Editorials and Opinions

Georgetowner •

The law that governments most commonly pass is the Law of Unintended Consequences.

The legislation to help small businesses reduce costs and insure more people, the Affordable Care Act, or Obamacare, may do the opposite.

First, a little history on employer-provided healthcare.

During World War II, labor markets were tight and demand for good employees was fierce. When federal law imposed wage and price controls that prohibited employers from raising wages to attract workers, employers increased benefits such as healthcare.

In 1945, President Truman proposed a national healthcare system open to everyone on an optional basis. It failed in the face of fierce opposition from the U.S. Chamber of Commerce and various medical associations, which called it “socialism.” Labor unions campaigned for employer-provided healthcare. In 1954, Congress passed section 105 of the tax code, which allows employers to provide employee healthcare without the employees having to pay tax on the value received. (Today, that law is the most expensive tax “loophole,” costing the government more than $175 billion per year.)

By 1958, three quarters of Americans had employer-provided health coverage. (Today, the figure is less than half.)

In 1961, the IRS approved Healthcare Reimbursement Arrangements, or HRAs, that allowed employers to reimburse employees – with a receipt – for healthcare expenses without the employees owing tax on the reimbursement. Obviously few, if any, employers have unlimited reimbursement plans.

For whatever reason, group plans cost more per person than individual plans. For example, a group plan for a company with 10 to 25 employees with an average age of 35 costs about $800 per month per employee. Individual plans average about $300 per month. As a result, many small companies use HRAs to reimburse employees for their individual plans.

Beginning this year, Obamacare eliminated policy limits, so that a person with cancer no longer had to worry about running out of insurance.

But guess what? HRAs have limits, so reimbursement plans are now taxable for employees. Though HRAs are mainly used by small businesses, Target recently announced it was going to use HRAs to reimburse thousands of its employees up to $500 per month so they can buy their own insurance. (This also cuts Target’s cost in half, since group insurance costs $1,000 per month.) Because $500 is not an unlimited amount, those employees will owe tax on their reimbursements.

Clearly, Obamacare was trying to protect that cancer patient by requiring unlimited benefits, but did it intend for employees of small businesses to be hit with higher taxes? Does Obamacare intend to push small businesses into buying group policies at double the cost of individual plans? That’s not imaginable, though cynics and Obamacare-haters will say: Of course.

How many small companies use reimbursement plans? The executive director of a small Habitat for Humanity affiliate that uses a reimbursement plan says, “Lots of trees in those woods.” Its employees will collectively owe an additional $8,000. My company’s employees will owe an additional $25,000. Both the Habitat affiliate and my company will also reimburse the employees’ additional tax, but that only increases our costs.

In its effort to reduce costs and help small businesses, Obamacare increased taxes on the employees of small businesses. That is the Law of Unintended Consequences.

Georgetowner •

The holidays—you know, Christmas, plus others, plus agnostics and the church of shopping and unheard of sales and Santa Claus—swirl around us this time of year along with the occasional snow flurry. The holiday machine revs up like an SUV with all the horses and extras. In this city, we cannot escape the news: Syria, Iran, Ukraine snuck in there, but so far has not yet broken through the evening news. At last, Miley Cyrus’s wrecking ball seems to have stopped wrecking things.
This city is, however, odd as it gets still. The passing of Nelson Mandela managed to put the world into a kind of celebratory mourning as a great man disappeared from the scene, leaving South Africans to fret. Refreshingly, Pope Francis became Time Magazine’s Man of the Year.

With 2013 coming to an end, it’s time to assess and shop as well, and it was commonly agreed that President Barack Obama had the worst year of all, if you don’t count relatives of the young leader in North Korea. There’s the NSA scandal, Obamacare, Syria, Iran, the government shutdown. The rollout of Obama put Obama in a position where, according to one poll, he’s as popular as the Republican-controlled House, which is to say hardly at all.

Vincent Gray—our current mayor—ended the guessing game and decided to run for re-election, even though that old investigatory cloud hangs over him like a pimple. He may yet have second thoughts about—people actually yelled at him loudly at a recent candidate forum on education. As long as the mayor says he didn’t do anything—not exactly a rousing call to action—he’s going to get treatment like that. It’s less than four months to the April 1 primary election. And now at-large councilman and independent David Catania says he’s exploring a possible candidacy—and why shouldn’t he?
These were all interesting things, as are the Golden Globe nominations, the new high-tech gadgets, and even those commercials in which ticked-off squirrels attack a fine American man.

