Return to the Free Liberal Homepage

March 31, 2010

Global Warming Goodies

I’ve been a bit too busy to blog here lately, but I have written a bit elsewhere which some of you may find of interest. I just compiled a list of 82 ways to fight global warming. This is rather longer and meatier than the typical lists you will find by googling around. There was an SEO (search engine optimization) contest a while back to see who could rank highest for a global warming keyword phrase, so the Internet is littered with spammy sites on the subject. I’m on a mission to rank higher with some real info.

My list is not the usual feel good/be part of the chorus fluff, nor does it feature trivial actions like pumping up your tires so you can feel every pebble on the road. If global warming is a real problem, we must either demand that the developing world must permanently remain behind us in per capita carbon fuel consumption or we must cut our carbon consumption by 75% just to maintain the current worldwide carbon dioxide output as the developing world modernizes. To slow down or stop global warming requires even more cuts and/or sequestration.

Neither bouncy tires, compact fluorescent bulbs, nor windmills will do the trick. Radical actions will be necessary. But which radical actions? That’s the trillion dollar question.

Posted by CarlMilsted at 08:11 AM | Comments (3)

March 27, 2010

Time for a (Limited) Land Value Tax

Anyone who reads my comments on various sites, especially those of a libertarian bent like the Free Liberal and various mailing lists, know that I have been a frequent critic of the Georgist ideal of a Land Value Tax as a single levee. The current voice for this view is Dr. Fred Foldvary and his current and former students, including Brian Green. We enjoy our arguments on whether an LVT should be a single tax and whether now is the time for its adoption.

Land Value Taxes extract excess value from the location value of property, called economic rent. An effective LVT will negate such values and prevent significant appreciation, which works a bit like a sin tax. Most local jurisdictions do extract some land value, but not to the extent to prevent the housing bubble just witnessed. Indeed, local democracies find it hard enough to extract enough value to run the local school - and some don't even do that. Democratic theory shows why. Unless the assessors have some separation from the voters, an honest assessment is all but impossible. The other difficulty is that an effective tax decreases values over time and makes it hard to raise needed revenue - it is better for localities to allow values to increase, leave tax rates as they are and rake in the proceeds.

When a significant number of borrowers are underwater, it is probably not the time for a vigorous LVT with the goal of price stabilization. That was, of course, until yesterday. The White House has announced a procedure to allow people who are under water on their mortgage to have their principals written down. This makes it the perfect time to put in an LVT to prevent a new bubble from forming in later years. Since values usually stay low for a few years, we have time to fight about it, however the effort should start now.

Should it be a single tax? Absolutely not. Taxes should be economically linked to the activities they fund. Services to property, such as police and fire protection, corrections and mental health, and home inspection, local streets, sanitation, snow removal and rental enforcement should be paid from both an LVT and a tax on improvements (since expensive homes cost more to protect). Notice I left schools out of the mix.

School levies should come from a tax that redistributes income from all sources, not just land. While some are of the opinion that only land values make people rich, most will argue that celebrity CEOs are rich because of the economic rent they extract from worker wages rather than from the property they hold. Services to families, such as schools, remedial adult education, health care, and credits to assure a guaranteed income should come from a tax on employers. Such a tax would ideally force a just distribution of benefits and services (including tuition at both charter and sectarian schools) and not collect any revenue for the state.

A separate sales or Value Added Tax would fund the state to the extent it cannot self-fund. As a more visible levee, it would provide an incentive to reduce state activities, such as domestic military bases, weapon systems not deployed, commercial regulation and other non-entitlement general government not covered elsewhere.

An income surtax should extract income from accumulated economic rent and excess wages and inheritances, as well as activities that require further borrowing. These include overseas and at sea military deployments, net interest on the debt and debt retirement - including debt held by the government for retirees. The only out from paying such a tax (which should be on high incomes only and range from 3% to 23%) should be charitable contributions and income from selling shares to broad based employee-ownership plans.

