Topic: Tax and Budget Policy

Sink This SCHIP

That’s the catchy title of my oped in today’s New York Post:

The State Children’s Health Insurance Program is set to expire on Sept. 30. Unfortunately, neither side in Washington seems to have considered letting this SCHIP die…

Congress could make coverage more affordable simply by letting consumers and employers purchase out-of-state coverage…

Sweeping away those trade barriers would make coverage more affordable without increasing government spending, trapping families in low-wage jobs or increasing prices for private purchasers.

President of Senegal to Speak at Cato

Since becoming the president of Senegal in 2000, Abdoulaye Wade has been one of Africa’s most vocal proponents of liberal economic reforms. As he recently said, “I don’t want money, and I don’t want hand-outs. I want trade agreements….I believe in a liberal economy and have never put much faith in the state-run economy, because it fails….The state should intervene only to create the conditions necessary for the private sector to thrive. I am counting on the private sector, because it is crucial to Senegal’s future.” Join us on September 28 to hear President Wade discuss economic reforms in Senegal and the future of liberalization on the African continent.

Washington Post’s Popular Programs

Washington Post, September 18: “The Democratic Congress is considering 2008 spending bills that increase funding for politically popular programs….”

Washington Post, September 19: “With a difficult war debate looming and presidential vetoes for a host of popular legislation….”

Washington Post, September 20: “Republicans and Democrats in the [Virginia] General Assembly proposed election-year spending increases for popular programs….”

Notice any pattern? 

The Washington Post is a great paper, but like many papers it reveals a pro-spending bias when it reports on government budget issues. One aspect of this is the common portrayal of any increase or cut as affecting “popular programs.” Every type of program is portrayed as “popular,” whether it provides benefits to 50% of Americans or just 0.05% of Americans.

Presumably, Post reporters don’t do a public poll to find out which programs really are ”popular.” Instead, they just automatically stick the word in stories to perhaps suggest, “Ohhh, policymakers better not cut spending on that one or else there will be hell to pay.”

I’ve noticed this for years in the PostHere’s one on federal grants to local governments: “According to the police group, the most controversial proposals include a $376 million reduction in the popular Community Oriented Policing Services program….”

Washington Post readers sometimes complain that its stories are too wordy. Well, “popular” is one word that editors can look to chop out.  

Upcoming Cato Forum on the Rights of Terminally Ill Patients

In 2006, a panel of the D.C. Circuit Court of Appeals ruled that terminally ill patients have a constitutionally protected right to purchase and use experimental drug treatments not yet approved by the federal government. 

On August 7 of this year, the full D.C. Circuit overturned the panel ruling, holding that terminally ill patients have no such constitutional right.

On September 25, this coming Tuesday, the Cato Institute will host a policy forum titled, “Should the Government Insert Itself between Dying Patients and Unproven Therapies?“ 

Debating the rights of terminally ill patients will be Scott Ballenger, the lead counsel for the plaintiffs in that case; Ezekiel Emanuel, a bioethicist with the National Institutes of Health and a leading critic of the panel’s ruling; and yours truly.

The forum will be from 12-1:30pm, followed by a luncheon.  Register here.

Maryland to Boost Virginia’s Competitiveness

The geese that lay the golden eggs are about to fly south, but not because winter’s approaching. Instead, greedy politicians in Maryland are seeking to impose California-style income tax rates on the state’s most productive people. Even some local Democrats realize this is going to be a boon for Virginia, where the top income tax rate will be about four percentage points lower.

The Washington Post reports on Maryland Gov. Martin O’Malley’s unintentional campaign to boost Virginia’s economy:

Gov. Martin O’Malley yesterday proposed the first major overhaul of Maryland’s income tax brackets in 40 years, offering what he called a “more progressive” system in which high-end earners would pay more.…

“We must be very cautious that we’re not asking people to go live in other jurisdictions, where taxes are not as high,” said Sen. Rona E. Kramer (D), chairwoman of Montgomery [County]’s Senate delegation. “Northern Virginia is a very appealing place, and it’s right across the river.” …House Minority Leader Anthony J. O’Donnell (R-Calvert) called the plan “a historic beating up on Marylanders through the income tax,” noting that the top marginal rate would increase by nearly 37 percent.

…Under O’Malley’s plan, Montgomery residents in the highest bracket would pay a combined state-county rate of 9.7 percent, which County Executive Isiah Leggett (D) said yesterday is “not acceptable.” …The combined rate of 9.7 percent would also exceed the current top marginal rates in the region. In Washington, the top rate is 8.5 percent; in Virginia, 5.75 percent; and in Delaware, 5.95 percent. Maryland would not be alone in imposing higher rates on upper-income earners. California, for example, applies a rate of 10.3 percent on incomes of more than $1 million.

What if We Just Slashed Medical Spending in Half?

That’s the question Robin Hanson poses in the most recent issue of Cato Unbound.  His answer?  We’d probably be better off:

We could cut U.S. medical spending in half without substantial net health costs. This would give us the equivalent of an 8% pay raise.

Hanson entertains responses to his essay by distinguished health economists David Cutler, Dana Goldman, and Alan Garber – who are not as dismissive of Hanson’s thesis as you might expect.

Hanson was my health economics professor.  Only later did I learn he does not have a degree in economics.  (Insert your own credibility-shattering joke mcannon [at] cato.org (here).)  As he explains in his essay and elsewhere, “Most students in my eight years of teaching health economics have simply not believed me, even after a semester of reviewing the evidence.”

I was familiar with much of the evidence presented, and so I found Hanson’s argument plausible.  But I am not so familiar with the evidence to be confident that I could find the holes in Hanson’s argument.  So I did what any student would do: I put my professor on the hot seat with A-list economists from Harvard, Stanford, and Rand.

So far, the discussion has been everything I hoped.  But it hasn’t yet zeroed in on the heart of the contributors’ disagreement.  I hope they will all stay engaged. 

Will American Capitalism Be Surpassed?

Sallie James hit the nail on the head in her blog post today: ”business deals, and not formally negotiated trade agreements, are driving globalization.”

That made me think of this Deutsche Post webpage I came across. 

It sounds spectacular: The world’s largest shipping and logistics hub at the world’s largest airport, all in low-tax, freewheeling Dubai.

America used to do great stuff like this. But while we’ve still got a moribund and bloated government postal service, Germany’s privatized Deutsche Post seems to be at the leading edge in global shipping and business services.  We’ve got congested, government-owned, and union-dominated seaports, while Dubai will be host to a huge and efficient intermodal system.

America still has lots of world-beating companies such as FedEx and Intel. The problem is in Washington: federal policymakers sit on their hands doing little to improve economic productivity while ambitious upstarts such as Dubai and Ireland are providing more freedom and more opportunity for businesses to grow.