Category Archives: markets

Define “Fair”

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Some think the mortgage interest deduction from our income taxes is unfair. After all, says one such,

I can easily construct a situation in which a taxpayer essentially enjoys no [mortgage related] tax benefits whatsoever. How about the single individual or possibly a married couple without children, who make just enough to make ends meet but still cannot save to buy a house? Or possibly, they prefer renting to the onerous commitment of home ownership. There doesn’t appear to be any tax breaks for them.

Although this person offers no definition of “fair” whatsoever, she seems to think that “fair” means everyone gets the same benefit, even though by her own construction, they’re not in the same situation as those who’ve “earned” that benefit. Because, equal outcomes.

One gets this grade on an assignment, another gets that grade, that’s unfair? One gets a first place prize in a contest and another doesn’t, that’s unfair? One earns more money than another, that’s unfair? One has a more fortunate endowment of work ethic, talent, luck, than another, that’s unfair? One made better use of his equal opportunity and so becomes better off than another, that’s unfair? How, exactly?

Of course, this particular question easily could be begged with a proper reform of our tax code, a reform that brings us to a single flat rate with no deductions, credits, etc. What is truly unfair is using our tax code for social and economic engineering and thereby picking winners and losers by government fiat rather than by actual performance and merit.

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Keep in mind that the sole purpose of taxes under our Constitution is to fund the government, not to control how free men interact with each other in a free market, not to say, “This is a worthy enterprise, but that is not.”

The Wrong Question

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Jim Angle, of Fox News, usually does better than this.

“Right now the savings that was projected to pay for all this spending [on Obamacare] is not being collected as originally projected,” said Charles Blahous, of the Mercatus Center. He estimated the law will eventually cost $200 billion a year by 2020.

And

“There was about $100 billion that was supposed to come in over the next 10 years from penalties on individuals, if they did not carry health insurance, penalties on employers, if they do not offer health insurance, and to date, those penalties have not been enforced,” Blahous said.

The law also counted on more than $700 billion in cuts to Medicare, including up to $150 billion in cuts to Medicare Advantage, but the president set those aside at the behest of Senate Democrats who feared angering seniors in an election year.

It’s gotten so bad that the CBO will no longer do estimates on Obamacare’s costs, Angle cites American Enterprise Institute’s Joe Antos as saying.

But then Angle goes astray:

The changes, and the overall uncertainty regarding the price tag, are raising concerns about whether the law even has enough revenue coming in to pay for the program.

This is the wrong question. The delays and alterations illustrated above show the essential capriciousness of any government effort—not just the present administration’s effort; this one is only the most active—at emulating a private business arrangement. This law shouldn’t have any revenue coming in to pay for it. This should be a private enterprise matter, with private enterprise raising the money for its private enterprise endeavor—or the endeavor fails, because the free market—American citizen participants—don’t want it. The law shouldn’t exist.

A…Misunderstanding…on the Supreme Court

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The liberal wing of the Supreme Court is at it again. The three women of the wing are furthering their demand that women generally are entitled to get their contraceptives via OPM, rather than with the women’s own money—apparently, it seems, because these three female Justices think women generally are too helpless to have their own money. These three also are continuing their demand that access to contraceptives must take priority over the religious tenets of the ones they would require to make the provision.

Writing for the dissent to a Supreme Court order advising that Wheaton College, a Christian school in Illinois, need not continue to provide birth control coverage absent filing a form with its insurer asserting its religious objections, Justice Sonia Sotomayor wrote the following:

Those who are bound by our decisions usually believe they can take us at our word. Not so today. After expressly relying on the availability of the religious-nonprofit accommodation [in Hobby Lobby to justify expanding exemptions from contraceptive coverage to closely held commercial businesses], the court now, as the dissent in Hobby Lobby feared it might, retreats from that position.

Of course, the Court’s opinion created no such reliance, as Justice Sotomayor knows full well. The “religious non-profit exemption” was one of a couple of possible alternatives proffered in the Court’s opinion that illustrated less restrictive means of facilitating women’s ability to obtain contraceptives. The Hobby Lobby ruling included this potential alternative in a part of its discussion of the requirement that a government-generated religious burden (or burden of any sort) be applied through the least restrictive means possible:

The least-restrictive-means standard is exceptionally demanding, see City of Boerne…and it is not satisfied here. HHS has not shown that it lacks other means of achieving its desired goal without imposing a substantial burden on the exercise of religion by the objecting parties in these cases. See §§2000bb–1(a), (b)(requiring the Government to “demonstrat[e] that application of [a substantial] burden to the person…is the least restrictive means of furthering [a] compelling governmental interest” (emphasis added)).

The most straightforward way of doing this would be for the Government to assume the cost of providing the four contraceptives at issue to any women who are unable to obtain them under their health-insurance policies due to their employers’ religious objections. This would certainly be less restrictive of the plaintiffs’ religious liberty, and HHS has not shown, see §2000bb–1(b)(2), that this is not a viable alternative.

