Category Archives: Gas Prices

Taxes…and more taxes.

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One way or another, Spring is tax time. This year could be like no other in our country’s history. More taxes will become effective—more taxes to be paid, than at any other time since George Washington was inaugurated.

You won’t hear about it from the MSM, nor from any mainstream news outlet. You won’t know the extent of these taxes until it comes time for them to be paid. And, pay you will.

The first item is, unsurprisingly, Obamacare. This is the first time you will pay your Obamacare tax. If you don’t have health care, you will have to pay a penalty. If you do have health care, your employer will have to pay a tax to support Obamacare. If you’re self-employed, your tax will be the increased cost of individual healthcare. Regardless of your circumstances, you will pay more.

Obamacare penalty may come as shock at tax time

By Tom Howell Jr. – The Washington Times – Sunday, January 18, 2015

http://media.washtimes.com/media/image/2015/01/19/obama_s877x585.jpg?321c9d70daf99fc888c0b24f70eed91a13ac78bc

In a scene reminiscent of Pontius Pilate washing his hands after sentencing Jesus, President Barack Obama wipes his face with a cloth handed to him by White House Butler Von Everett in the Blue Room of the White House following an event with business leaders in the East Room, Jan. 28, 2009. (Official White House Photo by Pete Souza)

Those Americans who didn’t get health insurance last year could be in for a rude awakening when the IRS asks them to fork over their Obamacare penalty — and it could be a lot more than the $95 many of them may be expecting.

The Affordable Care Act requires those who didn’t have insurance last year and didn’t qualify for one of the exemptions to pay a tax penalty, which was widely cited as $95 the first year. But the $95 is actually a minimum, and middle- and upper-income families will actually end up paying 1 percent of their household income as their penalty.

TurboTax, an online tax service, estimated that the average penalty for lacking health insurance in 2014 will be $301.

“People would hear the $95, quit listening, and make an assumption that that was what their penalty was going to be,” said Chuck Lovelace, vice president of affordable care for Liberty Tax Service. “I think that a lot of people will be surprised when they get in there and find out that their penalty is [based] on their household income.”

The penalty is designed to prod Americans to buy insurance and the penalty for not having it is scheduled to rise considerably: to a $325 minimum or 2 percent of income in 2015, and to a $695 minimum or 2.5 percent of income in 2016. (The column continues on to a 2nd page at the Washington Times website.)

It may not have been in the forefront of everyone’s mind about Obamacare taxes (note: that’s plural,) we did know they were coming. Other taxes, or tax proposals are more recent.

With the dropping price of gasoline at the pump, a by-product of the Oil War between the US and OPEC, the Congress is considering raising the gas tax for the first time since 1993. The belief in Washington is that people will have more disposable income due to the lowering cost of gas at the pump so they can afford to pay a higher tax.

Corker calls for federal gas tax hike

Mary Troyan, Tennessean Washington Bureau 4:04 p.m. CST January 11, 2015

WASHINGTON – Low gas prices have rekindled talk on Capitol Hill about raising the federal gas tax to eliminate huge annual deficits in the federal Highway Trust Fund that pays for road and bridge work around the country.

While some top Republicans remain adamant a tax hike is not the answer, there are signs that the idea, including one from Sen. Bob Corker of Tennessee, is at least getting a fresh look.

Corker and Sen. Chris Murphy, D-Conn., have proposed raising the federal gas tax by 12 cents over two years and indexing it to inflation. To make the concept more palatable to fiscal conservatives, the measure would lower other taxes.

The 18.4-cent-per-gallon gas tax hasn’t been raised since 1993. As vehicles have become more efficient, the revenue generated by the tax has dropped. Current stopgap funding for the Highway Trust Fund expires in May, and transportation officials in Tennessee and other states are holding back projects until uncertainty about the federal money is addressed.

Sen. John Thune, R-S.D., chairman of the Senate Commerce, Science and Transportation Committee, said this week a gas tax increase could not be ruled out. Republican Sen. Jim Inhofe of Oklahoma, chairman of the Senate Environment and Public Works Committee, agreed. (Read more at the website.)

