What Does the CBO Report REALLY Say About How ObamaCare Affects Jobs?

SUMMARY #1: If the Government takes from Peter to pay for Paul's health insurance, Paul has less or no incentive to work to pay for his own insurance.

SUMMARY #2: ObamaCare means more able-bodied people in the wagon and fewer workers to actually pull the wagon.

The Obama Administration and their allies are attempting to blunt the harsh reality escaping from the Congressional Budget Office (CBO) report, The Budget and Economic Outlook: 2014 to 2014 (February 2014).  The report includes Appendix C, titled "Labor Market Effects of the Affordable Care Act: Updated Estimates," beginning on page 117 (PDF page 123).  I encourage you to download and read the CBO's words for yourself.

Here are a few of my favorite snippets, free from the Administration's bogus claim that ObamaCare (a.k.a., the Affordable Care Act or the ACA) "liberates" people from jobs that they supposedly held only because it provided health insurance benefits.  In fact, ObamaCare reduces the size of the available workforce and inflicts disincentives to productive work.

"How Much Will the ACA Reduce Employment in the Longer Term?

The ACA’s largest impact on labor markets will probably occur after 2016, once its major provisions have taken full effect and overall economic output nears its maximum sustainable level. CBO estimates that the ACA will reduce the total number of hours worked ... almost entirely because workers will choose to supply less labor—given the new taxes and other incentives they will face and the financial benefits some will receive."

Of course, by complete and accidental coincidence, the largest impact happens after 2016, which just happens to be a Presidential election year.

"The reduction in CBO’s projections of hours worked represents a decline in the number of full-time-equivalent workers of about 2.0 million in 2017, rising to about 2.5 million in 2024."

How big a loss is 2 MILLION full-time-equivalent workers? The entire U.S. job market lost 8.7 million full-time jobs after the 2008 recession caused by the global financial crisis. Those 2 million full-time-equivalent workers equates to about 23% (one-fifth to one-fourth) of all the jobs lost during the last recession.  Additionally, 2 million jobs represents 74% of the number lost in the 2001 recession after the 9/11 terrorist attacks.  The number is NOT inconsequential.

But there is an important distinction. According tot he CBO report, the JOBS won't disappear but the WORKERS will.  In other words, they'll be more able-bodied people in the wagon and fewer able-bodied workers to pull the wagon.

"The decline in full-time-equivalent employment stemming from the ACA will consist of some people not being employed at all and other people working fewer hours ...."

As widely reported, employers have cut work hours to avoid some of ObamaCare's poor policy mandates.  The White House, who once claimed that ObamaCare has no effect on the labor market, now also claims that these lost hours are a good thing because it "liberates" people from jobs they held only to receive health benefits.  Never mind that some of those "liberated" receive big, taxpayer-funded subsidies paid by "un-liberated" (i.e., enslaved) people still in the work force.

"The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses’ demand for labor, so it will appear almost entirely as a reduction in labor force participation and in hours worked relative to what would have occurred otherwise rather than as an increase in unemployment (that is, more workers seeking but not finding jobs) or underemployment (such as part-time workers who would prefer to work more hours per week)."

Hmm. A reduction in labor force participation, huh? Do you mean like a further reduction in the lowest participation rate in the civilian job since 1978?

Or, does the CBO mean a further reduction in the jobs-to-population ratio, which appears to be stuck at its lowest level in a generation?

Ask also, WHY would "workers choose to supply" less labor? Is it because they don't feel like working?  Did they suddenly win the lottery?  Did they find a rich sugar-momma cougar and they're now entertained as a cabana boy and paid in "free" margaritas? No, it's because SOMEBODY ELSE is paying for their health insurance via ObamaCare's taxpayer-funded subsidies.  ObamaCare's subsidies are poorly designed and seemingly designed to punish middle-class families here in California.  Earn just $1 more a year and your health insurance costs jump by over $8,000 and your after-insurance take-home income drops by $16,000.  This is NOT sane policy.

The CBO report openly admits this later, on pages 118-119 (PDF pages 124-125).

"In CBO's view, the ACA's effects on labor supply will stem mainly from the following provisions, roughly in order of importance:

• The subsidies for health insurance purchased through exchanges;

• The expansion of eligibility for Medicaid;

• The penalties on employers that decline to offer insurance; and

• The new taxes imposed on labor income.

"Some of those provisions will reduce the amount of labor supplied by some workers; other provisions will increase the amount of labor supplied by other workers. Several provisions also will combine to affect retirement decisions."

WHY do taxpayer-provided subsidies matter? Here, let the CBO elaborate:

"For some people, the availability of exchange subsidies under the ACA will reduce incentives to work both through a substitution effect and through an income effect. The former arises because subsidies decline with rising income (and increase as income falls), thus making work less attractive. As a result, some people will choose not to work or will work less—thus substituting other activities for work. The income effect arises because subsidies increase available resources—similar to giving people greater income—thereby allowing some people to maintain the same standard of living while working less."

In other words, ObamaCare will take money from those in the workforce by necessity and give it to others so that they no longer need to work.  Again, this is NOT sane policy.

Democrats, of course, focus on another portion of the CBO report, which highlights ObamaCare's "stimulative" effects.  Unfortunately, these "stimulative" effects were debunked in Bastiat's "Broken Window Fallacy" written back in 1850.

