Topic: General

Charity Doesn’t Begin in This Home

Andrew Cuomo – former secretary of HUD, former candidate for governor of New York, current candidate for attorney general of New York, and best known as the son of former Democratic dream candidate Mario Cuomo – released his tax returns earlier this month. In 2004 and 2005 Cuomo had more than $1.5 million in adjusted gross income. And he gave a total of $2,000 to charity. He made no charitable contributions in 2003, when his income was a bit less than $300,000. It’s no wonder that Cuomo believes passionately in taxing Americans to support all manner of welfare and transfer programs. Looking within himself, he quite understandably fears that in the absence of coerced transfer programs there would be no support for the poor. Yet in fact Americans gave about $250 billion to charity in 2004, or an average of about 2 percent of income.

In a related story, leftwing bloggers two months ago denounced Vice President Cheney for the “shady charitable contributions” reported on his 2005 tax return and called him “a major beneficiary of the Hurricane Katrina tax relief act.” What was so shady? It seems that on an income of almost $9 million (mostly deferred compensation from his years at Halliburton), Cheney gave 77 percent of it, or $6.8 million, to charity. Some beneficiary! To the lefty bloggers, and especially to their commenters, this was shady because normally you can only take a deduction of up to 50 percent of your income, but that cap was lifted to encourage contributions in the year of Katrina. So Congress passed a law to encourage charitable contributions, and Cheney gave more to charity, and leftists called him “shady.” A clear case of Bush Derangement Syndrome.

Faith-Based Health Insurance Reform

I had the opportunity yesterday to meet with Tim Murphy, Massachusetts secretary of health and human services, to discuss Governor Romney’s Massachusetts health care reform.  Secretary Murphy, who is smart, knowledgeable and personable, clarified a great many questions about the plan.  Unfortunately clarity was not reassuring.

Secretary Murphy essentially confirmed that the concerns I raised in my recent Briefing Paper were correct.  But he said we shouldn’t worry about them.  For example, there were questions about whether the Massachusetts Health Connector, the new government agency that operates as a clearinghouse for the individual and small group health insurance markets, would have the power to limit the insurance plans it would offer.  The Heritage Foundation had insisted it had no such authority.  However, Secretary Murphy confirmed that it did.  He believed, however, that this would not be a problem for two reasons: 1) he had faith that the board would not abuse its power and would offer a wide range of plans, and 2) if a future board did attempt to limit the type of available plans, people could choose to buy plans outside the connector.  He was confident that the Connector would not squeeze out an independent market in small group and individual insurance, although he admitted that the Connector would not be competing on an even playing field.

He also said that we shouldn’t worry about new mandated benefits driving up the cost of the mandatory insurance policy, because voters would object to rising costs and resist any new mandates.  He said that if the program’s cost rises too much voters will demand that the program be cut back.  And he admitted that the plan was a form of managed competition, but believed that they had devised the right incentives and penalties to make it all work.

In essence, this is a faith-based health insurance program.  Governor Romney has set up a program that depends on future insurance providers, legislators, governors, and voters all behaving in exactly the way he expects.  For example, legislators will never respond to special interests by adding new mandates and regulations.  Voters will react to rising costs not by asking for increased subsidies but by cutting back on the program.  (Can anyone recall the last time voters did that?).  Businesses won’t drop health insurance coverage and let taxpayers pick up the tab.

Maybe Governor Romney and Secretary Murphy are right, though I wouldn’t hold my breath.  But shouldn’t we wait and see what happens before other states or the federal government rush to copy it?  The Heritage Foundation has announced a major effort to convince other states to adopt Massachusetts-like reform.  California, Louisiana, Maryland, Michigan, Wisconsin, and the District of Columbia are reportedly considering it.  Lawmakers in those states should think twice about going down this road toward more government control of the health care system.

BP Dismisses “Peak Oil” Concerns

The interesting thing to me about the “are we running out of oil” debate is that those who know the most about the oil business and with the most at stake in the answer - the major investor-owned oil companies - by and large aren’t worried. The further away you get from the oil producers themselves, the more you encounter worriers.

In that vein, it’s worth reading this summary of BP CEO’s John Browne’s interview with Der Spiegel that appeared yesterday. The only investor-owned oil company that I am aware of that has any substantial disagreement with Browne’s analysis is Chevron. But then again, Chevron is relatively terrible at finding oil compared to their competitors, so perhaps their worries about depletion are handy rationales for poor past performance.

By the way, I wrote an essay on oil depletion for Chevron’s “Will You Join Us?” webpage when it was initially launched, but, alas, it hasn’t seemed to change Chevron’s mind much.

Motion to Dismiss this Lawsuit … With Extreme Prejudice!

Item: Criminal brings lawsuit against John Q. Citizens for defending themselves.

