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  • January 2015
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CAGW Reaction to SOTU 2015: The President Is in an Alternate Universe

The President’s State of the Union Address would have made a good episode of “The Twilight Zone.”

In “The Obama Zone,” the following is true, because he either never mentioned the subject matter or failed to properly state the facts:

∙ There is no national debt.

President Obama never mentioned “national debt” throughout his entire speech.

∙ There is no government waste, fraud, abuse, or mismanagement.

President Obama never mentioned “government waste” or “wasteful spending” throughout his entire speech. In fact, he has only mentioned wasteful spending twice in his last seven SOTU addresses, and has proposed increased government oversight efforts once.

∙ There are no duplicative or overlapping federal programs; every one of them is in perfect working order.

President Obama failed to address the hundreds of billions of dollars in overlapping and duplicative federal programs identified in four previous Government Accountability Office reports published in 2011, 2012, 2013 and 2014. Former Senator Tom Coburn (R-Okla.) claimed the amount of overlap and duplication revealed in the reports could have covered the cost of the sequester.

∙ Islamic terrorism does not exist and Al Qaeda has been defeated.

President Obama said “terrorism” and “terrorist” once each during his State of the Union address. He stated that America’s mission in Afghanistan is “over.” He mentioned ISIL once, and never spoke of Al Qaeda, which is the first time the group has not been mentioned in a SOTU speech since 9/11.

∙ High school is not paid for by property taxes.

President Obama failed to recognize the taxpayers that would be footing the bill for his “free” community college plan – and even failed to mention how the proposal would be paid for at all: “America thrived in the 20th century because we made high school free, sent a generation of GIs to college, and trained the best workforce in the world. But in a 21st century economy that rewards knowledge like never before, we need to do more. That’s why I am sending this Congress a bold new plan to lower the cost of community college — to zero. Whoever you are, this plan is your chance to graduate ready for the new economy, without a load of debt.”

∙ Social Security and Medicare are not going broke.

President Obama never made reference to the worsening financial woes of the Social Security and Medicare trust funds, the two largest and most popular government entitlement programs. Instead, he only mentioned Social Security and Medicare once each, stating, “…at every moment of economic change throughout our history, this country has taken bold action to adapt to new circumstances, and to make sure everyone gets a fair shot. We set up worker protections, Social Security, Medicare, and Medicaid to protect ourselves from the harshest adversity.”

There is not much more to say about a speech that was really about nothing, since virtually none of the President’s ideas stand a chance of being enacted into law. It was a waste of time and money for taxpayers. This may have been the most irrelevant State of the Union Address in many years.

Sequestration-sensitive Pentagon Misses $145M in Improper Payments

Not all improper payments are fraudulent (inadvertent expenditures are all too common in the federal government, but many are “honest mistakes” without nefarious intent), but all fraud should be considered improper. Or so one would think.

On Thursday, January 15, 2015, the Washington Examiner reported that “Pentagon counters missed $145 million in wasted military health benefits.” The Department of Defense inspector general (DODIG) calculated that the Defense Health Agency (DHA) lost about $213 million in 2013 to improper payments. Of that total, the DHA only reported improper payments of about $68 million, neglecting to include $145 million presumably lost to fraud.

Their rationale for the omission? Well, if you publicize the amount of fraud, you’ll tip off the fraudsters that you’re onto them. Therefore, we should hide the number. Besides, it is another part of the Pentagon altogether that tracks fraud, so that’s not really our job.


While we are not always sure that it’s the case, we would hope that, at the very least, our federal government could walk and chew gum at the same time. To wit: without revealing sources or divulging the particulars of ongoing investigations, the Pentagon should let the taxpayers know the larger truth – that is, how much of their hard-earned dollars have been squandered, whether inadvertently or fraudulently – or both.

Despite what the colorful Col. Nathan “You can’t handle the truth” Jessep exclaimed on the stand in the classic court-martial film, A Few Good Men, the American public can handle the truth. Moreover, we deserve it.

For the rest of the story, please refer to the DODIG’s report, released on January 14, 2015.

Municipal Broadband Proposal Seeks to Overturn State Laws

The President continued his preview of the State of the Union address on January 14, 2015 by announcing that among the top priorities for this year will be “removing barriers” for faster Internet speeds. This follows his November 10, 2014 statement asking the Federal Communications Commission to reclassify the Internet in order to subject it to an 80-year old regulatory regime intended for landline telephones, rather than forging a new path forward to modernize communications laws.

