Modify L & I and Save $610 Billion

July 27, 2008
Modify L & I and Save $610MM
Was talking with a self-insured administrator of a large government agency. The numbers are expensive for the administrative and medical costs associated with Self-Insuring outside of Labor and Industry. The agency has to set aside $5MM for meeting future actuarial needs. Their are 395 self-insured companies in Washington State. They at present have 700 employees. If during this “economic downturn” the requirement was only 75% of the actuarial amount then this could free up low bond interest amounts of about $1.25MM. Multiplied by 395 (assuming the average is the same size of the other self-insured companies) then this could free up $610.75.
The second problem is Labor and Industry costs are just about double in Washington State as compared with Oregon. If this agencies cost is $595,000 to 800,000 per year with 700 employees this would be $70.83/employee/month to $95.24/employee/month. Or the $70.83 X 12 is $849.96. Divided by 2 is $424.98. Multiply this by 700 employees gives $297,486/year in savings. Project this out to the self-insured industry and the number is $117,506,907. This is indeed a staggering number. Add the above to this number and the additional cash available for production is now $610MM. Multiply this number when people move money in our state and this will add up quickly.

That is not all.

 At the present time the self-insured industry starting on October 1st will be starting to be required to complete 75 CPE (Continuing Professional Education) hours over a five year period of time. They will be needing to complete; 20 hours in claim management, 20 hours in medical, 20 hours in statutory, 13 hours in legal, and 2 hours in ethics. This really is not where the problem is because this should have been required long ago. The government employees who enforce the rules are not required to pass this test. They are required to take the test but if they fail then they still have their jobs. However, if a claims administrator for a company does not pass the test they will lose their job and have to take the test over in six months period of times. All five parts must have a minimum of 70% for passing the exam. Employers will then need to scramble to find another passing administrator during the six month period of time because the next day they will be out-of-compliance and without an authorizing signature for next weeks reports. Extra pay for the new administrator or go to another administrative service for the six months or change back to regular Washington State Labor and Industry Insurance coverage. This will drive up the costs of insurance. Business solutions may be to move to Oregon of which I hear a loud sucking sound as the Columbia River take a bend in the river south. Or the other possibility is another sucking sound as jobs leave the United States and go offshore. Reduce the hassle and move would be the large company slogan.

My solution is the reverse. Change the administrative nature of the Labor and Industry so it is more in line with Oregon or other states rules and regulations and also reduce the actuarial requirement so required funds are at 75%. Do I hear another sucking sound but back to the great State of Washington instead.

 

 

 

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Improving the Economy

July 11, 2008

Keith Ljunghammar, EA, CFP

How to Cut the Recession and Improve the Economy.

When I was selling securities at a brokerage house the primary client had money that was about to move. An inheritance, under performing investments, or an increase in personal income through a promotion or graduating from college.

When I was exploring the mortgage industry my schooling said to look at a mortgage purchase approaching or recently passing a two year timeframe. Also a credit rating improving and lower interest rates can be a double plus for the homeowner. Both counted together or separately can be potential clients.
When helping to preparer tax returns I noticed my income can improve when I prepare more tax forms. This would be either by paying attention to the taxpayer or advising for tax changes which the taxpayer would benefit from and have a smaller tax bite and more than likely more forms for tax reporting.

When insurance agents interview clients the degree of support and the reduction of risk or spreading of risk is what is being offered.

When Congress wishes to influence the flow of funds either for helping the economy or moving social concerns tax manipulation is the tool Congress uses with great enthusiasm. Home mortgage interest, education credits, mortgage interest credit, tax-free interest, low-income housing credit, lower capital gains rates and more are the tools which Congress has used in the past to help in establishing National goals.

In order for Congress to truly recognize what is ailing the economy they must see where the weakness is in the macro economy and see what type of tools have or could be used or create to help the macro and the micro weaknesses strengthen. What can stimulate. What can help.

First what can be strengthened with a little bit of effort and have the greatest amount of pull. Can the solution for the macro be concentrating in a few segments of the micro. But the conclusion from finding what can strengthen the problems in the economy must be seen. What or where are the weaknesses.

