Over at Downsizing the Federal Government, Chris Edwards has released an updated version of his “Plan to Cut Spending and Balance the Federal Budget.” The plan proposes spending cuts of more than $1 trillion annually by 2021, which would balance the budget without resorting to damaging tax increases. Federal spending would be reduced to 18 percent of gross domestic product by 2021 under the plan, which compares to President Obama’s projected spending that year of 24.2 percent of GDP.

Some key points:

• No sacred cows are spared. Defense, domestic, and so-called entitlement programs are all cut.

• The plan recognizes that the scope of federal activities must be curtailed. It would begin the reversal of decades of federal expansion into hundreds of areas that should be left to state and local governments, businesses, charities, and individuals.

• Instead of viewing federal spending cuts as a necessary evil, the plan recognizes that the cuts would shift resources from often mismanaged and damaging government programs to the more productive private sector, thus increasing overall GDP.

• The plan doesn’t achieve budget balance by increasing taxes. Under current tax policy, federal revenues as a share of GDP will gradually return to levels considered normal in recent decades. It is federal spending that has reached abnormally high levels. It must be reduced in order to get the government’s spiraling debt under control.

Updated Cato Budget Plan is a post from Cato @ Liberty - Cato Institute Blog

Britain may have given the world freedom as we understand it (see The Liberty of Ancients Compared with that of Moderns by Benjamin Constant), but you would not know it from the last prime ministerial debate that took place last Thursday. The candidates (Conservative David Cameron, Labour’s Gordon Brown and Liberal Democrat Nick Clegg) used the word “freedom” only 2 times. They said the word “free” 5 times, but all in the context of the supposedly “free” goodies, which they promised to lavish on the electorate. Words “responsible” and “responsibility” fared somewhat better (4 times). But the winning words were “fair” and “fairness” that were mentioned 22 times — almost always in connection with taxing the rich. Here is a typical example:

Brown: “But I come back to the central question about fairness that has been raised by our questioner. How can David [Cameron] possibly justify an inheritance tax cut for millionaires at a time when he wants to cut Child Tax Credits? Let’s be honest. The inheritance tax threshold for couples is £650,000, if your house is worth less than that you pay no inheritance tax. What David [Cameron] is doing is giving 3,000 people, the richest people in the country, he’s going to give them £200,000 each a year. That is simply unfair.”

It was Gordon Brown, the current Prime Minister, who increased the top rate of income tax to 50%. Neither Clegg nor the supposedly business-friendly Cameron have proposed to cut that rate. Indeed, “fairness” in British politics seems to amount to little more than taxing the most productive members of society “until the pipes squeak.” Those words were uttered by Denis Healy who was the Chancellor of the Exchequer in the 1970s. It was under his leadership that the UK ran out of money and had to borrow billions from the IMF. It turns out that when you tax the rich too much, they will work less or leave for a more hospitable jurisdiction. Margaret Thatcher and Ronald Reagan understood it. Messrs Cameron, Clegg and Brown do not.



Forget Freedom. The UK Poll Is All About ‘Fairness’ is a post from Cato @ Liberty - Cato Institute Blog

As we enjoy the opening week of the new baseball season, we should reflect on the dastardly organization that spends too much money and raises the price of baseball for everyone.

No, it’s not the New York Yankees: it’s the United States government.

You see, as discussed in this recent New York Times op-ed, the price of baseball has increased all across the Major Leagues because of the tax write-off (read: subsidy) that businesses get to treat clients and employees to ball games:

There are many reasons for the price explosion, but a critical factor has been the ability of businesses to write off tickets as entertainment expenses — essentially a huge, and wholly unnecessary, government subsidy.

These deductions have led to higher ticket prices in two ways. On the demand side, they have fueled competition for scarce seats, with business taxpayers bidding in part with dollars they save through the deductions.

While baseball parks built in the 1960s and before held as many as 56,000 seats, the modern trend is toward smaller-capacity parks, with a higher percentage of total space dedicated to skyboxes. The new Yankee Stadium, the only major-league park built since 2000 with more than 44,000 seats, has 3,000 fewer seats than its 1923 predecessor but almost three times as many skybox suites.

