I don’t use the “L” word very often but in this case it seems completely appropriate.
Would a government-run health plan upend the employer-based health insurance system used by 160 million Americans?
The Democrats claim the answer is ‘no’.
Sens. Edward Kennedy, D-Mass., and Chris Dodd, D-Conn., say their plan would preserve employer-sponsored insurance coverage and create an affordable public option for those who need it.
“The … bill virtually eliminates the dropping of currently covered employees from employer-sponsored health plans,” Kennedy and Dodd said in a letter to members of the Health Committee, one of two Senate groups working on health reform.
The bill includes a “pay or play” provision that would require employers to provide adequate coverage for their workers or subsidize a system that will.
“Pay or play” would require companies to pay the government $750 per full-time worker per year ($375 for part-timers) if they don’t offer health coverage, or if they offer “qualified” coverage but pay less than 60% of workers’ premiums. Small businesses that employ fewer than 25 workers would be exempt.
The Congressional Budget Office, which analyzed the legislation, estimated that by 2019 the same number of workers would be covered by employer-based plans as would otherwise be the case under the current system.
“It tracks what we’re seeing in Massachusetts,” a senior Democratic aide on the Senate Health Committee said on a conference call with reporters.
I’ve put the lie in bold. Why is it a lie? Anyone out there have a $750 a year health care plan? Anyone? I don’t know of a plan for an individual that costs only $750. If there is, then there’d be no reason for any of this nonsense would there?
And Kennedy and Dodd (and the Democrats), the supposed “experts” on health care know that very well. This is pure disingenuousness on their part. This is a blatant attempt to launch a lie to get them past a very important sticking point in the public perception of the bill.
But the average – average – individual health care insurance cost in the US is almost $4,000. And then there’s the cost of administering it.
Hypothetical – you employ 100 people. Let’s say your company pays full health care coverage at the national average (for simplicity sake, assume they all have individual policies). You have two people who administer the coverage at $35,000 each. Your total cost each year to cover your employees is $470,000.
If you pay the federal government $750 per employee a year, your total cost is $75,000. But you can let the two people you’ve had administering your health care program go, saving $71,500 (includes -$1,500 for 2 less employees). Total cost of “pay or play” for you? $3,500 the first year ($73,500 vs. $470,000 every year afterward). In reality, however, it is a net savings of $466,500. You don’t have to be a very good businessman to figure out that one do you?
And remember – these figures only involve “individual” coverage. Family coverage is much more costly, but I see nothing from our two Senate experts which even addresses that. So obviously, the cost of the health care of 100 employees could be vastly more than my simplified example.
No wonder we see corporations coming out now to back this sort of a program. For the vast majority of them, $750 per employee is a huge savings not to mention getting them out of the health care provision and administration business. They’ll pay it gladly. If you like your doctor or your plan, tough beans. You’re going on the government plan. And, of course, the administration will be more than happy to blame your problem on “greedy corporations.”
When they do, just consider the lie and the incentive it provides and then lay the blame precisely where it belongs. Not that it will do you any good where it concerns your present doctor and plan.
Just another step along the road to single-payer brought to you by two lying Senators and backed by the CBO.
Octavio Sanchez, writing in the Christian Science Monitor, takes exception to the charges that what happened with the removal of President Manuel Zelaya. was a military coup.
Instead, he says, it was a “triumph of the rule of law.” And he gives the world a little lesson in the Honduran Constitution.
In 1982, my country adopted a new Constitution that enabled our orderly return to democracy after years of military rule. After more than a dozen previous constitutions, the current Constitution, at 27 years old, has endured the longest.
It has endured because it responds and adapts to changing political conditions: Of its original 379 articles, seven have been completely or partially repealed, 18 have been interpreted, and 121 have been reformed.
It also includes seven articles that cannot be repealed or amended because they address issues that are critical for us. Those unchangeable articles include the form of government; the extent of our borders; the number of years of the presidential term; two prohibitions – one with respect to reelection of presidents, the other concerning eligibility for the presidency; and one article that penalizes the abrogation of the Constitution.
