RUTHFULLY YOURS

Republicans in Congress are plowing ahead on tax reform, and one obstacle is the complexity of Senate budget rules that limit how much taxes can be cut. The good news is that for once Washington’s fiscal fictions could be deployed to improve policy by repealing ObamaCare’s individual mandate as part of tax reform.

The Senate Finance Committee on Thursday released the details of its tax proposal, which includes a permanent 20% corporate rate and more. Senators Pat Toomey and Bob Corker cut a budget deal to allow for $1.5 trillion in net tax cuts over 10 years without accounting for faster economic growth (and more revenues) as a result of reform.

The trick is Senate procedure. The GOP is invoking a budget process that allows the party to pass the bill with 51 votes. But Republicans have to comply with the Senate’s Byrd Rule, which says the legislation can’t add to the deficit beyond the 10-year budget window starting in 2028. The Senate draft doesn’t meet this standard, so some parts of the bill may have to expire after a decade unless Republicans can fill the hole. It’s a shame this process pummels good policy.

Enter the idea of repealing ObamaCare’s individual mandate. The Congressional Budget Office predicts that dumping the mandate would “save” $338 billion over 10 years—and the savings continue in the following decades. The budget gnomes assume that if people are not forced to buy health insurance, fewer people will sign up for subsidies or Medicaid. The idea that millions of people will dump free health care is one oddity of CBO methods, but that’s an editorial for another day.

If you were deliberately trying to design the most arbitrary, painful and pointless tax possible, how would you go about it?

First, you would structure it to inflate the cost of an essential product. Then, you’d create exemptions so vast that only 5% of taxpayers were subject to it. You might even ensure that it hit people only when they were particularly vulnerable—like when they’d lost a job. Finally, you would use it to drive enrollment in entitlements, so that it increased the federal deficit by $338 billion.

In short, you would design something that looks very much like the Affordable Care Act’s individual mandate.

Sen. Tom Cotton (R., Ark.) has made headlines by suggesting that tax reform should include a repeal of the mandate—an annual tax of between $695 and $13,380 imposed on 6.5 million American households. In defense of the mandate, ObamaCare’s defenders have resorted to hyperbole and scare-mongering, probably because the penalty is so difficult to justify on the merits.

In most insurance markets, people seek coverage in proportion to the risk they expect to face, and insurers receive payment in proportion to the cost they expect to cover. This approach prevailed for nongroup health insurance in most states prior to ObamaCare. It produced stable markets with premiums of less than half what currently prevails on the exchanges, but often failed to ensure affordable coverage for individuals with major chronic conditions.

The ACA has reversed this situation, providing affordable coverage to individuals with pre-existing conditions, but yielding plans that are priced well above the needs of most Americans. The average annual premium was $5,712 in 2016, while median health-care spending was only $709 in 2014.

The individual mandate was intended to prevent the bulk of individuals from fleeing this unappealing arrangement. Its advocates have argued that the mandate reduces premiums on the exchanges, but this is only true to the extent that it pushes more cost-effective alternatives out of reach.

As a newly released Manhattan Institute Issue Brief demonstrates, the mandate is superfluous to the ACA’s core guarantee of affordable coverage for individuals with pre-existing conditions. In fact, it is subject to so many exemptions that recent studies have failed to discern any impact of the mandate on the proportion of Americans who are uninsured.

The ACA’s guarantee of affordable insurance to low-income individuals and those with pre-existing conditions is due entirely to the law’s subsidy provisions. These expand automatically to whatever level insurers need in order to bring a plan to market, which limits premiums and out-of-pocket costs as a share of income. This principle holds regardless of the ratio of healthy to sick enrollees in the exchange.CONTINUE AT SITE

Donna Brazile has confirmed Bernie Sanders’s worst suspicions. Ms. Brazile, who served as interim chairman of the Democratic National Committee during the fall 2016 campaign, says in a new book that during the primaries, the DNC was controlled by Hillary Clinton’s campaign. Ms. Brazile claims the arrangement was “not illegal,” but that is far from clear.

Ms. Brazile reports that when she arrived on the job in July 2016, Gary Gensler, the campaign’s chief financial officer, told her the DNC was fully under the control of the campaign. In September 2015, 10 months before Mrs. Clinton’s nomination, the party had moved its bank account to the same bank in New York used by the Clinton campaign and created a joint fundraising committee, the Hillary Victory Fund, whose treasurer, bank account, and control were vested in the campaign.

