Obama’s Shadow Government

How many of these names do you recognize?

Adolfo Carrion, Aneesh Chopra, Ear; Devamey, Kenneth Feinberg, Carol Browner, Ed Montgomery, Todd Stern, Cass Sunstein, Ron Bloom, and John Brennan. If none of them ring a bell, it is because they and others are all part of a shadow government of some thirty “czars”; advisers to President Obama who did not submit to the Senate confirmation process and are exempt from Congressional oversight.

Article 2, Section 2, U.S. Constitution, an excerpt: He (the President) shall have power, by and with the advice and Consent of the Senate, to make treaties, provided two thirds of the Senators present concur; and he shall nominate, and by and with the advice and consent of the Senate shall appoint ambassadors, other public ministers and consuls, judges of the Supreme Court, and all other officers of the United States whose appointments are not herein provided for, and which shall be established by law: but the Congress may by law vest the appointment of such inferior officers, as they think proper, in the President alone, in the courts of law, or the heads of departments.”

The Constitution creates two types of positions in the executive branch: principal officers and inferior officers. The first of these are nominated by the president and confirmed by the Senate. The latter are not subject to this process.

The Obama administration began with a series of nominations that were found to be tax cheats and forced to withdraw before Senate confirmation. One of them, Van Jones, put in charge of “green jobs” was forced to resign when it became known that he was a self-identified communist. Carol Browner, responsible for environmental and energy issues, was on the board of the Commission for a Sustainable Society, the action arm of the Socialist International.

In the case of “special envoys” George Mitchell, Richard Holbrooke, and Dennis Ross, they all engage in ambassadorial duties, representing the nation to foreign entities and are responsible only to the president. Key elements of the nation’s foreign policy, particularly as regards the Middle East, remain hidden from the public, except in terms of the president’s public pronouncements.

All of the president’s cabinet secretaries in charge of various departments and agencies of the government are vested with administrative powers and all must be confirmed by the Senate. By virtue of the Administrative Procedure Act, these offices must hold public hearings and maintain records when decisions are made, thus creating a paper trail. All of these offices must have separate lines in Congress’s annual appropriations bills.

The bulk of the president’s czars are exempt from such oversight. They advise and answer directly to the president and a number of them exercise control over the decisions made by cabinet secretaries and agency directors, most of whom have been reduced to a role of carrying out their decisions, their agenda.

The U.S. government is being run out of the White House by a cohort of czars/advisers who do not answer to the American people and operate in the dark. This is part of the warning issued in “The Blueprint: Obama’s Plan to Subvert the Constitution and Build an Imperial Presidency.” The authors, Ken Blackwell and Ken Klukowski, are both attorneys with extensive knowledge of the Constitution. Blackwell has been an ambassador.

These czars are essentially unconstitutional and illegal.

All presidents have had advisers, but none prior to Obama have had so many and none have been delegated vast powers. They represent a violation of the separation of powers essential to a democratic republic and all violate the need and expectation of transparency and accountability.

Some have demonstrated in their past publications and present statements that they are wholly incompetent to hold such power. The regulations czar, Cass Sunstein, has said that animals should have the same legal rights as humans. The science adviser, John Holdren, has advocated putting chemicals in the drinking water or requiring devices that would neutralize fertility, including compulsory abortion.

John Brennan, the terrorism czar, responsible for homeland security, downplayed the near disaster of the Christmas “underpants bomber” and claimed that all possible intelligence that could be secured from him had been in less than an hour after his arrest!

All these czars function in direct contradiction of the long history of such advisers to presidents and in contradiction to the framework of the U.S. Constitution designed to ensure that the executive branch is answerable to Congress.

The function (or lack of it) of elected senators and representatives is ugly enough as seen in the failure of Congress to exercise caution in the passage of bills that affect the economy and the lives of all Americans. The U.S. debt has increased to levels not seen since World War Two. Obamacare was an ugly process of bribery and closed-door deals that resulted in a straight party line vote that was a repudiation of the will of the people.

No one knows what these unelected and unsupervised czars are doing, but you can be sure they all are loyal advocates and agents of the socialist transformation of America.


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Obama Administration admits rationing panels exist in ObamaCare

Sarah Palin was right! Of course, when she mentioned it liberals went nuts claiming that she was fear-mongering. Now, President Obama’s Budget Director is heralding the cost cutting measure.

