The leaders of the House of Representatives plan to address health care through a “deem and pass” strategy.  Professor Michael McConnell believes this strategy violates the Constitution.  But put that aside for now. Ms. Pelosi has chosen “deem and pass” because, as she said, “people don’t have to vote on the Senate bill.” The “people” in question are House Democrats whose votes are essential to passing the bill.  These members fear voters would penalize them for voting for the Senate bill. As the Washington Post put it, “deem and pass” would “enable House Democrats not to be on record directly as supporting the Senate measure.”  A House Democrat running in a tough election will be able to deny voting for the Senate bill if it passes into law. We would then have an odd situation in which a bill became law even though only a minority of House members are willing to take responsibility for having supported it. It would be, as it were, a mystery how the bill became law.

This all reminds me of the TARP legislation. In my recent policy analysis of how Congress performed badly in the TARP case, I found that members of both of chambers were concerned mostly with avoiding responsibility for voting for the bailouts. In the tough cases, and probably many others, Congress does what it can to avoid being held accountable.

Many people inside DC will look at “deem and pass” through the lens of political hardball. If Pelosi can pull it off, she will be praised as tough and shrewd, a risk taker who gets her way by any means necessary.

But there is a larger problem here.  The willingness and capacity of Congress to shirk responsibility for its acts suggests deep institutional decline and corruption.  That decline implicates more than Congress itself. How can representative democracy work if voters cannot hold their representatives accountable?

“Deem and Pass” and TARP is a post from Cato @ Liberty - Cato Institute Blog

House Democrats claim that a not-yet-released Congressional Budget Office report puts the cost of their revised health care overhaul at $940 billion over the next 10 years.

Though I have yet to see the CBO score, I’ll bet anyone a fancy lunch that it does not claim the legislation would cost the federal government just $940 billion from 2010 through 2019.

As former Congressional Budget Office director Donald Marron has explained over and over, the figure that Democrats consistently cite for the cost of their bills is only the CBO’s estimate of the cost of federal spending related to the expansion of health insurance coverage.  It is not the full cost to the federal government, because each bill also spends taxpayer dollars on other items.

Marron examined the CBO’s March 11 score of the bill that passed the Senate on Christmas Eve, and found an additional $96 billion of spending over 10 years.  If the most recent iteration of ObamaCare is similar, then new federal spending in that bill would be approximately $1.036 trillion — pushing the total over the president’s spending target.

Anyone care to take me up on that fancy-lunch wager?

Moreover, the on-budget costs of the legislation probably account for only 40 percent of the total costs.  The other 60 percent come from the private-sector mandates.  But Democrats have systematically suppressed any estimates of those hidden taxes, probably because such an estimate would reveal the full cost of the legislation to be closer to $2.5 trillion over the next 10 years.

It has been 272 days since Democrats introduced the first complete version of the president’s health plan.  We still haven’t seen an honest cost estimate.

Yet. Another. Fraudulent. Cost Estimate. is a post from Cato @ Liberty - Cato Institute Blog

• Busy with an ambitious domestic agenda, the Obama administration has put trade issues on the back burner. Let’s hope it stays that way.

• A little lesson on how government works. (As opposed to how it’s supposed to work.)

• There has been talk that House Democrats are planning to “deem” the health care bill into law without calling for a vote. If you’re not sure how that process works, read this.

• Contrary to a growing belief in Washington, revaluing China’s currency will not cure the trade deficit.

• Podcast: “ObamaCare Threatens Innovation” featuring Michael F. Cannon.

Wednesday Links is a post from Cato @ Liberty - Cato Institute Blog

I’ve already posted two series of such queries.  But every day brings new questions to mind.  So here are a few more:

• What does it say that pharmaceutical-industry lobbyists are meeting with House Democrats to write this legislation behind closed doors?  Or that the pharmaceutical industry is preparing to spend millions of dollars on advertisements in support of the legislation?
• Does it trouble you that a former federal judge writes, “Under Article I, Section 7, passage of one bill cannot be deemed to be enactment of another“?
• Does it trouble you that Speaker Pelosi says of the proposed “deeming” strategy, “I like it because people don’t have to vote on the Senate bill“? (Emphasis added.)
• What does it say that left-of-center The Washington Post editorializes that the Democrats’ endgame seems “dodgy” and “threatens to turn into something unseemly and, more important, contrary to Democrats’ promises of transparency and time for deliberation”?
• What does it say about the feasibility of the Obama health plan that Speaker Pelosi is drawn to the “deeming” strategy, which she once opposed in a court of law?

