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2023-05-30 07:00 by Karl Denninger
in Federal Government , 418 references
[Comments enabled]  

The details are still a bit thin but.....

There is no reduction in the debt on the table.  That is, the government refuses to cut spending to less than what it can take in via taxes.

The growth in "mandatory" programs, specifically CMS, is where the problem is as I've pointed out for 30 years, all the way back to long before this column was originated and when I was running MCSNet.  Its a math problem when you get down to it, but that also means its a serious political problem because waving your arms around will do nothing.

What makes it worse is that all of it is illegal.  15 USC Chapter 1 makes what our medical and pharmaceutical firms do on a daily basis federal felonies carrying 10 year prison terms -- for each person screwed, and each occurrence.  Two decisions, Royal Drug (440 U.S. 205 (1979)) and Maricopa County (457 U.S. 332 (1982)) both found that there is no immunity from anti-trust law for medical providers, medical "insurance" companies or drug companies.

None.

These decisions have stood unchallenged since 1982.  No statute has modified them.  The cited claim of immunity in the first (McCarran-Ferguson) was disposed of as not applicable, so that sort of claim regarding insurance firms is void too as res judicata (already decided.)

Neither political party nor any of the States have in the 40 years since prosecuted anyone for these violations, nor sent anyone to prison -- including those who got slapped for doing it in the cases that went to the court originally themselves.  None have forced the end of discriminatory pricing practices.  California has gone even further and claimed authority to enact same at a state level despite the Supreme Court throwing up all over what they did in the 1982 decision prior to the state's act and nobody has gone after them either.

We cannot resolve the fiscal mess in the United States without resolving this.  There is no possible resolution without not only putting an end to this but removing it on a forward basis.  The cash-basis deficit within CMS is larger than the entire federal deficit for last year.  That is, if you fixed it there would be no deficit.  The inflation you see today would not exist.  The destruction of your purchasing power over the last several administrations would not have, in the main, happened.

The parties will not take this on because you won't force them to.  Instead you wish to talk about other things, all of which I'm sure you think are very important.  Without resolving this, however, there is no way to stop the inflationary monster that is eating your financial health alive and there is also no way to prevent what will inevitably occur: The collapse of the US medical system when it can no longer extract any more money, and if you need it at that point or beyond you will be dead.

Obamacare was all about trying to buy said system a few more years.  The covid "countermeasures" paid for by the government were as well.  The facts are that staffed beds have fallen by about a third since 1975 but the cost incurred in hospitals has skyrocketed.  During the last three years 18% of all persons hospitalized with a specific virus died yet in some counties, including mine, nearly 9 out of 10 died during a six month period -- specifically, the back half of 2021 which was much worse than the first few months when we allegedly "knew nothing" as this was a brand new disease.  Our government's policy was to pay bonuses for treatments even when they didn't work and even when they led to wildly out-of-norm and above average fatality rates -- in some cases, such as here, when said policies and "treatments" produced fatalities (failure) at five times the average rate across the nation as a whole.

Nobody has done anything about any of it, nor has one politician so much as raised a hand and asked for formal inquiry and explanation.  The money blown on these objectively-worthless measures -- after all, if you leave in a box the measures obviously were in fact worthless -- drove up the inflation rate in your state and town anyway and while you can debate whether the inflation is worth it if the treatments are successful there is no debate to be had when they fail

ALL of these payments were made through and by CMS.

The entire problem in our federal budget and spending lies there.

Yes, we can debate military spending and many other programs -- and should.

But if we don't fix this area of the budget using something like my proposal from years ago we will fail and so will our nation.

That failure, if we continue to allow this to go on, will come soon.

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2023-05-25 07:00 by Karl Denninger
in Federal Government , 367 references
[Comments enabled]  

Bernie is out making a stink about the debt ceiling being a matter of our "priorities" as a society -- once again.

He continues to persist in the claim that we can just tax rich people more and solve it.

