What's In H.R. 3200 Health Care "Reform"

Congress adjourned (mercifully), Congressmen and Senators are going back home and more than half of them (mostly Democrats) will be trying hard to sell us the health care "reform", whose bill, H.R. 3200, you can bet your farm (or windmill or solar panel) that they haven't even read. So, before you go to these increasingly acrimonious townhall meetings with your Congressman/Senator, please educate yourself and know what to ask.

This blog has already discussed in detail two particular sections of the bill, Section 1233 ("advanced care" for senior citizens) and Section 141 (unelected health care Commissar deciding everything for you). I continue to browse the section titles of the actual bill and look in detail if they look "interesting". I was going to write about another section that I found during browsing, Section 163, which will allow the government a direct, electronic access to your bank account, and provides a back-door national ID card system.

I will write a post about Section 163, but for your quick reference I found this list at UrbanGrounds.com. It seems someone else is reading the actual bill, and twittering as he reads. The following list covers about half the bill, which is over 1000 pages. Page numbers may change as they mark up the bill, but section numbers should remain. Here goes:

"There is a man by the name of Peter Fleckstein (aka Fleckman) who is reading it and has been posting on Twitter his findings. This is from his postings (Note: All comments are Fleckman’s):

Pg 16: SEC. 102. PROTECTING THE CHOICE TO KEEP CURRENT COVERAGE. lines 3-26 of the HC Bill – OUTLAWS PRIVATE INSURANCE by forbidding enrollment after HR 3022 is passed into law.

Pg 21-22: SEC. 113. INSURANCE RATING RULES of the HC Bill MANDATES the Government will audit books of ALL EMPLOYERS that self insure!!

Pg 29: SEC. 122. ESSENTIAL BENEFITS PACKAGE DEFINED: lines 4-16 in the HC bill – YOUR HEALTHCARE IS RATIONED!!!

Pg 30: SEC. 123. HEALTH BENEFITS ADVISORY COMMITTEE of HC bill – THERE WILL BE A GOVERNMENT COMMITTEE that decides what treatments/benefits you get.

Pg 42: SEC. 142. DUTIES AND AUTHORITY OF COMMISSIONER of HC Bill – The Health Choices Commissioner will choose your HC Benefits for you. You have no choice!

PG 50-51: SEC. 152. PROHIBITING DISCRIMINATION IN HEALTH CARE in HC bill – HC will be provided to ALL non US citizens, ILLEGAL or otherwise.

Pg 58: SEC. 163. ADMINISTRATIVE SIMPLIFICATION HC Bill – Government will have real-time access to individual’s finances and a National ID Healthcard will be issued!

Pg 59: SEC. 163. ADMINISTRATIVE SIMPLIFICATIONHC Bill lines 21-24 Government will have DIRECT access to your BANK ACCOUNTS for electronic funds transfer. This means the government can go in and take your money right out of your bank account.

PG 65: SEC. 164. REINSURANCE PROGRAM FOR RETIREES is a payoff subsidized plan for retirees and their families in Unions and community orgs (ACORN).

Pg 72: SEC. 201. ESTABLISHMENT OF HEALTH INSURANCE EXCHANGE; OUTLINE OF DUTIES; DEFINITIONS Lines 8-14 Government is creating an HC Exchange to bring private HC plans under Government control.

PG 84: SEC. 203. BENEFITS PACKAGE LEVELS HC Bill – Government mandates ALL benefit packages for private HC plans in the Exchange

PG 85: SEC. 203. BENEFITS PACKAGE LEVELS Line 7 HC Bill – SPECIFICATION OF BENEFIT LEVELS FOR PLANS = The Government will ration your Healthcare!

PG 91: SEC. 204. CONTRACTS FOR THE OFFERING OF EXCHANGE-PARTICIPATING HEALTH BENEFITS PLANS Lines 4-7 HC Bill – Government mandates linguistic appropriate services. Example – Translation for illegal aliens!

Pg 95: SEC. 205. OUTREACH AND ENROLLMENT OF EXCHANGE-ELIGIBLE INDIVIDUALS AND EMPLOYERS IN EXCHANGE-PARTICIPATING HEALTH BENEFITS PLAN HC Bill Lines 8-18 The Government will use groups i.e., ACORN & Americorps to sign up individuals for Government HC plan.

PG 102: SEC. 205. OUTREACH AND ENROLLMENT OF EXCHANGE-ELIGIBLE INDIVIDUALS AND EMPLOYERS IN EXCHANGE-PARTICIPATING HEALTH BENEFITS PLAN Lines 12-18 HC Bill – Medicaid Eligible Individuals will be automatically enrolled in Medicaid. No choice!

pg 124: SEC. 223. PAYMENT RATES FOR ITEMS AND SERVICES lines 24-25 HC No company can sue the GOVERNMENT on price fixing! No “judicial review” against Government Monopoly!!

pg 127: SEC. 225. PROVIDER PARTICIPATION Lines 1-16 HC Bill – Doctors/ AMA – The Government will tell YOU what you can make.

