As I have said before and I will say again, this is the most critical election you will likely face in your lifetime. The ones who would rob you of your freedom, your liberty, all in the name of saving us from ourselves, always, and I mean always tell you who they are and what they intend to do. Read more
Last week, Speaker of the House Nancy Pelosi (D. Ca.) told us, with a straight face, no less, that unemployment benefits create jobs. Anyone who frequents this blog knows that her comments make absolutely no sense. But, in a marvelous article in Thursday’s Wall Street Journal, Arthur Laffer explains not only why Ms. Pelosi’s statement is completely wrong, but also explains, in basic English, what the Obama administration should have done.
First, there is absolutely no economic stimulus from unemployment benefits. And, long term, it may actually harm economic growth. To demonstrate this, Mr. Laffer asks you to imagine an economy with only 2 workers, one of whom is employed, and one of whom is unemployed, and receiving unemployment benefits.
From whom do you think the unemployment benefits are taken? The other person obviously. While the one person who is unemployed may ‘buy’ more as a result of unemployment benefits, the other person from whom the unemployment sums are taken will ‘buy’ less. There is no stimulus for the economy.
Well, you may say, that example makes no sense because the money isn’t simultaneously taken out of the pocket of the employed, and, put in the pocket of the unemployed. But, the psychological impact is the same. The employed person knows that his taxes will have to rise to pay for the cost of the unemployment benefits, so, he spends less in order to be able to pay for the increased taxes down the road.
Let me add that I do not believe that we should have no unemployment benefits. But, Ms. Pelosi seems to believe the benefits should be extended indefinitely because they will create jobs. They will not. At best, we are only holding our own.
A better way…
Mr. Laffer tells us that between 2007 and now, we have spent $3.6 trillion (between Stimulus Part I, Stimulus Part II, the parts of the 2009 budget Bush vetoed, (aka, the Porkapalooza), and assorted other unemployment benefits extension bills, presumably to save or stimulate the economy.
Instead of spending that $3.6 trillion, Mr. Laffer says:
My suggestion would have been to take all $3.6 trillion and declare a federal tax holiday for 18 months. No income tax, no corporate profits tax, no capital gains tax, no estate tax, no payroll tax (FICA) either employee or employer, no Medicare or Medicaid taxes, no federal excise taxes, no tariffs, no federal taxes at all, which would have reduced federal revenues by $2.4 trillion annually. Can you imagine where employment would be today?
Sounds like Reagan, doesn’t he? Maybe now, you understand “Reaganomics”, and why lowering taxes, not increasing government spending, is the only way to truly stimulate the economy.
This is really too much. From the woman who wants us to pass bills so we can find out what’s in them, and tells us all to quit our jobs and become violinists, comes unemployment checks are the fastest way to create jobs. Eeeeesh! Read more
Last November I did a post on the differing legal justifications advanced by the Democrats in support of the mandate that everyone must buy insurance or pay a penalty. Steny Hoyer (D. Md.) insisted it was the power to tax, whereas Nancy Pelosi (D. Ca.) insisted it was the power to regulate interstate commerce. And, as we now know, Congress decided to side with Ms. Pelosi by devoting 3 pages of the bill explaining that the mandate was constitutional based upon it’s interstate commerce powers. At the time, I opined that although I didn’t agree with either position, I felt that the power to tax was the stronger argument. But, Congress didn’t consult with me.
It now appears that they should have.
There is a marvelous piece in today’s Wall Street Journal written by Randy Barnett, a Constitutional law professor at Georgetown, that explains that Obamacare supporters are now having a change of heart.
On March 21, the same day the House approved the Senate version of the legislation, the staff of the Joint Committee on Taxation released a 157-page “technical explanation” of the bill. The word “commerce” appeared nowhere. Instead, the personal mandate is dubbed an “Excise Tax on Individuals Without Essential Health Benefits Coverage.”
But, as Professor Barnett points out,
This switch in constitutional theories is a tell: Defenders of the bill lack confidence in their commerce power theory. The switch also comes too late. When the mandate’s constitutionality comes up for review as part of the state attorneys general lawsuit, the Supreme Court will not consider the penalty enforcing the mandate to be a tax because, in the provision that actually defines and imposes the mandate and penalty, Congress did not call it a tax and did not treat it as a tax.
So why is this so significant, you ask? Professor Barnett supplies the answer.
Never before has the [Supreme] Court looked behind Congress’s unconstitutional assertion of its commerce power to see if a measure could have been justified as a tax.
In other words, the Supreme Court doesn’t scour the Constitution looking for a clause that could make a law constitutional. The Justices look solely to what Congress has written.
Many viewed the election of Scott Brown (R. Ma.) as the death of Obamacare. But, to President Obama, Speaker of the House Nancy Pelosi, and Senator Harry Reid, it was a mere trifling inconvenience. According to Pelosi, the stage has been set to pass Obamacare anyway.
Here is the plan. Remember the negotiations between the House and Senate to reconcile the differences between their respective bills…the negotiations CSPAN was prevented from broadcasting? It appears that a deal has been reached. First, the House will pass a bill that simply covers the agreed upon House/Senate amendments to the Senate Bill. We’ll call that the “Amendments Bill”. Next, the House will pass the Senate Bill, and make their passage retroactive to the date that the Senate passed its bill. Finally, the Senate, using the “reconciliation process” (which only needs 51 votes), will pass the “Amendments Bill”. Both bills will go to Obama for signature. He will sign the Senate Bill first, and seconds later, sign the “Amendments Bill”.
And, voila, we will have Obamacare.
Of course, the reconciliation process in the Senate has never been used for anything like this before, much less a law that will let the federal government take over 20% of the American economy. Pelosi’s solution…lie to the American public.
It’s up to us [the Democrats in the House and Senate] to make sure the public knows this is not extraordinary…It would be a reflection on us if we could not convince people that this is not an unusual place to go.
So why the February 25 “health care summit”, Mr. President? You obviously know what Pelosi and Reid are planning to do. Or is this, too, part of the continuing deception?
We don’t want Obamacare, Mr. President. Oh, I forgot. To you, Pelosi and Reid, the opinion of the American public doesn’t matter. All that matters is your agenda…the American public be damned.