He's lying.

Look folks, this really is quite simple: The problem is that the price of these services has exorbitantly ramped driven by multiple factors.

CMS is responsible for all of it.

One trillion dollars, approximately, of the total 3.6 trillion spent since October 1st has been in that department and only about $400 billion has been received in taxes to offset it.

That's the problem, in short, and may I remind you that last year this department spent two trillion of the roughly six in total -- and not very long ago, in fact just a few short years ago, CMS spent $500 billion a year -- one quarter of what is spent now.

Just ten years ago CMS spent half what it spends today.

I recognized this problem -- and what it would do to the Federal Budget -- when I was running MCSNet in the 1990s.  It featured prominently in Leverage and on a continuing basis, which forms the basis for this article -- a proposal to permanently resolve the problem.

There has been zero political debate over an actual resolution.  Not one.  Bernie's railing about prescription drugs sounds like part of it, but its not.  Why not?  Because there's no need for laws to be passed; it has been illegal for more than 100 years to collude in restraint of trade or price fixing.

How does passing something else address willful refusal to enforce the law by both political parties?

We either address this or the rest does not matter.  Bernie's screed is nothing new and parts of it were put in place by Obamacare, which contrary to the claims Obama and others made it didn't resolve it -- it in fact made it worse.

Why?

All these "programs" abstract out the consequences of personal decisions away and, much worse, enable organized grift that drives deliberate inefficiency, price-rigging and worse.

These are difficult discussions -- but we have to have them and resolve this or we will descend into an Argentina-style Hell and, as has been seen in other places where this has occurred a nation does not recover from it once it occurs.

We're out of time folks.

And one of the primary changes that has to happen now is the outright fraud by both sides of the aisle on so-called "budget impact" that they all claim over 10 years time, yet exactly zero changes are binding over more than one year.

Thus the first change is that all claims must be made in the context of the current single year impact, and only that year.  Forward, unenforceable claims must be barred.

Can we get even that small change?

 I doubt it.

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2023-05-22 07:00 by Karl Denninger
in Federal Government , 703 references
[Comments enabled]  

Can we stop with the crazy?

Here's the clause that has CNN and a bunch of other wide-eyed nuts salivating:

Section 4

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Key: Authorized by law.

All spending must originate in the House (per the Constitution.)  However, Congress is the source of such limitation as well, and nothing in that clause -- or anywhere else in the Constitution says that Congress may not bind the execution of said spending based on the receipt of taxes to offset any debt that may otherwise be required.

This is the same thing your bank does.  You have $100,000 of income.  You also have a credit card with a $20,000 credit line.  If you keep invading it on the premise that you expect to earn $110,000 this year, because you are paid partially on commission or bonus, the bank can refuse to increase the line if that income does not materialize.  Thus, when you reach the $20 large that's all there is.

Likewise you can execute a Will that says "you get $1 million dollars provided you take care of my dog, including anything it may require to be healthy and live its best life, until its natural death."  This a two-part test and it is perfectly legal.  This sort of clause is literally all over estate plans and business contracts: You get X provided you do both Y and Z.  If you do not wish to do either of Y or Z then you don't get X.

Congress has done this by enacting the debt ceiling.  Neither Congress or the Executive can accurately predict how much tax revenue will come in.  Taxes, of course, come from economic activity; no activity, no taxes.  The CBO projects that revenue will be "X" and so does Treasury, but those are guesses because they rely on things that have not yet occurred and as such are inherently inaccurate.

Congress has set in place a two-part system for this.  The first is Appropriations, which are authorizations to spend and levies to be taxed.  The second is the debt ceiling, which is a hard limit on the difference between the two over time.

No, Treasury cannot go around this by claiming something in the 14th Amendment makes the Appropriation sacrosanct.  Congress has the authority under the Constitution, and has exercised it, to control the purse.  To be enabled by law and thus immune from being questioned debt that is issued by Treasury must be (1) issued for an appropriated purpose AND (2) be within the debt ceiling in effect at the time of said issue.