Of course, libertarians support low general taxes for a variety of reasons, but targeted tax breaks for luxury items pad the pockets of billionaire sports team owners, give a discount to companies showing off their “generosity” to clients, and generally distort the economy, all at a cost to taxpayers (including those who aren’t even baseball fans).

Boo! America’s national pastime of baseball should not be corrupted by national and state governments’ parochial pastime of corporate welfare.

For more in-depth analysis on the business of sports, read anything by Andrew Zimbalist or Home Team by my former professor Michael Danielson.  (Danielson taught a great class on the political economy of sports; my classmates who thought it would be a gut were in for a rude awakening.)

H/T: Above the Law

Play Ball! But Not With Taxpayer Money is a post from Cato @ Liberty - Cato Institute Blog

1. Additional federal spending transfers resources from the more productive private sector to the less productive public sector of the economy. The bulk of federal spending goes toward subsidies and benefit payments, which generally do not enhance economic productivity. With lower productivity, average American incomes will fall.

2. As federal spending rises, it creates pressure to raise taxes now and in the future. Higher taxes reduce incentives for productive activities such as working, saving, investing, and starting businesses. Higher taxes also increase incentives to engage in unproductive activities such as tax avoidance.

3. Much federal spending is wasteful and many federal programs are mismanaged. Cost overruns, fraud and abuse, and other bureaucratic failures are endemic in many agencies. It’s true that failures also occur in the private sector, but they are weeded out by competition, bankruptcy, and other market forces. We need to similarly weed out government failures.

4. Federal programs often benefit special interest groups while harming the broader interests of the general public. How is that possible in a democracy? The answer is that logrolling or horse-trading in Congress allows programs to be enacted even though they are only favored by minorities of legislators and voters. One solution is to impose a legal or constitutional cap on the overall federal budget to force politicians to make spending trade-offs.

5. Many federal programs cause active damage to society, in addition to the damage caused by the higher taxes needed to fund them. Programs usually distort markets and they sometimes cause social and environmental damage. Some examples are housing subsidies that helped to cause the financial crises, welfare programs that have created dependency, and farm subsidies that have harmed the environment.

6. The expansion of the federal government in recent decades runs counter to the American tradition of federalism. Federal functions should be “few and defined” in James Madison’s words, with most government activities left to the states. The explosion in federal aid to the states since the 1960s has strangled diversity and innovation in state governments because aid has been accompanied by a mass of one-size-fits-all regulations.

For more, see DownsizingGovernment.org.

Six Reasons to Downsize the Federal Government is a post from Cato @ Liberty - Cato Institute Blog

Cato experts put some of President Obama’s core State of the Union claims to the test. Here’s what they found.

THE STIMULUS

Obama’s claim:

The plan that has made all of this possible, from the tax cuts to the jobs, is the Recovery Act. That’s right — the Recovery Act, also known as the Stimulus Bill. Economists on the left and the right say that this bill has helped saved jobs and avert disaster.

Back in reality: At the outset of the economic downturn, Cato ran an ad in the nation’s largest newspapers in which more than 300 economists (Nobel laureates among them) signed a statement saying a massive government spending package was among the worst available options. Since then, Cato economists have published dozens of op-eds in major news outlets poking holes in big-government solutions to both the financial system crisis and the flagging economy.

CUTTING TAXES

Obama’s claim:

Let me repeat: we cut taxes. We cut taxes for 95 percent of working families. We cut taxes for small businesses. We cut taxes for first-time homebuyers. We cut taxes for parents trying to care for their children. We cut taxes for 8 million Americans paying for college. As a result, millions of Americans had more to spend on gas, and food, and other necessities, all of which helped businesses keep more workers.

Back in reality: Cato Director of Tax Policy Studies Chris Edwards: “When the president says that he has ‘cut taxes’ for 95 percent of Americans, he fails to note that more than 40 percent of Americans pay no federal incomes taxes and the administration has simply increased subsidy checks to this group. Obama’s refundable tax credits are unearned subsidies, not tax cuts.”

