The National Association for Business Economics has just released its NABE April 2010 Industry Survey and it finally looks like the U.S. economy is starting to move forward again.  Unfortunately, the survey also finds that the $787,000,000,000 economic stimulus package had very little to do with the improvement.

$787B and nothing to show for it!

What?  We spent $787 Billion and we got nothing to show for it?  Imagine that!

According the the NABE survey, 73% of responding economists from around the country belief that the Fed's stimulus bill from February 2009 has had no impact on employment.

Once again, American business owners and workers deserve the credit for getting our economy back on track.  And, while American business took action, the government looked busy, spent a lot of money, and failed to do anything meaningful.

When will we learn that government is not the answer?

If you divide $787B by the approximately 150,000,000 taxpayers in this country, that means that each of us taxpayers had to pay $5,246 for this stimulus package.  That should piss you off.  It sure does me.

My family holds ourselves to a pretty strict budget every month, unfortunately our government does not.

Well, enough with the rant.  There is a lot of good news in the NABE survey.  The economy is starting to improve, companies are starting to hire again, and profits are on the rise.  Here are some of the highlights from the report:

• Industry demand increased for a third consecutive quarter. Fifty-seven percent (57%) of April survey respondents reported rising demand versus only 6 percent reporting falling demand as the NRI jumped to its highest level in more than four years to 51. All four major industry sectors experienced strong demand growth.
• More than half of the NABE survey respondents said that some portion of their firms’ sales came from foreignbased operations, with 14% indicating that more than half of their sales were from foreign sources. Of those with sales from foreign operations, 42% indicated their sales increased in the last quarter, while 17% reported they decreased.
• Expectations for economic growth in 2010 have improved significantly. All NABE panelists again indicated business decisions are being made based on expectations for positive economic growth (as measured by real GDP) in 2010. Twenty-four percent (24%) of survey respondents believe real GDP will expand by more than 3%, and 70% of respondents believe the economy will expand by more than 2.0% in 2010.
• Profit margins expanded for the third quarter in a row. Twenty-five percent (25%) of survey respondents reported increased profitability versus 11% that reported declines. Three of the four major sectors posted higher margins than in January. Slightly more firms than in the previous quarter (18% vs. 17%) cut prices than raised them. This is a reversal from results in the past two surveys. In addition, fewer firms expect to raise prices in the coming quarter than had expected to do so in the January survey.
• Job creation increased for the first time in the past two years of this NABE survey. The percentage of firms increasing payrolls rose to 22% from 13% in the January survey. The percentage of firms cutting jobs moved lower—from 28% in January to 13% in April. The share of respondents expecting their firms to add employees over the coming six months rose to 37%, up from 29% in the previous survey.
• The share of respondents whose firms increased their capital spending over the prior quarter held nearly steady from the past two surveys—at 25%. Expectations for future capital spending deteriorated after improving for five straight quarters, although positive responses still exceeded negative ones by 41% to 22%. As in the past four surveys, expectations were positive for spending on computers and communications equipment, but negative for spending on structures.
• Materials costs continue to rise. The percentage of respondents reporting rising prices outpaced that of respondents reporting price declines. Labor cost pressures also continued to increase, with respondents reporting the highest NRI in more than two years.
• Credit conditions continue to hamper firms. Despite improvements throughout the economy, a large share of respondents continue to report that credit conditions had a negative impact on their businesses during the first quarter of 2010.
• The vast majority (73%) of respondents reported the fiscal stimulus enacted in February 2009 has had no impact on employment to date. While 68% also believe a jobs bill, such as the one recently enacted into law, will have no impact on payrolls, 30% do believe it will boost payrolls moderately.

Are you starting to see the economy starting to improve where you live?

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After six months of debating health care legislation, I have to admit that I have no clue what the current health care bill accomplishes.  But, I do know that Americans should be outraged by the deal President Obama cut with labor unions this week.

One key way that Democrats propose to pay for "health care reform" is to impose a new tax on "Cadillac" health insurance policies.  But, now it turns out that labor unions will be exempted from this tax.

How ironic that part of this health care reform package penalizes some Americans for having too good of health insurance plans.  I can't say how that makes sense.  But now, the Democrats are picking who will be penalized and who will not.

