An Interesting and Important Case


A new hazard has appeared on the radar screens of Team ObamaCare. The first, and most profoundly dangerous, hazard was overcome in Florida v United States when SCOTUS ruled that the individual mandate was constitutional. None of the ancillary cases floating around posed a serious threat.

This new one, however, could be very dangerous.

In 2011, Jon Adler[1], a law professor, sent an eMail to his friend Michael Cannon[2], saying that he [Adler] thought he had spotted an error in ObamaCare that could unravel a significant portion of the law[3]. It seems an important aspect of the implementation of the Affordable Care Act is being executed in defiance of the law’s instructions. The law says one thing and the government is doing another.

The exchanges are defined in §1311 and §1321 of the law, and their rights and duties delineated. In short, Affordable Care Act-compliant insurance policies would be offered through software “exchanges” that would act as a router between consumer and insurer, filtered for qualifications and assistance. One would go online and submit their data, and the exchange would produce a range of policies for which they qualify. The consumer would click on the policy desired, and the exchange would reveal how to directly contact the insurer offering that plan. These exchanges were to be operated in each State by that State (§1311). If a State declined to set up and operate an exchange, the federal government would establish and operate an exchange in that State (§1321). At issue are the federal subsidies for individuals buying insurance in their state’s healthcare exchanges. The plain-text language of the law stipulates that those subsidies should be allotted for plans purchased “through an Exchange established by the State under Section 1311[4].

The law is being implemented such that all fifty states are offering subsidies, not just the 14 states that chose to set up a 1311-exchange. Adler contends that this is illegal behavior, and that 1311-subsidies to 1321-exchanges should be struck down. This is problematic because it would take a significant number of consumers out of the game (those who could no longer afford any policy), costing the insurer a significant revenue stream, causing post-March premium adjustments. Premiums of those carrying ObamaCare policies would spike. This would be just the latest in a seemingly unending string of unpleasant surprises – increasing public displeasure with the Affordable Care Act (and thus the Democrats who voted for it or currently support it).

It would take players out of the game because a, say, $300-a-month policy, costs the insurer ~$240-a-month, actuarially, to operate, eighty percent of revenues being conscripted to payouts on policies. Profits and overhead – to include salaries and wages – to be gleaned from the remaining twenty percent of revenues[5]. This means that insurers are operating on a razor-thin margin, particularly at the outset. ObamaCare insurers will be cash-flow businesses for a decade or so from program enactment (March 31 2014). A significant reduction in consumers (and therefore revenues) will necessitate a re-calculation of fiscally responsible premium levels to adjust to this new reality. This could cause a further winnowing of financially-stretched consumers from ObamaCare (opting for the fines, or finding some other method of managing their healthcare), sparking another round of re-calculation and premium adjustments. Rinse and repeat. This feedback loop – what the industry calls a Death Spiral – leads inexorably to zero consumers for infinitely high-priced insurance[6].

Adler and Cannon wrote an op-ed to this affect in 2011[7]. Now there are four cases challenging the subsidies in federally-run exchanges. One of them, Halbig v Sebelius, was argued in DC District Court in November of 2011 by premier litigator Michael Carvin. The government issued a barrage of motions to dismiss, ranging from standing to fuzziness of complaint. Judge Paul L Friedman brushed the motions aside, each with cause, and noted that the trial should proceed to the merits phase. He noted that the issue is of “some urgency to both sides,” and said that “I want to do it quickly.” All briefs and motions were to be filed by November and oral arguments were heard on December 3. Judge Friedman said he would enter final judgment by February 15, ideally before IRS began handing out subsidies on January 1.

The crux of plaintiffs’ argument is that Congress unambiguously defined State and Federal exchanges and then unambiguously designated State exchanges as being eligible for federal subsidies. This is important because a principle of judicial interpretation of legislation is to look at the language used in the plain-text version of the legislation written and passed by Congress, and signed into law. And there it is: “subsidies should be allotted for plans purchased through an Exchange established by the State under Section 1311.” [8] It is considered a priori that Congress means what it says. Here the search is for legislative intent.

The crux of government’s argument is that the federal government is acting “in the shoes” of State exchanges, and thus should be treated as such. This is important because another principle of judicial interpretation holds that an insular ruling should resonate with the law as a whole. The purpose of the Affordable Care Act is to bring full-service healthcare coverage to the uninsured, so it would be logical to subsidize the resource-challenged consumer, wherever they are found. Here the search is for internal consistency.

