Forget Broccoli

Americans are either celebrating or damning the Supreme Court’s 5-4 ruling that the individual mandate is constitutional.

I find it hard to believe that anyone believed that the Supreme Court would rule any other way. Precedent dictates that the Federal powers of taxation are unimpeachable, and have been so since the New Deal. That’s the state of reality, and I found it puzzling that the individual mandate to purchase healthcare might be deemed unconstitutional when the collective mandate to collect taxes to purchase next-to-everything (including both healthcare and broccoli) has been considered constitutional for the best part of a century.

If America wants to overturn current legal norms America needs to elect different politicians. But with a greater and greater welfare-bound population, it seems inevitable that more and more Americans will vote themselves greater and greater quantities of free stuff.

Yet there is a bigger point to all of this, and it’s nothing to do with broccoli.

If Congress can constitutionally create a mandate for individuals to purchase healthcare, then Congress can create a mandate for individuals to purchase financial securities. Which — given the fiscal cliff that we are about to run off, and the reality that more and more sovereigns are dumping dollars and treasuries — could well be a useful weapon in keeping the Treasury’s borrowing costs low and the bread and circuses flowing.

Here are the GAO’s own figures:

With such a humungous load, it will take a lot of (shall we say) financial engineering to keep borrowing costs low.

The purchase of treasury securities is of course something Japan already mandates of financial institutions. Sure — the Fed and the primary dealers can do a lot of the heavy lifting — but what’s stopping Congress from mandating that patriotic Americans with any spare cash dump it into government securities (or even flagging equities)?

One day, Atlas may shrug. Until that day, Congress just acquired a powerful new funding tool.

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46 thoughts on “Forget Broccoli

  1. ‎”But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

    Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law — which may be an isolated case — is not abolished immediately, it will spread, multiply, and develop into a system.

    The person who profits from this law will complain bitterly, defending his acquired rights. He will claim that the state is obligated to protect and encourage his particular industry; that this procedure enriches the state because the protected industry is thus able to spend more and to pay higher wages to the poor workingmen.

    Do not listen to this sophistry by vested interests. The acceptance of these arguments will build legal plunder into a whole system. In fact, this has already occurred. The present-day delusion is an attempt to enrich everyone at the expense of everyone else; to make plunder universal under the pretense of organizing it”

    ~ The Law, Frederic Bastiat

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  5. Why not tax anyone who hasn’t bought a new car this year (or every year from now on)? We can label it as a control on carbon emissions while increasing revenue and stimulate sales at GM.

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  8. While this certainly creates enormous difficulties throughout the economic system, it is a mere distraction to what is the true dilemma that confronts the health care system.

    Regardless of how you wish to fund it, technology has created a system of care that we simply can NOT afford. And this with medically-related technologies still in their infancy.

    The rule of law giveth, and the rule of law taketh away.

  9. In essence, this has already been going on for a long time. Social Security is essentially a program of forced buying of government debt. Any surplus in the OASI trust fund is used to purchase mostly non-marketable government securities….and that is all off-budget borrowing. The real debt of the US government should include all of the SS benefit obligations.

    That’s why the feds will never allow the privatization of SS.

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  11. Why spend money promoting the purchase of WAR BONDS when you can mandate it.

    Mandate healthy food and mandate purchases of Crony business partner products.

    Since people cant bring up their children with proper values mandate their values in public schools.

    The Government and their middle class private educated crony family connected bureaucrat employees with their White Paper Policy documents supported by the collective party vote, KNOW BETTER.

    Social engineering with crumbs thrown to the peasants while the bureacrats live on cake.

  12. “If Congress can constitutionally create a mandate for individuals to purchase healthcare, then Congress can create a mandate for individuals to purchase financial securities.”