"... the ACA’s subsidies for health insurance will both stimulate demand for health care services and allow low-income households to redirect some of the funds that they would have spent on that care toward the purchase of other goods and services—thereby increasing overall demand. That increase in overall demand while the economy remains somewhat weak will induce some employers to hire more workers or to increase the hours of current employees during that period."

Why are these "stimulative" effects fallacy? Prior to ObamaCare, workers provided value or created wealth in return for income that paid for all or a portion of their health insurance.  Now, thanks to ObamaCare, most if not all of the insurance is paid by subsidies.  Where does the money for the subsidies come from? It comes from OTHER workers who provide value or create wealth in return for income.  Thanks to ObamaCare, these OTHER workers are now deprived of funds to pay for their own healthcare or to purchase their own "other goods."  ObamaCare is NOT real economic stimulation. It's simple income redistribution in another guise.

See also ...

The CBO wrote that ObamaCare  subsidies "reduce incentives to work" by "making work less attractive. As a result, some people will choose not to work or will work less—thus substituting other activities for work."  While the following video clip is for California's Food Stamp program, the effects are the same. Some completely able-bodied individuals will choose to live off the work of others courtesy to the government's redistributionist policies. These individuals are applying rational thought to the government's irrational policies.

The Strange Obama Approval / Abortion Correlation

Gallup recently posted that President Obama's overall approval rating in 2013 was greater than 50% in only 11 states.

This list seemed familiar but I couldn't immediately place it. Eventually, it came to me. The 11 states and DC, where President Obama's approval exceeds 50%, strangely and highly correlates with those states with the highest abortion rate, according to Census Bureau data (see Table 103: Abortions--Number and Rate by State of Occurrence and Residence, 2000 to 2008 in PDF form or download it in Excel format).

Strange, huh?

Does the pattern follow for states where President Obama has the lowest approval ratings?

The correlation isn't as high, but it clearly follows a similar but opposite pattern.

Perhaps this is why President Obama is so concerned about people being "punished with a baby."

Federal Budget Deficit Drops Below $1 TRILLION for the First Time During the Obama Presidency

The U.S. federal budget deficit dropped below the $1 TRILLION mark for the first time during the Obama Presidency.  Many politicians, including Senate Majority Leader Harry Reid, were quick to herald this "incredible accomplishment."  After all, the President has been busy claiming that he's reduced the deficit at the fastest rate in 60 years.  Naturally, he forgot to mention that his administration also INCREASED deficits at the fastest rate in 60 years.

While a $680 BILLION deficit may seem a major accomplishment, it represents 4.1% of U.S. gross domestic product (GDP).  Prior to the Obama Presidency, the last time the U.S. budget deficit was this high was 1992 during the last year of the George H.W. ("read my lips") Bush Presidency.  Borrowing was approximately $1.85 BILLION for each and every day of the fiscal year.

See also ...

The Rest of the Story Behind President Obama's Deficit Claim and PolitiFact's "Fact Checking"

Predictable: Treasury Department Adds Record Debt the Day after Congress Eliminated Debt Ceiling

Predictable: Treasury Department Adds Record Debt the Day after Congress Eliminated Debt Ceiling

The October 2013 government shutdown agreement resulted in Congress temporarily(?) removing the debt ceiling. As predicted in a previous post, Treasury has now added a record, $328 BILLION in unrecognized debt to the U.S. public debt in a single day--nearly a third of a TRILLION dollars in debt. This "new" debt was kept off the public debt to avoid exceeding the legal debt limit. The money has already been spent and was "borrowed" from a variety of other public funds including the retirement plans for federal employees. From the chart, even after adding $328 BILLION, Treasury will likely add another $25 BILLION in the next following days, until the actual public debt approaches the blue dashed trend line.

The following chart shows the daily increase or decrease in the U.S. national debt, measured in billions of dollars. It's the same information as above but only presents the day-to-day changes in the debt. The previous record increase followed the 2011 debt-limit debate when Treasury dropped $238 BILLION of off-the-books debt onto the public debt. The latest debt-limit impasse lasted longer and Treasury built up significantly more off-the-books debt. As a result, as soon as Congress removed the limit, Treasury officially recognized $328 BILLION in "new" debt.

Even a drunken sailor can predict that our current debt trajectory is "unsustainable." So what do we do about it?

• Congress and the President must craft and PASS an actual budget. The U.S. government has continued to operate without a formal budget for most of President Obama's tenure.
• Congress needs to vote on the fiscal reforms proposed by the Bowles-Simpson debt commission charted by President Obama.

See also ...

Is the U.S. Treasury Hiding Debt (Again)?

http://soquelbythecreek.blogspot.com/2013/07/is-us-treasury-hiding-debt-again.html

The Debt Ceiling and Where Do You Hide $238 BILLION?

http://soquelbythecreek.blogspot.com/2011/08/debt-ceiling-and-where-do-you-hide-238.html

Senator Obama Calls President Obama "A Leadership Failure"

Remember back in 2006 when President Obama spoke like a member of the Tea Party (the Tea Party hadn't been created yet)?

As the United States Congress and the President once again discuss raising the debt ceiling, it's good to ponder the words from then-Senator Barack Obama to the Senate on 16 March 2006. Back then, our official public debt was just $8.6 TRILLION.  It currently stands near $17 TRILLION, much of that increase under President Obama's reign.

