Stupid Is As Stupid Does

I have been busy the past two weeks with the selling and cleaning out of our home in Northern Virginia and have not had time to sit down and write anything. That does not mean there has not been anything going on. The following are some thoughts on what is happening and why I think they are headed the way they seem to be. I apologize for the length but I still have work to do to finish out the sale of the house and wanted to get this out ther.

Right out of the box we have to talk about the Russian issue. It appears that this is the only subject the media and the liberals in this country want to talk about. They don’t seem interested in anything else facing the nation. It does appear that the Trump campaign and family were pretty naïve about politics and allowed the Russian government to use them in their effort to prevent Hillary Clinton from ascending to the White House. The meeting with the Russian lawyer and her team and Trump’s son and campaign members was absolutely stupid. It showed how little they knew about how to run a real campaign and were just stumbling around in the dark. It also highlights the fact that they did not think they could actually win the race and were looking for some silver bullet to fire that would do in Clinton.

So the question goes back to why Vladimir Putin hated Hillary Clinton. Make no mistake, it was not his love of Donald Trump that caused the Russians to interfere in the election, it was his total disdain and hatred of Clinton. Whether conservatives want to admit it or not Hillary Clinton was the only hardliner in the Obama administration towards Russia and particularly Putin. President Obama was on his world tour of feel good politics showing the same naïve attitude towards foreign policy that the Trump team had towards a campaign. Obama felt that if he smiled and told other world leaders that the U.S. was responsible for much of the problems in the world that they would like him and the United States better. He lacked the experience in world affairs to really understand how all of this works and no matter how many times you smile and apologize it will not affect seasoned veterans of world affairs.

Hillary Clinton had been around world affairs for decades. She is an intelligent woman who saw the Russian threat for what it was. She probably agreed with Mitt Romney in the debate between he and Obama in 2012 when Obama vapidly remarked the “1980s are now calling to ask for their foreign policy back.” The previous year Ms. Clinton had denounced the Russian parliamentary elections as fraudulent and when she showed up in Russia with the famous “reset” button it had misspelled the word in Russian and it meant, “overload”. Hillary Clinton, whether you like her or not, understood that the Russian government, under Putin, clearly intended to flex its muscle around the world and reestablish itself as a major world power.

To be honest, the Trump’s were even more naïve about foreign policy than Barrack Obama. They felt they could treat foreign policy the way they treated business adversaries and they tried to run rough shod over people. They lacked the knowledge of the social graces that are put on in diplomatic circles. This is where you smile and greet diplomats and world leaders with a warm handshake and then leave them with the feeling they should count their fingers when the handshake is over. World politics is not a game you learn overnight. Most of these diplomats have decades of experience and they know and understand the charade that is being played out in public as opposed to the real policy that is being conducted in the backroom. Hillary Clinton knew it, Vladimir Putin knew it but unfortunately Barrack Obama and Donald Trump were not as knowledgeable about it.

My point is all of this is that Putin was not trying to elect Donald Trump as President as much as he was trying to defeat Hillary Clinton. She had personally attacked him an in a culture like Russia a man cannot stand back and allow a woman to attack him without some form of retribution. Putin also understood that Clinton knew Russia was a threat to the United States and the Western world and he preferred not to have to deal with her. Rookies like Barrack Obama and Donald Trump would be more preferable. They would say things like “cut it out” and other non-threatening gestures without any real teeth behind them. They would announce “red lines” but not have the fortitude to back those statements up.

I would be remiss if I did not say that I think Putin underestimated Trump on how he would treat Russia. For all the nice things he said about Putin and Russia Trump has actually turned out to be a problem for Putin. I don’t think this is due to any real diplomatic skill or foreign policy experience but rather his personality. You hit him he tends to hit back. So when Russia does something he actually reacts and after eight years of empty threats they are learning that there is a new sheriff in town and eventually they might have to learn to behave better.

In Congress the Republicans continue to show that they cannot come to an agreement on how to move their agenda forward and the Democrats are throwing up every roadblock in the legislative procedure they can conjure up.   Repealing ObamaCare continues to be a thorn in the side of the Republicans. For the past seven years they have done nothing but campaign on this subject but when the rubber hit the road they have done nothing but spin their tires.   There are a couple of factors that have limited their ability to move forward on a new healthcare plan. First are the different factions within the Republican party. Democrats like to pretend they are a big tent party with all sorts of factions but in reality they are all pretty much ones stripe of liberal and have discipline in the party and vote as a bloc. The Republicans, on the other hand, have the moderate wing of the party, the conservative wing and the ultra-conservative bloc. It is the latter that is the problem in the House where a group of about 30 Republicans, all in safe seats, continue to object to anything they don’t agree with and this frustrates Speaker Ryan’s efforts to move anything that could muster a majority in the Senate.

