Obamacare

There is a lot of cynical and dishonest blather right now about the need to dial down America’s political rhetoric because of the shootings in Tucson, even though such rhetoric played no role in the shootings. As the Denver Post‘s David Harsanyi notes, this blather is being used as a pretext by liberals (some of whom are quite nasty) seeking to shut down debate and criticism of abuses by big government.

Lost in the furor over the shootings is the fact that America has a fairly bland political culture that discourages harsh criticism of political leaders: bland by both historical and international standards. My French relatives regularly denounce their country’s leaders in far more heated and pungent terms than Americans like Sarah Palin do. Founding fathers like Thomas Jefferson and John Adams were attacked far more vitriolically in the media than recent presidents like Obama and Bush were, as Reason magazine points out here and here. Recent attempts to blame the shootings in Arizona on the political climate are ignorant of both America’s own history and the world beyond America’s borders.

As reporter Robert Barnes noted days ago in the Washington Post, there is “no evidence that the suspect in Saturday’s shootings that left six dead and Giffords and 13 others wounded was influenced by inflammatory political rhetoric, or that any voices that motivated him were outside his own head.” But Congressman Bob Brady (D-Pa.) responded by introducing a bill to “shut” harsh rhetoric aimed at politicians “down.” And the liberal establishment, speaking through the editorial board of the New York Times, recently called on Arizona to “quiet” the harsh “voices” who allegedly promote “division” by criticizing liberal constituencies like illegal immigrants, “welfare recipients,” and “bureaucrats.” The Times insinuated that “opponents of health care reform” had helped create a political climate that led to the shootings.

Chilling sharp criticism of political leaders is a bad idea. It will make it even harder to get entrenched politicians to address problems like America’s skyrocketing budget deficit, which has mushroomed as result of feel-good “bipartisan” policies like the recent deal between Obama and Congressional leaders (which will add $900 billion to the national debt to perpetuate welfare-expansions in the failed stimulus package, and tax-cuts that the country can’t afford), the Iraq War, the failed $150 billion Bush-Pelosi-Reid stimulus rebates, and the costly No-Child-Left-Behind Law backed by Ted Kennedy and George Bush (Bush increased education spending by 58% even as wasteful education spending exploded).

Chilling criticism of Obamacare is also a bad idea, given that even liberal commentators admit that it is a “disaster” that has not lived up to its promises, and given how it has increased state budget deficits, healthcare costs, and red-tape. And it has been criticized by law professors as violating Constitutional limits on Congress’s power under the Commerce Clause and Spending Clause.

The intellectual climate is already so stiflingly conformist in liberal circles that it is considered a faux pas or even racist to criticize Obama at some Washington-area dinner parties, no matter how factually based the criticism. The closing of the liberal mind is manifested in books such as I Can’t Believe I’m Sitting Next to a Republican. (Vitriolic and violent rhetoric from the left in recent years has made any controversy over Sarah Palin look like a tempest in a teapot: Palin’s use of martial metaphors in campaign rhetoric was completely commonplace and unobjectionable, as Slate’s Jack Shafer and others have noted, and the word “campaign” is itself of martial origin.)

Making politics blander will not do anything to prevent future shootings. People who threaten to kill government officials are seldom influenced by the tone of political rhetoric. I was once a law clerk for a federal judge (a moderate Republican much like John Roll, the widely respected federal judge who was slain in Arizona). My judge had received many death threats over the years (and his family later received death threats after his funeral). Accordingly we, his law clerks, were vigilant to make sure that six people who had threatened the judge not be allowed into his chambers. But none of these death threats were tied to politics, much less to heated political rhetoric or Talk Radio.

Most of the judges in this country who are slain are killed by people unhappy over outcomes in non-publicized cases, such as divorce cases, or child-custody disputes, or run-of-the-mill criminal cases. Political rhetoric plays no role in their death whatsoever. Similarly, would-be assassins like President Reagan’s assailant, John Hinckley, often have bizarre motives completely unrelated to politics.

