Tag: Obamacare

Republicans Are Right to Cut the IRS Budget

One of my many frustrations of working in Washington is dealing with perpetual-motion-machine assertions. The classic example is Keynesian economics, which is based on the notion that you magically create additional economic activity by having the government spend money instead of allowing the private sector to decide how it gets spent (in an especially bizarre display of this thinking, Nancy Pelosi actually said that subsidizing unemployment was the best way to create jobs).

Another example of this backwards analysis can be found in the debate over the IRS budget. The President is resisting a GOP proposal to modestly trim the IRS’s gargantuan $12.5 billion budget and his argument is that we should actually boost funding for the tax collection bureaucracy since that will mean more IRS agents squeezing more money out of more taxpayers.

Here are some excerpts from an Associated Press report about the controversy.

Every dollar the Internal Revenue Service spends for audits, liens and seizing property from tax cheats brings in more than $10, a rate of return so good the Obama administration wants to boost the agency’s budget.House Republicans, seeing the heavy hand of a too-big government, beg to differ. They’ve already voted to cut the IRS budget by $600 million this year and want bigger cuts in 2012. …IRS Commissioner Doug Shulman told the committee Tuesday that the $600 million cut in this year’s budget would result in the IRS collecting $4 billion less through tax enforcement programs. The Democrat-controlled Senate is unlikely to pass a budget cut that big. But given the political climate on Capitol Hill, Obama’s plan to increase IRS spending is unlikely to pass, either. Obama has already increased the IRS budget by 10 percent since he took office, to nearly $12.5 billion. The president’s budget proposal for 2012 would increase IRS spending by an additional 9 percent — adding 5,100 employees. …Obama’s 2012 budget proposal for the IRS includes $473 million and 1,269 new positions to start implementing the health care law.

Unlike Keynesian economics, there actually is some truth to Obama’s position. The fantasy estimate of $10 of new revenue for every $1 spent on additional bureaucrats is clearly ludicrous, but it is equally obvious that many Americans would send less money to Washington if they didn’t have to worry about a coercive and powerful tax-collection bureaucracy that had the power to throw them in jail.

This is an empirical question, at least with regards to the narrow issue of whether more IRS agents “pay for themselves” by shaking down sufficient numbers of taxpayers. Reducing the number of IRS bureaucrats by 90 percent, from about 100,000 to 10,000, for instance, surely would be a net loss to the government since the money saved on IRS compensation would be trivial compared to the loss of tax revenue.

But that doesn’t mean that a reduction of 10,000 or 20,000 also would lead to a net loss. And it certainly does not mean that adding 10,000 or 20,000 more IRS agents will result in enough new revenue to compensate for the salaries and benefits of a bigger bureaucracy. Even left-wing economists presumably understand the concept of diminishing returns.

But let’s assume that the White House is correct and that more IRS agents would be a net plus from the government’s perspective. The Administration would like us to reflexively endorse a bigger and more aggressive IRS, but public policy should not be based on what is a “net plus” for the government.

There are two ways to promote better tax compliance. The Obama approach, as we’ve read above, is to expand the size and power of the IRS. Up to a point, this policy can be “successful” in extracting additional money from the productive sector of the economy.

The alternative approach, by contrast, seeks better compliance by lowering tax rates and reforming/simplifying tax systems. This course of action boosts compliance by making evasion and avoidance less attractive. People are much less likely to cheat if the government isn’t being too greedy, and they’re also more likely to comply if they think there is less waste, fraud, corruption, and favoritism in the tax code.

Let’s now put this discussion in context. Obama wants more IRS agents in large part to enforce his new scheme for government-run healthcare. Yet that’s a perfect example of what I modestly call Mitchell’s Law - politicians doing one bad thing (expanding the IRS) only because they did another bad thing (enacting a health care bill that made the tax code even more convoluted and punitive).

So instead of making the IRS bigger in response to a bad healthcare law, why not repeal that bad law and shrink the size of the IRS? Even better, why not junk the entire tax code so we can replace the IRS with a system that is honest and fair?

And if these big steps are not immediately feasible, at least cut the IRS budget so that awful laws are enforced in a less destructive manner.

This Center for Freedom and Prosperity video has additional details about the national nightmare we call the IRS.

