Much has been said in the media about the "evils" of private equity, implying that investor return is paramount and the fate of the worker secondary. In an earlier post I opined on the track record of Bain Capital, detailing how many companies were acquired and the over-all results. The conclusion was that private equity companies work within our capitalist system. As a result, there are some "winners" and some "losers" but over-all there were more on the upside than the downside. I pointed out that capitalism does not guarantee that everyone will be a winner.
Since the president is now in full re-election mode, he has been very critical of Governor Romney's tenure at Bain Capital depicting Romney as a dollar hungry capitalist only interested in profits and returns to investors. He went on to say that that may make you successful in private equity but is no qualification for the presidency. And this coming from a community organizer, non-tenured law professor and junior senator who had not completed one term when he ascended to the presidency! On closer examination, we can see that Governor Romney is far more qualified to be president than Obama was when he was elected.
If Obama is going to double down on his attacks on Romney and say that Romney's record in private equity is fair game, then Obama's record in public equity is also fair game. And that record is not very good.
There is an excellent opinion by Marc Thiessen published in the Washington Post on May 24 titled:
"Forget Bain - Obama's public equity record is the real scandal"
Following is a summary of that opinion piece.
Obama has invested billions of taxpayer dollars in private businesses. Most of those investments have turned out to be complete disasters - leaving in their wake bankruptcies, layoffs, criminal investigations and taxpayers on the hook for billions.
Here are just a few examples of Obama's public equity failures:
Raser Technologies: In 2010 Obama gave them a $33 million taxpayer-funded grant to build a power plant in Utah. According to the Wall Street Journal, the company has filed for bankruptcy protection. The company has fewer than 10 employees and owes $1.5 million in back taxes.
ECOtality: Obama gave this company over $126 million in 2009 for the installation of 14,000 electric car chargers in five states. At the State of The Union address in 2010, Obama highlighted them as an example of a stimulus success story. According to the company's SEC filings, ECOtality has incurred more than $45 million in losses and has declared they may not be able to sustain profitability.
Additionally, ECOtality is under investigation for insider trading according to CBS News.
Nevada Geothermal Power: The Obama administration gave this company a $98.5 million taxpayer loan guarantee in 2010. It has been reported the company is in financial turmoil, their cash reserves have been drained and their auditor concluded there is significant doubt about the company's ability to continue as a going concern.
First Solar: The Obama Administration gave this company more than $3 billion in loan guarantees for power plants in Arizona and California. According to Bloomberg Business Week, the company fell to a record low in Nasdaq trading May 4 after reporting $401 million in restructuring costs tied to firing 30% of its workforce.
Abound Solar: The Obama administration gave this company a $400 million loan guarantee to build photovoltaic panel factories. According to Forbes the company halted production and laid off 180 employees in February.
Beacon Power: This green energy storage company received a $43 million loan guarantee from the Obama administration. Last fall this company was delisted by Nasdaq and has filed for bankruptcy.
This is just a sample of Obama's dismal track record in dispensing taxpayer money:
A company called SunPower received a $1.2 billion loan guarantee. As of January they owed more than they were worth
Brightsource got a $1.6 billion loan guarantee and has posted net losses of $177 million.
And of course, there is Solyndra, the solar panel manufacturer that received half a billion in our money in loan guarantees and went bankrupt, leaving taxpayers on the hook.
Obama says all projects received funding "based solely on their merits." If so, then I wonder why it is that fully 71%, as quoted in Peter Schweizer's book "Throw Them All Out", of the Energy Department's grants and loans went to "individuals who were bundlers, members of Obama's National Finance Committee or large donors. These cronies raised over $457,000 for Obama and were rewarded with grants or loans in excess of $11 billion!!!
Now that is quite a return on investment! I guess that is why the Energy Department Inspector General has launched more than 100 criminal investigations.
To conclude, Mr. Thiessen said:
"Now the man who made Solyndra a household name says Mitt Romney's record at Bain Capital 'is what this campaign is going to be about.' Good luck with that , Mr. President. If Obama wants to attack Romney's alleged private equity failures as chief executive of Bain, he'd better be ready to defend his own massive public equity failures as chief executive of the United States."
Saturday, May 26, 2012
Tuesday, March 13, 2012
What Is Taking So Long?
The US economy finally seems on a course to sustained recovery, but why is it taking so long?
Strong job creation and economic growth as measured by the gross domestic product creeping back to pre-2008 levels at close to 3.5% were predictions from Goldman Sachs a year ago.
But the Goldman analysts were one of many to predict incorrectly that 2011 would be a great year for the stock market and that higher corporate profits and increased consumer spending would all translate into decent job growth and the final nail in the recession.
The recovery looks real; it was the third month in a row in which the economy produced more than 200,000 jobs. Unemployment is holding at 8.3%.
The bigger issue is what is taking the economy so long to recover?
