Spending is Spending—Even When You Call that Spending a Tax Credit
Brad DeLong adds on to the critique of Perry Bacon Jr's abysmal WaPo story on the differences between Obamanomics and McCainonomics:
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To establish tax credits for health insurance requires the creation of a bureaucracy to assess and monitor health insurance plans—somebody has to decide purchase of which health insurance plans qualifies one for the tax credit, and which does not. Regulation via tax expenditures and a bureaucracy to define and monitor them is regulation—a point that eludes Perry Bacon Jr. His example of how McCain is for reducing regulation—well, that dog just won't hunt. And as for job creation—covering the uninsured definitely creates health-care jobs; tax credits to persuade people who almost all already receive employer-sponsored insurance to switch to catastrophic-only coverage is not and is not intended to be a job-creation measure. But Perry Bacon doesn't seem to realize this.
Nor does Bacon appear to realize that a government that spends through tax expenditure creates as many potential distortions as a government that spends through, well, spending—that is why they are called tax expenditures, after all.
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One of the most important tasks at hand, for America, is to divorce itself from the current system of employer-provided healthcare. But I understand that it will require a difficult mindset adjustment for many. After all, you already prostitute yourselves by urinating into plastic jars so that your employer can inspect your lifestyle...and you'd probably submit to a rubber glove cavity inspection if asked; therefore, it's perfectly intuitive that relinquishing complete control to your boss over your health matters isn't such a big stretch for an American. It's the way you like it.
But let me assure you that there is a better way. It consists of a tax exclusion for each person to use for healthcare. For those who can't use the the exclusion due to insufficient income, there should be cash payments a la Bush's stimulus payments...except the payments should be much bigger. Whether it's used for purchasing insurance or paying cash-for-service--or not used for healthcare at all--there should be NO qualifying criteria for the exclusion and/or payment. Hence, there will be no bureaucracy, since there is nothing to monitor.