Category Archives: markets

Going Soft

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Senate pseudo-Republicans are balking at one good item that was contained the House-passed American Health Care Act: repeal of Obamacare’s trillion dollars’ worth of taxes.  These guys actually don’t see the value of that repeal.  Senator Susan Collins (R, ME) is typical:

I don’t see how you can repeal all of the pay-fors…and still meet the goal of providing health-insurance coverage for people who truly need assistance[.]

Aside from the false premise of needing Federal government “pay-fors” as a default position, rather than a last result, the Lady from Maine and her fellows plainly either don’t understand free market principles, or they have no confidence in free markets.

One path for the Senate could be a repeal of the taxes but a delay in the effective dates.

This is the only legitimate point of discussion on the repeal of these taxes.  The AHCA makes the repeal retroactive to 1 Jan 2017.  It’s the repeal that’s important, not its date of effectivity.  Effective 1 Jan 2018 is fine, so is a date (certain) in 2019, to the extent health coverage providers, businesses, and individual citizens need time to plan and prepare.  The repeal itself, however, must be inarguable.

I’ve decried the House’s Freedom Caucus of No, but the Caucus of Squish in the Senate is going too far in the other direction.  These folks need to do the job they were sent to the Senate to do vis-à-vis Obamacare and our nation’s health provision and health coverage industries.  Failing to repeal the Obamacare taxes in addition to the reductions in other business and personal taxes that have been proposed is unacceptable.  If the Caucus of Squish fails to do this, its members need to be replaced at the next available elections for each of them.

If that costs the Republican Party control of the Senate, well—how will we tell the difference?  The Caucus of Squish is, with its timidity, worse even than the Progressive-Democratic Party.

The Durbin Amendment and Price Fixing

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Senator Dick Durbin (D, IL) added to Dodd-Frank an amendment that mandated the maximum price large banks could charge merchants who process debit-card payments.  The House’s Financial Services Committee, in marking up Chairman Jeb Hensarling’s Financial Choice Act, included repeal of the Durbin Amendment.

Naturally, Durbin has demurred, and he did so, among other place, in a Letter to the Editor of The Wall Street Journal.

It’s no secret that Wall Street hates the swipe-fee law that I authored in 2010. This law finally reined in the debit swipe-fee price-fixing that Visa and MasterCard were doing on behalf of banks. The old rigged system permitted Visa and MasterCard to fix the same fees for all card-issuing banks, and without competition the fees always went up. It was a market failure and merchants and their customers ended up paying for it.

And

The 2010 reform law said that if the nation’s top 1% of biggest banks are going to let Visa and MasterCard price-fix their swipe fees, then the fees must be reasonable and proportional to the cost of conducting the transaction.

Wow.  Price fixing is OK as long as it’s Big Government doing to fixing, says the Progressive-Democrat from Illinois.  No.  There exist, already, laws against such collusion; all that’s necessary, were the banks actually colluding as Durbin claims, is to enforce existing law.  There is neither need nor excuse to expand Government by writing a new law to fix a failure from enforcing existing law.

Market failure?  Again, no.  Not every burble, bubble, or dislocation represents a market failure; indeed, they’re the normal volatility of a thriving free market.  Or they would be with less government interference so we actually had a free market.  Far from a market failure, this failure is another failure of Big Government’s central planning for our market.  It’s time—long past time—to dump the Durbin amendment.

It’s time—long past time—for competition to reenter the credit and debit card free market niche and to let the free market “fix” the prices.  It’s time—long past time—for Big Government to leave the market.

The Freedom Caucus of No

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Daniel Henninger had some thoughts in Wednesday’s Wall Street Journal on this group’s first 100 days; read the whole thing.  I’m interested in one aspect of the No-ers’ first 100 days that Henninger was too polite to say out loud.  Henninger pointed out

Back in 2016, Speaker Paul Ryan and the House leadership held public hearings, conducted negotiations inside the House conference, and published texts of the proposed legislation to repeal and reform ObamaCare. The American Health Care Act that emerged from this process had both a political and policy purpose.

Its political purpose was to create a bill that could survive the House, survive the Senate, survive a conference and make it to Mr Trump’s desk to fulfill one of his and the party’s biggest political promises.

The policy purpose was to lay a foundation on which Health and Human Services Secretary Tom Price and his SWAT team of reformers, such as Indiana Medicaid specialist Seema Verma, could help Congress clean up the rest of ObamaCare over the next two years—moving away from the 2010 law’s 2,000 pages of legal babel and toward a market-based system.

But no (to coin a phrase).

The Freedom Caucus rose to say none of these pieces of the president’s legislative agenda could move forward until it got what it wanted: elimination of ObamaCare’s 10 essential health benefits.

The No-ers didn’t hold out for this sort of thing during those prior negotiations.  No, they waited until the American Health Care Act was before the public, hoping to extort concessions from President Trump and/or from their supposed fellow Republicans in the House.

The No-ers, with their behavior, have betrayed their own constituents by sticking them with continued Obamacare, a steaming swamp these persons have been pretending to want to get rid of.

If the Freedom Caucus of No welched on their 2016 agreement regarding health care, how can they be trusted with anything today?

Free Markets

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President Donald Trump revived his tough talk on the North American Free Trade Agreement Tuesday, warning Canada it must stop protecting its dairy farmers from US competition.

Canada’s trade policy, after all, manages dairy production through a quota system (which is anathema in itself to a free market, but that’s mostly a Canadian domestic problem), and it seriously impedes foreign competition with tariffs designed for the task.

Circularly, Canada controls dairy prices by matching them to “average” production costs, and then controls production by setting allowed quotas.  With prices thus under government control, Canada sets tariffs to achieve prices for imports of foreign dairy products that aren’t competitive.

Of course, there’s a flip side to this: the US must stop shielding American farmers from the United States’ own free market and eliminate Big Government price supports for dairy and other farm products as well as corn price support achieved via ethanol mandates.

Good luck with either.

Obamacare

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As The Wall Street Journal rightly pointed out, regarding the failed Obamacare repeal and replacement effort and the failing renewed discussions between the House Republican Conference and the Freedom Caucus of No,

The fury…suggests that some Freedom Caucus opposition is more cynical than sincere. Do its members want to appear to negotiate in good faith but insist on changes that centrists can’t accept, so they can then accuse centrists of killing the reform revival?

And

…perhaps there’s still hope for health-care reform. But first Republicans have to decide if they can accept progress that is short of perfection. If they can’t, then they’ll blow their best, and maybe only, shot at repealing and replacing a failing entitlement.

Here’s the problem, though: the Freedom Caucus of No already has betrayed their constituents once through that first failure by inflicting on them continued Obamacare instead of an improved system because the improvements weren’t perfection.

For how long will the No-ers continue to betray their employers? The No-ers are carefully eliding the back half of Reagan’s remark about half a loaf: come back tomorrow for the rest. Of course, that requires accepting the first half first….