President Obama and his supporters are right that it takes time to dig out of a hole so deep.
But his critics also have a point. The administration's policies helped delay the rebound and make it more tepid than it might have been.
You can begin with Obama's signature first-term economic "achievement" the $800 billion stimulus plan that was supposed to create all those shovel-ready jobs and stop unemployment from rising above 8%.
We all know how that turned out, with unemployment hovering between 9% and 10% until just recently and the GDP floundering such that even some Obama supporters have attacked the stimulus' futility. Much of the money went to states to plug their budget deficits and reduce government layoffs; another amount went for ridiculous green schemes proposed by politically connected companies like Solyndra.
As for all the shovel-redy jobs, the president himself has joked about how they weren't as shovel-ready as he expected. But this is no joking matter.
Obama's biggest economic mistake was not just the wasted stimulus but a war on US businesses that he continues to wage today.
Even as evidence mounted that his stimulus plan was a failure, the president ignored the nation's economic woes and spent most of 2009 and 2010 pushing for the least business friendly mandate to come out of Washington in years- his universal health insurance plan.
Timing is everything.
Obama was not pushing a new mandate during an economic boom when employers might shrug off the costs and ignore the uncertainty, but when, as he puts it, the economy was in the ditch. Instead of giving the private sector reason for hope, he gave it more to fear - so businesses retrenched and the "recovery summer" the administration predicted for 2010 never came.
Nor did it come last year. Again some problems were clearly out of the president's control like the euro crisis which was a drag on the global economy. But so were Obama's policies.
Businesses react rationally when it comes to hiring more workers and here is what they have had to consider since 2009:
A president who does not miss a chance to bash millionaires and billionaires and who always talks up the "justice" of raising their taxes.
A financial reform law that raises costs so much that banks cannot afford to take normal business risks and lend to entrepreneurs.
An administration that is so hellbent on serving its union allies that it sues Boeing for opening a nonunion plant in South Carolina where unemployment is almost 10%.
Now that Obama is in full re-election mode, he has dropped the Boeing suit. But he still stalled the Keystone Pipeline which would have produced some real shovel-ready jobs and also more oil. And while he has put some anti-energy regulations on hold, nobody thinks he is likely to delay them if he wins re-election.
THE BOTTOM LINE IS ANYONE LOOKING TO GIVE THE PRESIDENT CREDIT FOR THE RECOVERY NEEDS TO EXPLAIN WHY IT TOOK SO LONG AND TO TELL US WHAT, EXACTLY, OBAMA DID TO MAKE IT BETTER.
In previous post I have opined on Obama's lack of leadership and business experience both of which are proving to be the major impediments to the recovery.
Strong job creation and economic growth as measured by the gross domestic product creeping back to pre-2008 levels at close to 3.5% were predictions from Goldman Sachs a year ago.
But the Goldman analysts were one of many to predict incorrectly that 2011 would be a great year for the stock market and that higher corporate profits and increased consumer spending would all translate into decent job growth and the final nail in the recession.
The recovery looks real; it was the third month in a row in which the economy produced more than 200,000 jobs. Unemployment is holding at 8.3%.
The bigger issue is what is taking the economy so long to recover?
President Obama and his supporters are right that it takes time to dig out of a hole so deep.
But his critics also have a point. The administration's policies helped delay the rebound and make it more tepid than it might have been.
You can begin with Obama's signature first-term economic "achievement" the $800 billion stimulus plan that was supposed to create all those shovel-ready jobs and stop unemployment from rising above 8%.
We all know how that turned out, with unemployment hovering between 9% and 10% until just recently and the GDP floundering such that even some Obama supporters have attacked the stimulus' futility. Much of the money went to states to plug their budget deficits and reduce government layoffs; another amount went for ridiculous green schemes proposed by politically connected companies like Solyndra.
As for all the shovel-redy jobs, the president himself has joked about how they weren't as shovel-ready as he expected. But this is no joking matter.
Obama's biggest economic mistake was not just the wasted stimulus but a war on US businesses that he continues to wage today.
Even as evidence mounted that his stimulus plan was a failure, the president ignored the nation's economic woes and spent most of 2009 and 2010 pushing for the least business friendly mandate to come out of Washington in years- his universal health insurance plan.
Timing is everything.
Obama was not pushing a new mandate during an economic boom when employers might shrug off the costs and ignore the uncertainty, but when, as he puts it, the economy was in the ditch. Instead of giving the private sector reason for hope, he gave it more to fear - so businesses retrenched and the "recovery summer" the administration predicted for 2010 never came.
Nor did it come last year. Again some problems were clearly out of the president's control like the euro crisis which was a drag on the global economy. But so were Obama's policies.
Businesses react rationally when it comes to hiring more workers and here is what they have had to consider since 2009:
A president who does not miss a chance to bash millionaires and billionaires and who always talks up the "justice" of raising their taxes.
