Tag: economics

Are They Clever Enough?

Maryland politicians see themselves as quite clever.  Their thinly veiled ruse of raising taxes and fees in non-election years fools no one who pays taxes and pays attention.  Governor Moore’s commitment to not raise taxes and fee in 2026 attempts to mislead the voters (most of whom do not pay enough attention).  The 2025 massive tax and fee increases are yielding a considerable revenue benefit in 2026 at the expense of taxpayers/voters.  Yet, a 2027 structural deficit, reportedly well in excess of a billion dollars, must be dealt with to meet his constitutional requirement to propose a balanced budget.  In fact, as has been reported by The Sun (Will Md. Officials address billions in fiscal deficits?), cumulative projected structural deficits of nearly $10 billion lie ahead through fiscal year 2030 because spending forecasts exceed revenue projections.  Because even raising taxes again next year will likely not be enough to address the projected deficit, cuts to the state’s most expensive programs, i.e. “the Blueprint” and Medicaid, must wait until after the election so the same serial government spending offenders are reelected.

The governor is in a race.  Not just a race to keep his job and give propulsion to his political ambitions beyond Maryland. A race to keep this incredibly leaky ship afloat until his gamble on high tech industry and jobs potentially bears fruit. It is not a rational gamble. This is occurring as Maryland ranks among the top in states with the wealthiest residents and business owners fleeing for states with more friendly tax structures, energy costs and government regulation.  It is a gamble where the odds are against him.  Even if his offerings of incentives to entice entrepreneurs to the state is successful, it takes years for fledgling new tech enterprises to grow rapidly enough to bring a critical mass of professional level income taxes and corporate taxes to materially affect state tax revenues.  All the while, as the state’s unfriendly tax structures on high income earners and high-tech businesses diminish those same revenues at a rate exceedingly difficult to overcome without massive further tax increases and or painful budget cuts. Maryland is far behind its neighbors like Virginia whose thoroughly robust, high-tech economy, despite COVID and federal job cuts, is generating state budget surpluses producing tax rebates to citizens and an equally robust jobs market.

It brings to mind the story of the ten friends that go to dinner nightly together and divvy up the bill by the tax rate of each diner.  The diner with the highest tax rate begins by paying nearly 60% of the bill.  When the restaurateur offers them a 20% discount for their loyalty, the question arises as to how to share the discount.  They again agree to do it by tax rate.  When the highest taxpayer receives most of the discount, the group gangs up on the high taxpayer because of his enviable income.  The highest taxpayer, offended and abused, no longer joins the group for dinner.  When the group dined the next evening, they were horrified to learn that they must come up with over 50% of the bill they had not yet had to pay.

Members of the Democrat party, consistently believe the most successful among us never pay their fair share of taxes and fees.  Their recent tax increases were targeting Maryland’s most successful citizens.  Before this direct assault on success, Maryland’s tax structure was already among the highest for a wide swath of taxpayers.  The completely insulting increase in fees, lifting Maryland to absurdly high levels of counter-progressive “taxes” by another name, adversely affects virtually every citizen.  Those fees are literally several times the rates in neighboring states.  As the informed flee, the state is left with an increasing majority of voters who recklessly machine vote Democrats into office believing they are their best chance for a fair deal.  At some point one would hope that this ongoing bludgeoning of the uninformed would foment descent.

Shame on the governor and the legislature. Shame on them for believing that, yet again, the Democrat majority in the state, many who just do not pay enough attention to the facts (as politicians count on) will blindly vote them back into office.  Their fiscal offenses are just below the level necessary for even the most uninformed voter to revolt.  Republicans do not have all the answers.  But, at some point, the desire to spend and spend, in an attempt to make everyone happy, will crash into the fiscal wall.  Meaningful spending cuts will have to be made short of a tax policy that craters an already weakening state economy leading to an increasingly violent downward spiral that is just beyond view, but looms ever present.   Many who have benefited mighty from the flow of state funds must be told to seek alternatives.  Many Democrats are incredulous but, the party is over.

Single Payer is Fool’s Gold

Many intelligent observers and participants in the American healthcare system strongly propose a legislatively mandated, federal government run, single-payer healthcare system for this country.  On the surface it has many positive attributes that would attract admirers and proponents.

Many are saying how effective and efficient Medicare is for the growing population of seniors.  Seniors experience a system of healthcare that provides a robust set of services that, on the surface, seems cost effective and comprehensive.  That system, on its own, provides a broad range of services and covers a substantial amount of the cost associated with those services.  But, not all of the cost.  Often, 20% is left for the Medicare beneficiary to fund personally.

For those who can afford it, especially if you have chosen a “PPO-like” secondary insurance plan, a system of secondary coverage through private insurers is required to make up the difference between what the complete medical services cost and what Medicare covers.  For those who cannot afford secondary coverage, possibly they qualify for Medicaid.  Medicaid is the federal Center for Medicare and Medicaid Services (CMS) safety net system designed to provide complete coverage for those whose personal financial situation enables qualification. Is intended to cover those considered to be at or below official poverty levels. Or those who do not qualify for Medicaid might select a Medicare HMO-like plan commonly known as Medicare-Advantage plans.  Those in the gap are forced to forgo other quality of life expenses to pay for “medigap” insurance or risk bankruptcy.