That the opinion went on at greater length about the “religious non-profit exemption” in no way alters its status as one of at least two hypothetically offered alternatives for satisfying the (hypothetically accepted) government interest in providing contraception free to the user. There plainly is no basis to any claim that filing for a “religious non-profit exemption” is the sole means of being…excused…from providing religiously proscribed contraception.

Another aspect that makes the Wheaton matter interesting here, though, is the question of the form itself that Sotomayor insists that Wheaton should be bound to file in order to get that “religious non-profit exemption.”

As Wheaton correctly notes, it’s not who pays for the provision that’s at issue, it’s that Wheaton would be required to sanction the provision by still being required to have contraception coverage done in their name.

“Wheaton believes that authorizing its [insurance administrator] to provide these drugs in Wheaton’s place makes it complicit in grave moral evil,” the college said in its injunction application filed Sunday with the court. “Wheaton can neither provide the mandated coverage nor execute and deliver” forms that prompt others to do so.

This is clear enough to all but the Progressive who cannot distinguish the pecuniary from the moral.

Contradictions of the Export-Import Bank

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The Export-Import Bank is a hoary, old financial institution with the purpose of facilitating American exports by providing financing or guaranteeing loans for cross-border transactions in which the private sector declines to participate.

There’s a hint there.

It may be that such government involvement might have done some good in the bad, old days before widespread free trade agreements. It may be, too, that tariffs were a good idea a long time ago. Or maybe not.

Free trade agreements signed since those days have facilitated lower prices, more freely moving “factors”—economist-speak for the goods that companies take in and process into goods that they then sell—and more freely moving labor.

Free trade agreements, in this way, have resulted in a broader range of goods for American consumers and American companies and have produced them at lower prices than heretofore.

The hint is this: if no one in the private sector wants a part of a deal, it’s likely to be a waste of taxpayer money for the Ex-Im Bank to get involved.

Some supporters of the function of an Ex-Im, if not of the bank itself, mention as William Galston did in a recent Wall Street Journal op-ed that

Ex-Im supported the exports of more than 3,400 small businesses that probably could not have obtained commercial financing, for reasons unrelated to the creditworthiness of the prospective borrowers or to the quality of their proposed transactions.

There is, however, nothing stopping those small businesses from forming their own private-enterprise association to support each other with such needed financing.

Galston cited other supporters who see the aircraft industry as an industry desperately needing the Ex-Im Bank [emphasis added].

[T]he manufacture and sale of commercial aircraft is far from a free market. Boeing’s major competitor—Airbus—receives massive export subsidies from a European consortium. In the best case, Europe and the US would negotiate the mutual elimination of subsidies. But until that happens, say Ex-Im’s supporters, it would be self-destructive for the US to stand down unilaterally.

These supporters, apparently, think this is another area where the US should lead from behind.

No, let the Ex-Im’s authorization expire, say I.

The Uselessness of Obamacare

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Here’s another example of the ineffectiveness of the Obama administration—of government generally—as a business manager. HHS’ Office of the Inspector General conducted a review of ObamaMart’s performance last fall and early winter—from October through the end of December—although it didn’t include four ObamaMart centers that chose not to comply with the IG’s request for information.

As of the first quarter of 2014, the Federal marketplace [ObamaMart] was unable to resolve about 2.6 million of 2.9 million inconsistencies because the CMS eligibility system was not fully operational. It was unable to resolve inconsistencies even if applicants submitted appropriate documentation.

Moreover,

These inconsistencies pertained to citizenship, national status, and lawful presence; income; and employer-sponsored minimum essential coverage.

These are things that determine whether a citizen must buy a government-approved health plan, and if so whether that citizen is eligible for taxpayer subsidy for the premiums.

And there’s this [emphasis added]:

[ObamaMart] was capable of resolving more than 330,000 inconsistencies with Social Security number, non-employer minimum essential coverage, incarceration status, and whether the applicant is an Indian. However, during the same reporting period, the Federal marketplace reported that it had actually resolved only about 10,000 such inconsistencies, or less than 1 percent of the total.

The thing isn’t even capable of collecting quality control data.

[ObamaMart] could not determine the number of applicants who had at least one inconsistency. Rather, the Federal marketplace reported unique inconsistencies, and it could not determine the corresponding number of applicants because one applicant could have more than one inconsistency. As a result, it was not possible at the time of our evaluation to determine the extent to which inconsistencies are distributed across applicants in the Federal marketplace.

Marketplaces also reported that data on inconsistencies may be overstated. Some marketplaces reported that failures with eligibility systems allowed applicants to submit multiple applications. In these instances, each application could be processed and cause the same inconsistencies to occur and be counted.

There were a number of examples; I only excerpted the one.

Just wait until tax time next April when these failures will come home to roost. Who’s got the government-approved plan? Who’s (still) eligible for taxpayer subsidy? Who owes the government a refund because he wasn’t eligible for that taxpayer subsidy, or wasn’t eligible for so much? Not even the Shadow knows.

But the ones who’ll be hurt the most will be the little guy, barely making ends meet and forced to buy a plan he neither needed nor wanted, and the little guy who must pay back the subsidy for which he wasn’t actually eligible.