Good Night, Lou Dobbs
In his CNN swan song last night, Lou Dobbs told his loyal if shrinking audience that important national issues
are now defined in the public arena by partisanship and ideology rather than by rigorous empirical thought and forthright analysis and discussion. I will be working diligently to change that as best I can.
I would argue that his very act of resigning from his prime-time perch is probably the best contribution he’s made yet to advancing “rigorous empirical thought.”
Since he launched his program “Lou Dobbs Tonight” in 2003, the CNN anchor has been engaged in one long rant against immigration, free trade, and other populist bugaboos. His approach was anything but rigorous and empirical.
In a review of his 2004 book, Exporting America, I critiqued his flabby reasoning and questionable facts. (My new Cato book, Mad about Trade, is a painless, one-shot antidote to everything Dobbs has said about free trade, manufacturing, and the middle class.) The New York Times, “60 Minutes” and other mainstream news outlets have exposed such outrageous whoppers from Dobbs as his claim that immigrants have caused an explosion of leprosy cases and crime.
Dobbs was vague about his plans for the future last night, but there is some speculation that he will run for office, perhaps for president in 2012. I hope he does. It would be an interesting test of just how popular his sentiments really are among Main Street Americans.
“Opt-Out” Smoke and Mirrors
At today’s Politico Arena the editors ask:
Reid’s Option: Does it help or hurt the chances for healthcare passage by Christmas?
My response:
Like every other part of ObamaCare, the “opt-out” proposal for the “public option” is a mystery — and almost certainly will continue to be even after the likely 1,500-page bill emerges, if ever it does. Will residents in states that opt-out be able to opt-out of the taxes needed to support the public option? (Please don’t say the public option will be self-supporting: we’re grown-ups.) Healthy taxpayers in North Dakota, after all, have no incentive to subsidize unhealthy New Yorkers. But if states can opt out of the tax part, then we’ll have “adverse selection” at the state level, the very thing the “individual mandate” is meant to stop at the individual level. Yet if states won’t be able to opt out of the tax component, then what’s the incentive for states to opt out of the public option? All pay, no benefit, is a sucker’s game.
This is all smoke and mirrors. And it’s laughable to think that the Congressional Budget Office can score any of this, when nobody knows what “this” is. For all the backroom dealings so far, enough has taken place in public to enable the public to see what’s going on, and it’s not pretty. It’s the usual something-for-nothing gimmickry, like last week’s “doc-fix” joke. The vote on that is the best predictor so far of where this whole thing is going. When labor tells us they might accept a tax on high-value insurance plans if it doesn’t hit the middle class, we know the money isn’t there. May ObamaCare rest in peace until more sober people are able to attend to what’s really required to straighten out the health care mess that Congress created in the first place.
Trade Delivers Peace and Bargain Prices
For a fair and authoritative (and did I mention favorable?) assessment of my new Cato book, Mad about Trade: Why Main Street America Should Embrace Globalization, you can read William H. Peterson’s review in today’s Washington Times.
Dr. Peterson is an adjunct scholar with the Heritage Foundation and the Ludwig von Mises Institute who holds a Ph.D. in economics from New York City University. In his review he writes:
Daniel Griswold’s tour de force explores, reasons and documents how import competition benefits the American consumer, seeing him move ahead toward greater peace incentives, lower real prices, more choices, better quality. Mr. Griswold also tracks how the big-box retailers such as Wal-Mart, Home Depot and Best Buy deliver the world’s goods mostly by sea via millions of big, truckload-size containers. …
So Mr. Griswold would have the United States adopt or maintain trade policies best for most Americans, especially the poor and middle class, no matter what other nations do. Says the author: Let’s drop the remaining barriers separating us from ongoing growth and peace policies enhancing the global marketplace. Bully for him.
Information at the beginning of the review should have given the cover price of the book as $21.95. It is available with a nice discount at Amazon.com along with a peek inside at the table of contents and selected pages.
My Question for the President
President Obama will hold a press conference tonight to answer questions about his health care reform proposal. This is what I would ask him:
Mr. President, during your campaign, you said, “I can make a firm pledge…Under my plan, no family making less than $250,000 a year will see any form of tax increase.” You also said that “no one will pay higher tax rates than they paid in the 1990s.”
Your National Economic Council chairman, Larry Summers, has written that employer mandates “are like public programs financed by benefit taxes.” Under the House health reform bill, an uninsured worker earning $50,000 per year, with no offer of coverage from her employer, would face a 15.3-percent federal payroll tax, a 25-percent federal marginal income tax rate, an 8-percent reduction in her wages (to pay the employer penalty), plus a 2.5 percent uninsured tax. In total, her effective marginal federal tax rate would reach 50.8 percent.
