Friday, May 15, 2009

Response to Isolationism

In his blog post on U.S. foreign policy, Allen makes a good argument. The United States government must be very selective when it comes to intervening in the affairs of other countries, as such actions can have unfavorable results and cost this country a great deal. There is no quick or easy way out of the conflict in Iraq, for example, and we must be careful to avoid such situations in the future when there is no urgent need for them.

I agree that we should not try to change other countries' forms of government to something more favorable to us, by military or even financial means. These endeavors can lead to instability and violence, and do not necessarily have the intended outcome. Chilean president Salvador Allende, a socialist, was overthrown (after the U.S. government exerted an effort to create economic conditions favorable to a coup). As a result, Chile was taken over by Augusto Pinochet, under whose regime thousands were reportedly killed.

We cannot afford to go about dispensing help wherever there is a problem, particularly in light of our present financial troubles. However, there are sometimes circumstances that require us to get involved, whether militarily or financially. If there is a crisis that a country cannot deal with alone, the United States has a responsibility as a world power to provide aid.

Friday, May 8, 2009

Health Insurance Tax?

Health care reform is a high priority for the Obama administration. Many Americans cannot afford to pay for private health insurance, and major reform is needed to make coverage affordable for lower-income people. An important question, though, is how to pay for it - making health coverage available to nearly 50 million uninsured Americans is bound to be costly. One method advocated by some (though not by President Obama) is to allow the most expensive employer-supplied health benefits to be taxed as income.

Proponents of the idea argue that it would be an important source of the revenue necessary to pay for health care reform. One Congressional estimate puts the revenue that could come from the tax at $100 billion over five years, according to an article in the New York Times. A problem with the tax would be the difficulty in writing the legislation. It would have to be written carefully to avoid taxing lower-quality coverage that is expensive because of other factors (such as location or the size of the company paying the benefits) along with expensive, high-quality plans. Also, some analysts point out that if the group of taxable plans is too narrowly defined, the revenue gained will not be significant enough to warrant the action in the first place.

Even though the money for reform must come from somewhere, a tax on health insurance is not a good way to get it. Just because some employees' health benefits are expensive does not necessarily mean that they have income to spare. They must still pay costs associated with health insurance, and whatever the quality of their coverage they may still have difficulty paying their part. Taxing health benefits as income would put an undue burden on citizens struggling to get by.

Friday, April 24, 2009

Potential Immigration Legislation

For the most part, I disagree with what Anjana says in her post. I do agree that this year probably isn't the best time to embark on immigration reform, but the system has problems and needs to be fixed at some point. This may involve the kind of legislation that she argues against. The bill has not been written yet, but will be discussed over the summer and perhaps drafted this fall. It would make it possible for illegal immigrants to gain legal status, and also strengthen border security and crack down on employers that hire illegal immigrants.
Even if this legislation was drafted and passed, it probably would not drastically increase competition for citizens' employment. For one thing, the immigrants would not "automatically" get jobs in place of other Americans. They would have to apply for jobs like everyone else, and many are already working illegally - that's why they came to the U.S. in the first place. Also, revenue resulting from the bill would include not only fines, but taxes collected from newly-legal immigrants.
Anjana makes a good point about the current economy, though. A group of potentially millions of new citizens, qualified for government assistance, is the last thing our government (already heavily in debt) needs right now. The immigration system must not come before more urgent priorities such as the economy, and should wait until the country is more stable.

Thursday, April 9, 2009

Reducing carbon emissions: the cap-and-trade system

In 2004, the United States emitted approximately 6,049,435,000 metric tons of carbon dioxide into the atmosphere, more than any other country and about a fifth of man-made CO2 emissions. It is estimated that since 2006 China has surpassed the U.S., but this is due to increases in Chinese emissions, rather than to any great improvements on the part of the U.S. Meanwhile, global warming is a real threat, and global greenhouse gas emissions must not continue at the present rate. The United States, as a major contributor to the pollution, has a responsibility to keep its CO2 levels in check. One method that has been proposed is the "cap-and-trade" policy endorsed by President Obama. Though this plan is criticized as effecting too much cost on consumers, no significant decrease in emissions can come without someone paying for it. Unfortunately, such decreases are necessary, and the cap-and-trade policy is a good way to do it.

Obama's plan involves setting a limit on the amount of carbon dioxide that can be emitted and selling credits (with the total amount sold equal to the emissions limit) to companies permitting them to release a particular amount of CO2. If a company's emission levels are lower than the amount it bought credits for, it can sell the excess credits to other companies that need more. Over time, the CO2 limit (and therefor the number of credits issued) goes down and the price of credits increases. The benefits of this plan will be significant - it will greatly reduce carbon dioxide emissions in the United States (the goal is an 80% reduction by 2050), while generating billions of dollars in revenue for the federal government.

