Free Markets, Free People

Max Baucus

Why limiting the power of government should be every citizen’s first priority

Here’s why I fear government.  It is a small, seemingly insignificant story in the big scheme of things, but in reality it points to a power that should simply not be allowed for government to possess.

Tweak of a regulation, stroke of a pen and a small industry is “snuffed out”:

A tiny amendment buried in the federal transportation bill to be signed today by President Barack Obama will put operators of roll-your-own cigarette operations in Las Vegas and nationwide out of business at midnight.

Robert Weissen, with his brothers and other partners, own nine Sin City Cigarette Factory locations in Southern Nevada, including six in Las Vegas, and one in Hawaii. He said when the bill is signed their only choice is to turn off their 20 RYO Filling Station machines and lay off more than 40 employees.

[…]

The machines are used by customers who buy loose tobacco and paper tubes from the shop and then turn out a carton of finished cigarettes in as little as 10 minutes, often varying the blend to suit their taste. Savings are substantial – at $23 per carton, half the cost of a name-brand smoke – in part because loose tobacco is taxed at a lower rate.

"These cigarettes are different because there are benefits in saving money and in how they make you feel," said Amy Hinds, a partner who operates the Sin City Cigarette Factory at Craig and Decatur.

"These cigarettes don’t have any of the chemicals in them, and the papers are chemical-free, unlike the cartons people buy from Philip Morris."

But a few paragraphs added to the transportation bill changed the definition of a cigarette manufacturer to cover thousands of roll-your-own operations nationwide. The move, backed by major tobacco companies, is aimed at boosting tax revenues.

Faced with regulation costs that could run to hundreds of thousands of dollars, RYO machine owners nationwide are shutting down more than 1,000 of the $36,000 machines.

And who offered this “tiny amendment”?

"The man who pushed for this bill is Sen. (Max) Baucus from Montana, and he received donations from Altria, a parent company of Philip Morris. Interestingly enough, there are also no RYO machines in the state of Montana. It really makes me question the morals and values of our elected speakers."

Or “what freaking business is it of Max Baucus?  How does it effect him or his state? 

More freedom, more choice up in smoke.  The problem, of course, is the cigarette industry is an unpopular industry.   But it begs the question, if it can do this to a business we don’t particularly care for, there’s absolutely no reason it can’t do the same thing to one we do care for.  As it has been said many times, “a government strong enough to give you things is also strong enough to take them away”.  And here it is taking away a choice for consumers because it disapproves of the product.

And there’s also a very big hint of crony capitalism (Max Baucus, who has none of the businesses in his state but receives donations from Altria?  Yeah, nothing suspicious there).

This reminds me of the arguments for the 1st Amendment.  The test isn’t with speech with which you agree, it is instead protecting speech with which you completely and utterly disagree.  It is with speech so vile you’d prefer to shut them up but know if you do, then you’ve given others permission to shut you up.

I don’t smoke but I’ll defend to the death your right to smoke, as long as you don’t violate any of my rights by doing so.

But Big Government – yeah, no way.

Forward.

~McQ

Twitter: @McQandO

Baucus: The Real Cost Of Health Care Reform …

David Freddoso catches Sen. Max Baucus (D-MT) in an unscripted moment of truth:

“Health care reform, whether you use a ten-year number or when you start in 2010 or start in 2014, wherever you start at, so it is still either $1 trillion or it’s $2.5 Trillion, depending on where you start…”

Of course, regardless of where you start, it won’t cost just the 894 billion that has been claimed. Again, for those who’ve missed it the numerous times I’ve mentioned it, CBO can only score a 10 year window. So, knowing that Democrats used a bit of trickery to make the bill in the Senate seem to cost less than it really does. They front-loaded the taxes (they begin immediately upon passage) and they delayed the major programs (they begin in 2014 – those are the two dates Baucus cites) so that the cost is spread over 10 years (although they only take place in 6) as is the revenue. You figure it out – 10 years of revenue and 6 years of spending – would that drive the supposed 10 year cost down?

Of course it would. Is that the true cost of the program? Of course it isn’t. And, if you look at the second 10 year window, costs explode (into the 2.5 trillion range).

Also, the claim is cuts in Medicare will help pay for this. Yet they’re about to pass the “doc fix” bill which will prevent 250 billion (a quarter of a trillion) in reduced payments to doctors. Does this indicate a willingness to do what is necessary to pay for this health care monstrosity? Of course it doesn’t. It again indicates that Congress enjoys the roll of Santa Claus much more than that of being fiscally responsible.

