In another episode of There’s No Such Thing as a Free Lunch, we will quickly explore universal coverage legislation, which, though politically popular, is terribly expensive.

In the recent discussions for passing a national universal coverage plan, the president has noted correctly that any large health care system could reduce costs in numerous ways. For instance, a government system could rate the efficacy of different treatments to determine whether they are cost-effective. A government plan could also reduce costs by denying expensive treatments that only extend life by a few months. Also, paying doctors for outcomes, rather than services, (paying for the output, rather than the input) could reduce costs and potentially improve care. Finally, the size of any government plan gives the government great negotiating power to bargain down prices from pharmaceutical companies, hospitals and doctors.

Many of these items sound like health care rationing. In fact, they are, but as with any other limited resource, we can only afford as much health care as we’re willing to pay through tax hikes.

The New York Times recently carried an interesting op-ed advocating rationing.  The article poses some good questions that will have philosophers and ethicists arguing from their armchairs.  For instance,

You have advanced kidney cancer. It will kill you, probably in the next year or two. A drug called Sutent slows the spread of the cancer and may give you an extra six months, but at a cost of $54,000. Is a few more months worth that much?

Furthermore, does it matter if the patient is 85-years-old or 16-years old?  Some will immediately see a problem with a policy that makes distinctions like this in choosing to withhold care.  Ethically, many (I’m especially looking at you, Immanuel Kant) would be outraged that we would make such distinctions— or even any distinction— to choose to ration care.  One life is as equally worthy as another, they would say.  A rich country cannot issue a death sentence simply because care is deemed “not worth it,” they might add.

A utilitarian view would probably side with any budget analyst or any health agency head suffering from budget constraints.  Whatever provides the greatest overall benefit (to society as a whole) for the least cost is the ideal policy.  An extra month of life for an elderly person may not offset the additional tax burden (or commensurate government service reductions) to cover the cost.

However, if you’re the one being denied care under this policy, you probably won’t have much sympathy for the utilitarian view.  After all, you paid taxes to support this system and the entire pretext for this costly government program was to ensure that people wouldn’t suffer unnecessarily because of cost.

Once the program is grouped with other so-called entitlements, people will view it as, well, an entitlement.

Enough philosophy.  The reason the current reform proposals are doomed is that they will require too many sacrifices from too many powerful interest groups.  First, after years of scolding employers who provide little or no coverage for their employees, those employers who do provide superb coverage may now face a tax for doing the right thing.  Now, some in the House are proposing a tax hike on those making more than $280,000 annually.  The main problem with this, of course, is that many small businesses are sole proprietorships and the companies’ incomes are reported on the tax returns of their owners.  A tax hike on “the rich” will also hike taxes on many small-business owners.  A business tax hike, especially in this economy, could discourage small businesses from hiring.  A tough sell when the unemployment rate just topped 10%.

Furthermore, for true reform to actually reduce costs, any government plan will have to reduce payments to doctors and hospitals, who have both profited nicely from our current arrangement.  Massachusetts, with its universal coverage plan, is continuing to suffer escalating health care costs.  The commonwealth is now considering cutting payments to doctors and hospitals.  Opposition from the health lobby is muted for now:

Representatives of [health care] groups joined in a unanimous commission vote for the recommendations. But they made clear that their continued support might depend on devilish details, the kind that will determine whether their members are net losers and, if so, by how much.

Opposition will likely build as the costs become more evident.

On the national scene, the head of the Congressional Budget Office, the non-partisan Congressional agency tasked with calculating the costs of proposed legislation, testified that neither the House nor Senate bills impose the measures necessary for reducing costs.  The Post writes,

Although the House plan to cover the uninsured, for example, would add more than $1 trillion to federal health spending over the next decade, according to the CBO, it would trim about $500 billion from existing programs — increasing federal health spending overall.

Some provisions of the bill have the potential to trim spending further, [CBO head] Elmendorf said, but “the changes that we have looked at so far do not represent the sort of fundamental change, the order of magnitude that would be necessary, to offset the direct increase in federal health costs that would result from the insurance coverage proposals.”

That is because the fundamental change would require a politically impossible degree of arm-twisting from various interest groups, including doctors, pharmaceuticals, hospitals, private insurers, patients, and taxpayers.

