Massachusetts Treasurer Blasts RomneyCare and, Equivalently, ObamaCare
Massachusetts state treasurer and recent Democrat Timothy Cahill has harsh words for the health plan foisted on his state and the identical plan that President Obama is trying to foist on the nation. From The Boston Globe:
“If President Obama and the Democrats repeat the mistake of the health insurance reform here in Massachusetts on a national level, they will threaten to wipe out the American economy within four years,” Cahill said in a press conference in his office.
Echoing criticism leveled by congressional Republicans in recent weeks, Cahill said, “It is time for the president, the Democratic leadership, to go back to the drawing board and come up with a new plan that does not threaten to bankrupt this country.”
[T]he state’s health insurance law…Cahill said, “has nearly bankrupted the state.”
Cahill said the law is being sustained only with the help of federal aid, which he suggested that the Obama administration is funneling to Massachusetts to help the president make the case for a similar plan in Congress.
“The real problem is the sucking sound of money that has been going in to pay for this health care reform,” Cahill said. “And I would argue that we’re being propped up so that the federal government and the Obama administration can drive it through” Congress.
Commonwealth Connector, the independent state agency established to help residents find the health insurance, has “totally failed,” to create competition and connect people with affordable insurance, Cahill said, pointing out that 68 percent of the residents it serves receive subsidized care.
“We haven’t done anything about driving down costs,” Cahill said. “We haven’t helped small business. We haven’t changed the way we pay for health care and the way we deliver it.”…
Asked for solutions today, Cahill said he would seek to “level the playing field” between hospitals that charge different rates for similar procedures, seek to increase competition by allowing health insurance companies plans to sell plans across state lines, and would slash benefits mandated under state law.
For more on the Massachusetts health plan, see “The Massachusetts Health Plan: Much Pain, Little Gain.”
Filed under: Cato Publications; Health, Welfare & Entitlements
Federal Aid to States Is Too Popular
The Economist’s Free Exchange blog asks: “[W]hy isn’t federal aid to states more popular, and popular enough to get through Congress, given that nearly every American lives in one?”
I would ask the blog’s author: How much more popular would he like it to be? As the following charts show, federal aid to state and local governments has catapulted to record levels.
As I’ve discussed elsewhere, Medicaid has been driving the growth in federal subsidies to state and local governments. But other areas, such as education, income security, and transportation, have also seen substantial increases.
Subsidizing state and local government is quite popular with federal, state, and local policymakers and associated special interests. It’s doubtful the average citizen is aware that so much of their state’s spending is derived from their federal tax dollars. However, I suspect that most folks (who aren’t on the take) would frown upon the concept of sending money to Washington only to have politicians send it back to the states via the federal bureaucracy. While there may be popular support for many of the state programs funded with federal dollars, citizens need to understand that federal subsidization of state and local government has fueled unhealthy government growth at all levels.
Shameless Vote-Buying through Education?
There’s an act for that! And another act, and another act, and another…
Oh, did we forget to mention the painful results? Well, federal education “gifts” do have a tendency to blow up in your face.
Filed under: Education and Child Policy; General; Government and Politics
Tuesday Links
- Obama’s budget and the $1 trillion mistake.
- Justin Logan on the rise of government and central control: “The factor that explains the largest share of the centralism and growth of the American state is war.“
- What we can learn from Hugo Chavez: “The lesson for all of us, north and south of the border, is watch our presidents closely, and check them when they try to slip their constitutional bonds.”
- “Stimulus Means More Meddling in Education” featuring Adam B. Schaeffer.
Post-State of the Union Links
- Cato experts give Obama’s State of the Union a video fisking.
- Are we watching the History Channel or something? Because this new president sure does sound a lot like the old one.
- Time for the SOTU fact check: Cato experts put some of President Obama’s core State of the Union claims to the test. Here’s what they found.
- Flashback to February 2009: Gene Healy on how “the president talks too much.“
- During this year’s SOTU, President Obama criticized the Supreme Court decision in the Citizens United case. Today’s podcast examines the Court’s ruling.
