The Law of Intended Consequences
- The Law of Intended Consequences
- Prosperity, Not Austerity
- "Retreat by Design and on Principle"
- Don't Mention the War
- "I'm Pretty Sure They Would Be Denied Entry Today"
- The Ideological Un-Muddling
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Commentary by Robert Tracinski
1. The Law of Intended Consequences
Well, what do you know? It turns out that ObamaCare is having all of the evil effects we warned against—and it's having those effects even before it has been fully implemented.
Several new reports have come out—see here and here—indicating that large employers are considering dropping the health insurance they now offer, paying fines to the government, and dumping their employees onto government-subsidized insurance exchanges. And under ObamaCare, they would profit by doing so.
The main link below reveals another angle of ObamaCare. Giving the lie to the president's promise that we will be able to keep our health insurance, it turns out that the law will require extensive changes to all existing policies. But these changes might be interpreted as creating new policies that are not grandfathered and will be subject to even more new regulations—which will drive up their cost.
Note especially one fact: how many policies are affected, and how deeply, is all to be determined by the ruling of an unelected bureaucrat in the Department of Health and Human Services. Maybe this is what Nancy Pelosi meant when she said Democrats had to pass the bill so that we could find out what's in it.
As a preview of the next step, there comes the news that four major health insurance companies in Massachusetts have been operating at a loss ever since they had price controls imposed on them under ObamaCare's precursor, RomneyCare. And when a business operates at a loss, it can't operate for long.
If you think this swath of destruction is all an accident, a result of stupid or careless legislation, think again. All of this was predicted by critics—and it is the real goal of the legislation. It is a giant example of the Law of Intended Consequences. The destruction of private health insurance is not an unfortunate result of an incompetently drafted law. It is the intended purpose of the law.
As I warned late last year, "If the left's goal is to impose socialized medicine in America, this bill does it in the most callous and destructive way possible. It smashes private health care—then leaves us stranded in the rubble, at which point we will be expected to come crawling back to the same people who caused the disaster and ask them to save us." That process is already beginning—not in three years, but now.
The only good news is that the momentum for repeal of ObamaCare is building. Most notably, I was gratified to see the editors at National Review—which has not always had a head of steam for rolling back the welfare state—calling for a one-sentence repeal of ObamaCare, an attempt to remove any room for the kind of compromise and evasion that would result in a partial repeal or mere reform of the bill.
The Obama administration's headlong plunge into socialism has radicalized much of the right. And we're going to need them to stay radicalized.
"Will Any of Us Be Able to Keep Our Current Plans?" Avik Roy, National Review Online, May 10
Depending, once again, upon the regulatory divinations of HHS bureaucrats, it may turn out that no one with private insurance can keep his or her preexisting plan.Here's how it works: Obamacare, in theory, exempts "grandfathered" insurance policies from some, but not all, of the various regulatory mandates contained within its 2,300 pages. But, obviously, the law massively changes the interactions between government, insurers, hospitals and doctors, and patients. Insurers will need to adjust their policies to take into account changes in both the regulatory and the business environment.
So, if an insurer tweaks its policies in 2011 to conform to these changes, will the government define the new policy as an old one that has been tweaked, or a brand new one that can't be grandfathered? In other words, what is the degree to which a "grandfathered" policy can change before it is redefined as a new policy and thereby subjected to an additional blizzard of new mandates? As Kaiser Health News describes it:…
"[Erin Reidy of the American Cancer Society] said the group is recommending that the administration 'adopt a real narrow definition of grandfathering and any change to coverage should constitute a loss of grandfathering status.'"
Unfortunately, at the moment, there isn't a business in the country that has any idea what is going to happen. "The law is mostly vague on exactly what constitutes a grandfather plan," notes the Kaiser report. "The administration, which is writing the regulations that implement the new law, is expected to issue its guidance soon on how it interprets the grandfathering clause."
2. Prosperity, Not Austerity
Speaking of previews of where we're headed, the financial crisis spreading in Europe is a warning writ large. Even the New York Times is now admitting that national bankruptcy is the ultimate end result of a generous welfare state.
But what really boggles my mind is the solution that is being peddled by international economists: "austerity," which largely means paying the government's bills by jacking up taxes—on an economy already collapsing under the burden of government.