Visit Cato’s Tax Policy Page for much more on this.

SPENDING FREEZE

Obama’s claim:

Starting in 2011, we are prepared to freeze government spending for three years.

Back in reality: Edwards: “The president’s proposed spending freeze covers just 13 percent of the total federal budget, and indeed doesn’t limit the fastest growing components such as Medicare.

“A better idea is to cap growth in the entire federal budget including entitlement programs, which was essentially the idea behind the 1980s bipartisan Gramm-Rudman-Hollings law. The freeze also doesn’t cover the massive spending under the stimulus bill, most of which hasn’t occurred yet. Now that the economy is returning to growth, the president should both freeze spending and rescind the remainder of the planned stimulus.”

Plus, here’s why these promised freezes have never worked in the past and a chart illustrating the fallacy of Obama’s spending claims.

JOB CREATION

Obama’s claim:

Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. 200,000 work in construction and clean energy. 300,000 are teachers and other education workers. Tens of thousands are cops, firefighters, correctional officers, and first responders. And we are on track to add another one and a half million jobs to this total by the end of the year.

Back in reality: Cato Policy Analyst Tad Dehaven: “Actually, the U.S. economy has lost 2.7 million jobs since the stimulus passed and 3.4 million total since Obama was elected. How he attributes any jobs gains to the stimulus is the fuzziest of fuzzy math. ‘Nuff said.”

State of the Union Fact Check is a post from Cato @ Liberty - Cato Institute Blog

Last year I tried to compile a list of all the taxes President Obama and his allies were maneuvering to impose. But each week brings new ideas. Just recently we’ve heard about a bank tax, applying the Medicare tax to capital gains and other “passive” or “unearned” income, raising the Medicare tax rate, raising or broadening the capital gains tax, an income tax “surtax,” a tax on tanning — and of course the tax on private health insurance to pay for the expansion of government insurance has moved to the top of the list.

And all of these on top of these ideas proposed or publicly floated by President Obama and his aides and allies:

• Raise the top income tax rates from their current 33 percent and 35 percent rates to 36 percent and 39.6 percent in 2011
• Limit itemized deductions for people paying high rates
• Increase capital gains and dividend taxes by 33 percent for people paying high income tax rates
• Impose a value-added tax (VAT) on all goods and services
• Raise the Social Security tax by lifting the cap
• Raise a variety of business taxes by $353 billion over 10 years, including repeal of LIFO rules, restoring Superfund taxes, seven tax increases on energy companies, and more
• Tax employer-provided health benefits
• Implement a cap-and-trade system for emissions permits, the functional equivalent of a massive new tax
• Tax drivers on their mileage
• Change rules to raise gift taxes
• Restore the estate tax at 45 percent
• Raise cigarette tax by 62 cents a pack
• Raise taxes on beer, wine, liquor, and soda
• Eliminate health savings accounts and flexible savings accounts
• Tax employer-provided cellphones
• Tax AIG employee bonuses
• Raise taxes on overseas corporate earnings

Back in July the Wall Street Journal reported:

President Barack Obama’s health-care plan is in jeopardy because of serious concerns that costs will spin out of control. As much as anyone, it’s White House budget director Peter Orszag’s job to save it…

After his TV appearances, he went straight to the Senate Finance Committee, where he spent three hours with committee aides brainstorming about how to pay for the trillion-dollar legislation. At one point, they flipped through the tax code, looking for ideas.

Flipping through the tax code, looking for ideas on how to relieve us of more of our money. That’s a great visual of Obama’s Washington. President Obama and his allies look at the vast abundance in America, and all they see is wealth that they don’t yet control. It annoys them. They could do so much good with that money. How dare bankers and businesses, farmers and entrepreneurs, widows and foundations hold tight to their wealth, when government has so many plans to fund? “Let’s go and get it from those who’ve got it,” they cry, in the immortal words of Sen. Barbara Mikulski.

