BY the time President Obama gave his State of the Union address last year, the speech felt like an old friend. It had been part of my life — from the brainstorming sessions in late November 2009 to the last minute fact-checking. I knew when all of my favorite lines were coming. That led to an awkward moment during the address when I sprang to my feet, applauding the president’s tacit endorsement of the free-trade agreement with South Korea, before noticing that the only other person cheering seemed to be Ron Kirk, the special trade representative.
It’s Your Money
September 23, 2019
When I first meet people
They always ask…
So… what do you do…
I respond…
We save companies money…
That normally gets a positive response…
People like to save money…
Now….
Do you have time for a quickie quiz…
How many of you have signed a contract…
Thought you got a good deal
Possibly a great deal and…
Never looked at the paperwork again
Can I see a show of hands…
You…
Yea…. you over there
Is your hand up or are you scratching your head…
It looks like you wanted to put your hand up
Come on…
Let’s be honest
We all have done it…
I believe that all of us have good intentions…
But let’s face it we just get busy
No matter how you planned your day
Something happens and you are once again
Putting out fires
The first thing we do with any potential client
Is validate what they are currently paying
Are you paying the exact rate you signed for…
Believe it or not…
This is not always the case
I have people tell me….
Yea… we signed a contract and I was told
We are paying well below market prices
That is always great to hear
But let’s see if that is their reality…
Do you mind if I see your contract…
And could we also get a copy of your latest bill…
I can’t tell you how many times
We find that people are being charged
The wrong rate
And most of the time it is for more than
What you signed for
We always direct them to call the provider
And clarify…
Why are we paying this higher rate…
Our contract states we should be paying xxxx amount
Guess what the response normally is…
Oh, we’re sorry
That was billed improperly
Let us correct that…
We can give you a credit
Or send you a refund
How nice of them….
If they were under charging you
I bet they would contact you and say
We have a problem
However, if they are over charging you
You don’t hear from them
This is your money…
Don’t be afraid to ask for it…
HBS clients have received thousands of dollars in refunds
Always be aware of what you are paying…
And if you are not sure…
Give us a call
HBS leaves no stone unturned in our search for savings
We find ways to save you money
It’s a Miracle
March 23, 2018
Sometime last August
I noticed a small lump on my face
It was on my left chin
Right below my left lower lip
I thought
It is probably an ingrown hair
I’ll keep an eye on it
By the end of September
I noticed it was getting bigger
I went to the doctor for my annual physical
I asked…
What is this little lump on my face
Oh…It looks like a cyst
No one knows why you get them
It could get bigger
It could get smaller
Or just go away
I wouldn’t worry about it
Most doctors don’t like to cut in that area
For there are a lot of nerves in that area of the face
So…I went home thinking
Maybe this will just go away
Another month passed
I noticed it was getting bigger
Hmmmm…
I should probably get a 2nd opinion
Hey hon…
Do you know a Dermatologist I can call…
Just google Dermatologists in the area
See if you recognize any names
I see a name I know
I call their office
I’m sorry….
The Doctor is not taking any new patients
Can you at least give me a referral…
Do you have any names I can call…
I’m running blind here…
I can give you a couple of numbers
Try these…
Kathy….my associate says…
We went to a dermatologist in Voorhees
We liked him
You might want to give him a call
Sounds good…
Give me the number
I called and got an appointment
It’s just a cyst
It could get bigger
It could get smaller
It may just go away
If I were you…
I would probably cut it out
You don’t want it getting infected
That will hurt
I would need to make a small incision
It will take about 15 minutes
You will need about 3-4 stitches
See the receptionist out front
I can do it on Tuesday
Do I really want this cut out…
Stitches…
Let me get one more opinion
I call another doctor…
It’s just a cyst
It could get bigger
It could get smaller
It may just go away
Is it bothering you…
If not…
I would not do anything
If it starts bothering you
Call me and we can cut it out
I would have to cut from here to here
And you would need about 6 stitches
You’ll have a small scar on your face
You’ll look tougher
Like you got cut in a fight
Do I really want this cut out…
Stitches…
I think I like when he said…
I would not do anything
Another 2 months pass
It looks like it is getting bigger
But sometimes it looks like it is getting smaller
All of a sudden…
My lower left lip is getting numb
I am having trouble opening my mouth
My left chin is getting warm
The bump is getting red…
The cyst is infected…
I start making phone calls…
The doctor can see you in 2 weeks
You don’t understand
It’s infected
I need to see someone now
Not 2 weeks
I’m thinking…
My friend is a plastic surgeon
If anybody is going to cut my face
I might as well go to the best
I call John’s office…
I’m sorry
He’s in a consultation
Can he call you when he is done…
He gets right back to me
I am going to call in an antibiotic
Stop and see me Friday
I walk into his office on Friday
Ohhhh…That looks pretty bad…
You still taking the antibiotic…
I don’t think I want to do anything today
I’ll just clean it up
And get all the infection out
He gives me a local
And starts working on the infected area
Everything is oozing out
He explains…
You have body oils under your skin
Sometimes they come together and crystalize
Then they grow a small skin around it
Like a lima bean
To protect it
That’s what a cyst is
I can see the top of the cyst
I think I can get this…
You feeling alright…
Just like pulling a tooth
He goes in and…
POP….
