In the News: Blog

When I describe Obamacare as the greatest assault on our freedom in my lifetime, I can cite many reasons, from the massive tax increases to the incredible pile of new regulations to the unprecedented federal mandate to buy something.

It’s not appreciated enough just what we lose when freedom is crushed. One huge loss is the American innovation in medicine, from drugs to devices to surgical techniques. As Scott Atlas, a physician now at Stanford University’s Hoover Institution, pointed out last week in the Wall Street Journal, that innovation mostly has happened in the United States, and the majority of it has been funded by private investment.

But, Atlas points out, that investment in innovation has slowed dramatically, especially amid the miserably weak recovery of the past five years. He writes:

“But the economy's weakness itself has been exacerbated by the negative impact of new taxes and regulations under ObamaCare. According to Congressional Budget Office estimates, the new health-care law will levy more than $500 billion in new taxes over its first 10 years to help pay for insurance subsidies and Medicaid expansion. These new taxes include significant levies on key health-care industries, such as manufacturers of medical devices and drugs, and their investors.

“As a result, small and large U.S. health-care technology companies are moving R&D centers and jobs overseas. The CEO of one of the largest health-care companies in America recently told me that the device tax his company paid last year exceeded his company's entire R&D budget.”

And so, Atlas writes, companies are cutting jobs and moving R&D – and its jobs – overseas.

But it’s not just Obamacare’s taxes:

“The bureaucrats at the Food and Drug Administration are also hindering medical-technology and drug development. According to a 2010 survey of more than 200 medical-device companies by medical professor and entrepreneur Josh Makower and his colleagues at Stanford University, delays of approvals for new medical devices are now far longer in the U.S. than in many other developed countries. In the European Union—not exactly known for cutting through red tape—it takes on average seven months to gain approval for low- to moderate-risk devices. In the U.S., FDA approval for similar devices takes on average 31 months.”

This didn’t have to happen. Health care could have been improved for all without a vast increase of federal control and taxes. That, nonetheless, is the route President Obama and Democrats took. The job now is how to repair the damage already inflicted. Atlas has ideas:

“First, strip back the heavy tax burdens that currently inhibit innovation, starting with repealing the Affordable Care Act's $29 billion medical-device excise tax and the $80 billion tax on brand-name drugs. Change the tax code to add incentives for investment in early-stage medical technology and life-science companies, as well as for philanthropic gifts to academic institutions that promote tech entrepreneurs.

“And finally, simplify processes for new device and drug approvals, so that the FDA becomes a favorable rather than an obstructionist environment for these life-saving and cost-saving discoveries.”

That’s a “tall order,” Atlas writes. He’s correct. But it is one that starts with voters recognizing the reality of what is happening and acting accordingly.

The first word in the laughably misnamed “Affordable Care Act” refers to the way that Obamacare is supposed to lower the cost of health care.

The president promised infamously that his plan would cut the cost of a typical family's premium by up to $2,500 a year. Instead, the average family premium was about $2,581 higher by last year than it was in 2010, the year Obamacare was enacted.

Those premiums are going to go right on briskly rising, say experts.

And if you don’t buy coverage on the government-run “exchanges” but still get it through your employer, you’re in for a shock in 2017 — assuming your employer can still afford to cover you, which is looking increasingly unlikely.

But “affordable” also meant that the government would help pay the premiums, high as they might go. Obamacare includes subsidies to cover part of the premiums for plans bought on the exchanges. These give taxpayer money to insurers to cover part of the premium for buyers earning as much as four times the poverty level. They were supposed to make it pain-free for most buyers, so that middle-class America would fall in love with Obamacare.

It’s not turning out that way. USA Today reports that the subsidies, which are structured as tax credits, mean that "hundreds of thousands of consumers could owe back some of that money next April.”

The subsidies vary with income and life situation, such as whether you’re married. But they are paid before that income is earned, so if anything changes between the time you buy coverage one year and file taxes the next winter, the IRS may want money back:

"Those affected took advance payments of the premium tax credit for health insurance. Some married couples could owe $600 or $1,500 or $2,500 or even more. It might feel like a raw deal for some who are already suffocating under the escalating costs of health insurance. . . .

