Friday Five for November 14 2014

Our total national debt now stands at $17,941,406,575,143.38. Debt held by the public stands at $12,872,812,914,521.72 and intragovernmental debts amount to $5,068,593,660,621.66. An example of the latter is when the Social Security Trust Fund purchases special issue Treasury Notes (which they are required to do by Federal law) and then Congress spends that money on one thing or another. Another example is when you or I purchase a United States Savings Bond. That bond becomes a payable – or debt – of the Federal Government. Given that our current Gross Domestic Product (GDP) stands at $17.535T (chained 2009 GDP is at $16,150T) at the end of the 3rd quarter for 2014, one can see that our total national debt exceeds our annual output as a nation. If anyone thinks this is a manageable situation, think again. Servicing our debt is expensive. The interest we paid in October of 2014 was $8.7B – in one month! At the time of this writing, we have paid over $430B in interest this year. Our Federal outlays (Table 1.1) in 1978 were $478B. It looks like we’ll spend in interest payments alone in 2014 what the entire Federal Government outlays were in 1978, just a mere 36 years ago. Does anyone really care? We don’t think so.

In a remarkable breath of fresh air, we learn what those who were writing the ACA (Affordable Care Act) thought of us normal Americans. After a series of frank but embarrassing statements on the strategies behind the Administration’s passage of the ACA, Professor Gruber has shown the utter disdain this administration has for the average American, the purposeful writing of “tortured” language so as to mask the true intent of the bill, their purposeful lack of transparency, their support of the ends justifying the means and the immense hubris that he and others possess:

“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies. Okay, so it’s written to do that. In terms of risk rated subsidies, if you had a law which said that healthy people are going to pay in – you made explicit healthy people pay in and sick people get money, it would not have passed… Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really really critical for the thing to pass… Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.” (Video here, here, here and here)

The lack of mainstream news coverage on this is remarkable. What is equally surprising is that voters by a 50% to 44% margin still have a more unfavorable than favorable view of Obamacare. But that’s the lowest level of dislike in over a year. While voters are clearly getting used to the law, the favorables and unfavorables have moved very little since its passage in 2010. It will be interesting to see if the expected jump in policy costs impacts these numbers.

We, too, read this book. The Hard Thing about Hard Things is a good book for any business owner – Christian or otherwise – to read. While the language is a bit salty in some places, the books thrust is spot on: It takes courage to run a business. Not just competence. In fact, we would postulate that it takes more courage than competence to run a small business.

Obamacare was front and center in most major political races this year, and half of voters say last week’s Republican takeover of Congress was a repudiation of President Obama’s party rather than an endorsement of the GOP. Democrats don’t disagree.

When it’s time for Happy Hour, most Americans order a beer or wine. Personally, I like White Zins……

Bill English
CEO, Elevate
Associate, The Platinum Group


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