Less Is More in Education Funding
Spend more money on education, the President says? Actually, we should be looking there for savings . . . here are some of the numbers:
State governments spent 35 percent of their general funds on K–12 education in 2007, according to the National Association of State Budget Officers. In contrast, Medicaid — which is continually singled out as a problematic state-budget item, even though most Medicaid funds come from the federal government — accounted for just 17 percent of general-fund expenditures. Combined, state and local governments spend 27 cents of every dollar they collect on public K–12 education system, but only 8 cents on Medicaid.
Filed under: Education and Child Policy; Tax and Budget Policy
Wednesday Links
- Cato experts will live-blog Obama’s State of the Union Address tonight. Join in, submit questions, and watch the speech right here on Cato@Liberty at 9:00 PM EST.
- A quick, ten-point libertarian State of the Union Address.
- One “Great Canard”: Federal Reserve Chairman Ben Bernanke argues that the Fed’s monetary policy was not responsible for the U.S. housing bubble.
- Podcast: “Obama’s Fiscal Right Fake” featuring Chris Edwards.
Tuesday Links
- Gene Healy on today’s election in Massachusetts: “If Republican Scott Brown wins the Massachusetts special election Tuesday, the Bay State will have its first GOP senator since the era when disco was king. And Brown will have the much-derided Tea Party legions to thank.”
- Why opportunistic politicians need to stop using times of crisis for their own ends and let the next one go to waste.
- George W. Obama? “Bush’s successor—who actually taught constitutional law at the University of Chicago—is continuing much of the Bush-Cheney parallel government and, in some cases, is going much further in disregarding our laws and the international treaties we’ve signed.”
- Can Google beat China? Cato’s Timothy B. Lee tackles the question in The New York Times Online.
- Podcast: “Our America Initiative” featuring former New Mexico Governor Gary Johnson. Johnson discusses out of control government spending, immigration, the Bush years, the drug war, defense policy and more.
Vermont’s Education Spending
I happened to catch the January 7 State of the State speech by Gov. Jim Douglas of Vermont on C-SPAN. It was a sober and serious presentation that laid out the facts about higher taxes and excessive spending, which are problems in just about every state.
Douglas on excessive education staffing Vermont:
Since 1997, school staffing levels have increased by 23 percent, while our student population has decreased by 11.5 percent. The number of teacher’s aides has gone up 43 percent. The number of support staff has gone up 48 percent. For every four fewer students a new teacher, teacher’s aide or staff person was hired. There are 11 students for every teacher – the lowest ratio in the country – and a staggering five students for every adult in our schools. With personnel costs accounting for 80 percent of total school spending, it’s no wonder that our K-12 system is among the most expensive in the nation at $14,000 per student per year.
Current staffing and compensation levels cannot be maintained as the student count continues to decline. If we simply move from our current 11 to 1 student/teacher ratio to 13 to 1, we would still have one of the lowest ratios in the country, while saving as much as $100 million. If we want to make education costs sustainable, we must return balance to classrooms. I propose that over four years we bring our statewide student/teacher ratio to affordable levels.
Douglas on excessive education bureaucracy:
Our school governance structures are a vestige of the 19th century and, like our unsustainable personnel costs, must be reformed. We have 290 separate school districts –- one for every 312 students –- 63 different supervisory bodies and a State Board of Education. That’s a total of 354 different education governing bodies for a state with only 251 towns.
Douglas on education financing:
At the root of our education funding challenge is a system that’s substantially eroding local control. Each year the connection between your school budget vote and your property tax bill becomes more and more distant. . . our education funding regime has grown into an unmanageable maze of exemptions, deductions, prebates, rebates, cost-shifts and hidden funding sources. Overlapping rings of complexity keep all but a few experts from understanding the many moving pieces. This is not good tax policy, not good government, and, if you ask most Vermonters, not good for much of anything. It’s time to pull back the curtains and let the sun shine in on how education is funded. Transparency – Who is paying? What are we paying for? What are the results?
Douglas on excessive education regulations:
Currently, Vermont schools are prohibited by law from accessing out-of-state distance learning programs … If a school sought to provide a new Chinese program for this student, or even a group of students, they would have to hire a new teacher with the expertise – a costly step. Allowing students to access approved distance learning programs from around the country is a simple, affordable change we can make to improve quality.
