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October 9, 2009 6:46AM

Are Living Standards Higher in Denmark or the United States?

By Daniel J. Mitchell

The left loves Scandinavia, but for the wrong reason. Nations such as Denmark and Sweden have much to admire, particularly their open markets, low levels of regulation, sound money, and honest governments. Indeed, if fiscal policy is removed from the equation, both Denmark and Sweden are more laissez-faire than the United States according to Economic Freedom of the World (as I noted in this recent video).


But fiscal policy is where the Scandinavians have serious problems. Taxes are confiscatory, punishing people who work, save, and invest. High levels of government spending, meanwhile, reduce economic growth by diverting resources from the productive sector of the economy and funneling them into the stifling welfare state.


Not surprisingly, this is the reason why statists admire Scandinavian nations. Matthew Yglesias, for instance, recently expressed his great admiration for Denmark. And I suppose I would agree with him if asked to pick the world’s best welfare state. I’ve been to the country several times and there is no question that laissez-faire policies in areas other than fiscal policy have helped the nation remain relatively prosperous.


But Yglesias is a bit lovestruck about the Danes (an understandable impulse for non-economic reasons), and it leads him to make some rather strange assertion — presumably because he wants us to believe that Denmark’s good points are because of (rather than in spite of) an onerous fiscal burden. What jumped out at me was his claim that Danes enjoy a “higher average material standard of living” than Americans. I’m not sure where he gets that, since the World Bank, CIA, United Nations, and IMF all show that the United States has more per-capita economic output.


To be fair, measures of per-capita gross domestic product are not a perfect measure, even if they are adjusted for purchasing power parity. So let’s take a look at other statistics that try to compare living standards. The two that I found (perhaps Yglesias found others, in which case I look forward to his identifying the source) are from the Organization for Economic Cooperation and Development and, coincidentally, the Danish Finance Ministry.


The OECD, many of you already know, is not my favorite organization. The bureaucracy’s anti-tax competition campaign is a reprehensible attempt to hinder the flow of jobs and capital from high-tax nations to low-tax jurisdictions. So surely nobody will claim that the OECD is a collection of market fundamentalists trying to manipulate statistics to make high-tax nations look bad. So let’s now look at this chart, which is based on the OECD’s calculations of average individual consumption per capita, pegged against an average for member nations of 100. It certainly appears that living standards in the United States are much higher.

Table1

Now let’s look at numbers from the Danish Finance Ministry. The bureaucrats there, in response to a parliamentary request, put together figures on per-capita individual consumption and per-capita private consumption.

Table1

I suspect the Finance Ministry is not trying to make Denmark look bad compared to the United States, yet the data certainly suggest that Americans enjoy higher living standards than their Danish counterparts.

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Tax and Budget Policy
October 9, 2009 6:14AM

Baucus Bill’s Spending Cuts Won’t Stick

By Michael F. Cannon

Why? Just ask Sen. Evan Bayh (D‑IN):

You can sort of see this coming. The savings from the pharmaceutical companies and the insurance industry, you can kind of count on that because they’re not very popular.


The hospitals are a different story. People, you know, like their hospitals; they tend to trust their hospitals. The hospitals have pledged big savings. I can easily forecast at some point in the not-too-distant future the hospitals coming in and saying, “You know what, this isn’t working exactly the way we expected. Please spare us from this,” and them getting a good hearing in [Congress].

The same thing goes for physicians.


And the pharmaceutical companies.


And the insurance industry.

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Health Care
October 9, 2009 6:12AM

The Baucus “Failsafe” Is a Failsure

By Michael F. Cannon

To reassure us all that Baucus 2.0 would not increase the deficit, its author Sen. Max Baucus (D‑MT) included a “failsafe” provision: if the OMB director determines that the Baucus bill would increase the deficit in the following year, that determination would trigger automatic cuts in the bill’s health insurance subsidies.


Sooooo, would those automatic cuts operate more like the failed Gramm-Rudman-Hollings automatic cuts, or the failed sustainable-growth-rate automatic cuts? Automatic spending cuts never work because today’s Congress cannot bind future Congresses.


