Tag: Obamacare

Snooki Tax Creates Jobs!

The IRS says it needs 1,054 more staffers – at a cost of more than $359 million in fiscal 2012 alone – just to watch over the initial implementation of Obamacare.  And this is before the individual mandate kicks in, the non-compliance with which the IRS is also supposed to police (which by itself doesn’t make the non-compliance penalty, let alone the mandate, a tax – for those of you following the constitutional taxing power arguments).

Among this new IRS battalion will be 81 people assigned to “Snooki tax” enforcement, making sure that tanning salons pay a new 10 percent excise tax.  Their cost: $11.5 million.  (And again for you constitutional taxing power fans: the Snooki tax, because it’s an excise – a tax on a transaction or activity or enjoyment of a privilege – is an actual tax, so no constitutional defects here whatever the wisdom of this policy might be.) 

So don’t let anyone say that Obamacare is “job-killing.”  Clearly the solution to all our unemployment problems is to create all sorts of new taxes and then hire everyone in the country to enforce them against everyone else.  (Also, we should block out the sun to create jobs for candlemakers, which policy would of course go hand in hand with outlawing incandescent light bulbs.)

H/T: Josh Blackman

A Dishonest Budget, as Told in One Graph

Yesterday, President Barack Obama released his proposed budget for fiscal year 2012.  Many of my Cato colleagues have already discussed why the president should be embarrassed of this document.  Chris Preble writes that the president offers “faux cuts” to military spending.  Dan Mitchell says the president is “missing in action” on entitlement reform.  Chris Edwards writes that “the Obama administration has completely chickened out on spending reforms in its new budget.”

They were too kind.  This budget is thoroughly dishonest, too.

Back in 1997, Congress enacted automatic reductions in the price controls that Medicare uses to pay for physician services.  Congress has delayed those cuts year after year, and everyone now agrees they are politically infeasible.  We’re not talking about your the usual, Washington-DC definition of spending cuts here, which is just a reduction in spending growth.  If the accumulated cuts were to take effect in 2012, as provided by current law, Medicare payments to physicians would fall by some 25 percent, and lots of seniors would find their doctor no longer accepts their Medicare coverage.  The problem is, these cuts are still on the books and they grow larger every time Congress delays them.  But no one wants to come up with the money needed to pay for a permanent “doc fix.”

Enter President Obama’s FY2012 budget submission.  Rather than propose a permanent “doc fix,” the Obama administration proposes a temporary and dishonest one.  As shown by the blue bars in the below graph, the administration proposes to delay these cuts until 2014 at a cost of $54 billion.  As shown by the black line, the administration proposes to pay for this additional spending by reducing the rate of spending growth in other areas of Medicare by $62 billion over the next 10 years.  Note that only 6 percent of these Medicare “cuts” will occur in 2012 and 2013.  The other 94 percent of the “cuts” will come after the administration has spent the $54 billion it wants to spend.  Note also that the vast majority of the “cuts” would take effect after Barack Obama is no longer president.   Finally, the president offers no proposals to deal with the cuts in physician payments during the last eight years of the 10-year budget window (as shown by the purple bars).  But he’s more than happy to use those implausibly low current-law spending levels to make his proposed budget appear more responsible than it is.

It’s the same old story: dessert today, spinach tomorrow.  (Or, never.)

Both parties engage in such dishonesty all the time.  Those cuts in physician payments were scheduled to take effect in 2011.  To pay for delaying them until 2012, Congress and the president agreed on the ridiculous and dishonest strategy of trying to track down and recover excessive subsidies that the federal government will pay to people in ObamaCare’s health insurance “exchanges,” beginning in 2014.  (Call it the new “pay and chase.”)

Catholicism and Libertarianism

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

Michael Gerson’s claim that “Catholic social teaching is simply not libertarian” [“A Catholic Test for Politics,” Feb. 8], reveals that Gerson either does not understand Catholicism, or libertarianism, or both.  Immediately thereafter, he cites many libertarian aspects of Catholic social teaching: “the necessity of limited government,” subsidiarity, respecting the human rights of “even illegal immigrants,” etc.  When he claims that repealing ObamaCare or government funding for AIDS and malaria conflicts with Catholic social teaching, he ignores that government coercion is inherent in those policies.  Is Gerson claiming that Catholic social teaching condones using violence or the threat of violence to heal the sick?  Catholics who reject those policies do so because they want to heal the sick through peaceful, non-coercive means. They cast their lots with Christ – not Caesar, as Gerson recommends.  Gerson should spend some time learning about libertarianism, from actual libertarians. I would be happy to arrange it.