Wow… look at this thing
That’s been in there for awhile
I think we got everything
Just keep Neosporin and a band aid on it
What….No Stitches…
No… I think it is going to heal fine
Come see me next Friday
It’s a Miracle
No stitches
No cyst
And…
1 week later
There is little evidence
That anything was ever done
Thanks John…
Your hands have been blessed by God
Every Day is a Gift
We find ways to save you money…
Thanks for the referrals
Thank
Health Care Reform Rules Give Patients A New Bill Of Rights
November 20, 2012
As reported by Jeffrey Young Huffington Post 112012
Health insurance consumers won’t be discriminated against because of pre-existing conditions, can’t be charged more because of gender and will be guaranteed a basic set of benefits under historic new federal regulations published Tuesday.
Think of them as the Patients’ Bill of Rights that eluded former President Bill Clinton more than a decade ago. The regulations carry out the promises of President Barack Obama’s health care reform law, which will extend health insurance coverage to 30 million people over a decade and outlaw some of the industry’s most notorious practices.
Health insurance companies, state regulators and consumer advocates have eagerly awaited these rules since Obama enacted the health care overhaul in March 2010.
The details contained within the 331 pages of regulations are crucial for health insurance companies and states preparing for the new options that will be available to uninsured people and small businesses starting in 2014. The health insurance exchanges, online marketplaces where consumers can shop for plans and determine whether they qualify for tax credits to pay for private insurance coverage or Medicaid benefits, are slated to be open for business on Oct. 1, 2013.
“Americans in all 50 states will have access to an exchange and the benefits of the new law,” Health and Human Services Secretary Kathleen Sebelius said on a conference call with reporters Tuesday. “Beginning in October next year, families and small-business owners everywhere will be able to shop for affordable, quality health coverage.”
The Department of Health and Human Services published three separate regulations Tuesday. Broadly, the rules restate the health insurance market reforms in Obama’s health care law. But health insurance companies and state officials that aren’t actively resisting the implementation of Obamacare need the details to ensure that health insurance exchanges are ready, and health plans available for sale on time.
One lays out the rules requiring health insurance companies to sell coverage to anyone who applies, prohibits charging women more than men, limits how much people must pay additionally based on age, where they live, family size and whether they use tobacco, and guarantees renewal of health coverage every year.
A second set of regulations spells out which benefits all health insurance plans sold on the exchanges must cover — 10 categories of medical care, including emergency services, hospital stays, maternity care, prescription drugs and preventive medicine. In addition, the rule explains how states must designate an insurance product already on the market as a “benchmark plan” to serve as a model for what the new insurance products will cover starting in 2014. This regulation also sets up how health insurance companies must prove their plans will cover at least 60 percent of a consumer’s average annual medical expenses.
The cost of health insurance on the exchanges will be subsidized using tax credits for people with incomes up to 400 percent of the federal poverty level, which is $44,680 this year. People who make up to 133 percent of poverty, $14,856 in 2012, will qualify for Medicaid in states that opt into an expansion of the health program for the poor.
The Obama administration published a third rule on “wellness” programs that employers include in workers’ health benefits, such as discounts to employees who quit smoking, lose weight or lower their cholesterol. The new regulations are designed, in part, to prevent companies from using the programs to set prices to discriminate against workers who don’t meet the wellness programs’ standards.
Publishing these regulations is just one small step toward 2014, however, and major obstacles remain. As of Monday, just 17 states and the District of Columbia had committed to creating a health insurance exchange themselves as the law sets out, according to a tally by the Henry J. Kaiser Family Foundation. The federal government will have to step in, and partially or completely establish these exchanges in the rest of the states, including those run by Republican governors like Rick Perry of Texas who have vowed continued opposition to the law.
“Now that the law is here to stay, I’m hopeful that states and other partners will continue to work with us to implement the law,” said Sebelius, who offered to meet with governors who have outstanding questions about states’ role in carrying out the health care reform law. Florida Gov. Rick Scott (R), an ardent opponent of Obamacare, last week wrote Sebelius requesting a sit-down.
