Topic: General

On Health Care, Walker and Rubio Offer ObamaCare-Lite

In today’s Manchester Union-Leader, I explain the eerie resemblance that the health care plans advanced by presidential candidates Gov. Scott Walker (R-WI) and Sen. Marco Rubio (R-FL) bear to ObamaCare:

The centerpiece of both “replace” plans is a refundable tax credit for health insurance. Yet such tax credits already exist, in Obamacare. Also like Obamacare, the Walker/Rubio tax credits would allow Washington to decide how much coverage you purchase, penalize you if you don’t buy that government-defined plan, and conceal massive redistribution of income under the rubric of tax cuts…

How would Walker and Rubio pay for their new spending? Would they keep Obamacare’s tax increases? Raise taxes elsewhere? Would they finance new health care spending by cutting existing health care programs? If so, chalk up yet another way their plans would resemble Obamacare.

I also provide an alternative for reformers who actually want better, more affordable, more secure health care.

Conservatives can offer a better “replace” plan that is politically feasible by expanding a bedrock conservative initiative: health savings accounts, or HSAs, which have already enabled 14.5 million Americans to save more than $28.4 billion for their medical expenses tax-free.

Expanding HSAs would give workers a $9 trillion effective tax cut, without cutting spending or increasing the deficit, and would drastically reduce government control over Americans’ health decisions. Most important, “large” HSAs would spur innovations that make health care better, cheaper, and more secure — particularly for the most vulnerable.

Conservatives need to get this right, lest they repeat the same mistake they made in 1993-94.

For decades, prominent conservatives advocated an individual mandate. The left then picked up the idea and gave us Obamacare. Before they once again fall into the same trap, conservatives should drop any support for the implicit mandate of health-insurance tax credits. Expanding HSAs is more compassionate and provides a direct route toward freedom and better health care.

For more on Large HSAs, see here, here, and here.

Americans Have More than They Realize

According to Gallup, more Americans think of themselves as “have-nots” today than at any point since Gallup began posing the question almost thirty years ago, while fewer Americans see themselves as “haves.” (Please see Emily Ekins’s earlier post for an in-depth analysis from a different angle). But do Americans actually have less in 2015 than in 1988? Let’s dig into the data to see whether Americans might have more than they realize.

2015 is the first year when Americans spent more money dining out than they spent on groceries. Let’s examine why that might be. In 2015, U.S. GDP per person (adjusted for inflation) reached an all-time high. At the same time that average personal wealth is rising, many necessities like food are going down in price. As a result, spending on the basics takes up a smaller and smaller share of an American’s personal disposable income—dropping from 39% in 1988 to 32% in 2013. This means that Americans have more money left at the end of the day, which they can then choose to save, invest, or spend on luxuries like dining out.

Not only are Americans wealthier on average, but they are also working less. The average American worker in 2015 works 30 fewer hours in a year than her counterpart in 1988, and yet is almost $18,000 dollars richer in real terms.

HumanProgress.org advisory board member Mark Perry recently pointed out that today’s young Americans may actually be the luckiest generation in history, based on what they can buy with earnings from a summer job. And increases in real wealth do not capture technological advances, which also contribute to rising living standards. The quality and variety of available goods is improving across the board. Almost no one had a cell phone in the United States back in 1990, but today they’re ubiquitous—and more useful, with an app for just about everything.

In many ways, Americans have more today than ever before: more leisure time away from work, more disposable income left after basic expenses,  more choice in what they buy, and more advanced technologies at their fingertips.  Of course, there are still people who live in genuine need. The Great Recession and various growth-retarding policy decisions have done great harm, especially to the poor. Still, if the many positive trends that we are seeing continue, then hopefully more Americans will come to count themselves among the haves instead of the have-nots. To learn more about improving living standards in the United States and beyond, pay a visit to HumanProgress.org.

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More Keynesian Primitivism from the Congressional Budget Office

I never watched That ’70s Show, but according to Wikipedia, the comedy program “addressed social issues of the 1970s.”

Assuming that’s true, they need a sequel that addresses economic issues of the 1970s. And the star of the program could be the Congressional Budget Office, a Capitol Hill bureaucracy that apparently still believes - notwithstanding all the evidence of recent decades - in the primitive Keynesian view that a larger burden of government spending is somehow good for economic growth and job creation.

I’ve previously written about CBO’s fairy-tale views on fiscal policy, but wondered whether a new GOP-appointed director would make a difference. And I thought there were signs of progress in CBO’s recent analysis of the economic impact of Obamacare.

But the bureaucracy just released its estimates of what would happen if the spending caps in the Budget Control Act (BCA) were eviscerated to enable more federal spending. And CBO’s analysis was such a throwback to the 1970s that it should have been released by a guy in a leisure suit driving a Ford Pinto blaring disco music.

Damn the Accountants! Full Speed Ahead on the Suez Canal Expansion

A Washington Post story on Egypt’s addition to the Suez Canal reminds me of stories about stadiums, arenas, and convention centers. First, there’s a leader with an edifice complex:

There was no public feasibility study, just an order from the new president. He wanted Egypt to dig a new Suez Canal. Oh, and he wanted it completed in a year.