Retirement taxes should go to employee-ownership shares and a large insurance fund holding such shares (with workers at non-stock firms paying into the insurance fund). Taxes should be employer-paid only and should be credited to employees equally, regardless of pay. Bonuses for actual accomplishment or educational attainment (rather than position only), as well as reinvestment of dividends, should go to both retirement accounts - with a protion of dividend income going to longevity increases. This removes the incentive to fire middle age workers as they get too expensive.

Posted by MichaelBindner at 11:42 AM | Comments (2)

TEA Party Economics

Lest we forget, TEA is for Taxed Enough Already, but the question is, are they? We are getting some idea of their basic demographics, but I'm interested in something meatier. Are they, in fact, taxed enough for what they get? (They can also use these questions to look for themselves, but I doubt as a group they are that self-reflective - any members or groups are welcome to prove me wrong by surveying the membership and telling us how it went).

What is the range of their Adjusted Gross Income? What is the range of their taxable income? What is the range of their marginal and effective tax rates?

How many have FHA and VA mortgages? How many have other subsidized mortgages? How many have mortgages owned by Fannie and Freddie? How many are in subsidized housing?

How do they earn their money? How many are military or governmental retirees, current members or reservists? How many work in the defense industry or have worked there? How many get Veteran's Benefits (including free health care with presecriptions that are bought more cheaply because the VA negotiates with drug companies)? How many work building roads or are in some way in the transportation industry (road, rail or air?)

How many work for employers that take advantage of the tax exclusion of health care benefits? How many take the mortgage and property tax deductions? How many take the Child Tax Credit (regular and expanded), energy credit or other credits?

How many have businesses in an industry with special tax breaks (like oil and gas)? How many work for a business that benefits from agricultural inspection programs to make sure that the food they sell is safe? What is the value to them of this service being offered? How many benefit from agricultural subsidies up the supply chain? To what extent does that show up in their employer's or their own bottom line?

Based on their income tax liability, what is their share of the Net Interest expense of the government? (or, if they prefer, their family share based on their average family size).
What is the average benefit from each type of government activity, the total average benefit and how does it compare to their tax burden? Are they "taxed enough already"?

Feel free to add other question or suggest a researcher who might ask them in the comments section.

Posted by MichaelBindner at 09:50 AM | Comments (0)

March 26, 2010

A Compromise on Health Care: Single Payer Catastrophic

As I wrote Wednesday nite, some type of single payer insurance is inevitable because the mandates in the law are simply too weak to have everyone buy insurance, while pre-existing condition reforms will likely bend the cost curve the wrong way and bankrupt insurers and send them to TARP for a bailout or liquidation.

We could wait for a financial crisis, or we could put through a real bipartisan reform of the reform. Of course, this means giving up on univeral comprehensive but it also means giving up on for profit insurance.

The only proposal that does this is to have single payer catastrophic insurance funded by a payroll tax. Employers would fund Health Savings Acccounts for workers and employees would fund Flexible Spending Accounts for optional services. More under the fold.

Why do both an HSA and a FSA? Two reasons - bending the curve requires that consumers notice the pain (simply allowing them to cash out savings is not enough) and abortion funding. Single payer means that all catastrophic care would be government funded and the insistence on Hyde means that without some consumer funded account, abortion services would be cash only. Additionally, an FSB could included OTC (which the reform takes out) and can be accessed for their full value on day one, while HSAs have to build in value - meaning that providers have to wait to get paid. Eventually, as HSA values increase, FSB requirements go down, however they will at least fund normal use of copays and non-covered expenses.

Medicaid and Medicare HSA contributions would be paid by the government out of the same payroll tax which funds Catastrophic (and Long Term Care) coverage and everyone would have only one Health Security Card to access all three accounts. All beneficiaries would also have the same card, so the discrimination against Medicaid beneficiaries would stop. The payroll tax should be shifted entirely to employers, allowing salary but not net pay deductions to finance this. Compromise should mean that we stop arguing about the cost and hiding the tax from most employees would do this.