The administration hasn’t yet detailed how it will handle the workload of establishing so many health insurance exchanges on its own but Gary Cohen, the director of the Center for Consumer Information and Insurance Oversight, vowed that it would get done. “Absolutely, we will be ready. There will be an exchange in every state open for business on Oct. 1 of next year,” he said on the conference call.
Eight states also already have declared they would not participate in the Medicaid expansion, which will curtail Obama’s goal of extending health coverage to the poorest people in those states. When the U.S. Supreme Court upheld the health care law in June, it also permitted states to refuse the Medicaid expansion, which the Congressional Budget Office says will result in 3 million fewer people gaining health coverage.
The benefits and consumer protections in the new regulations are in addition to other provisions of the health care reform law already in place, such as forbidding insurance companies from denying coverage to children with pre-existing conditions, and allowing young adults to remain on their parents’ health plans until they turn 27.
As reported by Mike Sacks for the Huffington Post
WASHINGTON — After the Supreme Court oral arguments in the health care case Tuesday morning, the Obama administration better start preparing for the possibility of a future without the individual mandate.
From the very start, things did not go well for the government’s argument that the requirement under the Affordable Care Act that virtually all Americans have health insurance or pay a penalty is constitutional.
U.S. Solicitor General Donald Verrilli began his argument not with his usual calm and clear delivery, but rather with a case of coughs that seemed to take him off his game.
And just as he was starting to recover his composure, Justice Anthony Kennedy, a key swing vote, asked, “Can you create commerce in order to regulate it?” Kennedy’s question adopted the framing of the case put forward by those challenging the mandate.
From there, the barrage against Verrilli did not relent until he sat down nearly an hour later.
The conservative justices appeared particularly concerned that if they upheld the mandate, Congress would be loosed to regulate nearly anything else it deemed a national problem.
Verrilli argued that the health care market’s unique features allow Congress to require the uninsured to purchase health insurance.
“The health care market is characterized by the fact that, aside from the few groups that Congress chose to exempt from the minimum coverage requirement, … virtually everybody else is either in that market or will be in that market,” Verrilli said. Plus, he said, “people cannot generally control when they enter that market.”
Chief Justice John Roberts responded, “The same, it seems to me, would be true, say, for the market in emergency services: police, fire, ambulance, roadside assistance, whatever.”
When Verrilli said those services do not constitute markets, Justice Samuel Alito asked what would keep the government from applying to burial services — which Verrilli conceded do constitute a market — the same rationale about preventing cost-shifting that it used for health care.
Verrilli never quite answered that question, pointing instead to the “billions of dollars of uncompensated costs” that distort the health insurance market.
Alito then flipped the tables, saying that the mandate will require young, healthy people to pay more per year for insurance than they would pay for health care out-of-pocket, thus forcing them “to subsidize services that will be received by somebody else.”
“If you’re going to have insurance, that’s how insurance works,” Justice Ruth Bader Ginsburg argued back, in the first of the four-justice liberal bloc’s attempts to shore up the government’s case.
She and Justices Stephen Breyer and Sonia Sotomayor would all leap in to make the government’s case themselves after Justice Antonin Scalia invoked the prospect of a broccoli mandate.
Verrilli could not gain traction with his alternative arguments that the mandate falls within Congress’ ability to pass laws “necessary and proper” to effectuate its constitutionally enumerated power to regulate commerce. Scalia, who relied on this clause in 2005 to uphold a federal ban on cultivating marijuana for personal consumption, said the individual mandate may be necessary to carry out the Affordable Care Act, but it is not proper “because it violated the sovereignty of the States.”
“If the government can do this, what, what else can it not do?” Scalia asked.
After a brief halftime, Paul Clement, a former U.S. solicitor general, began his argument on behalf of the 26 states challenging the mandate.
If Verrilli struggled, Clement shined. The conservative justices remained largely silent as he skated through the liberals’ heavy questioning.
“The mandate represents an unprecedented effort by Congress to compel individuals to enter commerce in order to better regulate commerce,” he began, employing the same terms Kennedy used to describe the mandate throughout the government’s argument.
When Breyer rolled out a multi-part question seemingly designed to be his tour de force on the mandate’s obvious constitutionality, Clement cut the legs out from under it, noting that Breyer was talking about the wrong constitutional provision.
Roberts then asked Clement to address the government’s contention that “everybody is in this market, so that makes it very different than the market for cars.” But it was hard to view this question as anything but diplomatic after Roberts’ own clear antagonism to the same contention during Verrilli’s hour.
Instead, Roberts appeared to favor the challengers’ belief that the mandate regulates the insurance market, not the health care market, and the consumption of insurance, unlike health care, is not an inevitable fact of life.
“We don’t get insurance so that we can stare at our insurance certificate,” Justice Elena Kagan responded when Clement offered her that argument. “We get it so that we can go and access health care.”
