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Volume 14, Issue 15: April 10, 2012

  1. Alternatives to Health Insurance Mandates
  2. Fiscal Reform Scorecard
  3. Afghanistan Withdrawal Would Improve U.S. Leverage
  4. Vern McKinley in Washington, DC, April 16
  5. New Blog Posts

1) Alternatives to Health Insurance Mandates

Proponents of the individual-mandate provision of the Affordable Care Act argue that requiring people to purchase health insurance would help remedy the problem caused by “free riders”—people whose decision to forego insurance imposes a cost on others. In his latest op-ed, Independent Institute Research Fellow John C. Goodman argues that there are better ways to deal with the uninsured than by requiring them to purchase insurance.

Goodman begins by arguing that the free-rider problem is smaller than is commonly believed. The free riders, he argues, do not include the uninsured that are wealthy enough to pay their medical bills without insurance. Nor should those who can’t afford to buy insurance be considered willful free riders. The real free riders are average-income earners who are uninsured. This segment of the population pays for only about half of the healthcare services they consume using their own resources—approximately $1,500 per uninsured per year—and others pick up the rest of the tab.

At first glance, it might seem fair to impose a tax on them equivalent to the $1,500 in uncompensated care that they consume, but Goodman notes that this is problematic: �these uninsureds already pay higher taxes because they don’t have tax-subsidized (employer-provided) health insurance. In addition, the uncompensated care they consume is delivered locally, whereas the extra taxes they would pay would tend to go to Washington, DC. Dealing with those two problems could be tricky. A better approach, Goodman argues, would be to offer a refundable tax credit for healthcare purchases (say, $2,500 for individuals and $8,000 for a family of four). Low-income earners could be given a healthcare voucher that would operate the same way food stamps work; the recipients would even be free to add their own money to the value of the voucher. “All this can be done without any mandate and without telling people what specific health insurance benefits they have to buy,” Goodman writes.

Mandates vs. Free-Riders, by John C. Goodman (, 3/31/12)

More by John C. Goodman


2) Fiscal Reform Scorecard

Keeping track of federal spending proposals can be a daunting task. Fortunately, Independent Institute Research Fellow Craig Eyermann, creator of the Government Cost Calculator at, has discovered a highly revealing chart that combines public debt projections from several different sources, including the White House, the Congressional Budget Office, the House Republicans, and the Fiscal Commission.

The graph, a production of the Mercatus Center at George Mason University, helps viewers see that proposals having similar outcomes over the next few years in fact vary tremendously over the course of the next decade. As he notes in his latest piece at, viewers can use the graph “as a scorecard to see how well each of the major proposals to date do at bringing the nation’s skyrocketing debt into control.”

As Eyermann notes, however, the trajectories are not equally revealing. For example: “The [Congressional Budget Office’s] baseline budget, which relies on the expiration of major tax hikes and no new government spending to achieve its debt reductions, could not be considered to be a serious proposal,” he writes. “It relies on both today’s and tomorrow’s politicians to do absolutely nothing other than to follow the current law with respect to the budget exactly as it is written, which is something that U.S. politicians have proven to be unable to do for any sustained period of time where their interests are involved, with the current leadership of the U.S. Senate being the only exception in modern U.S. budgetary history, unless there is actually something to the speculation surrounding their inaction.” Fortunately, Eyermann’s notes that accompany the graph provide valuable clarification.

A Debt Reduction Proposal Scorecard, by Craig Eyermann (MyGovCost Blog, 4/9/12)—The Home of Your Government Cost Calculator!


3) Afghanistan Withdrawal Would Improve U.S. Leverage

President Obama is facing pressure to keep U.S. troops in Afghanistan beyond the 2014 withdrawal date. Instead of succumbing to those pressures, he should remove troops even sooner, according to Independent Institute Senior Fellow Ivan Eland. One of the most compelling reasons for a rapid troop withdrawal involves a difficult ally: Pakistan. Eland argues that a rapid pull out would enable the United States to achieve a strategic objective that has remained elusive throughout the longest war in U.S. history—obtaining real leverage over Pakistan, a country that has accepted U.S. financial assistance to fight Afghan militants and has also aided the same militant groups.