Highlighting the “success” of 1 GB Cities such as Cedar Falls, Iowa, Kansas City, Missouri, and, Chattanooga, Tennessee, the President declared that this country wasn’t doing well enough in broadband deployment because cities such as Los Angeles, New York City, San Francisco, and Washington, D.C. only have .5 GB (500 Mbps) service available in their communities. Even so, a 2014 report by the Progressive Policy Institute ranks the U.S. as 10th worldwide in average broadband speeds. Pretty impressive once you realize that South Korea has a smaller landmass to cover with network connections than does Kentucky. The President’s solution? Overturn state laws that restrict municipal broadband deployment through federal preemption.

The state laws the President insists must be overturned were enacted in order to protect the legal subdivisions within the state borders from making costly mistakes by building networks that they are ill-equipped to either manage or maintain. The restrictions range from requiring that municipal communications services must be both mandated by a referendum and self-sustaining, to complete prohibitions on cities and towns selling telecommunications services if a private sector company already provides such services.

Citizens Against Government Waste’s publication, Telecom Unplugged: Ushering in a New Digital Era, included a few examples of poorly managed municipal broadband networks, including the build-out of Provo, Utah’s iProvo network. The iProvo network was supposed to be operated as a publicly-run utility. It accrued a debt of $39 million to be paid through a $5.35 tax, known as a “telcom debt charge,” found on monthly utility bills of city residents. Unable to manage the system, the city agreed on April 18, 2013, to sell the existing municipal fiber deployments to Google for $1 and to permit the company to bring Google Fiber to the city. While the sale gets Provo out of the business of providing Internet service to its residents, the taxpayers are still paying off the prior debt.

On June 19, 2014, The Wall Street Journal published a column by Citizens Against Government Waste President Tom Schatz and Utah Taxpayer Alliance Vice President Royce Van Tassell, highlighting the pitfalls of government-owned broadband networks, also known as municipal broadband systems. The article highlighted the problems encountered by the Utah Telecommunications Open Infrastructure Agency (Utopia), whose inadequate business plans and lack of subscribers left the agency with negative net assets of $146 million.

As Schatz and Van Tassell noted in their column, a 2012 study of government-owned broadband networks by Widener University’s Joseph Fuhr, Jr. found that “Many cities and municipalities have entered into the broadband market with disastrous results.” The failed networks, he said, “have neither the resources nor the expertise necessary to provide consumers with reliable state-of-the-art broadband connections.”

As noted by an August 6, 2014 review by Lawrence Spiwak, President of the Phoenix Center for Advanced Legal and Economic Policy Studies, it is questionable whether the Federal Communications Commission has the statutory authority to preempt these state laws.  The decision to engage in municipal broadband expenditures is something each state and local community should decide.  This authority should not be overturned by an overzealous federal bureaucracy.

To Market, To Market – First U.S. Biosimilar On Its Way

On Wednesday, January 7, 2015, I attended the Food and Drug Administration (FDA) Oncologic Drugs Advisory Committee meeting that discussed and recommended approval of the first biosimilar drug, called filgrastim, under the Biologics Price Competition and Innovation Act (BPCI).  It was an exciting and historic event.

Citizens Against Government Waste (CAGW) has written about the importance of biosimilars for some time.  BPCI was one of the few good things that came out of the Affordable Care Act (ACA), better known as ObamaCare, which was signed into law in March 2010.  BPCI created an abbreviated pathway for bringing the “generic” versions of biologic drugs, more properly called biosimilars, to the marketplace.  Biologics are made from living organisms, as opposed to chemically-based drugs.  In addition to a biosimilar providing a safe and effective alternative to the brand-name product once its patent has expired, a November 2014 Rand Corporation study found that introducing competing biosimilars could cut spending on biologics by $44 billion over the next decade.

Filgrastim is the generic name for the brand-name drug Neupogen®, which is manufactured by Amgen.  Filgrastim boosts the production of neutrophils, a type of white blood cell that fights infections.  The drug is utilized to reverse neutropenia, an abnormal condition in which there are not enough neutrophils, often a side effect from cancer treatments.

