Arnold Kling reaffirms his membership in the Anti-Universal Coverage Club.
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Sneaky Sequentialism
Amid the current debate over expanding the State Children’s Health Insurance Program — as well as every other attempt to expand federal control over America’s health care sector — opponents accuse proponents of incrementally moving America toward a government-run system. The strategy seems to be:
First, we let government programs, the tax code, and special-interest-driven regulation slowly kill private markets. Second, we have government take over each area as it collapses: first health care for the elderly, then the poor, then the kids, then the near-elderly. Lather, rinse, and repeat until government controls it all.
Left-wing politicians pursue this strategy because they know American voters won’t swallow socialized medicine all at once. (Just look at what happened to the Clinton health plan.) And they don’t speak openly about it, because they know voters are less likely to swallow SCHIP expansion if they see where it’s headed.
That’s why it was so refreshing to read what Ezra Klein blogged while attending the YearlyKos convention last weekend:
At the health care panel, Kathleen Stoll, from Families USA, says, “some of you may think of me as an incrementalist. I prefer to think of myself as a sneaky sequentialist.”
I think I prefer the term “sneaky sequentialism” too. “Incrementalism” doesn’t necessarily suggest an ultimate destination. “Sequentialism” suggests there is a destination, and a mind consciously devising a plan to get us there.
In an upcoming briefing paper on SCHIP, I note how that program fits the Left’s sequentialist strategy, and identify Families USA among the “Baptists” who seek to expand SCHIP because that would move us toward total government control of the health care sector.
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Pandering to the Protectionists
Given the audience, one could have expected a goodly amount of protectionist rhetoric from the Democratic presidential candidates in their debate last night at an AFL-CIO forum. But at times it seemed as though they were battling to see who among them could pander the most.
Dennis Kucinich has never been a promoter of open trade and markets, so it is hardly surprising that he said withdrawing from NAFTA and the WTO would be a “first week in office” priority. Thank goodness he’s not a serious candidate. What is worrisome is the cheers his pledge elicited. Do the members of the AFL-CIO truly believe that if two of our largest trade partners (Canada and Mexico) increased their tariffs on American goods, that would somehow benefit them? Is the WTO seen as such a negative force overall that withdrawing from its forums and its legal protections is perceived as wise?
The other candidates, to their credit, did not match Mr Kucinich’s pledge. But that is to damn them with faint praise, however, as most of them did undertake to “revise” trade agreements, including NAFTA, (presumably by putting in more stringent rules on labor and environmental provisions) and to put more emphasis on enforcement of trade agreements. None of them, not even Senator Clinton, whose husband showed a commendable commitment to trade during his time in office, stood up and defended the benefits of trade.
Senator Obama, given the chance to acknowledge the positive effect of trade on working families — i.e., cheap goods — demurred, making an emotive, if economically illiterate, point about how a cheap T‑shirt is useless if one doesn’t have a job. As though the U.S. economy was not demonstrating that consumers can have access to cheaper goods as well as record employment.
Perhaps the next Democratic presidential candidates debate should be held at a consumer- or taxpayer-group forum.
Sub-Optimal Tax Cuts in France
Supporters of limited government often say that there is no such thing as a bad tax cut, but it also is true that some tax cuts are better than others (for instance, see here for a comparison of the sub-par 2001 tax cuts and the supply-side 2003 rate reductions). If policy makers want to boost economic performance, they should concentrate on reducing marginal tax rates on additional economic activity. By this standard, the tax cuts advocated by the new French President generally are not well designed. He is seeking to cap the total income tax burden at 50 percent rather than 60 percent, but this change affects the total tax bill and may not have much impact on the decision to engage in additional productive behavior. A better approach would be to lower the top tax rate. Likewise, Sarkozy wants to increase wealth tax exemptions, but this approach is inferior to a rate reduction (or, better yet, repeal of the tax). He also has a gimmicky plan for tax cuts on overtime and a scheme for mortgage payments. The good news is that there will be tax cuts in France. The bad news is that they could have been better designed. Tax-news.com reports
Chief among Sarkozy’s reforms are measures creating more exemptions to France’s wealth tax, which has often been cited as a key reason why France lags behind its competitors in terms of investment and economic growth, and a 50% cap on individual income tax, down from 60%. The reforms would also cut tax on overtime — encouraging more French workers to work beyond the previously politically sacred 35 hour week, part of plans to make the domestic labour market more flexible and business-friendly — and tax cuts on mortgage interest payments. …It is hoped that Sarkozy’s tax and economic reforms will tempt back the hundreds of thousands of French citizens who have left the country seeking less punitive tax regimes. Popular destinations for the estimated 500,000 French tax exiles include Belgium, Switzerland, the UK and the US. …studies show that it is not just the rich and famous who have seemingly grown weary with France’s high taxes, with families and investors fleeing in increasing numbers. Research by French Senator Philippe Marini, cited by Bloomberg, claims that households fleeing the fortune tax have climbed to a record 649 in 2005 from 370 in 1997. Another study by the Economic Analysis Council concluded that approximately 10,000 business directors have fled France in the past 15 years, taking as much as US$137 billion in capital to invest elsewhere.
