Obamacare = O’boondoggle

Everything has a consequence and there are many attached to Obamacare, many not in the mainstream knowledge base. Jobs and innovation in the United States is the latest victim of the law. The Supreme Court will decide the fate of the law under the King vs. Burwell case at the end of the month. A description of the case is found here. There are some key facts on the case that need to be known as noted here. Additional destructive consequences still loom in the future.

ObamaCare’s Anti-Innovation Effect

by Scott W. Atlas

Of the many unintended consequences of the Affordable Care Act, perhaps the least noticed is its threat to innovation. Although most discussions center on the law’s more immediate effects on hiring, insurance rates and access to doctors and care, attention should also be paid to its impact on U.S. research and development and health-care technology.

The overwhelming majority of the world’s health-care innovation occurs in the U.S. This includes ground-breaking drug treatments, surgical procedures, medical devices, patents, diagnostics and much more. Most of the funding for that innovation—about 71% of U.S. R&D investment—comes from private industry. A recent R&D Magazine survey of industry leaders in 63 countries ranked the U.S. No. 1 in the world for health-care innovation.

But that environment is changing. According to R&D Magazine and the research firm Battelle, growth of R&D spending in the U.S. from 2012 to 2014 averaged just 2.1%, down from an average of 6% over the previous 15 years. In that same 15-year period, Malaysia, Thailand, Singapore, South Korea, India and the European Union saw faster R&D spending growth than the U.S. China’s grew on average 22% per year.

The recent slowdown in R&D spending in the U.S. is in part caused by weak economic growth since the 2008 financial crisis. But the economy’s weakness itself has been exacerbated by the negative impact of new taxes and regulations under ObamaCare. According to Congressional Budget Office estimates, the new health-care law will levy more than $500 billion in new taxes over its first 10 years to help pay for insurance subsidies and Medicaid expansion. These new taxes include significant levies on key health-care industries, such as manufacturers of medical devices and drugs, and their investors.

As a result, small and large U.S. health-care technology companies are moving R&D centers and jobs overseas. The CEO of one of the largest health-care companies in America recently told me that the device tax his company paid last year exceeded his company’s entire R&D budget. Already a long list of companies—including Boston Scientific , Stryker and Cook Medical—have announced job cuts and plans to open new centers for R&D, manufacturing and clinical trials overseas.

The bureaucrats at the Food and Drug Administration are also hindering medical-technology and drug development. According to a 2010 survey of more than 200 medical-device companies by medical professor and entrepreneur Josh Makower and his colleagues at Stanford University, delays of approvals for new medical devices are now far longer in the U.S. than in many other developed countries. In the European Union—not exactly known for cutting through red tape—it takes on average seven months to gain approval for low- to moderate-risk devices. In the U.S., FDA approval for similar devices takes on average 31 months.

The 2011 PricewaterhouseCoopers Medical Technology Innovation Scorecard found that “the gap between innovation leaders and emerging economies is rapidly narrowing.” And that “although the United States will hold its lead, the country will continue to lose ground during the next decade.” It goes on to say that “China, India, and Brazil will experience the strongest gains during the next 10 years.”

Since the signing of the Affordable Care Act in 2010, private-equity investment in new U.S. health-care startups has also diminished. Annual capital investment has decreased to $41 billion in 2013 from $61 billion in 2011, according to quarterly reports by the accounting and audit firm McGladrey LLP. Similarly, the Silicon Valley-based law firm Wilson Sonsini Goodrich & Rosati reported in its semiannual Life Sciences Reports decreases from the first half of 2010 through the second half of 2013 in deal closings and capital raised for startups in biopharmaceuticals, medical devices and equipment, and diagnostics, with only a slight uptick in health-information systems investment.

