Two Down

Mitt Romney and Newt Gingrich have both recently demonstrated why they are unfit to be the Republican presidential nominee in 2012.

Romney defended legislation he supported when governor of Massachusetts that vastly expanded the state's role in healthcare in Massachusetts, including mandating that state residents have health insurance and creating panels to oversee healthcare. If it sounds like ObamaCare, that's because it shares many similarities. Romney says he doesn't support ObamaCare, since it should be up to each state to impose Massachusetts-style controls. As if the loss of freedom is OK if a state does it but terrible if the federal government does.

Gingrich decided to lambast Paul Ryan's thoughtful plan to allow Medicare to survive its pending bankruptcy with reforms as "right wing social engineering". Ryan proposed allowing seniors who are currently under the age of 55 to buy insurance with a $15,000 subsidy by the government, giving seniors the ability to have a higher quality and/or more cost effective insurance then they currently have. Instead, Gingrich thinks the individual mandate to purchase health insurance is a good thing.

Gingrich's comments are already being used by Democrats to attack Republicans.

Romney and Gingrich have greatly undermined Republican opposition to the Democrats' efforts socialize healthcare. Since ObamaCare is such a fundamental issue in the 2012 campaign, Republicans have to look elsewhere for their nominee.

The Syrian Treatment

An American diplomat was recently hooded, roughed up, and detained by Syrian security agents.

In a different era, such behavior would be considered an act of war and America would respond accordingly. But in such a world, the prospect of America's response would have deterred Syria from engaging in this thuggish behavior to begin with.

Gaia Isn't Happy

In many schools, Earth Day means students will be inundated with the importance of environment. It can often take on a religious-like devotion to the cause.

But you never hear on Earth Day the full reality of humanity's relationship with nature, such as the devastating tornadoes that recently killed hundreds in the South, the earthquake and tsunami that killed over 14,000 people in Japan, and the hurricane that killed over 300,000 people in Haiti. Or why the 2004 tsunami in less industrialized Indonesia killed over 200,000 people, while in heavily industrialized Japan, the death toll was over 90% lower.

We need an Industrialization Day to celebrate the achievements of the industrial revolution, which so dramatically improved the material terms of the human condition. Your life may depend on it.

We Win, They Lose

One of my first thoughts of hearing the wonderful news that Osama Bin Laden was killed by American special forces in a spectacular raid into Pakistan was a comment by Ronald Reagan. Reagan was asked his vision of how the Cold War with the Soviet Union would end, and Reagan replied, "We win, they lose."

While Bid Laden's death is not synonymous with victory in the war on terrorism, it certainly is an important piece: America lives and thrives, while one of our leading enemies is dead. That is the lesson we want all of America's enemies to fear, so as to prevent them from being our enemies in the first place.

Another thought that quickly came to mind was the contrast in the success of this mission with the abysmal failure of the 1980 effort to rescue the American hostages held by Iran. 30 years of an American military build up led by Ronald Reagan, which provided the capacity and confidence to gain operational experience from successful war fighting and special operations activities, have honed our military's skills today to a degree that dwarfs the capabilities of the U.S. military in 1980.

Lastly, the extraordinary skill and bravery of America's warriors is remarkable, and for which we should be very grateful. Without men such as these, we could not enjoy the quality of life we take for granted in America.

Real Healthcare Reform

Imagine there was a healthcare innovation that resulted in a 14% decrease in costs in the first year of its implementation while preserving patient choice (unlike socialist healthcare policies in Canada and in Europe that achieve lower costs through government controls, limits, and rationing of healthcare spending).

Given the intense public debate over healthcare spending, you would think this was a major news event, and that healthcare reformers would be excited to discuss this remarkable result.

Well, there is such an innovation. A few weeks ago, the Rand Corporation published a study of high deductible health insurance plans, which showed that healthcare spending by first year members was 14% lower than members in traditional health insurance plans.