A financial reform law that raises costs so much that banks cannot afford to take normal business risks and lend to entrepreneurs.
An administration that is so hellbent on serving its union allies that it sues Boeing for opening a nonunion plant in South Carolina where unemployment is almost 10%.
Now that Obama is in full re-election mode, he has dropped the Boeing suit. But he still stalled the Keystone Pipeline which would have produced some real shovel-ready jobs and also more oil. And while he has put some anti-energy regulations on hold, nobody thinks he is likely to delay them if he wins re-election.
THE BOTTOM LINE IS ANYONE LOOKING TO GIVE THE PRESIDENT CREDIT FOR THE RECOVERY NEEDS TO EXPLAIN WHY IT TOOK SO LONG AND TO TELL US WHAT, EXACTLY, OBAMA DID TO MAKE IT BETTER.
In previous post I have opined on Obama's lack of leadership and business experience both of which are proving to be the major impediments to the recovery.
Thursday, March 8, 2012
Happy Anniversary
Two years have passed since the passage of President Obama's landmark health insurance reform.
I think most people would agree it is time for a report card.
Before passage in March 2010, Obama promised:
Hearings on the law would be broadcast on C-SPAN, I do not believe there were any.
Bi-partisan committees, yet Republicans were virtually locked out of closed door meetings.
We would all embrace it - did you get that impression from the town hall meetings?
We would see lower premiums - industry people are telling me premiums are rising 25% to 40%.
America's dissatisfaction with ObamaCare continues to grow and the Supreme Court will be taking up the issue of the individual mandate very soon. More than 20 states have filed suit against the federal government to rescind ObamaCare, an unprecedented action in U. S. history. Burdens placed on states to implement health insurance exchanges will bust budgets so most states have done nothing to establish the exchanges.
The Obama Administration continues to deny medical loss ratio (MLR) exemptions for states where companies are threatening to leave the market, thus nullifying the promised increase in competition; meanwhile many exemptions have been granted for special groups, notably unions.
Former Democratic presidential candidate Howard Dean predicted that as many as one-third of the nation's small businesses will dump their employees onto the exchanges. He quoted from a McKinsey study that concludes most small businesses are not going to be involved with health insurance anymore once this all takes effect.
This law, when fully implemented in 2014, will cause states to be overwhelmed by the glut of people thrust onto their exchanges. The amount of subsidization and sheer size of this all-encompassing law will turn what was once a health insurance system in need of some tweaking into a crippled and mangled mess, leaving the states and the economy on life support.
If the health care system needed some fixing two years ago, President Obama himself could not have predicted any better the situation our nation will face if the law survives the Supreme Court review and goes into full effect. He said: "If all we are doing is adding more people to a broken system then costs will continue to skyrocket , and eventually somebody is going to be bankrupt, whether it is the federal government, state governments, businesses or individual families."
I could not have said it better myself!
Happy Anniversary, America
I think most people would agree it is time for a report card.
Before passage in March 2010, Obama promised:
Hearings on the law would be broadcast on C-SPAN, I do not believe there were any.
Bi-partisan committees, yet Republicans were virtually locked out of closed door meetings.
We would all embrace it - did you get that impression from the town hall meetings?
We would see lower premiums - industry people are telling me premiums are rising 25% to 40%.
America's dissatisfaction with ObamaCare continues to grow and the Supreme Court will be taking up the issue of the individual mandate very soon. More than 20 states have filed suit against the federal government to rescind ObamaCare, an unprecedented action in U. S. history. Burdens placed on states to implement health insurance exchanges will bust budgets so most states have done nothing to establish the exchanges.
The Obama Administration continues to deny medical loss ratio (MLR) exemptions for states where companies are threatening to leave the market, thus nullifying the promised increase in competition; meanwhile many exemptions have been granted for special groups, notably unions.
Former Democratic presidential candidate Howard Dean predicted that as many as one-third of the nation's small businesses will dump their employees onto the exchanges. He quoted from a McKinsey study that concludes most small businesses are not going to be involved with health insurance anymore once this all takes effect.
This law, when fully implemented in 2014, will cause states to be overwhelmed by the glut of people thrust onto their exchanges. The amount of subsidization and sheer size of this all-encompassing law will turn what was once a health insurance system in need of some tweaking into a crippled and mangled mess, leaving the states and the economy on life support.
If the health care system needed some fixing two years ago, President Obama himself could not have predicted any better the situation our nation will face if the law survives the Supreme Court review and goes into full effect. He said: "If all we are doing is adding more people to a broken system then costs will continue to skyrocket , and eventually somebody is going to be bankrupt, whether it is the federal government, state governments, businesses or individual families."
I could not have said it better myself!