Sanchez makes the point that Honduras has gone through same sort of “trial and error” process with its constitution as has the US, France and other nations. But he then focuses on the 7 articles that cannot be repealed or amended. They form the crux of the case against Zelaya.
These are the facts: On June 26, President Zelaya issued a decree ordering all government employees to take part in the “Public Opinion Poll to convene a National Constitutional Assembly.” In doing so, Zelaya triggered a constitutional provision that automatically removed him from office.
Constitutional assemblies are convened to write new constitutions. When Zelaya published that decree to initiate an “opinion poll” about the possibility of convening a national assembly, he contravened the unchangeable articles of the Constitution that deal with the prohibition of reelecting a president and of extending his term. His actions showed intent.
Our Constitution takes such intent seriously. According to Article 239: “No citizen who has already served as head of the Executive Branch can be President or Vice-President. Whoever violates this law or proposes its reform [emphasis added], as well as those that support such violation directly or indirectly, will immediately cease in their functions and will be unable to hold any public office for a period of 10 years.”
Notice that the article speaks about intent and that it also says “immediately” – as in “instant,” as in “no trial required,” as in “no impeachment needed.”
Supreme Court Justice Rosalinda Cruz defended the ouster of Zeyala as well:
The arrest order she cited, approved unanimously by the court’s 15 justices, was released this afternoon along with documents pertaining to a secret investigation that went on for weeks under the high court’s supervision.
Others have also defended Zeyala’s removal:
David Matamoros, a member of Honduras’ Supreme Electoral Tribunal, also defended the military’s action.
He said Zelaya originally called the vote a plebiscite, then, when that was barred, shifted to describing it as a poll, creating uncertainty as to its legal standing and his intent. No government agency was willing to conduct the vote, he said. All the ballots and equipment for the illegal poll were flown in on a Venezuelan plane, he said. The court ordered the materials confiscated.
Nothing has been said about the apparent meddling by Venezuela. Nor has there been any investigation by those so interested in immediately condemning the action taken by the authorities in Honduras as a “military coup” into the constitutional claims of the interim government. Given Sanchez’s description of the evidence and the constitutional provisions, it appears he may be right – this was indeed a triumph of the law.
So why was Zelaya flown out of the country instead of being arrested?
The Supreme Court and the attorney general ordered Zelaya’s arrest for disobeying several court orders compelling him to obey the Constitution. He was detained and taken to Costa Rica. Why? Congress needed time to convene and remove him from office. With him inside the country that would have been impossible. This decision was taken by the 123 (of the 128) members of Congress present that day.
15 justices of the Supreme Court, 123 of 128 Congress members, the Attorney General, the Supreme Electoral Tribunal and the military all acted in concert and apparently within the law and the constitution, to remove someone who had violated the constitution and essentially impeached himself.
Don’t believe the coup myth. The Honduran military acted entirely within the bounds of the Constitution. The military gained nothing but the respect of the nation by its actions.
I am extremely proud of my compatriots. Finally, we have decided to stand up and become a country of laws, not men. From now on, here in Honduras, no one will be above the law.
Given that explanation and assuming it is the case, it seems we should be celebrating what Honduras has done instead of condemning it.
And after reading this, it won’t be hard to do:
Pakistan’s top Taliban leader, Baitullah Mehsud, is buying children as young as 7 to serve as suicide bombers in the growing spate of attacks against Pakistani, Afghan and U.S. targets, U.S. Defense Department and Pakistani officials say.
A Pakistani official, who spoke on the condition that he not be named because of the sensitive nature of the topic, said the going price for child bombers was $7,000 to $14,000 – huge sums in Pakistan, where per-capita income is about $2,600 a year.