The left opposes these "austerity" measures, but for the wrong reason: because "austerity" doesn't allow even more borrowing and spending.
Below, James Pethokoukis offers the real answer to the kind of debt crisis created by our welfare state: a return to policies—including lower taxes—that enable economic growth. Recent history has shown that if we can merely hold the growth of government in check—as the Republican Congress did, briefly, in the late 1990s—a vibrant, growing private economy will produce more than enough wealth to turn budget deficits into surpluses and begin paying down our otherwise unsustainable debt.
"How to Pay Down the Debt," James Pethokoukis, Weekly Standard, May 17
The "slash and tax" approach has a poor record of success globally. Since 1980, some 30 debt-plagued nations have tried to reduce their indebtedness through such austerity measures. In practically all cases, according to a new study by financial giant UBS, the increase in national debt was only slowed, not reversed, by such policy pain….Current spending policies, especially on health care, will create budget deficits so huge that creditors would surely stop lending long before any worst-case scenarios happen. But what might a worst-case scenario look like? As the CBO forecasts it, America's debt-to-GDP ratio could top 700 percent by 2080 (an almost unthinkable level; basket case Zimbabwe is a world's worst 300 percent right now). But drill down into that prediction and you find that the CBO has plugged in a rather dismal long-term forecast of U.S. economic growth, just 2 percent or so. That's only two-thirds of the average U.S. growth rate since 1970. But what if (a) government spending tracks current projections over the next 70 years, (b) government revenue as a percentage of GDP stays at its historic average of 18 percent, and (c) the economy were somehow to grow a bit faster than its 20th-century average, about 3.5 percent. Under those conditions, according a recent study by JPMorgan Chase, a much wealthier America (generating $100 trillion in tax revenue rather than $50 trillion) would be able to afford projected spending without raising taxes. The long-term budget gap would vanish.
So what's the best mix of options? Well, the Obama deficit panel might want to take a peek at a 2009 study by Harvard University's Alberto Alesina and Silvia Ardagna. It examined 40 years of debt reduction plans by advanced economies and found that "those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases." They're also associated with higher economic growth. But spending cuts alone are probably not enough. The budget-cutting Roadmap for America's Future of Representative Paul Ryan, the Wisconsin Republican, intelligently cuts future social insurance benefits as a share of the economy and partially shifts Americans into private retirement and health care plans. So far, so good. But the Ryan plan would take seven long decades to restore American indebtedness to pre-financial crisis levels….
Faster growth would…accelerate the dividends from the Ryan plan since his blueprint cautiously uses the slow-growth CBO estimate….
It will take a full-spectrum effort: lower taxes on companies and capital, pork-free spending on infrastructure and basic research (beyond health care), an education system that teaches students rather than feathering the nests of teachers' unions. Every aspect of US public policy will need to be optimized for economic growth. Now that sounds like a worthy subject for a Washington commission.
3. "Retreat by Design and on Principle"
The radicalization of the right may be a good long-term result from Obama's lurch to the left, but in the meantime, the president and Congress will pass a lot of pernicious legislation and impose a mountain of regulations—most of which will not be repealed or rolled back any time soon.
And there's another shoe waiting to drop: the president's anti-American foreign policy—and its consequences. Such as: the Russians seizing back some of their Easter European "sphere of influence," or Syria regaining its control over Lebanon.
Or something much bigger still to come. After all, we have an attorney general who cannot even bring himself to utter the words "radical Islam" or admit that it might have anything to do with terrorist attacks by Islamic radicals.
President Obama is getting ready to institutionalize his policy of American decline by presenting a new foreign policy grand strategy based on "international cooperation." Below, Charles Krauthammer names what that policy really means—"retreat by design and on principle"—and sketches out some of the consequences that are already happening as the rest of the world senses America's surrender.
