"Cadillac Tax" Hurts Everyone

Well, the Senate Democrats reached 60 votes yesterday, so they've shut the door on the potential for a Republican filibuster to stall a vote on the health care bill. It looks like a straight-party vote could come as soon as Thursday.

I've avoided writing much about the health care debates so far, but I've got a serious problem with one particular part of the Senate's health plan: the so-called "Cadillac Tax" on high-end health care plans (which the Democrats plan to use to help pay for the higher costs of insuring everyone else).

Why? In essence, the Senate is saying that people who have these "Cadillac" plans have too much health insurance. Now, since those people are paying for their own plans with the money they are making at their jobs, who has the right to tell them that they have purchased "too much"? It's funny that they are using the metaphor of a nice car to categorize those health plans, because this is the same (from a political theory point of view) as saying to someone who owns a literal Cadillac that they have too nice of a car. Why should the rich be allowed to have Cadillacs (or Cadillac health plans) when other people have Hondas or Fords (or the equivalent vehicle-metaphor health coverage)?

I guess those evil rich people (you know, the ones who own business and employ people) just don't deserve their rich cars, big homes, and cushy health plans unless the rest of us can have them too. Never mind that they are purchasing those things from their own funds. Philosophically, this seems like a bad way to justify anything except socialism.

But wait, there's more. In reality, an excise tax on the biggest and best health plans will hurt the middle class more than the rich. Megan McArdle explains:

"Taxing their health care plans is not going to cause the executives to consume less health care; traders earning millions of dollars a year are unlikely to forgo an MRI because it might cost nearly as much as they dropped on wine last Saturday night. You might be able to get their back office folks and the secretaries to cut back a little, but those folks are pretty well paid."

The bottom line is that if you tax the rich (aka - the employers), it will mean higher costs for everyone who works below them. This is the step that the Democrats always forget about. Patricia Murphy takes a deeper look at how this plan to "tax the wealthy" will actually hurt everyone else a lot more:

"Obama said he did not want the tax to hit middle-class families, but when the bill emerged from the Senate Finance Committee in September, it proposed charging insurance companies and a 40 percent excise tax for high-dollar -- but not exactly gold-plated -- plans. The bill now calls for the tax to apply to plans exceeding $8,500 for individuals and $23,000 for families, for the cost of combining health savings accounts, medical, prescription drugs, dental, vision, etc. The tax is charged to insurance companies, but it is widely assumed they would pass it on to employers....

...Beth Umland, the research director for Mercer (an employee benefits consulting firm), explained that although the "Cadillac tax" is targeted at high-dollar plans, the cost of insurance plans is primarily driven by the age, gender, health and location of a company's workers, not the lifestyle they enjoy.

"Plans that trigger the excise tax are not necessarily generous plans," she said. "Small employers offer significantly less-generous plans than large employers, but just as many small employers are going to trigger the tax." Plans for workers in dangerous professions, like steelworkers, also have higher-cost plans because they experience more work-related health problems."

In other words, an excise tax on business owners will be passed down in the form of lower real wages to all the employees. That means that union workers making $40,000 a year (or so) are going to get hit by those costs as well. The Democrats are trying to tax the evil rich people who own businesses, produce things, and create jobs, but they are inadvertently going to skewer the middle and working classes as well. No one wins.

On one hand, it's kind of funny that union members (who played a big role in sweeping the Democrats into power in 2006/08) are now getting screwed by the party they usually support. On the other hand, it's political suicide for the Democrats to alienate one of their major bases of support.

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Polishing the Brass on the Titanic

The Audit Bureau of Circulation, which calculates newspaper circulation numbers in the United States, has released the totals for the six-month period from March-September. Let's just say they aren't very pretty.

When compared to the circulation numbers from March-September of 2008, only one of the top 25 newspapers in the United States has seen an increase an increase in circulation. That paper, the Wall Street Journal, is up a whopping 0.6 percent. As for the other 24, its not only that they are down, but how badly they are down. Here's a sampling:

USA Today: -17.2%
New York Times: -7.3%
Washington Post: -6.4%
New York Post: -18.8%
Houston Chronicle: -14.2%
Boston Globe: -18.5%
Dallas Morning News: -22.2%
San Francisco Chronicle: -25.9%

These aren't papers that no one cares about; these are some of the most important papers in the country. And some of them have lost one out of every five or six readers in the span of a year. Megan McArdle thinks this is more than just a bad stretch:

"I think we're witnessing the end of the newspaper business, full stop, not the end of the newspaper business as we know it. The economics just aren't there. At some point, industries enter a death spiral: too few consumers raises their average costs, meaning they eventually have to pass price increases onto their customers. That drives more customers away. Rinse and repeat . . ."

