Hurtling Towards a Train Wreck

Real Clear Politics

By Ed Feulner
President of the Heritage Foundation

Nobody could have been happier to see August end than the liberals pushing government-run health care. The month, to put it mildly, was not kind to President Obama and his allies. Their worst nightmares were realized -- Americans examined the bills being proposed and turned out in great numbers to voice their opposition.

What we can expect in September is another matter. Desperate times call for desperate means -- or so liberals will think. Those who oppose this hostile takeover of one-sixth of our economy must be ready.

Proponents of Obamacare will not succeed, however, if everyone understands what unfolded last month. Simply put, the American people took matters into their own hands before the politicians could have their way.

Let's be very clear about what happened here. Your leaders did not want you to scrutinize the profound changes they were proposing, and the best excuse they offered was that you, the American people, were too stupid to understand it.

This isn't mere hyperbole. Politicians pushing for an overhaul of our health care system sat down with people from the Heritage Foundation and actually said, many times, such things as: "We have to pass this before the American people can read it. They will not understand it, and people will tell them bad things about it."

But the American people did understand. They realized that the overhaul the left proposes threatens the good quality care that most receive. They sensed, moreover, that their leaders were trying to rush through complex and far-reaching changes that would have unforeseen cultural and economic consequences.

The health care industry is worth $2.5 trillion a year, comparable with Britain's entire gross domestic product and larger than that of most European countries. Can you imagine Britain's entire economy being reordered by a few people working secretly in backrooms in a matter of weeks? What are the chances they could ever get that right?

But the American people cannot take all the credit for slowing down this train wreck. Some of it should go to White House communicators who came up with arguments that were ludicrous on their face, such as insisting that a public option would introduce "competition" into the health insurance market.

Thank God we commissioned a Lewin Group study that made it clear that more than 88 million Americans would lose their private insurance if a government competitor were created. These numbers made it abundantly clear that the "government option" would quickly become the only option. And as a Heritage study just showed Friday, Obamacare will cost U.S. businesses up to $49 billion a year and will mean that as many as 5.5 million Americans could lose their job.

The Congressional Budget Office, with its numbers showing that the plans being proposed wouldn't lower costs but raise them, drove in another valuable nail.

So this is where we are, and where we have been. But where are we going? One thing is clear: The president obviously plans to take a more active role in promoting his version of reform. A major address to both houses of Congress is planned for Sept. 9.

Those tempted to invoke the late Sen. Edward M. Kennedy's name to pass health care bills should remember that he was not revered in all quarters. Doing so would be a tactical error on their part.

So would using reconciliation to ram through a bill, as Democratic Sen. Charles E. Schumer of New York and former Democratic Party leader Howard Dean are advocating. Reconciliation -- a legislative process that requires only a 51-vote majority in the 100-seat Senate, rather than the 60 votes needed to break a filibuster -- is expressly meant only for budgetary matters. Its use would divide the country further and reduce the U.S. Senate to being no more deliberative than the House of Representatives.

Nor should the president and his allies try to disguise the same rejected "reform" under a different name. Renaming the public option a "co-op" is disingenuous, for example. It all amounts to the same thing: a single-payer system, which means the only choice Americans would have is a government package.

We also must anticipate the protests that the president's supporters expect to mount over the coming weeks. These protests are facilitated by the White House campaign apparatus Organizing for America and the same people who called those who turned out in August "astroturf."

Going forward, we do need to fix America's health system, but in a common-sense way that is in synch with our country's values. If we are going to redesign it, we will have to do it in stages, learning from our many mistakes. We are going to have to encourage states to take the lead in figuring out how to proceed. Mr. Obama could get broad support in town-hall meetings and across the aisle for this agenda if he is willing to embrace it.

What he needs to realize after his return from Martha's Vineyard is that -- as he has often said -- this isn't about him, it's about the country. And the country has rejected what he is proposing. The people have understood. As Ronald Reagan frequently reminded us: Trust the people.

The Cap and Tax Fiction

Democrats off-loading economics to pass climate change bill.

House Speaker Nancy Pelosi has put cap-and-trade legislation on a forced march through the House, and the bill may get a full vote as early as Friday. It looks as if the Democrats will have to destroy the discipline of economics to get it done.