"The Fruits of Weakness," Charles Krauthammer, Washington Post, May 21
It is perfectly obvious that Iran's latest uranium maneuver, brokered by Brazil and Turkey, is a ruse. Iran retains more than enough enriched uranium to make a bomb. And it continues enriching at an accelerated pace and to a greater purity (20 percent). Which is why the French foreign ministry immediately declared that the trumpeted temporary shipping of some Iranian uranium to Turkey will do nothing to halt Iran's nuclear program….But the…real news is that already notorious photo: the president of Brazil, our largest ally in Latin America, and the prime minister of Turkey, for more than half a century the Muslim anchor of NATO, raising hands together with Mahmoud Ahmadinejad, the most virulently anti-American leader in the world.
That picture—a defiant, triumphant take-that-Uncle-Sam—is a crushing verdict on the Obama foreign policy. It demonstrates how rising powers, traditional American allies, having watched this administration in action, have decided that there's no cost in lining up with America's enemies and no profit in lining up with a US president given to apologies and appeasement….
They've watched our appeasement of Syria, Iran's agent in the Arab Levant—sending our ambassador back to Syria even as it tightens its grip on Lebanon, supplies Hezbollah with Scuds and intensifies its role as the pivot of the Iran-Hezbollah-Hamas alliance. The price for this ostentatious flouting of the United States and its interests? Ever more eager U.S. "engagement."
They've observed the administration's gratuitous slap at Britain over the Falklands, its contemptuous treatment of Israel, its undercutting of the Czech Republic and Poland, and its indifference to Lebanon and Georgia. And in Latin America, they see not just US passivity as Venezuela's Hugo Chávez organizes his anti-American "Bolivarian" coalition while deepening military and commercial ties with Iran and Russia. They saw active US support in Honduras for a pro-Chávez would-be dictator seeking unconstitutional powers in defiance of the democratic institutions of that country.
This is not just an America in decline. This is an America in retreat—accepting, ratifying and declaring its decline, and inviting rising powers to fill the vacuum.
Nor is this retreat by inadvertence. This is retreat by design and, indeed, on principle. It's the perfect fulfillment of Obama's adopted Third World narrative of American misdeeds, disrespect and domination from which he has come to redeem us and the world. Hence his foundational declaration at the UN General Assembly last September that "No one nation can or should try to dominate another nation" (guess who's been the dominant nation for the last two decades?) and his dismissal of any "world order that elevates one nation or group of people over another." (NATO? The West?)
4. Don't Mention the War
I haven't provided many updates recently on the "surge" in Afghanistan. That's partly because it's too early to judge. We've made some gains in Marjah and Kandahar, and the enemy has managed some counter-attacks. But counter-insurgency is a long game, and the quick turnaround in Iraq in 2007 was very much a historical exception.
There's another reason I have not been focused on Afghanistan the way I was focused on Iraq: because we don't need to be. The most important context for the surge in Iraq was the existence of a defeatist opposition party at home. If the surge hadn't worked, there would have been no second chance. The Democrats would have fulfilled their campaign pledge to de-fund the war and force a withdrawal from Iraq.
In this case, the context is very different: the opposition party is more hawkish than the administration. So if the current Afghan surge falls short, the Republicans won't demand that we pull out and go home. Instead they will say, in effect, "put us in charge, and we'll do better."
Below, Fred Hiatt sketches out the same picture, but from a different perspective: the existence of bipartisan support for the war in Afghanistan. He is right about the shallowness of that support—on the left, which will openly turn against the war at the first good opportunity. Even here, though, the left will suffer from the same dilemma we faced during the Bush years: if they are too vigorous in criticizing President Obama, they will end up giving power to a political opposition which is, from their perspective, even worse.
So I expect the anti-war left to remain conflicted and drained of energy, allowing us to put this issue on the back burner for a while—except for one thing that I think we should be worried about. The Pauls—Ron Paul and Rand Paul—have risen to prominence in the past few years because they have offered the most radical response to the financial crisis, the bailouts, and the government takeover of the economy. But they also accept a typically Libertarian, quasi-pacifist, blame-America-first foreign policy.
One of the roots of the financial crisis, in my view, is that the right spent the years after September 11 focusing most of its intellectual energy on the war and the threat of radical Islam—and largely ignored the intellectual battle for capitalism. Now I'm concerned that they've been compelled to do the opposite.