That was last August. And on Thursday, with much pomp and circumstance, President Abdel Fatah al-Sissi inaugurated the new waterway — an expansion of the original, really.

And then, as noted above, there was no real study. In the United States elected officials usually commission bogus studies that economists laugh at.

There’s the hoopla in place of sound economics:

For the past few weeks, the country has been bombarded with messages, slogans and propaganda — all extolling the virtues of what the government is calling Egypt’s “gift to the world.” The canal will double shipping traffic and change the world, officials say. In a countdown to the opening, the flagship state newspaper said: “48 hours… and the Egyptian dream is completed.”

Just this week the mayor of St. Louis, saved by a judge from having to endure a public vote on taxpayer funding for a new NFL stadium, exulted:

“Having an NFL team in a city is really, I think, a huge amenity,” he said. “It’s one of the things that make living in a big city fun.”

Like the stadiums, the new canal path wasn’t needed:

But less important amid the hyper-nationalist fervor, it seemed, is the fact that the $8 billion expansion of one of the world’s most important waterways probably wasn’t necessary….It will probably shave only a few hours off the time that vessels wait to traverse the canal. Global shipping, economists say, has been sluggish since the 2008-2009 world financial crisis.

As with stadiums and other grand municipal projects, economists scoff at the purported benefits:

“This is politics. [The government] wants to give the impression we are entering a new phase of the Egyptian economy,” said Ahmed Kamaly, an economics professor at the American University in Cairo. Egypt’s economy tanked with the turmoil of the Arab Spring, with foreign reserves plummeting and the tourism industry suffering.

“It’s all propaganda,” Kamaly said of government’s grand promises of a revived national economy. “The benefit is overestimated.”

Egypt wants to be known as a modern country. Well, spending taxpayers’ money on white elephants is certainly a characteristic of rich, advanced countries. But $8 billion is a lot even in the white elephant league.

Rubio Was Right on Fed Ed Power Grabbing

In last night’s GOP presidential debate, Sen. Marco Rubio (R-FL) said in response to a question about the Common Core national curriculum standards that, sooner or later, the Feds would de facto require their use. If you know your federal education – or just Common Core – history, that’s awfully hard to dispute.

Said Rubio: “The Department of Education, like every federal agency, will never be satisfied. They will not stop with it being a suggestion. They will turn it into a mandate. In fact, what they will begin to say to local communities is: ‘You will not get federal money unless you do things the way we want you to do it.’”

That is absolutely what has happened with federal education policy. It started in the 1960s with a compensatory funding model intended primarily to send money to low-income districts, but over time more and more requirements were attached to the dough as it became increasingly clear the funding was doing little good. Starting in the 1988 reauthorization of the Elementary and Secondary Education Act (ESEA) we saw requirements that schools show some level of improvement for low-income kids, and those demands grew in subsequent reauthorizations to the point where No Child Left Behind (NCLB) said if states wanted some of the money that came from their taxpaying citizens to begin with, they had to have state standards, tests, and make annual progress toward 100 math and reading “proficiency,” to be achieved by 2014.

Tonight — #Cato2016 Coverage Continues With the GOP Debates

Politics is America’s national sport, so it’s not too surprising that political rhetoric focuses more on playing the game than on real-world policy solutions. While this might make for more entertaining television, viewing political discourse in this way can be a serious detriment to our society.

That’s why Cato scholars will be injecting insightful commentary and hard-hitting policy analysis into the national conversation throughout the 2016 campaign season, using the Twitter hashtag #Cato2016.

The coverage started with Mondays’s Voters First Forum (highlights here), and will continue today with the two national debates to be aired by Fox at 5:00 p.m. and 9:00 p.m. tonight.

Tune in and join the conversation on Twitter using #Cato2016.

Results from the Libertarianism vs. Conservatism Post-Debate Survey

The Cato Institute and Heritage Foundation recently co-hosted a debate in which interns from both organizations debated whether conservatism or libertarianism is the better philosophy. At the conclusion of the debate, the Cato Institute conducted a survey of debate attendees finding important similarities and striking differences between millennial conservative and libertarian attendees.

Full LvCDebate Attendee Survey results found here

The survey finds that libertarian and conservative millennial attendees were similar in skepticism of government economic intervention and regulation but were dramatically different in their stances toward immigration, LGBT inclusion, national security, privacy, foreign policy and perceptions of racial bias in the criminal justice system.

While the survey is not a representative sample, this survey offers a snapshot of engaged conservative and libertarian millennial “elites” who have higher levels of education and political information, and who chose to come to this event. To date, little information exists on young conservative and libertarian elites. Since these attendees are politically engaged millennials, their responses may provide some indication of the direction they may take both movements in the future.

Eighty-percent of millennial respondents self-identified as either conservative (41%) or libertarian (39%): This post will focus on these conservative and libertarian millennial attendees.

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