In the Senate the equations is a little different. Senators represent states and not smaller districts. ObamaCare created a system that gave huge subsidies to people for healthcare and expanded access to Medicaid for millions more. What Republican Governors and Senators are quickly learning is that once you give something to people (voters) that benefits them it is very difficult to take it back. Even voters who supporters who get a subsidy or who were put on Medicaid like this and don’t want to give it back. They say they don’t like ObamaCare but if you change anything that impacts their subsidized or free healthcare they will rebel as well. So now you have Senators from states where the Governors have expanded Medicaid and they are unwilling to see those benefits reduced. Remember, the “cuts” in Medicaid that you read about and hear so much about from the media and the Democrats are not really cuts. What they are is reductions in the growth of Medicaid in the future. But that does not stop liberals from telling everyone that Republicans are cutting Medicaid and that people will die. Talk about hyperbole.

Over and over the leadership in the Senate tries to rewrite a bill that will bring the conservatives and moderates together. The conservatives object to the Obama taxes that remain in the bill. This is the long list of taxes that were put in place to subsidize this program and some of them have yet to be enacted. Obama was very shrewd in giving out the benefits first and then putting the taxes to pay for them later. Get the people hooked on the benefit and make someone pay later.

WASHINGTON, DC — Obamacare contains 20 new or higher taxes on American families and small businesses. Arranged by their respective sizes according to CBO scores, below is the total list of all $500 billion-plus in tax hikes (over the next ten years) in Obamacare, their effective dates, and where to find them in the bill.

$123 Billion: Surtax on Investment Income (Takes effect Jan. 2013): A new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income:

  Capital Gains Dividends Other*
2012 15% 15% 35%
2013+  23.8% 43.4% 43.4%

 

*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations.  It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income.  It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans.  The 3.8% surtax does not apply to non-resident aliens. (Bill: Reconciliation Act; Page: 87-93)

$86 Billion: Hike in Medicare Payroll Tax (Takes effect Jan. 2013): Current law and changes:

  First $200,000
($250,000 Married)
Employer/Employee
All Remaining Wages
Employer/Employee
Current Law 1.45%/1.45%
2.9% self-employed
1.45%/1.45%
2.9% self-employed
Obamacare Tax Hike 1.45%/1.45%
2.9% self-employed
1.45%/2.35%
3.8% self-employed

 

Bill: PPACA, Reconciliation Act; Page: 2000-2003; 87-93

$65 Billion: Individual Mandate Excise Tax and Employer Mandate Tax (Both taxes take effect Jan. 2014):

Individual: Anyone not buying “qualifying” health insurance as defined by Obama-appointed HHS bureaucrats must pay an income surtax according to the higher of the following

  1 Adult 2 Adults 3+ Adults
2014 1% AGI/$95 1% AGI/$190 1% AGI/$285
2015 2% AGI/$325 2% AGI/$650 2% AGI/$975
2016 + 2.5% AGI/$695 2.5% AGI/$1390 2.5% AGI/$2085

 

Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS). Bill: PPACA; Page: 317-337

Employer: If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees.  Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer). Bill: PPACA; Page: 345-346

(Combined score of individual and employer mandate tax penalty: $65 billion)

$60.1 Billion: Tax on Health Insurers (Takes effect Jan. 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year.  Phases in gradually until 2018.  Fully-imposed on firms with $50 million in profits. Bill: PPACA; Page: 1,986-1,993

$32 Billion: Excise Tax on Comprehensive Health Insurance Plans (Takes effect Jan. 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family).  Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions.  CPI +1 percentage point indexed. Bill: PPACA; Page: 1,941-1,956

$23.6 Billion: “Black liquor” tax hike (Took effect in 2010) This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105

$22.2 Billion: Tax on Innovator Drug Companies (Took effect in 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year. Bill: PPACA; Page: 1,971-1,980

$20 Billion: Tax on Medical Device Manufacturers (Takes effect Jan. 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax.  Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986

$15.2 Billion: High Medical Bills Tax (Takes effect Jan 1. 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI).  The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. Bill: PPACA; Page: 1,994-1,995

$13.2 Billion: Flexible Spending Account Cap – aka “Special Needs Kids Tax” (Takes effect Jan. 2013): Imposes cap on FSAs of $2500 (now unlimited).  Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.  There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.  Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center(link is external)) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. Bill: PPACA; Page: 2,388-2,389

$5 Billion: Medicine Cabinet Tax (Took effect Jan. 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). Bill: PPACA; Page: 1,957-1,959

$4.5 Billion: Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D (Takes effect Jan. 2013) Bill: PPACA; Page: 1,994

$4.5 Billion: Codification of the “economic substance doctrine” (Took effect in 2010): This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. Bill: Reconciliation Act; Page: 108-113