The feds aren’t the only ones eying consumers’ wallets, a number of states are covetously thinking the same as the feds. As usual, the excuse is the crumbling transportation infrastructure and dwindling Highway Trust Fund. The root cause isn’t insufficient taxes, the root cause is that, like the Social Security Trust Fund, the Feds have been robbing the Highway Trust fund to pay for more welfare.

The highway crumbling infrastructure isn’t due to a lack of taxes, it’s due to redirecting the money to other non-transportation projects. Cut those other projects, stop robbing the trust funds, and there would be plenty of funding to rebuild the highways and bridges.

The same reasoning applies to the states.

States look at hiking gas tax as fuel prices plunge

Aamer Madhani, USA TODAY 12:09 p.m. EST January 17, 2015

With gas prices dipping to their lowest level in years, lawmakers in state capitals throughout the USA are increasingly open to the idea of raising fuel taxes to help rebuild crumbling roadways and bridges.

The movement at the state level comes as House Speaker John Boehner, R-Ohio, said last week that he’s doubtful that there will be enough backing for a bi-partisan push to raise the federal gas tax, which has stood at 18.4 cents per gallon since 1993.

The Obama administration has also declined to endorse raising the federal gas tax to finance road funding, but says it will take a look at anything Congress comes up with.

State legislators and governors, however, aren’t waiting for Washington.

Republican leaders who typically find talk of raising taxes a non-starter are making the issue a priority in 2015, even though polling consistently has shown broad opposition among Americans to fuel tax hikes.

“The states have shown that they are more likely to act on the gas tax than the federal government is,” said Carl Davis, a senior policy analyst at the Institute on Taxation and Economic Policy, a research group in Washington. “The states have to balance their budgets. If they see, their roads are in bad shape or their bridges are literally falling down—in some cases—they need to come up with a way to pay to improve that. And there’s a limited number of things you can do at the state level.” (Read more here.)

The column notes that a number of states have raised gas taxes in recent years. I also note that most of those states are in the liberal north-east, the area commonly known as the rust belt for good reason—tax flight by businesses.

The final example of taxes for this post comes from Missouri. At least one bill has been filed to convert the state to the ‘Fair Tax.’ I’m of two minds on this. I don’t like consumption taxes, sales taxes. Sales taxes have many unintended consequences, the least of which is to drive consumers to buy large ticket items out-of-state where taxes may be lower. On the other hand, I wouldn’t mind seeing Missouri’s Department of Revenue taken down a very large peg.

A bill has been filed for the 2015 Missouri session that would reduce Missouri’s income tax by 25% per year until it is eliminated. It also proposes an increase of the current 4% sales tax to 7% sales tax on “retail sales of new tangible personal property and taxable services.” It idea is that the sales tax would be gradually increased as the income tax is decreased to make the scheme, “revenue neutral.” Frankly, I’ve never seen a bill work as it was envisioned. Something always goes wrong. It is the unintended consequences that make our lives harder and they are never fully corrected.

Be that as it may, we must be eternally vigilant on taxes. I’ve yet to meet a tax I liked. Every tax I’ve ever seen failed to meet its original purpose.

 

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Strike! While the price is low.

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The price of crude dropped to $45 a barrel yesterday. A gas station in Texas posted a pump price of $1.499 a gallon. We all rejoice at the lowering prices. Long-haulers see their costs dropping, and the economy begins to pick up. ‘Course, Washington takes credit of all of it while doing nothing but talk.

Oh, they are talking. Talking about raising gasoline prices by at least another 12¢ as gallon. Why? Because consumers can afford to pay more since they aren’t paying as much per gallon!

Incredible! But, not completely unexpected from the crazed spending lusts of those in Congress and in the administration. I expect our local congresscritter, Vicky Hartzler, who supports massive welfare spending in her voting for the yearly Ag bill (SNAP/Foodstamps), will get in line with her rubberstamp.

It’s not as if the taxes collected has decreased. No, in fact the gas tax revenues has increased. With the lower gas prices, people and businesses are driving more, buying more gas. The federal gas tax is 18.4¢ and 24.4¢ for diesel fuel. It is a fixed tax per gallon. If the tax was a percentage of the cost of a gallon, then a lowering price would reduce the tax revenue—but it is not.

The Daily Signal, a news website and newsletter of the Heritage Foundation posted an article today that delves deeper in the push for more taxes. Surprise, Surprise! It’s not just democrats pushing for a higher tax.