Neupogen® went off of patent protection in 2013, thus opening the door for competition in the U.S.  In July 2014, Sandoz, submitted the first biosimilar application under BPCI to the FDA for filgrastim.  Sandoz is the generic division of Novartis, a global pharmaceutical company.  Sandoz, based in Germany, has marketed its filgrastim biosimilar, called Zarzio, in the European Union (EU) since 2009; in Australia since 2013; and in Japan since early 2014.  It is currently sold in more than 40 countries.

The U.S. lags far behind Europe in the marketing and use of biosimilars.  The EU has been approving biosimilars for the marketplace since 2006.

The advisory committee said the data presented by Sandoz showed their filgrastim biosimilar has no clinical differences with the Amgen product Neupogen®.  But in spite of this good news, more decisions and controversies remain.

One major decision still pending is if the International Non-Proprietary Name (INN), or generic name, should be shared by both the brand-name biologic drug and its corresponding biosimilar.  (In this case filgrastim would be the INN.)  The World Health Organization (WHO) created the INN system over 60 years ago.  WHO states, “the existence of an international nomenclature for pharmaceutical substances, in the form of INN, is important for clear identification, safe prescription and dispensing of medicines to patients, and for communication and exchange of information among health professionals and scientists worldwide.”

CAGW has been involved with INN issue since last year.  In July, 2014, we wrote a letter to the FDA on the naming controversy, urging them to adopt the European model of brand-name biologics and biosimilars sharing the same INNs.  But there have been calls for the FDA to utilize a unique naming system; different INN names for each brand-name biologic and each corresponding biosimilar.  CAGW believes this suggestion is nothing more than an effort to stifle access to competitive products.

Just recently, the American Medical Association (AMA) has indicated it will recommend to the FDA that brand-name biologics and their corresponding biosimilars share the same INN.  According to Inside Health Policy, the AMA has raised “concerns surrounding unique naming for biological products, saying that nonidentical INNs may suggest to prescribers that the active ingredient in products is different; create the impression that interchangeable biosimilars have important, clinically relevant distinguishable effects; and reduce uptake and substitution of interchangeable biosimilar products.”

The other major issue to be decided by the FDA is interchangeability.  The FDA has not issued specific guidance on interchangeability – when a biosimilar can be substituted for the brand-name biologic.  The FDA considers interchangeability to be a higher standard to meet although according to the Generic Pharmaceutical Manufacturing Association “no other global regulatory agency makes a distinction between biosimilarity and interchangeability.”

Amgen and Sandoz still have other issues to work out called the “patent dance.”  In this case, both sides have differing views on what BPCI requires with regard to exchanging patent information such as manufacturing processes.

Hopefully the FDA will give official approval for the biosimilar by March and patients will have access to it by the end of the year.


You can read more about CAGW’s work in the biosimilar area here:






Put a Fork In It: Why Taxpayers are Fed Up with Pork-Barrel Spending

For 16 years, Louisiana Sen. Mary Landrieu fed her constituents powerful promises of pork – pork barrel spending that is. Fortunately for taxpayers, the results of the December 6, 2014 Senate run-off race stifled any of Landrieu’s future attempts at bringing home the bacon, and eliminated the dangerous implications that Landrieu’s fiscal negligence could have further imposed.

In a December 8, 2014 article featured on The Washington Post’s Wonkblog, Max Ehrenfreund implied that this strategy, known as earmarking, the redirecting of funds to pet projects in order fulfill personal political interests, possibly prevented Landrieu from reclaiming her throne as voters may have soured on the practice of pork barrel spending – and rightfully so.

From fiscal year’s (FY) 2008 to 2010, the only years in which members of Congress were required to list the earmarks that they requested, an assessment completed by Citizens Against Government Waste (CAGW) determined that Sen. Landrieu was responsible for 436 earmarks costing $794.5 million.

Since the enactment of the earmark moratorium of 2010, the practice of deal-making and back-door vote trading between members has drastically decreased from $16.5 billion in FY 2010 to $2.7 billion in FY 2014, though pork barrel spending is not entirely a thing of the past.

