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December 10, 2010

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BobDenver

The AP is reporting that Obama is buying Dem votes by pouring more money down the green energy sinkhole. "Tax provisions aimed at increasing production of hybrid automobiles, biodiesel fuel, energy-efficient homes, coal and energy-efficient household appliances would be extended through the end of 2011 under the bill."

LUN

BobDenver

Spam, spam, spam, spam. Let's try this LUN.

Jane (sit on the couch or save your country)

One member I talked to said if this is the way he's going to negotiate with the Republicans, what's he going to do with the Iranians, you know?

Well Duh! The country will be long gone before any of these morons in Congress understand why.

Bob, that is troubling. The republicans should expose it and walk away.


d-man

Nice, Tom. Very nice.

narciso

With the reports of Iranian missiles being Venezuela, that's not just a rhetorical argument

Pofarmer

Tax cuts are onr thing. We've got to stop the spending, especially the useless spending on things like "green energy".

peter

I'm with Dr. K on this one. LUN

Jane (sit on the couch or save your country)

I think the republicans should say that for every dime the left earmarks, the right is going to defund another green project. That should bust the debt in about 6 months.

Threadkiller

Hostage Takers!

Sloppy Joe Biden was off in his prediction timeline. This must be the crisis that will test the prez.

These are the earmarks Inhofe is upset about. Presidential earmarks.

You are right Jane that they should kill an entire bill if it includes bribes. But I think it is important to identify where the earmarks originate.

centralcal

Prof. Jacobsen at Legal Insurrection on the tax package says I have a sinking feeling that we wuz had.

It is really too bad we couldn't devise a "stuxnet-like" worm to invade spending bills in the congress and render them savings bills instead.

maryrose

Obama is desperate for a win anywhere and so far he is coming up short. I am fearful about the START treaty and do not want it rammed through in this lamest of congresses.The recess can't come soon enough for me.

maryrose

I also want to know who cussed out the president. Where's our inquisitive media?

Pagar

From the link Centralcal put up at 09:58.

"an ethanol tax credit and a grant program for renewable energy developers"

That should be the deal breaker right there.
No Republican should allow either of those items to move forward.

MarkO

I admit. I was the one that told the President to do something anatomically impossible, although seemingly desirable.

Clarice

I'm afraid I'm too stupid to understand Dr K's point.

narciso

I must admit Clarice, I don't get it either.

Jack is Back!

Sorry for being so Anduril here but this is Jim DeMints reasoning on opposing the compromise:

Dear Fellow Conservatives:

Many of you have contacted me about the bipartisan tax deal reached between President Obama and Republican leaders. I've carefully reviewed the legislation and I wanted to explain to you why I cannot support it.

First, I do not want to see anyone's taxes go up and I have been fighting for years to permanently extend all the tax rates. I disagree with the President that we cannot afford to extend these rates for everyone. It's the people's money and we should not raise taxes on hardworking American families.

But this bill does much more than simply extend tax rates.

For starters, it includes approximately $200 billion in new deficit spending and stimulus gimmicks. That's a lot of money that will have to be borrowed from China and repaid by our children and grandchildren. If we're going to increase spending on new programs, we must reduce other spending to pay for it.

The bill also only extends rates for two years. We don't have a temporary economy so we shouldn't have temporary tax rates. Individuals and businesses make decisions looking at the long-term and we're not going to create jobs without giving people certainty as to what their taxes will be in future.

The bill also fails to extend all of the tax rates. It actually increases the death tax from its current rate of zero percent all the way up to 35 percent. One economic study shows that this tax increase alone will kill over 800,000 jobs over the next ten years.

Finally, the bill now includes dozens of earmarks for special interests, including ethanol subsidies, tax breaks for film and television producers, give aways for Puerto Rican rum manufacturers, favors for auto racing track owners, and a hand out for businesses in American Samoa.

The President called Republicans "hostage takers" this week but he should be pointing his figure squarely at himself. We've known for years that these tax rates were going to expire but he did nothing about it until the last minute. Now Americans are being told they have to accept hundreds of billions in new spending and stimulus gimmicks, an increase the death tax, and a bunch of unnecessary earmarks or their taxes will go up.

I'm not going to be bullied into voting for things that will hurt our country because politicians in Washington ignored the problem until it was a crisis.

Many of you fought hard to elect new leaders to the Senate this year with the expectation that they would fight deficit spending, tax hikes, and backroom deals. I take that commitment very seriously and I'm prepared to vote against this bill even if I'm the only one in the Senate to do so.

I appreciate the efforts made by my party's leaders to negotiate this deal but I believe Americans deserve much better. This deal should be rejected and then fixed. We can easily extend these tax rates without increasing spending once the new crop of Republican senators, including Pat Toomey, Marco Rubio, Rand Paul, Mike Lee, and Ron Johnson, are sworn in. The President has already conceded that taxes cannot go up and we'll have more Republicans in Congress in a few weeks to fight for a better deal.

Thank you for supporting the principles of freedom and for your continued encouragement. I will continue to do my very best to be your voice in the United States Senate.

