Author Archives: dave

Message to the Reactionary Wing of American Politics: There is no Socialism in the United States

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The U.S. Does Not Have a Socialist Economy or a Government Based on Marx’s Political Philosophy. But We do Have “The General Welfare Clause” of the Constitution.

There is no socialism in the United States: bupkus, nada, zip, none whatsoever. The United States has a capitalist economic system. Furthermore, we are a democratic-republic. That will not change in the foreseeable future.  What we also have is constitutionally justified “general welfare” for alleviating suffering of citizens left behind by advancing technology, for meeting fundamental needs of those who have experienced personal or societal catastrophes, and for addressing other threats to the “general welfare” of the populous, e.g., climate change, nuclear waste, and other threats to safety and health of Americans.

The framers of the constitution anticipated the probability of events or trends that would threaten the well-being of citizens on a wide scale. Hence, they included the “general welfare clause” in the constitution as a raison d’etre for federal spending to protect the populous from extensive harm.

Article I, Section 8, Clause 1 of the U.S. Constitution states that:

“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.”

Libertarians, Neocons, and Other Right-Wing Groups Claim that the General Welfare Clause is Meaningless.  The Supreme Court Has Clearly Held that they are Wrong

Based on an interpretation of the general welfare clause, the Supreme Court has held that OASDI, Unemployment Insurance, Medicare, Medicaid, TANF, and a Host of other Government expenditures for meeting threats to “we the people” are constitutional (see e.g., U.S. v. Butler, 297 U.S. 1, 1935, Helvering v. Davis, 301 U.S. 619, 1937, Steward Machine Co. v. Davis, 301 U.S. 548, 1937, and New York v. U.S. 504 U.S. 144, 1992).

Those opinions are now part of the warp and woof of U.S. constitutional law. Nevertheless, conservative forces have been pushing a false narrative, i.e., “The Supreme Court is wrong and continuing to improve the welfare of U.S. citizens through government expenditures is moving the U.S. toward socialism.”  This kind of nonsense is coming out of the Hoover Institute, The Heritage Foundation, the Koch-funded Cato Institute and other reactionary, conservative propaganda organizations (see, e.g., John Cogan, “High Cost of Good Intentions: A History of U.S. Federal Entitlement Programs”).

Liberals have Failed to Develop a “Constitutional versus Socialistic” Narrative Based on the Truth. Why is this important?

A radical, reactionary right-wing has always existed in the United States and has, since the rise of communism soon after the dawn of the 20th Century, labeled liberals as communists and socialists.  Indeed, red baiting has been a barrier to improving the lives of U.S. citizens left behind by industrial capitalism.

The “general welfare” clause justifies a safety net for individuals thrust into poverty by technological advancements which reduces the need for labor.  Furthermore, care for an aging population, extension of the benefits of advanced medical care to all citizens, and a morally decent standard of living for our society as it has evolved have been held to be constitutional under the clause by the Supreme Court.

Accusing Democrats and liberals of “socialism” and “radical leftism” should be laughable, but it is working for reactionaries.  It’s working because Democrats and liberals have failed to go on offense with a narrative based on the truth: (1) Federal expenditures are justified by the U.S. Constitution, (2) A capitalistic system will, of necessity, fail to meet the fundamental needs of all U.S. citizens, and (3) A decent system of government in the wealthiest country in the history of humankind has the constitutional duty and obligation to take up the slack between what private enterprise provides and what the entire population needs.

It is amazing to me how well right-wing red baiting has worked to keep people in poverty, without medical care, in substandard long-term care, in bad air, drinking bad water, and in all sorts of other threatening situations.  The liberal side of the political spectrum can do a much better job of framing and development of a narrative. Insofar as the accusation of “socialism/communism,” let’s just apply this metaphor: that dog doesn’t hunt. It is false. Let’s not stay silent in the face of it. Rather, let’s go on offense with our own narrative: “Yes we can afford to create a decent society and have the wealth to bring it about!”

Posted by Dave Kingsley 2/6/2021

The State of Long-Term Care in America: Video interview with Professor Charlene Harrington, UCSF

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Check out our Tallgrass Economics podcast interview with Professor Charlene Harrington. Professor Harrington is a gerontologist, registered nurse, and holds a PhD in sociology. She has made extensive contributions to the scholarly literature pertaining to long-term care, and is well known across the United States for her vast knowledge and presentations before legislative and regulatory bodies. Dr. Harrington has important insights to share pertaining to the current state of nursing home and senior care in America.