But perhaps Thomas Jefferson’s words are even more immortal and equally applicable: “He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people, and eat out their substance.”

Democrats’ Voracious Search for New Tax Revenue is a post from Cato @ Liberty - Cato Institute Blog

We’ve got an IRS Commissioner who doesn’t even do his own taxes, and is not embarrassed about it. We’ve got complex deductions that nobody understands, including the government, as the Maryland nurse with the MBA found out. We’ve got a Treasury Secretary and other high appointees who apparently cheated on their taxes. And we’ve got the Democrats hell-bent on greatly increasing the power and responsibilities of the overwhelmed IRS with their health care bill.

Now, more than ever, it’s time to scrap the current income tax and put in a flat tax. Or at least we could take a big jump in that direction with a “Simplified Tax,” as discussed in a new National Academies report. Get rid of all almost all deductions, exemptions, and credits and drop individual rates to 10 and 25 percent. While we’re at it, let’s drop the federal corporate rate to 25 percent or less.

For more on the two-rate tax idea, see my Options for Tax Reform and Rep. Paul Ryan’s American Roadmap.

Reforming the Insane Tax Code is a post from Cato @ Liberty - Cato Institute Blog

Suppose you’re a family of four at or near the federal poverty level.  Under current law, if you earn an additional dollar, you get to keep around 60-70 cents.

Under the House and Senate health care bills, however, you would get to keep maybe 38 cents.  Or 26 cents.  Or maybe just 18 cents.

The following graph (from my recent study, “Obama’s Prescription for Low-Wage Workers: High Implicit Taxes, Higher Premiums”) shows that under the House and Senate bills, the combination of (1) a mandate tax and (2) subsidies that disappear as income rises would impose implicit tax rates on poor families that reach as high as 82 percent over broad ranges of income.

This graph actually smooths out some rather bumpy implicit tax rates that spike as high as 174 percent.

In the 1980s and 1990s, the public saw that too-generous government subsidies can actually trap people in a cycle of poverty and dependence.  President Obama and his congressional allies seem not to have learned that lesson.

How ObamaCare Would Keep the Poor Poor is a post from Cato @ Liberty - Cato Institute Blog

In a new study titled, “Obama’s Prescription for Low-Wage Workers: High Implicit Taxes, Higher Premiums,” I show that the House and Senate health care bills would impose implicit tax rates on low-wage workers that exceed 100 percent.  Here’s the executive summary:

House and Senate Democrats have produced health care legislation whose mandates, subsidies, tax penalties, and health insurance regulations would penalize work and reward Americans who refuse to purchase health insurance. As a result, the legislation could trap many Americans in low-wage jobs and cause even higher health-insurance premiums, government spending, and taxes than are envisioned in the legislation.

Those mandates and subsidies would impose effective marginal tax rates on low-wage workers that would average between 53 and 74 percent— and even reach as high as 82 percent—over broad ranges of earned income. By comparison, the wealthiest Americans would face tax rates no higher than 47.9 percent.

Over smaller ranges of earned income, the legislation would impose effective marginal tax rates that exceed 100 percent. Families of four would see effective marginal tax rates as high as 174 percent under the Senate bill and 159 percent under the House bill. Under the Senate bill, adults starting at $14,560 who earn an additional $560 would see their total income fall by $200 due to higher taxes and reduced subsidies. Under the House bill, families of four starting at $43,670 who earn an additional $1,100 would see their total income fall by $870.

In addition, middle-income workers could save as much as $8,000 per year by dropping coverage and purchasing health insurance only when sick. Indeed, the legislation effectively removes any penalty on such behavior by forcing insurers to sell health insurance to the uninsured at standard premiums when they fall ill. The legislation would thus encourage “adverse selection”—an unstable situation that would drive insurance premiums, government spending, and taxes even higher.

See also my Kaiser Health News oped, “Individual Mandate Would Impose High Implicit Taxes on Low-Wage Workers.”

And be sure to pre-register for our January 28 policy forum, “ObamaCare’s High Implicit Tax Rates for Low-Wage Workers,” where the Urban Institute’s Gene Steuerle and I will discuss these obnoxious implicit tax rates.

