SOTU

It’s been a while since I’ve written anything, mostly because, for the first time in 5+ years, I’ve gotten somewhat addicted to a video game. Some friends are leaving for CA soon and they were giving away things they didn’t want to bring. This included a handful of games. I grabbed “Neverwinter Nights” since I knew it would run under linux. Since I installed it, I’ve been spending way too much time playing (to K’s annoyance, I’m sure).

I did manage to catch the State of the Union address last night, and for the first time ever, one of George Bush’s speeches did not infuriate me. I’m not certain what it was, there were certainly the usual lies, distortions and dangerous proposals, but they didn’t bother me as much. Perhaps it was the knowledge of a Democratic majority or maybe it was his tone, who knows.

As I said, there were still a number of inaccuracies in the SOTU:

  • “7.2 million new jobs in 41 months.” This is technically true. That said, a) it’s not that many jobs ~175k per month which barely keeps up with the increase in the working population; and b) this is Bush’s 60th month in office, in the first 19 months we lost ~5 million jobs. The net job gain is very small and is worse than any other post-recession period ever.
  • “Met goal of halving the deficit.” Sort of. Basically, for the past 4 or 5 years, this administration has overestimated budget deficits as compared to other, less biased projections. So, yes, they have halved the intentionally overestimated budget deficits, but they have not halved the actual budget deficits. Beyond that, if we hadn’t cut taxes on the rich, we would have a balanced budget today.
  • Earmarks – Given that his party has increased earmarks by roughly a factor of 7, in the past 12 years, and that Democrats have already stated they would kill all earmarks this year and severely restrict them in the future, this seems like he’s coming a bit late to the party – after earmarks won’t help his party as much.
  • Education and No Child Left Behind – NCLB seems to be intended to tear apart the public education system. Beyond that, it encourages teaching to the test; and even worse, while the president cited improvements in math and science, those are not across the board. He cherry picked the 4th grade results. Results in the 8th grade? Not so good.

In addition to the inaccuracies, there were a number of dangerous, misguided or just impractical proposals. I’m not going into all of them, but one is interesting: health insurance.  The president proposed a system whereby the tax deduction for health insurance would be capped at $7,500 for an individual, $15k for a family.  However, purchasing any health insurance would allow you to claim that deduction ($7.5k or $15k).  The thinking is that people without insurance could use the deduction to lower the cost or even pay entirely for the insurance.

There are a few problems with this.  1) Generally, the uninsured are less well of and don’t have a large tax burden.  They pay at a lower tax bracket and with other deductions may not even pay taxes on the $15k (remember, this is a tax deduction, not a tax credit).  This is not likely to be enough to encourage people to buy insurance.  2) The cap grows with inflation.  However, health care costs grow much faster.  Right now, only a few people exceed the cap, in 10 or 20 years, the number will be much larger (even with the increased cap).  3) The incentives here are likely to drive healthy people out of the larger risk pools that keep costs down for everyone.  So this could push many plans into an insurance “death  spiral:” healthy people leave, increasing per person costs and the plan costs, so more people leave, etc.

In short, the proposal is damaging.  Insurance plans needs as large a population as possible and this proposal will fragment the populations so that in the end, you’re on your own for your health care.  In fact, that’s the short version of what Bush’s “ownership society” is all about: you’re on your own.

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