Meanwhile, many of the best and brightest who come to the U.S. to study science, technology, engineering and math—the STEM subjects that are so crucial to innovation—are choosing to return to their home countries upon graduation. In 2008, a survey conducted by Vivek Wadhwa and his team of researchers at Duke, Harvard and the University of California found that only 6% of Indian, 10% of Chinese and 15% of European students expected to make America their permanent home. Much of this is Congress’s fault. Lawmakers have been slow to increase limits on H-1B visas for high-skill foreign workers. Pressure has been brought to bear on Congress to take action, but it may be too late for an increase in the visas to have much effect in health care, given the decline in R&D spending that would make use of their talents.

What can be done to reverse these damaging trends? First, strip back the heavy tax burdens that currently inhibit innovation, starting with repealing the Affordable Care Act’s $29 billion medical-device excise tax and the $80 billion tax on brand-name drugs. Change the tax code to add incentives for investment in early-stage medical technology and life-science companies, as well as for philanthropic gifts to academic institutions that promote tech entrepreneurs.

And finally, simplify processes for new device and drug approvals, so that the FDA becomes a favorable rather than an obstructionist environment for these life-saving and cost-saving discoveries. It’s a tall order, especially in today’s Washington. But America’s health—and wealth—depend on it.

*** Obama’s ‘King v. Burwell’ Speech Displayed The Very Ideological Fervor That Led Him To Break The Law

In a case called King v. Burwell, the Supreme Court will soon decide whether it agrees with two lower courts that President Obama is breaking the law by subjecting 57 million employers and individuals to illegal taxes, and spending the illegal proceeds to hide the cost of HealthCare.gov coverage from 6.5 million enrollees. Today the president delivered a speech designed to cow the Supremes into turning a blind eye to the law. Instead, he offered what for some is the missing piece of the King v. Burwell puzzle. He displayed the very ideological fervor that leads powerful people to break the rules.

“We have an obligation to put ourselves in our neighbor’s shoes, and to see the common humanity in each other,” the president said. Yet the president of the United States has an even more important obligation to “take Care that the Laws be faithfully executed.”  It’s right there in Article II, Section 3 of the U.S. Constitution, which President Obama swore to uphold. King v. Burwell is about his failure to meet that obligation.

 

Putin’s Plan for a Military Artic Region

Despite sanctions against Russia, the Artic is still at risk. The recent G-7 meeting brought more solidarity agreement of sanctions on Russia but only due to Putin’s hostilities against Ukraine and in violation on the Minsk Agreement. The full text of the agreement is here in English. No conversations have taken place with regard to Putin’s operations in the Artic.

Going back to 2103, Putin not only announced his aggressions for the Artic region, he is intensifying operations while there is no mission to stop his objectives. Two years later, he is succeeding.

Russia has been building new ships and preparing to deploy troops along its northern border as melting Arctic ice will make it possible for more commercial traffic to transit the so called Northern Sea route. There is also the potential for large mineral deposits in the region.

“There are plans to create a group of troops and forces to ensure military security and protection of the Russian Federation’s national interests in the Arctic in 2014,” Defense Minister Sergey Shoigu said at the same meeting.

Putin’s declaration highlights several military moves the Russians have made in relation to the Arctic in the last few years.

Nikolai Patrushev, the head of Russia’s Security Council, announced in mid-2012 it would create ten naval bases along its northern coast. In May, Russia announced it would be constructing up to four new ships for duty in the Arctic.

Putin’s remarks follow Canada’s plan to claim Arctic territories — including the North Pole — as sovereign Canadian territory, the country’s foreign minister announced on Monday.

“We are determined to ensure that all Canadians benefit from the tremendous resources that are to be found in Canada’s far north,” John Baird said, according to an Associated Press report.

Last week, Canada made preliminary claims to some Arctic regions and plans to make more.

Russia, of all the eight members of the Arctic Council, has the most naval assets to patrol the surface of the Arctic.

Russia has more than 37 government icebreakers compared to Canada’s six and America’s five, according to a July review from the U.S. Coast Guard.

However Canada is currently constructing a new surface naval force, complete with a collection of ships that would be designed to operate in cold climates.

Under the sea, the U.S. nuclear submarine force remains as the dominant power in the region.

