In the wake of the election the President has made some public statements about just what he plans to do in his last term. Here is the the transcript of his November 6 radio address. It seem to lay out six points on the economy with a couple of sub-points but precious little detail (wherein the Devil resides). The points are
Stimulate the economy by making health care affordable in two sub-points (a) let businesses pool to get employee health insurance at better rates, and (b) in some unspecified way restrict law suits for medical malpractice.
In some unspecified way restrict frivolous law suit and class action law suits.
Reduce government paper work
Congress should enact a national energy policy.
Pursue free and fair trade agreements.
Tax relief.
I keep having this sinking feeling that what we have here is a collection of code words that maybe don’t really mean what the seem to say on first reading. For instance, it seems to me that all this means:
At repeated theme of the President’s surrogate’s ads leading up to the election were claims that you the voter were being deprived of medical care because physicians and hospitals were getting their pants sued off. It was, according to the ads, wholly because of greedy trial lawyers. Apparently there are no people injured by medical negligence and incompetence, only people who have unpreventable bad out-comes who are recruited by greedy trial lawyers, who incidently manage to bewitch and seduce juries of otherwise responsible citizens into awarding outrageous and ruinous verdicts. In my professional life I’ve been involved in all of two medical malpractice cases - in one the surgeon left a nine inch long forceps inside the patient’s gut (you should have seen the x-ray on that one) and in the other the hospital had disregarded a fetal monitor that said that the fetus was in acute distress. In one the malpractice insurer nearly broke down the door to settle and in the other the case went to trial on the question of damages. In the second case the argument was that maybe there was a stainless steel salad spoon wrapped up in the guys large intestine but he was only out the cost of the second operation, a simple hardware-ectomy.
As far as insurance pools are concerned, many trade associations have group insurance plans, stuff like the Midwestern Hardware Store Association Health Plan courtesy of Blue Cross/Blue Shield, or the one I am a member of for Farm Bureau members. I’m not a farmer but if I make an annual payment of $40 I can be a Farm Bureau member and get a group insurance rate.
Neither of these look to me like any substantive new policy that might result in a significant increase in the number of people in this country with medical insurance.
Class actions have been a focus of US Chamber of Commerce/Heritage Foundation angst for years. Whether they have a significant effect on commerce I question. I suppose the Ford Pinto cases did put a crimp on the Ford Motor Company for a while but I don’t see any Ford shareholders going to the poor house or any Ford workers on the street because of the law suit. Ford workers are on the street because of assembly plants in Mexico and because the car market in now international. Frivolous law suits have long been the boogy man of big industry but few can show us one – including the hot coffee at McDonald’s which turns into a pretty serious case once you cut through the BS and look at the facts and the course of the litigation. The case about the guy using a rotary lawn mower as a hedge trimmer, incidently, was no case at all but the product of the fertile imagination of some insurance PR flack.
Reduced government paper work sounds like code for less business regulation to me. That’s fine, but what regulation goes by the boards?
Isn’t a national energy policy code for oil drilling in the Arctic Refuge? That is an idea that is beloved by the President but was rejected by a GOP controlled Congress last year.
Trade agreements? I admit I don’t know what this is pointed at. The European Union? Canadian pork? Mad cows to Japan?
Tax relief. Other than eliminating the Estate Tax what does the President have in mind? Is he looking at imposing a national value added tax or some sort of a federal sales tax to shift the burden of taxation away from a progressive income tax to some sort of flat tax on spending? How does that help a national economy that has been supported for the last two or three years by consumer spending?
Anybody have any ideas about the President’s Second Term economic policy. Is this new stuff or just more of the same?
Well, no, not just that. I’d say it is code for drilling in ANWR + giving lots of pork (tax breaks etc.) to encourage more drilling and encourage nuclear power + giving lots of tax breaks for ethanol + giving the companies who made MTBE a “get out of liability free” card + giving a few small tax breaks for renewable energy and conservation.
In other words, it is an energy plan completely without vision and almost completely devoid of any connection to other issues such as reducing climate change. Hell, even Former Treasury Secretary Paul O’Neill apparently couldn’t understand why Cheney and Co. came up with the sort of pork-laden energy policy catered to special interests rather than a truly good piece of public policy.
To me, “reduce paperwork” sounds like floating out the idea of simplifying the income tax system. Many are speculating that he wants to reduce the number of tax brackets, and reduce many deductions and exemptions. Each of those, of course, would move us closer to a flat tax system, hurting the lower economic rungs and helping the upper ones, compared to the tax system now.
