Thursday, October 30, 2008
Tuesday, October 28, 2008
His tax credit is larger than the current tax subsidy for insurance.
The McCain health-care insurance tax credit may well be one of the most misunderstood proposals of this presidential election. Barack Obama has been ruthless in his attacks. But the tax credit is highly progressive and will provide a powerful incentive for people to purchase health insurance. These features under normal circumstances should endear Democrats to the proposal.
Consider the current exclusion. Its value rises with how much someone spends on health care, and how much of this spending is funneled through employer-sponsored health-care coverage. This creates an incentive for people to purchase policies with low deductibles, or which cover routine spending. These policies look a lot less like insurance and more like prefunded spending accounts purchased through employers and managed by insurance companies. Consider homeowners and auto insurance policies. Do these cover routine spending on cleaning the gutters or tuning up a car?
The subsidy encourages people to buy bigger policies that cover more, and leads to greater health-care spending. Moreover, lower deductibles and coverage of routine spending dulls consumers' sensitivity to price. Reducing the tax bias should result in insurance that is more focused on catastrophic coverage and less on routine spending.
Monday, October 27, 2008
Financial panics, if left alone, rarely cause much damage to the real economy, output, employment or production. Asset values fall sharply and wipe out those who borrowed and lent too much, thereby redistributing wealth from the foolish to the prudent.
When markets are free, asset values are supposed to go up and down, and competition opens up opportunities for profits and losses. Profits and stock appreciation are not rights, but rewards for insight mixed with a willingness to take risk... Good decisions should be rewarded and bad decisions should be punished. The market does just that with its profits and losses.
No one likes to see people lose their homes when housing prices fall and they can't afford to pay their mortgages; nor does any one of us enjoy watching banks go belly-up for making subprime loans without enough equity. But the taxpayers had nothing to do with either side of the mortgage transaction...
Giving more money to people when they fail and taking more money away from people when they work doesn't increase work. And the stock market knows it.
These issues aren't Republican or Democrat, left or right, liberal or conservative. They are simply economics, and wish as you might, bad economics will sink any economy no matter how much they believe this time things are different. They aren't.
Friday, October 24, 2008
The complaint against the Alaska governor, at its most basic, is that she doesn't qualify for admission to the national political fraternity. Boy, that's rich. Behold the shabby frat house that says it's above her pay grade.
Congress has the lowest approval rating ever registered in the history of polling (12%!). She isn't the reason polls are showing people want the entire Congress fired, with many telling pollsters they themselves could do a better job.
The primary discomfort with Gov. Palin is the notion that she doesn't have sufficient experience to be president, that Sen. McCain should have picked a Washington hand seasoned in the ways of the world. Such as? Here's an opinion poll question:
If as Joe Biden suggests the U.S. is likely to be tested by a foreign enemy next year, who of the following would you rather have dealing with it in the Oval Office: Nancy (of Damascus) Pelosi, Harry Reid, John Edwards, Joe (the U.S. drove Hezbollah out of Lebanon) Biden, Mike Huckabee, Geraldine Ferraro, Tom DeLay, Jimmy Carter or Sarah Palin?
My pick? Gov. Palin, surely the most grounded, common-sense person on that list of prime-time politicians.
Here's a pop quiz: Who's donated the most money to an effort in California to defeat Proposition 8, an initiative on the November 4 ballot that would define marriage as between a man and a woman in the state?
A) Gay-advocacy organizations
B) Civil-rights groups
C) The California Teachers Association
If you guessed "C," you understand the nature of modern liberal politics. And if you didn't, perhaps you're wondering what exactly gay marriage has to do with K-12 public education.
Public school teachers of America, take note. This is your dues money at work.
Wednesday, October 22, 2008
The Declaration of Independence sets out the basic underlying principle of our Constitution. "We hold these truths to be self-evident, that all men are created equal, that they 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, deriving their just powers from the consent of the governed . . . ."
