James Pethokoukis

Politics and policy from inside Washington

Romney: Values vs. data

May 12, 2011 17:48 UTC

A very tough WSJ editorial today looking at RomneyCare, but it was the summary that really caught me:

For a potential President whose core argument is that he knows how to revive free market economic growth, this amounts to a fatal flaw. Presidents lead by offering a vision for the country rooted in certain principles, not by promising a technocracy that runs on “data.” Mr. Romney’s highest principle seems to be faith in his own expertise.

More immediately for his Republican candidacy, the debate over ObamaCare and the larger entitlement state may be the central question of the 2012 election. On that question, Mr. Romney is compromised and not credible. If he does not change his message, he might as well try to knock off Joe Biden and get on the Obama ticket.

If a series of studies somehow (unlikely) showed that high taxes and nationalization of business would produce a higher standard of living, would I be for those policies? I would not, because that sort of society would be a far more oppressive one where a person would not be free to pursue happiness as he or she saw it.  While numbers should inform decisions, it’s not always about following the data wherever it takes you. Not at all. I remember talking with a libertarian econ professor who said he used to believe that his side “had the better studies.” As he got older, he became a bit less sure of that. But he also really didn’t care since at the core of cosmology was a belief in the value of freedom.


Talk about no factual argument given, just platitudes…

Tell us exactly how much money is going to pay exactly which commissars [or is it czars], which union kickbacks, which political favors, and which other graft. And be specific.

This is the usual spoon fed babble the ditto-bots get drummed into their little heads every day, two hours ever morning, and four hours every afternoon, followed by three hours of prime time, every single day.

So yes, let’s look at all the examples around the world, and compare them to America’s system. America treats healthcare as a risk, while the rest of the civilized word treats it as a cost. That’s why Americans pay twice as much for health services as the rest of the world, and get results that are no better.

There is no risk of getting sick. Disease does not care if people have health “insurance” or not. People get sick, they get care, and society pays the COST. Adding a layer of for-profit business to “manage the risk” is insanity.

And yet, Republicans are willing to spend whatever capital, political or otherwise, to protect this racket.

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Which party is at greater risk from a debt ceiling debacle?

May 12, 2011 14:58 UTC

Stu Rothenberg thinks there is plenty of danger to go around:

The nature of the Republican risk is obvious. If the GOP looks inflexible, excessively ideological and extreme, voters are likely to turn against it. This is more likely, of course, if Democrats look reasonable and emphasize their willingness to compromise. (Swing voters love the idea of compromise.) It’s also more likely if the most vocal and ideological elements of the GOP define their party.

But even partisan Democrats agree that their party faces a considerable risk if they look as if they are insufficiently committed to cutting spending. Indeed, merely by supporting an increase in the debt limit, Democrats play into an image that they are trying to change — that they are fiscally irresponsible.

This is why, some observers speculate, that if a “clean” vote on increasing the debt limit occurs soon (as some predict), large numbers of Democrats will vote against it. That would give ammunition to House Republicans, of course.

While Democrats surely would attempt to blame the GOP for a spike in interest rates due to a loss of confidence in the U.S. government’s reliability, it is far from clear that the president would avoid serious damage if the U.S. economy were to suffer from any chaos produced by the government reneging on its obligations.

Still, the only group of players that doesn’t appreciate the potential negative fallout from a deadlock is House Republicans, many of whom seem to think that failing to raise the debt limit wouldn’t be all that big of a deal. That view may well be delusional, but it gives them a great deal of power in any negotiations, since they don’t feel the pressure to act that others do.




There are societies that don’t see challenges coming, so they never take the time to develop solutions. There are other societies that see challenges coming, but they lack the skill and wherewithal to implement solutions. And then there are societies that see the challenges coming, know exactly how to respond, and still falter due to a dysfunctional political system that is sabotaged by misguided ideologues.

The near-collapse of the global economic system just happened. Wall Street isn’t exactly popular with the American mainstream, but Congressional Republicans don’t care, pursuing a strategy that would have been unthinkable just a few years ago. They’re counting on the public not knowing the difference, and the GOP is paying no price whatsoever for their financial industry antics.

The debt ceiling is not the only easily preventable crisis area in which the United States fails to act, due entirely to Republican intransigence and foolishness. We face a climate crisis, and extreme volatility in the energy sector, but the GOP refuses to consider sensible solutions even they supported a few years ago. If we don’t raise the debt ceiling, we risk a crisis of Congress’ own making. All because our political process has placed enormous power in the hands of incompetent ideologues who prefer inaction to action, and crisis to stability, even when the threat is staring us in the face.

