Tidbits Quotations
To Accompany December 15, 2014 edition of Tidbits
Bob Jensen at Trinity University

The federal Bureau of Justice Statistics finds that female college students are less likely to be raped than other women in the same age group ---
Robin Wilson

With $2 Gas, hybrid and electric cars are for Drivers Who Are Bad at Math ---
Jensen Comment
The question is how long gas will stay under $4 per gallon in the USA? It almost all depends on Saudi Arabia in spite of increased USA production. It will be great if we end the stupid corn ethanol requirements. It will be sad if we slow the momentum toward solar and splitting water to make hydrogen. Forget the windmills along with the corn ethanol.

Economists avoid the question of what to do with workers displaced by robots?

Greece may see elections early next year, and a new poll just out has the radical leftist Syriza party in first place by more than 3 percent. If Syriza takes power, the relative calm of Greek financial markets could be rocked.

Most white Americans want Eric Garner's killer indicted — but not Michael Brown's ---

Each pound of avocado grown in Southern California takes 74 gallons of water on average.

How Times Have Changed for the Holidays
Zinsser's essay about how Norman Rockwell might portray the holiday today ---

Happiness is like a butterfly: the more you chase it, the more it will elude you, but if you turn your attention to other things, it will come and sit softly on your shoulder.
Henry David Thoreau

It makes me wonder how all those people on Medicaid, food stamps, and welfare can afford iPhone and car payment monthly fees in hundreds of dollars. I suspect the main reason is avoiding marriage to what would otherwise become a higher income spouse.
Bob Jensen

According to the National Retail Federation, Americans are projected to spend $7.4 billion on Halloween this year, including $350 million on costumes for pets.
Kristin van Ogrop, Time Magazine, October 27, Page 58
Michele Obama should be rightly outraged at the unhealthy sugar intake of millions of children, and for what?

Be brave enough to start a conversation that matters.
Margaret Wheatley,

We must be willing to get rid of the life we've planned, so as to have the life that is waiting for us.
Joseph Campbell

If everyone is thinking alike, then somebody isn't thinking.
George S. Patton

Holiday travelers faced a literal nightmare on Sunday morning when the line for security checks at Midway Airport in Chicago was reportedly over a mile long. KOMO reporter Denise Whitaker said that the line was 1.2 miles long. An airport spokesperson said that she wasn't surprised by the crowds.
You know traveling is bad when the cab lets you off more than a mile in front of the airport.

It's better to walk alone than in a crowd going in the wrong direction.
Diane Grant

The measure of who we are is what we do with what we have.--
Coach Vince Lombardi

For the first time ever, there are 100 women in Congress
Sarah Kliff --- http://www.vox.com/2014/11/5/7160477/women-in-congress-first-time-100-legislators-midterms

Mahatma Gandhi’s List of the 7 Social Sins; or Tips on How to Avoid Living the Bad Life ---

Dumb Rich Kids Get All The Breaks
Paul Krugman --- http://www.businessinsider.com/krugman-on-rich-poor-wealth-success-america-2014-11
Paul's Krugman managed to graduate from Yale and then got a PhD from MIT.  I don't was a rich kid kid but he got the breaks..
Barack Obama managed to graduate from Columbia University and then got a law degree from Harvard.  I don't think he was rich kid but he got the breaks..
Michelle Obama and Sonia Sotomayor graduated from Princeton University.  Neither them was rich kid but each one got the breaks..
There is such a thing as getting breaks under the American dream, and those breaks are commonly earned without being a rich kid.
Why is it that so many poor people who became rich and prominent in the USA despise the system that gave them such big breaks in life?
Would their chances have been as great outside the USA if they were smart and not rich?

Moocher Hall of Fame --- https://danieljmitchell.wordpress.com/the-moocher-hall-of-fame/

The 17 Most Corrupt Countries In The World ---

Here are the 17 most corrupt countries, according to the index:

Screenshot 2014 12 03 06.29.01Transparency


The lowest ranked countries are perceived as "plagued by poor governance, and untrustworthy and badly functioning public institutions like police or media."

The four least corrupt countries are Denmark (92), New Zealand (91), Finland (89), and Sweden (87), while the US came in 17th — along with Barbados, Hong Kong, and Ireland — with a rating of 74.

Read more: http://www.businessinsider.com/most-corrupt-countries-in-the-world-2014-12#ixzz3Kq8ohKMY

Jensen Comment
Sadly the global map of corruption is very red except in North America, Europe, Australia, New Zealand, and Japan. Extortion and bribery dominate the rest of the world.

India is highly corrupt at Rank 85. China is worse at Rank 100. Russia is much worse at Rank 136.

The Most Corrupt and the least Corrupt Nations of the World ---

One of the reasons the USA is not in the Top 10 nations in terms of ethics is that vendors who do business with municipalities and schools (from Chicago to Detroit to Podunk Township) must often pay bribes and kickbacks to public officials like mayors and other city leaders. Another reason is that USA city officials so often steal things.

Exhibit A
"Jury Convicts Former Detroit City Treasurer, Pension Officials of Conspiring to Defraud Pensioners Through Bribery"
U.S. Attorney's Office
December 8, 2014

Hypocrisy at UC Berkeley:  Celebrate Free Speech by Whisking Away a Conservative Speaker for His Own Safety
"Berkeley Protests Shut Down Peter Thiel Speech," by Joel B. Pollak, Breitbart, December 11, 2014 ---

On Wednesday evening, in the very hall where the University of California at Berkeley had just celebrated the 50th anniversary of the Free Speech Movement, demonstrators shut down a speech by billionaire tech guru--and noted libertarian--Peter Thiel.

. . .

On Monday evening, Breitbart News had reported on the commemoration of the 50th anniversary of the Free Speech Movement from within the same hall. One veteran of that event, philosopher John Searle, lamented that Berkeley had not achieved complete free speech, because of hostility towards unpopular views, particularly conservative ones.

Obama refuses to prosecute members of the New Black Panther Party for their plot to commit murder and bombing


. . .

In a November 2014 undercover sting operation, the St. Louis police sold a fake bomb to members of the New Black Panther Party, who thought they were buying a real bomb. They tried to buy two additional bombs, but the EBT card that they were using did not have enough money on it. They were planning to murder Ferguson Police Chief Tom Jackson and St. Louis County Prosecuting Attorney Robert McCulloch, and bomb the Gateway Arch.

Normally, the federal government would have charged them with terrorism.

However, the Obama administration refused to charge them with terrorism, or with plotting to commit murder and bombing. The only charges filed by the federal government were for making false statements when they attempted to purchase two 0.45 caliber pistols. The federal indictment made no mention whatsoever of their plot to commit murder and bombing.


"Germany Says Snowden's Bombshell About NSA Tapping Merkel's Phone Could Be Bogus," by Norbert Demuth, Reuters, December 12, 2014 ---

"Google Pulls Out Of Russia," by Joshua Barrie, Business Insider, December 12, 2014 ---

"NY Times: Life Insurers Use State Laws to Avoid $100 Billion in U.S. Taxes," by Paul Caron, TaxProf Blog, December 13, 2014 ---

New York Times DealBook, Life Insurers Use State Laws to Avoid as Much as $100 Billion in U.S. Taxes:

Some companies have been called economic traitors for seeking to lower their tax bills by moving overseas. But life insurers are accomplishing the same goal without leaving the country, saving as much as $100 billion in federal taxes, much of it in the last several years.

The insurers are taking advantage of fierce competition for their business among states, which have passed special laws that allow the companies to pull cash away from reserves they are required to keep to pay claims. The insurers use the money to pay for bonuses, shareholder dividends, acquisitions and other projects, and because of complicated accounting maneuvers, the money escapes federal taxation.

"WSJ: Bonus Depreciation Fails to Boost Jobs, Capital Investment,"  by Paul Caron, TaxProf Blog, December 12, 2014 ---

With Congress poised to extend a raft of tax breaks, consider this: One such break has helped AT&T and Verizon slash their recent tax bills by billions of dollars without leading to the intended increase in investment or jobs.

The measure, known as “bonus depreciation,” lets companies offset their income with investments they have made more quickly. It was enacted in 2008 as part of the economic stimulus package with the goal of giving companies an incentive to build more factories or upgrade more equipment, creating jobs and giving a boost to sluggish economic growth in the process.

But that isn’t how it has worked, at least at AT&T and Verizon, whose vast networks of towers and cables make them two of the country’s biggest investors in infrastructure.

AT&T estimated its federal tax bill last year at $3 billion, down from about $5.9 billion in 2007, before the tax relief was enacted. Verizon estimated that it would get $197 million back last year, compared with a 2007 bill of $2.6 billion.

Meanwhile, the companies have kept their capital spending relatively flat since the stimulus was adopted, and their employee count has dropped by more than 100,000 people, a fifth of their combined work forces.

Socialism --- http://en.wikipedia.org/wiki/Socialism

"The performance of state-owned enterprises has been shockingly bad," The Economist, November 22, 2014 ---

ON NOVEMBER 14th Brazilian police raided the offices of Petrobras, a vast state-controlled oil firm at the centre of a corruption scandal. Back in 2010 Petrobras was a symbol of Brazil’s economic rise. It conducted the largest global equity raising on record, to pay for the development of fields off Brazil’s coast. Now, bribes are the least of it. Despite an investment binge its production growth has been anaemic. Its returns on capital and its shares have slumped. Its balance-sheet is shot, former executives have been arrested and its accounts may be restated. Petrobras is today an exemplar of something else: the lousy performance of state-owned firms.

Ronald Reagan said the nine most terrifying words in the English language were “I’m from the government and I’m here to help.” For investors the scariest words may be, “I’m from a state-owned firm and I want your capital.” Across the world, big, listed state-owned enterprises (SOEs) that were floated, or raised mountains of equity, between 2000 and 2010 have had a dismal time. Their share of global market capitalisation has shrunk from a peak of 22% in 2007 to 13% today. Measured by profits their decline is less stark, mainly because big Chinese banks continue to report inflated profits that do not accurately reflect their rotten books. Exclude them and SOEs’ share of earnings has slumped, too (see chart). It will probably fall further.

In Russia, Gazprom, which the Kremlin once predicted would be the first firm to be worth $1 trillion, has crumpled: it is worth $73 billion today. India’s mismanaged state-owned banks command miserly valuations compared with their private peers. Since 2009 the Shenzhen stockmarket’s index, which is dominated by private firms, has rocketed past that of its rival in Shanghai, which is mainly made up of state companies, notes Sanford C. Bernstein, an analysis firm. Once, investors swooned at the rise of China Mobile, a state-owned operator. Now they admire Xiaomi, a wily private handset-maker. Shares in Vale, a Brazilian miner in which public-sector pension funds have a big stake, have lagged those of its private-sector peers, BHP Billiton and Rio Tinto, by over 40% in the past three years.

Overall, the SOEs among the world’s top 500 firms have lost between 33% and 37% of their value in dollars since 2007, depending on how one treats firms that were unlisted at the start of the period. Global shares as a whole have risen by 5%.

It was not meant to be like this. As the West slipped into a crisis in 2007-08, state capitalism supposedly took the business world by storm, particularly in the emerging world. It had two elements. Sovereign wealth funds (SWFs) gathered the excess savings that oil-rich and Asian countries accumulated, investing them overseas. And a new, hybrid kind of SOE was in vogue. When Europe and Latin America privatised firms in the 1980s and 1990s, they often went the whole hog, with the state selling out completely—think of British Gas or telecoms in Brazil. But in the 2000s private investors were invited to play only a subordinate role, with the state keeping a controlling stake and making enlightened decisions in the interests of all. Investors lapped it up: they forked out more than $500 billion in SOE equity raisings between 2000 and 2012.

