Finally, Someone In The Federal Government Did Something Right

It is certainly not often that I say this but finally someone in the Federal government did something worthwhile and right, as outlined in an article from the Associated Press on July 16, 2010. Let it not be said that I do not recognize it when the political class does something right for a change and consistent with my book, "Love My Country, Loathe My government." In this case, they were executing Step 5 from the book that insists that more enforcement resources be expended to stop the massive amount of fraud and waste that government programs incur every year. By the government's own estimate, this fraud could be as high as $90 billion a year or about $770 for every U.S. household just from the Medicare program.

The article described a massive law enforcement round up of 94 people who were involved in defrauding the Medicare program, and the U.S. taxpayer, of Medicare funds. Details of the bust include the following:

• People were arrested in various cities including Miami, New York City, Detroit, Houston and Baton Rouge.
• The 94 people arrested were charged with pilfering $250 million of Medicare funds.
• 33 of the people were arrest in Miami and charged with stealing $140 million but that the real amount of total fraud in the Miami area is closer to $3 billion.
• Those arrested are accused of bilking Medicare for unnecessary equipment, physical therapy, and other treatments that patients never received.
• In one such scam, $72 million were paid out for bogus charges to just one clinic in Brooklyn. Wiretaps show that one man at the clinic did nothing but hand out money in the back of the clinic all day long.
• People let the scammers use their Medicare numbers and cards in exchange for $50 to $100 per visit.
• In another Brooklyn case, more than 3,700 claims were submitted on behalf of just one woman, who also was arrested (she is 82 years old). Just her false billings alone resulted in payments of $141,161.
• The types of people involved in Medicare fraud include doctors, clinic owners, patients, patient recruiters, and organized crime.
• Two people in Miami are accused of bilking Medicare out of $119 million for costly HIV drugs that patients never received. They then turned around and spent the money fraudulent funds on hotels, helicopters, boats, and a water park.

Kudos to all involved who made this happen. It is a great start. Hopefully, it is only a start because:

• while the Miami busts identified $114 million in fraud, this is only 3.8% of the total fraud thought to be going on in Miami.
• how come the Feds did not identify the woman in Brooklyn with over 3,700 claims much sooner, say around the 2,000 claim mark? Are the Federal data systems or human watchdogs so oblivious that they had to wait until there were 3,700 claims for the same person before they moved in to stop the fraud?
• the article says that for the first time, investigators can actually stop payments to a claimant if they think fraud is afoot. Up until recently, claims were paid upfront without any questions asked and follow up was either non-existent or ineffective. Why did we wait several decades to put this simple fix into the payment process? It could not have been a surprise that this was the main cause of the fraud, why did the political class wait so long for a common sense fix?
• while $251 million is good, how much will actually be recovered and how much has already been spent and no longer exists?
• and yes, $251 million is good but it represents only .3% to .4% of the probable annual Medicare fraud nationwide.

Yes, this is a great first step and it is a step that I have advocated since the beginning, making it one of the premier steps of the fifty steps laid out in the book. My bigger concern is that the political class is about to make this government insurance pot of money much bigger, as a result of Obama care, attracting much more fraud if we are not careful.

The analogy I would use would be like buying a new heating system for your house. Prior to buying that new heater, a reasonable person would first check the basics: better insulation in the attic, weather strip the windows, weather strip the doors, etc. Once you fix the basics, you can now buy a less expensive heating system since you plugged all of the holes in the house first. That is what should have been done with Obama care. The basics should have been done first, i.e. put the data systems in place and the enforcement resources and processes in place first to clean up the fraud. Once you had the fraud under control, you can come out with a less expensive health care reform bill since the holes would have been plugged, saving the taxpayer substantial money. Unless this first step quickly morphs into a much bigger and wide ranging anti-fraud process, we are putting that heater into that house without the proper insulation and lord knows how much heat will escape along with our tax dollars.


Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Also visit the following sites for freedom:

http://www.cato.org/
http://www.reason.com/
http://www.robertringer.com/
http://www.realpolichick.blogspot.com/
http://www.flipcongress2010.com/

Down The Rabbit Hole And Into The Surreal World Of The American Political Class

By taking a hard but honest look at the problems facing this country in today's world, it is easy for most people to identify the five or six overriding issues that deeply affect the most Americans. I would bet that the following issues would make most people's top ten:

• Two ongoing wars in the Middle East.
• A failing public education system.
• An ongoing battle against the plague of illegal drug usage.
• Escalating health care costs.
• High unemployment.
• The lack of a national and rational strategic energy plan.
• Illegal immigrants and the problems caused by the lack of a national border security capability.