But were we talking about any of that stuff, at length, in our town? God forbid—and maybe he should—but local news folks, be they sportscasters or not, were talking Redskins. Will Coach Shanahan quit? Why is he benching RGIII? Why won’t Dan Snyder budge on the name game regarding the Redskins? Yadda yadda yadda, your da-da team has won three games, and people must toss and turn all night over this and wake up screaming.

Put an end to it. Folks, whoever you are still paying top dollar to see a deadskin game, have the decency to put a brown paper bag over your head.

After all, it is time for all of us to brighten up and have a Merry Christmas and a Happy New Year.

Georgetowner • December 6, 2013

Although the race for the Democratic Party nomination for Mayor of the District of Columbia seems to have been going on for some time now, with several high-profile candidates from the District Council and one from the restaurant field running hard, there was always something incomplete about the whole thing, as if something or someone were missing.

That would be incumbent Mayor Vincent Gray, over whom hung and still hangs an investigative cloud by the Feds about his 2010 campaign, said cloud apparently preventing him from committing to make a re-election run. Nevertheless, here, there and lately, Gray dropped hints like breadcrumbs for squirrely political reporters—and met very, very privately with a few neighborhood leaders around the city, seeking their advice.

Well, things are a lot clearer today.

Mayor Vincent Gray has decided to run for re-election. In doing so has changed the game so much that one can truly say: let the games begin.

Gray made the announcement in a Dec. 2 letter, which basically said he had a pretty good record to run on, ignored his potential legal problems, asked everyone to join in and wished everyone a Merry Christmas. News4 reporter Tom Sherwood, a long-time, sage observer of D.C. politics, going back to the Barry years, broke the news.

Cornered by the press at last, Gray continued to refuse to deal with the ongoing federal investigation into his 2010 campaign. The investigations involve, among other things, an alleged shadow campaign by financier Jeffrey Thompson which reportedly raise more than $500,000 in unreported funds. Several Gray aides from that campaign have been indicted or have pleaded guilty to felony charges. U.S. Attorney for the District of Columbia Ronald Machen has said the investigation is continuing.

Asked again about the investigation and the impact it had and might have, Gray said, “We’re trying to look ahead. … I didn’t do anything.”

Tommy Wells, who is the District Councilmember for Ward 6 and running for mayor, obviously thinks he did. In a strongly worded statement, Wells said, “Vince Gray was elected under false pretenses and doesn’t deserve a second chance because he ran a corrupt campaign. I’ve known Vince Gray for years, and I’m disappointed he let me down and everyone in D.C. down.”

Ward 4 Councilmember Muriel Bowser, also running for mayor and the first candidate to announce a mayoral run, addressed the issue of the investigation and the mayor, although in less stringent terms. “Gray will have to end his silence and answer the many legal questions about his 2010 campaign,” she said.

Ward 2 Councilmember Jack Evans is running for the second time to become mayor in his long political career. At this writing, he has made no official statement on Gray’s status. Likewise, neither has at-large councilmember Vincent Orange, also making his second mayoral run.

For sure, Gray’s entry into the race casts a different light on the campaign. He has to collect enough signatures to qualify but that should not be a problem. He remains—cloud or no cloud—a formidable candidate with a successful record of accomplishment to run on. But ethics in this city remain a critical issue, and the gap between rich and poor has widened considerably during his tenure. Economic, class, cultural and racial divides remain in a fast-changing city, the demographics of which are changing dramatically.

It’s quite possible that some candidates—restaurateur Andy Shallal and perhaps councilman Orange—entered the race on the premise that Gray was not going to run. Now, that situation has changed and dramatically so.

Still, Gray is hardly a shoo-in simply because he is mayor. Whatever accomplishments he can tout, he remains a mayor subject to the possibility of further revelations about his 2010 campaign. The silence he has kept about that campaign is troubling, over and above the “I’m silent on the advice of my attorney” reason. And that campaign will become a topic in every candidate forum that Gray attends. Now, it’s truly a question not only of the truth about the campaign but one of politics. And for his opponents that topic is now squarely on the table.

On the flip side, education and the schools seem to be improving. The city is prosperous and is being celebrated by many as becoming a “world-class” city. Crime is down, and Walmart is coming. Cranes dot the city’s skyline. Gray can take a good deal of credit for that.

But “I didn’t do anything” doesn’t make for much of a campaign slogan. The Democratic primary election is April 1, which is also April Fools’ Day. Absolutely stay tuned.

