Yet much of her speech wasn't about immigration and the economy at all. Much of it was about enforcement, which made the speech by default mostly a speech about...]]> Wed, 11 Nov 2009 00:00:00 -0600 For years Dr. Linda Halderman operated a general surgery practice in California's San Joaquin Valley, where she treated patients ranging from those with serious, life-threatening conditions to those seeking elective, cosmetic treatments. In a recent piece in Investors Business Daily, Halderman recounted the story of a woman patient who had not had a mammogram in several years even though her family had a long history of breast cancer. "But I don't have insurance," the woman told Halderman when the doctor asked why she had neglected to get a test that costs $90. Yet the woman was in Halderman's office for $400 Botox treatments that she was paying for.

In her piece...]]> Wed, 04 Nov 2009 00:00:00 -0600 Your sales are lousy. Your biggest customer just went bankrupt owing you a few hundred thousand dollars. Your health insurance costs are rising rapidly and you're having trouble financing your accounts receivables.

But that's not the half of it. There's an Internal Revenue Service auditor poring over your books in the conference room. A state sales tax agent has left you a phone message that he wants to come in for a visit, and city fire inspectors just dropped off a violations summons.

With government budgets sharply constrained and likely to be under pressure for years to come, businesses struggling in the recession are now facing intense and rising scrutiny from tax and...]]> Wed, 28 Oct 2009 00:00:00 -0500 Back in the winter when Congress was debating whether stimulus programs could get money into the economy quickly enough to make a difference, supporters of government efforts to prime the pump argued that tax credits would offer Americans a quick financial shot in the arm. After all, what else does government need to do to process a tax credit except take in applications, verify their accuracy, and then ship the money out the door?

Oops.

In what amounts to the most underreported story of the year, the Treasury Department's Inspector General testified last week that in an effort to get money into the economy quickly the Internal Revenue Service rubber-stamped most applications...]]> Wed, 21 Oct 2009 00:00:00 -0500 If you live in New York State and don't have health insurance but earn too much money to qualify for subsidized state insurance, you can always reduce your costs sharply by moving to Connecticut. There, you'll pay $7,750 a year for a family policy that would cost you $12,250 in New York State.

If you are in the same boat in New Jersey, you can decamp next door to Pennsylvania and reduce your insurance bite from nearly $10,500 a year for family coverage to $6,500. Or, if you prefer a bare-bones high deductible policy, you can pay a mere $800 a year in Pennsylvania for your family coverage.

All of this talk of health reform in Washington has created the illusion that we have a...]]> Wed, 14 Oct 2009 00:00:00 -0500 As a ‘learning experience,' the current recession and its associated housing bust haven't produced many enlightening moments for our policy makers in Washington. Nothing makes that more obvious than the news that delinquencies and foreclosures are rising rapidly among mortgages insured by the Federal Housing Administration, whose reserves have fallen below acceptable levels. The agency's losses, which are almost entirely on loans made after problems with Fannie Mae and Freddie Mac were already apparent in the current bust, may require (guess what) a new taxpayer bailout.

Washington's view of what's happening at FHA falls into two broad categories. On the one hand there are...]]> Wed, 07 Oct 2009 00:00:00 -0500 When David Paterson became governor of New York after Eliot Spitzer's hooker escapades, the former state senator from Harlem shocked New Yorkers by declaring that taxes were too high and that he had many friends who had left the state because there were better opportunities elsewhere. New York had to grab control of its spending rather than continue raising taxes, said the former state senator with a long tax-and-spend track record, in what amounted to the equivalent of ideological heresy.

Still, as a political lightweight and accidental governor, Paterson quickly got rolled by the big-government wing of his own party, who passed a budget for this year with $6.1 billion in...]]> Wed, 30 Sep 2009 00:00:00 -0500 Benjamin Franklin observed that lending money to a man of good character could pay dividends for society if the borrower found success in life, because then he was more apt to help others the way Franklin had helped him, thus creating a virtuous chain of future lending.

But the opposite is also true, that the influence of money lent unwisely to the undeserving can reverberate for years. During the housing bubble, for instance, many borrowers eager to cash in on the real estate boom obtained mortgages under dubious circumstances. Some lied about their income levels, past credit history or their reasons for buying a home. Eager to do ever more business, many lenders turned an eye away...]]> Wed, 23 Sep 2009 00:00:00 -0500 If grandstanding were an art form, Phil Angelides would be its Picasso.

During his tenure as California State Treasurer, an office which landed him a spot on the boards of the state's giant public pension funds, CalPERs and CalSTERs, Angelides pursued a highly political agenda that trumped his fiduciary responsibility to the taxpayers of the state, at times with disastrous consequences. He loudly promoted an agenda of "social investing" for the funds, helping to drive them into investment decisions urged by his political allies in the state's unions. Under him and his fellow board members CalPERs also pushed for state legislators to expand public sector pension benefits, a decision...]]> Wed, 16 Sep 2009 00:00:00 -0500 The Acorn scandal, in which freelance journalists posing as a prostitute and a pimp went seeking a mortgage for a house of prostitution and received advice on how to evade the law, is a fitting new chapter in the controversial history of the advocacy group.