The frustration in the economy as I see it was created in the mortgage industry. Now the mortgage industry is hurting and another industry related to the mortgage industry is the construction industry. The creation of a mortgage document does not create wealth but the actual construction process so let’s look at the construction industry.

Weakness in the construction industry can be seen by the months of inventory waiting to be sold. At the present time six months is the length of time between a house being on the market and sold. When this happens the construction industry may go to home improvements if the home owners have the money to do this. The homeowner who has extra money but is not moving may want a little bit more room. Then they are happy. More on this later.

One other industry which when it moves from weakness to strength move with little effort. This is in both directions. Good to Bad and from Bad to Good. Historically when the overall economy moves by five percent the durable goods industry can move by fifty percent.

One of the booming industries at the present time is the energy industry. From oil and now to farming. Farming is a new contender. Segments of the energy industry are; oil, gas, dams, nuclear, corn or similar, coal, shale oil, ethanol, methanol, heating oil, solar, wind, water wave power, geo-thermal. All of these and more have attached infrastructures and are steady and in great demand as the economy improves. They slip as the economy goes down.

Dynamic changes in the macro economy are not stagnant and will never be stagnant ever again. China and India are increasing demands of oil. So even if our economy traditionally decreases instead of the price of oil decreasing it will increase and our economy will slip further and this dynamic change will decrease our economy even more.

If our economy needs pushing can there be some type of a tool where by using the tool the economy will not be hurt and ideally helped. Is there some method where the risk of consuming “oil” will not hurt our economy. What will stregthen without causing risk. Can something be moved from one area of the economy without causing things like wage-push, inflation, deflation, exhaustion of a segment of the economy. Is the risk low. Can the move create taxes by stimulating one are without taxing in another area. Any solution which hurts the helping segment cannot be a solution. Can the solution reduce imports or reliance of goods and services of finances from foreign governments or foreign investors. Can this be done safely and as close to risk-free as possible.

One major caveot is to make sure the U.S. dollar does not weaken further. Traditionally one way the federal reserve increases the value of the dollar is to increase the federal reserve rate so loan interest reates are higher. But then durable goods manufactured in the U.S. cost more in foreign countries. As our $ improves the foreign governments currency decreases.

Reviewing all of this and comping up with an economic solution – oh my. Is there a palace in the economy which can do all of this.

Yes, there is.

The alternative energy industry has had dynamic discoveries in the recent past. A group of MIT reserchers are in the process of developing an ion battery which can give a 450 mile electric car battery performance and a recharge time of fifteen minutes. Solar celll discoveries have recently increased the effectiveness by ten times. From the start of the wind industry efficiencies have increased effectiveness by five times. These discoveries are like finding a major oil deposit and they renewable and not depleting.

This can help some of the energy segment and some of the construction industry and some of the durable goods industry. But can this be thrown into the dynamic arena without taking away that much from another area. What area is moving slowly and if it moved faster would not be hurt.

Let’s consider funds which are setting in a low return area. Traditional IRAs, pensions and Roth IRAs. Not moving and not expected to move. But not just moving from one security to another will not move an industry in a dynamic fashion. Increasing the supply without moving the demand only decreases the cost of the supply. Moving demand and supply at the same time can be the only solution. It must by dynamic.

The alternative energy segment demand should be stimulated but by the homeowner. Construction and the construction industry needs a stimulus. Taking money out of a pension, IRA or Roth IRA for installing alternative sources can be the only solution. Homeowners can manufacture their own sources of heat and electricity and sell the extra back to the energy industry. Thus the taxpayer/homeowner can make money, reduce taxes, have no tax consequences, stimulate the durable goods industry, hire excess cosntruction workers capacity, not harm or decrease the value of the dollar, increase alternative fuel energy durable goods industrial base capacity, lower the price of alternative fuel because of the increased capacity and supply and helps in increased capacity to be sold overseas and helping our economy and strengthens the economy. And finally it gets stagnant money to move this stimulating more than the economy. Every dollar made equals $12 in the economy.

