Hope! Real Medicare-Medicaid Reforms

Sensible reforms to two budget-busting government health care programs may be possible after all. Hotair.com has an interesting post about the bi-partisan behind-the-scenes discussion—including at least 12 Democratic senators—of the Paul Ryan-Ron Wyden compromise to reform Medicare for seniors.

Promising news, too, on the Medicaid program, which Grace Marie Turner calls "a dismal program that finances care for low-income Americans but condemns them to long waits in emergency rooms to get even routine care." Rhode Island "wrested from the Bush administration a global waiver for the state's Medicaid program" in exchange for an experimental block grant with a five-year spending cap of $12.1 billion.

A December 2011 study by the Lewin Group, a consulting firm, found that Rhode Island's block-grant experiment allowed it to lower spending and improve the quality of care while maintaining the same enrollment levels. Patients had better access to doctors, reducing the need for expensive emergency room use. Costly long-term care patients who don't need to be in nursing homes were switched to home and community-based care, for example. The savings total more than $55 million.

Now several members of Congress "have introduced the State Health Flexibility Act (H.R. 4160) to federal funding for Medicaid and the Children's Health Insurance Program into one block grant to the states."

The legislation would give the states maximum flexibility to tailor the program to meet the unique health care needs of their citizens without having to plead with Washington for every minor improvement they want to make.

Importantly, the legislation meets the seven principles for Medicaid reform proposed by 29 governors in June 2011, and it also requires accountability to taxpayers. Annual audits are required in each state to report to the U.S. Treasury, state legislatures and the public to ensure the federal funding is spent properly.

Liberty or Equality? We Can't Have Both

"Freedom and equality are sworn and everlasting enemies, and when one prevails the other dies ... to check the growth of inequality, liberty must be sacrificed." —"The Lessons of History," by Will and Ariel Durant

With liberals pushing tax hikes for the top 1% of Americans, former Senator Phil Gramm and Steve McMillan tackle liberals' misleading claims of income inequality in a lengthy Wall Street Journal article entitled, "The Real Causes of Income Inequality."

Nowhere is the political debate over income inequality more detached from reality than the call for the top 1% of American income earners to pay their "fair share." The Organization for Economic Cooperation and Development (OECD) data on the ratio of the share of income taxes paid by the richest taxpayers relative to their share of income show that the U.S. has the world's most progressive tax burden.

The top 10% of earners in the U.S. pay 35% more of the income tax burden than in Sweden and 22% more than in France. These figures—from the 2008 OECD publication "Growing Unequal?"—include all household taxes imposed on income at the federal, state and local level, including social insurance taxes.

In an eternal irony unique to large welfare states, it is the expansion of government in the name of the poor and middle class that always costs poor and middle-class families the most. When the U.S. collects 16.1% of GDP in income taxes, the top 10% of taxpayers pay 7.3% and the other 90% pick up 8.9%.

In France, however, they collect 24.3% of GDP in income taxes with the top 10% paying 6.8% and the rest paying a whopping 17.5% of GDP. Sweden collects its 28.5% of GDP through income taxes by tapping the top 10% for 7.6%, but the other 90% get hit for a back-breaking 20.9% of GDP.

If the U.S. spent and taxed like France and Sweden, it would hardly affect the top 10%, who would pay about what they pay now, but the bottom 90% would see their taxes double.

Since OECD members have significantly higher consumption taxes on average than the U.S., the total tax burden of bigger government is even more heavily borne by lower-income citizens in developed nations than these numbers suggest.

The real and alarming message in these OECD numbers is that there appear to be limits in the real world to how much tax blood can be extracted from rich turnips.

WSJ: Forget Buffett; it's the Obama Rule

"Forget Warren Buffet...," argues the Wall Street Journal. "This week the Administration officially endorsed what in essence is the Obama Rule: Taxes must be high simply to spread the wealth, never mind the impact on the economy or government revenue. It's all about 'fairness', baby."

The Buffett rule is really nothing more than a sneaky way for Mr. Obama to justify doubling the capital gains and dividend tax rate to 30% from 15% today. That's the real spread-the-wealth target. The problem is that this is a tax on capital that is needed for firms to grow and hire more workers. Mr. Obama says he wants an investment-led recovery, not one led by consumption, but how will investment be spurred by doubling the tax on it?

The only investment and hiring the Buffett rule is likely to spur will be outside the United States—in China, Germany, India, and other competitors with much more investment-friendly tax regimes. The Buffett rule would give the U.S. the fourth highest capital gains rate among OECD nations, according to a new study by Ernst & Young, to go along with what is now the highest corporate tax rate (a little under 40% for the combined federal and average state rate). That's what happens when politicians pursue fairness over growth.

