Beware an SCHIP “compromise”

As the President and Congress aim for a "compromise" about SCHIP, I encourage you to remember than any likely deal will not be a good outcome for the taxpayer, the health care system, or our constitution.It’s much like two burglars getting to your house at the same time. One of them only wants the jewelry. One of them wants the jewelry, your TV, your comic book collection (no, I don’t have one), and your pet goldfish. They come to a "compromise", in which the first thief gets 3/4 of your jewelry and the second thief gets 1/4 of your jewelry, plus your TV, and half of the comic book collection (he didn’t see the shelf with the other half). They generously leave your goldfish. Exactly how grateful are you for that compromise? How much better off would you have been if you had somehow prevented the burglars from getting into the house to begin with (or if you had been home and shot them?)

This is the nature of the SCHIP debate. Do not let the "spirit of compromise" fool you into thinking that the outcome is a good one. You’re still being robbed. They’re just trying to get you to open the door for them and help them load their cars with your stuff.

The beauty of a capitalist economy is that it is not a zero-sum game. Wealth is created in the aggregate. Although we always hear cries from the left that income inequality is rising (in terms of how much richer the richest are than the poorest) or that the “middle class” is shrinking in size, we never hear people make the best responses to those claims:

  1. The rich are getting richer… So what? Do you (incorrectly) assume that the rich getting richer means the poor are getting poorer?

  2. Why do you think there is any role for government in interfering with people’s ability to earn money or keep what they earn?

  3. Even if you can twist the constitution to find government authority to do so, what do you propose that history and common sense have not shown repeatedly to lead to economic disaster?

  4. If you are really interested in “fairness”, can you argue with a straight face that it is “fair” for the top 1% of earners to pay 34% of all income taxes, the top 5% to pay 55% of all income taxes, and the bottom 50% to pay only 3.5% of all income taxes? Do you truly believe that the rich are not paying their “fair share” after learning just how “progressive” (i.e. punitive of success) the system already is? (The number of liberals who know these numbers is roughly equal to the number of Italian war heroes or Jewish sports legends.)

Don Boudreaux, Chairman of the Department of Economics at George Mason University, recently sent the following letter to the New York Times:

Judith Warner writes that "More and more people are being priced out of a middle class existence". This statement is true, but only because more and more Americans are getting richer. Consider the percentage of American households in each of these different annual-income categories in 1967 and in 2003 (all reckoned in 2003 dollars to account for inflation):

___ 1967 2003
$75K and up 8.2 26.1
$50K – $75K 16.7 18.0
$35K – $50K 22.3 15.0
$15K – $35K 31.1 25.0
under $15K 21.7 15.9

If the middle class is disappearing, it’s doing so by swelling the ranks of the upper classes.

A free market economy can and usually does make most people richer, even if it doesn’t increase everyone’s wealth equally or proportionately. This can not happen in a zero-sum game.

Government, however, is at best a zero-sum game. In order for Big Brother to spend money on something, including “insurance” or income redistribution plans like SCHIP, it must get that money by taxation or borrowing (which simply represents future taxation.) In order for someone to win the government lottery, it means that other Americans are losing.

I don’t want to sound cruel, and clearly that’s how the left tries to portray anyone who opposes SCHIP or its expansion, but when Nancy Pelosi said that “children must be the winners” in the upcoming discussions with the president, my reaction was “so taxpaying adults must be the losers”.

In addition to all the usual problems of entitlement programs (like driving governments toward bankruptcy), SCHIP competes directly with private insurance, giving incentive to people who are eligible for the program to cancel their existing insurance and take the government’s free lunch.

According to a recent Heritage Foundation study, “Congress’s expansion proposals for SCHIP could cover as many as 2.4 million newly eligible children, but because of crowd out, the ranks of the uninsured would decrease by only 1 million. This is because, for every 100 newly eligible children in families with incomes between 200 and 400 percent of the federal poverty level (FPL), 54 to 60 children would lose the private coverage that they have today.” This crowd out effect would cause the cost of covering a currently uninsured child to more than double…to around three times the cost of private insurance.

SCHIP is a bad idea for other reasons, too: It is another step away from encouraging child-raising responsibility where it belongs, with the parents. It is an unjustifiable transfer of income from people without children to people with children. It is being used to cover adults and to cover children who are not poor; in other words it is a giant step toward truly socialized medicine. SCHIP is the evil love child of “HillaryCare” socialism and her “It takes a village” nanny state.

Unfortunately, President Bush’s counselor Ed Gillespie recently said that Bush’s objections to SCHIP were “not about the money”. I can just picture President Bush and Nancy Pelosi, wearing stockings over their faces, arriving at my house to rob me and just trying to decide between themselves how much I’m going to lose.


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