Do you stand by those pledges, and would you therefore veto any employer mandate or individual mandate as a tax on the middle class?
(Add it to the questions I posed here and here.)
Filed under: Health, Welfare & Entitlements; Tax and Budget Policy
Why Taxing the Rich Is Not Enough to Fund Big Government
Appearing on Fox News on Monday, Cato’s Daniel J. Mitchell explained why taxing the rich to pay for big government programs may make for a good sound bite on the campaign trail, but when there aren’t enough wealthy people to tax, the middle class ends up footing the bill.
“When politicians are aiming at the rich, it’s the middle class that winds up getting hit in the crossfire,” Mitchell said. “They use ‘tax the rich’ as the rhetoric, but they always go after the ordinary people to get more money to fund their big government schemes.”
Watch the whole thing:
Week in Review: Health Care Battles, Pay Caps and North Korean Prisoners
Will Obama Raise Middle-Class Taxes to Fund Health Care?
President Obama is promoting an expansion in federal health care spending, and Democratic leaders are scrambling to find ways to pay for it. The plan is expected to cost about $1.5 trillion over the next decade, but the administration has promised that health care legislation won’t add to already huge federal budget deficits. In a new paper, Cato scholars Michael D. Tanner and Chris Edwards argue that expanding government health care will likely involve huge tax increases on the middle class.
Tanner warns of “Obamacare” to come, saying that Obama’s new health care plan will give “government control over one-sixth of the U.S. economy, and over some of the most important, personal, and private decisions in Americans’ lives.” Don’t miss Tanner’s in-depth analysis of the new health care plan that is making its way through Congress, which “would dramatically transform the American health care system in a way that would harm taxpayers, health care providers, and — most importantly — the quality and range of care given to patients.”
A part of the plan would include “public option” (read: government-run) health care, which would allow the government to compete against private health care providers. Tanner says it would be the first step toward wiping out the private insurance market as we know it:
Regardless of how it is structured or administered, such a plan would have an inherent advantage in the marketplace because it would ultimately be subsidized by taxpayers. It could, for instance, keep its premiums artificially low or offer extra benefits, then turn to the U.S. Treasury to cover any shortfalls. Consumers would naturally be attracted to the lower-cost, higher-benefit government program.
…It is unlikely that any significant private insurance market could continue to exist under such circumstances. America would be firmly on the road to a single-payer health care system with all the dangers that presents. That would be a disaster for American taxpayers, physicians, and—most importantly—patients.
Treasury Seeks to Control Executive Pay Across the Private Sector
Fox Business reports, “The Treasury Department on Wednesday took new steps to rein in executive compensation, saying the Obama Administration would introduce legislation that could create stricter limits on pay; it also appointed an official to head up efforts on the issue.”
In a 2008 Policy Analysis Ira T. Kay and Steven Van Putten explain the misconceptions many people have about executive pay, and why the market is a better arbiter than any bureaucrat in Washington:
Such populist sentiments are often based on misunderstandings about the role of corporate executives in the economy and the vigorous competition that exists for these highly skilled leaders. In the past, federal regulatory efforts based on such misunderstandings have generated unintended consequences, which have damaged the economy and hurt the ability of the market for executives to self-regulate over time.
The labor market for executives and the associated pay levels are already subject to high levels of regulation. Indeed, U.S. corporations are subject to more stringent executive pay disclosure requirements than corporations anywhere else in the world. Before additional regulatory and legislative efforts are unleashed, policymakers should examine the rationale for current pay structures and the strong links between executive pay and corporate performance.
In a Washington Times op-ed, Alan Reynolds says efforts to cap executive pay are wholly misguided:
Congressional hearings to barbecue Wall Street executives are as fun as a circus, but with more clowns. Presidential politics is now taking such political distractions to a lower level.
…Most top executives who were actually in charge during the craze of overinvestment in mortgage-backed securities have been fired. Executives who are fired are not in a position to be “giving themselves” anything.
In reality, top executives are mainly paid by accumulating a big stockpile of company stock and stock options. Estimates of annual CEO pay that Congress and the press have been focusing on look as high as they do only because of the high value of restricted stock or stock options at the time.
Writing in 2007 (before the first round of major bailouts), Cato scholars Jerry Taylor and Jagadeesh Gokhale took it a step further: “Pay Bosses More!”:
Excessive executive compensation harms no one but perhaps the stockholders who put up with it. And stockholders put up with it because there’s good reason to believe that sizable CEO compensation packages help — not harm — corporate performance, which redounds to their benefit, and that of the firms’ workers.