Russia is interested in the Arctic for a number of reasons, though natural resources and pure geopolitical imperatives are the major driving forces behind Moscow’s thinking. The Arctic contains an estimated 30 percent of the world’s undiscovered natural gas and 13 percent of its undiscovered oil reserves, regarded by Moscow as important sources of foreign investment that are critical to the country’s economic development. The Northern Sea Route from East Asia to Europe via the Arctic Ocean provides another economic opportunity for developing infrastructure in northern Russia.

Militarizing the Arctic will be a key imperative for the Russian military throughout 2015 and beyond — alongside modernization in general and bolstering forces in Crimea and the Kaliningrad exclave. According to the Russian Ministry of Defense, Soviet-era bases in the Arctic are being reactivated in response to NATO’s renewed interest in the region.

The airstrip on the archipelago of Novaya Zemlya is being renovated to accommodate modern and next generation fighter aircraft in addition to advanced S400 air defense systems. Part of the Northern Fleet will also be based on the island chain, which is ideally positioned for operations in the Arctic region. The Northern Fleet represents two-thirds of the entire Russian Navy, which is the only navy in the world to operate nuclear-powered icebreaker ships. Great detail can be read here.

ISIS Tactics Include Taxes and Treasures

With a multi-country coalition, air strikes, ground intelligence gathering, surveillance drones and up to 1000 more troops being deployed to Iraq, the White House has no strategy and blames the Pentagon.

The Pentagon has a division that is assigned to war-gaming and planning in all conditions across the globe that is based on human intelligence, information gathered from diplomatic staff in all embassies, use of software, estimations, locations of military assets, threats from the enemy, money, transportation, secret deals, ordnance positioning and more. The Pentagon always has several strategies that are current and nimble that require dynamic alterations as even minor conditions change. For Obama to blame the Pentagon is childish and misguided.

Despite nine months and $2.44 billion in U.S. airstrikes against the fighters and their oil facilities and smuggling networks, the self-proclaimed Islamic State has proven to be as resilient financially as it’s been militarily.

The group that President Barack Obama dismissed in January 2014 as a junior varsity team last year seized an estimated $675 million from banks, plus $145 million in oil sales and ransom payments and tens of millions more from other commercial enterprises, looting and extortion, according to U.S. Treasury and United Nations figures.

“This isn’t your average terrorist group operating from your average safe haven,” said Juan Zarate, a former assistant secretary of Treasury for terrorist financing and financial crimes who spent years targeting al-Qaeda funding. “They have access to oil in Iraq and Syria; access to major population centers; access to banks, antiquities and smuggling groups — all of that allows them to be more agile and have access to more capital and resources than your average terrorist group.”

“The truth is nobody really knows how much they’re making now,” said Daveed Gartenstein-Ross, a senior fellow at the Foundation for Defense of Democracies. “The U.S. government is getting closer to pegging the group’s finances because of things like last month’s raid in eastern Syria. But no one knows how much they’re getting versus their spending.”

Islamic State “is in some ways a proto-state, in some ways a terrorist organization, in some ways an insurgency and in some ways a transnational criminal group,” he said. Like drug cartels in Colombia and Mexico and al-Qaeda offshoots in Somalia, northern Mali and Yemen, the group is extorting taxes, plundering local resources and taking a cut of commercial enterprises, he said. Read much more detail here.

ISIS has published their objectives on the internet for the world to see and yet operates with unhindered. ISIS is fully functional in an estimated 12 countries while the Obama administration is in neutral to lead the coalition in both offensive and defensive measures. The impact of the coalition is inert.

Egypt, a country working to recover from a power revolution is at particular risk.

From Oren Kessler in part: Egypt’s once-foundering economy is slowly rising from the abyss. President Abdel-Fattah al-Sisi has cut costly fuel and food subsidies, cut red tape on investments, instructed the Central Bank to tackle the black market in foreign currencies and vowed to bring unemployment under 10 percent.