The recent revelations that Councilmember Marion Barry (D-Ward 8 ) funneled a city contract to his on-again-off-again girlfriend (Mr. Barry canceling and renewing the contract in sync with the relationship’s woes) has brought about a need to strengthen the city’s ethics laws.  Though conflict-of-interest laws prohibit giving contracts or positions to member’s of an official’s own household (the law defines this as immediate family), there is no restriction against giving contracts to girlfiends or boyfriends, who may in fact share interests and advantages akin to those of legal family.

Though using public funds to enrich one’s boyfriend or girlfriend (or mistress— Mr. Barry, “standing moral compass of God” is still married to someone else, lest we forget), may not be illegal, but it is unethical.  Public faith in good government rightly erodes at the sight of people of questionable qualifications reaping public benefits simply for being in bed with the powerful (in this case literally).

Mr. Barry, when asked if he would award city money to a girlfriend, responded, “Unless the law changes, why not?”

Mr. Barry’s ethical lapses are frequent enough that such a remark should not come as a surprise.  During his mayoralty, crime in the District soared, schools soured to become some of the worst in the nation, and people fled the city just so they could receive decent government services.  In 1990 Mr. Barry was arrested and caught on camera smoking crack in a hotel room with a woman who was not his wife.  Recently it was revealed that Mr. Barry failed to file Federal tax returns for eight of the last nine years and had also neglected to file city tax returns.

No one who so carelessly disregards the tax law should be in a position to determine how public funds are spent.  Nobody is above the law and it is time the city codify this principle further.  We propose the city council enact the following law to ensure that anyone running for elected office in the city has filed all tax returns as required and does not owe any outstanding debts to the city.

WHEREAS equality before the law and obedience to the law are necessary for a fair and free society, two requirements listed below will be added to D.C. Code § 1 – 1001.02 defining “qualified electors.”  For the general election following the ratification of this bill, a “qualified elector” will be defined as a person who meets the existing requirements and

1. Who has filed all tax returns to the District government as required; and
2. Who is not delinquent in the payment of any taxes, fees, or judgments to the District government.

The District of Columbia Board of Elections and Ethics will certify these additional requirements.

George Will sarcastically notes that the fuel-efficient-car-of-tomorrow boosterism is moot now that gas is cheap again:

The two best-selling vehicles in America this year are large pickup trucks (Ford F-Series and Chevy Silverado). In February, Toyota sold 13,600 Tundra and Tacoma pickups and 7,232 Priuses. It sells the Prius at a loss, which it can afford to do because it makes pots of money selling pickups. Has the Car Designer in Chief, a.k.a. the president, considered the possibility that what he calls “the cars of tomorrow” will forever be that?

The American car-buyer likes big cars, regardless of fuel-efficiency. If the president wants Americans to move away from gas profligacy—a position that seems to be politically popular—he might suggest raising the Federal gas tax to make fuel efficient cars more financially attractive. Though I think this is a wise idea eventually (raising taxes right now in a recession is unwise), I still hold that a Congress bowing to popular will (as it typically should) will handily defeat any such proposal.

The public may agree with statements that the country is too dependent on oil, but its behavior suggests the complete opposite.  The Obama energy agenda may not be as popular as he might think.

Public anger over the bonuses paid by AIG was well-deserved, but the resulting tax action by the House was unwise.

The House voted 328 to 93 on Thursday to confiscate via the tax code 90% of retention bonuses paid by recipients of TARP funds.  Though it is a moral hazard to reward bonuses for huge losses, the White House has even admitted that nothing in the TARP rules prohibits recipients from writing out such hefty retention checks in the first place.

Rep. Charles Rangel, the chairman of the House Ways and Means Committee, the committee that writes the tax code, was at first possessed by a rare fit of good judgment in cautioning his colleagues against using “the [tax] code as a political weapon.”  However, as public outrage mounted, Mr. Rangel himself sensed which way public opinion was going and introduced the confiscation measure.  (Mr. Rangel himself is beset by his own tax, rent-control, mortgage, and car scandals, but that’s “none of your goddam business.”)

This tax risks poisoning the TARP program altogether since banks will balk at terms that require them to abrogate existing contracts and that force them to lose necessary talent to competitors. It also sets an example that all future business decisions are subject to political, not economic, scrutiny.  Though it is fair that recipients of public money be held to public standards of accountability—as politicized as that may be—it is important that Congress and the Treasury view these banks as investments; when they lose, the public loses.