I’m Not So Sure I Like Your Mental Activity

The latest federal judge to declare ObamaCare constitutional claimed that Congress can regulate “mental activity,” like the mental activity of choosing not to purchase health insurance.  Or shoes and ships and sealing wax.  Or my book.

National Review editor Rich Lowry has an excellent column explaining why this latest, ahem, legal victory for ObamaCare “delivered a more telling blow against the law in the course of ruling it constitutional than critics have in assailing it as a travesty…It’s the most self-undermining defense of the constitutionality of a dubious statute since then–solicitor general Elena Kagan told the Supreme Court that under campaign-finance reform, the government could ban certain pamphlets.”

Mitch Daniels’s ObamaCare Problem

That’s the title of my latest column at National Review Online.  An excerpt:

Mitt Romney isn’t the only Republican presidential hopeful with an Obamacare problem: Indiana governor Mitch Daniels, were he to become the GOP’s nominee, could also undermine the repeal campaign that has united the party’s base and independent voters.

Among his liabilities:

Daniels’s decision to accept Obamacare funds and move forward with implementation is further undermining the repeal effort. Yesterday, federal judge Roger Vinson reversed his initial order forbidding the Obama administration to implement the law. He did so in part because plaintiff states such as Indiana are implementing it, which he said “undercut” their own argument that he should block it.

But all is not lost for Daniels.

Daniels can spare himself and the repeal movement such setbacks by following the lead of Florida governor Rick Scott (R.) and Alaska governor Sean Parnell (R.) and flatly refusing to implement any aspect of Obamacare. Daniels could even organize another letter in which his fellow governors all make the same announcement.

A move like that could separate him from the pack.

‘Medicare Loses Nearly Four Times as Much Money as Health Insurers Make’

The latest from Jeffrey H. Anderson, which I’ll file under I-Wish-I’d-Said-That:

In a newly released report, the Government Accountability Office (GAO) estimates that, in fiscal year 2010, $48 billion in taxpayer money was squandered on fraudulent or improper Medicare claims. Meanwhile, the nation’s ten largest health insurance companies made combined profits of $12.7 billion in 2010 (according to Fortune 500). In other words, for every $1 made by the nation’s ten largest insurers, Medicare lost nearly $4…

Actually, it may have been even worse than that: The GAO writes that this $48 billion in taxpayer money that went down the drain doesn’t even represent Medicare’s full tally of lost revenue, since it “did not include improper payments in its Part D prescription drug benefit, for which the agency has not yet estimated a total amount.”

Courtesy of The Weekly Standard.

It’s Official: Governors Implementing ObamaCare Are Undermining the Lawsuits

Judge Roger Vinson of the U.S. District Court for the Northern District of Florida has just responded to the Obama administration’s “motion to clarify” his prior ruling, which declared ObamaCare unconstitutional and void.  That “motion to clarify” essentially asked Vinson, “Didn’t you really mean that we can keep implementing ObamaCare while we appeal your ruling?”  Today, Vinson answered, “No.”

The attorneys representing the plaintiffs, who include Florida and 25 other states, argued that the administration’s “motion to clarify” was actually a veiled request to have Vinson stay (i.e., set aside) his original order blocking implementation.  Vinson agreed, and therefore treated the Obama administration’s “motion to clarify” as a motion to stay, which he granted.  Vinson made clear, however, that if the administration fails to file a notice of appeal by March 10 or fails to seek an expedited appeal either with the 11th Circuit Court of Appeals or the Supreme Court, then his stay will lift and the administration will (once again) be barred from implementing or enforcing ObamaCare.  In other words, Vinson prevented the Obama administration from treating his stay as an excuse to ignore his ruling while the further entrenching the law.

It would have been better if Vinson had stuck to his original order blocking implementation.  Yet he made clear that one of the reasons he did not is that many of the states asking him to strike down the law are implementing it anyway.  Vinson wrote that the case for blocking implementation:

is undercut by the fact that at least eight of the plaintiff states…have represented that they will continue to implement and fully comply with the Act’s requirements — in an abundance of caution while this case is on appeal — irrespective of my ruling.

