Cochrane on ObamaCare’s Contraceptive-Coverage Mandate
My Cato colleague John Cochrane – who is way smarter than I am — has a generally excellent op-ed in today’s Wall Street Journal on ObamaCare’s contraception mandate:
Salting mandated health insurance with birth control is exactly the same as a tax—on employers, on Catholics, on gay men and women, on couples trying to have children and on the elderly—to subsidize one form of birth control…
The tax rate and spending debates that occupy the media are a small part of the effective taxes and spending that the government achieves by these regulatory mandates…
The natural compromise is simple: Birth control, abortion and other contentious practices are permitted. But those who object don’t have to pay for them. The federal takeover of medicine prevents us from reaching these natural compromises and needlessly divides our society…
Sure, churches should be exempt. We should all be exempt.
My only quibble is with his claim, “Insurance is a bad idea for small, regular and predictable expenses.”
That’s generally true. But medicine is an area where, potentially at least, small up-front expenditures (e.g., on hypertension control) could prevent large losses down the road. So it may be economically efficient for health plans to cover some small, regular, and predictable expenses. Both the carrier and the consumer would benefit. In fact, that would be the market’s way of telling otherwise uninformed consumers, “Hey! Controlling your hypertension is a really good for you!” And really, if someone is so risk-averse that they want health insurance with first-dollar coverage of everything – and they’re willing to pay the outrageous premiums that would accompany such coverage — why should we take issue with that?
ObamaCare’s contraceptive-coverage mandate demonstrates that government does a horrible job of picking only those types of “preventive” services for which first-dollar coverage will leave consumers better off. But I also think advocates of free-market health care generally need to let go of the idea that health insurance exists only for catastrophic expenses.
The Ethos of Universal Coverage
Associated Press photojournalist Noah Berger captured this thousand-word image near the Occupy Oakland demonstrations last month.
(AP Photo/Noah Berger)
Many Cato@Liberty readers will get it immediately. They can stop reading now.
For everyone else, this image perfectly illustrates the ethos of what I call the Church of Universal Coverage.
Like everyone who supports a government guarantee of access to medical care, the genius who left this graffiti on Kaiser Permanente’s offices probably thought he was signaling how important other human beings are to him. He wants them to get health care after all. He was willing to expend resources to transmit that signal: a few dollars for a can of spray paint (assuming he didn’t steal it) plus his time. He probably even felt good about himself afterward.
Unfortunately, the money and time this genius spent vandalizing other people’s property are resources that could have gone toward, say, buying him health insurance. Or providing a flu shot to a senior citizen. This genius has also forced Kaiser Permanente to divert resources away from healing the sick. Kaiser now has to spend money on a pressure washer and whatever else one uses to remove graffiti from those surfaces (e.g., water, labor).
The broader Church of Universal Coverage spends resources campaigning for a government guarantee of access to medical care. Those resources likewise could have been used to purchase medical care for, say, the poor. The Church’s efforts impel opponents of such a guarantee to spend resources fighting it. For the most part, though, they encourage interest groups to expend resources to bend that guarantee toward their own selfish ends. The taxes required to effectuate that (warped) guarantee reduce economic productivity both among those whose taxes enable, and those who receive, the resulting government transfers.
In the end, that very government guarantee ends up leaving people with less purchasing power and undermining the market’s ability to discover cost-saving innovations that bring better health care within the reach of the needy. That’s to say nothing of the rights that the Church of Universal Coverage tramples along the way: yours, mine, Kaiser Permanente’s, the Catholic Church’s…
I see no moral distinction between the Church of Universal Coverage and this genius. Both spend time and money to undermine other people’s rights as well as their own stated goal of “health care for everybody.”
Of course, it is always possible that, as with their foot soldier in Oakland, the Church’s efforts are as much about making a statement and feeling better about themselves as anything else.
Should New Hampshire Create a Health Insurance Exchange?
The liberty-lovers at New Hampshire’s Josiah Bartlett Center for Public Policy have produced this video of my appearance before the New Hampshire House of Representatives where I argued against creating health insurance “Exchanges”:
(Notice my rapt audience.)
