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Paul Craig Roberts
Paul Craig Roberts
26 Mar 2010
Washington Murdered Privacy at Home and Abroad

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19 Mar 2010
American Naifs Bringing Ruin to Other Lands

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17 Mar 2010
The Offshored Economy

In the 20th century, Detroit, Mich., symbolized American industrial might. Today it symbolizes the offshored economy. Detroit'… Read More.

How Wall St Destroyed Private Medicine


At my annual check-up, my doctor handed me a sheet explaining the reasons for office fee increases for Medicare Patients. It is worth reporting at length.

Medicare fixes the prices for Medicare patients' health care. All office charges for Medicare, including office visit charges, have been set by the Federal government since 1984. In real terms (adjusted for inflation), these fixed prices are less today than they were three decades ago.

During the last four years, there have been large decreases in Medicare reimbursements for laboratory services provided in-house by private physicians. Payments for in-office blood work, for example, have been cut 35 to 47 percent. Yet, a physician's overhead continues to increase as a result of uncontrollable costs, such as property taxes, building insurance, electricity, maintenance, malpractice and workers compensation insurance.

As one result, my doctor had to close both the x-ray unit and the state and federally licensed medical laboratory on his premises. Now patients are inconvenienced by having to go to other locations for services that formerly were provided by the doctor at lower cost. A one day medical check-up is now a multiple day event and more expensive.

While Medicare payments to doctors have been cut, regulations have been increasing: "Almost every outside diagnostic procedure (CT, MRI scan, sonogram) ordered by this office now has to be pre-approved by some outside agency. Many medications are now requiring pre-approval or step therapy. Each requires filling out 1-2 pages of forms and/or two or more phone calls. This requires personnel time and therefore more cost. Consultant referrals are requiring more paperwork and time to schedule."

My doctor has more people employed doing paperwork than he does delivering health care.

While Medicare payments for in-office services to private doctors, including those for blood work and x-ray units, were drastically cut, payments to outside corporate facilities for the same services were increased. It is obvious what is afoot. Corporate lobbies are using their whores in Congress to shift income from physician offices to corporate labs, corporate medical service providers, and hospitals that are owned by national corporations.

Legislation that cuts payments to private physicians and increases the payments to large corporate entities is intended to destroy private practice and to create in its place corporate bureaucracies in which doctors are wage slaves. The physician's income is diverted to shareholders, CEO bonuses, and Wall Street. Health care is being replaced with health business.

As a result of the way American medicine is being reconstructed, patients will cease to have a doctor whom they know and who knows them. Important information is lost in a system of bureaucratized "health care" in which a patient sees whatever face happens to be on duty at the corporate provider. Impersonal health care thus brings a cost of its own, and its quality can be low compared to private practice. Indeed, the U.S. is creating a "health care" system that is more costly and less efficient than single-payer national health systems. But it will enrich corporations and provide play for Wall Street.

It turns one's stomach to watch libertarians and "free market economists" defend bureaucratized impersonal health care as "free market medicine." There is no free market present. Corporate lobbies and campaign contributions use government power to create bureaucratized monopolies that destroy medicine for the practitioner and the patient. Wall Street pushes for greater shareholder earnings, which are achieved by denying care.

Just as independent businesses have been destroyed by corporate chains, from Wal-Mart to auto parts to fast food, medicine is being destroyed by monopoly capital. The risks of starting a private business today are many times higher than they were a half-century ago. Chains have turned Americans who once were independent businessmen and women into employees.

The fate of the health care bill demonstrates the power of private lobbies.

What was to be health care for Americans was instantly transformed into 30 million new patients for the private health insurance industry. The "solution" to tens of millions of Americans being unable to afford health care is a law that requires them to purchase a private health care policy or be annually fined. As most of these uninsured Americans cannot afford to purchase a private policy, the plan is for the federal government to use taxpayers' money to subsidize their purchase of a policy from private companies.

In other words, tax money is being diverted to the pockets of private businesses. This is par for the course in "capitalist" America.

In today's America, Karl Marx's criticisms of capitalism are understated. Wherever one looks, the scene is one of the government using taxpayers' money to enrich private interests. Taxes are collected from people who can barely make it, and the revenues are transferred to multi-millionaires and billionaires. The federal government piles debt on the backs of heavily burdened and dispossessed Americans in order that investment banksters can pay annual bonuses that exceed the lifetime earnings of most Americans.

Every aspect of the U.S. military has been mined for private profit. Supply and other functions for the military, such as those provided by Halliburton and Blackwater, services once provided by the military itself at low cost, have been privatized. These services now cost many multiples of the cost to taxpayers of in-house military provision.