If such a result could be obtained across all healthcare spending in the United States, the savings in 2010 would have been over $350 billion. Federal and state budget deficits would be reduced significantly as Medicare and Medicaid spending decreased. And all based on individual choices rather than government fiat.

How can this be?

High deductible insurance plans increase the incentives for consumers to be prudent in spending money on healthcare, since the consumer has greater out-of-pocket costs before health insurance kicks in. But the greater out-of-pocket costs doesn't mean the consumer loses out relative to traditional health plans, since these plans can be combined with a health savings account (HSA), where an employer makes a contribution to an account which pays for out-of-pocket healthcare spending, and amounts which aren't spent are kept by the employee.

As an example, imagine a traditional health plan costs the employer and employee $18,000 in premiums and has no deductible (the $0 deductible is not the norm today, but makes for an easier comparison - the point remains valid with more typical deductibles of $500 or $1,000).

Let's say a high deductible plan, with a $10,000 deductible, costs $8,000 - and the employer contributes $10,000 to a HSA to pay out-of-pocket costs. And let's also assume that the two insurance plans have the same co-pay for amounts above the deductible.

What's happened here is that the the $18,000 premium for the traditional health insurance plan has been split into two components in a high deductible plan combined with an HSA: the same $18,000 now funds the HSA to pay for out-of-pocket costs and pays the insurance premium to cover healthcare spending above the deductible.

If the employee has health costs greater than $10,000, the employee's net cost is the same for the two plans. But for health costs less than $10,000, the employee comes out ahead with the high deductible plan, since he can keep the unspent money in the HSA. And since the employee can keep the unspent money, he has an incentive to be prudent in spending money on healthcare if his spending for the year turns out to be below the deductible amount.

This is a long of saying that incentives matter, which is one of the truisms of economic life. People respond to incentives, and traditional employer-provided health insurance, Medicare, and Medicaid have little or no incentives for the consumer to incur less healthcare costs since a third party is paying almost all of the incremental costs.

The Rand study also showed that consumers in high deductible plans used fewer preventive services - even though by law high deductible plans have no deductible on preventive treatments like vaccines. Such consumers presumably didn't know that the cost for preventive treatments wouldn't come out of their pocket; this issue can be rectified with efforts to promote awareness of their new plans terms.

It is important to point out that Democrats have fought the introduction, and then expansion, of HSAs. Republicans for years tried to get HSAs into law, which the Democrats opposed.

Since Rand's study is entirely predictable, based on the premise that people respond to incentives, why would the Democrats oppose HSAs and the cost savings they would bring? They did so because HSAs would be effective in reducing health care costs through individual choice and market mechanisms - instead, the Democrats prefer to promote the idea there is a healthcare crisis which can only be solved by increasing government's role in healthcare, such as ObamaCare.

Unserious About the Budget

The negotiations over the budget compromise reached this week between Republicans and Democrats in Washington demonstrate the depths of Democrats' attachment to enormous levels of government spending.

Notwithstanding that the 2011 federal budget deficit is estimated to be a staggering $1.6 trillion, Obama's original budget called for an increase in government "discretionary" spending. After facing determined Republican efforts to cut spending this year, Obama and the Democrats came out for holding "discretionary" spending flat - that's right, in the face of a $1.6 trillion deficit, the Democrats proposed no reductions in spending.

The final compromise seems (I say "seems" because there is some debate that some of the cuts are recissions of spending authority that may not have been spent anyway, so the actual reduction may be less than the announced $39 billion) to cut spending by about $39 billion, or a cut of a little more than 2% of the budget deficit and 1% of government spending. That's it. Mountains of deficit spending, and Democratic opposition held the reduction to 2% of the deficit.