Clement parried that remark and concluded his time before the justices apparently unscathed by the liberals’ attacks.
Michael Carvin, representing the National Federation of Independent Business and several individuals, used his half hour as a sort of end-zone dance for the seeming defeat of the mandate, going so far as to chuckle at questions from Breyer and Sotomayor.
When Verrilli returned for his rebuttal, all he could do was remind the justices of their “solemn obligation to respect the judgments of the democratically accountable branches of government.”
Whether one or more of the Supreme Court’s conservatives will ultimately come to that conclusion, and thereby defy the expectations they set on Tuesday morning, is anyone’s guess.
As reported by Courier Post
Written by
ANGELA DELLI SANTI and BETH DeFALCO
TRENTON — Republican Gov. Chris Christie and Democratic Senate President Stephen Sweeney reached a deal Wednesday to change retiree pension and health benefits by requiring public workers to pay more for both.
The deal, if approved by the Legislature, would require bigger contributions from all public workers beginning July 1, a person who has been briefed told The Associated Press. The person insisted on anonymity because the deal has not been made official.
It would also mean that public workers’ health benefits would be legislated, not negotiated, as they are now. Christie has been pushing for legislative changes; union leaders have been opposed.
An official announcement is planned for later Wednesday. Details were still being worked out by Democrats who control the Senate.
Assembly Speaker Sheila Oliver, also a Democrat, has been involved in the talks over the past several weeks, but it’s not known whether she agrees with the deal. Her spokesman, Tom Hester Jr., declined to comment Wednesday.
The governor’s office did not respond to messages for comment.
The pension and retirement health systems are both underfunded by tens of billions of dollars. The proposal is designed to reduce the long-term indebtedness of both systems.
One provision of the deal would require the state to make its annual pension payment. Governors of both parties have skipped or greatly reduced their pension contribution in most of the past 20 years.
The deal would raise pension contributions immediately by at least 1 percent for public workers such as local police and firefighters; teachers; state police; and state, county and municipal workers. Judges, who now put 3 percent of salary toward their pensions, the least of any public worker group, would see that amount increase to 12 percent.
The deal also would require employees to pay more for health care under a new salary-based contribution formula that would be phased in over four years. The rate could be as high as 30 percent of the cost of the premium for top wage earners and as low as 3 percent for the lowest-paid employees. Most workers now pay 1.5 percent of their salary toward health care regardless of the cost of their plan.
The proposed state budget for the fiscal year that starts July 1 relies on more than $300 million in savings from health benefits reforms.
The Communication Workers of America, the state’s largest public worker union, wants health care to remain a collective bargaining issue. The union representing 55,000 state and local employees is in negotiations with the Christie administration over a new contract; its current contract expires June 30.
“This proposal destroys collective bargaining,” said Hetty Rosenstein, the union’s state director. “It’s completely unaffordable for anybody — it does not one thing to actually save health care dollars, all it does is shift them.”
“All over this country there is a fight to protect collective bargaining,” Rosenstein said, “and we think Democrats in New Jersey should join that fight.”
The union’s health care giveback proposal relies on increased cost-sharing by employees, bulk purchasing of prescription drugs and updated medical record-keeping to reduce costs by $240 million in the fourth and final year of the contract.
Medicare Fraud – $900B Crime that Technology Can Solve
March 28, 2011
As reported by ReimagineAmerica
Congratulations to the FBI for their “take-down” of a $100M Medicare fraud ring on October 13,2010. According to the NY Times October 14 morning addition, the “band of Armenian-American gangsters” billed Medicare for more than “$100M by inventing 118 bogus health clinics in 25 states”. According to the paper, the gangsters made off with $35M in cash that cannot be recovered. You will find a link to the NY Times news story at the end of this blog.
How did this happen? It happened because Medicare is a wholly automated payment system that is notoriously porous. If the SSN number of both patient and doctor are validated electronically, and the treatment code is separately validated electronically, an electronic payment is generated. Only after the payment is any audit performed. Often, but not always, the audit happens only when a recipient reviewing their own Medicare statement reports activity they know to be fraudulent, according to the CBS 60 Minutes exposé filmed in Florida, earlier this year, I suppose that Medicare subscriber doctors, also, report fraud when the IRS accuses them of under reporting their income?
The 2010 Health Care Reform legislation did include funding for Medicare fraud detection. But focusing on investigation after the fraud occurs and on TV warnings to Medicare recipients urging them to “guard the card” will not solve a problem estimated to be at least $50B – billion with a B – dollars a year! In fact, the legislation expects these efforts to save only $2B a year – 4% of the estimated reduction in benefit payments mandated by the Act. Wow we need to do 96% better or cut seniors’ benefits, according to Congressional Budget Office estimates!