Research shows that HSAs would bend the cost curve by giving consumers the incentive to shop smarter, which would save money over time and avoid the necessity of price controls. Of course, the AMA would not like this development unless we threw in malpractice reform. Then the trial lawyers get upset, so the reform must take their needs into account. Also, reform must also make sure incompetent (rather than unlucky) doctors are punished or it will never fly.

The way to reform malpractice is to have special juries with medical society participation hear these cases and empower these juries to discipline doctors, including license revocation. Compensatory damages would remain uncapped, however punitive damage caps must not be allowed to damage the due process rights of plaintiffs by allowing defendents to outspend them on legal talent. To keep the playing field level, the cap should be three times defendent legal fees or some set amount - whichever is higher. Awards would remain untaxable until all appeals are exhausted and are only taxable on money actually received - with compensatory payments remaining tax free. With a capped award, excessive award appeals will no longer be allowed and a bond against the judgment must be posted by the insurer during the appeals process.

Would insurers fight this? It depends upon the timing. At first, they might. Eventually, when their stock price starts to tank and the only way they can stay in business is to provide administrative services to the single payer plan, they will likely come around.

I would offer one further loophole, throwing a bone to the die hard libertarians. Employers can opt out of single payer by prepaying hospital and specialist services at their employees' preferred hospital and by hiring their own doctors to treat employees and their families onsite. This would also take care of the cost curve and is similar to how we deliver health care to the military, veterans, Congress and the President. If retirees are allowed to keep the same coverage and long term care coverage is provided separately, this should also be deductible. Some tax for services to the poor would still have to be paid, however, so there won't be a total opt-out on the payroll tax.

Now that we have health care reform, there is no longer any advantage to the Republicans to avoid negotiation - of course, they may be too partisan to realize this and are so badly staffed with PR specialists that compromise proposals have to use small words - but that should wear off when they realize they've just made themselves look dangerous and foolish and that, if they really care about the cost curve, they have to play ball.

Why should the Democrats negotiate? Some of us still want single payer and believe that the for profit model can't work for much longer. Circumstances will prove us right in less than a decade, however there is no gaurantee of having sixty Senate votes when it finally does. Also, single payer alone only bends the cost curve through capping fees while the approach I have outlined is more likely to bend fees without price controls. Like it or not, we own the debt that we inherited from Dubya and bending the curve is likely the only way to avoid catastrophe.

Posted by MichaelBindner at 09:35 AM | Comments (0)

The Inevitability of Single Payer

Cross-posted from Daily Kos from two days ago:

I see that there is still activity around seeking a public option in reconciliation. I think this is a mistake. If you are going to offer any grudge amendment from the left, offer one to make TARP money available to health insurers in financial difficulty and give the USG the authority to liquidate operations as it sees fit. The USG should see fit to start offering its own insurance plan which will grow and grow until it eats everyone else. (Of course, there was not such amendment, but the analysis still applies, which is below the fold).

How will Single Payer happen? Its pretty obvious. The Republicans knew, it seemed, but were not clear. They spent too much time on historionics and not enough time explaining their position - that reform is a prelude to real government run health care - either a single payer Canadian system or a British national health service. They left people with the impression that if you give the Democrats an inch, they will take a mile. That is not how it will happen, however.

Here is what I told the White House, the Senate Finance Committee and the House Ways and Means Committee majority and minority staffs:

"The main attraction of single payer comes from the nature of commercially provided insurance to seek profit, and how that effects the delivery of service. The problem is that even with all of the consumer responsibility you can think of, the drive for greater and greater profits will have insurance companies constantly searching for ways to avoid paying for the care they promise their policy holders.

Firms are less concerned about deductible levels as they are about how to avoid paying for serious chronic illness. Patients with several risk factors, such as a high BMI and advancing age, are not attractive to insurers since they detract from the bottom line due to the possibility of stroke, diabetes, heart attack et al.

