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Four Questions And Answers About Jonathan Gruber’s Obamacare Lies

Obamacare architect Jonathan Gruber is finally honest—about lying like crazy.

Massachusetts Institute of Technology economist Dr. Jonathan Gruber, widely cited as “the architect of Obamacare,” recently committed a Kinsley gaffe, “when a politician tells the truth— some obvious truth he isn’t supposed to say.”

This bill was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies. Okay, so it’s written to do that.  In terms of risk-rated subsidies, if you had a law which said that healthy people are going to pay in – you made explicit healthy people pay in and sick people get money, it would not have passed… Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really, really critical for the thing to pass. It’s a second-best argument. Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.

This provokes four questions:

Here are my answers.

Jonathan Gruber Isn’t The Only Liar

Here are a few areas where American economic policy hides or obscures subsidies or costs, I believe intentionally.

  • As Gruber points out, in Obamacare the healthy subsidize the sick. He does not point out that embedded within this the healthy subsidize the sick for sickness related to unhealthy behaviors. A congressional floor vote to defend such a value choice, if made transparent and explicit, would certainly fail.
  • Obamacare also forces young people to subsidize older people by limiting the width of premium “rating bands” for insurance sold in the individual market. This was the result of closed-door lobbying by AARP. This one might pass Congress if voted upon explicitly, but the ACA’s architects hid it to avoid admitting that they were shafting young people.
  • Social Security conflates forced individual retirement saving, insurance programs, and massive cross-subsidies, in part to hide the latter.
  • So does Medicare. The biggest cross-subsidies are across birth year cohorts, but there are plenty of others as well. Don’t get me started on trust-fund accounting.
  • The employer-side half of Federal Insurance Contributions Act payroll taxes that finance most of Social Security and part of Medicare are often framed as if they “are paid by the employer” when their true economic burden is borne by the employee in the form of lower wages. If all FICA taxes were imposed on the employee side, they would be more transparent and less popular.
  • A minimum-wage increase forces low-skilled, unemployed workers to subsidize the wages of the low-skilled employed. Expanding the earned income tax credit is a more transparent way to help the low-skilled unemployed, but it puts the costs on budget and in full view. The Left pushes to hide the costs and lies, claiming it’s a free lunch.
  • Corporate Average Fuel Economy requirements are less transparent than a gas tax that would achieve a similar goal. But gas tax increases are wildly unpopular while raising CAFE standards appears only to make things harder “on the auto companies.”
  • A global CO2 cap-and-trade system would have obscured the redistribution of global economic growth from developed economies to developing economies. An explicit and transparent carbon tax imposed only on developed economies would achieve a similar endpoint but would have made explicit this massive proposed global redistribution.
  • For years, policymakers used Fannie Mae and Freddie Mac to subsidize homeowners through hidden credit subsidies. The Left pushed this for low-income home buyers through affordable housing goals, while elected officials across the political spectrum supported the same thing for all home buyers through special advantages conferred by government on these two firms.

I could go on. Corporate incomes taxes hide the costs imposed on the people who work for, own, and buy from these firms. Many agricultural subsidies are intentionally obfuscated to enhance their bipartisan support. Apparently Gruber thinks it’s okay to lie to American voters when his allies are in power to enact policies that he wants but the voters wouldn’t. He then says American voters are “stupid” both for not agreeing with his value choices and for not figuring out the deception.

I disagree.

When you strip away all the complexity, economic policy is ultimately an expression of elected officials making difficult value choices. If over time these officials make value choices that do not reflect the values of the people whom they represent, they can, should, and will be replaced.

When these same elected officials, and those who advise them, deliberately construct policies to hide value choices that would be unpopular were they transparent and explicit, we end up with two terrible outcomes. We get policies that do not reflect our values, and we re-elect representatives who are lying to us.

This article is reprinted with permission from KeithHennessey.com.

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