Just another uninformed potshot from the columnist who sees libertarianism’s emphasis on limited government as “morally empty,” “anti-government,” “a scandal,” “an idealism that strangles mercy,” and guilty of “rigorous ideological coldness.”

Obamacare Defenders Grasping at Straw Men

Last week saw a splash of publicity for defenders of Obamacare’s constitutionality.  First, Yale law prof Akhil Amar had a hyperbolic op-ed in the L.A. Times, prompting a thorough fisking by Tim Sandefur, Ilya Somin, and me (among others). Then Harvard law prof Larry Tribe (who has written for the Cato Supreme Court Reviewhad one in the New York Times.  Here’s an excerpt:

Since the New Deal, the court has consistently held that Congress has broad constitutional power to regulate interstate commerce. This includes authority over not just goods moving across state lines, but also the economic choices of individuals within states that have significant effects on interstate markets. By that standard, this law’s constitutionality is open and shut. Does anyone doubt that the multitrillion-dollar health insurance industry is an interstate market that Congress has the power to regulate?

Well, actually, Prof. Tribe, you’re asking and answering the wrong questions, as I say in my letter to the editor that appeared in the Sunday Times:

First, this is indeed a “novel” issue for the Supreme Court: Never before has the federal government asserted the power to require people to engage in economic activity under the guise of regulating commerce.

Second, those challenging the law do not question Congress’s power to regulate the “multitrillion-dollar health insurance industry,” but rather distinguish such regulation from a command for individuals to purchase that industry’s products.

Third, the difference between activity and inactivity is anything but “illusory”; if Congress can regulate mere decisions, then it can tell me, for example, that I shouldn’t spend time writing letters to the editor.

And finally, imagining that Justice Antonin Scalia would support the government here because he previously ratified prohibitions on the production and consumption of marijuana is to remove the very activity-inactivity distinction that he recognized in that earlier opinion.

Most recently, the Times itself editorialized against the views Randy Barnett presented to the Senate Judiciary Committee – and Randy replied here

Setting aside the issue of why Congress is only now getting around to holding hearings on the constitutionality of a fundamental piece of legislation it passed nearly a year ago, it’s clear now at least that the proponents of limitless, extra-constitutional government are running scared.  Obamacare delenda est.

The Federal Government’s Police Power

Last week, after I responded to Akhil Amar’s op-ed that defended, in an uncharacteristically unthoughtful and ad hominem way, the constitutionality of the individual mandate, a reader suggested that Amar’s argument – particularly that “breathing is an action” that Congress can regulate – reminded him of that Police classic, “Every Breath You Take.”  What’s ironic about this suggestion, perhaps inadvertently, is not only the invocation of “breathing” but that the whole Obamacare battle boils down to competing views of federal power:  Does the government have a general “police” power or is its authority limited to that finite set of powers listed in the Constitution?

And so, without further ado, here’s how the song would look updated for 2011’s favorite constitutional debate (with apologies to Gordon Sumner aka Sting):

Every breath you take
Every move you make, or
Decide not to take
Even when you flake
We’re mandating you

Every single day
Every word you say
Every game you play
Even if you stay
We’re coercing you

O don’t you fuss
You belong to us
How we regulate every step you take

Every move you make
Every vow you break
Every smile you fake
Every claim you stake
We’re mandating you

The Constitution’s lost without a trace
Since ‘37 we go every place
Limits on government you can’t replace
Got rid of those so we’re always in your face
We’re commanding you, no saying please

Every move you make
Every vow you break
Every smile you fake
Every claim you stake
We’re mandating you

Why Ryan-Rivlin Beats ObamaCare on Costs — and Spending

Washington Post blogger Ezra Klein asks of Rep. Paul Ryan’s (R-Wisc.) Medicare voucher proposal (co-authored with former Congressional Budget Office director Alice Rivlin):

Why are the cost savings in his bill possible, while the cost savings in the Affordable Care Act aren’t?…when it comes to the ACA, Ryan firmly believes that seniors will quickly and successfully force Congress to reverse any reforms that degrade their Medicare experience. That’s a fair enough concern, of course. What’s confusing is why it isn’t doubly devastating when applied to Ryan-Rivlin.

Set aside that Klein violates Cannon’s First Rule of Economic Literacy: Never say costs when you mean spending.  And that he uses the word “affordable” to describe ObamaCare.

There are two reasons why the Medicare spending restraints in the Ryan-Rivlin proposal are more likely to hold than those in ObamaCare.

