Cato Daily Dispatch for November 23, 2005
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Holiday Gas Prices DropMedicaid Costly for New Yorkers
U.S. to Eliminate Canadian Lumber Tax
Holiday Gas Prices Drop
"Gas prices have declined in recent weeks -- an 86-cent fall from a Labor Day high of $3.06 a gallon for regular to the current national average of $2.20, according to Oil Price Information Service," reports USA Today. "'There's some encouragement here, even if the price is still a quarter higher than last year," says Justin McNaull, a spokesman for AAA, the auto club, in Washington. 'Just to see prices starting with a one again ... it's not quite that first robin of spring. But it's a start.'"
In "What's the Answer for High Gasoline Prices? Nothing," Cato senior fellows Jerry Taylor and Peter Van Doren write: "What, if anything, should government do about the sustained increase in gasoline prices? Not a thing. For both practical and theoretical reasons, politicians and regulators should resist the temptation to monkey around with fuel markets. No matter how well intentioned, intervention to protect consumers will only make matters worse.
"At the end of the day, the best remedy for high gasoline prices is...high gasoline prices, which provide all the incentives necessary for motorists to conserve, for oil companies to put more product into the marketplace, and for investors to look into alternatives fuel technologies. Government has never demonstrated an ability to do better."
Medicaid Costly for New Yorkers
"For years, New York Medicaid, the state's health care program for the poor, has been an open-air bazaar for drug companies and their wares. Prescriptions that are severely restricted in many states are often dispensed freely here, and at higher prices, costing taxpayers hundreds of millions of dollars," the New York Times reports.
"As a result, the state program spends more on drugs for each Medicaid recipient than any other state but West Virginia, according to federal statistics. While other states have tried to fight soaring drug costs, New York lacks even the most basic controls that dozens of other states and private health insurers have used."
In "Medicaid's Untallied Costs," Michael Cannon, Cato's director of health policy studies, writes: "Medicaid is welfare. Like other forms of welfare, it discourages work and charitable effort among the taxpayers who fund it. More troubling, though, is that it discourages self-sufficiency and encourages dependency among beneficiaries.
"In addition, Medicaid increases the cost of private medical care and health insurance. A program that offers services effectively free of charge to tens of millions of beneficiaries cannot help but fuel demand and medical inflation.
"Providing medical assistance to the poor without fostering dependency is a delicate balancing act. And the costs incurred by getting it wrong don't get a line-item in the federal budget. Reforming Medicaid along the lines of the 1996 welfare law would allow the states to strike a better balance for all involved."
U.S. to Eliminate Canadian Lumber Tax
"The U.S. [yesterday] submitted, under protest, to a trade panel's ruling that the Commerce Department said would largely eliminate duties on $7.6 billion in lumber imports from Canada," according to Bloomberg News. "Commerce officials said the decision to comply with a ruling made under the North American Free Trade Agreement won't immediately reduce lumber duties, and the U.S. left open the possibility that it may appeal the NAFTA decision."
In "America's Credibility Goes 'Timber!'," Daniel Ikenson, a Cato policy analyst, writes: "America's growing disdain for its international trade commitments is a troubling development. It will now be that much easier for U.S. trade partners to break the rules while citing U.S. precedents. Members of Congress who grandstand over 'unfair' Chinese trade practices, for example, no longer preach from the moral high ground.
"U.S. credibility on trade issues is waning at a time when strong leadership is desperately needed. With the Doha Round of WTO [World Trade Organization] talks fast approaching what experts believe to be a do-or-die meeting in Hong Kong in December, U.S. mockery of the rules could not come at a worse time. There was already a perception in many countries that the rules of trade are stacked in favor of the larger economies. When the world's largest economy ignores those rules, perceptions can quickly become entrenched wisdom."
Greg Garner, editor, ggarner@cato.org
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