The CBO estimates that, if the failsafe were to work, it would require 15-percent cuts in the bill’s new health insurance subsidies from 2015 through 2018. But the agency essentially says the mechanism would be unworkable.


The failsafe is a failsure. Baucus 2.0 would increase the deficit.

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Health Care
October 8, 2009 4:39PM

“Read the Bill” = Deliberative Process, Please

By Jim Harper

The debate about whether members of Congress and senators should read bills has been getting highly literal lately. It’s capped off by Angie Drobnic Holan’s article, “Speed-Reading the Health Care Reform Bill?, on Politifact (a St. Petersburg Times site) this morning.


Faced with a 1,000-or-so-page health care reform proposal, “a person could conquer the bill in seven to 13 hours.”


There you have it! That’s what it takes if you want ‘em to read the bill!


Of course, the “read-the-bill” concept is a stand-in for others:


One is simply having a more deliberative process in Congress. It’s dawning on the American public that bad things happen when Congress operates in haste—the derivatives debacle, for example. Oh, and also, government takeovers. Oh yeah, and spending orgies.


But “read the bill” is also about power.


“Waiting periods … tend to disperse power to people who might otherwise be at the margins of the debate,” reports Holan. “Centrist Democrats in the Senate, for example, have asked for waiting periods after amendments and conference reports.”


It goes beyond that, too. Letting the public read finalized bills before they become law allows the public to second-guess Washington, D.C. and transfers power back home. People want to use the Internet to have more say in governance.


And there is far more knowledge, sense, and brain-power out there in the land than on Capitol Hill (I say as a former legislative staffer). Given a regular process for doing so, the people (and lawyers) faced with implementing proposed federal laws would examine and critique proposals in Congress much more than they do now. This would help improve results, though Members of Congress would surely chafe at being overseen by the lowly public.


Speaking of waiting periods, recall that President Obama promised to post the bills coming out of Congress for five days before he signs them. Let’s take a look at how he’s done with this promise so far:

Still only one of 68 have been posted online for five days before signing. Forty-six of 68 (nearly 68%) have been held at the White House for five days after presentment. There is nothing stopping the president from posting these bills online for the time he promised.


It might be that the folks in the White House don’t want to reveal the trivialities that Congress and the president deal with. Eighteen of the 68 new laws this year (26%) have renamed post offices and courthouses.


Also, five bills have been temporary extensions of existing laws (plus one temporary government funding measure). These are all examples of Congress and the president failing to manage existing government programs and spending. It’s possible that the White House doesn’t want to give exposure to these laws and bring discredit on the federal government generally.


Whatever the case, here’s the list so far of new laws and the president’s adherence to the “Sunlight Before Signing” pledge.