Happy Anniversary, America
Monday, February 6, 2012
A Slippery Slope
The United States Department of Health and Human Services announced on January 20 that almost all employers, including Catholic employers, will be forced to offer their employees health coverage that includes sterilization, abortion-inducing drugs and contraception. Almost all health insurers will be forced to include these "services" in the health insurance policies they offer and almost all individuals will be forced to pay for that coverage as part of the health insurance policies they purchase.
This ruling should be of great concern to all Americans regardless of religious belief, or position on pro-life/pro-choice issues. This ruling should be a red flag to all Americans of the danger of an Administration that has no respect for the rights of others and one that has the attitude of being the smartest guys in the room.
In so ruling, the Administration has undermined both the principle of religious conscience and the First Amendment to the Constitution in an unprecedented and profound way. Unless the ruling is overturned, faithful Catholics will be forced either to violate their consciences or to drop health coverage for employees and suffer penalties for doing so. The Administration's only concession was to give Catholic institutions one year to comply. This is not only inadequate but insulting as the Administration is basically saying this is the law of the land so take it or suffer the consequences of non-compliance. It betrays the faith of many Catholics who, until now, have supported this Administration with an honest will.
Catholic leaders across the country have made it clear they cannot comply with this ruling without compromising long held convictions and undermining Catholic identity. This ruling interferes with the basic right of Catholics to work for the common good.
In this ruling we have yet another example of an Administration that wants to force social change upon us in the worst possible way led by a President who cares little for the rights and convictions of the citizenry.
This ruling has nothing to do with abortion or contraception but has everything to do with this Administration displaying their arrogance toward the people and it has everything to do with individual liberty. Again, this president is forcing us to do something thru legislation just as he did with the Individual Mandate. This is another smoke and mirrors move, someone must pay for these mandates. The president keeps saying these "benefits" are free but someone must pay for it!
If this Administration can force us to buy insurance and pay for benefits we do not want, what is next? Whenever the government issues a mandate, in reality it is eliminating choice.
This ruling exposes Obama's steps toward unlimited power for the central government and its unique disdain for people who do not think like him. No change in wording will change Obama's position on the issue.
With his recent policy tweak, Obama asserts that insurance companies will do -for free- what faith based organizations do not want to do. Nonsense! Insurance companies will simply price their products based on actual cost. The courts are already considering the constitutionality of Obama Care. How can a government supposedly of the people, by the people and for the people punish the people if they do not want to shop at Obama's health care store?
Even though this issue is a direct threat to religious liberty, it is much bigger. It threatens the very essence of liberty by allowing government to dictate matters of individual discretion. Even if there was not a direct and wholly unconstitutional assault on the religious convictions of Catholics and other Christians, it is simply not the government's right to demand that an employer provide something that it does not want to give, or that employees do not want. If the president can demand employers to provide contraceptives or even abortion today, then next he may demand some other form of health coverage. He could then insist all employees be covered for dental and cosmetic surgery. Maybe I need a face lift but it is not a necessary function of the president to demand it.
The president's attempt to move the cost to the insurance companies is lame and laughable. It is not about adding forced benefits for people, it is about taking away the right of self-determination from people. No president has been granted that authority or power from the Constitution and it simply fails to meet the test of the "consent of the governed."
We should all object to the notion that we are required by the dictates of the president without Constitutional or legislative process to surrender the terms of our faith.
Nancy Pelosi was right about one thing, they needed to pass this legislation so we could all understand it. Well, they passed it and now we know. Speaker Boehner should put the ObamaCare bill back on the table for a vote. Let's see who is willing to put his or her name on it now that we know what is in it!
Obama is acting like a thug with a cavalier attitude that people of faith should cast aside their beliefs in favor of politically correct thinking. This is incredibly insulting and ignorant of the very nature of faith.
Contraception access is not the issue. It is available from many sources. The issue is who pays and whether all, including faith based organizations, must be made to kiss the ring of the American monarch and swear loyalty to his value system.
Henry the Eighth would be proud.
It is time for Obama to repent and Congress to repeal.
The Constitution is king, not Mr. Obama!
Saturday, February 4, 2012
A Foreigner's Perspective
In a recent edition of the London Times, Irwin Stelzer, business advisor and director of policy studies at the Hudson Institute, wrote an op/ed piece on the Republican presidential candidates. I found his opinions to be very interesting so following is a condensed version of his piece which also includes some of my own thoughts:
Politics makes for strange bedfellows. With the exception of Mitt Romney, all the candidates have decided that it is evil to take over failing companies in an attempt to restructure them so they can grow and create jobs. What these candidates have forgotten is that this so-called creative destruction has enabled risk-taking businessmen to create the capitalist system that has created the greatest material prosperity the world has ever seen. They are all saying that Romney's successful stewardship of Bain Capital disqualifies him from becoming the party's nominee to face Barack Obama in November.
Why? Because in the process of restructuring companies headed for the rocks two bad things sometimes happen: there are layoffs before the leaner company went on to success and the rescue effort failed.
