We Need A Change

More than ever, we have to open up our political system to new ideas. Both parties have grown stale in their approach to long-standing problems. Take healthcare. The Democrats, no matter what they say, want a single-payer system. Everything else is just a way to get there. The Republicans seem to have a brain freezeā€”a few changes around the edges, but no real plan. There is nothing attractive about the rationing that’s always part of a single-payer system or our current very costly approach. Other countries, such as Singapore, have had great success in moving a new direction.

The problem is, if one side proposes something different, the other dismisses it out of hand. Worse, each exists in its bubble. One side might not even be aware of what the other is discussing. Unfortunately, we have too many examples of mutual exclusion.

Before the election, A major American newspaper, the New York Post, published a story potentially damaging to Joe Biden. A laptop allegedly belonging to Joe Biden’s son Hunter was found. Some emails casting doubt on Hunter’s business practices and showing his father’s knowledge of them was on it. I have no special powers to establish the truth of the situation, but at a minimum, we would expect Hunter and his father to contest the story’s veracity. We never heard the father or son’s defense because no one asked. Also, Big Tech limited the story’s spread. It took over three years to find Trump wasn’t Putin’s agent. It would be nice to know the Bidens aren’t in hock to China and others.

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Adding It Up

In my last post, I gauged the Trump administration has a more robust awareness of the world dangers facing us. It seems more appreciative of the goals of the leaders of China, Russia, and Iran. Nothing in the Obama-Biden administration’s history showed they were genuinely apprehensive of these players’ real motives. Biden may surprise us, but a man with no deeply held principles will probably do as he has always done. He will go where the current wind is blowing. Trump seems closer to the traditionally conservative world view. For this group of pro-Biden conservatives, the reasons for their move must lie with domestic policy.

Conservatives, if they are known for anything, stand for smaller government. A government not invading all facets of our lives. Governments are intrusive by expanding regulations. In the wake of the Great Recession, the Obama-Biden significantly increased rules in most areas. Many conservatives saw these as the main reason for the worst recovery from a recession in history. The regulations made it more difficult and expensive to do business. It showed a particular disdain. The “you didn’t build it” attitude.was hardly welcoming. Remember, business goes and grows where it’s welcome. Many economists give more credit to a better regulatory climate than tax cuts to the high employment pre-COVID-19 economy.

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Why Not The Best?

Recently one of the architects of the Affordable Care Act (ACA), Ezekiel Emanuel, wrote a Wall Street Journal OP-Ed. In the article, he concedes the ACA has mostly been an expansion of Medicaid.This is a program paying providers so poorly many refuse or severely limit service. In light of this, Emanuel now acknowledges the ACA isn’t working and needs replacement. His recommendation is we look to the health plans of Germany or the Netherlands. He chooses these two, “where citizens choose among competing private health insurers called “sickness funds,” are closest to the U.S. system.”

Why would we want something close to what we have? Our present healthcare system is a costly mess. Just 11 days earlier, George P. Shultz and Vidar Jorgensen had an article on the same Op-Ed page. It pointed to Singapore as providing top-notch healthcare at a low price. By most measures, Singapore is at the top national healthcare heap. Why ignore this success? Why promote the lower performing German and Dutch systems? Maybe Emanuel only writes for the WSJ Op-ed page rather than reading it.

With the possibility of the ACA being declared unconstitutional, real discussion healthcare has to take place. Even if a decision is delayed, it will be a significant topic in the upcoming election. It’s no embarrassment to look to other nations to find what might work better. According to Shultz and Jorgensen, Singapore is the place to start. Some may say Singapore is too small to compare. Yet, many people keep throwing up comparisons to the Scandinavian nations. Only Sweden has a larger population. Singapore also measures up favorably on a per capita wealth basis.

Shultz and Jorgensen mention Scripps College economist Sean Flynn as a statistical source on Singapore. Strangely, this name came up in Steve Forbes’ fact and comment in his magazine’s June/July issue. Forbes lauded Flynn’s book “The Cure That Works.” I found it on Amazon and immediately downloaded the Kindle version.

What I received was a clear and easy to read look at arguably the world’s best healthcare system. The author frames this with an understanding of how we got to our present healthcare system. What’s peculiar is this remarkable book was published over a year ago. Still, Forbes and I are only talking about it now. Regardless of flying under the radar, it is an essential contribution to our healthcare discussion.

