Biden’s Double Death Tax

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Over the past two decades, Congress has repeatedly softened the blow of the federal estate tax by increasing the exemption amount – from $600,000 in 2000 to just under $12 million now.

It still hits the largest, most successful family businesses hard, and most people think taxing death is wrong regardless of the exemption level. Nonetheless, President Trump called the higher exemption “virtual repeal,” because for most Americans the tax is no longer a direct concern.

President Biden has other ideas. At the heart of his budget is a new, second “double” death tax with an effective rate of 43.4% on the appreciated value of assets held by an owner following their death. This new double death tax is in addition to, not instead of, the estate tax. And with only a proposed $1 million exemption, it would hit all income levels as vast numbers of small businesses, family enterprises and farms may be hold assets (land, buildings, machinery, etc.), but are often cash poor or even in debt.

A new study conducted for the Committee to Unleash Prosperity by the economic modeling firm REMI finds the economic consequences of this double death tax would be devastating. The study found – with very conventional assumptions – that the Biden proposal to impose capital gains tax at death and hike the rate to over 40% would destroy well over 900,000 jobs and cost the average household about $10,000 in lost income.

California stands to lose 125,000 jobs, New York 50,000, Pennsylvania 33,000, Georgia 30,000, Colorado 25,000, and Arizona 20,000. Even West Virginia, a small and relatively poor state, would shed 4,000 jobs with the new “double” death tax. Montana, 4,000 jobs. The list goes on.

That’s probably part of why its former longtime Montana Democratic senator and former Senate Finance Committee Chairman Max Baucus recently came out swinging against the tax, writing it “would force family businesses and ranchers to liquidate when an owner dies and to lay off employees while bringing in little revenue for Uncle Sam. Lawmakers should know this is a mistake… Proponents try to temper criticism by suggesting carve-outs, but we’ve learned from experience that they are ineffective.”

Another Democrat, former House Agriculture Chairman Collin Peterson, went even further, calling it “the worst idea that has been proposed in terms of its impact on agriculture in my lifetime.”

Meanwhile, Main Street USA remains utterly confused as to why the Biden Administration and Congress seem so intent on now hammering family businesses, those most challenged as they try and emerge from the COVID-19 lockdowns, with massive, even crippling, new asset transfer taxes. They are also putting the livelihoods of those that work for or do business with family businesses, and their communities, in jeopardy.

Sadly, all this has very little to do with tax policy. It is about finding “pay fors,” or new government revenues, to cover the cost of Biden’s massive new spending programs.

The scorekeepers at the Congress’s Joint Committee on Taxation found that a capital gains tax above 28 percent starts to actually lose the government revenue – in part because confiscatory rates above that level tend to induce people to hold assets until they die. So the Biden budget wizards came up with the “solution” of imposing a capital gains tax at death.

They don’t seem to care that it would crush thousands of family farms and businesses and destroy hundreds of thousands of jobs. They must hope voters aren’t paying attention.

Copyright 2021 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected]

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Credit Card Rewards Are in Political Peril

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The same politicians who mostly killed free checking and debit card rewards programs through government price controls are setting their sights on credit cards – and that means miles, cash back, and other rewards are now in jeopardy.

That’s a potential political earthquake, because a recent study found that 84 percent of all credit cards are rewards cards, and 70 percent of cardholders who make less than $20,000 a year have rewards cards. Many small businesses also rely on rewards cards – especially cash-back cards.

Those individuals and small businesses need to engage quickly to stop efforts underway by Senator Dick Durbin (D-IL) to build support from his colleagues to extend his 2010 price-control and network-routing regulations on debit cards to credit cards.

The debit card experience should be seen as a cautionary tale.

Rushed to the Senate floor with no committee consideration as part of the Dodd-Frank Act, the Durbin Amendment placed price caps and network routing mandates on debit card transactions, benefiting the biggest retailers but disrupting the business models of banks, credit unions, and stores selling smaller-ticket items. When banks and credit unions were squeezed, they had to cut expenses, and that meant cutting free-checking accounts to customers with lower balances and ending nearly all debit rewards programs.