Last week Fox Business News reported, and an IBM spokesman confirmed, that Sam Palmisano, CEO of IBM, told Barack Obama that IBM had carefully studied the Medicare fraud issue and estimated the actual 10 year problem to be closer to $900B – that’s billion with a B — over ten years. Mr. Palmisano believes so strongly in both IBM’s numbers and IBM’s potential solution that he offered to “build” the solution for “free”. Fox reported that Barack Obama turned down this offer. Can you imagine, an American CEO of an American corporation offers a solution that could, potentially, save 90% of the projected health care reform deficit and the President of the United States turned down the offer?
I was astounded – so astounded that I knew I needed to verify the story before I gave full vent to my frustration. So I Googled “IBM Medicare fraud”. Turns out that it’s true! IBM confirmed it.
There is no mystery here. Health care is a great business opportunity for IBM. IBM Health Care Practice works with partners every day in both the United States and Europe to improve the use of technology to simultaneously reduce the cost of delivering health care and improve health care outcomes.
It is important to examine my Palmisano’s language carefully. He offered to “build” the solution for free to “prove” it worked. He never said, IBM didn’t want to be paid if it worked. He was willing to “share the risk”. That has been a standard practice in business for years! Time that we adopted these money saving practices in the government as well.
Why would the President turned down such an offer? Certainly he knows that all major technology initiatives in federal government are done by private contract vendors? So what’s up?
- Most benignly, he does not want to appear to promote one federal vendor over others? That can easily be dealt with in the contracting process – requiring IBM to partner with other major software and hardware vendors to develop an “open source” solution.
- Can it be the President, who has no business experience, does not understand the concept “investing in a new business opportunity”? Mr. Palmisano is not an altruist. Successfully ending Medicare fraud would further strengthen IBM’s “qualifications” as a global health care solutions provider. This would be worth billions in new profits to IBM and its partners.
- Can it be possible that the President really has such a deep-seated distrust of business and business executives that he cannot imagine a CEO can be a patriot at the same time that he is responsible for producing share holder value?
- Could the President fear that accepting this offer might be seen as a public rebuke of the team at Medicare, who are all SEIU or AFGE members? Could he be concerned that such a perception would have political ramifications as he looks to government union support in his 2012 Presidential election?
Based on CBS and the New York Times reporting, I can think of a half dozen “quick hit” changes to the existing Medicare payment process that would produce billions in potential Medicare fraud savings. So, its easy for me to believe that the full force of IBM, IBM partners, the Medicare staff, and the FBI could eliminate $900B in Medicare fraud over the next decade.
Personally, I believe that Mr. Palmisano is acting both as a patriot and a good CEO. Mr. Obama, what do you have to lose?
The GOP’s rude awakening on health-care repeal
January 21, 2011
Friday, January 21, 2011
This whole health-care thing isn’t quite working out the way Republicans planned. My guess is that they’ll soon try to change the subject – but I’m afraid they’re already in too deep.
Wednesday’s vote to repeal President Obama’s health insurance reform law was supposed to be a crowning triumph. We heard confident GOP predictions that cowed Democrats would defect in droves, generating unstoppable momentum that forced the Senate to obey “the will of the people” and follow suit. The Democrats’ biggest domestic accomplishment would be in ruins and Obama’s political standing would be damaged, perhaps irreparably.
What actually happened, though, is that the Republican majority managed to win the votes of just three Democrats – all of them Blue Dogs who have been consistent opponents of the reform package anyway. In terms of actual defectors, meaning Democrats who changed sides on the issue, there were none. This is momentum?
The unimpressive vote came at a moment when “the will of the people” on health care is coming into sharper focus. Most polls that offer a simple binary choice – do you like the “Obamacare” law or not – show that the reforms remain narrowly unpopular. Yet a significant fraction of those who are unhappy complain not that the reform law went too far but that it didn’t go far enough. I think of these people as the “public option” crowd.
A recent Associated Press poll found that 41 percent of those surveyed opposed the reform law and 40 percent supported it. But when asked what Congress should do, 43 percent said the law should be modified so that it does more to change the health-care system. Another 19 percent said it should be left as it is.
More troubling for the GOP, the AP poll found that just 26 percent of respondents wanted Congress to repeal the reform law completely. A recent Washington Post poll found support for outright repeal at 18 percent; a Marist poll pegged it at 30 percent.
In other words, what House Republicans just voted to do may be the will of the Tea Party, but it’s not “the will of the people.”
“The test of a first-rate intelligence,” F. Scott Fitzgerald wrote, “is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.” By this standard, House Republicans are geniuses. To pass the “Repealing the Job-Killing Health Care Law Act,” they had to believe that the work of the nonpartisan Congressional Budget Office is both authoritative and worthless.