Just a reminder from the Governor:

Last weekend while you were preparing for the holidays with your family, Harry Reid’s Senate was making shady backroom deals to ram through the Democrat health care take-over. The Senate ended debate on this bill without even reading it. That and midnight weekend votes seem to be standard operating procedures in D.C. No one is certain of what’s in the bill, but Senator Jim DeMint spotted one shocking revelation regarding the section in the bill describing the Independent Medicare Advisory Board (now called the Independent Payment Advisory Board), which is a panel of bureaucrats charged with cutting health care costs on the backs of patients – also known as rationing. Apparently Reid and friends have changed the rules of the Senate so that the section of the bill dealing with this board can’t be repealed or amended without a 2/3 supermajority vote. Senator DeMint said:


“This is a rule change. It’s a pretty big deal. We will be passing a new law and at the same time creating a senate rule that makes it out of order to amend or even repeal the law. I’m not even sure that it’s constitutional, but if it is, it most certainly is a senate rule. I don’t see why the majority party wouldn’t put this in every bill. If you like your law, you most certainly would want it to have force for future senates. I mean, we want to bind future congresses. This goes to the fundamental purpose of senate rules: to prevent a tyrannical majority from trampling the rights of the minority or of future congresses.”

In other words, Democrats are protecting this rationing “death panel” from future change with a procedural hurdle. You have to ask why they’re so concerned about protecting this particular provision. Could it be because bureaucratic rationing is one important way Democrats want to “bend the cost curve” and keep health care spending down?

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What's behind the anti-tea party hate stories?

There's a new narrative taking hold in the wake of the recent tea party protests and the anniversary of the Oklahoma City bombing: The tea partiers' intense opposition to the Obama administration has led to overheated political rhetoric, which could in turn lead to violence.

Former President Clinton has emerged as a leading voice of this new narrative. In interviews, Clinton said it's "legitimate" to draw "parallels to the time running up to Oklahoma City and a lot of the political discord that exists in our country today."

"Watch your words," warned ABC News, reporting that Clinton "weighed in on the angry anti-government rhetoric, ringing out from talk radio to tea party rallies."

The reports dovetailed with earlier media that stories also depicted tea party gatherings as angry mobs, accusing protesters of throwing racial epithets at black lawmakers and of making threats of violence. The implication is that all this could be part of a nationwide trend.

"Just this month, the Southern Poverty Law Center reported that it had tracked an explosion in extremist anti-government patriot groups fueled, in large part, by anger over the economy and Barack Obama's presidency," NBC's David Gregory said in early April.

"In this highly charged political atmosphere, where you've got so much passion, so much disagreement, this takes it, of course, to a different level."

How did this story line grow?

Many of the claims that extremism is on the rise in America originate in research by the Southern Poverty Law Center, an Alabama-based group that for nearly 40 years has tracked what it says is the growing threat of intolerance in the United States. These days, the SPLC is issuing new warnings of new threats. But today's warnings sound an awful lot like those of the past

In 1989, the SPLC warned of the growing threat of skinheads, saying, "Not since the height of Klan activity during the civil-rights era has there been a white supremacist group so obsessed with violence."

In 1995, the SPLC warned of the growing threat of right-wing militias.

In 1998, the SPLC warned of the growing threat of Internet-based hate groups.

In 2002, the SPLC warned of the growing threat of post-Sept. 11 hate groups.

And just a few weeks ago, the SPLC warned of the growing threat of "patriot" groups.

But in the world of the Southern Poverty Law Center, the threat is always growing. Ronald Reagan's policies led to a growing threat. The election of Bill Clinton led to a growing threat. Is it any wonder that Obama's presidency has, in the SPLC's estimation, led to a growing threat?

Hate groups exist across the political spectrum, and have for a long time. But they have nothing to do with the frustration over deficits, taxes and Obamacare that we have heard at tea party gatherings. That frustration, felt by Republicans, independents and even some Democrats, is a mainstream reaction to the activist course the president and Congress have taken.

It's important to distinguish between a political threat and a physical one.


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Iceland Crisis Report: Banks' Owners Owed the Most

The majority owners of the three largest Icelandic banks, Kaupthing, Landsbanki and Glitnir, and of the investment bank Straumur-Burdarás, were also their largest debtors, as the Special Investigative Commission’s crisis report, which was made public yesterday, has revealed.

According to dv.is, the following statements can be found in the report.

“At Glitnir Bank the largest loan recipients were Baugur Group and companies related to Baugur. The increase in Glitnir’s granting of loans to this group after mid-2007 is especially noteworthy.”