To garner the support of a handful of Republicans in 2010, Senator Durbin pitched his regulations as a boon to both retailers and to consumers. This is what actually happened:

  • 77 percent of retailers kept prices the same and 21 percent actually increased prices because of the Durbin regulations, per the Richmond Federal Reserve.
  • Free checking dropped from 60 percent of all accounts to only 20 percent, according to a University of Pennsylvania study.
  • The Durbin Amendment cost the average low-income American about $160 per year, per a Boston University study.
  • The number of unbanked Americans increased by about a million, according to the same study.

Durbin considers this a success – because his only real purpose was to push down transaction costs for the biggest retailers. And just as debit regulations hurt consumers, imposing Durbin-style price and routing controls on credit cards will result in rewards programs disappearing – particularly for lower income customers who are less valuable to banks.

Is that worth it to relieve influential big box retailers of what they claim are excessive transaction fees? If the costs are really so high, why have “cash only” stores almost completely disappeared?

Electronic payment costs vary, but average around 2 percent. But the average cost of cash across all retail sectors is 9 percent in a recent study. Grocery stores are on the low end of cash costs at 5 percent, while bars and restaurants are on the high end of cash costs at 15 percent. The study defined the cost of cash as managing cash drawers, interacting with their banks with deposits, reconciling cash flows, and “shrinkage” from cash that goes missing from loss, theft, and fraud.

Aside from their transaction-cost savings from using cards, retail merchants know that most of their customers prefer using cards and spend more per transaction when they use cards than when they use cash.

Of course retailers want to cut their costs, and they already drive hard bargains with payment networks. Having government step in with price controls and routing rules, however, would enrich them by disrupting a well-functioning market and harming consumers.

Before signing on to Durbin’s latest bad idea, senators should ask themselves how they will defend their vote to constituents who as a result stop earning miles, cash back, and other rewards with every purchase.

Copyright 2021 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected]

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Biden’s Infrastructure Plan Ignores Success of Broadband

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Broadband has been America’s greatest infrastructure success story – modern, reliable, and passed the stress-test of soaring demand from COVID lockdown with flying colors.

It’s success stands in stark contrast to government-run infrastructure – water, sewer, transportation – which in many places is in a state of disrepair. It also stands in contrast to broadband in Europe, where regulators opted for government-managed pseudo-competition, as networks struggled and strained and had to be throttled when demand surged.

As the University of Pennsylvania’s Christopher Yoo reported: “Between 2010 and 2016, American providers invested on average annually 2.35 times as much per household as their European counterparts. This allowed the average U.S. household to consume more than three times as much data as the average European household in 2017, according to Cisco. This is a significant jump over the 44% difference between U.S. and Europe that existed a decade ago.”

Even Obama’s FCC chief Tom Wheeler admitted at the height of lockdown: “Credit is due to the nation’s broadband providers. The fact we can work from home is the result of hundreds of billions of investment dollars and construction and operational skill.”

A sensible infrastructure policy would look to broadband as a model to bring more private management and investment into other types of infrastructure. The Biden administration is doing precisely the opposite – massively funding a government takeover of broadband.

The justification for government-run broadband keeps changing. As recently as 2010, Obama National Economic Council member Susan Crawford warned “consumers will have just one provider to choose from: their local cable monopoly.” Wireless couldn’t compete. Telco Internet – with the exception of Version FIOS – didn’t count as broadband. “This is the central crisis of our communications era,” she wrote.

The exact opposite happened. Competition kept increasing—every year, more Americans have more options for Internet access. Today, it’s not just cable and telecommunication companies competing, it’s 5G providers, fixed wireless providers, and low-Earth orbit satellite companies all vying for broadband dollars.

So now, just one Democratic administration later, the primary justification for government-run networks is that private networks are great at downloading, but don’t upload fast enough. Really?

The U.S. Treasury is proposing a redefinition of broadband to symmetrical 100 megabit upload and download speeds that would instantly make 58 percent of all households unserved — surprise, even your gigabit cable Internet isn’t broadband anymore!

The idea is absurd on the merits. Broadband consumers in 2019 used 14 times more downstream than upstream. Asymmetrical networks were deployed not just for technical reasons, but to serve actual usage patterns. Zoom’s posted technical requirements only call for 0.6 to 3.8 Mbps of upstream capacity. While video conferencing increased due to COVID, this asymmetrical usage barely budged.

