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Cato Dispatch for September 25, 2009

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(Links to outside sources were active as of the date of this dispatch; however, not all news sources maintain links to current stories indefinitely. Some links also may require registration.)

You Will Buy Health Insurance... Or Else

President Obama's plan to make health insurance compulsory has come under bipartisan fire for being a new tax on the middle class – a charge the Obama administration denies.

In the latest Cato briefing paper, "All the President's Mandates: Compulsory Health Insurance Is a Government Takeover," Director of Health Policy Studies Michael F. Cannon cites Obama adviser Larry Summers' description of health insurance mandates as "public programs financed by benefit taxes," and notes that the House bill would impose tax rates higher than 50 percent on some middle-income earners. Cannon also explains how the individual mandate could increase costs, force millions of Americans to switch coverage, and ultimately allow government to ration care.

Writing in the New York Post, senior fellow Michael D. Tanner says, with all due respect, Mr. President, it’s definitely a tax:

Think of it this way: If the government took money directly from you, then turned around and gave it to an insurance company, everyone would agree that you've been taxed. How is that any different from the government mandating that you pay the insurer directly? At the end of the day, you still have less money to spend the way you want.

For more, watch Cannon debate MIT health economist Jonathan Gruber on PBS NewsHour.

Government: Hey, Let's Take Over the Internet

On Monday, Julius Genachowski, chairman of the FCC, proposed new rules to prevent Internet providers from selectively blocking or slowing Web traffic. The rules would also be expanded to include wireless companies. Cato scholars have long argued against government regulation of the Internet. In a recent study titled The Durable Internet: Preserving Network Neutrality without Regulation, Cato scholar Timothy B. Lee warns, "It would be especially ironic if, in their effort to protect the Internet against centralized control by major telecom companies, the [net neutrality supporters] laid the groundwork for a regulatory regime that telecom incumbents ultimately used to limit competition in the broadband industry."

Jim Harper, director of information policy studies, comments:

If the FCC goes ahead with regulating the Internet, the public will get a good look at what closed systems are really like. The FCC’s retrograde “Electronic Comment Filing System” doesn’t even allow full-text searches of submissions. This is but one failing the Internet’s engineers all over the country—and not just in big telcos—will run into dealing with the FCC.  It’s laughable that this outdated telecommunications bureaucracy is trying to take over the Internet.

Cato Quick Hits

• Daniel J. Ikenson explains why the U.S. slapped a trade tariff  on Chinese tires: “President Obama’s decision was guided strictly by selfish, political considerations: He felt he owed American unions for their previous and continuing support, regardless of the economic and diplomatic fallout.”
• If you’d like to see what Obama wants to do to the U.S. health care system, don’t listen to his rhetoric, look at what he’s doing to Medicare.
• Johan Norberg discusses the true cost of financial regulation: “A detailed anatomy of the bubble shows that many of the policies and regulations meant to reduce financial risk actually increased it.”
• An important read for understanding the G-20 meetings: “Crash Course in Global Economics.”
• What the end of the missile defense system in Central Europe means for U.S.- Russian relations.

Chris Moody, editor, cmoody@cato.org