Monthly Archives: March 2010

Rum and Kook a COLA

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There is no inflation. The Cost of Living hasn’t risen for several quarters.

Cost of living is by definition the cost of maintaining a certain standard of living.

Employment contracts, pension benefits, and government payments such as your Social Security check can be tied to a cost-of-living index, typically to the CPI or “Consumer Price Index.”

The CPI reports the average price of a lot of stuff — what is called a constant “market basket of goods and services” — purchased by average households. According to Bloomberg Business News, the CPI wonks add up and average the prices of 95,000 items from 22,000 stores and 35,000 rental units. Those prices are weighted by assuming that you distribute your spending along strict percentages. Housing: 41.4%, Food and Beverage: 17.4%, Transport: 17.0%, Medical Care: 6.9%, Other: 6.9%, Apparel: 6.0%, and Entertainment: 4.4%. Taxes are exempt from the CPI totals so when your property tax or sales tax or income tax or Cadillac health care tax or gasoline tax or telecommunications tax or blue cheese tax rises, it doesn’t actually cost you any extra.

In calculating the CPI, the U.S. Bureau of Labor Statistics uses a formula that reflects the fact that consumers shift their purchases toward products that have fallen in relative price. Although this substitution game means the BLS reduces what we pay by “living with” store brands instead of name brands, BLS says my analysis is incorrect. Their objective “is to calculate the change in the amount consumers need to spend to maintain a constant level of satisfaction.” As long as the BLS gets to define “satisfaction.”

Where, oh where is Mick when we need him?

The Social Security Administration writes, “Since 1975, Social Security’s general benefit increases have been based on increases in the cost of living, as measured by the Consumer Price Index. We call such increases Cost-Of-Living Adjustments, or COLAs. Because there has been a decline in the Consumer Price Index, there will be no COLA payable in 2010.”

  • Campbell’s Cream of Tomato soup costs between 80 cents and $1 per can in most markets today. Do you remember when it was 40 cents? I do. But the Cost of Living has declined.
  • A five-pound bag of flour costs about $2.49 in most markets today. Do you remember when it was a buck? I do. But the Cost of Living has declined.
  • Gasoline costs between $3.50 and $4 per gallon in most markets. Do you remember when it was $0.999? I do. But the Cost of Living has declined.
  • According to USAToday, health insurance premiums cost about $13,375 per annum last year. (And despite the new law, insurers say they do not have to cover kids with pre-existing conditions.) Do you remember when a family policy cost $2,500? I do. But your premiums will still go up. And, of course, the Cost of Living has declined.
  • Milk costs between $3.50 and $4 per gallon in most markets. Do you remember when it was $1.75? I do. But the Cost of Living has declined.

I wish stuff didn’t cost so much but even more I wish our “leaders” didn’t lie to us about stuff costing so much. Oddly, I cannot vote myself a raise.

The Perfect Storm

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President Barack Obama signed the “Patient Protection and Affordable Care Act” into law yesterday. They drank champagne at the White House and Kool-Aid around the blue states.

This combination of tax and mandate is the most significant regulatory remodeling of the U.S. healthcare system since Medicare and Medicaid passed Congress in 1965.

Conservatives should hate Obamacare because it will eventually raise taxes by Two Trillion-with-a-T dollars.
Libertarians should hate Obamacare because it immediately expands the size of government.
Liberals should hate Obamacare because it will double the size and scope of the insurance companies they blame entirely for the health care crisis.

My advice? Buy stock in Unitedhealth Group (UNH, trading at $21.08/sh) and Wellpoint (WLP, trading at $36.42/sh).

Mr. Obama has made an interesting progression. In 2009, he stole what was once the largest corporation in the world and gave it to his political cronies. In 2010, he stole what is the largest health care system in the world and gave it to the insurance companies. In 2011, it appears he will steal the largest democracy in the world and give it to our (“former”) enemies.

And you thought The Perfect Storm was just a movie.

 

The Obamacare Observations

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This directory lists many No Puffin Perspective™ articles about the euphemistically named Patient Protection and Affordable Care Act (PPACA) signed into law by President Barack Obama in 2010.

The New England Journal of Medicine reported in 2009 that “Health care spending represents a growing share of our national income and is projected to increase from 16% of the gross domestic product today to 20% by 2018.”

The first two articles in the directory are a challenge to fix the existing health care system starting from the simple premise, Health care in America is fundamentally broken. The remainder are but a sample of what the Obama Administration called “glitches” in the rollout and continuation of nationalized health care.

How to Fix It, Part I
How to Fix It, Part II

Worser
Here’s What Obamacare Actually Does For You
Not a Single Dime
We’re Number One!
Why Your Premium Just Went Up
One Piece At A Time
Disinformation?
Sleight of Something
They Got the Gold Mine (We Got the Shaft)
Change We Can Believe In!
First Among Equals
Obamacare
The Countdown to Nationalization, Part III
Exchange?
I Told You So.
We’re Number One!
The Perfect Storm
Throw Cash at It
How Much Will the Government Give You?
Diminishing Expectations
Know the Code, Part I
Know the Code, Part II
Paying for It
Hit the Road, a roundup of recent “successes”
The Unaffordable Care Act, Part 739
Democrats are Insurance Pawns

All Obamacare Topics, starting with the most recent.

 

Turning Out the Lights

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My old friend “Swampy” has been visiting for a couple of weeks. Don Swamtek loves Spring skiing and, despite the above average temperatures here the past 45 days (we annihilated the record high, bumping it by 6̊  to 66̊ on Friday), there is 3 inches of new snow in the mountains. Jay Peak has a 26 – 40 inch base and Stowe has 32 – 56 inches.

