Hoosier Tax-and-Spender

Editor’s note: This post was written on October 30, following a briefing by Indiana officials on Gov. Daniels’ proposed health care reforms.  It was posted briefly, then pulled when those officials asked ex post that the details be kept confidential until announced by the governor.  That happened today.

Indiana Republican Mitch Daniels received a grade of ‘D’ in Cato’s most recent governors report card, which grades the 50 governors on their record of cutting taxes and spending.  I’ve just returned from a briefing on a new health care proposal that Gov. Daniels has put together, and it doesn’t seem that he wants to improve his grade.

The Daniels proposal would:

  1. Increase cigarette taxes by 25 cents per pack,
  2. Use those funds to “pull down” additional federal Medicaid dollars (federal matching funds allow Indiana to almost triple their money), and then
  3. Offer new government subsidies to every able-bodied adult under 200 percent of poverty. 

In addition, it would have the state fund a health savings account (HSA) for each enrollee, and if an enrollee receives the recommended preventive care and does not touch their HSA funds (preventive care is 100 percent covered), at the end of the year an enrollee could withdraw $600 from their HSA to spend, say, on a color TV.  If he instead leaves that taxpayer subsidy in his HSA, he gets to roll it over and let it grow.  I’ve argued in a number of places that HSAs are not the solution to Medicaid, in part because they would resurrect within that program the same dependence problems that we tried so hard to kill in AFDC. 

Gov. Daniels is not proposing an entitlement, and participants would have to pay for a portion of their premium.  But those and other provisions (e.g., the income cutoff, the mandated benefits package, etc.) would be subject to revision on their way through the state house and by subsequent governors and legislators.  Pretty soon, it would be an entitlement, the participants’ contribution would be smaller, the HSA cash subsidies would be greater, the income cutoff would be increased, and the benefits package expanded.  How can I be so sure?  Because Indiana can do all these things and the feds will pick up two-thirds of the tab.  And heck, if this is a Republican proposal, where is the opposition going to come from? 

As I told the Gov. Daniels’ loyal foot soldiers, someone needs to shove this proposal in a drawer.  There is nothing worth saving. 

Where do Republicans keep coming up with these tax-and-spend health care ideas?  The party needs a health care revival, particularly when it comes to Medicaid.

Money Can’t Buy ‘em Learning

New York’s Court of Appeals has just ordered the state to spend an additional $1.93 billion on NYC public schools. It is the resolution of a 13-year lawsuit claiming that the city had been nickel-and-diming NYC students, but neither the plaintiffs nor the dissenting Chief Judge are satisfied.

The ruling “does not resolve the inadequate funding of the New York City public schools,” wrote Chief Judge Judith Kaye. Democratic City Councilman Robert Jackson, who helped organize the original lawsuit, called the decision “very disappointing because the amount of money that the court is talking about is not what’s needed.”

So what is the putative pittance that NYC spends per pupil in public schools, which will purportedly remain inadequate even after the injection of an additional $2 billion: about $14,000 per year. Back in 2003, NYC was already spending $13,640 per pupil annually – almost identical to the $13,826 per pupil average for the state as a whole. That was $341,000 a year, per classroom of 25 children. The current figure would of course be higher.

In the 1999-2000 school year, the average private school tuition in the United States was $4,689. Catholic schools, of which NYC has many, charge considerably less. And, as I found in a recent analysis of Arizona private schools, tuition typically comprises about 80 percent of total private school revenue. So private schools get by with thousands of dollars less per pupil annually than the supposedly underfunded government system, while offering far higher graduation rates and comparable or better student achievement. They even do a better job of promoting such social virtues as tolerance and civic engagement among their students.

How high will government school spending have to rise before the institution’s believers start to question their absolute faith in its beneficence? How many more children’s futures will they sacrifice to their ideological vanity before acknowledging that monopolies are just as dysfunctional in education as in every other field?

Freedom is Breaking Out all Over

Being a libertarian means you’re often the entertainment at cocktail parties.  ‘Let’s have Jim tell us why there should be no traffic lights!  It’ll be a riot!’