Meanwhile, we have more evidence than ever that government-owned networks are boondoggles. A recent report from Citizens Against Government Waste found:

“From Bristol, Virginia to Provo, Utah, GON projects have proven to be costly, unsustainable, and anti-competitive, while they divert taxpayer resources from higher priorities and fail to solve connectivity issues… Proposals by members of Congress and the Biden administration to preclude private sector participation in up to $100 billion in broadband funding will stifle innovation and cripple investment in new technology.”

The Obama stimulus spent $7.2 billion on broadband – and almost all of it ended up going to well-populated areas (more votes there) that were already served. Even with the advantage of free tax dollars, these systems were, the report found, “ineffective or failed, loans became delinquent, and borrowers defaulted. The NTIA project completion rate was abysmal.”

Now states are sitting on $350 billion of so-called COVID relief funding. They will be tempted to again spend it in on government-owned networks in vote-rich areas rather than reaching sparsely populated areas without broadband, or figuring out why some low-income consumers don’t subscribe to even cut-rate or free Internet plans. And Congress looks poised to add yet another pot of broadband money in the pending infrastructure bill.

All of this gets infrastructure exactly backwards. Congress should repeal the restrictions on the $350 billion they have already sent states that ban it from being used for roads and bridges, and target broadband spending narrowly to the few remaining truly unserved.

Copyright 2021 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at [email protected]

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Too Many of the Wrong Tests and None of the Right

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After an early bureaucratic disaster – the feds banned private sector tests and failed to deliver a test that worked – the U.S. has ramped up testing to astronomical levels, dwarfing the rest of the world and any historical comparison.

We now average about 1.5 million tests per flu season, and we’ve now run over 57 million tests for COVID-19. But have all those tests delivered what proponents of mass testing promised? Have they contained the spread and restored public confidence that infectious people are at home, not out and about?

Absolutely not. In fact, by the time most test results are available, the people who were positive are no longer infectious. The tests serve no actual infection control purpose. And the tests that actually would make all the difference are still banned by the FDA.

The CDC reports that most infected people are no longer infectious six to ten days after symptom onset. People with very severe disease can be infectious longer – up to 20 days – but people with severe disease aren’t waiting for a test result to find out if they are sick and self-isolate. The CDC also reports, however, that even though they have never found live, infectious virus three weeks after symptom onset, the so-called gold standard PCR tests we have been using can show positive based on non-infectious viral debris for up to 12 weeks.

So the mass, industrial-scale testing we’re doing – with several days turnaround time – isn’t letting infectious people know they are positive quickly enough to alter their behavior. And many of the positives are likely meaningless artifacts of months-old infections. It feeds a mass public panic but accomplishes little else.

The tests that we actually need are instant tests that people could take themselves and get results in the morning, confidently going about their daily activities knowing they are not infectious. These tests, paper antigen tests, have been developed by a team at MIT that applied for FDA approval back in March. There are several companies ready to mass produce them with FDA approval, and unlike the PCR tests that cost around $100 per test, the paper antigen tests could cost as little as $2, making daily self-testing cost effective for most Americans.

In an astonishing display of government stupidity, the FDA’s objection to the paper antigen tests is based on precisely the characteristic that makes them vastly superior to the PCR tests – they are far less sensitive. FDA has used the extreme sensitivity of the PCR tests as a benchmark and refused to issue emergency use authorizations for less sensitive tests. But a test that is so sensitive that it picks up viral debris for months is not a useful tool to prevent infection.

A less sensitive test that is calibrated to show positive when a person is actually infectious is far more useful. That makes the paper antigen tests not only cheaper and faster but better than the 57 million PCR tests that have become a national obsession.

From the beginning the FDA has made a total mess of testing. Last week they finally introduced a new application for at-home testing. They should approve applications from credible paper antigen test manufacturers as soon as possible – they really should have done it months ago.

Copyright 2020 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the Committee to Unleash Prosperity. Kerpen can be reached at [email protected]

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COVID-19: The Nursing Home Disease

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I recently testified before the House Select Coronavirus Subcommittee on the meltdown in nursing homes, which excluding New York (which deliberately underreports) now account for over 55 percent of deaths with COVID.  The House Democrats’ goal was to blame these high death rates on President Trump – but the blame should belong squarely to the handful of governors who presided over these disasters.

