WSJ.com - A Dangerous Medicare Proposal

 

WSJ.com - Opinion: A Dangerous Medicare Proposal

 

Medicare Part D, the prescription-drug benefit program for seniors, has cost the federal government considerably less than was initially estimated. It's also overwhelmingly popular among beneficiaries. But in Washington, Part D is now a prime target for overhaul. In the heat of debate over the debt ceiling, President Obama and a group of lawmakers have proposed lowering the deficit by eliminating one of the very things about Part D that makes it such a success.

That thing is competition. Part D works—and stands out among federal entitlement programs—because it harnesses market forces to save money for the government and beneficiaries. Drug companies compete for the right to sell their drugs to the private insurers who participate in the program. Those private insurers, in turn, compete to offer their plans to the Medicare enrollees.

The result is a program that cost 32% less than the Congressional Budget Office's original estimate. The competitive bidding process—aided, in part, by patent expiration of brand drugs—drives down the costs to both the beneficiaries and the taxpayers.

Some policy analysts dismiss the argument that medical innovation is driven by profits. But the facts tell the opposite story. Lack of potential profits is exactly the reason why diseases that afflict poor countries receive few R&D dollars.

Venture capital funding for the biotechs that kick-off research for new drugs is completely contingent on strong signs of profitability in terms of intellectual property, disease prevalence and reimbursement. The government's proposed price controls will ultimately cause some of this funding to dry up entirely.

This is the rerun of a much too familiar story: The more a government gets involved in paying for care, the more it will use its power as a big buyer to force down prices to providers. This has already happened in other parts of Medicare and many European countries.  For the U.S., this story will not end as happily.

 

 

 

 

WSJ.com - Toying With Default

 

WSJ.com - Opinion: Toying With Default

 

Barack Obama was in full-scold mode Friday night, summoning Congressional leaders to the White House to "explain to me how it is that we are going to avoid default." It's a terrific question, albeit one the President refuses to answer. He remains far more interested in maneuvering to blame a default or credit downgrade on Republicans than in making himself part of any plausible solution to a crisis he insists is imminent.

Then again, it has long been clear that Mr. Obama isn't interested in spending reform. In February he proposed a budget that spent more than any in U.S. history. In April he demanded that Congress pass a "clean" debt ceiling hike that included no spending cuts whatsoever. Only after House Republicans unveiled their own sweeping budgetary reforms did the White House rush to also claim it wanted deficit reduction as part of the debt-ceiling debate.

The President insists his party is offering serious spending cuts and entitlement reform. He also likes to talk about "balance," which to him means real tax increases immediately and speculative spending cuts some time in the distant future. Behind the scenes the White House has only ever agreed to token reform and cuts. Here's a number for the debt history books: Mr. Obama's final offer in the Biden talks was a $2 billion cut in 2012 nondefense discretionary spending. The federal government spends more than $10 billion a day.

 

 

 

 

WSJ.com - A Gun Activist Takes Aim at U.S. Regulatory Power

I was told my link in Friday's email didn't work right, so I'm sending it out again.

WSJ.com - A Gun Activist Takes Aim at U.S. Regulatory Power

WSJ.com - A Gun Activist Takes Aim at U.S. Regulatory Power

This article contains some background on the commerce clause and 10^th amendment fights, including quick summaries of the key court cases that have greatly expanded Federal power.  While my level of hope is low that SCOTUS will correct past mistakes, I strongly support a narrow reading of the commerce clause.  After all, do you really think the Feds should be able to control how much wheat you grow for your own use on your own land?  Does that sound like “Land of the Free” to you?

 

WSJ.com - A Gun Activist Takes Aim at U.S. Regulatory Power

 

For years, Mr. Marbut argued that a wide range of federal laws, not just gun regulations, should be invalid because they were based on an erroneous interpretation of Congress's constitutional power to regulate interstate commerce.

Ten state attorneys general, dozens of elected officials and an array of conservative groups are b acking the legal challenge he engineered to get his constitutional theory before the Supreme Court. A federal appeals court in San Francisco is now considering his case.

Mr. Marbut isn't basing his pro-gun effort on the Second Amendment, the one that talks about a right to bear arms, but on the 10th, which discusses the limits of federal power.

He concluded the Supreme Court had twisted the words of the commerce clause, which grants Congress authority to "regulate Commerce with foreign Nations, and among the several States."

He conceived of the Firearms Freedo m Act as a way to get it reconsidered. He says he focused on the commerce clause, rather than Second Amendment theories popular with firearms enthusiasts, to prompt a broad ruling that would rein in federal power.

 

 

WSJ.com - Overcaffeinated CAFE

WSJ.com - Opinion: Overcaffeinated CAFE

 

Praying for the insanity to blow over is the auto industry's strategy for dealing with the Obama administration latest urge to double down on fuel economy mandates. Auto makers, wishing to appear deferential to the government that bailed them out, only plead that any new targets be ratcheted up slowly so future administrations will have plenty of chance to repeal the rules before they take effect.

This, we're sad to say, is the most rational stance taken by any player in the CAFE bargaining now under way in Washington.

Economies around the world are foundering from an accumulation of policy excesses produced by the sort of straight-line, robotic thinking Obama is applying to so-called corporate average fuel economy rules.

If more money for less work is popular, thought Greece, twice as much money for half as much work will be even more popular.

If 64% of Americans owning their own homes is a good thing, thought Bill Clinton, 67% is better. If 67% is good, thought George Bush, 69% is better.

If forcing auto makers to build cars that deliver an average of 35.5 mpg is good, believes Mr. Obama, forcing them to deliver 56.2 is even better.

Engineering is absent. Any appreciation of the law of diminishing returns is absent.

Asking consumers, meanwhile, to bear the cost of fuel-economy improvement they don't value will cause them to keep their old cars on the road longer. And in pursuit of what benefits? If we junked every gasoline-powered car and truck in America, it would have no appreciable impact on global carbon dioxide. If, as Mr. Obama intends, we switch to electric cars, those cars would be powered by coal, so the alleged atmospheric dividend will be doubly elusive.

 

 

 

 

WSJ.com - The Jobless Summer

WSJ.com - Opinion: The Jobless Summer

 

Perhaps you've already noticed around the neighborhood, but this is a rotten summer for young Americans to find a job. The Department of Labor reported last week that a smaller share of 16-19 year-olds are working than at anytime since records began to be kept in 1948.

Only 24% of teens, one in four, have jobs, compared to 42% as recently as the summer of 2001. The nearby chart chronicles the teen employment percentage over time, including the notable plunge in the last decade. So instead of learning valuable job skills—getting out of bed before noon, showing up on time, being courteous to customers, operating a cash register or fork lift—millions of kids will spend the summer playing computer games or hanging out.

The lousy economic recovery explains much of this decline in teens working, and some is due to increases in teen summer school enrollment. Some is also cultural: Many parents don't put the same demands on teens as they once did to get out and work.

But Congress has also contributed by passing one of the most ill-timed minimum wage increases in history. Even liberals ought to understand that raising the cost of hiring the young and unskilled while employers are slashing payrolls is loopy economics.