The GreaterTragedy

On a national news cable channel a portion of a video was played this week.  Made through the resources of an organization called Ready to Believe, it was of a sister of one of the shooting victims at the Century Multiplex in Aurora, Colorado.  She is an attractive young woman named Chloe Anderson and makes a poignant plea, with soft music in the background, for the viewer to contribute to an internet fund and to also pass the link for the video onto other potential viewers.  She shares in the video that the financial burden her family faces for the medical treatment of her wounded sister Petra is “daunting”, and they have the possible prospect of having to choose between treatment for Petra and her mother’s need for cancer treatment. As of the time I viewed the video six days after the attack they had raised $202,000. 

She will likely raise the money she needs. Hopefully her family’s burdens will be limited to the health issues they face and not insolvency.  If what the family raises exceeds their needs I suspect they will turn around and donate the difference, being undoubtedly selfless. The entire exercise is a highly visible version of requests for help one sees or hears about with some frequency.  Whether it’s televised pleas, news about bake sales, raffles, marathon marches, firehouse solicitations, church bazaars, or whatever, they all strike a sympathetic chord; moreover they put emphasis on the positive aspects of giving - the greater community helping, perhaps even saving one of its own without a quid pro quo.  It’s even routinely suggested that such action exemplifies the American spirit – independent and unconditional in its rugged resolve to rally around adversity.  To me the event itself has become the real tragedy and I seem to vacillate easily between feelings of nausea and anger.

The good citizens of this nation no longer lead their lives on wagon trains crossing the wilderness.  When times are tough we no longer can expect Sheriff Andy Taylor and Aunt Bea to arrive at the door with a basket of goodness, nor Marcus Welby, MD to cure what ails us in exchange for a wide grin of appreciation.  The greater tragedy is that for every such emotionally uplifting fund drive there are probably hundreds, possibly thousands of people who are forced to give up everything they own just utilize what John Boehner and Eric Cantor call the best health care system on the planet.  The entire sick Republican establishment continues to attack the Affordable Health Care Act (AHCA) and successfully get a majority of healthy, white, middleclass Americans to believe that begging to get help for health care is the American way.  For Republicans it is the American way, especially for those businesses on the receiving end of all those donations and estate liquidations.  The fact that Mitt Romney is campaigning on, among other things, the vowed repeal of AHCA is a testimony to power of greed and collective idiocy.

In 2014, provided Romney is not elected, everyone will have access to health care insurance, there will be no refusal of anyone for prior conditions, there will be no caps on coverage, and there will be caps on out-of-pocket expenses.  There is no clear evidence that overall health care costs will decline.  That is clearly step two.  The AHCA, when it takes effect in 2014 will reduce government health care costs by only a pittance, a mere $109 billion over 10 years, according to Congressional Budget Office, but it’s at least going in the right direction.  But whether we pay for health care as a nation in taxes (my preference) or insurance premiums we finally , as a nation, are in it together…all of us.  The reduction in costs will have to come from the providers, and it will be a battle.  Under the new law the insurance companies are now limited to 20% of premiums for administrative costs and profit.  That’s an improvement.  In all other advanced economies that percentage is in single digits.  We have a ways to go.

When will the American Conservative stop getting their warm and fuzzes by participating (vicariously or actually) in the charitable support of health care for pretty white people? They don’t realize or are too stupid to understand that the system they so lovingly embrace and the changes they so vehemently oppose are simply a manipulation by a really bad political party, whose true interests are very narrow.  Rank and file Conservatives or Tea Partiers should look in the mirror because, like most Americans, they’re not particularly attractive nor particularly gregarious and therefore unlikely to get many hits on their own internet plea for help. This is what they want to keep?

You People

In an interview last week on ABC's Good Morning America, Ann Romney was asked about her husband's refusal to release more than one year of prior tax returns (note: Romney has released only one tax return, the 2012 return which will not be filed until October 15^th – and probably released 3 days before the election – hardly counts).  Mrs. Romney departed briefly from her soft demeanor that attaches easily to subjects like family and God.  Like a politician she ignored the point that not releasing the returns created a speculation of deception and instead addressed the presumed deception that the users of that information would engage in. 

As I was watching she also said something curious and telling which Robin Roberts chose not to address. Robin, were you just not listening?  Mrs. Romney said regarding the tax returns "…we’ve given all you people need to know…".  With the clamor for Mitt's taxes (he files separately from his wife - which of course means she has significant income of her own) from Democrats, Republicans, Independents, pundits of all persuasions, and, of course, ratings hungry media types, it brings into question just who “you people” are - the American people, perhaps? The use of that phrase was telling because of its ability to make the obvious…well, obvious.  It also highlights the lack of insight on the part of the Obama campaign on the true nature of their opponent.

The Obama campaign has been targeting Romney’s character through relentless attacks on his stewardship of the Bain Capital Corporation.  Living here in Virginia, a hot swing state, we get to see it all.  Obama’s people have rightly concluded that they want to (early on) successfully point out that, for those who think they have no good choices for President, the choice of Romney is decidedly worse.  The Obama guys are, however, making a critical mistake.  Willard Mitt Romney is, as far as I can see, not a bad person. He is a lot of things; rich, attractive, stiff, inarticulate, loving father and husband, and (fortunately) a lousy politician.  He is also quite adept at making money through business (as opposed to, say, professional talents, such as with LaBron James or Leonardo DiCaprio).  His ability to make money or, more precisely, raising money is what made him appear critical to the survival of the Salt Lake Winter Olympics in 2002.  Just what does all that mean?