More than 60 percent of both nursing home deaths and total COVID-19 deaths occurred in just seven blue states with about 20 percent of the U.S. population: New York, New Jersey, Connecticut, Pennsylvania, Massachusetts, Illinois, and Michigan.  The governors in each of these states ignored federal guidelines and pursued some version of the policy of admitting infectious patients to nursing homes as soon as they were clinically stable.

Nationally about 2 percent of the long-term care population has died with COVID-19 – but over 12 percent in Connecticut, 10 percent in New Jersey, 9 percent in Massachusetts, and about 4 percent in Illinois. Even New York’s dishonest underreported number is 4.4 percent of the state’s long-term care population.

Carnegie Mellon and University of Pittsburgh mathematicians showed back in March that efforts to shelter everyone would lead to a far higher death total than efforts focused on the elderly, but the liberal governors chose to ignore that reality – even as we’ve seen over 80 percent of COVID deaths among seniors.

New York’s policy was implemented via a March 25 advisory that said: “No resident shall be denied re-admission or admission to the [nursing home] solely based on a confirmed or suspected diagnosis of COVID-19. [Nursing homes] are prohibited from requiring a hospitalized resident who is determined medically stable to be tested for COVID-19 prior to admission or readmission.”

The Society for Post-Acute and Long-Term Care Medicine warned in response:  “Unsafe transfers will increase the risk of transmission in post-acute and long-term care facilities which will ultimately only serve to increase the return flow back to hospitals, overwhelming capacity, endangering more healthcare personnel, and escalating the death rate.”

This caution was ignored and the policy stayed in effect until May 10.  New York presently reports 6,413 deaths physically in long-term care facilities. Adding hospital deaths, which the state refuses to report, would likely double or triple that number.

Similar policies in New Jersey, Massachusetts, Connecticut, Illinois, Michigan, and Pennsylvania – where the state health secretary moved his own mother out of a nursing home while sending infectious patients in – produced similar outcomes.

As Dr. Anish Koka described it: “Two weeks into the lockdown, Philadelphia hospitals had been emptied waiting for a New York-style surge that never came… But nursing home patients were treated like patients from the community who were too well to be admitted to the hospital – they were sent home.  The consequences of keeping these patients at the nursing home meant the health system had to eventually deal with the entire nursing home being infected.”

Pennsylvania now reports at least 4,345 long-term care resident deaths; all others are at least 2,054.

It isn’t just state size. California nearly adopted substantially the same policy as the meltdown states, but reversed it just two days later – they didn’t ignore the backlash. With a markedly different policy in place, including sending COVID-negative nursing home residents out of Los Angeles area facilities to the USN Mercy hospital ship to establish COVID-only facilities, the state so far has lost only 1.1 percent of its long-term care population, fewer total deaths in this cohort than little Connecticut.

By prohibiting readmission without effective infection control and deploying the national guard, adequate testing, and PPE, Florida reported long-term care COVID deaths at 1,664 as of June 21 – a quarter of New Jersey’s, and 1.1 percent of the state’s large long-term care population. Texas has fared even better, with less than half its COVID-19 deaths in long-term care and presently at only 0.6 percent of that population.

Most states are now finally making serious efforts to test their entire long-term care population.  That’s great, but if the CDC does not fix its definition counting any death in the presence of the coronavirus, nursing home residents with mild or asymptomatic infections will still show up in the count when they die of other causes. The median nursing home stay before death is just five months. If this definitional problem isn’t fixed, deceptive counts will add to the problem of misperceived public fear.

We need honest reporting and counting to understand the risk of serious illness or death with COVID, and we need policies targeted to protect the vulnerable – not to scare the public. And the governors who presided over the carnage need to be held to account.

Copyright 2020 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the Committee to Unleash Prosperity. Kerpen can be reached at [email protected]

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CBO Won’t Hide Biden’s Government Takeover of Health Care

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It became a major scandal when Philadelphia-based researcher Rich Weinstein uncovered video of Jonathan Gruber, the architect of Obamacare, saying: “This bill was written in a tortured way to make sure the CBO did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies.”