Now comes word that seven cities and regions in Europe are doing away with traffic lights and signs - indeed with most traffic regulations.

“The many rules strip us of the most important thing: the ability to be considerate. We’re losing our capacity for socially responsible behavior,” says Dutch traffic guru Hans Monderman, one of the project’s co-founders. “The greater the number of prescriptions, the more people’s sense of personal responsibility dwindles.”

Psychologists have long revealed the senselessness of such exaggerated regulation. About 70 percent of traffic signs are ignored by drivers. What’s more, the glut of prohibitions is tantamount to treating the driver like a child and it also foments resentment. He may stop in front of the crosswalk, but that only makes him feel justified in preventing pedestrians from crossing the street on every other occasion. Every traffic light baits him with the promise of making it over the crossing while the light is still yellow.

“Unsafe is safe”

The result is that drivers find themselves enclosed by a corset of prescriptions, so that they develop a kind of tunnel vision: They’re constantly in search of their own advantage, and their good manners go out the window.

The new traffic model’s advocates believe the only way out of this vicious circle is to give drivers more liberty and encourage them to take responsibility for themselves.

I first read about the weakness of traffic regulation in Regulation magazine and was reminded of the concept by a recent post on TechDirt which seems to have stirred some passion given the 100+ comments.

I’m entirely in favor of a deregulated, human-oriented traffic system - though I am slightly concerned about it diminishing my entertainment value at cocktail parties.

The New Russia and the New Eurasia

For anyone interested in what’s going on in Eurasia, specifically Russia and its relations with all of the other nations of the continent, I highly recommend watching or listening to the Cato Institute’s policy forum today on “Russian Energy Policy and the New Russian State.” (I’m not sure when the video and audio will be archived for online streaming, but it will be very soon). Robert Amsterdam, Attorney for jailed Russian oil entrepreneur (and now political prisoner) Mikhail Khodorkovsky, made some very sharp and interesting comments about what is happening to the rule of law in Russia.  Andrei Illarionov, former Economic Adviser to President Putin, then laid out the course of Russia’s energy policies under President Putin and explained the disastrous effects of those policies of re-nationalization (which has taken place alongside a coincident “privatization” of the Russian state, which is coming rapidly under the control of a KGB-corporate-state network) on the Russian economy, on the legal system of the Russian Federation, and on the long-term prospects of liberty in Russia.

Interest in the topic is increasing, as shown by Sunday’s Washington Post, which had a very insightful article on developments in Russia. As the article shows, Russian businessmen such as Vladislav Tetyukhin are strong-armed into turning control of their firms over to the ruling elites:

Last year, Tetyukhin was invited to tea at the Moscow headquarters of Rosoboronexport, and the conversation, he said, quickly took an unpleasant but not unexpected turn. Executives from Rosoboronexport told him that they wanted to buy a controlling stake in the titanium concern. The tea, he said, suddenly did not taste so sweet.

At first, Tetyukhin and Bresht publicly protested any sale of their shares, but their company quickly found itself under investigation by the tax police, and the prosecutor’s office launched an inquiry into VSMPO-Avisma’s share structure. Before it was acquired by VSMPO, Avisma, a raw materials supplier, was owned by Khodorkovsky, a potentially dangerous connection.

Rosoboronexport said it planned to move into the metals industry to “prevent the enterprises of the metallurgy sector from being usurped by various organizations, including those acting in the interests of foreign capital and using illegal methods.”

Not so sweet, indeed.

Born-Alive

Last week the British Nuffield Council on Bioethics published a report including step-by-step recommendations regarding the proper care of premature infants.  The Council recommended that infants born earlier than 22 weeks of gestation not be resuscitated and that infants between 22 and 23 weeks of gestation only receive intensive care if their parents request such care and the infant’s doctors agree.

There has been a flurry of commentaries in U.S. papers and blogs about the Nuffield Council’s recommendations, but not a single one that I have seen mentions the fact that in the U.S., it would be illegal to follow the Council’s recommendations.   In 2002 President Bush signed into law the federal Born-Alive Infant Protection Act and in 2005 DHHS Secretary Mike Leavitt stated “[w]e aggressively enforce federal laws that protect born-alive infants.  We issued clear guidance that withholding medical care from an infant born alive may constitute a violation of the federal Emergency Medical Treatment and Labor Act and the Medicare Conditions of Participation.”