Wherever you fall on each of these major issues (e.g. against the wars or for the wars, against legalization of drugs or against legalization, etc.), most sane people would agree that if we could focus and solve just this small handful of issues, the world would be so much better.

However, when you listen to politicians speak, you sometimes wonder what world and reality they are dealing with and living in. Have they fallen down the proverbial rabbit hole from Alice In Wonderland to a world that is different from the ones most Americans inhabit everyday? Could it be that these major problems facing the nation listed above, the same ones that have not been solved by the political class for decades, have not been resolved because the political class lives in a different dimension than us? Consider the following events relative to the American political class that have recently popped out of the rabbit hole of politics:

• A county politician in Wisconsin, running for a political office, opines in a public forum and on camera that Arizona is definitely not a border state with Mexico.. In all of the maps of the country I have seen throughout my life, Arizona is shown to have a very long common border with Mexico. In this Wisconsin politician's world, that is not the case, making it tough to solve the illegal immigration problem when we are looking at totally different maps.
• When the Democrats took over both houses of Congress in 2006, the Speaker of The House, Nancy Pelosi, proclaimed that the Democrats would reign in the outrageous deficit spending habits of the Bush administration and the Republican Congress. She vowed that there would be no new Federal government spending unless other areas of the Federal budget were reduced in order to pay for the new government spending, her highly touted "pay as you go" approach to curtailing the size of government. She proudly proclaimed on her website: "While the President's (Bush) budgets have turned surpluses into deficits, the Democrats' budget takes America in a new direction, returning fiscal responsibility to Washington and the right priorities for our nation." Given the fact that Federal government spending has grown significantlyand budget deficits have skyrocketed (tripled) since this Democratic Party Congressional takeover and into the first two budgets of the Obama administration, it is apparent that Nancy Pelosi exists in a different universe from us. Most of us would agree that fiscal responsibility does NOT mean tripling the size of the deficit within four short years as it does in Pelosi's mind. However, we would agree with her assertion that the Democrats' budget is taking us in a new direction, the fast track to national bankruptcy.
• Let's stay with Pelosi for another trip down the rabbit hole because her world is so fascinating and different than ours. The Speaker recently announced that high unemployment is good, and that, in fact, high unemployment is one of the best ways to create jobs. You cannot make this stuff up, check out her press conference on YouTube where she seriously made this claim. Thus, in her world, the more people that are unemployed, the more jobs are created for those in need of a job. In her world, if we can get to 100% unemployment, everyone might have a job created as a result. Obviously economic theory is different where she exists.
• In Georgia Congressman Hank Johnson's world, physical laws of nature are suspended. In a recent Congressional hearing, the Congressman expressed his worry that the U.S. island of Guam might tip over in the ocean. Again, you cannot make this stuff up, check the YouTube video of the hearing.
• The Associated Press reported on July 15, 2010 that Federal prosecutions of illegal immigrants jumped to new high levels in the spring as the "Obama administration continued an aggressive enforcement strategy championed under President George W. Bush." Apparently, in our world, 4,145 cases were referred to Federal prosecutors in March and April. This was the highest number of cases for any two month stretch in the past five years. The article also reported that deportations have also climbed significantly, from 185,944 in 2007 to 387,790 in 2009. So let me get this right: the Federal government is prosecuting and deporting more illegal aliens than ever but has the chutzpah to turn around and sue the state of Arizona for trying to reign in the same large wave of illegal immigrants coming into its state from Mexico? Seems kind of contradictory, at least in our world of reason. Apparently, it makes perfectly good sense in Washington, send home illegal immigrants with one hand and slap the state of Arizona with the other hand for doing the same thing.
• On July 13, 2010, the Associated Press reported that over 100,000 pieces of children's jewelry had to be recalled from retail shelves because the jewelry contained high levels of cadmium, a dangerous heavy metal if ingested. That's the good news. the bad news is that in the world of government safety regulation (e.g. U.S. Consumer Product Safety Commission), one does not learn from past mistakes. Several years ago, U.S. government safety organizations failed to realize that there were many, many children's toys being sold in this country that had high levels of lead, another substance that can cause severe damage to a child if ingested. After that recall, it turns out that the same manufacturers replaced lead with cadmium, resulting in another recall earlier this year, a recall that included millions and millions of products. One would have hope that after the lead scare, the safety organizations would have been more on alert about similar type products. No such luck. After we got through the first cadmium scare, we now have another one. In the product safety dimension, learning does not happen, disasters just repeat over and over again.
• In the world of the American political class, all Republicans are vehemently against homosexuals and Democrats are the only advocates for the gay way of life. However, in our reality, this is not the case. An Associated Press report from July 13, 2010, reported that a Republican gay rights group, Log Cabin Republicans, is suing the administration in Federal court over the refusal of the Obama administration to repeal the "don't ask, don't tell" military doctrine on gays serving in the armed forces. This will set up the surreal situation where a Democratic administration will be using taxpayer funds to defend a policy, a policy it also wants to see repealed, against a group that is traditionally been painted as anti-gay. Got that, makes no sense to me either.
• And finally, lets leave this post with some Orwellian and otherworldly snippets from President Obama. George Orwell in his novel, 1984, was very precise when he showed how by manipulating how you say things, war is peace, freedom is slavery, etc., you can make the unreal become real. In President Obama's world, getting our military out of Iraq means staying in Iraq, closing the Guantanamo Bay prison means leaving it open, not hiring lobbyists to serve in his administration means hiring lobbyists to serve in his administration, significantly reducing earmarks means increasing earmarks, being fully engaged in helping the Gulf Coast residents survive the BP oil spill means taking two vacations, playing seven rounds of golf, participating in several athletic photo ops with various teams, and taking at least two trips to California to campaign for other Democrats, and not raising taxes for anyone earning under $250,000 a year means raising the taxes for those same people's kids and grandkids by allowing unprecedented government spending and national debt increases, increases that every American, present and future, will eventually have to pay.