On the other hand, silencing dissenters will prevent them from harmlessly letting off steam and thus increase the likelihood that a few of them will resort to violence. As Supreme Court Justice Louis Brandeis, who was once venerated by liberals, observed in Whitney v. California, “repression breeds hate,” and “hate menaces stable government”; “the path of safety lies in the opportunity to discuss freely supposed grievances and proposed remedies.”

Obamacare is making state budget problems much worse, as governors now lament. Earlier, CEI filed an amicus brief in Florida v. HHS on behalf of two governors explaining how the radical changes to state Medicaid programs resulting from Obamacare violated limits on congressional power under the Constitution’s spending clause. Some of the fiscal burdens Obamacare imposes on states are obviously huge, while many others are ambiguous, unpredictable, and contingent on bureaucratic caprice, and uncertain future events.

Governors like Phil Bredesen (D-Tenn.) and Donald Carcieri (R-R.I.) warned earlier about the crippling costs of Obamacare to state budgets, but they were ignored by Obama and Congressional Democrats in their headlong rush to pass the health care bill. An adviser to Gov. Bredesen, James Blumstein (a professor of constitutional and health care law at Vanderbilt), argues that Obamacare is a violation of constitutional limits on Congress’s power under the spending clause.

In his ruling striking down Obamacare’s individual mandate (requirement that people buy health insurance), Judge Hudson in Richmond declined to strike down the rest of the law, believing that the unconstitutional part of Obamacare, which violated constitutional federalism constraints, could be severed from the rest of the law. But the health care law lacks a severability clause, and lawyer Ken Klukowski filed a brief in Florida’s challenge to Obamacare explaining why the entire law should logically be struck down. In Reason, Peter Suderman explains why even if Obamacare is not struck down in its entirety, the courts should at least strike down some other provisions that are related to the individual mandate, such as Obamacare’s ban on insurers taking into account pre-existing conditions.

As I noted earlier in The Washington Examiner, “To justify preserving the rest of the law, the judge cited a 2010 Supreme Court ruling that invalidated part of a law — but kept the rest of it in force. But that case involved a law passed almost unanimously by Congress, which would have passed it even without the challenged provision. Obamacare is totally different. It was barely passed by a divided Congress, but only as a package. Supporters admitted that the unconstitutional part of it — the insurance mandate — was the law’s heart. Obamacare’s legion of special-interest giveaways that are ‘extraneous to health care’ does not alter that.” In short, Obamacare’s individual mandate is not “volitionally severable,” as case law requires.

Moreover, even if a single unconstitutional provision could be severed from Obamacare to preserve the remainder, that would not fix its other constitutional violations. The individual mandate, which exceeds Congress’ power under the Interstate Commerce Clause, is not the only unconstitutional provision in the health care law. Obamacare also violates the Tenth Amendment through Medicaid expansion provisions that transgress spending-clause limits applicable to federal-state programs, as I explain in an amicus brief for two governors in Florida v. HHS.

Law Professor James Blumstein, a constitutional and healthcare expert and advisor to Gov. Phil Bredesen (D-Tenn.), makes a different, but powerful, constitutional argument here that is also based on the Constitution’s spending clause.

Earlier, I discussed some of the bad effects of Obamacare on patients, employers, consumers, and the insurance market.

Doug Powers takes aim at the silly argument by the Obama administration that opposing Obamacare is analogous to opposing basic civil rights. As he and Michelle Malkin note, if Obamacare is such a civil right, why are employers — and even labor unions that backed the law — seeking waivers from its onerous requirements?

Yesterday, a federal judge in Richmond struck down Obamacare’s requirement that individuals buy health insurance in this ruling in Virginia v. SebeliusCEI joined that brief.  The judge’s ruling found that the requirement exceeded Congress’s power under the Interstate Commerce Clause, as I earlier explained.  As we previously noted, Obamacare harms medical advances, private employers, insurance-policyholders and health-insurance markets.

Ed Morrissey takes issue with another argument made by Attorney General Holder and HHS Secretary Sebelius.

