I got to share my thoughts on the State Children’s Health Insurance Program with Farai Chideya of National Public Radio’s News & Notes program yesterday.
Click here to listen.
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I got to share my thoughts on the State Children’s Health Insurance Program with Farai Chideya of National Public Radio’s News & Notes program yesterday.
Click here to listen.
Amid the debate over the State Children’s Health Insurance Program, author and Washington Examiner columnist Tim Carney asks the question, “Does SCHIP insure kids or subsidize savvy HMOs?”:
[W]hile Democrats are dragging children to the White House for photo ops, as if the children are the primary constituency of this bill, federal lobbying records tell a different tale.
Lobbying records from the first half of 2007 show that the health care industry spent more than $227 million lobbying Washington. Congressional Quarterly Healthbeat News reported last month: “What’s behind health care lobbyists’ spending frenzy? Most signs point to … SCHIP.”
Sure enough, the biggest lobbyists in the industry all support the Democratic bill. America’s Health Insurance Plans (AHIP), the trade association for HMOs, supports the bill, as do its biggest members, such as Blue Cross Blue Shield.
The Pharmaceutical Research and Manufacturing Association (PhRMA), one of Washington’s most powerful lobbyists, is also behind the bill. So is the American Medical Association.
Because the details of any substantial bill or regulation will be complex, the mainstream media will always portray the debate as a battle between the interested parties. In this case, the official storyline is that it’s poor children against a president overly concerned about the boogie man “government-run health care.”
But poor children don’t have clout on Capitol Hill. They’re not the reason this bill got 68 votes in the Senate and 265 votes in the House.
It’s got to be nice [for] the Democrats now. You get to do a favor for the HMOs, and everyone’s convinced it’s “for the children.”
I include the nation’s governors — who are always in favor of more federal money — in the bootleggers category.
Kudos to Tim Carney for reporting what less-rigorous reporters will not. (Why, oh, why can’t we have a better press corps?)
The Tax Foundation provides a nice summary of the latest Internal Revenue Service income tax data here.
Pundits are always interested in tax data for particular income groups. For example, they want to know whether Bush has favored the highest-income 1% of taxpayers.
A good way to find out is to look at average tax rates over time. By “average tax rates” I mean total federal income taxes divided by adjusted gross income. The following figure shows average tax rates for six income groups in 1990, 2000, and 2005.
The income groups refer to percentiles of tax filers ranked from those with the highest AGI to those with the lowest AGI. The figure shows the highest-income groups on the left and the lowest-income groups on the right.
1990 was before the Clinton tax increases of 1993. 2000 was after the modest tax cuts of 1997, but before the Bush tax cuts of 2001. 2005 was with the Bush tax cuts in place.
Observations
Tax rates on those with high incomes are far greater than for other Americans. Folks at the top pay about 25% of their income in federal income taxes, which compares to less than 5% for half of the population at the bottom end.
For the top two groups, the tax rate in 2005 was about the same as 1990. Essentially, the Bush tax cuts just reversed out the Clinton tax increases on these folks.
The Bush tax cuts substantially reduced tax rates for people in every income group. Indeed, those at the bottom had the largest relative reductions in their tax rates.
This is a little wonky, but let’s compare average tax rates in 2000 to 2005. For the top group, the rate fell from 27.45% to 23.13%, a reduction of 16%.
Now consider the middle-income “top 26–50%” group, for example. Their tax rate fell from 9.28% to 6.93%, a reduction of 25%.
Those at the bottom have paid little, and now they pay even less, due to legislation under both Clinton and Bush. Indeed, these data do not include the tens of billions of dollars sent to lower-income families as a result of the earned income tax credit, and thus it overstates taxes paid by the bottom group.
I’m for lower taxes for everyone, but I wish people would look at the actual data first before carping about the rich supposedly being specially favored by recent tax cuts.