The sad thing is that the political class lives in their own world, a world where the pay is very good, the benefits are great, you can almost never get fired since you have rigged the election process, and you don't have to care what your constituents think and the issues they face. That is why Step 39 in "Love My Country, Loathe My Government" is so critical. Step 39 would impose term limits on all Federally elected officials, forcing them out of their worlds and other dimensions after one term, hopefully replaced by regular people that are grounded in this world and the major issues listed above. It is time to bury the rabbit hole once a fall all, stop wasting taxes and start tackling real issues and problems.




Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Also visit the following sites for freedom:

http://www.cato.org/
http://www.reason.com/
http://www.robertringer.com/
http://www.realpolichick.blogspot.com/
http://www.flipcongress2010.com/

Pollitical Class Voodoo Economic Myths and Lies - Myth # 4

Over the past few blogs we have examined and destroyed three economic myths that the political class likes to use to keep American citizens confused and under control from an economic perspective. We have proven that 1) the so-called Bush tax cuts for the rich were not the determining factor in the skyrocketing deficits, 2) that Social Security is really a scam and that the free market would have been a much better investment alternative for most Americans over the years, and 3) economic stimulus spending is a cruel joke that only moves money around in the economy and does not create wealth or real jobs.

Today we will kill a fourth myth. Today's myth is the untruth coming from the political class that taxes must be raised in order to tame our deficit problem, i.e. the government has not collected enough taxes and that is what is causing the deficit to balloon. Of course, since this is a myth, nothing could be further from the truth. The basis of the analysis today is a great article at the Heritage Foundation website written by Brian M. Riedl entitled, "The Three Biggest Myths About Tax Cuts and The Budget Deficit." We have already touched on the first two myths analyzed by Mr. Riedl, namely that the Bush tax cuts caused the deficits we are seeing today. However, it is the third myth we are covering today, a myth that he frames as: "Declining revenues are driving future deficits." In other words, in his opinion, it is a myth that the deficits are caused by the government not collecting enough taxes.

To prove this point, Mr. Riedl does a simple analysis where he takes three economic data series from 1960 to 2020 (estimated) and divides two of the series by the third to create two ratio series. The denominator is the country's annual GDP and the two numerator series are the amount of money that the government spent every year and the amount of money that the government collected in taxes and fees every year. From 1960 to 2009, the ratio of government spending to GDP averaged 20.3% and the ratio of government revenues to GDP was 18.0%.

