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July 20, 2019

9/21/2017 7:29:00 AM
Health care, tax reform: It's now or never

Republicans can argue about immigration and dreamers, they can argue about defense spending and Russia, they can argue about trade and marijuana (yes, they are fighting over that), but there are two issues they had better stop squabbling about and pass: a health care overhaul and tax reform.

The time for both is now, and it's probably never if the year passes without these major initiatives being enacted. To avoid an American catastrophe, Congress needs to stop its infighting and President Trump needs to use all the negotiating skills he has to make them happen.

It's not so important politically. To be sure, if the Republicans don't pass these signature reforms, which they have been pledging to do and campaigning on for years, voters will be outraged.

Likely, though, voters still will be more outraged at the cultural-war and big-government antics of Democrats, and that will probably save the GOP's hide - and their congressional majorities - in 2018.

There won't be a real fight in 2020, either. If Congress blocks Trump's agenda on health care and tax reform, it will be signing the GOP establishment's death warrant, and Trump or a new kind of Democrat or independent may prevail. If they enact reform, well, Trump becomes the new Ronald Reagan.

But all that political speculation, right or wrong, is beside the point. The point is, the American people, and the middle class in particular, need these reforms. America's middle class needs to be great again.

There's really only one last chance on health care, and that's the bill being proposed by Sens. Lindsey Graham and Bill Cassidy and others, including our own Ron Johnson.

Basically, that bill takes all the money being spent on Obamacare - the marketplace subsidies, the insurance company bailouts, Medicaid expansion - and sends it to the states to craft their own health care policies.

If Vermont wants a socialist government-run health program, it can have it. If Wisconsin opts for a free-market system based on competition in the health-care industry, it can have it.

True, the bill isn't perfect. It retains too many Obamacare taxes and regulations, but in its overall thrust it frames a structural fidelity to the U.S. Constitution by placing more power - much more power - in the states and much less power in the federal government.

It's also better than a simple repeal of Obamacare would be, for, in its seven years, that monstrosity has so warped and deformed health care systems that repealing it won't simply take us back to where we were before Obamacare; it would leave us stranded in Obamacare's wreckage, with no way out.

Vesting power in the states also leaves open the future repeal of remaining federal regulations and taxes and charts a course for a complete federal exit from health care.

We agree with a letter sent by Gov. Scott Walker and 14 other governors to Senate majority leader Mitch McConnell calling for passage of the bill, in which they stated simply and correctly: Obamacare is broken and the states are the best place to fix it.

They compared the pending proposal to welfare reform in the 1990s, when, as they wrote, governors such as Tommy Thompson from Wisconsin, Terry Branstad from Iowa, and John Engler from Michigan used block grants from the federal government to dramatically reduce the rolls of public assistance in their states.

"Welfare reform passed in the 1990s works because states were given maximum authority along with adequate funding," the governors wrote. "This model can work for the repeal and replacement of Obamacare."

They are right and Congress should get it done.

On tax reform, Republicans are pushing a $1.5-trillion tax cut for individuals and corporations as well as other reforms, and President Trump seems poised to go along. It's a good proposal, though, as Ron Johnson said, $1.5 trillion should be considered a minimum cut.

But at least that amount would transfer billions and billions to the private sector for investments in wages, job creation, and needed infrastructure. It's just the economic medicine the doctor ordered.

Predictably, there are conservatives opposed because, all other things being equal, a $1.5-trillion tax cut will increase the deficit by - let's do the math here - $1.5 trillion. The conservatives say that will, in the long run, burden future generations and lower our standard of living.

They have a point, and we too reject the argument of supply-siders who say the tax cuts will pay for themselves through economic growth.

They never do. We have rejected faith-based budgeting by the Left - the theory that more government spending for welfare will somehow, by taking money out of the private sector, lead to growth within it - and in Gov. Walker's own budgets.

No, a $1.5-trillion tax cut needs to be accompanied by an equal amount of spending cuts. After all, as Milton Friedman posited, the amount you spend is the amount you need to tax for, and if we tax for $1.5-trillion less, we should spend $1.5-trillion less.

There are countless ways to cut government spending, and there's no need to provide an exhaustive list. A few years back, the Heritage Foundation found $343 billion in cuts just by privatizing, targeting programs more precisely, eliminating outdated and ineffective programs, and eliminating waste, fraud, and abuse.

If we go further and pare down the military-industrial complex, whack the environmental-multinational-corporation complex, eliminate big business tax loopholes, and abolish needless big-government agencies, that would do the trick.

In the end, though, we know Congress is too cowardly to pull the trigger on many of those spending cuts, tax cuts or no. Their nests are too feathered.

And that really leaves us with a Hobson's choice: We can take the tax cuts, or we can take nothing at all.

If we follow the voice of deficit hawks and reject massive tax cuts, there still won't be any spending cuts. Economic stagnation will only grow, the spending will increase to fight that stagnation (in vain), and deficits will continue to spiral out of control. Poverty will increase, and future generations will suffer more and more.

If we take the tax cuts, the spending will continue, but there will at least be new economic growth and new prosperity, and at least some of the new deficit will be ameliorated by that growth. In addition, poverty will be reduced, at least for a time, and that will provide new ladders of opportunity for tomorrow's generations.

What's more - and this is the essential point - taking the historic opportunity to cut taxes now may well create a political environment in which spending cuts can be realistically and politically achieved.

How so?

In times of prosperity, politicians become emboldened to undertake new, expensive challenges. Prosperity breeds confidence and inspiration, and it makes once unimaginable dreams affordable. In 1961, for example, new President John F. Kennedy challenged the nation to put Americans on the moon by the end of the decade, and, incredibly, we did it.

The president didn't live to see it happen, but his policies are what made it possible. It was the ambitious Kennedy business tax cuts, and the resulting prosperity of the 1960s, that made it possible to dream and achieve that impossible dream.

These days, our dream isn't to put people on the moon, but to save our present and future generations from the poverty caused by accumulated debt. Today it seems unimaginable to restrain entitlements and cut government spending, and it is certainly impossible to do so when people are hurting and scared and insecure.

But a new round of prosperity could enable us to shed our pain and fear and insecurity. A new round of prosperity, stoking an age in which people are less in need of government support and are more independent and aspirational, could once again allow us to set our sights on what we now believe we cannot do: cut government spending, manage entitlements, and reduce the nation's debt significantly.

If we could put Americans on the moon in less than a decade, surely we could do these things in less than a generation. A new round of tax cuts in the Kennedy mold could again allow us to dream and achieve the impossible dream.

Now, today, is the time to start.

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