By Lawrence J. McQuillan • Thursday October 27, 2016 5:17 PM PDT •
According to the President’s Office of Management and Budget, the 2016 federal budget looks like this (p. 115):
|2016 Federal Budget ||
|National debt held by the public ||$14,129,000,000,000
|Total national debt ||$19,765,000,000,000
Now let’s pretend this is a household budget by removing eight zeros:
|Annual family income||$33,360
|Annual family spending||$39,510
|New debt on the credit card||$6,150
|Outstanding balance on the credit card||$141,290
|Money owed to credit card and relatives||$197,650
Clearly, this family is financially irresponsible, as rising debt and debt-service costs consume the family budget. Changes need to happen immediately. The same is true for the federal government.
In a New York Times commentary titled “Ignoring the Debt Problem,” Paul A. Volcker, former chairman of the Federal Reserve, and Peter G. Peterson, former secretary of commerce, said:
Delaying action now will make the needed changes only more painful and difficult later on, while also increasing the risk of financial crisis before the reforms are even made. That is why the real debate should begin immediately.
Yet at the final presidential debate, both candidates missed the opportunity to clearly lay out their visions for a fiscally responsible, long-term future for our country. There’s still time to solve this problem. But our next president needs to show leadership in the first months.
At our age, neither of us will personally suffer from a failure to act. It is those with long lives ahead—grandchildren and great-grandchildren—who deserve the benefit of prospering in a nation with sound finances.
Take some advice from two observers who have been around for a while: The long term gets here before you know it.
By John R. Graham • Thursday October 27, 2016 9:58 AM PDT •
Doctors Without Borders /Médecins Sans Frontières (MSF) has decided to reject a donation of one million doses of pneumonia vaccine from Pfizer, Inc. The global health charity’s convoluted reasoning goes like this:
There is No Such Thing as “Free” Vaccines
Pneumonia claims the lives of nearly one million kids each year, making it the world’s deadliest disease among children. Although there’s a vaccine to prevent this disease, it’s too expensive for many developing countries and humanitarian organizations, such as ours, to afford.
Free is not always better. Donations often involve numerous conditions and strings attached, including restrictions on which patient populations and what geographic areas are allowed to receive the benefits.
Critically, donation offers can disappear as quickly as they come. The donor has ultimate control over when and how they choose to give their products away, risking interruption of programs should the company decide it’s no longer to their advantage.
This remarkable document goes on to praise GSK, a competitor of Pfizer’s, for having declined to offer pneumonia vaccines for free, but instead offer them for $3.05 per dose to all humanitarian organizations. I don’t know about you, but I will take free over three bucks any day.
By John R. Graham • Wednesday October 26, 2016 5:06 PM PDT •
Even I did not think it would be this bad: The Obama administration has confessed that the average 2017 Obamacare premium hike for the benchmark (second-lowest-cost) Silver plan will be 25 percent. (Back in June, it looked like the hike would be 16 percent.)
Don’t worry, says the administration, tax credits will ensure that beneficiaries pay only a fraction of their premiums. It is true that very few people would buy Obamacare plans without the tax credits, the administration cheers. In reality, however, that is not a sign the plans are “affordable”; it’s only a sign that taxpayers are bearing more of the burden.
When the Affordable Care Act was passed in 2010, the Congressional Budget Office estimated that 23 million people would get coverage from the exchanges in 2017, subsidized by $75 billion of tax credits. That’s an average tax credit of about $3,260 per person (including those who receive no tax credit).
By Robert Murphy • Wednesday October 26, 2016 4:35 PM PDT •
Neither of the major party presidential candidates is a font of economic wisdom. However, if you look hard enough, you can find a glimmer of truth in some of their rhetoric. In this post I’ll analyze two of the issues raised by the candidates, showing how each contained some truth but also confusion.
At one point during the third presidential debate, Trump said he just left “some high representatives in India,” and that that country was growing at 8 percent, while China was growing at 7 percent, which for them (he claimed) was “a catastrophically low number.” In contrast, the United States economy has only been growing at “around the 1 percent level.”
Now on Twitter and other online forums, economists roundly mocked Trump for being unaware of the concept of economic “convergence,” in which standard models predict that poorer countries grow faster than rich countries. The economists’ critique is valid as far as it goes: Trump seemed to be claiming that India and China are growing faster than America merely because they enjoy better government policies, and not because they are starting from a lower level of per capita real income.
By Robert Higgs • Tuesday October 25, 2016 10:04 AM PDT •
In the antebellum South, it was not uncommon for slaves to rent themselves from their masters. As a young man, Frederick Douglass did so, for example. His owner gave him leave to go out on his own, to find employment where he could, and to pocket the pay he received for such work, except that each month he had to pay his master a fixed sum for his freedom. Douglass worked in the shipyards of Baltimore, caulking ships. Aside from his rental payment for his own body, he lived as he wished, subject to his income constraint. He found his own housing, acquired his own food and clothing, and so forth, just as a free wage worker would have done.
It strikes me that this practice has much in common with the situation in which an ordinary private person finds himself in any modern country today. The person is in general at liberty to arrange his own employment, spend his earnings as he pleases, acquire his own food and housing, and so on, except that he must pay a rental for this personal liberty, which takes the form of a portion of his earnings that must be paid to the various governments that collect income and employment taxes in the jurisdiction.
