Tag Archives: political economy

Welfare Reform: MIA

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Senate Republicans and Progressive-Democrats agreed in principle to a two-year budget deal that sets outer bounds on spending allocations that are yet to be debated and passed in the two Houses.  The deal increases defense spending by $165 billion over the next two years, and it increases domestic spending by $131 billion over those two years.

But at what price?

One price is the potential for a return to $1 trillion deficits.  To an extent, that’ll be reduced by a growing economy as the tax reform law begins to take effect.

The larger price, though, by far, is the lack movement on the big three budget failures: Social Security, Medicare, and Medicaid transfers.  These remain not on any track toward privatization, or with that last item, not on any track toward reducing to zero transfers.

In 2016, the Federal government spent almost $950 billion on Social Security payments and a bit over $590 billion on Medicare.  Federal Medicaid transfers to the States in 2016 ran some $325 billion.

Fixing those would be produce a large reduction in deficits to the point of budget surpluses, which could be used to run down our national debt.  And the fixing would produce a large return to the personal responsibility that has contributed so strongly to our nation’s greatness and prosperity.

Deep States, Bureaucrats, and Incumbency

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Whether the current idea of a Deep State plotting against the current administration is accurate or not, it has been clear for some period of years that bureaucrats who have been in Federal employ for too long become entrenched and begin working at cross purposes with those of their agency bosses.  The latter, being political appointees, are, at least indirectly, selected by the Federal government’s employer, us citizens.

While we can cure the overt incumbency problem of our politicians by electing others in their stead, the incumbency of bureaucrats, none of them elected, is both generally unseen and harder to correct.

There are, though, a couple of things we can do to correct this.

One is to limit the power of public unions by barring them from collecting “dues” or any other fees from non-members.  After all, rather tautologically, they don’t—can’t—represent anyone other than their members.  Non-members should be free to negotiate their own government employment contracts, and if those contracts happen to look like union contracts, that’s just a happy—or unhappy—side effect of those separate negotiations.  The wage competition also would apply downward pressure on government labor costs, to the benefit of us taxpayers who are the ones paying those wages, anyway.

It’s also important to take the government side out of the labor negotiations; although likely this is just pie in the sky.  Currently unions, when they make political donations, are donating to the politicians nominally negotiating those contracts on behalf of us taxpayers.  One possibility is to have a third-party negotiator represent us rather than those politicians, albeit this is even more pie in the sky.  Then put the union employment contracts up for final approval/rejection by plebiscite in the jurisdiction in which the contract is proposed.

Another measure is to change via legislation the nature of the employment contracts that are allowed.  Civil servant employment contracts should be limited to a five-year period with automatic expiration unless each house of Congress positively renews the contract.  Moreover, those contracts should be renewable only in three-year increments, and each renewal should be justified first by the agency for which the employee works and then by each house of Congress.

Additionally, transfers between agencies, whether permanent or temporary, should not be allowed unless the receiving agency eliminates a job position for each transfer in.  Such transfers should be for the expertise gained, not simply to increase headcount.

Finally, every five years, the public service union of relevance should be recertified, first by secret ballot vote of the union members, and then by roll-call vote in each house of Congress.

Five years is long enough to get useful work out of a new hire, and having to justify the continuation of the employment contract can help to hold down the disruptive power of bureaucrat incumbency by increasing turnover.  Requiring the public service union to recertify also can help to hold down the ability of the union to bloat off us taxpayers.

Yes, that will increase the work load of Congress.  That’s beneficial, too.  Working on this sort of thing will contribute to Congress not working on foolishness.

The New Tax Law and Bankruptcy

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The Wall Street Journal is quick to point out how the tax reform bill passed last December does little to help failing businesses.

The new tax law is a boon to most US businesses, but it will make life harder for one type of company: those that are struggling financially or at risk of filing for bankruptcy.

The new tax law was never intended to help failing businesses, though, it was designed to help the rest of us individuals and our businesses—and to help those who are failing do better next time.

The law eliminated a provision that gave money-losing companies a cash infusion in the form of a retroactive federal tax refund by applying current losses to past tax bills. Experts say these tax breaks, called net operating loss carry-backs, gave companies access to money at a critical time….

No, the provision helped current businesses paper over bad decisions and outright failure by letting them rewrite their history; there’s nothing that helped failing businesses do better in future.

The provision, in fact, was written in the aftermath of WWI, ostensibly to help our economy’s manufacturing sector.  On the contrary, though, the provision was enacted to bail out from Woodrow Wilson’s attempts to nationalize significant fractions of our industrial sector and to attempt recovery from Wilson’s drastically inflationary policies.  Any policy enacted for bad reasons always will fail in the end.

“It doesn’t fix the business, but it fixed the balance sheet,” she [Bankruptcy lawyer Cathy Hershcopf] said of the tax benefits.

Indeed.

A New Welfare Trap

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This one is in the offing at the State level, and comes as a result of the punitive tax for not buying health coverage was repealed last December.

At least nine states are considering their own versions of a requirement that residents must have health insurance….

And

Maryland lawmakers are pursuing a plan to replace the ACA mandate, which requires most people to pay a penalty if they don’t have coverage. California, Connecticut, Hawaii, Minnesota, New Jersey, Rhode Island, Vermont, and Washington, as well as the District of Columbia, are publicly considering similar ideas.

Notice that.  These are Progressive-Democrat-run states.

The less well off who couldn’t afford either the penalty or the remaining costs—high deductibles, low per centage of plan provider payments even after “coverage” kicked in—under Obamacare still won’t be able to afford mandated coverage in these States.

Beyond that, they won’t be able to leave the State and relocate to one that doesn’t inflict these costs.  Their already limited economic resources are a barrier to such relocation.  Added to that, though, will be the lack of portability of the mandated coverage plans: having been dragooned into one by, say California or DC, they won’t be able to take it with them, even to Connecticut or Minnesota.  Or to a State that doesn’t require them to buy something they don’t want.

Progressive-Democrats really are that desperate to keep their welfare “recipients” trapped in welfare cages. Aside from that bit of self-serving…nonsense…the move also demonstrates the Progressive-Democrats’ utter contempt for us Americans.  We are, their behavior and policies say, just too mind-numbingly stupid to be entrusted with our own choices.  We have to be led by our Betters, forced for our own good, to do certain things.

Working for a Living

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Indiana has joined Kentucky in getting approval to add a work requirement to its Medicaid program (separately: Federal approval should not be a requirement; the program should be a State-run and -funded program only).

Of course, there are objections.

Democrats and consumer groups are decrying the GOP push, saying it is antithetical to Medicaid’s goal of expanding health care.

That’s plainly not true, though (I’ll ignore the conflation of health care with health care coverage).  The push is exactly what’s needed to make health care coverage available to all who want it.  The plan, even as minimal as this one is (the work-related requirement would apply only to a small segment of Indiana’s Medicaid enrollees), will facilitate availability, not limit it.  By making it possible for folks to get off this welfare program and into jobs that can enable them to buy their own coverage—if they want it—it will allow the State’s Medicaid dollars be committed to those who truly need Medicaid because they’re too old, too young, and/or too infirm to get desired coverage on their own.