Kent Comforts interview with Professor Harrington can be accessed at:

https://youtu.be/_4JXC-cE3SI

Watch for our Interviews: Coming Soon

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By:

Dave Kingsley

To better disseminate information about the current nature of the senior living industry, the condition of Social Security & Medicare, and other issues pertaining to the economics and politics of aging, we will be conducting interviews with professionals, workers, politicians, and others with something important to say about the elderly and the political economy.

Kent Comfort’s interview with Professor Charlene Harrington will be posted in the next day or two. We feel that sharing professor Harrington’s vast experience, accomplishments, and knowledge in the field of long-term care is invaluable for informing all Americans who would like to see the United States move toward a more humane form of care in nursing homes. For instance, her comments on the Norwegian system of long-term care are of importance to understanding what could be instead of what is.

The Disappearance of Scientific, Rational, Commonsense Thinking

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By:

Dave Kingsley

In the Age of Show Business, Public Discourse Is Often Dangerous Nonsense

The current spread of absurd QAnon, conspiracist, white supremacist beliefs is the apotheosis of the takeover of our minds by infotainment, sound bite journalism, and the dumbing down of Western, liberal societies. Preceding the Trump presidency, a broad swath of the public was conditioned to believe about anything posted on the internet. So, a dangerous demagogue was able to capture the U.S. government by spreading hateful myths about an African American president and Hispanic immigrants.

A violent racist, anti-Semitic movement has also been intertwined with the growth of fanatical, anti-science religious groups across the U.S. In the early 2000s the “religious-right” successfully attacked and derogated science curricula in public schools. Critical thinking in science classes was significantly diminished.

There is no doubt in my mind that the failure of progressives, liberals, moderates, and principled conservatives to counter a crazy right-wing attack on science has contributed to the growth of irrational beliefs – leading to hundreds of thousands of preventable deaths during the raging COVID. It was hard for us to believe that a Donald Trump and what he has wrought would really happen in this country. We thought that the moral high ground would be good enough and our emotional appeals to human decency would be a viable narrative and strategy.

Beware of Slick, Simplistic Presentations

Science is skeptical. It is also hard work. In the age of show business, the most entertaining and amusing presentations will grab attention of an audience far quicker than substance requiring some mental effort. Nevertheless, empirical evidence in support of a position is absolutely necessary.

Science is a process. Hence, it is also necessary for the audience to not only respect the credentials of presenters – if they actually have the credentials – but at the same time, the audience and colleagues must be engaged in an exchange. Do we understand each other? How do we deepen our knowledge and make better decisions in the public interest? What can we all contribute to the effort? These are questions designed to prevent audiences given to passive acceptance to whatever expert or even charlatan is disseminating.

Advocates & Activists Must Demand Scientific Analyses and the Truth: We Owe it to our Fellow Humans

Professionals and volunteers advocating and agitating for better conditions for those around us deprived of human decency and subjected to dehumanizing and abusive medical care are responsible for seeking the truth. For example, the financial-real estate-medical industrial complex is providing misleading information about the federal and state funds flowing into and out of the nursing home system.

The long-term care industry has been able to trick legislators, advocates, and the public far too long with their hardship pleas. The truth is this: the nursing home system is structured for the flow of capital through an opaque pipeline, which in the final analysis benefits ultra high net worth individuals and contributes to the maldistribution of wealth.

Commonsense, scientific, rational thinking is needed to debunk the false narratives of an industry dedicated to finance rather than humane care. That is what this blog is all about and we will advocate and agitate for a counter to the nonsense far too often swallowed by legislators, regulators, the media, and the public. We can see what’s coming. Things will not get better on their own.

The Threat of White Nationalist Terrorism to American Democracy: A Common Sense Understanding

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Max Skidmore

Editor’s Note: This post by Max Skidmore is an excerpt from his recently published book The Common Sense Manifesto (Washington, D.C.: Westphalia Press, 2020, 41-43). It is important to remember that this was published in February 2020, nearly a year before the violent insurgency that attempted to seize power from the United States Congress. Then, consider how much recent events have demonstrated that this warning was not exaggerated; the United States was threatened by a clear and present danger from right-wing extremists, and also from self-described “conservatives,” who constituted the Republican Party.