If it is then under the 14th Amendment it is valid.

This is no different than a whiny 18 year old screaming that Grandpa said he'd give said 18 year old $20,000 conditioned on him going to college and maintaining passing grades, and now he's pissed off because he went, got drunk every day chasing girls and when he flunked out Gramps cut the money off.  What we are seeing now, and have in the past, is exactly the same thing: Petulant, infantile arguments by politicians that they "deserve" to do that which they law does not permit.

Any bill, bond or other indebtedness, now matter how done via whatever means of manipulation, incurred by Treasury that results in a level of debt beyond the ceiling is not valid and to the extent that Treasury tries to conflate that they are violating the Constitution and risking the entire world declaring that none of the issued debt is in fact good as they are ignoring the predicate requirements in our prime directive founding documents.

Oh, by the way, no, refusing to raise the ceiling is not a default.  Treasury has the funds to pay the principal (or roll it) and interest since rolling said debt does not increase the ceiling and the money is there to pay the interest.  Those payments have legal priority so the claim that refusal to raise the ceiling would result in a "default" is a lie.  What would occur is that Treasury would be unable to spend that which it does not tax first, after deducting said interest payments.  That would piss off plenty of people who otherwise believe they will get said funds and who also think they're entitled to provide good and services to the government (and then would have to choose between not providing them and not getting paid for them) but it is not a "default."

That's the beginning and end of it folks until and unless Congress repeals the debt ceiling entirely.

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2019-02-13 14:50 by Karl Denninger
in Federal Government , 445 references
[Comments enabled]  

There's simply no other way to express this....

 

These numbers are for only three months, so for the full year multiply by four.

Again, the total "social insurance and retirement" tax grab is $274 billion.  Social Security is a 12.3% tax (up to the cap) and Medicare is 2.9% (no cap.)  The split is thus roughly-speaking ~19% Medicare, the rest (81%) Social Security.

If you want to get down into the detailed numbers they don't "quite" add there because there is both spending and tax revenue that gets bucketed in each from the various line items.  But it's not off by much; the "line item" (without the bucketing) comes up as 74/26 -- not materially different.

81% of $274 billion is $222 billion.  Social Security spent $251 billion.  That's a ~29 billion shortfall.  Not good but there are a lot of Treasuries held against that requirement, and by 2026 the budget impact as a percentage starts to fall because the boomers start to die, statistically speaking.  In other words Social Security had a ~12% shortfall over the first three months, indistinguishable from my last look (12% .vs. 13%.)  This is easily fixable on a forward basis without much economic pain.

Medicare, on the other hand, spent $153 billion but took in just $52 billion.  That's a shortfall of 66%; that is, two thirds of it is unfunded.  You would have to more than triple the Medicare Tax Rate in order to bring it to parity.

That's an "improvement" over the nearly 75% deficit in the first month but we are in fact talking about bleeding out in two minutes rather than three; the outcome does not change.

Add to that "Health" (Medicaid, mostly) and it's much worse; now you take in $52 billion but pay out nearly $300 billion.

Note that the deficit thus far is $319 billion.  If you were to get rid of the deficit between Medicare and Medicaid .vs. tax receipts you would almost close the deficit to zero.  If you also increased the FICA tax rate by 13% (to just under 7% for "each half"), increased the income cap where it stops being collected or some combination that wounds up in the same place as well the deficit would be effectively zero.

$319 billion over three months equals roughly $1,300 billion, or close to $1.3 trillion in deficit for the entire fiscal year.  The only good news is that April is usually a strongly positive month (as a result of taxes being due) but either way the deficit is almost-certain to be in the neighborhood of $1.1 trillion this year.

You cannot fix this with either taxation or cost-shifting. It is mathematically impossible to do so.