Part I: The Fed is Competent?
Part II: The Natural Rate of Unemployment
Part III: Bernanke, Blinder, and Underpants Gnomes

Professor Blinder writes: “All in all, it looks like the nation and the world need an Economics 101 refresher. So let’s start with the basics.

All in all, it looks like Professor Blinder needs an Economics 101 refresher too. So let’s start with the basics.

There are three types of unemployment: (1) frictional, (2) structural, and (3) cyclical. I am frictionally unemployed if I leave my current job and take time off before starting my new one. I am structurally unemployed if I lose my job to globalization or minimum wage increases, etc. I am cyclically unemployed if the economy is in recession.

Keynes referred to cyclical unemployment in proposing his solutions. The Fed might be gravely mistaken to assume that today’s high, persistent unemployment rate is purely cyclical. The Fed can only impact cyclical unemployment, not structural or frictional. The sum of frictional and structural unemployment is the natural rate of unemployment. The Fed cannot alter this.

There are many reasons why structural unemployment rather than cyclical unemployment might be at play:

  1. Exchange rates are more volatile: unpredictable monetary policies and debt crises are the cause. If I am in an industry that relies heavily on exports, I am in danger of unemployment.
  2. Health care reform: the costs have yet to be determined and increase employment costs. Needless to say, employers care about the total costs of hiring employees, not just the money wage/salary they pay workers. This uncertainty overwhelms the tiny tax credits offered in the stimulus package.
  3. The housing market is still sick. If people can’t move easily, labor mobility is constrained. It’s more difficult for me to find work if I can’t move.
  4. Higher, extended unemployment benefits reduce the incentive to be employed, at the margin.
  5. The Dodd-Frank Act also imposes numerous uncertainties on the financial sector. This complicates the process of linking savers with investors. Consequently, investment is curtailed and higher unemployment results.
  6. The uncertainty about the capital gains tax rate didn’t help. Increasing taxes on capital decreases capital accumulation (investment). It does not help it. If productivity-increasing equipment costs me $200,000 and I’m willing to pay $250,000 for it, that’s great! If I have to pay a $60,000 tax on it, that’s bad: The equipment now costs me $260,000 and I was only willing to pay $250,000 before. Now I won’t buy it. I am worse off. The equipment supplier is worse off. The employees of the equipment supplier are worse off because they’ll need fewer workers for production.

If 10 percent is the new natural rate of unemployment, then fiscal policy simply crowds out private investment — private sector spending declines 1 for 1 with increases in government spending in that case. Monetary policy is completely impotent.

A ruling in Virginia’s constitutional challenge to Obamacare’s individual mandate is expected later today.  The Competitive Enterprise Institute joined in an amicus brief filed in support of Virginia’s lawsuit by the Cato Institute and constitutional law professor Randy Barnett.  You can find that amicus brief at this link.

Earlier, I discussed why the health care law’s individual mandate (requirement that individuals buy health insurance) exceeded Congress’s power under the Interstate Commerce Clause.  You can find that discussion at this link.  (I was a lawyer in the last Supreme Court case that struck down a federal law under the Commerce Clause, United States v. Morrison, 529 U.S. 598 (2000).)

The judge in the Virginia case, U.S. District Judge Henry Hudson, earlier rejected the government’s motion to dismiss Virginia’s lawsuit at a preliminary phase (a Rule 12(b)(6) motion to dismiss).

Update: Judge Hudson rules against the Obama administration, finding that the individual mandate is unconstitutional.

Earlier, I discussed some of the bad effects of Obamacare on patients, employers, consumers, and the insurance market.

Obamacare is going to wipe out 800,000 jobs through its disincentives to work.  That contrasts sharply with false claims by House Speaker Nancy Pelosi (D-Calif.) that the new health care law would create jobs,  ”400,000 of them almost immediately.” That 800,000 lost jobs “is 50% more than all the people who work for GM, Ford, and Chrysler combined,” yet the Congressional Budget Office regards it as a “small amount” compared to the overall labor force.  To some people, the glass is always half full.