    I’m a big fan of your blog but this is nonsense, or at least stretching an argument to obscenity. Most americans don’t have insurance, so they wait until things go catastrophically wrong before the see a doctor, then they can’t pay the bill and it ends up costing every one. If that same person had free health care, they would have been going to the doctor and whatever ended up being serious would have been detected long ago. Obamacare is forced preventive medicine, it’s being forced to eat your broccoli. Likening that to forcing someone to buy JPM is preying on the stupid.

    • “Free” health care? Nothing is for free [literally and figuratively].

      Obamacare is an enormous give-away to the insurance companies and a continuation of the pathetic sick-care system that masquerades as a health care system in the U.S.

      • poor choice of words on my part. subsidized health care. if you’re suggesting the system could be worse than it is, i disagree. health insurance is ridiculously expensive, providers always try to deny coverage, and you are always referred to the cheapest doctors they can pool in the most disparate areas of town with unknown “staffers”. all this for $500/month.

        • Things can ALWAYS be worse, but it must be understood that when corporate America took-over health care, they designed it to insure mega-profits for themselves and their associated friends, BIG PHARMA, technology corps., etc.

          This system is doing EXACTLY what it was designed to do, as is every other system in the U.S.. Things are THIS bad in this country BY DESIGN. It’s how things always are.

        • Labocetta:

          The point is, it wouldn’t be called a mandate. It would be called a tax. This opens the door to lots of similar compulsions. Of which financial securities would be the most egregious. But also the most inevitable.

    • Laboccetta. You make an interesting point. In Australia we have universal health care and this is funded by a flat 1.5% tax on income (With adjustments for lower income recipients) This means anybody on the poverty line gets free health care, and I agree it could encourage people to see a Doctor earlier, preventing more costly care. It could also prevent infectious diseases caused by high risk activity.

      But I tell you, it is common for a Dr to “Bulk” bill as they get a higher rate than a private fee paying patient who wants a choice of Doctor, so they easily give “sick slips” which encourages a healthy fee and Doctor shopping if they don’t. A result it is a license to print money.

      Universal health care is definitely abused by certain patients and Doctors. Provided Fraud Safeguards are in place, it can be beneficial as “Preventative medicine”

      However in Australia, if you earn over an income threshold, you must take out Private Health cover or get an additional flat income tax. People grumble about it, but they usually take out Private Health care. Do we still have waiting lists in public hospitals? Yes. Do the poor get health care? Yes.

      I was against it, but now after thinking of you comments, it does make some sense to mandate health care akin to forcing someone to eat their broccoli.

      I just hope that in the rush to expedite the system to gain political points, the system is not ripe for abuse.

      Australia’s Social Security and Health Care system:

      http://www.humanservices.gov.au/customer/information/welcome-medicare-customers-website?utm_id=9

      I admit it does provide a safety net, but the amount of bureacrats it employs and the commercial real estate it occupies is a massive drain. There has to be a better system to ensure the mentally ill, drug adled and impoverished who can’t look after themselves, can get healthcare without risking other members of society.

      Once you create Government Departments it is very hard to curtail them.

      • “Once you create Government Departments it is very hard to curtail them.”
        That is absolutely true. I feel that if government should do anything, keeping the population safe, educated, and healthy are worthy pursuits. Private versions of these three services should always be available, but we are still a Christian nation that takes care of the weakest. This coming from an Atheist.

    • I’m afraid it’s not so non sensical. It starts with health care; who the heck can say that you should be denied healthcare? Then it will be education, security, housing (how can people be homeless in the richest country in the world?). This is potentially endless. It will take time but we will come to that and yesterday was an important mile stone.

      • “I’m afraid it’s not so non sensical. It starts with health care…Then it will be education, security, housing.”

        The next thing you know, they’ll force you to insure your home and your car and your business. Oh yeah, they already do. It speaks volumes on our society that it took the government longer to ask us to insure our health than any of these things considering their impact on others. After all, one man’s freedom ends when it impinges on another’s.