“[Mehsud] has turned suicide bombing into a production output, not unlike [the way] Toyota outputs cars,” a U.S. Defense Department official told reporters recently. He spoke on the condition that he not be named because of ongoing intelligence efforts to catch Mehsud, a prime target for a U.S. and Pakistani anti-Taliban campaign.
People like Mehsud claim to represent a religion of peace and act on its behalf. Yet no religion of peace would ever sanction or condone actions such as this. Perhaps it is time we quit accepting their stated claims that they’re Islamic warriors and call them what they deserve to be called – animals barely worth the price of a bullet.
Rarely will you find me using the term “exterminate”. But when I read things like this, I truly believe that the Taliban are more than deserving of complete and utter extermination. This is a “seed” which needs to germinate no further.
God speed to the 4,000 Marines who’ve just launched Operation Khanjar. May their aim be true enough to bring down this miserable swine somewhere along the line.
A couple of quick examples of real world problems with government run health care. South Africa:
KwaZulu-Natal health MEC Dr Sibongiseni Dhlomo has issued an ultimatum to striking doctors, calling on them to return to work on Friday or face the music.
Addressing the media in Durban on Friday, Dhlomo said notices had been sent to all hospitals calling on all striking doctors, dentists and pharmacists to resume their duties no later than 08:00.
The department was also preparing a court interdict to force the striking health professionals to end the strike, he said.
“We as the department of health are designated as an essential service provider and therefore find the action of these health professionals [is] disrupting service delivery and compromising patients’ lives,” said Dhlomo.
He said the department had been more than reasonable in dealing with the unprotected strike.
“This situation is untenable, we cannot continue to put the lives of our people in danger and the government will act,” he said.
Dhlomo said people had died due to the unavailability of doctors, although he was unable give the number of people who died as a result of the strike.
A recent example you’re probably more familiar with from Canada:
A critically ill premature baby is moved to a U.S hospital to get the treatment she couldn’t get in the system we’re told we should emulate. Cost-effective care? In Canada, as elsewhere, you get what you pay for.
Ava Isabella Stinson was born last Thursday at St. Joseph’s hospital in Hamilton, Ontario. Weighing only two pounds, she was born 13 weeks premature and needed some very special care. Unfortunately, there were no open neonatal intensive care beds for her at St. Joseph’s — or anywhere else in the entire province of Ontario, it seems.
Canada’s perfectly planned and cost-effective system had no room at the inn for Ava, who of necessity had to be sent across the border to a Buffalo, N.Y., hospital to suffer under our chaotic and costly system. She had no time to be put on a Canadian waiting list. She got the care she needed at an American hospital under a system President Obama has labeled “unsustainable.”
And this one:
In 2007, a Canadian woman gave birth to extremely rare identical quadruplets — Autumn, Brooke, Calissa and Dahlia Jepps. They were born in the United States to Canadian parents because there was again no space available at any Canadian neonatal care unit. All they had was a wing and a prayer.
The Jepps, a nurse and a respiratory technician flew from Calgary, a city of a million people, 325 miles to Benefit Hospital in Great Falls, Mont., a city of 56,000.
Great Falls was better equipped to handle their case than was Calgary? People like to dismiss these as “anecdotal”, but they continue to describe a system in which decisions have been made that end up endangering the lives of children. It is inevitable when the primary focus of “reform” is “lowering cost”.
Doctor’s strikes. Limited if not completely unavailable neo-natal care. The refusal of the system, based on cost concerns only, to provide certain care that places the lives of those on the margin in jeopardy.
Is that what we have to look forward too?
[HT: Micaela S]
One of the favorite arguments of the government health care crowd is the supposed Medicare low overhead argument – i.e. Medicare is more efficient than private insurance because its overhead is so much lower than private administrative costs.
But the administration of Medicare is a miracle of low overhead and a model, despite all the fraud and abuse, of what government can do right. Three percent of Medicare’s premiums go for administrative costs. By contrast, 10 to 20 percent of private-insurance premiums go for administrative costs. Roll that figure around on your tongue. When you swallow and digest it, you’ll understand that any hope of significantly reducing health-care costs depends on a public option.