Pg 145: SEC. 312. EMPLOYER RESPONSIBILITY TO CONTRIBUTE TOWARDS EMPLOYEE AND DEPENDENT COVERAGE Line 15-17 An Employer MUST auto enroll employees into public option plan. NO CHOICE!!

Pg 146: SEC. 312. EMPLOYER RESPONSIBILITY TO CONTRIBUTE TOWARDS EMPLOYEE AND DEPENDENT COVERAGE Lines 22-25 Employers MUST pay 4 HC 4 part time employees AND their families.

Pg 149: SEC. 313. EMPLOYER CONTRIBUTIONS IN LIEU OF COVERAGE Lines 16-24 ANY Employer with payroll of $400k and above who does not provide public option pays 8% tax on all payroll.

pg 150: SEC. 313. EMPLOYER CONTRIBUTIONS IN LIEU OF COVERAGE Lines 9-13 Business’s with payroll between $251k – $400k who doesn’t provide public option pays 2-6% tax on all payroll.

Pg 167: SEC. 401. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE Lines 18-23 ANY individual who doesn’t have acceptable HC according to Government will be taxed 2.5% of income.

Pg 170: SEC. 401. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE Lines 1-3 HC Bill Any NONRESIDENT Alien is EXEMPT from individual taxes. (Americans will pay)

Pg 195: HC Bill – SEC. 421. CREDIT FOR SMALL BUSINESS EMPLOYEE HEALTH COVERAGE EXPENSES Officers and employees of HC Administration (GOVERNMENT) will have access to ALL Americans financial and personal records!

PG 203: SEC. 441. SURCHARGE ON HIGH INCOME INDIVIDUALS Line 14-15 HC – “The tax imposed under this section shall not be treated as tax” Yes, it says that!

Pg 239: SEC. 1121. SUSTAINABLE GROWTH RATE REFORM Line 14-24 HC Bill Government will reduce physician services for Medicaid. Seniors, low income, poor affected.

Pg 241: SEC. 1121. SUSTAINABLE GROWTH RATE REFORM Line 6-8 HC Bill – Doctors, doesn’t matter what specialty you have, you’ll all be paid the same.

PG 253: SEC. 1122. MISVALUED CODES UNDER THE PHYSICIAN FEE
SCHEDULE Line 10-18 Government sets value of Doctor’s time, professional judgment, etc. Literally value of humans.

PG 265: SEC. 1131. INCORPORATING PRODUCTIVITY IMPROVEMENTS INTO MARKET BASKET UPDATES THAT DO NOT ALREADY INCORPORATE SUCH IMPROVEMENTS. Government mandates and controls productivity for private HC industries.

PG 268: SEC. 1141. RENTAL AND PURCHASE OF POWER-DRIVEN WHEELCHAIRS. Federal Government regulates rental and purchase of power driven wheelchairs

PG 272: SEC. 1145. TREATMENT OF CERTAIN CANCER HOSPITALS – Cancer patients – welcome to rationing!

Page 280: SEC. 1151. REDUCING POTENTIALLY PREVENTABLE HOSPITAL READMISSIONS The Government will penalize hospitals for what Government deems preventable readmissions.

Pg 298: SEC. 1151. REDUCING POTENTIALLY PREVENTABLE HOSPITAL READMISSIONS Lines 9-11 Doctors! Treat a patient during initial admission that results in a readmission? Government will penalize you.

Pg 317: SEC. 1156. LIMITATION ON MEDICARE EXCEPTIONS TO THE PROHIBITION ON CERTAIN PHYSICIAN REFERRALS MADE TO HOSPITALS Lines 13-20 OMG!! PROHIBITION on ownership and investment! Government tells Doctors what and how much they can own!

Pg 317-318: SEC. 1156. LIMITATION ON MEDICARE EXCEPTIONS TO THE PROHIBITION ON CERTAIN PHYSICIAN REFERRALS MADE TO HOSPITALS lines 21-25, 1-3 PROHIBITION on expansion – Government is mandating hospitals cannot expand!

pg 321: SEC. 1156. LIMITATION ON MEDICARE EXCEPTIONS TO THE PROHIBITION ON CERTAIN PHYSICIAN REFERRALS MADE TO HOSPITALS Lines 2-13 Hospitals have option to apply for exception BUT community input required. Can you say ACORN?!!

Pg 335: SEC. 1162. QUALITY BONUS PAYMENTS Lines 16-25 Pg 336-339 – Government mandates establishment of outcome based measures. HC the way they want. Rationing

Pg 341: SEC. 1162. QUALITY BONUS PAYMENTS Lines 3-9 Government has authority to disqualify Medicare Advantage Plans, HMOs, etc. Forcing people into Government plan.

Pg 354: SEC. 1177. EXTENSION OF AUTHORITY OF SPECIAL NEEDS PLANS TO RESTRICT ENROLLMENT – Government will RESTRICT enrollment of Special needs people! OMG! My sister has Downs Syndrome!!!

Pg 379: SEC. 1191. TELEHEALTH EXPANSION AND ENHANCEMENTS Government creates more bureaucracy – Telehealth Advisory Committee Can you say HC by phone?

