K Marx The Spot

The Great Missile Defense Boondoggle

This excellent Bulletin of the Atomic Scientists article by Theodore Postol and George Lewis explains, in detailed fashion, why missile defenses, particularly the kind bandied about by the Bush administration, are doomed to fail.

Why the United States has spent tens of billions of dollars on this boondoggle is an exercise left to the reader.

Labels: boondoggle, missile defense, Postol and Lewis, stupid government tricks

Like This Would Work

Here comes John McCain's flack, with a simply splendid idea to solve the American care crisis.

Republican John McCain wants to change how people get their health insurance, shifting away from job-based coverage to an open market where people can choose from competing policies.

McCain said Tuesday he would offer families a $5,000 tax credit to help buy insurance policies. Everyone would get the credit, whether he or she keeps a policy through an employer or shops for a new one.

"You simply choose the insurance provider that suits you best," McCain said in a speech Tuesday at the H. Lee Moffitt Cancer Center & Research Institute in Tampa.

"The health plan you chose would be as good as any that an employer could choose for you. It would be yours and your family's health care plan, and yours to keep," he said.

Advisers called the speech a major policy address though McCain has talked about the same ideas for several months.

You see, the current system, in which insurance companies compete on price and services to be selected by employers, is somehow fatally flawed. And the way to fix it is to have the same sort of competition go on with consumers instead of corporate human resource departments as the targets of the advertising and promotion.

Indeed, why should decisions like this be delegated to people whose profession it is to make these sorts of decisions every day?

And we know that heavy promotion of prescription drugs to consumers never results in bad drugs being foisted on the public, or consumers spending more than they ought to.

(Never mind that Health Savings Accounts, which are supposed to to be the centerpiece of this revolution towards "consumer-driven health care" are unpopular enough that even George Bush, their public champion, only used one in two years of the last five.)

Even better is how the federal government would pay for this.

To pay for the tax credit, McCain would eliminate the tax exemption for people whose employers pay a portion of their coverage, raising an estimated $3.6 trillion in revenues, [McCain adviser Doug] Holtz-Eakin said. Companies that provide coverage to workers still would get tax breaks. McCain would also cut costs by limiting health care lawsuits.

$3.6 trillion? Total federal government receipts, excluding Social Security and Medicare taxes, are only $1.6 trillion per year. Perhaps the $3.6 trillion figure is some sort of multiyear amalgam.

The tax exemption for health insurance is an offset against taxable income. Let us assume that the typical taxpayer is in the 25% federal tax bracket. To offset a $5,000 tax credit would mean that the exemption is $20,000 per year.

It's not.

No wonder McCain still needs to be educated on economics and stuff.

Labels: health insurance gimmickry, John McCain, stupid government tricks

Capital Idea

At Eschaton, Atrios writes that talk of capital gains tax hikes ought not to worry the middle class, although the pundits will surely say it will.

With talk of raising the capital gains tax in the air, you're going to hear a lot of conservatives and mainstream media folks blather on about how much this kind of thing is going to be so bad for the "middle class" or "even working folk" because everyone is invested in the stock market through 401K plans, etc. But the capital gains tax rate will never apply to that money. More than that, any capital gains from those plans will be, upon withdrawal, taxed at the income tax rate which for most people will be higher than the current 15% capital gains rate. So wealthier people who have direct investments in stocks and whatnot get to pay 15% on their capital gains, while the rest of us in lowly 401K land will likely be paying a higher rate.

This is right, as far as it goes. What needs to repeated is just how skewed capital gain income is to the very, very rich. In 2005, fully 56% of long-term capital gains were reported by the 0.3% of taxpayers with over $1,000,000 in taxable income for the year. And that figure is representative of all recent years for which the IRS has reported statistics.

In other words, capital gains cuts matter very little to the vast majority of "investors" but they matter very much to 303,000 truly lucky duckies, who have been able to convince politicians of both parties that capital gains cuts somehow help small investors.

Labels: Capital gains, stupid government tricks

Now They Tell Us

I hate daylight savings time.

Not because it is a hassle, but because I feel poorly enough in the winter when it is dark in the morning and dark in the afternoon and not all that light in between. When daylight savings time starts, the light in the morning that I was starting to appreciate is now a whole hour later—and it takes several more weeks of dark mornings for me to recover my (relative sanity). And it is worse now that daylight savings time starts earlier in the year—in previous years, I at least got the reprieve of standard time that lasted until early April.

Now comes news that daylight savings time makes no economic sense at all. Better late than never, I suppose.

Having the entire state switch to daylight-saving time each year, rather than stay on standard time, costs Indiana households an additional $8.6 million in electricity bills. [The researchers] conclude that the reduced cost of lighting in afternoons during daylight-saving time is more than offset by the higher air-conditioning costs on hot afternoons and increased heating costs on cool mornings.

Labels: Daylight savings time, stupid government tricks