The quote became famous but was widely misunderstood; he was not referring to the penalty versus tax question, on which Chief Justice John Roberts would later uphold the law. The issue was whether the payment for a mandatory government insurance program should be scored as tax revenue – like Social Security or Medicare premiums – or considered private sector payments. This is crucial because a program scored as taxes and spending is transparently a government takeover, with potentially trillions of dollars shifted from the private sector to government.

There’s bad news for Joe Biden’s current plan. As Biden explained: “I’d bring back the individual mandate… and here’s the deal. We’re in a situation where if you provide an option for anybody who in fact wants to buy into Medicare for All, they can buy in.”

It’s hard to see how a mandate paired with a government plan could be scored by CBO as anything but taxes and spending.

The relevant CBO document is a report from May of 2009.

Biden’s Medicare-for-All public option would unambiguously be scored as a government program, even if he tried to dress it up as a nonprofit. But what about the mandatory purchase of putatively private insurance under the Biden scheme? Could tortured language exclude that from the CBO score? Probably not this time.

The central framework of Obamacare, an individual mandate to buy a tightly regulated but notionally private insurance product, was a close call for CBO. Gruber, Pelosi, and Obama got away with it based the expectation that there would be many different companies in the exchanges (which in most of the country has not occurred) and on the lack of a public option.

Once Biden adds his public option, the whole program clearly becomes taxes and spending, exposing the massive expansion in the size of government expressly to the American people:

“In CBO’s view, a requirement that individuals purchase health insurance combined with tight federal constraints on the market for such insurance or a dominant role for a public plan would constitute a fundamentally governmental system, reflecting the exercise of the government’s sovereign power. In those situations, premiums appearing in the budget – for a public plan or for insurance purchased through exchanges or in the private market – should be recorded as federal revenues.”

If CBO sticks to this standard, Biden will lose the principal advantage of the public plan strategy – its ability to camouflage from American voters that it leads directly to forcing everyone into a one-size-fits-all government plan by creating the illusion of allowing a choice of private plans.

The “public option” strategy for ending private insurance is to set it up in a rigged competition with a government-run plan that can absorb losses indefinitely and can use the power of government to dictate below market prices to doctors and hospitals – as Joe Biden dot com puts it: “the Biden public option will reduce costs for patients by negotiating lower prices from hospitals and other health care providers.” Simultaneously, private plans would be subject to regulations by the same government that is competing with them.

Americans would have the illusion of being able to keep their private insurance for a while, but would all eventually end up in the single payer government plan.

Some have said that makes the public option a Trojan Horse for single payer, but Yale professor Jacob Hacker, the inventor of the plan, disputed that characterization to a 2008 audience at the liberal Tides Foundation: “Someone once said to me, ‘Well, this is a Trojan horse for single payer.’ I said, ‘Well, it’s not a Trojan horse, right? It’s just right there! I’m telling you!'”

Unfortunately for Biden, if the CBO follows its own guidelines on the issue, no amount of torturing legislative language will get him a score that conceals his intention to have government take control of American health care.

Copyright 2020 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the Committee to Unleash Prosperity. Kerpen can be reached at [email protected]

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Unmasking AARP As A Front Group

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For years the major health care policy debates in Washington and state capitals have been distorted by the fact that one of America’s best known and trusted advocacy organizations, AARP, has functioned largely as a lobbying and PR front for the country’s biggest health insurer, UnitedHealth.

Yet elected officials continue to see and hear their advocacy messages as representing millions of seniors – who are famously reliable voters – with a serious corrosive impact on the ability to advance meaningful free-market health reforms.

Even during this pandemic, with the whole world hoping that the biopharmaceutical industry can discover and deliver breakthrough cures and vaccines at record speed, AARP continues to bang the drum for government price controls. In fact, after the pandemic arrived in America AARP sent a letter advocating for Nancy Pelosi’s draconian price control plan, which would threaten drugmakers with a tax of 95 percent of their gross revenues if they don’t accept government set prices.

When governments set the price of cutting-edge drugs, needed innovations and investments dry up. A new cure now costs an average of $2.6 billion to bring to market. If government policy makes it impossible to recover those costs and earn a return on capital, as Pelosi’s bill would, seniors would suffer from a shortage of new cutting-edge treatments and potential cures for diseases like Alzheimer’s, cancer, diabetes – and of course from any new emerging pandemic, like the one we face now.

