Heritage Weekly Notes: 11.9.13

Cash for clunkers’ failure should now be familiar. Cash for Clunkers—in which the government gave vouchers for the purchase of a new car to people who turned in their old gas guzzlers—didn’t help the economy, didn’t help the poor, and it didn’t help the environment says a new report by Ted Gayer and Emily Parker. George Will summarizes:

Most of the 677,842 sales were simply taken from the near future. That many older vehicles were traded in—and, as required by law, destroyed. Gayer and Parker accept as reasonable an estimate that the cost per job created by the program was $1.4 million. […]
Because the program was not means-tested, it had only a slight distributional effect of the sort progressives favor: Voucher recipients had lower incomes than others who bought new cars in 2009. Against this, however, must be weighed the fact that the mandated destruction of so many used vehicles probably caused prices for such vehicles to be higher than they otherwise would have been, meaning a redistribution of wealth adverse to low-income consumers.
As for environmental benefits from Cash for Clunkers, the reduction of gasoline consumption was small and “the cost per ton of carbon dioxide reduced by [the program] far exceeds the estimated social cost of carbon.” [Washington Post, November 6; see also “Cash for Clunkers: An Evaluation of the Car Allowance Rebate System,” by Ted Gayer and Emily Parker, Brookings Institution, October 31]

But it was a preview of what can go wrong when the government tries to rig demand. Will, again, points to a key passage, this one from a New York Times report:

Around the country, dealers had put off the laborious task of applying for the rebates? […] which requires entering the 17-character identification numbers of each vehicle to be scrapped, scanning images of proof of insurance and filling out other paperwork. The computer system was overloaded, according to the dealers. They said they would finish one page in the application, hit enter and nothing would happen. Eventually a message would appear notifying the dealer that the page had “timed out.” Tom Frew, the business manager at Galpin Motors in Los Angeles, said that he needed 35 tries to register just one of the company’s 11 dealerships on the day that the program opened because of problems with the government Web site. On Friday, he spent an hour processing just one rebate application, he said. [“In Congress, a Jump-Start for Clunkers,” by Matthew L. Wald, New York Times, July 31, 2009]

The history book on the shelf keeps repeating itself.

There’s a marriage penalty in Obamacare. Garance Franke-Ruta explains:

Any married couple that earns more than 400 percent of the federal poverty level—that is $62,040—for a family of two earns too much for subsidies under Obamacare. “If you’re over 400 percent of poverty, you’re never eligible for premium” support, explains Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation.
But if that same couple lived together unmarried, they could earn up to $45,960 each—$91,920 total—and still be eligible for subsidies through the exchanges in New York state, where insurance is comparatively expensive and the state exchange was set up in such a way as to not provide lower rates for younger people. (Subsidy eligibility is calculated using a complicated formula involving income in relation to the poverty line, family size, and the price of plans offered through a state’s marketplace.) […]
“In the tax code, you have a different set of tax rates for married couples that mitigates the marriage penalty to some degree,” says Robert Rector, a senior research fellow at the Heritage Foundation who has been writing about the marriage penalty in health reform since 2010. Under Obamacare, however, there are “dramatic” penalties that are “substantial—particularly with couples in the upper age range,” he says.
“What you are doing is saying ... you have to pay a penalty of multiple hundreds of dollars—a substantial portion of your income—to stay married,” Rector says. “It’s saying society is basically hostile to the institution of marriage.” [The Atlantic, November  5]

Health care entitlements can be repealed, and history proves it. Now that millions of Americans have been told the health insurance they had chosen to buy with their own money isn’t good enough under the new ObamaCare regulations and that they will have to buy more expensive insurance instead, perhaps it’s time to revisit the idea that federal entitlement programs can never be repealed after the benefits begin to flow.
Actually, that did happen once. In November 1989, Congress repealed the “Medicare Catastrophic Coverage Act of 1988.” The law provided new hospital services, home health care services, and a drug benefit for Medicare beneficiaries, while putting lower limits on out-of-pocket expenditures. But seniors didn’t like it. Ed Haislemaier wrote about the problems with the law at the time:

Responding to a flood of angry phone calls and letters from their elderly constituents, a growing number of Congressmen and Senators are seeking to repeal or revise the “Medicare Catastrophic Coverage Act of 1988” enacted in June of that year. The amount and the tenacity of elderly opposition to the law, particularly to the new taxes that will fund it, took many Congressmen by surprise. It also has provoked an open and widespread grass-roots rebellion within the nation’s largest senior citizen lobby, the American Association of Retired Persons (AARP), whose national office pushed hard for the original legislation. Already, some 30 bills have been introduced to repeal the catastrophic act in whole or in part or to change the way it is financed. More bills are expected. […]
The elderly understandably are most upset about the new income surtax used to fund two-thirds of the catastrophic act. The surtax penalizes prudent senior citizens who saved and invested for their retirement and those who choose to supplement their income by continuing to work. Worse still, the surtax rate is scheduled to increase annually with no limit. This makes the surtax a constantly escalating assault on the financial health and independence of America’s retirees. […]
When the program was enacted, the Congressional Budget Office estimated that the surtax would collect $21.7 billion in revenues in fiscal 1989 through 1993. The CBO now estimates that the new tax will collect $25.9 billion during that period. The Bush Administration puts the amount at $28.3 billion. [“Dealing with the Protests over the Medicare Catastrophic Coverage Act,” by Edmund F. Haislmaier, The Heritage Foundation, August 23, 1989]

Lesson: Everybody likes to hear promises of benefits but when they learn they will face significant new costs as part of the bargain their views of an entitlement program can shift quickly. People are now finding out how ObamaCare will cost them. [See also: “The Prospects for Ending Obamacare: Learning from Health Policy History,” by Robert E. Moffit, The Heritage Foundation, June 21, 2010.]

Politifact lies about checking facts. Between 2008 and 2012, Politifact, the so-called fact-checking project at the Tampa Bay Tribune, ran six columns rating the truthfulness of claims regarding President Barack Obama’s various statements that under Obamacare people could keep their health insurance if they like it. That’s according to a tally by Sean Higgins at the Washington Examiner. [Washington Examiner, November 4]
In none of those columns did Politifact hold the President accountable for telling a lie. The best Politifact could do was rate the President’s claim “half true.” It wasn’t totally false, Politifact reasoned, since “one of the points of reform is to change the way health care works right now.” Politifact might as well have said: “Anybody who looks into it must realize the claim can’t be true, so it’s not really a lie to say it.”
By the way, that reasoning, from an August 2009 column, perfectly tracks the liberal talking points now. Jared Bernstein, for example, defends the President by writing: “[A]s clearly stated at the time, if such a plan were to significantly change in ways that are inconsistent with consumer protections under the ACA, it would lose its grandfathered status. Like I said, this has been known since the law was written.” [On the Economy, October 29]
Higgins also observes that Politifact regularly engages in “goal-post moving”: While it purports to evaluate the truthfulness of statements, it’s really assessing the merits of Obamacare from a liberal perspective. One example:

Politifact took another swing on June 28, 2012, the same day it was calling Romney a liar. This column reacted to Obama’s statement:
“If you’re one of the more than 250 million Americans who already have health insurance, you will keep your health insurance.”
It was his most definitive statement yet. Politifact noted: “Obama suggests that keeping the insurance you like is guaranteed.”
It nevertheless gave the president a pass because “many Americans already lose their current health plan for reasons that have nothing to do with the new law.” So, hey, what’s the big deal?
Politifact concluded: “Americans on balance benefit from the law’s provisions. We rate Obama’s claim Half True.” [Washington Examiner, November 4]

It’s getting harder and harder to tell a lie these days.

A new employment bill would trample free association. On Thursday, the Senate passed the Employment Non-Discrimination Act (ENDA). If it becomes law, the measure would make it illegal for organizations with 15 or more employees to “fail or refuse to hire or to discharge any individual, or otherwise discriminate against any individual […] because of such individual’s actual or perceived sexual orientation or gender identity.”
Aside from trampling Americans’ right to associate freely as they choose, there are some other problems with the law, observes Ryan Anderson:

ENDA also raises serious concerns regarding religious liberty. Although the bill provides some protections for religious liberty, they are inadequate and vaguely defined. They build on Title VII’s religious-liberty exemptions, which have been subject to repeated litigation with conflicting rulings by different courts.
Still, while it isn’t clear which religious organizations would be exempted from ENDA, it is clear that the bill would not exempt those who wish to run their businesses and other organizations in keeping with their moral or religious values. […]
Issues of sex and gender identity are psychologically, morally, and politically fraught. But we all ought to agree that young children should be protected from having to sort through such questions before an age-appropriate introduction. ENDA, however, would prevent employers from protecting children from adult debates about sex and gender identity by barring employers from making certain decisions about transgendered employees. […]
Moreover, whatever the significance of gender identity, we can’t deny the relevance of biological sex in many contexts. An employer would be negligent to ignore the concerns of female employees about having to share bathrooms with a biological male who says he identifies as female. Failing to consider these repercussions raises a host of concerns about privacy rights. But ENDA would prevent taking these concerns into account. [National Review Online, October 31]

Liberals, this is not the argument you were looking for. Some liberals argue that low-wage-paying employers “cost” taxpayers money when their employees become eligible for public benefits. They haven’t quite thought through the implications of that argument, observes Andrew Biggs:

[The National Employment Law Project] has a new headline-generating report claiming that “Taxpayers are shelling out $1.2 billion a year to help pay workers at McDonald’s.” Overall, they state “the low-wage business model at the 10 largest fast-food companies in the United States costs taxpayers more than $3.8 billion each year.” Low fast food pay, the NELP logic goes, causes employees to become eligible for taxpayer-funded benefits such as Food Stamps and the Earned Income Tax Credit. If fast food chains paid a living wage, NELP argues, taxpayers would save billions.

The idea that welfare programs are a cost to taxpayers created by low-wage paying jobs implies that employers are able to employ their workers at a much lower wage than they would be able to offer absent welfare programs. Biggs points out what that means:

If NELP is right, though, that has important implications for how we view the welfare state. For instance, a dollar-for-dollar offset implies that federal transfer programs drive down working-class wages, since the higher benefits rise, the more wages fall. Thus, according to NELP’s logic, it is federal government policy that lies behind working-class wage stagnation in recent years.
This same logic also suggests that the hundreds of billions spent over decades on social transfer programs for the working poor have done nothing to raise the standard of living of beneficiaries, since every dollar is skimmed off by Ronald McDonald and the shareholders he fronts for. [RealClearMarkets, November 6]

In any case, the idea that people become willing to do the same job for less when the government gives them money makes no more sense than saying that a person becomes willing to take a pay cut because his rich uncle died and left him a fortune. Or, it makes no more sense than saying you found a $100 bill that you had forgotten about, so now you’ll have to lose five $20 bills from your wallet in order to make things even.

The bravest school choice activist: The story of Malala Yousafzai, the Pakistani girl that the Taliban tried to murder, isn’t being told correctly, reports James Tooley:

Education International, the global teachers’ union umbrella group, is typical. Malala is campaigning, they say, so that all can benefit from ‘equitable public education’; that is, government education. The BBC summary of her talk on her 16th birthday to the UN highlighted only ‘her campaign to ensure free compulsory education for every child’. […]
In fact, everything in her life story—related so beautifully in her just-published autobiography, written with journalist Christina Lamb—points to something importantly different. In her life story, she’s not standing up for the right to government education at all. In fact, she’s scathing about government education: it means ‘learning by rote’ and pupils not questioning teachers. It means high teacher absenteeism and abuse from government teachers, who, reluctantly posted to remote schools, ‘make a deal with their colleagues so that only one of them has to go to work each day’; on their unwilling days in school, ‘All they do is keep the children quiet with a long stick as they cannot imagine education will be any use to them.’ […]
In fact, Malala’s life story shows her standing up for the right to private education.
For the school she attended, on her way to which she was famously shot by the Taleban, was in fact a low-cost private school set up by her father. […]
A senior economist at the World Bank, Jishnu Das, suggests that in Pakistan generally there were 50,000 private schools in 2005; that meant one in three of all schoolchildren in private education, many of them attending the kind of low-cost private schools created by Malala’s father. […]
It’s not just in Pakistan. At least half of India’s villages have access to a low-cost private school, and they are estimated to serve the vast majority—70 per cent or more—of the urban poor. […] A study just completed in Lagos State, Nigeria, shows 73 per cent of primary-school-age children are in private schools. In the slums of Monrovia, Liberia, only 8 per cent of children use government schools; while 21 per cent are out of school, 71 per cent—from some of the poorest families on the planet—use low-cost private schools. [The Spectator, November 9]

The Heritage Foundation214 Massachusetts Avenue, NE
Washington, DC 20002-4999
phone 202.546.4400 | fax 202.546.8328