Bush is prepared to veto bill to expand child insurance

WASHINGTON, July 14 — The White House said on Saturday that President Bush would veto a bipartisan plan to expand the Children’s Health Insurance Program, drafted over the last six months by senior members of the Senate Finance Committee.The vow puts Mr. Bush at odds with the Democratic majority in Congress, with a substantial number of Republican lawmakers and with many governors of both parties, who want to expand the popular program to cover some of the nation’s eight million uninsured children.

With regard to my previous post:

The proposal would increase current levels of spending by $35 billion over the next five years, bringing the total to $60 billion. The Congressional Budget Office says the plan would reduce the number of uninsured children by 4.1 million.

The new spending would be financed by an increase in the federal excise tax on tobacco products. The tax on cigarettes would rise to $1 a pack, from the current 39 cents.

This is another example of revenue-raising. Tobacco consumption is very price-inelastic: it takes very large increases in price to affect relatively small changes in the quantity demanded. And the government loves it – one of the reasons why it is so hard to model cigarette consumption/demand is that most of the price is tax. The white house is already referring to this as ‘tax increases’, which is kind of like the way John Kerry voted for tax increases 350 times (remember that piece of idiocy?).

Funnily enough, most smokers die younger and more quickly, so they actually use less health-care resources than the rest of us lingerers. We’re robbing them blind.

What does not change, however, is that in the land of resource-allocation make-believe, the Bush administration will choose to save smokers a little money rather than give health insurance to 4.1m American children. Here’s something else to consider: those 4.1m kids will need care, at some point. That care will need to be paid for. One way or another, you will fund it. How is that not, in practice, a tax on you? Money you think is being taken from you to maintain roads might go towards this instead.

Or, given the difference is about USD45bn, will be used to pay for about an hour of the Iraq War. Here are the governments priorities:

We would prefer some of you to speed and make us money: just please try not to hit anybody

The Taxman Hits, in the Guise of a Traffic Cop

SHORT of cash and long of arm, the State of Virginia recently unveiled the nation’s first $1,050 speeding ticket.

…

All over the country, supporting safety improvements on the wages of reckless driving has become a tradition. But in the relations between government and its citizens, the four-digit traffic ticket also seems to signal a leap in the use of fines and fees — and just about any other form of enhanced governmental income production — to avoid the dreaded thing itself, a tax increase.

…

The rising cost of public benefits like pensions, health care and police services, combined with the conventional wisdom that raising taxes is political poison, have led public officials to cast a wide net for this kind of public revenue.

Leasing public bridges in Kentucky. Taxing tattoo parlors in Arkansas. Selling off large chunks of the state highway system in Indiana. Selling off bundles of state student loan portfolios in Missouri. Taxing funeral processions in New Orleans. Those are just some recent measures undertaken or proposed.

“Anything that puts money in the treasury, without raising taxes, is on the table,” said Sujit CanagaRetna, chief fiscal officer for the Council of State Governments, a Washington-based research group that works with state lawmakers. “It is a trend that we see growing tremendously.”

Wow – weren’t those tax cuts for the rich supposed to turn the US economy into a recession-recovering wonderland? Here’s a tip to readers who have yet to pick up on this: the Bush administration is slowly sending States as broke as it can, from unfunded mandates to unfunded Orange Alerts. When the Federal Government is the only branch able to afford to govern, its abrogation of previously-separated powers will be complete.

So. The next time you are forced to pay some stupid, outrageous money for something that makes no sense, just remember. States, cities and townships are being landed with more of the work and less of the money, that’s why. Enjoy that cut in your income tax, if you make enough money to get one of any significance.

But back to speeding. People in Australia and the UK, certainly, are often moved to violence over the issue of speed-cameras. The argument is that they are used for revenue-raising. As a non-motorist (and, more importantly, as a law-abider) I am unsympathetic. You simply cannot be angry over the penalty (known) for breaking a law (also known).

Where the argument has merit, however, is this: if speed-cameras primary purpose was preventing people from speeding, it is not the fine that needs to change, it is the number of cameras. If every inch of road was covered, such that the probability of getting caught, if you speed, became 100%, would you speed? No. Motorists speed not because they don’t care about the penalty, but because they believe they will not be caught. The incentive that works is the risk, not the penalty. Remove that change, and the problem is solved. It is the fact that speed-cameras are limited in number that demonstrates revenue-raising is at least a secondary motive for their use.

If nothing else, at least the state of Virginia is being frankly honest about it. Here is another question: allowing that the state needs the money (we can have that argument another time, if you like), would you prefer it came on land-rates, cuts in health insurance, etc.? Or from people who are breaking the law and endangering human life (and state infrastructure, both of which ought to be precious to you)? The downside is that if it is successful in reducing speeding, another policy immediately becomes important. The problem is the Faustian (of sorts) bargain the state makes – does it want money, or safety? Is it implying that it will accept motorists risking the lives of citizens, if they’re prepared to pay a bribe to the state to do so?

