Sunday, July 06, 2008

The Hidden Tax Increase

Congress is talking about free health care. It sounds so Utopian and it looks like it might have a good chance of becoming law, a gift to the Hoi Polloi. Think again, it’s not what it appears to be. Congress has come to realize that the health care benefits promised to the over 65 retirees are in need of serious financing. I would like to believe that we can avoid socialized medicine (another word for free). This is a way to raise taxes to pay for entitlement programs (Medicare and Medicaid) that have no real funding method in place.

Funding Medicaid and Medicare for people over the age of 65 has to come from somewhere. At that age people do need health care (lots of it). Hmmmmm. Why not offer everyone free health care? Social Security started out the same way in 1935, a 2 percent tax on workers. This way, the government can raise extra money out of the 18 to 50 age group; they don’t get sick much and that’s a good thing. The money this group saves by not buying health insurance will be put to better use. It’s the old “FDR tax the young to pay the old,” plan. We are all going to get old so it’s money in our own pocket. Yea, Right! “Free Health Care” is a euphemism for “Raising Taxes.”

Service is a big issue. Compare it to old time amusement parks. They charged a price for each ride and the lines weren’t long. Now there is a price of admission and unlimited rides (you get to wait forever to ride the event). I call it the Disneyland Effect; you are sold a dream, the real part is the long line.

In today’s world it is pay as you go medicine. Now if/when we go to the System of free health care, we will encounter the "Disneyland Effect," unlimited health care with limited resources. Congress in desperation needs everyone to pay into this free health care plan. It will be a little like the Social Security plan that now takes 20 percent of our paycheck. “By God let’s give Joe Six-pack free health care, he deserves it!” Plus the employer will probably get to pay half of it, just like Social Security. Ever wonder where the employer got the half he matches with your half??? Actual wages could increase 10% and you wouldn’t see a penny of it. If fact, you could become unemployed because your boss couldn’t meet his payroll (assuming the employer and employee both pay 5%).

Do you get the feeling that "We the People" are incredibly stupid or that everyone in Congress use to be a very successful used car salesman??? Read between the lines. I’m sure there will be more than one to stand in, especially if you suddenly become unemployed.

Free health care and a tax stimulus check pulled out of thin air. Do you get the feeling that we are about to have an election?


Anonymous said...


What Big Bank do you think will go bust? It seems like the bad news is accelerating, and things are getting worse. I am very concerned, in that things are slowing down considerably. According to Mr. Roubini at NYU, we are in, and headed toward a global "slowdown" of possibly significant proportion. The damage done with easy money and spend like there is no tommorow will hurt even those who did not fall into that trap. It is truly unfortunate for all. What is so sad is that it did not have to happen.

I read something interesting the other day about the derivitives and other "inventions" from the Wall Street rocket scientists. The article said that essentially what has happened is that there has been a run on the bank, but this time it was a run on the "shadow banking" system which is the unregulated banking system.

In any event T. Boone Pickens seems to have hit the nail on the head. He said that what we are observing is the largest transfer of wealth in history. But not by parents to the baby boomers but in the form of US Dollars and other capital overseas.

Remember the saying "What's good for GM is good for America"

America cannot afford to lose GM. If we lose that segment of our industrial base, and what do we really have? We need to begin thinking about what kind of country and future it is that we want for our children.
Free trade has not equaled fair trade, and that is something that has been forgotten in this whole process.

I'm Not POTUS said...


I think you've stumbled upon the answer to the health care issue.

Think of it as an "E" Ticket tax policy.

The best part of Walts' ticket system was that you couldn't buy just a book of "E" Tickets you had to get the whole package A,B,C,D,E.
Spoiled rich kids would toss full books of A,B,C & D to the curb outside of Materhorn or Space Mountain. I once paid for my meals by reselling the untouchable letters to a cheap dad for 5% face value next to the entrance.

Now do the same to health care where "E" Tickets rides are boob jobs, lipos, face lifts and the like.

Rich people who are fat, ugly or vain can indulge as usual and donate the unused tickets back to the government pool of tickets for the poor for a tax write off.

You could expand the realm of "E" tickets to stuff like idiot "trekkers" that go up a mountain in a storm and get rescued. Or even charge drunk "E" ticket rates for their self inflicted injuries.

Heck I'm gonna go out right now and trademark "RxBay" as a secondary auction market.

Jim in San Marcos said...

Hi Anon 1:38

Let's see, banks to go bust?

Citigroup and Bank of America come to mind. The bank part is not in question, it's the rest of what they do that is in bad shape. Credit card debt comes to mind.

UBS, J P Morgan and Deutsche Bank are a few others, REO's and CDO's are their toys.