$2.7 Billion: Tax on Indoor Tanning Services (Took effect July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons. Bill: PPACA; Page: 2,397-2,399

$1.4 Billion: HSA Withdrawal Tax Hike (Took effect Jan. 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. Bill: PPACA; Page: 1,959

$0.6 Billion: $500,000 Annual Executive Compensation Limit for Health Insurance Executives (Takes effect Jan. 2013): Bill: PPACA; Page: 1,995-2,000

$0.4 Billion: Blue Cross/Blue Shield Tax Hike (Took effect in 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. Bill: PPACA; Page: 2,004

$ Negligible: Excise Tax on Charitable Hospitals (Took effect in 2010): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS. Bill: PPACA; Page: 1,961-1,971

$ Negligible: Employer Reporting of Insurance on W-2 (Took effect in Jan. 2012): Preamble to taxing health benefits on individual tax returns. Bill: PPACA; Page: 1,957

This is the problem Republicans now face in repealing a bill that everyone likes to complain about in general terms but when it gives them something that someone else is paying for they refuse to give it up.

The Senate has delayed any vote on healthcare until after Sen. John McCain recovers from emergency eye surgery. His doctors have advised him to remain in Arizona for a week. With no margin for error Leader McConnell cannot go to a vote without everyone on board and ready to vote. I am not sure he has McCain’s vote yet but in the end he will need it. The Democrats, the party of a big tent, will vote as a monolith and all vote against any proposal to repeal ObamaCare.

So that begs the question of what should Republicans do if they cannot devise a plan that (1) gets enough votes to pass both the House and the Senate; and (2) is not political suicide at the polls. In my opinion they should just vote to repeal ObamaCare. Strike the entire law and revert back to the previous system. That would accomplish a couple of things. One, it will force Governors to start telling their state Senators to take some action; and two, it will force the Democrats to come to the table and start negotiating. They know that ObamaCare is seriously flawed and ultimately will fail. They are playing a game of political chicken with Republicans to see which one will blink first. I have always said that any major piece of legislation, like healthcare, that affects the lives of so many Americans is not good legislation if it is passed on a strictly partisan vote. The Democrats rammed ObamaCare through on a partisan vote. No Republicans voted for the bill and the result was the Democrats lost control of both the House and the Senate. Perhaps we could do the unthinkable and get both parties to sit down and craft a bipartisan bill that would work. It would not be what either party would craft left to their own devices but it would remove it as a political wedge since both would have skin in the game. Each leader would have to assure the other that a strong majority in each party would vote for the bill. If the public does not like it they cannot blame one party over another.

One last issue I wanted to cover today. I mentioned that Democrats in the Senate are stalling on every issue and trying to deny Republicans and Trump a win on any single item. They have taken it to new heights on judicial appointments. Traditionally the administration will nominate District judges for the Federal bench and confer with the Senators from the home state. There is an arcane practice in the Senate where a Senator can “blue slip” a nominee that they feel is unqualified for the position. This has been used in the past but not to the degree that we are seeing today. Senators from states that have two Democrat Senators are trying to block any judicial nominee from their state regardless of the nominee’s qualifications. They are setting a dangerous precedent because Republicans could engage in this game as well in future administrations.

Right now the Federal bench is packed with Obama appointees and they tend to be more liberal. We see this in the decisions on the travel ban where they are citing campaign rhetoric for their decisions instead of citing statutory law. In clear English, they are using their political views on the subject to color their judicial decisions. The Supreme Court overturned those stays with some modifications and immediately the judge in Hawaii decided he could expand the list. I suspect he will be overturned again and at some point get the message. Write you opinions based on law, not your political leanings.

With Trump now in the White House you can expect the vacancies in the judicial system to be filled with more conservative judges. I have to assume the Democrats think they can block them for four years and keep the federal judiciary tilted strongly in favor of liberals. But what if Republicans keep control of the Senate and decide not to confirm any liberal judges nominated by a Democrat President? That is the real issue. Injecting more politics into the judicial system is just plain wrong. There will always be some politics in the process but making it more political is not a solution. Judges should be evaluated on their legal credentials. You won’t always agree with everything they say or rule on but if they are qualified they should be confirmed.

At some time the Democrats will have to realize they lost the election. They lost it because they had a badly flawed candidate and the American public voted for a change. Stomping their feet and pouting will not win future elections for them. Acting like little children and refusing to allow anything to go through the Senate without 60 votes if only creating more gridlock and making the pubic realize that all of them, both parties, are incapable of solving the nation’s problems. It was only eight short years ago when the darling of the left, Barrack Obama, told Republicans his famous quote, “I won, and elections have consequences”. I guess they liked that statement then but not so much today.

In the end all I can think of the quote that was made popular in Tom Hank’s movie Forest Gump when he said “Stupid is as Stupid does.”

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