87% of Americans do not belong to labor unions.  But for the 13% of Americans who are part of a union, the government is saying that the rest of us should pay more than those 13%.

So, organized labor, the majority of whom are government workers, will not be taxed on their "Cadillac" health insurance policy.  Meanwhile the rest of Americans will.

This stinks of political corruption at its highest level.  The Democrats need a way to pay for their health care reform and are unfairly choosing who should pay the burden.  Like too often, Government, both Democrats and Republicans, are hurting middle class Americans.  We should not stand for this.

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TITLE XIII--CONSUMER ASSISTANCE TO RECYCLE KIDNEYS

Sec. 1301. Short Title- This title may be cited as the 'Cash for Kidneys Program for 2012.'

Sec. 1302.  Cash for Kidneys Program

(a)  Establishment- There is established in the Department of Health and Human Services a voluntary program to be known as the 'Cash for Kidneys Program' through which the Secretary, in accordance with this section and the regulations promulgated under subsection (d), shall--

(1)  authorize the issuance of an electronic voucher, subject to the specifications set forth in subsection (c), to offset to purchase price or lease price for a qualifying lease of a kidney from a senior citizen who has decided to give up his kidneys after consultation with government end of life specialists upon the surrender of an eligible youthful, but diseased kidney to a doctor participating in the Program;

(b)  Qualifications for and Value of Vouchers- A voucher issued under the Program shall have a value that my be applied to offset the purchase price or lease price of a qualifying lease of a kidney from a senior citizen who has given up his kidneys after consultation with government end of life specialists as follows:

(1)  $3,500 VALUE- The voucher maybe used to purchase a kidney from a senior citizen less than 70 years old;

(2)  $4,500 VALUE- The voucher may be used to purchase a kidney from a senior citizen less than 80 years old and greater than or equal to 70 years old.

(3)  In order to receive a voucher the participating consumer must be willing to turn in his kidneys upon demand of the Federal government.

(c)  The Cash for Kidneys Program will run as long as the current supply of senior citizen kidneys last.

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The debate in Washington today is focused on whether Government needs to take control of healthcare.  From listening to our politicians you would think that individuals can’t manage their own healthcare choices.  But I would argue that we have not been given the chance to make our own healthcare decisions.

Today’s health insurance system is primarily an employer provided system where the individual is removed from choices over his or her healthcare decisions.  This employer provided system reduces competition within the health insurance market which allows the cost of medical care to increase year after year.  If people do not have any control over the amount of money that they pay for health insurance or medical procedures, there is no free market system to restrain inflation.  In other words, people need to choose whether they are willing to pay for a procedure at the stated price.  If demand at current prices is too low, prices will fall.  If demand is too high at current prices, then prices will go up.

Put The Individual Back Into Healthcare

I am for healthcare reform, but I want reform that empowers individuals rather than the government.  There are free market solutions to our healthcare problems.  We need government to pave the way for these free market solutions.

As you know, I am a strong believer in the free market.  Millions of individuals making millions of independent decisions and purchases is the best way to reduce the cost of health insurance.  If people have no economic decision to make when deciding whether to undergo a medical procedure or test, there is no restraint on demand.  We need a to create a system that allows individuals to make these types of choices.  For most goods in our economy, the price is set by the market which is comprised of the millions of individuals making decisions on whether to purchase those goods that their stated prices.  If people decide that goods cost too much, they will not buy them and the price will drop until demand meets the supply.  We need the healthcare market to operate under that same free market system.

In order to do this we need our government to enact laws that empower the individual, not empower government.  Government has not done a good job managing the cost of Medicare, so why do we think it will be able to manage the cost of the entire healthcare industry?  The truth is that it will not be able to control these costs and therefore it will either have to raise taxes or dictate what medical treatments people can get.

However, there are other options.