What went wrong? As trade surpluses and commodity prices have fallen, SWFs have accumulated cash at a slower rate and spent less on buying stakes in firms. In 2013 their investments were $50 billion, under half the level of 2008, reckons Bernardo Bortolotti of Bocconi University in Milan. SOEs, meanwhile, have been through hell. Tumbling commodity prices have hurt energy and mining firms. Sanctions have clobbered Russian firms. Corruption scandals have erupted, and not just in Brazil. Jiang Jiemin, PetroChina’s ex-boss, was arrested in 2013, for example.

But at the root of the underperformance is what looks like a huge misallocation of capital by SOEs. Given licence by politicians, and with little need to pacify stroppy investors, their capital investment surged, accounting for over 30% of the global total by big listed firms.

More than $2.5 trillion has been invested in telecoms networks, hydrocarbons fields and other projects by SOEs since 2007. Gazprom built an alpine ski resort for the winter Olympics. Etisalat, a telecoms firm in the United Arab Emirates, blew $800m on an operation in India whose licence was cancelled after an anti-graft inquiry. To counteract the global slowdown after 2007-08, state banks went on a lending binge in China, India, Russia, Brazil and Vietnam. The resulting bad debts are only now being recognised.

As the balance-sheets of SOEs have grown faster than profits, return on equity has slumped from 16% in 2007 to 12% today, less than the 13% achieved by private firms. China’s four biggest banks, with their inflated earnings, flatter this picture. Excluding them, SOEs’ return on equity falls to 10%. Cash returns to investors are poor: SOEs’ dividends and buy-backs are typically only 10-15% of the global total. Flabby and stingy, SOEs are now priced by investors at about their liquidation value.

For governments and managers of SOEs the immediate task is firefighting. While SOES’ aggregate balance-sheet is passable, some companies are too indebted. Vietnam has had one big SOE default, by a shipyard. Petrobras has net debt equivalent to four times its gross operating profit. Rosneft, a Russian oil firm, must refinance $21 billion of bonds before April. Its bond yields have risen sharply and it wants state aid. Many SOE banks in the emerging world need to be recapitalised.

Next, investment levels and costs need to be cut, so as to lift returns on capital. There is little sign that this is happening yet. Natural-resources SOEs will probably be slower to react to lower commodity prices than their private-sector peers. All state firms find it hard to lay off people—the SOEs among the world’s 500 most valuable firms employ 8m, and their workforce has risen by a fifth since 2007. Those in industries facing disruption from the web, particularly banking and telecoms, will probably need redundancy schemes.

Privatisation 3.0

In the longer term, managers need to rethink how firms are run. Interviewed by The Economist in April, Xi Guohua, the chairman of China Mobile, talked of introducing incentive-based pay, awarding staff shares and establishing stand-alone units with freedom to innovate. “The old organisation will restrict our development and stand in our way, and we are fully aware of the urgency of such changes,” he said.

China Mobile’s efforts are part of a wider drive in China to make SOEs more efficient by deregulating prices and interest rates, introducing more private investors and increasing competition. Narendra Modi, India’s newish prime minister, has a similar plan to open up Coal India, a notoriously inept monopolist, to competition and to resuscitate India’s state-run banks.

Yet at the heart of all these efforts, a tension remains: who are SOEs run for? The public good, as interpreted by politicians? Or shareholders? Only some countries have resolved this, either by the state selling out completely, or by establishing robust mechanisms to keep firms at arms’ length from the government, such as at Temasek, Singapore’s state holding company. Until this question is resolved the value-destroying impulses of SOEs will remain, and investors will be wary of both established firms and newcomers. That is why, as the box alongside describes, not a single foreign investor took part in Vietnam’s latest flotation of a state firm.

Jensen Comment
There are myths that persist among the naive. One myth is that socialism is not subject to market opportunities and controls. This can be true as evidenced by the problems that the Soviet Union and Mao's China had with socialist enterprises and collective farms that often led to empty shelves and the wrong products in the wrong place at the wrong time. But state-owned enterprises in global markets are often subjected to global prices such as world oil and other commodity prices markets.

Another myth is that capitalism is subject to market opportunities and controls. Much of what we call private enterprise is not capitalism. Often such enterprises are monopolies or unwieldy oligopolies that control markets rather than vice versa.

Both public and private enterprises that do not face fierce competition are seldom engines of innovation. The USA would not have all the technological communications innovations if the AT&T monopoly had not been blown apart. The railroad oligopoly has not changed a whole lot while the world of transportation captured the its markets and invented all sorts of ways to deliver people and merchandise much more efficiently and effectively.

The above article does illustrate how I often frustrate my socialist friends by asking them to show me role models of tremendous state-owned enterprises. There are of course some examples (think Norway), but these are few and far between. Success stories are usually instances where relatively large reserves of valuable commodities (like oil) are such that most any type of enterprise is going to succeed.

In my opinion, state-owned and corruption-bound are all too often synonyms.

"Welcome to Illinois, the Deadbeat State:  Last year the Land of Lincoln had to defer paying $7 billion owed to contractors. Its bond rating is the worst of any state," by Gerald Skoning, The Wall Street Journal, December 9, 2014 ---

Like millions of other Americans, I have spent cautiously, paid bills on time and maintained a strict budget. That doesn’t make us heroes. But it does mean we have exercised common sense, which has been sorely lacking among the politicians in my home state of Illinois.

The Land of Lincoln has accrued a $111 billion unfunded liability for government workers’ pensions—up 75% from five years ago. There is an additional $56 billion of unfunded debt to cover health benefits for the state’s retirees. Illinois today is already spending more of its general fund on pensions than on K-12 education. One in four tax dollars pays for its retired workers’ benefits. Last year the state had to defer paying $7 billion owed to contractors. All this after Democrats in 2011 raised income taxes and corporate taxes by 67% and 30%, respectively.

It’s getting embarrassing to admit that I’m a citizen of such a deadbeat state.

The level of debt is staggering. According to a recent report by Statista Inc., Illinois residents owe $24,959 each as their share of the outstanding bonds, unfunded pension commitments and budget gaps the state has accumulated. Thank goodness this obligation doesn’t go on my credit report, or my credit rating would be in the tank along with the state’s A-minus bond rating, the worst of any state in the nation.

It is no wonder that 850,000 people have left Illinois for other states in the past 15 years, according to the Illinois Policy Institute. Or that Illinois has become one of the most business unfriendly states in the country (40th in a recent Forbes survey).

Ironically, there is an easy way for me and my fellow Illinoisans to reduce our obligations: Move next door to Indiana, or maybe to Florida. The debt per resident in the Hoosier State is just $5,726 (third lowest in the country) and residents of the Sunshine State owe only $7,175 each (fourth lowest). It may be a coincidence, but the eight lowest debt-per-resident states have Republican governors.

Crushing debt isn’t just Illinois’s problem. According to State Budget Solutions, America’s 50 state governments collectively owe $5.1 trillion, including outstanding bonds, unfunded pension commitments and budget gaps. California has by far the largest debt—$778 billion—more than twice that of No. 2, New York, with $387 billion in red ink.

County and local governments also are huge debtors. The Cook County treasurer notes that the county’s numerous local governments have a debt load of more than $140 billion. Of course, Uncle Sam is the worst offender in the deficit-spending Hall of Shame. The federal debt is more than $17 trillion and increasing by $4 billion a day. Every citizen’s share of the debt is $58,604.

The $17 trillion federal deficit is the tip of the iceberg. The U.S. has nearly more than $115 trillion in unfunded liabilities, principally in entitlement programs such as Medicare and Social Security. That’s $1.1 million per U.S. taxpayer.

Forget about Indiana and Florida, maybe I should move to the Cayman Islands. But I’m not going to leave the United States—or Illinois. The message of the midterm elections last month was that Americans want to put the era of fiscal irresponsibility and economic stagnation in the rearview mirror. I’m hoping that Bruce Rauner, the Republican elected governor of deep-blue Illinois, will show them how it can be done.

Mr. Skoning is a labor and employment lawyer in Chicago.


What is the incentive to manage pensions responsibly in Illinois?

"Illinois’s Pension Absurdity:  A judge rules that all benefits are forever, no matter the public cost," The Wall Street Journal, November 28, 2014 ---

Republican Bruce Rauner has his work cut out rehabilitating Illinois from years of liberal-public union misrule, but now he may also have to cope with a willful state judiciary. Consider a lower court judge’s slipshod ruling last week striking down de minimis pension reforms.

The fiscally delinquent state has accrued a $111 billion unfunded pension liability—a 75% increase from five years ago—in addition to $56 billion in debt for retiree health benefits. Incredibly, the state is spending more of its general fund on pensions than on K-12 education. One in four tax dollars pays for retirement benefits. Last year the state had to defer $7 billion in bills to contractors. This is after Democrats in 2011 raised income and corporate taxes by 67% and 30%, respectively. Little wonder that Illinois has the nation’s worst credit rating.

Democrats last year passed modest pension fixes conceived with the fainthearted judiciary in mind. The retirement age for younger workers increased on a graduated scale. Workers now in their 20s could still retire with pensions approximating 75% of their salaries at age 60.

Salaries used for pension calculations were also capped at an inflation-adjusted $110,600 with a gaping carve-out for workers who collectively-bargained higher pay. Cost-of-living adjustments were tied to years of service and inflation instead of annually compounding at 3%. As a political salve, the state even cut worker pension contributions by 1%.

Yet Sangamon County Circuit Court Judge John Belz last week rejected all pension trims as a violation of the state Constitution, which holds that “[m]embership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” According to Judge Belz, there is “no legally cognizable affirmative defense” for impairing pensions benefit.

Except, well, 80 years of U.S. Supreme Court precedent. Federal courts have established that states may invoke their police powers to impair contracts. In the 1934 case Home Building & Loan Association v. Blaisdell, the U.S. Supreme Court ruled that emergencies “may justify the exercise of [the State’s] continuing and dominant protective power notwithstanding interference with contracts,” which the U.S. Constitution otherwise prohibits.

The Supreme Court has since developed a balancing test that allows states to impair contracts when it is reasonable and necessary to serve an important public purpose. The level of legal scrutiny increases with the severity of the impairment.

Yet Judge Belz refused even to consider the state’s argument that it must tweak pensions to maintain vital public services (e.g., police, schools). The court “need not and does not reach the issue of whether the facts would justify the exercise of such a power if it existed,” the judge asserted. If the police power existed?

Perhaps the judge assumes that the Illinois Supreme Court, based on its 6-1 decision this summer that extended constitutional protections to retiree health benefits, will strike down the pension reforms. Judge Belz teed up the high court by quoting copiously from that opinion.

Even if they lose at the Illinois Supreme Court, Mr. Rauner and the legislature will still have options for fixing their pension mess including moving new workers to defined-contribution plans and putting a constitutional amendment before voters that affirms the ability to prospectively modify retirement benefits. Option C would be to petition Illinois’s more prudent neighbors for annexation.