Anyone who actually believes these numbers from Congress is either naive, purposely blind to the truth, inexperienced with their ways or just doesn’t care.  This is a bank breaker and will eventually have to be reckoned with.  Don’t forget that those who said Medicare would be a low cost program when it was first implemented (and now has 35 trillion dollars in future obligations) are now making the claim that spending 894 billion (or 1 trillion or 2.5 trillion) will actually save us money.  Yes, for those who believe in flying unicorns, it will be the first entitlement ever to turn a profit.

~McQ

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Lefty Blog Discovers Regressive Tax In Baucus Health Care Bill

Now one can only hope they’ll take as close a look at cap-and-trade. Anyway, FireDogLake discovers the following:

An excise tax on high-end health insurance benefits is an extremely regressive tax on the middle class. Even though Ezra Klein claims this tax is progressive, it is not. It would raise relatively little money from the wealthy.

It is true that the bottom 30% is unlikely to pay very much of the new excise tax, but ,by the same token, the top 0.1% will pay almost none of it either.

This is the middle class tax of all middle class taxes. Many, many middle class people work for companies and corporations which offer health care plans that are above and beyond the average for such plans the Baucus bill has set. The so-called “Cadillac” policies are nothing more than those whose cost is above that average. The intention, of course, is to tax them to pay for the bill. The result will be one of two things – a reduction in the benefits to meet the average and avoid the tax (thereby drying up one of the revenue streams this bill depends on to fund it) or, if a public option is involved, withdrawing their present plan in favor of dumping their employees in the public option plan and paying a fine (which is sure to be less than paying for and administering a plan of their own).

In every way the middle class gets screwed. It either ends up paying the increase in cost that the tax entails, or it sees it’s benefits cut to avoid the tax, or gets dumped into a public option if that’s available.

Calling the plans the Baucus bill targets “Cadillac” plans is just another example of identity politics used to marginalize those who are the targets of the tax. It is an attempt to wring any sympathy for the victim out of the process by implying it will be the rich who are effected. As FDL has discovered, that’s not the truth at all.

But then, the truth is rarely to be found existent when politics is in play.

~McQ

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If The Public Option Is Dead The Democrats Killed It

Not that I’m complaining.

Max Baucus’ Senate Finance Committee voted on Jay Rockefeller’s public option amendment. No joy for public option supporters:

After five hours of debate, the Senate Finance Committee this afternoon voted down Sen. Jay Rockefeller’s proposal for a public option to compete with private insurers.

Though a majority of the committee’s Democrats supported it, the amendment was defeated overwhelmingly, 15-8. The proposal sought to create a public health insurance option that would set rates like Medicare does.

Now as I understand it, there are 13 Dems and 10 Reps on that committee. So it is important to understand that all that is required for anything to come out of that committee the Democrats want is to vote the party line. 10 Republican cannot stop a thing.

Which brings us to the second public option offering and vote:

The Schumer market-responsive public option amendment has now failed. It was called at 3:50.

The vote was 10-13. Three Democrats opposed.

Two Democrats (Bill Nelson of Florida and Tom Carper of Delaware) voted for Schumer’s amendment after opposing Rockefeller’s.

But Sens. Max Baucus, Kent Conrad and Blanche Lincoln still opposed.

Baucus has been quoted as saying his job is to fashion something that will draw at least 60 votes (and a public option won’t do it).  Ben Nelson feels that they need 65 votes (meaning 5 Republicans have to go along) on any Senate bill to make it “legitimate”.

Of course this doesn’t mean some other Democrat won’t try to offer a public option amendment to the bill, but my sense is if Schumer can’t get it done, it’s not going to get done. I guess the Senate is left to talk co-ops and triggers instead while the leftosphere and the House Progressive Conference does a slow burn.

~McQ

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The Fantasy Of BaucusCare’s Savings

There are a number of people dancing in the street because there’s finally a bill in existence that the CBO says will reduce the deficit. Not by much, but that’s really irrelevant – it does the job that meets one of President Obama’s primary goals.

Of course the plan, authored by Sen. Max Baucus, has also come under fire from both the right and left for various aspects each doesn’t like. But that CBO endorsement, well, they’re pretty happy about that.

However, a close examination of that endorsement should warn everyone with an understanding of politicians and Congressional history off of the plan.