For example you'd have to nearly double the individual income tax rate on everyone, including the middle class; to close the gap by increasing the corporate tax rate you would have to raise it by more than an insane and utterly impossible 600%.  Any claim that we can solve this by making people pay "their fair share" is a flat-out lie.

You cannot get there by "cutting spending" on other than these programs either; if you cut all "other spending" to zero along with transportation and education you'd only cover 30% of the deficit.  Cutting military spending to zero (which is obviously impossible) wouldn't get there either.

There is only one way to solve this problem and that is to collapse Medicare and Health spending by 80%.  You can only resolve the problem by collapsing the medical and health insurance monopoliesforcing everyone to publish a price for everything and charge everyone the same price, where said price must be handed out before service is provided, along with telling everyone involved that for any and all conditions in which a lifestyle change will remove the need for treatment government will pay zero unless the person in question makes that change.

The trend is not improving and it is not "The Next Generation" that will have to deal with this.

This has to stop right damn now or it will blow up before we get through the next Presidential term -- and no, you cannot tax your way out of it either.  The people in Washington DC -- Congress and the President -- must be held personally and politically responsible for their refusal to deal with the only way to put a stop to it, which is to destroy the medical monopolists using existing, 100+ year old law, and to do it right damn now.

And if they refuse we the people must enforce our demand for them to do so.  They will refuse, I remind you, unless forced by the people -- and there are peaceful and lawful means to do exactly that (e.g. a general strike.)

Nothing less than the literal existence of this nation as a Constitutional Republic is at stake.

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2019-01-25 07:00 by Karl Denninger
in Federal Government , 144 references
[Comments enabled]  

Yes, we need a wall.  Why?  Because bad people sneak in without one.

They do with one too, but it's harder and thus there are fewer attempts, and even fewer successes.  That's good, not bad.

You have to want more illegal invaders to refuse physical barriers.  Just as locking your car or house does not make it impossible to steal from either, it increases the difficulty and thus makes it less-likely.  $5 billion in the context of the federal budget is just over one tenth of one percent of spending.  Any gain in security is worth that amount of money.

But if you want to stop the insanity generally you have to force Congress to keep the promise it made when Reagan gave amnesty to illegals: You must stop the handouts.

Reagan was promised wide-scale immigration reform to end the enticement to come illegally, on a permanent basis, in return for amnesty for illegals already here.  He gave Congress the amnesty.  He never got the elimination of the enticements and it was the Democrats that didn't give it to him.

This is the same political party refusing now and it does not matter that most of those reps and senators are no longer serving; the party itself is the same.

Trump therefore should demand, before any further negotiation, that the past promise be fulfilled.

It's not that hard to do:

  • 100% E-Verify, under criminal felony penalty for failures to do so and business seizure for a second offense.  No exceptions.  This is trivially enforceable; employers already have to file 941s to report withholding taxes.  Add one field for each employee that must contain the E-Verify control number on each report.  Change the law so that non-reporting or false reporting on a 941 is a felony criminal offense with a statutory penalty of $5,000 per employee, per month not reported or falsified and that all directors, officers and employees involved in producing said false report are subject to a year in prison, consecutively, for each employee not reported.   This instantly ends employment capability for illegal invaders.

  • No welfare or other government program of any kind that is in whole or part funded by the Federal Government (specifically: Medicare, Medicaid, Section 8, Food Stamps, WIC, S-CHIP, Education, etc) may be provided to any household unless all residing there are verified US Citizens or permanent residents.  Require prosecution for lies on said forms verifying eligibility and require that any such lie is a felony.

  • No medical treatment without proof of payment is required of any facility except as pure charity care to any person who is not a lawful permanent resident or citizen.  All such care amounts, if provided without payment, must be publicly disclosed no less often than quarterly in aggregate along with the total amount of actual collected payments for services by all medical facilities (in other words if they're going to try to make you pay for it under the table they have to disclose it.)