Mr. President, I rise today to talk about America's debt problem.

The fact that we are here today to debate raising America's debt limit is a sign of leadership failure. It is a sign that the U.S. Government can't pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies.

Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion. That is "trillion" with a "T." That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President's budget will increase the debt by almost another $3.5 trillion.

Numbers that large are sometimes hard to understand. Some people may wonder why they matter. Here is why: This year, the Federal Government will spend $220 billion on interest. That is more money to pay interest on our national debt than we'll spend on Medicaid and the State Children's Health Insurance Program. That is more money to pay interest on our debt this year than we will spend on education, homeland security, transportation, and veterans benefits combined. It is more money in one year than we are likely to spend to rebuild the devastated gulf coast in a way that honors the best of America.

And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on. Every dollar we pay in interest is a dollar that is not going to investment in America's priorities. Instead, interest payments are a significant tax on all Americans — a debt tax that Washington doesn't want to talk about. If Washington were serious about honest tax relief in this country, we would see an effort to reduce our national debt by returning to responsible fiscal policies.

But we are not doing that. Despite repeated efforts by Senators Conrad and Feingold, the Senate continues to reject a return to the commonsense Pay-go rules that used to apply. Previously, Pay-go rules applied both to increases in mandatory spending and to tax cuts. The Senate had to abide by the commonsense budgeting principle of balancing expenses and revenues. Unfortunately, the principle was abandoned, and now the demands of budget discipline apply only to spending. As a result, tax breaks have not been paid for by reductions in Federal spending, and thus the only way to pay for them has been to increase our deficit to historically high levels and borrow more and more money. Now we have to pay for those tax breaks plus the cost of borrowing for them. Instead of reducing the deficit, as some people claimed, the fiscal policies of this administration and its allies in Congress will add more than $600 million in debt for each of the next 5 years. That is why I will once again cosponsor the Pay-go amendment and continue to hope that my colleagues will return to a smart rule that has worked in the past and can work again.

Our debt also matters internationally. My friend, the ranking member of the Senate Budget Committee, likes to remind us that it took 42 Presidents 224 years to run up only $1 trillion of foreign-held debt. This administration did more than that in just 5 years. Now, there is nothing wrong with borrowing from foreign countries. But we must remember that the more we depend on foreign nations to lend us money, the more our economic security is tied to the whims of foreign leaders whose interests might not be aligned with ours.

Increasing America's debt weakens us domestically and internationally. Leadership means that "the buck stops here." Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.

On the Contrary Mr. President, ObamaCare Does "Shoot Rates Way Up"

UPDATED on 8-OCT-2013 with latest pricing information from Covered California.  The new pricing is slightly higher than the information available in September, before the exchanges opened officially.

In a September 16, 2013 speech, President Obama said of the "Affordable Care Act (ACA or ObamaCare), the signature legislation during his presidency ...

“There were lot of the horror stories, how this would shoot rates way up, how there were going to be death panels, and all that stuff. None of that’s happened."

I'm sorry, Mr. President, but you are WRONG and I have the numbers to prove it--at least for our family.  Maybe a DOUBLING or a TRIPLING of insurance costs may not qualify for "shoot rates way up" in your book, but they do in ours.

Here's a chart showing the actual monthly premium costs paid for our Blue Shield of California high-deductible plan since the President first proposed his major overhaul of the U.S. health care system.  As is PLAINLY obvious, our rates have more than DOUBLED!  We even experienced a 30% increase just months after the "Affordable" Care Act (ACA) was officially signed into law.

That red dot in the upper right-hand corner?  That the price of the least-expensive plan available from Covered California, the ObamaCare health insurance exchange.  Notice that it is HIGHER than what we pay now, unless we receive a taxpayer-financed subsidy.  So, if we adopt one of the President's plans, our insurance premiums will be 231% higher--more than TRIPLE--what they were when the President first proposed ObamaCare.  The ObamaCare policy is also roughly 50% HIGHER than what we pay now.

The dashed dark red line shows the trend line for a 20.1% annual growth rate since President Obama took office, which is MUCH, MUCH faster than the official rate of inflation.

On the Covered California exchange, the price you actually pay for health insurance depends on your family size, age, and--most importantly--how much money you make.  The least-expensive plan available for our family is $1,121 per month, or $13,452 per year.  Depending on your income, the price you pay for this policy ranges from $0 to $13,224 with any difference generously paid by taxpayers via a subsidy called "premium assistance," as shown in the following chart.

There's also an interesting "feature" of the pricing structure.  For example, should our family income be $110,279 (which isn't "rich" for many portions of Santa Cruz County and its high housing costs and cost of living), we would pay $446 per month ($5,352 per year) for a $1,121 per month ($13,452 per year) health insurance package. Despite our income, the additional $8,100 cost difference is generously paid by as a subsidy from taxpayers.

However, should I earn just $1 more, the ObamaCare pricing scheme "shoot rates way up," as the President so eloquently states it, by $8,100.  Earning just $1 more--$110,280 per year instead of $100,279--increases my health insurance cost by $8,100!

I understand the reader's skepticism at this seemingly ridiculous claim.  Consequently, I encourage you to visit the Covered California web site and double-check my numbers for yourself using the data provided above in the screen shots.  One can only hope that this is somehow a "glitch" in the system, but it appears to be built into the pricing scheme for all packages, just at different income levels based on the number and ages of people covered.