Law enforcement officials became aware decades ago that one of the greatest dangers threatening Americans came from white nationalists, and from various neo-Nazi groups. This is especially true given the widespread availability of even the most lethal firearms to virtually anyone in the United States. Prudently, the Department of Homeland Security began to look carefully at such groups, and to study them seriously. 

When they learned of such studies, though, American conservatives raised vehement protests. Studies of threats from the extreme right, they shrieked, were attempts to suppress “conservatives.”  So powerful was their reaction that the Department of Homeland Security halted all such studies. Republican office holders recognized immediately that studies of right-wing dangers absolutely required study of the dangers of American conservatism, itself. 

Damning examples are easy to find.  In 2016, Ron Nixon wrote in the New York Times that “Homeland Security Looked Past Antigovernment Movement.”[1] In 2012, an article in Wired was titled, “DHS Crushed This Analyst For Warning About Far-Right Terror.”[2] As far back as 2011 the Washington Post reported that “Homeland Security Department Curtails Home-Grown Terror Analysis.”[3] All that led to the anguished cry in November of 2018 that “Law Enforcement Failed to See the threat of White Nationalism. Now They Don’t Know How to Stop it.”[4]

The irony of the situation is what it says about the unintended candor of the conservatives who protested in the first place. In a twisted way, there is something humorous here. Despite their generally staid lifestyles as privileged members of the moneyed elite, Republican elected officials argued that targeting dangerous extremists—those who were often living in the woods while stockpiling assault weapons and the like—was to target “conservatives.” 

They were closer to being accurate than they seemed. The casual observer could have thought of this as paranoid nonsense, but the conservatives knew better. They knew very well that the most violent elements of society were kindred souls ideologically with themselves. As the discussion here makes clear, the violent potential of their ideology brought them closer to their alt-right relatives. Such closeness between overt violent extremists and their kindred in the alt-right has brought about a most terrifying result. 

The Republicans have energized the most violent, and least rational, segment of the American electorate.  Because of the electoral college that disregarded nearly three million more votes for Hillary Clinton, they managed to elect to the presidency of the United States an ignorant and malevolent buffoon. Despite some early criticisms from a few Republicans, he quickly became “their guy,” and Republicans lined up to give him their firm support as he slashes, burns, and rips. 

At the same time, he also whines, and complains that he is being mistreated. He, who obviously knows almost nothing about history or past presidents, says that he is being treated more unfairly than any other president in history.

A widespread uprising has yet to be experienced, but irrational violence is becoming increasingly common. Mass murders are so frequent that they seem almost to have become normalized. On 3 August—on a single day—there in fact were two such massacres by white nationalist terrorists, widely separated. The first was in El Paso, Texas, followed shortly by the other in Dayton, Ohio. Each caused multiple deaths. Even Trump conceded that “perhaps” more should be done (at least until later, when he backtracked after having spoken with an NRA official). His supporters, and perhaps others as well, say that it is unfair to hold Trump responsible. To anyone familiar with American politics, and with Trump’s rhetoric, common sense should make it impossible to deny a definite connection.

[1] Ron Nixon, “Homeland Security Looked Past Antigovernmental Movement, Ex-Analyst Says,” New York Times (8 January 2016), https://www.aol.com/article/news/2019/03/17/white-house-dismisses-praise-of-trump-by-new-zealand-shooter/23694289/ (accessed 27 March 2019).

[2] Spencer Ackerman, “DHS Crushed This Analyst  For Warning About Far-Right Terror,” Wired, (7 August 2012), https://www.wired.com/2012/08/dhs/ (Accessed 27 March 2019).

[3] R. Jeffrey Smith, “Homeland Security Department Curtails Home-Grown Terror Analysis,” The Washington Post(7 June 2011), https://www.washingtonpost.com/politics/homeland-security-department-curtails-home-grown-terror-analysis/2011/06/02/AGQEaDLH_story.html?noredirect=on&utm_term=.abfcf3e66cc2 (accessed 27 March 2019).