"Experts say people need to realize early on that they should report changes in income and other changes in one's life, such as a marriage, throughout the year. See HealthCare.gov to report 'income and life changes.’”

The paper points out that the snag won’t hit everyone. But it is most likely to affect “people in transition,” as one expert put it — those who are in and out of work, or those who don’t hold a regular 9-to-5 job. So people with plenty of stress in their lives, in other words, will be getting a second dose of it from the IRS because of the way government “helped” them.

This isn’t the biggest problem with Obamacare, or the most widespread. But it again shows the real legacy of this “reform” — the government meant to help people but made buying health coverage still harder. Health insurance used to involve understanding deductibles and co-pays — now it also includes dealing with the IRS. Obamacare doesn’t just cost you more money, it may cost you more stress.

The “Affordable” Care Act, President Obama’s perversely named disruption of health care, continues to be something America does not want, according to pollsters at the respected Kaiser Family Foundation. They revealed Tuesday that just under half of Americans disapprove of the law, while only 35% approve of it – numbers mostly unchanged over the past year, during which Obamacare’s benefits have been rolled out.

The more Americans see of the law, the more they become confirmed in their dislike of it.

No wonder. Last year’s rollout was botched, but recently the newly installed head of the federal “exchanges,” the artificial markets where customers must go to find government-mandated insurance plans, told a newspaper, “Part of me thinks that this year is going to make last year look like the good old days.”

And many people will be having to visit those exchanges: As the National Journal reported last month, people who found an Obamacare plan they liked and could afford will have to change plans yet again to keep the same deal. Those who simply stick with what they found last year may find themselves owing the IRS because, say consultants, of miscalculated subsidies.

But even if Washington eventually fixes these technical problems, Obamacare is still slamming the American economy.

For one thing, the law is making health care costlier. The Obama administration itself admitted this last week. Actuaries at the Department of Health and Human Services said that health care spending will rise from about one-sixth of Americans’ output last year to one-fifth in 10 years. Taxpayers will bear 48% of that burden, up from 41%, the agency said.

These rising costs, HHS projected, will come from an aging population but also from “spending growth associated with the coverage expansions in the Affordable Care Act.”

Obamacare hits the economy in a still deeper way. University of Chicago economist Casey B. Mulligan explains how in the Wall Street Journal:

“Although the ACA helps specific populations by giving them a bigger slice of the economic pie, the law diminishes the pie itself. It reduces the amount that Americans work, and it makes their work less productive. This slows growth in both personal income and gross domestic product.”

For one thing, Mulligan writes, the law imposes harsh penalties on small and midsize businesses that do not provide health coverage and that hire more employees. “The result of penalizing businesses for hiring and expanding is going to be less hiring and expanding,” he writes.

Another 25 million people cannot get Obamacare’s premium subsidies because their employers do offer coverage. The only way to get those subsidies, he writes, is to go part-time, find an employer who won’t cover them, or stop working:

“Most people wouldn't give up working merely to qualify for a few thousand dollars in assistance. But it is a mistake to assume that nobody is affected by subsidies, because there are people who aren't particularly happy with working, planning to leave their job anyway, or otherwise on the fence between working and not working. A new subsidy is enough to push them over the edge or to get them to stop working sooner than they would have otherwise.”

Employers will adapt, too, says Mulligan. They can avoid penalties by cutting employees’ hours to 29 a week. This isn’t just theory. Investor’s Business Daily reports that last week’s employment figures show industries with many low-wage workers are cutting hours.

“This is not the most productive way to arrange the workplace,” writes Mulligan, “but it allows employers to avoid the mandate and its penalties and helps the employees qualify for individual assistance.”

Mulligan’s point isn’t that Obamacare has no benefits. It is that the law provides them to some people at too high a cost to everyone. It weakens the economy, he writes: “In effect, people who aren't receiving assistance through the ACA are paying twice for the law: once as the total economic pie gets smaller and again as they receive a smaller piece.”

Americans can understand that. The program’s continued unpopularity demonstrates this.

This week the Senate is taking up political votes to help protect Harry Reid’s vulnerable Senate Democrats. Forty-six Senate Democrats have proposed Senate Joint Resolution 19, a measure to essentially repeal the First Amendment. The constitutional amendment is designed to energize the left wing base of the Democrat party, and so far it is working.