As a side note, I fully expect those income limits to remain firm as income naturally increase thanks to inflation.  That way, more and more people are forced off subsidies into paying the full cost.  The current income levels are likely set based on ballot-box power.  You only need a certain percentage of people receiving government benefits to force them to vote your way.

Surely, ObamaCare makes those earning above $100,279 pay more simply out of fairness, right? Let's instead evaluate ObamaCare premiums as a percentage of total family income, as shown in the following chart. Those in the Obamacare "Donut Hole" pay the most as a percentage of income. The donut hole extends from $110,280 to almost $290,000.  Those making less than $110,280 pay less thanks to taxpayer subsidies.  Those making more than $290,000 pay less because ObamaCare premiums are a smaller share of their family income.  The "affordability" red line under the "Affordable" Care Act is supposed that nobody should pay more than 9.5% of their income toward health care.  On that measure, Covered California fails those earning between $110,280 and a little more than $140,000. Those who suffer from the wedge will either work less or work more to avoid the extra burden.  This is not what sane policy looks like.

But it gets worse.  Consider your "after-insurance" income under ObamaCare.  If I made $110,279, I would pay $5,352 for insurance but receive a $13,452 insurance policy thanks to the generous $8,100 taxpayer-provided subsidy.  My effective after-insurance income would be $110,279 (income) - $5,352 (the cost of the ObamaCare policy) + 8,100 (subsidy to buy and benefit from a $13,224 insurance plan), which equates to $113,027.

However, if I earn jut $1 more--$110,280 instead of $110,279--my after-insurance income actually DROPS BY $16,199!  My effective after-insurance income would be $110,280 (income) - $13,452 (the cost of the ObamaCare policy) + $0 (subsidy), which equates to just $97,056.

Thanks to ObamaCare, I can earn $1 more and actually end up with $16,199 less!  That's Obamanomics for you.

I won't even discuss the much more limited access to doctors.  It took over two months for my daughter to see a doctor about a leg injury.  In the meantime, she's stuck on crutches.

See also ...

• Insurers limiting doctors, hospitals in health insurance market
  www.latimes.com/business/la-fi-insure-doctor-networks-20130915,0,2814725.story

The Rest of the Story Behind President Obama's Deficit Claim and PolitiFact's "Fact Checking"

In a speech at Knox College in Illinois on July 24, 2013, President Obama said ...

"... our deficits are falling at the fastest rate in 60 years."

The fact-checking website PolitiFact even rated this claim as true.  However, PolitiFact fails to put this claim and their "true" rating into proper context.  It is much like saying that it is true that the Nazis did good things, as some still claim, while ignoring the big picture of their atrocities and mass murder.

It is indeed true that "our deficits are falling at the fastest rate in 60 years," as shown in the following figure (click to enlarge).  According to the PolitiFact article, the White House makes this claim using a four-year change in the deficit as a percentage of the U.S. gross domestic product, as shown in this chart.  However, what both President Obama and PolitiFact fail to mention is that while "our deficits are falling at the fastest rate in 60 years," this comes after increasing our deficits at the fastest rate since we won World War II after defeating the Nazis and the Japanese Empire.  The deficit reduction is laudable, but it also comes as a result of the prior massive deficits.  Some of the deficit spending during President Obama's first term can be attributed to Bush-era spending, under a Democrat-controlled Congress, including seizing Fannie Mae and Freddie Mac, TARP, and the initial auto bailouts. Additional spending happened under the Obama Administration, again with the Democrat-controlled Congress, including the $787 billion Stimulus, Cash for Clunkers, buying General Motors, 99 weeks of unemployment benefits, and increased welfare, food stamps, and disability benefits.

Let's look at this same information in another manner.  The following chart shows the annual budget surplus or deficit (mostly deficits) as measured as a percentage of the U.S. gross domestic product (GDP).  The bars are color-coded by political party of the President (red for Republican, blue for Democrat) and the Presidents are listed at the top.  As you can see, it is technically true that we are currently reducing our deficits at their fastest pace in 60 years, but only because we ran massive deficits in excess of $1 TRILLION for four years from 2009 through 2012.  Although the 2013 fiscal year isn't yet complete, the White House Office of Management and Budget (OMB) forecasts a smaller annual budget deficit of $759 billion, which helps bolster the President's claim.  However, as a percentage of GDP, this "greatly reduced" deficit still exceeds the largest deficit from President George H. W. Bush in 1992--twenty years earlier.  Part of the reason for the for the smaller budget deficit is the controversial sequestration process that enforces across-the-board budget reductions in spending growth.

Our Rating

We rate the President's claim as "technically true but misleading."  The President is making claims that omit the full context for his claims.

Unfortunately, this isn't the first time that we've found President Obama's claims to be factually correct but misleading.  He, or somebody on his staff, is apparently a fan of the classic book, How to Lie with Statistics.  For another example, see President Obama's claims "... that Ho Chi Minh was actually inspired by the U.S. Declaration of Independence and Constitution, and the words of Thomas Jefferson.”.  Based on Ho's actions, however, Ho apparently read a cheap knock-off translation of these works.

See also ...

• Digging Deeper Into President Obama's Manufacturing Jobs Claim
• What Does the Obama Job Chart Really Mean?

Misconceptions

We received the following tweet that originally alerted us to President Obama's deficit claim. Unfortunately, many of the President's supporters do not actually understand what the President claimed.

