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October 19th, 2009 2:35 pm
Obama Economic Aide Criticized Individual Mandates, Government Financing
Posted by Print

Larry Summers, Director of President Obama’s National Economic Council, has been a loyal ally to the administration and proponent of current health care reform proposals floating around Congress.

Summers has backed ObamaCare despite the many troubling provisions contained in House and Senate legislation, namely the individual health care mandate and the government-run public option.

Apparently, the economic views of Dr. Summers have changed in the current partisan environment.  When he was an academic and cared more about economic externalities than political favoritism, he penned this paper critiquing individual mandates and government-run plans.

Here is an excerpt:

Note that a payroll tax on employers directed at financing health insurance benefits publicly would have the same employment displacement effects [translation: people lose their jobs] as a mandated health insurance program….  If policymakers fail to recognize the costs of mandated benefits because they do not appear in the government budget, then mandated benefit programs could lead to excessive spending on social programs.  There is no sense in which benefits become “free” just because the government mandates that employers offer them to workers.  As with value-added taxes, it can plausibly be argued that mandated benefits fuel the growth of government.”

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