A Right to Fire Protection?

Much has been made of the recent new story in Obion County, Tennessee. This was the story about the rural trailer that caught fire. When the fire department arrived on scene, they realized that the homeowner had failed to pay the annual $75 fee for fire protection. Accordingly, the firemen were ordered to back off, allowing the trailer to burn to the ground, a total loss.

The chief of the fire department has been roundly castigated for his decision. Apparently the trailer owner had paid the fee in years past, but this year he “forgot.” But I don’t see how the fire chief could have made the decision any other way. If the fire had been put out, not only would they have no guarantee that the homeowner would pay up next year, but as word spread, surely other homeowners would also choose to make the payment optional. “I just don’t have the money this month. Besides, what are they going to do, just let the place burn? They won’t do that.”

Here’s what I would like to see reported: in the week or so since this story broke, how many $75 checks have arrived at the Obion County courthouse, from other homeowners who had “forgotten” to pay for fire protection? “Holy crap, ma, they’re serious! They just let the Jones place burn to the ground! We gotta come up with the money, just in case.”

Many people, including me, had not realized that purchasing fire protection insurance was optional. It seems that this situation applies in many rural areas. When you think about it, this makes sense. In cities, and even in the suburbs, built up densities are high enough that a fire that starts in one structure can easily spread to surrounding buildings. Accordingly, fire protection becomes a common good. Everyone bears the risk, and the costs are covered through tax revenues.

In this case, the risk was isolated to the individual property owner. He could have pooled his risk with the other property owners by paying the fee, but whether on purpose or through negligence, he bore the risk alone.

He chose to roll the dice on needing the fire department. This time the dice came up snake eyes.

Disability Claims

We had one of our employees quit last week. She worked half a shift on Tuesday, left for a doctor’s appointment, then called in Tuesday afternoon to say she was quitting with no notice.

Here’s what was reported to me:

At the woman’s doctor appointment, she had reported symptoms so severe, that her doctor had declared that she should be on permanent total disability. He told her he would support her in her disability claim. The woman promptly went down to the local Social Security office and filed for disability. After filling out the paperwork, the first question the officials asked her was: are you still working? When she told them she was going to give two weeks notice, she was told not to give notice, as it would screw up her claim, by continuing to work after filing for disability status.

Additional information: The woman’s husband just started receiving his disability checks, after waiting almost two years for his claim to wend its way through the system. It usually takes at least a year for Social Security disability claims to be processed. However, it turns out that you get back pay: once your claim is approved, payments are made back to the date of first filing.

A few questions: Why are the bureaucrats at Social Security coaching applicants for disability? I would think that at best, part of their job would be root out attempts to defraud the taxpayers. At worst, they would maintain strict neutrality. If you want to go back to work after filling, who are they to advise against it. Let the chips fall where they may.

This leads me into my next question, and central point. If this woman was able to work two weeks notice, then how disabled could she be? For that matter, she worked a full shift Monday. I saw her do it. There was no evidence that I could see of a disabling medical condition. Not last week, or the week before, or the week before that. She never came to management and asked for an accommodation to any medical condition.

Here’s where I speculate: Our employee worked her job, supporting herself and her husband while his disability claim was processed. Now it’s his turn to support her. His back disability will support them while her claim is processed. Furthermore, now that he has learned the ins and outs of the system, he will be able to coach her while she goes for a second helping from the same pot.

This leads to one more question: How many people on disability have another member of their household also drawing disability? Once somebody in the house figures out how to get free money, how often does another member of the home decide to go for more free money?

Okay, that was two final questions.

The more things change ...

Recently I have been reading some of the works of Ralph Waldo Emerson, the nineteenth century philosopher and writer. In his essay titled Self-Reliance, I came across the following passage:

“…do not tell me, as a good man did today, of my obligation to put all poor men
in good situations. Are they my poor? I tell thee thou foolish philanthropist that I grudge the dollar, the dime, the cent, I give to such men as do not belong to me and to whom I do not belong. There is a class of persons to whom by all spiritual affinity I am bought and sold: for them I will go to prison if need be; but your miscellaneouspopular charities; the education at college of fools; the building of meeting-houses to the vain end to which many now stand; alms to sots, and the thousand-fold Relief Societies; -- though I confess with shame I sometimes succumb and give the dollar, it is a wicked dollar which by and by I shall have the manhood to withhold.”

