Tag: Barack Obama

Clinton and Obama, Polar Opposites

Last night, Bill Clinton introduced President Barack Obama as the Democratic nominee. He went to great lengths to stress their similarities, but failed to mention their divergent views on the appropriate size of government.

When President Clinton took office in 1993, government expenditures were 22.1% of GDP, and when he departed in 2000, the federal government’s share of the economy had been squeezed to a low of 18.2%. As the accompanying table shows, during the Clinton years, federal government expenditures as a percent of GDP fell by 3.9 percentage points. No other modern president has come close.

 

And, that’s not all. During the final three years of the former President’s second term, the federal government was generating fiscal surpluses. Clinton was even confident enough to boldly claim, in his January 1996 State of the Union address, that “the era of big government is over.”

When it comes to the appropriate size of government, Clinton and Obama are polar opposites.

The Flawed Bipartisan Consensus on Military Spending and Foreign Policy

I have a new piece up at ForeignPolicy.com this morning, commenting on the GOP’s apparent confusion about government spending and the effects that such spending has on others.

The party that opposes nearly all other forms of federal spending happily embraces the military variety. Republicans assert that military spending cuts will result in massive job losses, even as they argue that cuts in other federal spending would grow the economy and create jobs in the private sector. They are skeptical that the federal government should engage in nation-building at home, but celebrate it abroad. Republican candidate Mitt Romney accuses Obama of fostering a “culture of dependency” in the United States, yet ignores that U.S. security guarantees have created an entire class of affluent countries around the world that now rely upon U.S. tax dollars to pay for their defense.

Trouble is, as I point out, President Obama “hasn’t been anxious to kick other countries off the dole.” He boasts that the “the United States is still the world’s ‘indispensable nation,’” and he pledges that the U.S. military will continue “to underwrite global security,” which doesn’t leave much for anyone else’s military to do.

Such an ambitious mission is expensive.

Obama’s unwillingness to make deep cuts in military spending confirms his rhetoric. Over the next decade, the Pentagon’s annual base budget (which excludes most war costs) will average $517 billion in constant 2012 dollars, 11 percent higher than what Americans spent during the George W. Bush years.

For many Republicans, but especially for Mitt Romney, that isn’t nearly enough. They accuse the president of gutting the Pentagon’s budget, and loudly complain about his unwillingness to undo the automatic spending cuts that would cut even more (that they, inconveniently, engineered).

Republicans could reasonably claim that military spending should get a pass because the Constitution clearly stipulates a federal role in defending the country. But nowhere is it written that Americans must provide security for others; that is the job of their governments, not America’s.

Indeed, the Republicans’ reflexive commitment to more military spending is particularly curious given their appreciation for how incentives work in the domestic sphere. Republicans know quite well that people are not inclined to pay for things that others will provide for them. GOP leaders speak often of moral hazards – when individuals or businesses behave irresponsibly because others are there to bail them out. The same problem exists in international politics, but is strangely ignored in the GOP’s plan to continue policing the world.

I conclude the piece with some unsolicited advice for the GOP nominee, but I doubt he’s listening. You can read the whole thing here.

Written Testimony on the Illegal IRS Rule to Increase Taxes & Spending under Obamacare

The written testimony that Jonathan Adler and I submitted for the House Oversight Committee hearing on the Internal Revenue Service’s unlawful attempt to increase taxes and spending under Obamacare is now online. An excerpt:

Contrary to the clear language of the statute and congressional intent, this [IRS] rule issues tax credits in health insurance “exchanges” established by the federal government. It thus triggers a $2,000-per-employee tax on employers and appropriates billions of dollars to private health insurance companies in states with a federal Exchange, also contrary to the clear language of the statute and congressional intent. Since those illegal expenditures will exceed the revenues raised by the illegal tax on employers, this rule also increases the federal deficit by potentially hundreds of billions of dollars, again contrary to the clear language of the statute and congressional intent.

The rule is therefore illegal. It lacks any statutory authority. It is contrary to both the clear language of the PPACA and congressional intent. It cannot be justified on other legal grounds.

On balance, this rule is a large net tax increase. For every $2 of unauthorized tax reduction, it imposes $1 of unauthorized taxes on employers, and commits taxpayers to pay for $8 of unauthorized subsidies to private insurance companies. Because this rule imposes an illegal tax on employers and obligates taxpayers to pay for illegal appropriations, it is quite literally taxation without representation.