Pension Benefit Guaranty Corporation (PBGC) --- http://en.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corporation

The Pension Benefit Guaranty Corporation (PBGC) is an independent agency of the United States government that was created by the Employee Retirement Income Security Act of 1974 (ERISA) to encourage the continuation and maintenance of voluntary private defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at the lowest level necessary to carry out its operations. Subject to other statutory limitations, the PBGC insurance program pays pension benefits up to the maximum guaranteed benefit set by law to participants who retire at age 65 ($54,000 a year as of 2011).[2] The benefits payable to insured retirees who start their benefits at ages other than 65, or who elect survivor coverage, are adjusted to be equivalent in value.

During fiscal year 2010, the PBGC paid $5.6 billion in benefits to participants of failed pension plans. That year, 147 pension plans failed, and the PBGC's deficit increased 4.5 percent to $23 billion. The PBGC has a total of $102.5 billion in obligations and $79.5 billion in assets.

Jensen Comment
Private sector companies can pay premiums to insure employee pension benefits will carry on when companies carrying this insurance go bankrupt. But at least those benefits are capped. For example, here on Sunset Hill Road I have a friend who is a retired United Airlines Captain. When United Airlines went bankrupt his pension benefits were cut in half because the insured benefits are capped for high-salaried employees. In terms of the public sector such caps are no longer allowed unless this court ruling is overturned by a higher court.

Because of their skills, airline Captains are understandably paid very well with large pension benefits tied to their high salaries before retirement, pensions that they themselves contributed to out of their salaries over the years. In the public sector, salaries are generally not so high, and sometimes the high pension benefits are outright frauds such as the $500,000 annual pension of the former City Manager of tiny Bell, California. Illinois public pension plans were similarly wracked with frauds promising enormous pensions and early retirements.

One can argue that pension contracts should not be broken, but pension contracts are commonly broken in the private sector. Employees of companies that did not pay for PGBC insurance may lose all their pensions depending upon the outcomes of the bankruptcy courts. Employees of companies that are insured by PGBC may still lose part of their pensions like my friend nearby lost half of his United Airlines pension. Then why is it that public sector pension contracts cannot be broken somewhat similar to private sector pensions?

The main problem with this ruling is that there is moral hazard. It encourages fraud and mismanagement of pensions in the public sector. The main problem with public sector pensions in Illinois that they were enormously mismanaged and underfunded. What is the incentive to manage pensions responsibly in Illinois?

"Measuring Pension Liabilities under GASB Statement No. 68," by John W. Mortimer and Linda R. Henderson, Accounting Horizons, September 2014, Vol. 28, No. 3, pp. 421-454 ---

While retired government employees clearly depend on public sector defined benefit pension funds, these plans also contribute significantly to U.S. state and national economies. Growing public concern about the funding adequacy of these plans, hard hit by the great recession, raises questions about their future viability. After several years of study, the Governmental Accounting Standards Board (GASB) approved two new standards, GASB 67 and 68, with the goal of substantially improving the accounting for and transparency of financial reporting of state/municipal public employee defined benefit pension plans. GASB 68, the focus of this paper, requires state/municipal governments to calculate and report a net pension liability based on a single discount rate that combines the rate of return on funded plan assets with a low-risk index rate on the unfunded portion of the liability. This paper illustrates the calculation of estimates for GASB 68 reportable net pension liabilities, funded ratios, and single discount rates for 48 fiscal year state employee defined benefit plans by using an innovative valuation model and readily available data. The results show statistically significant increases in reportable net pension liabilities and decreases in the estimated hypothetical GASB 68 funded ratios and single discount rates. Our sensitivity analyses examine the effect of changes in the low-risk rate and time period on these results. We find that reported discount rates of weaker plans approach the low-risk rate, resulting in higher pension liabilities and creating policy incentives to increase risky assets in pension portfolios.

Bob Jensen's threads on the sad state of governmental accounting ---


Most, but not all, unions support these cuts because the losses to retirees will be greater if these private sector and union pensions are not reduced
"Congress Says It Has to Cut Pensions to Save Them," by Peter Coy, Bloomberg Businessweek, December 11, 2014 ---

The $1+ trillion budget is really a Nancy Pelosi budget in the sense that nobody, especially members of Congress," will know what all is in it until after it is passed" --- which is what Pelosi said about the ACA when it was passed in 2010.

Bob Jensen's threads on pension accounting ---

Financial Data for Each of the 50 States in the USA ---

Substance Versus Media Grandstanding
"Let’s Pretend Dodd-Frank Works:  Elizabeth Warren’s phony outrage over a rewrite of swaps rules," The Wall Street Journal, December 11, 2014 ---

. . .

Senator Warren says that junking the rule will “let derivatives traders on Wall Street gamble with taxpayer money and get bailed out by the government when their risky bets threaten to blow up our financial system.” She’s urging Democrats to oppose the big budget bill, and as we write this she’s stampeded many House Democrats against it.

We’re all for shrinking the taxpayer safety net. And we hate to be the ones to break it to Ms. Warren, especially mid-passion play, but separate provisions of Dodd-Frank have already stretched the taxpayer safety net to cover Wall Street’s derivatives trading.

All of the major clearinghouses that stand behind derivatives trades have been deemed “financial market utilities” and under the law now have access to emergency loans from the Federal Reserve. All of the giant Wall Street banks at the center of the derivatives market have already been deemed “systemically important” under the law. And the FDIC, which now has the responsibility to rescue—er, “resolve”—failing banking giants, has already clarified that its goal is to keep the subsidiaries of giant bank holding companies operating even if the parent is failing.

During Ms. Warren’s Wednesday stemwinder, we got the feeling that even she understands this. We can’t say for certain whether she was ad-libbing or reading from a text, but she referred to the FDIC as “the agency that will be responsible for bailing out Wall Street when their risky bets go sour.” Exactly.

This proposed change is far from the top priority in fixing Dodd-Frank. Engineered by Sen. Chuck Schumer (D., N.Y.), the change will give big banks an edge over non-bank competitors that cannot use deposits to fund their derivatives trades. It ought to be revisited as part of a larger overhaul of the 2010 law. But no one should believe that the Dodd-Frank status quo prevents bailouts.

This week’s show of anger is intended to promote the same false narrative that liberal politicians have been telling since the 2008 panic. This fairy tale holds that the root cause was derivatives, and not the underlying mortgage crisis and too-easy monetary policy that Washington did so much to create.

Bankers without fear of failure can get in trouble in many ways (although usually it’s about real estate), and many have failed for reasons that had nothing to do with swap contracts. Hard as it may be for progressives to understand, derivatives serve an economic function beyond enriching bankers. Main Street companies and farmers use them every day to manage risks—locking in prices on products they buy and sell, reducing their exposure to changes in interest rates or the value of currencies in which they will be paid by overseas customers.

Such activity had nothing to do with the financial crisis, but the misguided war on derivatives resulted in another Dodd-Frank provision requiring Main Street customers to put up more cash when engaging in such contracts—cash that could otherwise build their businesses. This destructive piece of Dodd-Frank is also going away this week, thanks to Rep. Jeb Hensarling’s (R., Texas) bargaining over federal terrorism insurance.

For those who seek to prevent future taxpayer bailouts, the issue is not about the terms of a manufacturer’s swap contract or which bank subsidiary is allowed to hold which type of exposure. The issue is whether guardrails can be created to prevent central bankers, regulators and politicians from creating a credit mania and then rescuing the biggest losers when the boom turns to bust.

This is the critical reform project, and debunking the false assurances of Dodd-Frank is a good place to start.

"U.S. Justice Department Allows Native American Tribes to Grow, Sell Marijuana," by David Stout, Time Magazine, December 11, 2014 ---

Jensen Comment
The ruthless Mexican drug cartels will not tolerate competition in the USA market. How long before Native American tribes are are terrorized by the vicious drug cartels? Why grow it in Mexico and risk losing a lot of it at the border when you can simply grow millions of tons of it inside the USA?

"Corporate Germany Set for Gender Revolution:  New Law Would Require More Than 100 Large Companies to Have at Least 30% Women," by Ulrike Dauer, The Wall Street Journal, December 11, 2014 ---

Bob Jensen's threads on gender issues ---


"TIGTA: IRS Has 25-30% Error Rate In Refundable Child Tax Credits, Mistakenly Pays $6-7 Billion," by Paul Caron, TaxProf Blog, December 10, 2014 ---

The Treasury Inspector General for Tax Administration yesterday released Existing Compliance Processes Will Not Reduce the Billions of Dollars in Improper Earned Income Tax Credit and Additional Child Tax Credit Payments (2014-40-093):

The Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) are refundable credits designed to help low-income individuals reduce their tax burden. The IRS estimated that it paid $63 billion in refundable EITCs and $26.6 billion in refundable ACTCs for Tax Year 2012. The IRS also estimated that 24 percent of all EITC payments made in Fiscal Year 2013, or $14.5 billion, were paid in error. ...

The IRS has continually rated the risk of improper ACTC payments as low. However, TIGTA’s assessment of the potential for ACTC improper payments indicates the ACTC improper payment rate is similar to that of the EITC. Using IRS data, TIGTA estimates the potential ACTC improper payment rate for Fiscal Year 2013 is between 25.2 percent and 30.5 percent, with potential ACTC improper payments totaling between $5.9 billion and $7.1 billion. In addition, IRS enforcement data show the root causes of improper ACTC payments are similar to those of the EITC.

New York Times, Billions in Child Tax Credits Were Invalid, U.S. Audit Finds



The 10 Worst Countries for Women ---

Jensen Comment
Many of these are the 10 worst countries for men as well. Is there a model Islamic nation that is more happy than hateful?

"Who Can Save Us From the Farm Bill's False Savings? Just as critics feared, the Farm Bill is waste billed as savings." Baylen Linnekin, Reason Magazine, December 6, 2014 ---

When the U.S. Senate voted in favor of passage of the 2014 Farm Bill in February, the buzz on Capitol Hill was that the bill would "save" taxpayers lots of money.

A giddy press release put out by the Senate Agriculture Committee, hailing the passage of the Farm Bill as it awaited Pres. Barack Obama's rubber stamp signature, used some version of the word "save" at least eight times.

The Farm Bill "[s]aves $23 Billion.... save taxpayer money... finding savings... save taxpayers billions.... saves taxpayer dollars...." and so on.

Many of the savings claims in the press release are attributed to the Ag Committee chairwoman, Sen. Debbie Stabenow (D-Mich.), who authored the bill.

Stabenow issued a slew of her own press releases touting the bill's cost-saving ability.

The bill will "reduce the deficit," boasted one.

And she touted the bill's savings in comments to the media.

"Specifically," read a New York Times report on passage of the Farm Bill, "Ms. Stabenow pointed out that the bill eliminates a much-criticized $5 billion-a-year crop subsidy to farmers who received the payments whether they grew crops or not."

She also put this shift front and center in her press releases.

"Eliminates unnecessary direct payment subsidies, a significant reform in American agriculture policy," her office wrote in a prominent bullet point on the Farm Bill. "Direct payments are paid out every year whether or not there is a need for support."

Continued in article


A Rolling Stone Gathers Fiction Without Fact

In light of these developments, Rolling Stone magazine is no longer standing by its story about a fraternity gang rape at the University of Virginia ---

"Like A Rolling Stone A charge of rape at UVA unravels, and so does a political narrate." The Wall Street Journal, December 5, 2014 ---

Rolling Stone magazine has now acknowledged “discrepancies” in an article it published last month about an alleged premeditated gang rape at a University of Virginia fraternity. Reporter Sabrina Rubin Erdely made sensational allegations based solely on the testimony of the alleged victim. Ms. Erdely also made no attempt to get a comment from the alleged assailants, a failing that bloggers and columnists first pointed out.