Let me explain. While the CBO does indeed say this plan will reduce the deficit, it makes it very clear that such a reduction is contingent upon some very unlikely happenstance.

First the savings:

[T]he Chairman’s proposal would reduce the federal deficit by $16 billion in 2019, CBO and JCT estimate. After that, the added revenues and cost savings are projected to grow more rapidly than the cost of the coverage expansion. Consequently, CBO expects that the proposal, if enacted, would reduce federal budget deficits over the ensuing decade relative to those projected under current law, with a total effect during that decade that is in a broad range around one-half percent of GDP….

Now that which is very, very unlikely:

These projections assume that the proposals are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation. For example, the sustainable growth rate (SGR) mechanism governing Medicare’s payments to physicians has frequently been modified (either through legislation or administrative action) to avoid reductions in those payments. The projected savings for the Chairman’s proposal reflect the cumulative impact of a number of specifications that would constrain payment rates for providers of Medicare services. The long-term budgetary impact could be quite different if those provisions were ultimately changed or not fully implemented.

The Baucus plan, just like the House plan, derives the majority of its “savings” in cuts in Medicare spending. However, as Peter Suderman at Reason’s Hit & Run explains, the likelyhood of those cuts ever being made, at least to the point necessary to reduce the deficit, is poor at best. Why?

Because of the mechanism the bill uses to make them:

It’s true that the Baucus plan, which creates a commission to figure out how to cut Medicare costs, sets up a slightly more robust framework for cost-cutting than currently exists. But that commission still only gets to make recommendations, and Congress still has the power to block them.

To review – in order to meet the CBO numbers, the bill must be enacted and remain unmodified for two decades. And, Congress must enact the Medicare cuts to the level required of the bill to achieve those reductions.

I ask you – what would you bet on either of those things actually ever coming to pass?

~McQ

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The Baucus Plan For Expanded Health Insurance Coverage

This is the culmination of a “year of work” by Sen. Max Baucus. And the cost? Well much less than the House version if you’re to believe the Senators who put it together. Instead of 1.5 trillion, this one will only cost us 850 to 900 billion over 10 years – another sum we cannot afford.

Why is this version less costly than the House version? Well they’re going to tax insurance companies.

Yes, I hear you. I know you know what it really means. But for the benefit of those on the left who stop by here to troll instead of taking the time to learn basic economics, we’ll again restate what should be obvious.

Corporations don’t pay taxes. Their customers do. The buck doesn’t start or stop with them – they just pass them along.

A recent report by Oppenheimer & Company, the investment bank, said, “It will be very difficult for the Senate Finance Committee to structure the fees in a way that they won’t be immediately passed on to customers in the form of higher premiums.”

Of course it will be difficult for that committee to structure them that way since it has no desire to do so:

Mr. Baucus’s plan, expected to cost $850 billion to $900 billion over 10 years, would tax insurance companies on their most expensive health care policies. The hope is that employers would buy cheaper, less generous coverage for employees, thereby reducing the overuse of medical services.

The separate new fee on insurance companies would help raise money to pay for the plan. The fee would raise $6 billion a year starting in 2010, and it would be allocated among insurance companies according to their market shares.

So it is a redistribution of your money (once the insurance company raises its fee to offset the “tax”) back to the very same insurance companies to subsidize the effort to insure everyone.

If this doesn’t catch the eye of union employees and pensioners and turn them completely against this version, then they’re totally impervious to reason. They are prime candidates for newer, cheaper and less generous coverage if this were to be passed into law.

To make the misery equal for all, Baucus and crew hope your employer, union, pension fund will drop the health care you’re now satisfied with for a cheaper, less generous policy and thereby reduce “the overuse of medical services”. And the money taken from you will be given back to the very insurance companies which it previously “taxed” to subsidize the uninsured.

But mind you, it’s all for your own good. And no, this isn’t at all government intrusion in a market to a level sufficient to change behavior – quit saying that. Because we all know that Jay Rockefeller is right, don’t we?

Mr. Rockefeller said the fees were justified because insurance companies were “rapaciously, greedily and unstoppably making money by underpaying the patient, by underpaying the provider and by overpaying themselves.”

Who again sets the standard for medical reimbursement in the US? It darn sure isn’t private insurance companies, is it? To bad that White House email address for fishy health care info isn’t still functioning.

And of course, when Chuck Schumer says something like, “The health insurance industry should pay its fair share of the cost because it stands to gain over 40 million new consumers under health care reform legislation,” you know its a bad idea. Schumer has never once demonstrated he has a grasp on the economics of anything. And this is no exception. But he does understand the political ramifications of such a bill.