Respectfully,

Jim DeMint
United States Senator
Chairman, Senate Conservatives Fund

MarkO

I understood Dr. K's point to be that the extention of unemployment benefits constituted a stimulus package, although in the hands of individuals, not organizations.

I could, once again, be wrong.

Captain Hate

Maybe Dr K is correct in what he claims but he's very un-specific on pointing out exactly what he means. I think that DoT and ChaCo got it correct when they pointed out in their separate comments that compromises tend to not satisfy anybody completely. I agree with everybody that states that spending is completely out of control and needs to be reined in but that's probably more of a job for the next Congress than this lame-duck song and dance.

I still respect Dr K but the last two years haven't been very good for his reputation, including badly underestimating the TP. Maybe his wheelchair is designed to hide his clean toga.

Rick Ballard

Well, Krugman disputes Krauthammer.

If there were an actual bill on tap which included the details I would try and come up with an opinion. I don't know the source of Krauthammer's $900 billion but he appears to count tax cuts rather heavily.

Clarice

I think an opinion columnist who cannot make his point clearly enough to be understood is wasting the readers' time...and I generally really like his work.

Captain Hate

I thought even sooper genius God of global warming Algore has renounced ethanol.

 centralcal

I agree with Clarice and narciso that I am having trouble "getting" Krauthammer's point. He tried stating it on O'Reilly's show last night with about the same ambiguity.

I thought you all might like to read this piece by Marc Ambinder and Major Garrett: The Rupture - note it underscores what Rick Ballard states - that there really is no bill yet to read and dissect.

glasater

From C-cal's link and one that AB Stoddard mentioned on Special Report--the following statement is one that reflects probably the most accurate view of the liberal D's rage:

As with so many fights in Washington and around dinner tables, the sense of hurt comes from feeling exluded. House Democrats object to the way that the deal was introduced to them – through the press, without their input. To make it worse, the more they read about the architecture of the deal, the angrier they’ve become.
Pagar

What I've been saying for years has been picked up at Pundit & Pundette what a difference a bribe makes.

"Rule of thumb: If Sen. Tom Harkin likes it, it's bad for America."

I believe you could say that about any Democrat.

(Another) Barbara

I still respect Dr K but the last two years haven't been very good for his reputation,

His reputation is unsullied in my house and his message seems clear: Obama's saying to the Republicans, "Don't t'row me into that briar patch, Br'er Fox."

I think I said the day the "compromise" was announced that behind the scenes the Dems were celebrating and toasting each other -- or they should have been. As Krauthammer points out, Repubs get a relative pittance -- small percentage of tax relief at the upper end and a lower death tax but a nose-inside-tent revival of it, still -- in exchange for giving Obama the means to be re-elected. And since then, according to Politico, Dems have added ethanol and money for green research and implementation, and Republican negotiators reportedly are not protesting much. We are being had rather handily, in my opinion.

mikey

I usually like Charles Krauthammer, the German tool. He is right on most issues but he also see the world as a DC conservative. He is counting the extension of all tax cuts for 2011 as a second simulace. He buys into CBO scoring.

That is all DC insider stuff. He also is often wrong in his perception of events. I remember he was arguing that the town hall meetings in 2009 would lead to a backlash. That was typical dc thought. He thought the Presidents performance at the press conference helped him. I think Peggy Noonan has the perception correct.

 centralcal

(Another)Barbara: The more I read this morning, the more I have to agree with you that we are being had.

I think the whole Biden-McConnell deal should die now. No Republican should vote for it. Better the new House write a bill in January.

Clarice

What is ordered expended can be cut from next years budget, but to raise taxes now will surely cause the economy to swoon even further. I do not understand dr K's point at all.

Perhaps one might argue that the public will be so furious as their taxes rise and the economy sinks even further that they will sweep the Dems completely out in 2012, but I'm funny about wishing such misery on my country even for an assumed political advantage.

Thomas Collins

See LUN for the most complete set of tax bill legislative documents that I have been able to find so far.

Jane (sit on the couch or save your country)

We are being had rather handily, in my opinion.

I agree - and so does Rush apparently. Wait til January and pay for the spending or it doesn't happen.

If the republicans let this pass they have officially abandoned everything the election was about.

 centralcal

Clarice - I don't understand Kraut's point either. Actually, what is concerning me is a deep distrust of all things Democrat. This whole kabuki theater of opposition from the Dem caucus in the House, no written bill, Harry Reid offering "sweeteners" to appease the left, etc., etc. has the acid dripping in my stomach and reminds me of so many other outrageous bills that have been enacted these past 2 years.

I work in the accounting industry, we are trying to follow events as closely as possible because we know the impacts upon ourselves, our clients, our neighbors - so I totally agree that I don't want additional misery piled upon the country.

glasater

If the current tax rates are not kept in place -- it will be very expensive in the new congress to rescind and refund what those tax hikes would entail.

The agreement reached by R leaders with Zero was supposed to be written in stone and now there is talk of more negotiations. I don't like that at all.

As Janet says...What a mess!

Jim Rhoads a/k/a vnjagvet

From the docs referenced by TC, it appears to me many of the "stimulus" provisions over which Dr. K has heartburn are extensions of programs which are already in place. I can't tell if any money is appropriated for these programs, but if not, doesn't the new Congress have the discretion to appropriate? Isn't the new Congress unlikely to fund any over the top Christmas presents?