PG 425: SEC. 1233. ADVANCE CARE PLANNING CONSULTATION Lines 4-12 Government mandates Advance Care Planning Consult. Think Senior Citizens end of life

Pg 425: SEC. 1233. ADVANCE CARE PLANNING CONSULTATION Lines 17-19 Government will instruct and consult regarding living wills, durable powers of attorney. Mandatory!

PG 425: SEC. 1233. ADVANCE CARE PLANNING CONSULTATION Lines 22-25, 426 Lines 1-3 Government provides approved list of end of life resources, guiding you in death!

PG 427: SEC. 1233. ADVANCE CARE PLANNING CONSULTATION Lines 15-24 Government mandates program for orders for end of life. The Government has a say in how your life ends!

Pg 429: SEC. 1233. ADVANCE CARE PLANNING CONSULTATION Lines 1-9 An “advance care planning consultant” will be used frequently as patients health deteriorates.

PG 429: SEC. 1233. ADVANCE CARE PLANNING CONSULTATION Lines 10-12 “advance care consultation” may include an ORDER 4 end of life plans. AN ORDER from GOV

Pg 429: SEC. 1233. ADVANCE CARE PLANNING CONSULTATION Lines 13-25 – The Government will specify which Doctors can write an end of life order.

PG 430: SEC. 1233. ADVANCE CARE PLANNING CONSULTATION Lines 11-15 The Government will decide what level of treatment you will have at end of life.

Pg 469: SEC. 1302. MEDICAL HOME PILOT PROGRAM Community Based Home Medical Services=Non profit organizations. Hello, ACORN Medical Services here!!?

Page 472: SEC. 1302. MEDICAL HOME PILOT PROGRAM Lines 14-17 PAYMENT TO COMMUNITY-BASED ORG. 1 monthly payment 2 a community-based org. Like ACORN?

PG 489: SEC. 1308. COVERAGE OF MARRIAGE AND FAMILY THERAPIST SERVICES AND MENTAL HEALTH COUNSELOR SERVICES The Government will cover Marriage and Family therapy. Which means they will insert Government into your marriage

Pg 494-498: SEC. 1308. COVERAGE OF MARRIAGE AND FAMILY THERAPIST SERVICES AND MENTAL HEALTH COUNSELOR SERVICES Government will cover Mental Health Services including defining, creating, rationing those services.

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Most importantly, ask your Congressmen/Senator this: WHY NOW?

The country is in the worst recession since the Great Depression, and it is a recession caused by excess credit and leverage, not by excess inventory. The last time this type of recession happened was the Great Depression. Consumers don't have extra money, the country is utterly broke. WHY are we embarking on a huge, costly project like health care "reform", NOW?

The president's sense of "urgency" seems to coincide with the health care industry lobby's effort. (In case you are not aware, the health care industry is FOR the "reform and is planning on advertisement blitz this summer. That alone would tell you who is going to benefit. Not you and me.) Also remember that Congress would be EXEMPT from their own "reform".

The stock market didn't crash last September because of health care crisis. It crashed last September because of credit problems at world's major banks. The credit problems were caused by the loose monetary policies by the Federal Reserve under the misguided government policy of home ownership as a right (just like what they are saying now, that heath care is a right). That caused a price inflation of all asset classes, most notably real estate; resultant low cost of capital (= low interest rate) led to malinvestment in inefficient sectors with low returns on capital. This recession was caused by financial reasons.

The government and this particular administration don't seem to care what caused it, but care about not wasting this excellent opportunity to shove in "reforms" that are their life-long dreams. They want to put one of the culprits of the financial debacle the Federal Reserve as the head of the sweeping financial "reform". They don't seem to care that the country does not have money; they want to create brave new, enormous projects like health care and climate, on credit (= debt. remember, this country is broke. Just in July, it had to issue over $700 billion worth of Treasuries), in the middle of a credit-driven recession.

What's more, the health care in the U.S. has already been taken over by the government for all intent and purposes, and it is one of the most inefficient sectors of the economy because of that. More money and bureaucracy dumped on top of the inefficient sector, how would that help? If they truly believe it will help lift the country out of recession, they need to have their heads examined.

I wish their summer vacation would last for ever and ever.

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Curious Entry At Drudge Report 7/31/09

"The government plans big revisions to historical economic data... Developing... " No link yet.

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Bank Closure In July 09 - End Of Month

Now that's a green shoot. 24.

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H.R. 3269 Passed The House

H.R. 3269 "Corporate and Financial Institution Compensation Fairness Act of 2009" just passed House on a 237-185 vote. 2 Republican voted yes, 16 Democrats voted no.

House votes to restrict Wall Street pay (7/31/09 AP)

"WASHINGTON – The House voted Friday to slap restrictions on how Wall Street executives are paid after nine banks that took government aid rewarded thousands of their employees with bonuses topping $1 million each.

"Bowing to populist anger and defying President Barack Obama's suggestion that government rely on incentives instead of intervention to curb excessive salaries and bonuses, the House passed the bill on a 237-185 vote.

""This is not the government taking over the corporate sector. . . . It is a statement by the American people that it is time for us to straighten up the ship," said Rep. Melvin Watt, D-N.C."

As this blog wondered a few days ago, what populist anger? Was SEIU demonstrating again, this time in front of Citigroup's headquarter?

