Topic: Tax and Budget Policy

A Damn Fine Health Care Proposal

By
Michael F. Cannon

The White House is sending out teasers regarding a health care proposal that President Bush will unveil in his (penultimate!) State of the Union address on Tuesday.  By design, such teasers leave out important details.  Yet they give the outlines of what could be a damn fine health care proposal.

The president is proposing to limit the currently unlimited tax break for employer-sponsored health insurance.  He’d also extend that newly limited tax break to people who don’t get coverage from an employer – in fact, he’d completely break the link between the tax break and employment.

That tax break is behind much of the inefficiency and inequity in America’s health care sector.  It encourages almost 200 million Americans to behave irresponsibly, which increases the cost of health care for themselves and everyone else.  Economists on the left and right have argued for limiting or eliminating it for decades.  The last president to propose such a limit was named Reagan.

It’s going to be a tough sell, of course.  The administration estimates that 20 percent of covered workers would face a higher tax burden, and those workers probably will object that their taxes would increase.  The fact that reducing government influence over people’s decisions is effectively a tax cut is a much harder point for most people to grasp.  Other opponents will scream that the proposal would destroy employer-based health insurance.  What those opponents actually mean, however, is that they don’t think workers should be free to choose where they purchase their health insurance.

I have criticisms of the proposal, too.  For example, I think we should do more to give workers ownership over the money that employers currently spend on health benefits.  (Mike Tanner and I lay out one way to do so in Healthy Competition: What’s Holding Back Health Care and How to Free It.)  Unless workers own those dollars, they might have to take a pay cut to exercise their new freedom to choose, which doesn’t seem like freedom at all.

Important details are still missing – details that will determine how helpful, complicated, and politically feasible the proposal will be.  I’ll withhold final judgment until I see the final product.  But at this point, it appears that President Bush is the only prominent politician who is taking health care reform seriously.

Topics: 
Cato Publications, General, Health Care, Tax and Budget Policy

Venezuela: Plus ça Change, Plus C’est la Même Chose

By
Marian L. Tupy

Hugo Chavez came one step closer to becoming a full-fledged dictator last night, as “Venezuelan lawmakers gave initial approval to a bill granting … [him] the power to rule by decree for 18 months so that he can impose sweeping economic, social and political change.” The vote in the National Assembly was unanimous — as befits a budding communist country.

Not that Chavez’s powers were much constrained prior to yesterday, but his soon-to-be official recognition as Venezuela’s dictator serves as an important reminder that state control of the economy and dictatorship go hand in hand.

Since the collapse of the Soviet empire, many defenders of socialism have argued that dictators, including Mao, Stalin, and Pol Pot, were aberrations; they took Marx’s ideas in the wrong direction. They claim that nationalization of the means of production (call it communism, socialism, or Marxism) and democracy can be compatible. In The Road to Serfdom, Hayek showed that it cannot. Some 50 years later, Hayek’s argument holds. Every socialist regime tends toward authoritarianism of some sort.

Chavez reminds us of the anti-democratic nature of socialism. As such, he is turning into a major embarrassment for many on the Left who supported him. Unfortunately, what the proponents of socialism again and again fail to realize is that it is the message, not the messenger, that is embarrassing.

Topics: 
International Economics and Development, Political Philosophy, Tax and Budget Policy

Irony, in the Alanis Morissette Sense

By
Jim Harper

Here’s a nice book-end to Chris Edwards’ recent post — and the flurry of controversy — about federal compensation reaching precisely double the national average: 

Tax Prof Blog (via Volokh) notes that federal employees owe $2.8 billion in taxes. Tax Prof lists and compares the “scofflaw” rates of different agencies and departments, with the U.S. Commission on Civil Rights coming in just shy of 10 percent.

Topics: 
Government and Politics, Tax and Budget Policy

But Tell Us What You Really Think of the NCLB, Matt

By
Andrew J. Coulson

Matt Ladner, VP for research at the Arizona-based Goldwater Institute, has some harsh words for the No Child Left Behind Act:

The latest incarnation, in fact, represents yet another step in the long sad history of ineffectually throwing money at public schools. NCLB is headed for the ash-heap of failed education reforms. The only question at this point is how expensive of a failure it will become.

Topics: 
Education and Child Policy, Tax and Budget Policy

NEJM Reviews Medicare Meets Mephistopheles

By
Michael F. Cannon

This week’s issue of the New England Journal of Medicine carries a review of the Cato Institute’s latest health care book, Medicare Meets Mephistopheles by Cato adjunct scholar David A. Hyman. Reviewer Peter Jacobson of the University of Michigan School of Public Health writes:

Hyman’s bracing critique reflects the fact that neither Medicare’s problems nor the ascendancy of market-based approaches to solving them can be ignored any longer.

Medicare Meets Mephistopheles provides a good starting point for free-market advocates who are serious about preventing the federal government from imposing price controls on prescription drugs, or otherwise stealing from future generations.

Topics: 
Cato Publications, General, Health Care, Tax and Budget Policy

Underpaid CEO?

By
David Boaz

The Wall Street Journal headline blares “Disney CEO Iger’s Bonus, Salary Total $17 Million” (in the print edition). To most of us, that’s an unbelievable amount of money, and no doubt many readers felt their blood pressure–and their populist anger–rising.

What the story didn’t quite say, though, was how much money Bob Iger made for Disney shareholders since he took over in October 2005. It did note that the company’s stock price has risen 43 percent in that time. So in the 15 months that Iger’s been in charge, shareholders have made some $23 billion. They probably figure $17 million is a fair reward to the CEO who played a major role in that gain.

Topics: 
General, Tax and Budget Policy

Schwarzenegger’s Shakedown

By
Michael F. Cannon

Much has been written about TerminatorCare, Gov. Arnold Schwarzenegger’s (R) plan to guarantee health coverage to all Californians by employing every lousy idea the Left has ever conjured. 

But much of what has been written about TerminatorCare is wrong. Media accounts and even some policy wonks have reported that Schwarzenegger, through the magic of Medicaid, would have taxpayers in other states pay for only half the cost of his plan. Would that that were so.

Instead, Schwarzenegger actually proposes to use an old Medicaid trick that would put non-Californians on the hook for much more than half the cost. First, he would boost state payments to providers, which triggers federal matching funds. But then he would tax the providers so much that he would recover the state’s initial outlay plus most of the federal matching funds, which he would then use to finance the rest of the plan.  At the end of the day, California would spend zero extra dollars on provider payments, yet the ruse would net an additional $1.3 billion from taxpayers in other states.  

After one cuts through the budget gimmicks, one finds that Californians would contribute only $1.3 billion to the plan, while taxpayers in other states would contribute $4.5 billion — or over three times as much.

I haven’t seen so many people who couldn’t shoot straight since Commando. 

Ooh, wait, I have another one! The Schwarzenegger health plan brings to mind the tagline from Commando:

Somewhere… somehow… someone’s going to pay!

(Hey, with a dry cool wit like that, I could be an action hero.)

Topics: 
Cato Publications, General, Health Care, Tax and Budget Policy

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