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

Dear Poor People: Please Remain Poor. Sincerely, ObamaCare is a post from Cato @ Liberty - Cato Institute Blog

Chris Edwards and I wrote a nice book on this topic, but maybe this video gets the point across without having to turn a page.

Here’s another video, hopefully more substantive, on the issue of tax competition. And here’s one on the perils of class warfare.

Obama Has Declared Open Season on Golden Geese. Good Idea or Not? is a post from Cato @ Liberty - Cato Institute Blog

In a post at the Enterprise Blog two days ago, economist Mark Perry deftly parodies a typical mainstream media account of trade protectionism by editing the story in redline to contrast its original presentation with its true significance. I recommend reading the whole thing, but here’s the first paragraph:

WASHINGTON POST (Reuters) – A U.S. trade panel gave final approval on Wednesday to duties taxes ranging from 10 to 16 percent on cost-conscious firms in the U.S. who purchase low-priced Chinese-made steel pipe rather than high-price domestic pipe, in the biggest U.S. trade case to date against China American companies (and their shareholders, employees, and customers) who shop globally for their inputs and find the best value in China.

Perry’s point—and I share his frustration—is that the mainstream media typically fail to convey even a sense of the costs of U.S. protectionism to U.S. interests even though Americans (and non-Americans living in the U.S.) bear the greatest burden of that protectionism. When the U.S. government imposes duties on Chinese steel, it is imposing taxes on U.S. consuming industries, their employees, their shareholders, and their customers.

Considering that more than half of the value of all U.S. imports in a typical year is raw materials and intermediate goods (i.e., inputs for producers operating in the United States, who employ people, transact with other businesses, and pay taxes in the United States), the number of U.S. victims of U.S. import taxes is much larger than one can ever glean from a typical media account. Taxes on Chinese-made ”Oil Country Tubular Goods” or OCTG (the subject in the article Perry edits), which are used for oil exploration and transport, will raise costs in the energy industry, which are likely to be passed onto consumers in the form of higher energy prices.

As described in this paper, trade is no longer a competition between “Us and Them.” There is competition between entities that—because of the proliferation of cross-border investment and transnational production and supply chains—often defy any meaningful national identification. But that competition is preceded by collaboration and cooperation between entities in different countries. The factory floor has broken through its walls and now spans borders and oceans—a fact that renders U.S. workers and workers in other countries complementary in more and more cases, and a fact that amplifies the cost of trade barriers.

But media—chained to the false “Us versus Them” paradigm—describe protectionist policies as actions taken by one national monolith against another, and convey the impression that American readers should be cheering for Team America. It is a worldview that conflates the well-being of “our producers” with some homogenized conception of “the national interest.” It is the same misguided scoreboard mentality that colors reporting of the trade account, where exports are deemed “good” and imports “bad.”  And, it is this simplistic, misleading characterization that, in my opinion, is most responsible for withering public opinion about trade and globalization over the past decade.

I look forward to more of Dr. Perry’s editing projects.

Mainstream Media’s Trade Gap is a post from Cato @ Liberty - Cato Institute Blog

This is the last week to buy presents, so for those of you who can’t find zhu zhu pets, here are a couple of options sure to bring a smile. The first option is a long-sleeved t-shirt honoring the Secretary of the Treasury.

If t-shirts are not high on the list for your friends and family, here’s something everyone can use. There are more than 70,000 pages of tax law and IRS regulation, and although there are not that many squares in this roll, all taxpayers will enjoy creating their own “performance art” with this gift (sadly, does not include a grant from the NEA).

Last Minute Christmas Shopping? is a post from Cato @ Liberty - Cato Institute Blog

It’s been a rough couple of weeks for Greece, which has been battered by rumors of government default. Interest rates have been climbing, as investors are nervous about state finances, and the country’s debt rating has been downgraded.