A side issue involves why IRS is poised to emit subsidies on January 1. It seems that President Obama issued a request to IRS that it interpret the disparate clauses as unintentionally specifying that only State exchanges are eligible, and to issue subsidies to all who financially qualify. Plaintiffs argue that this effectively changes the language of the law, and that no one but Congress is constitutionally allowed to do that.

Whoever loses in the DC District Court will undoubtedly appeal to the US DC District Court of Appeals, and that loser to the US Supreme Court. A narrow ruling on Halbig v Sebelius (that only States exchanges are eligible to authorize subsidies) will all but unravel the Patient Protection and Affordable Care Act, and a broad ruling (that subsidies be considered only on financial criteria) will further buttress its legal pedigree.

[1] Professor, law; director, Center for Business Law and Regulation, Case Western Reserve University.

[2] Director, health policy studies, Cato Institute.

[3] Pema Levy, The Case That Could Topple ObamaCare, in Newsweek, December 17 2013, 1505EST.

[4] Ibid.

[5] Insurers will generate “off-book” revenues by short-term investing operating surpluses in low-risk, dependable return instruments. This will increase absolute profits without polluting ObamaCare accounting of the 80-20 rule, making it possible for insurers to participate in the first place.

[6] There are those who say that this was the Democrats’ idea – allow ObamaCare to collapse so as to necessitate the “Single-Payer” option – nationalized healthcare.

[7] Jonathan H Adler and Michael F Cannon, Another ObamaCare Glitch, in Wall Street Journal, November 16 2011.

[8] See, for example, Michael F Cannon, An Update on Halbig, and Other Lawsuits That Could Make the Decrepit Look Like a Hiccup, in Forbes, November 2013.

Up from NeoLiberalism


We are living the operational weakness of modern American liberalism (neoliberalism) – it’s bored by the details of erecting the dream.

Neoliberals have a utopian view of neoliberalism realized, and that view is based upon a collection of social-, economic-, gender- and racial-justice principles taken to be axiomatic. In foreign policy, for example, neoliberals favor an arms-length relationship with foreign capitals, friend or foe. They are by nature Liberal Internationalists, eschewing the harshness of Realism. Domestically, neoliberals tend to be Euro-style Social Democrats, believing that the prime function of central government is to provide for the people. Neoliberals are, in other words, broad-brush visionaries – theoreticians on the macro-level. They favor large, sweeping programs that establish new norms.

It’s actually carrying out those visions that bore neoliberals.

A textbook example, if somewhat Gilbert & Sullivan in its execution, is the whole Patient Protection and Affordable Care Act saga. Neoliberals were flush with winning the White House and legislative majorities in both Houses of Congress. They had total control of the government of the United States of America. They could pass anything they wanted. And what they wanted was a grand gesture, of course, to usher-in the Age of NeoLiberalism – healthcare as a right.

From those four words on a page, had to be fashioned the next level of detail: “we’re going to put 30 million needy new patients into a shrinking doctor-pool, and give everyone improved care at lowered cost without increasing taxes or indebtedness.” The writing of the bill would delineate how to manipulate the existing national economy into compliance with those four words on a page. For this task, they hunkered down in political isolation (“We won [the election] and we’ll write the bill”) with the century-old liberal dream of universal healthcare. So much had been written about this, so many think tank studies, so many speeches, that the architecture of the proposal was well understood. They had the conceptual and political freedom to craft the bill in as pure as they wanted.

The process quickly broke-down into an orgasm of “2+2=Grapefruit” thinking, and colloquial political assaults and exemptions dominated the synthesis of the bill. They emerged with a 1,726-page tome that explained the bill in what they call “plain language,” as to distinguish it from the “legislative language” version (2,300+ pages) which is what appears in the US Code. The “simple” version ran over 1,700 pages! No one bothered to read the thing (with the possible exception of Paul Ryan, who took exception with it) – “You’ll have to pass the bill to find out what’s in it.”

It’s a kaleidoscopic salad of double-accounting (e.g., using $500 billion of Social Security money twice), self-defeating trajectories (e.g., low penalties on the prime players for not participating), and does nothing to realize the promise (e.g., “putting 30 million needy new patients into a shrinking doctor-pool, and giving everyone improved care at lowered cost without increasing taxes or indebtedness”).