Extensive research revealed that 109 earmarks totaling $2.7 billion still managed to weasel their way into the twelve FY 2014 appropriations bills.  An initial CAGW evaluation of the 2015 “CRomnibus” appropriations bill, a combination of a continuing resolution (CR) and omnibus appropriations, produced similar findings: earmarks are still very much alive.  Unfortunately, only a few individual members can be directly linked to most funding requests, as the vast majority of the earmarked funds include fewer details than those prior to the moratorium.

Both government accountability and transparency have taken a punch to the gut, raising disturbing questions for the future, particularly since representatives and senators from both sides of the aisle continue to clamor for earmark revival by sullying the political process.

During a November 14, 2014 closed-door caucus meeting, Rep. Mike Rogers (R-Ala.) proposed re-instituting earmarks for “state, locality, or a public utility or other public entity,” claiming the moratorium transfers too much power over spending decisions to the executive branch. While the proposal was ultimately dismissed, it surprisingly enjoyed considerable support from Republican lawmakers. In the past year, Sens. Harry Reid (D-Nev.) and Richard Durbin (D-Ill.) along with Rep. Jim Moran (D-Va.) have also argued for a return to an earmarking system, albeit unsuccessfully.

Prior to the moratorium, earmarking led to corruption, including the incarceration of members and staff – mostly Republican – and led to an inequitable distribution of projects. Taxpayers seem to have the negative implications of pork barrel spending figured out, while earmark advocates have all but forgotten the days when Congress used earmarks to promote overblown spending and sell out the American people in order to remain in power, or maybe they haven’t.
Earmarks do not lead to reduced or controlled spending as earmark enthusiast Rep. Rogers has claimed; they simply act as a “gateway drug” for big spending, allowing pork-addicted members of Congress to grease the skids for even bigger, more wasteful legislative vehicles.

Instead of trying to reinstate earmarks, members of Congress should devote their time and energy to restoring regular order to the budget process in order to cut the bloat that continues to plague government spending and prevent authentic compromise.

As voters decisively awarded control of the Senate to the Republicans, while also electing the largest majority of taxpayer advocates in the House since the 1928 elections, Ehrenfreund’s assertion may be correct: Taxpayers are fed up with money mongers who continue to fan the embers of profligate spending in Washington.

A return to the bad old days of earmarking, regardless of political party affiliation, would be a repudiation of the message that voters sent to Capitol Hill as a result of the mid-term elections: move America forward by practicing individual responsibility, not aberrant behavior, to establish a permanent culture of fiscal restraint and trust in Washington.

Jonathan Gruber Goes to Washington

Most of you know about Jonathan Gruber. He is the Massachusetts Institute of Technology (MIT) economics professor that was hired as a consultant by the Obama administration to provide guidance on designing ObamaCare. He has often been called the “architect” of ObamaCare. What was his consulting fee just from the Department of Health and Human Services? A mere $400,000. I wrote in an earlier blog that he had been called to testify before the House Oversight and Government Reform Committee on December 9, 2014. That hearing occurred today.

Yesterday, I was listening to WMAL, a local radio station. The hosts asked their usual Monday guest Joseph diGenova, former United States Attorney, District of Columbia, what questions congressional Republicans should ask professor Jonathan Gruber in the hearing. What did diGenova say? He said they should ask about and get his billing invoices, not only for the federal government but also from the states that hired Gruber. According to diGenova, the records are vague and with little transparency on what Gruber did for the millions of dollars he received.

For example, Vermont government officials hired Gruber to help them design their single-payer plan. State Auditor, Doug Hoffer, wants all of Gruber’s billing records and payments. The blog Vermontdigger has been following the Gruber billing issue and has reported there is a lack of information on the invoices.

I watched most of the hearing. Sure enough, Gruber’s billing records were a topic of much heated discussion. The Hill reports, “In a House Oversight hearing to examine the ‘transparency failures of ObamaCare,’ the embattled healthcare adviser who called voters stupid repeatedly refused to say how much money he received from the government.” He also said he would not provide the documents and data related to his consulting work and told the committee several times to work with his attorney to get that information.

Rep. Jason Chaffetz (R-Utah) asked Gruber “What are you hiding? Why won’t you give those to us? According to The Hill:

Chaffetz then ordered Gruber to submit the information within 30 days, with nearly a half-dozen others joining in.

Gruber, who largely kept a calm voice and demeanor during the grueling hourlong hearing, mocked Chaffetz’s request for documents.