Written in the 1840’s, this hit me like a thunderbolt. There really is nothing new under the sun. The only change to the terms of the debate in the last 160 years has been that now Emerson’s philanthropist would argue that it is the government’s job to “put all poor men in good situations,” and Emerson must give his money in taxes to support this worthy goal.

Cell Phones for All

I discovered a fresh outrage this weekend. Unusually for me, I was glued to the tube, watching the series finale of Lost. Four minutes of show, three minutes of commercials. Anyway, from sheer repetition, commercials for Assurant Wireless began to penetrate my consciousness.

Assurant Wireless offers a free cell phone, along with 200 minutes of free nation-wide calling every month, as long as you qualify. The primary qualification is to be receiving food stamps, or to have income below 135% of the Federal poverty level.

The first problem with this is that the “free” cell phone service is not free, of course. It is being paid for out of the taxes attached to the paying customers’ phone bills every month. So I’m being taxed, not to pay for a common good like police or fire protection, but for someone else’s specific good. But the irritation doesn’t stop there.

I can kind of wrap my mind around the concept of food stamps. No one should starve in a nation full of food. But when was it decided that cell phone service is a right, not a discretionary expense?

Then there’s that 135%. The whole point of having a Federal poverty level is that is supposed to be the line demarcating the poor (who presumably need help from the government), from the not-poor, who should be able to fend for themselves.

Those are all bad enough to give me dyspepsia. The part that really frosts me, however, is the television commercials. The contract to provide the “free” cell service is so lucrative that the company (a division of Virgin Mobile) can afford a primetime TV ad campaign. They want to reach anyone who might be qualified, and get them to sign up. There used to be at least a little bit of a stigma associated with government assistance. You were supposed to have enough pride to take care of yourself. Not any more. Don’t be embarrassed to get free cell phone service. You’re entitled to feed at the government trough.

This whole situation irritates me, but in reality, it is only an irritant. The taxes that pay for this program are not unduly onerous. But I wonder how the folks who earn 140% of the poverty line feel. If they want cell service, they have to choose what to sacrifice to afford the luxury of a cell phone. I’ll bet this makes them just wild.

Medical Care

The Obama administration is putting on a full court press to get their health care legislation passed before Congress goes into recess in August. Since the bill is about twelve hundred pages long, quick passage would mean that most of the Representatives and Senators voting on the bill would not have actually read it.

I understand the sense of urgency on the part of the administration. The longer the period of reflection and debate, the more time opponents of the President’s health care restructuring plan have to uncover flaws and mobilize opposition. Obama and his advisors want to enact their plan while they still have some momentum left from the election.

Political expediency does not make a rush to judgement a good idea, however. Since health care is currently about 16% of the American economy, such haste is a little scary to me.

The underlying assumption behind all the talk of universal coverage is the belief that all of the inhabitants of the United States have a right to unlimited medical care. You are entitled, solely by your residence in this country, to as much or as little health care as you feel you need. Hip replacement? Go wild. Dialysis three times a week? Knock yourself out.

I always thought I had a right to free speech and free assembly, that I could live where I wanted and how I wanted, without a lot of interference from the government. Apparently I missed the part where I was entitled to free medical care.

I wonder what other free stuff I’m owed as my birthright?

Health Care Assumptions

The Obama administration is getting ready to unveil their plan to massively restructure the delivery of health care in this country. One of the core rationales for this plan is to extend "access" to health care services. This argument overstates the case. I would argue that there is no problem with accessing health care in this country.

If you have a medical problem, you can go to any emergency room in the country. They must, by law, treat you without reference to your ability to pay. When you go to the emergency room, a doctor will (eventually) see you about your problem. If you are bleeding on the linoleum, you will move to the head of the line, guaranteed.

The problem is not that people want access to health care, and they can't get it. We already have universal access to health care. The problem is that people want unlimited access to medical care. The question is not whether everyone should have health care in this country. The question is whether everyone should have access to as much medical treatment as they want.

If we answer that question as a yes, then it leads inevitably to another question. how do we pay for it?