Right now, the Medicare average is 3% and private insurance averages 12%. But Tom Bevan points out, some of that difference is an apples and oranges comparison:
But here’s the catch: because Medicare is devoted to serving a population that is elderly, and therefore in need of greater levels of medical care, it generates significantly higher expenditures than private insurance plans, thus making administrative costs smaller as a percentage of total costs. This creates the appearance that Medicare is a model of administrative efficiency. What Jon Alter sees as a “miracle” is really just a statistical sleight of hand.
Furthermore, Book notes that private insurers have a number of additional expenditures which fall into the category of “administrative costs” (like state health insurance premium taxes of 2-4%, marketing costs, etc) that Medicare does not have, further inflating the apparent differences in cost.
However, when you make an apples to apples comparison, Medicare comes out much worse than private insurance:
But, as you might expect, when you compare administrative costs on a per-person basis, Medicare is dramatically less efficient than private insurance plans. As you can see here, between 2001-2005, Medicare’s administrative costs on a per-person basis were 24.8% higher, on average, than private insurers.
So, contrary to claims of Alter, Krugman, and President Obama, moving tens of millions of Americans into a government run health care option won’t generate any costs savings through lower administrative costs. Just the opposite.
Make sure you click through and check out the real Medicare administrative costs as compared to private industry.
Then there’s waste fraud and abuse. Did you happen to catch that little hand wave at “fraud and abuse” in the first quote touting Medicare’s efficiency? What, pray tell, is one of the primary jobs of an administive system? Would you imagine it to be the elimination of fraud and abuse – or said another way, to ensure that the company pays legitimate claims and avoids fraudulent and unnecessary payments?
How efficient is a system which is awash in both fraud and abuse? And, without profit, what incentive do they have to eliminate it?
John Stossel takes that part of the “Medicare efficiency” myth apart:
But there’s a bigger point – the connection between “low” administrative costs and staggeringly HIGH levels of fraud and waste. As Michael Cannon at the Cato Institute and Regina Herzlinger at Harvard Business School have pointed out, much of the 10 to 20 percent of private insurance administrative costs goes to preventing fraud. Private insurers, you see, care about whether or not they lose money. Medicare, with its unlimited claim on the public purse, does not. It’s only taxpayer money, after all.
The results are predictable, but breathtaking nonetheless: an estimated $68 billion (with a B) in outright Medicare fraud every year (About $3 billion in Miami-Dade county ALONE.) On top of that, according to well-respected Dartmouth researchers, roughly a third of Medicare’s total $400 billion annual spending goes to procedures which were medically unnecessary.
That’s, on average, 68 billion every year. Imagine a private insurance company surviving with loss figures like that. But as Stossel points out, without an incentive to eliminate fraud and abuse, it continues year after year after year, with politicians and Medicare administrators tut-tutting but never really doing anything about it.
That is the reality of Medicare’s efficiency. It is also the probable model any future health care insurance run by the government. Efficiency is an illusion brought about by a statistical sleight of hand and ignoring the systemic waste, fraud and abuse of Medicare.
One more time into the breach. The CBO has issued a warning to Congress about entitlement spending. Again. Here’s a key paragraph:
Almost all of the projected growth in federal spending other than interest payments on the debt comes from growth in spending on the three largest entitlement programs–Medicare, Medicaid, and Social Security.
Most of you know that Medicare and Medicaid have an unfunded future liability of 36 trillion dollars. That’s about 3 times the annual total GDP of the US economy. And they are the very same type of “public option” program – i.e. government insurance – that the left says is so very necessary and crucial to real “health care reform”.
In other words, the left’s argument is that adding at least 47 million (presently uninsured), plus the possibility of adding 119 million who are shifted to the public option from private insurance (private insurance, btw, doesn’t have any effect on the deficit whatsoever since we, the private sector, are paying for it) will somehow make the deficit picture better?