First, ObamaCare’s restraints amount to nothing more than ratcheting down the price controls that traditional Medicare uses to pay health care providers.  Structuring Medicare subsidies in this way – setting the prices that Medicare pays specific providers – makes it very difficult to lower those prices, because the system itself creates huge incentives for providers to organize and lobby to undo those restraints.  As I explain more fully in this op-ed from September 2010, Medicare vouchers would change that lobbying game by reducing the incentives for provider groups to expend resources in the pursuit of higher Medicare spending.  That gives the Ryan-Rivlin restraints a much better shot at surviving.  (Seriously, it’s a pretty cool feature.)

Second, Klein predicts a backlash against Medicare vouchers because he says it amounts to “giving seniors less money to purchase more expensive private insurance.”  The notion that Medicare is less costly than private insurance is pure, uninformed nonsense.  Medicare and a “public option” are attractive to the Left precisely because such programs hide the full cost of their operations from enrollees and taxpayers.  It is a virtue of vouchers that they would reveal to Medicare enrollees the actual prices of the coverage and services they demand, because that information will spur enrollees to be more cost-conscious when selecting a health plan and consuming medical services.  That, in turn, will force insurers and providers to compete on the basis of cost to a degree never before seen in this nation, competition that will generate the sort of cost-saving innovations that Jim Capretta discusses here.

Both of these reasons boil down to the truism that nobody spends other people’s money as carefully as they spend their own.  We’ll make a lot of progress in this country when the Left realizes how much damage they’ve done by ignoring that truism.

Fixing the Economy Demands More Than a Stroll across Lafayette Park

President Obama’s visit with the Chamber of Commerce this week has infuriated the anti-business Left.  But short of expropriation and nationalization, what doesn’t? 

Robert Reich and NPR and the scribes at the Huffington Post just don’t get it.  Their man may be in the White House, but business holds the keys to the kingdom.  Whether the president’s priority is job creation or reelection, nothing matters more than sustained economic growth. And without business having confidence that policy in the United States will become more hospitable and predictable, investment and job creation will remain tepid.

The president doesn’t have nearly the leverage assumed in the delusions of groups like Public Citizen, which wrote: “What America needs is not olive branches to giant corporations but controls over the companies that sank the economy.”  Back here in reality, businesses have options.  Many can choose to produce and operate in other countries, where the economic environment may be more favorable.  In that regard, globalization has produced a veritable Galt’s Gulch, which serves as an important check on bad economic policy.  Governments are now competing with each other to attract the financial, physical, and human capital necessary to nourish high value-added, innovation-driven, 21st century economies.  Gratuitously punitive anti-business policies will only chase away the companies that the president exhorts to invest and hire.

According to a survey of 13,000 business executives worldwide, conducted by the World Economic Forum, 52 countries have less burdensome regulations than the United States.  Add to that the fact that the United States has the highest corporate tax rate among all OECD countries and it becomes less mysterious why U.S. businesses shift more operations abroad.

As I wrote in a December 2009 Cato paper:

Governments are competing for investment and talent, which both tend to flow to jurisdictions where the rule of law is clear and abided; where there is greater certainty to the business and political climate; where the specter of asset expropriation is negligible; where physical and administrative infrastructure is in good shape; where the local work force is productive; where there are limited physical, political, and administrative frictions.

This global competition in policy is a positive development.  But we are kidding ourselves if we think that we don’t have to compete and earn our share with good policies.  The decisions we make now with respect to our policies on immigration, education, energy, trade, entitlements, taxes, and the role of government in managing the economy will determine the health, competitiveness, and relative significance of the U.S. economy in the decades ahead.

The president is beginning to get it – though grudgingly.  He acknowledges the burdens of excessive and superfluous regulations and bureaucracy (remember his SOTU story about the jurisdictions entangled in the salmon’s journey from salt water to fresh water to the smoker?).  The president has hinted that he would like to see the corporate tax rate lowered.  He knows that businesses have options to invest, produce, and hire abroad—and that oftentimes U.S. policy chases them there.  But, so far, rather than push policies to encourage domestic investment, production, and hiring, the president has done the opposite, while demonizing businesses that follow the incentives to go abroad.

The president’s position during his exchange at the Chamber of Commerce was that he has made concessions to business by moving toward the center on tax and trade policy, and that now it is time for business to show good faith by investing and hiring.  But Obama’s small steps toward the center come after two years of sprinting to the left on economic policy.  After ObamaCare, Dodd-Frank, taxpayer bailouts, unorthodox and legally-questionable bankruptcy procedures, subsidies for select industries, Buy American and other regulations governing how and with whom “stimulus” dollars could be spent, and the administration’s tightening embrace of industrial policy, businesses want a more quiet, less intrusive, less antagonistic, predictable policy environment before they will feel comfortable playing the role Obama wants them to play.

Until that happens, the president shouldn’t expect torrents of investment and hiring from the business community.