Economist Gregory Mankiw explains.
There has been a lot of talk lately about the CBO scoring of the health bill. Here is one thing people should understand about their numbers: When they estimate the budget impact of a bill like this, they assume the path of GDP is unchanged.
Recall that the bill raises taxes substantially. Some of these tax hikes are the explicit tax increases on capital income to pay for the insurance subsidies. Some of these tax hikes are the implicit marginal rate increases from the phase-out of the insurance subsidies as a person's income rises. Both of these would be expected to reduce GDP growth.
And there are other reasons to assume that ObamaCare will slow economic growth, notably its mandates on businesses.
Cross posted at Jim Miller on Politics.
Posted by Jim Miller at March 21, 2010 02:30 PM | Email ThisWhat we can say about the CBO score the Democrats got is that it could be overestimating or underestimating the savings that health-care reform will deliver, but in any case, this is the best guess from the town's most rigorous guesser. And it's a more promising prediction than was offered for the Medicare Prescription Drug Benefit or the Bush tax cuts or really any piece of legislation passed in the last 10 years. Democrats have done the best they can to make this bill fiscally responsible, and CBO has done the best it could to make that a tough test to pass. Dismissing that works for the GOP's short-term agenda, but that shouldn't be confused with a serious methodological critique that they mean to sustain.Posted by: MikeBoyScout on March 21, 2010 05:09 PM
So, it'll be like going from the Clinton Administration to the Bush Administration, only we'll get more healthcare. Sounds good!
...the most violence done to the U S Constitution in the last 70 years.
They passed a resolution opening prison camps in foreign lands, allowed rendition of innocent persons thereto, and approved illegal wiretapping? Did they declare anyone to be an "enemy combatant", or approve torture of such persons?
Posted by: tensor on March 21, 2010 05:46 PMAnd Glenn Beck made a good point this past week: He played audio of Obama complaining that we should not have to pay for people's bad health habits. Beck pointed out that --guess what? Obama smokes. He's not willing to change his bad health habits; just yours. He is "more equal" than you, dontcha know? This is only the beginning.
Posted by: Michele on March 21, 2010 08:20 PMAs does Rep. McDermott, who routinely receives 75% of the vote. I do find it amusing you believe private health-care companies do something useful, especially encouraging "innovation." The profits of a private health insurer ARE the difference between the amount of healthcare for which the policyholders pay, and the amount they receive. These companies certainly don't encourage medical innovations; they deny coverage for exactly such attempts!
They are middlemen, skimmers, who produce nothing except paperwork and grief. (And private yachts for their CEOs, if the company can deny sufficient value to the policyholders.)
Posted by: tensor on March 21, 2010 08:31 PMAs does Rep. McDermott, who routinely receives 75% of the vote. I do find it amusing you believe private health-care companies do something useful, especially encouraging "innovation." The profits of a private health insurer ARE the difference between the amount of healthcare for which the policyholders pay, and the amount they receive. These companies certainly don't encourage medical innovations; they deny coverage for exactly such attempts!
They are middlemen, skimmers, who produce nothing except paperwork and grief. (And private yachts for their CEOs, if the company can deny sufficient value to the policyholders.)
Posted by: tensor on March 21, 2010 08:31 PMand what about that Canadian leader who announced he was coming to the states for a procedure that would be way less hard on the body than the archaic junk being done up in Canada? We have innovation here; and Canada is stuck with less. Now we will be more like them. Obama is putting America on the road to second-class very quickly. His record-busting deficits are also putting us there very quickly. He is an evil president.
Here is what it does:
"For people at those income levels [people earning more than $200,000 and couples starting at $250,000] , all their investment earnings will be taxed 3.8%, marking the first time the hospital insurance tax has hit non-wage income."
I think this is fairest way to tax people.
I would like to see us reduce:
-Income Tax
-Capital Gains Tax
-Business Tax
-Sales Tax
However -- I have no problem at all with asset taxes on interest and dividends.
While investment drives business, dividends and interest on idle money, really doesn't do much (often for both investors and the economy).
True business is about flow, creation, products, jobs.
Asset taxes release capital back into the market in the fastest way possible, tend to reward the doers and penalize the idlers.
I say, Republicans should take a second look at this Asset Tax (Health Bill) and reconsider!
You do realize that capital gains taxes are taxes on capital gains, the profits on investments that you so dearly want to support. I think you really don't understand what is investment earnings, especially among the rich. It's not your grandmother's savings account at the bank; it's a structured investment vehicle or shares in venture capital firm or LLC that returns passive income.
The very capital you want to free up to drive business. It's the dividends and interest paid back that creates the desire to make the investment in the first place!
Posted by: Shanghai Dan on March 24, 2010 09:28 PM