Questions for Thoughtful ObamaCare Supporters, Part III is a post from Cato @ Liberty - Cato Institute Blog

According to MSNBC, Democratic leaders have given up on trying to appease pro-life House Democrats:

House leaders have concluded they cannot change a divisive abortion provision in President Barack Obama’s health care bill and will try to pass the sweeping legislation without the support of ardent anti-abortion Democrats.A break on abortion would remove a major obstacle for Democratic leaders in the final throes of a yearlong effort to change health care in America. But it sets up a risky strategy of trying to round up enough Democrats to overcome, not appease, a small but possibly decisive group of Democratic lawmakers in the House…

Democratic Rep. Henry Waxman of California, chairman of the Energy and Commerce Committee…predicted some of the anti-abortion lawmakers in the party will end up voting for the overhaul anyway.

Pro-life Democrats will vote for taxpayer-funded abortions?  Without even a fig leaf of a compromise?

ObamaCare Will Include Taxpayer-Funded Abortions is a post from Cato @ Liberty - Cato Institute Blog

The American people don’t want President Obama’s health care plan (see below). Massachusetts voters don’t want it.

The White House knows that the people don’t want it.  In Ohio last week, President Obama said:

the process has been less than pretty. When you deal with 535 members of Congress, it’s going to be a somewhat ugly process…when you put it all together, it starts looking like just this monstrosity. And it makes people fearful. And it makes people afraid. And they start thinking, you know what, this looks like something that is going to cost me tax dollars and I already have insurance so why should I support this.

Yet Democrats still want ObamaCare to become law, and they are very close to making it happen.  If Speaker Nancy Pelosi bribes enough House members to reach that magic number of 218 votes, she could hold the vote with as little as 24 hours’ notice.  And ObamaCare would become law.  Done and done.  Comments from David Axelrod and other administration officials this weekend indicate that they haven’t given up on the Senate bill, and suggest that they are likely pressuring House Democrats to support it.

On ABC News’ This Week, Axelrod said, “People will never know what’s in that bill until we pass it.”  He was right, though not in the sense that he meant it.  As bad as the American people think this legislation is, they won’t really know until Nancy Pelosi bribes her way to 218 votes.

ObamaCare Could Become Law at Any Time is a post from Cato @ Liberty - Cato Institute Blog

This has not been a good week for the national Democratic Party. Along with losing the Massachusetts Senate seat, the party took another step toward making hostility to trade liberalization a plank of party orthodoxy.

As my Cato colleague Sallie James flagged earlier today, the Democratic Congressional Campaign Committee issued a press release yesterday criticizing a Republican candidate in upstate New York for contributing to the Cato Institute. And, of course, everyone knows that Cato is “a right wing extremist group that has long been a vocal advocate for extremist, unfair trade policies that would allow companies to ship American jobs overseas.”

Among our sins, in the eyes of the DCCC, is that Cato research has supported tariff-reducing trade agreements, such as the North American Free Trade Agreement (NAFTA). Our work has also advocated unilateral trade liberalization—getting rid of self-damaging U.S. trade barriers regardless of what other countries do—which violates the conventional Washington wisdom that we can’t lower our own barriers without demanding “reciprocity” and “a level playing field” from other nations

There is nothing extreme about our work on trade. It fits comfortably within mainstream economics expounded not only by Adam Smith and Milton Freidman but by such liberals as Paul Samuelson and Larry Summers.