50th-anniversary poll of Kevin Rudd’s Labor

Two things. First: between them, the Australian’s fortnightly Newspoll and the Herald’s monthly ACNielsen polls have apparently come to 50 in number (Alan Ramsey is not a fan). And for most of that period, they’ve shown the same thing: Rudd, or Rudd’s Labor, is more popular than Howard or the Libs. Peter Hartcher came upon a lovely analogy: The Wizard of Oz.

“It is hard to escape the conclusion,” wrote a former Keating adviser, Bill Bowtell, in Quarterly Essay, “that the great necromancer Howard has morphed into the Wizard of Oz, pulling lever after lever behind a tatty curtain, mystified why nothing seems to work as well as it once did.”

He carries it farther, himself,

The Australian electorate, presumably, takes the role of Dorothy, pulling back the curtain to discover that the great and powerful wizard is merely an old man frantically working the levers and switches to generate the magical image that has sustained him for nearly a dozen years.

“You humbug!” the disillusioned girl tells the old man in the 1939 movie classic.

Immediately upon seeing this, I didn’t buy it (even the appearance of lily-gilding sets me off). A second time around, though, and I rather liked it. That John Howard firmly believes sleeves are for keeping tricks up in is not news to a lot of people, but the polls over the last few months have demonstrated that, more and more, Australia has come to know John Howard of old. Tax cuts, terrorist scares (actual, rather than the fear of Steve Liebman being trotted out to embarass himself at us again, which is also Very Real Fear), and the hostile take-over of Indigenous communities up Noth have done nothing at all really for Howard’s polling (and I fully believed the Northern Territory gambit to be Howard’s Big Pull for this election – which it would have been, had his numbers turned around. No snap election for us, though).

This latest poll has Labor 58% : 42% Liberal for two-party preferred, but more relevantly Labor 49% : 39% Liberal in primary voting. I say ‘more relevantly’ because I relied (like, I suspect, Labor) on two-party polling to get my hopes up at the last election. It didn’t work out, though. With 49% of primary voters, however, even with the death of the Australian Democracts Labor is doing very robustly indeed. Of course these are surveys of ‘around’ 1,000 people, usually – the degree to which they are properly representative should be borne in mind. There’s also a big difference between responding to a survey and voting for one’s government. When push comes to fill-in-the-box, people go with their gut. Which is to say, their fear.

Which leads to the second part: just what is it Howard has to offer, or frighten us to death with? Hartcher’s article concludes with what by now must, given the tepid and cynical reaction to the Northern Territory play, be a redundant warning:

Today’s poll does, nonetheless, give us a strong glimpse of the future of how the Government will campaign. Unable to build up its own vote, it will be increasingly driven to drag Rudd’s down. We can expect the Government to continue to campaign positively, with new measures, as it seeks to establish that it still has energy and ideas. But we should expect the emphasis of its efforts to become increasingly negative as it intensifies its attacks on Rudd.

I say ‘must’ probably more to reassure myself, than in certainty. Surely we’re smarter than this, by now? He says, living in the US. Voters really aren’t that clue-in, I know.

Meanwhile, the economic numbers just refuse to fall for Howard, but at least the blame isn’t falling entirely on him, either.

The poll of 1412 voters, taken from Thursday to Saturday, finds 20 per cent of respondents have cut their spending “a lot” and 17 per cent “a little” to cope with rising housing costs.

Of those polled, 27 per cent attribute the housing affordability crisis to buyers wanting better homes than previous generations and driving prices up, an argument the Government has used.

Twenty-two per cent blame speculation by investors and developers, while 21 per cent blame interest rate rises, of which there have been four since the 2004 election. Only 8 per cent agree with the Government’s other argument that slow land releases by the states are making housing unaffordable.

Thank God for the small mercy of people not buying into the garbage about land-releases. Unfortunately blaming home-owners belies a fundamental mis-understanding of incentives (you’re all forgiven for not teaching Economics at a University, also). Had deregulation and the pursuant opening-up of credit taken place in the 1960s instead, we would have seen all of this under the baby boomers, rather than now. It’s much the same as thinking everyone on the road driving faster than you is a lunatic, irrespective of how fast you’re driving at the time. Everyone wants as much space as they can afford.

Andrew Charlton, rounding out economics, has a very good article up in the Sydney Morning Herald (caveat: Kevin Rudd is launching the new boko by Charlton on Monday. So there’s a bias there).

The Liberal and Labor claims deserve thorough scrutiny because what we believe about the foundation of our wealth makes a great deal of difference to how we should pursue our future.

If, as our economic superheroes would have us believe, Australia’s prosperity has been due to the superior performance of our leaders, then our job as citizens is merely to continue to passively re-elect those leaders.

But if our success is a complex combination of long-term policies and global circumstances, then our challenge is to ensure we continue constant public debate with a view to finding the right policies to sustain our position in a changing world.