They had a chance to craft from the heights of a hundred years of theory – the best and the brightest of neoliberalism – and they chose to go small-ball. They blew it.

The very complexity of the thing precludes it from working. Nobody can write that much code – computer or legal – into a workable whole because of the myriad of unintended consequences unwinding simultaneously. Frank Lloyd Wright would admonish his students that “a thing will do precisely what its design permits it to do, regardless of what the designer had in mind.” You can’t wish a flawed premise workable. And “30 million needy new patients into a shrinking doctor-pool, giving everyone improved care at lowered cost without increasing taxes or indebtedness” is a flawed premise.

The economic model is inter-demographical wealth transfer – the young and healthy pay for the old, the infirm, and the uninsurable. And then they stipulate that offspring can remain on their parents’ policy until 26 years of age. These are the prime financiers of the program, and they are exempted! The rest of the young and healthy are to choose between $400 to $500 a month premiums with $6,000 deductables, or an annual fine ranging from $95 or 1% of income (the first year) to $325 or 2% of income (the second year) to $695 or 2.5% of income (thereafter). Only in the third year does the penalty exceed one month’s premium, and those premiums are needed from year-one for the business model to work. The combination of these two features almost assures that the economics are going to be upside down from day-one.

Doctors and hospitals are refusing to participate (they lose money), and doctors are retiring early (seeing rough seas ahead). There aren’t enough residency slots in the country to replace the exiting doctors in near enough time to counterbalance the trend, and even if there were, you are replacing seasoned skills with raw, new ones. Quality of care would necessarily diminish. When demand badly outstrips supply, the economy spawns black markets and rationing. The rich will be able to go offshore for quality care and everyone else will get their care rationed.

The natural tendency of ObamaCare is to fly apart from contradictions in the premise.

While all of this was going on, we experienced a politically corrupt IRS, serial Justice Department failings, a complete collapse of State Department’s responsibilities to its own, and two election cycles. The unseemly way in which the bill was passed – without a single Republican vote, and over the omnipresent polled objections of a majority of the American people – cost Democrats their legislative majorities in both Houses. They retained a simple majority in the Senate, and retained the White House in the second election cycle.

Then came the rollout. A website with an embedded Data Hub – a “server” of information between customer and federal agencies, for the verification of customer-supplied information, and access to the policies for which they qualify. They had three years to design the thing, and let contracts totaling more than $400 million dollars (on a cost-plus basis). It was, and is, a disaster. The picture that’s emerging is that virtually all the people actually working on it knew it wasn’t ready, and virtually all the political types were committed to going live on October 1st. The political types won the day, and the coders were proven right. Forty-five days later, we are up to being able to handle 11,000 visitors a day (Drudge Report fields over two million unique visitors daily), and three twentysomethings in San Francisco took a week and developed an enrollment screen that works[1]. It does so by bypassing all the “exchanges,” state and federal, asking you only to fill-in your zip code, age, number of people covered and salary (if you want to see if you qualify for subsidies), and listing the policies for which you qualify. If you see one you like, click on it, and the screen directs you to the insurer offering that plan. It doesn’t care about your name, address or Social Security number, etc (only the insurer needs personal data). Simplicity itself.

The general contractors, and their sub-contractors (and their suppliers), produced a hodge-podge of code that doesn’t work, has copyright problems, wasn’t end-to-end tested (the consumers were alpha-testers), exhibits data-security as an afterthought (the backup transaction file isn’t even encrypted), and was running on too few servers. It would be amateurish if not for the hundreds of millions of dollars we paid them to produce it. The only conclusion is that there was no oversight. I have dealt with government contracts in the defense sector, and they always contain benchmarks – “phases” of the contract that must be demonstrated to be attained by the prime contractor before proceeding (and collecting another increment of funding). It doesn’t sound as though the programmers for the enrollment screen had such provisions in their contracts. They showed up on October 1 with a broken, non-functional product. And “no one knew it.” If true, that’s a condemnation of malfeasance by CMS, and by extension, HHS. If not true (if somebody knew), that’s a condemnation of leadership character or ability.

Coincident to the rollout was the ever-growing number of people losing their existing policies, obviating President Obama’s principle selling point during the 2012 campaign – “If you like your insurance, you can keep your insurance. Period. If you like your doctor, you can keep your doctor. Period.” It can now be documented that he made that promise some 36 times between 2009 (when the bill was being written) and 2012 (after he signed the bill). The perception is that he lied. Now he says “What we said was ‘if you like your insurance, and it hasn’t changed since the bill was signed into law, you can keep it.’ ” He’s trying to reconcile what he said with what the law says, and they are irreconcilable. Gaffe or lie, it’s just more incompetence being heaped on the Act.

