08 May 2017

On Death and Taxes

They are said to be the only two unavoidable events in life. Well, your friend and mine Raul Labrador had his 15 minutes of fame this past week, by uttering this gem:
nobody dies because they don't have access to health care.

Funny thing is, morality aside (and economists and Right Wingnuts do so at all times), he's mostly right. Most of the money spent on keeping coggers alive for a few extra months before cancer or heart disease kills them, fits his statement. With or without healthcare, they'll die of the disease that healthcare can't actually cure. "We can't afford it!!!!" Some, Right Wingnuts especially, point to the increase in life span since 1900 (or some similar year) as the reason that Social Security and Medicare must soon collapse. The problem with that assertion is that it's totally false. Yes, average life span at birth is up by a couple of decades since some earlier date, but that increase is almost entirely due to childhood vaccination and antibiotics getting more folks to maturity. In other words, the average/mean life span went up just because more people make it to 65 (pulling the average to the right of the graph), rather than people at 65 living lots of more years.

For those not in the Medicare cohort, mandatory service means that if a 30 year old ghetto junkie gets hit by a bus, he'll be treated at some sort of hospital ER. He may not survive such quality healthcare, and he may spend the rest of his worthless life in destitution being forced to pay back for that service. But he did get healthcare when he needed it. So Labrador isn't fully wrong. The quality of life of those without real healthcare is lots worse than it is with healthcare, but the 1% don't give a shit. And there's a practical reason for that.

This core problem is subtle. As many, including Your Humble Servant, have said, the AHCA is a charade. Rather than being a serious attempt to do what Orange Julius Caesar promised, "everyone, better, cheaper" than Obamacare, it's a bait and switch ploy to give $1,000,000,000,000 in taxes back to the rich folks. Recall, Obamacare included a bit of a tax increase on the upper brackets to defray the subsidies for the poor. Further, Congress has budget rules which make it difficult (modulo another Nuclear Option as Gorsuch) to pass a tax cut without certain preconditions. In sum, by "refunding" the onerous taxes on the rich from Obamacare, the really big cut promised the rich by Orange Julius Caesar is procedurally greased. Who would have thought an avowed Populist would be so thoughtful to the rich? Shit kickers in the Empty States sure didn't, of course.

Here's the subtlety. A progressive tax system works, the populace buys into it, when most of the money rests with the middle class. They largely are the ones paying for the Damn Gummint services. The rich pay some bit more, but not enough to piss them off. As the income distribution skews ever further right, pulling the average ever higher than the median, the middle contributes a declining amount to the total since they have a declining part of the income pie. The rich, who can and do afford what have historically been public services, have rebelled. Why should they pay for a ghetto junkie's rehab or yet another ghetto kid or a bridge in the Rust Belt that's about to fall down?? It just ain't fair.

Yet more subtlety. If you go spelunk the FRED data, you'll find that the US GDP distribution by sector has changed mightily over the last few decades. In sum: in the past the rich put up with progressive taxation since their businesses depended on the poor having enough moolah to buy the stuff they sold. A quasi-symbiotic relationship. But, these days the GDP is skewing evermore toward services "consumed" mostly by rich folks. The rich are more and more making stuff that is sold only to the rich themselves. Why put up with income transfer if none of it comes back? So, yet another reason to opt out of taxation.

And, Orange Julius Caesar, neo-Populist, and Right Wingnut Congress are happy to oblige. Will the shit kickers in the Empty States ever realize they were lied to and care? Don't bet on it.

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