The Financial Times reports that France is deregulating and cutting taxes in hopes of competing with London in the financial services market. The article also notes that Switzerland and Germany also are trying to attract business by reducing the burden of government. Needless to say, these positive reforms would not happen if the bureaucrats in Brussels had the authority to create a continent-wide regulatory regime. Another threat to deregulation and better policy is IOSCO (the International Organization of Securities Commissions), which wants to impose one-size-fits-all regulation on all jurisdictions — particularly ones with a more laissez-faire approach:
The French government yesterday unveiled its plans to boost Paris as a financial centre, proposing a more lightly regulated market for companies and funds on the Euronext exchange. Several of the measures are closely modelled on UK structures, as the French capital seeks to make up ground lost to London. The new market segment would operate according to European Union minimum standards in terms of listing and disclosure. …Switzerland’s leading financial services companies launched their own campaign last month for tax cuts, a relaxation of immigration rules and other measures to turn their country into the world’s third largest financial centre after London and New York. Frankfurt launched its own more lightly regulated market segment two years ago… Ms Lagarde said the government had already shown serious commitment to financial services by cutting taxes, particularly for higher earners. France’s high taxation is one reason why so many young French bankers flock to London.
More evidence that when the government says a project will cost $1, taxpayers will end up paying $2 or more.
The Washington Post notes that Congress is considering further funding of a Navy ship program: “The congressional action followed months of delays as costs ballooned. The cost for the initial two ships was estimated at about $220 million each but now appear to cost up to double that.”
Andrew Ferguson at the Weekly Standard provides a pretty accurate portrait of Alan Greenspan, but he seems to have a problem with libertarians.
Ferguson labels Ayn Rand’s philosophy “creepy” for “placing the self at the center of the moral universe.” Where would such a crazy idea come from?
Well, we do know that all men are “…endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men…”
Ah hah. It was the Creator that put individual lives at the center of the moral universe. That’s why he endowed us with unalienable rights. And because pursuing one’s own life and happiness is moral, Americans build their government around the idea.
Cato adjunct scholar Tyler Cowen takes on Naomi Klein’s book Shock Capitalism in the New York Sun:
Rarely are the simplest facts, many of which complicate Ms. Klein’s presentation, given their proper due. First, the reach of government has been growing in virtually every developed nation in the world, including in America, and it hardly seems that a far-reaching free market conspiracy controls much of anything in the wealthy nations. Second, Friedman and most other free market economists have consistently called for limits on state power, including the power to torture. Third, the reach of government has been shrinking in India and China, to the indisputable benefit of billions. Fourth, it is the New Deal — the greatest restriction on capitalism in 20th century America and presumably beloved by Ms. Klein — that was imposed in a time of crisis. Fifth, many of the crises of the 20th century resulted from anti-capitalistic policies, rather than from capitalism: China was falling apart because of the murderous and tyrannical policies of Chairman Mao, which then led to bottom-up demands for capitalistic reforms; New Zealand and Chile abandoned socialistic policies for freer markets because the former weren’t working well and induced economic crises.
My old friend Steve Horwitz asks Klein a couple of pointed questions:
1. You say that crises are opportunities for free market ideologues to force their preferred policies through in violation of democratic processes. However, in the gravest crisis of the 20th century, the Great Depression, it was government that grew enormously, and the free market was restricted, in ways never before seen in the US.…How do you reconcile the main thesis of your book with the historical evidence that government has grown and markets have been made less free in almost every crisis of the 20th century? …
2. In the aftermath of the biggest crisis in the US of the 21st century (9/11), government spending has grown enormously, government regulations have expanded, and civil liberties are threatened. Each of these are results that people like Milton Friedman and many other classical liberal free market economists not only oppose, but oppose precisely because they are antithetical to the very free market reforms they would like to make. … What gives? It certainly seems like crises produce a lot more government and a lot less free market reform.
Horwitz is making the same point Justin Logan made recently; as Bruce Porter and Robert Higgs have shown, much of the growth of government throughout American history (and elsewhere) has been a result of crises like wars and depressions. Sometimes, it’s true, an economic crisis may precipitate economic reforms, as in New Zealand in the mid-1980s. But the historical record shows that states usually seek more power, not less, when confronted by a crisis.
Pinochet’s economic reforms in Chile, of course, are a centerpiece of Klein’s argument. Pinochet was a military dictator, the argument goes, and he implemented the policies of Milton Friedman. QED. But there are lots of military dictatorships — Wikipedia counts 34 in Latin America — and Pinochet’s junta seems to have been the only one to pursue free-market policies. It’s an exception, not a rule. Which is hardly surprising: military men tend to be attuned to hierarchy and control, not to the undirected diversity of a market economy.