Clarice

My thoughts exactly, Jim.

Threadkiller

">http://www.politico.com/arena/"> Idiots and others weigh in on the proposed legislation.

Tom McClintock was the fiscal genius of California. He always saw the truth to any bill. How the hell does the GOP keep him away from a camera? Why in the world would they pick the CFL dufus for the Energy committee over McClintock?

Threadkiller

">http://www.youtube.com/watch?v=k0O9W-KHpLE"> Dufus

Boatbuilder

I'm having a very hard time believing that Obama and the dems are really that good at acting, or are really that clever. I think that both Obama's pique and the Dem's outrage was real; I also think that since none of them have any principles whatsoever they have no qualms about doing what they are doing now--rejiggering the deal to screw the Republicans and get as many goodies out of it as they can. They are banking on the Republicans fear that they can be painted as being responsible for the "middle class tax increase" (which will no longer be known as the Bush tax cut) come January. I hope (but am not particularly confident) that the Republicans have it in them to say "Go ahead, make my day." Surely most of the muddle is clued in enough at this point to realize that the $2000 to $4000 per year they've been saving on their taxes was courtesy of Bush and the Republicans, and that the Dems have always resisted those "cuts"

Jane (sit on the couch or save your country)

If the current tax rates are not kept in place -- it will be very expensive in the new congress to rescind and refund what those tax hikes would entail.

If I were MCConnell I'd send out a memo that every last dime to pay for a delay will be taken out of dem pet projects.

The reason I don't think it will be defunded after the fact as that little bad faith would mean that Obama will never work with us again - maybe that's okay but unless he is in on the plan he can be one petulant SOB.

Captain Hate

Exactly Boatbuilder; Toonces has as much game as that pathetically busted lip would indicate. And Krauthammer is a fool to buy into that static analysis garbage. That said if the Repukes don't push back against any subsequently larded up bill, they will need primary challenges ASAP.

Jim Rhoads a/k/a vnjagvet

Is the Bumster a dufus or a political genius? You can't have it both ways. As for me, I don't think he is a political genius. I'm withe Rick on that one.

Clarice

From the Republican staff summary of the Bill:

Summary of Tax Hike Prevention Agreement
KEY POINTS:
Prevents tax increases on every American who pays income taxes Eliminates job‐killing tax increases on small businesses Provides relief from the estate tax for family owned businesses and farms Preserves the $1,000 per child tax credit and marriage penalty relief Blocks higher taxes on capital gains and dividends
Protects at least 21 million households from being hit by the AMT in 2010 Replaces the stimulus bill’s Making Work Pay Credit with a reduction in the payroll tax

Thomas Collins

Jim and Clarice, with respect to refundable tax credits (that is, those for which a taxpayer can actually receive money from the Feds, as opposed to simply having his or her or its federal tax liability reduced), I am embarrassed to say (having practiced tax law since the Medieval Warming Period, I still find myself to be ignorant of certain basic aspects of our tax system) that I don't know whether the refunded money is simply part of the US Department of the Treasury's general appropriation, or whether some other appropriation mechanism is used. I have always assumed that if a refundable tax credit (such as the earned income tax credit) is on the books, the money will be there for taxpayers eligible for a refund (that is, it is different from a program authorized by statute but for which Congress doesn't appropriate funds).

Danube of Thought

"To make it worse, the more they read about the architecture of the deal, the angrier they’ve become."

Where the hell were these guys when the architectural marvel known as Obamacare was being assembled? Did they expect Obama to negotiate with McConnell on C-Span or something?

Clarice

I married a CPA and tax lawyer so I never would have to think about that stuff after law school, TC

The staff summary also says this about the AMT:

"The agreement adjusts for inflation the Alternative Minimum Tax (AMT)
exemption amount for 2010 and 2011, and allows non‐refundable personal credits
against the AMT.
In 2010 alone, this ensures that at least an additional 21 million households
will not be hit by the AMT."

Jim Rhoads a/k/a vnjagvet

TC:

As you read it, how much of the Christmas presents are in the form of earned tax credits?

peter

I think we blog readers and amateur wonks are the DC insiders; Krauthammer's point, which has been echoed by Rush today,and also by Mark Levin, is that Obama's Monday press conference wasn't the disaster all the righty blogs thought it was, and that the deal was bad for the Republicans. I think his point is that the tea party was thrown overboard.

Thomas Collins

If you haven't used up your spousal tax question allowance for 2010, Clarice, you might see whether he knows what the refundable tax credit funding process is.

Clarice

I know what his point is, peter, but I don't see where he gets it from. I'm old fashioned enough to like you see text when discussing legislation.

Clarice

**to like TO see text***

Clarice

I'll try to remember, TC, but I bet CC could answer that immediately.

Cecil Turner

CNN gives the individual credits (including child credits and EITC) at $8.3B. By comparison, the unemployment insurance is $56B, and the biggest new tax break is the payroll tax holiday at $112B.

(The Bush tax cuts are about $544B, only $81.5B of that for folks in the >250K bracket.)