When a politician invoke "American people", as this Rep. Watt did, beware.

The stock market immediately dipped on the news of the bill's passage. For details of the bill, please go to my post which has the actual text of the bill.

Now the unelected government bureaucrats will decide what's risky and determine the compensation of a private industry - financial, for now. The health care "reform" bill specifies one Health Choices Commissioner who will decide on what kind of health care we will be allowed to have. All for the good of American people, I'm sure.

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Judge Denied Fox Network's FOIA Request

A federal judge said no to Fox News Network's request under the Freedom of Information Act (FOIA) for documents detailing which companies received how much money under what programs from the Federal Reserve. According to the U.S. District Judge Alvin Hellerstein in Manhattan federal court, they are "trade secrets".

UPDATE 1-U.S. judge rules for Fed in Fox News Network request (7/30/09 Reuters)

"NEW YORK, July 30 (Reuters) - A U.S. judge on Thursday denied a bid by Fox News Network LLC seeking details from the Board of Governors of the Federal Reserve about the central bank's loans to companies affected by the financial crisis."

The judge ruled ONE document in favor of Fox News:

""I rule that one document, which the Board determined is not a record, is indeed, a record. The Board shall identify this document and either produce it or claim an exemption," Hellerstein said in a written order.

""In all other respects, I grant the Board's motion and deny Fox's motion, finding that the Board performed an adequate search and that Exemption 4 permits the Board not to disclose the documents that Fox seeks.""

"Under Exemption 4 of the FOIA, an agency must demonstrate that the information sought is a "trade secret" or "commercial or financial" in character and "obtained from a person" and "privileged and confidential.""

Trade secrets. That's rich. Against overwhelming opposition from the taxpayers, the bank bailout bill was passed, the taxpayers foot the bill, and the Fed spends it as it sees fit and we are supposed to just trust them. Chairman Bernanke himself doesn't know where the money's gone in the numerous currency swap lines he has opened with central banks around the world, but we are to trust him. Nowhere in the Federal Reserve's balance sheet are the transactions under numerous lending programs detailed.

Come to think about it, it is the definition of a bank - take someone's money and lend it to someone else. So the Federal Reserve, the central bank for the U.S., is after all nothing but another commercial bank. The difference: people hand the deposits to commercial banks on their own free will, while the Federal Reserve bank just takes money whether the depositors (taxpayers) like it or not.

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U.S. Dollar Going Off The Cliff...

The U.S. Dollar index has gone off the cliff. It's currently down 1.22% (big move for fx market) for the day, at 78.31. June intraday low was 78.33.

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Subtitle E Section 141 of H.R. 3200 Health Care "Reform" Bill

establishes a Health Choices Administration in the executive branch and an unelected Health Choices Commissioner. [emphasis is mine]

Subtitle E--Governance

SEC. 141. HEALTH CHOICES ADMINISTRATION; HEALTH CHOICES COMMISSIONER.

(a) In General- There is hereby established, as an independent agency in the executive branch of the Government, a Health Choices Administration (in this division referred to as the `Administration').

(b) Commissioner-

(1) IN GENERAL- The Administration shall be headed by a Health Choices Commissioner (in this division referred to as the `Commissioner') who shall be appointed by the President, by and with the advice and consent of the Senate.

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Great. An(other) unelected official, a(nother) czar, appointed by and answerable only to, the über-czar, uhh, President, will decide on your health care. His/her mandate? That's in Section 142:

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SEC. 142. DUTIES AND AUTHORITY OF COMMISSIONER.

(a) Duties- The Commissioner is responsible for carrying out the following functions under this division:

(1) QUALIFIED PLAN STANDARDS- The establishment of qualified health benefits plan standards under this title, including the enforcement of such standards in coordination with State insurance regulators and the Secretaries of Labor and the Treasury.

(2) HEALTH INSURANCE EXCHANGE- The establishment and operation of a Health Insurance Exchange under subtitle A of title II.

(3) INDIVIDUAL AFFORDABILITY CREDITS- The administration of individual affordability credits under subtitle C of title II, including determination of eligibility for such credits.

(4) ADDITIONAL FUNCTIONS- Such additional functions as may be specified in this division.

Basically, the whole aspect of this health care "reform".

Don't turn around.. The Commissar in town, Oh uh...

Here's a take by the Heritage Foundation, posted on 7/29/09.

By the way, does this chart (created by GOP, to be sure) look like the "reform" will save money or reduce cost?

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Cash For Clunkers To Be Suspended (Already?)

Welll, that was quick. The program started just last Friday.

AP sources: Govt to suspend 'cash for clunkers' (7/30/09 AP)

"The government plans to suspend its popular "cash for clunkers" program amid concerns it could quickly use up the $1 billion in rebates for new car purchases, congressional officials said Thursday.

"The Transportation Department called lawmakers' offices to alert them to the decision to suspend the program at midnight Thursday. The program offers owners of old cars and trucks $3,500 or $4,500 toward a new, more fuel-efficient vehicle."