I’m obviously missing something here.
With the public option, we’re adding a new entitlement (47 million who presently supposedly can’t afford insurance, meaning taxpayers will subsidize theirs). Assuming it is set up originally to be paid for by premiums, at some point, like Medicare and Medicaid, and every other government entitlement program I can think of, it will pay out more than it takes in. How can it not? It is a stated “non-profit” program and it will include subsidies. At some point, another revenue stream is going to be necessary as it burns through the premiums with its payouts.
Well, say the proponents of government involvement in your health care, we’re going to save money by doing preventive health care. Yes, preventive care is the key to lower costs because a healthier population is one which visits the doctor less. While that may seem to be at least partially true (you’d think a healthier population would, logically, visit the doctor less) the part that is apparently missed when touting this popular panacea is the cost of making the population healthier (and the fact that the assumption of less visits isn’t necessarily true) doesn’t cost less – it costs more:
If health care providers can prevent or delay conditions like heart disease and diabetes, the logic goes, the nation won’t have to pay for so many expensive hospital procedures.
The problem, as lawmakers are discovering to their frustration, is that the logic is wrong. Preventive care — at least the sort delivered by doctors — doesn’t save money, experts say. It costs money.
That’s old news to the analysts at the Congressional Budget Office, who have told senators on the Health, Education, Labor and Pensions Committee that it cannot score most preventive-care proposals as saving money.
So with that myth blown to hell, we’re now looking at a government plan which will add cost to the deficit by subsidizing the insurance of 47 million and (most likely) many more, plus a plan to use a more costly form of medicine as its primary means of giving care.
But, back to the entitlement report – or warning. The CBO says that unless entitlements are drastically reformed (that means Medicare, Medicaid and to a lesser extent, Social Security) we’re in deep deficit doodoo:
The most frightening findings in this report are the deficit and debt projections. In this year and next year, the yearly budget shortfall, or deficit, will be the largest post-war deficits on record–exceeding 11 percent of the economy or gross domestic product (GDP)–and by 2080 it will reach 17.8 percent of GDP.
The national debt, which is the sum of all past deficits, will escalate even faster. Since 1962, debt has averaged 36 percent of GDP, but it will reach 60 percent, nearly double the average, by next year and will exceed 100 percent of the economy by 2042. Put another way, in about 30 years, for every $1 each American citizen and business earns or produces, the government will be an equivalent $1 in debt. By 2083, debt figures will surpass an astounding 306 percent of GDP.
The report also finds high overall growth in the government as a share of the economy and of taxpayers’ wallets that provides an additional area of concern. While total government spending has hovered around 20 percent of the economy since the 1960s, it has jumped by a quarter to 25 percent in 2009 alone and will exceed 32 percent by 2083. Taxes, which have averaged at 18.3 percent of GDP, will reach unprecedented levels of 26 percent by 2083. Never in American history have spending and tax levels been that high.
Here’s the important point to be made – these projections do not include cap-and-trade or health care reform.
Got that? We’re looking at the “highest spending and tax levels” in our history without either of those huge tax and spend programs now being considered included in the numbers above. Total government spending, as a percent of GDP is now at an unprecedented 25%. And they’re trying to add more while this president, who is right in the middle of it, tells us we can’t keep this deficit spending up forever.
That’s Glenn Garvin of the Maimi Herald’s question:
For weeks, Zelaya — an erratic leftist who styles himself after his good pal Hugo Chávez of Venezuela — has been engaged in a naked and illegal power grab, trying to rewrite the Honduran constitution to allow him to run for reelection in November.
First Zelaya scheduled a national vote on a constitutional convention. After the Honduran supreme court ruled that only the country’s congress could call such an election, Zelaya ordered the army to help him stage it anyway. (It would be ”non-binding,” he said.) When the head of the armed forces, acting on orders from the supreme court, refused, Zelaya fired him, then led a mob to break into a military base where the ballots were stored.