Rick Ballard

TC,

Thank you for the link to the "actual" legislation. I'm reading the nine page list of possible financial impacts and there is certainly something there to enrage any sentient being.

Since I don't regard money remaining in my checking account rather than in Tax Cheat Timmy's Plunder Account to be a "cost" to the economy, I fail to find a factual basis for Dr. Krauthammer's assertion.

I will also note two things:

1. There is no budget.

2. The 111th Congress has no power to bind the 112th Congress.

Speaker Boehner will have two years in which to reiterate the heartfelt remark made yesterday by a Democrat House member - and the full support while doing so of the 56% of the electorate responsible for placing him in his position.

 centralcal

I bet CC could answer that immediately.

Nope - no one in my office (yes, I asked) knows the funding process for the tax credits. They all agreed that it was an excellent question, however.

Clarice

Exactly..but failing to extend the present tax structure will surely harm an already teetering economy, IMO

Cecil Turner

I'm a big Krauthammer fan, but I can't support this:

At great cost that will have to be paid after this newest free lunch, the package will add as much as 1% to GDP and lower the unemployment rate by about 1.5 percentage points. That could easily be the difference between victory and defeat in 2012.
In the first place, his numbers appear inflated. The CNN link above gives ~315B over the basic tax cuts (admittedly too much), but his numbers are almost exactly double that. Second, that static analysis stuff is dubious, and in this case made even more so by the fact that a large chunk of it is in unemployment insurance (which has a significant though probably modest effect of increasing unemployment).

Thomas Collins

Jim, See LUN for Novagradac's list of documents related to the current bill and previous extender bills. The second link has expenditure estimates for the current bill. It appears that the increase in earned income tax credit rates is estimated to result in a $3,685,000,000 cost.

 centralcal

TC: Here is a link I found that analyzes the funding of Obama's 2010 budget, which includes nutrition programs and refundable tax credits.

Not sure it answers your "process" question?

Clarice

via instapundit..Randy barnett at Volokh reports that govt has conceded that the provisions relating to the insurance companies will fall for lack of a severability provision if the individual mandate is held unconstitutional (though it argues some other provisions might not fail).

"In a briefing of White House reporters yesterday, anticipating the forthcoming decision, the White House issued a fact sheet conceding that, should the individual mandate be held unconstitutional, the regulations being imposed on insurance companies “would” also fall:


The Affordable Care Act also bans insurance companies from discriminating against people with preexisting conditions beginning in 2014 (In 2010, insurance companies were banned from discriminating against children). However, unless every American is required to have insurance, it would be cost prohibitive to cover people with preexisting conditions. Here’s why: If insurance companies can no longer deny coverage to anyone who applies for insurance – especially those who have health problems and are potentially more expensive to cover – then there is nothing stopping someone from waiting until they’re sick or injured to apply for coverage since insurance companies can’t say no. That would lead to double digit premiums increases – up to 20% – for everyone with insurance, and would significantly increase the cost of health care. We don’t let people wait until after they’ve been in a car accident to apply for auto insurance and get reimbursed, and we don’t want to do that with healthcare. If we’re going to outlaw discrimination based on pre-existing conditions, the only way to keep people from gaming the system and raising costs on everyone else is to ensure that everyone takes responsibility for their own health insurance. If we don’t, then we will go back to the days of allowing insurance companies to deny coverage to people with pre-existing conditions.
If the constitutional challenge to the Affordable Care Act’s individual responsibility requirement ultimately prevails, it would mean that provisions preventing health insurance companies from discriminating against people with pre-existing conditions would also be invalidated by the court because the two are inseparably linked. If insurance companies are required to cover those with pre-existing conditions, who are potentially more expensive to cover, without requiring everyone—both sick and healthy people—to have insurance, premiums will increase rapidly. Similarly, other provisions – including banning insurers from discriminating based on health status, age and gender – would also fall.

For some time, I have been making the same argument concerning the implication of Congress not including a severability clause in the Act. See here. So, while I am little surprised that the White House would concede this in advance of a ruling, I concur in its assessment of this issue.

At the same time, the White House said this too:"

Thomas Collins

Although I don't know for sure, my suspicion is that the chart LUNed in my 2:25 PM post is based on static analysis (that is, it doesn't take into account increased economic activity that results from marginal tax rate cuts). It is interesting to note, however, that retention of the 10% bracket is scored to "cost" more than retention of the 33% and 35% brackets.

It really burns me up that the continuation of the existing brackets is temporary. Permanent extension would help the economy more. In addition, permanent extension would help the non-rich more. Buffett and Gates and other rich clowns who pontificate about how good they are to want to pay higher tax rates can easily absorb and plan around higher rates. It's the small business entrepreneur who is really hurt by increasing marginal tax rates. And when the small business entrepreneur faces added pressure from higher marginal rates, job creation is stifled. Thus, the policy supported by Dems hurts lower and middle income folks who want to earn a living (although Dem policies do tend to help temporarily those whose life ambition is to be a layabout; I say temporarily because when the social welfare state collapses, layabouts are going to have to fend for themselves or starve).