"A survey of 2,000 dealers by the National Automobile Dealers Association found about 25,000 deals had not yet approved by NHTSA, or nearly 13 trades per store. It raised concerns that with about 23,000 dealers taking part in the program, auto dealers may already have surpassed the 250,000 vehicle sales funded by the $1 billion program."

About the only "stimulus" money that has worked and it's suspended in one week. And lawmakers want more money to keep it going.

"Even before the suspension, some in Congress were seeking more money for the auto sales stimulus. Rep. Candice Miller, R-Mich., wrote in a letter to House leaders on Wednesday requesting additional funding for the program.

""This is simply the most stimulative $1 billion the federal government has spent during the entire economic downturn," Miller said Thursday. "The federal government must come up with more money, immediately, to keep this program going.""

Ummm, I don't know about that. My car is an old SAAB (1988) but it gets too good a mileage and does not qualify. My truck is even older but it gets even better mileage. So, as a taxpayer, I get to fund this program, with no personal benefit. There's no incentive for me to keep it going.

Alternatively, since this program was attached, for some unknown reason, to H.R. 2346 "Supplemental Appropriation Act of 2009", maybe the government can ditch some of the projects in the bill and fund the cash for clunkers. My suggestion would be:

• Ditch the new embassy in Af-Pak and save $1 billion
• Let the World Bank fight the world poverty on its own and get that $3.7 billion
• Don't assist Jordan, Lebannon, Egypt and Israel, and save about $1 billion
• Don't assist IMF and get that $7.6 billion

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OT: President's $50,000/Week Vacation on Martha's Vineyard

An article at MSNBC website ("Poll: Obama loses ground on health care") includes a quote from Democratic pollster Peter D. Hart:

“This is a president who needs a vacation”

Well, it looks like he's going to have a good one.

$20m holiday home at Blue Heron Farm suits Barack Obama to a tee (7/28/09 Times Online UK)

Mr Obama and the First Family are planning to spend their summer break on a $20 million retreat on the wealthy playground island off Cape Cod and even seem undeterred that the property is owned by a Republican.

According to the Vineyard Gazette, the resort island’s journal of record since 1864, the Obamas have chosen Blue Heron Farm, in Chilmark, recorded as America’s most expensive small town in 2007.

The farm features a swimming pool, golf practice facilities — Mr Obama plays regularly — a basketball court, access to a private beach and a rental price tag of up to $50,000 (£30,000) a week.

Here's the article from Vineyard Gazette.

According to the Times Online article, "The Obamas are reported to be determined to pay their way" - a rather convoluted sentence, but it seems to say they at least intend to pay. (The U.S. President's salary has been $400,000 since 2001.)

Some people commenting in the Times article are wondering why he can't vacation at the taxpayer-funded Camp David, like many Presidents before him. One of them remembers President Bush vacationing at his own home, and suggests Obama take a vacation at his Chicago home.

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Waxman's Committee To Discuss Health Care Bill Tomorrow

Waxman didn't get his wish of taking up the health care bill H.R. 3200 in his Committee today. The Committee on Energy and Commerce website is still down, due apprarently to increased traffic. The site says:

"The Energy and Commerce website is experiencing an unusually high number of visitors.
We are endeavoring to restore access as quickly as possible.

"The Committee on Energy and Commerce will be meeting at 10:00 a.m. on Thursday, July 30, to continue consideration of "H.R. 3200, America's Affordable Health Choices Act."

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Dems Reach A Deal On Health Care

Blue Dogs say they've reached a compromise on health care
(7/29/09 CNN)

"A group of fiscally conservative House Democrats announced Wednesday they reached a deal with the chamber's Democratic leaders on a health care reform bill.

"Ross [Rep. Mike Ross of Arkansas] said the deal between four Blue Dogs on the House committee [the Energy and Commerce Committee] , the House Democratic leadership and the White House lowers the cost of the House health care reform plan by $100 billion and also exempts businesses with payrolls below $500,000 from having to provide health coverage for workers. "

The committee chairman (Waxman) wants to take up the bill at 4:00 pm today. (Little wonder the stock market is down; I do believe that the market was buoyed in the last 2 weeks because of perceived delay/defeat of the health care money wasting reform.)

No one knows for sure how much the total cost would be, so "cutting" $100 billion doesn't mean a thing at this point. Exemption of business with payrolls below $500,000 is an improvement from $250,000 originally proposed. And that's a deal for those so-called Blue Dog Democrats??

But wait, the Energy and Commerce Committee of Waxman? What does it have anything to do with health care reform?

I checked around, and found these 5 committees that are involved in crafting the health care "reform".

• the House Committee on Ways and Means (already voted)
• the House Committee on Education and Labor (already voted)
• the Committee on Energy and Commerce (may be voting today)
• the Senate Committee on Health, Education, Labor, and Pensions (HELP) (already voted)
• the Senate Finance Committee

Votes in the committees have been strictly partisan, with few Democrats voting no. I don't know for sure whether the Senate is going to use reconciliation process. If they do, all the Senate needs is a simple majority to pass the bill.

And of course, behind these committees, there's the White House with Rahm Emanuel.

With the help of health care industry lobby who's spending $100 million on ad campaigns in support of health care "reform" (that alone tells you who is going to get royally screwed by the legislation - you and me), they are going to ram it through Congress.

