President Obama's narrow and partisan victory on health care reform caused a time warp. Suddenly, it is early 2009 all over again, with liberals trumpeting Obama as the herald of a new liberal era, with the media and some conservatives cautioning Republicans against opposing the president, and above all the perception that Obama is a strong leader.
"The art of economics consists in looking not merely at the immediate but at the larger effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."
It's been fascinating to watch the debate between Michael Kinsley and Paul Krugman over inflation. Kinsley, like a lot of people, worries that all this government expansion will result in inflation somewhere down the line. Krugman dismissed Kinsley with his typical combination of arrogance and ill will, saying that "textbook economics" separates inflation (not always bad) from hyperinflation (always bad). Kinsley responded by pointing out that Greg Mankiw's textbook makes no such distinction:
I have been waiting for Paul Krugman to tell me how we are going to handle the debt, once we get this recession out of the way. No, really. There’s no economist whose judgment I trust more. (About economics, that is.) I’ve been all for the stimulus and the jobs bill and even, I guess, the sundry bailouts. But don’t we at some point have to start paying the money back? And how are we going to do that? Krugman’s failure (unless I’ve missed it) to give us an answer to that question is one of the things that makes me worry.
Krugman's rebuttal? Kinsley checked the wrong textbook. In his text, Krugman points out, there is a difference "between Zimbabwe-type hyperinflation and the more moderate type of inflation that afflicted the US and others in the 70s."
Well, it is done. Obama has signed the Senate bill into law. Americans now have a statutory right to health insurance, and in most if not all cases a right to have someone else pay for that insurance. I believe we have only the dimmest understanding of the full consequences of this legislation. It will raise taxes. Its cost-controls are unproven and trivial. The bill will increase demand for a fixed commodity and thus increase the overall price of that commodity. So health care spending will continue to rise as more people enter the system, the population gets older, and technology continues to improve. Susan Ferrechio runs through the various unintended consequences here.
Sometime in the next hour, the House of Representatives of the United States of America will pass into law a health care reform that the people they represent oppose. In so doing, they will complete the decades-long project of American liberals to create an American welfare state along the lines you find in postwar Western Europe. Next comes immigration, cap-and-trade, a universal entitlement to higher education, and card-check legislation empowering unions. And after that come the tax hikes -- not just on the rich, but on everyone -- that will be required to pay for this drastic expansion of government. Never in modern congressional memory has so much been affected for so many by so few.
Do not believe anyone who tells you they understand the path American politics will take after this vote. It is truly unique. And yet a few things are clear. One, the idea of the "pro-life" Democrat should be tossed into the dust-heap along with such outmoded concepts as cold-fusion. Two, Obama will achieve a short-term bump in his political capital, and likely his poll ratings, because he will have achieved something that every Democratic president since Harry Truman has been unable to accomplish. And three, Obamacare is a testable proposition. The proponents of this legislation have made distinct claims regarding its costs and consequences that should not be forgotten -- especially when America encounters its first debt crisis some years from now.
Let's give the last word to Rep. Paul Ryan:
Liberals are right. America will never be the same.
On January 20, the day after Scott Brown’s upset victory in the Massachusetts Senate race, Barack Obama suggested that he might just have to settle for a more modest health care reform package than the one Democrats had been pushing for a year.
The health care debate is beginning to resemble trench warfare. You have two camps -- the Yeses and the Nos. They spend most of their time launching artillery attacks on the opposing position. Every so often, though, a soldier traverses No Man's Land as he rushes to join the other side.
So far four Nos have joined the Yeses. But there is a larger, much more undefined, group of Yeses slowly crawling across the barren wasteland toward the No trench.
John Boccieri becomes the fourth Democrat who voted against the health care bill in November to flip his vote to "yes". He joins Betsy Markey, Bart Gordon, and Dennis Kucinich. I expect Scott Murphy of New York to become the fifth soon. Other potential flippers from "no" to "yes" include Suzanne Kosmas (Fla.), Brian Baird (Wash.), Jim Matheson (Utah), and Jason Altmire (Pa.).
Rep. John Boccieri announced he's flipping to Yes today. Let's hope he's enjoyed his time in Washington -- it's probably going to end pretty soon! Boccieri, a freshman, is the first Democratic representative his district has elected since the 1950s. The district voted for McCain. Better visit all the monuments while you can, congressman.
Nancy Pelosi and Louise Slaughter have come up with a parliamentary maneuver -- "deem and pass" -- reeking of evasiveness and trickery that Democratic members are going to have to embrace. But it gets better! The point of "deem and pass" is to allow representatives to vote directly only on the reconciliation "fixes" rather than on the Senate health care bill (which will be deemed to be passed if reconciliation passes). But the reconciliation "fixes" make the Senate bill even more politically unattractive.
* Additional tax increases, on top of the ones in the Senate bill. The reconciliation bill raises the Medicare payroll tax by 0.9% to a combined employer-employee 3.8% for individuals with income over $200K and couples over $250K, and, beginning in 2013, creates a new 3.8% tax on some capital income from interest, dividends, annuities, royalties, and rents for those individuals and families.
* Even deeper cuts to Medicare Advantage, which will mean fewer and less attractive Medicare Advantage plans available to seniors.
Rehashing their lobby for a proposed abortion compromise in the U.S. Senate version of Obamacare in December, liberal Catholics and Evangelicals are now urging the U.S. House of Representatives to pass the Senate version of the bill.