The thing to remember in very stressful times, is that even the strongest bank can fall prey to rumor. Depositors vote with their feet.

Financial markets are collapsing. Fanny Mae and Freddie Mac are about to become toast (if you are a stock holder).

To big to fail means it's too big for our government to cover the tab. The 150 billion dollar stimulus package should set a few warning flags. 15 trillion dollars of losses (a guesstimate by me) is more than the national debt if I remember.

Anyone who thinks that these are just bank losses is not playing with a full deck. The losses will be felt in the retirement plans and annuities. A lot of what a bank can do is outside of FDIC insurance umbrella.

If you are looking for stocks to short, be careful once they hit $15. At that level, blue sky and hype can keep them from going lower. I sure am tempted though to short another one or two financial stocks.

I know this all sounds pretty dismal, but housing has another 18 months of very bad news before there can be an upturn.

Be careful of T Boon Pickens, he's one of the few people that could make money at his own funeral. What ever you think he's doing, you're probably wrong. He's a magic act with style and a lot of good common sense.

Hope this is of some help. Thank you for your comments

Jim in San Marcos said...

Hi I'm not [Potus] (President of the United States --An inside joke)

I remember back to those times. Seems like just yesterday. I remember always making an effort to give my unspent tickets to someone with small kids.

I think that you have been beaten to the punch with your idea. They call it cable vision. You pay for crap you'll never use, it's called the "Basic Plan." Once you get to $90 a month you get stuff you might watch.

Seriously though, If you have been to Disneyland lately, it is crowded and it takes an hour in line to get on a ride. 12 rides in 12 hours. 11.5 hours waiting in line. Too many people in the park means you have to wait longer to get on a ride. You can't beat that if you own the place!

Canada has free health care and if you need a heart bypass, they put you on a waiting list, it's a 6 month wait. Huh??? You gotta be kidding!!!! Where do you go? You fly to India for the operation if you have the cash, it's 50% cheaper than coming to the USA.

You raise an interesting point about optional surgery. Would boob jobs and sex changes be covered by the proposed free health care plan?
I guess if the Democrats hurry and pass the bill, Obama could become the first female black president. (Sorry I couldn't help myself, it was too bad to pass up , the Democrats really want to win this election)

Wasn't the Matterhorn 4 E tickets and you only got 12 total of each class? Can you remember back 50 years???

Take care and thank you for your comments.

Sackerson said...

Isn't most of the money spent on the last 6 months of life? In which case, why bother?

... Oh dear, apparently cutting down there wouldn't help - see:

Anonymous said...

"Free health care and a tax stimulus check pulled out of thin air. Do you get the feeling that we are about to have an election?"

Just waiting to see what else is conjured up before November. Works out well for you and me though, huh? As Will Rogers once said:

"I don't know jokes; I just watch the government and report the facts."

Question is, will we still be laughing down the line?

Anonymous said...

O honey have you been to disneyland lately? Attendance is way down. We walked on and off Pirates several times last Thursday with no wait. Same goes for many other rides.
One of my co-workers was from Canada. His parents had moved to the US a few years back. His mother developed cancer and needed treatment. Do you think they got first class treatment here? No, they moved back to Canada where she received the care she needed with no bullshit. My father always uses the story that Canadians have inferior health care and have to wait in long lines...however all my Canadian friends sing a much different tune. I'm gonna guess that the one with the most up to date news is not my father.
I think it is a sad statement that the US can't figure out how to provide decent health care for it's citizens. There is too much waste in the system and no oversight and we get that for top dollar when the government isn't in control.
My son was a preemie born four years ago at Cedars. Both parents employed full time with supposedly great benefits and we are still wrestling with the billing department at the hospital over my kids delivery costs. The system is broken and needs some kind of help. It is unaffordable now.
What's your plan for fixing the mess? Do only the wealthy business owners get to take their kids to the doctors? Do we indenture poor parents for health care? Sometimes I read this blog and think you are enjoying watching the world go to hell with an attitude of "I got mine too bad the rest of you will lose out." You can't honestly think that cutting everyone off from all social programs is the only solution, do you?

Jim in San Marcos said...

Hi Anon 4:33

I'm not for cutting anyone out of social programs. I would just like the government to be able to pay for them. Free health care benefits for people over the age of 65 cost about $500 to 1,000 a month in actual premiums. Having the government pick up the tab doesn't pay the bill. The costs are real. What you pay into Social Security, you will get back in the first 5 years of your retirement.

Do you know where the stimulus check you just received came from? It came from your savings. They taxed everyone's money in the bank by 10%. Nobody worked to earn the money, the government printed it. Its a little like taking a quart of water and adding it to a pot full of soup. You can feed a few more people, but you haven't really created more soup, just the illusion of it.

