Tag: Democrats

The Health Care Reform Bill Will Cost $500 Billion in New Taxes

House Democrats released their 1,018 page health care reform bill, America’s Affordable Health Choices Act of 2009, yesterday.

This bill is a dog’s breakfast of bad ideas paid for by more than $500 billion in new taxes. The reform would impose an individual mandate on individuals, requiring every American to buy a government designed insurance package or pay a new tax equal to 2.5 percent of their income. At a time of rising unemployment, businesses would be required to provide health insurance to workers or pay a new tax equal to 8 percent of workers wages. These new taxes could drive the total cost to taxpayers much higher than the $500 billion in direct taxes in the bill.

In addition, the bill includes a host of new insurance regulations that will drive up the cost of insurance premiums, and a new government-run insurance plan that will “compete” with private insurance. That government-run plan will ultimately force millions of Americans out of their current insurance plan and into the government-run system. This is a health care “reform” under which Americans will pay more for worse care.

To get an idea of what sort of bureaucratic nightmare that would ensue with passage of this bill is illustrated by the Republican Staff of the Joint Economic Committee here.

For regular updates on the reform process as it progresses, check out Cato’s health care Web site.

Jeff Flake vs. the Spending Robots

Rep. Jeff Flake of Arizona is one of the very few fiscal policy heroes in Congress. Last night, he was doing what he does best – offering amendments to cut funding from a wasteful appropriations bill moving through the House.

Flake tried to strike spending earmarks slipped into the bill by both Republicans and Democrats. Watching the action on C-SPAN, I was struck by what a bunch of robots the big spenders defending the bill were. They said things like “this project is very important,” “it will help people,” and “it has a rate of return of 30-to-1 for every tax dollar spent.”

Flake pointed out the simple logical flaws in the spenders’ arguments. If an earmarked project is so important, why doesn’t it get funding through the normal competitive process? If a project has such a high return, wouldn’t private investors swoop in to earn the big profits? The “high return” claim is a commonly used gambit by big-spending politicians. Economist Martin Sullivan calls it the “liberal Laffer curve.”

Anyway, the spending robots listened politely to Flake, then they focused back in on their staff-prepared bullet points and continued with their self-interested drivel about how the nation’s fate rested on federal aid for the Elvis museum back in their hometown, or whatever their particular project was.

Flake presented some interesting statistics on the earmarks in the agriculture appropriations bill being considered last night. As shown in the chart below, two-thirds of the earmarks go to a small, exclusive club within the House of those on the appropriations committee, committee chairs, and party leadership. He characterized the appropriations process as a “spoils system,” which is evocative of government corruption of the past, such as Tammany Hall.

But unlike the original Tammany Hall, today’s spoils system is not party-based. Instead, it’s run by an elite and bipartisan group of spending robots within Congress, who pose as representatives of the people when they travel outside the beltway. As Flake implied, it’s odd that the great majority of members and their constituents, who get the short end of the stick from the spoils system, don’t revolt.

Socialist Surtax for Health Care

In their desperate bid to find half a trillion dollars or so to fund a health care expansion, Democrats have no shortage of bad ideas. Indeed, their new idea is even worse than last month’s dastardly plan to hike taxes on beer and wine.

The Democrat’s new idea is to slap a special “surtax” on high earners. A surtax is simply a flat additional charge based on adjusted gross income. The model for the new scheme seems to be a four percent surtax proposed by House tax writer Charlie Rangel in 2007.

Elsewhere I’ve explained why tax hikes on high earners is poor economic policy.  But politically, what’s striking is how far American economic policy is moving to the left of policies in other major nations.

The chart shows that the current top U.S. personal income tax rate (including the average state rate) is 42 percent, which is the same as the average in the 30 nations of the Organization for Economic Cooperation and Development (OECD).

President Obama already plans to increase the top federal rate from 35 percent to 40 percent at the end of 2010. That would push the combined federal-state rate to 47 percent, substantially above the average of other major industrial nations. Imposing a 4-percent surtax on top would push the top rate to 51 percent, which would be higher than many nations that were traditionally more socialist than America, including France (46%), Germany (48%), and Italy (45%).

Obama and the Democrats chafe at being labeled “socialists”, and it’s true that Republicans are just as socialist when it comes to spending policies. But tax rates higher than France? Tax rates over 50%? Come on Democrats, you’ve got to be kidding!

The Failure of Do-Nothing Policies

A news story from today in a slightly alternate universe:

Jobless Rate at 26-Year High

Employers kept slashing jobs at a furious pace in June as the unemployment rate edged ever closer to double-digit levels, undermining signs of progress in the economy, and making clear that the job market remains in terrible shape.

The number of jobs on employers’ payrolls fell by 467,000, the Labor Department said. That is many more jobs than were shed in May and far worse than the 350,000 job losses that economists were forecasting.

Job losses peaked in January and had declined every month until June. The steep losses show that even as there are signs that total economic activity may level off or begin growing later this year, the nation’s employers are still pulling back.

White House press secretary Robert Gibbs said, “President Obama proposed a $787 billion stimulus program to get this country moving again. He tried to save the jobs at GM and Chrysler. But the do-nothing Republicans filibustered and blocked that progressive legislation, and these are the results.”