        The argument is weak not only because what should be subsequent mandates to health care are already in place, but because mandating health care is in such a different arena than mandating financial products that you could claim anything via this methodology, ie: “next they’ll be mandating I jump off a bridge!” I’m just nit picking here, you only hurt the ones you love :)

      • Let’s be clear:

        I don’t have a problem with universal housing, universal healthcare, universal prosperity.

        I have a problem with government delivering it.

        It’s inefficient and iatrogenic.

        As a younger Barack Obama once noted, you can’t fix housing by mandating everyone buys a house.

        But you sure could channel a lot of money to your cronies in the financial industry by doing so.

        • I just worry about the wolves tending to the sheep. I’ve seen enough credit reports to know how badly medical bills are ruining people’s lives. Doctors already run many more tests than are required on their patients to maximize profit, and prescribe medicines that they are paid to suggest. I’m just not sure the free market handled this one so well.

          I have no problem with what I think will become a two tier system. The poor will get shitty but basic Obamacare, and the middle and upper class will get superior care through private plans.

  13. poor choice of words on my part. subsidized health care. if you’re suggesting the system could be worse than it is, i disagree. health insurance is ridiculously expensive, providers always try to deny coverage, and you are always referred to the cheapest doctors they can pool in the most disparate areas of town with unknown “staffers”. all this for $500/month.

  14. “I admit it does provide a safety net, but the amount of bureaucrats it employs and the commercial real estate it occupies is a massive drain. There has to be a better system to ensure the mentally ill, drug addicted and impoverished who can’t look after themselves, can get healthcare without risking other members of society.”

    BR, it’s called, private charity.

    No society can continue along the path of repairing/replacing body parts. This is intellectual/fiscal insanity.

    The solution is a health care system, i.e., prevention only. Keep yourself in the best shape possible and hope for the best.

    • “Private charity” — spot on! GOVERNMENT charity, like retirement, education, housing, banking, etc. — everything we foolishly and unconstitutionally allow the federal government to take over from the individual, family, community, state — is ineffective, inefficient, perpetually expanding, and advantageous to the bureaucrats and “the money changers” rather than the customer. How does Salvation Army food, clothing and shelter compare to welfare and food stamps? How do IRAs compare to Social Security (even if Congress had not stolen the latter’s funds)? How do home-schooled and private-schooled students perform compared to public schooled?

      If you will allow an octogenarian to preach (prattle? pontificate?) from lots of experience as a player and an observer:

      + Government is a monopoly. Worse, it operates through force. Somebody else makes choices for you.

      + Three rules for citizens. (1) Delegate to government only those functions which CANNOT be handled by individuals, family, neighborhood, volunteers or private organizations. (2) Keep it at the lowest (nearest) level of government with the resources. (3) Watch everything at every level of government — even remote Washington, D.C., which is difficult — like a hawk.

      + Model worlds. (1) In a PERFECT WORLD (with perfect people): no government needed. (2) In an IMPERFECT WORLD (with imperfect people) but with PERFECT GOVERNMENT: only minimal government necessary — strong defensive/deterrent military; safety net supporting private and state-local government in providing IN-KIND charity (food, clothing, shelter, clinic medicine), NOT entitlements in cash, stamps. etc.; PRIVATE unemployment and healthcare insurance, probably with “cafeteria” options. (3) In the REAL WORLD (imperfect people and imperfect government): not simple to theorize or easy to install — in the U.S. it is estimated that half of the people work for a living and half vote for a living; the former must vote and campaign hard to halt the death spiral, while some of the latter half are persuaded to realize that liberty and opportunity are better for them and their children and their ethnic brothers and sisters.

      • Impermanence, Don, I have thought about your comments PRIVATE CHARITY.

        Agreed. On reflection,

        Read “The Modern Regime” By Hippolyte AdolpheTaine 1890.

        It outlines the outcomes of the French Revolution, and how private Charities and local organised and backed schoolmasters were overthrown by the State.

        Basically we are living in a Jacobian dream, and common sense nightmare.

