Government Shutdown

 

The current government shutdown is in its fourth week. What is the issue? It is not Medicaid, or SNAP (food stamps). These are covered in the Continuing Resolution (CR) passed by the House of Representatives. The House resolution is called a "clean"one because it does not change anything. All current programs would be continued. The Democrat minority in the Senate, however, has used the filibuster to block the CR and demand the continuation of Federal subsidies for participants in the Affordable Care Act (Obamacare). Apparently, Obamacare enrollment has never reached expectations, while claims have skyrocketed to the extent that large premium increases are expected next year.  

 One of the first things I learned when I went into the insurance business over 50 years ago was that insurance was simply the prepayment of claims. It is paying in advance to cover some future bill or expense. It does not matter if it is life insurance, automobile insurance, or medical insurance. The same basic principle must apply. A policyholder pays monthly or annual premiums and these premiums are pooled with others to pay eventual claims. 

 

Medical insurance is no different. It only had its origins in the 1930s during the Great Depression. At that time hospitals and physicians were finding it increasingly difficult to collect from their patients, many of whom were out of work. As a result we had the birth of the “Blues.” Both Blue Cross and Blue Shield were products of the Depression. In short, people would enroll in these plans and pay a monthly or quarterly premium that over time would build up enough of a reserve to cover their future claims. This idea seemed to benefit everyone. Doctors and other health care providers would no longer have to go after their patients like collection agencies; and the patients would not have to come up with a large amount of cash to handle large, unexpected medical bills. 

 

However, to avoid excessive or frivolous claims that raise the cost for everyone, most medical insurance policies included deductibles or co-insurance to reduce or eliminate small claims. This was right out of Insurance 101 since actuaries were well aware that the most cost effective strategy was to make the patient bear part of the cost out of pocket.

 

However, the use of medical insurance to cover future health care costs only took off after World War II. The war had finally taken the country out of the Depression and the economy was booming. In a major change the Federal Government allowed corporations to purchase group medical insurance plans for their employees. Employers were not required to provide health insurance but the government altered the tax code to provide a great incentive. 

 

Unlike other forms of compensation the cost of the medical insurance would not be considered taxable income to the employee. This was important especially to high salaried employees at a time when the highest tax rate was 70%. In other words, employees covered under such a group insurance plan could now have most of their medical expenses paid with tax-free income. It was a no-brainer. Instead of giving all employees a taxable salary increase, the employer could give them a tax-free benefit that would cover future health related costs.

 

The employer sponsored plans were incredibly attractive to all concerned and sparked a veritable revolution in health care in this country. Employers could deduct the cost of their plans as an ordinary business expense while employees could rely on their pre-tax medical insurance plan to cover major medical expenses. Since these were group insurance plans all employees had to be covered even if they had pre-existing medical conditions. Increasingly these group insurance plans came to dominate the market.

Nevertheless, the basic principle of insurance still governed these group plans. They all involved a pre-payment of claims most often through automatic payroll deductions.

 

This system of corporate sponsored insurance worked remarkably well for the great majority of Americans for many years. There were obvious problems, however, that needed to be fixed. People would lose their coverage when they lost or changed their jobs. Self-employed people did not ordinarily have access to these plans. Unemployed workers would eventually lose their coverage. People with pre-existing medical problems would find it almost impossible to get coverage on their own.

 

Attempts had been made to deal with these problems but critics of the system still insisted that over 30 million people were without medical insurance. Even if that number was accurate it would be wrong to say that all those people lacked access to medical care. One of the problems with the system was that so many people refused to purchase medical insurance and just went to the local hospital ER for even ordinary care.

 

Instead of trying to fix the problems in the old system, proponents of the Affordable Care Act sought to overhaul the entire health care system in this country. Now instead of getting a tax break as an incentive for providing employees with medical insurance, employers would be forced to provide such insurance or pay a penalty. Even though the Obama administration had arbitrarily extended the corporate mandate for a year, some employers still chose to drop their plans.

 

More importantly, at the time the Affordable Care Act was passed in 2014, President Obama indicated that it would not be so affordable, and that Federal subsidies would be needed for a couple of years to help participants pay their premiums. As it turned out, the subsidies did not go away. Because of these subsidies many enrollees in Obamacare did not have to pay the full premium for their medical insurance. No matter what you call it, it was no longer insurance but welfare.