Not surprisingly, Greek politicians are dealing with the crisis in large part by further increasing the tax burden. One particularly horrible idea is a 90 percent tax on bank bonus payments. I don’t know if lawmakers in Athens have heard of the Laffer Curve, but they’re about to get a real-world lesson that will teach them how punitive tax rates lead to less revenue.

For those who wonder how Greece got into this mess, here’s a quick chart I put together, based on OECD fiscal data. Don’t be  surprised if America has a similar chart in about 10 years.

Is Greece’s Fiscal Crisis Caused by too Much Spending or too Little Revenue? is a post from Cato @ Liberty - Cato Institute Blog

Huge deficit spending, a supposed stimulus bill, and financial bailouts by the Bush administration failed to stave off a deep recession. President Obama continued his predecessor’s policies with an even bigger stimulus, which helped push the deficit over the unimaginable trillion dollar mark. Prosperity hasn’t returned, but the president is persistent in his interventionist beliefs. In his speech yesterday, he told the country that we must “spend our way out of this recession.”

While a dedicated segment of the intelligentsia continues to believe in simplistic Kindergarten Keynesianism, average Americans are increasingly leery. Businesses and entrepreneurs are hesitant to invest and hire because of the uncertainty surrounding the President’s agenda for higher taxes, higher energy costs, health care mandates, and greater regulation. The economy will eventually recover despite the government’s intervention, but as the debt mounts, today’s profligacy will more likely do long-term damage to the nation’s prosperity.

Some leaders in Congress want a new round of stimulus spending of $150 billion or more. The following are some of the ways that money might be spent from the president’s speech:

• Extend unemployment insurance. When you subsidize something you get more it, so increasing unemployment benefits will push up the unemployment rate, as Alan Reynolds notes.”

• More infrastructure spending. This will lead to misallocation of resources since only markets can allocate resources efficiently. Governments allocate capital on the basis of politics instead of economics.

• “Cash for Caulkers.” This would be like Cash for Clunkers except people would get tax credits to make their homes more energy efficient. Any program modeled off “the dumbest government program ever” should be put back on the shelf. 

• More Small Business Administration lending. A little noticed SBA program created by the stimulus bill offered banks an “unprecedented” 100 percent guarantee on loans to small businesses. The program has an anticipated default rate of 60 percent. Small businesses need lower taxes and fewer regulations, not a government program that perpetuates more moral hazard.

• More aid to state and local governments. State and local government should be using the recession to implement reforms that will prevent them from going on another unsustainable spending spree when the economy recovers. Also, we need fewer state and local government employees – not more – as they’re becoming an increasing burden on taxpayers.

The president said his administration was “forced to take those steps largely without the help of an opposition party which, unfortunately, after having presided over the decision-making that led to the crisis, decided to hand it to others to solve.” Mr. President, nobody has forced you to do anything. You’ve chosen to embrace – and expand upon – the big spending policies that were a hallmark of your predecessor’s administration.

Spending Our Way Into More Debt is a post from Cato @ Liberty - Cato Institute Blog

• Chris Preble on Afghanistan: It’s time to leave. “We don’t need 100,000 soldiers in Afghanistan chasing down 100 al-Qaeda fighters.”

• Malou Innocent on Obama’s West Point speech.

• A few possible outcomes of U.S. military engagement in the Middle East.

• More updates on ClimateGate.

• An overview of all the hidden taxes in the health care overhaul.

• Podcast: “Obama’s Afghanistan Contradiction“

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

President Obama’s approach to health care reform — forcing taxpayers to subsidize health insurance for tens of millions of Americans — cannot not change the status quo on abortion.

Either those taxpayer dollars will fund abortions, or the restrictions necessary to prevent taxpayer funding will curtail access to private abortion coverage. There is no middle ground.

Thus both sides’ fears are justified. Both sides of the abortion debate are learning why government should not subsidize health care. Tip of the hat to President Obama for creating this teachable moment.

Meanwhile, Catholics should be outraged at the United States Conference of Catholic Bishops (to which my grandfather served as counsel). Yes, the USCCB helped prevent taxpayer funding of abortions in the House bill. But at the same time, those naughty bishops have abandoned the Church’s doctrine of subsidiarity by endorsing the rest of the Democrats’ plan to centralize power in Washington.