As for the argument that the energy price increases caused by a cap-and-trade system will put too much financial strain on consumers, the government can at least partially relieve this. The revenue generated by the sale of carbon credits can be put into tax breaks, thereby offsetting the burden of higher energy costs. If most or all of the revenue is used this way, the cap-and-trade system should not have too much effect on taxpayers.

Even if the tax breaks don't completely cover the price increases, the benefits of cleaner air are worth paying a little extra for energy. Restricting CO2 emissions cannot solve the world's pollution problems, but it is an important and necessary step that the United States government must take.

Friday, March 27, 2009

Anger at AIG bonuses misplaced?

Hans A. von Spakovsky, in his article Misplaced Anger on AIG at National Review Online, argues that it is not only pointless to confiscate the controversial AIG bonuses, but it is counterproductive. His essay is directed at visitors to NRO, specifically conservatives who want to learn about the A.I.G. controversy. Von Spakovsky has some credibility on the matter. He is a former commissioner on the Federal Election Commission, and for a time was the in-house counsel for an insurance company that went through major financial difficulties.

Von Spakovsky claims that lawmakers do not understand people's careers or how the economy works. He describes his experience at the insurance company he worked for and what happened when it ran into trouble. He states that in a struggling company, employees will find jobs at other companies for fear that theirs will fail and they will be unemployed. He says that in such situations, bonuses are necessary to keep the employees that are needed to run a business. Von Spakovsky uses this point to argue that a 90% tax on bonuses at companies such as A.I.G. will "drive out" the "top talent" and important employees that should be working to make the business profitable. If it fails to be profitable, taxpayers will "never recover their $150 billion investment" in A.I.G. He fails to mention, however, that A.I.G. bonuses were paid to employees in A.I.G.’s financial products unit, which is the part of the company that got them into trouble in the first place. It doesn't make much sense to be trying to retain the people at least partially responsible for the current problems.

Von Spakovsky at first would seem to be making a good point, and it is true that the amount of money paid in bonuses is a small fraction of the bailout money given to A.I.G. His argument that the bonuses are necessary, however, is ultimately not very convincing. For example, there is no suggestion that his own company actually benefited materially by retaining him and his coworkers with financial incentives.

Friday, February 27, 2009

David Brooks on Obama

In his article "The Uncertain Trumpet," which appears in the New York Times, columnist David Brooks criticizes President Obama's recent policies, focusing on Obama's handling of health care reform. Brooks is a credible source, as an experienced author, editor, and commentator on "The Newshour with Jim Lehrer". He is a conservative, but respects Obama and does not criticize him just because of party differences. His essay is aimed at readers of the New York Times who are interested in Obama's policies and health care reform.

Brooks argues that Obama has not been as involved in policy-making and reform as it would seem based on his address on Tuesday, and gives several examples. He suggests that Obama has not fully left behind old Washington habits, saying that he "enthusiastically perpetuates the myth" that average Americans can enjoy health care and other government spending while letting the top 2% of the population pay for everything. In my opinion, with the economy in its present state many Americans cannot afford to pay more taxes, but when the economy is stabilized, perhaps the current tax breaks on middle-class citizens can be repealed. This will help pay for such things as health care and reduce the deficit.

Brooks comments on "a weird passivity emanating from the White House," saying that Obama shows "deference to the Washington establishment" and isn't exercising his authority to enact his policies. His most effective example is about health care. The Obama administration is giving Congress a lot of control over the health care reform bill, providing only eight "general principles" and leaving the rest up to the legislators. Brooks contends that so much freedom should not be given to the "Congressional Old Bulls." He argues that the process would be full of Congressmen and lobbyists struggling for influence and trying to push their own agendas, and that the Obama administration should have written a plan before sending it to the legislature.

While some of Brooks' points are less successful than others, overall he makes a fairly effective case that Obama could be more aggressive on policy and reforming the usual proceedings in Washington.

Friday, February 13, 2009

Stimulus bill passes the House

The House of Representatives on Friday passed the $787.2 billion stimulus package with a vote of 246-183, reports Deborah Tedford in an article at npr.org. The bill was voted against by all House Republicans, and seven Democrats. House GOP Leader John Boehner argued that the stimulus plan “falls woefully short,” and House Speaker Nancy Pelosi, of course, supports the plan. In addition to merely relaying the event, Tedford describes some of the ways the stimulus money will be spent. I would recommend it for the article itself, which is interesting, and also for the access it provides to more detailed information for those who are interested. It includes the link to a more comprehensive chart of the proposed spending, and a link to the House Rules Committee website.


http://www.npr.org/templates/story/story.php?storyId=100685976