Archives: May, 2012

Yes, the IRS Can Use Liens and Incarceration to Enforce ObamaCare’s Individual Mandate

Here’s a poor, unsuccessful letter I sent to the editor of the Washington Post:

A recent article [“Could the health-care law work without the individual mandate?”, Mar. 28, A8] claims the IRS “will be barred from using … collection tools such as placing liens or threatening incarceration” to enforce compliance with the requirement that Americans obtain health insurance. Not so.

Suppose the IRS assesses me a $1,000 penalty for failing to obtain health insurance. It is true that the law prohibits the IRS from using liens or incarceration to collect that $1,000. But, money being fungible, the IRS may simply deem my first $1,000 of income-tax withholding to be payment of that penalty. As a result, I would owe an additional $1,000 in income tax at the end of the year, and the IRS could come after me with every tool at its disposal, including liens and incarceration.

You Do Know What Makes It a ‘Free’ Market, Right?

Here’s a poor, unsuccessful letter I sent to the editor of the Washington Post:

Health-care provision at center of Supreme Court debate was a Republican idea” [Mar. 27, A7] describes the health care law Mitt Romney signed while governor of Massachusetts as comprised of “free-market ideas.” Really?

RomneyCare’s individual mandate, now mirrored in ObamaCare, uses the power of the state to compel people to health insurance. What could be more un-free than that?

If Thomas Edison Had to Submit His Innovations to Medicare, You Would Be Reading This by Candlelight

Two articles in the Washington Post sparked these two poor, unsuccessful letters to the editor. First this:

I’m no Republican, but “‘Innovation advisers’ chosen for ideas to improve health care, cut costs” [Jan. 21] gives short shrift to those who oppose the new health care law’s Center for Medicare and Medicaid Innovation when it reports, “Some Republicans have questioned the value of investing in experimentation to produce results at a time of limited resources.”

If some critic of the law actually said, “Resource limitations prevent us from investing in innovations that stretch resources further,” please do print it. I could use the laugh. But that’s not why critics oppose the Center.

The argument against the health care law’s efforts to promote innovation is that they won’t work. The Congressional Budget Office recently reported that out of dozens of supposed Medicare innovations, only one met its goal of saving taxpayers money. That pilot program ended 16 years ago. Medicare has yet to adopt it program-wide.

This is an important debate. Readers deserve to hear both sides, not caricatures.

And then this:

Recent coverage of the new health care overhaul [“‘Innovation advisers’ chosen for ideas to improve health care, cut costs,” Jan. 21; “Center for Medicare and Medicaid Innovation aims to cut health-care costs,” Jan. 26] let defenders make outlandish claims about government efficiency, but gave short shrift to critics.

Government is not more innovative than private health insurance. It was private health plans that developed important innovations like prepayment, bundled payments, pay-for-performance, and penalties for medical errors. Government adoption typically lags private insurers by decades. In the rare instance where Medicare successfully tests an innovation (read: bundled payments for heart bypass surgery), it goes nowhere. If Thomas Edison had to submit his innovations to Medicare, you would be reading this by candlelight.

We don’t need more pilot programs to tell us that Medicare blocks innovation. What we need is a little skepticism when presented with the latest Bureau of Government Efficiency.

‘Lawsuit Contentions, Like Beer Itself, Can Be Dangerous When Over-Quaffed by the Naive’

To be fair about it, New York Times columnist Nicholas Kristof has written some pretty good stuff about the Drug War and other topics. But when he’s having a weak day, he’s weaker than watered beer, or so I conclude in a new Reason piece about his latest crusade.

Last week Kristof urged readers to boycott Anheuser-Busch products until the brewer cuts off beer sales near the alcoholism-ravaged Pine Ridge reservation of the Oglala Sioux. Whatever you think of the paternalistic premises at work here, Nebraska’s system of wholesaler-protective beer regulation appears to make it impossible, even unlawful, for the maker of Budweiser to do any such thing. And Kristof’s second proposal, to extend the boundaries of the reservation itself, fails to allow for obvious adaptive responses by both sellers and buyers.

Kristof has more insight than most of his colleagues into why the Drug War has failed. Why does he seem to forget those insights when it comes to the most familiar of legal drugs?

NATO Summit Will Reaffirm Afghanistan’s Weakness

The focus of the upcoming NATO summit in Chicago will be Afghanistan. President Obama is expected to speak of the need for solidarity from the international community. His only major success will be a pledge from NATO members to commit funds to Afghanistan well beyond 2014. Difficult questions surrounding the mission’s long-term sustainability will remain unanswered. But any long-term plan for stabilization must put Afghans in the lead. That is the country’s true path to self-sufficiency.