Lest you imagine that this likening is hyperbolic, consider what happens to someone who resolutely refuses to pay the governments the rental payment for his body. He is subjected to a series of enforcement actions, culminating—if he resists at every step—in his being hauled off to jail and having his personal property seized to satisfy the governments’ demands. Thus, he loses both his property and his personal liberty.
People imagine that they own themselves and that they are free. But don’t tell that tale to the tax men. They know who really owns you.
By John R. Graham • Monday October 24, 2016 3:54 PM PDT •
In April 2015, huge bipartisan majorities passed a milestone Medicare reform bill called MACRA (Medicare Access and CHIP Reauthorization Act), which imported all the worst elements of Obamacare into Medicare. At the time, I wrote a series of posts (culminating in this one), which anticipated that physicians would refuse to swallow the medicine MACRA prescribed.
Currently, most Medicare payments to physicians are based on activities doctors perform. For example, if a doctor checks your Body Mass Index and records it in your file, he can submit a claim for that. However, these activities alone do not necessarily make patients healthy. MACRA attempts to change this by paying doctors for improving patients’ health status, rather than just performing a bunch of activities. Doctors who score poorly on MACRA’s value measurements are supposed to be penalized financially and those who score high are supposed to be rewarded.
Since the bill was signed, the details have percolated from the elite physician executives who run the medical societies that lobbied for the bill down to practicing physicians. There has been pushback.
By Abigail R. Hall Blanco • Monday October 24, 2016 9:26 AM PDT •
When I was an undergraduate student, the vast majority of my readings came from textbooks. For several years I looked at supply and demand graphs, calculated unemployment rates and elasticities, and answered questions about how changes in particular variables would impact inflation and economic growth according to various models.
During my senior year, however, our economic research class was assigned two “popular press” books by well-known economists. The topic of the course that semester was economic development. I’m forever grateful for those book assignments.
One of these books I have, and will probably always keep, in my office. Occasionally, I look back at the highlights I made and the questions I wrote in the margins what seems like a lifetime ago. Some of the questions I’ve since been able to answer. Others are still a mystery to me. I frequently recommend this book to students interested in economic development.
By Robert Higgs • Thursday October 20, 2016 1:37 PM PDT •
Must not enter US church
Might be terrorists
From India and China
Parents in Thailand
Sorry Charlie, no quota
State before mother
Good friends in Iran
Stay away you mad bombers
US picks my friends
Who chooses for me?
Bureaucrats in Washington
By John R. Graham • Thursday October 20, 2016 9:54 AM PDT •
In a recent post I discussed new evidence that so-called consumer-driven health plans (CDHPs) reduce health spending one-eighth among employer-sponsored group plans run by national health insurance companies.
CHDPs are defined as High-Deductible Health Plans coupled with Health Savings Accounts (or Health Reimbursement Arrangements). These plans became available in 2005. However, they appear to cover only a little over one-quarter of employed people or their dependents who are enrolled in their benefits.
The case for CDHPs is that consumers (patients) will spend their health dollars more prudently than insurers or employers will. So: Why is such a small proportion of people enrolled in CDHPs despite over a decade of evidence supporting the case that they cut the growth rate of health spending?
By William Watkins • Wednesday October 19, 2016 5:21 PM PDT •
There has been much chatter recently about whether Christians with libertarian or conservative convictions can, in good conscience, support Trump.
At the American Conservative, Rod Dreher says no.
Over at Chronicles Tom Piatak challenges Dreher’s reasoning.
Walter Block, who is behind the Libertarians for Trump movement, says that “The Donald is the most congruent with our perspective” (meaning the freedom philosophy–not necessarily a Christian worldview).
This, in my opinion, is a matter where we must give our friends on the Right much leeway. One’s pulling or refraining from pulling the lever for Trump should not be a litmus test for who is a “true” libertarian or conservative (of the non-neocon variety).
The New Testament paints with broad strokes how Christians are supposed to respond to government. Romans 13 teaches that the institution of government is something that God ordains because of evil in the world. We owe respect to the governing authorities to the extent they do not contradict God’s decrees. In light of a Christian’s duties towards government, it naturally follows that when we have a chance to influence government in elections or otherwise, we should seek the good. But what is the good?
A believer could reason that Trump, for all his faults, is the lesser evil than Hillary and thus cast his ballot for the Donald. A Trump administration would not be as hostile to orthodox Christian tenets about marriage, sex, etc., as a Clinton administration. It also would probably be less likely to involve us in foreign wars and nation-building.
But under the broad canopy of reasonableness it is also possible to conclude that Trump’s vulgarity, licentiousness, and claim that he needs no forgiveness from God, prevent a Christian from casting a ballot for him. One can make a case that Christians should disassociate from such a man and that we cannot trust his judgment on important matters of state.
For Christian conservatives and libertarians, this election is not an easy call. With the post-modern destruction of western society, perhaps we have the two candidates we deserve. Let each of us make decisions on this election in good conscience and without demonizing a fellow traveler who makes a different decision in this unusual political season.