But to do this no tax consequences would have to be showing on the individuals return. No withdrawal income tax or ten percent penalty. If no taxes then a repayment schedule would have to be legalized. If it costs $15,000 to $20,000 for the house construction then a $1000 per year repayment should not be a harmful affect to the economy. Allow income from the creation of excess energy rebates to pay the “loan” back to themselves needs to be written into the law. Or repayment of the “loan” at the time of the selling of the homeowners house. No harm, no foul.

Let’s do it. Move the money. Stimulate an efficient source of energy. Reduce the cost of living. Get the construction and alternative fuel source industries active and increase the strong dynamic aspects of exports.

Thanks


Life, Liberty and the Pursuit of Happiness

July 11, 2008
Life, Liberty and the Pursuit of Happiness

Endorse: I-409, Respect Washington Initiative; Retrofit Viaduct;  Garbage to Energy Plant; all of State Auditor Brian Sonntag 432 performance audit recommendation – Saves $3 Billion; SR-520 eight lanes.

Promote: Medical alternatives; lower credit card maximum interest rate; reduce cost of mortgage refinancing; stimulate home energy self-reliance.

Observe: Macah Tribe Ocean Wave Power buoy project. 1MW for 150 homes.

Whether lowering costs of government or stimulating growth in industry by making it freer or creating efficiencies in government through technology usage the end result is:

Economic growth creates stable jobs.


Letter to Contributors

July 11, 2008

Friends for Keith Ljunghammar for 46th Leg, Pos. 1
2400 NW 80th Street, PMB 324
Seattle, WA 98117-4449

web address: http://www.ljunghammar.com

email address: keith [a*t] ljunghammar.com

personal email address: vbhoundabout [a*t] hotmail.com

EIN: 26-2819892

cell: 206.388.9982

Dear Sirs

As decision makers, I am sure you are and want to know something about me.

I am running for the 46th Legislative District, Position 1. I am running as a Republican.

I am running on some conservative issues and will be promoting conservative ideas and fiscal responsibility. Too many times excessive expenses from the State have been ignored by the current legislature. The State Auditor, Brian Sonntag, a Democrat, has conducted several performance audits and come up with 432 suggestions which could save over $3 Billion. As of today none of the recommendations have been implemented. They should be debated.

Savings from these reductions could help in the expense of other capital improvements which could lower costs to the individual taxpayers.

What I would be looking for and keeping in mind would be if a cost expenditure would reduce the operating cost of an individual and to reduce the costs of the government if applicable.

From a business standpoint different pieces of equipment can be used in different styles and sizes of a business. The end result can be the same but the two remain competitive. Capital vs. labor is the difference.

What works in one part of the state may be totally inappropriate in another part of the State. One would not put a lite-rail from Cle Elum to Ellensburg and neither would one put a windfarm in downtown Seattle. But the reverse might work.

Taking into consideration federal law changes and the mitigating of these consequences should be considered and studied. When bankruptcy laws were changed and the risks to creditors were reduce or substantially eliminated interest rate risk but now currently no legislative action has taken place to reduce costs to consumers by taking into consideration the reduced risk and thus the lowering of interest rates. Inflation (1980) has also come down since the interest rates have gone up and still the high consumer rates have continued. Interest rates in the long run do not stimulate Washington State’s economy but rather dampen it. It may stimulate short-term the national economy however.

Capital Improvements such as King County Councilwoman Kathy Lambert’s garbage to energy $700 million capital project is a case of capital expenditure which could create happiness with the taxpayers and help reduce the continuous upward cycle of taxes after 21 years for 29 more years.

These and other considerations are why I would request a non-tax deductible contribution from your organization. Also I would request receiving some information on your organization as well.

Sincerely

Keith Ljunghammar, EA, CFP

Candidate for 46th Legislative District, Position 1


Door Flyers

July 11, 2008

Respecting Your Thoughts

and Freedoms

by

Creating Stable Jobs

thru

Economic Growth Efficiencies

not

Government Growth of Bureaucracy

* Retrofit Viaduct

* I-520 needs 8 lanes

* Endorse I-409 Respect Washington Referendum

* Lower credit card interest rates to pre-1980 levels

* Promote Alternative Medicine health clinics to reduce low income

medical clinics costs.

* Revamp mortgage industry so refinance costs may be $100 – $500

for a home-equity loan.

