More Trade News
My colleague Dan Griswold pointed out yesterday some unfortunate editing in the Washington Post. Here are a couple of other trade-related items in the news recently:
I think often the United States has to lead,” Baucus said, noting that what lawmakers come up could be used as a model for other countries to copy.
So the U.S. would saddle its consumers with higher prices in exchange for little benefit environmentally and in the process risk retaliation and alienating countries who it insists are necessary for global cooperation on climate change?
Some leadership.
And it may well be that the Chinese have the jump on the United States here, in any case. They’re proposing to introduce a carbon tax of their own, to prevent double-taxation in the form of carbon tariffs by the developed countries (banned under WTO rules) and to keep the carbon tax revenue — collected, remember, from U.S. consumers! — for themselves, all while seeming to play nice on climate change. I bet those who proposed carbon tariffs are sorry they spoke out now. (HT: Scott Lincicome)
Filed under: Energy and Environment; Trade and Immigration
ObamaCare’s ‘Sweetheart Deal’ for PhRMA
The New Republic’s Jonathan Cohn reports that back in March, IMS Health projected slightly negative revenue growth for the pharmaceutical industry but recently changed that projection to 3.5-percent annual growth from 2008 through 2013.
“What changed?” Cohn asks. “A major factor, according to IMS, was the emerging details of health care reform . . . Put it all together, and you have more demand for name-brand drugs . . . enough to boost revenue significantly.” And:
“If this bill is implemented,” the report concludes on page 138, “an increase in prices on new drugs can be expected.”
How could this be happening? Oh yeah:
That brings us back to the deal that the Pharmaceutical Researchers and Manufacturers of America, which represents those companies, made with the White House and Senate Finance Committee . . .
The industry agreed to embrace health care reform and, later on, launched a massive advertising campaign to promote the cause. In exchange, the White House and Senate Finance–which had been asking various industries to pledge concessions that would help pay for the cost of coverage expansions–promised not to seek more than $80 in reduced payments to drug makers.
To an industry as big and profitable as the drug makers, giving up $80 billion over ten years wouldn’t seem like much of a sacrifice–a point critics started making right away. But if IMS is right, the drug industry wouldn’t even be giving up $80 billion, in any meaningful sense of the term. If anything, it’d be making more money. Maybe quite a lot of it.
Which is what I predicted, both here and here.
Cohn concludes, “the drug industry has enormous leverage in Congress.” But Cohn still supports the president’s health care takeover. Or is it PhRMA’s health care takeover?
Filed under: General; Health, Welfare & Entitlements
Health Care: Not Close to Over
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.
Parsing Pelosi: House Health Takeover Would Cost around $2.25 Trillion
Just like the Senate Finance Committee’s government takeover, the House of Representatives’ government takeover hides more than half of its cost by pushing those costs off the government’s budget and onto the private sector.
So when Speaker Pelosi says the House bill would cost under $900 billion, what she actually means is that it would cost around $2.25 trillion.
Filed under: Cato Publications; General; Health, Welfare & Entitlements
Nice Insurance Company. Shame If Anything Were to Happen to It.
Just days after the health-insurance lobby released a report criticizing the Senate Finance Committee’s health care overhaul (for not expanding government enough!), Democrats and President Barack Obama lashed out at health insurers, threatening to revoke what the Government Accountability Office calls the insurers’ “very limited exemption from the federal antitrust laws.”
Democrats say they’re motivated by the need to increase competition in health insurance markets. Right.
According to Business Week:
David Hyman, a professor of law and medicine at the University of Illinois College of Law and adjunct scholar at the Cato Institute…considers it unlikely that repeal would fundamentally change the nature of the market. While it might increase competition in some markets, he says, it could actually decrease it in others, such as those where small insurers survive because they have access to larger providers’ data. Changes to the act could therefore hurt smaller companies more than larger ones, he says.
Because the act doesn’t outlaw the existence of a dominant provider but simply prohibits collusion, says Hyman, a repeal would fall short of breaking up existing market monopolies that are blamed for artificially inflating prices. The current move against [the] McCarran-Ferguson [Act], he says, “has more to do with the politics of pushing back against the insurance industry’s opposition to health reform than it does with increasing competition in health-insurance markets.”
Combined with what The New York Times described as the Obama administration’s “ham-handed” attempt to censor insurers who communicated with seniors about the effects of the president’s health plan — the Times editorialized: “the government’s Centers for Medicare and Medicaid Services had to stretch facts to the breaking point to make a weak case that the insurers were doing anything improper” — it’s hard to argue that this is anything but Democrats threatening to use the power of the state to punish dissidents.
When Republicans were in power, dissent was the highest form of patriotism. Now that Democrats are in power, obedience is the highest form of patriotism.
Filed under: Cato Publications; General; Government and Politics; Health, Welfare & Entitlements; Law and Civil Liberties
Tuesday Links
- How to measure the effectiveness of Obama’s stimulus plan.
