A Deadly Scheme
Henry Aaron and Isabel Sawhill, of the Brookings Institute, provide a wonderful example of the insanity of allowing individuals to plan large segments of the economy:
So here is what we propose: Congress should enact a value-added tax, the equivalent of a broad-based sales tax on all goods and services. It should take effect only after unemployment has fallen to a predetermined level or in, say, five years, whichever comes first. Congress should link revenue from the new tax and other sources directly to public healthcare spending through a newly created healthcare trust fund. The trust fund would pay for all federal healthcare spending. This framework would mean that Americans would get the healthcare they are willing to pay for. If spending outpaces projections, Congress will have to choose between raising taxes and finding ways to slow the growth of spending.
By balancing revenue and healthcare spending, such a reform would help solve America’s long-term fiscal problems. In the near term, it would also support and sustain the economic recovery. Consumers would be encouraged to buy now, before the tax takes effect. And by showing financial markets that Congress is determined to put our fiscal household in order, it would help keep interest rates low and encourage investment. The trust fund mechanism would strengthen incentives to institute reforms that will actually bend the healthcare cost curve, because measures to slow the growth of healthcare spending would avoid unpopular future tax increases that would otherwise be necessary.
How is it possible that people who are paid, essentially, to think can argue that a looming tax increase equivalent to one-sixth of the U.S. economy will encourage consumers to splurge while the splurging’s good without making the parallel assessment that the huge taxes will suppress the economy once implemented? One of the reasons given in a previous paragraph for rejigging the healthcare system in a public direction is that, with ever-improving “medical interventions… [p]atients will insist on having them.” Well, if the government must thus bend to supply what patients demand, why won’t consumers learn the lesson and start demanding the things for which Aaron and Sawhill assume they’ll splurge?
This program — which one may suspect will be the end result of the Democrats’ healthcare path — would be a recipe for the hollowing and destruction of the United States of America, beginning with its entrepreneurial soul.