Then, in an August 2015 memorandum of understanding, the DNC essentially handed over its operations to the Clinton campaign for the next 15 months.

The purpose of joint fundraising committees is to allow more than one entity to collaborate in raising money and share in the costs. Each participant is subject to federal contribution limits. When the party itself is a participant, its committee (in this case the DNC) normally handles accounting and financial controls. Not here. The Hillary Victory Fund was controlled by the Clinton campaign, with a campaign employee as treasurer and the fund’s bank account established at the Clinton campaign’s bank. According to Federal Election Commission reports, the Hillary Victory Fund has raised more than $526 million.

The DNC asserted its “neutrality” by also entering into a joint fundraising committee with the Sanders campaign. It raised a total of $1,000. And the Bernie Victory Committee treasurer was the DNC’s designee.

“Money in the battleground states usually stayed in that state,” Ms. Brazile writes, “but all the other states funneled that money directly to the DNC, which quickly transferred the money to Brooklyn”—i.e., Clinton headquarters. She says state parties raised $82 million, of which they kept less than 0.5%.

The memorandum of understanding promised the Clinton campaign, among other things, “complete and seamless access to all research work product and tools” paid for by the DNC, despite Federal Election Commission regulations that prohibit privately sharing such research with a candidate without either reporting the costs as an in-kind contribution or allocating them against the party’s coordinated spending limits for that candidate.

The memo also tied transfers of funds raised for the DNC by the Hillary Victory Fund to operational control of the DNC’s expenditures: “The release of the Base Amounts each month are conditioned on the following: . . . hiring of DNC Communications Director . . . DNC senior staff . . . joint authority over strategic decisions . . . alerting HFA”—Hillary for America, the campaign—“in advance of . . . any direct mail communications that features a particular Democratic primary candidate or his or her signature.”

Contributions to the DNC, even though made through the Hillary Victory Fund, were required by law to be transferred to the party and could not legally be withheld by the Clinton-designated treasurer. Nor does the law allow a single candidate to control a political party’s operations and expenditures. CONTINUE AT SITE

At the end of each Supreme Court term, around Independence Day, Justice Clarence Thomas takes his clerks to tour the battlefield at Gettysburg. By then, long hours of intense, closely researched debate, along with the almost parental care that the justice and his wife, Virginia, have lavished upon them, have melded the young lawyers into something like family. They have spent part of the year on Fourteenth Amendment questions, but now it’s time for a closer look at the realities that the amendment addresses. “I thought it would be important for my clerks not just to talk about the Fourteenth Amendment, not just to talk about the equal protection clause,” explained Thomas in a Heritage Foundation lecture last year, marking his 25th anniversary on the Court, “but to go and feel it—to see the place, to see what this was about. Why did people die? To go where Lincoln delivered the Gettysburg Address, where he implores us, the living, to make it worthwhile, this experiment to which these people had given the last full measure.” Because, he concludes, “this ideal, that’s all we have left: the perfectibility of this great republic.”

That ideal of republican perfectibility—the full realization of Jefferson’s proposition that all men are created equal—lies at the heart of Thomas’s career on the nation’s highest court. Lincoln had urged his Gettysburg audience to rededicate themselves to that ideal to spark a new birth of freedom, which would have occurred, had not some failed actor felt called to blow out the noblest brain of the age five days after the South’s surrender. If Lincoln had lived, Reconstruction would have invested black Southerners permanently with all the civil rights of American citizenship, as the heroic president intended. That’s why biographer Richard Brookhiser calls Lincoln, in his book’s title, the Founders’ Son: the Great Emancipator understood the Founding Fathers’ vision of liberty and equality before the law with a seer’s acuity and aimed to bring it about more completely than circumstances had allowed the Founders themselves to do.

But Southern segregationists derailed his plan soon after his assassination and prolonged racial oppression for nearly another century, distorting race relations in the nation to this day. It’s in this sense, as Thomas works to fulfill Lincoln’s task of extending the unalienable rights of the Declaration of Independence to all Americans, that it’s not fanciful to think of the justice as the Founders’ grandson.

How Thomas could become so historically consequential is a story that really begins with his actual grandfather, Myers Anderson.