Libertarians have nowhere to turn By Scott Sumner

In my view neither major political party has libertarian inclinations. That’s not to say that there aren’t a few individual party members who lean slightly libertarian. Senator Rand Paul is obviously more libertarian that Donald Trump, and Senator Ron Wyden is obviously more libertarian that Hillary Clinton. But both parties are firmly in the “big government” camp.

When I point this out to conservatives they often insist that I should be a Republican, as that party is more pro-small government than the Democrats. When I point out that the size and scope of government grew much more under Bush than Clinton, they wave away this objection, “That’s the old GOP, the Tea Party has injected new libertarian instincts into the Party.” Sorry, but I just don’t see it.

Today we learned that the GOP has caved again, producing a budget full of spending and special interest tax cuts that bust the budget cap agreed to just a few years ago, balloon the deficit and make the tax code even more complex and inefficient.

“The end product here is just cleaning the barn; it’s a disaster,” Brat said of the spending and tax deal. “We’re breaking our pledge on the budget caps to the American people, we’ve lost fiscal discipline, and we’re throwing it all on the next generation.” But in the same breath, Brat praised Ryan: “Not only is he saying the right things, he is lining it up to do the right things … and then leadership can’t hijack the budget at the end of the year and throw the kitchen sink, which we just did.”

So once again libertarians were suckers for GOP sweet talk about “small government”, but next year will be different. We promise.

I’m slightly more sympathetic to the progressives who insist that I should really be a Democrat. They tell me “After all, you are rational. You believe in evolution and support carbon taxes and redistribution and think money was too tight during the Great Recession. You are pro-immigration and skeptical of the idea that America is an ‘exceptional’ nation, which must police the world.” Those are all good arguments, but then I start obsessing about economics. After all, I am an economist.

When Obamacare was passed I thought the bill was more of a missed opportunity than a complete disaster. And that’s because I thought the US health care system was already pretty much a complete disaster, wasting massive amounts of money on treatments of doubtful utility. Full of regulations that grossly distorted the system. And by far the worst distortion was the massive subsidy that the government provides to company-sponsored health insurance, which cuts the cost of health insurance to consumers by roughly 40%.

My progressive friends pointed out that Obamacare did contain one very important type of cost control, the so-called “Cadillac tax” on expensive health insurance. Because this tax was not fully indexed to health care inflation, it would gradually squeeze costs over time. I was skeptical; pointing out that the tax was delayed many years into the future. If they were really serious about this idea, then why not implement it much sooner, not after President Obama would be out of office?

And now we read that my skepticism was justified.

The tax break package would cost about $650 billion and extend around 50 credits for businesses and individuals while also delaying until 2017 a tax on medical device manufacturers. The approximately $1.1 trillion appropriations package would fund the government for the remainder of fiscal 2016 and contains a two-year delay of the Affordable Care Act’s so-called Cadillac Tax on expensive employer-sponsored health care plans as well as a delay of a tax on health insurance plan purchases.

The one good policy reform in Obamacare has been delayed for another 2 years. Does anyone seriously believe that it will then be implemented?

And by the way, this delay could not have happened without substantial GOP support, which pretty much proves that their opposition to Obamacare was not motivated by free market principles, but rather greed and selfishness—they didn’t want their tax money providing health insurance for the poor. That’s a defensible opinion, but I wish they had been honest about their motives.

HT: Tyler Cowen