"In the Absence of Debate, Iraq and Afghanistan go Unnoticed," Fred Hiatt, Washington Post, May 24
In a time of joblessness and home foreclosures, it's not surprising that politics would focus on the economy more than on national security. And maybe, in a time of toxic partisanship, we should be grateful for this inattention to the wars, taking the absence of debate as a sign of rare bipartisan consensus. Certainly few would miss the vitriol of the Iraq debate of a few years back.Yet there's something disquieting about the quiet….
It…seems likely that apparent bipartisan consensus masks a shallowness of support, an unease that permeates wings of both parties but that, for different reasons, neither party feels ready to politically exploit…. [I]f the absence of debate reflects not full-bodied consensus but a wishful averting of eyes, then a spectacular attack on US forces, or even a US surge that yields fruit more slowly than hoped, could tip public opinion abruptly. In that case even political leaders who believe in the mission, having been AWOL from the debate, will have difficulty tipping it back.
5. "I'm Pretty Sure They Would Be Denied Entry Today"
The one thing I am very uncomfortable with about the Tea Party movement is its pervasive anti-immigration sentiment. I'm not sure they're a majority of tea partiers, but they are extremely vocal.
When I say this, I usually get the objection (you know who you are) that these tea partiers are not anti-immigration—they're just opposed to illegal immigration. They're just for enforcing the law.
But I agree with the author below that this is a false issue. After all, would you feel the same way about vigorously enforcing ObamaCare, or cap-and-trade (if it passes), or using the tax laws to lock up a bunch of small business owners who have violated obscure provisions? You probably wouldn't, because you would rather change (or repeal) these pernicious laws.
To say that we need to enforce the existing laws is to say that you agree with the laws. And the existing laws on immigration are highly restrictive. Believe me, I know people who have slogged through them, and the current system is designed to do everything possible to discourage and prevent legal immigration, of all kinds. It's designed to block out everyone: Mexican day-laborers, Indian computer programmers, Australian writers, Canadian sculptors.
That's the big context for the current immigration debate. What we have is the worst possible combination: a huge demand for immigrant labor, combined with very restrictive immigration laws, combined with very lax enforcement of those laws. If you follow the law, you are punished—but there are huge incentives and little risk for ignoring the law. So don't blame the immigrants—they're just following the incentives that we created for them.
The easiest way to fix this—and the only way that can be justified, in my view—is to start loosening the quotas and arbitrary restrictions on immigration. (There should still be a higher bar and a longer process for citizenship. We want to make it easy to come work here, but immigrants should have to show a long-term commitment to this country before they are allowed to vote.)
The political position closest to my view is the slogan that our borders should have "high fences and wide doors"—except that if we actually made the doors wide, we wouldn't need high fences. The incentive to jump over them would disappear.
Oh, and as for the cost of "social services" for immigrants, this is easily fixed. How much does a Mexican immigrant pay to have a "coyote" smuggle him across the border? How much does a computer programmer pay in legal fees to get his H1-B visa? Have them pay that money in an entrance fee, instead, with the money set aside to defray whatever immigrants cost the government. But I almost hesitate to propose this, because I expect that it would become just another shakedown—that the immigrants would end up paying us a lot more money than they cost us.
And besides, this issue is insignificant compared to the disastrous cost of welfare-state payments to native-born Americans. It's the Baby Boomers, not the immigrants, who are bankrupting Social Security.
At any rate, as further arguments along these lines, I offer a pretty good immigration special just published by Forbes, which presents a largely pro-free-market case for reducing restrictions on immigration. One of the best samples is below.
"Give Me Your Tired, Your Poor," Art Carden, Forbes, May 20
Oppressive governments crush the hopes and humanity of millions. There's a pretty simple way we can help these millions get richer and freer faster while making ourselves richer too: We can open our borders.The gains for potential immigrants are enormous. In his excellent (and free) Let Their People Come, economist Lant Pritchett argues that the additional income people could earn from working in the US for eight weeks would be the same as the additional income they could earn from a lifetime of access to microcredit programs. Immigration to rich countries beats all other forms of aid as a way to increase the incomes of the world's poor, and it makes the world's rich richer to boot….
Restricting others' access impoverishes us financially, culturally and socially.
