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The Lighthouse is the weekly email newsletter of the Independent Institute.
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Volume 18, Issue 13: March 29, 2016

  1. How to See Through Obama’s New Budget Trickery
  2. Affordable Housing Mandates Make Homes Less Affordable
  3. Worse than Obamacare Penalties
  4. Obama Goes to Cuba
  5. New Blog Posts
  6. Selected News Alerts



1) How to See Through Obama’s New Budget Trickery

The Independent Institute has just updated its Government Cost Calculator—an online service at MyGovCost.org that enables U.S. taxpayers to estimate their lifetime federal tax liability. The update incorporates new estimates of government spending and collected tax revenue published by the nonpartisan Congressional Budget Office (CBO). The timing of the update couldn’t be better: The trickery embedded in President Obama’s FY2017 budget proposal underscores the importance of the Government Cost Calculator in helping taxpayers understand how runaway federal spending affects their pocketbooks.

The White House’s proposal hides the impact of recommended spending hikes by projecting unrealistically high estimates of revenue and economic growth, according to Independent Institute Research Fellow Craig Eyermann, creator of the Government Cost Calculator. The administration estimates, for example, that nominal GDP will grow much faster than predicted by the CBO. The White House projects, for example, a growth rate that’s 12.8 percent higher in 2019 than the nonpartisan budget agency predicts, and 13.2 percent higher in 2020. “These higher forecast GDP figures ‘boost’ President Obama’s predicted tax collections, which then make the future deficits that would result from his spending proposals appear smaller,” Eyermann said.

One category of increased federal spending in Obama’s budget proposal is—you guessed it—healthcare. The president is requesting $11.8 billion more on healthcare through 2020 than he requested in last year’s budget proposal. “This proposed increase demonstrates how badly President Obama either forecast or deliberately misrepresented the costs for sustaining the Affordable Care Act in the future,” said Eyermann.

The New Budget Proposal and You, by Craig Eyermann (MyGovCost News & Blog, 3/23/16)

MyGovCost.org — Home of the Government Cost Calculator

Love Gov: From First Date to Mandate

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2) Affordable Housing Mandates Make Homes Less Affordable

Hearts sank last month when the U.S. Supreme Court refused to hear a challenge to a housing law in San Jose, Calif., requiring real-estate developers to sell some of their new units at below-market prices. Activists who tout “affordable housing” may have cheered, but those who understand what inclusionary zoning laws actually entail knew the Court’s decision was cause for mourning, not for celebration.

“Unfortunately, the price controls that these ordinances create do more to make houses more expensive,” writes Independent Institute Senior Fellow Benjamin W. Powell. “Affordable housing” mandates, he explains, act like an extra tax on developers, resulting in a reduction in the construction of new homes and higher prices on most of the homes in a new development—as well as higher prices on the existing supply of housing.

As an economist who co-authored a study about inclusionary zoning in California, Powell speaks with authority. His findings should give pause to anyone concerned with housing prices. “In the Bay Area, for example, we found that cities with inclusionary zoning ordinances imposed an effective tax of $44,000 on each new home,” Powell writes. “In Orange and Los Angeles counties, the effective inclusionary tax was $66,000 per new home.”

Supreme Court Decision Will Not Make Housing Cheaper, by Benjamin W. Powell (Orange County Register, 3/24/16)

Housing America: Building Out of a Crisis, edited by Randall G. Holcombe and Benjamin W. Powell

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3) Worse than Obamacare Penalties

The Affordable Care Act entails a host of fines or punitive taxes—call them what you wish—that kick in if an individual fails to insure or fails to accurately estimate next year’s income, and if an employer fails to offer healthcare coverage to its workers or if the premiums for the policies offered are deemed excessive. However, none of these measures is as severe as the penalty a firm must pay if it provides a worker with portable coverage, which would offer continuity of care when a worker changes jobs or leaves the workforce.

“The fine the employer is now exposed to is $100 per employee for each day the infraction takes place, or $36,500 per year!” writes Independent Institute Senior Fellow John C. Goodman. This penalty, he adds, originates not in Obamacare or any other legislation, but rather in a ruling by the Treasury Department—something entirely within the administration’s control.

Not only is the penalty huge, but it also undermines one of the key rationales for the passage of the Affordable Care Act. “Ironically, the current administration policy outlaws the very solution that would have taken care of the problems that were used to justify Obamacare,” Goodman continues. Nearly every coverage shortfall resulting from a pre-existing condition, he explains, “arises because insurance isn’t portable.”

Portable Health Insurance: An Idea Whose Time Has Come, by John C. Goodman (Forbes, 2/22/16)

Priceless: Curing the Healthcare Crisis, by John C. Goodman

A Better Choice: Healthcare Solutions for America, by John C. Goodman

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4) Obama Goes to Cuba

President Obama’s historic visit to Havana won’t bring the Cuban people freedom overnight, but it may bring the island nation one step closer to loosening the socialist yoke under which it has suffered for almost sixty years. The president’s official reception in Cuba also suggests that Raul and Fidel Castro recognize that mitigating one risk—the spread of discontent that could foment an anti-communist revolution—requires them to take another: the creation of conditions that could whet the people’s appetite for political freedom.

“A greater opening of Cuba to the outside world scares the Castros more than anything else, because more international economic connections, which the Cuban economy desperately needs to right the ship, also bring in dangerous new ideas and thus pressures for political change,” according to Independent Institute Senior Fellow Ivan Eland.

The Castro regime may strive to manage the next chapter in the nation’s history in ways designed to minimize the threat to communist rule, as China and Vietnam seem to be effectively doing. But even if the Communist Party succeeds in maintaining its political hold in the short run, Obama’s friendly overture to the Cuban people is to be lauded, Eland argues. “Although Obama’s normalization of relations with Cuba might never cause the country to become a flowering free market democracy, that outcome should not be the goal,” Eland writes. “Obama’s opening is the right policy, if only because the United States should try to get along—without needing to love—its neighbors.”

Obama’s Historic Visit to Cuba Is the Right Policy, by Ivan Eland (Huffington Post, 3/22/16)

Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty, by Ivan Eland

The Che Guevara Myth, and the Future of Liberty, by Alvaro Vargas Llosa

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5) New Blog Posts

From The Beacon:

From MyGovCost News & Blog:

Government Money Pit Still Leaks Taxpayer Dollars
K. Lloyd Billingsley (3/28/16)

Obama Budget: Runaway Inflation in Health Care Spending?
Craig Eyermann (3/25/16)

The New Budget Proposal and You
Craig Eyermann (3/23/16)

The Road to Waste, Fraud and Abuse
K. Lloyd Billingsley (3/23/16)

You can find the Independent Institute's Spanish-language website here and blog here.

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6) Selected News Alerts

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