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A Curious Statement from Gov. Romney
I’ve been at a conference in Hawaii for a few days, so I don’t know if anyone called Mitt Romney to the mat for this extraordinary statement he made during the most recent GOP presidential candidates’ debate (quoth The New York Times):
But Mr. Romney took aim at Mr. Giuliani’s recent proposal to offer people $15,000 in tax deductions to help them buy health insurance. “We have to have our citizens insured, and we’re not going to do that by tax exemptions, because the people that don’t have insurance aren’t paying taxes,” he said.
I think Romney is wrong when he says, “We have to have our citizens insured.” But at least that point is debatable.
Did Romney actually say, “we’re not going to do that by tax exemptions”? Are you kidding me? Not only does Romney’s own Massachusetts health plan use tax breaks to expand health coverage — that’s all it uses. That law requires employers to offer a type of health plan (a Section 125 “cafeteria plan”) that extends the federal tax exclusion for employer-sponsored health insurance to the “employee portion” of the premiums. The whole point of the “Connector” is to extend that exclusion to health plans your employer doesn’t offer, and to make sure workers don’t lose the exclusion when they change jobs. Even the controversial requirement that all residents purchase coverage is an attempt to use a tax break to expand coverage. If you buy coverage, you get the personal exemption from the Commonwealth’s income tax. If you don’t buy coverage, no exemption for you.
And what’s this about the uninsured not paying taxes? The Census Bureau reports that 17 million of the people it counts as uninsured had household incomes over $50,000 per year. The Tax Foundation suggests that over half of the uninsured pay either income or payroll taxes, meaning that Romney is not even half-right.
(If Romney wants universal coverage, and tax breaks won’t accomplish that, how’s he gonna do it? More government spending?)
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More on the Spying Bill
I’ve got a write-up of this weekend’s spying bill up at Ars Technica. It’s pretty bad:
Before undertaking surveillance activities, intelligence officials would need to obtain a certification from the Attorney General and the Director of National Intelligence—both subordinates of the president—that there were “reasonable procedures” in place for ensuring that the eavesdropping “concerns” persons located outside the United States, and that the foreign intelligence is a “significant purpose” of the surveillance activities. That certification would only be reviewed after the fact, and only to determine if the procedures were, in fact, “reasonable.” A single certification could approve a broad surveillance program covering numerous individuals, and no judge would review the list of individual targets.
Moreover, the requirement that surveillance “concern” non‑U.S. persons could plausibly permit spying on the relatives, friends, and business associates of a foreign target. Indeed, the administration might argue that the only way to obtain all information regarding foreign targets is to conduct dragnet surveillance of American communications and sift through them to find relevant information.
The legislation empowers the administration to “direct” individuals to “provide the government with all information, facilities, and assistance necessary” to carry out foreign surveillance. These quasi-subpoenas would not be subject to judicial review before they were issued. The targets of such orders—who will typically be telecom company executives, not terrorism suspects—have the option of appealing the order to the FISA court, but given the broad scope of surveillance activities authorized by the legislation, it seems unlikely that such challenges would succeed. Moreover, the legislation offers legal immunity to those who comply with such orders, so telecom providers will have little incentive to resist them.
The only real bright spot is that the legislation sunsets after six months. That will give Congress the opportunity to do what it should have done this weekend: require that no surveillance of domestic communications occur without prior judicial approval of each surveillance target. I’m not going to hold my breath.
New at Cato Unbound: Peter Leeson on Practical Anarchy
Everybody seems to know we need government … But pirates didn’t! How did they manage without the state? In this month’s thought-provoking Cato Unbound lead essay, Peter T. Leeson, the BB&T Professor for the Study of Capitalism at George Mason University, explores what pirate “constitutions,” credit institutions among 19th century African bandit traders, and the well-being of Somalians after the collapse of the Somalian state have to tell us about the possibility of practical anarchy. It works better than you think, Leeson concludes. “As long as there are unrealized gains to realize, people will find ways to realize them” — state or no state.
Can organizations really solve complex problems of coordination without government coercion? Can voluntary bands provide public goods? Are there conditions under which groups are better off stateless? Leeson will be joined in tackling these question by three eminent commentators: Florida State economics professor Bruce Benson, author of the seminal The Enterprise of the Law: Justice without the State; Dani Rodrik, professor of international political economy at Harvard’s Kennedy School of Government; and Randall Holcombe, another distinguished Seminole economist and current president of the Public Choice Society. Benson is on deck to reply this Wednesday. Stay tuned!