Thursday, June 28, 2012

A Tax Is a Tax Is a Tax

Of course the stock market dropped about 130 points. Twenty new or higher taxes across-the-board are bad for economic growth, bad for job hiring, bad for investors, and bad for families.

A tax is a tax is a tax, according to Judge Roberts. But he forgot to say that if you tax something more, you get less of it.

Presumably Mitt Romney will make this case in a major way. Hopefully he won’t forget that Obamacare is not just a huge tax hike. It’s also a major new spending entitlement that’s already pegged at $2.5 trillion and will increase the federal debt burden much faster than the GDP expands.

In other words, tax, spend, regulate, borrow. The Obama mantra. Romney must go after it -- time and time and time again.

Bankrupting the economy is not exactly a job-creator.

No Economic Miracle if Obamacare is Overturned

It may well be that the complex tax-and-regulatory mandates embodied in Obamacare have proven to be a deterrent for business job creation. You hear it all the time from men and women in business -- especially smaller businesses, but large companies too.

However, color me skeptical that business will embark on a hiring binge if the Supremes overturn the Obamacare mandate tomorrow. Why? Because the uncertainty premium about future health-care policy is still going to be high, and it won’t be resolved until well after the election. Businesses will have almost no idea what Congress will propose if the Supreme’s strike down Obamacare.

For example, it’s going to take money and high insurance premiums to cover preexisting conditions. There also are the stay-at-home 26 year olds and the so-called health-care market exchanges among the states. There are many other issues to be resolved, but the big question is: How will they be financed?

Will there be a tax? Will there be regulations?
One thing’s for sure. A pure free-market health-care system is not going to happen. Many Republicans talk about a patient-centered consumer-choice system, which would be great. Give consumers tax credits for the same deductions that businesses now have. That also would be great. Include interstate insurance competition. Another winner. Tort reform. Another plus.

But the fiscal reality for health-care insurance and payouts to doctors in hospitals is going to be up in the air for quite some time. It’s a known unknown. And because of that, I think businesses are still going to sit on their hands until they know with greater certainty what the costs of hiring the extra worker is really going to be.

For the foreseeable future, there’s no economic miracle if the Supremes strike down Obamacare (as I believe they will).

Tuesday, June 26, 2012

One-on-One with Marco Rubio

The run-up to the presidential election is really a debate about growth and taxes, Sen. Marco Rubio of Florida told CNBC on Monday.

“Growth helps the debt be more manageable, unemployment, all of these things,” he said in an interview on “The Kudlow Report.”

“Tax increases do not lead to growth,” he said. “The reason why I oppose increases in taxes is not some religious objection, or even an ideological one. It is the knowledge that increasing taxes discourages growth.”

Rubio said that taxes remove money that was going to be spent into the economy. “When the government spends that dollar, they’re going to be a lot less efficient, a lot less stimulative,” he said.

Rubio, who is being considered a vice presidential running mate by presumptive Republican nominee Mitt Romney, also spoke about the debt crisis, health care and Arizona’s controversial immigration law, on which the U.S. Supreme Court ruled Monday.

Asked by Larry Kudlow whether there could be a compromise like the one former Florida Gov. Jeb Bush mentioned in an earlier appearance — $10 of spending cuts for every $1 of revenue increases — Rubio held firm.

“I’ve always believed that was a false choice. The goal is not to give each side what they want,” Rubio said. “The goal is to solve the problem.”

Hours after the nation’s highest court upheld one of the most controversial parts of Arizona’s immigration law — that police can make checks for immigration status — Rubio agreed with the decision. “I’ve always believed the Arizona immigration law was constitutional,” said Rubio, the son of Cuban immigrants, even as he admitted “mixed feelings” about it initially.

Part of the law that was upheld instructs law enforcement officials to verify the immigration status of anyone they detain.

“I understand why Arizona did it. I understand why the people of Arizona are frustrated. I believe they have the 10th Amendment right to pass that law,” he said.

But the federal government, Rubio added, needed to fix the problem with a few steps: “Secure the border, have an electronic verification system in place and modernize our legal immigration so it reflects the 21st century needs of our country.”