[4] Janet Reitman “U.S. Law Enforcement Failed to See the Threat of White Nationalism. Now They Don’t Know How to Stop it,” The New York Times Magazine (3 November 2018), https://www.nytimes.com/2018/11/03/magazine/FBI-charlottesville-white-nationalism-far-right.html (accessed 27 March 2019).

Lobbyists for the Nursing Home Industry are Pleading Financial Hardship on Behalf of the Corporations they Represent: Advocates & Activists Need to Debunk that False Narrative

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Dave Kingsley

A Government Funded Service that Requires Heart & Soul has been Turned over to Businesses that have no Heart and no Soul

Corporations in the nursing home industry do what corporations do – they make as much money as they can for their shareholders.  Advocates and activists do what caring people do – they fight for patients with heart and soul against corporations that have no heart and no soul. Profit is profit and care is care, and “ne’re the twain shall meet.” 

In this age of little integrity, corporate behavior has little to nothing to do with social responsibility and everything to do with executives’ perceived obligations to their investors/shareholders and themselves.  In that endeavor, they have no qualms about deceiving the public with misinformation about their finances. A number of times I have attended legislative hearings and listened to lobbyists convince legislators that providers’ net income is so low they can barely stay in business.

Providing low quality care and excusing it with a claim of “running on a thin profit margin” is a typical maneuver of long-term care providers. This is a lie and deserves some intense and strong pushback. It is not hard to find evidence to rebut this falsehood.  For instance, it is my opinion that The Ensign Group is the biggest owner and operator of nursing homes in the United States. I’m claiming it is the biggest because unlike the other large operators it owns the 270 properties (at latest count) it operates, whereas companies like Brookdale have sold their facilities to Welltower and other REITs (they manage them on a contract basis).

The Ensign Group is doing quite well – even during the COVID pandemic. The table below displays the company’s income statement, which includes revenue and net income through the 3rd quarter of 2020 compared to the same period of 2019. Revenue has increased from $1.5 billion during the same period in 2019 to $1.8 billion in 2020. The company’s net income (profit) in the third quarter was $43.3 million compared to $27.8 million in the 3rd quarter of 2019. The 2020 year-to-date net income in the 3rd quarter was $125.2 million compared to $84.4 million in 2019.

It is important to note that net income on the income statement is after depreciation, amortization, taxes, and interest. Calculating earnings after these expenses isn’t the current accepted standard for evaluating corporate performance. Earnings before interest, taxes, depreciation and amortization (EBITA), would be much higher than net income and is a better reflection of the company’s financial strength. There is no point in getting into the weeds on this particular point – it is an important point however. Suffice it to say that the financial data we are able to obtain from publicly listed companies suggest that long-term care is an attractive investment.

Senior Housing will be a Vibrant and Appealing Investment Opportunity for at Least the Next Ten Years

The Baby Boom generation began entering retirement age in 2011 and will swell the 65+ population until 2029, when the last year of the 1946 through 1964 birth cohort enters the magic retirement age of 65. Demographers are predicting that the 65+ demographic will reach 80 million. Real estate and finance sectors of the economy have been granted generous tax advantages. Those are the main undertakings of senior housing/long-term care. Furthermore, guaranteed revenue from Medicare and Medicaid and a powerful lobby for keeping regulators at bay or under control will attract investors to this industry.

Don’t take my Word For it, Look at the Trade Publications

Although the movement for community and home based care will continue to intensify, demand for skilled nursing will remain high due to an increasing 80+ population and advancing medical technology. In a recent article in Skilled Nursing News (Skilled Nursing Continues to Outpace Senior Living in Near-Term Investment Outlook, January 21, 2020), Alex Spanko wrote the following:

With a combination of strong federal relief and a seemingly safe place in the wider health care continuum, skilled nursing facilities have repeatedly emerged as bright spots in an otherwise hazy financial outlook for players in the senior housing and care sector.

Fitch Ratings on Tuesday added to that trend in awarding a BBB- rating and stable outlook to unsecured notes issued by National Health Investors (NYSE: NHI), a major publicly traded landlord in the space (https://skillednursingnews.com/2021/01/skilled-nursing-continues-to-outpace-senior-living-in-near-term-investment-outlook/).