His actions have been repudiated by the country’s supreme court, its congress, its attorney-general, its chief human-rights advocate, all its major churches, its main business association, his own political party (which recently began debating an inquiry into Zelaya’s sanity) and most Hondurans: Recent polls have shown his approval rating down below 30 percent.
In fact, about the only people who didn’t condemn Zelaya’s political gangsterism were the foreign leaders and diplomats who now primly lecture Hondurans about the importance of constitutional law. They’re also strangely silent about the vicious stream of threats against Honduras spewing from Chávez since Zelaya was deposed.
Warning that he’s already put his military on alert, Chávez on Monday flat-out threatened war against Honduras if Roberto Micheletti, named by the country’s congress as interim president until elections in November, takes office.
I think Garvin’s question is a good one. If you have someone who continues to pursue activities which are clearly not constitutional, and instead is doing everything within his power to subvert said constitution, what do you do?
Well perhaps have the military arrest him and throw him out of the country is not the first action which comes to mind, granted. However, in Honduras, unlike here, the military does have a law enforcement function. That may not be ideal (because of exactly the perception it leaves) but that’s the case. Perhaps, in retrospect, the best thing that could have been done is have civilian law enforcement arrest Zelaya, keep him in the country and put him on trial. Bottom line – it seems his removal was justified based on his actions.
What the world seems to be objecting too most is the method of his removal while ignoring the reasons.
And then, as Garvin points out, we have the thug in Venezuela threatening Honduras while everyone remains silent:
”If they swear him in we’ll overthrow him,” Chávez blustered. “Mark my words. Thugetti — as I’m going to refer to him from now on — you better pack your bags, because you’re either going to jail or you’re going into exile.”
No one denouncing the coup seems to be bothered by Chavez’s threats. In fact, it could be argued that the reaction of the US has green-lighted Chavez and his followers to intervene in some way, to include militarily. Not that Chavez or the Venezuelan military are competent enough to actually do that, but it certainly wouldn’t surprise me now if they tried.
Zelaya was trying to follow Chavez’s template and somehow manage a constitutional change to a permanent presidency through bypassing the constitutionally mandated process and claiming a popular mandate instead. Even his own party didn’t support his attempt and the congress, dominated by that party, passed a law making what Zelaya was attempting illegal. Zelaya attempted it anyway, making what Zelaya was doing a criminal offense. The Supreme Court of Honduras ruled against Zelaya. The Attorney General apparently enforced the law.
Here, we’d call that the “checks and balances” working. There, the result is apparently a “coup”.
The point? In reality, this is not at all a cut-and-dried “military coup” as it is being portrayed. It wasn’t a disgruntled group of military officers who decided to take the law into their own hands and to change the government because they don’t like the form or direction in which it was heading. Instead a rather broad based coalition of politicians, to include those in his party, and other institutions such as the congress (legislative branch) and Supreme Court (judicial branch), found his criminal behavior to be unacceptable and decided to take what they considered to be legal action to prevent a rogue politician from any further attempts at violating the law.
They removed him from office.
And, unlike its reaction to the brutality on display in Iran, the world had an immediate knee-jerk fit.
We now have Venezuela threatening Honduras without a peep from the OAS or the US. We have the OAS now giving Honduras 3 days to reinstall Zelaya or else (what the “else” is is anyone’s guess). We have the president of Argentina sticking her nose into the affair. And we have the showdown tomorrow as Zelaya, in the company of the UN, OAS and Argentine president, reentering Honduras in a bid to retake office. Honduras has said Zelaya will be arrested if he reenters.
Why was there such a rush on the part of the US to denounce this? If sitting back for 10 days and assessing the situation in Iran before speaking was such a good idea as the administration claims, why wasn’t the same true in Honduras? As the facts come out, it seems that it isn’t what it is being characterized as.