The United States government, in no way, shape, or form is the "smallest government in 50 years." The Twitterer is potentially mistaking a claim that we have the lowest percentage of people employed by the government in 45 years. Likewise, the President has not "reduced debt faster than any other President in history."  The President's claim is about deficit reduction, not debt reduction.  Here's a quick tutorial on the difference between deficit and debt, courtesy of the United States Treasury.

In order to have actual debt reduction, we must first run a budget surplus ... and we're in no danger of doing that any time soon.  However, based on changes to policy, it is possible to reduce the forecasted future debt while currently running a deficit.

The President's claim also covers the last 60 years (actually, 64-65 years), not all of U.S. history. There were much bigger improvements to deficits immediately following the end of World War II.

Sorry, we don't "Ignorant much" around these parts.

Methods

According to PolitiFact, the Obama Administration makes this claim using the annual budget deficit measured as a percentage of the U.S. gross domestic product (GDP).  They then measure the difference over a four-year time frame (YEAR(n) - YEAR(n-4).  The deficit as a percentage of GDP data is available directly from the White House web site as Table 1.2.  Use the field "Surplus or Deficit" under "Total".  We used the mid-year updated figures from the White House for 2013, which is not included in Table 1.2.  The updated values are -4.7% and $795 billion, which are to the benefit of the President's claim.

Data Sources

White House: Office of Management and Budget: Historical Tables

Table 1.2—Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789–2018 (Total Surplus or Deficit as a Percentage of U.S. GDP)
Table 1.1—Summary of Receipts, Outlays, and Surpluses or Deficits (-) as Percentages of GDP: 1930–2018 (Total Surplus or Deficit in Current Dollars)
www.whitehouse.gov/omb/budget/historicals

Wall Street Journal: White House Sees Smaller Budget Deficit in 2013 (Lower, revised 2013 deficit numbers based on mid-year update)

online.wsj.com/article/SB10001424127887323368704578594020152453486.html

PolitiFact: Obama says deficit is falling at the fastest rate in 60 years
www.politifact.com/truth-o-meter/statements/2013/jul/25/barack-obama/obama-says-deficit-falling-fastest-rate-60-years

FactCheck.org: Deficits Falling (From Way Up)
http://www.factcheck.org/2013/08/deficits-falling-from-way-up/

Keeping It All In the Family: The Cozy Relations between Media and the Obama White House

Updated 5-JUN-2013

The traditional media coalition is often criticized for having a too-cozy relationship with the White House. This criticism becomes especially interesting when you consider the number of family connections in the media to current or former Obama Administration staff.  These are but a few.

(click to enlarge)

For example, current White House Press Secretary Jay Carney is married to Claire Shipman, a correspondent for ABC News and a contributor to ABC's Good Morning America.

Former Obama White House Press Secretary Robert Gibbs is now a contributor to NBC News and MSNBC.  Similarly, former Obama Senior Advisor David Axelrod is now senior political analyst for MSNBC.

Deputy National Security Advisor for Strategic Communications, Ben Rhodes, is the brother of CBS News President David Rhodes.  Ben Rhodes apparently coined the term "kinetic military action" for the U.S. involvement in toppling Libyan dictator Muammar al-Gaddafi.  According to media reports, Ben Rhodes advised President Obama to withdraw support for Egyptian President Hosni Mubarak as part of the Egyptian "Arab Spring".  Ben Rhodes also helped coordinate the Obama Administration's talking points for the Benghazi terrorist attack where U.S. Ambassador John Stevens and three other Americans were killed.  Ben Rhodes is also active in driving American policy in Syria.

Dr. Elizabeth Sherwood-Randall is Special Assistant to President Obama.  Previously, she was an advisor to then Senator Joe Biden, the current Vice-President of the United States. Her brother is Ben Sherwood, President of ABC News.

President Obama's new National Security Advisor, Susan Rice, is married to Ian Cameron, former executive producer for ABC News' "This Week" Sunday news show.  Susan Rice was former U.S. Ambassador to the United Nations.  She also gained notoriety during the Benghazi incident for the dubious claim, supposedly written by the U.S. "intelligence" community, that the Benghazi attack was caused by a little-viewed YouTube video.

Former Obama White House Director of the Office of Management and Budget, Peter Orzag, is married to the lovely Bianna Golodryga, who is co-anchor on the weekend edition of Good Morning America (GMA).  GMA is part of ABC News, under Ben Sherwood.  Peter Orzag is now Vice Chairman of Global Banking at Citigroup. The Orzag/Golodryga relationship began with a DC sex scandal.

Former White House Deputy Press Secretary, Katie Hogan, is married to ABC News reporter, Matthew Jaffe. According to his official ABC News bio, Jaffe covered the 2012 Presidential election for ABC News and Univision.  Interestingly, his wife, Katie Hogan, stepped down as White House Deputy Press Secretary to join President Obama's 2012 re-election campaign as deputy press secretary. Katie Hogan now serves as spokeswoman for President Obama's Organizing for Action, a tax-free 501(c)(4) organization.

Tom Nides is former Deputy Secretary of State for Management and Resources under then Secretary of State Hillary Clinton.  Mr. Nides is married to Virginia Moseley, who is Vice-President and Deputy Bureau Chief for CNN's Washington, D.C. bureau.  Virginia Moseley was former senior Washington producer for ABC News' Good Morning America (GMA).  Apparently, Virginia Moseley and Ben Sherwood were also former college classmates.