Publicly listed corporations in the long-term care business will be reporting their 4th quarter and 2020 annual reports in the next few weeks. We will be compiling essential information for all them and posting it on this blog. Combined, these companies own a significant share of the long-term care industry. If their financial statements don’t support the “hardship pleas” of their lobbyists, then advocates need to ask for evidence of their claims.

We Must Demand the Truth about the Federal Budget: It’s Important for Funding Medicare, Medicaid, and Other Federal Programs for the Elderly

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Dave Kingsley

Political Economy Accounts for the Effects of Propaganda – Orthodox Economics Do Not

The focus of this blog is on economics, finance, and politics – we could more aptly say that we conduct research and write about “political economy.”  As opposed to orthodox economics – overwhelmingly taught in the academy and practiced by most professional economists these days – political economy considers the cultural, historical, and political, context of the economy.

In the current cultural context, an increasingly high tolerance of lying, and intentionally misinforming the public has been developing since the Reagan Revolution. A survival of the fittest, winner take all, hyper-competitive capitalism has become intertwined with money in politics, boosting venal politics. This is having a major effect on how federal spending is presented to the public.

Propaganda

 Propaganda has become a noticeable feature of public discourse on federal funding. By propaganda, I’m referring to intentional disinformation, i.e., lying, plus the individuals and organizations that wittingly and unwittingly disseminate it. As the venality of politics increases, there is a proportional increase in significant amounts of propaganda. For instance, in the past few decades, the late Wall Street mogul Peter G. Petersen funded several “inside-the-Washington, D.C.-beltway think tanks” for the purpose of selling the public on the belief that this country – the richest country on the planet – can’t afford to fund a decent level of retirement security, e.g., Social Security, SSI, medical care, e.g., long-term care, housing, and other programs for a dignified and humane old age.

I have already blogged somewhat about Petersen’s phalanx of organizations such as The Committee for a Responsible Federal Budget, The Concord Coalition, and The Bipartisan Policy Committee.  The boards of these organizations include prestigious individuals from government, the military, business, and super-rich families. Former congresspersons who have behaved suitably while in office often serve as board members or high paid executives of these special interest “think tanks” which pass themselves off as legitimate research institutions, when in fact they are propaganda machines.

Petersen’s Billions for Propaganda Have Had a Huge Impact on Budget Beliefs

If you are looking for information on the federal budget, you can find some nice looking, colorful, pie charts online that are simple, easy to understand, and wrong.  The pie chart below is nothing less than a lie. This representation of the 2019 budget has been typical of what has been disseminated over the past several decades. The 2020 budget will be atypical due to COVID and would muddy the waters somewhat on this post, which addresses enduring concerns.

The above chart illustrates the percentage of “federal spending” that is allocated to major categories such as Social Security and defense.  This is typical of what one finds when Googling the federal budget.  This chart is disseminated by the Committee on Budget & Policy Priorities (https://www.cbpp.org/research/policy-basics-introduction-to-the-federal-budget-process).  The CBPP is usually on the progressive side of issues, but they are on board with the pervasive misinformation regarding the budget.  Unfortunately, misinformation about the federal budget dominates public discourse.

Social Security is “Off Budget” by Law:  It Only Makes Sense that it Would Be.

What’s wrong with the information on the above chart?  Although the data are purportedly “budget data,” they are not.  The title of the chart is “Federal Spending FY 2019,” which is a rather slick maneuver, because it appears in a document entitled “Introduction to the Federal Budget Process.”  No doubt, Social Security is a component of federal spending, but it has nothing to do with the budget.  “In the 1983 Social Security Amendments a provision was included mandating that Social Security be taken “off-budget” starting in FY 1993” (https://www.ssa.gov/history/BudgetTreatment.html#:~:text=Research%20Notes%special%20Studies%20by%20the%20Historian%27s,%20%24567%20billion%20%201%20more%20rows%20).

Expenditures on Social Security are from a dedicated payroll tax, benefits are actuarially determined based on individual accounts, and no general fund transfers are made to the program, which cannot run a deficit or borrow money. Benefits would be reduced if revenue could not meet payout earned by beneficiaries.  So, to display it as 23% of the federal budget is false. Furthermore, prior to 2020 and the COVID crisis, Trust Fund balance of $3 trillion had accumulated.  This was not counted against the deficit.

In 2019, Only 42.6% of Medicare ($339.8 billion) was Transferred from the General Fund.