  15. AZIZ: I very much enjoy and learn from the give and take with you and your flock/mob/gang or whatever. But, as is typical of my classification of critter (human being), I tend to skip over the attaboys and pick on the perceived oopses. So …

    • [to continue]
      1. “Precedent” does not “dictate” except to the timid, lazy and irresolute But that describes most of us who have spent a lifetime of security and prosperity in U.S., U.K., EU, etc.

      2. “If America wants to overturn current legal norms America needs to elect different politicians”. Spot on, but also we need to AMEND the Constitution to modernize and clarify. [See Article V of the Constitution*]. Anti-American, anti-democracy, anti-rule-of-law forces (including politicians, interest groups, journalists, media, public school teachers unions, and academic bureaucrats) realize that OVERT attacks** against Constitutional rights would be unpopular, so they undermine the Constitution by electing/appointing/applauding “legislators from the bench” and other covert infiltration. HOWEVER, the current grass roots uprising (“tea parties”, etc.) demonstrates that there is support for clarifying and modernizing amendments to strengthen protection of rights and limits on government powers.

      3. “Atlas may shrug”. ‘Tis a consummation devoutly to be wished! Let’s inform your readers, most of whom have been “protected” from encountering such economic/political wisdom, that “Atlas Shrugged”, a classic novel by Russian-American Ayn Rand, dramatized a citizens’ non-violent revolt against creeping socialism; would you agree that it is almost as good as your countryman George Orwell’s “1984″ and “Animal Farm”?

      * The Cato Institute sells inexpensive copies of “the Pocket Constitution” (includes the
      Declaration of Independence).

      ** However, Amendment XVI, empowering congress to levy UNLIMITED taxes on incomes, has turned out to be a lethal weapon for government vs. the people, as has the power to print money. Income was taxed 3% at first. Of course any Amendment can be amended or cancelled.

      • @ Don,

        “so they undermine the Constitution by electing/appointing/applauding “legislators from the bench” and other covert infiltration”

        Bingo. Spot on. Judges are in control.

        I agree, that Constitutional change is required. It will take another War of Revolution to amend. This would necessitate a Civil war and break of the USA.

        http://online.wsj.com/article/SB123051100709638419.html

  16. As a member of the US Armed Forces in the sixties each member was required to buy one US Savings Bond per month. So part of your $35.00 monthly salary went to Buy a $25 US Savings Bond. Looks like the balance of the population will receive the same treatment.

  17. All pensions (govt.state,private), IRAs, and 401Ks will be converted into annuities, and the current equities being replaced with Treasury Bonds.This will fund the gubment excesses for years to come! BTW this has already started with GM retirements…

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  22. How crazy can it get? How about this passage from “Atlas Shrugged” by Ayn Rand:

    “… In the name of general welfare, to protect the people’s security, to achieve full equality and total stability, it is decreed for the duration of the national emergency that—

    … Point One: All workers, wage earners and employers…shall henceforth be attached to their jobs and shall not leave, nor be dismissed, nor change employment under penalty of jail….
    …Point Two: All industrial, commercial, manufacturing and business establishments … shall remain in operation …under penalty of nationalization of their property…
    …Point Three: All patents and copyrights …shall be turned over to the nation as a patriotic emergency gift…
    …Point Four: No new devices, inventions, products…not now on the market shall be produced…
    …Point Five: Every establishment, concern, corporation or person ingaged in production…shall produce the same amount of good per year as they produced during the Basic Year…over and under production shall be fined…
    …Point Six: Every person…shall spend the same amount of money on the purchase of goods per year as spent during the Basic Year…over or under purchasing shall be fined…
    …Point Seven: All wages, prices, salaries, dividends,profits, interest rates, and forms of income of any nature shall be frozen at their current rates…”

    Granted, this seems silly and irrational and impossible, but…is anything happening today any more sane or logical? And this was written 50 years ago.

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