Category / United States Government

by Hoosier Econ

Lawyers Getting Rich Off Social Security Disability

ZeroHedge.com is out today with a piece about the explosion of social security disability and what lawyers are getting in fees.
Here is a snippet and you can read the rest here.

Social Security Disability Insurance (SSDI) is no small program, costing taxpayers more than the combined cost of federal welfare payments, housing subsidies, food stamps and school lunches. Attorneys receive taxpayer-funded fees each time they successfully place a client in the program, which incentivizes them to encourage clients to file disability claims. The fees are capped at 25 percent of the successful client’s SSDI award, or $6,000, whichever is less.

Attorneys took in $1.2 billion in such fees in 2013, up from just $425 million in 2011.

Here is a graph showing the explosion of SSDI recepients.

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by Hoosier Econ

Economics & “Coolidge”

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Halfway through reading Amity Shlaes book “Coolidge”. Very detailed and good reference for what the country was politically/economically facing at the time. Here are some economic factors from Calvin Coolidge time period:

Debt after WWI was $27 Billion. Nine times higher than 2 years before.

College professor salaries in 1890 were $2,500. This was 20 times more then tuition. Average American wage earner made $425/year.

1905, home in Massachusetts cost between $2,000-$5,000. Banks did not do mortgages. Building associations did.

1915 IRS employed 4700 people

1920 federal budget was $6.3 Billion and Calvin Coolidge Vice Presidential salary was $12,000.

From 1920 – 1921 Ford Motor Company sold 1.25 million cars.

by Hoosier Econ

Wind and Solar Carry Higher Megawatt Prices

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Economic Policies for the 21st Century recently published a lengthy article titled America Should Avoid Germany’s Failed Energy Policy. Found an interesting price comparison of renewable energy vs standard forms.

These problems with green energy help to explain why only 4 percent of U.S. energy comes from wind and solar. Data from the Energy Information Agency show that, for plants entering service in 2019, levelized wind power costs will be between $64 and $175 per megawatt. Solar power will cost between $155 and $195 per megawatt. For comparison, conventional natural gas fired plants produce energy at a levelized cost of $14 per megawatt. Nuclear comes in at $71 per megawatt, comparable with efficient wind farms. The costs to consumers from renewable energy mandates are even higher when tax incentives are included.

by Hoosier Econ

Cost of Caring for Illegal Immigrant Child: $86,846.34

While back I posted a piece about the cost associated with the taxpayer caring for illegal immigrant children. Now new dollar amounts have been discovered by Judicial Watch. Sad thing about the bloviating transparency talk from immigrant supporters is this information had to be obtained by an FOIA because the government was unwilling to produce the numbers.

Federal officials paid Baptist Children and Family Services nearly $183 million to help care for 2,400 unaccompanied illegal immigrant children for four months earlier this year at military facilities in Oklahoma and Texas, according to documents made public Wednesday by Judicial Watch.

“The cost to the American taxpayer was $86,846.34 per illegal alien child at Ft. Sill [in Oklahoma], for a total to $104,215,608 for 1,200 UACs from June 12 to October 18,” Judicial Watch said. “The bill also included $2,648,800 in compensation for 30 members of the BCFS ‘Incident Management Team,’ for a total to $88,293 per IMT member for the four-month period.”

The contract was awarded to Baptist Children and Family Services. Here are other items bought by this contract:

“Recreational items will include board games, soccer balls, basket balls, jump ropes, bracelet making kits, yarn, puzzles, arts and crafts, decks of cards, and eye-hand coordination game sets. Reimbursement is requested for $180,000.”

“Educational items will include … tempera paint, paint markers, paint brushes, easel brushes, art paper … Crayons, multicultural crayons … for $180,000.”

“Laptop Kits … 100 Kits … 5 Laptops per kit – $500 per kit … $200,000.”

°“VOIP Phone Kits … 80 kits … 10 cell phones per kit with International call capabilities and radio … $160,000”

H/T Washington Times

by Hoosier Econ

Are Your Local Indiana Officials Financially Literate

Few years back I was approached by an acquitance to support their run for local office. Coincidentally I had just reviewed some economic news on their budget situation in the town he was running in. The person gave me a beautiful speech about “giving back” and helping the poor. I asked him a direct financial question pertaining to the financial issue he would have to deal with once in office. His look was all I needed to know he had no clue in what I was asking about.

Liz Farmer addresses this question in an article from February 2014 about the impact of municipalities not having people elected with economic knowledge.

