Some of my commenters attempt to make the illogical argument that because the top marginal income tax rate was almost forty percent during the Clinton era that there is no harm in raising it back to that now. Jim Manzi dissects this foolishness. I doubt if they’ll understand it, though.
[Update a few minutes later]
Victor Davis Hanson — Oh What Debts We Will See:
Athens in the fourth century B.C. chose to mint “redheads”, silver coins with bronze cores that were quickly exposed once the patina around the coins’ imprinted busts wore off. Rome did the same thing, and by the fourth century AD simply flooded its provinces with money of little real value. Germany paid off its war debts to France in the 1920s, with deliberately inflated German marks. I lived in Greece during the oil-embargo hyperinflation of 1973, and remember buying individual eggs with three or four inked-in price figures crossed out, as the store-keeper kept upping the price each day. (And I remember farming in the early 1980s when full-strength Roundup herbicide seemed to go from $60 to $70 to $100 a gallon in a single year).
I don’t think any one knows what is quite going on. I recently gave a lecture, and a Wall Street grandee afterwards approached the dais, asking me for advice (me, who could not even turn a profit growing raisins, and was a lousy peddler of family fruit for years at Farmers’ Markets), saying in effect something like the following: “Mr. Hanson—Consider: Real estate bad—not going to put money there when I’m not sure where the bottom is. Stocks worse—had I got out at New Year’s, I’d have thousands more than I do now. Cash pathetic—the interest doesn’t even cover what’s lost to inflation. So what’s left—the dole?”
I had no advice, of course, other than some vague warning that we are in a war against capital, sort of similar to what Sallust and Cicero claim that Catiline and his band of dissolute and broke aristocrats were planning, with his calls for cancellation of debts and redistribution of property.
It seems less than vague to me.
[Evening update]
How to wage a war on business. Any resemblance to current administration policies are purely coincidental, of course.
R-squared of .28 (roughly) means that 28% of the variability of one factor is captured by the other factor. Valid but not terribly strong, in other words, and suggestive of other factors.
I think you’re missing the forest because the trees are in the way. The Clinton (and Bush I / Reagan) eras were considered rather favorable for small business formation. The people that are getting all John Galt over the tax rate increase are painting that era as disasterous.
Small business formation is a function of many factors, including such things as health-care costs, availabilty (or lack) of financing, etc. Nor is small business formation the only goal of or means to economic development.
Thanks for demonstrating my point, Chris.
Actually, I think you don’t understand statistics.
You are entitled to think whatever foolishness you wish.
Tell me, Chris, how do you know that the economy wouldn’t have grown even more in the nineties absent the Clinton tax rate increases?
Rand, I understand the argument, I don’t agree with it.
how do you know that the economy wouldn’t have grown even more in the nineties…
I don’t. I can’t prove a negative. I can prove that Clinton didn’t end the world.
I can prove that Clinton didn’t end the world.
Well, that’s a (non)interesting non-sequitur. Or should I say, straw man? Which seems to be par for the course.
I’ll grant that all else being equal, a higher top marginal rate will lead to less entrepreneurship. But that is not much of a claim, because all else is never equal. Different tax rates mean different revenue levels, which means a different public deficit (or surplus), different levels of income inequality, etc.
For example, Obama is proposing paying for wider health insurance coverage using revenue from higher top marginal tax rates. All else being equal, having a more socialized health insurance system will lead to more entrepreneurship, because the difficulty and expense of getting coverage today is a deterrent to switching jobs and starting companies. Who’s to say which of these effects will be greater in actual practice?
The fact that the economy boomed in the 90s when rates were higher shows that a 39.6% top rate is not kryptonite to the economy. Maybe the economy would have been even better with a 35% rate — we’ll never know. But the fact that things were so good in the 90s does make the hysterical attacks on Obama’s program (e.g. “war on capital”) sound unhinged. The GOP was unanimously opposed to Clinton’s tax hike, too, and they predicted economic ruin to follow. They were wrong.
“Small business formation is a function of many factors, including such things as health-care costs, availabilty (or lack) of financing, etc.”
There are two types of small businesses that entrepreneurs create: lifestyle companies and growth companies. There are a lot of small lifestyle companies out there but while they create an interesting base, they don’t drive interesting technological or economic growth rates.
Growth oriented startups have “exit strategy” as one of their main factors for whether you start the enterprise. Sarbanes-Oxley has effectively negated the public market as a generally applicable exit strategy. The only other one left is acquisition. And in a market like this you have to be aware that the companies you expect to acquire you are being challenged on all fronts.