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Cutting entitlement benefits to wealthier Americans

May 12, 2011 14:49 UTC

Good stuff on means testing from Charles Blahous over at e21:

As it happens, the two largest and fastest-growing areas of federal spending, Social Security and Medicare, are both ones for which the wealthiest Americans are fully eligible for rising benefits. Both programs are, to be sure, of extreme political sensitivity. But the financial imbalances in these two programs require correction by elected officials in any event. To the extent that spending on the wealthy is constrained within these programs, it will reduce the financial pressure for even more politically-sensitive changes to them.

1) The essence of what is required is for the two parties to agree on how many high-income individuals to affect, and on how much. Social Security provides a ready case study in how this could be done. Many Democrats, for example, have expressed sympathy with the concept of raising the current $106,800 limit on the amount of wages subject to the Social Security tax. Such a measure would affect roughly 20% of workers (the number who have wages above the current limit at some point in their careers). Legislators could therefore choose instead to slow the growth of benefits – perhaps for that same number of workers, or the top 20% of the wage spectrum.

How much should the growth of such benefits be slowed? It is not financially necessary to reduce Social Security benefits from current levels. Current Social Security proposals, for example, that employ “progressive indexing” would only impose price-indexation on less than 1% of workers, with everyone else receiving faster benefit growth. Limiting the highest-income 20% to inflation-adjusted benefits and allowing gradually faster growth for workers below that level could by itself eliminate well more than half of the entire Social Security shortfall.

2) As for Medicare, Democrats and Republicans fiercely disagree on whether cost containment is best achieved via a premium support model, or by the federal government’s imposing price controls within the program’s current design. But they do agree on the need for cost containment itself. Already certain features of federal health care law, such as the exemption from the “Cadillac plan tax” and the vouchers provided under the new health entitlement, will grow only with the Consumer Price Index (CPI), despite the fact that historically health cost inflation has exceeded economy-wide CPI. If it is politically acceptable to restrict these forms of federal health care support to CPI growth, surely Medicare direct spending on the highest-income beneficiaries could similarly be limited. (This cost containment could be achieved most neatly by changing the rate of growth for income-related Part B premiums so as to hold the growth rate for total Medicare per-capita expenditures to CPI for the highest-income beneficiaries).

3) Though these are the largest federal spending programs, and though most other direct spending is not targeted on the rich by any definition, savings from direct payments to higher-income individuals need not end there. Agriculture support payments, for example, are currently made to farmers with adjusted gross farm incomes as high as $750,000 (and allowing for an additional $500,000 in non-farm income). At a time when so many continue to struggle amid a weak economy, when federal finances are in desperate condition, and when many talk of the necessity of raising taxes on millionaires, it is difficult for taxpayers to understand why direct payments to millionaires continue. It is encouraging that reports on nascent bipartisan deficit talks indicate that such excessive farm subsidies are potentially on the chopping block.

A bipartisan effort to restrain entitlement spending on the rich will not draw unanimous praise. Some on the far left will see such reforms as part of an insidious plot to weaken popular support for cherished programs. But even objection from these quarters is potentially useful and informative. As a nation we must decide whether our loyalties attach to the programs in the abstract or to the individuals affected by them both as beneficiaries and as taxpayers. We need an informed debate over whether the costs of government should rise to unprecedented levels simply because of the political importance some might attach to buying the support of those who least need assistance.


First they came for the flash traders …

May 12, 2011 14:31 UTC

Democrats want to raise taxes on oil companies. They want to slap fees on high-frequency trading firms. And they want to raise taxes by$2 trillion over the next 10 years, including a 3 percent surcharge of millionaires.  All of which will solve nothing since we either need to radically restructure entitlements (such as through the Paul Ryan approach) or hit the middle class with broad new taxes (the true “progressive” approach which they will not fess up to.) For now, though, liberals are focusing on the easy targets for higher taxes: Big Oil, Wall Street and The Rich. But that is not where they will stop …


Really, using the start of a phrase that stated “First they went after the Communists” then “Trade Unions” and “Jews” (left-wing groups) as a statement about the evils of the Nazis to support a right wing agenda is not just classless, it belittles the evil that was Nazi Germany.

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