The Real Tragedy of the Komen/Planned Parenthood Flapdoodle
…is that it overshadowed news that the U.S. House of Representatives overwhelmingly voted to repeal one of two new entitlement programs created by Obamacare—the ironically named CLASS Act—with a bipartisan three-fifths majority. (With numbers like that, Congress could even repeal Obamacare’s death panel!)
But really, one private organization pulling funding for another private organization is way more important than Congress voting to repeal an entitlement program … isn’t it?
‘We Are Not Deciding between Regulation and Autonomy, We Are Deciding Whether or Not We Want a Puppet Government’
That’s how Charlie Arlinghaus, president of New Hampshire’s Josiah Bartlett Center for Public Policy, describes the decision confronting states about whether to create an ObamaCare Exchange in this op-ed for the New Hampshire Union-Leader.
Filed under: General; Government and Politics; Health Care; Political Philosophy
Yes, Virginia, There Is a Christmas Tree Tax
Via Heritage’s “The Foundry” blog (and the outraged Facebook posts of former Cato interns), behold the Christmas Tree Tax.
It’s an announcement from the Agriculture Department’s Agriculture Marketing Service that it will be levying a fifteen cent tax on Christmas trees, payable to a new “Christmas Tree Promotion Board.” The tax will raise about $2 million from Christmas tree farmers and importers directly. That money comes indirectly from you.
As noted at The Foundry, the Ag Department claims the fifteen-cents-per-tree “assessment” is “not a tax nor does it yield revenue for the Federal government.” This claim fails both informal and formal analysis.
Informal: Do Christmas tree farmers go to jail if they refuse to pay? Yes. It’s a tax.
Formal: Is it a “non-penal, mandatory payment of money or its equivalent to the extent such payment does not compensate the Federal Government or other payee for a specific benefit conferred directly on the payer”? Bingo. Tax.
The formal definition is from the Taxpayer’s Defense Act, a bill I helped write while a congressional staffer after carefully researching the distinction between taxes and other government revenues, such as fines, legitimate fees, and such.
The Taxpayer’s Defense Act would have barred agencies from establishing or increasing taxes without first getting Congress’ approval. The idea was simple: No taxation without representation. And that idea is violated by the Agriculture Department’s new Christmas Tree Tax.
‘Corporations Are [Made of] People’
Mitt Romney’s explanation of why he’s against raising taxes on corporations — indeed, America already has some of the highest corporate tax rates in the developed world — at the Iowa State Fair was a bit awkward but not wholly incorrect. Reason‘s Katherine Mangu-Ward has a good post with video and transcript, but here’s the salient bit:
ROMNEY: We have to make sure that the promises we make — and Social Security, Medicaid, and Medicare — are promises we can keep. And there are various ways of doing that. One is, we could raise taxes on people.
AUDIENCE MEMBER: Corporations!
ROMNEY: Corporations are people, my friend. We can raise taxes on—
AUDIENCE MEMBER: No, they’re not!
ROMNEY: Of course they are. Everything corporations earn also goes to people.
AUDIENCE: [LAUGHTER]
ROMNEY: Where do you think it goes?
AUDIENCE MEMBER: It goes into their pockets!
ROMNEY: Whose pockets? Whose pockets? People’s pockets! Human beings, my friend. So number one, you can raise taxes. That’s not the approach that I would take.
Now, obviously, Romney is not saying that corporations are living, breathing beings with rights to abortion (or not, or depending on the stage of development of the fetal/baby corporations) and marriage, who are subject to Obamacare’s individual mandate (or even Romneycare’s for Massachusetts corporations), can be put to death if they murder someone, and so forth. He means that corporate money always comes from, flows through, and ends up in human hands. It cannot be otherwise: we are the only beings/entities/”things” on the planet that deal in money. Not even the honey badger does that.
Deconstructing the Revenue Side of the Debt-Ceiling Deal: Yes, There’s a Real Threat of Higher Taxes
Politicians last night announced the framework of a deal to increase the debt limit. In addition to authorizing about $900 billion more red ink right away, it would require immediate budget cuts of more than $900 billion, though “immediate” means over 10 years and “budget cuts” means spending still goes up (but not as fast as previously planned).