This criticism is not coming from Democrats who have no use for the unpleasant aspects of American capitalism. This criticism is also not coming from European defenders of the social democratic system to which Obama wants to "transform" (his word) America.
This criticism is coming from candidates trying to get the support of conservatives who in their eagerness to derail Romney are advocating capitalism without risk or failure, which is akin to religion without sin: it will not work.
According to the Wall Street Journal, during Romney's tenure Bain gathered capital from investors and lenders and invested in 77 companies. Some 22% of those companies filed for bankruptcy or went out of business, some struggled along, some produced extraordinary profits for Bain's investors - roughly 50% to 80% annually. LIke oilmen who drill exploratory wells knowing that nine out of ten will be dry holes but the successful one will cover the cost of all ten and yield a profit, private equity firms gamble on the overall success of their portfolios.
It is unfortunate that the debate about American capitalism is being cast as a debate about the role of financial architects because one of the forces that drives capitalism forward is the private equity firm like Bain Capital that creates new, re-organized companies.
But there is more to capitalism than finance. There is investment by risk-taking, innovative entrepreneurs of the sort that populate Silicon Valley and garage laboratories all over America. John Maynard Keynes refers to "animal spirits" that reside in people possessed of a spontaneous urge to action than inaction, a group of people that Barack Obama knows nothing about and cares not to understand.
Romney, born to wealth, hardly qualifies as a hero of capitalism. He is a successful investor and good manager who, among other things, revived Staples which now employs over 70,000 and Domino's pizza with 145,000 workers.
Unfortunately, he opposes a president who has little use for bankers, an absolute distaste for "the rich", who he defines as "millionaires and billionaires" and any family earning more than $250,000 a year. It is Romney's misfortune that his Republican colleagues are giving so much ammunition to the Democrats.
If voters think government is simply a large business and the skill required to manage Bain is the skill needed to restructure government, Romney is their man. If they think that an entirely different world view from that of Obama is required, Romney also qualifies,no matter what one thinks of his Bain experience.
Two things are certain. First, running a private equity firm is not a disqualification for the presidency as might be the case for lobbying on behalf of Fannie Mae and Freddie Mac. Second, if Ron Paul decides to head the third party Libertarian ticket, he might siphon off as much as 6% of Romney's vote (assuming Romney is the candidate) and virtually assure Obama an extension of his stay in the White House.
Monday, June 20, 2011
Obama Care
One of the provisions of the Patient Protection and Affordable Care Act (ObamaCare) requires insurance companies to spend 80% of premiums they collect from small employer groups on claims. The figure for large employer groups is 85%. All other administrative expenses must be paid out of the remaining funds, referred to as the Medical Loss Ratio (MLR).
On the surface this seems to make sense and can be viewed as fair to all participants of these health insurance plans. But as the saying goes “the devil is in the details”.
A major problem/issue is that the law requires agent compensation to be part of the MLR, classifying it as an administrative expense. In order to comply, insurance companies were forced to cut agent compensation. In some cases, these cuts were up to 50%.
Now this makes no sense because ObamaCare created so much confusion, agents were inundated with questions from clients which necessitated much research to find answers. I can attest to this from my own experience. So at the very moment the government created more work for insurance agents and brokers, they effectively reduced their compensation.
Tell me how this makes any sense?
Hopefully, relief is in sight!
Two Congressman have introduced legislation that would exclude agent compensation from the MLR. The bill, the Access to Professional Health Insurance Advisors Act of 2011 has support from both sides of the aisle. It has been introduced by Reps. John Barrow (D-GA) and Mike Rogers (R-MI).
The bill is one of several attempts to free insurance companies from being forced to include agent compensation in their administrative costs. There is, of course, no guarantee that insurance companies will increase agent compensation if the law passed but it is a step in the right direction.
ObamaCare did not specify how to classify agent compensation under the MLR formula. However, through the regulatory process agent compensation was included in the MLR formula and also included as part of the “non-claims costs” category.
“Agent compensation is passed through by the insurance company from the consumer to the agent and is collected as part of the premium as a convenience,” says Robert Rusbuldt, president and CEO of the Independent Insurance Agents of America. “This compensation is not insurance company revenue and therefore should not be part of the MLR formula and the Rogers-Barrow legislation is a crucial technical fix to correct this error.”
If this issue is not addressed it can only cause harm to the consumer. Separately, many other insurance trade groups have been appealing for exemptions from the MLR calculations.
Hopefully, members of Congress will realize the value of this bill as the “status quo” is just not acceptable. According to a recent survey of 520 insurance agents conducted by the National Association of Insurance and Financial Advisors, 13% of agents experiencing reduced commissions have laid off or reduced the hours of support staff. Another 23% have considered staff reductions.
More than 25% say they will be forced to reduce staff in the future if commissions remain depressed.
Once again, the Obama administration and Congress, in spite of the claims that they are doing things to create jobs, propose and enact legislation that does just the opposite!