“A change in executives had then occurred, with parties connected to Baugur and FL Group significantly increasing their shares in the bank.” In April 2007, Lárus Welding took over as CEO of Glitnir from Bjarni Ármannsson.

“When Glitnir collapsed, Baugur and related companies owed the bank almost ISK 250 billion [USD 2 billion, EUR 1.5 billion]. That amount equals approximately 70 percent of the bank’s equity basis.”

“The largest shareholder of Kaupthing, Exista, was also its second-largest debtor. The largest debtor was Robert Tchenguiz, shareholder and chairman of Exista. At the collapse of the bank, Exista owed Kaupthing more than ISK 200 billion [USD 1.6 billion, EUR 1.2 billion].”

“At the collapse of Landsbanki, Björgólfur Thor Björgólfsson and companies related to him were the bank’s largest debtors. Björgólfur Gudmundsson was the bank’s third largest debtor. In total, their commitments to the banks were well over ISK 200 billion. That was more than the entire equity of the Landsbanki conglomerate.”

“Björgóflur Thor was also the largest shareholder of Straumur-Burdarás and he was chairman of that bank. Björgólfur Thor and Björgólfur Gudmundsson were both, along with related parties, among the bank’s largest debtors and together they formed its largest group of loan recipients.”

The report also states that the employees of banks are generally not in a good position to evaluate whether the banks’ owners are suitable loan recipients.


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What do your IRS taxes really pay for?

Most taxpayers have no idea what their federal income taxes actually provide. When I ask folks if they know where their IRS check goes I get answers from, “…it pays for the operation of the Federal Government.” to, “… hummm, I really don’t know.” Actually both answers are partially true. Why were the IRS and the Federal Reserve created by the same act of Congress — what is their relationship to the Federal Government?

About a year ago, I made the assertion that the Federal Reserve through the IRS has the power to tax directly by congressional action and indirectly by inflation. It is very easy to see when you understand the “not quite governmental, not quite private” structure of the Federal Reserve System and its taxing arm the IRS.

Here is how it works. Congress passes a law, the House appropriates the funds. The Federal Treasury Department prints the notes for the appropriation. Then the Federal Reserve purchases these notes/paper at the cost of printing, about 4 cents note. A $1bill, $100 bill, or $1000 bond, costs the same 4 cents. The Federal Reserve then loans this money back to the Federal Government at interest based on face value. This interest rate may fluctuate. The cash is then distributed to the regional Federal Reserve banks from which the appropriations are disseminated as per the Congressional mandate.

Now, as the interest climbs with each appropriation, this debt requires payment your taxes – and occasionally the taxes must be increased to keep up with the “can never be paid off by design, debt”. The Federal Reserve profits greatly on this value created out of thin air paid by IRS collected taxes, and OUR REAL ASSET collateral on loans that go into foreclosure/confiscation.

Periodically, the Federal Reserve will ask Congress for an increase in money supply. This indirectly taxes folks by pumping cash into the economy which decreases the buying power of the dollar. This makes it seem as though prices have risen – not the case, the money added causes the value of the dollar to drop. This is the inflation tax. A tax that causes big problems for people with savings or on fixed incomes. The frightening thing is, the FED-IRS has NEVER had it’s books opened to Congressional scrutiny.

On 2/26/09, Representative Ron Paul rose before the House to introduce his “Federal Reserve Transparency Act” HR-1207. In his speech, he said…

“…Throughout its nearly 100-year history, the Federal Reserve has presided over the near-complete destruction of the United States dollar. Since 1913 the dollar has lost over 95% of its purchasing power, aided and abetted by the Federal Reserve’s loose monetary policy. How long will we as a Congress stand idly by while hard-working Americans see their savings eaten away by inflation? [...] Whenever you question the Fed about the strength of the dollar, they will refer you to the Treasury, and vice versa. The Federal Reserve has, on the one hand, many of the privileges of government agencies, while retaining benefits of private organizations, such as being insulated from Freedom of Information Act requests. [...] The Federal Reserve can enter into agreements with foreign central banks and foreign governments, and the GAO is prohibited from auditing or even seeing these agreements. Why should a government-established agency, whose police force has federal law enforcement powers, and whose notes have legal tender status in this country, be allowed to enter into agreements with foreign powers and foreign banking institutions with no oversight?”

In this unique Federal Reserve/Federal Government relationship the IRS works as the “Taxing Arm For The FED” – NOT the Federal Government which is prohibited from direct taxing at Article 1 section 9 clause 4 of the Constitution! Now you know. Those sneaky-rascal bankers anyway.