Public Law Date Presented Date Signed Five Days? Posted (Linked)? Posted Five Days?
P.L. 111–2, The Lilly Ledbetter Fair Pay Act of 2009 1/28/2009 1/29/2009 No 1/29/2009 No
P.L. 111–3, The Children’s Health Insurance Program Reauthorization Act of 2009 2/4/2009 2/4/2009 No 2/1/2009 No
P.L. 111–4, The DTV Delay Act 2/9/2009 2/11/2009 No 2/5/2009 Yes and No
P.L. 111–5, The American Recovery and Reinvestment Act of 2009 2/16/2009 2/17/2009 No 2/13/2009 No
P.L. 111–6, Making further continuing appropriations for fiscal year 2009, and for other purposes 3/6/2009 3/6/2009 No No No
P.L. 111–7, A bill to designate the facility of the United States Postal Service located at 2105 East Cook Street in Springfield, Illinois, as the “Colonel John H. Wilson, Jr. Post Office Building” 2/26/09 3/9/2009 Yes No No
P.L. 111–8, The Omnibus Appropriations Act, 2009 3/11/2009 3/11/2009 No 3/6/2009 No
P.L. 111–9, To extend certain immigration programs 3/18/2009 3/20/2009 No No No
P.L. 111–10, To provide for an additional temporary extension of programs under the Small Business Act and the Small Business Investment Act of 1958, and for other purposes 3/19/2009 3/20/2009 No No No
P.L. 111–11, The Omnibus Public Land Management Act of 2009 3/30/2009 3/30/2009 No 3/30/2009 No
P.L. 111–12, The Federal Aviation Administration Extension Act of 2009 3/24/2009 3/30/2009 Yes No No
P.L. 111–13, The Generations Invigorating Volunteerism and Education Act 4/20/2009 4/21/2009 No No No
P.L. 111–14, To designate the United States courthouse under construction at 327 South Church Street, Rockford, Illinois, as the “Stanley J. Roszkowski United States Courthouse” 4/14/2009 4/23/2009 Yes No No
P.L. 111–15, The Special Inspector General for the Troubled Asset Relief Program Act of 2009 4/14/2009 4/24/2009 Yes No No
P.L. 111–16, The Statutory Time-Periods Technical Amendments Act of 2009 4/30/2009 5/7/2009 Yes No No
P.L. 111–17, A joint resolution providing for the appointment of David M. Rubenstein as a citizen regent of the Board of Regents of the Smithsonian Institution 4/28/2009 5/7/2009 Yes No No
P.L. 111–18, A bill to repeal section 10(f) of Public Law 93–531, commonly known as the “Bennett Freeze” 4/28/2009 5/8/2009 Yes No No
P.L. 111–19, The Civil Rights History Project Act of 2009 4/30/2009 5/12/2009 Yes No No
P.L. 111–20, The Protecting Incentives for the Adoption of Children with Special Needs Act of 2009 5/5/2009 5/15/2009 Yes No No
P.L. 111–21, The FERA 5/19/2009 5/20/2009 No No No
P.L. 111–22, The Helping Families Save Their Homes Act of 2009 5/20/2009 5/22/2009 No No No
P.L. 111–23, The Weapon Systems Acquisition Reform Act of 2009 5/21/2009 5/22/2009 No 5/14/2009 No
P.L. 111–24, The Credit Cardholders’ Bill of Rights Act of 2009 5/20/2009 5/22/2009 No 5/14/2009 No
P.L. 111–25, The Ronald Reagan Centennial Commission Act 5/21/2009 6/2/2009 Yes No No
P.L. 111–26, To designate the facility of the United States Postal Service located at 12877 Broad Street in Sparta, Georgia, as the “Yvonne Ingram-Ephraim Post Office Building” 6/9/2009 6/19/2009 Yes No No
P.L. 111–27, To designate the facility of the United States Postal Service located at 300 East 3rd Street in Jamestown, New York, as the “Stan Lundine Post Office Building” 6/9/2009 6/19/2009 Yes No No
P.L. 111–28, To designate the facility of the United States Postal Service located at 103 West Main Street in McLain, Mississippi, as the “Major Ed W. Freeman Post Office” 6/9/2009 6/19/2009 Yes No No
P.L. 111–29, To designate the facility of the United States Postal Service located at 3245 Latta Road in Rochester, New York, as the “Brian K. Schramm Post Office Building” 6/9/2009 6/19/2009 Yes No No
P.L. 111–30, The Antitrust Criminal Penalty Enhancement and Reform Act of 2004 Extension Act 6/19/2009 6/19/2009 No No No
P.L. 111–31, The Family Smoking Prevention and Tobacco Control Act 6/16/2009 6/22/2009 Yes No No
P.L. 111–32, The Supplemental Appropriations Act, 2009 6/19/2009 6/24/2009 Yes No No
P.L. 111–33, The Native American Heritage Day Act of 2009 6/16/2009 6/26/2009 Yes No No
P.L. 111–34, To designate the Federal building and United States courthouse located at 306 East Main Street in Elizabeth City, North Carolina, as the “J. Herbert W. Small Federal Building and United States Courthouse” 6/19/2009 6/30/2009 Yes No No
P.L. 111–35, To designate the Federal building located at 799 United Nations Plaza in New York, New York, as the “Ronald H. Brown United States Mission to the United Nations Building” 6/19/2009 6/30/2009 Yes No No
P.L. 111–36, The Webcaster Settlement Act of 2009 6/19/2009 6/30/2009 Yes No No
P.L. 111–37, The Veterans’ Compensation Cost-of-Living Adjustment Act of 2009 6/25/2009 6/30/2009 Yes No No
P.L. 111–38, A bill to provide additional personnel authorities for the Special Inspector General for Afghanistan Reconstruction 6/24/2009 6/30/2009 Yes No No
P.L. 111–39, To make technical corrections to the Higher Education Act of 1965, and for other purposes 6/26/2009 7/1/2009 Yes No No