Even with subsidies it would appear that most of the un-insured did not find the plans attractive, or were not able to navigate the red tape necessary to enroll. The expected number of plan participants never materialized.   

 

When Obamacare was passed the Federal government was over 17 Trillion dollars in debt. Now the debt is over $37 Trillion. How is the government going to pay these subsidies?  Will it just print more money and add to inflation, or will it have to raise the taxes on everyone. It is a problem that deserves careful study and cooperation, not drastic measures like shutting down the government, and shutting down the benefits of the needy. 

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A Senior's Day

For those who think Senior citizens have nothing to do all day, below find a guest post from my brother Joe about a typical day. Joe is 81 and a retired NYPD sergeant. After his wife Anita died almost 11 years ago, Joe found a companion in Norma. In the process he adopted her family, or they adopted him. Bri and Matthias are Norma's great grandchildren who are both doing well at Joe's high school alma mater, Msgr. McClancy in Queens. I retain Joe's unique spelling and grammar.

 Here is a run down of my day’s activities.

I start off the day by checking my iPad, first for my sleep apena results. Note today’s reading 0.9 great. Next I have some oj and cherios with raspberries and blackberries as blueberries are weigh too high. They have a new gimmick as they pack the blue berries in a larger container but it’s really the same 1 pint. At $5.99, come on, man.

Next I have a teleconference with my sleep apena Dr., the modern wonder as you don’t have to go to the office and wait. She goes over my results with me and says the machine and me are working very well. I ask her to go over the setting on the machine as I had to adjust the humidity, since it seemed I was getting water boarded. You're doing great she says see you in 6 months. Pay co pay later.

Norma's son John will take us to 14th and 4th ave, union square for her therapy session at 1230. Afterwards I will take Norma to the Polish bakery for coffee and a roll, ok I cheat and have a danish, best prices in Williamsburg.

So far so good, as I await Bri softball game which will be played in Staten Island at 430 pm. I am going to watch it on my iPad as traffic is horrendous at that time.

Suddenly, I get a call from Bris father, Richie. Game canceled, he is not happy. He informs me that Brianna will be going to Cheerleading from 6-8pm and could I pick her up as he is taking Matthias to a college fair. Ok.

I now go early to the school hoping that they finish early. As I have about 3/4 of an hour,I start reading my book on Auschwitz. Note, almost finished the authors 5  years in captivity is over, but not his post traumatic ordeal. It’s now 8 pm and no signs of the kids, I call mom and ask her if she picked up Bri? She says Bri knows you are picking her up. Terror. Finally at 825 pm Bri says she coming out. These cheerleaders practice more than the soft ball team. In January, they will be going to Disney for a tournament. Bri get in and as usual asks if we can get something to eat, as she no longer likes Mcds, we go to her favorite deli by her house for grilled chicken sandwich.

Matthias come out and asks me about Columbia, I wanted to tell him you don’t go there to play baseball but say that’s where my friends nephew went before transferring to Vanderbilt, note he went on to play 10 years in majors. One good thing about it being 9 pm is there is no traffic.

I now go home and Norma says where have you been? I change the channel to see the Phillies lose in the 11th, 2-1. As I am now eating a cup of yogurt, I check my emails,Trump is upset that I don’t respond to him, I never should have bought that hat in 2016. Next I see that the kids mom, Antoinette, has sent me two emails re first marking period and except for an 89 in Bris algebra all 100 and 99s. Are the teachers at McClancy judge fans with the 99s?

Question how many women other than Antoinette Funicello do you know with that name? After all these years, I am a 5 year old boy upstairs at 4911 69st and mom is making me sunnyside up eggs, I loved the way the end was crispy. Never was able to do that.

Well, almost finished, but before that I check to see how the Giants are doing against The eagles. What they beat the Super Bowl champs, now that’s another story.

I almost forgot that some where between all this , I took Norma to bank and tried to have her son put on her account, even though I know her passcode. Prior to this at another branch the female rep said technically I was not supposed to do her banking.Funny the ITM machine, never said you are not Norma. Can you imagine Baba going to an itm machine. Different world.

It’s not over as Norma ask I could stop at the pharmacy to get her non diabetic cough syrup.