The answer, according to many, is to legislate a transformation to a government-run, single payer system, often called “socialized medicine”, to ensure a completely equal system of healthcare for all citizens.  A noble concept.  Where it has been attempted, “first-world” countries like France and Great Britain, it has proven to have a fatal flaws.

First, those who have been “subjects” of those systems in France and Great Britian for example, understand that the lack of affordability, without bankrupting those countries, presents a quality of healthcare that is, frankly, substandard.  For example, wait times for care is unacceptable.  The pay to providers is squeezing the best and brightest out of the government run system fleeing to a system of “private insurance” that no-one wishes to talk about.  Both France and Great Britain have a system of private insurers.  Those insurers fund providers and facilities exclusively intended to service a class of patients whose employers are paying the premiums whose intent is to retain the best and brightest employees in their industries.  The system has created an environment of even greater inequity.

Secondly, a single payer system would present an irresistible force that would deplete the pharmaceutical industry of the profit motive necessary to fund years and years of research necessary for the sort of medical advancements we have enjoyed for many decades.  Investors would simply move on to a better alternative.  On the surface that system appears to represent greater fairness but would eventually starve the entire population of advancements intended to extend and add quality of life to many, many more.

A simple example is the currently popular set of drugs providing weight loss.  One could say the industry is just excusing an obese America’s glutenous behavior.  In fact, it is potentially extending the lives of millions for several years while improving their quality of life and self-image.  Would pharmaceutical companies have even invested in the years of research necessary to provide these options if the profit incentive was removed?

The system in America as it stands is a graceful balance of a government provided safety net in Medicaid and Medicare plus secondary insurers for the balance of us who can afford a system that provides both the highest quality healthcare in the world and an incentive to pharmaceutical firms to continue their quest for cures across the complete spectrum of health challenges.  The governmental challenge is to create a means to discern and “insure” those who truly cannot afford a Medicare/private secondary scenario and grant a Medicaid-like solution without bankrupting a governmental fiscal situation that is already producing trillions in federal deficits each year.  This is a true conundrum. 

What one would prefer is a solution that combines equal amounts of spending cuts and revenue increase.  The major issue that must be addressed (and is in the forefront of the current funding crisis in Congress) is Medicaid support for illegals.  This is clearly a place to cut spending as the system was never intended to pay the entirety of the healthcare needs of non-citizens.  It is completely illogical to expect American taxpayers to support the entirety of the healthcare costs of tens of millions of non-citizens, while taxpayers themselves struggle to pay for the ever-increasing healthcare costs for their own families, with federal dollars that do not exist except in the Alice-in-Wonderland world of deficit spending.

This leads to another discussion of when will the deficit spending madness end?  I am certain the liberal, wokie version of reality is that the rich, billions and billions of billionaires, should just pay, not just a little more, but A LOT MORE, and, poof, the deficit is gone! 

These same wokie economic “experts” I’ve personally encountered believe that “trickle down” is the source of the income disparity in this country.  If these “experts” had actually taken some economic classes in college they would have learned that the entire American capitalistic economic system is based entirely on “trickle down”.  The wealthy, in order to make income from their wealth, invest in businesses that, simply, pay EVERYONES salary, healthcare, life insurance, 401K contributions, on and on, out of the profits they earn from their investments in all the businesses in this country and around the world!  They pay FOR ALL that, and then pay HALF A TRILLION IN FEDERALBUSINESS INCOME TAXES E-A-C-H YEAR!   And guess what, all those salaries they pay, each of those employees pay a total of 2.4 TRILLION IN FEDERAL TAXES EACH YEAR!  So, in reality, billionaires are already paying THREE TRILLION a year in just federal taxes before you add in their personal federal income tax burden.  This does not include what they pay in billions and billions in state and local taxes through employee and business tax burden.

In 2022, the top 1% of earners in America paid approximately $854.5 billion in federal income taxes, accounting for 40% of all individual income tax revenue. Their average effective tax rate was 26.1%.

The total wealth held by billionaires is approximately 13 trillion.  If a wealth tax collected the entirety of their wealth, it wouldn’t reduce the federal deficit BY HALF!  Not to mention it would totally collapse the world economy.

So what’s the answer?  Reasonable, AGAIN a reasonable plan, to significantly reduce spending and reasonably increases taxes so as to not significantly and negatively impact economic activity.  This is critical because significant tax increases that drive the economy into recession would lower employment, reduce income tax receipts and offset any deficit reduction achieved through tax increases.  Billionaires could pay more in tax.  But only to the point where it does not negatively impacts business investment thus reducing employment, worker incomes and stock market returns for many millions of Americans whose retirement plans rely on wall street success.

By the way, moderate Democrats understand this dynamic.   Its those who are ignorant of these critical facts, the wokie, “socialist democrats”, who believe significantly reducing economic success is a problem that big government can mitigate.  They say just give government all the money and they will make the world okay for everyone.  PA-LEESE, lets get real!  Check in with governments who have experimented with socialism, France, Great Britain, and ask the average citizen if they are better off?  Why their wealth taxes failed.  Why the working class riot in the streets because the systems is crushing them economically.

Why are Americans not fleeing this country for France, Great Britain, Mexico, Syria, Iran, (the list is long)? Because, the United States of America, with all its warts, is still the place in the world with the highest standard of living and the most individual freedoms than any country in the world!  But PLEASE, lets draw the line at funding healthcare for illegal immigrants, sign the clean CR and get back to the business of fiscally responsible governing.