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Fighting the Zombies
Bryan Caplan offers up a criticism of the House healthcare reform bill:
The Krugman we've got is sold on the House health bill. But the Krugman we had, the thoughtful economist who wrote The Accidental Theorist, would have responded differently. Krugman Past, unlike Krugman Present, would have pointed out that when the unemployment rate is 9.7%,
it's a bad idea to legislate an 8% payroll increase on businesses that fail to offer health insurance. Employers are reluctant to hire workers at today's wages; how are they going to feel once the marginal worker gets 8% pricier?
It's not just Krugman who should be against such legislation at a time like this; so should any sensible Keynesian.
"At a time like this." I think I've read critiques similar to this about a thousand times now. I guess it sounds mighty clever, hoisting Keynesians by their own petard or something. But it's nonsense. The "pay-or-play" payroll tax increase doesn't go into effect until 2013 — and if the recession isn't over by then we've got way bigger things to worry about than a minor increase in payroll tax receipts.
Ditto for Waxman-Markey, which frequently gets the same treatment. But W-M won't have any effect on energy prices for years, and even when it does the impact will be tiny at first. Like healthcare reform, it won't have the slightest effect on the recession because it won't take effect until well after the recession is over.
If you want to argue that higher payroll taxes are bad in general, then fine. I might even agree with you depending on what alternative you offer up. But leave the recession out of it.
House Health Bill
I guess this bill will have to do, tho’ I think that not separating health coverage from employment is a mistake that will come back to bite us later.
The doctor in our family is not happy:
“My practice is 70% Medicare. Reimbursement is already low and if they cut reimbursement to me I cannot "make it up in volume". I will have to LIMIT my # of Medicare patients like they already do in the cities. This will decrease access. Primary care residencies are already in the toilet. You may be able to appoint an automobile czar but you can't appoint someone to be a doctor. If they make my license contingent on participation, I will retire...seriously. Then what will the country have? I am far, far from alone on this.”
I haven't seen any mention
I haven't seen any mention that cutting Medicare reimbursements is on the table.
$400B of the $1T cost comes
$400B of the $1T cost comes from reduction in medicare- that's been reported like everywhere, $600B from tax increases. How really believes the government can extract that much from computerizing medical records?
Medicare reductions
IT is my understanding that the vast majority of the Medicare savings comes from reforming the prescription drug benefit. By giving the Feds bargaining power, there is an anticipated $245 billion in savings.
Couldn't disagree more
This is not just a cyclical downturn, and I'm pretty sure 2013 won't look so wonderful.
Any proposal that reinforces the link between employment and health insurance is a bad idea. And any proposal that would be a defacto tax on low-income, low-skill employment is a terrible idea. Doesn't matter whether it's in 2009 or 2013. And I also have been little surprised that Krugman is so accepting of the employer mandate/penalty proposal.
The only sensible way to fund universal healthcare, besides getting rid of the tax exemption employers receive for the insurance they provide, is to tax the wealthy, who should be paying much higher marginal ratesin any case.
But the sooner we break the link between employment and health insurance the better.
Depends upon one's choosen theory of economics.
"Like healthcare reform, it won't have the slightest effect on the recession because it won't take effect until well after the recession is over."
But, if you buy into Republican style psyco-economics, then mere anticipation of future tax increases (such as by running a Keynsian deficit -or mandating future spending) instantly translates into people hoarding their cash. The bottom line from this line of thinking is that stimulus doesn't work, because a future-tax-aphobic public will absorb the stimulus by increasing their savings. This seems to be the argument that is going around. If you buy into this reasoning about stimulus, you will also buy into the economic destructiveness of promised future costs thingy.
History Repeats Itself
I hear times were tough back when they passed Social Security as well.
"and if the recession isn't
"and if the recession isn't over by then we've got way bigger things to worry about than a minor increase in payroll tax receipts."
Why? I mean really, why? I know this is a popular argument - if things haven't improved in two years then the world will have come to an end so we have license to do whatever we want now - but do you *really* think that's true? Isn't it possible that over the next few years we are going to muddle through with high unemployment - and with the world still here -, so that indeed an increase in payroll tax receipts *won't* be welcome?