Modern American Liberalism had its best shot at demonstrating their ability to live up to their rhetoric, and they didn’t. We didn’t get a gleaming edifice of social justice, we got a garish finger-painting of special interests, cronyism, magical thinking and surreal economics. People losing their insurance outnumber those getting new policies by a hundred to one. Fewer than 50,000 have enrolled as of this writing, and most of those are takers – the infirm and uninsurable who will consume services far in excess of their premiums. And it’s going to get worse. Next year, when the business mandate kicks-in, millions more will dumped onto the exchanges (from policies they liked, and severed from doctors they liked). It was a lost opportunity that all liberals should mourn. Politically, liberals have lost a high-stakes poker hand – their signature achievement, totally attributable to Democrats, is failing before their eyes.

And it is this that is the lesson here: neoliberals are too ethereal to efficiently run complex processes. They seem to lack the discipline to keep a process running within sustainable bounds. Neoliberals aren’t good with bounds. When they get something enacted, they’re off to the next big dream. The pedestrian task of making the last idea work is alien to them.

They have, over the last five years, shown their utter contempt for day-to-day management. All of the crises during this period are attributable to a lack of, or wholly incompetent, oversight – the day-to-day management of process. Neoliberals aren’t good at it, they don’t like it, and all failures are somebody else’s fault. There is no visible institutional inquisitiveness – they don’t appear to want to be good at it, don’t want to like it, and failure is irrelevant.

This is not a partisan attack, rather an observation of operational ineptitude. Regardless of their political agenda, they are proving incapable of governing, and that is a dangerous attribute from those who are supposed to be governing.

[1] See John Blackstone, SF programmers build alternative to, CBS News, November 8 2013, 1926EST.



Total cost of is ~$300 million, so far[1] (and they had three years to design and build it[2]). It came out on October 1, right on time, but it crashed. Repeatedly. After three days of essentially no service, the president suggested that people use the phone bank. It crashed. It turns out that the “glitches” President Obama assured us would be cleared up in a couple of days are actually manifestations of software that is cobbled together not unlike the law itself. This most tech-savvy administration in history kept moving the goal posts on what the site was supposed to do until it was too late for end-to-end testing – well, QSSI did try one end-to-end test with 200 applicants (it crashed). Essentially, we were the beta test. It crashed. While in real-world service, it never got above 2,000 applicants before it crashed. We were told that there was so much interest in the insurance that the site was overwhelmed[3]. John McAfee, founder of the security software company, disagrees, noting that the site was actually conducting denial of service attacks on itself. The pieces don’t work together.

Three years and $300 million and it doesn’t work. It shimmies and it shakes and it falls down.

Not to worry, President Obama is mounting a “tech surge” to fix it. Jeff Zients, an economist, will head up a Geek Squad of computer guys from inside and outside of government to get the website going. By November 30th. You have to be covered by December 15th lest you get to deal with the IRS. Not to worry, the fine for not having insurance is absurdly smaller than the cost of the insurance. Of course, if you can’t afford the Affordable Care Act, everybody else will subsidize your policy. Let’s see if we can’t guess who will sign up for this house of cards – the takers: the old, the infirm, the uninsurable. In fact, this is the Achilles Heel of the business plan for ObamaCare. The way the whole scam works is to get a bunch of young healthy people to buy way more insurance than they need so that people who are uninsurable can get their bills paid. It depends on one demographic subsidizing another demographic. It’s wealth transfer.

Well, your average healthy young person is going to weigh this ridiculous coverage ($300-$400 a month and $6,000 deductible) against the $95 fine for not being covered, and make the rational decision. OMB tells us that there needs to be 7 million policies purchased by March, and that 2.5 million of them need to be the young and healthy, for the whole thing to be somewhat self-sustaining. So far, they are losing ground on those metrics.

Fourteen states are running their own exchanges, and they’re working (small government: 14, Big Government: 0), but the news isn’t all good – 85%-90% of those actually buying coverage are going to Medicaid, not private insurers. Oregon didn’t have a single sign-up for private insurance. All Medicaid. The deficit swells.

Doctors and hospitals are declining to participate with ObamaCare policies – they lose money.

