From the Wall Street Journal:
The quicksilver qualities of the Affordable Care Act individual mandate penalties—what you pay if you don’t buy government approved health coverage—are something to behold. Does the Obama Administration think they’re a fine, a tax, or maybe something else? Well, that depends, as revealed in a telling exchange at a House budget hearing Wednesday.
New Jersey Republican Scott Garrett asked White House budget director Jeff Zients about his claim that no one earning under $250,000 will see a tax increase under his boss: “So if I am part of a family that does not buy health insurance in violation of the President’s health-care program and I got to pay because of that, that is not a tax increase—that is not a tax on me?”
Mr. Zients replied, “The Affordable Care Act saves money,” which is not merely irrelevant but false. Mr. Garrett tried again and Mr. Zients said “I’m not sure I’m following the question.” Mr. Garrett once more: “Is that a tax on me or is that not a tax on me?”
Mr. Zients: “Well, this is—” Mr. Garrett: “A moment ago you said there’s no tax increase.” Mr. Zients: “There aren’t.” Mr. Garrett: “So that’s not a tax?” Mr. Zients: “No.” Mr. Garrett: “That’s not a tax. Okay. I just want to be clear on that because that’s not the argument the Administration is making before the Supreme Court.”
Game, set, match. Mr. Garrett is better informed about the Obama legal team’s arguments before the High Court, which call the penalty a tax to try to better defend its constitutionality. What Mr. Zients’s confusion really shows is that what the President also once tried to define as a non-tax tax is indefensible.
This is all theater, a grand Kabuki and Fandango amongst the 1%ers, the Congress, and the Administration, each dancing to their own special interest rhythms.
The House Majority resisting tax increases but nor tax fairness, the Administration subversively cynical about the canard that taxes must help pay for their programs, and the 1%ers, sitting, like the vultures they are, on the barnyard fence waiting for the inevitable disgorgement of spoils that will never reach the Robins.
It's all a sham because none of erstwhile elected/appointed officials in senior most positions remember the historical paradigm shift in this nation's monetary and fiscal policy which occurred in August, 1971. Briefly, Nixon abandoned the Bretton Woods principles and the U.S. left the gold standard and fixed exchange rate world, and all other nations soon followed. That action changed our nation from one with gold backed currency to one with nothing backing our currency.
We became a sovereign, fiat currency issuer. Which means that we could never be insolvent in our own currency, we could never have programs that depended upon revenue for their funding, and we only needed to tax and borrow to manage aggregate demand, not raise revenue.
Since a fiat currency nation can create all the dollars it needs it is not constrained by revenue to spend.
the tax Mr. Garret speaks of is, as are all taxes, a reduction in disposable income no matter what the income level or source of the tax. Since we are no where near anything even close to problematic inflation, there should be no tax at all.
The Administration either does not know, or if it does know, doesn't care, that any tax right now, with real unemployment at 22%, is counter productive to its economic growth tactics. (I see no strategy in what the Administration has done to reduce unemployment or increase disposable income.) Recent increases in gas prices will neutralize the 2% FICA tax holiday anyway.
That FICA tax pays for nothing, it's simply a record keeping mechanism used by the IRS, Treasury and the Fed, that gives the CBO a basis to construct it's equally meaningless, "objective" estimates of the nation's income and expenditures.
All the Treasury/Fed do is mark up reserve accounts held by the Fed for all government accounts, all banks and foreign governments doing business with the U.S. and POOF, Medicare-Medicaid checks appear. Treasury checks don't bounce. So Mr. Garret is correct in identifying the Administration's slight of hand "tax." However, he and his colleagues need to ask and have national discussions on the more critical question...
"Why does a sovereign, fiat currency monetary system need to raise revenue?"
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