Topic: Tax and Budget Policy

A Positive Health Care Agenda for Free-Market Advocates

If you know any limited-government types who are looking for a positive health care agenda (off-hand, I can think of ten), be sure to let them know about a forum Cato is hosting on Thursday titled, “Health Savings Accounts: Not Entirely Consumer-Directed (Yet).”

HSAs are the most important step Congress has taken toward liberalizing America’s health care sector.   At this forum, I’ll be introducing a proposal that would let workers own every one of their health care dollars – not just the few thousand dollars that HSAs let them control.  Tentatively titled “large HSAs,” this proposal would:

  • Allow workers to control 100 percent of their health benefits dollars
  • Allow HSA holders to choose any type of health plan
  • Eliminate the tax code’s biases toward employer-sponsored insurance and excessive coverage
  • Cap the tax exclusion for employer-sponsored insurance and
  • Provide tax relief to those without employer-sponsored insurance, including the uninsurable.  

Joining me to comment on the proposal will be the CEA’s Katherine Baicker and Jason Furman of the Brookings Institution’s Hamilton Project. 

The forum will be held just two days from today, on Thursday, May 24, at 4pm EDT at the Cato Institute.  Click here to register or watch the event online.  Click here for directions and parking information. 

More Special-Interest Favors for Fannie and Freddie

Created by politicians and bolstered by aggressive lobbying, Fannie Mae and Freddie Mac are quasi-private companies with special access to funds and special regulatory exemptions. With the playing field dramatically tilted in their direction, these morgage-industry behemoths are accumulating ever-larger portfolios. In a genuinely unfettered market, this would be just fine, but this is not the case. Because of their special access to the Treasury, Fannie and Freddie create a heads-they-win-tails-we-lose situation for taxpayers. If Fannie and Freddie prosper, it is the consequence of government favoritism that results in the economy’s capital being misallocated. If they fail, there almost surely would be a bailout reminiscent of the S&L fiasco. There has been an effort to slightly curtail the risks caused by the Fannie and Freddie subsidies, but the Wall Street Journal notes that the one decent provision of the bill was removed. Not surprisingly, there is widespread expectation that the White House will approve a bill that actually makes a bad situation even worse:

Their amendment to Mr. Frank’s bill, which passed by voice vote Thursday night, guts the one provision that made it worth the effort. What’s left is a regulator who would lack the authority to limit the risk that Fannie and Freddie’s $1.4 trillion mortgage-backed securities portfolios pose to the financial system, plus a $500 million a year boondoggle that goes by the euphemism “affordable housing fund.” …That leaves the White House and Treasury with some decisions. Administration officials were cautious about the Bean-Neugebauer amendment when first proposed, but Fannie and Freddie’s friends are betting the Administration wants a deal enough to accept even a bad one. However, a “reform” that does nothing to reduce the problem of putting so much housing risk into two companies, and which also includes an annual $500 million donation to “housing” activists such as Acorn is worse than the status quo.

Senator McCain’s Domestic Agenda

Sen. John McCain today laid out his domestic agenda in a speech before the Oklahoma State legislature.

The speech is noteworthy for two topics not mentioned by the Senator. First, he makes no promises about additional restrictions on campaign finance. Of course, he also does not promise any liberalizing reforms of government oversight of campaign spending, reforms that might appeal to Republican primary voters.

Senator McCain also omits any concrete proposals about cutting back the federal government. To be sure, he promises a government that is smaller and more efficient. He just does not say specifically what spending will be cut and which programs will be eliminated.  He does promise to spend more on the federal workforce. That does not seem likely to lead to a smaller federal government.

McCain praises business and suggests the federal government can become more like successful firms. He does not mention, however, how the burden of taxation might be eased on individuals and the businesses they create and manage.