If all of the world’s concern is focused on the “democratic process”, where was that concern last week as the now ex leader of Honduras tried to subvert the constitution and claim a mandate by means it prohibited?
Nowhere to be heard. The world was quite content, it seems, to let another declared leftist permanently install himself as a virtual dictator in a Latin American country. But let that country try to enforce it’s constitution, and all hell breaks loose.
Voluntarily as a part of the agreement signed last year by the Bush administration.
I think this is the first time I’ve mentioned Iraq at all for months. That in itself is quite amazing.
In 2006 most people were waiting for the Iraqi version of the last helicopter leaving the US embassy in Saigon. Now, we’re turning over the vast majority of the security work in Iraq to the Iraqis as the people of Iraq celebrate the handover.
Trust me – no one is anymore pleased to be heading out of the cities than US troops. And for the opponents of the war, it’s pretty hard to deny the success that has been built on the surge and the change in strategy implemented by the Bush administration.
In fact, Obama really hasn’t had to do a thing except accept the plan that administration left in place and execute it.
There’s always a “but”. But that doesn’t at all means everything is smooth sailing and unicorns and rainbows are now in Iraq’s future. Instead it means that for the most part, the Iraqi state is functional and at least minimally able to take care of its own security. It also will probably mean, in the absence of US military might, that some of the old players will again try their hand at fomenting violence in a bid to reestablish their agendas for Iraq.
This still remains a red letter day for Iraq, however. And it also is a red letter day for the region. The question is will they continue to make progress or will we see sectarianism and the violence that usually accompanies it reemerges as US troops withdraw.
There are going to be horrific acts of violence in Iraq for a while. That is just the nature of the beast as the last of the dead-enders do their thing. What we have to hope for is the progress to this date continues, Iraqis think of themselves as Iraqis first (and whatever religious sect or ethnic group second) and work toward a stable and democratic Iraq.
Everyone I’ve talked too who’ve been there since the surge, to include Michael Yon, are very encouraged by what they’ve seen and experienced.
Best of luck to the Iraqi people – it is pretty much now theirs to make or break. We’ll soon see how badly they want what they have.
Paul Krugman came out today for “border adjustments” (tariffs) on goods from countries who aren’t participating in economy killing CO2 emissions control taxation.
If you only impose restrictions on greenhouse gas emissions from domestic sources, you give consumers no incentive to avoid purchasing products that cause emissions in other countries; as a result, you have an inefficient outcome even from a world point of view. So border adjustments here are entirely legitimate in terms of basic economics.
Actually they’re “entirely legitimate” if you swallow the premise Krugman is pushing here, namely that CO2 is a “pollutant” and its restriction is a “legitimate” reason for imposing taxes on both your own economy and the goods coming from another economy which doesn’t agree with the premise. And, of course, this ignores the probable reaction countries hit with this tariff might have.
Krugman then attempts to justify such a “border adjustment” by claiming such a move is probably legal under “international law”:
The WTO has looked at the issue, and suggests that carbon tariffs may be viewed the same way as border adjustments associated with value-added taxes. It has long been accepted that a VAT is essentially a sales tax — a tax on consumers — which for administrative reasons is collected from producers. Because it’s essentially a tax on consumers, it’s legal, and also economically efficient, to collect it on imported goods as well as domestic production; it’s a matter of leveling the playing field, not protectionism.
And the same would be true of carbon tariffs.
What he sort of dances around when he claims this will “level the playing field” is all products, regardless of their origin, will see dramatically increased pricing. The point of the tax is to hopefully steer consumers to domestically produced products which are produced under government approved conditions rather than those from countries like China and India which aren’t playing the game the US wants them to play. Not only will the consumer here be asked to pay for the CO2 offsets imposed on domestic industry, but they will have to pay for offsets for foreign producers as well when the VAT cost is passed on in the price of the goods.
