The Stimulus and Socialized Medicine

Most of the debate over the stimulus bill (or the Big Boondoggle as my colleague David Boaz calls it) has been over the cost and wasteful spending. Less mentioned are the bill’s many provisions that would increase government control over the U.S. Health Care system. For example,

  • The bill would spend $83 billion to subsidize state Medicaid costs, including paying 100 percent of the cost of Medicaid coverage for unemployed workers and their families. And there would be no income or asset limits whatsoever on eligibility. As a result, still more of the middle-class would be shifted into government health care. Nor is the extension of eligibility limited to just the middle-class. A Republican amendment to bar millionaires from the program was stripped out before final passage in the House.
  • For the unemployed who don’t go directly into government-run health care, the stimulus bill would spend $30 billion to extend COBRA coverage, and have taxpayers pick up 65 percent of premium costs. It would also require employers to continue COBRA coverage until a worker becomes eligible for Medicare. (Currently employers are only required to provide COBRA coverage for 18 months). Studies show that this would raise the cost of insurance for employers and workers.
  • The bill would spend $1.1 billion to create a Comparative Effectiveness Council, so that the federal government can decide on whether medical treatments are worth the money. Once the federal government decides how medicine should be practiced, according to the summary featured in a discussion draft of the bill, “interventions…that are found to be less effective and in some cases more expensive will no longer be prescribed.”
  • And, the stimulus would also spend some $20 billion for the federal government to muscle its way into the growing market for electronic medical records.

Does anyone actually believe that increasing government control over one-seventh of the U.S. economy is going to be stimulative?

What Happened to No-Drama Obama?

Promoting the big deficit spending bill in the Washington Post, President Obama writes:

[I]f nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.

“[A] crisis that, at some point, we may not be able to reverse”? Flooding and locusts, too?

Hmmm. Now, where have we heard such fear-mongering before?

We’ve Heard This All Before

I’m sure there’ll be much ado about President Obama’s rallying cry for the ever-growing “stimulus” in today’s Washington Post , but to me it reads as just so much lofty but empty rhetoric. And at least in education, we’ve heard it all before.

Here’s what the President wrote about education in today’s op-ed:

Now is the time to give our children every advantage they need to compete by upgrading 10,000 schools with state-of-the-art classrooms, libraries and labs; by training our teachers in math and science; and by bringing the dream of a college education within reach for millions of Americans.

Now, where might I have heard this sort of thing before? Oh, here’s an example! From President Jimmy Carter back in 1979, pushing for creation of the U.S. Department of Education:

The Federal government has a limited, but critical responsibility…to ensure equal educational opportunities; to increase access to postsecondary education by low and middle income students; to generate research and provide information to help our educational systems meet special needs; prepare students for employment; and encourage improvements in the quality of our education. 

President Carter, of course, got his Department of Education, and schools have also gotten a lot more money, as Adam Schaeffer and I pointed out yesterday. Indeed, looking specifically at the period between 1979-80 and 2004-05 (the latest for which data is available), inflation-adjusted, per-pupil expenditures in public elementary and secondary schools rose from $6,549 to $11,470, a 75 percent increase. And total federal education funding? Adjusted for inflation, In 1980 Washington spent or helped to provide $94.5 billion. By 2006, that figure had ballooned 146 percent, hitting $232.0 billion!

So how can we have pretty much all the same needs as we had in 1979? Because education spending is almost always as empty as the rhetoric that drives it, doing little or nothing to actually improve outcomes for students while letting politicians appear to “care” and enriching powerful education interest groups. In other words, it does nothing of what it promises, but keeps the busted status quo going strong!

‘Buy American’ Debate Is Not Dead Yet

The near-$1 trillion spending bill working its way through Congress has all the hallmarks of business as usual in Washington. It includes billions of dollars for home-state pet projects, billions more in spoils for majority-party benefactors, and numerous provisions that its sponsors hoped would elude close scrutiny.

One such provision is the Buy American requirement, which restricts competition to domestic suppliers on infrastructure projects financed through the spending bill. The provision clearly violates U.S. commitments under various international agreements to allow most major trading partners to compete for government procurement. And it invites frivolous waste of the kind reserved for people spending other people’s money.