But that’s the relatively uncontroversial part. The fighting we’re seeing today revolves around a “super-committee” that’s been created to find $1.5 trillion of additional “deficit reduction” over the next 10 years (based on Washington math, of course).
And much of the squabbling deals with whether the super-committee is a vehicle for higher taxes. As with all kiss-your-sister budget deals, both sides can point to something they like.
Here’s what Republicans like:
The super-committee must use the “current law” baseline, which assumes that the 2001 and 2003 tax cuts expire at the end of 2012. But why are GOPers happy about this, considering they want those tax cuts extended? For the simple reason that Democrats on the super-committee therefore can’t use repeal of the “Bush tax cuts for the rich” as a revenue raiser.
Here’s what Democrats like:
There appears to be nothing in the agreement to preclude the super-committee from meeting its $1.5 trillion target with tax revenue. The 2001 and 2003 tax legislation is not an option, but everything else is on the table (notwithstanding GOP claims that it is “impossible for Joint Committee to increase taxes”).
In other words, there is a risk of tax hikes, just as I warned last week. Indeed, the five-step scenario I outlined last week needs to be modified because now a tax-hike deal would be “vital” to not only “protect” the nation from alleged default, but also to forestall the “brutal” sequester that might take place in the absence of an agreement.
But you don’t have to believe me. Just read the fact sheet distributed by the White House, which is filled with class warfare rhetoric about “shared sacrifice.”
This doesn’t mean there will be tax increases, of course, and this doesn’t mean Boehner and McConnell gave up more than Obama, Reid and Pelosi.
But as someone who assumes politicians will do the wrong thing whenever possible, it’s always good to identify the worst-case scenario and then prepare to explain why it’s not a good idea.
Boehner Plan Doesn’t Cut Spending
House Speaker John Boehner is scrambling to revise his budget plan after the CBO found that it would only cut spending by $850 billion, not the $1.2 trillion promised.
However, the Boehner plan doesn’t actually cut spending at all. The chart shows the discretionary spending caps in the Boehner plan. Spending increases every year—from $1.043 trillion in 2012 to $1.234 trillion in 2021. (This category of spending excludes the costs of wars in Iraq and Afghanistan).
The “cuts” in the Boehner plan are only cuts from the CBO baseline, which is an imaginary path of future spending designed as a planning tool for Congress. Boehner can propose to spend any amount in any future year he wants, and in this plan he choose to have a steadily rising spending path.
The Boehner plan also doesn’t cut spending in a more fundamental way. It doesn’t lay out any particular programs or agencies to terminate. I’m in favor of spending caps as a secondary enforcement mechanism, but actual cuts have to come first. A caps-only plan like Boehner’s just kicks the can down the road. At best, it simply nudges future legislators to actually cut something specific.
Why doesn’t the House leadership propose real cuts? They’ve certainly got the resources and expertise to do the job. A single senator — Tom Coburn — produced a 620-page report last week detailing hundreds of programs to cut and terminate. Coburn and his staff read through thousands of articles and reports on the real-world performance of federal programs, and they made a good case for each particular cut they proposed.
Republican leaders can’t hide behind baselines forever. If they really want a smaller government as they keep claiming, they’ve got to target particular programs and agencies and begin a national debate about terminating them.
Thoughts on the Boehner Plan
These are the times that try budget analysts’ souls—especially budget analysts who’d like to see Washington dramatically cut spending. The debate over lifting the debt ceiling has produced a number of proposals from Capitol Hill—none of them have been worth celebrating. We can now add House Speaker John Boehner’s latest proposal to the pile.
Boehner’s proposal boils down to the following: cap discretionary spending over 10 years to achieve $1.2 trillion in savings; have (another) bipartisan group of policymakers come up with $1.8 trillion in “deficit reductions” over ten years; and get a vote on a balanced budget amendment. In exchange, the president would get to increase the deficit by $900 billion this year and by another $1.6 trillion next year.
Here are some thoughts on Boehner’s plan:
- Under the Congressional Budget Office’s optimistic spending baseline, the federal government will spend $46 trillion over the next ten years. Obviously, reducing spending by $1.2 trillion oven ten years is relatively small.