On the surface this seems to make sense and can be viewed as fair to all participants of these health insurance plans. But as the saying goes “the devil is in the details”.
A major problem/issue is that the law requires agent compensation to be part of the MLR, classifying it as an administrative expense. In order to comply, insurance companies were forced to cut agent compensation. In some cases, these cuts were up to 50%.
Now this makes no sense because ObamaCare created so much confusion, agents were inundated with questions from clients which necessitated much research to find answers. I can attest to this from my own experience. So at the very moment the government created more work for insurance agents and brokers, they effectively reduced their compensation.
Tell me how this makes any sense?
Hopefully, relief is in sight!
Two Congressman have introduced legislation that would exclude agent compensation from the MLR. The bill, the Access to Professional Health Insurance Advisors Act of 2011 has support from both sides of the aisle. It has been introduced by Reps. John Barrow (D-GA) and Mike Rogers (R-MI).
The bill is one of several attempts to free insurance companies from being forced to include agent compensation in their administrative costs. There is, of course, no guarantee that insurance companies will increase agent compensation if the law passed but it is a step in the right direction.
ObamaCare did not specify how to classify agent compensation under the MLR formula. However, through the regulatory process agent compensation was included in the MLR formula and also included as part of the “non-claims costs” category.
“Agent compensation is passed through by the insurance company from the consumer to the agent and is collected as part of the premium as a convenience,” says Robert Rusbuldt, president and CEO of the Independent Insurance Agents of America. “This compensation is not insurance company revenue and therefore should not be part of the MLR formula and the Rogers-Barrow legislation is a crucial technical fix to correct this error.”
If this issue is not addressed it can only cause harm to the consumer. Separately, many other insurance trade groups have been appealing for exemptions from the MLR calculations.
Hopefully, members of Congress will realize the value of this bill as the “status quo” is just not acceptable. According to a recent survey of 520 insurance agents conducted by the National Association of Insurance and Financial Advisors, 13% of agents experiencing reduced commissions have laid off or reduced the hours of support staff. Another 23% have considered staff reductions.
More than 25% say they will be forced to reduce staff in the future if commissions remain depressed.
Once again, the Obama administration and Congress, in spite of the claims that they are doing things to create jobs, propose and enact legislation that does just the opposite!
Monday, June 6, 2011
Are You Kidding Me?
In this past Sunday’s New York Times, Nicholas Kristof wrote an article entitled “Our Fantasy Nation?” His article centers on the desire of Tea Party conservatives and many Republicans to block the raising of the debt ceiling and offers an example of a nation that “lives up to their ideal”.
The nation he compares us to is Pakistan where he claims fewer than 2% of the people pay any taxes, government is limited and burdensome regulation never kills jobs. He further uses as examples of comparison that Pakistani society embraces traditional religious values, nobody objects to school prayer, same sex marriage is not imaginable and criminals are never coddled. Citizens are deeply patriotic and nobody burns flags.
And on this basis he concludes that the Republicans and Tea Party conservatives are moving America in the direction of Pakistan?
ARE YOU KIDDING ME?
Although he admits Sarah Palin and John Boehner do not intend to turn Washington into “Islamabad-on-the-Potomac” and that long-term budget issues need to be addressed (I assume he means by both Democrats and Republicans although he does not say this) he makes a very strong point that when Republicans insist on “starving the beast” of government, cutting taxes, regulations and social services, those are the steps to America becoming Pakistan.
ARE YOU KIDDING ME?
The rest of the article goes on to state how disastrous a Republican budget victory would be. For evidence he states the following:
history has taught us that government must take on more responsibility
citizens must pay more taxes
citizens of the Congo:
pay minimal taxes
there is high inequality
there is free-wheeling business and high military expenditures
the conclusion, I guess, is we are becoming like the Congo!
ARE YOU KIDDING ME?
And again we get the familiar argument that too much wealth is concentrated in too few hands, that the wealthiest 1% of Americans have greater net worth than the bottom 90%. Is this the fault of the wealthiest of our citizens?
ARE YOU KIDDING ME?
And if this were not enough nonsense, Mr. Kristof quotes G. Jeremiah Ryan, president of Bergen Community College in New Jersey. Mr. Ryan states that when the school was founded in 1965, two-thirds of the cost of running it was supposed to be paid by state and local governments and one-third by students. He goes on to say that today students bear 78% of the cost.
Is that the fault of the conservatives and Republicans? Perhaps that is not the conclusion that Mr. Kristof intended but the implication certainly is there. This is an example of the state government promising more than it could deliver, plain and simple. To imply otherwise is just not fair.
Yes, America is in an economic malaise and something must be done to spur employment, improve the housing market and aid the poorest of our citizens. It has been said that a society can be judged on how it treats its poor and I believe there is some truth to that.