But hey, why bother with reducing the number of tax brackets when oyu can simply jump to a national sales tax and have the poor pay twenty five percent or so of their income while the rich pay virtually nothing? In all seriousness “simplifying” the tax code is a perennial promise, and just because the administration is saying that a national sales tax is “on the table” doesn’t necessarily mean that they’ll push for it. There’s still that lingering deficit, and interest rates could shoot up if the situation in China changes, so any serious changes to the tax code that actually reduce the amount of taxes paid might be a tough sell to a Republican Congress.
With the Bush administration, top priorities often shift quickly. Social Security privatization was all he talked about in the 2000 campaign, but was forgotten a few months after he got into office. Now it seems he’s not mentioning it at all. Has he given up on the whole idea? Planning to keep it under the radar screen until a more favorable time? Who knows.
As for trade agreements, he promised to be aggressive on those four years ago. Then he showed up at all the meetings, but didn’t speak much, dodged questions, and didn’t really fight against trade barriers. Then there’s the question of how he’ll respond to recent decisions by the WTO that certain subsidies offered by the United States are unacceptable.
I always love it when either candidate goes off about “fair” trade or “unfair” trade agreements. They’re right, the agreements are unfair, but largely unfair in our favor. For instance, if Bush was that concerned about free-trade, he’d be more aggressive at eliminating exemptions for agricultural producers when making trade agreements (hi sugar industry!), wouldn’t have put those moronic steel tariffs in place, wouldn’t constantly use anti-dumping measures as a way to pander to certain industries, etc. I’d love to see Bush use this wonderful mandate to enact somewhat controversial free measures, such as killing the stupid Byrd amendment, but I have no hope.
Revenue neutral. He claims he doesn’t want to use it to lower taxes, but to make the whole system less efficient.
Lowering the number of brackets, and restoring the revenue from lower top brackets by getting rid of tax loopholes that the rich use to lower their tax burden.
This sounds like a very good idea to me. WHen you set a high top bracket, and then create a zillion loopholes that reduce by the effective top rate by, say, 5 points, you’re way better off to simply lower the rate by five points and get rid of the loopholes. Fewer economic distortions, more transparency, and less money wasted on lawyers and accountants.
The devil, of course, is in the details. Most of these ‘loopholes’ are someone’s pet ‘job growth’ program or ‘environmental’ program. So we’ll have to see how that shakes out. But no one should assume that this is necessarily going to make the tax system less progressive. In fact, it may make it much fairer. The people who really get hurt by a complex system of loopholes meant to lower the top tax brackets are those who make reasonable incomes, yet not enough to be able to shelter their money or pay for tax accountants. That describes large swaths of the middle class.
And if tax reform makes the tax system more efficient at collecting money, and makes the economy more effective, then the end result should be more revenue - without tax increases.
Oh dear gawd. Bush has never stood for anything of the sort.
When he comes out and says he wants to restore the 1986 tax act, that’s when you can say he’s for true simplification.
Hard to do? Hardly. The ghost of the 15/28 bracket scheme is still there. All it would take is enough will to stand in front of Delay and say that he wants cap gains to be taxed at the same rate as ordinary income, and eliminate the loopholes that act eliminated, while bringing down the top rate.
Don’t hold your breath.
Bush has spoken of a “hydrogen economy” as the way for the future. I’m not convinced it can be made to work, but is that, perhaps, what he means by a “national energy policy”? Funding research into hydrogen fuel-cell technology? Research is always good . . . I guess . . .
No. I think National Energy Policy refers to the energy bill that was filibustered in Congress.
I think the research on hydrogen (which was pretty piddly anyway…we are talking on the order of 1 billion dollars over 5 years…Or on the order of 0.005 of an Iraq War) was separate from the energy bill.
Considering Bush’s first-term economic plan began and ended with “tax cuts for the rich,” I don’t think we should be looking at anything that can’t be expressed in eight words or less.
Oh, and Sam? The big “rich people already don’t pay more because of all the loopholes” is talking-point hogwash.
Ask yourself why, if rich people already find ways out of paying taxes, it was so incredibly important to give the top tax brackets huge tax breaks in his first term. That was his biggest campaign promise.
SOME rich people do. That’s the nature of loopholes. They’re put in place to favor some economic choices over others, to push resources into areas the government thinks are ‘good’.