McArdle, who stood in front of me and about 40 other enterprising young journalists back in June and tried to assure us there would be some kind of future in the business, is not the only one who says newspapers are circling the drain.

Paul Gillin, of Newspaper Death Watch, says that newspaper circulation today is lower than it was in 1940, the first year for which data on circulation is available. Back then, 31 percent of people read a newspaper. Today, it's less than 13 percent. Even worse, in 1940 there were 118 newspapers published for every 100 households in the United States. Ten years ago, there were 53 per 100 households. Today, that total is less than 33 per 100 households.

On the plus side, the ABC also released the top 10 circulation gainers during the past year. Then again, I think it's a top 10 list because there weren't enough papers with positive numbers to make a full top 25.

Maybe it's time I read the writing on the wall and gave up on this kind of career.

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Global Warming Now in Doubt, Americans Say

In the past six months, apparently 14 percent of Americans have changed their minds about the existence of global warming, according to a new survey by the Pew Research Center. In April, the same survey said that 71 percent of people felt there was "solid evidence the Earth is warming", but in October's survey only 57 percent said that was true.

There was also an 11 percent decline (from 47 to 36) in respondents who said the Earth's warming was due to human activities. Also significant is a nine percent decline (44 to 35) in people who said global warming is a "serious problem". The decline goes across all political opinions, but it is most pronounced among independent voters.

So why is this? Could it be that health care and swine flu have replaced global warming as the biggest threat to life on Earth? Could it be, as Megan McArdle suggests, that "45 million Americans spent the last year reviewing the scientific evidence on Global Warming and changed their minds"? Or was it the unseasonably cool summer that most of North America experienced, combined with the earliest snowfall on record in many places in the Rocky Mountains, that has swayed opinion?

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Why I reluctantly dislike the plan for high-speed rail

First of all, I love trains. At the very least, I love the IDEA of trains. They are both romantic and powerful, representing the glory of an earlier time and the power of industry. Unfortunately, the reality of train travel in America is nothing like that, at least not in the age of Amtrak.

So I'm a bit torn on the idea of High-Speed Rail in this country. As a train-lover, I enjoy the idea that investing in faster, better trains could make transcontinental rail travel competitive with airlines. But, at the same time, I'm forced to admit that it's a wasteful dream that will never be fulfilled, for a number of reasons.

The most important reason is simple geography.

We frequently hear that building High-Speed Rail in this country will give us a system that is similar to what they have in Europe. Having ridden trains in Europe (at least in Belgium, the Netherlands, Germany, France, Italy, Austria, and Germany), I must say they have a pretty good thing going (with Italy being the exception, but even that wasn't all bad). However, as much as I would love a European-style train network in this country, the lack of dense population centers anywhere between the coasts makes it virtually impossible.

Megan McArdle explains it well:

"They [the liberals] also underestimate the role of geography. It is true that most Americans live near relatively dense cities. But that is still very different from the European situation, where virtually every town is basically a suburb of one of a handful of major national cities. (Before the various regionalists start stoning me, I mean this geographically; almost every town in Europe is close enough to a major city that in America, it would be considered to be a suburb.) This enables them to build rail networks on a scale that I just don't see us being able to match here."

In the Kato Daily Podcast back on June 19, Kato Senior Fellow Randal O'Toole pointed out that the proposed "High-Speed Rail network" will connect about 60 cities in 33 states, but it doesn't actually connect them at all, because there will be six separate high-speed rail lines that don't link up with one another.

"For example, the Obama plan includes a line from San Antonio to Dallas, and from Houston to New Orleans, but no line between Houston and any other city in Texas....People in Texas are going to say, we want a line from Dallas to Houston. People in Florida are going to say, 'why are we building a line from Atlanta to Jacksonville, and from Orlando to Miami, but not from Jacksonville to Orlando?' People in Colorado are going to say, 'why did you skip the Rocky Mountains altogether?'"

So the geography of America makes transcontinental high-speed rail an economic impossibility. We just have too many big parts of the country where there are so few people that we would never be able to justify the cost of building a line (through Wyoming, for example) there. The only chance high-speed rail has is in regional sections where it might be an attractive alternative to flying or driving.

However, that doesn't get around the second big problem: money. More specifically, it's all the money that has to go be spent to cut through all the red-tape that is sure to be created anytime you want to build something that is massive and will certainly disrupt the lives of people and/or possibly endangered plants and animals. The irony, of course, is that it's usually left wing groups who create those headaches that stall other left-wing groups plans.

