Power And Dollar

Lay Taxes To Those Not Buying Guns? NRA Must Be Grinning

John Roberts acknowledges that the Obamacare is unconstitutional in the commerce clause.  However, Roberts upholds the Obamacare because it is constitutional to lay taxes to those who do not buy health insurance.  So, using John Roberts formula, can the federal government lay taxes on those not buying guns? 

It seems like John Roberts’ formula is: if it is unconstitutional to X and it is constitutional to lay taxes to X, then it is constitutional.  Better yet, can the federal government impose taxes to finance the rendition program? Or lay taxes to finance the eaves dropping?  To impose taxes if you do not perform birth control?  To impose taxes if you do not perform abortion?  To impose taxes if you do not send your children to public school (this is already in practice)?  To impose taxes if you do not send your children to home school (this is not in practice)?

If John Roberts’ formula has to be supplemented by the general welfare clause, then not much difference it would make, as Richard A. Epstein (professor of law at New York University and a senior fellow at the Hoover Institution) suggests in NYTimes on 2012.06.29: Congress has the power to “lay and collect Taxes” only in order “to pay the Debts and provide for the common Defence and general Welfare of the United States.” The congress still can impose taxes if you do not buy guns since gun ownership contributes to the general welfare, if you agree that more guns around means we will have less criminals around.  The newer formula can still apply to anything the Congress sees fit. 

Isn’t the case that whenever something is unconstitutional to anyone element of the Constitution, then it is constitutional?  Benjamin Franklin said: “They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.”  John Roberts reversed (or the converse) the reasoning and we get a wonderful universal health care.  At what costs?

June 29, 2012 Posted by | activism, advocacy, america politics, Current Events, Democrats, opinion, politics, Regulation, Republican, Thoughts | , , | Leave a comment

Obamacare Makes Labor Market More Favorable To Small Businesses

 

Republicans champion capitalism, especially “the pursuit of happiness”.  For that, Republicans consider businessmen to be their safe constituents.  Is enabling small businesses to compete more effectively against the mega corporations something Republican look forward to?  Interestingly enough, Democrats are doing that this time instead of Republicans.  And that is through this Obamacare.

Extending health care to all is the idea of Obamacare.  Having this barrier to health care obviously gives an edge to someone.  In terms of politics (or policy), the question is always about who gets the advantage (or the disadvantage).  Prior the Obamacare days, the advantage is to the employers who can afford the administrative cost of providing a health care insurance to its employees, thus giving them an overwhelming advantage in recruiting and retaining the human resources they need.  This disadvantage suffocates small businesses and self employed.  Ultimately, innovation is sacrificed. 

Plenty of employees make employment decisions based on the health care package.  Many people give up their business dreams and stay as an employee because of the fear of not having health care for their families.  Almost everyone will be covered when Obamacare becomes effective.  Yes, the operating cost is higher for small business owners, however, this increase cost will draw the small business owners much closer to the advantage enjoyed by the mega corporations than if they acquire the health package alone.  In fact, only 38% offer health insurance to employees among the small business owners in 2009 versus 61% in 1993 (read here). 

If America’s small business owners’ talents for success are not willing to move to them and continue to stay in General Motors, ATT and like, then where is the next Google?

March 23, 2010 Posted by | activism, advocacy, america politics, Current Events, 美國, Democrats, economics, Election 2010, health care reform, nonprofits, obama, opinion, politics, Thoughts, US politics, wordpress-political-blogs | 1 Comment

Massachusetts Is Pushing Up Your 401k

As Massachusetts comes to a close to their choice US Senator, investors from the rest of world are approving their expected result: Republicans will win this election.  How does a local election affect your 401k?  Is that the only factor that drives up your 401k value?  No, certainly not.  However, the spike of not only a few companies (Aetna, NYSE:AET; Johnson and Johnson, NYSE:JNJ), but also industries’ stock value and the appreciation of US dollars against most currencies and in particular against Chinese yuan (CNY) is a good indication that this fluctuation is not due to some company quarterly earnings but some political event (Cadbury is the exception, NYSE: CBY).