The spending to GDP ratio was generally under the long term average from the 1960s to the late 1970s and from about 1985 until about 2007 and above the long term average from about 1980 to about 1984. The key point to remember is that for most of the Bush administration, the long term spending to GDP ratio was below the long term average. The revenue to GDP ratio bounced around the average of 18.0% throughout the entire period. It is expected to stay around the long term average through the year 2020.

While the revenue ratio stayed around the long term average through the past ten years or so, the spending to GDP ratio has skyrocketed since Obama took office, rising to around 25% in 2009, 2010 and 2011 (estimated) before expecting to decline to about 23% and then constantly rising until it hits an astronomical 26.5% in 2020. Thus, according to this simple ratio analysis, it is the large run up in spending, relative to the GDP of the nation, that is causing the deficits, not the fact that the government does not collect enough in taxes. That ratio has remained relatively stable for the past fifty years.

Mr. Riedl does on further analysis, determining that government spending for just Social Security, Medicare, Medicaid, and interest on our national debt will jump from about $1.6 TRILLION a year to an annual average of $3.5 TRILLION a year. Since the Federal government is currently collecting about $2.1 TRILLION in 2010 to fund the entire Federal budget, tax collections would have to increase 66% just to cover these four budget items in the next decade. Other government costs such as defense, student loans, Federal employee salaries, etc. would also have to be paid for with additional taxes.

Consider another example. Since the current Federal budget is about $3.5 TRILLION, if we keep all other expenses flat and added in the extra $1.9 TRILLION a year from the increase costs of these four line items, the total annual Federal budget would become $5.4 TRILLION. In order to keep this level of expense at the long term average of 20.3%, the U.S. economy would have to grow from its current size of about $14 TRILLION to over $26 TRILLION within a few years. This is not going to happen.

Thus, myth disproved. It is not insufficient tax collection driving the deficit, it is sky high government and political class spending driving the deficit, primarily in the four categories o Social Security, Medicare, medicaid, and interest payments. There is not enough revenue and wealth that could be taxed out of American citizens to overcome this outlandish spending. Which makes it critical that numerous steps from "Love My Country, Loather My Government" be implemented as soon as possible:

• Step 1 - start reducing Federal government expenditures across the board by 10% a year for at least five years.
• Step 4 - funnel some of these expense savings into the three or four most deadly diseases facing the country today in order to reduce Medicare, Medicaid, and overall medical spending.
• Steps 10, 11, 12 - use these three steps to start fixing Social Security finances immediately.
• Step 28 - convene a panel of experts to determine the underlying root causes of escalating health care costs in this country and implement a plan to attack these root causes, dumping the ineffective and prohibitively expensive Obama Care reform legislation.
• Step 39 - implement term limits for all Congressional members in order to remove the stigma of making the hard economic decisions required to reduce government spending.

Thanks to Mr. Riedl and the Heritage Foundation for helping us destroy this myth. Now that the myths are destroyed, it is time to start dealing with reality and that reality starts with the dumping of all incumbents in November.

Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.



Also visit the following sites for freedom:



http://www.cato.org/

http://www.reason.com/

http://www.robertringer.com/

http://www.realpolichick.blogspot.com/

http://www.flipcongress2010.com/

Political Class Voodoo Economic Myths And Lies - Myth #3

The past two days we have disproven too long standing myths and lies that the political class has constantly shoved down our throats, namely that the so-called Bush tax cuts for the rich caused all of the economic trauma and skyrocketing deficits over the past few years and that Social Security is a far better and safer alternative compared to letting people invest their money for retirement the way they want to invest it. Two myths down, a few more to go.

Today we will disprove the myth that government spending is an effective way to stimulate the economy and create real jobs. This is a timely topic as the nation continues to struggle with very high unemployment (about 10%) and sluggish economic growth. The Obama administration launched their stimulus economic program last year and some in the political class are calling for another shot of stimulus spending since we are still in the economic doldrums. But did the first stimulus package to any good? You can obviously make the case that it did not since unemployment is still so high, with over 14 million Americans still out of work. A vast majority of the 5% or so economic growth in the fourth quarter of 2009 can be proven to be from the temporary jolt of stimulus spending, spending that has resulted in no long lasting effect as economic growth has fallen off throughout 2010. If we go back to our blog post of October 31, 2009, we see more distressing numbers. At that time, the Obama administration claimed that the stimulus plan had created or saved 650,000 jobs. It also reported that $180 billion of the stimulus funding had been spent. If you do the simple calculation, using all of Obama's numbers, you see that each of the jobs created/saved cost about $277,000 each to be created or saved. You cannot reduce unemployment through stimulus spending if it costs over a quarter million dollars to create or save one job that likely pays significantly less than that.