When the website is fixed (sometime in the next administration, at a cost of billions – if current trends hold) then we will see that the real problem with ObamaCare is ObamaCare. The only way this works is to strip freedom out of the equation (mission accomplished) and produce a new normal (read: Liberal Utopia) of high unemployment, high debt, high taxes, and a mangrove thicket of bureaucrats between doctor and patient (partially done – just waiting for the rest to kick-in in January).

[1] Glenn Kessler, How Much Did Cost?, in Washington Post, October 24 2013, 0600EDT.

[2] The Patient Protection and Affordable Care Act was signed into law on March 22 2010.

[3] Interest in the insurance? That’s just silly – we are mandated to get it.

the Gift Horse of ObamaCare


In her now infamous gaffe[1], then-Speaker of the House Nancy Pelosi told us – “We’ll have to pass it to find out what’s in the bill.”

Although there have been hints at the shadow it will cast over everyday life, the first real testable event will occur next Tuesday when the state exchanges will be open for business in support of the individual mandate. What I would like to do here is to forget the moralistic debate over whether or not universal health assurance is a good idea, and examine whether or not it is, as enacted, workable.

The financing of the program comes from two main sources, a $50-billion-dollar-a-year transfer from Medicare to ObamaCare (for ten years) and a wealth transfer from young to old as young people must purchase coverage they don’t need to pay for old people’s coverage they can’t afford. The first stream has yet to kick-in as politicians have a hard time taking $50 billion away from seniors, who vote in greater proportion than any other demographic. So that part of the bill isn’t working and ObamaCare isn’t being funded as written. In fairness, it’s only been a couple of years and that may well yet happen, but at very least, ObamaCare is significantly underfunded at this point because of the lack of political will of politicians to obey the law they passed. I said at the time that no politician would vote to take $50 billion away form seniors.

The second stream is about to be tested. As the individual mandate kicks-in, we will see if the young are willing to pay for the elderly. Take, for example, a 27 year old who is no longer eligible for coverage under his parents’ policy. He will have the choice of buying coverage from an exchange for from $2,009.28 a year (minimum coverage) to $3,054.24 a year (“Gold” coverage), or pay a once-a-year tax of $95 if not covered by tax time. Which option do you think will appeal more to a rational young person? If they need medical care while not covered, they go to the hospital and acquire insurance then (insurers can’t turn anyone down for pre-existing conditions). It’s a no-brainer.

Regarding the exchanges themselves, only 16 states have set up exchanges, and the federal government hasn’t set up exchanges in other 34 yet. So, the law will come into affect with only 16 states able to comply. The online sign-up isn’t ready, so enrollees will have to enroll by phone for the time being. Can you say “2-hour hold”? The software that is to operate the data hub (that goes out and gets whatever personal information the exchange needs to verify your eligibility for the coverage you choose) isn’t ready yet, and will not have enough time to run exhaustive security checks before it’s pressed into use. The “navigators”, phone operators that help people wander around inside ObamaCare trying to figure out what they can and cannot do, are just now being hired (with only six states mandating background checks), and will be, by definition, lightly trained by Tuesday. I look for massive identity theft and misuse of personal information.

There are some unintended consequences of the employer mandate that are showing potential to do social harm. There are 315 companies that have laid workers off, siting ObamaCare as the reason, thus demonstrating a real negative effect on general employment. This means that even after recovery, the systemic unemployed will be higher than before ObamaCare, we just don’t know by how much yet. Also, many employers are moving what employees they can from full-time to part-time, lowering the standard of living for those employees. That’s a negative social effect in and of itself, but the details of the full-time/part-time migration has another embedded problem. To keep companies from cutting the workday by just an hour in order to classify a worker as part-time, the law stipulated that anyone who worked thirty hours a week would be, for the purposes of the Affordable Care Act, considered as full-time. Business has said “OK” and began limiting as many workers as possible to 29 hours. Unions have rebelled against what it calls a “set-by-government workweek of 30 hours” instead of the 40-hour workweek that unions fought to establish. They say this will weaken the middle class as wage earners work fewer hours than before. People who know me, know that I agree with very little unions have to say, but in this instance, their case is based on empirical evidence. The general workforce is weakened and impoverished by the consequences of the way the law is written. These situations don’t directly relate to the workability of the law as written, but may do so indirectly if the public blames the law for the consequences, rendering ObamaCare politically unworkable.