Even if both houses pass the measure and the President signs it (his press secretary says he’s open to the idea), it will face Constitutional challenges in the courts for several reasons:

It is a bill of attainder, which punishes people or a group of people without the benefit of a trial.  Since Members of Congress have already publicly expressed that the purpose of the bill is to punish a particular group of people, they may have unwittingly proven the case to a court that their intention was never to set a national tax policy, but rather to react against an act that benefited a short list of people.

Similarly, the bill denies due process.  The Fourteenth Amendment stipulates that the government may not “deprive any person of life, liberty, or property, without due process of law.”  However unwise the bonuses were, they were lawfully distributed, and an explicitly confiscatory tax against this group of recipients without any sort of trial deprives the recipients of any sort of due process.

Furthermore, the tax is an ex post facto law, confiscating income already lawfully distributed.  Though Congress certainly has the authority to tax and to tax income already distributed (i.e. existing wealth), the power to tax involves the power to destroy, and there is no doubt as to the inention of this onerous 90% tax rate.

The bonuses amount to a tiny fraction of a sliver of the TARP, but as we have argued before, even a small portion misspent is still irresponsible.  Nonetheless, some commentators on the Right have labeled this row “cosmic myopia” and a “bonfire of the trivialities.”

Ideally, Congress and the Administration would tie future compensation packages to performance, but in the rush for due accountability, we cannot ditch the rule of law.

Today’s New York Times article on Massachusetts’s universal health insurance plan reveals one major obstacle to a nationwide plan:

Those who led the 2006 effort said it would not have been feasible to enact universal coverage if the legislation had required heavy cost controls. The very stakeholders who were coaxed into the tent — doctors, hospitals, insurers and consumer groups — would probably have been driven into opposition by efforts to reduce their revenues and constrain their medical practices, they said.

Though the President and many in Congress promise a universal coverage plan for the nation, they have not publicly acknowledged that the only feasible way to implement it will require the costly appeasement of various lobbies opposed to cost-controls.

The President rightly criticized Medicare Part D’s statutory inability to bargain down drug prices from pharmaceutical companies, but will he stand up to doctors and hospitals and bargain down fees for doctors visits and hospital stays? Will he propose limits on malpractice damages thereby limiting the cost of malpractice insurance, but also limiting lawyers’ incomes? Will he demand that insurance companies accept everyone regardless of condition, even if it raises the premiums for everyone else? Will he try to relieve medical school debt by forcing down tuition costs?

If not, or even if these necessary financial controls are delayed a few years, where does Pres. Obama intend to find the money for this?  He is considering taxing employee-provided health benefits, a part of the McCain platform he criticized while running for office.  Though a wise idea, the reality of any tax he would impose would contradict his campaign rhetoric (though this wouldn’t be the first time).

A nationwide health insurance plan, though politically popular, would require taxes and fees that would likely prove unpopular, not only among the general public, but among key Democratic constituencies (e.g. lawyers, doctors, professors) as well.

Rarely does our culture explicitly extol the virtues of money.  It’s a bit crass, we’re told.  Money concerns, however, have a way of focusing minds on things that matter and away from faddish diversions.  There is only so much airtime and so many op-ed pages and so many emails to Congressmen that could ever be generated during the lifespan of any political controversy cycle.  When there’s nothing else serious to talk about, “cultural” issues (e.g. God, guns, gays, etc.) are afforded their fifteen minutes.

Mark Rich in the Times writes that in this economy, where concerns of money trump all others, the culture warriors of the past 20 years are getting laid-off, as President Obama reverses the global gag rule and stem cell policies of the Bush Administration.

What has happened between 2001 and 2009 to so radically change the cultural climate? Here, at last, is one piece of good news in our global economic meltdown: Americans have less and less patience for the intrusive and divisive moral scolds who thrived in the bubbles of the Clinton and Bush years. Culture wars are a luxury the country — the G.O.P. included — can no longer afford.

Yes and no.  While the moral scolds are still scolding and their followers are still reiterating their specious talking-points, other issues are crowding them out.  Rich is wrong to think that “Americans have less and less patience” with those who want to teach creationism in school (a majority of the public wants this), or to keep the gays for marrying (even a majority of Californians won’t allow it).  These erstwhile “values voters” still exist in large numbers, but are distracted by more pressing economic concerns.  It’s not so much a matter of patience as it is a matter of attention.  When the economy’s decline has settled, the silent majority (Rich admits their silence, but not their majority) shall once again savor the luxury to take offense to Janet Jackson’s exposures and other such non-issues.