Gary Tischler •

We used to think of the “The Holidays” as encompassing perhaps what we could call the advent period, those days leading up to the celebration of Christmas and running into New Years and the extension of the college football season and bowl games.
These days, in this town, in our town, it seemed to me that holidays have become cyclical—the media outburst—we contributed to it—on the 50th anniversary of the assassination of JFK seemed to fold itself into the holidays, if not the holiday spirit, because of its commemorative and ceremonial aspects.

You started thinking in those days about the coming holidays, about birthdays, about time and reunions and remembering, which is as much a part of “The Holidays” as turkeys, family get togethers, punch and finding a gift-wrapped car in your driveway, snow on the ground, sleighs and thousands of frequent flyers in the air, and the faint odor of ongoing local, state, country and world affairs bearing both hope and the scent and sense of unreality.

Maybe it was my birthday falls in December, maybe it was the nuttiness about the—excuse the expression—breakout of the affordable care act, but I wasn’t so interested in the news. Instead, I found myself touched every now and then by a simple and heartfelt fact—I have been a part of Georgetown through the Georgetowner for longer than I care to admit, as well as admitting that I care. This was brought home to me when I attended a CAG meeting at the City Tavern as old as Gerogetown itself, where Steve Kurtzman and the graceful Barbara Downs told tales of of Georgetown and of being former CAG presidents, along with Chris Murray, who gave the village an electric, edgy touch with his Govinda Gallery and rock and roll connections, as well as Pie Friendly, sharp-minded and full of memory.

I was reminded again being at the Georgetown Seniors Center for Thanksgiving lunch as festive as any I can recall, an occasion full of songs.

On Thanksgiving, we watched the Macy’s Parade, and the National Dog Show, but not football. We celebrated the day with friends, and we went to the Downtown Christmas Market. I used my Barnes and Nobles Gift Card to buy Doris Kearns’ latest gift to the history of America, a tome on Teddy Roosevelt, Taft and the crusading muckrakers of the turn of the century.
Things happened: Former Treasury secretary Tim Geitner was seen giving a dollar to a homeless man in Georgetown, according to the Washington Post. Someone robbed the buckets from a Salvation Army office. Pope Francis told the world that he was not happy with the gap between wealthy and poor, with rampant consumerism, sounding more and more like he was preaching parts of the Sermon on the Mount.

We went to see “The King and I” in Olney. I saw a grown old man cry at the end of this terrific production which overcame the memory of Yul Brynner and stands up in its own right.

And so it goes. Or, as the King of Siam would say, right on both counts, “It is a puzzlement,” and et cetera, et cetera, et cetera. The holidays remain still bright and beckoning.

David Post • November 20, 2013

Mark Twain said, “There are lies, damn
lies, and statistics.”
Numbers matter. They tell a story.

Eighteen percent.
Eighteen percent is the amount of national
income spent on healthcare. Almost one of
every five dollars.

With more than 10,000 people reaching age
65 each day and healthcare costs increasing, that
number will reach 20 percent within a few years.

Thirteen percent.
Thirteen percent is the amount of the nation’s
total income we, as a nation, pay in income tax.

$50,000 and $15,000.

$50,000 is the average annual household
income in the country. $15,000 is the annual
cost of health insurance for the average household.
45 percent and declining. 25 percent and
growing.

45 percent is the percentage of the population
that is covered by employer provided health
care, even though employer-provided healthcare
is the basis of our national system.

Several years ago, the majority of the population
was covered by employer provided healthcare.

No more.

Not only is employer-provided healthcare
declining, but an increasing amount – now 25
percent – of the cost of employer’s cost is now
paid by the employee.

$1 trillion and 26 percent.

Government spending on healthcare, including
Medicare for the elderly, Medicaid for the
poor, and the military and VA, exceeds $1 trillion
and 26 percent of all government spending.
Within ten years, these costs are projected to
double.

$600 billion and 2.9 percent

Medicare costs $600 billion. The 2.9 percent
Medicare payroll tax brings in $225 billion.

Adding the $75 billion in Medicare premiums
charged to seniors and deducted from their social
security checks, only half the cost is covered.

The taxpayer covers the rest.

$400 billion and 11 percent.

Medicaid and military-based health costs
over $400 billion, more than 11 percent of government
spending, all of which is paid by the
taxpayer.

Fifty years ago, only 2 percent of government
was on healthcare. Today, it’s 26 percent
and growing. Fifty years ago, less than 5 percent
of the economy was healthcare; today it’s 18
percent.

50 million or 16 percent.

50 million people, or 16 percent of the population,
have no health insurance, but receive care
simply by going to a hospital. Taxpayers and
insured people pay more to cover those costs.