Excessive staffing, complex bureaucracy, complex financing, and excessive regulation are problems in government education systems across the country. There is no better time than today, when states have large budget gaps, to tackle these chronic problems.
So kudos to Douglas. His speech was a contrast to that of Colorado’s Gov. Bill Ritter, who followed him on C-SPAN uttering the usual lofty but vacuous speech we expect of most politicians.
Filed under: Education and Child Policy; Tax and Budget Policy
Blasphemy Laws Are an Admission of Failure
The Washington Post feature “On Faith” today discusses Ireland’s new, profoundly misguided blasphemy law. Blasphemers there can now be fined up to $35,000. That’s a lot of money for a few little words.
Atheist Ireland is testing — and protesting — the law by publishing blasphemous quotations like the following:
“Thou hast said: nevertheless I say unto you, Hereafter shall ye see the Son of man sitting on the right hand of power, and coming in the clouds of heaven.”
“Ye are of your father the devil, and the lusts of your father ye will do. He was a murderer from the beginning, and abode not in the truth, because there is no truth in him.”
“May Allah curse the Jews and Christians for they built the places of worship at the graves of their prophets.”
“Show me just what Muhammad brought that was new and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached.”
They are, respectively, from Jesus, Jesus, Muhammad, and Benedict XVI.
Maybe it’s an American thing, but the Post apparently couldn’t find any panelists to defend the law. These folks are all professional wordsmiths, of course, and these tend to be most supportive of the freedoms that they depend on the most. As I noted in my recent Policy Analysis, those who are most easily offended, and who value free speech the least, tend to gravitate not to newspapers, but to governments (and university administrations). That’s where the power is.
Susan Jacoby, for whom I have the utmost respect, even calls the law Pythonesque, likening it to the Ministry of Silly Walks. Of course, there’s this as well:
Blasphemy laws are oddities, because they concede an awful lot of emotional power to the blasphemer. They tell the world: My feelings are so very fragile. Or perhaps they say: My god is so very weak — so weak that he needs state protection against other gods, or even against mere potty-mouthed humans. Either way, it’s an embarrassing admission, but hardly the business of government. If your god can’t take the heat, he’s hardly a god at all.
Jesus and Mo put it very well indeed:
Palmer and Cowen on Libertarianism
On Tuesday I hosted a Book Forum for Tom Palmer’s new book, Realizing Freedom: Libertarian Theory, History, and Practice. You can see the video here. I thought Tyler Cowen’s comments were very astute, so I reproduce an abridged version here:
The first question is, “What do I, as a reader, see as the essential unity or unities in the book?” And I see really two. The first is I see this as a construction and articulation of a vision of what I call reasonable libertarianism. I think we’re in a world right now that is growing very partisan and very rabid, and a lot of things which are called libertarian in the Libertarian Party, or what you might call the Lew Rockwell / Ron Paul camp, are to my eye not exactly where libertarianism should be, and I think Tom has been a very brave and articulate advocate of a reasonable libertarianism. And if I ask myself, “Does the book succeed in this endeavor?” I would say, “Yes.”
The second unity in the book, I think, has to do with the last thirty years of world history. I know in the United States now there is less liberty. But overall, the world as a whole, over the last thirty years, has seen more movement towards more liberty than perhaps in any other period of human history. And I suspect most of these movements toward liberty will last. So there have been these movements towards liberty, and they have been motivated, in part, by ideas. The question arises, which are the ideas that have been the important ones for this last thirty years? And I view Tom’s book, whether he intended it as such or not, as a kind of guide to which have been the important ideas driving the last thirty years. And a lot of the book goes back into history pretty far – the eighteenth century, the Levellers, debates over natural rights – and I think precisely because it takes this broader perspective it is one of the best guides – maybe the best guide – to what have been the most important ideas driving the last thirty years (as opposed to the misleading ideas or the dead-end ideas). So that’s my take on the essential unities.
Another question you might ask about a collection of essays is, “Which of them did I like best?” I thought about this for a while, and I have two nominations. The first one is “Twenty Myths about Markets,” which is the essay on economics. I don’t know any piece by an economist that does such a good job of poking holes in a lot of economic fallacies and just laying out what you hear so often. You would think an economist would have written this long ago, but to the best of my knowledge, not.