‘Do I have documents?’ Gruber asked. ‘I have all sorts of documents. I ” have a piece of paper in front of me.’

The Republicans have threatened to serve a subpoena for his billing records and to bring him back before the committee.

Republicans were not the only ones that were angry. Ranking Member Elijah Cummings (D-Md.) said Mr. Gruber’s remarks about American voters were “stupid,” “irresponsible”, and “incredibly disrespectful.” He expressed frustration over Gruber’s remarks concerning the way the law was written, such as how “a lack of transparency is a huge political advantage” and the “stupidity of the American people” was useful in getting the bill passed.

It is clear that the Oversight and Government Reform Committee is not through with Mr. Gruber. He probably should have been more cooperative about providing his billing records and with his demeanor to Rep. Chaffetz. After all, Chaffetz is the incoming chairman of the committee.

Newt’s Very Bad Idea

Former House Speaker Newt Gingrich often comes up with ideas to change how the government works.  One of his most recent suggestions has made a lot of people who care about property rights scratch their head.

At a December 2, 2014 meeting of Academy of Managed Care Pharmacy executives, Speaker Gingrich was asked about the high costs of certain biopharmaceutical drugs, such as Gilead Science’s hepatitis drugs Sovaldi and Harvoni.  According to the December 4, 2014 edition of Inside Health Policy, he said, “I think there are some drugs where it may either lead the government to buy the patent rights to figure out some way to make it a public commodity, because it is so expensive if it stays at a monopoly level.”  He went on to say that the policy should apply only to drugs that are “very life-changing.”

Alarmingly, this concept aligns him with Public Citizen, a left-of-center group that has long called for single-payer or government-run healthcare.  According to Inside Health Policy, the group’s president, Robert Weissman, advocated for a similar solution with respect to pharmaceuticals before a December 4, 2014 Senate Veterans Affairs Committee.

If the U.S. government wanted to forcibly purchase a patented drug, it would be equivalent to the taking of personal property by eminent domain.  If the company refused to turn over the patent for the offered price, the government would simply confiscate it.  This is no better than countries like China, India, or Russia, which steal intellectual property on a routine basis.  Such policies should never be deployed in the U.S.

Furthermore, getting the government involved in “purchasing” certain drug patents would kill innovation in the U.S. pharmaceutical industry.   Why would companies and investors want to risk developing a life-saving drug only to have it confiscated?  No longer would the U.S. produce approximately 52 percent of the world’s biotechnology and pharmaceutical patents.  Perhaps the U.S. would precipitously drop to the patent production level of other countries that utilize pharmaceutical price controls, such as Japan, which produces about 10 percent; or the entire European Union, which provides around 20 percent of the world’s biotech and pharmaceutical patents.

The way to drive down the cost of drugs simply should be encouraging competition.  For example, Citizens Against Government Waste (CAGW) has urged the Food and Drug Administration to finalize its work on designing the shortened regulatory pathway to bring biosimilars, the “generic” version of biologic drugs, to the marketplace.

Removing barriers within pharmacy networks is another way to cut costs.  Drug benefit plans constantly seek ways to lower the price of pharmaceuticals, such as creating preferred pharmacy networks, increasing efficiency by utilizing mail-order pharmacies, and developing formularies.  But groups such as community pharmacists lobby Congress, state legislatures, and government bureaucracies to write laws and regulations to force the drug benefit plans to accept “any willing pharmacy” to participate in their network, or bar plans from offering lower prices for drugs via mail order.  Such policies reduce a plan’s bargaining power and drive up costs for patients.

Perhaps Speaker Gingrich should stop promoting the potential theft of IP and read CAGW’s new book “Intellectual Property: Making it Personal.”  The last paragraph in the book says it best:

Everyone benefits from IP.  If the Founding Fathers had not recognized its importance, the light bulb, the telephone, the cell phone, and the microchip might never have been invented.  Strong IP protection is fundamental to keeping the engine of ingenuity on track for generations to come.

USPS In-APPtitude on Display

Sometimes, when it comes to grAPPling with the overarching, mind-numbing problem of trillions in government waste across all federal agencies, it’s the little vignettes that really illustrate and crystallize the larger story.