The thinking, obviously, is that if prices are the same, US consumers will buy US goods instead of, say, Chinese goods. The problem, of course, is much of what we consume isn’t made here anymore. So the result would be the US consumer would end up paying higher prices for goods produced in China with no change in behavior by China.
Additionally, China will view this as a protectionist measure, whether the WTO thinks it is “legal” or not. China will simply claim that the US, as a rich country and large “polluter”, should be doing more than they are doing in terms of emissions control, and impose its own “WTO legal” VAT in response. Same with any other country targeted by the US for a tariff.
This is, frankly, an invitation to a trade war. Krugman can wrap his protectionist argument in whatever legality he’d like, but the fact remains most countries effected will view it as an attempt to limit trade and react accordingly. And, of course, by Krugman’s own admission, it is you who will be paying the tariff cost for China and India if this is ever passed into law.
But not Iran.
Hmmm. And even saying anything about Iran could be considered “meddling” in the internal affairs of another country, per the Obama administration, but apparently working actively within Honduras to stop what it characterizes as a “military coup” isn’t meddling.
Confusing foreign policy.
An interesting aspect of the Honduran “coup”, per Fausta is:
-Tuesday last week the Honduran Congress, led by members of his own party, passed a law preventing the holding of referendums or plebiscites 180 days before or after general elections.
– The Honduran Congress, led by members of his own party, named a commission to investigate Zelaya. The Commission found (my translation: If you quote it, please credit me and link to this post)
Zelaya acted against the mandates of legal and electoral laws, the Public Ministry, the National Congress, the Attorney General, and other institutions of the State, which had declared the poll illegal.
Additionally, the court weighed in:
Indeed, Honduras’ La Prensa states that (My translation: If you use this, please credit me and link to this post)
An official statement of the Supreme Court of Justice explained that the Armed Forces acted under lawful grounds when detaining the President of the Republic, and by decommissioning the materials to be used on the illegal poll which aimed to bring forth Executive Power against a judicial order.
Other sources verified that the president of the Congress, Roberto Micheletti, will assume the presidency of the republic in a few hours.
Honduran president Manuel Zelaya was detained this morning by the military in compliance with an order of the courts of law.
I’ve also seen a report that the new president, Roberto Micheletti, is of the same party as Zelaya.
As I said this morning I’m not a Honduran Constitutional expert – but our Constitutional expert-in-chief seems to have it all figured out. I think the “why” should be obvious:
Analysts said quick criticism of the coup by Obama and Clinton on Sunday pleased Latin American countries bitter about the long history of U.S. intervention in the region.
Despite Obama’s claim that this would set a “terrible precedent”, the State Department still hasn’t yet made a determination that an actual “military coup” has actually taken place:
Despite Obama’s comments, Secretary of State Hillary Clinton said the administration was not formally designating the ouster as a military coup for now.
Such a designation could force the U.S. leader to cut off most aid to Honduras. Under U.S. legislation, no aid — other than for the promotion of democracy — may be provided to a country whose elected head of government has been toppled in a military coup.
“We do think that this has evolved into a coup,” Clinton told reporters, adding the administration was “withholding” that determination for now.
The stated reason is they want to leave room for negotiations with “the goal of restoring democratic order in Honduras”.
What isn’t clear, however, is whether or not what happened wasn’t a result of “democratic order” and legal. For instance:
Jason Steck, writing at Real Clear World Blog, explains
what is happening in Honduras may be an example of a coup that is not only legal, but mandatory
because, in Honduras’s case, the military has been endowed with a role in maintaining democratic governance; this time their task was to delivery Zelaya safely out of office and into the airplane to Costa Rica.
If this all ends up being constituitonally legal, it will be interesting to see how Obama backs off his previous statements or whether, instead, he continues to characterize the arrest of Zelaya as a “coup” to play to the leftist crowd now “pleased” with his initial reaction.
Regardless, I’m less than impressed with Obama’s reaction to world events in Iran, North Korea and now Honduras.