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Nevadans are free to don their arms in the open

Even though it’s legal, not everyone comfortable with gun-wearing citizens, especially some police

Just about everybody on the Metro Police force has heard of Tim Farrell, and he sometimes gets mistaken for a law enforcement officer.

Farrell is simply a 29-year-old wireless Internet engineer — and a gun rights crusader. He is one of what appears to be a growing number of people taking up the “open-carry” cause, advocating a constitutional right to openly carry firearms.

“The open-carry movement has gained momentum over the last four or five years because people are waking up to their rights,” Farrell says. “I don’t need a permit to exercise free speech. I don’t need a permit to be tried by a jury if I’m accused of a crime, so why do I need a permit to carry a gun if I have a constitutional right to carry a gun?”

Nevada is a better place than most for Farrell because it is "an open--carry state." Nevada reiterates the right to bear arms in its constitution and does not have blanket restrictions on law-abiding citizens’ open carrying of firearms.

That’s why a dozen or so people who attended the March 27 Tea Party rally in Searchlight were able to openly carry firearms.

One was Dave Stilwell, a 44-year-old truck driver from Las Vegas who always carries a gun for self-defense.

He says he was jogging back from a garage sale near his house one morning last May with his .45-caliber pistol on his hip. Around Jones Boulevard and Cheyenne Avenue, a Metro patrol car rolled up slowly behind him.

A shopkeeper had called police after seeing the gun, said the officer, who took the pistol from Stilwell, removed the magazine and the bullet in the chamber, checked the ID number on the gun and then returned the weapon and ammunition to Stilwell before driving away.

“I just told the officer I was exercising my body and my rights,” he said. “In retrospect, I didn’t think that was such a big deal.

“I knew I would have contact with police at some point. Even though it’s my legal right to carry a gun, there’s a lot of propaganda out there, a lot of inaccurate information. When I started to open carry a couple years ago, I would have guessed that 90 out of 100 people didn’t think it was legal.”

So have open-carry advocates latched onto the Tea Party movement? Stilwell said that although he attended with gun in holster, his reason for going was to join others who care about their rights.

“Rights are becoming more prevalent because people feel like their backs are against the wall because of the government,” he says.

Farrell is not a Tea Partyer. He describes himself as libertarian and pro-choice on abortion. He and Stilwell are on the same page when it comes to guns, however.

Like Stilwell, Farrell says he carries his handgun wherever he goes, for self-defense. He says he has never been kicked out of a casino or other place of business but finds himself educating business owners who question why he is so brazenly armed.

Farrell says he has worn his gun many times into his neighborhood restaurant and bar near the U.S. 95-Summerlin Parkway interchange. But as he walks in one recent afternoon, a bartender who spots the gun is taken aback. She says the only pistol-packing customers she has served are undercover cops.

“So what I should have done is asked to see your concealed weapons permit because that is something that’s mandatory,” she tells Farrell.

“I don’t have a concealed gun on me,” he replies. “I do have a concealed-weapons permit but you do not need a concealed-weapons permit for a nonconcealed gun.”

“I mean, a regular permit just to carry the gun around,” she says.

“There is no permit in this state for that,” he tells her.

“It used to be years ago you would have to give your weapons to the bartender,” she says.

“This bar is private property, obviously,” Farrell says. “You can set whatever rules you want.”

“You can pull that out on me and shoot,” she tells him. “You see what I’m saying?”

“Well, of course. And that’s one of the reasons to carry openly, is for self-defense but it’s also to educate others as well that, one, it’s not against the law and, two, that not everyone with a gun is a bad guy. Certainly if there was a bad guy coming to rob you, he wouldn’t let you see the gun until it was too late.”

With that, the bartender goes about her business.

It undoubtedly helps that Farrell is not one of those guys who wears head-to-toe camouflage gear. He wears polo shirts and bluejeans.

He doesn’t have a gun collection. “I have a handgun and a shotgun, that’s all, just to keep me and my wife safe.”

When Farrell read Stilwell’s blog post about how he had been stopped by police, Farrell researched state and local laws, as well as police regulations and then conducted an experiment.

On the night of June 24, he holstered up his loaded 40-caliber Glock 23 pistol and proceeded to a sidewalk on Las Vegas Boulevard, just south of Charleston Boulevard, where he was certain he would be noticed by police. He was.

It wasn’t his first encounter with the law. While vacationing in Nashua, N.H., early last year, he was stopped on foot on the way to a bank by police who asked about his gun. Minutes later he was allowed to go about his business with gun in tow. Such is life in the “live free or die” state, apparently.