The framers structured the Constitution to assure that our national government be by the consent of the people. To do this, they limited its powers. The national government was to be strong enough to protect us from each other and from foreign enemies, but not so strong as to tyrannize us. So, the framers structured the Constitution to limit the powers of the national government. Its powers were specifically enumerated; it was divided into three co-equal branches; and the powers not given to the national government remained with the states and the people...
Since Marbury v. Madison the federal judiciary has assumed the role of the interpreter and, now, final arbiter of our Constitution. But, what rules must judges follow in doing so? What informs, guides and limits our interpretation of the admittedly broad provisions of the Constitution? And, more directly, what restrains us from imposing our personal views and policy preferences on our fellow citizens under the guise of Constitutional interpretation?...there are really only two ways to interpret the Constitution -- try to discern as best we can what the framers intended or make it up. No matter how ingenious, imaginative or artfully put, unless interpretive methodologies are tied to the original intent of the framers, they have no more basis in the Constitution than the latest football scores.
Tuesday, October 21, 2008
If those of us who favor free markets for the freedom and prosperity they bring are right, the political system may soon put our economy on track for a catastrophe.
Monday, October 20, 2008
This faith in political solutions thrives in the face of repeated government failure. Big farm bills have raised the price of food and squeezed out small farms. Campaign finance reform made it harder to challenge incumbents. FEMA couldn't deliver water to hurricane-ravaged New Orleans as well as Wal-Mart did. Medicare has a $35 trillion unfunded liability over the next 75 years.
Yet the media and political class call for more government control.
[Note: The TV special this article refers to "John Stossel's Politically Incorrect Guide to Politics," aired last week, and can be watched online here: http://abcnews.go.com/2020]
Friday, October 17, 2008
Though we doubt most Americans realize it, this would be one of the most profound political and ideological shifts in U.S. history. Liberals would dominate the entire government in a way they haven't since 1965, or 1933. In other words, the election would mark the restoration of the activist government that fell out of public favor in the 1970s. If the U.S. really is entering a period of unchecked left-wing ascendancy, Americans at least ought to understand what they will be getting, especially with the media cheering it all on.
Americans voting for "change" should know they may get far more than they ever imagined.
Tuesday, October 14, 2008
Where are the champions of free-market capitalism? Someone needs to remind us all that two great works were published in 1776, both representing game-changing advances in human freedom: The Declaration of Independence, authored by future American president, Thomas Jefferson, and "The Wealth of Nations" by Scottish economist Adam Smith. Both embrace the social wisdom of individual liberty; both extol the importance of personal responsibility.
France's president held out the possibility that all is not lost, that we can fix what is broken. "The financial crisis is not the crisis of capitalism," according to Mr. Sarkozy. "It is the crisis of a system that has distanced itself from the most fundamental values of capitalism, which betrayed the spirit of capitalism."
It is a distinction that could make all the difference.
Monday, October 13, 2008
It's a clever pitch, because it lets him pose as a middle-class tax cutter while disguising that he's also proposing one of the largest tax increases ever on the other 5%. But how does he conjure this miracle, especially since more than a third of all Americans already pay no income taxes at all? There are several sleights of hand, but the most creative is to redefine the meaning of "tax cut."
For the Obama Democrats, a tax cut is no longer letting you keep more of what you earn. In their lexicon, a tax cut includes tens of billions of dollars in government handouts that are disguised by the phrase "tax credit."
Thursday, October 9, 2008
On choice, portability, quality and especially equity, the McCain health plan is far superior to Mr. Obama's. The Democrat is merely offering Canada on the installment plan.
Mr. McCain recognizes that a large part of the problem is that the tax code favors employer-funded health insurance. The system, which began as a response to FDR's wage and price controls, is built on tax breaks that allow employers to buy health insurance with pretax dollars.