It is a major power grab by Democrats to suppress speech they disagree with. It is authoritarian and it is wrong. As National Review noted:

“The Democrats are not calling this a repeal of the First Amendment, though that is precisely what it is. Instead, they are describing the proposed constitutional amendment as a campaign-finance measure. But it would invest Congress with blanket authority to censor newspapers and television reports, ban books and films, and imprison people for expressing their opinions. So long as two criteria are met — the spending of money and intending to influence an election — the First Amendment would no longer apply.”

I agree. All this resolution will do is help protect a sitting senator’s seat. Former U.S. Solicitor General Theodore B. Olson writing in the Wall Street Journal states:

"Democrats claim that the Supreme Court has made politicians and political parties less accountable by encouraging donations involving outside interest groups. Outside of what? Democrat fundraising circles? Their actual fear is that less traditional candidates—including outsiders—will have the funding necessary to challenge incumbents in primaries without the blessing of party elders."

Members of Congress, who already enjoy enormous incumbent re-election advantages, should not be charged with allocating political free speech. In business, competition enhances the quality of the product. The political world is no different.

In 2010, I was a political novice. I had never held public office and had no name recognition. My opponent was a widely known 18-year incumbent senator. In order to compete, I had to spend money to help convey my message to Wisconsin. This amendment would give government the power to regulate or prohibit that spending. By doing that, government would silence the message.

Olson quotes a liberal icon, Sen. Ted Kennedy:

“ ‘In the entire history of the Constitution,’ the late Ted Kennedy once stated on the Senate floor, ‘we have never amended the Bill of Rights, and now is not the time to start. It would be wrong to carve an exception in the First Amendment. Campaign finance reform is a serious problem, but it does not require that we twist the meaning of the Constitution.’ ”

S.J. Res. 19 is shameful.

President Obama participates in a tennis clinic on the White House basketball court. (White House photo by Pete Souza)

Charles Krauthammer pointed out perfectly, in case you missed it, that the issue of Burger King merging with a Canadian doughnut chain and moving its headquarters north is not really about taxes. 

This isn't the murky question of what motivates the cross-border deal. Burger King says it’s not mainly about lowering the 27% effective tax rate the company paid in 2013 but more about growth possibilities. The company will save some money on taxes, though, and liberals have enraged themselves by saying that it’s just a loophole to get out of paying the unusually high corporate tax rates of the United States.

But tax rates aren’t really at issue, noted Krauthammer:

“Everyone knows why inversions are happening. America’s 35 percent corporate tax rate is absurdly uncompetitive. Companies are doing what they always do: legally lowering their tax liabilities.

“What is maddening is that the problem is so easily solved: tax reform that lowers the accursed corporate rate. Democrats and Republicans agree on this. After the announcement of the latest inversion, Burger King buying Tim Hortons and then moving to Canada, the president himself issued a statement conceding that corporate tax reform — lower the rates, eliminate loopholes — is the best solution to the inversion problem.

“It’s also politically doable. Tax reform has unique bipartisan appeal. Conservatives like it because lowering rates stimulates the economy and eliminating loopholes curbs tax-driven economic decisions that grossly misallocate capital.”

So why doesn’t this happen? Liberals should like eliminating loopholes, and Republicans have been proposing this trade-off for years. Yet President Obama refuses, saying there is no time, Krauthammer writes:

“No time? Where has he been? He does nothing about tax reform for six years (during two of which Democrats fully controlled Congress), then claims now to be too impatient to attempt the real solution. Instead he wants to hurry through a punitive anti-inversion law to counterbalance the effects of our already punitive tax rates.”

“This is nuts,” writes Krauthammer, and he is right. The more it looks like Obama administration and Democrats will try locking the door to companies desperate to escape punitive tax rates, the more inversions you can expect. The solution is obvious: Enact the reform that appeals to both Democrats and Republicans, even the president, have praised.

But that would require leadership, Krauthammer writes:

“A real political leader would abandon this sideshow and actually address corporate tax reform with a serious revenue-neutral proposal to Congress. There would be hearings, debate, compromises. We might end up with something like the historic bipartisan tax reform of 1986 that helped launch two decades of nearly uninterrupted economic growth.

“But for that you need a president.”