  • No remittances may be sent out out of the country without positive identification and proof of lawful residency or citizenship from the person doing the sending.  Period.

  • No birthright citizenship.  Come here and crap out a baby, it's a citizen of whatever nation you are but isn't an American citizen.  You must be a citizen to confer citizenship at birth.  Period.

  • Unlawful entry must be defined as a criminal felony and permanent bar to future entry for any reason.  If you wish to claim asylum, come to the border and lawfully request it.  If you wish to visit, come to the border and lawfully request entry.  If you cheat from this day forward no matter how or why you are permanently barred from ever entering the United States.

  • Those nations which border ours must be held responsible for any person who is on their soil and makes an attempt at unlawful entry, or who is turned away or deferred during an asylum request until their case is heard.  If you are our neighbor and call yourself "friend" and "trading partner" then start acting like one.  If someone illegally enters from your nation you have a responsibility to take them back when we catch them.  If someone comes into your nation with the purpose of requesting asylum in our nation and you allow them to do that's fine, but that person's safety and place to live is on you until their claim is adjudicated.  What you do from there and whether you let the people in to make said claims in the first place is your business.  Any nation that refuses, even once, to take back an illegal invader caught after unlawful entry from their nation, or a person with a deferred or refused asylum request that presents at our shared border has all trade and border crossing closed until it accepts back the person or persons it allowed to attempt to invade our nation from their land.

For those already here who, the claim is, we should "take care of" (e.g. Dreamers, etc)

  • If you came here as a child and are now an adult you must have graduated High School and demonstrate proficiency at a minimum standardized testing level in all applicable subject matter, including the English language, to qualify for further deferment.  While there are some "Dreamers" who are college students or even graduates at this point virtually all covered by this program are now adults.  ROUGHLY HALF have failed to graduate High School, demonstrate functional literacy in English or both.  These are not "Dreamers", they are public charges and must not be given anything beyond the theft they've already accumulated.  That one in ten -- or one in 100 -- is a high-achieving college graduate or student does not in any way extend to those who are either slugs or thugs.

  • If you came here as a child and still are one you must complete your education and become proficient in English. Drop out or get kicked out and you both lose your eligibility and are immediately deported.

  • You must have an executed Affidavit of Responsibility as for any other legal immigrant by an existing citizen who is responsible for you.  In other words you must have a citizen sponsor who both can and will take financial responsibility to prevent you from being a public charge.  This is required of legal immigrants and it damn well needs to be required here too.

  • You must not have a criminal record of any sort more-serious than a routine traffic violation.  Any conviction for an offense against the public peace including robbery, DUI, drug dealing, shoplifting and of course more-serious criminal activity, whether by conviction or plea, is an automatic disqualifying event, without exception.

  • You must document that you have either received all of your support from your sponsor or have lawfully worked and paid taxes in full.  This includes educational, medical and other government-funded expenses; if you received public education you or your sponsor must repay the fully-laden per-pupil cost of same.  If you received medical care under Medicaid or similar you must reimburse the full amount spent on your care by the government.  If you worked under the table you must demonstrate that you personally paid all the taxes otherwise due including both halves of FICA.  If you haven't done so up until now as a result of intentional conduct (e.g. working for cash under the table) you may be excused from criminal liability for your intentional conduct but you must report and pay all such tax arrears anyway, including interest and penalties as with any other intentional underpayment and you must begin to do so immediately and on an agreed payment plan without exception, or your sponsor must do so, until it is all paid off.

  • Assuming the above is met you may have a provisional green card however you still go to the back of the line and are subject to all of the above until your turn comes up in our normal, legal immigration proceeding.  Once your turn does come up you may have full permanent residency and ultimately apply for naturalization as may any other lawful permanent resident.

That's the minimum opening requirement.

If we do not shut off the welfare state for illegal invaders we will never solve the problem.

Leave the government shut down until this is passed first.

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