The CBO, which “scores” the impact of proposed legislation, calculated that the health-reform law will reduce federal deficits by at least $143 billion through 2019. Confronted with the fact that repeal would deepen the nation’s fiscal woes, Republicans simply claimed the CBO estimate to be rubbish. Who cares what the CBO says, anyway?
Er, um, Republicans care, at least when it’s convenient. Delving into the CBO’s analysis, they unearthed a finding that they proclaimed as definitive: The reform law would eliminate 650,000 jobs. Hence “Job-Killing” in the repeal bill’s title.
One problem, though: The CBO analysis contains no such figure. It’s an extrapolation of a rough estimate of an anticipated effect that no reasonable person would describe as “job-killing.” What the budget office actually said is that there are people who would like to withdraw from the workforce – sometimes because of a chronic medical condition – but who feel compelled to continue working so they can keep their health insurance. Once the reforms take effect, these individuals will have new options. That’s where the “lost” jobs supposedly come from.
The exercise in intellectual contortion that was necessary for the House to pass the repeal bill will be an excellent tune-up for what’s supposed to come next. “Repeal and replace” was the promise – get rid of the Democrats’ reform plan and design one of their own. This is going to be fun.
It turns out that voters look forward to the day when no one can be denied insurance coverage because of preexisting conditions. They like the fact that young adults, until they are 26, can be kept on their parents’ policies. They like not having yearly or lifetime limits on benefits. The GOP is going to have to design something that looks a lot like Obamacare.
Meanwhile, Obama’s approval ratings climb higher every week. Somebody change the subject. Quick!
What Obama Should Say About the Deficit
January 16, 2011
Economic View
By CHRISTINA D. ROMER
Published: January 15, 2011
This year, instead of being on the floor of Congress with the rest of the cabinet, I will be watching on television with the rest of the country. Instead of knowing what is coming, I can write about what I hope the president will say. My hope is that the centerpiece of the speech will be a comprehensive plan for dealing with the long-run budget deficit.
I am not talking about two paragraphs lamenting the problem and vowing to fix it. I am looking for pages and pages of concrete proposals that the administration is ready to fight for. The recommendations of the bipartisan National Commission on Fiscal Responsibility and Reform that the president created are a very good place to start.
The need for such a bold plan is urgent — both politically and economically. Voters made it clear last November that they were fed up with red ink. President Obama should embrace the reality that his re-election may depend on facing up to the budget problem.
The economic need is also pressing. The extreme deficits of the last few years are largely a consequence of the terrible state of the economy and the actions needed to stem the downturn. But even with a strong recovery, under current policy the deficit is projected to be more than 6 percent of gross domestic product in 2020. By 2035, if the twin tsunami of rising health care costs and the retirement of the baby boomers hits with full force, we will be looking at deficits of at least 15 percent of G.D.P.
Such deficits are not sustainable. At some point — likely well before 2035 — investors would revolt and the United States would be unable to borrow. We would become the Argentina of the 21st century.
So what should the president say and do? First, he should make clear that the issue is spending and taxes over the coming decades, not spending in 2011. Republicans in Congress have pledged to cut nonmilitary, non-entitlement spending in 2011 by $100 billion (less if recent reports are correct). Such a step would do nothing to address the fundamental drivers of the budget problem, and would weaken the economy when we are only beginning to recover.
Instead, the president should outline major cuts in spending that would go into effect over the next few decades, and that he wants to sign into law in 2011.
Respected analysts across the ideological spectrum agree that rising health care spending is the biggest source of the frightening long-run deficit projections. That is why the president made cost control central to health reform legislation. He should vow not just to veto a repeal of the legislation, but to fight to strengthen its cost-containment mechanisms.
One important provision of the law was the creation of the Independent Payment Advisory Board, which must propose reforms if Medicare spending exceeds the target rate of growth. But the legislation exempted some providers and much government health spending from the board’s purview. The president should work to give the board a broader mandate for cost control.
The fiscal commission recommended that military spending — which has risen by more than 50 percent in real terms since 2001 — grow much more slowly in the future. It also proposed thoughtful ways to slow the growth of Social Security spending while protecting the disabled and the poor. And it recommended caps on nonmilitary, non-entitlement spending.
President Obama needs to explain that while these cuts will be painful, there is no way to solve our budget problem without shared sacrifice. At the same time, he should give a ringing endorsement of government investment in infrastructure, research and education, which increases productivity and thus improves both our standard of living and the budget situation over time. And, following the fiscal commission, he should ensure that spending cuts not fall on the disadvantaged.