Clarice

cc--the question was the mechanics of those credits.. In Michigan here's how that's described and I assume it follows the federal system:

:Certain tax credits are refundable to the taxpayer. The tax credit is first to be applied against tax liability. If the amount of the credit is greater than the tax liability, the excess is treated as an overpayment of taxes and is refunded to the taxpayer. ...
www.michigan.gov/budget/0,1607,7-157-11460_11541---,00.html

Thomas Collins

Thanks, cc. It doesn't go into the refundable tax credit appropriations process, but I can add it to my materials on the new legislation (part of one of the more glamorous aspects of my job being to have to sound informed on pending tax legislation at holiday gatherings of clients and colleagues).

 centralcal

Oops, Clarice! I thought I was answering this:

If you haven't used up your spousal tax question allowance for 2010, Clarice, you might see whether he knows what the refundable tax credit funding process is.

If it was how an individual gets his tax refund (i.e., credit); your Michigan example is correct.

Clarice

Why would there be appropriations for this? Wouldn't they simply calculate the estimated amount of credits and the income of those estimated to claim it and deduct that from the estimated tax revenues?

 centralcal

Twitter news:

1. Va. federal judge will rule on state’s constitutional challenge to health care law on Monday, Dec. 13 (this is the Cuccinelli one, yes?)

2. U.S. and others cancel planned pressers in Cancun today as time ticks down on U.N. climate deal. (ha ha ha ha ha - no concensus?)

cathyf

If every employer in America has to redo withholding calculations for January paychecks, and then redo them again in February after the new Congress passes some new bill, that will cost real money. If, however, the bill passes now and then in February Congress tries to fix it, I don't think that they have to political mojo to do it. Every Democrat in a federal office who is up for election in 2012 is terrified of what happens when every working American's paycheck goes down next month, and the not-paying-attention muddle suddenly is intently focused on punishing the responsible party.

The Dems have only one overriding goal -- to figure out some way to put that pay-envelope-opening moment off past Nov, 2012. That is what gives us the leverage to get anything passed when we lack control of the White House and both houses of Congress.

It seems to me that the best outcome will be for the tax rates to go up January 1st, and then the Republicans take control of the House and filibuster-with-cushion numbers in the Senate, and then ride it to restoring the Bush tax rates, doing it without pork, and maybe even some real spending cuts in there too.

I'm reverting to the Rostenkowski Rule -- when irate citizens surround your limo and threaten to flip it over, even the most ardent communo-fascist will become a Tea-Partier-for-a-day. But Congress had to actually pass the long-term-care insurance and start collecting the premiums from retirees' monthly checks before the citizenry got to that point, and I think that's true now, too. I suspect that a majority of Americans have no clue yet that the Democrats scheduled a tax increase for them this January, and if the 2-year extension gets passed, then they might never know.

The very worst outcome is a string of two-year extensions. Businesses will reduce plans for expansion, hiring, etc. in expectation of the Clinton rates, but the taxes collected will only be at the Bush rates. Instead of a "pure" Clinton rate scenario where the lower GDP is partially offset by the higher rates, or a "pure" Bush rate scenario where the lower tax rates are partially offset by the higher GDP growth, instead we will have a mixture of both -- more GDP damage AND a bigger fiscal disaster.

Clarice

That's an interesting analysis (as usual) Cathy but I wonder if anyone will believe the extension is only for 2 years given the unpopularity of the president and his party , the likelihood of an appropriations blood bath in Congress and the fact that the vote will precede the next election.

Porchlight

(The Bush tax cuts are about $544B, only $81.5B of that for folks in the >250K bracket.)

But isn't that money we would only in theory collect if the cuts expired? Even if the static analysis is correct, it's not actual money scheduled to leave the Treasury to be spent on something in the next two years.

I guess if you make the argument that we'll be borrowing (or printing) that amount to make up for a budget shortfall, you could say it's "spending," but is anyone actually making that argument? We don't even have a budget to make it with!

Krauthammer really needs to break down these numbers.

Cecil Turner

But isn't that money we would only in theory collect if the cuts expired?

Exactly, and you can't call it "stimulus" of any sort, since it's just a continuation of the status quo. The only part that's new is the spending (mostly on UI) and other tax breaks, which are the relatively minor part of the bill (per CNN . . . I'm not sure where CK got his figures, so it's hard to evaluate 'em).

cathyf

Barnett's Volokh article has comments turned off, so I can't ask the $64,000 question there so I will ask it here: The White House analysis is absolutely spot on. (It's what I've been ranting about for the last year!) But the true problem with the bill is that the mandate is a sham because the amount of the fine is too low.

We had a local Tea Party candidate (who lost, alas) who used a concrete example of a guy she talked to who was self-employed. He spent $2000/year for a BC/BS policy with a very high deductible. Obamacare outlawed those policies, so his only choice would be the BC/BS "normal" deductible policy which was $13,000/year, which he could not afford. So he was going to pay the $2,500 fine.

In other words, he was going to go from $2000/year for catastrophic insurance to $2500/year for NO insurance.

So, here's a question for you lawyers out there -- can the courts take into consideration that the amount of the fine makes the individual mandate a sham, that Congress passed the law with full knowledge of the dollar amount of the fine, and thus uphold the law which de facto outlaws health insurance as being clear legislative intent?