Three remedies exist. The IRS should rescind this rule before it takes effect in 2014. Alternatively, Congress and the president could stop it with a resolution of disapproval under the Congressional Review Act. Finally, since this rule imposes an illegal tax on employers in states that opt not to create a health insurance “exchange,” those employers and possibly those states could file suit to block this rule in federal court.

Requiring the IRS to operate within its statutory authority will not increase health insurance costs by a single penny. It will merely prevent the IRS from unlawfully shifting those costs to taxpayers.

Related: here is the video of my opening statement, and Adler’s and my forthcoming Health Matrix article, “Taxation without Representation: the Illegal IRS Rule to Expand Tax Credits under the PPACA.”

My Testimony on the Illegal IRS Rule Increasing Taxes & Spending under ObamaCare

Here is the video of my recent opening statement before a House Oversight Committee hearing on the IRS rule that Jonathan Adler and I write about in our forthcoming Health Matrix article, “Taxation without Representation: the Illegal IRS Rule to Expand Tax Credits under the PPACA.”

Please forgive the audio.

In addition, Pete Suderman writes that Adler and I “have jointly authored a long and quite convincing rebuttal to defenders of the IRS rule over at the journal Health Affairs. If they are right, it could be a fatal blow to the law.”

The Illegal IRS Rule to Increase Taxes & Spending under ObamaCare: Our Response to Timothy Jost

Jonathan Adler and I have a post at the at the Health Affairs blog where we respond to Timothy Jost’s critique of our working paper, “Taxation without Representation: the Illegal IRS Rule to Expand Tax Credits under the PPACA.” Jost has been our most tenacious (if not most consistent) critic.

Here’s an excerpt. Keep in mind that although we say “tax credits,” government spending accounts for about 80 percent of the money involved. Which is a lot: the cost of this illegal IRS rule could be in the hundreds of billions of dollars.

The dispute is over whether the [Patient Protection and Affordable Care] Act authorizes the IRS to provide tax credits only in Exchanges established by states (under Section 1311) or also in Exchanges established by the federal government (under Section 1321). Three facts are key to this dispute.

First, both sides acknowledge that the statutory language governing eligibility for tax credits is clear and unambiguous. The Act provides that taxpayers are eligible for tax credits if they purchase a health plan through “an Exchange established by the State under section 1311.” That language clearly authorizes tax credits only in state-established Exchanges, and the Act employs or refers to that language no less than six times when authorizing tax credits. There is no parallel language anywhere in the statute authorizing the IRS to offer tax credits through federal Exchanges established under Section 1321.

Second, there is nothing in the statute that conflicts with the plain meaning of that language. Indeed, the rest of the statute supports that plain meaning. Nor has anyone identified anything in the law’s legislative history that conflicts with that language. The only statement anyone has found on this point shows the statutory language was intentional. During congressional debate, the bill’s lead author, Senate Finance Committee chairman Max Baucus (D-MT), explained that the bill conditions tax credits on the establishment of a state-run Exchange.

Third, even though some members of Congress and the President might have preferred a law that authorized tax credits in federal Exchanges, they nevertheless enacted a law that did not. Many advocates of health care reform urged passage of the Senate bill even though there were parts of the bill they did not like, and knowing full well that not all defects could or would be fixed through the reconciliation process. Congress amended the sections of the Senate bill that authorize tax credits and cost-sharing subsidies a total of 12 times through the reconciliation process, but left the language limiting tax credits to state-established Exchanges undisturbed. Again, many of those amendments support the clear meaning of that language, and none of them conflict with it.

And yet, in late May the IRS finalized a rule that will issue tax credits—and therefore will trigger cost-sharing subsidies and employer-mandate penalties—through federal Exchanges, contrary to the plain language of the statute. It is our contention that this rule is illegal.

We invite everyone to read our working paper alongside Jost’s post, and our reply, and to decide for themselves whether the IRS is breaking the law.

You can also watch Jost and me testify before Congress on the IRS rule tomorrow at 9am ET in room 2154 of the Rayburn House Office Building.

The Obama Girls’ Health Care Choices

According to the White House, President Obama recently told a crowd of supporters:

Mr. Romney wants to get rid of funding for Planned Parenthood.  I think that is a bad idea.  I’ve got two daughters. I want them to control their own health care choices.

Umm, yeah. Two things about that.

One, if—as President Obama wills it—the president of the United States gets to determine Planned Parenthood’s funding levels, then his daughters do not control their health care choices.

Two, it hardly seems that Obama’s daughters—these children of The One Percent—have even the most plausible claim that low-income Americans should be forced to pay for their … eventual … services that Planned Parenthood provides.