NYSE and S&P500 are going up today.  What is the top concern of investors these days?  The future US fiscal deficit.  What will be the greatest contributor to future US fiscal deficit?  Health care.  Obama’s health care reform will have a direct impact to US fiscal deficit.  Not having an one-sided US Senate also means banking reform will have to have greater compromise.  Rumor has it that Consumer Financial Protection Agency may be dropped. 

Are investors disapproving Obama administration?  Investors probably will donate to his re-election campaign as well as his opponent’s in 2012, not to mention both parties’ 2010 congressional election funds.  Investors simply see that the new policies do not provide more values.  Investors like risk management tools that enhance certainties of any kind.  Risk certainty is what helps investors choose their company ownerships (i.e. how your mutual fund manager buys stocks for you).  Therefore, one cannot assume investors hate governments at all times. 

Health care reform in the States will create a higher demand for health care products, such as health care insurance, drugs, and equipments.  The list will be endless.  Financial industry reform will provide greater risk control or at least monitoring over systematic risk.  However, health care reform is so broad that no one can understand while financial reform favors the establishment of the financial industry and not the investors (you, a typical 401k or IRA investor).  

Obama’s options?  House (Nancy Pelosi) will have to pass the legislation at its current form or suffer a longer and more arduous negotiation between House and Senate for any bill senate passed, including the health care bill.  Divert attention from anything unpleasant to immigration legislations.  Haiti will induce refugee problems.  Mexican border violence will induce debate about border security, for instance border fence.

January 19, 2010 Posted by | america politics, banking, Barack Obama, Current Events, health care reform, obama, opinion, politics, US politics, wordpress-political-blogs | Leave a comment

Obama’s Another Banking Show

Taxing on banks is politically convenient since people are angry against the financial crisis.  Thus, it is a populist solution.  Furthermore, a mid-term election is coming up where the incumbent party is expecting to lose seats.  What is interesting about this item is: who will (and will not) get taxed among these banks?  What other options does government actually have to achieve the stated goals?

Community banks will get excluded.  Community bankers are still very influential in the local communities, i.e. they affect a lot of voting behavior in the congressional districts.  The key about this where is the cut-off point for community banks or non-community banks?  There are more than 8,000 banks in the country.  Of those, the top 3 banks take up about one third of the assets, more than $3T altogether.  About 100 banks are over $10B in asset.  If $10B is the cut-off, then we have 100 banks for this tax.  But is it $10B or $1B for a bank to be considered a community bank?  How much room is there?

The government says it wants to not affect consumers and investors.  That is rhetoric.  We all know it will get passed on to consumers AND investors.  It’s just who gets more of it. 

If eliminating fat cat is the goal, are there options?  There are always options.  The only question is: what kind of trade-offs are there?  A company is able to pay huge sum to executives (still employees) is that there are so few companies occupying the market space that investor have no choice but to part the profit to these critical employees.  Making the profit margin among these companies thinner by taxing is only one way to minimize the profit.  The more market oriented approach is to introduce more competitors in the market, for instance,

1)      Enable smaller banks to eat into the market share of the big markets;

2)      Disable banks from entering too many different markets, such as the old law that says a retail/mortgage bank cannot enter investment banking;

3)      Banks cannot perform house trade with depositors’ money.

Are these above new and bright ideas?  No.  These are all recycled ideas America has already tried and ditched or tried in other industries.  The first one is congruent to the anti-trust law.  The second one is Glass-Steagall Act.  The third one is from insurance industry and pension industry.  Obama can achieve the goal without being overly creative.  This creation simply tells us he is on another political show.

January 11, 2010 Posted by | america politics, banking, Barack Obama, 美國, Election 2010, legislation, obama, opinion, politics, Regulation, wordpress-political-blogs | 2 Comments

Obamacare and Copenhagen Accord: Non-Events

US dollar continues its rise against Euro and British pound.  The recent news regarding the development of health care bill and Copenhagen accord did very little to reverse this movement.  Why does it matter?  What does it mean?