The Las Vegas Strip encounter was far more intense, with police arriving in squad cars and on motorcycles in a show of force, guns drawn. Farrell was handcuffed and his gun was confiscated, its bullets removed. Over the course of the next 23 minutes, Farrell invoked his right to talk to an attorney, told police not to touch his gun, and that he hadn’t consented to being searched and detained. He refused to answer questions about whether he possessed a registration card for the weapon, and invoked his right to remain silent.

Bottom line: He hadn’t committed any crime. After police ran a background check on Farrell, confirming his gun was properly registered, and finding that he also has a concealed-weapons permit and is not a dangerous criminal, he was uncuffed. He was handed back his gun but the bullets were dropped down one of his pants pockets and the empty magazine was placed on an irrigation box 100 feet away. He was ordered not to move until police drove away.

“I understand the need for officer safety,” Farrell said. “These guys have a tough job. But officer safety does not trump my rights. To stop me there has to be something other than the fact I have a gun. They shouldn’t have even taken my gun.”

Based on complaints from Farrell, Metro’s Citizen Review Board and internal affairs division each launched investigations into his case last summer. Although the officers involved were cleared of wrongdoing, Metro’s force had to take a refresher course on how to handle individuals who openly carry firearms.

Last month, a five-member panel of the Citizen Review Board found that police had complied with department policy related to the incident but that neither the policy nor police training at the time Farrell was stopped was specific enough on “open carry” stops. The board concluded that the police action was “the result of ambiguity among officers on how to handle an individual asserting his Second Amendment right to openly carry a gun in public.”

While cadets are trained in Metro’s police academy on how to handle constitutional rights, including those involving gun possession, the agency’s thick policy and procedure manual is silent on open-carry issues.

Andrea Beckman, the Citizen Review Board’s executive director, says Farrell’s case “brought to light the significance of how to train police officers on open carry.” Farrell’s case, in fact, was the first open-carry dispute heard by the board, and his name is now familiar throughout Metro.

A little more than a month after “the Farrell incident,” Metro’s 3,000 officers took their refresher course.

“When we don’t respond to something the way we should have, we’re quick to correct ourselves,” Metro Patrol Division Deputy Chief Kathleen O’Connor says.

The review board noted, however, that one police sergeant who confronted Farrell needed more training because it was clear from the sergeant’s testimony that if he had been given a test after the refresher, he would have failed.

The open-carry issue is tricky for police, O’Connor says, because officers are caught between preserving an individual’s open-carry rights and protecting the public from potential harm.

Of course, some police officers are not the only ones uncomfortable with the idea of lots of citizens walking around with guns on their hips. Opponents say the more guns that are being toted around, the greater the possibility that a bystander could be hit by a stray bullet, the more likely it is that a criminal will get a citizen’s gun and use it for no good. Even some Second Amendment advocates acknowledge that an individual who openly wears a gun in a crowded public area might result in the same reaction that a false warning of fire can in a crowded theater.

There are exceptions to Nevada’s open-carry rights. Among them is a state law that prohibits average citizens from carrying firearms on college campuses, at public or private schools and at day care centers without written permission from the heads of those facilities. An individual also cannot legally possess a firearm while intoxicated.

Local laws prohibit possession of guns in Clark County parks or in vehicles within North Las Vegas city limits.

Violation of the North Las Vegas “deadly weapons” ordinance, on the books since 1978, is a misdemeanor punishable by up to six months in jail and a $1,000 fine. The ordinance provides exceptions to the weapons ban as it pertains to “ordinary tools or equipment carried in good faith for uses of honest work, trade or business, or for the purpose of legitimate sport or recreation.” The ordinance has only been enforced in conjunction with traffic stops for other violations, such as speeding or suspicion of criminal activity, police say.

It also appears to violate the state law that gives the Legislature, not local governments, the power to regulate firearms, UNLV Boyd School of Law professor Thomas McAffee says.

“The state statute does permit some older local registration requirements, but the city ordinance here is a complete ban on possession in a motor vehicle, which seems to clearly fall within the scope of the state reservation of authority,” McAffee says.

Michael Davidson, North Las Vegas’ chief criminal attorney, said his interpretation is that the ordinance is legal because when the state law was last revised in 2007, the intent was to preserve pre-1989 local gun laws that had nothing to do with firearm registration. He said there have been dozens of cases in recent years where convictions that included violation of that ordinance have been upheld in North Las Vegas Municipal Court without a single appeal of the weapons ban made to District Court in Clark County.