Ok, with all this when did I take my 9 pm meds? I carry backup meds in my wallet

Now that I have either amused or bored you , have a good day, as Richie for now is picking up the kids today. If you think this is too much, Remember, the Lord only gives you what you can handle.

Forgot, as I was driving to school, the song Forever Young came on the radio as Brianna must have switched the channels.

Ps . 15 days to Daemen first gave, October 25, the day I joined the NYPD. Going to be hard to watch without # 3 in lineup.

Bri softball coach gave her #20 shirt, she was always #1 but will have to wait until his daughter graduates. At least unlike Matthias she is playing.*

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*Matthias is a Senior with an "A" average who also pitches for the Varsity baseball team. Bri is a Freshman who made the girl's Softball Varsity team.

Peace Deal News

  

I have been a regular reader of the Wall Street Journal (WSJ) for over fifty years. Even though I worked in the financial services industry, I liked the Journal more for its editorial content than its business news. A few years ago the Journal was acquired by media giant News Corp. It was an unprecedented deal since it was agreed that the traditionally conservative editorial pages would be independent of the new owner. 

Sure enough, the Journal’s editorial pages have remained largely conservative and pro-business. However, since 2016 the WSJ editors and commentators have never been able to swallow Donald Trump to the point where it is hard for them to say one good word about him, his actions, or his policies. They don’t appear to hate him in the manner of left-wing commentators, but they seem to regard him as a rogue relative whose presence they would prefer to ignore. 

So far this year I do not recall the editors of the Journal writing anything good about the President. No one can blame them for consistently opposing his tariff policies but where is the applause as he brokers one peace deal or cease fire after another. They have even been strangely reticent about this weekend’s peace deal that included the release of the Israeli hostages.

Last Saturday, they did bury the following at the end of an editorial that praised the awarding of the Nobel Peace Prize to a courageous female opponent of the Venezuelan dictatorship. 

“If Mr. Trump helps Ms. Machado and the Venezuelan people restore democracy, and help free Mr. Lai from prison, the President will deserve the Nobel next year.”

In their opinion, the unprecedented Peace deal in the Middle East as well as the others negotiated over the globe in the past nine months are not good enough.

Journal political columnists have been equally reluctant to praise the President. Karl Rove, a regular columnist every Thursday since he left the Bush administration, has never forgiven Trump for his criticism of the Bushes. Despite his political astuteness, he finds it almost impossible to give the President any credit. 

Holman Jenkins, usually an acute political observer, has to almost tie himself in knots rather than give any praise to obvious achievements of the Trump administration. After all these years, he still cannot understand the President’s popularity and insists that James Comey won the election for him back in 2016.

Peggy Noonan has been the lead political columnist in the Weekend edition for years. She has never liked Trump as a person or politician. I recall that in 2016 she admitted that she voted for Edmund Burke, a long dead British political scientist, rather than cast a ballot for either Trump or Hillary Clinton. She must feel that she would become a pariah among her political friends if she ever said a good word about President Trump.

Finally, last Saturday she had to break down and give President Trump a grudging hand for brokering the Gaza peace deal. She wrote,

"Give it to him. Give him your applause. Sometimes pessimism reaches a point of moral error. Sometimes hope is the only realistic approach.

So give it to President Trump, whose White House has produced the first progress in the Mideast since the grave crisis of Oc. 7 began. He announced Wednesday with typically Trumpian words. He called it, “a big, big day, a beautiful day, potentially one of the great days ever in civilization.”

Finally, the release of the hostages on Monday led to an editorial, albeit not the lead editorial, with this headline:

“Trump’s Hostage Triumph in Jerusalem.”

Despite the headline the editorial was full of caveats and warnings. It was left to global affairs columnist Walter Russell Mead to finally give credit where credit was due.

“Only Mr. Trump could have made this happen. No other living politician could have reassured Israel, threatened Hamas, and patched together a broad coalition the way he has done. Mr. Trump has his shortcomings… but he is a leader who bestrides the world scene like no other.”

Apparently, the news dam has started to leak.

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Anna Magnani: The Rose Tattoo

At a local library book sale, I picked up a DVD of The Rose Tattoo, a 1955 film adaptation of the play by Tennessee Williams, one of the foremost American playwrights of the twentieth century. I had seen the film years ago, but my memory of the plot was muddled. I did recall that the film starred Anna Magnani, an Italian actress, and Burt Lancaster, the well-known American film star.

