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.)

The National ID Debate, Part II

“It is the policy of the United States that the Social Security card shall not be used as a national identification card.”

So reads the last line of the Illegal Immigration Enforcement and Social Security Protection Act of 2007. The bill would put an encrypted machine-readable electronic identification strip on each Social Security card, which would enable employers to access an “Employment Eligibility Database” at the Department of Homeland Security. The database would include the citizenship status of every Social Security card holder.

Employers who hired someone without checking this … national Social Security identification card … against the Department of Homeland Security’s database would be punished. (Must remember: “It is the policy of the United States that the Social Security card shall not be used as a national identification card.”) 

So goes the push for “internal enforcement” of immigration law — sure to be an important topic in the immigration debate this year. 

The national ID law that is now in place, the REAL ID Act, is a reaction to the terror attacks of 9/11, and the assumption that knowing who someone is tells us what that person plans to do. 

But the REAL ID Act is in retreat. With states bridling at the burden they’ve been asked to bear in order to implement the act, legislation to repeal REAL ID was introduced late last year, and it is likely to be re-introduced soon.

The next wave of the ID debate will be about immigration.

On Thursday, January 18th, we’ll be having a lunch-time book forum here at Cato on my book, Identity Crisis: How Identification is Overused and Misunderstood. I will present the book, and I have invited two interesting commentators — skeptics of different parts of my theses — to weigh in. 

Please join us for what I hope will be an interesting discussion of identity issues, and a preview of an important part of the coming immigration debate. 

Register for the book forum here.

Chavez: Do We Need Any More Evidence?

In his three-hour inaugural address — yet another characteristic he shares with his hero, Fidel Castro — Venezuelan strongman Hugo Chavez eliminated any remaining doubt about his plans to rule as a socialist dictator. Yet some journalists still can’t bring themselves to speak truth about power.

Take the Washington Post, for instance. Reporter Juan Forero’s story is headlined “Chavez Would Abolish Presidential Term Limit.” He notes Chavez’s stirring mantra, borrowed from Castro: “Socialism or death!” He reports:

All week in Caracas, Chavez has shaken markets and angered the Bush administration by promising to nationalize utilities, seek broader constitutional powers and increase the state’s control of the economy. He has also frequently referred to the new, more radical phase in what he calls his revolution — drawing comparisons with Castro’s famous declaration on Dec. 2, 1961: “I am a Marxist-Leninist and will be one until the day I die.”

But then in the next paragraph Forero cautions:

If the theatrics are similar, however, the apparent goal is not. Chavez stresses that Venezuela will remain a democracy, and analysts do not believe his government will embark on a wholesale expropriation of companies, as Castro’s government set out to do soon after taking power in 1959.

Remain a democracy, eh? Well, that’s good news.

At the end of his article, Forero does note:

He has installed military officers in all levels of government and packed the Supreme Court, and now says he will end the autonomy of the Central Bank.

Good thing Venezuela is going to remain a democracy, or those actions could be worrisome.

In his 1,000-word story, Forero failed to note a key point that other journalists pointed out: Chavez said he would  ask the National Assembly, all 167 of whose members are his supporters, for special powers allowing him to enact a series of “revolutionary laws” by decree.

What more would it take for a journalist to conclude that Chavez’s “apparent goal” is the same as Castro’s and that, of course, he does not intend for Venezuela to “remain a democracy”?

Even people usually thought of as on the left have viewed Chavez’s consolidation of power with alarm. Human Rights Watch yesterday issued a report saying that Chavez and his supporters “have sought to consolidate power by undermining the independence of the judiciary and the press, institutions that are essential for promoting the protection of human rights.”

In a recent study for the Cato Institute, Gustavo Coronel, former Venezuelan representative to Transparency International, shows that “corruption has exploded to unprecedented levels…and Chávez has created new state-run financial institutions, whose operations are also opaque, that spend funds at the discretion of the executive.”

We know from theory and history that socialism — state ownership of the means of production and the attempt to eliminate for-profit economic activity — leads inevitably to tyranny. We saw it in Russia, China, and Cuba. We know that Cuba is one of the poorest countries in the world after almost 50 years of Castro and that its people daily risk their lives in rickety boats to escape.

