In which Idaho gives the feds the finger, tariffs are still bad, and I don’t mention the 45th president.
EVEN THOUGH it’s been said and said again, this week in Donald Trump-related news was a real doozy. From Trump’s baby-faced son-in-law Jared Kushner losing his security clearance (about time) to our president’s latest apoplectic meltdown (please stop), I was feeling a little weary. So to preserve my sanity, this edition of Musings will henceforth feature no mentions of our commander-in-chief. But it will still be worth reading; I promise!
Why Follow the Law When You Could Just Not Follow the Law Instead?
Idaho isn’t only for potato-lovers; it’s now also the nation’s capital for flagrant violations of the Affordable Care Act. Courtesy of some intrepid law-flouters in Boise, Idaho is now allowing non-Obamacare-compliant health insurance plans to go on the market in April.
Blue Cross of Idaho’s “Freedom Blue” health plans would provide skimpy coverage with lower premiums. Critically, the plans discriminate based on health status and reinstate annual caps on insurance benefits. Just so we’re clear, Obamacare prohibits discrimination based on health status and annual caps on insurance benefits. So Idaho is breaking the law, it seems.
I’m simplifying, of course. There’s at least one brainy lawyer who thinks that, based on some Supreme Court precedents plus a little bit of voodoo magic, Idaho’s shenanigans might not be as illegal as they look. Federal agencies could intervene, though it’s unclear if they will.
The lesson of Idaho’s health-insurance mischief is that control of state governments matters. America’s system of dual federalism rightly gives immense latitude to the states, even to skirt federal law. To control American politics, first control state legislatures, as Republicans now do. My money is on the Democrats taking back the White House in 2020. But even then, the Republican domination of state governments will endure.
Why Do Nothing When You Could Just Actively Harm the Economy Instead?
The walls of the Hall of Bad Ideas are lined with many oldies-but-goodies. Lead paint; reversible ties; describing the answer to a math problem as your “Final Solution.” But worse than all of these (although reversible ties are beyond egregious) is the tariff.
A tariff is a tax on an imported good. The basic justification for a tariff is that domestic manufacturers need the government to protect them from foreign competition. So the government taxes stuff that we import, making foreign goods less competitive. The problem is that less competition means higher prices. Who pays those higher prices? You do, at the store. In that regard, tariffs are, in reality, a tax on consumers.
Consider my mind thoroughly boggled, then, at the fact that we are now imposing 25% tariffs on steel and 10% on aluminum, all to fulfill a campaign promise. The consequences are well documented and, well, obvious. Our trading partners will fume. Prices will rise. Companies that buy aluminum or steel will lay off workers. Economic output will take a hit. American steel and aluminum producers will get fat off of the government protection. This is exactly what happened with the 2003 Bush steel tariffs.
It’s worth noting that steel shortages are not a national security concern, as a January 2018 Commerce Department report argued. Less than 5% of total domestic steel consumption goes to defense. We also import much of our foreign steel from Canada, with whom we will probably not go to war. Safe to say that our steel supply is safe.
It bears reiterating a point I’ve been making in my columns for a while now: the Republican Party is ideologically defunct. The current iteration of the party is lukewarm on free trade and hostile to immigration that is pivotal to a free market—values it once held dear. Not to mention the Republicans’ fiscal irresponsibility. What America needs now more than ever is a real free-trade party, a real free-market party, a real fiscal-responsibility party. To counterbalance the coming wave of economic leftism, if anything else.