- Forbes: The CBO estimate of the number of people who would stop being uninsured under the Senate Finance Committee proposal is exaggerated by at least 7 million to 10 million.
- Smoke and mirrors within the Senate Finance Committee?
- How to save democracy in Honduras.
- Video: Economist Daniel J. Mitchell discusses economic reform on CNBC.
Three Irrefutable Facts About the Baucus Bill
The Senate Finance Committee votes today on Senator Max Baucus’ version of the health care bill. Cato health care experts have analyzed the bill thoroughly, and point out three vital components to the cost and reach of the legislation:
1) The real cost of the bill is in excess of $2 trillion.
Chairman Max Baucus hoodwinked the CBO with a number of clever budgetary gimmicks, most notably by keeping about half of the cost off the federal books. The bill also assumes Congress will make cuts to Medicare payments, which has never once happened before.
2) The bill contains an enormous middle-class tax hike.
The bill imposes a 40 percent excise tax on health insurance plans that offer benefits in excess of $8,000 for an individual plan and $21,000 for a family plan. Insurers would almost certainly pass this tax on to consumers via higher premiums. As inflation pushes insurance premiums higher in coming years, more and more middle-class families will find themselves caught up in the tax — providing the government with more revenue.
3) The bill creates a national ID program.
The bill contains a paragraph explicitly addressing “eligibility verification.” You must prove who you are to federal entitlement agencies in order to qualify for the bill’s “state exchanges” and tax credits. No ID, no benefits.
Senate Health Regulation Bill Includes National ID Plan
Thanks to the push for a more transparent Congress, we’re getting a better look at what new health care regulations might shape up to be. Alas, not a very good look: with weak justifications, the Senate Finance Committee is working on a strange “plain language” description of the bill, and apparently not planning to read or release the final language.
I’ve found something worth noting, though, in each of the bill versions I’ve seen. The Senate Finance Committee’s Rube Goldberg plan for health care in America has a provision establishing paragraph talking about “Eligibility Verification.”
If you want to access the “state exchanges” or collect the federal tax credits created by the bill, your eligibility will have to be verified. Here’s what it says:
Eligibility Verification. In order to prevent illegal immigrants from accessing the state exchanges or obtaining federal health care tax credits, the Chairman‘s Mark requires verification of the following personal data. Name, social security number, and date of birth will be verified with Social Security Administration (SSA) data. For individuals claiming to be U.S. citizens, if the claim of citizenship is consistent with SSA data then the claim will be considered substantiated. For individuals who do not claim to be U.S. citizens but claim to be lawfully present in the United States, if the claim of lawful presence is consistent with Department of Homeland Security (DHS) data then the claim will be considered substantiated. Individuals whose status is expected to expire in less than a year are not allowed to obtain the tax credit. Individuals whose claims of citizenship or lawful status cannot be verified with federal data must be allowed substantial opportunity to provide documentation or correct federal data related to their case that supports their contention.
Translation: Every American who wants to access a “state exchange” or get the tax credits in the bill would have to submit data about themselves to the Social Security Administration or Department of Homeland Security for verification. If you don’t do it, no exchanges or tax credits. If your data doesn’t match, no exchanges or tax credits, unless you can convince SSA or DHS bureaucrats that you are who you say you are.
Sound familiar? Then you probably read my Cato Policy Analysis “Electronic Employment Eligibility Verification: Franz Kafka’s Solution to Illegal Immigration.” The paper discusses how verification of immigration status for employment eligibility would plunge Americans into a Kafka-esque bureaucracy and deny many law-abiding Americans the ability to work. Ultimately, the system requires a national identification card.
The same goes with a health care “eligibility verification” system. If you’re one of the millions of people about whom the Social Security Administration has bad data, plan to spend long hours waiting in line to plead with indifferent federal bureaucrats for health care access. When attacks and complications on the verification system break it down, they’ll move to “strengthen” the system. Get ready to dig up your birth certificate—they’ll want to scan it into their computers—plan to be photographed and fingerprinted, and get ready to stand in line for your national ID card.
It was refreshing to see Joe Wilson heckle the president the other week—the president is our employee, after all—but in their enthusiasm to generate differences with President Obama, Republicans may be coalescing behind plans to push a national ID and federal background check system that all freedom-loving Americans should reject.
Filed under: Health, Welfare & Entitlements; Telecom, Internet & Information Policy
Weekend Links
- How cap-and-trade is like ritual self-flagellation.
- The Senate Finance Committee’s version of health care reform is definitely a step up from all of the other versions of the bill. But that’s still a pretty low bar.
- Change? The president cuts another deal for special interest lobbyists at the expense of American families.
- Why free trade is a boon to the environment.
“Keep Your Subsidies off My Ovaries”
In my recent Cato paper, “All the President’s Mandates: Compulsory Health Insurance Is a Government Takeover,” I explain that if Congress compels Americans to purchase health insurance, it would “inevitably and unnecessarily open a new front in the abortion debate, one where either side—and possibly both sides—could lose.”
