…because I’m an economist and a mom–that’s why!

I Don’t Care What You Call It, Just Do It

September 23rd, 2009 . by economistmom

I’m in Charlottesville, VA tonight having combined a business trip with a campus visit for my oldest daughter, who’s a senior in high school. I’m happy to report (being the Virginia residents that we are) that she really liked what she saw today on her informal tour with a friend who’s a first-year student here.

But I didn’t have time to follow the Senate debate on the health bill today, nor to think of anything else to post.  But Donald Marron posted something today that I honestly meant to blog on earlier this week–President Obama arguing with George Stephanopoulos about what is or is not a “tax.”  Of course, this is not “news” to me given how the Administration has referred to their proposed “revenue enhancements” as “factors” and “things” before–anything but the dreaded “T word.”

So I don’t feel like slicing and dicing the various definitions of “tax” tonight, because having just given a talk on fiscal responsibility and the federal budget today (here in Charlottesville), all I feel like saying about it is I don’t care what you call it, we need to stop wimping out behind labels and find the courage to “just do it.”

10 Responses to “I Don’t Care What You Call It, Just Do It”

  1. comment number 1 by: AMTbuff

    Rivkin and Casey wrote a recent column in the Wall Street Journal claiming that this tax is really a penalty. Such a penalty, they say, is unconstitutional because the federal government has no authority under the constitution to order anyone to buy health insurance. Rivkin and Casey believe that dressing a penalty up to look like a tax does not change its nature. That mirrors the debate on the 90% AIG tax passed by the House.

    Obama has dealt his own side of this debate a serious blow by publicly agreeing that this penalty is not a tax. How in the world is his administration going to defend this provision against constitutional challenge now? By claiming that it really is a tax and that the President lied about that on national TV?

    Obama’s health advisors have to be tearing their hair out. This gaffe could doom the entire health care plan. At its root is a complete obliviousness to constitutional limits on federal power, a lack that reaches its zenith among activists-turned-politicians.

  2. comment number 2 by: SteveinCH


    You are an optimist. I no longer really believe there are any limits on Federal power, at least according to the Supreme Court. The reasoning that Court has applied that has led to our current situation is almost beyond belief. I don’t believe whether you call it a tax or a fee will have any impact on the Supreme Court.

    Their reasoning will be Health Care = Interstate Commerce = Subject to Federal Power full stop.

  3. comment number 3 by: Rodger Malcolm Mitchell

    Simple. All money going from the private sector to the public sector is a tax.

    Rodger Malcolm Mitchell

  4. comment number 4 by: Jason Seligman

    A Rose by any other name…

    If a private auto insurance underwriter increases your premium after you get three speeding tickets, is that a fee, a penalty, or a tax?

    If your health insurance premiums went up should you fail to engage in preventitive care (annual check ups) is that a fee a penalty or a tax? If you were with a public insurere would it be called something different.

    And finally, if instead your premiums were reduced when you got checkups, and/or reduced your health risks in other ways, would that be a “rebate?”

    From Webster:

    Main Entry: tax
    Pronunciation: \?taks\
    Function: transitive verb
    Etymology: Middle English, to estimate, assess, tax, from Anglo-French taxer, from Medieval Latin taxare, from Latin, to feel, estimate, censure, frequentative of tangere to touch — more at tangent
    Date: 14th century
    1 : to assess or determine judicially the amount of (costs in a court action)
    2 : to levy a tax on
    3 obsolete : to enter (a name) in a list
    4 : charge, accuse ; also : censure
    5 : to make onerous and rigorous demands on

  5. comment number 5 by: SteveinCH

    I’m with Diane. Who cares what we call it? We need more revenue to make the math work (we also need to control spending fyi). The only reason this matters is because our President made a big deal of not raising taxes on anyone who makes less than $250k. Republicans, realizing this was a BS commitment to make, are calling him on it both when it’s reasonable and when it’s not.

  6. comment number 6 by: Jim Glass

    Regarding whatever the semantic dispute is worth, for the record, Mankiw today quotes Obama’s guy Larry Summers on the subject, “Essentially, mandated benefits are like public programs financed by benefit taxes.”

    And Hennessey quote the Baucus mark itself, page 29, Excise Tax. “The consequence for not maintaining insurance would be an excise tax”.

    So clearly the bill is imposing a new tax on the non-”rich”. It says so.

    “Who cares what we call it? We need more revenue to make the math work”

    First thing, it doesn’t come anywhere near close to making the math work.

    Second thing, shouldn’t the first thing be the substance of whether the bill is actually good or bad, with making the math work being only the second thing?