As a sidebar, the IRS, who hasn’t even begun enforcing anything yet, announced that it has misplaced $162 million of ObamaCare money. Just lost it. I think we can all agree that the federal government can lose $160 million with one hand tied behind its back, what makes this particularly troublesome are two things: The IRS is an accounting house, keeping track of monies received and spent is what it does, and; these guys are going to have the responsibility of disseminating our sensitive personal financial information onto the data hub, based upon request of anonymous exchange operators. This will all be done using just-finished, lightly-tested software. Shuttling our information around is the beta test. What could go wrong?

[1] The political definition of “gaffe” is when a politician inadvertently tells the truth.

NOTE: Title illustration by Gary Varvel.

Stop or I’ll Shoot!


We are witnessing why I am not a Republican.

Let’s review. The current budget runs out of appropriations authority on September 30, meaning that the executive can distribute incoming tax revenues among the various commitments of the government, but can’t spend-forward money it doesn’t physically have. The House has passed a continuing resolution (CR) that upholds the current budget spending authority until December, with clause that defunds ObamaCare (prohibits any federal monies spent in implementing the Patient Protection and Affordable Care Act). That bill now resides in Harry Reid’s IN box (along with the 14 other defunding and repeal acts sent by the House to the Senate).

A contingent of Senate Republicans led by Senators Ted Cruz of Texas and Mike Lee of Utah want to filibuster the bill (which they assume will put up for a vote with the defunding language removed). And it’s here that the logic eludes me. The CR would lock-in current levels of spending (which includes the sequester – more cuts in government spending than otherwise possible under this administration); if the defunding language actually made through the Senate (which it won’t), the president would veto it, now requiring 67 votes to override – and if Republicans can’t muster 60 votes to pass it in the first place, where are going to get another seven votes to override a presidential veto? Regardless of how this comes out, the press will see it (and sell it) as being the Republicans’ fault. This is a no-win situation for the GOP.

ObamaCare is an abomination – probably the worst piece of legislation ever passed[1]. I get that. If fully implemented, it will be ever-harder to reverse[2]. I get that. It’s just that there is no way the Republicans are going to win the battle they have chosen and everybody knows it.

They are making a valid point using an invalid tactic.

[1] This on the grounds that it is utterly unworkable. The 1,700 pages of plain-language text is complex beyond understanding, contains so many internal contradictions that there is no way to navigate the system without breaking some aspect of it. Whether or not you like what it tries to do, it just bad law – sloppily written and sold on false claims.

[2] It’s not unlike the dealer who gives kids their first taste of heroin – once they’re hooked, then the price comes into play. This is how liberals get their agenda enacted: they give you something for free, and when the actual cost becomes apparent, it’s too late, nobody wants to lose their freebee.

the Unintended Consequences of Explaining the Unintended Consequences


A consequence of the previous page – These People are Afraid of a Brain Drain?! – is, if they believe what they say, then they know this law is bad for Americans.

If abiding ObamaCare would cause high-value aides to leave, then ObamaCare must be judged as being anti-competitive. Therefore, when American business is brought into compliance, it will reduce our competiveness, causing business to do whatever it can to reduce the arbitrary costs of ObamaCare – set key employees aside and 1099 or part-time as many of the rest as they can. If you’re small enough, do what you can to stay under 50 employees. Avoid union involvement (they will bind you to the most expensive plans). One can only guess how much of a depressive this exerts on the unemployment and labor participation rates.

People who repeatedly seem mystified by the effect of regulation on employment are forgetting a fundamental relationship in business – to be hired, you must be worth more to the company than you cost. If, for example, you make $25 an hour (of which you take home ~$20), you cost your company ~$39.73 an hour, thus you must represent more than $39.73 an hour of productivity, else the company has no reason to incur the cost. Everything that increases the cost of employment depresses employment. It’s not rocket science.

Therefore, it behooves every company to minimize the costs of ObamaCare, depressing hiring, and what hiring does occur will be less favorable to the new-hire (than before ObamaCare). The 99%, in other words, are the ultimate victims of a program that says it helps them.

“But wait!” I hear you scream, “the unemployed with ObamaCare are better off than the unemployed before ObamaCare.” Well, yes, but, being unemployed, their premiums are picked up by everybody else, raising absolute governmental costs of ObamaCare, resulting in some combination of higher debt and higher taxes. This, of course, further raises the business cost of hiring, further depressing hiring, further increasing unemployment, putting more people in the subsidized pool, further raising government spending, and so on.