If insurers must cover everyone and can't charge potentially sicker people more, their ability to increase profits over time (which seems to be the goal of privately held firms) will be greatly impacted. In the end, their business model will not handle covering everyone at a market rate. This will lead to either consolidation (until they can't consolidate anymore), bail outs or the offloading of the sickest to some kind of public fund.

In other words, single-payer insurance is almost inevitable - whether by government mandate or because of the natural tendencies of the market. Does this mean Congress can pass single payer healthcare now? It would be extremely unlikely for the industry or Congress to be that forward thinking. The best thing measure at this time is to pass something now and let events develop. If and when the bottom falls out of the industry, however, Government must be ready with some kind of single payer proposal."

Private insurance is doomed. (The Bill is now law, we can say it now). It will be doomed faster if mandates are found unconstitutional or are inneffective to really force participation (especially if you can drop coverage until you get sick).

If the GOP had said this more clearly, rather than sounding like a bunch of conspiracy nuts, they could have stopped the inevitability of single-payer, which will come about once the insurance industry starts running to TARP after their stock price starts to tank.

My advice if you have a small fortune and want a big fortune is to buy a CDO betting that within 10 years the Insurance companies will go to TARP and be liquidated (or be ready to sell their stocks short).

If we want real, sustainable, health care reform it is time to realize that we need a payroll tax or a VAT to pay for it. More importantly, we need to start spreading the word that private insurance is doomed. The more we say it, the more it is true and the quicker we get real reform.

Tell Cramer and give him a big Booyah! from me.

Posted by MichaelBindner at 09:24 AM | Comments (0)

March 22, 2010

Paying for McCain/Boehnercare

In the lead up to the health care summit between the congressional Democratic and Republican leadership and the White House, the GOP plan and the President's plan were compared. It was an apples to oranges comparison, however, since the GOP plan was not fully fleshed out - not in terms of details but in scope. That plan (which has been taken down from the GOP web page) included an expansion of SCHIP, Medicaid reforms and malpractice reform, however it did not flesh out comprehensive reform which would have bent the cost curve.

The closest the Party has come to that was the John McCain proposal from the 2008 campaign, which would have provided a tax credit large enough for catastrophic health care, taxed all other health care coverage and provided for(presumably) tax free Health Savings Accounts. This reform would have effected every American rather than reforming around the edges. By providing a credit rather than a tax exclusion, however, it would have been more expensive if it were universally adopted - since no one would retain comprehensive insurance or employer provided insurance coverage - although most would not have been happy with such an option. Given the Republican allergy to progressive taxation, this plan would have either increased the deficit still further or would have required some form of payroll or consumption tax (maybe a Value Added Tax) to fund it.

This actually sounds like something I once proposed, since according to economic theory, such measures would be necessary to bend the cost curve (although the total price tag would be just as high as Obama care once you finished adding up tax credits and exclusions). How much it would bend the curve, however, is seriously disputable. Health care is not a "normal good." It is a good that makes consumption of other goods possible, at least in dire situations. You cannot buy a car if you are dead or disabled. Such non-normal goods do not respond well to supply and demand - especially if one has guaranteed access because one has an insurance card and a Health Savings Account/Flexible Spending Account. Except for elective procedures, there is absolutely no incentive to hold back on getting the best and most expensive care possible. I am also fairly sure that we do not want people to make such choices anyway.

Comprehensive insurance looks like it costs about the same as a catastrophic tax credit/HSA combination - at least from the fiscal standpoint - while not providing the same level of coverage.

Would such a plan be more popular than Obama care? Given that most people would be dropped from their comprehensive insurance as the tax exclusion for it goes away, I seriously doubt it.

Posted by MichaelBindner at 04:41 PM | Comments (0)

March 17, 2010

Don't Like Israel's Settlements: Stop Paying the Tab!