“The intent was to go after gangbangers, not mom and pop in the RV,” Davidson says.

Farrell and other local open-carry advocates counter that North Las Vegas’ law is unconstitutional on its face, no matter the intent.

These advocates staged peaceful protests in North Las Vegas last year — picking up litter “to show we’re just regular guys” — and in January in front of Bally’s on the Strip, where numerous tourists had their pictures taken with Farrell and roughly 20 of his fellow gun-toters.

Farrell had given a Metro watch commander a courtesy heads-up before his armed group headed down to the Strip. The police commander thanked him for the warning, acknowledged the group’s right to assemble, but also pleaded with Farrell to cancel his plans.

The tourists who took pictures, however, encouraged Farrell and his posse to keep standing up for the Constitution, he says, and that’s what he intends to do.


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We blundered over swine flu, admit health chiefs

Global health chiefs have finally admitted that they may have overreacted to the swine flu 'pandemic' - landing governments with millions of unused vaccines.

The World Health Organisation has conceded that it may have been guilty of failing to communicate 'uncertainties' about how virulent the new virus was.

Critics say the UN agency was too quick to designate the influenza a pandemic in June after it spread from Mexico.

Keiji Fukuda, its top influenza expert, yesterday admitted a six-phase system for declaring this was confusing and the bug was not actually as deadly as bird flu.

'The reality is there is a huge amount of uncertainty (in a pandemic),' he said.

'I think we did not convey the uncertainty. That was interpreted by many as a non-transparent process.'

He admitted the scale may be flawed as it takes into account the geographic spread of a virus but not its severity.

'Confusion about phases and level of severity remains a very vexing issue,' added Mr Fukuda.

He was addressing a meeting of experts reviewing the WHO's handling of the first influenza pandemic in 40 years.

Last week it emerged Britain wasted up to £300million on vaccines that will never be used.

H1N1 has killed 17,770 people in 213 countries, the WHO says.

Read more: http://www.dailymail.co.uk/news/worldnews/article-1265530/We-blundered-swine-flu-admit-health-chiefs.html#ixzz0l3grZYLx


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H1N1 Spread Linked to Seasonal Flu Shots

The four new studies conducted by Canadian researchers conclude that the traditional seasonal flu vaccine seems to have boosted the risk of infection with pandemic H1N1 swine flu by almost double.

In one study, the researchers revealed to use ongoing sentinel monitoring system in order to assess the frequency of prior vaccination with the seasonal flu vaccine in people suffering from H1N1 swine flu in 2009 compared to people without swine flu.

The study discovered that seasonal flu vaccination was linked with a 68 percent boosted risk of falling in prey to swine flu.

“I do think that they did the best they could with the data they had”, said Dr. Mark Loeb, an infectious diseases expert at McMaster University in Hamilton who was not part of the study and who seems to be sceptical about the study’s conclusion.

The studies, published April 6 in the online journal PLoS Medicine, attributed to the combined of over 40 researchers including many of Canada’s top influenza experts. The data is reported to be fetched from four studies that draw cases from British Columbia, Alberta, Ontario and Quebec.

However, the studies failed to show the presence of a true cause-and-effect link between seasonal flu vaccination and subsequent swine flu illness, or it is due to presence of a common factor among the people in the study.


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Healthcare overhaul won't stop premium increases

Public outrage over double-digit rate hikes for health insurance may have helped push President Obama's healthcare overhaul across the finish line, but the new law does not give regulators the power to block similar increases in the future.

And now, with some major companies already moving to boost premiums and others poised to follow suit, millions of Americans may feel an unexpected jolt in the pocketbook.

Although Democrats promised greater consumer protection, the overhaul does not give the federal government broad regulatory power to prevent increases.

Many state governments -- which traditionally had responsibility for regulating insurance companies -- also do not have such authority. And several that do are now being sued by insurance companies.

"It is a very big loophole in health reform," Sen. Dianne Feinstein (D-Calif.) said. Feinstein and Rep. Jan Schakowsky (D-Ill.) are pushing legislation to expand federal and state authority to prevent insurance companies from boosting rates excessively.

At least in the short term, regulators will be able to do little more than require insurers to publicly explain why they want to raise rates. Consumer advocates think that will not be an effective deterrent against premium increases such as the 39% hike that Anthem Blue Cross sent some California customers last year.