The "war on terror" enriches the armaments/security industry and enables Israeli territorial expansion. The Israel Lobby and the munitions industry are major sources of funding for U.S. political campaigns.

Prisons have been privatized in order to create profits for private corporations. The prisons require high incarceration rates in order to be profitable. Consequently, "freedom and democracy" America not only has the highest incarceration rate and the highest absolute number of prisoners in the world, but also a prison population comparable in size to the prison population of Stalin's Gulag Archipelago.

Congress allows private companies run by hardline Republicans to count electronically without paper trails the votes in elections. It has been proved over and over that the electronic voting machines, with proprietary undisclosed codes, can rig any election, especially if there are no exit polls or the captured media can find a way to discredit the exit polls.

And now we have private health care destroyed by the greed for profit. There are many reports of health care corporations, but not private doctors, rationing and even denying health care to policyholders in order to maximize profits. There are reports of people with treatable forms of cancer who were not told by their corporate health care providers in order to avoid the cost of their treatment. These reports are in compliance with capitalist America's emphasis on profits uber alles, to hell with people, the environment, honor and integrity.

Wall Street is romanticized by libertarians and "free market economists." They believe, entirely on the basis of their ideology, that Wall Street finances venture capitalists who bring economic progress and higher living standards. Wall Street does no such thing, especially since financial deregulation turned Wall Street into a speculative hedge fund.

Wall Street is concerned with annual bonuses. It will do anything to get them.

Today the interests of American capitalists are as far removed from the interests of the population as the bureaucrats of state-owned firms under socialism. Neither can fail, no matter how incompetent or inefficient, as they have the public purse as their backup.

The Wall Street investment banks, which created with the compliance of the regulatory authorities and the credit rating agencies, "toxic" instruments that were sold worldwide, thus destroying the prospects of people in many countries, are devoid of integrity and honor. Their only god is greed. And they control the U.S. government, which is too dependent on campaign contributions to restore regulation.

The lobbies of greed rule America. The White House, Congress, even the federal judiciary are impotent in the face of capitalist greed.

There is no government of the people, for the people, by the people, only the rule of private interests.

Dr. Roberts was assistant secretary of the U.S. Treasury in the Reagan administration, associate editor of the Wall Street Journal, Senior Research Fellow in the Hoover Institution, Stanford University, and held the William E. Simon Chair in Political Economy, Center for Strategic and International Studies, Georgetown University.

To find out more about Paul Craig Roberts, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at



4 Comments | Post Comment
Great critique of the public-private partnership, aka fascism or corporatism. I'm puzzled that he doesn't use those words. It sounds as though he is advocating socialism, and confusing free-market capitalism with state capitalism.
What we need is not more Marxism, but a return to limited constitutional government. Get the government out of medicine, and also mortgage financing, automobile manufacturing, etc.
The White House and Congress are far from impotent. Their greed for power combined with corporate greed for profit is a combination lethal for both freedom and prosperity. We no longer have a balance of power between public and private sectors, but the worst of both.
Comment: #1
Posted by: Jane Orient
Tue Feb 23, 2010 7:26 PM
Thank you for correctly asserting that there is no free market in medicine today. When physicians are prevented from offering basic services such as lab and imaging studies, outpatient surgery facilities, etc., via unequal price controls, not only does the public suffer, but physicians are grossly discriminated against. As Mr. Roberts correctly points out, the lobbyists pressure government to provide benefits to the corporate entities, such as hospitals, third-party payors, etc. Something is drastically wrong when a Medicaid HMO executive rakes in $2.9 million in one year!
Jane Orient's prescription for this mess is right on target: "Get the government out of medicine, also mortgage financing, automobile manufacturing, etc." But, how do you accomplish that? The lobbyists are so deeply entrenched in Washington, that breaking this cycle will be nearly impossible. The more money transferred into Congressional coffers, the more benefits will be expected from the legislators.
There is a small document, however, largely ignored today, which strictly prohibits the federal government from meddling in all these areas. The U.S. Constitution strictly limits the boundaries of the central government, and the 10th Amendment emphasizes this. When this country comes to grips with the need to stop the transfer of public money into private ventures, true free markets will emerge, along with a successful, efficient economy. I see Mr. Roberts understanding the natural deterioration into fascism and collectivism, not condoning it. We now hear the constant cry that "free markets" aren't working, so we need government to step in. The fact is, what we have is not a free market--not in healthcare, and not in many other areas.
Comment: #2
Posted by: Ken Christman
Wed Feb 24, 2010 7:51 AM
Mr. Roberts interpretation of the facts in our health care system of payments and government intervention is misguided in looking for a scape- goat. It is not Wall Street that is causing our system to be dysfunctional; it is the massive governmental intervention into health care. Wall Street is just reacting to the Bureaucrat imposed on health care starting the supposition that unlimited health care is an entitlement to every citizen and illegal citizen is a right; and that the government has a duty make this happen. This is 180 degrees for what a libertarian would want. A Libertarians'' philosophy is for people to be free to choose their own destiny, as long as they do not burden or affect others freedom.
We do need government, for our safety and culture of coexistence to live out lives without the minutia of intervention to every aspect of our lives. It is an impossible task to undertake for government of optimal guarantee healthcare to everyone, as it is an infinite goal. There will never be enough to supply man's wants (not needs).
Comment: #3
Posted by: Ronald Pomykala
Thu Feb 25, 2010 3:47 AM
Mr. Christman's comment about the deeply entrenched status of lobbyists is right on target. There is, however, a simple way of disempowering those lobbyists - take away the pool of tax money they they prey on. The CONSTITUTIONAL SUPPORT TAX (the CST) that follows is a way of using the States to do just that. (The paragraph numbering is not intended as an outline. The numbers are simply a way for a reader to point to a place where there might be a question.)