So its not just that marginal tax rates are going up. Its that its part of a shift toward a generally unfriendly business environment. In the 90s you may have had a higher marginal tax rate but you had an IPO exit that gave founders a pretty good chance at making enough money after tax to make the entire thing worthwhile. M&A deals don’t give you the multiples that IPOs do.
So no, you can’t say that “if it was OK in the 90s then it would be OK now”. Improve the business environment by lowering corporate tax rates, getting rid of Sarbanes-Oxley, and reducing the regulatory environment and then we can talk.
The GOP was unanimously opposed to Clinton’s tax hike, too, and they predicted economic ruin to follow. They were wrong.
I’m wondering why you have to be continually reminded that other things happened in the 1990s besides Bill Clinton’s tax rate hikes (e.g., the Republicans taking over the Congress). Is it an attention deficit thing?
Chris,
Rand’s point wasn’t about the statistics, but about you (and Jim and Bob). And you proved it handsomely. You might consider going back and reading his post a couple more times.
I don’t think any conservatives were predicting ruin, specifically, from the Bush 41-Clinton tax hikes. Downturn yes, ruin no. They did predict ruin from HillaryCare if it had passed. At least that’s what I feared.
We did get downturn. I do not believe that the dot-com bust was the only factor in the recession at the end of Clinton’s term.
(The bust was inevitable. As Econ 101 teaches, all infant industries go through a shakeup phase. When nobody’s done it before, most of the people trying to figure out to get that newfangled thing to make money will get it wrong. Anyone remember the Osborne computer, or the Bernoulli box?)
Ah yes, when logic fails for Rand there’s always ad hominem.
When the GOP voted unanimously against the 93 tax hike they didn’t say “this will be a disaster unless the country gives us control of Congress next year.” They said “this will be a disaster” — and they were wrong. The GOP control of Congress in the 90s was not veto-proof. They could not undo the 93 tax act until Bush was in the White House.
Now they’re saying it again, and they could be just as wrong.
Ah yes, when logic fails for Rand there’s always ad hominem.
Just an observation. An insult (particularly an apparently accurate one) is not, per se, an “ad hominem.” Perhaps you don’t understand the meaning of the phrase. If so, it would certainly be of a piece with the theme of this post.
They said “this will be a disaster” — and they were wrong.
Do you have a citation for “they” saying it would be a “disaster”?
I would bet that most of “them” said that it would hurt economic growth. Which it no doubt did, because that’s what higher marginal tax rates, particularly on “the rich,” do.
If they were wrong, it was because they didn’t anticipate taking over the Congress the next year.
The GOP control of Congress in the 90s was not veto-proof. They could not undo the 93 tax act until Bush was in the White House.
Irrelevant. They didn’t have to undo the the tax act to mitigate its effects. Restraining Clinton-era budgets to get a budget surplus, and welfare reform (two things that would never have happened under a Democratic Congress) no doubt helped a lot.
Alan: Your memory is flawed. To wit:
Rep. Newt Gingrich (R-GA), GOP Press Conference, House TV Gallery, 8/5/93:
I believe this will lead to a recession next year. This is the Democrat machine’s recession, and each one of them will be held personally accountable.
Rep. John Kasich (R-OH), CNN, 7/28/93:
This plan will not work. If it was to work, then I’d have to become a Democrat…
Rep. Robert Dornan (R-CA), 8/5/93:
The problem with our economy is that there is too little employment and too little growth. This plan will do nothing to improve that condition and will actually make it worse.
Rep. Christopher Cox (R-CA), 5/27/93:
This is really the Dr. Kevorkian plan for our economy.
Rep. Thomas Ewing (R-IL), 8/5/93:
…This bill is a disaster waiting to happen.
Rep. Jim Ramstad (R-MN), 3/17/93:
…will stifle economic growth, destroy jobs, reduce revenues, and increase the deficit.
Rep. Phil Crane (R-IL), 3/18/93:
…a recipe for economic and fiscal disaster.
Rep. John Kasich (R-OH), CNN, 7/28/93:
…We have a stagnant economy and there is nothing down the road that makes it look like we’re going to have the kind of economic growth that puts people to work.
Rep. Dick Armey (R-TX), CNN, 8/2/93:
The impact on job creation is going to be devastating, and the American young people in particular will suffer a fairly substantial deferment of their lives because there simply won’t be jobs for the next two to three years to go around to our young graduates across the country.