All publications make mistakes, including us, but this one is worth some meditation for what it says about our larger media and political culture. All the more so given the amount of laudatory national attention the story received, and the trauma it caused at UVA.

Part of the reason may be a natural human reluctance to investigate the credibility of an alleged rape victim. But that should not have stopped Ms. Erdely from doing some basic due diligence. The rape allegedly took place at a loud “date function” at the Phi Kappa Psi fraternity house on September 28, 2012. On Thursday the fraternity released a statement that it “did not have a date function or a social event during the weekend of September 28th, 2012.”

The larger problem, however, is that Ms. Erderly was, by her own admission, looking for a story to fit a pre-existing narrative—in this case, the supposed epidemic of sexual assault at elite universities, along with the presumed indifference of those schools to the problem. As the Washington Post noted in an admiring profile of Ms. Erdely, she interviewed students at several elite universities before alighting on UVA, “a public school, Southern and genteel.”

In other words, Ms. Erdely did not construct a story based on facts, but went looking for facts to fit her theory. She appears to have been looking for a story to fit the current popular liberal belief that sexual assault is pervasive and pervasively covered-up.

Now that the story has begun to fall apart, it’s worth considering the damage. Though it may never get as far as the bogus 2006 rape charges against the students of the Duke lacrosse team, members of the UVA chapter of Phi Kappa Psi will have to live with undeservedly tainted personal reputations, especially since the charges may never be decisively refuted. UVA has also taken an unfair blow to its reputation. Nor can the story do any good for the broader interest of preventing future campus sexual assaults.

We live in an era of politically driven narratives—particularly about race, class and gender—which the media often use to assert “truths” before bothering to ascertain facts. Last month in Ferguson, Missouri, and now at UVA, we’ve seen the harm those narratives can do.

"U-Va. students challenge Rolling Stone account of alleged sexual assault," by T. Rees Shapiro, The Washington Post, December 10, 2014 ---

. . .

Instead, the friends remember being shocked. Although they did not notice any blood or visible injuries, they said they immediately urged Jackie to speak to police and insisted that they find her help. Instead, they said, Jackie declined and asked to be taken back to her dorm room. They went with her — two said they spent the night — seeking to comfort Jackie in what appeared to be a moment of extreme turmoil.

“I mean, obviously, we were very concerned for her,” Andy said. “We tried to be as supportive as we could be.”

The three students agreed to be interviewed on the condition that The Post use the same aliases that appeared in Rolling Stone because of the sensitivity of the subject.

They said there are mounting inconsistencies with the original narrative in the magazine. The students also expressed suspicions about Jackie’s allegations from that night. They said the name she provided as that of her date did not match anyone at the university, and U-Va. officials confirmed to The Post that no one by that name has attended the school.

Also, photographs that were texted to one of the friends showing her date that night were actually pictures depicting one of Jackie’s high school classmates in Northern Virginia. That man, now a junior at a university in another state, confirmed that the photographs were of him and said he barely knew Jackie and hasn’t been to Charlottesville for at least six years.

The friends said they were never contacted or interviewed by the pop culture magazine’s reporters or editors. Although vilified in the article as coldly indifferent to Jackie’s ordeal, the students said they cared deeply about their friend’s well-being and safety. Randall said that they made every effort to help Jackie that night.

“She had very clearly just experienced a horrific trauma,” Randall said. “I had never seen anybody acting like she was on that night before, and I really hope I never have to again. . . . If she was acting on the night of Sept. 28, 2012, then she deserves an Oscar.”

They also said Jackie’s description of what happened to her that night differs from what she told Rolling Stone. In addition, information Jackie gave the three friends about one of her attackers, called “Drew” in the magazine’s article, differ significantly from details she later told The Post, Rolling Stone and friends from sexual assault awareness groups on campus. The three said Jackie did not specifically identify a fraternity that night.

The Rolling Stone article also said that Randall declined to be interviewed, “citing his loyalty to his own frat.” He told The Post that he was never contacted by Rolling Stone and would have agreed to an interview.

The article’s writer, Sabrina Rubin Erdely, did not respond to requests for comment this week.

Rolling Stone also declined to comment, citing an internal review of the story. The magazine has apologized for inaccuracies and discrepancies in the published report.

The 9,000-word Rolling Stone article appeared online in late November and led with the brutal account of Jackie’s alleged sexual assault. In the article, Jackie said she attended a date function at the Phi Kappa Psi fraternity in the fall of 2012 with a lifeguard she said she met at the university pool. During the party, Jackie said her date, “Drew,” lured her into a dark room, where seven men gang-raped her in an attack that left her bloodied and injured. In earlier interviews with The Post, Jackie stood by the account she gave to Rolling Stone.

Palma Pustilnik, a lawyer representing Jackie, issued a statement Wednesday morning asking that journalists refrain from contacting Jackie or her family. The Post generally does not identify victims of sexual assaults and has used Jackie’s real nickname at her request.

“As I am sure you all can understand, all of this has been very stressful, overwhelming and retraumatizing for Jackie and her family,” Pustilnik said. She declined to answer specific questions or to elaborate in a brief interview Wednesday.

Curious about friend’s date

Randall said he met Jackie shortly after arriving at U-Va. in fall 2012 and the two struck up a quick friendship. He said Jackie was interested in pursuing a romantic relationship with him; he valued her friendship but wasn’t interested in more.

The three friends said Jackie soon began talking about a handsome junior from chemistry class who had a crush on her and had been asking her out on dates.

Intrigued, Jackie’s friends got his phone number from her and began exchanging text messages with the mysterious upperclassman. He then raved to them about “this super smart hot” freshman who shared his love of the band Coheed and Cambria, according to the texts, which were provided to The Post.

“I really like this girl,” the chemistry student wrote in one message. Some of the messages included photographs of a man with a sculpted jaw line and ocean-blue eyes.

In the text messages, the student wrote that he was jealous that another student had apparently won Jackie’s attention.

“Get this she said she likes some other 1st year guy who dosnt like her and turned her down but she wont date me cause she likes him,” the chemistry student wrote. “She cant turn my down fro some nerd 1st yr. she said this kid is smart and funny and worth it.”

Jackie told her three friends that she accepted the upperclassman’s invitation for a dinner date on Friday, Sept. 28, 2012.

Curious about Jackie’s date, the friends said that they tried to find the student on a U-Va. database and social media but failed. Andy, Cindy and Randall all said they never met the student in person. Before Jackie’s date, the friends became suspicious that perhaps they hadn’t really been in contact with the chemistry student at all, they said.

U-Va. officials told The Post that no student with the name Jackie provided to her friends as her date and attacker in 2012 had ever enrolled at the university.

PBS Still Wants Viewers to Believe the Rolling Stone Article ---

. . .

That would be an important and interesting segment. But, that’s not the story the News Hour’s (PBS) Judy Woodruff aired. Instead, viewers received an incoherent mash of inconsistent messages. Woodruff didn’t even lead with the magazine’s stark and unambiguous statement. Instead, she opened with a recounting of the “horrific” allegations and the global response to the story. Then she acknowledged the magazine had issued a note to its readers saying new questions had been raised. She minimized its expression the story was wrong.

Another False Rape Story
"INVESTIGATION: Lena Dunham ‘Raped by a Republican’ Story in Bestseller Collapses Under Scrutiny,"  Brietbart, December 2014 ---

In her just-released memoir, Not That Kind of Girl, Lena Dunham describes her alma mater, Oberlin College, as "a liberal arts haven in the cornfields of Ohio." After a month-long investigation that included more than a dozen interviews, a trip to the Oberlin campus, and hours spent poring through the Oberlin College archives, her description of the campus remains the only detail Breitbart News was able to verify in Dunham's story of being raped by a campus Republican named Barry.

On top of the name Barry, which Dunham does not identify as a pseudonym (more on the importance of this below), Dunham drops close to a dozen specific clues about the identity of the man she alleges raped her as a 19-year-old student. Some of the details are personality traits like his being a “poor loser” at poker. Other details are quite specific. For instance, Dunham informs us her rapist sported a flamboyant mustache, worked at the campus library, and even names the radio talk show he hosted.

To be sure we get the point, on three occasions Dunham tells her readers that her attacker is a Republican or a conservative, and a prominent one at that -- no less than the "campus's resident conservative."

For weeks, and to no avail, using phone and email and online searches, Breitbart News was able to verify just one of these details. Like everyone else interested, we immediately found that there indeed was a prominent Republican named Barry who attended Oberlin at the time in question.

Whatever her motives, Dunham is pointing her powerful finger at this man. But as you will read in the details below, the facts do not point back at him. Not even close. This man is by all accounts (including his own) innocent.

Nonetheless, even though she is aware of the suspicion under which she placed this man, to our knowledge, Dunham has yet to clear his name.

To be sure we weren't overlooking anything, Breitbart News then took the added step of visiting the Oberlin campus in Ohio during the very cold week just before Thanksgiving. Here we interviewed a number of Oberlin staffers and students. Most were pleasant and helpful. Some less so. One adamantly refused access to documents and told us outright that it didn't matter if Dunham was telling the truth.

In the end, Breitbart News could not find a Republican named Barry who attended Oberlin during Dunham's time there who came anywhere close to matching her description of him. In fact, we could not find anyone who remembered any Oberlin Republican who matched Dunham's colorful description.

Under scrutiny, Dunham's rape story didn’t just fall apart; it evaporated into pixie dust and blew away.

One of the Most Powerful Women in America Cries 'Rape'

After receiving a reported $3.7 million advance, Dunham's memoir hit bookshelves in September with a publicity blitz usually reserved for conquering generals returning to ancient Rome. On top of the usual network television appearances and glossy magazine profiles, Dunham's book tour not only sold out in places, but scalped tickets reportedly sold for as high as $900.

Just four years ago, Dunham was casting family-members in micro-budgeted independent movies she hoped would help her break through. Today, she is the toast of elite salons along both coasts. Every word uttered, every Tweet tweeted, every promotional or political appearance made, and every episode of Girls (the HBO show Dunham created, writes, and directs) is obsessed and gushed over -- not only in the entertainment media, but also the mainstream media.

A name search at the New York Times yields more than 5000 results for the 28-year-old, almost exactly the same number recorded for Oscar-winner Kate Winslet, who's been a star since Dunham was 10.

Although she doesn't appear to have a very big or mainstream audience, Dunham is still adored by All The Right People and, as a result, she currently stands as one of the most powerful and influential women in America.

When no less than the President of the United States needed young people to turn out for his 2012 re-election effort, BarackObama.com turned to Lena Dunham.

What Dunham says reverberates through our culture. This obviously includes her rape allegation. The story of being a rape survivor led the charge and captured most of the headlines surrounding Dunham's book launch.

The Rape

The facts of the rape as Dunham lays them out are found in two chapters. In the chapter titled "Girls and Jerks" Dunham describes an "ill-fated evening of lovemaking with our campus's resident conservative." No name is given, no allegation of rape is made. The man in question is merely described as a jerk who tries to get away with not using a condom during sex and who "didn't say hi to me on campus the next day."