P.L. 111–40, A bill to award a Congressional Gold Medal to the Women Airforce Service Pilots (”WASP”) 6/24/2009 7/1/2009 Yes No No
P.L. 111–41, The Korean War Veterans Recognition Act 7/27/2009 7/27/2009 No No No
P.L. 111–42, Approving the renewal of import restrictions contained in the Burmese Freedom and Democracy Act of 2003, and for other purposes 7/27/2009 7/28/2009 No No No
P.L. 111–43, A bill to provide for an additional temporary extension of programs under the Small Business Act and the Small Business Investment Act of 1958, and for other purposes 7/30/2009 7/31/2009 No No No
P.L. 111–44, The New Frontier Congressional Gold Medal Act 7/27/2009 8/7/2009 Yes No No
P.L. 111–45, To authorize the Director of the United States Patent and Trademark Office to use funds made available under the Trademark Act of 1946 for patent operations in order to avoid furloughs and reductions-in-force, and for other purposes 7/27/2009 8/7/2009 Yes No No
P.L. 111–46, To restore sums to the Highway Trust Fund, and for other purposes 8/4/2009 8/7/2009 No No No
P.L. 111–47, Making supplemental appropriations for fiscal year 2009 for the Consumer Assistance to Recycle and Save Program 8/6/2009 8/7/2009 No No No
P.L. 111–48, The Miami Dade College Land Conveyance Act 7/31/2009 8/12/2009 Yes No No
P.L. 111–49, The Judicial Survivors Protection Act of 2009 8/3/2009 8/12/2009 Yes No No
P.L. 111–50, To designate the facility of the United States Postal Service located at 46–02 21st Street in Long Island City, New York, as the “Geraldine Ferraro Post Office Building” 8/11/2009 8/19/2009 Yes No No
P.L. 111–51, To designate the facility of the United States Postal Service located at 601 8th Street in Freedom, Pennsylvania, as the “John Scott Challis, Jr. Post Office” 8/11/2009 8/19/2009 Yes No No
P.L. 111–52, To designate the facility of the United States Postal Service located at 2351 West Atlantic Boulevard in Pompano Beach, Florida, as the “Elijah Pat Larkins Post Office Building” 8/11/2009 8/19/2009 Yes No No
P.L. 111–53, The Utah Recreational Land Exchange Act of 2009 8/11/2009 8/19/2009 Yes No No
P.L. 111–54, To designate the facility of the United States Postal Service located at 41 Purdy Avenue in Rye, New York, as the “Caroline O’Day Post Office Building” 8/11/2009 8/19/2009 Yes No No
P.L. 111–55, To designate the facility of the United States Postal Service located at 431 State Street in Ogdensburg, New York, as the “Frederic Remington Post Office Building” 8/11/2009 8/19/2009 Yes No No
P.L. 111–56, To designate the facility of the United States Postal Service located at 123 11th Avenue South in Nampa, Idaho, as the “Herbert A Littleton Postal Station” 8/11/2009 8/19/2009 Yes No No
P.L. 111–57, To designate the facility of the United States Postal Service located at 1300 Matamoros Street in Laredo, Texas, as the “Laredo Veterans Post Office” 8/11/2009 8/19/2009 Yes No No
P.L. 111–58, To designate the facility of the United States Postal Service located at 702 East University Avenue in Georgetown, Texas, as the “Kyle G. West Post Office Building” 8/11/2009 8/19/2009 Yes No No
P.L. 111–59, To designate the facility of the United States Postal Service located at 19190 Cochran Boulevard FRNT in Port Charlotte, Florida, as the “Lieutenant Commander Roy H. Boehm Post Office Building” 8/11/2009 8/19/2009 Yes No No
P.L. 111–60, To extend the deadline for commencement of construction of a hydroelectric project 8/11/2009 8/19/2009 Yes No No
P.L. 111–61, Recognizing the service, sacrifice, honor, and professionalism of the Noncommissioned Officers of the United States Army 8/11/2009 8/19/2009 Yes No No
P.L. 111–62, A joint resolution granting the consent and approval of Congress to amendments made by the State of Maryland, the Commonwealth of Virginia, and the District of Columbia to the Washington Metropolitan Area Transit Regulation Compact 8/7/2009 8/19/2009 Yes No No
P.L. 111–63, The WIPA and PABSS Reauthorization Act of 2009 9/10/2009 9/18/2009 Yes No No
P.L. 111–64, A joint resolution providing for the appointment of France A. Cordova as a citizen regent of the Board of Regents of the Smithsonian Institution 9/11/2009 9/18/2009 Yes No No
P.L. 111–65, To provide for the award of a gold medal on behalf of Congress to Arnold Palmer in recognition of his service to the Nation in promoting excellence and good sportsmanship in golf 9/21/2009 9/30/2009 Yes No No
P.L. 111–66, To provide for an additional temporary extension of programs under the Small Business Act and the Small Business Investment Act of 1958, and for other purposes 9/30/2009 9/30/2009 No No No
P.L. 111–67, The Defense Production Act Reauthorization of 2009 9/24/2009 9/30/2009 Yes No No
P.L. 111–68, The Legislative Branch Appropriations Act, 2010 9/30/2009 10/1/2009 No No No
P.L. 111–69, The Fiscal Year 2010 Federal Aviation Administration Extension Act 9/30/2009 10/1/2009 Yes No No
Related Tags
Government and Politics, Technology and Privacy
October 8, 2009 2:20PM