Rep. Dick Armey (R-TX), 8/5/93:
The economy will sputter along. Dreams will be put off and all this for the hollow promise of deficit reduction and magical theories of lower interest rates. Like so many of the President’s past promises, deficit reduction will be another cruel hoax.
Rep. Wally Herger (R-CA), 8/4/93:
The simple fact is that the Clinton plan will not lower interest rates. It will not lower inflation. It will not create jobs. And it will no lower the deficit. The Clinton tax plan will spur inflation, lose jobs, increase the deficit, and hurt our economic growth.
Rep. Deborah Pryce (R-OH), 5/27/93:
The votes we will take today will not be soon forgotten by the American voter. [They] will lead to more taxes, higher inflation, and slower economic growth.
Rep. Dick Armey (R-TX), CNN, 8/2/93:
Clearly this is a job killer in the short run. The revenues forecast for this budget will not materialize; the costs of this budget will be greater than what is forecast. The deficit will be worse, and it is not a good omen for the American economy.
—
Why should we take the GOP’s word this time?
Why should we take the GOP’s word this time?
We don’t have to take the GOP’s word. Ask any sane economist (i.e., most of them).
Rand: So it wasn’t necessary to rescind the Clinton tax hikes to get prosperity in the 90s? Do you think it is necessary to stop Obama’s tax hikes to have prosperity in the 10s?
Brock – I am not advocating a “war on capital.” Honest to God, I have a firm understanding of the roll of capital in the creation of wealth. I also have enough statistics training to know an R-squared of .28 isn’t a terribly strong correlation.
What I am and have been saying is that raising a tax rate 3.5 percent is not a “war on capitalism.” It is not punitive or redistributionist.
The tax cut that put our top rate at 36% was supposed to be temporary (expired 2011) because that was the only way to close the resulting Federal deficit, even with extremely rosy economic predictions.
Rand: So it wasn’t necessary to rescind the Clinton tax hikes to get prosperity in the 90s?
No, but it was necessary to mitigate them with countervailing policy measures, and the prosperity would probably have been greater absent the tax (rate) hikes. I include the (always) missing word because it is not at all obvious that they resulted in increased revenue over an alternate world in which they hadn’t occurred.
Do you think it is necessary to stop Obama’s tax hikes to have prosperity in the 10s?
I think that a lot more than that will be necessary (like reversing this insane package of overspending and social engineering that no one bothered to read before passing). And I think that it is absolutely nutty to raise tax rates in a deep recession, as Hoover did. Again, find me a consensus of economists who think that’s a good idea.
What I am and have been saying is that raising a tax rate 3.5 percent is not a “war on capitalism.”
No one that I know of has said, in and of itself, that it is. But then, when you don’t have actual arguments, straw men will have to suffice.
I’m puzzled by this fascination with whether Congressmen read the ARRA before voting on it. Does anyone really think that makes a difference?
Imagine an alternate universe where every Congressman and Senator read every stultifying line of legalese in that document. Would the result be noticeable better policy, by anyone’s metric?
Ah, Rand? Victor David Hanson, in the excerpt quoted above, said “we are in a war against capital.”
Now, if I were the typical commentor here, I’d suggest you work on your reading comprehension. Since I think that’s insulting, I won’t.
I’m puzzled by this fascination with whether Congressmen read the ARRA before voting on it.
The point is not whether the Congresspeople read it. Not even their staff read it. I’d be willing to bet that no one read it in its entirety before the vote. I’m not sure that anyone has yet, though there’s at least a chance of it by now.
Imagine an alternate universe where every Congressman and Senator read every stultifying line of legalese in that document. Would the result be noticeable better policy, by anyone’s metric?
Of course it would. If nothing else, it would have delayed the process, and delaying a bad thing is a good thing. It might also have caused the Maine mushheads to have had second thoughts, resulting in it not passing at all. I find bizarre the notion that Congresspeople shouldn’t be aware of the contents of bills that they vote on. On what planet does that make for better legislation? Do you have any idea how nutty you sound?
If this strange notion of mine that Congresspeople should read the bills they vote on were in place in general, It would mean that many of the laws passed wouldn’t have been passed, simply because there wouldn’t have been time to pass them, and that those passed would have been much simpler. Given that much of the federal code is a disaster, this would be an almost unalloyed good.