While watching the film at home, I turned to my wife and said that Magnani must have won an Academy Award for her performance, something that a quick online check verified. Magnani played a Sicilian woman who had come to America after her peasant family had arranged a marriage for her with an Italian man working as a truck driver in the American South. Initially fearful of marrying an unknown and unseen man, her fears were overcome on their first meeting. He was a handsome hunk with a beautiful rose tattoo on his formidable chest. He also had a touch of nobility in his blood. She came to adore the man whom she claimed was a baron.

Unfortunately, after fifteen years of marriage the man turns out to be a smuggler who transports more than bananas in his truck. At the beginning of the film, he dies in a truck accident while fleeing the police. She is left alone with a beautiful fifteen-year-old daughter to care for and must eke out a living as a seamstress in her home. Worse gets worse when rumors begin to fly that her beloved husband had been a philanderer.

The rumors foul the memory and reputation of her spouse, and most of the film deals with her efforts to deal with them. Complicating things is the intrusion of another Italian truck driver with a body like her late husband’s but with little else. He is poor and clownish and played well by Burt Lancaster in an unfamiliar role. There is also a subplot involving a budding romance between her daughter and a young sailor.

However, the movie is all Magnani. Tennessee Williams said that he wrote the original stage play with her in mind after seeing her in post-war Italian neo-realist films. He called her “volcanic,” and she certainly is. There had never been anything like her before in American films. In The Rose Tattoo she is earthy, vivacious, and sensual all at the same time. In a word, she is Italian. Subsequently, she would be followed in American by other fiery Italian actresses: Gina Loll0brigida and Sophia Loren come immediately to mind.  

Coincidentally, in 1955 the Best Actor award went to Ernest Borgnine, himself an Italian immigrant, who played a second-generation Italian American butcher in Marty which that year won the award for Best Picture. Looking back I can see that the success of these two films was a remarkable achievement that marked the acceptance of Italian immigrants in America. It took three generations but Rome was not built in a day. 

Since Edward G. Robinson played an Al Capone like ruthless gang boss in the 1930s, Italians had usually been portrayed as either mobsters or cheap hoodlums. There were some notable exceptions but 1955 marked a real turning point. It’s true that mob films like the Godfather were yet to come, but Marty and The Rose Tattoo portrayed Italian Americans as ordinary people, albeit full of life and emotion.

I often think that most people living through great historical changes do not realize what is going on. During the Italian renaissance, for example, I doubt if most people had even heard of Leonardo, Raphael or Michelangelo. I was a sixteen-year-old third generation Italian American living in New York City in 1955 and I do not recall seeing either of these films at the time. I certainly did not think that films like these had any historical importance.

My paternal grandparents had moved out of their Italian neighborhood in Manhattan years before to Woodside, a section of the borough of Queens that was then, as well as now, a true melting pot. On my block facing busy 69^th Street, there was an Italian barbershop on one corner, and an Irish family on the other. In the center of the block my parents lived above a deli next to my grandparents’ home. The deli was run by a German American family as was the neighborhood soda fountain and candy store across the street. My parents could understand Italian but only used it with their parents, not with their children. They wanted their children to be American.

Now that I think of it, perhaps nothing contributed more to the acceptance of Italian Americans than the success of baseball’s New York Yankees. Before his retirement in 1951 the Yankee center fielder Joe DiMaggio had been the best player on the greatest team in baseball. Even after his retirement, the Yankees, led by Yogi Berra and Phil Rizzuto, went on to complete a string of five straight World Series victories. I think it safe to say that the Yankees were beloved in New York’s Italian American community. It is true that 1955 was not a good year for the Yankees. In that year they lost to the hated Brooklyn Dodgers in the World Series, and the great DiMaggio’s marriage with movie idol Marilyn Monroe came to an end. 

Nevertheless, 1955 marked the real arrival of Italians in America. The way was open for films like Moonstruck and My Cousin Vinny as well as the Godfather epic with its host of imitators in both the movies and on TV. Of course, it would not be long before pizza would become as American as apple pie.

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The Industrial Revolution and Socialism

Climate Change activists date the current warming trend to the onset of the Industrial Revolution. It seems obvious to me that their alarmism about Climate has more to do with an animus against the Industrial Revolution and its effects than concern for the environment. Capitalism and free enterprise are associated with the Industrial Revolution. A recent study showed that today 50% of college students consider themselves to be Socialists. The percentage of their professors must be even higher. 