I'd still go for health care, but please let's cut out this specious, and ridiculous, argument.
...
Have you ever heard the saying, "Let's burn that bridge when we come to it?"
You're worrying about something in the future which is totally avoidable by changes made... In the future. What we do now doesn't change whether it'll be advisable to have that tax then or not.
Have you ever heard the
Have you ever heard the expression, "Don't burn your bridges?"
"Specious and ridiculous
"Specious and ridiculous argument?" 10% unemployment is specious and ridiculous? You aren't serious are you?
"Specious and ridiculous"
"Specious and ridiculous" refers to Kevin's argument, not to 10% unemployment. I'm afraid I can't even understand how you managed to misparse so badly.
you tell 'em, a
Specious and ridiculous indeed. I'm sure we will weather long term economic upheaval at least as well as the Weimar Republic did.
Four years, not two
Four years is a really long time in relation to the business cycle. If we really are still in a recession by then (though the word for a recession that long surely is "depression"), then by all means hold off on the tax increases, or cut them elsewhere. But we have to start paying for our government sometime, and continuing to let uninsured people die of untreated cancer, hypertension, diabetes, simply isn't an option.
Kevin All reasonable
Kevin
All reasonable forecasts of unemployment suggest that it will be higher in 2012 than it it was in 2007. Previous serious economic shocks had that effect (if you adjust for those discouraged from the labour force entirely ie not reported in the official unemployed).
Payroll taxes always cost jobs. That is a durable effect well studied. The 'tax wedge' between what employees are paid, and what they cost their employers, has been studied and compared internationally: the higher the wedge the higher the cost in terms of lost employment.
However if this means that some US employers will cut healthcare coverage and let the government take up the slack with (cheaper) healthcare, this could still be a net gain to the US economy.
I am sure that the average healthcare cost of employee health insurance in the US is greater than 8% of payroll. Hence the 'race to the bottom' to cut healthcare coverage.
again you misunderstand conservatives
When they say it's bad to raise taxes "at a time like this," they mean the Cenozoic Era.
I'm shocked - SHOCKED - that
I'm shocked - SHOCKED - that the Democratic Congress would wait until after the 2012 elections to really stick it to the public.
I wonder why they would pick dates after 2012?
Oh yeah, that would be after Obama's re-election bid.
Democrats are slime. Too bad they underestimate large swaths of the American public. Confidence polls in Obama are plummeting fast and many people realize the harm his policies will have on America, fiscally and otherwise.
When will liberals realize America never was, never wants to be and never will be a socialist nation?
Your lack of contact with reality
is astonishing.
Ditto for Waxman-Markey,
Ditto for Waxman-Markey, which frequently gets the same treatment. But W-M won't have any effect on energy prices for years, and even when it does the impact will be tiny at first. Like healthcare reform, it won't have the slightest effect on the recession because it won't take effect until well after the recession is over.
If you want to argue that higher payroll taxes are bad in general, then fine. I might even agree with you depending on what alternative you offer up. But leave the recession out of it.
Which was one of several fundamental problems with nearly ex-Gov. Palin's op-ed in the WaPo two days ago. We were in the middle of a recession, and cap-and-tax would just make it worse, and think about all those poor unemployed people. (Wonder if anyone's ever done a study on what issues prompt Republican leaders to shed tears for the economic fortunes of the average American. But I digress.) But anyone paying attention knew that W-M was going to have essentially no effect for a few years out.
Bad, but not that bad
. There is only one logical reason to put such a clause into the bill: the bill's authors see the public option as only a bargaining chip, and don't expect a public option in the final bill. Obviously with a strong public plan, we don't need to force employers to provide insurance. With luck, the "pay or play" clause will be bargained away, and the public option will survive.
As a business owner and somewhat reluctant capitalist, I don't like the idea of my government telling me what to do. But I also realize that since my competitors are governed by the same laws, "pay or play" doesn't put me at a competitive disadvantage.
A business owner and a
A business owner and a somewhat reluctant capitalist? What are you, fraught with guilt or something? If indeed you are what you say you are, I'd have any other term for you: unsuccessful.
