I've just finished "Free Lunch" by David Johnson that was written in 2007.I'm going to review some of his points from chapters ten to twenty -six as best I can.Gerald Cassidy's firm invented the appropriation earmark,in which a specific amount of money for a specified recipient is written into a spending bill in the late seventies.Many earmarks identify the beneficiary as a hospital,college,or non-profit association,but they are just the entity the money passes through on its way to IBM,Johnson&Johnson,or Ford Motor.Cassidy is a demigod to those in the influence business.He is widely regarded as the premier lobbyist in the nation's capital.His personal fortune is well in excess of $100 million,including an imposing mansion on Chesapeake Bay.Cassidy&Associates was sold in 1999 to Interpublic Group,a worldwide firm with 43,000 workers who seek to influence the public and governments through advertising,lobbying,polling,and public relations.The Federal government spends about $5 million per minute.Arranging to divert even a few seconds of this spending to a client will justify a job,and one who can capture a few minutes will live very well indeed.All lobbyist are not out to undermine the taxpayer. David Ewald lobbies to oppose subsidies and works for Gander Mountain who doesn't take them. They are fighting Cabella's and Bass Pro who tries to squeeze communities for subsidy tribute.
Johnson wrote about a free lunch for the burgeoning burglar alarm business.In many cities and suburbs, one of every eight calls for police service come from a company that monitors burglar alarms. Taxpayers spent well north of $2 billion to respond to these calls, a subsidy to the alarm industry, which is spared the expense.More than a fourth of the subsidy goes to Tyco International.Tyco was at the center of the Wall Street stock scandals,with investors losing tens of billions(Dennis Kozlowski,Mark Schwarz stole $600 million).Tyco has there legal headquarters in Bermuda as a tax shelter to avoid helping to maintain the US government.After three decades of study,99% of the alarms are false.Over 60% of the false alarms are caused by the customers themselves(leaving door ajar,etc.)
Title insurance was the next topic.Americans paid $16.5 billion for title insurance in 2005.Five huge companies( title insurance) collect 92% of all premiums paid in America: Fidelity National Financial of Jacksonville;First American Corp. from Houston;LandAmerica Financial of Glen Allen,Virginia;Steward Information Services of Houston;and Old Republic International Corp. from Chicago. About 80% of the premiums is kicked back to the referral person(mortgage broker,real estate broker, lawyer,banker).In 2005 the industry paid $748 million in claims.This is about 6% of the total of premiums collected.They made 94% for operating expenses and profits.Europe and Australia have a government system to check land title. The citizens pay a small fee for checking and to fund insurance in the event a mistake is made.
There was a time when college in America was free,or nearly so.Now, the costs of college have grown faster than inflation with predatory leading practices becoming common.The growth of advanced education has slowed with more men earning doctoral degrees in 1975 than 2005.President Bush,"the education President",cut Pell grants for poor college students by reducing the grant and the amount of money in the pool for these students.Students borrow about $85 billion each year and a fourth of these loans come from Sallie Mae,EduCap and Nelnet that are free to charge any interest rate they want.An estimated 200,000 students do not attend college due to a lack of resources.
Johnson had a few chapters on energy and the influence Enron(Lay and Bush) had in de-regulating the industry.By the magic of markets, Enron sold(with the help of paid representatives..Senate Bill 7) a system to lower prices for big industrial users.In the past,the price for electricity was regulated by the government with producers and consumers getting appropriate,fair prices due to production levels and costs.Data(12 mon. in 2007)) showed that electricity where Enron style laws were adopted cost $48 billion more than the average cost in states that retained traditional regulation.That is $132 million per day in excess costs that act like a tax on customers paying the bill.A few years before,Cheney( with his secret energy committee) refused to examine a memo from Rep.Jay Inslee that stated the generating stations were manipulating prices by withholding supply to increase prices for consumers.At one point,California paid $600 for a kilowatt of power that cost $30 a year earlier.So much for free markets in the energy business.
The chapter on "Unhealthy Economics" reviewed the numerous problems created for citizens when non-profit health plans turn into profit making machines.No other modern country regards health care as an insurance business.The business sense of insurance includes the concept of examining claims to see if they fall within the contractual boundaries for payment.This is how we ration health care in America,through contracts that limit care and exclude coverage-and by having tens of millions of people go without any insurance at all.In Europe,Japan,Canada,Australia,and New Zealand, people doesn'give heart transplants to octogenarians.These countries care about the entire citizenry by making policies that will support everyone in the society. Giving a heart transplant to someone in their eighties takes away care from those much younger.No one is discriminated because of pre- existing illness or lack of money.The first strategy of corporate-run health insurance companies is to avoid marketing to employers and other groups where the need for health care is likely to be the highest.The second strategy is to pay providers less.Third is to deny care.A study showed two thirds of administrative costs for profit insurers are spent on care denial.Lastly,Americans spend six times the average of what 13 other modern countries do on health care.In 1994,California Blue Cross,a non profit ,paid top executive $922,000 for his services. A decade late as head of Wellpoint,for-profit company,paid him $19.2 million for his services to screw the customers.
Enough... there is more...read this book and see what our country is doing all of us in this time of need.
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