Why Washington Politicians Want to Hike the Gas Tax

Stephen Moore / /

Suddenly everyone in Washington wants a gas tax hike—apparently so consumers don’t save too much money at the pump. As prices keep falling, the politicians and the moochers in Washington want a piece of the action.

Rather than raise the federal gas tax, a better policy would be to repeal the federal tax and let states pay for their own road projects.

House Minority Leader Nancy Pelosi, D-Calif., and Senate Minority Whip Richard Durbin, D-Ill., and even Republicans such as Sen. Bob Corker of Tennessee have linked arms with the entire road-building industry and green groups that want the cost of fuel to go up.

Pelosi won’t even hide her cynical motivation: With gas prices low, maybe motorists won’t notice that we’re gouging them.

“If there’s ever going to be an opportunity to raise the gas tax, the time when gas prices are so low—oil prices are so low—is the time to do it,” she explained.

That’s rich coming from Pelosi, who has done everything she can to stop the shale oil and gas revolution that made prices fall in the first place.

Apparently if OPEC can’t keep prices high, the feds will. And these are the folks who say they want to help the middle class.

Every penny increase in the gas tax will take about $1 billion out of the wallets of consumers. So a 10-cent or 20-cent gas tax will take about $10 billion to $20 billion from consumers.

The politicians like to point to studies by road builders and civil engineers that insist America’s infrastructure is crumbling and we must spend hundreds of billions of dollars to fix our roads, highways, bridges and airports. Now there’s an impartial jury. Who do you think is going to get all this money?

Corker adds that we are “just stealing from future generations out of the general funds to pay for infrastructure because Congress is going to fund infrastructure but not in the appropriate way.”

Corker is right that America needs more roads and needs to fix the ones we have to reduce congestion and potholes. But this isn’t because the 18.4-cents-a-gallon gas tax raises too little money—$34 billion a year should be plenty and infrastructure spending is near an all-time high.

The “stealing” that is going on is from the trust fund. Congress siphons tax dollars away from roads to worthless mass transit systems with tiny ridership.

Why should motorists see their gas tax dollars go to transit projects they don’t use?

If Washington would simply devote all gas tax dollars to roads, we wouldn’t need a tax hike.

Don’t be surprised if gas tax hike dollars help fund California’s $68 billion high-speed rail white elephant. The program has been so riddled with cost overruns, it may go down in history as one of the most absurd transportation projects in U.S. history.

There’s no bigger hypocrite when it comes to infrastructure than President Obama. He wants $300 billion for a federal infrastructure fund even as he announces he will veto a bill to create needed pipeline infrastructure and some 42,000 jobs at virtually no cost to taxpayers. Pelosi and Durbin are against Keystone, too.

Rather than raise the federal gas tax, a better policy would be to repeal the federal tax and let states pay for their own road projects.

The interstate highway system was completed 30 years ago, and there is no more need for a national tax at 18.4 cents a gallon to fund bridges and high-speed rail projects to nowhere. Devolving transportation projects back to the states will ensure that gas tax money is used for the highest value-added projects.

The column continues at the website. You can read it in it’s entirety here.

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“Don’t Get Stuck on Stupid!”

That was a quote from Lt. General Russell Honeré from the Katrina cleanup when the military had to come in to help state and federal officials in New Orleans. While the circumstances and reasons for the quote has been forgotten, the quote itself has not.

The dems in Washington have not taken that advice. No, they, after their massive losses last November, continue with their failed agenda. Only now, they are pushing that failed agenda harder.

Dems double down on liberal populism, push bolder wealth redistribution

By S.A. Miller and David Sherfinski – The Washington Times – Monday, January 12, 2015

House Democrats, fresh off massive election losses, say the problem is they didn’t make a bold enough case for tax increases and wealth transfer to the poor. They rectified that Monday with a speech by Rep. Chris Van Hollen proposing tax increases on the wealthy with the money going straight to tax cuts for the poor and middle class.

The plan uses tax laws to encourage employee wage increases, reduce tax breaks for Wall Street and slap another fee on financial transactions. The government would dole out $1,000 tax credits for most workers and increase a slew of other tax credits for poor and middle-class families.