Clarice

cathy, as a practical matter you are right about consequences, but the simple argument that Congress lacks constitutional authority under the commerce clause (or anything else) to require insurance is a strong, clear constitutional argument IMO. In any event under what provision of the constitution can Congress de facto outline a legitimate industry?

Clarice

**OUTLAW a legitimate industry**

Porchlight

Cecil,

I'm not sure where CK got his figures, so it's hard to evaluate 'em

CNN has it at $860 billion and Krauthammer at $990 billion. Not sure what accounts for the difference. But either way he does seem to be accepting the (to my mind, lefty) argument that maintaining the status quo is going to "cost" @ $600 billion on top of the other stuff in the deal. People at HotAir and other places are freaking out as if it's $600 billion in new spending, like TARP or Porkulus.

I suspect Dr. K's gotten an earful from a lot of his colleagues and friends on this.

Thomas Collins

Cathyf, my view is that under traditional (at least since the FDR era) deference courts grant Congress to legislate under the Commerce Clause, courts wouldn't second guess the amount of the fine. I think the better argument is that the mandate is an unconstitutional commandeering of the people.

See LUN.

Clarice

The discussion might be moot. Fox is reporting the Dems are tarting this bill out with whatever porkulus they haven't yet passed. Looks like it will be D OA..

Rick Ballard

TC,

There might be a link malfunction there - that or I'm having a (another?) cognition problem.

glasater

Rick & TC--

I got the doc TC had LUN'd so forgive this horribly long entry:

Massachusetts Community Health Center
Primary Care Nurse Practitioner Loan Repayment Program

INFORMATION FOR APPLICANTS

General Description
Community health centers (CHCs), with their explicit mission to serve underserved populations and history of providing care to working families, are especially well-suited to provide care to the many individuals who will be newly insured as a result of health reform but who may not yet have a medical home. The Massachusetts Community Health Center Primary Care Nurse Practitioner Loan Repayment Program is managed by the Massachusetts League of Community Health Centers and is funded by donations the Commonwealth of Massachusetts and other corporate institutions. The statewide program is intended to increase the capacity of health centers to provide primary care by enhancing the availability of primary care nurse practitioners. This initiative is intended to support the expansion of primary care capacity at all Massachusetts community health centers. It is anticipated that with the ease in educational debt, more nurse practitioners will choose primary care practice and commit to working at community health centers to provide critical health care services to medically underserved and uninsured residents.

Eligibility
This program is open to primary care nurse practitioners who have completed their training and have been newly hired to work in a Massachusetts community health center, with a hire date within one year of the application due date. Eligible nurse practitioners must have outstanding educational loans from an accepted institution or loan program (as defined in Attachment A). Please note, any obligation to the National Health Service Corp, the MDPH State Loan Program, or other loan forgiveness program must be completed in order to be eligible for this program.

Selection Criteria
Primary care nurse practitioners interested in participating in this program must submit applications to the Massachusetts League of Community Health Centers. Applications will be reviewed by a committee with representation from funders, the Massachusetts League of Community Health Centers, and other resources. Selection criteria will include commitment to a career in primary care practice and work in communities of need, experience and demonstrated service to underserved communities or special populations, volunteer and leadership activities.

Loan Repayment Awards
Awards will be made in the form of a forgivable loan to the applicant from the Massachusetts League of Community Health Centers of up to $15,000 a year for up to three years for a maximum of $45,000. Exact amounts may be less based on the applicant’s outstanding student loan indebtedness and other criteria. In no case will an award equal more than the applicant’s outstanding student loan indebtedness. In addition to loan indebtedness, the amount of the award will also reflect the strength of the application. Loan repayment recipients will be asked to sign a contract with the Massachusetts League of Community Health Centers prior to the disbursement of funds. For a copy of the contract, please contact apowell@massleague.org.

Application Requirements
To be considered for the Primary Care Nurse Practitioner Loan Repayment Program managed by the Massachusetts League of Community Health Centers, the following materials are required:
Primary Care Nurse Practitioner Loan Repayment Program Application (available at www.massleague.org).
Current curriculum vitae or resume.
Two letters of recommendation from nursing school department chairs, program directors, supervisors, community leaders, or other individuals of the applicant’s choice. These letters of recommendation should be mailed directly from the individual providing the recommendation to the Massachusetts League of Community Health Centers (see contact information below).
Forms: Loan Information and Verification Form; Authorization to Release Information; and Payment Information Form.
For those with a confirmed hire date as a primary care nurse practitioner at an eligible community health center: an approved CHC Employer site application, signed by the CHC President/CEO, must be submitted by the CHC.

Review Process
The review process includes (1) notification to the applicant of receipt of application and supporting materials and releases; (2) notification to the applicant of any missing or incomplete information; (3) notification to the applicant of the Committee’s decision on the application; and, for successful applications (4) processing of the Loan Repayment Program Promissory Note and other required documents.

