Wednesday, February 24, 2010

Kill Bill and Save Jobs

The "jobs bill" that was recently passed in the Sennate, with the help of a few Rebpublicans, will probably not do much of anything. But it does contain some good elements. Among other things, it aims to stimulate employment by removing payroll taxes. Payroll taxes (aka Social Security, Medicare-Medicaid taxes) are the worst taxes we have. They hurt low income earners most. Removing them could be a great boost to jobs. It reduces the cost of employment.

Of course, since the removal is only temporary, it is doubtful that it will have any permanent effect. Its impending reversal will inhibit even a short-run response. But its a great idea. Problem - how would we pay social security if we abolished the tax. Only one way. We'd have to reduce government expenditure elsewhere sufficiently to do so. A simple 10% cut accross the board would do it. Don't hold your breath.

You have to admire Obama's perseverance and tennacity. He refuses to allow his health bill to die. One may wonder: is there is any way to finally Kill Bill? The latest round, while tossing a lot of back-dealing baggage, maintains the universal insurance mandate and introduces a new doozy. Price controls on insurance premiums! Insurance premium prices will now be suject to government fiat - like a price board during war-time.

Economics 101 - lesson 2 or 3 - price controls cause shortages or surpluses and a lot of pain and often corruption and other things. They are the crudest, most primative types of interventionist economic policy. I know that some law-students do take elementary economics courses. Evidently this one didn't. So why should we suffer?

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