Despite House Energy and Commerce Chairman Henry Waxman's many payoffs to Members, rural and Blue Dog Democrats remain wary of voting for a bill that will impose crushing costs on their home-district businesses and consumers. The leadership's solution to this problem is to simply claim the bill defies the laws of economics.

Their gambit got a boost this week, when the Congressional Budget Office did an analysis of what has come to be known as the Waxman-Markey bill. According to the CBO, the climate legislation would cost the average household only $175 a year by 2020. Edward Markey, Mr. Waxman's co-author, instantly set to crowing that the cost of upending the entire energy economy would be no more than a postage stamp a day for the average household. Amazing. A closer look at the CBO analysis finds that it contains so many caveats as to render it useless.

Associated Press

Henry Waxman

For starters, the CBO estimate is a one-year snapshot of taxes that will extend to infinity. Under a cap-and-trade system, government sets a cap on the total amount of carbon that can be emitted nationally; companies then buy or sell permits to emit CO2. The cap gets cranked down over time to reduce total carbon emissions.

To get support for his bill, Mr. Waxman was forced to water down the cap in early years to please rural Democrats, and then severely ratchet it up in later years to please liberal Democrats. The CBO's analysis looks solely at the year 2020, before most of the tough restrictions kick in. As the cap is tightened and companies are stripped of initial opportunities to "offset" their emissions, the price of permits will skyrocket beyond the CBO estimate of $28 per ton of carbon. The corporate costs of buying these expensive permits will be passed to consumers.

The biggest doozy in the CBO analysis was its extraordinary decision to look only at the day-to-day costs of operating a trading program, rather than the wider consequences energy restriction would have on the economy. The CBO acknowledges this in a footnote: "The resource cost does not indicate the potential decrease in gross domestic product (GDP) that could result from the cap."

The hit to GDP is the real threat in this bill. The whole point of cap and trade is to hike the price of electricity and gas so that Americans will use less. These higher prices will show up not just in electricity bills or at the gas station but in every manufactured good, from food to cars. Consumers will cut back on spending, which in turn will cut back on production, which results in fewer jobs created or higher unemployment. Some companies will instead move their operations overseas, with the same result.

When the Heritage Foundation did its analysis of Waxman-Markey, it broadly compared the economy with and without the carbon tax. Under this more comprehensive scenario, it found Waxman-Markey would cost the economy $161 billion in 2020, which is $1,870 for a family of four. As the bill's restrictions kick in, that number rises to $6,800 for a family of four by 2035.

Note also that the CBO analysis is an average for the country as a whole. It doesn't take into account the fact that certain regions and populations will be more severely hit than others -- manufacturing states more than service states; coal producing states more than states that rely on hydro or natural gas. Low-income Americans, who devote more of their disposable income to energy, have more to lose than high-income families.

Even as Democrats have promised that this cap-and-trade legislation won't pinch wallets, behind the scenes they've acknowledged the energy price tsunami that is coming. During the brief few days in which the bill was debated in the House Energy Committee, Republicans offered three amendments: one to suspend the program if gas hit $5 a gallon; one to suspend the program if electricity prices rose 10% over 2009; and one to suspend the program if unemployment rates hit 15%. Democrats defeated all of them.

The reality is that cost estimates for climate legislation are as unreliable as the models predicting climate change. What comes out of the computer is a function of what politicians type in. A better indicator might be what other countries are already experiencing. Britain's Taxpayer Alliance estimates the average family there is paying nearly $1,300 a year in green taxes for carbon-cutting programs in effect only a few years.

Americans should know that those Members who vote for this climate bill are voting for what is likely to be the biggest tax in American history. Even Democrats can't repeal that reality.

