Fed Rejects Geithner's Review Request
I just wanted to point readers to an interesting article that I came across yesterday. Bloomberg is reporting that Fed Rejects Geithner Request for Study of Governance, Structure .
Sept. 21 (Bloomberg) -- The Federal Reserve Board has rejected a request by U.S. Treasury Secretary Timothy Geithner for a public review of the central bank’s structure and governance, three people familiar with the matter said.
The Obama administration proposed on June 17 a financial- regulatory overhaul including a “comprehensive review” of the Fed’s “ability to accomplish its existing and proposed functions” and the role of its regional banks. The Fed was to lead the study and enlist the Treasury and “a wide range of external experts.”
I think this may be one of the better things Obama and Geithner have tried to do. I'm not too optimistic on what the outcome of such a "review" would have been, and I'll touch on the Fed's "ability to accomplish its existing and proposed functions" a bit later, but nonetheless, at least they are trying to conduct some sort of "review," even if it is just for publicity to make them look "tough."
Government Ignored
While the report requested by the Treasury hasn’t been formally scrapped, no work has been done on the project, which was due Oct. 1, the people said. Treasury spokesman Andrew Williams declined to comment, as did Fed spokeswoman Michelle Smith.
Effectively the Fed is simply ignoring the Obama administration. This should make readers wonder. How much power does the Fed have? Why can they just ignore requests and other things that we throw at them? Where is the money they print going? Why has their balance sheet expanded by record levels in the past few years, and where is that money going? Congress created the Fed, and Congress can force the Fed to do whatever it wants (including disappear). While this request did not come from Congress, I hope it gets on Congress' radar and possibly alerts them to take action.
Audit the Fed
Is Obama serious about health care, or disingenuous?
Last night obama gave his much anticipated speech on his health care plan. One major point seemed to stick out in my mind.
An additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange. Let me be clear - it would only be an option for those who don't have insurance. No one would be forced to choose it, and it would not impact those of you who already have insurance. In fact, based on Congressional Budget Office estimates, we believe that less than 5% of Americans would sign up.
Obama seems to believe that a not-for-profit public health care option would only attract less than 5% of Americans to sign up. He also graciously points out that "No one would be forced to choose it."
Let's consider that, under this plan, we would have a public health care option whose purpose is to help drive down the cost of health care in the private sector, while also helping to insure people that can't afford private health care. All of these factors can lead one to presume that this public health care option would be cheaper than a private option.
If the public option is cheaper than the private option, then why on earth would Obama think that so few people would be interested in signing up for this? According to the National Coalition on Health Care, 18% of the population under the age of 65 is without healthcare, and that was in 2007. With the enormous job losses recently, I can only estimate that number to be higher today. Many of these people would probably be interested in a cheaper, taxpayer subsidized, health insurance plan.
In addition to this possible pool of people interested in this public option, many people that currently pay for insurance will probably switch when they realize there is a new, cheaper game in town. They will want to jump onto the taxpayer subsidies as well!
And, if that wasn't enough, think of the many small, medium, and even large businesses that provide health coverage for their employees. They may find it to be cheaper to drop their health benefits for employees and let them get the government plan. In many cases, this could even save money for the employee, depending on the costs of the different plans.
I surmise that these factors alone would easily bring a demand of greater than 5% to this health care plan, and the astonishing thing is that this plan is estimated to cost $1 trillion dollars, with a T. If Obama believes that less than 5% of Americans will sign up, and that it will cost a trillion dollars, then imagine the cost when 20% of American's sign up, or more!
Of course, I don't want to forget about how this will cause jobs to be lost in the existing private health care industry as, undoubtedly, at least some people will switch from private care to public care. Now, I would not be one to argue that losing jobs in the health care industry is a bad thing, and it may be something that needs to happen. What does not need to happen, however, is that we replace thes private jobs with public jobs in the new public care system that would be built up. In my estimation, the government might even employ more people to get the same job done than the private sector was employing. Again, this is not a good thing. Government will overspend, overpay, give out too many benefits, and do just about everything to squander taxpayer money in the most inefficient ways possible. With this plan, I feel we would find ourselves with another bleeding government beaurocracy that slowly destroys private sector jobs, while replacing them with bloated, inefficient government jobs. All this in a sector that the government has no business being in. If they were really concerned about people's health, maybe they would stop subsidizing corn, but this is a topic for another article.
As I said before, Obama was quick to point out that "No one would be forced to choose it," but I estimate that many people will be rushing to switch to a cheaper plan that can save them money, especially as their wages are cut (or lost completely). Many businesses may even force their employees to switch to this plan in an effort to save costs as revenues erode. I can only wonder if Obama was being serious when he said that he thought only 5% of Americans or less would sign up for this plan, or was he being disingenuous?