In fact, the devil is found in what Schumer doesn’t say – “40 million new customers, no pre-existing conditions, no option to deny coverage, no lifetime cap on payouts”. Yeah, sounds like a heck of a bargain, doesn’t it? 40 million new consumers and guaranteed bankruptcy leaving what?

Well good old Chuck Schumer and the government to fall back on, huh? And, after neatly rigging the game in such a way as to effectively eliminate private coverage, they’ll also offer up a hearty “we told you so” and blame it on a “market failure”.

Who needs a public option or a trigger when you can set things up this way? Yup, as is apparent, there are all sorts of ways to skin that single-payer cat, aren’t there?

~McQ

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Health Care – Plans To Exempt Unions, Tax Others

No “gold plated” care for you – unless you’re in a union.

Yes, friends, it’s payback time in the health care legislation world. Bloomberg reports:

The U.S. Senate proposal to impose taxes for the first time on “gold-plated” health plans may bypass generous employee benefits negotiated by unions.

Senate Finance Committee Chairman Max Baucus, the chief congressional advocate of taxing some employer-provided benefits to help pay for an overhaul of the U.S. health system, says any change should exempt perks secured in existing collective- bargaining agreements, which can be in place for as long as five years.

The exception, which could make the proposal more politically palatable to Democrats from heavily unionized states such as Michigan, is adding controversy to an already contentious debate. It would shield the 12.4 percent of American workers who belong to unions from being taxed while exposing some other middle-income workers to the levy.

This is how they manage to get at your health care plan. Baucus wants to tax any health care benefit that is more costly than those provided federal employees. Those costs are about $4,200 for individuals and $13,000 for families. The claim is they again want to go after the “rich” who have “gold plated” plans. And the example in the Bloomberg article is the $40,543 in health benefits paid to Lloyd Blankfein, chief executive of New York-based Goldman Sachs Group Inc., the fifth largest U.S. bank.

Of course that threshold will also affect people much lower on the financial totem pole than Lloyd Blankfein. For example:

It can also affect companies such as Henderson, Nevada- based Zappos.com, where workers’ $11 per hour pay is supplemented by employer-paid health insurance plans worth about $7,500.

So immediately you have an $11 an hour employee liable for $495 at 15% of the difference. But remember, your taxes won’t go up by a dime. Not a single dime.

Why the desire to exempt unions? Well it gets a favored constituency off their back, is a measure of payback for their support and union members can then enjoy their “gold plated” coverage while $11 an hour workers pay the freight. Don’t believe unions have gold plated coverage. Try this example:

Sandra Carter, a retired Pacific Bell Telephone Co. technician from Stockton, California, said her health benefits, worth about $12,000 per year, were negotiated by the Communications Workers of America. She is unmarried with no children, meaning her individual coverage exceeds benefits paid to federal workers by about $7,800. If that amount were taxed at the 15 percent marginal rate, she would owe $1,170.

“I can’t afford the taxes I pay now,” said Carter, who said she suffers from diabetes. “Why should I get taxed on a benefit that keeps me a functioning person?”

Gee Ms Carter, why should anyone? Why is it any business of the government to limit the coverage to $4,200 and tax the rest. Who is Max Baucus, or anyone, to arbitrarily set the insurance limit at $4,200 for individuals and $13,000 for families and punish those who have better plans through taxation?

I would guess, however, Ms Carter is fine with unions being exempted and also fine with others being taxed in her stead.

Most unions, of course, see themselves as the exceptions deserving of such exemptions:

Anna Burger, secretary-treasurer of the Service Employees International Union, said in an interview that workers have often traded salary increases for better benefits in agreements.

Taxes “shouldn’t be taken from the backs of workers who have bargained away wages and other things for their benefits over the years,” Burger said.

But it is ok if others who’ve negotiated the same sort of exchange privately get nailed, eh Ms Burger? It’s not the principle, it’s the exception which is important here apparently.

To their credit, some unions are actually standing on principle:

“Either way, we are against a tax on health-care benefits in whatever form it takes,” said Jacob Hay, spokesman for the Laborers’ International Union of North America. The union represents 500,000 workers, largely in the construction industry.

Special interest democracy – political payback – so blatant now that you don’t even have to wonder if it is being done. Democrats are shameless in their pursuit of it. If you’re in a favored group, your ship has come in.

~McQ