- The same dysfunctional congress that treats entitlement programs like lit sticks of dynamite is supposed to come up with $1.6 trillion in “deficit reduction.” Note that we’re not even talking specifically about spending cuts here, so that figure would likely include tax increases assuming they’re able to even come up with something.
- Under the Boehner plan, spending and debt will continue to rise. At the most, the plan would produce an average of $300 billion a year in cuts in exchange for increasing the debt ceiling by $2.5 trillion over the next two years.
- Boehner’s bill includes language that tightens up the definition of what constitutes “emergency” spending. Congress regularly slaps the “emergency” designation on all sort of non-emergency spending bills. I have no faith that the new language will stop the foxes guarding the henhouse from continuing to devour chickens.
- Where are the immediate spending cuts? Once again, we have the promise of cuts but no specifics. Even if the discretionary caps hold the line on that portion of spending, total federal spending (and debt) will continue its unsustainable upward climb. Entitlement spending is the biggest driver of our long-term budgetary problems but entitlement spending isn’t capped under the Boehner plan.
In sum, this plan is another stinker. But with Harry Reid controlling the Senate and Barack Obama sitting in the White House, the votes just aren’t there to get a plan passed that sufficiently addresses our fiscal mess by reining in the size and scope of government.
How Your Government Deceives You, ‘Social Insurance’ Edition
From my former Cato colleague, Will Wilkinson:
The trick to weaving an effective and politically-robust safety net for those who most need one is designing it to appear to benefit everyone, especially those who don’t need it. The whole thing turns on maintaining the illusion that payroll taxes are “premiums” or “insurance contributions” and that subsequent transfers from the government are “benefits” one has paid for through a lifetime of payroll deductions. The insurance schema protects the main redistributive work of the programme by obscuring it. As a matter of legal fact, payroll taxes are just taxes; they create no legal entitlement to benefits. The government can and does spend your Social Security and Medicare taxes on killer drones. But the architects of America’s big social-insurance schemes, such as Frances Perkins and Wilbur Cohen, thought it very important that it doesn’t look that way. That’s why you you see specific deductions for Social Security and Medicare on your paycheck. And that’s why the government maintains these shell “trust funds” where you are meant to believe your “insurance contributions” are kept.
Alas, like Social Security and Medicare themselves, the deceptions that protect these entitlement programs cannot go on forever.
Generally, liberals are profoundly conservative about the classic Perkins-Cohen architecture of America’s big entitlement programmes, which they credit for their remarkable popularity and stability. Yet that architecture offers very few degrees of freedom for significant reform. Crunch time is coming, though, and sooner or later something’s got to give.
If Wilkinson’s overlords at The Economist demand that he misspell program, they should be consistent and allow him to abandon the American convention of mislabeling leftists as liberals.
Rafael Correa’s Flat in Belgium
It is traditional for a Latin American nationalist to criticize people who take their money out of their country and invest it somewhere else. President Rafael Correa has done it several times. In 2009 he forced private banks to repatriate part of their assets.
What is unusual is finding evidence that he who preaches does not necessarily practice what he preaches. Last week, Ecuadorians were surprised to hear the news—with our tax authority (Servicio de Rentas Internas–SRI) and then the presidency as a source—that Correa had transferred $330,000 to his bank account in Germany. The President then clarified (“…don’t be stupid, the money was sent to Belgium not Germany”) [in Spanish] that the money was transferred to pay for an apartment for his family in Belgium, given that his children may pursue studies in that country.
But the story did not end there. Earlier this week, the director of the SRI, Carlos Marx Carrasco, announced [in Spanish] that he will publish a list of all citizens that have taken money out of the country with the amount they have paid in taxes for doing so (currently there is a 2% tax on all transactions that imply taking money out of Ecuador). Marx Carrasco said that this has to be done “so that the citizens can see (the behavior) of those who represent El Universo, Diario Hoy, El Comercio and all media, who with human misery have allowed themselves to question (what the president has done)”.
This is how, those who concentrate political power in Ecuador, use information collected for the purpose of charging taxes to take reprisals.
Cato on Facebook
Cato on Twitter
Cato on Google+
Cato on YouTube