The other favorite little piece of mine is called “Six Facts about Iraq,” which explains from Tom’s point of view – and Tom has been there a number of times – what’s going on in Iraq and why. It is only a few pages long, but I felt that I got a better sense of Iraq reading this short piece than almost anything else I’ve come across.
I’m not sure exactly what’s the common element between the two I liked best – they both start with a number – but I think the ones I liked best reminded me the most of Tom when he is talking. I had the sense of Tom being locked in a room, and forced to address a question, and not being allowed to leave until he had given his bottom line approach. And I think what he’s very good at through out the book is just getting directly to the point.
There’s more to Tyler’s comments, and lots more from both of them in response to questions, so check out the video.
Filed under: Cato Publications; General; Political Philosophy
Likely Supreme Court Tie Would Be a Loss to Property Owners
Today, the Supreme Court heard argument in Stop the Beach Renourishment v. Florida Department of Environmental Protection, which is a Fifth Amendment Takings Clause challenge involving beachfront property (that I previously discussed here).
Essentially, Florida’s ”beach renourishment” program created more beach but deprived property owners of the rights they previously had — exclusive access to the water, unobstructed view, full ownership of land up to the “mean high water mark,” etc. That is, the court turned beachfront property into “beachview” property. After the property owners successfully challenged this action, the Florida Supreme Court – “SCOFLA” for those who remember the Bush v. Gore imbroglio – reversed the lower court (and overturned 100 years of common property law), ruling that the state did not owe any compensation, or even a proper eminent domain hearing.
As Cato adjunct scholar and Pacific Legal Foundation senior staff attorney Timothy Sandefur noted in his excellent op-ed on the case in the National Law Journal, “[T]he U.S. Constitution also guarantees every American’s right to due process of law and to protection of private property. If state judges can arbitrarily rewrite a state’s property laws, those guarantees would be meaningless.”
I sat in on the arguments today and predict that the property owners will suffer a narrow 4-4 defeat. That is, Justice Stevens recused himself — he owns beachfront property in a different part of Florida that is subject to the same renourishment program — and the other eight justices are likely to split evenly. And a tie is a defeat in this case because it means the Court will summarily affirm the decision below without issuing an opinion or setting any precedent.
By my reckoning, Justice Scalia’s questioning lent support to the property owners’ position, as did Chief Justice Roberts’ (though he could rule in favor of the “judicial takings” doctrine in principle but perhaps rule for the government on a procedural technicality here). Justice Alito was fairly quiet but is probably in the same category as the Chief Justice. Justice Thomas was typically silent but can be counted on to support property rights. With Justices Ginsburg, Breyer, and Sotomayor expressing pro-government positions, that leaves Justice Kennedy, unsurprisingly, as the swing vote. Kennedy referred to the case as turning on a close question of state property law, which indicates his likely deference to SCOFLA.
For more analysis of the argument, see SCOTUSblog. Cato filed an amicus brief supporting the land owners here, and earlier this week I recorded a Cato Podcast to that effect. Cato also recently filed a brief urging the Court to hear another case of eminent domain abuse in Florida, 480.00 Acres of Land v. United States.
Comparing Vietnam and Afghanistan
Reports have leaked out over the past week that President Obama will announce that he is sending additional troops into Afghanistan. The only question seems to be whether he will send 30,000, 40,000 or some number in between. That is, frankly, not a very important issue.
And for all of his talk about “off ramps” for the United States if the Afghan government does not meet certain policy targets or “benchmarks,” the reality is that he is escalating our commitment. Since Obama has repeatedly asserted that the war in Afghanistan is a war of necessity, not a war of choice, his talk of off ramps is largely a bluff—and the Afghans probably know it.
There are obvious hazards in equating one historical event with a development in a different setting and time period, but there are a couple of very disturbing similarities between Vietnam and Afghanistan. In both cases, U.S. leaders opted to try to rescue a failing war by sending in more troops. And in both cases, Washington found itself desperately searching for a “credible” leader who could serve as an effective partner in the war effort.