And so it goes with the newest mis-hAPP unveiled by the United States Postal Service and reviewed by a reporter for Popular Mechanics:

It’s a simple demonstration of augmented reality’s potential: layering digital information over real-world objects in ways that add context or provide richer experiences. But to keep itself relevant in the digital age, the USPS needed to go further than this first attempt, which is little more than a greeting card.

The idea of turning stationary physical infrastructure from the analog era into a useful source of updated digital information certainly has appeal. New York City is about to take a similar tack with its 8,400 pay phones, planning to replace them with 10,000 new Wi-Fi hotspots. For the USPS in particular, the challenges of adapting to the digital era have been difficult: insurmountable pension costs and declining paper mail business have put the USPS’s finances in deep trouble. The agency reported a $2 billion dollar quarterly net loss in August, far more than the $740 million it reported in the same period last year. And that was despite revenue increases from price hikes on package deliveries.

So far, though, this app hasn’t proven to be the solution for giving today’s generation of smartphone-addicted, constantly texting adults a new reason to visit their local collection boxes. I tested the iPhone app on several blue collection boxes in my neighborhood in Brooklyn and none of them worked. As it turns out, the app needs to capture the USPS Eagle logo in your smartphone’s camera view in order to function properly, and that logo was completely faded on all my local collection boxes.

Not a new phenomenon, CAGW has exposed and highlighted the feds’ mismanagement and miscues related to mobile apps for years.  Just a reminder that the mis-APProporation of taxpayer money continues APP-ace.


Who’s the Obstructionist?

While I tend to write mostly about healthcare issues, a November 27 article from Investor’s Business Daily, entitled “Obama Taking Hard Line, Blows Up Bipartisan Tax Deal,” provides a brief look into what the next two years will be like.  Says Investor’s: The White House move this week to torpedo a deal between House Republicans and Senate Democrats to extend dozens of expiring tax breaks suggests that the executive action legalizing 5 million unauthorized immigrants may have been no fluke: Compromise appears to be near the bottom of President Obama’s agenda for his last two years in office.”

Keep in mind it was soon-to-be-former Majority Leader Harry Reid (D-Nev.) that was shepherding this bill through the Senate but with the veto threat, there are not enough votes (two-thirds from the House and the Senate) to override a presidential veto.  The tax extenders package is as good as dead for 2014.

I am not arguing whether all or parts of the tax extenders legislative package are valid, but if Obama can’t even work with a Democratically-controlled Senate and pass a bi-partisan bill, what will he do when the GOP takes over the Senate in January? This doesn’t bode well for other issues that Americans want, such as repealing and replacing ObamaCare, immigration reform, and so forth.

Investor’s hypothesizes that because of the Republican wave, Obama is moving further to the left (if that is even possible) and make it harder for the GOP to get anything done.  This is completely the opposite of President Bill Clinton who worked with a Republican congress – albeit with many acrimonious and partisan fights – and had successes such welfare reform and balanced the budget.

While Obama is following the Elizabeth “Hiawatha” Warren’s battle cry that the tax breaks are nothing more than “a massive handout to big corporations” leaving it to “working families to pick up the tab,” there are popular  provisions in it that also affect families such as making permanent an expanded deduction for users of mass transit and tax-free charitable contributions from tax-protected retirement accounts.  Investor’s writes, “While the bulk of the value of the tax breaks do go directly to corporations, helping out working families only indirectly, it’s unfair to charge that ‘there’s nothing in the deal for the little guy,’ said Keefe Bruyette & Woods policy analyst Brian Gardner.”

Investor’s writes that corporate tax breaks include a “$160 billion provision to make permanent and expand a research and experimentation tax credit, an idea that the administration has supported” and two provisions worth “about $73 billion over 10 years [that] would make permanent the American Opportunity tuition tax credit and an allowance for small businesses to write off capital investments permanently.”

The United States has the highest corporate tax burden in the industrialized world, approximately 35 percent.  Certainly overall tax reform is needed that will lower the corporate rate and flatten it, getting rid of many special interest tax breaks, including some that are in the tax extenders’ package. It likely means, as long as Obama is president, we will not see tax reform for American citizens and businesses. But for now businesses, who thought a tax extenders bill was on its way to passage, are facing tax increases that will not be good for the economy and job creation.

Only if enough Democrats revolt and override vetoes by the president, will anything be accomplished.