Mr. McCain doesn't want to scrap employer-based insurance. He would keep part of the tax deduction in place. But he wants to fundamentally change the way the system works and instead give the self-employed and individuals a tax break for buying their own insurance. There are several advantages to this approach:
Tuesday, October 7, 2008
Monday, October 6, 2008
This should not be a partisan argument. It is perfectly fair to argue that wealthy corporations should pay a greater share of the tax base than struggling middle-class Americans. Fair, but not realistic. The U.S. government can no longer dictate to global capital. Once, when the U.S. was the engine of global growth, when the world needed Wall Street for funding, capital could be taxed and controlled by the fiat of the U.S. government. No longer. The U.S. may have the will; it does not have the power.
The current debate in Washington gives no indication that this reality is understood. Both sides of the aisle are susceptible to a false sense of American economic sovereignty. Companies and countries flush with cash increasingly view U.S. laws, regulations and attitudes as undue burdens. As consumer activity accelerates outside the U.S. and Europe, and as financial centers spring up elsewhere, there is increasingly less inclination and less need for the world to go either to Wall Street or to Main Street.
Maybe only a friendly foreigner could say this. But America needs to realize that not everyone can own a home. The American Dream of home ownership for all is a fraud. Politicians who pimped this dream created an unsustainable mortgage industry whose collapse is only surprising because it didn't happen earlier. America's mortgage industry will not recover, nor deserve to recover, unless it is prepared to challenge this politically unpalatable reality.
America has a long and undistinguished history of populist politicians stacking the cards against lenders and in favor of risky homeownership... If socially laudable but economically reckless laws cause entirely predictable problems for lenders, don't be surprised if taxpayers have to bail them out.
Thursday, October 2, 2008
Most Americans hold an intuitive belief that one of the most effective ways to keep government in its appropriate place is to limit its access to our wallets. They have a well-grounded, experience-based suspicion that if government can take anything it wants from some (high-income) people, it can, and most likely will, take it from everyone else, too. They are unenthusiastic about massive new spending because they understand tax increases both feed government and whet its appetite for more.
The tax issue has lost its political punch in the eyes of some commentators, but not among voters. So the presidential candidates recognize this year's election could hinge on who better convinces Americans that he has the right plan to cut taxes.
A recent kerfuffle between Mr. Obama and Republican presidential candidate John McCain concerned the interstate purchase of health insurance. Mr. McCain wants to allow people to buy health insurance across state lines. Mr. Obama, on the other hand, opposes the idea and seems to believe it would create an unsafe, unregulated health-insurance market.
Mr. McCain backs legislation sponsored by Arizona Rep. John Shadegg. Known as the Health Care Choice Act, it would allow individuals living in one state to purchase health insurance being sold to people living in other states. The policy would still have to meet the regulations of the state in which it is being sold, and would be subject to additional federal oversight.
Creating an interstate option for individuals to purchase health insurance doesn't solve every problem faced by the 45 million Americans who are uninsured. But the choice isn't between a regulated or unregulated health-insurance market. The choice is between an overregulated market favored by Mr. Obama and a regulated market favored by Mr. McCain that provides more options to help individuals afford health coverage.
Wednesday, October 1, 2008
A running cliché of the political left and the press corps these days is that our current financial problems all flow from Congress's 1999 decision to repeal the Glass-Steagall Act of 1933 that separated commercial and investment banking. Barack Obama has been selling this line every day. Bill Clinton signed that "deregulation" bill into law, and he knows better.
As for the sins of "deregulation" more broadly, this is a political fairy tale. The least regulated of our financial institutions -- hedge funds -- have posed the least systemic risks in the current panic. The big investment banks that got into the most trouble could have made the same mortgage investments before 1999 as they did afterwards. One of their problems was that Lehman Brothers and Bear Stearns weren't diversified enough....
Mr. Obama's "deregulation" trope may be good politics, but it's bad history and is dangerous if he really believes it. The U.S. is going to need a stable, innovative financial system after this panic ends, and we won't get that if Mr. Obama and his media chorus think the answer is to return to Depression-era rules amid global financial competition. Perhaps the Senator should ask the former President for a briefing.