Schedule of Application Submission and Review
Application due
(no later than)
September 1, 2009
December 1, 2009
March 1, 2010
June 1, 2010
Decision October 1, 2009 January 1, 2010 April 1, 2010 July 1, 2010
Notification October 8, 2009 January 8, 2010 April 8, 2010 July 8, 2010

Implementation
The loan will be paid directly to the lending institution and, when allowable by loan terms, as a lump sum payment of $15,000 within 3 months of the start of each service year. The LRP service commitment begins on the date of application for those currently employed at their health center; for those not currently working, service commitment will begin as of the first day of employment.

If your first year payment will eliminate the balance of your loans, please contact MLCHC for further information.

The participating physician should anticipate the need to seek independent tax advice to determine the tax status of the loan when discharge is granted by MLCHC.  The MLCHC will not provide specific tax advice, but will provide information as to our understanding of the MLCHC’s responsibility and status of the loan activities in relation to IRS requirements.

Participant Requirements
Under the loan repayment program it is required that participating nurse practitioners will commit to full-time work and serve as a primary care nurse practitioner at an eligible and approved community health center site for a minimum of two years and up to three years. The maximum level of loan repayment will be up to $15,000 per year for a maximum of $45,000 over three years. The goal of the loan repayment program is to attract primary care nurse practitioners to work at community health centers. Any nurse practitioner who does not complete their service obligation will be obligated to repay all loan values paid under the program with a “to be assessed” market interest rate, service fees, and risk of penalties if obligations of repayment are not met in a satisfactory manner. Agreements and contracts will reflect that obligation.

Contact Information
Leslie Bailey, Program Manager
Physician Workforce Initiatives
Massachusetts League of Community Health Centers
Primary Care Nurse Practitioner Loan Repayment Program
40 Court Street, 10th floor
Boston, MA. 02108
Phone: 617-426-2225 Fax: 617-426-0097
www.massleague.org 

cathyf

I think that the long existence of drug laws are pretty clear evidence that Congress can outlaw a legitimate industry -- marijuana is a legitimate pharmaceutical with proven therapeutic effects. Heck, we fought a war over the proposition that Congress could outlaw the industry of buying and selling of human beings.

Suppose you buy a building, and then buy 10 different insurance policies on your building, each one for full replacement cost, and then your building "mysteriously" burns down. Rather than enforce your insurance contracts to collect 10 times the value of your "investment", the government is going to instead be prosecuting you for fraud. (There is a clear public welfare argument about letting people burn down their own buildings in an uncontrolled way. The building could have someone in it that the arsonist didn't know about. A firefighter could get injured or killed. A person across town could die of a heart attack because the fire department is busy.)

So, yeah, I think that there is pretty clear precedent that the Congress has the right to outlaw whole industries, and if we want to prevent them from doing that we have to elect people to office who won't vote for that, and vote out people who do, and vote in people who will repeal the noxious laws.

Thomas Collins

My cognition malfunction, Rick. Let's try again.

Jane the hostage taker

I posted this in the troll thread but since everyone is here - I cannot believe Clinton was forced to hold a press conference to bail out Barry.

If the democrats pork the bill up it should be DOA or the GOP starts off in big trouble. Clinton certainly didn't encourage that.

Clarice

Well, cathy we are getting far afield, but the prohibition on fraud isn't a prohibition on an industry.And one might argue that slavery and marijuana are substantially different than the health insurance industry ..but a better example is prohibition and that was accomplished only by constitutional amendment because otherwise there was a barrier to banning a legitimate commercial industry.

Rick Ballard

TC,

It actually makes a nice juxtaposition - the first is details of an indenture (voluntary servitude) and the second is a description of involuntary servitude (although I would quibble about jury duty - that's actually a duty pertaining to a granted, not inalienable, right).

cathyf

As for the Commerce Clause questions, I think that overturning Obamacare on that basis is simply wrong. I think that Congress having the right to regulate or simply outlaw such entities as modern insurance companies is precisely the purpose for which the Founders inserted the Commerce Clause in the Constitution.

Insurance is like gambling, in that it is the transfer of risk from customer to supplier in exchange for money. A casino which owns dozens of slot machines uses the Law of Averages to take quarters from all of its customers and return giant payouts to a lucky few, and make a small profit. An fire insurance company uses exactly the same mathematics to take (relatively) small premiums from all of its customers while paying out big bills for the (relatively) few whose houses burn down.

Passing laws that say that you can run a business selling fire insurance but can't run a business running slot machines -- that's completely within the purview of the legislature. Electing different representatives who pass laws outlawing fire insurance or laws allowing slot machines -- that's the democratic process. Throwing those representatives out and getting new ones to repeal noxious laws that the old legislature passed -- again, that's just how democracy works. If more states had voted for Republican senators, Jim Jeffords wouldn't have been able to turn the Senate over, and this tax law wouldn't have an expiration date on it. The Won was right -- elections have consequences, and the people are going to get what they voted for good and hard.

Don Carlos

Liberals always use profanity when trying to communicate. They're intellectual superiority requires it.

Clarice

As I understand the argument, cathy, it is that Congress cannot compel anyone to BUY anything and this law does. If you don't think this is a strong argument, where would you draw the line on the application of the commerce clause--that is what activity would Congress be unable to regulate?


Appalled

cathyf:

There is Supreme Court case law indicating that Congress has the power to regulate insurance. Back in the 40s, Congress turned over that power to the states.