A Noun is the Name of a Thing

I signed on with H&R Block to be a tax preparer this year. I did it both for the experience, which I figured would help with my own taxes, and because I hoped to make a little extra money. As a first year preparer, it turns out I was wrong about making any real money, but that is a topic for another post.

So I have been working part time the last two weeks doing taxes, and have done about 20 returns so far. Most of the people who file early are getting big refunds, but I didn’t realize how big until I started processing their taxes. The vast majority of the tax returns I’ve done have gotten way more money back from the IRS then they paid in withholding.

The language we use around taxes is completely misleading. Take someone who pays $2000 in withholding and gets all $2000 back, plus another $3000 in top of that. Should we be calling that a tax refund? Normally a refund is the return of money paid in. The return of withholding counts as a refund, but what about the other $3000? Instead of calling that part of their refund, wouldn’t it be more accurate to call it welfare?

At an even more basic level, why are we calling everybody taxpayers? Half the households in America pay no income tax. A more accurate term would be tax filers. Actually, if you get more tax money out then you pay in, doesn’t that make you a tax receiver?

I'm not done with the subject of taxes, there will be more to come. By the way, my opinions are my own and in no way should be considered to represent H&R Block in any way.

Taxes and Fairness

When people talk about everyone paying their fair share of taxes, what they usually mean is that someone else is going to pay more. But that raises the question: how much is the fair amount to ask people to pay, and how much more than that is unfair?

There are two ways of looking at that question. The conventional way is to look at someone who pays, oh say 20%, and determine that they could afford to pay more. So for this example, we could decide that 25% is that person’s fair share. After all, we're only asking that person to give up another 5% of their income. They can afford it, right?

To look at this from another perspective, let us examine a hypothetical economy. In our small scale imaginary model, there are only 25 income earners. The distribution of income among these households is as follows:
1 @ $1,000,000
14 @ $100,000
10 @ $10,000
So the top 4% of households earn 40$ of total income.

Let us further assume the following tax policy: the first $10,000 of income is exempt from tax. After that, up to $100,000 is taxable at 10%. Income above $100,000 is taxed at 20%.

Under this scenario, tax payments break down as follows:
$1,000,000 household: $189,000 (10,000*0%+90,000*10%+900,000*20%)
$100,000 households: $126,000 (14*(10,000*0%+90,000*10%))
$10,000 households: $0
Total taxes: $315,000

What this means is that 4% of the taxpayers are covering 60% of the total tax payments. Meanwhile, the bottom 40% of households are paying…nothing. Somehow that doesn’t strike me as fair play.

Of course, the example shown above is a completely imaginary, highly simplified economy. Let’s see what the numbers are for a real world economy, like, for instance, the United States.

According to the Heritage Institute, in 2004 the top 5% of taxpayers had 29% of the reported income, but paid 58% of the taxes. Expand that group to the top 10% of income, and the numbers climb to 39% of the total income and 71% of the taxes paid. Meanwhile, the bottom 50% of income earners paid less than 3% of the total taxes.

Maybe my example wasn’t so far fetched after all.

My policy point is this: if, as a society, we have decided that we have cut government spending as much as we can, and we need more tax revenue, let’s raise everyone’s taxes. We can have a debate about making the system more progressive, or less progressive. But if we are going to hit the high income folks up for more money, the low income folks should have to pay something in as well.

And maybe, if everybody has to kick into the pot, we’ll discover as a society that maybe we can do without some government spending after all.

Food Police

Last week the Los Angeles City Council passed what has to be a candidate for the worst new law of 2008. In the district of South Central Los Angeles, a thirty-two square mile area with over 500,000 residents, the new ordinance places a one year moratorium on building new fast food restaurants.

This part of LA has the highest percentage of obesity in the city. Fully 30% of the adults are obese. So the rationale behind this law is that the rate of obesity is connected with the prevalence of fast food restaurants in this area. By blocking new McDonald’s or KFC’s for a year, the goal is that planning for healthier food choices can be accomplished.

This plan is so ludicrous that one scarcely knows where to begin attacking it. Let’s start by pointing out how hard it is to define what a fast food restaurant is. I have not read the ordinance itself, but it apparently contains language about restaurants with limited menus. Well hello, but I’ve eaten in bistros where the night’s offerings were the five or six items chalked up on the menu board at the entrance. By a limited menu definition, the bistro would be fast food. Of course, the bistro chef could counter that he had been cooking all day, so the food wasn’t exactly fast.