The appreciation of US dollar indicates the development of the Obamacare does at best not weaken the confidence of the US economy or even improve the fiscal deficit in the future years and at worst not prevent US from being the temporary safe haven being the money parking lot.  Similarly, since Copenhagen accord is not a binding document, it provides no teeth to decrease carbon emission.  Thus, the mod of economic activity will not run into the risk of major shuffling in the United States.

Certainly a series of quarterly earnings following Copenhagen accord in the United States helps.  However, Obamacare and Copenhagen accord could have set how the future game rules will be structured not only in the States but also in the world, only that the States may have to bear the biggest brunt of this episode. 

In particular, Obamacare is not sending health insurance companies’ stock price downward.  On the contrary, health insurance companies have been performing very well in light of the Great Depression.   Either the market has already factored in all the political risk premium or the market actually considers them as non-events thus far.

December 22, 2009 Posted by | advocacy, america politics, health care reform, opinion, politics, US politics, wordpress-political-blogs | Leave a comment

Obama’s Public Administration Philosophy

No polling result is available to serve as a reaction gauge to Obama’s Afghanistan deployment speech.  Obama was an anti war candidate.  Now he is making a deployment decision.  Is he contradicting himself?  What is he after?  What does it mean to us?

He is after his re-election, as every politician is.  Having said that, what also went on in his mind must have been the 2010 mid-term election, although he knew (and everyone else knew) that Democrats will lose seats in that election since all president lose seats in the first term’s mid-term elections. 

War is expensive.  Unemployment is still high.  He acknowledges with Eisenhower’s quote very well that “Each proposal must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs.”  After all, war is still a budget item. 

He is not appeasing his own base.  That is for sure.  Is he reaching middle ground?  Considering a much greater proportion of rural area voters have military ties, having a higher expense on military could be Obama’s way to secure a wider base.  But at the expense of sending more people to battle field?

Obama’s speech stresses on one point to justify his approach to this war: the primary nation of nation-building exercise is his own nation.  Will the rural electorate see this as a venue to reward Obama’s core constituency, the urbanites?  Of course, this will be dictated by what Obama will do with the resources or energy freed up by this management approach.

This Eisenhoweran philosophy is simply a reflection of budget constraint.  This is consistent with Nancy Pelosi approach to this portfolio item: war tax.  If you want it, then pay for it.  If you do not want to pay for it, then you probably don’t think it is worth it.  Will the war tax actually fly?  Hard to say.  However, if this Eisenhoweran approach to military conflict will be applied consistently over time and therefore will establish a new foreign policy doctrine, then this war tax idea will eventually take roots.  That will establish another kind of precedence: purpose dedicated tax.  Not that purpose dedicated tax is completely new since social security is funded by a dedicated tax as well.  However, this war tax will definitely take this idea to the next level. 

This is what affects us the most.  America is facing a fiscal crisis and will continue to face a fiscal crisis for decades to come even after paying down the costs incurred by the Bush’s Iraq war, Bush’s Afghanistan war and now Obama’s Afghanistan war, because of the expecting expenses for baby boomers.  Due to this budget constraint, conflicts different interests group will compete harder for this federal budget.  Purpose dedicated tax will then be the weapon for different groups to secure their own funding, especially for new issues, such as green issues. 

If Obama will be employing Eisenhower approach and Pelosi will be playing her cards, they will create a new policy management philosophy that will last long beyond their political accomplishments.

December 3, 2009 Posted by | activism, advocacy, Afghanistan, america politics, Current Events, Election 2010, opinion, politics, US politics, wordpress-political-blogs | Leave a comment

Will Obama’s Health Care Bill Be A Plagiarized Product?

If Obama is drafting his own version of the health care bill, and that CNN is correct regarding a “trigger option”, then at least Obama actually wants it done, although fairly late in game since almost no Republican is left for negotiation.  One good example: Grassley says he will defeat Obamacare.