Kevin Glass writes at Townhall about the telling admission from the Congressional Budget Office last week about Obamacare: It will discourage some people from working.

The CBO, which is Congress’ nonpartisan accountants, tries to forecast not only federal spending but how the economy will perform. Its latest forecast was released last Wednesday. CBO repeated a prediction that it has made before: That the share of Americans “in the labor force” – working or looking for work – will not grow but will shrink.

The figure had been rising for decades, then fell dramatically during the recession. It has continued to fall, rather than bouncing back in the way it normally does during real recoveries, as Americans have given up on finding jobs. An unemployed person looking for work is considered to be in the labor force, but one who has despaired and taken a very early retirement, for example, or tries to get by on increasingly generous government benefits is no longer counted as participating in the labor force.

This is the fruit of an Obama economy marked by hostility toward economic success and business growth: The weakest recovery since World War II.

But, as Glass points out, the CBO says that even as the economy recovers, labor force participation won’t improve. The CBO’s graph:

Fewer Americans will even try finding a job, CBO says, because increasing demand for workers will run into two other forces. Read it on page 42: The most important factor is that the Baby Boom is getting old, but:

“Federal tax and spending policies will also tend to lower the participation rate. In particular, certain aspects of the Affordable Care Act will tend to reduce labor force participation, with the largest effect stemming from the subsidies that reduce the cost of purchasing health insurance through the exchanges. Because the subsidies decline with rising income (and increase with falling income) and make some people financially better off, they reduce the incentive for some people to work as much as they would without the subsidies.”

CBO is saying that because Obamacare gives a real subsidy that decreases as one's paycheck increases, this discourages people from earning more money. The agency was even more explicit in its forecast last February, when it said that this effect hit lower- and middle-income workers the hardest:

“For those workers, the loss of subsidies upon returning to a job with health insurance is an implicit tax on working (and is equivalent to an average tax rate of roughly 15 percent, CBO estimates). That implicit tax will cause some of those workers to lengthen the time they are out of work — similar to the effect of unemployment benefits.”

This isn’t just about the fate of workers who are discouraged out of the labor force. People who work are people who are creating wealth in the economy. If fewer people do that, we become a less prosperous country than we otherwise might have been. And that is what Obamacare is doing, according to the nonpartisan accountants at the CBO.

The Marquette University Law School poll last week found that Obamacare is still remarkably unpopular in Wisconsin – 52% of Wisconsinites dislike the law, while 38% liked it. The law, absurdly named the “Affordable Care Act,” is now more unpopular than it was last fall, during its disastrous rollout, the poll found. No wonder: Wisconsinites can see that it is not affordable and that it is going to cost most of us more than it is worth.

The CBO’s forecast says that it is going to cost all of America far more that we have so far imagined.

It’s sad that some political commentators are speculating that conservatives may be less able to “use” Obamacare as an issue as the federal government gradually improves the technical problems that made the rollout last fall such a disaster.

Commentators who say that miss a crucial point: The real harm from Obamacare isn’t that the website didn’t work. It’s that the Orwellian-named “Affordable” Care Act is inflicting enormous damage on the economy.

That means it’s inflicting economic damage on Americans’ lives. A lot of that damage is just now coming to light. Investor's Business Daily reported on a survey from the Philadelphia branch of the Federal Reserve on Thursday that suggests Obamacare is one reason this economic recovery has been the weakest in more than half a century.

“In a Philadelphia Fed survey of regional manufacturers out Thursday, 18% said they employ fewer workers due to the Affordable Care Act than they would in its absence. Just 3% say employment levels are higher as a result.

“Further, 18% said part-timers make up a greater share of workers due to ObamaCare, which absolves employers of responsibility for health care for those who work fewer than 30 hours a week. Just 1.5% said they've scaled back part-time work in response.”

It’s worse when you look at who is hurt the most: Those who can least afford it.

“IBD's own analysis of hours-worked data that businesses report to the Labor Department shows that ObamaCare's mandate is having its biggest impact on low-wage sectors. Among private industries where pay averages up to about $14.50 an hour, the average workweek has sunk to 27.4 hours, undercutting the record low seen at the depth of the recession in 2009.