Do these relationships matter? Consider the coverage of the Benghazi fiasco and the news media's role in covering the story.  For example, CBS reporter Sharyl Attkisson actively bulldogged investigations into the Benghazi incident.  Yet, her stories did not appear on broadcast for five months.  Could this be because CBS News is run by the brother of a White House official actively involved in "crafting" the official Obama Administration's message on Benghazi?

Our Business' Real-World Experiences with ObamaCare and Blue Shield of California

Remember how the "Affordable" Car Act (ACA), a.k.a. ObamaCare would going to make health care--er, well--affordable?  As usual, be afraid when somebody says, "I'm from the government and I'm here to help you."  Here's our small business' real-world experiences with ObamaCare.  We are admittedly a small company so our experience, while certainly not unique, may not apply universally.  The number of employees has not changed since 2008.

Note the rapid procession of increases after President Obama proposed what eventually become the "Affordable" Care Act (ACA) and the large increase  (30%!) shortly after the President signed the bill into law after it passed Congress on a one-party, majority-forced vote.

According to the Society of Actuaries, even more "good news" awaits California's small businesses, with up to 62% more increases coming by 2017.  Supposedly, there will eventually be a small business credit under ACA, but I'll believe it when I see it.  Currently, it just means that our health care insurance costs have DOUBLED in the last four years with no improvements in benefits or services.  Thank you, Washington!  It's there somebody else that needs your "help"?

Now, back to figuring out how to double our revenues in less than four years to pay for all this "help".

Digging Deeper Into President Obama's Manufacturing Jobs Claim

During his 2013 State of the Union address, President Obama said ..

After shedding jobs for more than 10 years, our manufacturers have added about 500,000 jobs over the past three.

The 500,000 number sounds impressive!  Is it true? Fortunately, the government keeps good records for all this data, so I checked.

The following chart shows the number of those employed in manufacturing (MANEMP) from January, 2008 until today. The minimum over the last three years happened in January, 2010 when the manufacturing workforce fell to 11,460 thousands, or 11.46 million.  The peak manufacturing workforce in the last three years happened in July, 2012 at 11,957 thousands, or 11.957 million jobs.  The difference between the peak and the trough is 497 thousand manufacturing jobs, which is certainly close enough to the claimed 500,000 for government work. However, the current tally through January, 2013 falls slightly to 450,000.

Because I know what the definition of "is" is and I'm semi-fluent in how politicians sometimes manipulate statistical data, my spidey senses were all a tingle from the "over the past three" years statement.  President Obama has been in office longer than three years, right?  How many manufacturing jobs have we created since he took office?  Here's the same chart as before, but now let's measure from February, 2009, when he was first inaugurated as President, until today.  By picking slightly different data points, we've now LOST 436,000 manufacturing jobs.  That's only a difference of 933,000 manufacturing jobs--nearly a million jobs difference--between the President's best-case numbers and the President's term in office.

Yes, I'm quite aware that President Obama was standing way too close when the big chunks struck the proverbial fan after the subprime mortgage bubble collapsed.  I'm also aware that we've bailed out banks, purchased one of the world's largest auto makers (General Motors), spent $878 BILLION on a Stimulus program, spent $3 BILLION on the "Clash for Clunkers" auto rebate that also benefited foreign auto manufacturers, had interest rates near 0% for years, and the Federal Reserve purchased over $1 TRILLION in U.S. debt.  Excuse me for saying, but I would have expected a much bigger jump in manufacturing employment given that amount of rocket fuel.

Yes, it's good that we increased the number of manufacturing jobs in the United States.  But let's compare the ratio of all manufacturing jobs (MANEMP) to the number of all those on non-farm payroll (PAYEMS).  This ration was about 0.1 back in January, 2008 meaning hat about 1 in 10 jobs was in manufacturing.  After the global financial crisis, this number dropped to about 1 in 11.2 jobs and has remained fairly flat over the President's time in office.

How can we be adding jobs but be losing manufacturing jobs as a percentage of the workforce?  Fortunately, total non-farm payroll (PAYEMS) has been slowly clawing its way back after the global financial meltdown. So, despite more manufacturing jobs, their percentage of the total workforce remains roughly the same (and even falling slightly the last few months).

That's the "good" news.  What's the bad news?  The percentage of people participating in the civilian workforce (EMRATIO) remains fairly stagnant and near a 30-year low.  Yes, even after all that rocket fuel.

Likewise, the average duration of unemployment (UEMPMEAN) is at a 30-year high, well above previous levels.  This may be due, in part, to Congress extending federal unemployment benefits to 99 weeks.

In summary, yes, it's good that we have employment growth in the manufacturing sector.  However, that growth is not as robust as the President's claim might lead people to believe.  We still have a long way to go toward a healthy economy, despite the massive infusion of cash, stimulus, and aid into the system.  We've also been in a 30-year trajectory (MANEMP) of lower and lower manufacturing employment, especially after the September 11, 2001 terrorist attacks.  There are many driving forces, including globalization (cost differences, tax policy, new competitors) and improved manufacturing technology (robotics) that lead to improved productivity.

What the President Said and What He Should Have Said

During his 2013 Inauguration speech, President Obama sounded a clear warning on the possible dangers of climate change.