In fact, for decades, the Democratic Party embraced lower barriers to trade:

• In the 1930s and ’40s, President Franklin Roosevelt and his Nobel-Peace-Prize-winning Secretary of State Cordell Hull lead the United States away from the disastrous protectionism of President Hoover and a Republican Congress.
• Democratic Presidents Kennedy, Johnson, and Carter all supported successful agreements in the General Agreement on Tariffs and Trade to reduce trade barriers at home and abroad.
• Bill Clinton, the only Democrat to be re-elected president since FDR, persuaded a Democratic Congress to enact NAFTA in 1993 and the Uruguay Round Agreements Act in 1994, which created the World Trade Organization. Clinton also championed permanent normal trade relations with China in 2000, which ushered that nation into the WTO.
• In the previous Congress, scores of House Democrats co-sponsored “The Affordable Footwear Act,” which would have unilaterally lowered tariffs on imported shoes popular with low-income Americans. Liberal Democrat Earl Blumenauer of Oregon visited the Cato Institute in July 2008 to speak in favor of the bill. (Will he be the next target of a DCCC press release for cavorting with “extremists”?) In the current Congress, a similar bill in the Senate is currently co-sponsored by such prominent Democrats as Dick Durban (Ill.), Chuck Schumer (N.Y.), and Mary Landrieu (La.).

To learn more about why Democrats (and Republicans) should support free trade, I highly recommend two books: Mad about Trade: Why Main Street America Should Embrace Globalization, by yours truly; and Freedom From Want: Liberalism and the Global Economy, by Edward Gresser, a trade expert with the Democratic Leadership Council.

Was Bill Clinton Also an “Extremist” on Trade? is a post from Cato @ Liberty - Cato Institute Blog

The fat lady hasn’t even started to warm up yet.

The narrow 220-215 victory in the House on Saturday night was a step forward on the road to a government takeover of the health care system.  But as close and dramatic as that vote was, that was the easy part.  The Senate must still pass its version of reform—which will not be the bill that just passed the House.  Nancy Pelosi was, after all, able to lose the votes of 39 moderate Democrats.  Harry Reid cannot afford to lose even one.  A conference committee must reconcile the two vastly different versions.  And then, Pelosi must hold together her 3 vote margin of victory (if it gets that far).  Yet several House Democrats who voted for the bill on Saturday said they did so only to “advance the process.” Their vote is far from guaranteed on final passage.  And, House liberals are almost certain to be disappointed by the more moderate bill that may emerge from the conference.

Among the more contentious issues:

Individual Mandate: This should’ve been low-hanging fruit. Democrats agreed on a mandate early in the process. But it became increasingly plain that a mandate would hit those with insurance as well as the uninsured — forcing people who are happy with their plan to switch to a different, possibly more expensive plan. With this mandate now being seen as a middle-class tax hike, qualms have developed.  The House bill contains a strict mandate, with penalties of 2.5 percent of income backed up by up to five years in jail.  The Senate Finance Committee, on the other hand, watered down the mandate’s penalties and delayed the mandates implementation.

Employer Mandate: The House bill also contains an employer mandate, a requirement that all but the smallest employers provide insurance to their workers or pay a penalty tax of up to 8 percent of payroll.  The Senate,  looking at unemployment rates over 10 percent, seems unlikely to include an employer mandate.

The Public Option: The House included, if not a “robust” public option, at least a semi-robust one.  But moderate Democrats in the Senate are clearly not on board.  Joe Lieberman (I-CT) says that he will join a Republican filibuster if the public option is included.  Harry Reid is trying various permutations: a trigger, an opt-in, an opt-out.  But as of now there is not 60 votes for any variation.

The Sheer Cost: Fiscal hawks like Sen. Evan Bayh (D-IN) say they will not support a bill that adds to the deficit or spends too much.  But the house bill cost a minimum of $1.2 trillion.

Taxes: The House plan to add a surtax on incomes of $500,000 or more a year has no support in the Senate. At the same time, the Senate plan to slap a 40 percent excise tax on “Cadillac” insurance plans is unacceptable to key Democratic constituencies like labor unions.