Chavez has promised to bring socialism to Venezuela. If he succeeds, we know that the result will be tyranny. But meanwhile, he’s not waiting for the advent of socialism. He has packed Congress and the Supreme Court with his supporters. He has installed his military officers in all levels of government. He is trying to end the autonomy of the Central Bank, nationalize major industries, abolish constitutional limits on presidential tenure, and perhaps most clearly, get his followers in Congress to give him the power to rule by decree.

“Remain a democracy” indeed.

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.

Next Up: Democrats’ Plan for Tax Augmentation

The Washington Post reports:

[Sen. Chuck] Hagel, a Vietnam veteran, angrily condemned the “escalation” of the [Iraq] war. “To ask our young men and women to sacrifice their lives to be put in the middle of a civil war is … morally wrong. It’s tactically, strategically, militarily wrong.”

“I don’t see it, and the president doesn’t see it, as an escalation,” [Secretary of State Condoleezza] Rice replied.

Hagel looked stunned. “Putting 22,000 new troops, more troops in, is not an escalation?”

“Escalation is not just a matter of how many numbers you put in,” Rice ventured.

“Would you call it a decrease?” Hagel pressed.

“I would call it, Senator, an augmentation.”

The War Decider

I can answer the question Senator Webb put to Secretary Rice yesterday. The answer is, yes, it is “the administration’s position that it possesses the authority to take unilateral action against Iran in the absence of a direct threat without congressional approval.” They haven’t yet directly said “we can launch a war with Iran and we don’t need anyone’s permission,” but it’s not hard to read between the lines:

In April 2002, John Yoo, then with the Justice Department’s Office of Legal Counsel, testified  before the Senate Judiciary Committee that ”the President has the constitutional authority to introduce the U.S. Armed Forces into hostilities when appropriate, with or without specific congressional authorization.” In an internal memorandum prepared shortly after September 11, 2001, Yoo had put it even more starkly: “In the exercise of his plenary power to use military force, the President’s decisions are for him alone and are unreviewable.” 

That is consistent with Vice President Cheney’s long-held view of the president’s powers, as can be seen in this Frontline interview in which Cheney discusses his role as secretary of defense during the Gulf War:

Q: The Congressional vote. Do you recall discussing with the President what he would have done if he’d lost the votes. 

Cheney: It was my view at the time [that] we were absolutely committed to getting Saddam Hussein out of Kuwait one way or the other, no matter what we had to do. We had to have the Saudis as allies in that venture, but if no one else had been with us, if it had just been the United States and Saudi Arabia, without the United Nations, without the authorization of the Congress, we were prepared to go ahead. I argued in public session before the Congress that we did not need congressional authorization…. I was not enthusiastic about going to Congress to ask for an additional grant of authority. I was concerned that they might well vote NO and that would make life more difficult for us, or that even if they voted YES and then we had a disaster on our hands and it didn’t work, they’d still be against us….

Q: But if you’d lost the vote …?

Cheney: If we’d lost the vote in Congress, I would certainly have recommended to the President we go forward anyway.

If and when Secretary Rice provides her promised written answer to Senator Webb, I doubt that it will say: “The president has the constitutional authority to launch wars at will, anywhere in the world, at any time of his choosing, without anyone’s permission. So yes, of course he can start a war with Iran.” But that is the administration’s view.

(Hat tip: Matt Yglesias

Health Plan Hubris

Jacob Hacker writes:

[E]very legal resident of the United States who lacks access to Medicare or good workplace coverage would be able to buy into the “Health Care for America Plan,” a new public insurance pool modeled after Medicare. This new program would team up with Medicare to bargain for lower prices and upgrade the quality of care so that every enrollee would have access to either an affordable Medicare-like plan with free choice of providers or to a selection of comprehensive private plans.

It seems to me that if a plan “bargains for lower prices,” then many providers would prefer not to participate. In that case, “free choice of providers” would require forcing doctors to join.

I was pointed to this plan by Matthew Yglesias, who praised it. I got to Yglesias via Tyler Cowen, who is more skeptical.

I am very pessimistic about the outlook for health care policy. It seems to me that wonks are engaged in a bidding war for politicians, in which the guy with the most hubris (Great health care for all! At half the cost!) wins. 

I think that the best that libertarians can hope for is to see some of these ideas tried in state laboratories and have their outcomes measured against their promises. My fear is that we will get the former but without the latter.