"We, the people, still believe that our obligations as Americans are not just to ourselves, but to all posterity.  We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.  Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms."

It's funny how the President can be so focused on the possible dangers of climate change, yet apparently so incredibly blind to obvious threats posed by massive overspending and deficits created by the federal government--a significant chuck added under his own supposed "leadership."  A bankrupt federal government will have ZERO hope of influencing environmental policy.

Here's what President Obama should have said.

We, the people, still believe that our obligations as Americans are not just to ourselves, but to all posterity.  We will respond to the threat of massive federal government indebtedness and overspending, knowing that the failure to acts betrays our children and future generations of Americans.  Some may still deny the overwhelming judgment of basic economics, but none can avoid the devastating impact of annual trillion dollar deficits, an unsustainably-expensive social safety net, and large increases in inflation if we continue to borrow heavily from the Federal Reserve Bank.  Massive indebtedness, unless for an investment that will provide gain, is merely just postponed poverty. 

As a side note, here's a snippet from the Social Security and Medicare Trustees' Report, signed by three Obama Administration cabinet officials.

Projected long-range costs for both Medicare and Social Security are not sustainable under currently scheduled financing and will require legislative action to avoid disruptive consequences for beneficiaries and taxpayers. If lawmakers act sooner rather than later, they can consider more options and more time will be available to phase in the changes, giving the public adequate time to prepare. Earlier action would also help avoid adverse impacts on vulnerable populations, including lower-income workers and people dependent on program benefits.

Who Pays Their "Fair Share" in California?

See also "California Proposition 30: Jerry Brown's Big Government Tax Hike" that gave Californians the nation's highest state sales tax rate and the nation's 1st-, 2nd-, 3rd-, 5th-, and 7th-highest marginal state income tax rates.

President Obama is fond of saying that "millionaires and billionaires" are not paying their "fair share" of taxes.  Of course, the President never explicitly defines what someone's "fair share" should be.

Here is a chart showing the average effective tax rate for California taxpayers, paying the state's highly income-progressive Personal Income Tax (PIT).  The effective rate is the tax paid divided by the Adjusted Gross Income (AGI).  The effective tax rate for the supermajority (66.67%) of Californian taxpayer's was between 0% and 1.5% in 2008--the latest tax data available. Meanwhile, the superminority (33.33%) paid between 1.5% and 8.97%.  Why is this important?  California requires a two-thirds majority to pass a tax increase.  Effectively, the supermajority of Californian's impose excess taxes on the one-third majority.

Revenues from Personal Income Tax (PIT) contributed over half (58%) of the state's General Fund (see Figure SUM-04), ...

... which pays for the majority of California's governmental services, including K-12 and secondary education, corrections, health and human services, etc. (see Figure SUM-05).

The General Fund also pays off California's General Obligation Bonds. In 2011-12, about 5.57% of the General Fund is allocated to paying off California's debt-financed projects.  An October 2011 report from the California Treasurer indicates that debt service is over 7% and will spike at over 9%, even without new borrowing.

The 33.33% superminority pays roughly 94% of all California Personal Income Taxes (PIT), effectively contributing over half of the entire General Fund. The 66.67% supermajority contributes just the remaining 6% of PIT, and roughly 3% of the General Fund.  Those with an Adjusted Gross Income (AGI) of $50,000 or less were in the bottom 66.67% in 2008.

At the ballot box, however, every taxpayer has the equivalent voice.  Consequently, the supermajority decides the projects and programs for which the superminority shall pay and how much the superminority will be charged for the privilege. 

The Occupy Wall Street movement employs divisive "us-versus-them" class-warfare rhetoric when it talks of "The 99%" and "The 1%."  Maybe the "The 1%" in California aren't pulling their weight.  Let's look at the data.  Despite being only 1% of the taxpaying population, "The 1%" paid 42% of all California Personal Income Tax (PIT) in 2008--the latest data available.  On average, the tax rate paid by "The 1%"  was over three times higher than the average rate paid by "The 99%."  At the ballot box, "The 1%" represents about 0.86% of all registered voters.  Want to understand why there is so much money distorting our political process?  It's because one set of voters decides how to spend the money raised by a minority of wealthy voters, who cannot prevail at the ballot box.

Again, 58% of California's General Fund revenues comes from Personal Income Tax (PIT) revenues.  Consequently, due to California's highly income-progressive tax system, "The 1%" pays 24% of the entire General Fund while the remaining 99% pay 34%.

It should be noted that California ALREADY implements President Obama's "Buffett Test."

• California ALREADY imposes significantly higher marginal tax rates on upper-income taxpayers.  Consequently, California has one of the most income-progressive tax systems in the United States.
• California taxes capital gains exactly like it does ordinary income.  There is NO capital gains tax preference in California.

If the "Buffett Test" really provided a solution, then California wouldn't have significant budget shortfalls.

Also, in honor of Governor Brown's tax increase proposal, the following chart cuts the day by those making over $300,000 (the target of most of the increases) and the 2/3rds majority of taxpayers, required to pass a tax increase (and who happen to earn $60,000 or less).

See also ...