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H.R. 3269 Executive Pay Rule Bill Passes Committee

H.R. 3269 "Corporate and Financial Institution Compensation Fairness Act of 2009" was passed today by the House Financial Services Committee (chaired by Barney Frank) in a 40-28 vote, and headed for the House vote on Friday right before Congress adjourn for the summer.

House Panel Passes Bill to Set Rules on Executive Compensation
(7/28/09 Wall Street Journal)

"U.S. lawmakers, responding to public outrage about outsize Wall Street pay packages, took the first steps on Tuesday toward setting new compensation standards for U.S. companies.

"The vote in favor of executive compensation legislation by the House Financial Services Committee gives lawmakers the chance to partially advance at least a portion of President Barack Obama's ambitious financial regulatory revamp before adjourning for the August recess. The House of Representatives is scheduled to vote on the measure on Friday.

"The bill, approved in a 40-28 vote, authorizes federal regulators to restrict "inappropriate or imprudently risky" pay packages at financial companies, though firms with under $1 billion in assets would be exempted.

"The legislation also gives shareholders a greater ability to weigh in on executive compensation packages and ensures that board compensation committees are made up of independent directors."

Public outrage?? What outrage? I thought the witch hunt over AIG bonuses were long time ago.

Apparently, "outrage" the article refers to is over a trader at Citigroup who is set to receive his $100 million bonus as stipulated in his employment contract.

Let's go to the bill itself and see what (else) is in it:

First, the purpose of the bill: "To amend the Securities Exchange Act of 1934 to provide shareholders with an advisory vote on executive compensation and to prevent perverse incentives in the compensation practices of financial institutions."

Section 2 gives shareholders greater say in executive compensations. A sop to shareholders, just like lawmakers are fond of invoking "taxpayers" and "Americans".

Section 3 specifies standards for Compensation Committee at corporate level. If a corporation is found to be in non-compliance with the standards set in this section, there's a penalty clause in Section 10B (a) (1): listing of a security of such a corporation will be prohibited.

[emphasis is mine]

SEC. 3. COMPENSATION COMMITTEE INDEPENDENCE. (a) Standards Relating to Compensation Committees- The Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by inserting after section 10A the following new section:
`SEC. 10B. STANDARDS RELATING TO COMPENSATION COMMITTEES.
`(a) Commission Rules-
`(1) IN GENERAL- Effective not later than 270 days after the date of enactment of the Corporate and Financial Institution Compensation Fairness Act of 2009, the Commission shall, by rule, direct the national securities exchanges and national securities associations to prohibit the listing of any security of an issuer that is not in compliance with the requirements of any portion of subsections (b) through (f).

Now, Section 4 is what the article of Wall Street Journal is focused on: authorizing federal regulators to "reduce perverse incentives" in compensations.

SEC. 4. ENHANCED COMPENSATION STRUCTURE REPORTING TO REDUCE PERVERSE INCENTIVES.

(a) Enhanced Disclosure and Reporting of Compensation Arrangements- Not later than 270 days after the date of enactment of this Act, the appropriate Federal regulators jointly shall prescribe regulations to require each covered financial institution to disclose to the appropriate Federal regulator the structures of the incentive-based compensation arrangements for officers and employees of such institution sufficient to determine whether the compensation structure--
(1) is aligned with sound risk management;
(2) is structured to account for the time horizon of risks; and
(3) meets such other criteria as the appropriate Federal regulators jointly may determine to be appropriate to reduce unreasonable incentives for officers and employees to take undue risks that--
(A) could threaten the safety and soundness of covered financial institutions; or
(B) could have serious adverse effects on economic conditions or financial stability.

(b) Prohibition on Certain Compensation Structures- Not later than 270 days after the date of enactment of this Act, and taking into account the factors described in paragraphs (1), (2), and (3) of subsection (a), the appropriate Federal regulators shall jointly prescribe regulations that prohibit any compensation structure or incentive-based payment arrangement, or any feature of any such compensation structure or arrangement, that the regulators determine encourages inappropriate risks by financial institutions or officers or employees of covered financial institutions that--
(1) could threaten the safety and soundness of covered financial institutions; or
(2) could have serious adverse effects on economic conditions or financial stability.

(c) Enforcement- The provisions of this section shall be enforced under section 505 of the Gramm-Leach-Bliley Act and, for purposes of such section, a violation of this section shall be treated as a violation of subtitle A of title V of such Act.

The Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999, (Pub.L. 106-102, 113 Stat. 1338, enacted November 12, 1999) is an act of the 106th United States Congress (1999-2001) which repealed part of the Glass-Steagall Act of 1933, opening up the market among banking companies, securities companies and insurance companies. (Wikipedia.org)

And who are these "appropriate Federal regulators?

• Board of Governors of the Federal Reserve System;
• Office of the Comptroller of the Currency;
• Board of Directors of the Federal Deposit Insurance Corporation;
• Director of the Office of Thrift Supervision;
• National Credit Union Administration Board; and
• Securities and Exchange Commission.

So these bureaucrats will decide what "sound risk management" is, and what "appropriate" compensation scheme is for private institutions.