Acorn found its way into the mortgage business through the Community Reinvestment Act, the 1977 legislation that community groups have used as a cudgel to force lenders to lower their mortgage underwriting standards in order to make more loans in low-income communities. Often the groups, after making protests under CRA, were then rewarded by banks with contracts to act as mortgage counselors in low-income areas in return for...]]> Wed, 09 Sep 2009 00:00:00 -0500 Charlie Rangel waited more than a decade to ascend to the chairmanship of the powerful House Ways and Means Committee, which shapes our country's tax laws, but in less than two years in that position he's fared poorly in the glare of the national spotlight.

Rangel's woes, ranging from unpaid taxes to undisclosed assets, shouldn't be shocking to anyone who has followed his four decades in office. For much of that time Rangel operated with impunity a powerful patronage machine in Harlem centered around several controversial, government-funded groups which spent millions of dollars with no records to back up the expenditures, failed to pay withholding taxes on some employees, billed...]]> Wed, 02 Sep 2009 00:00:00 -0500 The historic vote in Japan's recent national election, in which the Liberal Democratic Party which ruled nearly continuously for more than six decades has lost control of the government, is testament to deep undercurrents of discontent in a country whose economy is no bigger today than it was in 1996. The victorious Democratic Party, which touts Keynesian stimulus and more protections for Japanese firms, didn't inspire confidence among voters, according to polls, but the party carried the day anyway with an electorate hungry for change.

But change will come slowly for Japan because the roots of its economic problems are deep and not always well understood. Yes, the country is...]]> Wed, 26 Aug 2009 00:00:00 -0500 With their budgets squeezed by the sharp economic downturn, states and municipalities raised taxes furiously this last budget season. Legislators sold many of these new levies to a beleaguered citizenry as temporary fixes that are to be dedicated to paying for essential services that might otherwise have to be cut in an economic downturn.

But if the past is any prologue, many of these taxes will never go away, even when times get better, and the money from them won't be used for the purposes for which they were designed. Indeed, all you have to do is look at how governments around the country consistently misuse revenues from dedicated taxes and ‘temporary' surcharges passed in...]]> Wed, 19 Aug 2009 00:00:00 -0500 Recently I was listening to a radio program in which the host explained that in a few states health insurance policies issued by Blue Cross/Blue Shield were available at extremely reasonable prices, about $100 a month. The very first caller into the program demanded to know exactly what the annual deductible was in plans like this. When the host said $3,000 to $5,000 the caller responded, that isn't health insurance but catastrophic insurance. It's too expensive and that's why we need health care reform from Washington, he continued.

And there lies one of the problems with the health insurance reform debate. State government mandates and favorable tax treatment in Washington have...]]> Wed, 12 Aug 2009 00:00:00 -0500 For decades now, would-be health care reformers have claimed that if we just invest more in preventive care we will cut big chunks of spending out of our health system. In the early 1990s, for instance, Medicaid administrators and hospital executives argued that if we built more satellite health clinics in poorer neighborhoods, residents would get check-ups more often and visit hospital emergency rooms, where care is expensive, less frequently. So hospitals built the clinics, often with government grants, and we got more clinics but just as many emergency room visits, and Medicaid costs continued to spiral upwards.

Still, politicians have remained undeterred. In the 2008 presidential...]]> Wed, 05 Aug 2009 00:00:00 -0500 Listening to politicians, columnists, reporters, Wall Street economists, and car dealers crowing about what a success (if an unintended one) the cash for clunkers program has become, you'd think that Washington had created a modern version of the miracle of the loaves and the fishes. The program has not only boosted car sales, but its "multiplier effect," as a newspaper headline suggests, will somehow take the $1 billion in tax money we are spending to subsidize the purchase of new cars and turn it into how much in additional economy activity?...$2 billion?...$5 billion?...$10 billion?

And you thought the age of miracles had passed.

The rush to renew and extend the program,...]]> Wed, 29 Jul 2009 00:00:00 -0500 The Obama administration is unhappy with the slow pace of mortgage bailouts that banks and other lenders are crafting under the government's Making Homes Affordable plan. And so administration officials gathered financial executives in Washington to "knock heads" a bit, or to "encourage" lenders to move faster, depending on which news account of the meeting you believe.