Look at the debate over funding the Corporation for Public Broadcasting ("CPB"), which gets over $400 million a year from the federal government. Government funding for the CPB started in the 1960s under the stated goal of promoting alternative programming to the dominance of the three broadcast networks. Well, there is so much alternative programming today - think of the hundreds of channels available on cable and satellite TV, plus the ability to stream entertainment from the internet - that the ostensible reason for the CPB no longer exists. Moreover, there is little doubt that devoted viewers and advocates of public TV would increase their donations to make up any funding shortfall if the government ended its subsidies to public broadcasting.

If a government with a $1.6 trillion deficit can't eliminate spending on the CPB, we are not being serious about the fiscal crisis facing the nation.

But the Democrats went to the mat to defend the CPB subsidies. They probably worry that Democratic fundraisers and activists, who fund so much of the left's political and social agenda, would divert some of their contributions toward public broadcasting and away from electing Democrats.

Look for the Union Label

The Democrats' response to the efforts of Wisconsin Governor Scott Walker's effort to reduce collective bargaining rights for state and local government employees in Wisconsin has been educational.

If it weren't obvious before, we see just how beholden the Democratic party is to public unions for support. From fleeing the state to prevent a quorum to prevent the elected representatives of Wisconsin from completing their jobs, to comparing Governor Walker to Hitler, the Democrats and their supporters have engaged in political warfare to preserve union power in Wisconsin. You would only do this if such power was important to you.

Denying a quorum from being present is an abuse of legislative rules from a time when communications were slow and traveling from a legislator's home to the capital took a long time. Mandating a minimum quorum to vote on a bill therefore was an attempt to prevent members from being denied an opportunity to participate in voting on a bill.

Some have compared denying quorum to the filibuster in the U.S. Senate, whose purpose is to give the minority certain rights if they feel passionately about an issue, but that is a wrong analogy. Requiring a quorum is to allow legislators the time to get to the capital for a legislative session, or to prevent a majority from calling the legislature into session at a time or location that is difficult for the minority to attend and hence tipping the scales in the majority's advantage by denying the minority from being able to participate in the vote.

With modern communication and travel, such concerns are not relevant and could be satisfied with appropriate advance notice provisions to hold a legislative session. Instead, the Wisconsin Democrats used the quorum rules to prevent the legislature from operating, even though they had plenty of time to attend the legislative session.

The language directed at Governor Walker, such as comparing him to Hitler or Hosni Mubarak, is deeply offensive on many levels. Political debates that turn into name-calling don't advance the public's knowledge of the issues and in fact, suggest the name-caller can't advance facts or logic to make his case, so he uses invective instead.

Moreover, after so much commentary about having a civil tone of political discourse in the country after the shooting of the Democratic Representative Gabrielle Giffords in Arizona in January, we now see clearly that such comments were made for an attempted partisan advantage, and not for heartfelt convictions. Many of the commentators or politicians who implicitly or explicitly criticized the Tea Party or Republicans for falsely claiming their rhetoric had anything to do with the Giffords' shooting either have been silent while abusive language has been heaped on Governor Walker or have engaged in such rhetoric themselves. This further undermines the political culture in this country.

We also have learned that union thugs will direct their anger to the people in the public an large. Unions having now turned their attention to Wisconsin businesses, having sent a letter to Wisconsin business owners saying that if you don't actively support union efforts against Governor Walker, the unions will engage in boycotts of your business.

Interestingly, Wisconsin Democrats conceded to the benefit reductions in the new law, but wouldn't agree to the provisions that allowed state workers to opt out of the union or having the right to not have their union dues used for political donations. Why engage in all-out political warfare if the employee benefit issue was off the table?

Because the real issue is union power and campaign contributions to Democrats. As reported in the Wall Street Journal, when Indiana passed a similar law a few years ago, less than 10% of union members continued paying union dues. And without those dues, union leaders lose their own jobs, have to reduce their compensation to reflect diminished union financial resources, and reduce political campaign contributions which go overwhelmingly to Democrats.

And THIS loss of union money, more than the false right to be in a government union, is why the Democrats and their union allies are up in arms about the events in Wisconsin.