“This is a plan to grow the paychecks of all, not just the wealth of a few. This proposal attacks the chronic problem of stagnant middle-class incomes from both directions. It promotes bigger paychecks and lets workers keep more of what they earn,” Mr. Van Hollen, the ranking member on the House Budget Committee, said in a speech announcing the plan at the Center for American Progress, a liberal think tank in Washington.

The Maryland Democrat said the proposal would restore balance to a tax code that “is now skewed in favor of people who make money off of money and against those who make money off of work.”

The plan built upon the liberal populism that dominates the Democratic agenda for confronting a Republican-controlled Congress, such as the push to raise the minimum wage and reducing student loan debt. But it went further by offering workers a direct cash payment. (The column continues at the website.)

The scheme will probably be DOA in Congress. At least it should be. With the current push by the establishment GOP for accommodation with liberals, who knows, really, if this is dead, or, like Frankenstein’s monster, will suddenly gain life again.

It’s time for a resurgence of those, currently out of favor by the establishment, to gather again under the name of, “Taxed Enough Already!”

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Recap…

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I blogged (yes, it’s a verb!) yesterday about gas prices dropping below $2/gallon by Christmas. I was pessimistic. In thirteen states, including Missouri, that goal has already been reached.

In These 13 States, Gas Is Selling for Below $2 a Gallon

Natalie Johnson / /

Just two weeks ago, a sole gas station in Oklahoma swept headlines for dropping gas prices below $2 a gallon. Today, 13 states have joined that list, and the trend is expanding.Gas for less than $1.90 a gallon can be found in at least one station in Oklahoma, Louisiana and Ohio, according to CNN. CNN cites 10 additional states– Alabama, Arizona, Colorado, Indiana, Mississippi, Missouri, Nebraska, New Mexico, Texas and Virginia– that now have gas below $2 a gallon.“What we’re seeing is markets at work,” Heritage Foundation economist Nick Loris said. “Significant increases in supply and a relatively weak demand is lowering prices not just at the pump, but for most of the goods and services we pay for.”

The national average has dipped to $2.55 a gallon, marking the lowest drop since October 2009, according to AAA’s Fuel Gauge Report. Just a year ago, that average was $3.23.

“Oil prices are plunging because there is so much oil in the market,” AAA spokesman Mark Jenkins said in a press release. “It’s unclear exactly how long this will continue, but gas prices will keep falling as long as oil prices do.”

Jenkins said oil prices are predicted to continue dropping through the first half of next year, increasing the “likelihood of $2 gasoline.”

CNN partially attributes this drop in prices to decreased oil demand because of the “economic slowdowns” across Europe and Asia along with increasingly fuel-efficient vehicles.

Another key reason for the drop is the increase in U.S. output. Domestic oil production is at a three-decade high, contributing to the increase in supply and driving down costs.

But Loris cautions against celebrating too soon.

“The falling prices are certainly a welcome relief,” he said. “But that doesn’t mean policymakers should ignore the government-imposed regulations and restrictions that artificially inflate prices and prevent markets from working more efficiently.”

Low gas prices is a Christmas gift to us all.

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I’m a Mark Levin fan. I have most (all?) of his books. I don’t agree with everything he says, but I do believe most. He is one of the stalwarts of conservatism in the country. His Landmark Legal Foundation is in the forefront litigating for our liberty and the retention of our constitutional rights.

He also has a temper.

Mark Levin slams GOP: ‘The Constitution is in tatters’

By Cheryl K. Chumley – The Washington Times – Tuesday, December 16, 2014
http://media.washtimes.com/media/image/2014/05/29/ap88849515097_c0-0-4883-2846_s561x327.jpg?e9405e23da046a9ad99c1e954eefdd816ea390cd

Conservative Talk Show host and founder of the Landmark Legal Foundation, Mark Levin.

Conservative talk radio icon Mark Levin blasted his fellow Republican Party members during his most recent show, slamming the leadership for caving on the budget and for, time after time, ignoring basic constitutional principles.

“The Constitution is in tatters,” he said, adding that he was “one inch away” from breaking with the Republicans.He went on, Newsmax reported: “I want to tell the Republican leadership, the RNC, the NRSC, the NCCC, the NAACP — whatever they call themselves in the Republican Party — I am one inch away from leaving you. And I bet I speak for hundreds of thousands of people. One inch. You think this is a joke? You think you can lie to the American people?”