Ferrara: Why Obama Hates Paul Ryan

Peter Ferrara believes President Obama's April 3 address to the Associated Press reveals 4 things: he doesn't understand major issues facing the country, he is hopelessly dishonest about what he does understand, he is demanding left-wing extremism as policy, and he is very angry because he's been shown up by Paul Ryan, "who stepped up in his budget and provided the leadership that Obama promised America in 2008..." Worth a full read.

Scientists Chastise NASA on its Man-Made Global Warming Advocacy

NASA administrator Charles Bolden, Jr. got a letter from 49 former NASA scientists, engineers, and astronauts last week "admonishing the agency for it's role in advocating a high degree of certainty that man-made CO2 is a major cause of climate change while neglecting empirical evidence that calls the theory into questions." The key points made in the letter:

• "The unbridled advocacy of CO2 being the major cause of climate change is unbecoming of NASA's history of making an objective assessment of all available scientific data prior to making decisions or public statements."
• "We believe the claims by NASA and GISS, that man-made carbon dioxide is having a catastrophic impact on global climate change, are not substantiated."
• "We request that NASA refrain from including unproven and unsupported remarks in its future releases and websites on this subject."

Read the full text of the letter.

Dumb Ethanol Law Costs Us Plenty

Each year 1/3 of the U.S. corn crop grown on 33 million acres of farm land is diverted from food to ethanol fuel, and it's caused corn prices to triple since 2005, when the ethanol law took effect. Congress made things worse with the 2007 Renewable Fuel Standard (RFS) law. Since then, a 2010 Rice University study that found "no reason to believe" that corn ethanol production and use emit less carbon dioxide than gasoline.

Now there may be a better method to produce ethanol fuel cheaper, faster, and without using corn, reports Christopher Helman at Forbes, but the 2007 RFS law blocks its development in the U.S. because the innovation isn't plant-based. So the Dallas-based chemicals company, Celanese, is taking its innovation to China, where Beijing "issued final permits in March ... for an 80-million-gallon plant."

The corn-dominated ethanol lobby is conflicted about making ethanol out of fossil fuels. On one hand, corn growers don’t want competition from cheap gas. On the other, it’s in the national interest to cut oil imports. “We’re supportive of expanding all renewables and all alternative fuels,” says Matt Hartwig, spokesman for the Renewable Fuels Association. Says Joe Cannon, president of the Fuel Freedom Foundation: “We need every option. There are 2 billion people moving from bicycles to mopeds to cars, and that’s just in India and China.”

Thirteen congressmen led by Pete Olson, whose district around Houston, Tex. encompasses dozens of chemical plants, including Celanese, have introduced a bill to add natgas-derived fuels to the RFS. Any change would face attack from the greens but is supported by animal farmers who want cheaper feed corn. “We would prefer not to have the RFS at all,” says a spokeswoman for Olson, “but this is a step in the right direction.”

Until the RFS law changes, U.S. corn farmers will continue to get ethanol tax subsidies, China will get the benefit of a new US-developed fuel innovation, and US consumers will continue to pay higher prices at the gas pump and the grocery store.

Full article: How a Dumb Law Blocks a Great Way to Fuel America, by Christopher Helman 

Mead: The Myth of America's Decline

America isn't in decline, argues Walter Russell Mead; she is in the midst of a global economic realignment to a "septagonal, not a trilateral, world." The old trilateral economic world of the U.S., Europe and Japan is shifting to include China, India, Brazil and Turkey.

It won't be easy, and success won't be total. But even in the emerging world order, the U.S. is likely to have much more success in advancing its global agenda than many think. Washington is hardly unique in wanting a liberal world system of open trade, freedom of the seas, enforceable rules of contract and protection for foreign investment. What began as a largely American vision for the post-World War II world will continue to attract support and move forward into the 21st century—and Washington will remain the chairman of a larger board.

Despite all the talk of American decline, the countries that face the most painful changes are the old trilateral partners. Japan must live with a disturbing rival presence, China, in a region that, with American support, it once regarded as its backyard. In Europe, countries that were once global imperial powers must accept another step in their long retreat from empire.

For American foreign policy, the key now is to enter deep strategic conversations with our new partners—without forgetting or neglecting the old. The U.S. needs to build a similar network of relationships and institutional linkages that we built in postwar Europe and Japan and deepened in the trilateral years. Think tanks, scholars, students, artists, bankers, diplomats and military officers need to engage their counterparts in each of these countries as we work out a vision for shared prosperity in the new century.

The American world vision isn't powerful because it is American; it is powerful because it is, for all its limits and faults, the best way forward. This is why the original trilateral partners joined the U.S. in promoting it a generation ago, and why the world's rising powers will rally to the cause today.