October 17th 2009

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Articles from this issue:

EDITORIAL: Mao's long shadow over China

CANBERRA OBSERVED: Mr Turnbull in a dilemma of his own making

VICTORIA: Partial backdown over Equal Opportunity Act

NATIONAL AFFAIRS: Political lobby groups funded by your taxes

FOREIGN INVESTMENT: New foreign investment rules still fall short

ECONOMIC AFFAIRS: Immigration and Australia's economic future

FOREIGN AFFAIRS: Why Ireland voted for the Lisbon Treaty

ENERGY: Nuclear power policy shift for Germany

WORLD WAR II: Odilo Globocnik, forgotten co-author of the Holocaust

REPRODUCTIVE HEALTH: Abortion's dangers to health of future babies

OVERSEAS AID: Salesian missions to Philippines floods, Samoan tsunami

UNITED STATES: Message to America: learn to like taxes

OPINION: The Left's flawed concept of society

AS THE WORLD TURNS: China spells end of US dollar hegemony; Morality Hollywood-style; Australia's Frank Brennan SJ on same-sex marriage

CINEMA: Forgotten story of Victoria's early life - The Young Victoria (rated PG)

BOOK REVIEW: THE MARCH OF PATRIOTS: The Struggle for Modern Australia, by Paul Kelly

BOOK REVIEW: THE LOST SPY: An American in Stalin's Secret Service, by Andrew Meier

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Message to America: learn to like taxes

by Jeffry Babb

News Weekly, October 17, 2009
Taxes are the price a society pays for civilisation. This fact seems to be lost on many Americans. In America, talk of tax increases is described as a "third rail", derived from the electrified rail on subways systems that causes instant death if touched.

Thoughtful Americans know this tax phobia is stupid, but the Republicans have made themselves into a "no tax" party, such that they will crucify anyone who makes the obvious point that a nation such as America cannot sustain its domestic and foreign ambitions without spending vast sums of public money.

The Administration of George W Bush has left a mixed legacy. He started a "war of choice" in Iraq and then, instead of raising revenue to pay for it, he cut taxes.

This exacerbated a massive speculative boom that in turn caused an excess of liquidity that generated demand capable of being satisfied only by a massive flood of imports. It also created a boom in housing prices and the subsequent bubble which, when deflated, dragged down with it almost every economy in the Western world.

The proximate cause of the recession was the derivatives disaster. Mortgage-backed securities had been sliced and diced, then recombined, into "safe" financial instruments that inevitably collapsed.

Some argue the meltdown was the fault of Alan Greenspan, chairman of America's central bank, the Federal Reserve, for not raising interest rates and sucking the excess liquidity out of the economy. Greenspan was not an elected official. His job was to maintain the integrity of the currency, not make political decisions. Bush took the decision to go to war and cut taxes, backed primarily by a what even some of his conservative critics denounce as a claque of ex-Trotskyites, re-badged as "neo-conservatives".

What light does this throw on current US politics? The Republicans, despite running neck and neck with the Democrats in the opinion polls, fail to be reported adequately in the mainstream media. We can now say America has a two-party system, composed of the Democrats and Fox News. For anyone who has never seen Fox News, it is a cable channel owned by Rupert Murdoch's News Corporation that functions as an eternal political campaign against the Democrats in general and President Barak Obama in particular.

The American Right is in a lather of fury over President Obama's health care plans. The febrile intensity of Fox's campaign against these overdue health care reforms has abated somewhat as it has become clear that some sort of health bill is likely to become law.

Fox had been screening inflammatory segments in which its commentators denounce Obama's proposed health care reform as "communism", but neglect to discuss how every other developed country in the world has introduced some form of health care system without being communist.

Bills in the United States Senate and House of Representatives which address health care reforms have to be reconciled into a bill that can be approved by both houses. The Republicans have vowed that no health care bill will pass the Senate; but the weight of opinion is that they will not be able to sustain a filibuster, even though the Democrats do not have the 60 votes needed to over-ride this "death by debate".

President Obama has a clear mandate for some sort of health reform. Some 60 million Americans lack adequate health cover.

The US system is the worst of both worlds. Any health insurance system only functions when treatment is rationed. The queues can get longer (as in Britain and Canada); there can be a two-tier system (as in Australia) with private insurance for the middle class and Medicare for the battlers; or you can have cross subsidies (as in Taiwan) where extortionate prices are charged for drugs to subsidise medical care.

Americans have a sense of entitlement. They want the best that money can offer and they want it now - minimal co-payments, no delays, no gatekeepers. Health care must provide dental care and mobility aids, such as the electric scooters that the elderly ride around on, and every other aid or treatment you can imagine. This applies to private insurance and Medicare for the elderly, which is entirely funded by the government.


Thus America has an unappetising political stew. No new taxes, no cuts to current entitlements in existing programs, and the introduction of universal coverage - except, that is, for illegal immigrants. But that is a peculiarly American debate that Australians can afford to put in the too-hard basket for now.

American private health insurers are almost universally loathed. They treat health care as if it was car insurance: why spend money on something that is not worth repairing? Trouble is, we are not all going to have a major car accident, but we are all going to die.

A major stumbling block is the public option: giving the uninsured or small businesses the option of taking government-run insurance. But that is likely to be a bridge too far.

Health care reformers are wearily coming to the conclusion that half a bang is better than no bang at all.

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