As it happens, Caesar is the main source of funding for Catholic hospitals. That may explain why the bishops are so eager to render unto, ahem, Him.

Cross-posted at Politico’s Health Care Arena.

Abortion Funding and Health Care is a post from Cato @ Liberty - Cato Institute Blog

Blogger Matt Yglesias has described my CNN op-ed on health care as follows:

Meanwhile, in Harvard economist and Cato Institute senior fellow Jeffrey Miron’s dystopia, if your parents wind up with no money through bad luck or poor decision-making and then you get sick you’ll just die on the street for lack of money.

Did I really say such an outrageous thing? Well, I did not use exactly those words (as Matt makes clear), but yes, that is the logical implication of my position.

And I stand by it. Here’s why.

First, my assessment is that even with no government health insurance, hardly anyone would die on the street for lack of health care. The poor would use their income transfers to buy some health care or insurance. The poor would receive private charity. And health care would be far less expensive due to elimination of the distortions caused by government health insurance.

Second, my position is that government provision of health insurance is enormously inefficient: it means worse health care for everyone, and it wastes resources that can be put to other uses. So the negative of having a few people suffer without government health insurance must be balanced against the good of having better medical care for all and against the good that can be accomplished with those saved resources.

That good might be lower taxes for everyone, or more government spending on education, or greater public health spending to combat HIV in poor countries. Whatever the alternate uses turn out to be, one cannot escape the fact that a tradeoff exists between protecting the poor and other goals.

C/P Libertarianism, from A to Z

‘Letting the Sick Die on the Street’ is a post from Cato @ Liberty - Cato Institute Blog

That sensible — and hopefully not rhetorical — question was posed by Democratic Senator Mary Landrieu (D-LA) on National Public Radio, according to The Hill.

Regarding recent polling that shows that a new Fannie Med (my term) commands majority support among the public, Landrieu quipped, “I think if you asked, ‘Do you want a public option, but it would force the government to go bankrupt?’, people would say no.”

Real health care reform wouldn’t bankrupt taxpayers or the government.

“Why Don’t We Fix the Two Public Options We Have Now instead of Creating a Third One?” is a post from Cato @ Liberty - Cato Institute Blog

According to reports, executives from bailed out companies Citigroup, Bank of America, GM, Chrysler, GMAC, Chrysler Financial and AIG are going to see major pay cuts this year, which will be enforced by the president’s “pay czar,” Kenneth R. Feinberg. WaPo:

NEW YORK — The Obama administration plans to order companies that have received exceptionally large amounts of bailout money from the government to slash compensation for their highest-paid executives by about half on average, according to people familiar with the long-awaited decision.

The administration will also curtail many corporate perks, including the use of corporate jets for personal travel, chauffeured drivers and country club fee reimbursement, people familiar with the matter have said. Individual perks worth more than $25,000 have received particular scrutiny.

The American people have every right to be upset about generous compensation packages for executives at financial firms that are being kept alive by subsidies and bailouts.

But their ire should be directed at the bailouts, because that is the policy that redistributes money from the average taxpayer and puts it in the pockets of incompetent executives. Unfortunately, rather than deal with the underlying problems of bailouts and intervention, some politicians want to impose controls on salaries. This might be a tolerable second-best (or probably fifth-best) outcome if the compensation limits only applied to companies mooching off the taxpayers, but some politicians want to use the financial crisis as an excuse to regulate compensation at firms that do not have their snouts in the public trough.

This would be a big mistake. So long as rich people make money using non-coercive means, politicians should butt out. It should not matter whether we are talking about Tiger Woods, Brad Pitt, or a corporate CEO. The market should determine compensation, not political deal making. Markets don’t produce perfect outcomes, to be sure, but political intervention invariably produces terrible outcomes.

I debate this further on CNBC:

C/P The Hill

U.S. Cutting Pay for Bailed Out Company Executives 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