Why would a seniors group favor undermining the discovery of new cures seniors need?

A forthcoming report by Juniper Research (commissioned by American Commitment) explains this seeming paradox. Chris Jacobs explains how AARP – which somehow maintains a tax-exempt charitable status – has raked in an astounding $11 billion from its sales and marketing activities over the past decade, with revenues climbing from just under $200 million in 2001 to over $900 million in 2018.

Most of that revenue comes from UnitedHealth, which from 2010 to 2017 sent AARP a staggering $4.2 billion. That includes a record $627 million in 2017 – after which AARP stopped specifically disclosing how much it takes in from UnitedHealth. This is the same UnitedHealth that brought in record profits this quarter that, ironically, has come during a deadly pandemic.

The lion’s share of that windfall is from the sale of Medigap policies, for which AARP collects a nifty 4.95 percent off the top for lending its name and exclusive endorsement. Calling their vig a royalty instead of commission, they claim, sidesteps all of the rules and regulations for brokers and insurance sales. In fact, AARP recently defeated an Ohio lawsuit by arguing, successfully, that their relationship with their members “is not one of ‘trust or confidence'” and that membership “does not ‘transcend an ordinary business’ relationship.”

With all that money flowing, AARP’s policy positions almost always align with UnitedHealth’s business interests. Start with Obamacare. Despite overwhelming 14-to-1 opposition from its members, AARP’s executives supported it – and got rewarded with a very convenient carve out: Medigap policies, the AARP/UnitedHealth cash cow, are still allowed to exclude enrollees with some pre-exiting conditions.

Pelosi’s price controls bill also unambiguously benefits insurers and pharmacy benefit managers (PBMs) like UnitedHealth’s OptumRx subsidiary despite the non-partisan CBO research finding it would stifle the innovate drugs seniors rely one.

As Milton Friedman and other prominent economists have explained: “American consumers would get the short-term windfall of lower prices, but they would end up unnecessarily suffering and living shorter lives because promising new therapies would be delayed or not even developed.”

And last year AARP pushed to block a Trump Administration Medicare reform that would have applied big discounts to seniors’ prescriptions directly at the cash register at their local pharmacies, protecting the discounts that are currently pocketed by PBM middlemen like UnitedHealth.

AARP calls its lobbying outfit “AARP Advocates.” Lawmakers on the receiving end of their messages should ask, “For whom?”

Copyright 2020 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the Committee to Unleash Prosperity. Kerpen can be reached at [email protected]

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Coronavirus Failures Show Folly of Government-Controlled Medicine

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The United States is in the process of destroying its health care system via lockdown. By ordering that all but emergency medical treatments and procedures cease in the name of preserving health system capacity, we have emptied out hospitals to gird for a wave of COVID patients that never came.

Now hospitals are laying off and furloughing by the tens of thousands – and liberal opportunists see this, somehow, as a market failure that would justify government directly seizing control of the medical system through a Medicare-for-all plan. Liberals look at the virus response in Italy, Spain, France, and the United Kingdom and think – somehow – that’s what we need here. But we don’t have to look to the catastrophic failures of systems abroad as a cautionary tale, because here in America the two biggest failures in our coronavirus response were failures of centralized government control.

The slow start in the American health response was caused by a failed testing rollout, due to incompetent bureaucracy that prohibited private sector testing in favor of a CDC test that didn’t work and was contaminated by live virus. When it did finally work, there were severe capacity constraints – a problem caused not by too little centralized government control, but by too much.

As government loosened its grip and allowed private labs to conduct testing, capacity scaled up dramatically. This is a lesson we could have learned from South Korea’s experience, where their widely praised testing program was developed not by their national health system, but by private companies that were promised fast regulatory approval.

The second major policy failure was a decision that crippled our health system capacity and likely significantly increases deaths from all causes. It was a directive from Medicare – the very program liberals now seek to expand to everyone to the exclusion of all choice and competition.

On March 18, the Centers for Medicare & Medicaid Services (CMS) “announced that all elective surgeries, non-essential medical, surgical, and dental procedures be delayed” during the coronavirus outbreak.

With few if any exceptions, every health system in America implemented the directive, emptying out hospitals and doctors’ offices and crippling health system capacity everywhere the anticipated wave of coronavirus patients failed to materialize. The Mayo Clinic, for instance, is furloughing 30,000 employees.