"The irony here is that it was the Anthem rate increase that breathed new life into the healthcare bill," said Jerry Flanagan, medical policy director of Consumer Watchdog, a longtime supporter of tougher premium regulation. "But there is nothing in this bill to guarantee that it doesn't happen again."

The lack of muscle is stoking concerns that more rate jumps -- and an angry backlash from ratepayers -- could undermine support for implementing the healthcare overhaul.

Insurance industry officials say that talk of more regulation is misguided and have urged federal officials to focus instead on containing rising medical costs, which help drive up premiums.

"Politicians are much more comfortable looking at healthcare premiums," said Karen Ignagni, president of America's Health Insurance Plans, the industry's Washington-based lobbying arm.

Ignagni, as well as some independent healthcare experts, said policymakers should look at ways to control what hospitals and other providers charge, although few elected officials have shown much appetite for doing so.

Obama endorsed Feinstein's insurance proposal this year, including it in the healthcare blueprint he unveiled in February as Democrats were struggling to revive their proposals. But congressional rules prevented Democratic leaders from including the rate control provision in the final healthcare package.

Many consumer advocates think this enhanced regulation -- known in the industry as "prior approval" authority -- is the only real way to protect ratepayers from insurers, particularly for-profit companies under pressure to generate returns that satisfy Wall Street investors.

Prior approval requires insurers to submit proposed rate increases to regulators, who can then comb through companies' financial and actuarial data to see if the proposals are justified.

Insurers cannot raise premiums without explicit permission from the regulator.

Some states have given prior approval authority to their insurance commissions and have used it to force down premiums.

In New York, the state insurance department reduced nearly a quarter of the proposed premium increases between 1990 and 1995, according to a recent department analysis.

More recently, state regulators in Kansas successfully pushed Blue Cross Blue Shield of Kansas to reduce a proposed premium increase for some of its elderly customers, according to state Insurance Commissioner Sandy Praeger.

California, which does not have the power to block health plan increases, has been using similar authority to control property and auto insurance premiums for more than 20 years, said Dwight M. Jaffee, a real estate and finance professor at UC Berkeley's Haas School of Business. "It has been very successful," said Jaffee, who studied the state's experience.

Health insurance, however, is more complicated than property and auto coverage. And even the most active state regulators typically cannot investigate every proposed change in every segment of the insurance market.

In Maine, where an aggressive Bureau of Insurance reviewed 186 rate filings in 2009, regulators focus on the so-called individual market, where people buy coverage if it is not available through their jobs.

Maine is battling Anthem Blue Cross and Blue Shield, which regulators last year blocked from raising premiums an average of 18.5% on its individual customers.

Many states do far less, often requiring insurers only to file their proposed rate increases with the state insurance commissioner before passing them along to consumers. New York switched to that approach in 1996, a move that state regulators say resulted in "excessive rate increases."

A handful of states, such as Missouri, do not even require insurers to publicly disclose rate hikes.

The new federal healthcare law would step up oversight of health insurers in states with such limited regulation.

The bill directs the secretary of Health and Human Services to work with state regulators to develop a process for reviewing proposed premium increases to determine if they are unreasonable.

Insurers that propose such hikes would be required to post justifications on their websites.

For the first time, all insurance companies would have to dedicate at least 75% of their premiums to paying medical claims; this would reduce the proportion of companies' revenue that could go to administrative expenses, such as executive salaries and stockholder dividends. Some analysts think that requirement could restrain premium growth.

"These provisions are powerful forces that will help end sky-high premium hikes," said Nick Papas, a spokesman for Health and Human Services Secretary Kathleen Sebelius.

On Monday, the department announced it would accelerate the development of new regulations.

But more intensive oversight would not begin until 2014, when states set up new regulated insurance markets, or exchanges, where consumers who do not get insurance at work would shop for coverage.

The healthcare bill allows regulators to ban insurers from the exchanges if their rates are deemed unjustified.

Even some regulators wary of greater Washington control over state affairs say that more federal protections may be needed before then.

"Some consistency there is probably warranted," said Praeger, a Republican and former head of the National Assn. of Insurance Commissioners. Praeger criticized Obama's original proposal to give the federal government authority to block rate increases.

But she said last week that the insurance commissioners association was now talking with the administration about how the federal government could set a stronger minimum national standard for regulating medical insurance companies.

That could encourage more states to require insurers to get state approval before raising premiums.

On Capitol Hill, Feinstein said she was looking at ways to move her premium regulation bill forward, perhaps by attaching it to other legislation with bipartisan support.