    Do we really want to make the math work if it is a bad bill?

    our President made a big deal of not raising taxes on anyone who makes less than $250k. Republicans, realizing this was a BS commitment to make, are calling him on it both when it’s reasonable and when it’s not.

    It’s entirely reasonable as long as he continues to entirely, um, disingenuously insist that there is no tax increase involved — because it goes right to the issue of the intellectual integrity (or lack thereof) involved in the design of the bill and the selling of it to the public … which goes right to the quality of the bill.

    BTW, regarding Obama’s recent action against tire imports from China — which has created a bit of a fracas with our most important international trade-and-finance partner, if you look at who’s holding all our debt — did anyone notice Will’s recent column noting that none of the tire companies in the US had asked for it?

    Just one union asked for it.

    When just one union can get Obama’s people to throw such a spanner in US-Chinese relations, does it inspire as much confidence in you as it does in me that our entire health care system currently is being re-designed by dispassionate experts thinking only of the public good, rather than by a host of special interest groups all out for themselves, having the politicians do their bidding for them?

  7. comment number 7 by: Jim Glass

    Second update re:

    But Jim, regarding this comment of Keith Hennessey you quote: “it’s a transparent gimmick designed to try to get CBO to say the bills don’t increase the long-term budget deficit” How exactly would the “gimmick” get CBO to say the bill doesn’t increase the deficit if it in fact does? CBO isn’t exactly a lackey for the Administration, and they don’t get fooled by “gimmicks.”

    Hennessey has begun reviewing the Baucus bill.

    On the CBO scoring and the budget impact, a couple of snippets…

    ~~ quote ~~

    “The bill is scored as deficit neutral in the short-run and long-run. Kudos to the clever Baucus staff who know how to take advantage of CBO scoring conventions.

    “The likely reality will be far worse – the bill creates several policy pressure points that will inevitably lead to much higher spending and much higher budget deficits than are scored by CBO.

    [In particular, throwing in that Sustainable Growth Rate (SGR)-type mechanism to "guarantee" Congress will cut future medical spending, when in real life Congress ignores SGR rules year after year, really did the trick for CBO!]

    “They have addressed their biggest procedural and rhetorical hurdles. They have not solved the underlying policy problem.

    Despite the CBO score, if this bill becomes law I anticipate massive deficit increases for reasons I will explain in a future post…

    “In addition to massively restructuring the health sector, the Baucus bill would also be an enormous change in fiscal policy … The bill would create new entitlement spending equal to 0.7% of GDP, and growing seven percent per year for the long run …

    “Our long-run fiscal problem is driven in part by the unsustainable growth of health entitlement spending, so the solution is to create a new unsustainable health entitlement??”

  8. comment number 8 by: SteveinCH


    Totally agree the first question should be whether the bill is bad and I agree that it’s bad. Broadly speaking that is my point. The discussion on whether a fee you pay for not buying health care or not is a political distraction. It has nothing to do with the substance of the policy and only happens to play a stupid Washington game of gotcha.

    Outside of the point on the bill in particular, we do need to pay for the government we use and nobody in Washington wants to do that, preferring to use up valuable time discussing whether a fee is a tax or whether a stupid Congressman who yells “You lie” should be censured.

    You hold politiicians to a higher standard than I do. I expect no version of intellectual integrity or consistency from the breed. It’s like the refrain, “Yeah, well George Bush did worse”. Who in God’s name cares?

    Back to health care. There is no way to insure a bunch more people without spending more money and anyone who pretends otherwise is beyond disingenuous.

  9. comment number 9 by: Martin

    AMT and Steve, your swallowing the WSJ op/ed hook, line and sinker, that mandatory coverage is unconstitutional, is, like the op/ed itself, an empty rant.

    What does the FDIC require of banks? Mandatory insurance. (Don’t forget, according to SCOTUS, banks are “people” now.)

    What is auto insurance? Mandatory insurance.

  10. comment number 10 by: SteveinCH

    I won’t speak for AMT Martin, but I didn’t say anything about the constitutionality of mandatory coverage. I said that I thought the SCOTUS has proven very reluctant to push any constraints on Federal power so I doubted that relying on that was a good idea.

    For my own part, based on solely my reading of the Constitution, it is not consistent with the document; however, that is clearly not the point of view of the people empowered to make that decision.

    As to a WSJ editorial, I haven’t read it. Let me say it this way, as a matter of economics, I think and individual mandate, combined with guaranteed issue and community rating, is a major wealth transfer. In that, I am totally aligned with today’s WSJ editorial.

    Agreeing with something and swallowing it hook line and sinker are not the same thing.