Where Will The Real Stuff Come From --- Really?

Martin Feldstein writes here about the utter disparity between BHO's pronouncements about Obamacare and the real economics of socialized health care. Feldstein notes,

The deficits projected for the next decade and beyond are unprecedented. According to an assessment released in March by the Congressional Budget Office (CBO), the president's budget implies that deficits will average 5.2% of GDP over the next decade and will be 5.5% of GDP in 2019. Without the president's proposals, the budget office forecasts a 2019 deficit of only 2% of GDP.

The CBO's deficit projections are based on the optimistic assumptions that the economy will grow at a healthy 3% pace with no recessions during the next decade; that there will be no new spending programs after this year's budget; and that the rising national debt will increase the rate of interest on government bonds by less than 1%. More realistic assumptions would imply a 2019 deficit of more than 8% of GDP and a government debt of more than 100% of GDP.

BHO and the starry-eyed folks who support the House bill evidently believe they can tax and borrow to provide the so-called "public option" for health care. They forget that health care must be produced by real people using real resources. It really isn't about the money.

Higher taxes to finance Obamacare will definitely mean diverting scarce resources into health care and away from whatever else private citizens would have used their income to buy. Increased federal debt will mean diverting scarce resources into health care and away from whatever plant and equipment businesses would have put in place instead.

The economic maxim, "there ain't no such thing as a free lunch," remains true quite regardless of BHO's dissembling pronouncements. One grows weary of all the arguments that run in terms of money and financing. Think of the diversion of real resources that must take place to produce more health care. That's the real stuff.

Do we want to produce more health care each year? Maybe we do, but public opinion is making it evident that we do not want to be coerced into it. The real issue isn't whether more health care is a good thing. The real issue is whether BHO and his supporters get to force all of the rest of us to do their bidding.

I know readers of this blog may be tired of the repeated reference, but once again, I urge you to read Milton Friedman's article about health care reform here.

Voluntary exchange for health care, which is the foundation of all successful economies, has two attributes to recommend it. First, it works; second, it's moral. Coercion of the many by the few is neither moral nor will it work.

The Chickens Are Coming Home to Roost

This from the WSJ, 9-4-2009. Read the entire thoughtful article here.

Unlike the federal government, states cannot deny reality by borrowing without limit. The Obama administration's "stimulus" package in effect shared the use of Uncle Sam's printing press for two years. But after that money runs out, the states will be back where they were. Even if Congress goes for a second round of stimulus funding, driven by the political panic of bankrupt Democratic governors, it would only postpone the reckoning.

Will America be forced to relearn what happens when its government runs the printing press to finance spending? That's exactly what happened in the decade of the 70s and on into the early 80s. It may already be too late to avoid repeating the double-digit inflation that ensued in America due to deficit financing of the Vietnam War.

No, it won't ever get as bad in the United States as it is in Zimbabwe. Fortunately, we the people will turn the morons out of office before then. Hey, 2010 isn't that far away. Spendthrifts are already looking over their shoulders.

What Obama Wants

David Axelrod announced today that BHO is considering making a speech to tell us what he really wants done with health care. Well thank goodness. Unless I learn what BHO really wants, how could I possibly think about the issue.

Who besides Axelrod and BHO himself thinks America elected a king last year? Okay, maybe a bunch of Democrats think that, but who else? The arrogance is a bit off-putting, don't you think. How about talking about the real issues, instead of insulting everyone with half a brain?

Is Obama Ignorant or Duplicitous?

As the debate over socialized health care heats up, do you think it would be unreasonable if we insist that our President be informed and truthful about the issues involved?

Based on the words coming out of BHO's mouth, he is either ignorant of the facts, lies about them, or both. Read about it here. I think the stakes are too high for we the people to let BHO slide on this one. What do you think?

I can think of no other industry where the consequences of government control would be so dramatic and devastating as they would be for health care. Socialized anything is bad for liberty and bad for our economic well being. But with health care, the effects will be huge, irreversible, and profound.

Again, posts already made in this space lay out the issues with great clarity. If you have not already done so, please read Milton Friedman's article here.

We The People Elect Them

Read about our best and brightest supporters of the current administration here. We get what we vote for. Just how dumb are we?

Health Care

School's back in session, so that means Econoblast is back in session, too.

Looks like health care reform is all the rage these days. Also looks like lots of Congressmen and Congresswomen are choosing to ignore who they represent. Good; they will get their comeuppance November 2010 --- if a majority of their constituents take the time to vote. The polls are pretty clear; a majority of the folks don't like BHO's health care reform bill. BHO will be with us until November 2012, but without his Democrat majority, we might just make it in one piece that long.

Obama is straining credulity in his pronouncements about health care. Check it out here. We the people may be a bit slow, but usually we finally get it right. BHO needs to rethink his "slick willy" speeches, no matter how he delivers the words.

I've already made a post in this space about the health care reform debate. Check it out here. This article by Milton Friedman should be required reading for BHO, all his people, and all of Congress. But wait, Congress evidently doesn't bother to read legislation these days. Forgive me for suggesting such an absurd recommendation. Congress is too busy proposing laws and policies for us that they are unwilling to live with themselves; no time to read and think.

The Top & Bottom of the Health Care Debate

As usual, Milton Friedman provided a clear, easy to understand explanation of what appears to be a complex economic problem. You can read the whole article here.