McArdle give a great example:

"The Southeast High Speed Rail Corridor, established in 1992, is expected to finish its final environmental impact statement sometime in 2011. Some unspecified time after that, it will begin building out the links between Washington DC and Charlotte, North Carolina. For somewhere between 2-5 billion dollars, and three or more decades, we will finally be able to travel from Washington to Charlotte in 6 hours and 50 minutes--just 30 minutes more than it takes to drive the same route. On the plus side, you can read while you travel. On the minus side, it will cost at least three times as much, and you'll still have to rent a car when you get there."

Given those options, most people will choose to either fly (they'll still have to rent a car, but the trip is faster and not much more expensive), or drive (which will take the same amount of time, but it will be a lot cheaper, and you have your own car when you get there). Sadly, even for regional trips it will be impossible for high-speed trains to compete well enough with airlines to ever be financially workable.

Lee Harvey Oswald, Timothy McVeigh, or neither

I've touched on the whole bring-your-guns-to-the-town-hall-meetings phenomena before, but things continue to spiral a little out of control. It seems the craziest people are not the ones at the meetings with the guns, but the members of the media who continue to be completely appalled by these actions. Of course, they are mostly ignoring the fact that there has yet to be a violent incident involving one of these gun-toting citizens.

Last week, Megan McArdle did a great job exposing some of the loonies. Her recent post is here.

Apparently, not even the esteemed New York Times columnist Frank Rich can avoid jumping on the crazy train. He compares the current state of "violence" with the violet threats made against Kennedy by right-leaning radicals who feared he was the sign of a new liberal order in the 1960s:

"As the sociologist Daniel Bell put it, “What the right as a whole fears is the erosion of its own social position, the collapse of its power, the increasing incomprehensibility of a world — now overwhelmingly technical and complex — that has changed so drastically within a lifetime.”

Bell’s analysis appeared in his essay “The Dispossessed,” published in 1962, between John Kennedy’s election and assassination. J.F.K., no more a leftist than Obama, was the first Roman Catholic in the White House and the tribune of a new liberal order. Bell could have also written his diagnosis in 1992, between Bill Clinton’s election and the Oklahoma City bombing. Clinton, like Kennedy and Obama, brought liberals back into power after a conservative reign and represented a generational turnover that stoked the fears of the dispossessed."

Of course, he fails to note that most of the violence in the 1960s (including, most importantly, the ACTUAL ASSASSINATION of a U.S. President) was perpetrated by leftists. Lee Harvey Oswald was a Marxist and a Castro sympathizer, not a conservative nut-job.

Of course there are plenty of dangerous extremists on the right as well, but Frank's attempt to compare these protesters (who are entirely within their rights and have not done any actual violence to anyone with their firearms) to Oklahoma City bomber Timothy McVeigh (one of those previously mentioned dangerous extremists) is more than a little bit of a stretch.

In fact, the only real link he can establish is that McVeigh once wore a T-shirt that proclaimed Jefferson's quote about the "Tree of Liberty" being refreshed with the blood of tyrants and patriots (a quote that has become popular with some health reform protesters). Obviously, this is a fool proof method of proving that these legal gun carriers have the same motives as the man who killed 168 people in Oklahoma City.

Health Care Stuff

I don't really want to write too much about the whole health care reform thing going on right now, because, honestly, I don't understand enough of it to offer much. You might want to bookmark this page, because I'm not sure when I will make a statement like that again.

Anyway, I've been using all the attention on health care to educate myself a little bit and how and why the system works the way it does (or doesn't) and regardless of the outcome from Obama's plan, at least I've learned something. Either way, I still think the best plan for me is just to avoid getting sick/serious accidents/being within a mile of an emergency room.

My biggest single problem with the very idea of health care reform is that I'm not convinced that anyone understands the system well enough to reform it, let alone a bunch of politicians. I doubt the people in Congress who are going to reform the system actually understand the system any better than I do. Do we really want, as John Stossel writes, a bunch of people who have most likely never run a small business trying to overhaul one of the most complex markets in the world? What makes them think they are capable of doing it? They do understand that "Yes We Can" was just a campaign slogan, right?



Although there are plenty of well-informed opinions out there on the health care situation, I've found (not surprisingly) some of the most lucid and convincing arguments come from Megan McArdle over at The Atlantic. In particular, these two posts - though long - are worth a read:

A Long, Long Post About My Reasons For Opposing National Health Care

It's Adverse. But is it Selection?

Ron Paul also entered the blogosphere debate today with this post on the Campaign for Liberty site. He makes more good points for why this is a bad idea.