His efforts are beginning to bear fruit. In May, the ratings agency Standard & Poor’s revised Egypt’s country outlook from stable to positive, predicting real GDP growth over the next three years of 4.3 percent – double the average of the four years since the revolution. Meanwhile, the government’s suspension of the capital gains tax sent stocks soaring 6.5 percent in a single day.

Still, no economic turnaround will be complete without a recovery in tourism. The U.S. State Department currently urges citizens to exercise caution in traveling to the country, and advises against any non-essential travel in Sinai, where an insurgency by Islamic State-linked militants has raged since the military ouster of Muslim Brotherhood president Mohamed Morsi in July 2013. At the same time, shadowy pro-Brotherhood groups calling themselves Ajnad Misr (“Soldiers of Egypt”) and the “Popular Resistance Movement” are increasingly targeting the populous mainland, including Cairo, Alexandria and the cities of the Nile Delta. The government accuses the now-banned Brotherhood of responsibility for virtually every attack, but the extent to which the group is actually orchestrating the violence remains unclear.

What is clear is that continued terrorism, particularly against tourists, has the capacity to set back the fragile gains Cairo has made in restoring stability and reviving its economy. For Egypt, persuading visitors to come soak up the country’s sights and sun will require convincing them beyond a reasonable doubt that traveling to the land of the Pharaohs will not be a one-way ticket. More detail here.

Explaining Relations with Cuba, Prisoners and Debt

Repaying $15 billion in debt default:

The Cuban government has agreed that it owes $15 billion to the exclusive group of nations known as the Paris Club, after Cuba declared itself in default in 1986, according to a report from Reuters quoting diplomatic sources.

The figure agreed to includes principal, service charges, interest and fines that Cuba owes 16 Paris Club nations from its 1986 default, Reuters reported on Monday. However, it does not include compensation fees levied by the United States for private properties confiscated by the Cuban government since 1959.

The Paris Club is an informal group of creditor governments and institutions composed of 20 permanent member countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Italy, Japan, the Netherlands, Norway, Russia, Spain, Sweden, Switzerland, United Kingdom and the United States.

The agreement reached with the Paris Club advances negotiations on the terms of payment, the first since negotiations failed in 2001, in part due to a $35 billion debt owed to the former Soviet Union, Cuba’s primary benefactor before its collapse in 1991. In July, President Vladimir Putin agreed to forgive nearly all of that debt and pledged to reinvest payments made by the Cuban government toward development projects on the island.

“This agreement is another sign of the political will of the Cuban government to rejoin a reasonable credit system at the normal level of the world economy, in accordance with the norms of international financial standards,” said José Oro, director of research division of Cuba at Thomas J. Herzfeld Advisors Inc. investment firm in Miami Beach.  Read more here.

Criminal illegals that Cuba wont take back:

Havana won’t take them back

Hundreds with ‘Zadvydas cases’ refused by their home countries

Hundreds of Cuban criminals are released onto the streets of the U.S. every year because that nation won’t take them back — even though the Obama administration is trying to broker a more open relationship with the communist island nation.

It’s a quirk of immigration law known as “Zadvydas cases,” after a 2001 Supreme Court ruling that said the government cannot detain immigrants indefinitely if their home countries won’t take them back.

Cuba, China and Vietnam regularly top the list, but even some countries that are supposed to be closer partners, such as Guatemala, El Salvador and Honduras, are refusing to quickly accept some of their citizens whom the U.S. is trying to deport.

Cuba refused to take back 878 criminals last year and rejected nearly 400 through the first eight months of the current fiscal year, according to statistics that U.S. Immigration and Customs Enforcement provided to the House Judiciary Committee. Vietnam is second, having refused 331 criminals in 2014, though it has rejected the return of only 44 criminals so far this year.

All told, the government released 2,457 criminals and 461 non-criminal illegal immigrants onto the streets last year because of the Zadvydas strictures, ICE said. This year, the totals through May 9 were 1,107 criminals and 344 noncriminals.