• Soquel by the Creek: "Examining Governor Jerry Brown's Proposed Tax Increases"
  http://soquelbythecreek.blogspot.com/2011/12/examining-governor-jerry-browns.html
• Soquel by the Creek: "Average Federal Income Tax Rate by Income Group (1998-2008)"
  http://soquelbythecreek.blogspot.com/2011/08/chart-average-federal-income-tax-rate.html
• Soquel by the Creek: "The Oppressive Progressive Income Tax: California Edition"
  http://soquelbythecreek.blogspot.com/2009/07/oppressive-progressive-income-tax.html
• Soquel by the Creek: "Is Warren Buffett Paying His 'Fair Share'?"
  http://soquelbythecreek.blogspot.com/2011/08/is-warren-buffet-paying-his-fair-share.html
• California Franchise Tax Board: "2009 Annual Report--Statistical Appendix Tables," Table B-3
  http://www.ftb.ca.gov/aboutFTB/Tax_Statistics/2009.shtml

The Stagecraft President Stages More Political Kabuki

Oops, he did it again.  President Obama is already on record with a number of news organizations for carefully stage-crafting town hall meetings with well-placed planted questions.  There were many such events during the health care "debate."  Here's but one example.

Of course, the President and his team insist that it's all just great luck.  Uh huh, right.



The latest example is the planted question by a well-connected, big-money donor to the Democratic Party at a town hall meeting scheduled staged at LinkedIn.  Uncharacteristically, the President had a well-thought-out, eloquent, impromptu answer, all without the aid of a teleprompter.

The man who asked the staged question was Doug Edwards, a former Google marketing executive and author of "I'm Feeling Lucky: The Confessions of Google Employee Number 59".

The media, of course, lapped it up.

Surprisingly, I saw little follow up investigation by the media.  Who was this guy?  What would prompt him to ask such a question?  What's his angle?

Well, according to campaign finance disclosures for "Doug Edwards" and "Douglas Edwards" of Los Altos, CA and Campbell, CA, the esteemed Mr. Campbell graciously donated some $465,682 to various political causes between 2004 and 2012.  Amazingly, every single recipient is either a member of the Democratic Party or associated with the Democratic Party.  What are the odds?

Despite residing in California, Mr. Edwards' generosity extended to a variety of other states, including Montana, Wisconsin, Ohio, Minnesota, Massachusetts, and Tennessee.  Similarly, over $144,000 went to ActBlue, a money-laundering organization for the Democratic Party who bills themselves as "the online clearinghouse for Democratic action."  According to OpenSecrets.org, who tracks campaign spending at the national level, ActBlue is the #1 top all-time political donor with 99% of their money going to Democrats and 0% going to Republicans.

Mr. Edwards' biggest benefactors include:

• ActBlue (money-launderer for the Democratic Party): $144,100
• Democratic Congressional Campaign Committee (DCCC): $73,900
• Democratic Senatorial Campaign Committee (DSCC): $68,900
• Gillibrand for Senate (Democrat): $12,000
• Ohio Democratic Party: $10,000 

You can find a detailed list of Mr. Edwards' political contributions here.  The few apparent duplicated contributions are because of simultaneous contributions to both primary and general election campaigns, given on the same date.  It is more difficult to find spending records for the state level, but records show that Mr. Edwards spent at least $14,500 across California, Wisconsin, and Iowa.  Some of his ActBlue spending may actually be for state candidates.

Mr. Edwards is also a public member of the self-proclaimed "Patriotic Millionaires for Fiscal Strength".

In a few cases, Mr. Edwards' donated the maximum legal amount to various campaigns--well, the maximum legal amount unless you happen to be married.  Then, your wife can also contribute to the cause.

Mr. Edwards has indeed married very well. His amazingly bright and talented wife, Kristen, has a Ph.D. and M.A. from Stanford, degrees from Brown University and Middlebury College, and even studied at the Leningrad State University in the Soviet Union during the height of the Cold War, before it later became Saint Petersberg State University.

According to public campaign records, "Kristen Edwards" of Los Altos, CA gave another $113,400 to the Democratic Party and its causes.

Mrs. Edward's biggest benefactors include:

• ActBlue (money-launderer for the Democratic Party): $33,100
• Democratic Senatorial Campaign Committee (DSCC): $28,500

You can find a detailed list of Mrs. Edwards' political contributions here.  State donations are more difficult to track, but Mrs. Edwards spent at least $9,500 in California.  Some of her ActBlue spending may actually be for state candidates.

Ironically, the Edwards' don't need action from the President of the United States or even from the ineffectual U.S. Congress to increase their tax burden.  The Edwards' can contribute more of their money to taxes now, of their own free will, without waiting for the government to act.  Here's how.

Useful Information for Under-taxed Individuals

http://soquelbythecreek.blogspot.com/2010/09/useful-information-for-under-taxed.html

So, we are left with a few possible conclusions:

1. The President is the luckiest man on the planet and just happened to call on someone in the audience who just happens to agree completely with the President's stance on taxation and his job bill.
2. That the Democratic Party really isn't the crack, money-making machine that we all believed and the President had no idea that someone who's family gave over $500,000 to the Party, over multiple years, across multiple states, was in the audience.  Me?  I give a minor amount to one Democratic Party candidate and I'm on their mailing list forever!
3. The President and his handlers have little respect for the intelligence of the American public or the American press.

See also ...

• Los Angeles Times: "'Raise my taxes,' town hall attendee tells Obama"
  http://articles.latimes.com/2011/sep/26/news/la-pn-obama-town-hall-20110926