Medicare is an example of how insurance
is supposed to work. Everyone pays the 2.9
percent Medicare tax on wages. (The Medicare
tax does not apply to other income.) Everyone,
including the young and healthy, pays over their
lifetime so that all seniors have healthcare.

National healthcare costs can be covered
in one of three ways: The government could
tax and cover everyone like most countries
do. Everyone could be required to have insurance,
the premise behind Obamacare (and
Romneycare). The uninsured and poor could be
denied healthcare.

45 and zero.

Congressional Republicans have voted 45
times to repeal Obamacare.

None. Zero. Nothing. Nada. Zip. Zilch.
Despite objecting to Obamacare, Republicans
have offered no alternative.

The national healthcare system does not
work and is consuming the economy. Employerprovided
healthcare costs are shifting increasingly
to employees with the taxpayer picking up
increasingly more costs.

Mark Twain was funny, but wrong.

Healthcare statistics are not a lie.

Healthcare costs are consuming more and
more of everyone’s wallet.

Georgetowner • November 7, 2013

About 25 years ago, a popping noise arose outside our office. Then everything went dark.

The door next to ours slammed. Our neighbor, a giant of a man, ran outside screaming, “What the #!@% happened?”
At the time, the region was engaged in a heated debate about turning on a nuclear power plant. Fresh in everyone’s mind was the Chernobyl disaster only a year earlier in the Soviet Union and partial meltdown at Three Mile Island in Pennsylvania eight years earlier. The power company argued that nuclear power was safe, cheap, and nothing would ever go wrong. Opponents argued that nuclear disasters happen and take decades to recover from.

Turns out a squirrel got into the underground electric lines, bit a wire, fried itself and our computer, prompting my visit to city council to suggest that things happen with power companies.

Today, my most vivid memory is of my neighbor’s plaintive bellow that echoed for miles around, not of the cost and aggravation of losing our computer. He, too, lost his computer and hours of work. But neither of us closed our businesses over computer miseries.

The Affordable Care Act has serious computer problems, but when fixed, they will be forgotten. Few people recall the computer problems in 2006 with the start of Medicare Part D drug coverage for seniors. Pharmacies offered free guidance and had a steady stream of patients for months. Today, very few seek assistance and government computers work just fine.

In 2006, no one suggested repealing or delaying President Bush’s Part D plan which cost $1 trillion, hundreds of billions more than the ACA. Part D had no offsetting cost savings like the ACA has and uses private health insurance companies.

Ironies surround Obamacare. When it’s called the Affordable Care Act, rather than Obamacare – they are the same – people like it.
Another irony is that the ACA was the Republican’s private market response to President Clinton’s government-sponsored healthcare plan 20 years ago.

Mitt Romney extolled the virtues of how Massachusetts used Medicaid funds to buy health insurance for the uninsured with no change in cost and better results. He expected it to pave his way to the White House until the final iteration of Obamacare was his plan. Since then, he and Republicans were forced to argue how bad it was, even though it worked in Massachusetts.
The major complaint with Obamacare is its name. Despite complaints about government involvement in healthcare, few seniors or military complain about their government healthcare.

When a nation spends 18 percent of its income on healthcare – twice what other nations – and has 50 million people without healthcare, it has a problem that cannot be ignored.

Eighty years ago, Republicans opposed Social Security. Fifty years ago, Republicans opposed Medicare and Medicaid. Now they oppose the Affordable Care Act. They know that voters learn to like and rely upon government programs that make their lives better. Their nightmare is that Obamacare works.

Republicans were praying for something to wreak havoc on Obamacare. Their prayers were answered when that squirrel fried the Obamacare computers. But that squirrel didn’t prevail then, it won’t prevail now, and in the end, the squirrel will be fried.

Georgetowner •

By the time you read this, our long national and regional nightmare will be over.

Sorry, no, Obamacare has not been repealed, not for lack of trying. On the Internet, you can easily visit a dating site for farmers and ranchers, but not on the Obamacare site.

No, actually, we’re talking about the Commonwealth of Virginia’s race for governor, lieutenant governor and attorney general, a campaign during which District of Columbia residents have been bombarded just because of proximity with countless, perhaps more than countless, of television ads on an hourly basis.

This has been an annoying non-stop process for months, to the point where political junkies, to which we admit to being, are having a hard time to keep from pulling out their hair.

Here, in the Republican corner, we had Ken Cuccinelli, the Virginia state attorney general, who almost caused a GOP civil war in gaining the party’s nomination to run for governor, pitted against Terry McAuliffe, who never previously held public office but has helped many people gain public office with generous support and donations, especially President Barack Obama—who carried Virginia twice—and Bill and Hillary Clinton, his very own BFFs, who have stumped the state for him.