Finally, the president has to be frank about the need for more tax revenue. Even with bold spending cuts, there will still be a large deficit. The only realistic way to close the gap is by raising revenue. Some of it can and should come from higher taxes on the rich. But because there are far more middle-class families than wealthy ones, much of the additional money will have to come from ordinary people. Since any agreement will have to be bipartisan, Congressional Republicans will have to come to terms with this fact as well.
AGAIN, the fiscal commission has made sensible proposals. It recommended broad tax reform that lowers marginal tax rates and cuts tax expenditures — deductions and exemptions for mortgage interest, employer-provided benefits, charitable giving, and so on. Such tax reform cannot be revenue-neutral — it needs to increase tax receipts. But it can make the system simpler, fairer and more efficient while doing so.
Limiting the exemption of employer-provided health benefits would have the further advantage of making companies and workers more cost-conscious about health care.
Another revenue measure should be a tax on polluting energy. Basic economics says that something that has widespread adverse effects should be taxed. A gradual increase in the gasoline tax would raise revenue and encourage the development of cleaner energy sources. A broader carbon tax would be even better.
None of these changes should be immediate. With unemployment at 9.4 percent and the economy constrained by lack of demand, it would be heartless and counterproductive to move to fiscal austerity in 2011. Indeed, the additional fiscal stimulus passed in the lame-duck session — particularly the payroll tax cut and the unemployment insurance extension — is the right policy for now. But legislation that gradually and persistently trims the deficit would not harm the economy today. Indeed, it could increase demand by raising confidence and certainty.
The president has a monumental task. It’s extremely hard to build consensus around a deficit reduction plan that will be painful and unpopular with powerful interest groups. The only way to do so is to marshal the good sense and patriotism of the American people. That process should start with the State of the Union.
Greenspan…..Economy on brink of recession
June 24, 2008
As reported in Reuters:
JOHANNESBURG (Reuters) – Former Federal Reserve Chairman Alan Greenspan warned on Tuesday the U.S. economy was on the brink of a recession, with the chances of that happening at more than 50 percent.
The U.S. economy has been hit by a credit crisis, which began in the sub-prime mortgage market, prompting a series of interest rate cuts to help boost the economy. But price pressures are growing, making more rate cuts unlikely.
Asked if the U.S. economy was in recession, Greenspan said: “We are on the brink.”
A quick recovery was unlikely, he said via video link to a conference in Johannesburg. “A rebound at this stage is not something I think is in the immediate outlook,” he said.
“There are still very considerable structural problems remaining in the financial system. They will remain for a while. It’s going to be very difficult. There are a lot of unexpected adverse events out in front of us,” Greenspan said.
Greenspan said he did not believe arguments that the housing problems in the U.S. were due to interest rates being too low during his tenure. “As far as I’m concerned, the data do not support it (that argument). The housing bubble is clearly an international phenomenon.”
Our Perspective:
Pressure continues to grow in the business sector. Everyday you read a headline that another corporation is having massive layoffs. Fuel prices continue to rise, this leads to a rise in food prices. It becomes a spiraling effect. Our lack of commitment to address these issues in the past has come full circle.
What do we do?
Instant gratification has been the calling card but look where it has gotten us. We must focus on the long-term solutions that will increase the quality of life as we go forward.
Energy alternatives (solar, wind, geothermal), new ways to power our automobiles ( electric, water, I even heard of cooking grease). We must think outside the box to introduce new solutions that work and are a benefit to all. Just not a few.
Hutchinson Business Solutions, that is what we do. Introducing new ideas, creating opportunities that define a better tomorrow.
Let us know your thoughts? You can email george@hbsadvantage.com
Visit us on the web www.hutchinsonbusinesssolutions.com
On any sunny day at the Pennsauken Landfill, 13,000 solar panels sit quietly atop 15 acres of sealed-up garbage, pumping out the power.
When finished in February, it was called the biggest solar project east of the Mississippi.
But not for long. Work began in March on an even bigger spread, a 16.5-acre array of 17,000 panels next to the GROWS Landfill in Lower Bucks.
And this week, the Atlantic City Convention Center announced plans for panels atop its roof, in what executives say will be the largest single-building solar-energy project in the United States.
With solar energy on the rise, there’s likely no end in sight to the leapfrogging claims of “biggest.”
The nation and the region are seeing a burst in solar-power projects, especially in New Jersey, now the nation’s second-largest solar market after California.
The newest incarnation are mini-power plants, like those above, that power energy-hungry facilities or just feed the electrical grid.
Long built by idealists, these solar systems now can pay for themselves in less than five years, at least in New Jersey, where incentives are high. Energy costs also can be locked in, insulating companies from future price hikes.
“This is just the beginning of a huge potential,” said Steve Gabrielle, who helps develop renewable energy projects for PPL Corp., the utility that owns the Pennsauken installation.