Chris, have you ever actually started a company, or worked in a small start-up? Or are you speaking purely theoretically, like — alas! — so many on the government team? I tell you, the theorists will be the death of us.
Jim, first of all, this is pure fantasy:
Obama is proposing paying for wider health insurance coverage using revenue from higher top marginal tax rates.
Not going to happen, Jim. There simply isn’t enough money there. Health care sucks up perhaps 15% of GDP. If you want to funnel all that money through the government, you need to add at least 10% of GDP to governments present take (20% of GDP). I’m discounting for Medicare/Medicaid, which already go through government.
That means your complete tax take has to go from 20% of GDP to 30% of GDP. A 50% increase in total tax revenue, roughly an extra $1.5 trillion per year. You think you’re going to squeeze $1.5 trillion a year out of people making over $250,000? Dream on. You are going to have to put the bite on people making all the way down to minimum wage, and it is going to be a substantial bite, like an extra $1,000 a month for somebody making a mere $50,000.
Neither you nor Obama are being even the slightest bit honest about what this will cost. He is totally bullshitting, promising everyone a free lunch, as anyone who has actually seen the full cost of their health care plan at work could easily tell you. Transfer that cost from “overhead” your employer meets to your personal tax bill, and that’s what’s it would cost. Ouch.
This would lead to more entrepreneurship? I doubt it. First of all, that’s not the experience in other countries with national health plans. For one thing, you create a terrible free-rider effect. One of the reasons people try very hard to stay employed full time is to get and keep benefits. Suppose you can lose your job but still get just as good health care, because some other hard-working fool is paying fo it with his taxes? How hard to you work to get another job soon? Not as hard.
For another, where do you think most of the high value added job-growth areas are in this country in 2009? Bad news: they’re in health care. Advanced medicine is one of the few tech areas where the US completely dominates, where we can charge humongous wage rates, far above what the Chinese will work for, without risking market share, where we have a strong export market, where capital can reap huge rates of return, enriching entrepreneurs and workers both.
Let government take over health care, and you cut off at the knees the single largest arena for 21st century American entrepreneurship at a stroke. Goodbye, biotech. Goodbye, fancy new drugs to stop cancer. Goodbye, six-figure jobs producing those things. You might as well have advocated nationalizing the railroads in the 1840s and had government let everyone ship everything for free. We’d be an impoverished agricultural staple-crop nation still.
I mean, how do you expect 21st century America to justify a general wage rate substantially above the global average? What do we do that our hungry competitors in India, China, or Southeast Asia can’t do for $10/hour less? It had better be something where we have a huge technological edge. It had better be something in eternal and strong demand. Ideally, it should be something we’re already good at. Medicine and biotech coming to mind yet? Or are you thinking we should try to make money selling cars cheaper than the Koreans, accounting services cheaper than the Indians?
No, I have it! You think we should sell green energy the world, like your fantasizing leader. As if that wasn’t a total luxury good, the kind of thing with soft demand that goes totally limp when times get tough. Know anyone who skips the chemotherapy that keeps him alive when times get tough? That’s a product with a very stiff demand curve. That’s the kind of produce you want to be selling to the world.
Third and finally, you’re crazy if you think government subsidizing part of the salary costs, so to speak, of new firms (by covering the health care costs of the employees) is a good thing for economic growth. Why don’t you just suggest that government pay all the salaries of every new company? Or that government pay the interest on all small business loans? Including Internet pyramid scams?
You’re forgetting that one of the most important components of capitalism is “creative destruction.” It’s the idea that capital should not be tied up in unproductive, stupid ideas for any longer than necessary to prove they’re stupid. New businesses that can’t continue to cover their labor costs — including the health care costs — need to die quickly, to free up the labor and capital for businesses that can. If government seriously distorts the costs of doing business in this way, it’s just as bad as ag or ethanol subsidies, and leads to economic inefficiency in just the same way.
Ah, Rand? Victor David Hanson, in the excerpt quoted above, said “we are in a war against capital.”
Yes, he did. He was not referring merely to a small increase in the marginal tax rate. I don’t think I’d be making comments to anyone else about reading comprehension after this.
[shaking head in awe]
This would lead to more entrepreneurship? I doubt it. First of all, that’s not the experience in other countries with national health plans.
Carl, are you suggesting that Europe is less than a vibrant hotbed of entrepreneurship?
Why, all of those people who have abandoned it for Silicon Valley, the Research Triangle and Route 128 will be shocked to hear it.