This trigger option seems to suggest Obama will be plagiarizing Bipartisan Policy Center’s ideas.  In the world of policy development, being violated (the copy right of your policy idea, of course) is a good thing.  What does Bipartisan Policy Center say?  Why does Obama listen to this one?  Remember there are thousands of “think tanks”, advocacy groups and lobbyists who have plenty of ideas (guess where lobbyists’ policy ideas come from?).  So why Bipartisan Policy Center

Bipartisan Policy Center is created by all the living Senate Majority Leaders (Dole, Republican; Baker Republican; and Daschle, Democrat).  Taking their work probably does not only symbolize that Obama is buying a plan that has 2/3 of Republican input, but taking Republican ideas seriously into lasting piece of foundation to the country.  Is it a tactic or philosophic in substance?  Hard to say.  Does it increase the probability of getting done?  Yes, but how much?  That will have to depend on the sales delivery mechanism.  Will it be LBJ style where Obama will be calling each Congressmen, their donor, mother, children, gardener and babysitter?  Will it be an air war about Republicans defeating their own ideals?  It reads like Obama will want to avoid fighting. 

If you want to have advanced information about how this policy will affect your favorite health insurance companies such as Cigna, Aetna (NYSE:AET), Humana (NYSE:HUM), UnitedHealth (NYSE:UNH) Blue Cross Blue Shield (http://bcbs.com), then consider reading Pillar 2.  The main piece of recommendation from Bipartisan Policy Center that is related to health insurance companies such as is in Pillar 2.  If you want to find out how it will affect balance sheet of health care delivery companies (hospitals and so on) like Health Management Associates (NYSE:HMA), Community Health Systems (NYSE:CYH), then Pillar 1 and Pillar 4.  Pillar 3 has something interesting about laws concerning patients.  Of course all 4 pillars are important to all vested parties, be they practitioners, insurers, buyers, support systems (technology service providers).

September 4, 2009 Posted by | activism, advocacy, america politics, Current Events, obama, opinion, politics, US politics, wordpress-political-blogs | Leave a comment

Another Obama TV Performance? This Time, Health Care

Is Obama ready for a deal?  Unnamed senior aide says so to cnn.com.  Obama may be preparing another TV performance again.  We all know everyone in the country is vested in this issue, one way or the other.  The question Obama has to answer is: who else does he need to pull to his side to get this done?  Of course, an interesting question would be: Is he aiming to pass a health care reform? 

A lot of critics have already voiced their opinion (this one and this one) how Obama administration could have handled this debate better, more civilly so that the debate can have more substance. 

Let bygone be bygone.  Obama is only interested at the future anyway.  Which vested party will have a continual interest to fuel more grass root anger?  Not necessarily pharmaceuticals.  PhRMA is not that critical.  It is so uncritical that Republican would rather attack PhRMA’s position on Obama-care. 

As long as Republicans do not sign the legislation, the success or the failure of health care reform will make Republicans the biggest gainer.  In that sense, Republicans are the greatest stakeholder.  If health care reform fails, it certainly is a victory for Republicans.  If health care reform passes, this health care reform will provide ammunition for elections to come. 

Back to the pharmaceuticals, their interest lies in having more profit.  If the health care will expand prospective customers to enlarge their profits, they will be all for it.  In fact, this is how I would understand PhRMA’s website statement (this one and this one). 

Patients are voters.  In fact this issue will motivate a lot of voters, especially seniors.  This is where the upcoming Obama-care speech will be a major source of information.  When Obama will be talking to the voters through the TV box,
1) Who are the interest groups Obama will be talking to behind the text?
2) How is he creating dissent among the opponents?
3) Is he blaming someone else for the fear raised in the town hall meetings? Or is he explaining his position to overcome the fears?
4) Does he show a sense of prioritized items in this legislation?
5) Is he setting up an epic failure to harden his core support and lend a focus on something else?

Whatever position Obama will choose by then, he ultimate will re-structure the health insurance market, and possibly more than just the health insurance market.  Does anyone remember the last time a piece of legislation that affects the society in such scale?  It was the credit market.  Not anything caused by the 2008 credit crisis.  It was actually Equal Credit Opportunity Act enacted in 1974.  How long was that legislation? 8 pages.  How long is the current the congress is discussing?  >1000 pages.   Once it becomes clear what this health care reform beast looks like, it will become clear what kind of a world Cigna, Aetna (NYSE:AET), Humana (NYSE:HUM), UnitedHealth (NYSE:UNH) Blue Cross Blue Shield (http://bcbs.com) will have to live with.  Some will grow and some will shrink.  This is how political risk affects regulation risks.