By limiting competition, expanded Buy American requirements mean that taxpayers would get the smallest bang for their infrastructure buck. Cordoning off the market for U.S. suppliers would mean higher price tags, fewer projects funded, and fewer people hired. And by abrogating our obligations to allow major trading partners to compete for those projects, any short-term increases in U.S. economic activity and U.S. job creation likely would be offset by lost export sales–and the jobs that go with them–on account of copycat protectionism abroad.

Buy American requirements have been a part of U.S. procurement rules for 75 years. But those restrictions have been eased over the decades. Under various international agreements, the United States grants waivers to most major trade partners from many of the law’s restrictions. But the House-passed and original Senate-proposed legislation would supersede the waivers and raise considerably the threshold for issuing case-specific exemptions to foreign firms that wish to bid on procurement projects funded from the legislation.

On February 3, one week after passage of the House-version of the spending bill, President Obama finally broke his silence over the issue, expressing aversion to “sending a protectionist message” and opposition to provisions that could “trigger a trade war.”  The president’s comments were expected to soften the stance of some proponents of Buy American in both chambers.  Indeed those comments appear to have made some impression in the Senate.

Although the Senate voted down an amendment by Sen. McCain to exempt all of the infrasturcture spending in the bill from Buy American laws, it agreed to insert an amendment (sponsored by longtime trade skeptic Byron Dorgan, of all people) to ensure that the Buy American clause would be “applied in a manner consistent with United States obligations under international agreements.”  But that’s still no guarantee.  Unless the Buy American language is stripped entirely or the legislation includes language explicitly granting the waivers that currently exempt most of our major trade partners, there will be room for interpretation.

And there is still the problem of the House of Representatives, where the President’s concerns have not registered with the Congressional Steel Caucus or the chairman of the House Transportation Committee, James Oberstar, who said, “If [Buy American provisions are] not in, I’m not supporting this package and I’ll bring a lot of votes with me.”

So, will congressional Democrats very publicly shun their president on this issue or can they resist their growing habit of acting unilaterally and provocatively on trade?  The issue remains quite unresolved.

Nat Hentoff Joins Cato

It is official now – Nat Hentoff has joined the Cato Institute as a senior fellow

I spoke with him on the phone a few days ago and said I was looking forward to working with him – to which he replied “we’ve already been working together for years on civil liberties issues.”  True that.  He said Cato was a natural fit for him because we both take principled positions in defense of the Constitution and liberty.  

Nat Hentoff has authored many books and hundreds of articles, but here’s a quick sampling of his writings:  Criticizing President Bush’s attack on habeas corpus; defending Bush’s judicial nominee, Janice Rogers Brown; defending free speech on campus; criticizing the Clinton administration’s handling of the Elian Gonzales matter

Nat Hentoff wrote a regular column in the Village Voice for 50 years until last December.  His farewell column at the Voice is here.  Good stuff.  Cato will be stronger with Nat Hentoff’s passion for liberty and justice.

For more Cato Institute work on civil liberties, go here.

Harper: One to Watch in 2009

I’m pleased and humbled to have been named one of the Ars Technica/Tech Policy Central “People to Watch” in 2009. Along with my opposition to the REAL ID national identification scheme, they cite my work opposing the E-Verify national worker background check system (which would ultimately require a national ID).

Considering how the economic stimulus bill may be a vehicle for mandating broader use of E-Verify, the first thing you might see from watching me in 2009 might be an angry and disappointed advocate for liberty.

Don’t Call It “Stimulus”

David Friedman raises a very good point:

A well chosen name wins an argument by assuming its conclusion. Label cash subsidies to foreign government as “foreign aid” and who can be so hard hearted as to oppose them? Call subsidies to the public schools “aid to education” and you neatly skip over the question of whether additional spending in the public school system results in more education.

And “economic stimulus” is a classic example.

Everyone—including Obama, back when he was running for President—is against deficit spending. Relabel it “stimulus” and everyone is for it. The label neatly evades the question of whether having the government borrow money and spend it is actually a way of getting out of a recession—a claim for which evidence is distinctly thin. It is stimulus, so obviously it must stimulate.

So what should we call it? President Obama’s spending proposal? The deficit-spending package? I think we’d have trouble getting the media to call it the Big Boondoggle. Maybe the government bailout, following the Wall Street bailout and the auto bailout?

Alas, we’re probably stuck debating the “stimulus.” But that means the battle was half lost before it began.