* Observe Macah Tribe Ocean Power buoy. 1MW of power for 150

homes. Additional buoys energy for Seattle as an alternative energy

source.

* Endorse future garbage to energy plant.

* Observing Economic growth as the true tool for non-governmental

stable jobs.

* Help to stimulate home energy independence by home alternative

sources energy construction. Use of IRA/ROTH funds for building.

* Push 432/432 of Democratic leader State Auditor Brian Sonntag’s

performance audit findings. Will save $3 Billion when implemented.

To date the legislature has not approve a single one.

* Stimulate child education by making sure the Transportation Dept.

emphasizes road construction congestion reduction. Road

congestion reduces education study time.

* Include sound barriers along the I-5 corridor.

Keith Ljunghammar has a professional background in individual and corporate income tax. Is an Enrolled Agent and Certified Financial Planner . (CFP designation is put on hold until after the campaign.) Graduated from the University of Washington 1976. Resident of Seattle entire life except one year in Spokane. Prior company filed over 72,000+ free income tax returns in 2005.

Please see website for additional information and how these changes could help you in your personal and financial goals. Non-tax deductible contributions of up to $500 per individual will be gladly accepted from U.S. citizen or residents with green cards.

Paid for by:

Friends for Keith Ljunghammar, 46th Legislative District, Pos 1

2400 NW 80th Street, PMB 324

Seattle, WA 98117-4449

(206) 388-9982

website address: http://www.ljunghammar.com

comments: keith@ljunghammar.com


Letter to the Editor

July 11, 2008

Letter to the Editor

Once again the Macah, Yakama, Spokane and other tribes put themselves in a non-leadership position. Keeping money earned rather than sharing it and paying for the right to keep the money.

My uncle who was the pastor at several Indian tribal reservations including the Nez Perce and those mentioned above taught me that Indian society believes that what is yours is mine and what is mine is yours. The above shows what is mine is mine.

Leadership from the Indian Tribal Council would be sending in a portion as a tax to Washington State. But aside from sending taxes to Washington State the leadership could establish charities for the greater society. Build windmills on your land and give 1/2 the profits to pay for low income households electricity. Build colleges on your reservation land. Build industry on your land and build a future for tribal members. Or retrofit the Viaduct. Manufacturing pays more than casino pay.

Show leadership. Giving away large amounts of money for political reward will only perpetuate the suppression of the Washington Indian peoples.

I know the Indian people are strong and proud so I wonder why the Indian Tribal Council is still thinking of themselves as third class citizens. Strengthen don’t weaken.

Thanks

Keith Ljunghammar

46th District Legislative Candidate, Position 1

vbhoundabout [a*t] hotmail.com

2400 NW 80th Street

Seattle, WA 98117-4449

206.388.9982d


Reducing Credit Card Interest Rates

July 11, 2008

Excessive Credit Card Interest and How to Maximize our Economy.

Am contemplating suggesting Washington State law be changed.  Please respond if you think I will be going in the right direction.

1)  Require all credit collection agencies be licensed and bonded by Washington State.  Same laws as in the construction industry would apply.  If not bonded then the debtor would not have to pay the fees and would be able to collect back the fees plus $1000 in punitive damages and attorney fees would be paid by the collection agency upfront.  No bond then the collection agency is assumed to be wrong.  Also, the collection agency would have to pay off the entire balance of the credit card attempting to be collected.  Fraud laws would be enforced against collection agencies and thus collection agencies and the owners would not be allowed to file bankruptcy protection.  All assets of the collection agency and all personal assets would have to be sold to satisfy the debt.  Piercing of the corporate vail would be allowed.

2)  No collection agency will be able to collect interest while a debt is in collection.

3)  Maximum interest rate which can be collected by a credit card is 12% interest.  See above also.

4)  Installment companies can charge a maximum of 18% interest.  If no other credit cards exist at the time of signing the maximum installment rate would be 12% interest.

5)  Maximum time of payout for a credit card is one year.

6)  Payout time will be based upon FIFO (First-in First-out) accounting between credit cards.

