By Herb London, ,
Published May 07, 2015
If the health care reform and its aftermath mean anything, it is the calculated attempt to address inequality in the nation, a matter that surfaced during the presidential campaign and an issue that goes to the heart of this administration’s game plan.
The presumptive gap between rich and poor has been the catalyst for the Obama obsession with the redistribution of wealth. Mr. Obama claimed that health reform would “mark a new season in America.” He added, “We have now just enshrined…the core principle that everybody should have some basic security when it comes to their health care.”
Leave aside for the moment whether the health care legislation provides this basic security and, of course, its effect on the quality of care, the notable portion of the money to pay for this bill will come from payroll taxes on households making $250,000 or more. On average, the annual tax burden for households making a million dollars will rise by $40,000. Another source of financing will come from cutting Medicare subsides for private insurance, ultimately affecting their executives and shareholders.
By contrast, the benefits of the bill flow mostly to households making less than four times the poverty level. Those without insurance in this group will become eligible to receive subsidies or to join Medicaid.
Of course, many of the poor are already covered by Medicaid, but this bill extends coverage dramatically. The bill will also suggest that healthy people will be coerced into buying insurance, thereby subsidizing those who heretofore did not have insurance or had preexisting conditions that militated against coverage.
While Mr. Obama has commended President Reagan for “changing the trajectory of America,” this bill has changed America, period. From the trickle down view of the economy, Obama has instituted bottom up growth, a theory without an empirical basis. As the president now sees it, class warfare is not only desirable, it is a way to redress economic disparities. Presumably the laissez-faire foundation that Reagan commenced will be undone brick by brick with Obama led redistributionist schemes.
Unfortunately, class warfare of the kind President Obama has in mind cannot possibly generate the goals for which he is aiming. Raising taxes to extortionate levels does not produce additional revenue for the government.
Beyond a certain point, wealthy people work less, and earn less or put their assets offshore, but they will find a way to avoid the coercive reach of Uncle Sam.
What the Obama administration seems to ignore are the incentives that drive economic growth. As Abraham Lincoln noted, “You can’t make a poor man rich by making a rich man poor.” How can an economy grow when the catalysts for growth are thwarted by the extensive reach and policy orientation of government?
Establishing the proper balance between the market and government is never easy. But in the case of President Obama, we have a leader motivated by ideology to tilt the equation in the direction of government control. If the prescribed way of dealing with unemployment and unfunded liabilities is economic growth, the president’s polices insure the opposite.
It is not coincidental that the nation’s founders put a premium on opportunity and free markets recognizing full well that a market dominated system will invariably result in disparate rewards that encourage inequality. Economic equality can only be achieved by political engineers who take from some and give to others.
Should one parse the language of President Obama, this egalitarian agenda is his goal. Health care reform is merely one manifestation of his plan for the future. Surely he is not the first to attempt this quasi-Marxist economic vision. But we know from vast experience in Europe and the Soviet Union that the result of this quest is a stagnant economy, invidious comparisons and slow to non-existent economic growth.
Frederick Brown, writing in Harpers magazine, in 1981, said, “It could be said that each leftist generation reinvents, with such material as the age suggests, a lost utopia, an ancien regime, and a new order: each one finds its soul in evangelical distinctions between a ‘before’ and an ‘after’.”
President Obama is apparently searching for his lost utopia unwilling to recognize what came before and willfully shopping for a new tomorrow.
Herbert London is president of Hudson Institute and professor emeritus, NYU and author of “Decade of Denial” and "America's Secular Challenge."
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