It is nevertheless worth considering what the Nuffield Council has said to help put the Born-Alive Infant protection Act into perspective.   The Council’s report makes it clear that there is no realistic chance that a baby born under 22 weeks of gestation will survive and that infants born between 22 and 23 weeks have only a 1% chance of survival.  Furthermore, those few that do survive at 22-23 weeks are highly likely to suffer from severe handicaps.  (None of this information is limited to Britain.  U.S. statistics confirm these conclusions).  The Born-Alive Infant Protection Act requires health care professionals to try to save such babies. They must tape them down, stick them with needles and tubes, and resuscitate them – essentially, they are required to torture such babies until they die.  As a mother of four children and a Christian, I would want to hold and rock my little infant as it dies.  I wouldn’t want its precious few hours of life to be filled with pain and fear and never a mother’s warm embrace or soft voice.  It is a very cruel world indeed if the drafters of the Born-Alive Infant Protection Act knew they were going to require health care professionals to torture dying infants and deny parents the only realistic succor they have to offer – the physical affection that would tell such infants that, while their stay on earth is short, they are nevertheless loved.

“No Child” Not Working? Unbelievable!

The New York Times today reports the unthinkable: The vaunted No Child Left Behind Act (NCLB) has done almost nothing to shrink the black-white achievement gap, and the credit the Bush administration has given the law for overall achievement gains is – get ready – unfounded! Writes the Times:

The 2005 National Assessment of Educational Progress, a battery of reading and math tests administered to thousands of students in every state, showed some rising scores for all ethnic groups, and the black-white score gap narrowed in a statistically significant way for fourth-grade math. But on fourth-grade reading, and on eighth-grade reading and math, the black-white and Hispanic-white gaps were statistically unchanged from the early 1990s.

Over the past three decades, the gaps narrowed steadily from the 1970s through the late 1980s but then leveled out through 1999. Since then, some have narrowed again, but at a rate that would allow them to persist for decades. That picture showed up in a separate National Assessment test devised to measure long-term trends, administered in late 2003 and early 2004.

That test showed that regardless of race, scores increased a bit over three decades for 9- and 13-year-old students, with the best gains coming between 1999 and 2004.

Test administrators warned against attributing those gains to the federal law, because it had been in effect for about only a year when the 2004 test was given…..But Bush administration officials have routinely credited the law for the improved scores on that test.

Many Democrats who originally supported NCLB, as you can imagine, have put the blame for its failure squarely on Bush. Unfortunately, their own solutions feel distinctly like old times are here again:

The findings pose a challenge not only for Mr. Bush but also for the Democratic lawmakers who joined him in negotiating the original law…and who will control education policy in Congress next year.

Senator Edward M. Kennedy of Massachusetts and Representative George Miller of California, who are expected to be the chairmen of the Senate and House education committees, will promote giving more resources to schools and researching strategies to improve minority performance, according to aides.

Of course! More resources and “researching strategies” are the keys to real change. Why didn’t anyone else think of that?

Oh wait. They did: Federal spending on elementary and secondary education leapt from $43.8 billion in FY 2000 to $68.0 billion in FY 2005, a 55 percent increase, and NCLB imposed a whole new strategy of unprecedented federal control onto the schools. Yet, somehow, nothing changed.

Thankfully, there is a strategy that really could help struggling students get the education they need, but it would require embracing real change. First, the federal government would have to get out of education, ending more than 40 years of demonstrated failure and pulling some of the worst politics out of America’s classrooms. That, however, would not be enough, because while federal politicians are the most shameless about claiming victory in the face of abject failure, state and local politicians aren’t much better. There must, therefore, be a second phase: All states must offer universal school choice, finally putting parents in charge of education, and ending the era of strategies hopelessly built on politicians’ empty rhetoric and broken promises.