Saturday, January 06, 2007


I like this editorial from the Detroit News-

Democrats can do lots of damage in 100 hours

Democrats took over Congress Thursday promising to march through their populist agenda like Sherman through Georgia. Their priority list has understandable appeal -- raise wages for the working poor, limit pork barrel spending, get a better drug deal for Medicare recipients, punish the oil companies. And do it all in 100 hours.

But if rushed into implementation at the speed the Democrats promise, and with only limited opportunity for Republicans to respond, as their new rules dictate, what Democrats are likely to deliver is a package of shallow bills that don't accomplish their goals, are filled with unintended consequences and beg for a presidential veto.

Government spending discipline

Start with spending. Democratic leaders promise to break the link between congressional spending and special interest lobbyists. More power to them, if they can get real reforms in place.

A more worrisome piece of the spending package is the proposed strengthening of pay-as-you-go (PAYGO) rules that require all new spending to be offset by cuts in other programs or tax increases. We like the principle of PAYGO, but some Democrats want to repeal rules requiring a three-fifths majority to raise taxes and banning retroactive taxes. If that happens, Americans can expect higher taxes in short order. Real reform would place caps on both spending and taxes, and would apply PAYGO to all spending, including emergency appropriations.

Negotiating drug prices

Democrats pledge to pass legislation allowing the government to directly negotiate Medicare drug prices with the pharmaceutical companies. That may sound like a no-brainer, but it's not likely to work, and it could restrict access to many drugs.

Private companies that administer the Medicaid Part D drug program have been remarkably effective in negotiating favorable prices with the drug makers and, in fact, have kept drug prices below what the government initially estimated.

Rather than negotiate, the government is more likely to engage in price fixing, which will greatly limit the range of medicines available to seniors.

Minimum wage

Raising the minimum wage to $7.25 an hour from $5.15 will placate the Democrats' union bosses, but won't do much to raise the quality of life for Americans.

First, the claim that minimum wage employees are mostly the working poor struggling to raise families is a myth. The average minimum wage worker lives in a household with an income above $50,000 a year, suggesting that most are teen-agers and college students. Fewer than 20 percent live below the poverty line.

And a minimum wage hike will restrict the number of entry-level jobs, as employers reduce the workforce to control payroll costs.

College student loans

Democrats want to cut in half the 6.8 percent interest rate on student loans. The theory is that cheaper loans will encourage college attendance. But federal spending on college financial aid has increased 400 percent since 2001 without a surge in college enrollment, according to the Heritage Foundation. The interest rate cut is not something a budget-conscious nation can afford.

Social Security restrictions

Democrats will also move to pre-emptively ban private Social Security accounts. These self-managed retirement funds are seen by Republicans as a way to head off the coming Social Security crisis.

Allowing workers to own and manage their own retirement funds will provide them with larger benefits and increase the personal wealth of all working Americans. Taking the option off the table makes it more likely that the Social Security solution will be benefit cuts and tax hikes.

Democrats promise to make the nation dizzy with their speed of action this week. We hope they don't make the nation nauseous as well.

1 comment:

krshorewood said...

To your point on PAYGO.

Reality tells us that you cannot fight a military operation such as Iraq and not have to raise taxes.

People are not only seeing through the credity card economics of the last Congress, but are getting tired of shouldering the load while those in the economic stratosphere get off paying their fair share -- expecially when they are making so much off of war profiteering, fat energy subsidies and non-negotiable Medicare drug prices.

When a group like that is making so much off of us there is only one solution to bring it back into line -- taxes.