Abortion: Conservative Democrats insisted on a strict prohibition on the use of government funds for abortion.  The bill could not have passed without the inclusion of that provision.  House liberal swallowed hard and voted for the bill, despite what they called “a poison pill” anyway with the expectation that it will be removed later.  If the final bill includes the prohibition at least a couple liberals could defect.  If it doesn’t, conservative Democrats won’t be on board.

Immigration: The Senate Finance Committee included a provision barring illegal immigrants from purchasing insurance through the government-run Exchange.  The House Hispanic Caucus says that if that provision is in the final bill, they will vote against it.

As if these disagreements among Democrats wasn’t bad enough, public opinion is now turning against the bill.

President Obama has called for a bill to be on his desk before Christmas—the latest in a series of deadline that are so far unmet.  It is hard to see how Congress can meet this one either.  The Senate has not yet received CBO scoring of its bill and is not prepared to even begin debate until next week at the earliest.  That debate will last 3-4 weeks minimum, assuming there are 60 votes for cloture.  That means, the bill cant’ go to conference committee until mid-December, even if everything breaks the way Harry Reid wants.  Privately, Democrats are now suggesting late January, before the State of the Union address, is the best they can do.

The fat lady can go back to sleep—this isn’t over yet.

Health Care: Not Close to Over is a post from Cato @ Liberty - Cato Institute Blog

If House Democrats hold a vote on their health-care overhaul this weekend, they might as well vote to abolish the Congressional Budget Office too.

It would be no more audacious (and much more honest) than the way they have gamed the CBO’s rules to hide $1.5 trillion of the cost of their legislation — which has to be the biggest fiscal obfuscation in the history of American politics.

Here’s how they did it.

C/P Politico

Disguised Health Care Costs: The $1.5 Trillion Fraud is a post from Cato @ Liberty - Cato Institute Blog

According to The Hill, House Democrats are considering re-branding their new government-run health insurance program.  A “public option” evidently isn’t catchy enough.  Now they’re thinking, “Medicare Part E” as in, Medicare for Everyone.

By all means, model a new government program after Medicare, which:

• Drags down the quality of care for all patients, both publicly and privately insured
• Literally kills people by fueling the epidemic of deaths due to medical errors (as many as 100,000 annually)
• Is responsible for the fragmented delivery system about which the Left complains
• Has required one tax increase every four years, still has an unfunded liability approaching $90 trillion, and will therefore be the driving force behind income-tax rates essentially doubling by mid-century
• Has been expanded well beyond its original mission
• Didn’t save a single life in (at least) its first 10 years of operation
• Coerces people to choose it over private insurance
• Restricts enrollees’ freedom to spend their own money on medical care
• Is easily (and persuasively) parodied as a tool of the devil

Pleeeeease don’t throw me into that briar patch.

Medicare for Everyone? is a post from Cato @ Liberty - Cato Institute Blog

I’m not a fan of the House Democrats’ proposed takeover of the health care sector.  (If there’s one thing that legislation is not, it’s “reform.”)  But at least House Democrats were honest enough to include the cost of the $245 billion bump in Medicare physician payments in their legislation, unlike some committee chairmen I could mention.

Unfortunately, House Democrats have since decided that dishonesty is the better strategy.  They, like Senate Democrats, now plan to strip that additional Medicare spending out of health “reform” and enact it separately.  (Democrats are already trying to exempt that spending from pay-as-you-go rules, making it easier for them to expand our record federal deficits.)  Why enact it separately?  Because excising that spending from the “reform” legislation reduces the cost of health “reform”!

But why stop there?  Heck, enact all the new spending separately, and the cost of “reform” would plummet!  Enact the new Medicaid spending separately, and the cost of “reform” would fall by $438 billion! Do it with the subsidies to private health insurance companies, and the cost of “reform” would plunge by $773 billion!  All that would be left of “reform” would be tax increases and Medicare payment cuts.  Health “reform” would dramatically reduce federal deficits!  Huzzah!

Except it wouldn’t, because at the end of the day Congress would be spending the same amount of money.

The only good news may be this.  If this dishonest budget gimmick succeeds, then Congress will have “fixed” Medicare’s physician payments.  Absent that “must pass” legislation, the Democrats health care takeover would lose momentum, and would have to stand on its own merit.  That would be good for the Republic, though not for the legislation.