But, in my opinion, the answer is not in government bailouts, re-distribution of wealth or taking from the rich to give to the poor. These are all the result of a president, and most who surround him, that is anti-business and believes all problems can be solved by taxing the rich.
I DISAGREE!
You really want to know why we have persistently high unemployment in excess of 9%?
You really want to know why we continue to have a lagging real estate market?
You really want to know why stock prices do not reflect growth in corporate profits?
It is because we have an administration that has an entitlement attitude. Mr. Obama and his supporters believe:
Re-distributing wealth is the answer to the nation’s economic woes
If you tax the “rich” enough, you have the solution to the nations’ economic woes
If you impose enough taxes on business - those dastardly hard-working Innovators who had the guts to start and attempt to grow a business - you will solve the nations’s economic woes
Growth of capital is not important
Mr. Obama and his administration are imposing on the American people social engineering at its worst. They display the attitude of the community organizer - look to the government to solve all problems. Turn the rich into the enemy. Blame successful businesses for all the nation’s ills.
Mr. Obama spent the first 2 years of his administration blaming everything on president Bush. He never acknowledge that by 2010, the Democrats had controlled Congress for 4 years! Then he discovered that government cannot do it all so he embarked on his campaign of soak the rich. How innovative!
We expect and deserve more from our president.
America will never return to greatness or realize its potential with an administration that pursues re-distribution of wealth and entitlement to the needy.
Businesses, both small and large, will not hire when they are unsure of what is the next piece of legislation that will adversely affect them and average workers are being hurt by this administration’s agenda.
Let me give you 2 examples.
In early 2009, the Obama administration passed the American Recovery and Reinvestment Act which came to be known as the ARRA law. One of its provisions required an employer to pay 65% of COBRA insurance premiums for 9 months for any employee terminated involuntarily. The Obama administration claimed that the expense would be offset by a payroll tax credit.
ARE YOU KIDDING ME?
This is an example of the empty-head thinking of administration officials who never ran a business, were never responsible for meeting a payroll and do not have a clue of what it takes to build a successful business.
Many small businesses did not have enough people remaining on payroll for the tax credit to offset the cost of the insurance premiums so it was a net loss to the business owner. The business owner was left holding the bag, including the expense of keeping track of all this and being penalized for this social legislation. I know this to be true for I was establishing COBRA administration plans for businesses and saw the devastating affect of this supposedly beneficial law. Time and time again I listened to business owners question how they could comply with all the new paperwork and the expense of that paperwork. And that, of course, is never considered by policy makers that have no business experience.
There was a ripple affect from this law. Companies like my former employer that did COBRA plan administration had to spend hundreds of thousands of dollars to communicate the provisions of this law to clients to be sure they were compliant. This all had a negative impact on the bottom line with absolutely no assistance from the government.
As a result, many businesses stopped hiring as times were so uncertain they did not want to face the prospect of paying COBRA premiums for additional involuntary terminations.
Another example.
Under “Obama Care” the ability of a worker to pay for over-the-counter drugs on a pre-tax basis as part of an employer sponsored flexible spending plan was eliminated. The administration justified this by saying mainly high income workers took advantage of this tax break.
ARE YOU KIDDING ME?
I can tell you from personal experience of establishing these pre-tax plans for many companies, many moderate income people participated. And since the amount of payroll being set aside for pre-taxing OTC medical expenses also gave a tax break to the employer, the elimination of this benefit also hurt the business owner.
This effectively RAISED the cost of OTC drugs for all flexible plan participants who could no longer take advantage of the tax break. Yet you never heard this from the Obama administration. All we heard is that Obama Care would REDUCE costs. How dishonest!
So, I submit that the Fantasy Nation is not what Mr. Kristof says the Republicans are moving us toward, it is the Nation we currently have!
The nation he compares us to is Pakistan where he claims fewer than 2% of the people pay any taxes, government is limited and burdensome regulation never kills jobs. He further uses as examples of comparison that Pakistani society embraces traditional religious values, nobody objects to school prayer, same sex marriage is not imaginable and criminals are never coddled. Citizens are deeply patriotic and nobody burns flags.
And on this basis he concludes that the Republicans and Tea Party conservatives are moving America in the direction of Pakistan?
ARE YOU KIDDING ME?
Although he admits Sarah Palin and John Boehner do not intend to turn Washington into “Islamabad-on-the-Potomac” and that long-term budget issues need to be addressed (I assume he means by both Democrats and Republicans although he does not say this) he makes a very strong point that when Republicans insist on “starving the beast” of government, cutting taxes, regulations and social services, those are the steps to America becoming Pakistan.
ARE YOU KIDDING ME?
The rest of the article goes on to state how disastrous a Republican budget victory would be. For evidence he states the following:
history has taught us that government must take on more responsibility
citizens must pay more taxes
citizens of the Congo:
pay minimal taxes
there is high inequality
there is free-wheeling business and high military expenditures
the conclusion, I guess, is we are becoming like the Congo!