The United States never found such a leader in Vietnam, and was frustrated by a parade of repressive, corrupt, and ineffectual political figures. That experience sounds more than a little like the problem the Bush and Obama administrations have encountered with Afghan President Hamid Karzai and his government. That fact alone suggests that our Afghanistan mission is not likely to turn out well.
Vikings and Pirates and Taxes, Oh My!
Today’s episode of “Hagar the Horrible” could be an epigraph for the new Fall 2009 issue of Cato Journal.
This issue includes Greek economists Michael Mitsopoulos and Theodore Pelagidis on “Vikings in Greece: Kleptocratic Interest Groups in a Closed, Rent-Seeking Economy” as well as Peter Leeson, author of The Invisible Hook: The Hidden Economics of Pirates, writing (with David Skarbek) on the effects of foreign aid. As for taxes, well, editor Jim Dorn has assembled a number of useful papers:
- Andrew T. Young on taxing, spending, and “fiscal illusion”
- Michael J. New on the “starve the beast” hypothesis
- Alan Reynolds on Paul Krugman’s misunderstanding of the monetary and fiscal lessons of the Great Depression and Japan’s lost decade
And on the general rapaciousness of the state, don’t miss Jason Kuznicki’s careful review of government racial discrimination from the end of Reconstruction until the civil rights movement.
Filed under: Cato Publications; General; Tax and Budget Policy
Monday Links
- Today marks 20 years since the fall of the Berlin Wall. Full round-up of commentary on that historic day, here.
- The heroes who helped bring down the Wall.
- One size does not fit all: How the federal health care overhaul will disrupt progress in states that are already addressing problems at home.
- Move over Fox News: The Obama administration takes aim at climate scientists.
- Podcast: “ObamaCare: A Bad Deal for Young Adults“
The Pelosi Bill’s High Water Mark
Democrats are having difficulty corralling 218 votes for the Pelosi bill because Americans do not want government to be as big and as powerful as the House leadership does. Pro-life Democrats do not want a government so big that it can force taxpayers to fund abortions. Pro-choice Democrats do not want a government so big that it uses subsidies to restrict access to abortion coverage. Other Democrats don’t want a government so big that it turns the United States into a welfare magnet.
The American people don’t want the Democrats’ approach to health care generally. The more time the public has to digest ObamaCare, the more they dislike it:
And the Pelosi bill is the most expensive and extreme version of ObamaCare. Opposition will climb higher when the public learns the bill costs some $1.5 trillion more than Democrats claim.
Even a majority vote would not necessarily indicate majority support for the Pelosi bill. Rep. Jim Cooper (TN) and other Democrats are voting aye only because they want to keep the process moving – i.e., because this isn’t the vote that counts.
Win or lose, tonight’s vote will be the high water mark for the Pelosi bill.
(Cross-posted at Politico’s Health Care Arena.)
Filed under: General; Health, Welfare & Entitlements
Arizona Republic Corrects its Tax Credit Savings Estimate in Response to Cato Input
Last Wednesday, the Arizona Republic published a fiscal impact assessment of the state’s education tax credit programs for k-12 private school choice. While the story itself was a good faith effort, there were errors in both its data and assumptions. I wrote an op-ed intended for the Republic correcting those errors and e-mailed a copy to the story’s author, Ron Hansen, the same day his story was published.
While the paper’s editorial page expressed no interest in printing my submission, the Republic published a correction today based on the accurate spending and savings figures I provided. In a phone call, Hansen indicated that the correction was precipitated by my e-mail, though he opted not to mention that in his story, saying that he didn’t think the source of the correction was important.
On the one hand, Hansen and the Republic are to be commended for publishing a correction, and it should be noted that the bad data were provided to them by Arizona Director of School Finance, Yousef Awwad. On the other hand, their correction is incomplete — acknowledging only the bad data and not the mistaken assumption explained in my op-ed.
So while the Republic has now raised its savings estimate from their originally reported $3 million to a corrected $8.3 million, they have yet to explain that this figure could actually understate the total savings.
Still, their response is better than I expected. Most newspapers, in my experience, do absolutely nothing when factual and reasoning errors in their education stories are brought to their attention, and in fact go on to repeat those same errors in subsequent stories.
