Topic: Tax and Budget Policy

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

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.

Irony, in the Alanis Morissette Sense

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.

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

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.

NEJM Reviews Medicare Meets Mephistopheles

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.

Underpaid CEO?

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.

Schwarzenegger’s Shakedown

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.)

Those Who Sell Out Will Eventually Be Punished

In a sick way, I’m enjoying the debate over price controls for prescription drugs under Medicare Part D. Of course, I don’t want Congress to dry up the stream of drugs that will keep me alive and vigorous when I’m a geezer. It’s just … what were the Republicans and the drug companies thinking when they created Part D? What did they think would happen? Did they really believe that, if they’d create this program, Congress would never impose price controls?

As I argued on TV today, Part D has Congress buying — through the middleman of the private drug plans — a product with high research and development costs and low marginal costs. And Congress buys those drugs for a politically powerful group of citizens (the geezers). That kind of setup cannot last. The temptation for Congress to pay nothing more than the marginal costs will be inexorable, because doing so pleases constituencies that are paying attention (seniors and current taxpayers) and harms only those constituencies that are either unpopular (drug manufacturers) or else aren’t paying attention (future seniors, including those not yet born).

The writing is on the wall. It may not happen this year, but unless we scrap Part D, sooner or later we will get price controls on seniors’ prescription drugs.

So let’s scrap Part D.

What? You’re a Republican who voted for Part D, against conscience and better judgment?? And now you’re afraid to scrap Part D for fear of (gasp!) flip-flopping or offending the geezers?? Then start talking about fundamental Medicare reform, buddy. And start now.