ARE YOU KIDDING ME?
And again we get the familiar argument that too much wealth is concentrated in too few hands, that the wealthiest 1% of Americans have greater net worth than the bottom 90%. Is this the fault of the wealthiest of our citizens?
ARE YOU KIDDING ME?
And if this were not enough nonsense, Mr. Kristof quotes G. Jeremiah Ryan, president of Bergen Community College in New Jersey. Mr. Ryan states that when the school was founded in 1965, two-thirds of the cost of running it was supposed to be paid by state and local governments and one-third by students. He goes on to say that today students bear 78% of the cost.
Is that the fault of the conservatives and Republicans? Perhaps that is not the conclusion that Mr. Kristof intended but the implication certainly is there. This is an example of the state government promising more than it could deliver, plain and simple. To imply otherwise is just not fair.
Yes, America is in an economic malaise and something must be done to spur employment, improve the housing market and aid the poorest of our citizens. It has been said that a society can be judged on how it treats its poor and I believe there is some truth to that.
But, in my opinion, the answer is not in government bailouts, re-distribution of wealth or taking from the rich to give to the poor. These are all the result of a president, and most who surround him, that is anti-business and believes all problems can be solved by taxing the rich.
I DISAGREE!
You really want to know why we have persistently high unemployment in excess of 9%?
You really want to know why we continue to have a lagging real estate market?
You really want to know why stock prices do not reflect growth in corporate profits?
It is because we have an administration that has an entitlement attitude. Mr. Obama and his supporters believe:
Re-distributing wealth is the answer to the nation’s economic woes
If you tax the “rich” enough, you have the solution to the nations’ economic woes
If you impose enough taxes on business - those dastardly hard-working Innovators who had the guts to start and attempt to grow a business - you will solve the nations’s economic woes
Growth of capital is not important
Mr. Obama and his administration are imposing on the American people social engineering at its worst. They display the attitude of the community organizer - look to the government to solve all problems. Turn the rich into the enemy. Blame successful businesses for all the nation’s ills.
Mr. Obama spent the first 2 years of his administration blaming everything on president Bush. He never acknowledge that by 2010, the Democrats had controlled Congress for 4 years! Then he discovered that government cannot do it all so he embarked on his campaign of soak the rich. How innovative!
We expect and deserve more from our president.
America will never return to greatness or realize its potential with an administration that pursues re-distribution of wealth and entitlement to the needy.
Businesses, both small and large, will not hire when they are unsure of what is the next piece of legislation that will adversely affect them and average workers are being hurt by this administration’s agenda.
Let me give you 2 examples.
In early 2009, the Obama administration passed the American Recovery and Reinvestment Act which came to be known as the ARRA law. One of its provisions required an employer to pay 65% of COBRA insurance premiums for 9 months for any employee terminated involuntarily. The Obama administration claimed that the expense would be offset by a payroll tax credit.
ARE YOU KIDDING ME?
This is an example of the empty-head thinking of administration officials who never ran a business, were never responsible for meeting a payroll and do not have a clue of what it takes to build a successful business.
Many small businesses did not have enough people remaining on payroll for the tax credit to offset the cost of the insurance premiums so it was a net loss to the business owner. The business owner was left holding the bag, including the expense of keeping track of all this and being penalized for this social legislation. I know this to be true for I was establishing COBRA administration plans for businesses and saw the devastating affect of this supposedly beneficial law. Time and time again I listened to business owners question how they could comply with all the new paperwork and the expense of that paperwork. And that, of course, is never considered by policy makers that have no business experience.
There was a ripple affect from this law. Companies like my former employer that did COBRA plan administration had to spend hundreds of thousands of dollars to communicate the provisions of this law to clients to be sure they were compliant. This all had a negative impact on the bottom line with absolutely no assistance from the government.
As a result, many businesses stopped hiring as times were so uncertain they did not want to face the prospect of paying COBRA premiums for additional involuntary terminations.
Another example.
Under “Obama Care” the ability of a worker to pay for over-the-counter drugs on a pre-tax basis as part of an employer sponsored flexible spending plan was eliminated. The administration justified this by saying mainly high income workers took advantage of this tax break.
ARE YOU KIDDING ME?
I can tell you from personal experience of establishing these pre-tax plans for many companies, many moderate income people participated. And since the amount of payroll being set aside for pre-taxing OTC medical expenses also gave a tax break to the employer, the elimination of this benefit also hurt the business owner.
This effectively RAISED the cost of OTC drugs for all flexible plan participants who could no longer take advantage of the tax break. Yet you never heard this from the Obama administration. All we heard is that Obama Care would REDUCE costs. How dishonest!
So, I submit that the Fantasy Nation is not what Mr. Kristof says the Republicans are moving us toward, it is the Nation we currently have!
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