Continued in article

How to Mislead With Statistics
As Two-Parent families Decline, Income and Wealth Inequality
For example, married parents in a $200,000 home and income now have to live as single parents in two much lower quality homes on lower incomes

"For richer, for poorer: How family structures economic success in America," by W. Bradford Wilcox and Robert I. Lerman, American Enterprise Institute, October 28, 2014 ---

Executive Summary

The standard portrayals of economic life for ordinary Americans and their families paint a picture of stagnancy, even decline, amidst rising income inequality or joblessness. But rarely does the public conversation about the changing economic fortunes of Americans and their families look at questions of family structure. This is an important oversight because, as this report shows, changes in family formation and stability are central to the changing economic landscape of American families, to the declining economic status of men, and to worries about the health of the American dream.

Continued in article

$300,000 per speech on campus is the discounted price to universities
"Mrs. Clinton demands the rock-star treatment," byy James Taranto, The Wall Street Journal, December 1, 2014 ---

It’s nice work if you can get it: “When officials at the University of California at Los Angeles began negotiating a $300,000 speech appearance by Hillary Rodham Clinton, the school had one request: Could we get a reduced rate for public universities?” the Washington Post reported last week.

Mrs. Clinton’s agents replied that 300 grand was the discount rate. UCLA grabbed it, and the perennial potential president delivered the third annual Luskin Lecture for Thought Leadership. Previous Luskin Lecturers run the gamut from Kofi Annan to . . . Bill Clinton, demonstrating the depth of UCLA’s commitment to fresh and diverse ideas. (The Post reports Mr. Clinton received a paltry $250,000 two years ago.)

hrough a Freedom of Information Act request, the Post learned and reported many details of the negotiations over Mrs. Clinton’s Luskin Lecture. Her embarrassed supporters are striking back with sarcasm. “This just in: Hillary Clinton commands a pretty penny when asked to make a public speaking appearance,” sneers Dylan Scott of TalkingPointsMemo.com. “As breathless news stories about her hundred-thousand-dollar speaking fees have continued to reappear in some of the nation’s biggest news outlets over the last few months, conservative operatives take every chance they get to paint [Mrs.] Clinton as an out-of-touch elitist.”

Scott insists that “conservatives—and maybe to some extent journalists—[are] still refighting the last war, when Mitt Romney’s personal wealth defined him as aloof and inaccessible.” He adds that “some of the nuance might get lost in the big-dollar headlines.” To wit—though both these points are made in the Post piece—“private donors sometimes cover the full cost of [Mrs.] Clinton’s appearance and she has pledged to donate the proceedings to the Clinton Foundation, rather than pocket them.”

Well, so much for that “out-of-touch elitist” poppycock. Mrs. Clinton gets private donors to pay her lecture fees and then donates them (avoiding taxes, Scott neglects to mention) to the family foundation—just like Jane Six Pack.

The comparison to Romney, however, seems to us to miss the target. Whereas he earned his money in the private economy before going into politics, she is trading on her political power—past and prospective—to rake in the bucks as a public speaker, and perhaps to boost her 2016 prospects. The latter point was made by one UCLA alumnus quoted in the Post piece:

Days after the lecture, administrators discussed an e-mail that had arrived from graduate Charles McKenna, a lawyer who said he was concerned that the university was charging more than $250 for a ticket to hear a public official speak.
“In effect, this is a campaign appearance, as Ms. Clinton is undeniably looking into a presidential run in 2016,” McKenna wrote. “Why is a public university charging the public for the pleasure of providing Ms. Clinton the benefit of a high profile platform?”
One UCLA official advised against responding to McKenna’s e-mail “unless he pushes.” Another UCLA official then looked up the man’s giving record and responded that while he was a donor, he had not given large amounts.
In an interview Wednesday, McKenna said he never received a response to his e-mail. “If you’re a big shot, you get attention,” he said. “I’m not a big shot, by any stretch of the imagination.”

Even Scott is forced to acknowledge that “some of the details” in the Post story “weren’t flattering”—namely, Mrs. Clinton’s agents’ “very specific requests: a spread of hummus and crudités along with some cushions to be kept backstage in case she got uncomfortable.”

The Post also recounts discussions “at length” over “the style and color of the executive armchairs Clinton and moderator Lynn Vavreck would sit in . . . as well as the kind of pillows to be situated on each chair.” And along with the hummus and crudité, they demanded “coffee, tea, room temp sparkling and still water, diet ginger ale . . . and sliced fruit.”

It reminds us of Van Halen.

Snopes.com, the urban-legend website, confirms the truth of the claim that the hard-rock band’s “standard performance contract contained a provision calling for them to be provided backstage with a bowl of M&Ms from which all the brown candies has [sic] been removed.” Untrue are rumors that the band would “go on a destructive rampage” when this provision was not honored. Former lead singer David Lee Roth explained the actual rationale in his autobiography:

Van Halen was the first band to take huge productions into tertiary, third-level markets. We’d pull up with nine eighteen-wheeler trucks, full of gear, where the standard was three trucks, max. And there were many, many technical errors—whether it was the girders couldn’t support the weight, or the flooring would sink in, or the doors weren’t big enough to move the gear through.
The contract rider read like a version of the Chinese Yellow Pages because there was so much equipment, and so many human beings to make it function. So just as a little test, in the technical aspect of the rider, it would say “Article 148: There will be fifteen amperage voltage sockets at twenty-foot spaces, evenly, providing nineteen amperes . . .” This kind of thing. And article number 126, in the middle of nowhere, was: “There will be no brown M&M’s in the backstage area, upon pain of forfeiture of the show, with full compensation.”
So, when I would walk backstage, if I saw a brown M&M in that bowl . . . well, line-check the entire production. Guaranteed you’re going to arrive at a technical error. They didn’t read the contract. Guaranteed you’d run into a problem. Sometimes it would threaten to just destroy the whole show. Something like, literally, life-threatening.

It seems unlikely that the technical requirements of a Hillary Clinton speech are anywhere near that complicated, so what’s with the Van Halen-style demands?

Jensen Comment
In fairness it costs a lot to have a fleet of speech writers on full-time salary plus a traveling teach of technicians to keep the teleprompters working.

Here Are The 10 Worst States To Retire (possibly) --- http://www.businessinsider.com/here-are-the-10-worst-states-to-retire-2014-11

Jensen Comment
The above article mostly ignores taxation. For example, California is not listed as one of the worst retirement states even though it is one of the worst states in terms of taxation, especially if you're moving into the state and cannot enjoy the property tax relief of Proposition 13 ---
Nevada is one of the best states for tax relief, but is listed as being one of the worst states in terms of crime. I think California is worse for crime, although a lot depends upon where your retire in California. Don't count of crime relief in rural areas in some states, especially California, Texas, New Mexico, and Arizona. For example, in and around Stockton is now one of the most dangerous places to live in the USA.

There is a great deal of variation in terms of personal factors that often affect retirement preferences, possibly the most important being where your family is concentrated --- or at least the family that you most want to live near or family that needs you the most for such things as moral support, child care, etc. Some retirees really enjoy being near other retirees in the same age group. Others don't like living in the midst of a whole lot of other old folks.

As the saying goes, home is where the heart is --- although sometimes it takes a strong heart to do the shoveling. In some northern states there are high traditional migration rates for retirement. For example, New York has a very high migration rate --- especially to Florida.

In the Midwest it's common to retire in two places --- up north for the summer months and down south for the winter months such as in Texas, Arizona, and California. Typically the most time is spent in the north such that those Midwestern states still get most of your state income tax. In the Southeast some people spend more than six months in places like New Hampshire and move back south for the winter. New Hampshire is popular for the summer months because of having no state taxes on sales (think of costly new automobiles, boats, and motor homes) and retirement fund income taxes. Spend less retirement time in other New England states like Vermont and Maine to avoid their high taxes on retirees deemed to be residents.

Two of our friends sold their mountain-top home in New Hampshire and retired to Amelia Island in Florida thinking that the summer months would be tolerable if they lived beside the Atlantic Ocean (which they could well afford) ---
They were so miserable the first summer on Amelia Island that they now spend the summer months back in New Hampshire and only the winter months on Amelia Island. The very sultry months of July, August, and September in the deep south are unpopularly known as the Dog Days ---

I once spent two weeks in Hawaii that were equally sultry relative to my four summers in northern Florida (Tallahassee) and 24 summers in San Antonio. "Paradise" is a relative term. I really don't like humidity in hot weather. I like our mountain home in all seasons in spite of the shoveling. A diesel tractor helps, but there is still quite a lot of shoveling.

The tables and charts in this article are very helpful:  The unemployment rate tracked by the media does not distinguish between full-time and part-time jobs
"Everything You Should Know About the Jobs Numbers," by Mike Shedlock, Townhall, December 6 , 2014 ---

. . .

The official unemployment rate is 5.8%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 11.4%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Increasing the Minimum Wage for Many Low Income Workers Will Only Exacerbate the Hidden Problem

From the CFO Journal's Morning Ledger on December 5, 2014

Income volatility is low-wage families’ hidden problem
The financial volatility of paychecks that bounce up and down from week to week have become a feature of life for millions of workers
, writes Patricia Cohen for the New York Times. It isn’t easy to measure income variability, but studies suggests that a growing number of workers began to live off incomes that fluctuate with the season, an hourly schedule or the size of a weekly commission in the 1970s. That trend leveled off in the early 2000s, but jumped again when the financial crisis struck. “Low pay is also unsteady as well,” said Jonathan Morduch, who oversees a project for U.S. Financial Diaries. “This is a hidden inequality that often gets lost.” That strain explains why more than three-quarters of those surveyed in Mr. Morduch’s study said financial stability was more important than moving up the income ladder.

Forwarded by Maureen

History Lesson on Your Social Security Card
Just in case some of you young whippersnappers (& some older ones) didn't know this.
It's easy to check out, if you don't believe it. Be sure and show it to your family and friends. They need a little history lesson on what's what and it doesn't matter whether you are Democrat or Republican. Facts are Facts.

Social Security Cards up until the 1980s expressly stated the number and card were not to be used for identification purposes. Since nearly everyone in the United States now has a number, it became convenient to use it anyway and the
message, NOT FOR IDENTIFICATION, was removed.

An old Social Security card with the "NOT FOR IDENTIFICATION"

Our Social Security
Franklin Roosevelt, a Democrat, introduced the Social
Security (FICA) Program. He promised:
1.) That participation in the Program would be
Completely voluntary,
No longer Voluntary

2.) That the participants would only have to pay
1% of the first $1,400 of their annual
Incomes into the Program
Now 7.65%
on the first $90,000
3.) That the money the participants elected to put
into the Program would be deductible from
their income for tax purposes each year,

No longer tax deductible

4.) That the money the participants put into the
independent 'Trust Fund'
rather than into the
general operating fund, and therefore, would
only be used to fund the Social Security
Retirement Program, and no other
Government program, and,

Under Johnson the money was moved to
The General Fund and Spent

5.) That the annuity payments to the retirees would never be taxed as income.
Under Clinton & Gore
Up to 85% of your Social Security can be Taxed

Since many of us have paid into FICA for years and are
now receiving a Social Security check every month --
and then finding that we are getting taxed on 85% of
the money we
paid to the Federal government to 'put
away' --
you may be interested in the following:
------------ --------- --------- --------- --------- --------- ----
Q: Which Political Party took Social Security from the
independent 'Trust Fund' and put it into the
general fund so that Congress could spend it?
A: It was Lyndon Johnson and the democrat
controlled House and Senate.
------------ --------- --------- --------- --------- --------- --------- --
Q: Which Political Party eliminated the income tax
deduction for Social Security (FICA) withholding?