House Speaker Nancy Pelosi said at a press conference, “We begged President Bush to save Fannie Mae, Merrill Lynch, Bank of America, AIG, the rest of Wall Street, the banks, and the automobile industry. We begged him to spend $700 billion of taxpayers’ money to bail out America’s great companies. We begged him to ignore the deficit and spend more money we don’t have. But did he listen? No, he just sat there wearing his Adam Smith tie and refused to spend even a single trillion to save jobs. And now unemployment is at 9.5 percent. I hope he’s happy.”

Democrats on Capitol Hill agreed that the “do-nothing” response to the financial crisis had led to rising unemployment and a sluggish economy. If the Bush and Obama administrations had been willing to invest in American companies, run the deficit up to $1.8 trillion, and talk about all sorts of new taxes, regulations, and spending programs, then certainly the economy would be recovering by now, they said.

Should You Vote on Keeping Your Local Car Dealership?

There are lots of reasons Washington should not bail out the automakers.  Whatever the justification for saving financial institutions – the “lifeblood” of the economy, etc., etc. – saving selected industrial enterprises is lemon socialism at its worst.  The idea that the federal government will be able to engineer an economic turnaround is, well, the sort of economic fantasy that unfortunately dominates Capitol Hill these days.

One obvious problem is that legislators now have a great excuse to micromanage the automakers.  And they have already started.  After all, if the taxpayers are providing subsidies, don’t they deserve to have dealerships, lots of dealerships, just down the street?  That’s what our Congresscritters seem to think.

Observes Stephen Chapman of the Chicago Tribune:

The Edsel was one of the biggest flops in the history of car making. Introduced with great fanfare by Ford in 1958, it had terrible sales and was junked after only three years. But if Congress had been running Ford, the Edsel would still be on the market.

That became clear last week, when Democrats as well as Republicans expressed horror at the notion that bankrupt companies with plummeting sales would need fewer retail sales outlets. At a Senate Commerce Committee hearing, Chairman Jay Rockefeller, D-W.Va., led the way, asserting, “I honestly don’t believe that companies should be allowed to take taxpayer funds for a bailout and then leave it to local dealers and their customers to fend for themselves.”

Supporters of free markets can be grateful to Rockefeller for showing one more reason government shouldn’t rescue unsuccessful companies. As it happens, taxpayers are less likely to get their money back if the automakers are barred from paring dealerships. Protecting those dealers merely means putting someone else at risk, and that someone has been sleeping in your bed.

The Constitution guarantees West Virginia two senators, and Rockefeller seems to think it also guarantees the state a fixed supply of car sellers. “Chrysler is eliminating 40 percent of its dealerships in my state,” he fumed, “and I have heard that GM will eliminate more than 30 percent.” This development raises the ghastly prospect that “some consumers in West Virginia will have to travel much farther distances to get their cars serviced under warranty.”

Dealers were on hand to join the chorus. “To be arbitrarily closed with no compensation is wasteful and devastating,” said Russell Whatley, owner of a Chrysler outlet in Mineral Wells, Texas.

Lemon socialism mixed with pork barrel politics!  Could it get any worse?  Don’t ask: after all, this is Washington, D.C.

The Quiet War against School Choice

First, the Democrats in Washington for all intents and purposes killed the District of Columbia’s proven voucher program, but did it with Ninja-like stealth. The weapons: Nearly impossible reauthorization requirements, late Friday announcements, and politically expedient promises to keep kids currently attending good schools from being very publicly booted.

Now it’s Milwaukee’s turn. The new Democratic majority in Madison is on its way to cutting the value of individual vouchers while raising public school per-pupil expenditures, and even worse, is larding new regulations on private schools participating in the choice program. Perhaps the most ridiculous proposed reg: Requiring all participating private schools with student bodies that are more than 10 percent limited English proficient to provide  a “bilingual-bicultural education program.” As if one of the major benefits of choice isn’t that parents can choose such programs if they think they are best for their kids, and can select something else if they don’t! But, of course, political decisions aren’t primarily about what parents want and kids need.

Thankfully, there is a resistance forming to the assault in Milwaukee, with choice advocates now refusing to remain quiet after naively doing so when they were told that fighting back would only make things worse. The choice-supporting national media is also speaking up. But one can’t help but fear that it may be too little, too late.

No Longer among the “Usual Left-Right Battles”

Christopher J. Christie just decisively won New Jersey’s Republican gubernatorial primary, but had to veer away from his middle-of-the-road plan and venture into some traditionally conservative territory to do it, according to news accounts. Will that be a problem for him in the general election? Not necessarily. As NorthJersey.com’s Charles Stile observes, Christie’s ardent support for private school choice is not the polarizing stance it once was: these programs “once championed by conservative ideologues, are being embraced by urban Democrats.”

As we’ve been saying at the Center for Educational Freedom for some time now, the post-partisan age of school choice is well within sight, and draws closer every day. The last politicos to see that will find themselves on the wrong side of history, and the wrong side of voters in both parties.