More Data On The Republican Health Care Proposal

Today's WSJ had an Opinion piece from Robert Carroll, vice president for economic policy at the Tax Foundation, and an executive-in-residence with American University's School of Public Affairs. In it he makes the case that even for a family that has to purchase a $14,000 health care policy, the tax credit proposal would save the family money (I used $10,000 in the example I posted yesterday). Click here for the link.


Here is the chart they used:

Also you can read Mr Carroll's full Tax Foundation review by clicking here. I think you will find that the Tax Foundation does a good job of pointing out how both parties try to spin their policies.

The Health Care Debate - Interesting Articles This Weekend

I was surprised over the last year that when the Republicans suggested taxing excess health care benefits that it was not embraced as a good economic policy. I thought it made all the sense in the world

When the current Republican health care proposal was outlined giving individuals a tax credits for their health care coverage and eliminating the deduction at the corporate level I was intrigued. If a company paid $12,000 in health care benefits and the employee replaced that with a personal policy for say $10,000 two things would happen. The employer over time would pay such worker higher wages. So if wages went up $12,000, assuming a 20% tax rate. The employees would be ahead $9,600. Add in the $5,000 tax credit for a family and they would have $14,600 in their pocket to purchase their own $10,000 policy. Seems like its a better system than a national plan

Funny thing, in today's NY Times there was an article where businesses are afraid the Democratic health care proposal could increase employer payroll costs by as much as 6 or 7%. Click here for link.

But the best thing I read on this was a WSJ editorial on October 25 that pointed out that several of the Democratic economic advisers have been big proponents of eliminating the tax subsidy that is only granted corporations, generally supporting a plan such as the Republicans have proposed. Click here for link

Simple Charts to Understand Federal Reciepts and Expenses

In an effort to help explain the current challenges facing the United States the Heritage Foundation has prepared "The 2008 Federal Revenue and Spending Book of Charts". This compilation of information provides a very effective primer on the issues that our government officials need to address - problem is they just seem to ignore the real issues. Click here to access the charts.

Unfortunately, the chart below points out one of the more glaring issues.

The Lending Crisis - Funny What We Don't Listen To....

As we try to understand the carnage we have recently experienced in the stock market and look at the housing bubble and related lending crisis, we need to remember that this was not created by either political party alone, but rather a lot of people who in retrospect didn't really want to listen.

BusinessWeek published a very good article this week discussing how in 2003 Attorney Generals from North Carolina and Iowa met with John D. Hawke, Jr., the then head of the Comptroller of the Currency (he was appointed by the Clinton administration in 1998 and returned to private legal practice with Arnold & Porter in 2004) to voice their strong concerns about lending practices in their states. Click here for the link.

My favorite quote regarding our out-of-control lending system was made by Peter Wallison of The American Enterprise Institute in 1999 in regards to Fannie Mae easing of credit requirements on loans it purchases. He said ''From the perspective of many people, including me, this is another thrift industry growing up around us, if they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' Click here for the link.

Following this action, in November 1999 President Clinton signed the Financial Services Modernization Act of 1999, which overhauled U.S. Banking regulation (picture above). This legislation repealed certain parts of the 1933 Glass-Steagal Act and the 1956 Bank Holding Company Act, paving the the way for many of the abuses that contributed to the economic situation we find ourselves in today.

This legislation was passed with substantial support from both parties, passing the House in a vote of 362 - 57 and the Senate 90-8. So I think both Democrats and Republicans through this legislation were contributors to our current mess. I like when each tries to blame the other.