4 March 2010

Today’s Tabbloid
PERSONAL NEWS FOR [email protected]

FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS

A Government Man [Cato at Six Reasons to Downsize the

Liberty] Federal Government [Cato at
MAR 03, 2010 04:16P.M.
Liberty]
By Roger Pilon MAR 03, 2010 02:34P.M.

This afternoon Politico Arena asks: By Chris Edwards

Will the president’s health care remarks today sway enough

votes to pass ObamaCare through “reconciliation”?

My response:

Who knows? What they show beyond all doubt, however, is the mind-set
of the president and the bill’s proponents. Consider just a few of his
opening words: “Everything there is to say about health care has been
said and just about everyone has said it. So now is the time to make a
decision about how to finally reform health care so that it works, not just
for the insurance companies, but for America’s families and businesses.”

Notice first the insinuation that health care works today for the
insurance companies, but not for the rest of us. Obama has to have his
foil, this man with no experience in the private sector and little
understanding of how that sector works. But notice, more importantly,
that we need “to finally reform health care so that it works” — the 1. Additional federal spending transfers resources from the
implication being that this is a collective undertaking, the only question more productive private sector to the less productive public
being how to do it. “We’re all in this together.” In the private sector, if we sector of the economy. The bulk of federal spending goes toward
can’t reach an agreement about some proposed undertaking, we walk subsidies and benefit payments, which generally do not enhance
away. That seems inconceivable to Obama. He’s a government man: economic productivity. With lower productivity, average American
conceiving public solutions to private problems is what his life is all incomes will fall.
about.
2. As federal spending rises, it creates pressure to raise taxes
I suppose you could say that government is so enmeshed in health care now and in the future. Higher taxes reduce incentives for productive
today that there are only public solutions to the problems government is activities such as working, saving, investing, and starting businesses.
largely responsible for having created — starting with the favorable tax Higher taxes also increase incentives to engage in unproductive activities
treatment employer-provided health care affords. But the direction of such as tax avoidance.
reform needn’t be toward even greater government. It might be toward
less government, as with health savings accounts. But that approach has 3. Much federal spending is wasteful and many federal
been rejected from the start by Obama and his Democratic supporters. programs are mismanaged. Cost overruns, fraud and abuse, and
They move in only one direction. other bureaucratic failures are endemic in many agencies. It’s true that
failures also occur in the private sector, but they are weeded out by
competition, bankruptcy, and other market forces. We need to similarly
weed out government failures.

4. Federal programs often benefit special interest groups while

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Today’s Tabbloid PERSONAL NEWS FOR [email protected] 4 March 2010

harming the broader interests of the general public. How is that Step 1 occurs when the economy is prospering and tax revenues are
possible in a democracy? The answer is that logrolling or horse-trading growing faster than forecast.
in Congress allows programs to be enacted even though they are only
favored by minorities of legislators and voters. One solution is to impose Step 2 is when politicians use the additional money to increase
a legal or constitutional cap on the overall federal budget to force government spending.
politicians to make spending trade-offs.
Step 3 is that politicians do not treat the extra tax revenue like a
5. Many federal programs cause active damage to society, in temporary windfall and budget accordingly.Instead, they adopt policies
addition to the damage caused by the higher taxes needed to – more entitlements, more bureaucrats – that permanently expand the
fund them. Programs usually distort markets and they sometimes burden of the public sector.
cause social and environmental damage. Some examples are housing
subsidies that helped to cause the financial crises, welfare programs that Step 4 occurs when the economy stumbles (in part because more
have created dependency, and farm subsidies that have harmed the resources are being diverted from the productive sector to the
environment. government) and tax revenues stagnate. If the resulting fiscal gap is large
enough, as it is in places such as Greece and California, a crisis
6. The expansion of the federal government in recent decades atmosphere is created.
runs counter to the American tradition of federalism. Federal
functions should be “few and defined” in James Madison’s words, with Step 5 takes place when politicians solemnly proclaim that “tough
most government activities left to the states. The explosion in federal aid measures” are necessary, but very rarely does that mean a reversal of the
to the states since the 1960s has strangled diversity and innovation in policies that caused the mess. Instead, the result in higher taxes.
state governments because aid has been accompanied by a mass of one-
size-fits-all regulations. Greece is now at this stage. I’ve already argued that perhaps bankruptcy
is the best option for Greece, and I showed the data proving that Greece
For more, see DownsizingGovernment.org. has a too-much-spending crisis rather than a too-little-revenue crisis.
I’ve also commented elsewhere about the feckless behavior of Greek
http://bit.ly/dywLTh politicians. Sadly, it looks like things are getting even worse. The
government has announced a huge increase in the value-added tax,
pushing this European version of a national sales tax up to 21 percent.
On the spending side of the ledger, though, the government is only
FISCALLY CONSERVATIVE BLOG FEEDS proposing to reduce bonuses that are automatically given to bureaucrats
three times per year. Here’s an excerpt from the Associated Press report,
Lessons from the Greek Budget including a typically hysterical responses from a Greek interest group:

Debacle [Cato at Liberty] Government officials said the measures would include cuts in
MAR 03, 2010 01:53P.M. civil servant’s annual pay through reducing their Easter,
Christmas and vacation bonuses by 30 percent each, and a 2
By Daniel J. Mitchell percentage point increase in sales tax to bring it to 21 percent
from the current 19 percent. …One government official,
speaking on condition of anonymity ahead of the official
announcement, said…that “we have exhausted our limits.”
…”It is a very difficult day for us … These cuts will take us to
the brink,” said Panayiotis Vavouyious, the head of the
retired civil servants’ association.

Now, time for some predictions. It is unlikely that higher taxes and
cosmetic spending restraint will solve Greece’s fiscal problem. Strong
global growth would make a difference, but that also seems doubtful. So
Greece will probably move to Step 6, which is a bailout, though it is
unclear whether the money will come from other European nations, the
European Commission, and/or the European Central Bank.

Step 7 is when politicians in nations such as Spain and Italy decide that
financing spending (i.e., buying votes) with money from German and
Dutch taxpayers is a swell idea, so they continue their profligate fiscal
Fiscal crises have a predictable pattern. policies in order to become eligible for bailouts. Step 8 is when there is

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Today’s Tabbloid PERSONAL NEWS FOR [email protected] 4 March 2010

no more bailout money in Europe and the IMF (i.e., American taxpayers) itself. If the state got out of the marriage business, the state would be a
ride to the rescue. Step 9 occurs when the United States faces a fiscal lot more in all of our private lives, judging, inspecting, regulating,
criss because of too much spending. forbidding, taxing, redistributing, and all the rest. Much of the state part
of marriage is really a protection against the state.
For Step 10, read Atlas Shrugged.
All of this is a lead-up to saying congratulations to the same-sex couples
who will now be able to marry in Washington, DC. Perhaps even more
than other types of marriages, same-sex marriages need these
FISCALLY CONSERVATIVE BLOG FEEDS protections. (Some, like sponsoring an immigrant or collecting Social
Security, may have to wait for federal law to catch up.)
Marriage, Private and Public
On the whole, same-sex marriage means that gays’ and lesbians’ private
[Cato at Liberty] lives can stay private. It gives them a protection against the government,
MAR 03, 2010 01:36P.M. which has too often been used against them. It means that gays and
lesbians can be treated the same as any other group of citizens. And it
By Jason Kuznicki means that their basic right to be left alone is finally being honored.

Wouldn’t it be great if we could just get the state out of the marriage
business? Perhaps. Marriage is fundamentally private, after all. It’s a
matter for families, churches, and couples to decide for themselves. FISCALLY CONSERVATIVE BLOG FEEDS

Yet state recognition of marriage often acts to keep the government out Club for Growth Launches TV
of private life, to ensure family stability, and to give regular, orderly rules
for all those times when, despite our best efforts, family and state still Ad in Utah Senate Race [The
collide. Here are just a few of the things that the civil side of marriage
does: Club for Growth]
MAR 03, 2010 12:26P.M.
• If you’re happily married and you have children, you don’t have to
worry for a moment about child custody law. Your children are WASHINGTON S COMMITTEE. 202-955-5500.
yours to raise jointly, whether they are biological or adoptive.