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Wealth And How To Get It

The prevalent idea promoted across much of our media is the vast disparity between white and black wealth is indicative of “systematic racism.” No matter the reason, the gap exists. What is lacking actual proposals to increase black or anyone else’s wealth. What is offered generally involves money transfers or mandated higher wages. This may or may not increase wealth, depending on whether the additional money is saved or consumed. Wealth is just another way to say net worth. We determine our net worth by subtracting what we owe from our assets. What is left is our net worth.

An easy way to understand this is to look at how many people’s two biggest assets would determine one’s net worth. Say you buy a house for $100,000 and auto for $20,000. You were able able to acquire both with 10% down and to borrow the rest. You have $120,000 in assets and debt of $108,000. That leaves a $12,000 net worth. From that point forward, we have to mark the assets to their present market value. Autos are a depreciating asset. They lose value the instant you buy one. Real estate may depreciate or appreciate depending on several factors, the greatest one being location. If the real estate fails to appreciate and the car continues to depreciate, you’ll have a declining net worth. It could even turn negative. Keep this in mind.

Only the portion of one’s income actually saved can add to net worth. Unless it is used to obtain a capital asset, it cannot grow. Putting money in your mattress stays the same. If the assets acquired appreciate it adds to net worth. Maybe the asset gives a return of interest, dividends, or net rent. If those are reinvested, they can also add to wealth. If the value depreciates, your net worth reflects this adversity. This is all basic stuff but is often overlooked.

How do we help those with a net worth deficiency? I submit the “Expanded Dave’s Plan” would be an excellent place to start. Everyone has a Personal Benefits Account (PBA). It consists of two sub accounts at the financial institution of their choice. One combines all tax-favored savings accounts and the other a regular bank account. A catastrophic Health Care plan is associated with the tax-sheltered account. Significant medical bills can wipe out savings, but here we have protected them with a Catastrophic Policy. Employers and governments contribute proper benefits directly into the appropriate account. They’re yours even if you change jobs, locations, or both.

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An Expanded “Dave’s Plan” Could Help

Our government fumbled the lockdown leading to depression. Its actions have resulted in over 40 million jobs lost, and many businesses gone forever. Even after spending trillions, we have uneven results. We see long lines at food banks. Some are receiving aid, and some are still waiting. Many people receiving assistance are getting more than if they returned to work. Many people are losing or endangered of losing their health insurance along with their jobs. In a word, we have a mess.

It got me to thinking how much better off so many would benefit from a Personal Benefits Account (PBA). The bedrock of “Dave’s Plan” (Series on this site), the PBA combines your tax-favored savings plans with catastrophic health insurance. Each and everyone would be enrolled. By eliminating the paperwork associated with most medical claims, it would be cheaper and more efficient. It further lowers cost by virtually banishing credit risk. The very idea “pre-existing conditions would ultimately cease to exist. Big health problems are covered. It makes tax-favored savings available to every person. Everyone would have formed a connection to a financial institution. Run through the Internal Revenue System; it pulls existing programs into something workable and easy to use.

Most Americans have direct- deposit. The government already uses it to send people their social security, tax refunds, and EITC checks. Wouldn’t it be easier to combine all our safety-net programs into a single cash deposit? Under Dave’s Plan, everyone must file an income tax form. Once net income is determined, we can compute a safety net support payment. Just using a non-tax-sheltered account. Call it, “The Expanded Dave’s Plan.”

If we totaled all of our existing programs designed to help those down on their luck and the poor, it comes to a tidy sum. Food stamps(Snap), housing, EITC, job retraining, Tanf, and unemployment insurance are just some of the programs. What if we get rid of all of them and combine the money into a cash payment.s In the August 22, 2016 post “A Strong People” in my series on “The Long Journey to More” (Available on this Site), I noted the Cato Institute computed the programs a single mother qualified for would equal $2,000 a month cash payment in 2013. It’s ,of course more now. If your income falls below a certain point say through job loss or reduced hours it starts to kick in. You file an amendment to your return online. We should structure in a way they are high enough to sustain people bur low enough so as not to discourage anyone from working. The existence of so many income levels for different support programs means earning a few extra dollars may cost a recipient thousands. The is known as “the Poverty Trap.” Consolidating into one cash payment would avoid this disincentive.

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