The pie chart above pertains to a mythical budget of $4.4 trillion (see bar chart below).  Medicare is shown as 14%.  However, only 42.6% ($339 billion) of total Medicare expenditures of $796.2 billion is appropriated through the federal budget process. 

Instead of 14% of the total federal budget of $4.4 trillion, Medicare is less than 8%.  That is, if the federal budget is actually $4.4 trillion, which it isn’t.  Social Security must be eliminated.  There can be no argument about that.  Approximately $1.5 trillion in tax expenditures should be added, which would result in a total budget of nearly $5 trillion.

Tax expenditures are subsidies provided to corporations and individuals through the tax code.  “The Congressional Budget Act of 1974 (Public Law 93-344) requires that a list of “tax expenditures” be included in the budget” (https://home.treasury.gov/system/files/131/Tax-Expenditures-2021.pdf, p. 1).  You may have noticed that they never show up on impressive pie charts? So, for instance, subsidies to employers for health insurance provided by employers to their employees ($228 billion – the biggest tax expenditure) are not included in charts provided by think tanks.  Capital gains, employer defined benefits and defined contribution programs, accelerated depreciation, and a large number of other tax subsidies, most of which benefit high net worth individuals and corporations (including the long-term care industry), are major subsidies that cost taxpayers and put pressure on other forms of revenue.

Although Social Security & Medicare are a Small Part of the Federal Budget – they are Blamed for the Deficit

Social Security is not part of the $5 trillion federal budget.  So, the $339.8 billion transfer from the general fund for Medicare, which had total expenditures of $796 billion, mostly paid for with premiums, co-pays, deductibles (out of pocket or OOP expenses), and the payroll tax is on budget.  Hence, the entire $1.8 trillion expended on Social Security and Medicare only accounts for 6.8% of the entire federal budget.

The media will parrot press releases produced by the organizations responsible for budget propaganda.  Advocates, and activists have a duty and obligation to debunk and rebut these lies about cherished programs for the elderly.

The Media is Promoting a Dangerous & False Narrative by Claiming that the Nursing Home Industry is Struggling Financially

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Dave Kingsley

Here is a message to the media:  high net worth individuals and their financial managers do not invest in long-term care because it is a poor investment.  Furthermore, corporations will not continue in a line of business that is a losing proposition for their shareholders.  Nevertheless, journalists keep writing articles in which they promote a false narrative concocted by the long-term care industry and spread by the American Health Care Association. I call it the “nursing home industry hardship narrative.”

An egregious example of this false narrative appeared in the Kansas City Star recently.  Writing about the assistance requested from the National Guard by long-term care facilities, Star journalist Sydney Hoover said this: “Nursing homes in Kansas have long struggled financially, with many unable to pay competitive wages, or even basic utility bills.” The article went on to say that the “pandemic has exacerbated those difficulties, as the cost of personal protective equipment increases and staff shortages grow.” (“Kansas nursing home officials push for staffing aid – and calling out National Guard,” https://www.kansascity.com/news/coronavirus/article248477490.html).

This article cited no empirical evidence or any credible research that supports this typical industry “hardship narrative.”  I have been researching Kansas nursing home ownership for years – probably to an extent no one else has – and the only evidence of bankrupt and insolvent facilities pertains to chains taken over by private equity firms or white-collar criminals and looted.  Conversely, plenty of evidence exists to suggest that the long-term care business is an attractive investment.

It is incumbent upon agency employees, the media, and advocates to debunk the industry’s hardship pleas.  The evidence is not difficult to find.  Publicly listed companies are required to file quarterly and annual financial reports with the Securities & Exchange Commission. They are also required to file a “proxy report” on an annual basis, which includes executives’ and board of director’s compensation.

The largest long-term care facility owners are real estate investment trusts.  Welltower is the dominant REIT long-term care corporation in revenue (Over $5 billion in 2019).  It’s 2020 proxy report indicates that CEO compensation was $17 million in 2019.  Board member compensation ranged from $250,000 to $350,000. 

The Ensign Group – not an REIT – is one of the largest long-term care corporations in number of facilities.  Its 2020 revenue has increased quarter over quarter.  Like most of the other publicly listed corporations, the Ensign Group has had robust earnings, has paid dividends, and has not drawn down its rather impressive stash of cash. These companies are sitting on $billions in cash and equivalents and are not overly debt ridden.  Like the rest of corporations listed on a stock exchange, the value of Welltower, Ventas, Ensign Group shares tanked in March but have since recovered to near prior highs.