Here are 7 ways to reform healthcare that empower individuals:

1. Tax Credits For Individuals Purchasing Health Insurance – Most Americans get their health insurance through their employers and this benefit is not taxed by the Federal government.  However, if people purchase health insurance on their own, they do not get a tax break.  Let’s encourage them to buy insurance by giving them the same benefits as those getting health insurance through their employers.
2. Move Away From The Employer Provided Health Insurance Model – In order to contain the rising cost of healthcare, we need people to make financial decisions concerning their health.  One of the best ways to do that is to move away from the employer provided health insurance model.  This will allow individuals to decide exactly what type of health insurance plan they should buy. For example, I know that I will never use a chiropractor, but my health insurance policy pays for me to see one.  If I could choose a policy that does not include chiropractor coverage, my insurance premiums would be lower.
3. Allow Individuals to Use Health Savings Accounts to Purchase Health Insurance – This reform provides a tax benefit like reform #1 above.  If individuals can use pre-tax dollars to buy health insurance, more people will be able to afford it.
4. Allow Individuals to Purchase Health Insurance from Across State Lines – Did you ever wonder why there was a Pennsylvania Blue Cross and Blue Shield and a Delaware Blue Cross and Blue Shield?  It is because people can’t purchase health insurance policies from entities in other states.  Therefore, individuals are limited to the health insurance companies located in their state.  We could immediately increase the competition in the health insurance market by allowing individuals to purchase policies across state lines.
5. Medical Malpractice Litigation Reform – I am not one who believes that people should waive their rights to pain and suffering damages and lost wages in cases of medical malpractice.  However, we do need to reform medical malpractice litigation so that doctors can stop practicing defensive medicine.  Ordering unnecessary tests or procedures costs Americans a ton of money.  Doctors order these tests and procedures to avoid medical malpractice claims.  We need medical malpractice litigation reform that discourages the overuse of medical tests and procedures.
6. Don’t Require Health Insurance Plans To Cover Specific Benefits – Government today requires that health insurance companies offer specific benefits as part of their policies.  These mandated benefits increase the cost of everyone’s health insurance premiums even if the purchaser has no intention of using such mandated benefit.  Let’s allow health insurance companies to design insurance policies based on market requirements, not government mandates.
7. Convert Medicaid and Medicare Spending Into Vouchers For Lower Cost Private Health Insurance – Most Americans are happy with their insurance plans and medical providers, so why don’t we help the poorest in our nation purchase private health insurance policies?  The Medicaid and Medicare programs have a huge overhead cost associated with the bureaucracies needed for these programs.  Let’s privatize this system by giving money to the poor and elderly to purchase private insurance plans instead of government controlled plans.

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The Federal Government's Cash For Clunkers Program is unlike any government program that I have seen before - part environmentalism, part car dealership marketing campaign.  But, in less than a few weeks the program has had a huge effect on the used car market.  And, unfortunately, this effect can't be good for poor people looking to buy cheap used cars.

The government has given $1 billion of our tax dollars to encourage people to turn in their old "gas guzzling" cars for a new one that the government deems to be sufficiently gas friendly.   But, what if you don't have a car that you can turn in under the program?  What if you are in the market for a cheap used car yourself?  The laws of economics tell us that it is going to cost more money to buy a used car today than it did before the Cash For Clunkers Program.

As you know, I love the teachings of Dave Ramsey and his Total Money Makeover.  One of Dave's teachings involves paying cash for a car and only buying a car that cost the amount of cash that you have.  If that means buying a $1,000, do it and start paying down your debt so that you can upgrade to a better car when you can afford it.  For a lot of poor people, the cash for clunkers program is taking these cheap used cars off the market.  As these cheap used cars are destroyed, there are less cheap used cars for poor people to buy.

I will use a worst case scenario for this article.  Let's say that every person who participated in the Cash For Clunkers Program received $4,500 for his car.  That means that 222,222 used cars have been taken out of the used car market and are on their way to being destroyed.  That is a lot of cars.  Now, that $1,000 car might be out of the price range of poor people.

So how did we think that this was a good idea?  Well, like most government programs they are always started with the best intentions.  I certainly don't believe that anyone thought, "Hey, let's pass the Cash For Clunkers Program and hurt poor people."  But, that will be the result.

Unfortunately, I doubt that this will be the last program of this type we will see.  Now that the government is in the car business, my guess is that we are going to see more of these marketing ploys from Uncle Sam.  I just hope that poor people aren't hurt by the next one.

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