* * *

There’s one curious contradiction in Rich’s article:

As Michael A. Lerner writes in his fascinating 2007 book “Dry Manhattan,” Roosevelt’s stance reassured many Americans that they would have a president “who not only cared about their economic well-being” but who also understood their desire to be liberated from “the intrusion of the state into their private lives.” Having lost plenty in the Depression, the public did not want to surrender any more freedoms to the noisy minority that had shut down the nation’s saloons.

F.D.R. did not end “the intrusion of the state into … private lives.”  F.D.R. presided over a massive expansion of government intrusion, mandating all sorts of new taxes and social welfare schemes, not to mention the extensive economic regulation.  Whether or not one thinks the New Deal was wise, there is no doubt that F.D.R. expanded government intrusion.

Today The Post and the Gray Lady are publishing several good op-eds on Obama’s policies and methods.

Michael Gerson argues that Obama’s promise of change now rings hollow.  While Gerson’s criticism of Obama’s governing style and the Limbaugh affair are largely irrelevant, he rightly notes that the President is continuing with business-as-usual, i.e. promising everything for the price of nothing:

The pledge of “honesty” and “sacrifice” has become the deceptive guarantee of apparently limitless public benefits at the expense of a very few…. None of this is new or exceptional — which is the point. It is exactly the way things have always been done.

Charles Krauthammer argues that Obama’s stem cell and science policy is unsophisticated and contains a significant logical contradiction:

[The President declared] that we must resist the “false choice between sound science and moral values.” Yet, exactly 2 minutes and 12 seconds later he went on to declare that he would never open the door to the “use of cloning for human reproduction.”

Does he not think that a cloned human would be of extraordinary scientific interest? And yet he banned it.

Is he so obtuse as not to see that he had just made a choice of ethics over science?

Eugene Robinson defends Obama’s method of confronting all challenges (i.e. banking, health care, entitlements, infrastructure, education, etc., etc.) all at once.  He astutely dismisses the critics:

What these critics really want, though, is to delay or derail the progressive reforms that voters elected President Obama to carry out.

Judging by the scarcity of fiscal discipline over the past few years, it’s probably wise to characterize the opponents of the all-at-once agenda as really just opposing the agenda part, not the all-at-once part.

We, however, still hold by our belief that when governments rushes policy, the results are rarely wise (e.g.).

David Brooks (a conservative!) praises Obama’s nascent education policy as recognizing the importance of familial influence, teacher accountability, and charter school competition.  He writes that the President “has broken with liberal orthodoxy on school reform more than any other policy”.

Robert J. Samuelson in the Post reiterates my point (though I doubt he reads Monumentality) on how the President’s budget, entitled A New Era of Responsibility, is anything but responsible.

If Obama were “responsible,” he would conduct a candid conversation about the role of government. Who deserves support and why? How big can government grow before higher taxes and deficits harm economic growth? Although Obama claims to be doing this, he hasn’t confronted entitlement psychology — the belief that government benefits once conferred should never be revoked.

Is it in the public interest for the well-off elderly (say, a couple with $125,000 of income) to be subsidized, through Social Security and Medicare, by poorer young and middle-aged workers? Are any farm subsidies justified when they aren’t essential for food production? We wouldn’t starve without them.

Given an aging America, government faces huge conflicts between spending on the elderly and spending on everything else. But even before most baby boomers retire (in 2016, only a quarter will have reached 65), Obama’s government would have grown. In 2016, federal spending is projected to be 22.4 percent of GDP, up from 21 percent in 2008; federal taxes, 19.2 percent of GDP, up from 17.7 percent.

I’m still waiting for a President willing to tell the truth: that we should pay the higher taxes necessary to fund the services we demand, or, more broadly, that we can’t always get what we want.

Now that would be an act of responsibility.

Many small businesses such as shops and doctors’ offices are sole-proprietorships, meaning the income of the store is counted on the owner’s tax return as his own personal income. As a result, many small business owners are grossing more than $250,000 annually in income, even though they must pay rent, insurance, and employees’ salaries from this income, leaving only a modest sum to remain for the owner.