Cap-and-Tax Hits the Floor This Friday

By Michele Bachmann

It appears the Waxman-Markey cap-and-trade energy tax will be on the House floor for a vote this Friday. This legislation is an economic time bomb for our nation's already struggling economy and despite Democrats’ best attempts to frame it as a necessary measure to stop global warming, cap-and-trade is merely a gigantic tax and huge revenue booster for our federal government to allow them to keep spending and fund more government programs. No matter which analysis of this bill you look at, it means higher costs for all Americans. The CBO predicts that the rise in prices would hit low-income households the hardest as these homes spend a larger fraction of their income on energy needs compared to those with higher incomes. It will especially impact those Americans living in Midwest states who get most of their energy from coal-fired utilities and have large manufacturing sectors. One Minnesota company speaking up against this cap-and-tax bill is Holiday Stationstores, headquartered in Bloomington, MN. They have serious concerns about the low carbon fuel standard in this bill and its effects on the Upper Midwest. They shared their concerns in a letter to Minnesota Congressman Collin Peterson, Chairman of the House Agriculture Committee, at the time this bill was reviewed by his committee: "…Minnesota has among the cleanest burning fuels in the United States. However, Minnesota and a number of other Midwest states also rely heavily on transportation fuels that – while cleaner – are considered by some to have a large carbon footprint. “The concept of a low carbon fuel standard itself is especially problematic for Midwest states. Unlike California, which produces much of its own crude, the Midwest relies on crude from Canada.... In Minnesota, for example, more than 80 percent of the state's crude supply comes from Canada. Although it's plentiful, Canadian crude is typically denser and requires more energy to produce than lighter and sweeter crudes. This makes it arguably more carbon intensive than crude derived from places like the Middle East." The ones paying the price for this shortsighted bill are the businesses like Holiday Superstores who will be hit just for staying in business. And even worse, it's you and me who will ultimately feel the pain through skyrocketing energy costs. This plan is wrong in its premise and in its execution. With our economy struggling as it is right now, how can we afford to raise energy costs? To educate yourself on what cap-and-tax really means for you and your family, check out what the Heritage Foundation has to offer.

Conservative Principles of Health Care Reform: The Road Ahead

by the Honorable Michael B. Enzi

Heritage Lecture #1124

I want to thank the Heritage Foundation for hosting this event. The topic today is "Conservative Principles of Health Care Reform: The Road Ahead," but before I discuss the road that hopefully lies ahead, I would like to discuss the road we are on.

Today, our nation's health care system travels a dead-end road. When I introduced 10 steps to reform our health care system almost two years ago,[1] I noted that because of our health care crisis, literally every American stood a heartbeat away from devastation. The problem has only worsened.

The Problem

The state of our health care system poses the single greatest long-term domestic threat to America's stability, and responsibly reforming this system poses the single greatest challenge to our nation's policymakers in more than a generation. Two years ago, I said that we needed comprehensive health reform. And today, I say it again. I agree with President Obama, millions of Americans, and many lawmakers on both sides of the aisle: The time for reforming our health care system is now.

Our current rate of health care costs is simply unsustainable. Health insurance premiums for the average American family have nearly doubled since 2000. As a nation, our total spending on health care has more than doubled as a share of gross domestic product over the last 30 years. Health care economists agree that, absent reform, this trend will only accelerate over the coming decades.

Spiraling costs are also forcing more employers to cut back or drop the health insurance coverage they offer to their employees. The United States currently has the largest percent of its population uninsured of any industrialized nation. And as recent unemployment numbers show a rise to nearly 9 percent, we are sure to face a growing number of uninsured in the coming months.

We are headed down this unsustainable path because most of the incentives built in to the current system are designed to raise costs. Both in the area of health insurance and in medical services, we currently operate under a system that promotes inefficiency, encourages waste, and invites fraud.

If we stay the course and do nothing new with our nation's health care system, we threaten the American Dream. Our future entitlement obligations will grow, people will pay even more money, and they will receive less care. They will have to fill out more forms and wait longer to get the tests and see the doctors they need to see. There will be fewer doctors, nurses, and health care professionals to take care of an increasing number of patients.

We must reform our health care system, and the time to act is now.

So both sides of the aisle agree on the problem. Now, to some people that might not seem like much, but when you consider the other policy issues being discussed like card check, global climate change, and enhanced interrogation techniques, sometimes agreeing on the problem is a bipartisan accomplishment in and of itself. So now let's talk about solutions.

The Solutions

Let me be clear: I want to support a bipartisan health care reform bill. I also believe that it is possible to get broad bipartisan support behind such a bill. Republicans, Democrats, Independents, higher incomes, lower incomes&--it doesn't matter. We all worry about health care, and if we are committed to finding real solutions, then we will find some that we can agree on.

There never has been a bill with as many moving parts that affect as many people. To get a workable solution, it will require the effort of every member of the Senate. If we can't come up with a plan that can garner the support of at least 75 or 80 Senators, this institution will not have the confidence of the American people, and the plan will fail.

I am working hard with the chairmen and ranking members and other key members of the relevant committees to see what we can achieve. I believe that such a bill would have the following elements...