(Cross-posted at Politico’s Health Care Arena.)

House Democrats Choose Dishonesty is a post from Cato @ Liberty - Cato Institute Blog

The U.S. Chamber of Commerce has two charts showing what health care regulation looks like now…

…and what it would look like under the House Democrats’ health care plan:

More Health Care Charts! is a post from Cato @ Liberty - Cato Institute Blog

As Mike Tanner has written, the health care bill means a big tax hike — indeed, a lot of tax hikes.  It also means a reversal of one of President Ronald Reagan’s great achievements, bringing down the top marginal income tax rate. 

Reports the Washington Times:

Small-business owners are warning that the economy would suffer under a health care bill proposed by House Democrats, which would drive tax rates for high-income taxpayers to levels not seen since before President Reagan’s tax reform of 1986.

The top federal income tax rate, which Mr. Reagan and a bipartisan Congress lowered from 50 percent to 28 percent, would reach 45 percent in 2011 if Congress and President Obama enact the surtaxes that are part of the health care reform plan that House Democrats announced Tuesday.

Small-business owners, who would take a direct hit from the surtaxes, expressed dismay over the proposal, saying it would force them to curtail hiring and reduce wages amid the worst recession in a generation.

“If they institute a 5 percent surtax on income, it will have a severe impact on small businesses that are already hurting,” said Michael Fredrich, whose Wisconsin company, MCM Composites, molds plastic parts.

“We run maybe three days a week, sometimes four days a week, sometimes zero days,” he said. “I can tell you that at some point, people … running a small business are just going to say, ‘To hell with it.’ “

Individuals tend to focus on their tax burden.  After all, our overall tax bill reflects the amount of money we lose as legislators speed about the country allegedly “serving” us while promoting their own political ends. 

Marginal tax rates more directly affect decisions on saving, investment, business formation, work effort, job creation, and more.  Even politicians not enamored of the “rich,” whatever that term means, should recognize that we all benefit from an economic system which encourages entrepreneurship.

Proponents of big tax hikes might want to recall Aesop’s Fable, The Goose that Laid the Golden Eggs.  Wreck the economy, and the health care system will crash too.

Back to the Bad Old Days of High Marginal Tax Rates is a post from Cato @ Liberty - Cato Institute Blog

House Democrats released their 1,018 page health care reform bill, America’s Affordable Health Choices Act of 2009, yesterday.

This bill is a dog’s breakfast of bad ideas paid for by more than $500 billion in new taxes. The reform would impose an individual mandate on individuals, requiring every American to buy a government designed insurance package or pay a new tax equal to 2.5 percent of their income. At a time of rising unemployment, businesses would be required to provide health insurance to workers or pay a new tax equal to 8 percent of workers wages. These new taxes could drive the total cost to taxpayers much higher than the $500 billion in direct taxes in the bill.

In addition, the bill includes a host of new insurance regulations that will drive up the cost of insurance premiums, and a new government-run insurance plan that will “compete” with private insurance. That government-run plan will ultimately force millions of Americans out of their current insurance plan and into the government-run system. This is a health care “reform” under which Americans will pay more for worse care.

To get an idea of what sort of bureaucratic nightmare that would ensue with passage of this bill is illustrated by the Republican Staff of the Joint Economic Committee here.

For regular updates on the reform process as it progresses, check out Cato’s health care Web site.

The Health Care Reform Bill Will Cost $500 Billion in New Taxes is a post from Cato @ Liberty - Cato Institute Blog

The New York Times reports that House Democrats want to raise money for health care with a $550 billion tax hike on people who produce the most wealth. The Times says,

the proposal is perhaps the clearest expression yet of the mandate that Democrats believe they won last November, when voters expanded Democratic majorities in Congress and sent Barack Obama to the White House.

If Democrats think they won a mandate for huge tax increases — without talking about them — then 2010 ought to be fun.

Mandate for Taxes? is a post from Cato @ Liberty - Cato Institute Blog