A: The Democrat Party.
------------ --------- --------- --------- --------- --------- --------- -----
Q: Which Political Party started taxing Social
Security annuities?

A: The Democrat Party, with Al Gore casting the
'tie-breaking' deciding vote
as President of the
Senate, while he was Vice President of the US
------------ --------- --------- --------- --------- --------- --------- -
Q: Which Political Party decided to start
giving annuity payments to immigrants?

A: That's right!
Jimmy Carter
and the Democrat Party.

Immigrants moved into this country, and at age 65,
began to receive Social Security payments! The
Democratic Party gave these payments to them,
even though they never paid a dime into it!

------------ -- ------------ --------- ----- ------------ --------- ---------
Then, after violating the original contract (FICA),
the Democrats turn around and tell you that the Republicans want to take your Social Security away!
And the worst part about it is uninformed citizens believe it!

If enough people receive this, maybe a seed of
awareness will be planted and maybe changes will




From the CFO Journal's Morning Ledger on December 9, 2014

Workers to bear burden of ACA cost increases ---

Workers in the U.S. should expect health care to take a bigger bite out of their paychecks next year, CFO Journal’s Vipal Monga reports. According to Bank of America Merrill Lynch, finance chiefs at U.S. companies expect the Affordable Care Act to increase healthcare costs next year, and the majority expect to pass that along to their employees.

Jensen Comment
There were only supposed to be savings for workers under the ACA. What went wrong?

"ObamaCare by the Numbers: Part 2," by John Cassidy, The New Yorker, March 2010 ---

. . .

Does Santa Claus live after all? According to the C.B.O., between now and 2019 the net cost of insuring new enrollees in Medicaid and private insurance plans will be $788 billion, but other provisions in the legislation will generate revenues and cost savings of $933 billion. Subtract the first figure from the second and—voila!—you get $143 billion in deficit reduction.

The first objection to these figures is that the great bulk of the cost savings—more than $450 billion—comes from cuts in Medicare payments to doctors and other health-care providers. If you are vaguely familiar with Washington politics and the letters A.A.R.P. you might suspect that at least some of these cuts will fail to materialize. Unlike some hardened skeptics, I don’t think none of them will happen. One part of the reform involves reducing excessive payments that the Bush Administration agreed to when it set up the Medicare Advantage program in 2003. If Congress remains under Democratic control—a big if, admittedly—it will probably enact these changes. But that still leaves another $300 billion of Medicare savings to be found.

The second problem is accounting gimmickry. Acting in accordance with standard Washington practices, the C.B.O. counts as revenues more than $50 million in Social Security taxes and $70 billion in payments towards a new home-care program, which will eventually prove very costly, and it doesn’t count some $50 billion in discretionary spending. After excluding these pieces of trickery and the questionable Medicare cuts, Douglas Holtz-Eakin, a former head of the C.B.O., has calculated that the reform will actually raise the deficit by $562 billion in the first ten years. “The budget office is required to take written legislation at face value and not second-guess the plausibility of what it is handed,” he wrote in the Times. “So fantasy in, fantasy out.”

Holtz-Eakin advised John McCain in 2008, and he has a reputation as a straight shooter. I think the problems with the C.B.O.’s projections go even further than he suggests. If Holtz-Eakin’s figures turned out to be spot on, and over the next ten years health-care reform reduced the number of uninsured by thirty million at an annual cost of $56 billion, I would still regard it as a great success. In a $15 trillion economy—and, barring another recession, the U.S. economy should be that large in 2014—fifty or sixty billion dollars is a relatively small sum—about four tenths of one per cent of G.D.P., or about eight per cent of the 2011 Pentagon budget.

My two big worries about the reform are that it won’t capture nearly as many uninsured people as the official projections suggest, and that many businesses, once they realize the size of the handouts being offered for individual coverage, will wind down their group plans, shifting workers (and costs) onto the new government-subsidized plans. The legislation includes features designed to prevent both these things from happening, but I don’t think they will be effective.

Consider the so-called “individual mandate.” As a strict matter of law, all non-elderly Americans who earn more than the poverty line will be obliged to obtain some form of health coverage. If they don’t, in 2016 and beyond, they could face a fine of about $700 or 2.5 per cent of their income—whichever is the most. Two issues immediately arise.

Even if the fines are vigorously enforced, many people may choose to pay them and stay uninsured. Consider a healthy single man of thirty-five who earns $35,000 a year. Under the new system, he would have a choice of enrolling in a subsidized plan at an annual cost of $2,700 or paying a fine of $875. It may well make sense for him to pay the fine, take his chances, and report to the local emergency room if he gets really sick. (E.R.s will still be legally obliged to treat all comers.) If this sort of thing happens often, as well it could, the new insurance exchanges will be deprived of exactly the sort of healthy young people they need in order to bring down prices. (Healthy people improve the risk pool.)

If the rules aren’t properly enforced, the problem will be even worse. And that is precisely what is likely to happen. The I.R.S. will have the administrative responsibility of imposing penalties on people who can’t demonstrate that they have coverage, but it won’t have the legal authority to force people to pay the fines. “What happens if you don’t buy insurance and you don’t pay the penalty?” Ezra Klein, the Washington Post’s industrious and well-informed blogger, asks. “Well, not much. The law specifically says that no criminal action or liens can be imposed on people who don’t pay the fine.”

So, the individual mandate is a bit of a sham. Generous subsidies will be available for sick people and families with children who really need medical care to buy individual coverage, but healthy single people between the ages of twenty-six and forty, say, will still have a financial incentive to remain outside the system until they get ill, at which point they can sign up for coverage. Consequently, the number of uninsured won’t fall as much as expected, and neither will prices. Without a proper individual mandate, the idea of universality goes out the window, and so does much of the economic reasoning behind the bill.

The question of what impact the reforms will have on existing insurance plans has received even less analysis. According to President Obama, if you have coverage you like you can keep it, and that’s that. For the majority of workers, this will undoubtedly be true, at least in the short term, but in some parts of the economy, particularly industries that pay low and moderate wages, the presence of such generous subsidies for individual coverage is bound to affect behavior eventually. To suggest this won’t happen is to say economic incentives don’t matter.

Take a medium-sized firm that employs a hundred people earning $40,000 each—a private security firm based in Atlanta, say—and currently offers them health-care insurance worth $10,000 a year, of which the employees pay $2,500. This employer’s annual health-care costs are $750,000 (a hundred times $7,500). In the reformed system, the firm’s workers, if they didn’t have insurance, would be eligible for generous subsidies to buy private insurance. For example, a married forty-year-old security guard whose wife stayed home to raise two kids could enroll in a non-group plan for less than $1,400 a year, according to the Kaiser Health Reform Subsidy Calculator. (The subsidy from the government would be $8,058.)

In a situation like this, the firm has a strong financial incentive to junk its group coverage and dump its workers onto the taxpayer-subsidized plan. Under the new law, firms with more than fifty workers that don’t offer coverage would have to pay an annual fine of $2,000 for every worker they employ, excepting the first thirty. In this case, the security firm would incur a fine of $140,000 (seventy times two), but it would save $610,000 a year on health-care costs. If you owned this firm, what would you do? Unless you are unusually public spirited, you would take advantage of the free money that the government is giving out. Since your employees would see their own health-care contributions fall by more than $1,100 a year, or almost half, they would be unlikely to complain. And even if they did, you would be saving so much money you afford to buy their agreement with a pay raise of, say, $2,000 a year, and still come out well ahead.

Even if the government tried to impose additional sanctions on such firms, I doubt it would work. The dollar sums involved are so large that firms would try to game the system, by, for example, shutting down, reincorporating under a different name, and hiring back their employees without coverage. They might not even need to go to such lengths. Firms that pay modest wages have high rates of turnover. By simply refusing to offer coverage to new employees, they could pretty quickly convert most of their employees into non-covered workers.

The designers of health-care reform and the C.B.O. are aware of this problem, but, in my view, they have greatly underestimated it. According to the C.B.O., somewhere between eight and nine million workers will lose their group coverage as a result of their employers refusing to offer it. That isn’t a trifling number. But the C.B.O. says it will be largely offset by an opposite effect in which employers that don’t currently provide health insurance begin to offer it in response to higher demand from their workers as a result of the individual mandate. In this way, some six to seven million people will obtain new group coverage, the C.B.O. says, so the overall impact of the changes will be minor.

Continued in article

"Senate Bill Sets a Plan to Regulate Premiums," by Robert Pear, The New York Times, April 20, 2010 --- http://www.nytimes.com/2010/04/21/health/policy/21healt

. . .

Grace-Marie Turner, president of the Galen Institute, a research center that advocates free-market health policies, said the Democrats’ proposal was unlikely to succeed in lowering insurance costs.

“Capping premiums without recognizing the forces that are driving up costs would be like tightening the lid on a pressure cooker while the heat is being turned up,” Mrs. Turner said.

Mrs. Feinstein said her bill would close what she described as “an enormous loophole” in the new law. And she said health insurance should be regulated like a public utility.

“Water and power are essential for life,” Mrs. Feinstein said. “So they are heavily regulated, and rate increases must be approved. Health insurance is also vital for life. It too should be strictly regulated so that people can afford this basic need.”


The 6 Biggest Whoppers In Gruber's ObamaCare Comic Book ---

. . .

What the reviewers failed to mention is that the book is also chock-a-block with misinformation and outright falsehoods about the law Gruber helped construct — many of which Gruber himself exposed later on. Among the most glaring:

• Gruber claims that for individuals and small firms qualifying for a tax credit, "this bill will lower your health care costs." But Gruber would later go on to tell several states the opposite. One of them was Wisconsin, where he said fewer than 6% would see lower premiums, and 41% would get hit with hikes of 50% or more. Meanwhile, millions learned that Gruber's claim was a fantasy last year, when they confronted ObamaCare's sky-high premiums after seeing their existing plans canceled.

• Gruber declares that the law doesn't raise taxes on anyone "with incomes below $200,000 per year." Yet several of the dozens of tax hikes stuffed into the bill hit the middle class, or soon will. Americans for Tax Reform counted seven big ones.

• In the section on the Cadillac tax, which depicts Gruber tooling around in a Caddy, he claims this tax would apply "only to the top few percent of health insurance plans" and would hit more only if premiums climb faster than inflation.

But in videotaped comments, Gruber explains that the tax was purposely designed to start small and then eventually hit all employer plans, "essentially getting rid of the exclusion for employer-sponsored plans."

• Gruber emphatically declares that ObamaCare will cut the federal deficit by $1 trillion over its second decade because "the deficit-reducing effects of this legislation grow over time."

But all the Congressional Budget Office said was that a "rough outlook" for ObamaCare's second decade resulted in deficit cuts "in a broad range of around one-half percent of GDP." And that assumed the law was enacted exactly as written, and worked exactly as predicted, both of which have already failed to come true.

When the Government Accountability Office ran the numbers using more realistic scenarios, it found ObamaCare adding significantly to the long-term deficit. The CBO, meanwhile, has given up making even short-term forecasts of ObamaCare's impact on the deficit.