Weighing in on health care, Rubio said he would like to see the Obama administration’s Affordable Care Act be replaced with a free-market system in which insurance companies compete for consumers’ dollars.

“I think once there’s more choice, once the consumeris in charge of their health care dollars, the market’s going to meet that demand. Now all of a sudden, companies are going to try to figure out how to make themselves more attractive so that you choose them over somebody else. Right now they don’t have to do that,” he said.

“From the point of view of the marketplace, insurance companies, if they want my business, if I control my health care dollars, and I get to choose from any insurance company I want, I’ll go to you and say, ‘Hey guys, I would love to buy your insurance, but I have a kid who is sick. Will you cover them as well? Because this other guy will cover them, and I’ll go with them if you don’t do the same.’ I think that now the consumer is empowered to make that argument.”

Rubio said that for chronically ill Americans, state governments could create high-risk pools to provide insurance.

“I think that’s the one focused, narrow place where government — state government — can be helpful to folks,” he said.

Rubio was not asked about any possible run for vice president. On NBC’s “Meet the Press” on Sunday, Rubio declined to answer questions about it.

Thursday, June 07, 2012

One-on-One with Jeb Bush

Former Florida Governor Jeb Bush on Wednesday hailed the outcome of the Wisconsin recall election, praising Governor Scott Walker for emboldening conservatives in their drive to slash spending on a national level.

“He’s a courageous leader, and he was rewarded for courage,” Bush said on CNBC’s “The Kudlow Report.”

“In a world of dysfunction, it’s really good that a guy like that, who had the courage of his convictions and acted on them, is rewarded with a victory. I don’t even know why we had the recall to begin with, but if there was to be one, better to win by a bigger margin than he won in 2010, with a higher turnout. I think it’s a leading indicator of one thing, which is the intensity of the conservative side of politics is now stronger than the liberal side.”

The prediction might be partly wishful thinking.

In an exit poll of Wisconsin voters by ABC News, a majority — 51 percent to 44 percent — said they would support President Obama over Republican challenger Mitt Romney if the election were held that day.

Voters also picked Obama over Romney, 42 percent to 38 percent, to do a better job handling the economy, as well as by 46 percent to 37 percent on “helping the middle class.”

Bush said the recall election results — which Walker won with 53 percent of the vote to Democrat Tom Barrett’s 46 percent — represented a “spanking” for unions.

“It’s a spanking because they made it that way,” he said. “They raised the stakes, they made this a national campaign. All of the leadership, Debbie Wasserman Schultz of the Democratic Party and the union leaders all said that all roads lead through Madison, basically as it relates to the national campaign. This was a national statement.”

Walker’s victory, Bush said, also meant the Tea Party movement was alive and well.

“They play a huge role in reminding people we’re on an unsustainable course when it comes to spending at every level, and Scott Walker takes the general belief and does something really novel; he acted on it,” he said.

Bush reiterated that the United States government was on an “unsustainable course.”

“The only reason we’ve been allowed to stay on the course is a monetary policy of zero percent interest rates and the fact that Europe has bigger problems than we do, so... we’re slightly larger than the next midget, basically,” he said.

Creating 40 cents of debt for every dollar of federal spending, Bush added, was “not sustainable.”

“Never in anybody’s wildest dreams could anybody say that this is sustainable, so it seems to me that if you could — if you’re in a position of leadership, you have to find creative ways to find common ground, maybe through the tax code, maybe looking at exemptions,” he said.

Bush took a shot at cutting entitlement programs — Medicare and Social Security — though not by name.

“If you could get a cap on entitlement spending in the out years, you are going to save trillions of dollars, not billions of dollars, and in order to bring people along, are you going to have to look at the tax code,” he said. “And so, dealing with exemptions in some way that might satisfy the left to deal with the unsustainable entitlement problems we face. I don’t know what the exact deal would be, but Chris Christie is right about one thing, it requires leadership.”

Bush also criticized Obama for “dividing” instead of finding “common ground,” while defending his brother, former President George W. Bush.

“You’re in the fourth year of your presidency, it becomes unbecoming to constantly be blaming the past for your failures,” he said. “And it’s just not — I don't think politically — helpful to do that. And so, yeah, I mean, I think my brother gets a bum rap, but that’s just the way it is.”