Critics are unhappy with the banks for not staffing up fast enough to administer the program, which relies on government subsidies to help homeowners lower their mortgage payments to 31 percent of monthly income. Borrowers who've tried to sign onto the program report long waits to get a response from their banks, which...]]> Wed, 15 Jul 2009 00:00:00 -0500 The Lenny Dykstra tale is like the story of the housing bubble itself. Both were always too good to be true, filled with plenty of warning signs that were ignored by a public and a media that gobbles up a good investing narrative if it promises riches without reservation.

Dykstra, of course, is the former major league baseball player (Mets, Phillies) known for his tough, hard-nosed play, which earned him the nickname Nails. Dykstra was always something of a character-a potty-mouthed, irreverent, resolutely anti-intellectual man-of-the-people who once said that he didn't read books because reading hurt his batting eye and, even worse, "it makes you think too much."

You gotta'...]]> Wed, 08 Jul 2009 00:00:00 -0500 Your 401(k) balance might be stuck somewhere south of the border and the stock market might still be off 40 percent from the post-bubble high, but in recent days the headlines have been about big profits and bonuses making a quick comeback on Wall Street and in European financial capitals.

Based on financials from two quarters, analysts estimate that Goldman Sachs, fresh from repaying its government bailout money, will dole out $20 billion in salary and bonuses this year, an average of $700,000 per employee, while Morgan Stanley's compensation will range between $11 billion and $14 billion--in the neighborhood of $300,000 per employee. Executive recruiters quoted in news stories are...]]> Wed, 01 Jul 2009 00:00:00 -0500 In a recent poll, a majority of Americans surveyed said they wanted health care reform to include some kind of public medical plan that would compete with private insurers to hold down costs. Somehow, the respondents felt, adding a government-sponsored option would discipline the marketplace and keep costs in line.

The only way that will happen, however, is if government reverses course after nearly half a century in which it has been one of the biggest drivers of health care expenditures in the country. The public sector already pays half of all health care bills and has been subject to political manipulation, pressure groups and outright patronage in managing its portion of the...]]> Wed, 24 Jun 2009 00:00:00 -0500 In Guys and Dolls, craps players desperate for diversion welcome the arrival of Nathan Detroit because "even when the heat is on it's never too hot" for Nathan to arrange some action.

Today, Nathan Detroit is more likely to be a state legislator, a governor or a board of education commissioner than a Broadway gambler. Forty-eight of our states have now legalized at least some form of gambling, and in the wake of growing state budget woes, legislators are scrambling to expand government-controlled legalized betting to raise new revenues. Every recession, in fact, brings a little more state-authorized betting, so that what started out as a few state lotteries has grown to...]]> Wed, 17 Jun 2009 00:00:00 -0500 President Obama is attempting to build support for a health care reform effort whose goals would be to restrain medical costs and cover tens of millions of uninsured Americans. The two goals are related, since government often winds up paying subsidies to health providers like hospitals and clinics who care for the uninsured.

But any government plan would have to confront and overcome a troubling characteristic of the uninsured that rarely gets discussed in reform debates: Many of them, perhaps nearly half of the 47 million Americans without coverage, earn enough to afford insurance, or qualify for existing government health programs, but still remain without coverage.

Why...]]> Wed, 10 Jun 2009 00:00:00 -0500 To the Germans this is not merely a theoretical discussion, and maybe it shouldn’t be to us, either. Although few people in Germany actually “remember” the Weimar years because not many were alive then, the lessons of that era (and perhaps the notion of the pain the country experienced) have been repeated over and over again until they have been seared into Germany’s national consciousness.

By contrast, we’ve largely forgotten our most recent brush with raging peacetime inflation, the 1970s. Although nothing like Germany’s in the 1920s, ours was nonetheless powerful enough to be more dispiriting and more transformative of our culture than any stretch of post-World War...]]> Wed, 03 Jun 2009 00:00:00 -0500 But today’s world is very different. Public employee groups have accumulated so much power in recent years that governments are having trouble trimming budgets, especially burgeoning employee costs, while tax increases on an already-shrinking economy aren’t producing the revenues needed to close budget gaps. That’s created budgetary gridlock in places like California and is one reason why imposing figures like Warren Buffett have started to worry whether the old, reliable municipal bond market isn’t heading for turmoil. “Insuring tax-exempts…has the look of a dangerous business,” Buffett wrote to shareholders earlier this year.

Buffett isn’t alone in worrying about...]]> Wed, 27 May 2009 00:00:00 -0500 There are many reasons why America went from a nation of savers to debtors, why our personal savings rate dipped from a post-World War II average of about 10 percent in the late 1940s to under one percent annually from 2005 to 2007. But one reason certainly was a policy which emerged in the Great Depression and took hold in the post-war era that expanding access to consumer credit would energize our economy and spread the American dream to more households.

Although installment credit had gained a certain amount of respectability in the U.S. beginning in the late 19th century, starting in the 1930s the government came to see consumer credit as a tool it could use to manage and grow...]]>