Carl – yes I have in fact worked at a small business (10 employees) during the Clinton era. I was in management during the end of my tenure there, and health care costs were in fact an issue.
Since you bring up health care costs, let me point out that
1) The US spends a significantly larger percentage of its GDP on health care then any other industrialized nations
2) We rank at or near the bottom of health care outcomes compared to those same industrialized nations.
This suggests that whatever the rest of the world is doing is working better than what we’re doing.
Bills are written to be implemented, not read. Does my Congressman really need to read:
Provided further, That any action authorized herein shall be consistent with the merit principles of section 2301 of such title 5, and the Department shall comply with the public notice requirements of section 3327 of such title 5:….
Every bit of it was read (because it was written) by some staff person, and every Congressman should know the broad outlines of what they are voting for. But they shouldn’t have to read the F-15 maintenance manual before deciding whether to allocate more money for F-15 maintenance, and they shouldn’t have to read the ARRA to decide whether to pass it.
If your real point is that you want Congress to pass less legislation, just say that.
I want them to pass both less, and better legislation. Quality over quantity. I’m having trouble understanding how not knowing the content of the legislation contributes to that goal.
Carl: I have my own small business. I pay for my employees’ health insurance. Next to me on my desk are two letters, problems I need to solve because of our health insurer’s latest coverage and billing screwups. I wish I didn’t have to be an HR benefits manager — I’d rather work on our products.
As for health care costs, we could clearly have just as healthy a population for much less money, because all of our peer nations do so. The idea that it’s good to keep people working at their current jobs out of fear of losing their health care benefits is morally appalling (aside from being economically inefficient). Why not bring back indentured servitude and workhouses?
I have my own small business. I pay for my employees’ health insurance. Next to me on my desk are two letters, problems I need to solve because of our health insurer’s latest coverage and billing screwups. I wish I didn’t have to be an HR benefits manager — I’d rather work on our products.
…The idea that it’s good to keep people working at their current jobs out of fear of losing their health care benefits is morally appalling
I absolutely agree. The solution to both your and their problem is to take away the tax break from business for health care, and give it to individuals. Then you could afford to pay them more, and they could purchase their own health insurance, and they’d be independent of their employer. And the government.
Rand: There’s no reason to believe that having legislators literally reading every line of every bill would result in better legislation. It’s like saying that Microsoft would release better software if every executive read every line of code. Not getting bogged down at that level of detail lets them pay attention to broader strategic questions.
If you have contrary evidence, by all means bring it up.
There’s no reason to believe that having legislators literally reading every line of every bill would result in better legislation. It’s like saying that Microsoft would release better software if every executive read every line of code.
If you think that this analogy isn’t ridiculous, there is something fundamentally wrong with legislation that is even a thousandth as complex as Microsoft code.
And I see that you conveniently continue to ignore the specific complaint — that no one read that legislation before passage.
Rand: That “solution” may work ideologically, but not practically. Individual insurance is much more expensive than group coverage (which I discovered when it was a one-person company). It would still make economic sense for me to pay for my employees’ coverage even if it wasn’t a tax write off. Switching to individual coverage would just benefit the insurers.
Rand: That “solution” may work ideologically, but not practically. Individual insurance is much more expensive than group coverage (which I discovered when it was a one-person company).
Consider the possibility that that’s an artifact of the current system, and that there’s nothing intrinsic about it, and that there are solutions to that problem.
Rand: I assume that no one reads any 1000+ page bill in its entirety before passage. I don’t think that’s a problem — division of labor and levels of abstraction are good things.
It’d be neat if laws were so simple they could be read in one sitting. It’d also be neat if there were unicorns.
To put it another way: if Congressman A only read the ARRA text cover to cover, and Congressman B only read the Wikipedia entry on ARRA, I would trust Congressman B to have a better idea of what he was voting for. Insert cliche about forests and trees.
I assume that no one reads any 1000+ page bill in its entirety before passage. I don’t think that’s a problem
I do. It’s one of many reasons that we shouldn’t have 1000+ page bills, which are bad in and of themselves. And you have a lot more faith in Wikipedia, especially on controversial subjects, than I do.
Carl, how much do you want to bet that the cost of health care, as a percentage of GDP, will stay the same – and that the amount of “service” we’ll be getting for that amount spent will plummet? It’s been the story everywhere else health care’s been nationalized – which since we’re the last nation on earth that’s still expanding capabilities, is why I call it the “Logan’s Run” Health Care Plan.