Solar companies are scouting the region’s rooftops and vacant land, intent on moving quickly if Congress decides to extend a tax credit, enabling firms to recoup 30 percent of a commercial system’s cost.
New Jersey’s rebates for homeowners and businesses this year are oversubscribed. Applicants are being put in a queue for next year’s funds.
Growth has lagged so far in Pennsylvania, but that could change quickly. Incentives are being debated in the Pennsylvania legislature that could reenergize the state’s lapsed rebates.
One financial benefit of solar is its predictability. The system has a set cost up front; after that, the fuel – sunlight – is free.
That allows solar generators to offer long-term contracts for energy prices to large customers. For instance, much of the power from the Pennsauken array goes to a nearby customer, the Aluminum Shapes foundry.
The Atlantic City project will be built and owned by Pepco Energy Services of Virginia, which has a 20-year contract to sell the power back to the Convention Center, saving it about $4.4 million in energy costs.
These “power purchase agreements” are the financial backbone of many new deals. They allow firms to do what they do best under their roofs, while solar companies reap the potential from atop their roofs.
Those who have watched the growth – such as Philadelphia’s Andrew Kleeman, who left the real estate consulting and investment world last year to begin a solar-power company, EOS Energy Solutions – have noted how even the key players’ clothing has changed. “It’s gone from sandals to suits,” he said.
Kleeman, one of many, says he is “prospecting” and has a pipeline of projects where the building owners have pledged to go solar “as soon as the numbers line up.”
The cost of solar is decreasing due to new technologies and larger systems. At the same time, the cost of traditional nonrenewable sources is escalating wildly.
“Those lines are going to cross in the next couple years,” Kleeman said.
Besides its environmental benefits, solar energy bolsters the regional power grid by making the most energy when the need is greatest – those sunny summer afternoons when air conditioners are sucking maximum juice.
Nationwide, solar remains tiny. It is one-fifth the size of wind power, accounting for a fraction of 1 percent of the nation’s energy supply.
But solar installations grew by 45 percent in 2007. Much of the growth was due to what the Solar Energy Industries Association dubbed a “big-box boom” among companies that included Safeway, Whole Foods, Staples, Target, Home Depot, Macy’s, Wal-Mart and Best Buy.
The boom is further fueled – or perhaps forced – by 27 states that have annually raised requirements for the percentage of energy coming from renewable sources, such as wind or solar.
Utilities can either generate the power or buy credits issued to others who generate the power. The price of these credits is expected only to grow, making the deals more attractive to solar developers.
What makes the Mid-Atlantic region so attractive to solar developers is that several states, including Pennsylvania and New Jersey, have made specific requirements for solar.
Solar proponents think there is so much potential here that the organizers of a national conference on solar power opted to bring the event to Philadelphia next year.
“We specifically chose that location because we see Mid-Atlantic as an emerging market for solar,” said spokeswoman Monique Hanis of the Solar Energy Industries Association.
Others credit steeply rising energy prices in this region for propelling solar here beyond other parts of the country.
That said, Pennsylvania and New Jersey are worlds apart in solar energy production.
New Jersey has already had robust solar development because of financial incentives. As of March, more than $220 million in state rebates had helped build nearly 3,000 systems, capable of delivering 54 megawatts of power. New construction in 2007 was 114 percent greater than in 2006.
When the conglomerate Cox Enterprises decided to look into solar power, it wound up putting 705 panels – enough to power 12 homes – atop the roof of an auto-reconditioning shop in Bordentown owned by a division, Manheim, a car auction dealer.
“New Jersey had the most attractive incentives of all the states in the union,” said Cox vice president Mike Mannheimer. “It had, by far, the best return for us financially.”
Although he refused to give a financial breakdown of the incentives, Mannheimer said he expects the $1 million system to pay for itself in 41/2 years.
“These systems don’t cost much to maintain. They just crank away.”
Until now, Pennsylvania hasn’t even been counting systems. Production estimates range up to about two megawatts, enough to power 300 homes.
That could all change with legislation being hammered out in Harrisburg. Plenty of rooftop projects await the outcome.
One is Stable Flats, a 70-unit residential development in Northern Liberties where plans call for a $2 million, 260-kilowatt system to make the power.
It’s scheduled to be completed in 2009. But that hinges in part on a state rebate that will bolster a $700,000 economic-development grant, said developer Tim McDonald of the group Onion Flats.
The solar firm will still own the panels. It will get the federal tax credit, sell the solar credits to utilities, and provide residents with low-cost power.
“Building sustainably,” McDonald said, “doesn’t have to cost more money.”
Would you like to know more about solar opportunities in New Jersey and Pennsylvania? You may email george@hbsadvantage.com
Solar ….The New Sexy
Come join us and be part of the solution!
Hutchinson Business Solutions 