“The Zadvydas problem is an urgent one, considering that a large percentage of the most serious criminal alien releases are Zadvydas,” said Jessica Vaughan, policy studies director at the Center for Immigration Studies. “Given the obvious public safety risks, the administration should be more aggressive in seeking a solution or in using the tools available to them.”

In the Zadvydas ruling, the Supreme Court said immigration detention cannot extend beyond six months unless there is a compelling national security or public safety interest. If home countries won’t cooperate in taking back their citizens, the U.S. government must release them.

Republicans in Congress have proposed a number of fixes and have pushed for tools such as withholding visas from countries that refuse to accept their scofflaws, but the George W. Bush and Obama administrations have been reluctant to take those steps.

The issue is even more acute given that Cuba is the biggest offender and President Obama is trying to normalize relations with that nation. Analysts said it would be the perfect time to raise the issue of Zadvydas refusals.

The State Department didn’t respond to multiple requests for comment, but there is no indication that it has raised the issue as part of the talks.

Ms. Vaughan said that is a missed opportunity.

“It’s the best chance in decades to push Cuba to be more cooperative,” she said.

Beyond Cuba, the government faces problems returning citizens to a number of countries. Twelve nations refused the return of at least 70 of their citizens in 2014, including a number of countries that received generous U.S. aid.

One of those, Liberia, refused 85 criminals’ return, even as the U.S. was providing extensive help to combat an Ebola outbreak.

Three other Central American countries are poised to receive hundreds of millions of dollars in aid among them to try to stem a surge of their citizens entering the U.S. illegally for life in the shadows.  Read more here.

Among them, Guatemala, Honduras and El Salvador refused 127 criminals and 145 noncriminals in 2014.

The Guatemalan and Honduran embassies didn’t respond to repeated messages requesting comment, but El Salvador’s embassy in Washington said it does what it can while guaranteeing that its citizens go through legal due process.

“We want to make clear that there’s no policy that allows refusing deportations. On the contrary, our consulates give assistance to all Salvadoran prisoners in the United States seeking to facilitate their return to the country, where many of them won’t be in prison,” said Ana Virginia Guardado, an embassy spokeswoman.

She said her country refused return in cases in which the individuals rejected El Salvador’s consular help. She said El Salvador is still working on those cases and that individuals will be given travel documents allowing their deportation once they have exhausted all of their legal avenues in the U.S.

She said El Salvador has worked to accept nearly 8,000 deportees so far this year.

ICE said the Central American countries provide good cooperation and that the relationships have grown stronger with the surge of illegal immigrant children in the U.S. that peaked last summer.

“Through relationship-building, consular pilot programs and regular engagement, timely issuance of travel documents has risen, as has the host governments’ willingness and capacity to accept an increased amount of ICE air charter flights,” spokeswoman Sarah Rodriguez said.

Ms. Rodriguez said the number of refusals from the Central American countries is low compared with the total number of deportations. El Salvador’s 2014 refusal rate was less than half of a percent of the total number who were accepted back.

She said the cases that are refused often have special circumstances that make them tougher to complete. Even after they are released, however, the Zadvydas cases are still in the system and ICE is still working to deport them as soon as possible.

 

Meet Bernard Aronson and Venezuela Blackouts

Bernard Aronson, a Goldman Sachs insider with assignments in Latin America. It is especially cool that Barack Obama calls on Aronson to end the rebel fighting in Latin America. Or how about using Bernard to normalize Cuba with Hillary Clinton’s approval? John Kerry uses Aronson to handle matters with Columbia.

The intrigue begins. This is rather convoluted, so be patient as you read on.

Aronson has deep ties to Thomas Pritzker of Hyatt hotels fame same as Penny Pritzker who is Barack Obama’s Secretary of Commerce.

The Pritzker dynasty looks like this:

Family tree: Pritzker is the son of Jay Pritzker, founder of Hyatt Hotels Corporation.
Areas of interest:
nonprofits

College: Pritzker received a B.A. from Claremont Men’s College, and an MBA and J.D. from the University of Chicago.