A high priority will be to assess the effects of tax reform and to communicate the results widely. The Trump administration is using our ideas to reform Obamacare, Medicare and the health care system in general.
Tax Policy: We have become the leading think tank on tax policy – in this country and around the world. Laurence Kotlikoff and Alan Auerbach are the intellectual source of the original Ryan/Brady tax reform proposal, which was introduced in the spring of 2017. It eventually morphed into the bill that was enacted last December. Here are some specifics:
- Kotlikoff and his colleagues spent three years developing a first-of-its-kind global model of international capital flows.
- The model includes every major economic region in the world; it has 3½ million equations; and a single run takes 6 hours, using several computers.
- Using the model, Kotlikoff estimates that the new tax reform bill will raise the annual wage of the average family by $4,000. Over a lifetime, tax reform for a middle-income 30-year-old household is worth about $65,000.
- Kotlikoff and Auerbach also estimate that the system created by tax reform is just as progressive as the system it replaced.
- Not only is tax reform not a giveaway to the rich, it is also not a budget buster – the ratio of federal debt to GDP will be unchanged ten years from now.
- The White House continues to use Goodman Institute numbers in defending tax reform.
Going forward, we can expect the opponents to try to roll back the corporate tax cuts. Our economists are doing a state-by-state analysis of the benefits of tax reform in conjunction with the Federal Reserve Bank of Atlanta (the most respected of the Fed banks for data collection and analysis). These results will be stunning and will help defend tax reform against its critics – especially those who claim that the reform was a giveaway to the rich that will not benefit middle-class families.
Health Policy: Two years ago, John Goodman, Rep. Pete Sessions (House Rules Committee Chairman), Sen. Bill Cassidy (the most knowledgeable person on health policy in the Senate) produced a comprehensive bill to repeal and replace Obamacare. The bill was based on 12 bold ideas. It would produce universal coverage without mandates and without additional taxes and spending.
In the face of congressional inaction, the Trump administration has recently announced that it will wholly or partially enact 5 of the 12 bold ideas through executive orders. One of the most important of the ideas is allowing employers to help their employees obtain individually owned health insurance – which they can take with them from job to job and in and out of the labor market. Another important idea is making it easier for employees to obtain inexpensive concierge care – with 24/7 access to doctors by phone and email.
Going forward, we will explain and defend these reforms – on TV, radio, in print media, on social media and through other online venues.
Two especially difficult issues arose in the 2018 election year.
First, what has Obamacare actually accomplished? Senior Fellow Linda Gorman showed that the percent of the population with private health insurance was lower the day Barack Obama left office than on the day he took office. This is despite spending more than $100 billion a year on subsidies – theoretically enough to insure 20 million people.
Second, can Obamacare be replaced without endangering those with pre-existing conditions? During the fall, members of the House of Representatives introduced a resolution designed by John Goodman. They pledged that in any block grant of funds, states would have to show that people with chronic conditions will get better insurance – lower premiums, lower deductibles and wider provider networks.
Entitlements. We have assembled the best team of economists in the country to tackle the nation’s most pressing economic problem: entitlement spending. Thomas Saving was a trustee of Social Security and Medicare and served on President George W. Bush’s commission on reforming Social Security. Andrew Rettenmaier, a Texas A&M colleague of Saving, has done cutting-edge research on where our Social Security and Medicare dollars go. Saving, Rettenmaier and Goodman have produced the only study ever done on how to privatize Medicare – without loss of benefits and without raising taxes.
Laurence Kotlikoff has also done cutting edge work on entitlement programs, estimating that the federal government’s unfunded liability (total promises minus expected tax revenues) is $239 trillion in today’s dollars.
This year, we will focus on the need to reform 200 anti-poverty programs. Last year, we published a Brief Analysis showing that because of refundable benefits in the tax code it is impossible to be poor in America if you work full time – even if you earn the minimum wage and regardless of how many children you have.
Women and Families. One of the surprises of the 2018 election was the number of suburban women who abandoned the Republican Party. Yet neither party has come to grips with this fact: all of our major federal institutions (income tax law Social Security, labor law, employee benefits law, etc.) were designed in an era when people thought that husbands would be full-time workers, wives would be stay-at-home moms and the couple would never get divorced.
Clearly, modern families are trying to cope with outdated laws.
Some years ago, Wall Street Journal writer Kim Strassel and John Goodman wrote a whole book on these problems. More recently, Goodman Institute board member and former member of Congress Nan Hayworth updated the ideas in a Brief Analysis. We will have more to say on these issues in the coming months.
We are proud of what we have accomplished with your help. But there is so much more to be done.