And who are the "covered financial institutions"?

• a depository institution or depository institution holding company, as such terms are defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
• a broker-dealer registered under section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o);
• a credit union, as described in section 19(b)(1)(A)(iv) of the Federal Reserve Act;
• an investment advisor, as such term is defined in section 202(a)(11) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)); and
• any other financial institution that the appropriate Federal regulators, jointly, by rule, determine should be treated as a covered financial institution for purposes of this section.

So they can be any institution if the appropriate Federal regulators say it is a financial institution.

Note also the word "corporate" in the title of the bill. For now the bill is supposed to apply to financial institutions, but with putting in the word "corporate", they seem to have left a future possibility of applying the bill to all corporations.

Much was I horrified when the stock market suddenly careened off the cliff last September and took a huge chunk of my investment porfolio value with it, I do not believe in the government benevolent and omniscient. Particularly when it eagerly wants to force what it says is good for us the hapless citizens. Maybe all I have now is an illusion that this is still America, and not Soviet Union with the Politburo.

For the Board of governors of the Federal Reserve to decide what's appropriate risk, it's a farce. Two decades of reckless risk-taking (super easy monetary policy) by the Federal Reserve caused the credit bubble that led directly to the bust and recession we've been in since the end of 2007. That the bill came out of the committee chaired by a Congressman who vouched for the soundness of Fannie and Freddie up until they spectacularly collapsed is another joke.

If a Citigroup's trader made the company tons of money and his legal contract says $100 million bonus, by all means pay him $100 million. Money is fungible.

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Tax Botox, Soda, Fat Food For Health Care "Reform"

That's what the government is thinking, ostensibly to pay for the health care "reform". Whatever it takes to get their hands on someone else's money to spend on their pet projects including repairing old toilets in federal facilities.

Plastic Surgery Tax Eyed As Revenue Raiser (7/27/09 National Journal)

Tough love for fat people: Tax their food to pay for healthcare (Fixed) (7/27/09 LA Times)

CDC Chief: Soda Tax Could Combat Obesity (7/27/09 CBS News)

They are talking about 10% sales tax. The model for deciding "non-healthy" food seems to be European, where bureaucrats at the supra-government agency (European Commission) decide what is healthy for EU citizens.

Drudge Report still has a photograph of the House Speaker Nancy Pelosi, with her eyes fixed wide open (with alleged botox treatment). It also had a picture of VP Biden (not any more), who allegedly went through botox treatment and hair transplant. Ah, but remember, Congress is EXEMPT from whatever health care "reform" they will eventually enact. If they were to double the tax for members of Congress instead, then I may start to believe in change.

Also remember the idea of national sales tax, or Value Added Tax (VAT) that was floated in May.

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Danger of Not Having High Frequency Trading

Ever since the likes of New York Times and Forbes Magazine started to yak-yak about High Frequency Trading (as if this were a brand-new innovation just hitting the market), my fear has been that the regulators will come bumbling in and do what they normally do (i.e. something stupid), and pop goes the weasel (i.e. the stock market). I was not alone in that fear.

This from Zero Hedge:

Raymond James On Implications Of Flash Elimination - NYSE Biggest Winner... (7/27/09 Zero Hedge)

"...Although once the debate moves away from Flash to its natural progression into dark pools and ultimately HFT, watch out below: "Any move to restrict high frequency trading could have a significant impact on exchanges’ transaction fees as well as revenue earned from co-location; there is also the chance that efforts to restrict HFT in the equities world could bleed over into other asset classes as well, including futures. We view potential regulatory changes as a net negative for exchanges, but it is far too early to assess the impact of potential regulation on these two issues."

The 2-page Raymond James brief is at Zero Hedge, and here's the link.

Right before the quote that Tyler Durden made in the paragraph above, there is this from the Raymond James brief: "While dark pools represent ~10% of all trading volume currently, HFT volume is estimated to represent ~70% of market trading volumes."

Now you see what I mean by "pop goes the weasel?" Without HFT volume support, the market may indeed revisit March low, and this time it may not stop there. There are posters on Zero Hedge site who recall a "no bid" market during 1987 October market crash.

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Bernanke's Town Hall Meeting

A town hall meeting sponsored by the Federal Reserve?? I've never heard such a thing, how about you? It actually happened on Sunday, in Kansas City, Missouri.

The Fed Chairman in a town hall meeting. What was he selling?

Bernanke: Economy to bounce back stronger
(7/26/2009 CNN Money)

"NEW YORK (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke said Sunday that lessons learned from the recession and the financial crisis will help make the economy stronger than it was before the crisis.

"The Fed chairman answered questions from members of the public as well as moderator Jim Lehrer of PBS at a town hall event sponsored by the Federal Reserve Bank of Kansas City, Mo.

"The silver lining in this whole thing is that people are starting to save more, since they saw what happened with 401(k) investments," Bernanke said. "People are adopting good habits, so not only will we will be back on track, but the economy will be stronger than it had been before this started."

Hmmmm, do I see a semi-visible hand of the Fed's new lobbyist from Enron?