“Reform” appears to be the theme of Sen. McCain’s domestic agenda. This brings to mind his hero, Teddy Roosevelt, hardly a exemplar of limited constitutional government. Perhaps we should be thankful that Sen. McCain has forsaken for now “reforms” like McCain-Feingold.

But it is hard to avoid the conclusion that McCain has given up on the idea of cutting back government in favor of individual liberty.  He wants instead a government run by people animated by “higher aspirations” and “dedication to the national interest.” In other words, Sen. McCain is a big government conservative without qualifications.

Washington—the Anti-Economic Center

“Two West Coast senators are leading an effort to increase the number of cross-country flights out of [convenient but overcrowded] Reagan National Airport, a move that could lead to more noise over neighborhoods and jam already filled parking lots,” reports the Washington Post. 

Sens. Gordon Smith (R-Ore.) and Maria Cantwell (D-Wash.) have amended a Federal Aviation Administration reauthorization bill to allow up to 20 additional takeoffs and landings a day.

“It’s about connecting West and East Coast economic centers,” said R.C. Hammond, spokesman for Smith, elaborating on the senator’s motivation for the amendment.

Actually, Washington isn’t really an economic center. It’s more like an anti-economic center. Washington doesn’t do business, it impedes business, and subsidizes business, and regulates business, and cripples business. New York, Baltimore, Atlanta – those are East Coast economic centers. Not Washington, the city of lobbyists and government contractors.

Just what is it that businesspeople from Seattle and Portland would come to Washington for? They’d go to New York and Atlanta to make business deals. But they’d come to Washington to lobby for subsidies, or for regulations on their competitors, or to try to get a piece of the $2.9 trillion federal budget. But not to do actual wealth-creating business in the marketplace.

Some people say that West Coast senators want direct flights from National Airport to their home towns to make travel more convenient for them. If so, they should say so. But don’t tell us that the country would benefit from more Lobby Express flights.

Fighting for Earmarks

“Republicans will seek a House vote next week admonishing a senior Democrat who they say threatened a GOP member’s spending projects in a noisy exchange in the House chamber, Minority Leader John Boehner said Friday,” according to the AP.

Their target is Rep. John P. Murtha, D-Pa., a 35-year House veteran who chairs the appropriations subcommittee on military spending.

Murtha, 74, is known for his gruff manner and fondness for earmarks – carefully targeted spending items placed in appropriations bills to benefit a specific lawmaker or favorite constituent group.

During a series of House votes Thursday, Murtha walked to the chamber’s Republican side to confront Rep. Mike Rogers, R-Mich., a 43-year-old former FBI agent. Earlier this month, Rogers had tried unsuccessfully to strike a Murtha earmark from an intelligence spending bill. The item would restore $23 million for the National Drug Intelligence Center, a facility in Murtha’s Pennsylvania district that some Republicans say is unneeded.

According to Rogers’ account, which Murtha did not dispute, the Democrat angrily told Rogers he should never seek earmarks of his own because “you’re not going to get any, now or forever.”

“This was clearly designed to try to intimidate me,” Rogers said in an interview Friday. “He said it loud enough for other people to hear.”

Now it’s true that there’s a House rule that prohibits “lawmakers from placing conditions on earmarks or targeted tax benefits that are based on another member’s votes.” Wouldn’t want anybody to oppose your earmarks just because you opposed his.

But really – after they lost control of Congress partly because of their profligate spending and their multiplying earmarks – this is what Republicans choose to fight over? They’re going to draw a line in the sand on C-SPAN to defend Mike Rogers’s right to put special-interest earmarks in appropriations bills? That ought to bring the independent and libertarian and small-government voters streaming back.

All Wet

Today’s NYT has a fascinating story on the recovery of some $500 mi18ship600.jpgllion in gold and silver coins from a colonial-era shipwreck in the Atlantic. The recoverer is Odyssey Marine Exploration, a publicly traded firm (AMEX: OMR). Odyssey made headlines a few years ago when it salvaged $75 million in coins from the Civil War-era shipwreck of the SS Republic off Savannah, Ga.