I believe it means that Romney’s skill set is all wrong for a political leader, not that he is personally evil in some fashion, or that his inability to sing demands ridicule.  I worked in tax, finance, and banking for 31 years.  One thing I learned is that those who engage in exotic business finance do so by working the system to their advantage and by paying large sums of money to experts (firms really) who figure out the ways for them to do it.  Such expensive expert advice is simply an investment for those businessmen, without moral judgment, since the only relevant quantitative ethical value is profit.  There is nothing intrinsically wrong with that, but one should not shrink from or distort that it is what it is.  It is done with two major goals; first, to appreciate the market value of an investment and, second, to avoid taxes.

The fact that certain business people close down businesses to extract the most money out of the carcass,  or ship jobs to foreign locations to cut costs (even if only speculative costs), or engage in oddball investments (like derivatives or junk finance) which knowingly create risks that can bring down an entire financial system should not be surprising or unexpected.  Pursuing activities that skirt the edge of legality because legality has not been established is not immoral; it is simply the absence of morality.  It’s like making an ethical judgment about a disease – pointless.  The lack of morality occurs when we choose to take no action to cure the disease, or sell ineffective medicines as an effective cure.

Out of this comes a separation between those who understand strikingly complex finance (and profit from it) and everybody else. It might include Bermuda based companies or accounts in Switzerland and the Cayman’s.  This separation can, and usually does, lead to hubris and false grandeur.  That Mitt Romney believes he should be the President of you people has been justified in his own mind by the level of success he has attained through the accumulation of wealth that only we people with financial savvy can figure out how to do.  It would hardly be surprising that he might want to prove to his dead father (who being successful in manufacturing and possibly looked down on financial manipulation for profit) that Mitt is the kind of man who is clever enough to be President where his forthright and charismatic father was not.

Taxes and Benefits 101

I decided to wade into Chief Justice Roberts’ recent opinion on the Affordable Health Care Act (aka Obamacare or AHA) to get a better understanding of why he blindsided Conservative Republicans by finding that the so-called penalty for failure to purchase health insurance was, in fact, a tax.  I started wading, but when I saw that the opinion was 192 pages long I was up to my neck before I knew it.  So, like a barnyard chicken, I began to peck about in the opinion until I felt I had consumed enough to be satisfied.  What I concluded was that Roberts had ultimately landed on the side of the obvious, and had, to his credit, minimized the influences of politics and ideology. 

My curiosity over his decision had been peaked by my own tax career background, since from the law’s inception I had always considered the mandate penalty portion to be a tax.  It met the simple definition of a tax (a charge usually of money imposed by authority on persons or property for public purposes – per Merriam-Webster).  When incurred it was to be collected by the IRS (a fact now presented by Conservative opponents as a revelation – who did they think was going to collect it, the Daughters of the American Revolution?).  That it was called a penalty was appropriate in my opinion. The fact of the matter is that the Internal Revenue Code is filled with penalties, and all those penalties when retrieved become part of the general revenue.  The reason the term is used at all is because the tax can be avoided by simple compliance by the taxpayer. An obvious example is the requirement on the part of the Federal Government that everybody who owes an income tax must file an income tax return.  That mandate doesn’t impose a criminal violation if someone chooses not to do it; rather such failure only adds a penalty onto whatever tax (plus interest) that the taxpayer owes.  Like the AHA, no one has to pay the penalty if they comply with the mandate.  Simple…no surprises. 

So Republicans, who had planned to be able to use the Court striking of AHA as a major failure of the Obama Administration,  now have to fight the particulars of a law which, when exposed to the light of truth, has much more upside than down. They start by symbolically burning Chief Justice Roberts in effigy, then screaming (occasionally in tears) that Obama deceived the nation into accepting an atrocious tax - something along the lines of charging a mother with child abuse because she tricked her boy into eating cauliflower by telling him it was white broccoli. 

The next major step is to once again portray the AHA as a “job killer” making repeated reference to the burden placed on business (which under the law means businesses having 50 or more employees – those with less than 50 employees actually get tax-credit benefits under the law).  This burden on business argument gets to me as well.  It ultimately clouds the relationship between employer and employee and the understanding of what compensation is.

In this country, the use of health care insurance as a benefit of employment is an accident of history, as are some other benefits.  Despite the problems these arrangements have created, it has become the primary means of delivering these insurance services to the public. Probably the most serious opponents to health care reform are those who obtain their health care insurance, paid wholly or mostly, from their employer.  What has been lost is that the cost of health care insurance has become misconstrued as a fixed expense of the employer when it is actually a variable expense of labor, otherwise known as compensation.  Employers have always treated it as compensation, but because they don’t directly see it, employees generally don’t.  Even worse, employees often look at such a benefit as largesse from their employers, like it was a gift. 

If under AHA an employer finds that they have to contribute more (or at all) to employee health care insurance plans, they will factor that into their overall labor costs.  The actual payer of those costs always has and always will be the employee, as a portion of their compensation is being directed to purchase that particular service.  That is why this “job killer” argument is so hollow and so political.  Small businesses have always had control of their labor costs, if they are well run. What kills them is a lack of market. 

What employers primarily want is predictability, which includes labor costs.  What would maximize that predictability would be to get employers out of the health care business all together, but because neither political party has the foresight (or cohunes) to get that accomplished (at least for now), the next best thing is to step away from the hodgepodge inefficient system we had prior to AHA, provide consistency of health care insurance coverage to the entire nation and then begin to work seriously toward the next step – reducing per capita health care costs.