It’s a self-licking ice cream cone – it’s set up to solve a problem it creates.

These People are Afraid of a Brain Drain?!


On August 6, Congress announced that it was seeking an exemption from §1312(d) of the Affordable Care Act that requires them to get their health insurance on the newly created insurance exchanges and pay the same premiums the public will have to pay[1]. You see, it seems they like the coverage they’ve got (where we pay 75% of their premiums) and it turns out ObamaCare won’t let them keep it.

If the issue isn’t resolved, and massive numbers of lawmakers and aides bolt, many on Capitol Hill fear it could lead to a brain drain[2]. Really? This is the “smart” Congress?! Who put §1312(d) in the “Affordable” Care Act? These geniuses, that’s who. Now these $175K-a-year brainiacs can’t afford to pay the premiums that they insist the 99% pay? How does that math work?

Fairness would dictate that everyone who voted for ObamaCare join the rest of us and play by the same rules, giving the exemption only to those voting against it. But democracy dictates that Congress voted it in, Congress should live by the same rules as they inflicted on us.

Don’t hold your breath.

Of course they’ll get their crony discount – that’s how life works inside the Beltway – the elite decides how the rest of us should live (as long as they don’t have to play). How does that go again? Oh yeah – “When people find that they can vote themselves [other people’s] money, that will herald the end of the republic.”

[1] Betsy McCaughey, Congress Exempts Itself From the Law, Creators Syndicate, August 7 2013.

[2] Anna Palmer and Jake Sherman, Obamacare? We were just leaving …, in Politico, June 16 2013, 0513EDT.


NOTE: Title art by Glenn Foden.

How’s Our “Phony” Scandals Doing?


Fast & Furious[1]

The same ATF agent who lobbied for and spearheaded Fast & Furious (ATF Special Agent in Charge [Arizona] Bill Newell, who headed Wide Receiver until it was shut down under the Bush administration)[2] has been promoted to the Washington office. Wide Receiver involved around 275 guns, most of which were lost track of, and it was this lack of accountability that caused the Bush people to close it down. Fast & Furious involved over 1,500 guns and was shut down only after it became public (on February 22 2011) that Border Patrol Agent Brian Terry was gunned down on December 14 2010 with a Fast & Furious AK-47. It was later disclosed that ATF didn’t know where most of the weapons were[3]. Lack of accountability again, but this time it cost Agent Terry his life, and the program would likely still be going if not for the publicity.

In its earliest response to Senator Chuck Grassley’s (R-IA) questions about the gunwalking operation, DoJ sent a letter signed by Assistant Attorney General Ronald Weich, stating that ATF never “knowingly allowed the sale of assault weapons to a straw purchaser who then transported them into Mexico.” Ten months later, DoJ withdrew the letter acknowledging that it contained inaccuracies (read: they lied). The president has extended Executive Privilege over documents pertaining to the operation, and has removed the incident from his field of view. He won’t let anyone see what was going on, yet it’s a “phony” issue. Fast & Furious body bags: Two[4].


Now we find that around 400 MANPADs were stolen during the raid, and are now in the hands of “unknowns[5].” Riiiiight. At question are the thousands of SA-7 Grail (Russian: 9K32M Strela-2) shoulder-fired anti-air missiles that were in Moamar Qaddafi’s arsenals when the Libyan uprising started. As reported nearly a year ago, Ambassador Stevens was serving as point on a CIA operation to round up as many as possible and transship them through Turkey to rebels in Syria[6]. The “unknowns” are Ansar al-Sharia, the al Qaeda franchise in Libya and perpetrators of the raid on the consulate. It’s not clear whether the MANPADS were at the consulate or the CIA annex, but that they were gathered in one place adds credence to the fact that they were being gathered in order to get them out of Libya. While nothing can excuse our incompetent behavior before the incident, the CIA op can at least explain the cover-up afterwards, ridiculous as it was.
Even CBS Face the Nation’s Bob Schieffer asked Susan Rice, “Why am I talking to you?” It was widely known that President Obama, Vice President Biden, National Security Adviser Brennan, SecDef Panetta, SecState Clinton, CIA Director Petraeus and CINCAFRICOM General Hamm were all in town that Sunday, but all refused to go on national television and read the talking points. Susan Rice was the highest ranking official with plausible deniability (read: she didn’t know anything about the incident and could read the fictitious account handed her by the administration without being accused of lying). It went downhill from there. This “phony” scandal’s body bags: Four.