He spoke specifically to Republican promises to defund Obamacare and fight President Obama on immigration amnesty — and the recent failures of GOP leadership to take advantage of the budget dealings with Democrats to do just that.

“Do you think you can lie to … conservatives about how you’re going to defund Obamacare, run millions of dollars on ads on that to get re-elected, on how you’re going to fight unconstitutional amnesty? Tooth and nail? You think you can lie to us with impunity? And repeatedly? I don’t care how many millionaires and billionaires you have in your damn back pocket,” he said, Newsmax reported.

Mr. Levin then blasted the Republicans for speaking ill of Sens. Ted Cruz and Mike Lee in Politico and other media outlets.

“You sound like a bunch of munchkins,” he said. “Backbenchers. Immature! Stupid! Childish comments. I don’t know what this is going to add up to. I don’t know why we’re here. I’ve seen this movie before, and you’re so ineffective. You’re so impotent.”

Mr. Levin also said that he “worked for a president who shut down the damn government over half a dozen times. It’s not the end of the world. … Our Constitution is in tatters.”

Levin’s rant comes on the same day RINO Jeb Bush announced the formation of an “exploratory committee,” i.e., how many donors he can corral. Levin carries a lot of clout. His ‘Convention of States’ continues to gather more support. If another Romney or Bush RINO gets the nomination on 2016, the GOP is dead.

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Monday’s Review

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https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcSczwSA0_rO4tNqCsfF0bhYNTWsKfo5QUvhJPa-LhNzsXjcI8ABJust after Thanksgiving I read an article that predicted gas under $2/gallon by Christmas. I didn’t believe it. My wife told me that price of unleaded regular at our neighborhood gas ‘n grub was $2.149 this morning. That’s down 11¢ since Saturday, the last time I remember seeing a gas price. OPEC’s oil war against our fracking and oil-shale technology continues. The US will cave as soon as OPEC complains to Obama. In the meantime, enjoy the low gas prices while you can.

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Quote of the Day from Bloomberg News…

Bloomberg: “Of the 23 Republican senators up for re-election in 2016, 16 voted for Cruz’s parliamentary objection, known as a point of order, against what he called Obama’s “amnesty.” Two of them, Rand Paul [R-Ky.] and Marco Rubio [R-Fla.], are — like Cruz — considering presidential bids…”

Bloomberg News appears to think this action is negative, limiting spending, pandering to the voters of 2016. On the contrary, I think these Senators heeded the voices of their constituents and their votes should be lauded, not ridiculed.

***

There was a terrorist hostage incident in Sydney, Australia. Five people were shot, two killed including the RIF who started it all. From initial reports, their other person fatally shot was killed by the RIF. The Sydney Police, in another report, admit using live ammunition.

 

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Return of the Friday Follies

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It’s my habit to listen to one of my local radio stations in the morning.  One segment today had a local financial adviser, a PhD, as a guest and the subject was the price of gas.  After the unemployment numbers were announced today, the futures price of light crude dropped $2 in a few minutes.  Light crude is the source for gasoline.

People think that lowering gas prices (locally now at $3.169/gallon) is good…and it is for many. But it is important to understand the cause.

The price drop yesterday was triggered by the expectation of continued decreases in crude oil consumption.  When the job numbers are bad, as they are, there is less demand by business and, by extension, by individual consumers.  People and businesses will retrench, hoard assets, minimize expenses, and will reduce the cost of doing business until the economy recovers.

That last sentence is the key. The economy isn’t recovering despite the announcements coming out of the White House and their lib sycophants. As my Dad would say, “People are hunkering down to survive the times.”

Enjoy the low gas prices and remember they are low not due to more production but to less demand.

***

Ray Lahood, is a Obama lib from Illinois who unintentionally spoke the truth.  They envy the Chinese because it only take 3 people to make a decision instead of 3,000 or 3,000,000.

“The Chinese are more successful [in building infrastructure] because in their country, only three people make the decision. In our country, 3,000 people do, 3 million,” LaHood said in a short interview with The Cable on the sidelines of the 2012 Aspen Ideas Festival on June 30. “In a country where only three people make the decision, they can decide where to put their rail line, get the money, and do it. We don’t do it that way in America.” — Foreign Policy Magazine.