As we discussed earlier, it was the Congressional Budget Office’s own report that showed that Obamacare discourages work and thus shrinks the economy.  Obamacare was so poorly drafted that some people are massively punished for working and earning more.  One hypothetical 62-year old lost $7,836 in tax credits for a $22 increase in income, resulting in a 35,618 percent marginal tax rate on that additional income.  Who would work longer hours, or seek to earn more, if they end up with less take-home pay at an income of $55,000 than $46,000 — as is true for some people under Obamacare?

As noted earlier, the new healthcare law raises taxes on the middle-class and investors,  reduces lifesaving medical innovation, and drives up health insurance premiums.  It also will bankrupt many “small to midsize” medical-device manufacturers, driving up unemployment.

Even the Congressional Budget Office, which allowed supporters of Obamacare to hide its costs through gimmicks and dodges, admitted last “Friday that Obamacare includes work disincentives likely to shrink the amount of labor used in the economy.”  For example, it effectively creates a 35,618 percent marginal tax rate for one hypothetical 62-year-old whose income rises by $22, by triggering the sudden loss of $7,836 in government tax credits (as Ted Frank explains below).

As a newspaper columnist notes,

The new health law will give some older households without access to employer care a big incentive not to earn too much. That’s because earning more than 400% of the poverty level would make them ineligible for subsidies that may be well in excess of $10,000 for couples.  Consider this example of a single individual age 62 in a high-cost area and no access to employer care. According to the Kaiser Family Foundation’s Health Reform Subsidy Calculator … [a]t 400% of the poverty level, or $46,000, an individual would get $7,830 in premium subsidies.  And at 401% of the poverty level, an individual would get no government support.

Or, as legal commentator Ted Frank notes, under Obamacare,

[A] 62-year-old in a high-cost area earning $46,000 a year without health insurance is entitled to a $7,836 government tax credit. Leaving aside how our strapped government can afford that, here’s what’s interesting: if the same person makes a mistake and earns an extra $22 in income, he loses the entire $7,836 credit. (The cutoff, according to Kaiser, is between $46,021 and $46,022.) That’s a 35,618% marginal tax rate. Indeed, the problem is so severe that our 62-year-old subject will have more take-home pay if he earns $46,000 than if he earns $55,000. And even at lower income levels, there is as much as a 16% surcharge on income at the margin.

This penalty for working and earning more is the result of really lousy drafting on the part of the authors of Obamacare. They could easily have avoided this problem by gradually phasing out the premium subsidies and tax credits, the way the tax code gradually phases out personal exemptions and itemized deductions for people who make well over $100,000 a year.  But they were too arrogant to learn anything from existing provisions that worked.

As noted earlier, the healthcare law imposes many middle-class tax increases, such as on cosmetic surgery and medical devices, and it increases taxes in future years on investors.  Obamacare will also reduce lifesaving medical innovation, break many campaign promises, and increase state budget deficits. It is driving up health insurance premiums, and it imposes restrictions that failed when tried at the state level. It ignores advice from doctors and federal experts, and lessons from countries with universal health care, about how to reduce costs.

In The Washington Times, Dr. Milton R. Wolf debunks six “unkeepable Obamacare promises” that have already been shown to be false.  For example, President Obama promised that his health care overhaul would not raise taxes on anyone earning less than $250,000 a year: “I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”

But as Wolf notes, Obamacare’s “new excise taxes on pharmaceuticals and medical products will, of course, by necessity be passed on to the patients who depend on these lifesaving medicines, pacemakers, MRI machines or even tongue depressors.”  And Nancy Pelosi promised that Obamacare would create 4 million new jobs, 400,000 almost immediately, none of which ever materialized.

A political commentator notes that her family’s insurance premiums just went up by 45 percent, while the coverage became worse. One of her readers lost her insurance, after her family’s policy was canceled by the insurer due to Obamacare’s legal prohibitions.

We earlier discussed how Obamacare will create pointless red tape and busywork for doctors, and how it has already led to big premium increases, and the elimination of some popular health plans.  It also includes a $60 billion insurance excise tax that will be passed on to patients, and tax increases on some investors and homeowners starting in 2013.