Stepping up regulation doesn't promise to be easy. Insurance companies in Maine and Massachusetts have sued state regulators who tried to block rate increases.


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Key Fed, Treasury Actions Shrouded in Government Secrecy

Some crucial financial functions by the Treasury and Federal Reserve reportedly have been shrouded in secrecy by the U.S. government.

The prices of gold and silver have been allegedly suppressed by the Fed through JPMorgan Chase and HSBC, according to a London whistleblower.

Meanwhile, an analysis by a primary dealer in the U.S. Treasuries market shows that domestic banks could account for a large increase in direct bidders for government debt.

The reports come in the wake of economist Robert Reich's claim that the secretiveness of the Federal Reserve means it has no place in a democracy.

"The Fed is not part of the legislative branch," Reich recently wrote in his blog. "Its secret deals … violate the democratic process, if not the Constitution itself."

JPMorgan Chase and HSBC, which do the Federal Reserve's bidding in the precious-metals markets, reportedly have long been the government's lead actors in keeping down the prices of gold and silver.

Andrew Maguire explained to the New York Post JPMorgan's role in the metals pits in both London and here, and how they can generate a profit either way the market moves.

"JPMorgan acts as an agent for the Federal Reserve; they act to halt the rise of gold and silver against the U.S. dollar. JPMorgan is insulated from potential losses [on their short positions] by the Fed and/or the US taxpayer," Maguire, a 40-year veteran of the metal pits, told the Post.

"HSBC conducts an ongoing manipulative concentrated naked short position in gold. Silver is much easier to manipulate due to its much smaller [market] size," said Maguire, a former Goldman Sachs trader working at the London Bullion Market Association.

Maguire was scheduled to testify last week before the Commodities Futures Trade Commission, which is looking into the activities of large banks in the metals market, but was knocked off the list at the last moment.

However, "No one at JPMorgan is familiar with Andrew Maguire," said Brian Marchiony, a company spokesman. HSBC declined to comment.

Meanwhile, domestic banks could account for a large increase in direct bidders for government debt, Reuters reported.

The presence of direct bidders, one of three main categories of participants at Treasury auctions, has increased during recent auctions of securities.

Primary dealers, the banks and investment firms authorized to deal directly with the government and help the Federal Reserve carry out monetary policy, have fretted over the unpredictability of the direct bid, as well as the paucity of information on the identity of the bidders.

A report from Nomura Securities analyzing the Treasury Department's investor allotments and auction data theorizes that domestic banks account for part of the increase in direct bidders.

"With banks still reluctant to lend and the saving rate on the rise, bank assets have been shifting from loans to securities, benefiting from the steep curve," wrote George Goncalves, a fixed income strategist at Nomura.

Treasury data show banks increased their purchases of longer-dated Treasuries just as the percentage of direct bidders began to increase.

The department, which is aware of the identities of bidders but doesn't disseminate the information, welcomes the added participation in auctions as the government continues to issue new debt at a breakneck pace.

"At the March 10-year (note) auction, banks purchased $2.6 billion 10s (the highest on record)," Goncalves wrote. "Meanwhile banks purchased over $3 billion in (30-year bonds) in March too. This is noteworthy as in the past banks rarely went beyond the five-year point in this sort of size."

Nomura's analysis follows a hypothesis by Barclays Capital earlier this year that an increase in the direct bid was driven mainly by domestic money managers and mutual funds attempting to keep their purchases secret from the rest of Wall Street

For his part, Reich says that “Thomas Jefferson put a stop to Alexander Hamilton’s idea of a powerful central bank out of fear it would be unaccountable to the public. The Fed has just proven Jefferson’s point.”

As long as it's merely setting interest rates, Fed secrecy and political independence can be justified, says Reich, who served in three national administrations and was a secretary of labor under President Bill Clinton.

But once it departs from that role and begins putting billions of dollars of taxpayer money at risk — choosing winners and losers in the capitalist system — its legitimacy is questionable, says Reich, now a professor of public policy at the University of California at Berkeley.

The Fed now admits it bailed out Bear Stearns — taking on tens of billions of dollars of the bank's bad loans — in order to smooth Bear Stearns' takeover by JPMorgan Chase, Reich notes.

“The secret Fed bailout came months before Congress authorized the government to spend up to $700 billion of taxpayer dollars bailing out the banks, even months before Lehman Brothers collapsed,” he points out.

“The Fed also took on billions of dollars worth of AIG securities, also before the official government-sanctioned bailout.”


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