The 10-Q reports for these publicly listed long-term care corporations also indicate that they have been receiving a considerable amount of COVID relief from the federal government through the CARES Act.  For example, the VENTAS 3rd Quarter 10-Q states that the corporation applied for $35 million under Phase II of the Provider Relief Fund.  They further stated that “HHS recently announced a new $20 billion Phase III General Distribution allowance.”   

There seems to be little doubt that these highly subsidized corporations will land solidly on their feet as the pandemic is brought under control.  It is interesting to note the following statement by VENTAS regarding its liquidity during the COVID pandemic:

Since the start of COVID-19 pandemic, we have taken precautionary steps to increase liquidity and preserve financial flexibility in light of the resulting uncertainty.  See ‘Management’s Discussion and Analysis of Financial Condition and Result of Operations, Liquidity and Capital Resources; Recent Capital Conservation Actions.”  As of November 5, 2020, we had approximately $3.2 billion in liquidity, including availability under our revolving credit facility and cash and cash equivalents on hand, with no borrowings outstanding under our commercial paper program and negligible near-term debt maturing (Form 10-Q, page 9).

Fourth quarter 10-Qs, 2020 annual reports, and proxy statements will be issued early in February. At that time, we will have a clear picture of the financial condition of the publicly listed “players” in long-term care.  We will be analyzing those and reporting on the finances of the major providers in the industry.  These reports are hundreds of pages of financial information. Writing about them is a daunting task.  However, we will take small bites for posting on Tallgrass Economics Finance & Politics.

Our detailed analyses of long-term care provider finances will be uploaded to a new website – The New Economics & Politics of Aging at http://neweconomicsofaging.org/. If we do not begin to push back on industry propaganda, the future of long-term care looks bleak for patients and families.  The victimhood bestowed upon long-term care corporations during the COVID-19 pandemic will, if left unchallenged, strengthen their position with the public, politicians, and agencies charged with regulating them. Conversely, it will weaken the hand of advocates, the public, and families as they attempt to transform the current long-term care system from a business for extracting federal and state dollars at the expense of care into a truly humane system that values the lives of the elderly and disabled.

The “Nursing Home” System has Failed Patients and Employees. Now Operators are Calling on the National Guard for Help

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Dave Kingsley

Will we Just Bail Out the Industry & Move On?

Because it was a white wash, I have been critical of the CMS Commission on COVID in Nursing Homes. On September 16, 2020, the Trump Administration issued a press release with the title “Independent Nursing Home COVID-19 Commission Findings Validate Unprecedented Federal Response.” Probably another 100,000 patients will have died in long-term care institutions between that “big lie” (typical of autocratic regimes) and when the pandemic is under control.

Although the report shamefully let CMS, state agencies, and the industry off the hook for dereliction of their duties, the claim that it validated the federal response was blatant propaganda. I’m dismayed that I haven’t heard that from the advocates, scholars, lobbyists, and industry representatives who served on the commission.

Here’s the truth: staffing in many facilities has deteriorated to the point that the industry is calling for help from the National Guard. Apparently, they are receiving that help because nurses and other employees are leaving to work in hospitals and clinics. In addition to receiving an unknown amount of payroll protection assistance under the CARES Act and other supplemental payments, owners now want the National Guard to pick up slack in their workforce (see Sydney Hoover, “Kansas Nursing Home Officials Push for Staffing Aid” https://www.kansascity.com/new/coronavirus/article248477490.html). Apparently this military assistance has already been provided in some areas such as San Diego.

If that is what is required to save as many lives as possible, I’m all for it. However, I will keep agitating for a reckoning when the pandemic is under control. I want to know how much extraction of federal and state funds has taken place for the sake of investors and at the expense of saving lives. The best we can do in determining that is look at the financial statements of for-profit enterprises or the 990s of the non-profits. If facilities are owned by non-public corporations, we will not be able to see what was reasonably extracted. However, publicly held corporations will soon be submitting their 10-K reports to the Securities & Exchange Commission.