Companies pay workers what they must to deliver their products and services to the market, and supply and demand establishes executive compensation packages the same way it establishes consumer prices. Any overcompensation comes out of the firm’s bottom line — at a loss to the shareholders, not the workers.
North Korea Sentences Two U.S. Journalists to 12 Years Hard Labor
Two American journalists were convicted of entering North Korea illegally while on assignment, and exhibiting “hostility toward the Korean people.” This week, a North Korean court sentenced them to 12 years in a labor prison.
Cato scholar Doug Bandow comments:
Washington should publicly downplay the controversy and present the issue to the Kim regime as a humanitarian matter. The Obama administration should indicate its willingness to open a broader dialogue with North Korea, but indicate that positive results will be possible only if Pyongyang responds with cooperation instead of confrontation. Releasing the two journalists obviously would provide evidence of the former.
Regrettably, Laura Ling and Euna Lee are political pawns. As such, Washington’s best strategy to achieve their release is to simultaneously reduce their perceived value to Pyongyang and ease tensions between the U.S. and North Korea. Patience may be the Obama administration’s highest virtue and Ling’s and Lee’s greatest hope.
In a Cato Daily Podcast, Bandow discusses what can be done for the American prisoners, and how the U.S. government should react.
The Black Divide on School Choice
I’ve been reading the debate between our own Andrew Coulson and Rev. Joseph Darby with interest, not least because it is an extreme rarity to find an opponent of school choice with the courage and good faith to engage in such a public debate on the topic.
That said, something Rev. Darby wrote in his response caught my attention because of its parallels with the modern fight over school choice:
The first schools established for African-Americans following the Civil War were private schools. They sometimes, however, exclusively accepted the children of the black upper and middle economic classes while excluding the children of former slaves who struggled economically to survive. Public schools for African-Americans were decidedly and intentionally inferior, and the irony is that the opponents of quality public education in Charleston, South Carolina in that era included affluent African-Americans who saw good public schools as a threat to their private schools.
Too little is said about an uncomfortable contemporary truth: the irony is that the opponents of school choice across this country include affluent African-Americans who see good private schools as a threat to their public schools, their livelihoods, and their political and economic power.
There is a class divide in the African American community. If you take a look at the economics of urban areas, you will find that schools provide a large percentage of good middle and upper-middle class jobs for African Americans. If you look at the polling data, it is low-income blacks who are most supportive of school choice. And yet black elected officials are overwhelmingly opposed to choice.
And if you look at the black leadership class that runs our cities and failing public schools, you will find that many send their children to schools other than those in which they teach or those in the city they lead. I hold up as the most prominent example our first black president, Barrack Obama, who opposes private school choice policies and yet has always sent his own children to private schools.
Rev. Darby suggests, “a mass exodus to private schools will weaken public schools by leaving behind parents who have the least ability to advocate for or assist their children, and remove positive peer role models from struggling students.” If this is indeed true then the greatest damage has already been done to public schools by the likes of President Obama and other parents with the means to choose private schools for their children.
Why do Rev. Darby and other government school advocates not excoriate President Obama and other school choice opponents who patronize private education? Why are Rev. Darby and others not working assiduously to ban private schools altogether?
Why, in the final analysis, does Rev. Darby’s logic hold for the poor but not for the wealthy?
Below the fold I have more on these claims.
On Taxing Employer Health Benefits
Democrats in Congress are reportedly considering taxing employer-provided health insurance benefits as a way to pay for their health care reform plan. And, even though he brutally attacked John McCain for something similar (see below) during the campaign, President Obama may now go along with the idea.
Much of the media coverage around the idea has equated this tax hike with the McCain plan and other proposals by advocates of market-based health reform over the years that would shift the tax break from employer-provided insurance to individual insurance. However, there is an important distinction. The market-based proposals would have taxed employer-provided health benefits (treating them as taxable compensation), but would have provided workers with a deduction or credit for purchasing insurance regardless of whether they receive it through work or pay it on their own. The result, for all but a handful of workers with the most expensive gold-plated employer plans, would have been tax neutral. In fact, many workers would receive a net tax cut. The shift in tax treatment was simply part of a larger strategy to move from a system of employer-provided insurance to one where health insurance was personal, portable, and owned by workers.
The plan being discussed by Congress, on the hand, is simply a tax hike. It is not revenue neutral—it is a $1 trillion tax increase that will fall heavily on the middle-class. It is designed not to change the system, but simply to raise revenue.
That’s a very different thing!
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