Text 9368, 143 rader
Skriven 2005-02-27 17:34:00 av Jeff Binkley (1:226/600)
Ärende: Fact and Comment
========================
http://www.forbes.com/forbes/2005/0314/025.html

Fact and Comment Steve Forbes, 03.14.05, 12:00 AM ET 

Easily Financed 

Critics of President Bush's plan for reforming Social Security--the 
President would allow working people, if they so choose, to put up to 4 
of the 12.4 percentage points of their gross wages that are withheld as 
the Social Security payroll tax into their own personal retirement 
accounts--claim that we can't afford the $2 tril-lion or so of needed 
borrowing in coming years to finance the transition. They're wrong. We 
could easily finance such a transition. 

During World War II, after all, we borrowed in less than four years what 
would today be the equivalent of $10 trillion, and we did so at interest 
rates of less than 3%. 

The U.S. has $80 trillion in assets. Factor out our debts and the nation 
as a whole still has a net worth in excess of $50 trillion, which could 
double over the next decade. Those numbers don't even take into account 
all the portfolio assets that are held in other countries. Under the 
circumstances, borrowing an extra $100 billion to $200 billion a year 
is, in the vernacular, no sweat. 

The markets would quite easily, quite willingly buy bonds that would 
transform our unsteady, increasingly troubled pay-as-you-go system into 
one that would become a generator of capital of historic proportions, 
capital that would give us a far more muscular economy in the years 
ahead. 

If anything, the Administration should be criticized for taking such a 
cramped view of Social Security reform: Workers should be allowed to put 
6 to 8 percentage points or more into private accounts. The cap of 
$1,000 a year (and rising $100 a year thereafter) on those contributions 
is ridiculously small. 

The White House should have learned an invaluable lesson from its fight 
two years ago to eliminate personal taxes on dividends. The Democrats 
bitterly opposed the idea. At the end of the day the President didn't 
achieve an elimination of the tax, but he did cut the rate by nearly two-
thirds. Had President Bush not asked for the entire loaf, he certainly 
wouldn't have ended up with more than 60% of it. 

Free Markets = Better, Less Costly Care 

Rapidly rising costs for Medicaid and Medicare are threatening to 
overwhelm both state and federal budgets. Already state spending on 
Medicaid exceeds state outlays for elementary and secondary education 
combined. Annual government health care outlays routinely grow at double-
digit rates. 

In January Governor Jeb Bush of Florida proposed a free-market way out. 
His bottom line: Give Medicaid beneficiaries--after proper counseling--
the wherewithal to buy health insurance plans that best meet their 
particular needs. Companies would then compete to win family and 
individual customers. 

Florida already spends nearly $7,000 a year per Medicaid beneficiary. 
Delivery systems today are highly inefficient. There are no incentives 
for patients to get the best value for their Medicaid dollars nor for 
providers to provide more effective care at less cost. 

Competition would help cut costs while generating better service. 
Medicaid recipients would have a choice of private plans offering basic 
care, catastrophic coverage and the possibility of state-funded flexible 
spending accounts, which recipients could use to pay for medical 
services not covered under their basic plans or to purchase enhanced 
insurance coverage. One particular innovation in Governor Bush's plan 
would give Floridians the chance to earn enhanced benefits through 
flexible spending accounts if they engaged in healthy practices and 
responsible lifestyle choices, such as giving up smoking. 

As the governor said, "Our proposals put the focus back on the patient 
by allowing competition in the market to drive access and quality of 
care up from current levels in the Medicaid system." 

The Florida plan is based on the same principle as Health Savings 
Accounts. Congress enacted HSAs a little more than a year ago, and over 
the next few years they will become a common feature of company health 
care plans. HSAs are funded by employers and employees with tax-free 
dollars. The money grows tax- free and can then be spent tax-free on 
medical care. An HSA/Florida-type approach should also be crafted for 
Medicare. 

This Bad Bargain Must Go Up in Smoke 

Recently a Federal Appeals Court finally brought some sanity to the 
issue of the government's being able to sue tobacco companies for 
allegedly burying the truth about cigarettes being harmful. Forgotten in 
all of this, of course, is the fact that cigarette packs have carried 
health-warning labels on them for 40 years. The judges ruled that the 
federal government cannot force the tobacco companies to hand over $280 
billion of profits they earned while allegedly misleading us about their 
products' impact on people's health. The suit was born of Washington's 
jealousy over the $206 billion settlement 46 states had wrung out of the 
big tobacco companies several years ago. Uncle Sam wanted some tobacco 
loot, too. 

While the courts are at it, they should take a similar knife to the 
original settlement in the case of the states versus the tobacco 
companies. It is unconstitutional; it makes a travesty of the 
government's needing to win legislative approval before being able to 
exact a tax. 

That settlement is one of the most monopolistic, anti-property-rights, 
anticompetitive acts of modern times. Most state legislatures--not to 
mention the U.S. Congress--were not willing to raise cigarette taxes 
substantially and directly. But they wanted big money from the tobacco 
industry, so they cooked up an extraconstitutional scheme to get it. To 
settle various state lawsuits, the big tobacco companies agreed to cough 
up $206 billion over 25 years. To get the dough, the tobacco companies 
raised cigarette prices substantially. Thus, the taxes that legislators 
were afraid to levy directly were exacted in the form of more expensive 
smokes. In return, the states, in effect, were protecting the big 
tobacco companies from competition. 

It's no surprise that the major tobacco companies, thus protected, 
raised prices not only to service the settlement but also to fatten 
their bottom lines. The deal prevented would-be cutthroat competitors 
from stealing market share by selling cheap cigarettes. 

Now this cozy arrangement may come unstuck. A New York State court 
decision in early 2004 allowed a plaintiff to pursue an antitrust 
lawsuit against the settlement (see FORBES, Feb. 28). The original 
settlement inadvertently contained a loophole; it allowed cigarette 
discounters to get refunds of the special fee per pack of cigarettes 
that goes toward financing the settlement from states in which they 
don't sell their wares. States have been passing laws to close this 
loophole, but in October a federal court said no can do. After all, why 
should a company that didn't even exist at the time of the settlement be 
forced to pony up money for bad behavior in which it had played no part? 

The whole deal is like tax collecting in olden times. Governments would 
put the job of collecting taxes up for bid. Whoever won the contract 
could collect whatever they could from the peasants, as long as the so-
called tax farmers remitted a certain share of it to the crown. That 
tobacco settlement smacks of tax farming: Companies collect the money 
and remit it to the states.


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