These business owners, because their personal income is combined with their business income, may face higher taxes under Pres. Obama’s tax proposals. What makes this coming tax debate interesting is that tax increases will heavily fall on people who voted for the President in the first place. Is this an instance of betrayal or an instance of you get what you vote for?

Victor Davis Hanson at RealClearPolitics, addressing the new President, discusses the implications of classifying small-business owners as “the rich”. He very smartly identifies the Democratic constituencies that will face higher tax bills under the President:

In fact, for your [spending programs] to succeed, you must go after the upper, upper middle-class, those making between $250,000 and $600,000 who are restaurant owners, home builders, labor contactors, architects, surgeons, engineers, hospital executives, college administrators, Ivy-League law professors, and many dentists.

These households are wealthy, yes; but they don’t own or even fly on $50 million private jets or host private Super Bowl parties. Their income is all reported, and with such good salaries come high insurance and, in the case of business, constant reinvestment and expensive inventories. They are not greedy, but the bulwark of the United States’ productive classes who in aggregate pay over 40% of the collective income taxes, and provide most of the jobs in the country. Under your plan many in these high-tax states will pay nearly 70% of their incomes in FICA, Medicare, federal income, and state income taxes. Why gratuitously mislead the American people that those for whom you will lift FICA ceilings or up their IRS bites to 40% are in any way synonymous with the super-rich? Remember the very, very wealthy voted overwhelmingly in your favor precisely because their riches gave them immunity from high taxes, and in many cases they were far removed from the everyday risk and worry of owning a hardware store or trying to keep together a family-owned construction firm. George Clooney is a world away from a paving contractor, just as making $400,000 a year on call 24/7 is not quite making $40 million investing or $2 million for a cameo.

So please no more intellectual dishonesty, Mr. President. Those in great numbers who will pay your higher taxes are not really the rarer Warren Buffets, Bill Gateses, Diane Feinsteins, Teresa Heinz Kerrys, Sean Penns, George Soroses, Oprah Winfreys, or Tiger Woodses, whose mega-wealth really does result in private jet rides, and yet exempts them from worries that increased taxes might wreck their small businesses. (my emphasis)

Some business owners facing higher taxes may find it more economical to incorporate their businesses and file taxes separately for their respective businesses. If this is the case, the President’s plan to boost revenue to pay for all his programs may not collect as much as he anticipates.

(No worries, though, since we can always foist these financial burdens on the unborn. Since when do they vote?)

The President’s opponents highlight that his aim is to redistribute wealth downward à la Robin Hood, but the President himself prefers to highlight his aim to provide such necessities as universal health insurance coverage. However, if the President’s aim were merely to provide necessities, it’s only fair that he come clean with the true costs of these programs.

The Bush Administration, wanting to hide its deepening budget deficits, cynically and dishonestly refused to count Iraq spending as part of the normal budget, instead requesting the money as “emergency” appropriations. Though Pres. Obama is rightly including Iraq spending as part of the normal budget, he is underestimating the costs of his forthcoming health care plans, somehow imagining that taxing “the rich” (celebrities, hedgefund managers, as well as roofing company owners) can somehow finance the all-ages version of the most out-of-control government medical insurance program in the nation.

There is no such thing as free healthcare and the bill must be paid somehow, be it through escalating private premiums or through escalating tax rates.  The President is wisely persuing cost reductions through large-group bargaining of drug prices, digitization of medical records, and research into best practices to reduce mistakes.  These are worthy goals, no doubt, but like earmark reform, they will merely dent expenditures slightly, leaving hefty bills to be paid through the public treasury.

The super-rich can afford marginal increases in their tax bills, but sole-proprietors grossing more than $250,000 may find this President rather taxing.

Median sales prices for homes are dropping nationwide and assessments are rightly dropping with them. This comes as good news to taxpayers, but the DC city council is annoyed that the tax assessment appeals board is granting appeals.

In a meeting with Gandhi yesterday, D.C. Council members questioned whether the quasi-independent appeals board has enough real estate expertise and whether it is caving too quickly to property owners.

“Do we feel the need to explain to the board that what they do directly affects our revenues?” asked council Chairman Vincent C. Gray (D).

Some members suggested changing the format and composition of the board.

So according to Vincent Gray and other members of the council, the assessment board is supposed to politicize assessments to suit the council’s fiscal indiscipline. The council could always just raise the tax rate to compensate for the loss, but that would prove politically unpopular; it’s always easier to scapegoat the tax collector.