Yep, these wannabe dictators reveal themselves in so many ways. It behooves us to be aware and forewarned.

***

The employment announcement today added to an ongoing situation — 41 continuous months with unemployment above 8%.

“When we get an increase in general uncertainty, employers tend to postpone investment and hiring decisions,” Michael Gapen, senior U.S. economist with Barclays, told CNNMoney.

Well, duh!

***

Finally, this piece — the UN “Gun Ban” treaty. Ordinarily, I’d not give this much thought for a number of reasons. First, just signing a treaty doesn’t put in into force. Look at Wilson’s League of Nations for example. Woodrow Wilson devised the concept in his 14 Points at the end of WW1. 

The League was created but the US didn’t participate. Even though Wilson originated the idea and fought heavily for its creation, the US Senate did not ratify the treaty. A decade later, the League quietly folded its tent and disbanded.  It proved, like the UN, to be ineffective in blocking acts of aggression, it’s primary purpose.

This time, however, the passage of the treaty may be different.  We still have a democrat controlled Senate. No treaty can usurp the constitution. A treaty could not, for example, repeal the 2nd Amendment. The Constitution trumps treaties.

That was before Chief Justice Roberts turned his coat.

If the treaty is passed and Obama uses it to attempt more gun control using the Treaty as authorization, people will resist.  I don’t know what will happen if Obama uses force to enforce the treaty. No good will come from it.

When we no longer have confidence in the Courts to uphold the Constitution, our alternatives to resist tyranny become limited.

As I said, ratification of this treaty will bring no good to the nation.

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Friday Follies for February 24, 2012

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Gas Prices: A refinery fire in Washington state is the trigger, so says news sources, for the recent spike in retail gas prices. A fire last Friday at the BP Cherry Point site at Blaine, WA, is the trigger for the increases.  Gasbuddy.Com, a website that tracks gas prices across the country, says the fire halted production at the site.  The BP Cherry Point refinery produces 90% of the transport fuel for the west coast.

This weekend a major fire that started Friday at the BP Cherry Point Refinery in Blaine, Washington has left the refinery unable to take in its daily intake capacity (230,000 barrels per day), much of which arrives from Alaska. Approximately 90 percent of the crude oil refined there emerges as transport fuels making it the largest marketer of gasoline and jet fuel on the West Coast.
…

The refinery is on a massive sprawl of 3,300 acres and was built in 1971, making it one of the newer refineries in the U.S. Until this weekend, it was producing 3.5 million gallons of gasoline; 2.5 million gallons of jet fuel; and 2.2 million gallons of diesel per day. — GasBuddy.com

The suddenly cut in production was felt across the country.  West Virginia saw a $0.20-0.30 per gallon jump reports the West Virginia Gazette.

CHARLESTON, W.Va. — Gas prices in Charleston rose between 20 and 30 cents per gallon on Wednesday.

According to Gasbuddy.com, a company that tracks gas prices at more than 140,000 gas stations in the United States and Canada, gas prices at most stores in the area were between $3.49 and $3.58 early in the day and had risen to $3.79 and above by late afternoon.
Jan Vineyard, president of the West Virginia Oil Marketers and Grocers Association, said the cost from one of the area’s major suppliers went up 15 cents for gas stations, causing the higher prices. — WVGazette.

The West Virginia report also blames the crises with Iran and the transition to summer blends contributing to the increased prices.

Locally, here near KC, we could expect another ten to twenty cent increase in our gas prices before the weekend according to GassBuddy.  The price here has already risen twenty to thirty cents just this week.

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My wife and I hit 65 this year.  Like it or not, we’re being forced to sign up for Medicare.  My former employer only provided health insurance until we reach 65. At that point we’re dropped and expected to join the Medicare crowd.  Frankly, I couldn’t afford to stay with my employer’s health plan, it was costing me $1400/mth.  Up to this point, the cost was covered by a savings fund created when I was working.  Contributions to that fund ended years ago with the merger of Sprint and Nextel.  Sprint had a pension plan, Nextel didn’t.  After the merger, Sprint didn’t have a pension plan either.