Slate’s William Saletan explains how the pro-choice side could lose:
This week, the Senate finance committee is considering amendments that would bar coverage of abortions under federally subsidized health insurance. Pro-choice groups are up in arms. After all, says NARAL Pro-Choice America, “In the current insurance marketplace, private plans can choose whether to cover abortion care—and most do.” If Congress enacts subsidies that exclude abortion, “women could lose coverage for abortion care, even if their private health-insurance plan already covers it!“…
The argument these groups make is perfectly logical: If you standardize health insurance through federal subsidies and coverage requirements, people might lose benefits they used to enjoy in the private sector. But that’s more than an argument against excluding abortion. It’s an argument against health care reform altogether.
Saletan also explains why pro-life and pro-choice positions on Obama’s health plan are irreconcilable:
To get what they consider neutrality, pro-choicers have to make pro-lifers pay indirectly for abortions. And to keep what they consider clean hands, pro-lifers have to make abortion coverage federally unsupportable and therefore, in a subsidy-dependent system, commercially nonviable.
Rather than an argument against all health care reform, I’d say this is an argument against reforms that expand government subsidies or otherwise give government the power to choose what kind of insurance you purchase. Fortunately, there are better ways to reform health care.
Filed under: Cato Publications; General; Health, Welfare & Entitlements
Tuesday Links
- Twenty inaccurate claims in Obama’s speech to Congress on health care. “If [members of Congress] yelled out every time President Obama said something untrue about health care, they would quickly find themselves growing hoarse.”
- Political tensions decreasing between Taiwan and China.
- How Americans misunderstand war: “America’s biggest mistake in Afghanistan and Iraq was to think its modern military would make winning easy.”
- Always read the fine print: There is a dangerous provision in the Senate Finance Committee’s health care bill that could deny crucial health treatments for Medicare patients.
- Will the FDIC start borrowing from healthy banks to continue to provide relief to banks teetering on the edge?
- Podcast: Justin Logan explains why even the best policy toward Iran’s nuclear ambitions may not yield a positive outcome.
Transparent Health Care Legislating?
Will Americans get “quality time” with proposed health care legislation before it passes?
Some say no: The Senate Finance Committee recently turned back an effort to put Chairman Max Baucus’ bill online for 72 hours before the committee’s vote. The Committee is on the wrong side of history.
Transparency shifts power away from the center, so it’s favored by those out of power. It’s no wonder that Republican representative John Culberson, a member of the minority party, is putting H.R. 3400 (a significant health care bill) online for comment, using a tool called SharedBook.
Transparency won’t be a gift from government. It is something we have to take. That’s why I think the action lies in private efforts like OpenCongress, GovTrack, and (my own) WashingtonWatch.com. (Links are to sites’ H.R. 3400 pages.)
The public has a way of conforming their expectations to what’s possible, and transparent law-making is entirely possible today. Closed processes like the Senate Finance Committee’s consideration of health care legislation will not satisfy the public, and it will emerge from the committee with one strike against it irrespective of the merits.
Filed under: Health, Welfare & Entitlements; Telecom, Internet & Information Policy
The President’s Health Care Tax
As Michael Cannon discussed in an earlier post, the White House is trying to claim that health care “reform” does not mean higher taxes. This is a two-pronged issue. First, there is a mandate to purchase health insurance. Second, there is a tax (the White House calls it a fee) on people who fail to purchase a policy.
The White House claims this mandate is akin to state-level requirements for the purchase of health insurance, and that the newly-insured people will be getting some value (a health insurance policy) in exchange for their money. These assertions are defensible, but that does not change the fact that a tax is being imposed.
It might be plausible to argue that the mandate is not a tax if the value of the insurance policy to the individual was equal to the cost. But since these are people who are not buying policies, their behavior reveals that this obviously cannot be true. So this means that they will be worse off under Obama’s plan and that at least some of the cost should be considered a tax.
Filed under: Health, Welfare & Entitlements; Tax and Budget Policy
Thursday Links
- A new T-shirt for Senator Baucus: I worked for six months with half a dozen members of the Senate Finance Committee, and all I got was this lousy 223-page summary of what I hope the new health care bill will look like.
- Why should evidence even matter in education policy? I mean, we’re doing this for the children.
- Videos reveal tax-funded organization being used to help those who want to open a brothel and illegally bring underage girls into the United States as “sex workers.” Meet the two 20-somethings who exposed it.
- It’s time to narrowly define the mission in Afghanistan. “The United States does not have the patience, cultural knowledge or legitimacy to transform what is a deeply divided, poverty stricken, tribal-based society into a self-sufficient, non-corrupt, and stable electoral democracy.”
- Podcast: The future of health insurance: You buy it, or else.
Remember When $1 Trillion Was Real Money?
Senate Finance Committee chairman Max Baucus (D-MT) has announced that he has reached agreement on scoring a series of options that will reduce the cost of his health care reform bill to just $1 trillion over the next 10 years. Whew. Now we can all rest easy.
Still, no agreement on the tax increases needed to pay that $1 trillion though.
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