The sad truth that most in the political class do not understand or do not want to understand is that stimulus spending is an ineffective and inefficient way to spur the economy. It does not create jobs, it creates short term work, work that usually vanishes once the stimulus spending is spent, as illustrated by the decline in economic growth over the past year or so once the stimulus was spent. Governments cannot create wealth, they only can take wealth (via taxation) and redistribute it, usually less effectively than the free market. If that wealth had not been taken as taxes, it would have still entered the economy but would have entered the economy via individual citizens making individual choices. All the stimulus spending did was move around the money that was spent, it was not incremental spending to the economy.

A perfect counter example to this myth is what happened at the end of World War II. Consider the following information, mostly gathered from official U.S. government sources The first number is the year, the second number is Federal budget in millions of dollars, the third number is the unemployment rate and the fourth number is the GDP in billions of dollars:

1940: $9468, 14.6%,$101.4

1941:$13653, 9.9%, $126.7

1942: $35137, 4.7%, $161.9

1943: $78555, 1.9%, $198.6

1944: $91304, 1.2%, $219.8

1945: $92712, 1.9%, $223.0

1946: $55232, 3.9%, $222.2

1947: $34496, 3.9%, $244.1

1948: $29764, 3.8%, $269.1

1949: $38835, 5.9%, $267.2

1950: $42562, 5.3%, $293.7

1951: $45514, 3.3%, $339.3

Combine these facts with the facts that in 1945 there were conservatively about 10 million members of the armed services coming home to start civilian life and jobs (about 7% of the overall U.S. population). Did the U.S. government implement a stimulus spending program, significantly growing the deficit in order to create jobs for these returning members of the armed forces? It does not appear so from the above numbers:

• From a wartime high of about $93 billion in 1945, the Federal budget was reduced by about 40% in just one year in 1946 (from $93 billion to $55 billion)
• By 1948, just three years after the war ended, the Federal budget and spending was under $30 billion or almost 68% smaller than it was in 1945.
• However, despite these drastic cuts in Federal spending and about 7% of the population coming home to look for a job, the average unemployment rate for the six years immediately after the war was about 4.4%, a level that the Obama administration would kill for today.
• 7% of today's U.S. population equates to the creation of enough jobs for over 20 million Americans, enough to keep today's unemployment rate well under 5%.
• During the same time period, overall economic growth increased year over year for all but one year of the six years after the war and the U.S. government ran a budget surplus in four of the six years after the war (not on the chart).

Let's review what happened after World War II - despite a massive influx of new people into the economy and the draconian reduction in Federal government spending immediately after the war ended, unemployment levels stayed low, the economy grew robustly, and the Federal government enjoyed budget surpluses for several years (four out of six) immediately after the war. No stimulus programs, no Cash For Clunker disasters, no skyrocketing national debt, minimal deficit spending. All of the things that the political class is doing to day that are not working, the government in the 1940s did the opposite of and it worked beautifully.

Kind of reminds of the old Seinfeld episode where George Costanza does the exact opposite of what he has been doing because that behavior has always resulted in failure. Maybe the political class should learn a lesson from George and our analysis above: lose the myth that government stimulus spending actually works. When you start to look like George Costanza, you have a big problem, political class.

Let Americans keep most of their hard earned wealth, as outlined in Step 1 of "Love My Country, Loathe My Government," to spend it freely and personally how they want to spend it. They showed in the 1940s that their spending it on what they want and need is the surest way and mos efficient way to grow the economy. America came out of the war a healthy, robust nation with the strongest and freest economy in the world, something that we may not be able to claim today.

Our new book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Also visit the following sites for freedom:

http://www.cato.org/
http://www.reason.com/
http://www.robertringer.com/
http://www.realpolichick.blogspot.com/
http://www.flipcongress2010.com/