Maybe by fast food they mean a lack of table service. By that definition, a salad bar restaurant would be excluded, even though we can all agree that a salad bar could provide healthy food. Although, after loading up on the cheese and creamy dressing, you could debate that point.

What if you opened a new supermarket in South Central LA. Would the deli be able to sell rotisserie chicken? Would the market be able to put in a salad bar? I’m sure the planning department bureaucrats will be able to provide the answers to these kinds of questions. Eventually.

If you’re in a hurry for those answers, well, that’s just too bad. It’s your own fault for not getting a safe city job.

Even assuming we have a common definition of fast food, I don’t quite understand the theory that preventing fast food outlets will spur the development of other types of restaurant. Somehow I can’t envision Wolfgang Puck announcing plans to open “Spago in the ‘Hood.” When Emeril Lagasse is siting his next place, I’ll bet he doesn’t count the number of Wendy’s in the area.

Aside from the practical difficulties of helping Angelinos lose weight by using the blunt instrument of restricting their eating choices, it is troubling to consider the worldview that informs this experiment in social policy.

To wit: the residents of South Central Los Angeles are children, incapable of making decisions that affect their own lives without the wiser heads of the LA City Council stepping in to protect them from their poor decision making.

As a political conservative, I believe that we institute governments among ourselves for the primary purpose of protecting our freedoms. That includes the freedom to make dumb choices. Now, government is restricting freedom in the name of helping the citizens. “It’s for your own good.”

A lot of the rationale for this new law is to control Medicaid costs. After all, obese people have higher rates of diabetes, heart disease, and high blood pressure. A few years ago, the states’ Attorneys General piled on to attack the tobacco companies. The legal reasoning was that because states paid for half of Medicare expenses, they had the right to appropriate the profits of the tobacco industry. A variation of this argument is now being extended to cover what we eat. “If we are going to pay for your health care, than we have the right to regulate your choices that affect your health.”

The scary part of this argument is that almost every activity involves choices that have the potential to adversely impact our health. If we buy into the argument paying for health care gives government the right to regulate your activities, where do we stop?

“Our studies show that the citizens are not getting enough exercise. Therefore we have banned elevators in high obesity areas. Enjoy your climb, sir!”

The scariest part of this whole story: the LA City Council passed this moratorium unanimously.

Be afraid. Be very afraid.

Trouble Brewing

Last week in USA Today I read two different articles about entitlement spending by the Federal government. Taken together they painted a frightening scenario.

In the first article, it was disclosed that the average senior citizen received $27,289 in benefits from the Federal government in 2007. That is the combination of medical costs and Social Security combined. For the first time, medical spending outpaced Social Security. From 2000 to 2007, benefits increased 24%.

The second article was a short piece on Kathleen Casey-Kirschling. She is officially the vey first baby boomer, having been born one second after midnight on January 1, 1946. Having just turned 62, she has activated her Social Security, and has just received her first check.

So we have a combination of rapidly increasing costs per person for entitlement spending, and the start of a demographic bulge in the number eligible recepients. Put the two trends together and you have what I call "train whistles in stereo."

What do I mean by that expression, you may ask. Imagine you are standing in front of a railroad track. In your left ear you hear the whistle of an approaching train. In your right ear you also hear the whistle of an approaching train. Two approaching trains, one track. "Go fetch a cooler of cold drinks and set up the folding chairs, ma, there's gonna be a show. Um, mebbe you shouldn't set the chairs so close to the track."

The best part of one of the articles was the following quote: "We have a health care crisis. We don't have an entitlement crisis," says David Certner, legislative policy director of the AARP.

My reaction to that statement: "Where do they teach you to say things like that? Some Panama City 'hey sailor, want a hump-hump' bar? Go sell crazy somewhere else. We're all stocked up here." (Jack Nicholson, "As Good As It Gets")

Seriously, the AARP is a major lobbying group in Washington, and their public reaction to the predictable and wholly unsustainable rise in entitlement costs coming in the next few years is to stick their heads in the sand. Well, they've stuck their heads somewhere. Maybe not in the sand.