On November 20, 2014, Chairman Darrel Issa of the House Oversight and Government Reform Committee sent letters to Center for Medicare and Medicaid Services (CMS) Director Marilyn Tavenner and Massachusetts Institute for Technology (MIT) professor Jonathan Gruber asking them to testify before his committee on December 9 at 9:30 AM.  The topic: to examine the transparency failures related to the implementation of the Affordable Care Act (ACA), better known as ObamaCare.  So mark your calendars now for a lively hearing.

Director Tavenner has already testified before the committee on the numerous ObamaCare’s problems.  No doubt a main focus of this hearing will be how her agency inflated ObamaCare’s September enrollment numbers by including dental policies.   The actual enrollment numbers were not 7.3 million as announced, but closer to 6.7 million.

But it is Professor Gruber’s maiden appearance that will attract all the attention.  Most of you are probably are familiar with Mr. Gruber by now but for those of you who are not, he is often referred to as one of the major architects of ObamaCare.  He was paid $400,000 in consulting fees by the White House to help design the healthcare reform law and millions of dollars in additional consulting fees from federal and state agencies.

The reason he has been asked to appear before the committee is because many of his video-taped speeches in which he discusses his role in designing ObamaCare have finally come to light.  His words are not flattering to the writers of the law, nor the law itself, because he unwittingly tells the truth.

As you watch many of the videos, there is a sense of elitist smugness as the professor discusses his role being part of ObamaCare’s “inner circle.”  He provides an insight into the behind-the-scenes thought process in its design.  Many of his speeches, particularly those before fellow economists, are eye-opening as his audience laughs about many policy decisions, such as the deception around the creation of the “Cadillac tax,” selling it to the public as a tax on insurance companies, while hiding the fact the tax really falls on individuals.  And, it’s almost amusing to watch him talk, gushing like a school-girl with a crush, about being in the same room, breathing the same air, as President Obama.

The video, which really kick-started the “Gruber Film Fest,” is from the October 2013 Annual Health Economics Conference held at the University of Pennsylvania.  Gruber discusses the political advantage of having a lack of transparency with many aspects of ObamaCare, such as how the bill was cleverly written so the Congressional Budget Office did not score the mandate as a tax, hiding the fact that healthy people would pay more so sick people would get money to purchase insurance, and essentially relying on the “stupidity of the American voter” to make sure the legislation got passed.

In another video [begin at 31:23], Gruber discusses the taxpayer-funded subsidies for health insurance at a forum held January 18, 201 at the Noblis Innovation and Collaboration Center.  He clearly states that the subsidies for health insurance can only be issued to people who purchase ObamaCare in the state-run exchanges, not the federal exchange.  Gruber says the reason the law was written this way was to encourage the states to play nice and develop an exchange.  But, thirty-six states had a little “revolution” and have either failed or refused to establish an exchange.  The Gruber quote is particularly valuable because the policy is the basis of four lawsuits against the federal government.  The IRS has interpreted the law to say subsidies can be given in the federal exchange while the plaintiffs argue the law only allows subsidies in the state-run exchanges.  The Supreme Court has granted certiorari in one of the lawsuits: King v Burwell.  If the Court should agree with the plaintiffs, then taxpayer-funded subsidies will become non-existent in the federally-run exchange and ObamaCare will certainly collapse.

Who can the public thank for finding many of these videos?  Rich Weinstein, an investment advisor who lost his health insurance because of ObamaCare.  He has spent hours surfing the internet looking for and listening to lengthy, mind-numbing lectures and shares what he finds with conservative policy wonks who have long known ObamaCare was not going to be the panacea that was promised.

Not too long ago, ACA supporters such as House Minority Leader Nancy Pelosi (D-Calif.) and the President spoke highly of Professor Gruber; now they are running away from him.  Nancy Pelosi says she doesn’t know who he is and the President belittles his participation in the creation of the healthcare law.

One thing Mr. Gruber has certainly learned is Harry Truman’s old adage, “If you want a friend in Washington, get a dog.”



Here are some Gruber videos for your viewing pleasure.  HT to Phil Kerpen of AmericanCommitment and Norm Singleton at Campaign for Liberty


Gov. Mitt Romney praises Gruber


Tax is really on the people…not the insurance companies


University of Penn lecture, voters are stupid


The states get the subsidies, not the federal exchange


Budget Impact of Healthcare Reform