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[august]

Here in North Carolina we received an ominous memo from the executive administrator of our Health Plan.  It looks mighty grim.  Although they state that they will still be able to cover our health care, by March they will be broke.  And, right now they only have enough money to cover a few days worth of claims.

Yikes.   Obviously inflation will deal with this, but still.  Inflation will also make our salaries smaller and smaller in the long run. 

Here is the memo in case there is anyone from NC who is curious:

http://appserv02.uncw.edu/news/atuncw/annview.aspx?id=4529

More then ever, August

[zharkov]

I think the hidden agenda is the state plan administrator wants you to call and "lobby" your state rep to fund the budget shortfall.

IMHO, this is a common game in state politics.  They lowball budget items, which then results in a shortfall, then they come up with a supplemental appropriation before the stuff hits the fan.

BTW, another thing to keep in mind is that state tax receipts decline during an economic slowdown, so it is not entirely a case of playing politics.

[august]

Hi Zharkov.  Well that makes sense.  I didn't think that I was being manipulated with gloom and doom, but there you go.  I suppose governments were the first advertising agencies, spinning situations to achieve their ends. 

[college_grad]

It is important to remember that government and religion came into existence at about the same time, and served as a single entity.

But its also important to remember that healthcare costs have been rising about 10-15% a year while the GDP has been growing about 1-2% if you use a really generous deflator.  (I use the eternal-student deflator, that is "subsistence living" so by my calculations we're already 3 quarters into a deep recession, and not even halfway through the downward momentum)

Up 'til now, higher education has been spared the effects because of publicly guaranteed cheap student loans and has been able to maintain growth rates as unsustainable as the medical industry.  With student loans freezing up and state budget deficits ballooning exponentially over the last few years, the economy is bad enough to hit even the most insulated & publicly protected industries: health and education.

[august]

It is important to remember that government and religion came into existence at about the same time, and served as a single entity.

But its also important to remember that healthcare costs have been rising about 10-15% a year while the GDP has been growing about 1-2% if you use a really generous deflator.  (I use the eternal-student deflator, that is "subsistence living" so by my calculations we're already 3 quarters into a deep recession, and not even halfway through the downward momentum)

Up 'til now, higher education has been spared the effects because of publicly guaranteed cheap student loans and has been able to maintain growth rates as unsustainable as the medical industry.  With student loans freezing up and state budget deficits ballooning exponentially over the last few years, the economy is bad enough to hit even the most insulated & publicly protected industries: health and education.

Hi Collegegrad,

Although I can't agree with your assessment about religion and governments (I am a religious studies Ph.D.), I can definitely support your other points.  From my own, shopping for my family weekly supermarket notes, inflation is *way* above the government's own calculations.  In my own neck of the woods, by 7% at least. 

So, I agree with you there.  Bad times.

[oldchair]

Bad times, indeed.  Over the past few years, my state has worked tirelessly to reduce income and property taxes and to make up the differences with sales tax increases.  This not only shifts the tax burden to the poor (who spend a far greater percentage of their earnings on taxable goods than do the wealthy), but it also makes our revenue stream extremely volatile.  A tiny decrease in consumer purchases and tourism has huge implications for state budgets, especially when there's a smaller "base" of property tax revenue.  We're already being told to prepare for midyear budget reductions, but no one knows what they might be. The old forecasting models just don't work anymore.  It's very frightening.

[college_grad]

oldchair:  Is that Florida or is someone else stealing our strategy of anarchy by financial default? 

Actually, speaking as someone most personally affected by regressive and flat taxes, I have to say its the inflation tax and payroll taxes - not sales taxes - that are of biggest concern.  Sales taxes can mostly be avoided by shunning non-food consumer purchases whereas federal payroll and inflation devour nearly a quarter of all my gross income and offer no choices or alternative behaviors (but welfare.)

Hi Collegegrad,

Although I can't agree with your assessment about religion and governments (I am a religious studies Ph.D.), I can definitely support your other points

I'm curious now!  I can't think of any governments or religions that existed independently of the other until about early Christianity.

I majored in politics, minored in economy - There was literally a class called "Political Economy" that explained the methodology of the government's accounting tricks.  So based on that and my own trips to the grocery store, I think +7% is a perfect inflation modifier these days. 

Unfortunately, I think the disconnect is growing because recent Federal Reserve actions have typically taken months to fully affect the various markets and actually reach the consumer.  Many of today's prices are because of actions in March, and the magnitude of activity has grown since then. 

Keep an eye on student loans - if the federal direct program doesn't pick up a lot of slack this year (with money we don't really have, ie: more inflation) then there could be significant job cuts in higher ed.  There is a lot of institutional debt out there relying on a liquid supply of student debt - and that student debt stream is freezing quickly.

[oldchair]

oldchair:  Is that Florida or is someone else stealing our strategy of anarchy by financial default? 

Actually, speaking as someone most personally affected by regressive and flat taxes, I have to say its the inflation tax and payroll taxes - not sales taxes - that are of biggest concern.  Sales taxes can mostly be avoided by shunning non-food consumer purchases whereas federal payroll and inflation devour nearly a quarter of all my gross income and offer no choices or alternative behaviors (but welfare.)

I'm from South Carolina, where we do, incidentally, tax food.  The sales taxes are incredibly regressive.  The more of your paycheck you spend on necessities, the higher your proportional tax burden.  And remember you pay those taxes AFTER payroll taxes have already been deducted. 

As sales taxes go up , more folks cheat the system by buying items like clothing on -line from out of state retailers, but even this option is unavailable to our poorest citizens.  It's a horrible system for everyone, except those with lots of taxable property (real estate, cars, boats, motorcycles, airplane).

[august]

Hi Collegegrad,

Although I can't agree with your assessment about religion and governments (I am a religious studies Ph.D.), I can definitely support your other points

I'm curious now!  I can't think of any governments or religions that existed independently of the other until about early Christianity.

[/quote]

Hi, yes you are correct for that time period.  It is true that secularism is a very recent phenomenon in the history of humankind.  I suppose it depends on how you define "government" and this might also be a discipline issue.  In my field "government" doesn't characterize the living conditions of family pods.   Yet, archeologists have discovered evidence of religion within when exploring the material cultures of those societies.  I suppose this would be the Bronze age?  Don't hold me to that.
So, my only point was to say that religion existed prior to governments.  But you are certainly correct to point out that for most of our history, religion and governments co-existed, until, really, relatively recently. 

Oldchair: wow, the situation you describe sounds very bad.