The Problem Is Spending, not Deficits

By Daniel J. Mitchell

Speaking recently a Steamboat Institute conference, I explain that big government is America’s fiscal challenge, not whether the spending is financed with taxes or borrowing.

 


This issue is important because the statists are trying to create the conditions for a big tax hike. We got huge spending increases under Bush, and now Obama has picked up the baton and is racing in the same direction. Needless to say, the politicians don’t care about deficits when they are spending money. But when it is time to discuss tax policy, deficits suddenly become a giant threat to the economy and turning more of our money over to the political class is the only solution.


The Q&A session also is interesting, as I pontificate about the financial crisis, Keynesian economics, the rule of law, and tax competition(both videos courtesy of the Center for Freedom and Prosperity).

Related Tags
General, Government and Politics, Tax and Budget Policy
October 8, 2009 12:34PM

Baucus Bill Would Cost More than $2 Trillion

By Michael F. Cannon

Sen. Max Baucus’s (D‑MT) health care overhaul would cost more than $2 trillion. It would expand the deficit. But he has carefully and methodically hidden those facts – so well that he has completely hoodwinked nearly all the major media.


The media are reporting that the Baucus bill would reduce the deficit by $81 billion over 10 years. Wrong.


The Baucus bill assumes that Congress will allow the “sustainable growth rate” cuts in Medicare’s physician payments to occur beginning in 2012. Yet Congress has routinely and repeatedly blocked those cuts, making Baucus’s assumption preposterous. The CBO handled the issue delicately, but essentially said, “Sure, provided that the sun rises in the west in 2012, then yes, this bill would reduce the deficit.”


That means Baucus will come up at least $200 billion short on the revenue side, making his bill a budget-buster.


The media are reporting that the Baucus bill would cost just $829 billion over 10 years. Wrong.


As Donald Marron observes, that number omits as much as $75 billion in new federal spending. It also omits a $33 billion unfunded mandate on state governments.


But the worst part is that the Congressional Budget Office’s preliminary cost estimate omits the cost of the private sector mandates in the Baucus bill. In Massachusetts, those costs accounted for 60 percent of the total cost of reform. That suggests the actual cost of the Baucus bill – $829 billion plus $75 billion plus $33 billion, times 2.5 – is well over $2 trillion.


Yet the CBO score pretends those costs aren’t even there. It’s like a mystery novel that’s missing the last 50 pages. And the media aren’t even curious.


In the words of Brad DeLong, why, oh why, can’t we have a better press corps?


Cross-posted at Politico’s Health Care Arena.

Related Tags
General, Health Care