Why is health care any different from other goods and services? Why do lots of folks think everyone has a "right" to health care, but almost no one thinks everyone has a right to most other goods and services? I think the answer to that question is that we are simply unwilling to look into the eyes of someone suffering from disease or injury and ignore them. In other words, it's not health care that's different; it's the way we think and feel about people.

Lots of folks will be expending lots of ink over the next several months about health care in America. I recommend that we all read the brightest and best economic thinker of the 20th Century if we really want to understand the issues involved. Given the graying of America, I can't think of any other single issue that is going to be more important to understand. Read it here.

More Flawed Tax Policy

BHO is unhappy with our federal tax code. He notes that we have a tax code

"that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York."

The 17,000 pages of the U.S. Tax Code say lots of other things even goofier than this. I would recommend that BHO read the tax code, but that would be cruel and unusual punishment. Even lawyers can't stand to read the tax code, much less understand what it says.

If Obama really wanted to get serious about tax reform, he could embrace HR 25, the Fair Tax Bill. He could also visit the web page of Americans for Fair Taxation for easy to read explanations of why the Fair Tax would solve the corporate income tax problem he lamented about a few days ago. Adoption of the Fair Tax would solve a lot of other problems as well.

Better still, he could read the open letter sent to all members of Congress, the Senate, President Bush, and Bush's now forgotten tax reform commission. BHO could really give us change we can believe in by asking Congress to pass HR 25. That letter, signed by about 90 professional economists, provides a nice summary of the Fair Tax and why it's the right thing for America.

Will BHO do any of these? Let's just say I will be stunned if he does. After all, our President clearly wants more federal control of practically everything. Our convoluted U.S. Tax Code fits into that vision all too well.

The original Americans who ratified the Constitution would have been horrified had someone suggested that the federal government should withhold an income tax from the paychecks of Americans. In fact, the first Americans explicitly prohibited collection of an income tax in the first place, never mind withholding the tax from paychecks.

What's your personal average federal income tax rate? Don't forget payroll withholding taxes (i.e., Social Security and Medicare taxes). If it's 30%, then the 545 have declared that they own 30% of your labor. If it's 50%, then the 545 say they own 50% of your labor. You don't own all of your own labor services; it's the law. And you thought we were all free people, right?

Can we do away with federal taxation? No; that would be impossible, since we all seem to want something from government. But that doesn't mean we can't do a better job of taxing ourselves. The Fair Tax offers a completely practical way to improve the tax code. Give it a look.

Contract? Who Cares About Contracts?

Here, Brenner and Hume explain how the four largest banks in the country have a huge stake in courts revoking contract law in the case of mortgages.

But what about simple principles of contract law and keeping one's word? If courts force owners of mortgages to accept cram downs of principle or interest in a mortgage contract, that's compulsion---unless, of course, fraud was involved when the mortgage was written.

But mostly, no one is alleging fraud. People who won't or can't pay their mortgage can walk away. That's what foreclosure is all about. So who is that is lobbying Congress and the courts to modify mortgage contracts?

Liberty Loses A Champion

We lost a lover of liberty on Saturday with the passing of Jack Kemp. From the WSJ today,

Along with Senator William Roth of Delaware, Kemp proposed a 30% across-the-board tax cut. Though the Democrats who ran Congress combined with Old Guard Republicans to defeat it during the Carter Presidency, a GOP candidate by the name of Ronald Reagan liked what he saw. Reagan largely adopted Kemp-Roth as his own, campaigned on it in 1980, and the proposal eventually became the basis for the 25% income-tax cuts that finally took effect in 1983 and became the most successful domestic policy achievement of the modern era. The Kemp-Reagan policy mix of lower taxes to lift incentives, sound money to break inflation, and regulatory relief to unleash entrepreneurs became the foundation for the prosperity of the 1980s and 1990s.

Kemp's ideas and legacy continue to be relevant for today's Republicans, even if few of them seem to recognize it. The financial meltdown and recession have given President Obama a chance to revive a policy mix of higher spending and taxes, intrusive regulation and easy money. If those policies don't result in a sustainable expansion -- and history argues that they won't -- then Americans will again be looking for other ideas. Full article here

Kemp was a Republican, but his ideas were not about politics. He understood the value and morality of voluntary exchange markets. He understood that taxing away the income of the people to finance the schemes of the 545 leads to economic morass and concentration of power in the hands of the few.

Isn't it strange that BHO and his partisan supporters decry voluntary exchange markets, claiming that markets concentrate economic power in the hands of capitalists? Yet, all we have to do is look around to see that just the opposite is true. Voluntary exchange is, after all, voluntary. Government power is achieved through threat of and use of force. Which sounds moral to you?

Voluntary exchange markets are the most egalitarian, liberating, field-leveling social institutions ever devised. Barred by law from use of compulsion, markets require that buyers compete with other buyers to get what they want. Sellers must compete with other sellers to get the business of buyers. Voluntary exchange markets require that participants vote with their offers to buy and sell each and every time, offering value for value to get what they want.

Contrast voluntary exchange with politics. Politicians compete only in a tightly controlled game every few years for the votes of people who have extremely limited choices---choices from among those anointed by the major party power brokers. Politicians---funded by taxing the income of people who are productive--- concentrate economic power in the hands of the very few, the 545.

Jack Kemp understood that voluntary exchange coupled with lower taxes returns power and prosperity to the people. BHO and his supporters are evidently oblivious to this simple, historical truth.