Here, we had Republican state senator Mark Obenshain, a low key social conservative, and Democrat Mark Herrin, running for attorney general, while Democrat and physician Ralph Northam was pitted against outspoken anti-abortion Republican E.W. Jackson in the race for lieutenant governor. Long will their names be not remembered in the District of Columbia.
We have watched this campaign—by force—spiraling away every day. Cuccinelli vowing to create jobs, touting his early attempts to get rid of Obamacare, lambasting McAuliffe with a variety of questionable and not questionable negative ads, returned in kind by McAuliffe who attacked Cuccinelli for his stands on abortion rights for women, his social conservatism, and his failure to back GOP Governor Robert McDonnell’s transportation plan.

With McAuliffe holding a lead in the polls almost from the get go—a Zogby poll had him ahead by 12 percent, most others by much less than that—Cuccinelli failed to find traction in Northern Virginia. Cuccinelli’s best bet might have been President Obama campaigning for McAuliffe, giving him a chance to slam Obamacare. But McAuliffe—with no political experience or governing experience—seemed to have grown during the course of the campaign. He actually seemed to enjoy campaigning, a sharp contrast to Cuccinelli and his ads. The last image of the last ad for his campaign had a grim, unsmiling Cuccinelli walking toward the cameras. He might as well have said, “Vote for me, or I’ll arrest you.”

The odd part of the campaign was that neither candidate ever described himself or was described as a Democrat or Republican. Cuccinelli is a conservative, who was painted with the tar brush of the folks considered responsible for shutting down the government, our friends the Teaists, while McAuliffe was generally looked at as a liberal. Could this be the end of the party system as we know it? Doubt it.

There was another so-called race going on in New Jersey where Gov. Chris Christie was expected to win re-election over Democrat Barbara Buono by a hefty margin. Buono said that she was not running for president but that Christie is. Duh. Christie is so popular about the only thing that could derail him is an encounter with a lemon meringue pie. Hmm, make that a Key lime pie.

David Post • October 24, 2013

I’m a deadbeat.

Eight years ago, I purchased a two-year old condo in a beautifully manicured gated community with tennis and volleyball courts, swimming pools, clubhouse and gym, and covered parking in Florida across the street from a major league baseball training camp.

A bank offered me one of those ridiculous nothing-down, interest-only loans. I declined, put 20 percent down, and made regular payments. Three years later, Florida real estate crashed, and dragged my condo with it. Two-thirds of its value vanished. It was so far underwater that it could take decades to recover. My bank went broke, the next bank went broke, and the third bank sold my loan to a fourth bank working for Fannie Mae. The banks wouldn’t talk to me, so I couldn’t sell the condo without paying more money in a market gone sour that was not my fault.

Realtors, lawyers, and bankers all gave me the same advice: Default and do a short sale. That took 18 months. During that time I collected $20,000 rent. At closing, I offered it to Fannie Mae, but Fannie Mae told me to keep the money since any payment would cancel the sale.

At the end of the year, it sent IRS Form 1099 on which I had to pay tax. It was the wrong amount – a lot higher and a nice round number. Fannie Mae said if I could prove how much I really owed, it would replace the form.

I knew that defaulting would destroy my personal credit. (Before doing this, I talked with my bank to make sure it wouldn’t hurt my business.) Now, over two years later, I still can’t get a new credit card even though my income is good, my house has no mortgage, my credit cards are paid in full, and I have some savings. Lenders simply don’t trust me.

Last week, most Republicans voted for the U.S. to default on its debt ceiling to prove, somehow, that we are serious about out budget deficits. When countries such as Spain, Russia, and Greece and cities like Detroit defaulted, interest rates and unemployment rates skyrocketed to 25 percent. They still face years of severe financial problems.

The debt ceiling a quirk of history. Before 1917, Congress had to approve all specific types of borrowings. In 1917, the first debt ceiling law was designed to allow the Treasury to issue the types of debt necessary to finance World War I. After Congress passed Budget Control Act in 1974, the debt ceiling was raised simultaneously as Congress passed appropriation bills.

In 1995, after the federal government shutdown, Congress separated the spending authorization process from the debt ceiling. Since then, Congress passed trillions of dollars on spending bills without providing the money to pay those bills.

No other nation has a U.S.-style debt ceiling. No other nation approves spending without making the money available. No other nation is that insane.

My strategic and intentional default did not prove to my creditors that I was a tough negotiator or that I was serious about dealing with my debt. It proved that they don’t trust me, won’t lend me money, and charge extra. It proved that a deadbeat is a deadbeat.