Where Fun Comes to Die

The New York Times reports $70B in tax cuts for the recently signed stimulus bill.  At recovery.gov, the new website intended to promote transparency by allowing taxpayers to track the stimulus spending, the cited number is $288B for tax relief.  Why the discrepancy?  By examining the fine print you can read that “tax relief” includes “$15 B for Infrastructure and Science, $61 B for Protecting the Vulnerable, $25 B for Education and Training and $22 B for Energy, so total funds are $126 B for Infrastructure and Science, $142 B for Protecting the Vulnerable, $78 B for Education and Training, and $65 B for Energy.”  It’s not clear why these figures were all lumped under “tax relief” instead of being under their respective categories, but it is certainly misleading.  But what is politics without a few misnomers?  “Operation Iraqi Freedom,” “Patriot Act,” and now “recovery.gov” with $288B in “tax relief.”  New regime, old rules.

I know this is old news, but there’s something about the recent SCHIP expansion that bothers me. Unlike the Republicans, I don’t care about SCHIP’s impact on the private health insurance market. If the US healthcare system is an example of capitalism in action, well then, maybe that Mao fellow wasn’t entirely wrong.

What bothers me about the SCHIP expansion is not what it does, but how it’s paid for. The bill is estimated to cost $32 billion over the next 4 1/2 years, and that’s being paid for with an increase on tobacco taxes.

Full disclosure: I love smoking. At the right time and place, a good cigarette is one of life’s great pleasures. I oppose smoking bans in bars on the grounds that people who don’t like smelling smoke while they drink should avoid taverns altogether and seek out places more suited to their tastes, such as yoga clinics or candle shops. 

But this is about more the fact that I like spending time in flavor country.  This is about basic fiscal sanity.

The smoking rate in America has been in a steady, gradual decline for years, and many government officials have made anti-smoking efforts into a centerpiece of their public health campaigns. Given the draconian smoking bans that are being adopted in some parts of the nation (and the American public’s insatiable love for drug wars), it wouldn’t surprise me at all if possession of tobacco was a criminal offense before too long. To keep up with the Depression-are analogies that are so popular nowadays, Obama funding SCHIP with a tobacco tax is like Roosevelt funding social security with taxes on laudanum and cocaine-flavored sodas.

I understand why Obama would rather tax smokers than pay for SCHIP out of general revenues.  Smokers are an easy target politically, and voters always prefer raise somebody else’s taxes.  But as the tobacco well gradually dries up, one of three things has to happen:

(1) The government, realizing that gets more money from cigarette sales than the tobacco companies do, starts up a major ad campaign encouraging everyone to smoke “for the children’s sake.” 

(2) The government sets its tax receipts and public expenditures at sustainable levels.

(3) The government finds some exciting new way to push the buck along, like selling organ-backed securities to the Chinese or imposing a mullet tax.

I’d love to see #1, because I think it would be hilarious. I think we’ll probably see #3, because I’m cynical. #2, which would require people to think about the future and live within their means, is fundamentally unamerican.

Courtesy of the Washington Post, a great breakdown of how the stimulus money would be spent.  Interestingly, although some have complained that Republicans are being extremely partisan in not supporting the package, compromises appear to have trended to more spending and fewer tax cuts.  Obama’s own goal of having 40% of the money be immediately injected into the economy via tax cuts has dwindled to 22% with the peak of stimulus injection not occurring until 2010.  This stimulus proposal also misses the administration’s goal of having 75% of the money spent by September 30, 2010.

I almost thought President Obama’s op ed piece in the Washington Post was an internet hoax, it seemed so ill-advised for reasons explained here:

President Obama signed an op-ed this morning in the Washington Post, and it’s a quick hit that would have been better left unwritten. In it, he overpromises results from a bill that hasn’t been finalized and is still having amendments added in the Senate as I write this. But he says the stimulus bill will be “swift, bold and wise enough for us to climb out of this crisis.” How does he know that? Maybe it will, but none of us really knows yet what is going to happen.

The president promises more than a fix for housing, jobs and banks-he guarantees massive government involvement in many sectors of our economy-from energy to healthcare to schools to access to the internet. He goes on to promise “unprecedented transparency and accountability, so Americans know where their tax dollars are going and how they are being spent.” That’s a big deal if he can deliver it. We’ve been waiting for that for years.

The president would have been wise to invite the loyal opposition to join him in supporting the bill, or at least to acknowledge that reasonable minds can disagree on the road to compromise. But instead, he rejects criticism of the stimulus plan and reminds readers that his side won. He seems to blame Republicans for everything causing our country to fall apart. . . .

Anyone opposing the current stimulus package is engaging in “old ideological battles,” “narrow partisanship,” “bad habits,” and “the same old partisan gridlock that stands in the way of action,” he writes. I guess that includes not only the House Republicans, but economic experts Martin Feldstein and Alice Rivlin, the other 250 economists who have publicly stated their reservations.

Most of Washington is engaged in a battle of ideas, for the first time in a long time, about the meaning of capitalism and free markets and government intervention. The future of our economy is at stake, and the president would have been better off not engaging in overblown rhetoric and name-calling on the op-ed page. He came across as partisan and strident about the future, instead of inclusive and thoughtful. Someone else should have signed that op-ed.

I’m particularly disturbed by the president’s alarmist tone, appeal to crowd hysteria, and the pervasive feeling of extortion in the piece, but then i am always wary when a charismatic leader is able to whip up the masses to blindly follow using the carrot of prosperity and the stick of castrophe.   See, e.g., fascist leaders of the 20th century and most recently the current Iraq war which, like G.W. Bush, was extremely popular at the time.   But now I’m just fighting fear mongering with fear mongering.