Over fifty years ago when I taught a unit on the Industrial Revolution as part of a basic course in Western Civilization, I thought then and still believe today that the Industrial Revolution was one of the most significant developments in the history of the world. If you do an image search for Industrial Revolution, you will see countless images of smoke-belching factories of 150 years ago, but you will not see an image of the ubiquitous latest mobile phone pictured above. Before the Industrial Revolution life was indeed "nasty, brutish, and short."

Try to imagine a world today without the following:

Electricity

Clean water delivered by pipeline to your home

Modern sewers and waste removal systems

Automobiles

Home heating without firewood

Computers

Televisions

Air Conditioning in homes and cars

Trains, Planes, and Buses

Indoor Plumbing—before the IR there was no such thing.

Elevators

Washing Machines for clothes and dishes

Hospitals with their incredible technology

Cell Phones—most important of all!

It is hard to believe but our ancestors before the Industrial Revolution had none of these essential elements of modern life. Actually, many parts of the world today still live in the pre-industrial age without many of the items listed above. 

Industrial Revolution is the term given to the transformation of manufacturing from homes and shops to factories employing hundreds or even thousands. The transformation began in Great Britain in the late eighteenth and early nineteenth centuries, and eventually spread all over the world. However, before there could be an industrial revolution, there had to be three other revolutionary developments. 

First, there was a Demographic Revolution involving a substantial increase in population. This increase happened not so much because of a rise in the birth rate but because of a decline in the death or mortality rate due to a dramatic drop in infant mortality, a drop caused by advances in diet and sanitation. For example, in Italy in 1860, 232 of every 1000 infants died in the first two years of life but 60 years later only 127 of 1000 infants died during the same period. 

An Agricultural Revolution accompanied the Demographic Revolution. Human ingenuity devised new methods of farming, land management, and animal husbandry to feed the growing population. While doomsayers like the British clergyman Thomas Malthus were predicting mass starvation, they could not predict that the profit motive and human resourcefulness would provide for the needs of an ever increasing population. 

A Transportation Revolution also accompanied the Industrial Revolution. The nineteenth century was the great age of canal and railroad building. At the same time, steam power replaced wind power as a safer and more reliable source of energy. The revolution in means of transportation allowed mass migrations of people from rural areas to the urban centers of manufacturing and commerce. It also allowed goods and services to be delivered faster and at less cost. Lower costs meant that not only rich people could afford them.

From the beginning the tremendous social, economic, and political changes caused by these revolutions had both good and bad consequences. Rural areas lost population and industrial cities became overcrowded. Writers and social commentators were quick to point out the terrible working conditions in the factories, and the deplorable living conditions in the slums surrounding the factories. 

Moreover, critics objected, as they do today, to the incredible disparities in wealth and income between the factory owners and financiers (capitalists) who profited and the workers who toiled. The misery of the urban poor could not be overlooked. Nevertheless, in countries that did not industrialize, like Ireland or southern Italy, the poor were even worse off and literally starved to death either from actual food shortages or malnutrition. Why else would millions from Ireland and Italy leave their beautiful countries to live in the overcrowded cities of the New World?

I suspect that the Industrial Revolution still has a bad name today. Capitalist is a term of opprobrium and even capitalists shun to describe themselves as such. Even union members whose pensions are invested throughout the American industrial sector do not realize that they are capitalists. Of course, Progressives are outspoken in decrying the terrible effects of corporate greed and inequality.

It’s true that few of us will have the income or assets of CEOs, politicians, Rock stars, TV personalities, or professional athletes. But more than anywhere else in the world, we do have the opportunity to acquire and keep property. We can even buy and sell shares in the companies we work for. You may call it Capitalism but I prefer to call it a free-enterprise system. Whatever you call it, it has worked to raise the standard of living in this country to the highest level that has ever been seen in the world. 

Students today are asked to evaluate the relative merits of Capitalism, Socialism, and Communism. All three systems were responses to the Industrial Revolution. You can judge for yourself which of the three systems did the best job of providing the necessities of life listed at the beginning of this essay. Why are people still fleeing today from Socialist "paradises" like Cuba, Nicuagua, and Venezuela? 

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