In the fall of 2012, the Minneapolis suburb of Vadnais Heights found itself with a credit rating downgraded to junk status. Local leaders in the town of 12,000 were not only insulted, but shocked. Vadnais Heights owed its disgrace to one action it didn’t think was that crucial: It had stopped making bond payments on a $25 million sports complex. The town had expected the complex to meet its borrowing costs through added revenue, but it had fallen short of estimates. So town officials had ceased paying bondholders rather than choosing to bill taxpayers for the unexpected costs.

What is particular events led to misunderstandings of laws?

Failure to understand financial outcomes, even when combined with good faith, is more dangerous to states and localities than it has ever been. Tougher ratings standards are part of the picture, but the problem goes far beyond those. Municipal and state leaders face an entirely new regulatory climate with the passage of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act. That law, which is still being implemented, is bringing increased scrutiny of government financial performance on all levels.

Overall the above situations are not isolated cases. Smaller jurisdictions have issues getting economic competent people into office and usually make decisions on the fly.
I found this quote in the article to be very telling:

“When you think about it, I’m a retired cop and now I’m chairman of a finance committee of a $3 billion organization and the 10th largest city in the nation,” says San Jose, Calif., Councilman Pete Constant. “Can you imagine a corporation taking someone like that and putting them in charge of it with so little experience?”

by Hoosier Econ

Obscene Profits by Government

Economist Mark J. Perry makes this point about Black Friday retail sales:

On Black Friday, avg retailer will make $3.30 in profits per $100 of sales, but the average state/local government’s take will be almost $7

by Hoosier Econ

MLB Player Change Teams Because of Taxes?

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Pablo Sandoval few days ago signed with the Boston Red Sox in a free agent deal for five years and worth $100 Million. Kurt Badenhausen of Forbes wrote why Pablo left San Francisco:

Massachusetts has a flat personal income tax rate of 5.2%. California uses a progressive rate topping out at 13.3% at and above $1 million of income. In other words, 95% of Sandoval’s income would be taxed at this 13.3% rate if he re-signed with the Giants.

The Giants play in the National League West, which boasts three teams from California, including the Giants. This means that in addition to the Giants’ 81 home games, the team plays another 18 road games in California. The Giants also play three road games against their cross-bay rival A’s, bringing their total California games to 103.While Boston has to play ten games next year at the New York Yankees, it also has division opponents in Florida and Canada, where the players will pay no state income taxes (and no federal taxes in Canada).

Baseball players living in no-tax states have about 18.4% of their 2015 salaries sheltered from state taxes due to Spring Training taking place in tax-free states (Arizona does not tax Spring Training days). The Red Sox enjoy an additional 14.3% of tax-sheltered income from road games, while the Giants only get to shelter another 5.8%.

Read the rest here

by Hoosier Econ

Dutch Central Bank to US: Pound Sand

The United States Federal Reserve is not trusted and it doesn’t appear to be getting any better. In plain speak, the Dutch just told them they didn’t either. Also take this news as a great investment tip to start buying gold and silver as a precautionary investment.

The Dutch central bank, De Nederlandsche Bank, has repatriated in utmost secrecy 122.5 tonnes of gold from the Federal Reserve Bank of New York to its vaults in Amsterdam, The Netherlands, according to a press release from DNB published today.

“It is no longer wise to keep half of our gold in one part of the world,” a DNB spokesman said. WOW.

by Hoosier Econ

Why Doctors Are Leaving Medicaid

The new healthcare law that passed in 2010 was more of an expansion of getting people on medicaid then getting insurance. Medicaid is the “universal health care” that most don’t realize exists and it is taking on millions of new people each year. FORBES magazine has pretty lengthy write up about this program along with medicare.

Doctors seeing Medicare patients face a 24 percent cut in reimbursements beginning January 1.  But almost no one has grasped that those cuts will hit Medicaid too—thanks to Obamacare. Together both programs cover more than 100 million Americans, and the government expects about 9 million more people to join Medicaid next year.

The number of just regular doctors is drying up as new doctors coming out of med school go into specialty areas. Doctors cannot afford new Medicaid patients and here is one reason why:

Medicaid pays doctors about 59 percent of what medicare pays them—which is why doctors increasingly refuse to take new Medicaid patients.

In 2012 doctors ran to the exits in fleeing medicaid.

The Centers for Medicare and Medicaid Services (CMS) recently released a document showing that 9,500 doctors who had previously accepted Medicaid patients refused to do so in 2012.

In 2013 Congress voted to increase medicaid payments at the same rate of medicare. Now that is about to get cut again. The up and down of government intrusion in healthcare as this complicated law unfolds is taking a toll on our healthcare system. The people who suffer ultimately will be the patients.