Nonlawyers are quick to ask, “Can he really do that?!”

Let me attempt a quick answer:

Any person can sue any other person for anything. You can file a lawsuit against a newborn baby for “disturbing the peace” in a park. But there is a legal mechanism to dispose of meritless lawsuits without a trial or even a preliminary hearing–it’s called a motion to dismiss. And a motion to dismiss with prejudice will bar the litigant from bringing such an action again. When law students learn about the motion to dismiss with prejudice, their textbook should illustrate the concept by mentioning the case of the criminal who tried to sue his victims.

On the general subject of self-defense, we should all remember this gem from Colorado Sheriff Bill Masters: “It is your responsibility to protect yourself and your family from criminals. If you rely on the government for protection, you are going to be at least disappointed and at worst injured or killed.”

More on self-defense here. To listen to a talk that Masters gave at Cato, click here.

Income Inequality and Social Unrest: What’s Their Function?

The current debate on Cato Unbound, particularly today’s contribution from economist Edward E. Leamer, circles around the danger that income inequality poses to political stability.

Leamer argues that computer technology amplifies innate talent differences, and hence will widen existing income disparities. This seems undeniable. He then goes on to imply that this is necessarily a threat to political stability or social harmony. But is it?

Leamer’s unstated assumption is that there is a simple monotonic relationship between income disparities and social unrest. That is certainly a reasonable hypothesis, but it is not the only such hypothesis.

Isn’t it also possible that the relationship is more complex, and multivariate? It seems at least worth investigating the possibility that the relationship between income inequality and political instability is asymptotic – that the richer and richer Bill Gates becomes, the less impact any further increase in his income will have.

More importantly, isn’t it also worth considering the possibility that there are other variables in the equation besides income inequality; for example, the sufficiency of the incomes earned by those in the lowest quartile of the earnings distribution. If the poorest quarter of citizens were destitute, that would seem more socially destabilizing than if they could comfortably feed, clothe, and house themselves and their families – regardless of the incomes of the rich. Someone able to live comfortably might not care if the richest citizens double their incomes tomorrow, whereas someone who is barely scraping by might resent even the most modest increase in the incomes of the rich.

So perhaps the seemingly inevitable increase in income inequality will not pose a threat to social stability, so long as those with the least marketable skills can still earn a comfortable living.

It would be interesting to see a natural experiment conducted to test this theory using historical data.

The American Meddling Association

The American Medical Association has long ceased to be a serious advocate for doctors. It instead has become a propaganda arm for the wackier factions of the public health movement. The Chicago Sun Times reports that at its annual meeting this week, the AMA is considering throwing its support behind a move to tax soda sales, with proceeds going to various anti-obesity measures. This, despite little evidence that soda consumption is linked to weight gain (non-diet soda consumption has remained virtually unchanged since 1988). Not to mention the fact that if we’ve learned anything about sin taxes, it’s that they’re inevitably used for projects far removed from those educational programs promised when they’re enacted.

The soda tax endorsement comes on the heels of the AMA’s embarassing attempt to pass off a web-based survey (which the organization later admitted was an “advocacy” tool) about alcohol consumption as scientific research, complete with a fake margin of error. Last year, the same organization and its president expressed shock that – gasp! – most minors get their first taste of alcohol from… their parents. Seems to me that the supervising eye of a parent would be the ideal circumstance under which a minor would get his first sip of beer or wine, wouldn’t it?

Consider these other action items from the agenda for the AMA’s annual meeting this week:

  • Support a 50 percent reduction in salt in processed foods, fast foods and restaurant meals over the next decade.
  • Oppose beer ads on college sports broadcasts.
  • Prepare a report summarizing video game research, including emotional and behavioral effects and addictive potential.
  • Push to ban smoking in all public places and workplaces.
  • Support mandatory school instruction on the dangers of Internet pornography.

Meanwhile, as it continues to tell parents how to raise their children, and push for government regulation of private behavior, the AMA has been conspicuously silent, passive, or just plain wrong on issues you’d think would be high-priority for a group that claims to represent doctors: The relentless DEA campaign against doctors who specialize in pain management, for example. Pain activists say the AMA has been AWOL. And not only didn’t the AMA oppose many of the more onerous HIPAA regulations, it lobbied for their enforcement. The organization has also taken a relatively passive stance of the federal prohibition on medical marijuana, which puts political drug eradication goals ahead of patient care.

The AMA’s percentage of revenue from membership dues has fallen over the last few years. It now counts just 26% of U.S. physicians among its dues-paying members.

Given the organization’s priorities, I can see why. Journalists should keep that figure in mind when reporting on official AMA positions. The group certainly doesn’t represent the opinion of all doctors. Of, for that matter, even a majority of them.