Lastday! Renew, Renew!
Consider the possibility that that’s an artifact of the current system, and that there’s nothing intrinsic about it, and that there are solutions to that problem.
Actually, it’s baked into private insurance. The insurance company is betting a revenue stream of premiums against the insured person’s health and claims expense.
What’s more risky (and thus expensive) – betting against one or many? It’s the same logic whether we’re talking rockets or people. Individual coverage will always be more expensive than group coverage.
Geez, this thread is flying. It needs subthreads.
Jim, I appreciate exactly what you’re going through with the healthcare headaches, since I work in a small firm, too, close to the top. I understand exactly why small business wants these decisions off their desk, and so many of them strongly support nationalized health care. It’s a giant pain in the butt.
But Rand is absolutely right. Just read what you wrote yourself:
Next to me on my desk are two letters, problems I need to solve because of our health insurer’s latest coverage and billing screwups.
Why did your insurer screw up, hmm? I’m guessing you’re going to argue (1) they’re too damn big, too uncoordinate, with too much distance between the customer and top management, and/or (2) they don’t really care very much, because if I don’t renew my contract — if I stop being a customer — they won’t lose very much money.
So, as a solution you want to replace them with an even bigger operation (the Federal government), with even greater distance between the customer and top management (Congress)? And you want to replace the tiny leverage you have with your tiny fraction of their profit with the zero leverage you have when you must pay your premiums every April 15, on pain of jailtime, and there is no competing provider? Jim that’s just flat lunacy. If your problem is crappy care and incompetence by an unfeeling, inattentive big business bureaucracy, the last thing you should want is to change to a system with a still bigger and still less competent bureaucracy.
As for health care costs, we could clearly have just as healthy a population for much less money, because all of our peer nations do so.
This, I suspect, is the real reason you think it might make sense to have government run the show instead of private insurers. Bad news, Jim. This is total fantastical bullshit, pure propaganda that doesn’t stand up for one moment to critical inquiry. The people who have promulgated such bogus statistics have deliberate stacked the deck to make it look like American health care sucks. They do stuff like count American infant mortality rates such that very preemie babies (28 weeks) are counted as live births because American medicine tries to save them whereas in other countries they’re just written off as hopeless. Since 75% of them (roughly) die, that pulls down the infant mortality rate. But does it mean it’s worse to have a baby in the US than in England? Of course not. It’s the other way around, even if you have a preemie, because there’s a 25% chance he’ll be saved here, and a 0% chance he’ll be saved there.
You might as well note that death rates for serious diseases are worse in big university hospitals than in small country hospitals. Does that mean the latter are better? Nope. It means all the really tough cases go to the big hospitals, where, of course, they help to pull down the stats.
The people doing the analyses know this, and they deliberately fudge the numbers. When you look at stuff that most people think about as “quality of health care,” the US comes out way on top. For example, suppose you’re 72 years old and your knees are crippled with arithritis. You’re willing to pay for knee replacement, which will totally transform your life. How long do you wait for the surgery? In the US, weeks. Elsewhere, months to years, or it might simply be denied entirely because you’re too old. If you get Stage I breast cancer, where are your odds of making it out to ten years best? The United States, by far. If you get Stage IV lung cancer, which is quite terminal, where will you get the most pain-free time to wrap things up? The US. Have a problem only a transplant can solve? Better hope it happens here, otherwise, you may simply get to die.
These are the things that people really mean when they think about “health care quality.” How fast and how effectively will I get treated if something evil happens to me? By those standards, the US is miles and miles in advance of everywhere else. And, of course, it costs. You don’t get First Class health care for Economy Class rates.
Individual insurance is much more expensive than group coverage
Geez, Jim, educate yourself. As Rand points out, this is entirely because of the tax code, Do you see any obvious economic reason why insurance sold to Jim, Inc. for employee Jim should be far cheaper than insurance sold to Jim directly? Do you buy your auto insurance through your employer because it’s much cheaper? Of course not. Because the government hasn’t screwed up that market (yet).
Individual coverage will always be more expensive than group coverage.
Where is it written that the only group coverage an individual can get must be through an employer?
Individual coverage will always be more expensive than group coverage.
Chris, that’s an unusually brainless comment. Say I and ten of my friends go down to New York Life on sequential days and apply for “individual” insurance policies, on our lives, houses, auto whatever. Do we get worse rates than if we form a company and then apply all 50 of us at once?