The Times notes that Odyssey’s latest find will fuel the already-bitter battle between “academic” and commercial marine achaeologists over treasure-hunting and recovery. The article includes this fusillade from the academics:

Kevin Crisman, an associate professor in the nautical archaeology program at Texas A&M University, said salvage work on shipwrecks constituted “theft of public history and world history.”

He said the allure of treasure hidden under the sea seemed to blind the public to the ethical implications. “If these guys went and planted a bunch of dynamite around the Sphinx, or tore up the floor of the Acropolis, they’d be in jail in a minute,” Mr. Crisman said.

As a marine archaeology buff, I’ve eagerly followed the exploits of both academic archaeologists like Bob Ballard and treasure hunters like Mel Fisher. To be sure, the two groups operate differently — academics can pursue more scholarly study of their wrecks because they have the luxury of government and/or foundation funding for their work, while commercial archaeologists must please their investors, who want financial returns and/or the joy of recovering and owning pieces of history.

With that distinction made, I have to say that Crisman should go soak his head. Odyssey’s latest find and Mel Fisher’s Atocha salvage work most certainly are not thefts of “public” or “world” property because neither the public nor the world owns the wrecks. If a ship is lost outside of territorial waters then, at best, the ship’s original owner or insurer owns the wreck, and it often is the case that no one legally owns a wreck until someone discovers and begins working it. (There sometimes are bitter legal fights between the ship’s owner, insurer, and the wreck’s discoverer when a discovery is made.) Chrisman’s comparing Odyssey’s discovery and salvaging of its latest wreck to the destruction of properties like the Sphinx or Acropolis is all wet.

Just as important, commercial incentives motivate the discovery of wrecks and the advance of marine archaeology. (Indeed, why didn’t the academics beat Odyssey to the Republic or Fisher to the Atocha?) It took Fisher more than a decade of searching to find the wreck of the Santa Margarita, and another five years to find her sister ship, the Atocha. To recover artifacts from wrecksites, Fisher invented a simple yet ingenious device, the “mailbox,” to pump clear water into the site to improve visibility and sweep away sand that covers the wreck. And, using money from his share of the more than $400 million recovered from the Santa Margarita and Atocha, Fisher financed other expeditions and established a nonprofit maritime heritage museum. Crisman’s dismissal of treasure hunters and commercial archaeologists as being irresponsible yahoos who care only about riches seems little more than academic snobbery.

Moreover, Crisman’s portrayal of academic archaeologists as selfless scholars who protect history and advance the public’s interest is bilgewater. Academic archaeologists love working wrecks as much as treasure seekers do — the joy of finding and exploring wrecks, harvesting artifacts, and holding history in their hands. Just like treasure hunters, the academics want legal protections to ensure that only they can salvage from the wrecks they discover, and they squirrel away the salvaged artifacts in their offices and labs. One day, perhaps, those artifacts will be put on display so the public can look but not touch, but how is that much different than Mel Fisher’s museum or the selling of artifacts to private collectors who often then put the artifacts on display?

There certainly is room in marine archaeology for both the treasure hunters and the academics. But there isn’t room for the elitist attitude that only academic archaeologists should have the right to touch history and commercial ventures are equivalent to destroying the Acropolis.

Solving the Organ Shortage: A Move in the Right Direction

Jon Christiansen, a former Republican congressman from Nebraska, has founded an organization to create grassroots initiatives to help overcome resistance to providing organ donors with financial compensation.

Currently, under the National Organ Transplantation Act, it is illegal to provide “valuable consideration” for an organ. As a result, only altruistic donations are allowed and an average of seven people die every day waiting for an organ that never comes.

Christiansen’s new organization is called the American Organ Coalition. Christiansen, who is the group’s executive director, can be contacted by e-mail at jonlc [at] united [dot] net">jonlc [at] united [dot] net.