is not effective because it leaves too many people without coverage; healthcare premiums continue to increase, while the coverage continues to decrease; access to medical care is a RIGHT; all rights are tethered to responsibilities.
According to estimates by the Congressional Budget Office (CBO), more than 45 million people will be without health insurance in 2009. I'll be upfront about "estimates" and that I think one can manipulate statistics readily to tell a story, however, this can only be done to a point. So let's say for arguments sake that the CBO has inadvertently doubled the amount of people without health insurance so that there are actually only 22.5 million without it. That's only 8 times the population of the state of Utah, so a much more palatable number. Be it 22 million, or 45 million, that's a ridiculous amount of people to have no coverage. Luckily we are able to help some of them with medicare and medicaid.
Oh, I forgot to mention, about 10 million of those people are actually children, so it's hard for me to swallow the argument that those without coverage are lazy bottom-feeders that are looking for a free ride.
Of those of us that still are able to pay for some kind of a plan, the rates continue to rise, while the coverage falls. I'm not just citing ostensibly biased surveys, but my own personal experience. My rates for a private plan (from IHC) increased every year from 2002-2007, after which we moved to an employer-based plan that also increased its yearly premium from 2007 to the present. What concerns me is not just the increase (inflation explains part of it), but the necessity for rates to go up so dramatically (>130%). Translating that means that if you spent $100 ten years ago, then this year you would be upwards of $230 with less coverage.
I am extremely disappointed that universal healthcare has been dropped from the current proposal. The majority of developed countries (by majority I mean 97%) already have some form of universal coverage in place. This is my favorite map. Glad that we are on par with Africa and Southeast Asia. The entire European Union has adopted various forms of universal healthcare because they agree that medical access is a right of each of their citizens. Don't confuse my support of universal healthcare with the pretense that all these systems are without flaw. I case-by-case analysis of each form would be fantastic, and beneficial in developing a system for the United States. Why must we re-invent the wheel?
I digress. The point is that as a population moves away from despondency and poverty, the trend is for an understanding that all citizens (as part of the "life" clause) deserve healthcare. If private industry could guarantee that, I would advocate the system. Fortunately governments "were instituted of God for the benefit of man". Unfortunately, I don't think that equal coverage or access can be guaranteed on a State level, but will require the intervention of the Federal government. Hence the current reform.
Lastly, a few good things I like in the current bill (which is difficult to read, but should at least be read by EVERY individual, D or R or I, voting on the bill) -
- establish strict federal standards for insurance companies - limitations on the amount of profit per premium dollar - insures can not deny coverage because of a person's medical condition - higher premiums can not be charged based on gender or health status - companies can not rescind coverage when a person gets sick or disabled
SO got the ball rolling on President Obama's budget below, and I'd like to take a look at another aspect. The gap between the rich and the poor in America is the largest it has ever been. The chart below from the Heritage Foundation begins to tell the story:
This may be hard to read (you can find it online here), but the top one-fifth of income earners in America own about one-half of the wealth. The bottom two-fifths combined own about one-eighth of the wealth. But it is even more extreme, as the following chart from Think Progress shows:
This may again be hard to read (and you can find it online here), but you will see that the top one percent of Americans own twenty percent of the wealth, those between the top five and one percent own about fifteen percent of the wealth, and those between the top ten and five percent own about twelve percent of the wealth. This is the classic example of the rich getting richer and the poor getting poorer. The powerful are consolidating their power and the powerless are losing power. We cannot seriously call this either freedom or democracy.
The budget that President Obama proposed recently is the first major step shrinking the gap and assuring equality, opportunity, true freedom, and the American dream for every American. As SO mentioned in his post, the budget cuts taxes for 95% of Americans and allows the Bush tax cuts to expire on those making over $250,000 a year, which essentially puts the tax scheme back to Reagan-era levels.
The budget makes it easier for people to get unemployment benefits. It also temporarily increases food stamps and offers assistance to low income families to pay utility bills. Remember, over four million people have lost their jobs in the past year. We cannot simply ignore the fact that America is the wealthiest nation on earth while all around us are good, hard-working people struggling to put food on the table and pay the heating bill.