The survival and efficiency of Medicare is an interest for us. A vital interest you might say.  There have been several Medicare reform plans submitted recently.  One, the abomination called Obamacare, is now the law of the land if it isn’t repealed.  Obamacare will replace Medicare.  Oh, the name Medicare will continue but the fact is with Obamacare Medicare will cease as it currently exists.

Paul Ryan submitted a plan last year.  The left went into a frenzy over it.  It was a good plan but some better ones have emerged since.

Burr-Coburn: The Best Medicare Reform Proposal Yet

Many politicians (and many voters) duck the hard choices when it comes to Medicare reform. But what’s remarkable about the past year is that, in some ways, momentum appears to be building for real improvements to the program’s quality and sustainability. Based on a new proposal from Sens. Richard Burr (R., N.C.) and Tom Coburn (R., Okla.), the impossible seems within reach: the triumph of sound policy over interest-group politics.
…
If Wyden-Ryan and Lieberman-Coburn got together to do what many people did on Valentine’s Day, Burr-Coburn would be the result.
I’d previously called Wyden-Ryan a “game changer” for its utilization of two key reform principles, premium support and competitive bidding. Lieberman-Coburn hits the other key principles of reform, including cost-sharing and fraud prevention. As I wrote last June,

I have a lengthy essay in the Summer 2011 issue of National Affairs on Medicare reform, entitled “Saving Medicare from Itself.” In it, I discuss six core concepts for real Medicare reform: (1) preserving benefits for people aged 55 and older; (2) making sure that retirees share more of the costs of their care, and thereby a stake in prudent consumption; (3) means-testing; (4) indexing the Medicare retirement age to life expectancy; (5) aggressive fraud prevention; (6) allowing seniors to shop for value in insurance plans. The Lieberman-Coburn bill hits on many of these points in a way that well complements Paul Ryan’s premium support proposal.

Wyden-Ryan hits (1) and (6), while Lieberman-Coburn hits (2) through (5). Together, they comprise the most complete Medicare reform proposal, using bipartisan policy principles, that has yet been put together.
The plan includes these elements.
Premium support and competitive bidding
Burr-Coburn incorporates something quite similar to the Wyden-Ryan system of competitive bidding and premium support, in which retirees would be able to choose among private plans and a “public option” of traditional Medicare.
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One key difference between Burr-Coburn and Wyden-Ryan in this regard is that Burr-Coburn implements competitive bidding and premium support in 2016, not in 2022. On the plus side, this six-year difference has a huge impact on the long-term cost savings of Burr-Coburn.
Increasing the retirement age
As with Lieberman-Coburn, Burr-Coburn gradually increases the Medicare eligibility age from 65 today to 67 in 2027. This will allow Medicare’s eligibility age to match that of Social Security.
Improving the Medicare benefit
One thing that most people don’t realize is that Medicare, designed in 1965, has significant gaps and flaws in the design of its insurance benefit. Medicare doesn’t cover catastrophic costs, forcing many seniors to buy supplemental Medigap plans for their own protection, and giving providers perverse incentives to favor expensive hospitalizations over more efficient outpatient care.
Burr-Coburn would combine Medicare Part A (hospitalization) and Part B (outpatient physician services) into a single deductible, with a unified deductible of $550, co-insurance of 20 percent of costs until a retiree had spent $5,500, co-insurance of 5 percent until he had spent $7,500, and full coverage above $7,500.
Means-testing
Burr-Coburn requires greater cost-sharing for people with higher incomes: a far superior solution to raising taxes to subsidize these individuals. Those with incomes above $85,000 as individuals or $170,000 as married couples would be subject to a higher cap on out-of-pocket costs: $12,500 instead of $7,500.  For those with incomes above $107,000 individual or $214,000 family, the cap would be higher ($17,500) and even higher ($22,500) with those making $160,000 as individuals or $320,000 as married couples.
In addition, the plan would charge lower Medicare premiums to lower-income seniors, and higher premiums to higher-income retirees.
Cost-sharing reform

One of the worst aspects of Medicare is the way it is almost intentionally designed to waste money. Medigap plans are a big part of this, by providing private-sector supplemental coverage that undermines Medicare’s ability to incentivize seniors to be mindful of wasteful medical spending.