Immigration and trade opponents assume that jobs would not disappear if the borders were closed to free trade in labor, goods, and capital. They assume that Americans would fill the same jobs in agriculture, construction or manufacturing. And they would earn higher wages.
Not necessarily. If fencing, roofing and mowing cost more, we might just do these things ourselves or simply do without. Because competition lowers prices, outsourcing fencing, roofing and mowing is more attractive. This allows me to specialize in research, teaching and writing. We owe much of today's Great Conversation to the leisure afforded by specialization, trade and technological progress.
Some argue that new immigrants won't assimilate where previous generations of immigrants did. People are offended by how Spanish- or Chinese-language newspapers and television cater to immigrant audiences, but this has happened in immigrant enclaves throughout American history (I encourage you to look up foreign-language newspapers in St. Louis, for example). Furthermore, some immigrants are worried that their children are forgetting their roots because they assimilate so rapidly.
Some argue that they are only opposed to illegal immigration and that those who wish to move to the US should go through the legal channels. I'm afraid this is a dodge: American immigration law is cumbersome and wasteful; further, most of the people who wish to move here stand no chance of being allowed to…. Perhaps you're proud that your ancestors "came here legally." I'm pretty sure they would be denied entry today.
6. The Ideological Un-Muddling
It's fashionable today to praise "bipartisanship" and lament ideological "polarization." But I'm in favor of partisanship—not the blind partisanship of the hack who defends the party line no matter what, but partisanship motivated by real ideological differences.
We all complain about politicians who don't really stand for anything. But to the extent that our leaders do stand for something and define their differences clearly, we will get a partisan divide that breaks along a society's most important ideological fault lines. That's good, because it brings the big ideological issues out into the open where they can be debated.
Below, Michael Barone also points to the flipside of this argument: the problems we have when our parties are not divided along ideological lines. Specifically, he points to the main factor that muddled the philosophical difference between the two parties during the middle of the 20th century: segregation, which kept conservative southerners in the Democratic Party.
This also exposes one of the racism smears used against the Republicans. In the 1970s, Republicans launched a very successful "southern strategy" aimed at winning over conservative southerners who had traditionally been Democrats. But contrary to the left's claim, the Republicans did not do this by appealing to racism. In fact, they could do it only because racism had been removed as an issue. In effect, the deal they offered was: if you give up segregation as a lost cause, then we can work together on all of the other issues where we agree.
Of course, during the same period, the Republicans have mostly lost Northeastern "liberal Republicans." The overall result, though, is good: a party that is more clearly defined along ideological lines.
The final issue that needs to be removed in order to make the ideological un-muddling complete: religion.
"The Golden Age of Centrism Wasn't So Golden," Michael Barone, RealClearPolitics, May 20
Laments about polarization are filling the air—or at least that part of the air in which friends and family members have political discussions. It has been widely noted that every Republican member of Congress has a voting record to the right of every Democrat and every Democrat is to the left of every Republican. There is no partisan overlap anymore.This is bemoaned by celebrators of centrism, who look back to a golden age when there were lots of liberal Republicans and conservative Democrats.
Bottom of Form The funny thing is, when you look back to that time in mid-century America, the decades on either side of 1950, high-minded thinkers didn't like that partisan muddle at all.
Mid-century political scientists disliked the ideological incoherence of the two political parties. It would be better, they argued, to have one party clearly liberal and the other clearly conservative. Then voters would have a real choice and could be confident about the consequences of their votes….
But there was one great polarization in mid-century America, and it contributed significantly to the partisan muddle: the divide between North and South. Southern states had laws imposing racial segregation, and many didn't allow blacks to vote. The North had no such laws and, except for wartime and postwar migration to major cities and factory towns, had few blacks.
Southern whites voted solidly Democratic, but their officeholders were conservative on issues like civil rights and federal aid programs. That's why there were so many conservative Democrats in Congress. More Republicans than Democrats voted for civil rights laws, and some Republicans supported extending New Deal programs. So there were quite a few liberal Republicans, as well….
In the last 16 months, the Obama Democrats' proposals to vastly increase the size and scope of the federal government and to put federal spending on the way to doubling the national debt as a percentage of the economy have tended to sweep…cultural and foreign policy issues aside.
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