As for education, the great equalizer in America, the budget offers a new $2,500 credit to make college more affordable and replaces the old college student loan program with a new program run through the Department of Education which makes more money available for cheaper, including more Pell Grant money. My wife and I would never have made it through college with two bachelors degrees and one graduate degree without government assistance, and we are more than happy now to contribute to a system that allows expanded reach for others that are in the same situation we were in.
A substantial amount of money also goes to preschool programs, raising academic standards and test scores, and performance-based pay for teachers.
One of the greatest forces driving the separation of the rich and poor is also addressed in the budget: health care reform. Not only are the rich more wealthy (clearly) and more powerful, they are more healthy. While the poor delay medical care because of the cost and lose more work hours because of illness, the rich have ample health care opportunities. The budget lays out over $630 billion over the next ten years for the health care overhaul while suggesting guiding principles for Congress.
America can only be great if we are all great together. Opposing unchecked free market principles that only reward the elitist wealthy at the expense of the remaining 95% of the population is not socialism, it is a way to ensure freedom to all Americans in reality, not just in principle. The budget proposed by President Obama begins our progress toward more equality for all our citizens.
There are so many facets to President Obama's proposed budget that we will have to focus on each independently. First out of the gate is what common vernacular has deemed "cap and trade."
The motivation behind "cap and trade" is to reduce US emissions from carbon to well below the level set in 2005. To be precise, the goal is to drop the pollutions to 14% below former levels. As altruism is to often only the stuff of fairy tales, a more effective means of motivating businesses to reduce carbon emissions is by a system of taxation. Essentially, the government will auction off the chance to pollute. A business can purchase pollution access for some dollar amount per ton of CO2 to be released into our atmosphere. The government will limit the amount of pollution allowed (the cap part), and in the event that a company has leftover, unused pollution units, then can sell these to another company (the trade part).
The first, and most obvious, upside is the limit of CO2 pumped into Mother Nature. I don't honestly know how much of a difference this is going to make on her at this point, but everything we can do to ameliorate the disease, we must do. The second upside is what happens to the revenue. Conservative (as in cautious, not Republican) estimates suggest that the system will bring in 645 billion dollars over the next 10 years. A significant portion of this money will be used to fund research in alternative sources of energy, while some of the money will be given back to the consumer in the form of tax credits and refunds for transitioning to energy efficiency.
Oops. You caught me. I said it - "given back" to the consumer. The reality of the situation is that it is very likely that electricity, gas, and other utility costs will increase to offset the taxation of pollution. One report claims that the energy bills will jump by as much as 7%, and that the average tax will jump from 1,100 to 1,437 by 2015.
While I do concede that there will be an increase in the price of energy in the future, I want to break down these numbers to show just how dramatic they really are.
7% increase on energy bills. If you pay $50 per month throughout the year, then the bill will increase by $3.50 each month for a grand total of $42 per year.
Average tax to jump to $1,437 in 2015. Considering that inflation is hovering around 3% and will get the "average" up to $1,313, the additional $124 doesn't seem as significant. The other confounding factor that dramatic effect always omits from these kind of statements, is the definition of "average." Mathematically speaking, one takes all of the numbers in a set, adds the value together, and then divides it by the total number in the set. This analysis is great when the values are distributed equally above and below the average. For example, let's say that 10 different people pay taxes. Seven of them pay $20, one pays nothing, one pays $45 dollars, and one pays $2000. The average of the set is $218.50, but the majority of people pay $20.
The same it is with averages so often cited in reporting (by both factions). In the case of the increase in the average amount of tax is that there will be a return to the pre-Bush tax rate for the most wealthy from 33% to 36%. More later, but this return to 36% was decided on by the people that initially came up with the break. It was meant to be temporary, and thankfully it will be.
So back to the main issue. You will pay more for coal derived power in the future. Your money will be invested in developing alternative forms of energy production, and more efficient consumption of energy. The increase in rates is therefore a transient event - as alternative sources of energy become available, and as our ridiculouslyinefficient machines become more efficient, the cost of energy will come down. Minimal sacrifice now, maximum return later.
The alternative is to not have a cap and trade, not to invest in alternative energy, not to stop polluting, not to become more efficient, and not to save anything.