As the Obama administration explained to the court:

[S]ince the Court entered its judgment on January 31, at least 24 of the 26 plaintiff states have applied for additional grants authorized or appropriated by the ACA, continued to draw down grant funds previously awarded under the ACA, or otherwise availed themselves of resources made available by the ACA. Indeed, South Carolina has continued to drawn down exchange planning grant funds, even though it has declared the Act “void and unenforceable.” Similarly, Utah has described the declaratory judgment as an “injunction against further implementation” of the Act, but has continued to draw down Pre-existing Condition Insurance Plan (“PCIP”) funds and to request Early Retiree Reinsurance Program (“ERRP”) reimbursements.

Now would be a good time for the South Carolina Gov. Nikki Haley (R), Utah Gov. Gary Herbert (R), and the governors of the other 22 plaintiff states to join Alaska and Florida in refusing to accept any further ObamaCare funds, returning the ObamaCare funds they have already received, and ceasing all implementation activities, including “planning” efforts.

Tea partiers and other conservative groups turned on House Republicans in a dispute over when the House would vote to cut off all ObamaCare spending.  Where’s the outrage over the governors and state legislators that are eagerly pursuing that funding, actively implementing the law, and preventing judges from stopping implementation?

Congressional Republicans May Be Understating the Cost of ObamaCare

Yesterday, the Senate Finance and House Energy & Commerce committees released a joint report on the costs that ObamaCare’s Medicaid mandate will impose on states.  That report, which is based on other reports, likely understates the cost of that unfunded mandate.

In a new Cato Working Paper, “Estimating ObamaCare’s Effect on State Medicaid Expenditure Growth,” senior fellow Jagadeesh Gokhale constructed cost projections for the five largest states – California, Florida, Illinois, New York, and Texas – which account for 40 percent of the nation’s population.  Gokhale carefully decomposed and organized micro-data and state-specific administrative data on Medicaid eligibility, enrollments, benefit recipiency, and average benefits per recipient.  Gokhale found much larger cost burdens than the committees’ projections.  

For example, Gokhale projects that ObamaCare will force Florida to spend an additional $20.4 billion between 2014 and 2023. That is almost double the committees’ estimate of an additional $12.9 billion in spending by Florida between 2013 to 2023.

Obama Offers States ‘Flexibility’ to Adopt Single-Payer instead of ObamaCare

The New York Times reports:

Seeking to appease disgruntled governors, President Obama plans to announce on Monday that he supports amending the 2010 health care law to allow states to opt out of its most burdensome requirements three years earlier than currently permitted.

It’s significant that the president is finally acknowledging that ObamaCare is unworkable and will impose enormous burdens on the states.  Or is he?

A closer look shows that the president is not lifting the burdensome requirements ObamaCare imposes on states.  All he’s doing is proposing to move up, from 2017 to 2014, the date on which states can apply for federal permission to impose a different but equivalently or more coercive plan to expand health insurance coverage.  Here’s what the Times says about the legislation Obama will reportedly endorse, which was introduced by Sens. Ron Wyden (D-OR) and Scott Brown (R-MA):

The legislation would allow states to opt out earlier from various requirements if they could demonstrate that other methods would allow them to cover as many people, with insurance that is as comprehensive and affordable, as provided by the new law. The changes also must not increase the federal deficit.

If states can meet those standards, they can ask to circumvent minimum benefit levels, structural requirements for insurance exchanges and the mandates that most individuals obtain coverage and that employers provide it. Washington would then help finance a state’s individualized health care system with federal money that would otherwise be spent there on insurance subsidies and tax credits.

So states can “opt out” of ObamaCare’s individual mandate if they cover as many people, with as many benefits, and as many government subsidies, as ObamaCare would.  The Times quotes “administration officials” on how states might do that:

The administration officials said the so-called state innovation waivers in the Wyden-Brown bill might allow a state to experiment with ways to entice people to obtain insurance rather than requiring them to buy policies. It also might allow interested states to establish a single-payer system in which the government is the sole insurer. Gov. Peter Shumlin, a newly elected Democrat in Vermont, is pursuing such a proposal.

No such state plan can make a dent in the federal laws that are fueling the relentless growth in the cost of health care (see Medicare, the federal tax treatment of health care, etc.).  Therefore, the only way that states could cover as many people as ObamaCare does is by using ObamaCare’s tactic of forcing people to buy exorbitantly costly health insurance.  And if they’re not going to use an individual mandate, the only remaining option is a single-payer health care system.

President Obama’s move is not about giving states more flexibility.  It’s about moving the nation even faster toward his ideal of a Canadian- or British-style single-payer health care system.