The Op Ed

1. Our national discussion of taxation includes three proposals to modify or replace the Federal Income Tax. The proposals and their main proponents are (1) the FairTax (radioman Neal Boortz and Congressman John Linder); (2) a Flat Tax in some form (magazine publisher Steve Forbes), and (3) the Simplified Tax (Congressman Paul Ryan from Wisconsin).

2. There is another proposal being circulated among people in the Tea Party/Townhall Movement known as the CONSTITUTIONAL SUPPORT TAX (the CST). With the seeming unwillingness of Congressional leadership to acknowledge or incorporate the concerns of Americans into the Healthcare “Reform” Bill, perhaps it is time to take a closer look at the CST.

3. In Federalist Paper #30, Alexander Hamilton writes “.....there must be interwoven in the frame of the government a general power of taxation, in one shape or another.” The next paragraph continues “Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion and enables it to perform its most essential functions.”

4. The shape, or application, of the general power of taxation on a nation and its citizens can have a major effect on the degree of liberty the citizens enjoy. Over time a poorly designed tax structure can enable the expansion of government into aspects of a republic's life, people and economy never envisioned by, or acceptable to, its founders. Perhaps to the point where the continued existence of the republic itself is brought into question. Supreme Court Justice John Marshall's comment, “The power to tax involves the power to destroy” is now what we see being played out on the six o'clock news every night.

5. The 1913 passage of the 16th Amendment to the Constitution implementing the Income Tax changed the fundamental relationship between the Federal Government and the American People. Previously, Article 1, Section 9, Paragraph 4 (1-9-4) prohibited DIRECT taxes unless “in Proportion to the Census or Enumeration.” The wording of the 16th suspended this 1-9-4 Census requirement.

6. With the 16th in place, the shape of the flow of money into Federal coffers changed. Article 1, Section 8, Paragraph 1 (1-8-1) authorized Congress to “lay and collect Taxes, Duties, Imposts and Excises.” The Federal ability to acquire money was basically limited by 1-8-1 and 1-9-4 to taxing imported goods. Federal taxation beyond that was virtually nonexistent until the 16th.

7. However, the 16th fundamentally changed matters. With the 16th a percentage of the flow of dollars earned by Americans became subject to a Federal levy. A great expansion of tax collections, and therefore money to spend followed. For nearly 100 years now a spending industry consisting of (1) Congress, (2) the Federal bureaucracy, (3) lobbyists and (4) “hangers on” of all kinds has grown and deeply entrenched itself, drawing on this ever-growing pool of tax money.

8. The thirst for spending has grown to a point where even much larger collections through the Income Tax are insufficient. The borrowing power of the U.S. Government has become crucial in raising still more money to “cover” trillion dollar plus deficits. The possible financial fallout from this central planning approach is even bringing criticism from the Communist Chinese.

9. The awakening of the American People to this state of affairs is reflected in the Tea Party/Townhall Movement. Among other things, this Movement is in the process of organizing itself to provide channels of expression for the well-founded fears of this continued straying from American constitutional principles. One million plus people were in Washington, D.C. on 9/12. This followed the August 2009 Townhall meetings attended by thousands across the country to address ObamaCare. A political version of the spiritual Great Awakening has taken place.