Why is it called a "Public
Why is it called a "Public Option" anyway? It's a "government Option" run by the government. Calling it a public option is like calling Card Check "Employee Free Choice Act."
You Are Right
Actually, that would be an excellent name for Card Check.
A Bit OT: Call Finance Committee Members to Demand Public Option
The Senate Finance Committee is deciding their version of the health care bill in the next two weeks. Even though it is "Dem" controlled it is leaning against the public option -- among other things Max Baucus has former staffers lobbying him from Big Health. We should be calling/emailing everyone on that committee every day until August. If you call they just ask for your zip code and presumably count the yays/nays, it's very quick. If you email, you could write something like this:
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Dear Senator,
Please include a FULL public option in the Finance Committee health care bill, and get it out before the August recess.
Americans demand this out of basic fairness - they can see that 3/4 of medical bankruptcies involve people who already HAD private insurance when they got sick; they saw the report this month that private insurers systematically lied to inflate out of network pricing; and they know the public option would reduce prices and cost less for the taxpayer.
Please tell your colleagues that this ONE issue is MAKE OR BREAK for the voters for this Senate session--if they oppose the public option they will be under a huge spotlight at the next election for it. Tell them there is plenty of soft money to be had from lobbyists on other issues, on this one they had better vote for what is right, and what their constituents want and deserve.
Thank You!
PRIORITY: Blanche Lincoln (on the fence about public option)
Baucus, Conrad, Bingaman, Dodd (all willing to kill public option)
Wyden (actually against public option)
DEM Members (at least in name):
Please do at least these, if not all:
====================================================================
Blanche Lincoln AR (202) 224-4843
http://lincoln.senate.gov/contact/email.cfm
Max Baucus MT (202) 224-2651
http://baucus.senate.gov/contact/emailForm.cfm?subj=issue
Kent Conrad ND (202) 224-2043
https://conrad.senate.gov/contact/webform.cfm
Jeff Bingaman NM (202) 224-5521
http://bingaman.senate.gov/contact/types/email-issue.cfm
Chris Dodd CT (202) 224-2823
http://dodd.senate.gov/index.php?q=node/3128
Ron Wyden OR (202) 224-5244
http://wyden.senate.gov/contact/
====================================================================
Jay Rockefeller WV (202) 224-6472
http://rockefeller.senate.gov/contact/email.cfm
John Kerry MA (202) 224-2742
http://kerry.senate.gov/contact/email.cfm
Charles Schumer NY (202) 224-6542
http://schumer.senate.gov/new_website/contact.cfm
Debbie Stabenow MI (202) 224-4822
http://stabenow.senate.gov/email.cfm
Maria Cantwell WA (202) 224-3441
http://cantwell.senate.gov/contact/index.cfm
Robert Menendez NJ (202) 224-4744
http://menendez.senate.gov/contact/contact.cfm
Thomas Carper DE (202) 224-2441
http://carper.senate.gov/contact/
Bill Nelson FL (202) 224-5274
http://billnelson.senate.gov/contact/email.cfm
NOTE: Not to be confused with fascist "Dem" Ben Nelson NB
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GOP MEMBERS - I only list one, others are so far right it's
probably useless to call:
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Olympia Snowe ME (202) 224-5344
http://snowe.senate.gov/public/index.cfm?FuseAction=ContactSenatorSnowe....
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Committee on Finance (202) 224-4515 (they don't always answer phone though)
You could also call Reid and Durbin, the Senate leadership, to ask
them to pressure Baucus to stop compromising and include a public
option:
Harry Reid (202) 224-3542 PRESS 1
Dick Durbin (202) 224-2152
The big picture please!
Bryan Caplan wrote:
The economy worked better in the 1990s (at least in terms of producing GDP) than ever before. Does that mean it couldn't have happened since payroll taxes were higher in the '90s than in the 1920s or 1950s or 1970s?
If you want the economic system to work you do look at tax rates, but there are a lot of other factors too.
If you want our society to work you look at the economy, but you also look at a lot of other factors -- like, how well are people benefiting from the country's economic success.