7)  If one credit card is late or overdue on a payment then notice by one credit card must be sent to other creditors.  No additional credit will be allowed by the late credit card until the credit card is completely paid off to zero.  Other credit cards must not go over the limit of the balance established in that month plus $200 until the previous credit card(s) is paid down to zero.  New credit cards may not be issued until the balance is paid to zero.  Installment plans may be used but at an 18% interest rate.  Credit card notification would be between credit card affiliates only.  So VISA to VISA and MasterCard to MasterCard and Discover to Discover and American Express to American Express and Diners Club to Diners Club.  Notification from VISA to American Express would not be necessary.

8)  If other credit cards are issued prior to payoff then a zero interest rate can be charged.  New credit cards will have a secondary payoff rate or schedule.

9)  The objective of this is to limit the usage of credit cards.

10)  Multiple solicitation by credit card companies would thus take a lower priority.

11)  Cash backed credit cards would become more prevalent.

12)  Debit card usage would become more common and lower seller fees would be charged.  So instead of a 3%-4%-5% credit card fee this would encourage 30 cent fees for debit transactions.

13)  Would allow the consumer to pay less because sellers costs would be lower and bank losses would actually be lower.

14)  This would create a short credit sales crunch but the consumers would adjust to a healthier level of non-interest pre-funded available consumption.  The present economy presently has low consumer confidence and thus lower consumer spending so the ideal time to introduce this type of legislation is when the lowest possible consumer effect would take place.

15)  Overall this would be healthier for our overall competiveness in the world economy.  Lower overall consumer purchases would lead to a higher level of consumption previously allocated to interest rates which generate no economic stimulus benefit.  The lower interest rate on consumers would stimulate the growth of the value of the dollar and thus consumer prices would be lower due to this additional affect also.  More excess disposable income generated means the macro consumer would be healthy for Washington State consumers.

16)  The need for unproductive employees in the national economy would be extremely reduced due to the consumers more prudent purchasing powers.  Thus a shift from non-productive to other productive processes would elevate our economy to producing employees and make our macro economy stronger and indeed healthier.

17)  Washington State tax revenues would increase dramatically because the consumers have excess disposable income for the actual purchasing of additional goods and services which would be taxed at a higher rate.  Sales tax would be collected on this excess disposable income used for additional purchases rather than no sales tax being collected on the interest rate being charged.

18)  Interest rates would not be able to be punitive in nature.  No individual company should be allowed to collect punitive income just based upon the low credit repayment capabilities of the end consumer.  Limiting the capability of excessive spending will benefit all other consumers and lower price scales will be the generally established pricing logic of consumer based retail establishments. The micro adjustments between the end consumer and the macro economy stimulus would be complimentary.  Mentioned another way the pricing practices of the larger manufacturers would be modified to a higher production capacity and a lower $ micro economic policy.  Profits would be the same as previously.  Pricing policies would not need to be adjusted as dramatically for non-payment of manufactured goods by the retail establishment.  Cost of Goods Sold and maximizing consumer penetration policies would still be used but the movement of the economic graph would be discounted due to the shift and lowering of risk.  This would show both in manufacturing and in the retail markets.

19) Excessive non-risk income by credit collectors would not be as rampant as it is now.  The capability of the end consumer to get to a level of credit card non-compliance would be limited and restricted.  A shift to lower cost debit or prepaid credit cards would be a major macro economic phenomenon.

20)  Excessive disposable income and more consumer cash on hand would not make the federal reserve defensive by lowering the interest rate but the interest rate would be increased.  A more stable economy generates higher profits in the micro businesses where the adjusting of economic factors is lower.  Big  businesses would need to be more competitive and adjust prices downward in order to maintain market share.  Profits thus for big business would be lower but not excessive due to cost adjusting factors already priced into a product for losses due to non-payment.  This thus would allow our senior citizens who have major amounts of cash and investment assets to enjoy higher interest rates due to manipulation by the federal reserve.  The inflation factor structure into interest rates would of course be lower but the relative power of the principle of the senior citizen would not be as dramatically eroded as previously priced into consumer prices and into interest rates.  The strength of the pricing models both from macro and micro aspects will lower the relative risk priced into bank interest rates paid the bank account consumers.

Thanks

Keith Ljunghammar, EA, CFP