The issue is the mandate, and frankly, the argument that a person doing nothing is engaging in interstate commerce is a little hard to fathom. (I tend to think the escape hatch for this is the taxing power, and the way the courts have intterpreted the income tax amendment to the constitution.)

Politically, the easiest way out of all this is for the courts to invalidate it. That move WOULD be popular, though somewhat disquieting.

cathyf

Taking the slot machine analogy a little further. (If I remember correctly, this is Rick's analogy to begin with...)

In various places/times, governments have allowed and outlawed various forms of gambling. I have been maintaining that Obamacare is analogous to passing a law which says that slot machines are required to let you pull the lever and see the resulting lineup of pictures BEFORE you have to put the money in. I claim that this has the practical effect of outlawing slot machines, because:

a) People would only drop their quarter if it was a winning play.

b) With a one-to-one correspondence between winning plays and paid-for plays, every winner must pay out less than the amount of money you put in. If it's a quarter slot machine, then it can only pay out 24 cents -- the other penny is to cover the rent and utilities on the building, the cost to build the slot machine, etc.

c) THEREFORE, there are NO winning plays on such a slot machine, and no one would ever put money in to such a slot machine.

The conclusion is that if the legislature passed such a law about slot machines, then the legislature has in fact outlawed slot machines.

We know that the legislature has the authority to simply outlaw slot machines -- they are in fact against the law in quite a few jurisdictions. We know that the legislature has the authority to heavily regulate gambling. It seems to me to be completely within their authority to outlaw health insurance as being injurious to the public welfare. And the congresscritters who voted for this, and the president who signed it, are a mixture of hard marxists who think that health insurance is evil and should be outlawed, and people too stupid to understand what they were passing. And We The People voted enough marxists and useful idiots into office that they had the votes to pass this.

cathyf

Oh -- one more piece of the analogy: the individual mandate is equivalent to passing a law that requires everyone to drop $15,000/year worth of quarters into the rigged no-win slot machines, or pay a $2,500 fine/tax instead.

Going to the courts to get them to do away with the $2,500 fine/tax as being unconstitutional is not going to bring back real slot machines.

Rick Ballard

Dunno - I still maintain a small reservoir of hope that five of the nine folks who seem to enjoy dressing up in black gowns will exercise good judgment by noting that the Founders certainly envisaged a mixed up muddle of infinite idiocy being tricked by demagogues into a birthright for porridge swap. It ain't like they haven't seen the error of their ways and voted accordingly.

Clarice

I believe the govt has argued in court that this is NOT a tax. I also believe the legislative history shows that the drafters did not consider this a tax, in fact, IIRC, the expressly said it was NOT a tax.

While in logic one might argue that health insurance is like gambling, in reality that would be a very hard sell.

glasater

It's got to be a tax because the IRS is going to oversee if the premium has been paid.

cathyf
There is Supreme Court case law indicating that Congress has the power to regulate insurance. Back in the 40s, Congress turned over that power to the states.
I live in one state and work in another. I'm not the only person from around here who does. The nearest major medical centers to where I live are in the neighboring state, and so many of the people who live and work in one state receive health care in the neighboring state. Health insurance is part of compensation in my workplace, and most workplaces. It's a really tough sell to argue that this is not interstate commerce.
Clarice

Insurance might be engaged in interstate commerce, but your decision whether or not to buy it doesn't seem to be so. Could the govt compel you to buy GE appliances or GM cars to protect its investments and the jobs of the union members in these lemons?

cathyf

Whether you call it a tax or a fine, the point is:

a) it's smaller than what health insurance costs; and

b) the money doesn't go to the insurance companies it goes to the government.

As the White House says, no mandate, the whole shebang collapses. The piece that they are delusional about is that "double digit premium increase" part. No, the premium under Obamacare has to be

the maximum annual health care expenses possible to have

PLUS

overhead to administer the insurance company

No one would ever buy such a product. Even Bill Gates doesn't have enough money.

Danube of Thought

There is no longer any doubt at all that congress has the power to regulate health insurance.

The two judges who have upheld the mandate have said that a decision not to buy insurance is not really "inactivity" because such people are actually only putting off their activity; sooner or later down the road everyone will avail himself of the healthcare system.

The two judges who have ruled against it have said simply that a decision not to buy insurance is simply not activity and thus can't be regulated by congress.

I like the latter analysis better, but no one can really know what the SCt will do.

cathyf

...Unless the tax/fine/whatever-you-want-to-call-it is more than the market value of real health insurance premiums, then health insurance is dead.

glasater

In the court cases that have come before judges regarding some aspects of health reform it seemed I had read that the gov attorneys had decided to call paying the "premium" a tax. Reversing the thrust of their argument from what they held previously.

RichatUF

glasater-

The mandates are being defended by the administration under the theory they are a tax.

glasater

Thanks Rich. That's the article I remember reading--where the administration had changed its stance.

Clarice

The govt may have changed it's tack but that doesn't make not a tax, a tax, it makes the commerce clause arguments even weaker, IMO.Regarding the Xmas tree additions the house wants to put on, I understand those are provisions that were in the about to expire tax code--like the Bush rates--and word on the street is that the deal will pass.

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