An Indication of Seriousness, or More D.C. Manipulation?

H/T to Hot Air for linking to the deficit reduction plan by Republicans on the House Budget Committee. The plan would, according to Republican estimates, cut $1.3 trillion over ten years.

This is nowhere close to enough to even be a solid dent in the national debt (it averages out to $130 billion in annual savings- which is less than 1/10 of the deficit for this year alone), but at least it’s a start. The plan also, as Ed Morrissey pointed out, takes care of some of the major issues with Freddie Mac and Fannie Mae, which are sucking tens of billions of dollars annually from the American taxpayer, and continue to be damaging to the economy and the possibility of an economic recovery.

Of course, Social Security, Medicare, defense cuts, Medicaid and subsidies to private companies (outside of TARP and the stimulus) are not addressed. This is disappointing, and may show a lack of reform seriousness on the part of Republicans. However, this plan is a start. Considering that House Democrats can’t even pass a budget, this is a great public relations step for Republicans, and a small bit of hope for those of us who want to see a functioning America 10 years.

The Republican press release can be seen here, and the specific cuts are outlined below, as posted by Morrissey:

• Cancel Unused TARP Funds. Prohibit the Treasury Secretary from entering into new commitments under the Troubled Asset Relief Program [TARP]. Ending TARP would prevent up to $396 billion in additional disbursements; CBO estimates savings of $16 billion. H.R. 3140 introduced by Rep. Tom Price of Georgia.
• Cancel Unspent ‘Stimulus’ Funds. Rescind all unobligated budget authority authorized under the “stimulus” bill and dedicate to deficit reduction. Saves up to $266 billion. H.R. 3140 introduced by Rep. Tom Price of Georgia.
• Cut and Cap Discretionary Spending. Return non-defense discretionary spending to pre-Obama (fiscal year 2008) baseline levels. Saves up to $925 billion. Legislation introduced by Reps. Ryan and Hensarling (H.R. 3964) and Rep. Jim Jordan of Ohio (H.R 3298) include caps on discretionary spending.
• Reduce Government Employment. Hire one person for every two who leaves civilian government service until the workforce is reduced to pre-Obama levels (exempting the Departments of Defense, Homeland Security, and Veterans Affairs). Saves an estimated $35 billion. H.R. 5348 introduced by Rep. Cynthia Lummis of Wyoming.
• Freeze Government Pay. Freeze Federal civilian pay for 1 year. Saves an estimated $30 billion.
• Adopt the Legislative Line-Item Veto. Enact a constitutional line-item veto law. The President’s FY 2011 budget included terminations, reductions, and savings that would achieve $23 billion in one year. While Congress may not accept all these savings, the Line Item Veto can help reduce spending. H.R. 1294 introduced by Rep. Paul Ryan of Wisconsin.
• Reform and Bring Transparency to Fannie Mae and Freddie Mac. Reform these companies by ending conservatorship, shrinking their portfolios, establishing minimum capital standards, reducing conforming loan limits, and bringing transparency to taxpayer exposure. According to CBO, the cost to taxpayers of putting government in control of Fannie and Freddie is $373 billion through 2020. Saves an estimated $30 billion. H.R. 4889 introduced by Rep. Jeb Hensarling of Texas. H.R. 4653 introduced by Rep. Scott Garrett of New Jersey.
• Create a Sunset Commission. Establish a commission to conduct systematic reviews of Federal programs and agencies, and make recommendations for those that should be terminated; and provide for automatic sunset of programs unless expressly reauthorized by the Congress. H.R. 393 introduced by Rep. Kevin Brady of Texas.

Heritage Foundation Breakdown of Alternative Energy Costs

Heritage Foundation breaks down alternative energy costs.  Heritage points out that,

The inconvenient truth is this: nearly half of America’s electricity is generated from coal. Natural gas and nuclear energy add about 20 percent each. Most of the rest is provided by renewable sources, primarily hydroelectric energy at 6 percent. Non-hydro renewables like wind, solar energy and biomass total only 3 percent. And this is after decades of existing generous renewable subsidies. If electricity created by wind and other renewables were cost competitive, consumers would use more of it without a federal law to force consumption. But renewable energy is not cost competitive, hence the need for government coercion to force the American people to buy it.

You can find the relevant research paper here.

-nick

Will You Go to Jail If You Don’t Have Insurance?

Jack Balkin says that the answer is no.

Balkin is correct that, technically, anyone who does not buy insurance under the new set of laws will only have to pay a tax (or as I prefer to think of it, a fine).? Only if they refuse to pay the fine will they then, eventually, be sent to jail as a tax evader.? Fair enough.? But the general point still remains.? If you do not comply with this new law – you will be sent to jail.? Being sent to jail for refusing to pay the fine is only morally different if the fine has some particular justification.

Balkin argues that the fine (or as he prefers to think of it, tax) is justified by free-rider problems:

If lots of people (and especially young and mostly healthy people) don’t buy health insurance, the cost of insurance goes up for everyone, and it is passed on to others in the form of higher premiums. In addition, people who don’t buy health insurance tend to wait until their health problems are severe and then use emergency services; they may contract communicable diseases (which they may pass on to others) or they may become disabled. All of these costs get passed along to others–in the form of higher premiums and higher costs for hospitals and insurers–or they have to be absorbed by federal and state governments through programs for the poor or the disabled.

So if you don’t buy health insurance, you are increasing costs for other people. The federal government is taxing you to recoup some of those costs. An analogy would be taxes on alcohol or tobacco, although these taxes are usually worked into the retail price of the goods so that people don’t even have the opportunity to refuse to pay them. Another example would be taxes on an enterprise that is creating additional costs to the environment through pollution; the government taxes you if you don’t purchase and install anti-pollution equipment.

Balkin skips more than a few steps with this analysis.? In significant part, health care free riding is only possible because there are laws that legalize free riding.? For example, the laws requiring hospitals to treat all emergency room visitors, regardless of their capacity/intent to pay, are an invitation for free riding.? The costs of treating any of these patients who do not pay will be passed on to all of the hospital’s paying patients.? If we really wanted to eliminate this free rider problem, we would just make people pay for their emergency room visits – or we would at least not require hospitals to receive people without insurance.

The current health care reform is not a brilliant scheme to end free riding.? In large part, it is an attempt to write more free riding into law.? It requires insurance companies to transfer health care costs from sick to healthy patients.? It enacts massive subsidies that transfer costs from the poor to the wealthy.? These transfers are very much like actual free riding, and they would not occur in an efficient insurance market that had no free riding.

Balkin shrugs and says that “tax policy does this all the time”.? And so it does.? And opponents of these subsidies are right to remind the rest of the electorate that their participation is not voluntary, but enacted through threat of imprisonment.? Health care reform is commonly assumed to be in everyone’s benefit, but this is of course not the case.? The threat of jail time lies behind every government “charity”.