Flattening the “doc fix”
One of the worst and most persistent problems with federal budgeting has been the Medicare Sustainable Growth Rate, a global cap on the growth of Medicare payments to doctors and hospitals.
Because the global cap doesn’t keep up with the rise in the cost of health care, and provides no incentive for doctors and hospitals to be more efficient in the way they provide care, Congress has had to routinely step in with “doc fix” legislation that jacks up Medicare spending.
Repeal IPAB, Obamacare’s Medicare rationing board
Obamacare’s vision of government-rationed health care was on full display with the enactment of its Medicare Independent Payment Advisory Board, a new bureaucracy that seeks ultimately to control which treatments seniors can receive, based on the board’s view of their cost-effectiveness.
There are several problems with this approach, despite its enduring appeal to central planners. First is that rationing has done nothing to control the growth of health spending, as Britain has shown. In addition, “cost-effectiveness” is subjective, and imposes a one-size-fits-all formula on a diverse country of 300 million people, who respond differently to different treatments. (For more on this topic, see my report on my appearance before Congress at an hearing on IPAB.)
Burr-Coburn repeals IPAB and replaces it with a system that allows seniors to voluntarily chose the benefits and plans that best suit their needs.
Is Burr-Coburn the best solution? No. It is significantly better than what we have and more so with what we’ll get with Obamacare.  What it is, is a good start.  I’ve heard many conservatives complain about the Bush Prescription Drug plan. What those conservatives fail to see is that it works.  In fact it is the only Medicare segment that uses market forces to control costs. It works.
My wife and I are in a gap at the moment. My retiree heath insurance ended in December. My Medicare won’t start until March, May for Mrs. Crucis. At the moment we’re paying our own insurance.  I’ve found that catastrophic insurance isn’t too bad, about $150 for the two of us each month. Our prescription drugs aren’t too high either due to the price pressure from the Bush Subscription plan. It does make us watch our medical expenses and plan what should be done, what must be done, and what we can skip.
All-in-all, that’s a good thing.  It makes me wonder how much medical costs would drop if we repealed Medicare all together?  It’s an idea to consider.

Updated: Have you noticed the gas prices lately?

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Update (November 18, 6:30pm CST): My wife returned home an hour ago and reported that the price for unleaded regular has broken the $3 level—$2.999 at two separate stations.  I can’t remember how long it has been since prices were that low.

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I made a few comments at a couple of internet sites this week that my local gas prices are approaching the $3 line.  Coming down towards that line, that is.  Earlier this week, unleaded regular at my neighborhood gas station was $3.049/gallon.  Yesterday it dropped to $3.029/gallon.  Some of my neighbors wonder if the price will drop through the $3 line before Thanksgiving.  (Everyone expects the price to rise on or just before Thanksgiving although I remember that has not always happened in the past.)

At the same time, I read on Drudge and other sites that the price of Brent crude rose above $100/barrel during trading. How can our local pump price drop while the world crude price rises?  

US and Canadian domestic crude production. 

There is a glut of US and Canadian crude that has offset the price of international crude. That glut is stored in a place call Cushing, OK.

Greg Knapp, a local radio host, interviewed an oil industry analysis, Loren Steffy of the Houston Chronicle.  That interview is available via MP3 here.

Steffy noted that US refineries are working to utilize this domestic supply. At the moment, they’re set up to use imported oil via tankers.  When pipelines can be redirected to accept oil from the Cushing Tank Farm, there will be an immediate impact on the availability of oil.  We will be less vulnerable to variances of overseas oil supply—like the recent  and ongoing civil wars in Libya and Nigeria.

Steffy does not expect the current low gas prices to last.  They, like all commodities, are subject to the law of supply and demand.  At the moment we have more supply that we have demand and that is driving the gasoline prices down.

The trend, however, is towards equalization.  If we have a glut, we will sell that glut either here in the US or overseas.  There is demand for our product as seen in the revitalization of the Dakota oil fields and the central western states of Colorado and Wyoming.

The bottom line is to enjoy these low prices while they last.  The US industry could manage these prices to all our benefit if—we can get rid of the opposition of the bureaucrats in Washington and their liberal political supporters.

I urge you to listen to the MP3 interview linked above.  It will be an education.