Obama, in my opinion, is a pro-civil servant president, a contrarian position of Benjamin Franklin, if you remember Franklin’s Dangers of Salaried Bureaucracy.  Obama also enjoys eloquence argument (eloquent is not succinct).  Having a short legislation is easier to make it eloquent.  Of course, this is not a critical factor.  However, being short definitely makes it easier for the salesmen (congressmen). 

If Geithner will have to do financial sector regulatory reform, Obama can actually break this health care reform in pieces, in Federal Trade Commision, Department of Treasury, medicare and social security reform.  If Obama can be stealthier about this reform, he can accomplish more than anyone can conceive.

The cost to the society is high for this prolonged battle, may Obama be victorious or not.  Even Gore’s election loss did not generate such a polarized conflict over such a long period of time.  The last time an event generated such political energy was probably the 60’s.  If we employ this kind of analogy, then is this conflict between eggheads and the rest of society or is this a conflict between generations? Or is this a continuation conflict of the racial haves and have nots from the 60’s?

September 2, 2009 Posted by | activism, advocacy, america politics, Current Events, obama, politics, US politics, wordpress-political-blogs | 2 Comments

Too Big To Be

Obama administration is finally using anti-trust as a treatment for “Too big to fail”.  That is exactly what this blog asked for: http://poweranddollar.com/2009/03/27/anyone-understands-geithner/

Had Bush used this treatment during his time, systematic risk could have been reduced, although not eliminated nor sufficiently managed. 

Did Sherman and Clayton (as in Sherman and Clayton Acts, the anti-trust legislations) have systematic risk in mind?  Certainly not.  However, they were more in the line of if market entry cost is too high due to market makers, then something bad is bound to happen. 

Was that line of thinking new at the time? No.  That is why monopolies have to be granted by the governments in England, as in Crown corporations.  This practice is still in place, just to highlight how much consideration should be given for monopolies.

Interestingly enough Obama administration is trying to enforce tougher antitrust, Obama administration may be guilty of antitrust as well, if Obama administration is in “restraint of trade” or “price discrimination” on health care costs when the administration is trying to “contain cost”.  Unfortunately, critics are only concerned with “quality” or “ration care”.

The problem does not need to get that complicated.

May 11, 2009 Posted by | america politics, banking, Current Events, Democrats, politics, Republican, US politics, wordpress-political-blogs | Leave a comment

AIG The Sacrifice: The Reflection Of America’s Political Risk

 

I agree quite a few points of this article in regard to the AIG episode.

 

Of course, nothing is perfect.  I would change a word here:

It will certainly make Mr. Obama’s task much more difficult when he tries to sell the public [my version would be:  investors] on his administration’s ability to manage the rest of the bailout, and when he tries to sell private firms on the public-private partnership that will be needed to make the recovery work.”

 

Obama will have more difficulty to convince investors his future plans work (already stated in the article).  Also, Obama will have more difficulty to get troubled entities to take the bailout.  Look at AIG.  This bailout actually bites! 

 

AIG was politically insensitive.  This story alone will make firms in the future to invest more to mitigate political risk or at least reputation risk (branding), which is not a good news.  

 

In addition, a good portion of the reason for these companies to require a bailout is that their valuation (capitalization) fluctuated so greatly they were literally worthless.  So, some companies may realize taking themselves off the exchange is not a bad idea, at least they can insulate themselves from the volatility.  Is that what we want: fewer choices for mutual fund managers and pension fund managers?  If they have fewer options and social security is running out, then what are to do?

 

Fewer choices on the exchange also means quicker wealth concentration.  Gini coefficient will spike up very quickly.  Is that what Obama wants?

March 20, 2009 Posted by | activism, advocacy, america politics, banking, business, Current Affairs, Current Events, 美國, Democrats, economics, legislation, mccain, obama, opinion, politics, Regulation, Republican, US politics, wordpress-political-blogs | Leave a comment