And they wonder why two thirds of the public now doubt their credibility….
Revenge of the Laffer Curve, Part II
An earlier post revealed that higher tax rates in Maryland were backfiring, leading to less revenue from upper-income taxpayers. It seems New York politicians are running into a similar problem. According to an AP report, the state’s 100 richest taxpayers have paid $1 billion less than expected following a big tax hike. The story notes that several rich people have left the state, and all three examples are about people who have redomiciled in Florida, which has no state income tax. For more background information on why higher taxes on the rich do not necessarily raise revenue, see this three-part Laffer Curve video series (here, here, and here):
Early data from New York show the higher tax rates for the wealthy have yielded lower-than-expected state wealth.
…[New York Governor David] Paterson said last week that revenues from the income tax increases and other taxes enacted in April are running about 20 percent less than anticipated.
…So far this year, half of about $1 billion in expected revenue from New York’s 100 richest taxpayers is missing.
…State officials say they don’t know how much of the missing revenue is because any wealthy New Yorkers simply left. But at least two high-profile defectors have sounded off on the tax changes: Buffalo Sabres owner Tom Golisano, the billionaire who ran for governor three times and who was paying $13,000 a day in New York income taxes, and radio talk-show host Rush Limbaugh.
…Donald Trump told Fox News earlier this year that several of his millionaire friends were talking about leaving the state over the latest taxes.
Nanny State Doesn’t Like Competition – the English Version
A previous post by David Boaz poked fun at bureaucrats in Michigan for threatening a woman for the ostensible crime of keeping an eye on her neighbors’ kids without a government permit. English bureaucrats are equally clueless, badgering two women who take turns caring for each other’s kids. The common theme, of course, is that bureaucrats lack common sense — but the real lesson is that this is the inevitable consequence of government intervention (especially when politicians say they are “doing it for the children). The BBC reports:
England’s Children’s Minister wants a review of the case of two police officers told they were breaking the law, caring for each other’s children.
Ofsted said the arrangement contravened the Childcare Act because it lasted for longer than two hours a day, and constituted receiving “a reward”.
It said the women would have to be registered as childminders.
…Ms Shepherd, who serves with Thames Valley Police, recalled: “A lady came to the front door and she identified herself as being from Ofsted. She said a complaint had been made that I was illegally childminding.
“I was just shocked – I thought they were a bit confused about the arrangement between us. So I invited her in and told her situation – the arrangement between Lucy and I – and I was shocked when she told me I was breaking the law.”
…Minister for Children, Schools and Families Vernon Coaker insisted the Childcare Act 2006 was in place “to ensure the safety and wellbeing of all children”.
Filed under: Government and Politics; International Economics and Development; Regulatory Studies
Debt Aggravates Spending Disease
USA Today’s Dennis Cauchon reports that ”state governments are rushing to borrow money to take advantage of cheap and plentiful credit at a time when tax collections are tumbling.” That will allow them to “avoid some painful spending cuts,” Cauchon notes, but it will sadly impose more pain on taxpayers down the road.
When politicians have the chance to act irresponsibly, they will act irresponsibly. Give them low interest rates and they go on a borrowing binge. The result is that they are in over their heads with massive piles of bond debt on top of the huge unfunded obligations they have built up for state pension and health care plans.
The chart shows that total state and local government debt soared 93 percent this decade. It jumped from $1.2 trillion in 2000 to $2.3 trillion by the second quarter of 2009, according to Federal Reserve data (Table D.3).
Government debt has soared during good times and bad. During recessions, politicians say that they need to borrow to avoid spending cuts. But during boomtimes, such as from 2003 to 2008, they say that borrowing makes sense because an expanding economy can handle a higher debt load. I’ve argued that there is little reason for allowing state and local government politicians to issue bond debt at all.
Unfortunately, the political urge to spend has resulted in the states shoving a massive pile of debt onto future taxpayers at the same time that they have built up huge unfunded obligations for worker retirement plans.
We’ve seen how uncontrolled debt issuance has encouraged spending sprees at the federal level. Sadly, it appears that the same debt-fueled spending disease has spread to the states and the cities.
Cato on Facebook
Cato on Twitter
Cato on YouTube
Cato Tweets