• Throughout the book, Gruber cites CBO projections of ObamaCare's effects on premiums and coverage, calling it "the best independent source for evaluating bills like the ACA." What he doesn't mention is that when the CBO developed its health care forecasting model in 2007, Gruber had a role in creating it. It even credits Gruber for his "helpful comments and feedback ... throughout the model's development."

And in a 2011 paper, Gruber himself said that his own health care model "mirrors the CBO approach to modeling health reform."

• Gruber says that if the law's many cost-control measures work as expected, "the ACA will end up solving our cost problem in the U.S." But earlier this year Gruber told the Washington Post that it was "misleading" to say ObamaCare will save money. "The law isn't designed to save money," he said. "It's designed to improve health, and that's going to cost money."

Read More At Investor's Business Daily:


"Chuck Schumer: Passing Obamacare in 2010 Was a Mistake:  The Senate’s No. 3 Democrat says that his party misused its mandate," by Sarah Mimms, National Journal, November 25, 2014 ---

Chuck Schumer upbraided his own party Tuesday for pushing the Affordable Care Act through Congress in 2010.

While Schumer emphasized during a speech at the National Press Club that he supports the law and that its policies "are and will continue to be positive changes," he argued that the Democrats acted wrongly in using their new mandate after the 2008 election to focus on the issue rather than the economy at the height of a terrible recession.

"After passing the stimulus, Democrats should have continued to propose middle-class-oriented programs and built on the partial success of the stimulus, but unfortunately Democrats blew the opportunity the American people gave them," Schumer said. "We took their mandate and put all of our focus on the wrong problem—health care reform."

The third-ranking Senate Democrat noted that just about 5 percent of registered voters in the United States lacked health insurance before the implementation of the law, arguing that to focus on a problem affecting such "a small percentage of the electoral made no political sense."

The larger problem, affecting most Americans, he said, was a poor economy resulting from the recession. "When Democrats focused on health care, the average middle-class person thought, 'The Democrats aren't paying enough attention to me,' " Schumer said.

Continued in article

"Schumer’s ObamaCare Mea Culpa," The Wall Street Journal, November 25, 2014 ---

Now that 28—soon probably 29—of the 60 Senate Democrats who voted for ObamaCare are out of office, one of the surviving believers is confessing a crisis of faith. New York Senator Chuck Schumer’s striking remarks on Tuesday suggest that the church of ObamaCare is losing congregants even in the front pews.

Speaking at the National Press Club, the influential Senate leader identified the decline of middle-class incomes as the defining challenge of the age. Democrats can only win elections, Mr. Schumer said, as “the pro-government party”—and ObamaCare is undermining that larger political project.

The Senator called the law a distraction from the “middle-class-oriented programs” his party should have pursued after 2008: “Unfortunately, Democrats blew the opportunity the American people gave them. We took their mandate and put all of our focus on the wrong problem: health-care reform.”

Mr. Schumer said he still supported the entitlement’s goals, but “it wasn’t the change we were hired to make. Americans were crying out for the end to the recession, for better wages and more jobs.” We’re glad he’s finally taking our advice from 2009-2010.

This mea culpa is especially notable because it suggests the wall of implacable liberal opposition to reopening the health-care debate is starting to crack. Democrats have heretofore refused to acknowledge any failing in the law beyond the website rollout fiasco. Endangered Democratic incumbents tried to hold that line this year, and five of them will soon be unemployed.

Mr. Schumer’s response is to tell his colleagues to compose “a symphony” that includes liberal themes other than ObamaCare. Maybe this means that even the law’s media horn section will start to play different notes.

Ever the politico, Mr. Schumer put the problem to Democrats in terms crass enough for them to understand—“only a third of the uninsured are even registered to vote,” he said, and only “about 5% of the electorate” benefits from the entitlement. “To aim a huge change in mandate at such a small percentage of the electorate made no political sense.”

Mr. Schumer is still missing the crucial point. ObamaCare is not merely a disaster for big government but a disaster of big government. The law is unpopular because its mandates, taxes and central planning are harming the economy and the insurance and medical care of average Americans.

But with President Obama in twilight, Mr. Schumer is signaling that Democrats could break up the congressional phalanx dedicated to protecting Mr. Obama’s legacy at the expense of the rest of their economic agenda. If they’re concluding that ObamaCare also endangers their own electoral prospects, they may be open to repealing the more destructive planks or making other changes over White House objections.

Continued in article


"Sen. Chuck Schumer: Obamacare Focused 'On The Wrong Problem,' Ignores The Middle Class" by  Avik Roy, Forbes, November 26, 2014 ---

Despite the enduring unpopularity of Obamacare, Congressional Democrats have up to now stood by their health care law, allowing that “it’s not perfect” but that they are proud of their votes to pass it. That all changed on Tuesday, when the Senate’s third-highest-ranking Democrat—New York’s Chuck Schumer—declared that “we took [the public’s] mandate and put all our focus on the wrong problem—health care reform…When Democrats focused on health care, the average middle-class person thought, ‘The Democrats aren’t paying enough attention to me.’”

Sen. Schumer made his remarks at the National Press Club in Washington. “Democrats blew the opportunity the American people gave them…Now, the plight of uninsured Americans and the hardships caused by unfair insurance company practices certainly needed to be addressed,” Schumer maintained. “But it wasn’t the change we were hired to make. Americans were crying out for the end to the recession, for better wages and more jobs—not changes in health care.”

“This makes sense,” Schumer continued, “considering 85 percent of all Americans got their health care from either the government, Medicare, Medicaid, or their employer. And if health care costs were going up, it really did not affect them. The Affordable Care Act was aimed at the 36 million Americans who were not covered. It has been reported that only a third of the uninsured are even registered to vote…it made no political sense.”

The response from Obama Democrats was swift. Many, like Obama speechwriters Jon Lovett and Jon Favreau and NSC spokesman Tommy Vietor, took to Twitter. “Shorter Chuck Schumer,” said Vietor, “I wish Obama cared more about helping Democrats than sick people.”

Jensen Comment
So what's wrong with the ACA?
Firstly it expanded the piñata for fraud --- Medicaid. Half the people on Medicaid in Illinois were found not to be eligible for Medicaid.  It's bad in most other states that just are paying for audits while the Federal government is paying the tab.

Secondly it's a windfall for ACA insurance companies since the Federal government guarantees their profits and promises taxpayer money if they begin to fail. In capitalism, business firms are supposed to take on financial risks.

Thirdly, the affordable policies have 40%-60% co-pays that essentially prevents insured people from going to doctors, medical clinics, and hospitals unless they are really, really sick because of what it costs them up front. Insurance companies love that, because they are selling insurance that people don't use as much as they should be using that insurance.

Fourthly, insurance companies love the ACA because paying for medical services and medications for people behind on the payments of their ACA premiums are passed on to doctors and hospitals after 30 days. Is it any surprise that so many doctors and hospitals are refusing to accepted patients with ACA insurance?

And the list of complaints against the ACS goes on and on --- http://www.trinity.edu/rjensen/Health.htm

"ObamaCare Has Been A Boon To Insurers, Not Patients, Investors Business Daily, December 2, 2014 ---

Health Costs: Imagine a health reform plan that gives a boost to big insurance companies while leaving patients less able to pay their medical bills. Think progressives would cheer about it? They will if it's called ObamaCare.

Once upon a time Democrats championed ObamaCare as "taking on" big insurance while protecting families from big medical bills. So how are those promises working out?

A Gallup survey released late last week found that 33% reported putting off medical treatments this year "because of the cost you would have to pay."

That's higher than any time since Gallup starting asking this question back in 2001, and three points higher than it was last year — before ObamaCare's insurance regulations went into effect.

What's more, the share who put off treatment for a serious condition because of cost hit 22% this year, up from 17% when President Obama took office.

Even more interesting, the poll found that having insurance apparently offered less financial protection. The share of those with insurance who said they couldn't afford at least one medical procedure jumped from 25% in 2013 to 34% in 2014.

Gallup suspects part of the reason is the fact that ObamaCare plans deployed narrow networks and steep deductibles, which kept premium costs down but exposed patients to big health bills.

At the other end of the spectrum, ObamaCare appears to be a windfall for Big Insurance. Over the first three years the law was in effect, the insurance market actually got more concentrated, according to a new Government Accountability Office report.

Between 2010 and 2013, for example, the number of states where the top three insurers controlled 80% of the individual insurance market or more went from 30 to 38. The GAO data go only through 2013, and so don't fully account for changes in the market thanks to the ObamaCare exchanges.

But it's not as though ObamaCare has so far made any meaningful impact. A Kaiser Family Foundation study looked at seven states and found that it was pretty much a wash this year — some were more competitive, some less, others didn't change.

And a GAO report released earlier this year found that the biggest insurers either held on to or increased their market share in 40 states under ObamaCare. It also found that small insurers became increasingly rare.

Yes, there are more insurance companies competing for business in the exchanges in ObamaCare's second open enrollment season. But so far, the overall impact of the law has been to direct billions of taxpayer subsidies to insurance companies for benefits that don't seem to be trickling down to patients.

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

"Medical Costs Drive Record High Number of Americans to Delay Treatment," by Sarah Jean Seman, Townhall, November 29, 2014 ---

One in three Americans has delayed seeking medical treatment due to its high cost, according to a recent Gallup poll. This marks the highest percentage ever recorded in the 14-year history of the survey question.

Despite President Obama's dream of providing affordable health care coverage for all, fewer and fewer Americans are able to get the coverage they need. 

“Last year, many hoped that the opening of the government healthcare exchanges and the resulting increase in the number of Americans with health insurance would enable more people to seek medical treatment. But, despite a drop in the uninsured rate, a slightly higher percentage of Americans than in previous years report having put off medical treatment, suggesting that the Affordable Care Act has not immediately affected this measure.”

Even Upper-class Americans (those making more than $75K) were deterred by health care costs. Between 2013 and this year, there was an 11 percent increase in treatment delay among wealthier Americans.

What's more, the costs are not merely discouraging people from running to the Doctor for every little sneeze and cough. The survey found that Americans are becoming increasingly more likely (22 percent) to put off treatment for a "very" or "somewhat serious" condition or illness. Twice the number recorded (11 percent) for non-serious conditions.

Even as time continues to reveal Obamacare's negative impact on Americans, the Obama Administration continues to relentless promote its product as being what's best for the American people.

"Schumer’s Con Job for the Middle Class," by Peter Morici, Townhall, December 2, 2014 ---

Senator Charles Schumer, in a recent speech, stated President Obama and Democratic majorities in Congress were elected in 2008 to get the economy working for middle class families. Consequently, assigning extraordinary priority to passing the Affordable Care Act was a mistake.

In 2008, most middle class families had private insurance they liked; their incomes had been falling for about a decade.

The ACA was really part of Democrats’ agenda to assist the working poor—raising the minimum wage, and expanding Medicaid, food stamps, the earned-income tax credit, and higher education grants—while cozying up to big business to finance Democratic campaigns.

Schumer wants Democrats to advocate big government programs to cure middle class woes, and portray Republicans as servants of big corporate interests. He still embraces the ACA as sound policy, even though it made health care more expensive for many middle class families and it enriches Democratic contributors among top executives and shareholders in the health care industries.

That’s not surprising—Schumer championed the 2010 Dodd-Frank banking reforms.