• If you’re married and you die without a will, your spouse typically
gets at least a share of your estate. You don’t have to do anything FISCALLY CONSERVATIVE BLOG FEEDS
special for this to happen. It’s automatic, and I think this probably
strikes most people as fair. The New Spending Limit
• If you’re married, you don’t need to do anything special to be able Amendment [The Club for
to make medical decisions for an incapacitated spouse. It’s
presumed that you are competent to do this. Growth]
MAR 03, 2010 12:01P.M.
• You can sponsor your foreign spouse for U.S. citizenship.
Taxpayer rockstars Mike Pence and Jeb Hensarling are ready to take a
• You can sue for wrongful death of a spouse. big knife to the national debt. And here is the first of 5 segments of an
interview they did with C-SPAN:
• You can collect a spouse’s Social Security benefits.

• You can often keep joint personal finances without worrying that
your spouse will bankrupt you.

Depending on where you live, some of these protections can be won

outside of marriage, if you’re willing to go to a lawyer and spend a few
hundred bucks. Others, like the last four, can’t be had without either a
marriage or a blood relationship.

State recognition of marriage protects families, often from the state

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Today’s Tabbloid PERSONAL NEWS FOR [email protected] 4 March 2010

FISCALLY CONSERVATIVE BLOG FEEDS (Cross-posted at National Journal’s Health Care Arena.)

It’s Official: Democrats to Use

Nuclear Option [The Club for FISCALLY CONSERVATIVE BLOG FEEDS

Growth] EXCLUSIVE ... SCOTT BROWN

MAR 03, 2010 11:21A.M.
ON KUDLOW & COMPANY
From the POLITICO: Sen. Tom Harkin told POLITICO that Senate
Democratic leaders have decided to go the reconciliation route. The TONIGHT [Larry Kudlow’s
House, he said, will first pass the Senate bill after Senate leaders
demonstrate to House leaders that they have the votes to pass Money Politic$]
reconciliation in the Senate. Harkin made the comments after a meeting MAR 03, 2010 08:01A.M.
in Senate Majority Leader Harry Reid s office including Harkin and Sens.
Baucus, Dodd, Durbin, Schumer and Murray.

FISCALLY CONSERVATIVE BLOG FEEDS

Before Administering the Lethal

Injection, Dr. Obama Offers to
Sterilize the Needle [Cato at
Liberty]
MAR 03, 2010 11:04A.M. Scott Brown, newly elected Massachusetts Republican Senator, will join
me for an exclusive interview discussing his first major tax-cutting policy
By Michael F. Cannon proposal tonight.

In a letter to congressional leaders, President Obama wrote of his 7pm ET on CNBC.

openness to including Republican proposals in his health care
legislation. GOP Congressmen Mike Pence & Jeb Hensarling will also be aboard to
discuss ObamaCare and reconciliation, despite a clear majority of
Dropping a few Republican ideas into a government takeover of health opposition from Americans.
care is like sterilizing the needle before a lethal injection: a nice thought,
but the ultimate outcome is the same.

• Two of the four Republican ideas – federal grants to states that

adopt medical malpractice liability reforms, and ratcheting upward
Medicare’s physician-price controls – would increase government
spending.

• The president’s health savings accounts (HSAs) proposal would

merely loosen the noose around consumer-directed health plans.

• Undercover investigations in Medicare and Medicaid are likely to

be as unsuccessful as past efforts to combat fraud.

This is not bipartisanship. President Obama is creating the illusion of

bipartisanship while taking the most partisan route possible: forcing his
legislation through Congress via reconciliation.