Emulating the fully government-controlled National Health Service in Great Britain, Medicare made the call that denied cancer patients care they need, ended more transplant surgeries, and sent a panic through the country that caused heart attack and stroke victims to tragically die at home under the mistaken impression that the empty hospitals were too busy to help them.

In the face of this Medicare-caused catastrophe, liberals have floated the new argument that in a fully government-run system, hospitals wouldn’t suffer crippling revenue loss from canceling nearly all of their non-COVID medical services – because they would have direct taxpayer funding.

As if disconnecting revenue from the provision of actual medical care is somehow a virtue, they are taking the lesson that we should look at the catastrophic misallocation of resources by government we are currently seeing and institutionalize it permanently. Not to mention that for the math of the Bernie Sanders plan to even pretend to be realistic, he assumes that all providers would accept current Medicare rates, which are about 40 percent lower than what private insurance pays.

The only solution under Medicare-for-all would be even more massive, economy-crippling tax hikes than have already been proposed, possibly doubling every existing federal tax or more. Most likely we’d end up in the middle – with a smaller health system with less capacity, fewer ICU beds that would leave us less prepared for a future pandemic like Italy, Spain, and France – as well as steeply higher taxes.

Political or bureaucratic allocation of resources can never perform as well as a decentralized system that aggregates the decisions, preferences, and needs of millions of people. Every helpful action by the federal government during the crisis has taken the form of waiving or relaxing regulatory requirements, like telehealth and phone consult restrictions that never should have existed in the first place.

A more free market health system could avoid not just the catastrophic miscalculations like the one we are experiencing with the unnecessary collapse in non-COVID care, but also the everyday distortions caused by Medicare rules and petty federal regulations that tie the hands of doctors and patients. That’s the real policy lesson of the current crisis.

Copyright 2020 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the Committee to Unleash Prosperity. Kerpen can be reached at [email protected]

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Enjoying Fast Internet During the Lockdown? Thank Trump’s FCC.

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Not even a global pandemic can keep us from another battle in the long, bitter, and ever more disconnected from reality net neutrality wars. The FCC just closed yet another comment period in this seemingly never-ending saga, and the usual left-wing groups used it to beat their usual drums.

But as millions of Americans bunker in their homes typing away on laptops, smartphones, and tablets while watching their smart TVs in between their streaming video calls, we should take stock in the marvelous fact that the Internet is holding up just fine while an enormous surge of formerly offline activities move online.

For two glorious years the left achieved their goal of reducing the Internet to a regulated public utility – and nothing they said would happen did. There was no nirvana for users or rebirth of political freedom. There was a deficit of investment and a boom in paperwork and bureaucratic nonsense, and that’s about it.

Then net neutrality was repealed by President Trump’s pick for FCC chairman, Ajit Pai – in the face of a hyperbolic pitched political mobilization exercise in which the media and left wing groups claimed the world would end without the Obama regulations that had existed for all of two years. The hyberbolic mania reached new levels of extremism – up to and including death threats leveled at the young children of members of Congress and Chairman Pai, and a bomb threat called into the FCC on the day of the vote.

Of course nothing the angry net neutrality obsessives alleged would happen came to pass. Instead, we saw an incredible increase in network capacity, speed, and resilience as ISPs felt confident that their network investment would not be divested from them in the fever dream of the Marxist leaders of the net neutrality movement, like Free Press founder Robert McChesney.

It is hard to think of any greater enhancement to public safety, quality of life, and simple sanity during a period of prolonged home confinement than having reliable, fast, high quality network connectivity. The current pro-investment, pro-market policy has produced that outcome.

Europe – which has taken a more heavy handed regulatory approach than the Pai FCC – is having a different experience, with many countries throttling video traffic to prevent networks from breaking down.

Even Tom Wheeler, the former titular FCC chairman who adopted the Obama net neutrality order at the direction of the White House, has been forced to acknowledge the stunning outperformance of U.S. broadband networks compared to Europe. “Credit is due to the nation’s broadband providers. The fact we can work from home is the result of hundreds of billions of investment dollars and construction and operational skill,” he said.