A rapid pull out from the region would mean that the U.S. military “wouldn’t need a supply line or drone bases [in Pakistan] and could threaten to cut off aid if the Pakistanis didn’t pressure the Taliban to negotiate a postwar settlement for Afghanistan,” Eland writes in his latest op-ed.

Eland argues that the United States has a security interest in keeping Afghanistan from again becoming a base for al-Qaeda or other anti-U.S. terrorist groups, and that if the Taliban were to resume control of Afghanistan, they could be incentivized to prevent terrorists from operating freely in that country. Eland continues: “The Taliban and al-Qaeda don’t get along very well, and the Taliban have suffered greatly for providing a past safe haven for the group. America usually doesn’t believe its adversaries can learn; they can.”

Rapidly Ending the War in Afghanistan Solves Many Problems, by Ivan Eland (4/5/12)

No War for Oil: U.S. Dependency and the Middle East, by Ivan Eland


4) Vern McKinley in Washington, DC, April 16

Why were Bear Stearns and AIG rescued while Lehman Brothers was allowed to fail? On what basis did officials in the Treasury Department, the Federal Deposit Insurance Corporation and the Fed make their intervention decisions? Independent Institute Research Fellow Vern McKinley, author of Financing Failure: A Century of Bailouts, will address these and related questions at the upcoming event, “Were the 2008 Bailouts Justified?” This program will be held April 16 at the American Enterprise Institute in Washington, DC.

McKinley’s book is the most detailed ever written on the subject of bank bailouts. Attendees to this event will learn how the bailout agencies erected obstacles to thwart McKinely from obtaining their internal memos about their decisions to engage in selected bailouts.

Event: Were the 2008 Bailouts Justified?
Date: Monday, April 16, 2012
Time: Registration 1:45 p.m.; Program 2 p.m. to 4 p.m.
Location: The American Enterprise Institute, 1150 Seventeenth Street, NW, Washington, DC 20036
To attend, please contact Steffanie Hawkins at [email protected], 202-419-5212.

Featured Speaker: Vern McKinley is a Research Fellow at the Independent Institute and author of Financing Failure: A Century of Bailouts. From 1985 to 1999 Mr. McKinley worked with the Board of Governors of the Federal Reserve, Federal Deposit Insurance Corporation, Resolution Trust Corporation and Department of the Treasury’s Office of Thrift Supervision. In 1995, McKinley graduated with honors from George Washington University School of Law. Since 1999, McKinley has served as a legal advisor and regulatory policy expert for governments on financial sector issues in the United States, China, Nigeria, Indonesia, Ukraine, Kazakhstan, Latvia, the Philippines, Yugoslavia (now Montenegro), Kenya, Morocco, Sudan, Libya, Afghanistan, Armenia, Kosovo, and Tajikistan.

Jean Helwege, University of South Carolina
Alex J. Pollock, AEI
Phillip Swagel, AEI and University of Maryland

Peter J. Wallison, AEI

Praise for Financing Failure: A Century of Bailouts, by Vern McKinley:

“Paulson, Geithner, and Bernanke told the American public a pack of lies and misrepresentations during the subprime crisis. Where other authors merely parroted these untruths, Vern McKinley calls them on it in this very carefully researched book. Financing Failure shows us the appalling lack of logic in regulators' responses to financial crises and how, sadly, we can expect more of the same in the next crisis. McKinley has produced an excellent history of the flawed analysis of financial crisis policy of the last century.”
—Jean Helwege, Professor of Business Administration, University of South Carolina


5) New Blog Posts

From The Beacon:

From MyGovCost News & Blog:

A Debt Reduction Proposal Scorecard
Craig Eyermann (4/9/12)

Federal Worker’s Rap Video on Unlimited $$ and No Accountability Wins GSA Award
David Theroux (4/7/12)

U.S. Government Spending and Debt by the Numbers
Craig Eyermann (4/6/12)

Government Spending on Autopilot
Stephanie Freedman (4/4/12)

You can find the Independent Institute’s Spanish-language blog here.


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