Those made compliance with new mortgage and business lending regulations so cumbersome that many regional banks sold out to bigger banks—and lots of decently-paying jobs in smaller city banks were lost. In turn, with more deposits to invest, the Wall Street banks keep finding new scams—like rigging foreign currency markets and speculating in commodities—to keep funding multi-million dollar bonuses for New York executives and big campaign contributions to Democrats in the Senate and House.

Cozying up to big business—while championing the poor and offering lip service to the middle class—is what Democrats have done best lately.

President Obama’s favorite fund raising venue is the home of Comcast’s CEO, and his Administration has rewarded cable providers with little effort to curb abusive rates, which rise faster than inflation.

Now, the Treasury Department has decided telecom companies may count the wires to homes as real estate and qualify for lower corporate taxes—that’s the kind of special treatment Obama charges are the primary focus of Republicans lawmakers.

. . .

Democrats have blocked petroleum exploration off the Atlantic, Pacific and Eastern Gulf Coasts, Keystone and other pipeline and infrastructure projects. These limit U.S. oil supplies, enrich big multinational oil companies, and keep OPEC and Russian oil producers in business. In turn, those deny Americans good paying jobs and finance terrorism.

The new GOP congress should try to reverse those abusive policies. But each step of the way, the Senator from Wall Street will appear on Sunday talk shows to paint Republicans as servants of big business.

Oh what a flimflam man—the Senator from Wall Street wants to now present himself as champion of the middle class.

Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.


What is the main difference between errors in hospital bills (in over 90% of the billings) and retail store scanned billings (in over 4% of the billings)?

Errors in hospital bills almost always favor the hospitals.
Retail store billing errors only favor the stores about half the time.


"The Accuracy of Scanned Prices, David Hardesty, Journal of Retailing, 2014 ---

4.08% of the prices picked up by retail-store scanners are wrong, about twice the error rate considered acceptable by the U.S. Federal Trade Commission, says a team led by David M. Hardesty of the University of Kentucky that studied more than 231,000 products scanned over 15 years in the state of Washington. Slightly less than half the errors were overcharges. An intriguing finding: Error rates are higher in affluent neighborhoods, suggesting that stores may be more careful about mistakes in areas where shoppers are more price-conscious, the researchers say.

Continued in article

The Health Care Market is Not a Market

"Video:  Inside ‘Bitter Pill’: Steven Brill Discusses His TIME Cover Story," Time Magazine, February 22, 2013 ---

Simple lab work done during a few days in the hospital can cost more than a car. A trip to the emergency room for chest pains that turn out to be indigestion brings a bill that can exceed the price of a semester at college. When we debate health care policy in America, we seem to jump right to the issue of who should pay the bills, blowing past what should be the first question: Why exactly are the bills so high?

Steven Brill spent seven months analyzing hundreds of bill from hospitals, doctors, and drug companies and medical equipment manufacturers to find out who is setting such high prices and pocketing the biggest profits. What he discovered, outlined in detail in the cover story of the new issue of TIME, will radically change the way you think about our medical institutions:

· Hospitals arbitrarily set prices based on a mysterious internal list known as the “chargemaster.” These prices vary from hospital to hospital and are often ten times the actual cost of an item. Insurance companies and Medicare pay discounted prices, but don’t have enough leverage to bring fees down anywhere close to actual costs. While other countries restrain drug prices, in the United States federal law actually restricts the single biggest buyer—Medicare—from even trying to negotiate the price of drugs.

· Tax-exempt “nonprofit” hospitals are the most profitable businesses and largest employers in their regions, often presided over by the most richly compensated executives.

· Cancer treatment—at some of the most renowned centers such as Sloan-Kettering and M.D. Anderson—has some of the industry’s highest profit margins. Cancer drugs in particular are hugely profitable. For example, Sloan-Kettering charges $4615 for a immune-deficiency drug named Flebogamma. Medicare cuts Sloan-Kettering’s charge to $2123, still way above what the hospital paid for it, an estimated $1400.

· Patients can hire medical billing advocates who help people read their bills and try to reduce them. “The hospitals all know the bills are fiction, or at least only a place to start the discussion, so you bargain with them,” says Katalin Goencz, a former appeals coordinator in a hospital billing department who now works as an advocate in Stamford, CT.

Brill concludes:

The health care market is not a market at all.
It’s a crapshoot. Everyone fares differently based on circumstances they can neither control nor predict. They may have no insurance. They may have insurance, but their employer chooses their insurance plan and it may have a payout limit or not cover a drug or treatment they need. They may or may not be old enough to be on Medicare or, given the different standards of the 50 states, be poor enough to be on Medicaid. If they’re not protected by Medicare or protected only partially by private insurance with high co-pays, they have little visibility into pricing, let alone control of it. They have little choice of hospitals or the services they are billed for, even if they somehow knew the prices before they got billed for the services. They have no idea what their bills mean, and those who maintain the chargemasters couldn’t explain them if they wanted to. How much of the bills they end up paying may depend on the generosity of the hospital or on whether they happen to get the help of a billing advocate. They have no choice of the drugs that they have to buy or the lab tests or CT scans that they have to get, and they would not know what to do if they did have a choice. They are powerless buyers in a sellers’ market where the only consistent fact is the profit of the sellers.


"Bitter Pill:  Why Medical Bills Are Killing Us," Time Magazine Cover Story, March 4, 2013, pp. 16-65 (a very long article)  ---

"Yes, Hospital Pricing Is Insane, But Why? Time magazine issues a 24,000-word memo on what we already knew," by Holman Jenkins Jr., The Wall Street Journal, March 1, 2013 ---

Without diminishing the epic scope of Steven Brill's Time magazine piece about the U.S. health care system, he reiterates in lengthy detail perversities that are already well known, without offering a single useful insight on how it go that way, and even less on how to fix it.

Yet Mr. Brill, founder of CourtTV and American Lawyer magazine, author of books on terrorism and education, has written the longest piece in Time's history—24,000 words—so attention must be paid.

That health-care costs are inflated compared to what they would be in a reasonably transparent, competitive market (a point Mr. Brill never clearly makes) won't be a revelation. That hospitals allocate their costs to various items on their bills and price lists in ways that are opaque and arbitrary is not a new discovery either.

He finds it shocking that a hospital charging $1,791 a night won't throw in the generic Tylenol for free (instead charging $1.50 each). But this is to commit the reification fallacy of thinking there is some organic relationship between what a hospital charges for a particular item and what that item costs in the first place.

He dwells on the irrationality of hospitals charging their highest prices to their poorest customers, those without insurance. But he's also aware that these customers often pay little or nothing of what they are charged and hospitals reallocate the cost to the bills of other patients. He even notes that a hospital might collect as little as 18% of what it bills.

He vaguely gets that hospital price lists are memos for the file, to be drawn out and waved as a reference in negotiations with their real customers, the big health-care insurers, Medicaid, Medicare and other large payers.

The deals hammered out with these customers tend naturally to gravitate toward round numbers, leaving a hospital free to allocate its costs and profits to specific items however it wants. Mr. Brill may be offended that certain "non-profit" hospitals appear to be highly profitable. He probably wouldn't be happier, though, if they diverted their surplus revenues into even higher salaries and more gleamingly superfluous facilities.

"What is so different about the medical ecosystem that causes technology advances to drive bills up instead of down?" Mr. Brill asks. But his question is rhetorical since he doesn't exhibit much urge to understand why the system behaves as it does, treating its nature as a given.

In fact, what he describes—big institutions dictating care and assigning prices in ways that make no sense to an outsider—is exactly what you get in a system that insulates consumers from the cost of their health care.

Your time might be better spent reading Duke University's Clark Havighurst in a brilliant 2002 article that describes the regulatory, legal and tax subsidies that deprive consumers of both the incentive and opportunity to demand value from medical providers. Americans end up with a "Hobson's choice: either coverage for 'Cadillac' care or no health coverage at all."

"The market failure most responsible for economic inefficiency in the health-care sector is not consumers' ignorance about the quality of care," Mr. Havighurst writes, "but rather their ignorance of the cost of care, which ensures that neither the choices they make in the marketplace nor the opinions they express in the political process reveal their true preferences."

You might turn next to an equally fabulous 2001 article by Berkeley economist James C. Robinson, who shows how the "pernicious" doctrine that health care is different—that consumers must shut up, do as they're told and be prepared to write a blank check—is used to "justify every inefficiency, idiosyncrasy, and interest-serving institution in the health care industry."

Hospitals, insurers and other institutions involved in health care may battle over available dollars, but they also share an interest in increasing the nation's resources being diverted into health care—which is exactly what happens when costs are hidden from those who pay them.

Continued in article

Jensen Comment
Over a year ago Erika's Medicare-Anthem summary of charges for the month included an $11,376 charge for out patient surgery that was mistakenly billed to her account. We called our doctor who did the procedure in the hospital. Our doctor responded not to bother her or the hospital --- since Medicare-Anthem paid the entire bill it would not matter.

This bothered us since the woman (I assume it was a woman) may not have been eligible for Medicare-Anthem. So I phoned Medicare. Medicare said not to bother them and advised us to contact the hospital where the procedure took place. Any corrections should be made by the hospital and the doctor.

So I called the hospital's accounting office. They asked that I send in a copy of the Medicare-Anthem report. I hand-delivered the report to the the hospital accounting office --- which is miles from the hospital.

Over the ensuing year we waited for a corrected Medicare-Anthem report. Nothing! So I did a follow up visit to the hospital's accounting office. The feedback was that since Medicare-Anthem paid the bill there was no need to waste time correcting this item.

I keep thinking that some woman not eligible for Medicare got a windfall gain here. Who cares if it was Medicare-Anthem that got screwed?

Erika and I changed to a doctor that we like better. But we cannot change hospitals.

Moral of the Story
If the third party insurer gets billed mistakenly or pays too much nobody cares, least of all the doctors and hospitals who got reimbursed.

Who is telling a lie?

Steven Brill wrote a long cover story for Time Magazine, In that story he describes having his team examine eight very complicated hospital bills from different hospitals. In every case they found that the bills were laced with errors and overcharges in favor of the hospital and possible frauds.
Bitter Pill:  Why Medical Bills Are Killing Us," Time Magazine Cover Story, March 4, 2013, pp. 16-65 (a very long article)  ---

The following week Stamford Hospital CEO Brian G. Grissler replied as shown, in part, below. Steven Brill's reply to Grissler, Time Magazine, March 18, 2013, Page 2.

Brian G. Grissler
". . . Brill refused to share the patient's name or the complete bill, so we are unable to answer those questions . . . "

Steven Brill Responds
"Stamford Hospital was shown the bill and never disputed its authenticity. I made clear in the article the hospital settled for cutting its bill entirely in half."

Jensen Comment
There are four possibilities behind this dispute:

  1. Brian Grissler could be lying through his teeth.

  2. Brian Grissler may not have thoroughly investigated the ultimate resolution of this bill by his staff.

  3. Steven Brill could be lying through his teeth.

  4. Steven Brill and Brian Grissler may not be discussing the same bill (although Brill claims he only picked one bill to examine from Stamford Hospital).

My vote is that Answer 1 above is probably the correct answer, but we most likely will never know.




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Enron --- http://www.trinity.edu/rjensen/FraudEnron.htm

Rotten to the Core --- http://www.trinity.edu/rjensen/FraudRotten.htm

American History of Fraud --- http://www.trinity.edu/rjensen/FraudAmericanHistory.htm

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Shielding Against Validity Challenges in Plato's Cave ---

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

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The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


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