The Obama Administration recently condemned Israel's announcement of expanded settlements on Palestinian lands. This is all well and good and it is about time that an American leader at least expressed the position that Israel should not expand settlements as they contradict US policy.

But is this "outrage" going to have any impact? Not really. After all, the Obama Administration speaks with a forked tongue. While they claim to be concerned and frustrated with Israel's antics, the Administration has not threatened to cut the $3 billion in foreign aid American taxpayers send to the nation. So, in essence, while Obama expresses his concerns, we're paying the tab. Does this make any sense?

Me, I'd rather cut off foreign aid to all countries (including Israel which receives a disproportionate share). This is especially true at a time of ballooning deficits and economic difficulties here at home. Ultimately, however, as the Cato Institute has pointed out, foreign aid is ineffective.

Posted by PaulGessing at 11:49 AM | Comments (0)

March 04, 2010

Wanted: Global Warming

It was cold this winter. Indeed, it was so cold, that people are saying that man-made global warming cannot be true.

There is evidence to the contrary and evidence that warming is partly natural. It could be both sides are correct, since climatology is an exact science.

Where I part with most environmentalists, however (especially the Zero Population Growth types) is whether warming is a bad thing. Indeed, if man-made warming is true, then perhaps we would still be in the minor ice age which lasted from the 14th Century to the late 19th Century and that only industrialization ended the ice age.

How does that make warming a bad thing? Indeed, we have still not returned to 13th Century temperatures. It should never snow in either Washington, DC or London, England. Greenland should have pastureland. We don't have these things. In fact, variable weather is not the artifact of warming, it is the artifact of unstable cool periods.

We may still be in the tail end of the cold period now. If emitting carbon dioxide is all that is keeping us from a return to pre-industrialization weather, than I say Drill, Baby, Drill and thank God for dirty coal. Now, if sea levels rise so that rich beach condos are washed away, so much the better. Homo Sapiens is a migratory species. People will move before they die off and will probably have a better life for having expended the energy to move.

Posted by MichaelBindner at 02:56 PM | Comments (0)

March 03, 2010

Campaign Finance Reform

The recent Supreme Court decision striking down restrictions on corporate electoral speech has made campaign finance a hot issue. There is even talk of a constitutional convention call to draft an amendment to counteract it and create a system of public financing. Given the likely composition of just the Virginia delegation to such a convention, I am not sure this is a risk I am willilng to take. What I do want to do is below the fold.

Because each and every directly elected federal officer (counting the members of the Electoral College - which actually elect the POTUS) represent a state or the District of Columbia, I question whether federal campaign finance legislation is appropriate at all. It certainly has not decreased the power of economic interests in relation to the citizens. If anything, we are worse off than we were before Watergate.

If there is a federal law in this area, it should simply empower the states to regulate campaign finance as they see fit. If states also wish to establish a system of public finance, they can do so. If they wish to ban out of state donations, they should be able to do that too. I would probably draw the line against allowing them to regulate political ads, although this may be a state constitutional issue and not a federal one. Trusting the states is dicey, however, as they may not play fairly in this area nor would I want to tempt partisan majorities into testing the waters.

Some states would, undoubtedly, set up a system of public finance. Others might require that campaign committees not accept out of state, corporate or PAC donations or channel them blindly through party committees (which could even distribute them equally to all candidates). Some states will be more progressive than others, but this might be a good thing as innovative states may shame others into change. If other states allow more visible corruption to occur, this may well become an electoral issue - in fact, it is sure to become one if one party too obviously feeds at the corporate trough. This is, perhaps, the best way to ensure good behavior. Nothing we have tried to date has.

Posted by MichaelBindner at 11:49 AM | Comments (2)

Free-for-all (frfr-ôl) -- n. A disorderly fight, argument, or competition in which everyone present participates.

from Dictionary.com



SIMPLE AD ERROR VIEW COUNT NOT UPDATED

Advertisement