President's Levee, or All Creation Going to the White House, Washington, March 4, 1829, available via the Library of Congress.

The D.C. City Council voted to extend, just for the inauguration, the hours during which bars and clubs may serve alcohol.  Some city residents objected to the hastily passed bill and the mayor has qualified his support.  Nonetheless, the legislation will likely become law.

Cue the teetotalers!

Two members of the Senate, the body to which District residents are deprived the right to send representation, have objected to the plan.  Sens. Feinstein (D-CA) and Bennett (R-UT, surprise, surprise) fret like John Stuart Mill—who, coincidentally, served in the House of Commons—asserting “that the benefits of this emergency legislation, passed with little public notice, are far outweighed by its possible consequences.”

These Senators do no represent the District and should not horn-in on the city’s democracy.  Furthermore, the city cannot be expected to pass-up the expected windfall in tax revenue this inauguration will generate.  In these tough economic circumstances, who doesn’t want outside visitors to empty their pockets into one’s local treasury?

David Brooks captures two elements of Obamania.  First is its close association with privilege:

Obama is not only a member of this temperate [post-boomer] generation, but of its most educated segment. He has lived nearly his entire adult life within a few miles of one or another of the country’s top 10 universities.

His upscale, post-boomer cohort has rallied behind him with unalloyed fervor. Major college newspapers have endorsed him at a rate of 63 to 1. The upscale educated class — from the universities, the media, the law and the financial centers — has financed his $600 million campaign (which relied on big-dollar donations even more heavily than George W. Bush’s 2004 effort). This cohort will soon become the ruling class.

Second is its unpreparedness in handling the nation’s challenges.  The ruling elite will come to face problems America has not seen for decades.  Deflating asset prices, higher unemployment, and lower tax revenues will challenge any new administration, no matter who wins tonight.  Can the young Obama supports, roused to the polls by promises of hope and change, fully comprehend the pending hard-nosed politicking?

Raised in prosperity, favored by genetics, these young meritocrats will have to govern in a period when the demands on the nation’s wealth outstrip the supply. They will grapple with the growing burdens of an aging society, rising health care costs and high energy prices. They will have to make up for the trillion-plus dollars the government will spend to avoid a deep recession. They will have to struggle to keep their promises to cut taxes, create an energy revolution, pass an expensive health care plan and all the rest.

….

We’re probably entering a period, in other words, in which smart young liberals meet a stone-cold scarcity that they do not seem to recognize or have a plan for.

Indeed, the boomers continue to haunt American politics, even if one of their representatives is not in the Oval Office.  Hope and change are good talking points, but health care plans cost money and most economists agree that raising taxes right now would further damage the economy.  We can’t hold hands to make tough decisions; some constituencies will inevitably lose and if Sen. Obama wins the election, it won’t take long before some of his young naifs are disillusioned with the messiness and required compromise of democratic politics.

A President Obama may claim to represent change, but as Brooks astutely concludes, “In an age of transition, the children are left to grapple with the burdens of their elders.”

David Brooks, while assuming that the poll numbers will carry Obama down the street to the White House, thinks the nation is on an inevitable political swerve from the big-spending Right to the big-spending Left:

Over the past decade, liberals have mounted a campaign against Robert Rubin-style economic policies [of free-trade and balanced budgets], and they control the Congressional power centers. Even if [Obama]’s so inclined, it’s difficult for a president to overrule the committee chairmen of his own party. It is more difficult to do that when the president is a Washington novice and the chairmen are skilled political hands. It is most difficult when the president has no record of confronting his own party elders. It’s completely impossible when the economy is in a steep recession, and an air of economic crisis pervades the nation.

David, you’ve got a lot of ‘splainin to do.

First, I will concede that the Democratic Party is much more xenophobic and jingoistic on trade than it was during the Clinton years (see the recent votes on CAFTA and the trade agreement with Korea).  The party’s adherence to balanced budgets is a bit unknown, since the GOP has also found it shamefully convenient to buy political advantage through wasteful spending (the bad, the ugly).

However, it is fair to say that while the record shows that Sen. Obama is an obedient servant of the Democratic leadership, it is not fair to say that Barack Obama himself is as obedient.  While he was starting his political career in Chicago, he frequently bucked the South Side Chicago political machine in the pursuit of his own political ambitions, paying no heed for the establishment’s requests that he “wait his turn.”