What he didn’t mention is that the Obama order he rubber-stamped was referred to as “the nuclear option” for its devastating negative effects on investment. He praised companies for a success that depended on the reversal of his most significant policy.

Of course, that won’t stop the latest shrieks about the need for government to assert control over ISPs, a tenet of faith on the political left.

The rest of us, who are making do as best we can with the current lockdown situation should live in daily appreciation of the Pai FCC’s commitment to fixing the ideologically motivated, economically ignorant actions of the Obama administration.

Copyright 2020 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the Committee to Unleash Prosperity. Kerpen can be reached at [email protected]

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Reject a Government Takeover of Consumer Lending

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Price controls don’t work, cause shortages, and have precipitated economic disaster in every sector and jurisdiction that has attempted to impose them on any significant scale. But their braindead simplicity – something is too expensive, so we’ll mandate that it be cheaper – makes them forever seductive to politicians looking for easy political talking points.

So they remain in vogue, from proposals for national rent control to prescription drug “negotiations” in which government sets the price under threat of seizing all profits. It also includes financial services, where Bernie Sanders and Alexandria Ocasio-Cortez have proposed an annualized interest rate cap of 15 percent. Maybe they’re trying to make House Financial Services Chair Maxine Waters, who has proposed a 36 percent cap, appear reasonable.

Either version would have severe negative consequences for the availability of credit to consumers, especially people with lower credit scores that represent higher default risks.

The Waters cap is hardly reasonable. First of all, the headline number of 36 percent is deceptive because the “all-in” calculation includes all fees, making it equivalent to a retail annual rate cap of about 26 percent. An industry analysis found that would price at least 34 million consumers out of the credit card market – and that’s at a time of historically low interest rates. When and if the Fed tightens and the prime rate rises, the cost of capital for lenders will go up and millions more consumers will be priced out of credit cards.

Waters and her bill sponsors, Democrat Chuy Garcia and token Republican Glen Grothman, have justified their bill by saying it extends the 36 percent cap, already imposed by the Military Lending Act to veterans, to all consumers. But the actual results of the MLA should serve as a warning.

According to a Harris Poll: “Military Lending Act (MLA) borrowing restrictions have resulted in a majority of active duty military households being turned down for credit (51% turned down due to the MLA) and these households have higher usage of non-bank credit or debt.”

Of course, if we accept the logic of a federally imposed annualized rate cap, there will be relentless political pressure to ratchet it down over time.

Democratic presidential contender Bernie Sanders is already there. His legislation with AOC would impose a 15 percent annualized cap, which would affect hundreds of millions of credit card customers, some of whom would lose access to credit entirely and most of whom would lose popular rewards programs.

Pre-empting even liberal states like California and Virginia that have strictly regulated but allowed them to operate, the Waters and Sanders bills would effectively ban payday, vehicle title, and other small-dollar loans. These loans are inherently short-term and therefore cannot be priced on an all-in annualized basis, because most default risk is taken as soon as money is out the door. That means people in desperate circumstances will find themselves with no lawful options.

As Nobel prize-winning economist Paul Samuelson famously testified in 1969: “The concern for the consumer and for the less affluent is well taken. But often it has been expressed in a form that has done the consumer more harm than good. For fifty years the Russell Sage Foundation and others have demonstrated that setting too low ceilings on small loan interest rates will result in drying up legitimate funds to the poor who need it most and will send them into the hands of the illegal loan sharks. History is replete with cases where loan sharks have lobbied in legislatures for unrealistic minimum rates, knowing that such meaningless ceilings would permit them to charge much higher rates.”

Sanders tacitly admits that his rate cap could crush private sector consumer lending. His bill welcomes that possibility by authorizing government lending via the U.S. Postal Service. That would put taxpayers ultimately on the hook for substantial losses, because the lending would inherently be at rates that are insufficient to cover default risks.

I give it about one election cycle between when postal lending begins and when Democrats start calling for blanket postal loan forgiveness – at taxpayer expense.

Congress should do the right thing for taxpayers and consumers and reject price controls on consumer credit.

Copyright 2020 Phil Kerpen, distributed by Cagle Cartoons newspaper syndicate.

Phil Kerpen is the president of American Commitment and the Committee to Unleash Prosperity. Kerpen can be reached at [email protected]

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