Bernanke says the economy will be stronger. How? He doesn't say. Just fluffy and vague words to allay vague fears by the mass: Things happen, but this, too will pass.

"Facing questions from many concerned consumers, Bernanke sought to assure the audience by noting that "recessions happen." Though he said this is the worst recession since the Great Depression, he also said that, like all prior economic downturns, this one will end too.

"Bernanke said the economy is beginning to show signs of improvement, but recovery will be gradual. He said gross domestic product will likely rise by the end of the year into 2010, but job growth will lag. He conceded, "economic forecasts make weather forecasts look like physics," but said unemployment will top out above 10% before falling back in the second half of next year."

All he could offer is that the economy has recovered from recessions before, so it will recover someday from the curent one. And we are supposed to breathe a sigh of relief?

But the real purpose of this silly exercise (town hall meeting) is not to discuss the economy or the supposed recovery that's coming. The article continues:

"He declined to say outright that he opposes efforts by Congress and the Obama administration to create a separate consumer financial protection agency. But he said there were drawbacks to it, including possible "duplicative efforts" in monitoring. And he defended the Fed as being "very active" in the last three years on the consumer protection issue.

"Bernanke was even more defiant about a congressional proposal to audit Fed monetary policy and actions. He said politics need to remain separate from the Fed to ensure that inflation and financial stability remain in balance.

""It is incredibly important that the Fed maintain its independence -- it is so critical to the stability of economy," Bernanke said. "I don't think people realize that Congress' bill would allow the Government Accountability Office to be able to audit Fed decisions. That's not congruent with independence.""

This was the whole point of this town hall meeting: to sell the Federal Reserve as an independent, benevolent overseer of the U.S. financial matters; to lobby for more powers for the Fed and attack the Audit the Fed bill in the House (H.R. 1207) which now has 276 co-sponsors.

The Federal Reserve, to be sure, is indeed audited by an accounting firm (Deloitte). However, according to the Forbes article on July 21, (BTW, this Forbes article is very misleading; more later in another post)

"The law currently disallows auditing of three areas: the swap lines the Federal Reserve arranges with other central banks and international financing organizations; the actual deliberations and decisions of monetary policy (such as how much to raise and lower interest rates); and transactions made under the Federal Open Market Committee's direction."

Under the third - transactions made under the Fed Open Market Committee's direction - is where the garbage resides: TALF, TSLF, TAF, PDCF, OMO, ABCPMMMFLF (or AMLF for short), CPFF, etc, etc. Do we know who's getting these loans and how much? What are the collaterals? How are they priced? How about Maiden Lane LLC to "manage" Bear Stearns and AIG "assets"? Do we know what are those assets and how they are priced?

"Too big to fail" best describes the Federal Reserve.

Just last week, the U.S. Treasury Department auctioned off $65 billion of 70-day Cash Management Bill, which happen to carry higher interest rate than the equivalent regular Treasury bill, just so that the Federal Reserve can use the money for whatever that they've been doing. And the chairman is telling the taxpayers who foot the bill to just trust him.

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Treasury Auction of 13-Week Bill

The U.S. Treasury Department auctions 13-week bill every single week to fund the government operations (I hope). It auctioned this week's batch today, but one number caught my attention: Indirect Bidders.

This week, 13-week bill attracted only $4.62 billion of Indirect Bidders' money (which represents foreign buyers of Treasuries), or only 14.4% of total sales of $32 billion.

In June and July, the Indirect Bidder percentages of 13-week bill were:

• July 20: 44.3%
• July 13: 51.5%
• July 6: 32%
• June 29: 53%
• June 22: 29%
• June 15: 35.8%
• June 8: 34.9%
• June 1: 51.2%

If foreigners including foreign central banks stop rolling over the U.S. short-term debt, it would be some problem here... One week doesn't make a trend, but it is worth keeping an eye on it.

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Japan's Nikkei Blasts Through 10,000 Mark

(Update: 11:45PM PST)

Nikkei ended up 144 points to 10,088.66. On the closing basis, it was the first time since June to close above 10,000. 10,088 is a rather curious number, as it is only 2 points off the mid point high of the double-bottom formation that I sort of saw.

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with such ease that it is creating an anxiety among investors (particularly retail investors) that they are missing out big time if they are not in the market, according to an inraday market update at Nikkei.co.jp (website of Nippon Keizai Shinbun).

At the end of the morning session, Nikkei rose 173.72 points (1.75%) to 10,118.27, the highest since July 1 when Nikkei rose above 10,000 intraday. (On a closing basis, Nikkei had 2 days above 10,000 back in June.)

According to Nikkei.co.jp, buying is broad-based. The optimism that the U.S. corporate earnings are improving is fueling the rally.

Yen rose against U.S. dollars and Euro, but that didn't seem to dampen the spirit of market participants.

They say Asia follows the U.S (which I don't necessarily agree), and Nikkei has been the laggard among high-flying Asian indices. But for this once, can Dow Jones Industrial Average follow Nikkei and go past 10,000?


In the chart, from the top, BSE 30 (India), Shanghai Composite, Hang Seng (Hong Kong), Strait Times Index (Singapore), Nikkei (Japan), and Dow Jones Industrial (US).

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