“One limit to ObamaCare's economic drag is the possibility of evading its mandates by outsourcing work. The Fed surveys show that to be a popular tactic.

“In the Philadelphia area, 14% of manufacturers said they've boosted outsourcing on account of ObamaCare vs. 3% outsourcing less. In the New York region, 19% of manufacturers and 9% of service firms say they've stepped up outsourcing in response.”

The Wall Street Journal wrote of the results, along with similar results from the Federal Reserve Bank in Atlanta:

“Liberals will dismiss this as merely anecdotal or of minor impact, but it makes sense that ObamaCare's labor effects would be concentrated in some industries with relatively low-wage or marginal workers. The data points also help explain why the number of people employed part-time surged by 12% during the recession but the rate hasn't fallen even as the economy has improved. Or why labor force participation is the lowest since the late 1970s. . . .

“People are responding at least in part to the incentives to work fewer hours or not at all, as the research of University of Chicago economist Casey Mulligan on marginal tax rates has shown. But there are also simply fewer jobs available that would have been created in the past, as the Fed surveys show.”

Remember, Obamacare has led to some people gaining health coverage – but only about two million who didn’t already have coverage found insurance through the government-run “exchanges” at the heart of the scheme. Meanwhile, far more people will probably see their coverage become costlier, even unaffordable, in the next few years, say analysts. This illustrates that Obamacare is a bad trade-off just on its own health-care terms.

Add to that the depressing effect it has on whether you’ll find a job, and the news is, well, depressing.

Do you think that meat costs a lot at the grocery store now? It just may get still more expensive, thanks to your government.

Jayson Lusk, a professor of economics at Oklahoma State University, writes in the Wall Street Journal that it is now a fashionable idea among some of the more extreme environmentalists that people should be made to become vegetarian. The claim is that raising livestock, which they do not like, just happens to be destructive. But they may not limit themselves to trying to persuade you, writes Lusk:

“Each to his own, you might say. But these ideas are working their way into government policy proposals. For example, Angela Tagtow, a self-described ‘environmental nutritionist’ formerly with the Minnesota Institute for Sustainable Agriculture, was recently tapped to head the U.S. Department of Agriculture's effort to revise federal dietary guidelines. This is a sign that the new recommendations are likely to go beyond nutritional science to incorporate environmental considerations. Many observers believe that meat will be specifically targeted for scrutiny.

“Environmental nutritionists argue that the social and environmental costs of meat production—obesity, chronic disease, the production of green-house gases such as methane, etc.—are not reflected in prices at the grocery store or restaurant. ‘The big-ticket externalities are carbon generation and obesity,’ New York Times columnist Mark Bittman recently wrote. He argues that beef prices don't reflect these externalities and that ‘industrial food has manipulated cheap prices for excess profit at excess cost to everyone.’

“That the price of meat is too low might come as news to food consumers who, according to data from the Bureau of Labor Statistics, paid 14% higher prices for ground beef this June than they did in June 2013 and 29% more than two years ago. Recent droughts and high corn prices—due in part to Washington's support for ethanol—are largely to blame. It is unclear how high prices must rise to overcome the view that meat is ‘too cheap.’ Some industry critics have even called for new ‘meat taxes’ to discourage consumption.”

You can’t visit many county fairs or the Wisconsin State Fair without realizing that many Wisconsinites make a living providing meat that Americans want to eat. Our farmers grow it. Our workers turn it into bacon or bratwurst. They all do it with incredible efficiency – which is why critics claim that meat is somehow “too cheap.” The livestock are grown on farms Wisconsinites own and care for, land that often has been in their families for generations. The idea that they are abusing that land by feeding the country and that government must intervene to make meat less affordable is arrogant folly.

And the idea that government should be able to use taxes and regulations to make its citizens avoid the wholesome foods they prefer is repulsive.

President Obama says he cares about people whose job skills don’t earn them much more than minimum wage. He says that’s why he wants to raise the minimum wage – he says that will mean these low-skilled workers will earn more.

President Obama keeps saying this, even though the best evidence is that raising the minimum wage will hurt many of those workers by costing them their jobs. The Congressional Budget Office, Congress’ nonpartisan accountants, calculates that raising the minimum wage to $10.10 an hour will probably cost 500,000 jobs, perhaps as many as 1 million. It’s fair to ask why President Obama doesn’t seem to care that as many as 1 million low-skilled workers will see their pay reduced to zero.