The estimated cost of paying for the 230,000-350,000-strong Afghan National Security Forces (ANSF) hovers between $4 billion and $6 billion, annually. The President will seek $1.3 billion from allies, which in an age of austerity will be difficult for NATO partners, leaving the United States to foot much of the bill.

Although it is cheaper to fund Afghan forces than deploy foreign troops, long-term operations, maintenance, and sustainment costs for the ANSF may continue through 2025. Building security and governance to the point where locals can stand on their own is an indefinite commitment, not an exit strategy.

The real story of the summit is that U.S. and NATO officials plan to extend their financial support to Afghanistan in the face of war-weary publics at home, brazen insurgent attacks in the capital, and a string of scandals involving coalition forces and their Afghan counterparts. Lingering issues that will go unresolved include the quality of the ANSF, the seemingly indefatigable insurgency, and the long-talked-about negotiated peace settlement with extremists and regional powers.

Beyond the cost and size of the security forces, President Obama will also speak of the lofty commitments in the recently signed U.S.-Afghanistan strategic partnership framework, which include “protecting and promoting shared democratic values” and “social and economic development.” What remains unanswered is what will happen if Afghanistan does not meet these ambitious benchmarks.

What will happen if the fundamental rights and freedoms of women are not protected? What will happen if the 2014 presidential elections are not free and fair? What will happen if security and national unity are not advanced? Does failure void the agreement, and for how long will Afghanistan rely on the United States if we do not see progress? These questions persist as American taxpayers spend $2 billion a week on an unpopular war, and as widespread local corruption and perceptions of social injustice continue to fuel passive support of the insurgency.

The international community’s pledge to never abandon Afghanistan is well-intentioned, especially since Washington was partly responsible for that country’s past and present turmoil. But it is also imperative that the international community not become Afghanistan’s perpetual crutch. Afghans desperately seek foreign assistance, but what really matters is the long-term sustainability of Afghanistan’s institutions. Sadly, social and political changes won’t be seen as legitimate if they depend on institutions that appear to be at odds with local traditions or are excessively reliant on foreign patronage.

Paradoxically, the United States and NATO may wind up both helping and hindering Afghanistan on its path toward self-sufficiency.

Cross-posted from the Skeptics at the National Interest.

All Europe Needs Is a Massive Earthquake and Tsunami

Paul Krugman looks at the first-quarter growth results from some developed economies and notes Japan’s strong performance due to the post earthquake and tsunami reconstruction. He then compares it to Italy’s dismal results due to austerity measures (which, as I’ve pointed out here, consists almost exclusively of tax increases, not cuts in spending).

Krugman then says that “there seems to be some kind of lesson here about macroeconomics, but I can’t quite put my finger on it…” Is he really saying that what Europe needs to grow again is a massive earthquake and tsunami? Or maybe a nuclear accident? After all, Krugman once wrote that Fukushima’s “nuclear catastrophe could end up being expansionary” for the economy.

Speaking of economic lessons, has the good professor never heard of “the broken window fallacy”?

Next, the Sun

The Obama administration has acted to protect Americans from cheap access to solar energy, imposing tariffs of 31 percent and even 250 percent on solar cells and panels imported from China.

As I noted previously, this case echoes one of the most famous documents in the history of free-trade literature, Bastiat’s famous ”Candlemakers’ Petition.” In that parody, the French economist and parliamentarian imagined the makers of candles and street lamps petitioning the French Chamber of Deputies for protection from a most dastardly foreign competitor:

You are on the right track. You reject abstract theories and have little regard for abundance and low prices. You concern yourselves mainly with the fate of the producer. You wish to free him from foreign competition, that is, to reserve the domestic market for domestic industry.

We come to offer you a wonderful opportunity… .

We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival … is none other than the sun.

For after all, Bastiat’s petitioners noted, how can the makers of candles and lanterns compete with a light source that is totally free? Chinese solar panels aren’t free, but they’re inexpensive enough to be attractive to American buyers.

Any source that supplies solar panels to American consumers and businesses is a competitor of the American industry. And any source that can deliver any product cheaper than American companies is a tough competitor. Domestic producers will no doubt gain by imposing a tariff on their Chinese competitors. But companies that install solar power will lose, by having to pay higher prices for panels.

Businesses would always prefer a world without competitors. If they can’t outcompete their rivals in the marketplace, they may be tempted to ask the government for protection. And our “antidumping” laws actually invite such complaints. But economists agree that consumers, and the businesses that use imported products, lose more on net than producers gain. Protectionism is a bad deal for the American economy. And in this case, a bad deal for anyone who wants to see more solar energy in the United States.

More on “antidumping” laws here.