This article centered around the tax increase that the government is going to saddle us with in the name of health care. They get 40% of my paycheck now and if this passes, they will get another 10%.

Just examine the taxes collected in this country and the money spent. If our government was treated as any bank in this country, they would be shut down and sent to prison.

We are taxed two ways. The government gets 40% of my paycheck and of what I save, they take another 10% with inflation.

The money isn't there to do all of the things our government has promised. Germany had hyperinflation in the 1920's. How nice would it be to have your life savings wiped away by a government that printed money to pay the bills? It would mean the end of Social Security and Medicaid as we know it. A lot of us silver foxes could be living in card board boxes. That's not a retirement I have planned for.

I'm not trying to find solutions to our problems, I am just trying to point out that a lot of solutions are part of the problem. Lets face it, if these things were so easy to fix, it would have been done hundreds of years ago.

Thank you for your comments.

Jim in San Marcos said...

Hi Sack

Looks like your link got whacked. Here is that link

The article is rather scary, it was written in 2002. One trillion in health care costs is rather hard to imagine as being real.

Jim in San Marcos said...

Hi Boom to Bust

The way you wrote the two liner was funnier-- it must be your delivery!

When I first wrote those lines free health care made me think of unlimited Viagra prescriptions, the Tax Stimulus made me think of a nice chick hanging on my arm to spend it on. and the word election is not spelled with an "r"--so I cleaned it up.

You're right though, we have to keep our sense of humor, we ain't getting out of this alive.

Take care

Anonymous said...

Here's some food for thought:


Anonymous said...

You are paying handsomely for healthcare anyway, but the money you spend goes to fund the champagne lifestyles of hospital & insurance ceo's and doctors. You can be under a socialised system those people are going to be out of luck.

Jim in San Marcos said...

Hi Annon 11:45

I think when you deal with anything from an idealistic point of view, things make sense. But when you mix it with the real world, it isn't quite the same. Nobody is going to spend 10 years going to college and wrack up a quarter of a million in student loans, and not expect more from life. Socialized medicine is assembly line work. Get them in and out fast.

We reward skill with money and incompetence with law suits.

In theory socialized medicine seems like a logical approach. We just don't have the resources to devote to it. The amount of resources necessary to pay for it may be present, but then you'd have to cut other expenses; army, school education, government infrastructure,Social Security etc.

I'm writing something related to this for later this week.

Thank you for your comments

GP said...

Congress just voted not to reduce Medicare payments to doctors. I just turned 65 and used Medicare to have three small skin growths removed. The doctor was paid $2,600 for 30 minutes work by Medicare. I guess it is hard to make a living at $5,100 an hour.

Jim in San Marcos said...


It does sound pretty steep. I'll bet that the doctor remembers your name.

You might want to send a copy of that bill to your congressman (assuming that they can read)

Government programs tend to bloat real bad.

Without insurance, a bill like that could put you in the hospital.

Take care

Anonymous said...

Wow, this sight always amazes me in the same way as the political arena and banking folk do. We're ALL screwed royally as Americans. We are experiencing the ultimate smoke enema (SP?). We have gone from being created as a country of by the people for the people to by the corporation for the corporation. The biggest corporation screwing Joe six pack, WE that is, the US government, the second banks / insurance. The first Joe / WE can not fight so......after he's had enough, and I think he has now, or soon will... he'll just, I believe, the term is buy and bail his way through. This is so-o-o-o bad for us as a people. If a few banks get boned, that's one thing. If they are so scared, they will no longer lend to anyone, which is where we're at, that is quite another. The foreclosure system is jammed solid in CA, NV, FL, MI, OH currently. most of the current concern is SE, and SW. This could and, I believe, will attack basic property rights. That's the way our country currently works by the way. What do you think happens when the average household pays $1200 per month or more to heat their homes, and yearround? Ammagedon? The south will look good again? I am convinced, We the people, will continue to face the greatest depression of our lives and globally as well. Wake up America.

Jim in San Marcos said...

Hi Anon 7;46

I agree it isn't going to be pretty. A lot of people don't even have a clue.

Let's keep quite and move towards an exit.

Thank you for your comments, and good luck in this Maelstrom

Anonymous said...

We've tried the for-profit health care system for many, many decades now, so how's it working?

We have the most inefficient and most expensive health care in the world, and the trends are continuing. Medicare is plagued by private providers fraudulently billing their services.

When we try to adopt some basic capitalist measures, such as negotiating with drug companies for discounts when Medicare buys drugs, the "free market" Republicans won't let the bill pass.

Let's remove the financial inefficeiency of profits from the system (which also drives fraud costs) and adopt the popular and moral health public health plans enjoyed in other modern countries.