To curry favor with the Left, he has established a starkly partisan voting record on the Hill, but since his nomination, he has morphed toward a more centrist view (see the FISA vote, his new-found “discovery” of the Second Amendment).

Brooks is right though.  With a wobbly economy and no shortage of government promises, if financial reality coexists with campaign promises (either Obama’s or McCain’s) the National Debt is set to explode.

I’m nearing the end of Alan Greenspan’s The Age of Turbulence and came across his criticism of the Kyoto Protocol, an agreement environmentalists tend to adore, but which will inevitably have undesirable economic consequences for much of the world’s poor.  (My emphasis is added below)

There is no effective way to meaningfully reduce emissions without negatively impacting a large part of the economy. Net, [a capt-and-trade system] is a tax.  If the cap is low enough to make a meaningful inroad into CO₂ emissions, permits will become expensive and large numbers of companies will experience cost increases that make them less competitive.  Jobs will be lost and real incomes of workers constrained.  Can a national parliament vote to impose costs on constituents when the benefits of its actions are spread across the globe, wholly independent of where the CO₂ savings come from?

More generally, can a democratic government stand against an accusation that whatever savings in CO₂ emissions are pressed on its constituents, they are likely to be more than wiped out by increased emissions coming from developing countries that were not included in the agreement reached in Kyoto in 1997?  And can developing countries be asked to forgo creating the carbon emissions associated with economic development?  Should access to “free” pollution permits be shut off only after a large number of countries have become developed?  I doubt very much that a Kyoto-type accord will bring world agreement on some penalty for the emissions of greenhouse gasses.  Spewing CO₂ into the atmosphere is as much a violation of property rights as my dumping refuse into my neighbor’s yard.  But protecting such rights and assessing the costs of an infringement are exceptionally difficult because monitoring the cost is not feasible.  Our recent difficult history with international agreements requiring broad acceptance, whether in the World Trade Organization, the United Nations, or any other world forum, makes me pessimistic.  Cap-and-trade systems or carbon taxes are likely to be popular only until real people lose real jobs as their consequence.

We can summarize Greenspan thusly:

1. The Cost: Reducing emissions by fiat (either by cap-and-trade or by a carbon tax) will cost polluters money.
2. The Benefit: The benefits are a public good, indivisible and non-exclusionary.  Thus, non-participants will benefit no matter what.
3. The Politics: The public is unlikely to bear the costs of a system whose benefits are diffused and even visited upon non-participants.

Both John McCain and Barack Obama support some sort of carbon tax.  Though it is politically popular to show that one is “doing something” about a popular political issue, it will be interesting to see how the candidates respond to the details.  What happens when a carbon tax renders entire American industries unprofitable?  What happens when energy-intensive manufacturing jobs, often staffed by the lower- and lower-middle class, must lay off workers simply to pay for carbon permits?

If lower- and lower-middle class workers must face hardship while high-paid tax accountants and lawyers face minimal costs increases, are we really implementing a just tax system?  These are difficult questions to answer and though I know public opinion favors “doing something” to combat global warming, I suspect much of that support will wilt when it becomes clear that people of modest and meager means will face real hardship.

Cultivating One's Mind. Source: New York Times.

Berea College in Kentucky doesn’t charge its students tuition.  This contrasts sharply with many of the nation’s most prestigious schools, which charge hefty sums for tuition despite their astounding endowments.  Are the Ivies just become havens of America’s intellectual and economic elite?  The New York Times thinks so:

[A]ccording to 2002 data, only one in 10 of the students at the nation’s most selective institutions come from the bottom 40 percent of the income scale. And the proportion of low-income undergraduates at the nation’s wealthiest colleges has been declining, as measured by the percentage receiving federal Pell Grants, for families with income under about $40,000. At most top colleges, only 8 to 15 percent of students receive Pell grants.

The Senate and IRS are now investigating whether universities should be required to spend 5% of their endowments on education annually in order to maintain their tax exempt status.  The IRS and Congress tend to prefer that tax exemptions apply only on income that suits the public good.  If hefty endowments aren’t being used to broaden access to higher education, what public good do they serve?

Several of the Ivies have stepped up tuition assistance for students from low-income families, but, as the Times points out, the student bodies are becoming ever more priviledged.  Harvard, Yale, et al., beware: continue to lock out the poor and you may have to hire more accountants.