10. Much of the thinking of the Movement is centered on bringing pressure on Congress to change direction, or face replacement. The importance of possibly replacing legislators cannot be underestimated. But oddly, the crux of the problem, namely the system of direct income taxation that is the linchpin holding together the "spending foursome" mentioned above has not yet seriously come under discussion for replacement. Perhaps this is because none of the three proposed changes mentioned above eliminates direct taxation. However, the CONSTITUTIONAL SUPPORT TAX, (the CST), will achieve direct tax elimination.

11. In place of the 16th will be an indirect system employing the States to fund the Federal Government, namely the CST. The CST is a 21st Century update to Article 1-9-4 of the Constitution. It's implementation and operation will create a series of “political pressure point” constraints on Federal spending and its growth that currently do not exist. The 16th Amendment will be repealed and become a relic of history.

12. The CST starts with a census of income by State. All income earners, using a form much like the current long form 1040, will calculate and report their income to the senior tax bureau of their State of residence and to the IRS. The “new 1040s” will not, however, be used to calculate an individual tax liability. Rather, they will be used to develop a formula to divide among the States the Federal budget set by Congress.

13. The percentage that total income of all residents of each State contribute to a total national income amount (100%) will be calculated. The yearly Federal budget, still set by Congress, will then be divided among the States by the percentage each contributes to the 100%. The residents of each State will decide, by whatever process they select, to tax themselves to pay their State's mandatory share of the Federal budget. Taxes will be collected by and remitted to the IRS by the States.

14. A few of the “political pressure points” and other items to note about the CST (in no particular order) are:

15. First, it will divide the Federal budget among the States by a formula that is fair to all States. This will be true because each dollar of income, regardless of the State where it is reported as income, will be assigned the same number of pennies of the Federal budget. It will be a true “ability to pay” system across the States. It will be mandatory for each State pay its allocated portion of the Budget.

16. Second, Congress' power to tax will be limited to Article 1, Section 8 of the Constitution. With no 16th Amendment there will no longer be an ever-being-replenishing a pool of tax dollars in the hands of Congress. Congress will have to be much more sober and serious in developing the Budget because its members will know they must “sell” the Budget to the States.

17. Third, the States will again become a protective buffer between the pocketbooks of the citizens and the Federal Government as they were under Article 1-9-4. An enhancement to “Life, Liberty and the Pursuit of Happiness” thankfully enshrined in the Declaration of Independence.

18. Fourth, the “buffer” the States provide will have a double benefit. The States will have the money. Congress will have to go to them to get money. State and local officials across the country will quickly become something of a “benevolent and protective fraternal association” interested in keeping tax money at home. One key “political pressure point” with the CST is that before surrendering dollars the States will be continually posing the question to Congress, “Where is your Constitutional authorization to request money for this proposed spending?” The Preamble to the Constitution calls for only one thing to be “provided for” – “common defence.” The Tenth Amendment reinforces the Preamble.

19. Fifth, as a “fraternity” the State and local officials should be an effective offset to the power of the Federal Government.

20. Sixth, deficit spending will end. All money for Federal operations will come from the States. A second political pressure point is that Congress will have a hard time persuading the States to fund spending that is currently the sum of tax collections plus borrowed money.

21. Seventh, the general public will have a much greater interest in following the development of the Federal budget. On a timeline, the percentages for distributing the budget among the States for any one fiscal year will be announced about a month before that fiscal year begins. State and local officials and the public will want to know both their State's percentage and dollar levy as soon as possible and will always be watching.

22. Eighth, Federal earmarks will be greatly curtailed, if not eliminated. Since any earmark money will be added to the overall budget, the earmarks for any one project in any one State will add to the amount being drawn from the other 49 States. To keep the tax bill down for the residents of their own districts, each member of Congress will be far less willing to support any other members earmarks. Earmark-type projects are fine – if paid for only by the residents of the State deriving the benefit. Congress will have a powerful incentive to NOT do earmarks.

23. In short, the CST is a system for re-channeling the flow of tax dollars through our Federal/State governmental structure. The current Income Tax creates a framework where there are numerous encouragements to evermore Federal spending. The CST will restructure things to make a 180-degree turn to having multiple constraints on, rather than encouragements to, Federal spending.

24. There are those who would say that the CST is a “drastic and radical” proposal. Is it anymore drastic and radical, however, than trillion dollar plus deficits, the federalization of health care, the endangering of our very existence as a nation, the futures of our children and grandchildren, and our natural law freedoms?
Cy Mallinson 1311 Manor St. Kalamazoo, MI 49006-2143 1-269-342-0410
Comment: #4
Posted by: Cy Mallinson
Thu Feb 25, 2010 8:12 AM
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