They’re still doing it! Testimony released Thursday by House Ways and Means Committee Chairman Dave Camp (R-MI-4) reveals that an agent involved in reviewing tax exempt applications from conservative groups is still targeting Tea Party groups, three months after the IRS scandal erupted. In closed door testimony before the House Ways and Means Committee, the unidentified IRS agent said requests for special tax status from Tea Party groups are being forced into a special “secondary screening” because the agency has yet to come up with new guidance on how to judge the tax status of the groups[7].

So, not only is the “thorough investigation” non-existent (none of the groups involved in the denial of status, nor their counsel, have been contacted by the FBI – none), neither has the practice been corrected. If this is a “phony” scandal, why is Lois Lerner refusing to testify under Fifth Amendment protection? And why is nothing being done to correct an egregious abuse of executive power? These are the same warm and fuzzy people slated to enforce ObamaCare, adding everyone’s medical records to the tax data they already have.


As I’ve said before, this only holds a potential for future scandal, yet it is the only one the president has seen fit to actually address – outlining sweeping changes in the way NSA goes about its business[8]. Now we find that DEA has a similar database (billions of records), and are instructing prosecutors to use “parallel construction” to hide the source of their information. Parallel construction is a process whereby prosecutors make up where and how they got the tip to follow a given course of investigation, never revealing that it came from DEA, not in court documents, in testimony before the grand jury, or a judge, or in court. Prosecutors, in other words, lied in court filings, to judges, to grand juries, and to trial juries, all under orders from DEA[9]. Aside from being blatantly unconstitutional and against case law in every state, it now jeopardizes thousands of convictions across the country with appeals, most of which will probably succeed.


As far as we know, the nation’s top lawyers have actually stopped lying to judges to get at reporters’ metadata. Now perhaps they have time to arrest suspects in the Benghazi attack before CNN puts them on the air, or maybe actually look into the IRS handling of political groups, or examine why they allowed a failed weapons-tracking program to be tried again on an even grander scale, or find out why prosecutors have been systematically lying to our courts – you know, doing the things a Justice Department is supposed to be doing: watching out for the people. Just a thought.

Yet to Come

ObamaCare is in a shambles, a slow-motion train wreck. Every step of way, this abomination is scandalous. Its conception was an exercise in typical liberal magical-thinking: “Sure, in every country larger than Vermont, national healthcare has resulted in long queues for medical attention, rationing of care and egregious taxation, but we’ll do it better.” It was sold on a pack of lies: e.g., “If you like your insurance, you can keep it. If you like your doctor, you can keep him.” It was written in absentia of the opposition party: “We won [the election] so we’re going to write it.” It is being illegally altered almost daily – to include Congress exempting itself from what Democrats have foisted upon the people. And, if we believe the president (although there’s absolutely no reason to do so), it’s going to be implemented with the very real possibility of severe security weaknesses in the data-handling process and enforced by the trustworthiness-challenged IRS. This 2,700-page horror story started out ugly and can only get worse.

[1] Title art by Michael Ramirez.

[2] Sharyl Attkisson, A primer on the “Fast and Furious” scandal, CBS News, June 26 2012.

[3] Ibid.

[4] Jaime Zapata, Immigration and Customs Special Agent under DHS, was ambushed and murdered on assignment on a desolate road in Mexico on February 15 2011. Two weapons used in Zapata’s murder were linked by multiple sources to suspects who had been under ATF surveillance for at least six months before Zapata’s murder, but were not arrested.

[5] David Martosko [DC], 400 US surface-to-air missiles were “stolen” from Libya during the Benghazi attack, claims whistleblower, the Mail [London], August 12 2013, 1717EDT.

[6] Catherine Herridge and Pamela Browne, Was Syrian weapons shipment factor in ambassador’s Benghazi visit?, FOX News, October 25 2012.

[7] Paul Bedard, IRS agent: Tax agency is still targeting Tea Party groups, in Washington Examiner, August 8 2013, 1720EDT.

[8] Christi Parsons, Ken Dilanian and David Lauter[8], Obama outlines proposals for reining in NSA surveillance, in Los Angeles Times, August 9 2013, 1912PDT.

[9] David Ingram and John Shiffman, US defense lawyers to seek access to DEA hidden intelligence evidence, Reuters, August 8 2013.