“I really like this Global Weirding stuff,” he said after a run at Jay last week. He was wearing lederhosen at the time, although he also had on heavy wool socks.

In real life, Swampy is a nuclear engineer with one of the few remaining Fortune 500 manufacturers. He spends his days dreaming about building a new plant in his own country and his nights star gazing. I don’t know why so many of my friends are hooked on the night sky, but they all surely do like it dark.

“We haven’t built a new nuclear plant in the U.S. in more than 30 years,” Swampy said, “but nuclear power still creates almost a fifth of the electricity we use.” Output was 809 billion kWh in 2008. “It may provide only 20 percent of our nation’s electricity but that is 70 percent — more than two-thirds — of our carbon-free, pollution-free electricity.”

GE Hitachi Nuclear Energy and Polish power company Polska Grupa Energetyczna will collaborate to build Poland’s two new next-generation commercial nuclear power plants. Poland currently relies heavily on coal-fired production. That country needs the nukes to help diversify its energy production, especially since plants like the ones they plan would avoid annual emissions equivalent to approximately 1.3 million cars. Poland is surrounded by at least 26 nuclear reactors operating in its neighboring lands.

Meanwhile, South Korea has won contracts to design and build a nuclear research reactor in Jordan as well as at least four nuclear power plants in the United Arab Emirates. The South Korean team beat off France and an American-Japanese power consortium in the bidding competition.

Swampy surprises a lot of people because he is an environmentalist. He cools his house with natural convection and fans instead of air conditioning. He heats it with wood. He hangs some of his clothes to dry and uses an Energy*Star appliance for the rest. He has a solar water heater. He and I designed an electric car in the 70s. More important, he haunts garage sales (on his bike) rather than buying new. He repairs and reuses everything, although he refuses to wash out and reuse freezer bags (yes, I do that).

On the other hand, he is improbably cheerful about his environmental message. “I’m not doom-and-gloom enough to get people to make me their Messiah.” That doesn’t stop him from reminding us of the truth.

“Doesn’t matter if you believe people cause global warming or even if there is global warming,” he said. “That argument is sort of irrelevant.

“Oil was $150 per barrel just last year and there’s no reason to think this administration — or the Far Green — will do anything but try to jack the price even more. Even if affordability doesn’t bother you, we’re not making any more dinosaurs. Making electricity we can afford to use right now. That has to be the focus for alternate energy policy. Everything else you say is a distraction.

“If we don’t fix this, we’re gonna turn out our lights. For good.”

So, I have to wonder. With all that brainpower, with all that education, with all that belief in conservation, why can’t I get him to turn out the lights when he leaves a room?

The Countdown to Nationalization, Part III

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ObamaCare, due to be snuck back to the Senate hidden amongst 17 votes taken in the House today, will fix everything that’s wrong with health care in America.

Demorats would have you believe ObamaCare will not, as the President said yesterday, “solve every single problem in our health care system right away.” Of course, Demorats would also have you believe that solving 2 out 15,387 problems in our health care system is everything we need.

Demorats would have you believe ObamaCare will save you money! Of course, Demorats would also have you believe the $930 billion extra coming out of your paycheck is actually a bonus.

Demorats would have you believe ObamaCare will cure what ails you! Of course, Demorats would also have you believe an Emergency Room wait until 2014 is just fine.

Demorats would have you believe ObamaCare will save you money! Of course, Demorats would also have you believe twice as many people covered costs half as much. After all, Medicare provided health care coverage for 45 million Americans in 2008. Without any eligibility rules changes, enrollment is expected nearly to double to 78 million by 2030 although the number of workers paying in to Medicare each year from now until then will remain nearly the same. I guess it is the economy of scale.

Demorats would have you believe ObamaCare will cure what ails you right now! Of course, Demorats would also have you believe that their rush to passage has nothing to do with 65% of their constituents who want real reform rather than ObamaCare.

Demorats would have you believe ObamaCare will save you money! Of course, Demorats would also have you believe 12,000 new IRS employees will work for free. Medicare will spend $452 billion or 12.5% of the federal budget on care this year. Medicare is expected to cost $6.4 trillion from now until 2019 or 14.8% of the federal budget for the period.

Demorats would have you believe ObamaCare will be free of all special interest deals like the Cornhusker Kickback to states and insurance companies. Of course, Demorats would also have you believe Sen. Ben Nelson (D-Nebraska) is the Good Fairy.

Demorats would have you believe ObamaCare can take $522 billion out of Medicare by cutting waste and fraud to save you money! Of course, Demorats would also have you believe we need fewer jail cells because criminals will behave if we ask them nicely.

Demorats would have you believe the Social Security Trust Fund can underwrite ObamaCare to the tune of $71 billion. Of course, Demorats would also have you believe the increase in cost of living last year didn’t affect seniors because they have a fixed income.

Demorats would have you believe the new $50 billion long-term ObamaCare insurance premium isn’t a cost increase. Of course, Demorats would also have you believe they’ll never have to pay out $50 billion for long-term care because those costs will not come before 2020.

Demorats would have you believe doctors who already receive less than a quarter of what they bill will accept $371 billion less for their services under ObamaCare. Of course, Demorats would also have you believe a quarter of doctors or more won’t just drop taking Medicare patients when this cut occurs.

Demorats would have you believe the $210 billion new ObamaCare tax on investment income will help the economy. Of course, Demorats would also have you believe the Moon is made of blue cheese.

Drop your drawers and bend over the examining table, America. Demorats would have you believe this won’t hurt a bit.