I will be going through those 10-Ks as soon as they are available. If they reflect what we have seen in quarterly reports for the past year, then we need to ask why so many people died while executives, board members and shareholders gave up very little – if anything. We need to ask why some of the biggest owners sat on a pile of cash and continued to do business as if there were no pandemic.

What we have seen is euthanasia by neglect during the past year. If we do not hold the responsible parties in government and industry accountable, we will see even less regard for human life in long-term care institutions in the future. The industry will be further emboldened to deny treatment for the benefit of high net worth individuals who see long-term care as a good place to park their wealth and keep it from the IRS.

More People are Agreeing that Greed is “Not Good.” What they are Missing is that the Greedy have become Increasingly Clever.

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Dave Kingsley

Greed is No Longer Acceptable, but That’s Not the Whole Story

In his latest book, Evil Geniuses, Kurt Andersen suggests that the “greed is good era,” kicked off by the likes of Ronald Reagan, Milton Friedman, Ayn Rand, and Ivan Boesky, has run its course.  Andersen covers old territory that many progressive writers have been discussing ad infinitum, ad nauseum for decades, e.g., “the Powell Memo,” the rise of Chicago School free market economic orthodoxy, so on and so forth.

Perhaps greed is no longer de rigueur, but that does not really matter to a small number of Americans who have amassed incomprehensible economic and political power.  That power is centered in the economic sector known as “FIRE:” finance, insurance, and real estate, or, metaphorically speaking, Wall Street.  Indeed, finance now dominates the U.S. economic system.

The goal of financiers and the super-rich is to protect the wealth they have accumulated during the past few hyper-capitalistic decades following the ascendance of Ronald Reagan and Margaret Thatcher. Given the economic injustice Reagan-Thatcher neo-liberalism has wrought and shifting attitudes toward a just and fair economy, the greedy have turned to deceptive and clever political networks within the Washington, D.C. beltway.  As I will demonstrate in a series of blog posts, these networks have been successful in coopting advocacy and professional organizations.

501(c)4 and 501(c)3 organizations such as the Better Medicare Alliance, The Third Way, the Committee for a Responsible Feder Budget, the Concord Coalition, and others are particularly aimed at either privatizing Medicare or reducing Social Security and Medicare benefits. The financing of these lobbying groups can be traced to the late billionaire, private equity mogul, Peter G. Petersen.  The thirty board members of the Third Way – a Democratic Party “think tank” – are practically all financiers.

Better Medicare Alliance

The Better Medicare Alliance was initiated and funded by the insurance industry. This “think tank,” and front group for the insurance industry has a mission of privatizing Medicare through Medicare Advantage. With congressional cooperation, the insurance industry has been successful in shifting Medicare beneficiaries away from traditional Medicare and into Medicare Advantage.  Approximately one-third of all beneficiaries are now in MA. If this movement achieves its goal of killing traditional Medicare, the insurance industry will have achieved immense power over what will soon be a trillion-dollar health care program for the elderly.

The image of the BMA has been concocted to convince the public that it is an advocate for elders and the betterment of their cherished federal health care program.  That is a lie.  But a large number of professional and advocacy group have signed on as allies (https://www.bettermedicarealliance.org/our-allies/).  These allies – too numerous to mention in this post – range from insurance businesses to Area Agencies on Aging, Leading Age, nurses associations, and professional medical organizations.

We Know What Greed Has Wrought, but We Don’t Know How Entrenched it has Become.

In the past few years, a spate of books about the throes of hyper-capitalism have appeared in the popular press. The best among these are The Finance Curse by Nicholas Shaxson and Transaction Man by Nicholas Lemann.  Andersen’s book adds nothing to these and many others.

What all of these excellent writers have failed to see is this:  greed has spread its tentacles throughout the political system in a shadowy network that is rewarding congresspersons with post-career jobs as executive directors of think tanks and on corporate boards.  These so-called “think tanks” are highly influential behind the scenes and are called on by legislators for testimony in congressional testimony and consultation on legislation.  They are the go-to organizations when the press is looking for “expert opinion” on issues and legislation.

The growing elderly population of the U.S. must not ignore these powerful interest groups working against their best interests.  Hence, many future blog posts on Tallgrass Economics, Finance, & Politics will be focused on predatory activities by FIRE interests within the Washington, D.C. Beltway.