Of course not. Why would it? NYL doesn’t give a damn if its 50 newest customers came “individually” or as a group. Either way, it’s 50 new premium streams to balance against 50 new risks. The pooling of risk happens among all of NYL’s customers. Certainly they don’t take my personal premium income stream and make sure it balances my personal risk. That would be silly.
You can argue that risk pooling has to happen at the provider level, but that certainly does not imply that people need to go to the provider in one huge mass, instead of one at a time, as their individual decision moves them. All it implies is that any company that fails to attract a substantial number of customers among whom to pool the risk of any one customer being a big pain in the ass money sink is doomed. But that’s as true for retailers and car companies as it is for health insurers.
So in comparing nations, 1/5 to 1/4 of the population of the US, in Canada it’s 1/10; that’s not an accurate basis
for comparison. Never mind the increased FICA taxes, or
the cap n trade regulations.
It actually has more to deal with taxing based on percent wealth. The massive majority of people live in the tax bracket that owns a little under 1% of the wealth yet pays 3% of the taxes, sure that’s small fish, only 3%, but that means they are paying 200% more than they should have to. Obviously, rich people should be paying more taxes and poor people less, because after the idiocies of the Bush administration, we’re going to need this money. Now some might point to the people who claim they aren’t going to accept federal aid money (you know who) as examples of how it’s the Dems who are wasting all the money, but those people should quite frankly lose their jobs for placing their petty political squabbles over the good of the people they are supposed to govern.
Carl,
The last response is one where you’re just a little off. The transaction cost of bundling 50 individuals together is usually cheaper than individually. For example, only one sales rep cost (albeit bigger) than 50 separate ones.
As one who has looked into individual insurance as an Engineering Contractor, I really wanted to go to Health Maintenance Accounts (Golden Rule Insurance) but ended up with my wife’s policy. Ted Kennedy really screwed that up for individuals, so that we can be prepared for Government solutions. But it is a superior solution overall.
Carl – your logic on pooling costs is not backed by what actually happens in the marketplace. Go out and price individual vs. group coverage. I will bet that you will find individual coverage either more expensive, less generous, or both – if you can get it at all.
Chris, you still haven’t explained why the only group an individual can be in is an employer’;s group.
Jim,
“Ruin” is a word that suggests brink-of-destruction (or beyond) kind of damage. None of the Republican quotes suggest that the economy would be totaled or nearly totaled.
Mr. Newt’ recession prediction was off base (off by a few years), and they all failed to take into consideration that their party might gain a House majority during Vlad the Inhaler’s first term. Other than that, they understood properly that a $300 billion tax would stunt economic growth.
Heh, I’m surprised that Dornan didn’t make the Kevorkian quip.
Jim, I have a problem taking you seriously in this thread. I think there is a problem with requiring Congresspeople to read bills, for example, they may be illiterate or unfit physically or mentally for the job (attention deficit disorder, for example, makes it extremely hard to focus on long tasks).
A compromise would be to have the requirement that the bill is recited aloud prior to voting by either branch at a understandable rate of speed (say by a text to speech synthesizer). At 150 words per minute, 24 hours a day, assuming double spaced text, that should be around a page a minute. That’d only be around 17 days for this bill. Of course, you might want to restrict reading of the bill to congressional work hours in which case, it’s probably going to be two months. Multiple bills could be read at the same time.
Edits should go faster since one can read a diff of the bill. In all, this sounds entirely reasonable to me. This provides a strong incentive to reduce the size of a bill prior to voting. Unless of course, you think that it is a good idea to pass lengthy bills that nobody can summarize properly much less read. This is an idea I fail to appreciate. The Wikipedia remark fails to improve your argument. After all, political articles, due to the high incidence of propaganda, are one of the subjects where Wikipedia fails most often at being accurate.
And I must admit I fail also to see your enthusiasm for a healthcare solution that will aggravate your healthcare bureaucracy issues (unless there was some other problem that you have that you haven’t mentioned yet).
Rand – the group in theory could be any group. My point is that it has to be a group, not individuals.
Jim, I have a problem taking you seriously in this thread.
As opposed to what other thread?
My point is that it has to be a group, not individuals.
Then your point is irrelevant to mine, which is that there is no intrinsic reason to tie it to employment, except for an historical artifact of wage controls from the war, and we would be better off giving the tax break to the individual rather than the employer.