Friday, October 5, 2018

September, 2018, Part 2, By The Numbers: Medicare Insanity and Crime, Gun Control Causes Gun Violence and More

On a semi-regular basis we do a post under the theme, “By The Numbers.” Under this theme we analysis the crazy ways that politicians use numbers, from making them up outright, to using them inappropriately, to using them to lie to us. The problem for them when they do that is it is so easy to show how either stupid they are or how conniving they are. 

As an FYI, as you read my analysis of the misuse of numbers, keep in mind that I have a masters degree in statistics and for most of my life have been involved in analyzing numbers and stats. Politicians misuse of numbers and statistics is taken as a personal and professional affront to me and my profession.

1) Canada has some of the most restrictive gun control laws in the world and has had them for a while. The mayor of Toronto recently said that more gun control restrictions were needed. Byt according to the BBC: “Gun-related homicides and gun violence have increased. Firearm offences have also been on the rise in Canada in recent years. In 2016, there were 2,465 criminal violations involving firearms, an increase of 30 percent since 2013, according to figures released by the federal government.”

Much like Chicago, the more politicians put restrictions on guns the higher the violence level goes. Coincidence? I think not.

2) Many Washington politicians want to create a single payer health insurance system in this country where they and the Federal bureaucracy control EVERY aspect of EVERY American’s healthcare. Never mind that this kind of system has failed miserably in just about every country around the world where it exists.

They have coined this process of their's “Medicare For All” as if this is a good thing. But we have pointed out too many times to mention that Medicare is infested with criminal fraud and inefficiencies. Consider some sobering statistics from a recent AARP publication:
  • Medicare fraud alone is about $60 billion a year.
  • This comes out to about a $400 cost for every U.S. household every year.
  • The Medicare fraud level itself is larger than the Federal budgets for the EPA, Nuclear Security Administration, Department of the Interior, NASA, Pell College Grants, NIH Medical Research, and the Department of Homeland Security.
  • In fact, that $60 billion fraud loss is larger than the budgets of the EPA, Nuclear Security Administration, Department of the Interior, and NASA combined.
And some in Washington want to expand the Medicare program many times over. Can you imagine how large the fraud would become if that happened? 

3) AARP also recently reported on some medical people that actually got caught defrauding the Federal government within the Medicare program:
  • A Floridian doctor, Salomon Melgen, was sentenced to 17 years in jail for stealing $73 million from Medicare.
  • Houston doctor, Earnest Gibson III, was sentenced to 45 years in jail for stealing $158 million from Medicare.
  • A Fort Worth doctor, Noble Ezuknma, got 16 years in jail for being part of a $50 million Medicare scheme.
The thing that amazes me about these numbers is how much was stolen from Medicare before the crime was caught. These criminals are stealing millions and millions of dollars before getting caught. Is there no simple check point within the Medicare process that says that maybe claims for $158 million down in Houston is a little over the top? And these are the bozos that got caught, how many hundreds or thousands of other, smarter people are stealing from the Medicare system and taxpayers that are too smart to get caught

4) Hate him or love him, the numbers prove that Trump has presided over a massive economic boom time for this country and it citizens. Strong economic growth, low inflation, low unemployment, tax cuts, stable gas prices, the list of economic positives goes on and on. Compare his results to the anemic Obama economic results, as recently pointed out in a Wall Street Journal article:
  • In the previous economic 11 recoveries after a recession prior to Obama, the lost jobs during the recession were, on average, recovered in 27 months after the recession began: for Obama’s recovery, it took more than six years, 76 months.
  • Even the severe recession during the Reagan years recovered all of the lost jobs in just 35 months, half the time of the Obama recovery.
  • In those previous pre-Obama recoveries, GDP recovered on average in a little over a year: in the Obama recovery, that GDP recovery too three and a half years, twice the length of the severe Reagan recovery.
  • GDP growth averaged 2% over the Obama years, a third lower than the long term growth trend while Trump has gotten growth back over the 3% level in many quarters.
As we have pointed out so many times, Obama had no concept of how to help foster economic growth. Rather than reducing taxes and regulations, he did the opposite with the numbers above showing how terrible those policies of his were.

5) We have pointed out many times that three states, California, Illinois, and New Jersey my former home state, are in a race to see how fast they can become fiscally and economically insolvent. All three states have spent well beyond their means and tax bases, have shown no inclination to rein in spending and thus, their road to financial ruin is well underway. The only question that remain is when will that ruin become official and which state gets there first.

My money is on New Jersey. That state has a new governor, Patrick Murphy, and according to a summer Wall Street Journal article, he has shown no interest in all at reducing out of control state spending:
  • He wants to spend $50 million a year on “free” community college for state residents. How spending $50 million and saying it is free still eludes me.
  • He wants to increase annual school spending by over a quarter billion dollars a year.
  • He wants to bump up the top state income tax rate to 10.75% from 8.97%, an act that Obama proved is usually counter productive to economic growth and vitality.
  • Note: when Maryland did the same thing several years ago, the wealthier state residents just moved out of state, resulting in less income tax revenue despite higher tax rates.
  • But his tax insanity does not stop with the income state raise: he wants to raise the state sales tax to 7.5% from 7% and he wants to raise the state’s corporate tax rate to 13% from 9%, making it the highest corporate tax rate in the country and likely driving many businesses, and the jobs they create, out of the state.
And keep in mind that New Jersey probably has the worst funded pension and public employee retirement plans in the country, funding only 31% or so of its future pension liabilities. This is a classic numbers death spiral: politicians in the state have spent too much while not saving enough, they are raising taxes to cover their shortfall which will cause the wealthier residents and businesses to leave the state because of higher taxation which will reduce tax revenue which will mean that taxes need to be raised more which will drive more people and businesses out and boom, the death spiral is in place with no way out.

Oh, and by the way, New Jersey already has the highest property taxes in the country so it will not leave much wiggle room for those taxes either.

Whether at the state level of Federal level, it is obvious over and over that politicians have no concept of how to manage budgets, organizations, or economic growth. Their programs are ineffective and crime infested, their economic and tax policies are counterproductive to economic growth, and their ineptness results in economic distress to state and Federal income statements and balance sheets. The numbers do not lie even if politicians do.

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