Liberals usually reply by asking what else can be done for people who don’t earn much. The best answer is a booming economy in which employers compete for workers. But in the Wall Street Journal, Michael Saltsman outlines an answer I and others have advocated: the existing Earned Income Tax Credit. In particular, he notes that Wisconsin’s own Rep. Paul Ryan has talked about how to make the credit, like an income tax in reverse, work better:

“The EITC, a refundable tax credit for low-income households that phases out as income rises, helps the working poor without imposing a harmful mandate on employers. But the EITC has one major weakness: Under current law, the size of the credit is dramatically smaller for individuals and families without children. . . .

“Mr. Ryan's plan would close that gap. His proposal, as described in a House Budget Committee draft, would double the credit that childless adults receive as a percentage of their eligible income—to 15.3% from 7.65%. It would also lower the age of eligibility to 21 from the current 25, and raise the income threshold for receiving the maximum credit to $11,500 from $8,220. The results are significant: A childless adult who now receives $265 annually would take home $1,005 a year under Mr. Ryan's plan. That's roughly the equivalent of raising their minimum wage to $8 an hour.”

Even better, as Saltsman points out: The tax credit goes to people who live in poor households, instead of also going to people whose work skills don’t earn much but who live in well-off homes – such as teenagers of well-to-do families. “Only 18% of the benefits from Mr. Obama's wage proposal would go to minimum-wage earners living in poor families,” Saltsman points out.

Still better: The tax credit doesn’t make it costlier to hire low-skilled workers. It wouldn’t cost up to one million workers their jobs. It doesn’t punish businesses that happen to need a lot of work done that is really only worth $7.25 an hour. It doesn’t make them overpay for that work, the way a minimum wage hike would do.

Maybe that is why the president and other liberals seem to favor the minimum wage hike instead: Perhaps they’re more interested in sending businesses a “you didn’t build that” message and penalizing them accordingly. Perhaps their dislike of entrepreneurs is stronger than any of their talk about helping young people who are going to lose their jobs when the minimum wage rises.

Knowing that, the rest of us should see liberals’ arguments for what they’re worth.

Remember the triumphant tone that the Obama administration took about the number of people who signed up for insurance plans on the Obamacare exchanges? Eight million people had signed up, Democrats crowed, even though it turns out about three-fourths of those people were already insured.

Sure, people lost access to life-saving medications because they couldn’t keep the insurance they had and liked. True, Obamacare is making rates rise sharply for many people, and it’s going to make coverage unaffordable for far more people soon, but at least eight million people signed up.

Except that number’s now falling. Large insurers offering coverage on Obamacare exchanges are seeing their enrollment numbers shrink as people who signed up are backing out by not paying their premiums, Investors Business Daily reports:

Aetna, the nation's third-largest health insurer, “had 720,000 people sign up for exchange coverage as of May 20, a spokesman confirmed to IBD. At the end of June, it had fewer than 600,000 paying customers. Aetna expects that to fall to ‘just over 500,000’ by the end of the year.

“That would leave Aetna's paid enrollment down as much as 30% from that May sign-up tally.”

It’s not just Aetna, the paper reports:

“Other major insurers danced around questions about attrition on recent earnings conference calls, but none denied that it was occurring.”

Why the drop-off?

“The gap between the high watermark of sign-ups and the number of current premium-paying customers reflects both those who never sent in a first payment and those who stopped paying for any number of reasons. For some, finances may have been too stretched. Some may have gotten fed up with high deductibles, and others could have switched plans so they wouldn't have to switch doctors. Still others may have found a job that came with health benefits, or others lost income and qualified for Medicaid.”

Which is good news if it is the case that people were able to earn better benefits at work. It’s terrible news if they found themselves dependent on the charity of taxpayers, which is what Medicaid is. Others are just making do as best they can amid the disruption caused by the president’s well-intentioned but failing scheme.

Not to say that things were just fine before Obamacare, but messing with everyone’s health care for the sake of adding coverage for a small sliver of the population, rather than using good reform ideas that already were being offered, seems like an ever worse idea, now that the number of supposed Obamacare beneficiaries continues to shrink.