A Simple Government (10 page)

Another feature of the FairTax that makes it unique is the “prebate.” In order to make sure no one is taxed on the essentials of life, every registered American household would receive a monthly rebate check (prebate) to cover the sales tax on essentials up to the poverty level. This basically “un-taxes” the poor, lowers the general tax burden on most Americans, and makes the tax system progressive based on spending choices. No longer would those who are successful be penalized for their success by being stuck in a high tax bracket. They’d pay taxes commensurate with their spending choices. That’s certainly not the tax code we’ve come to know and “love,” is it? Why, it’s almost fair, not to mention rather simple.

Under the FairTax, people wouldn’t be pushed into buying a house to get tax breaks when they’d rather rent. If there’s one thing we’ve learned in the last two years, it’s that sometimes it actually makes sense to rent. The FairTax would give Americans more freedom to live how they wish, rather than encourage them to buy houses they can’t afford, as did Fannie Mae and Freddie Mac and the subprime scheme. It’s also better for the government because, according to the Congressional Budget Office, all the tax breaks and subsidies for home ownership cost $230 billion in 2009. It’s fairer for renters because they’re not put at an unfair tax disadvantage. It’s also better for those who choose to own but don’t want to see their investment destroyed in a bubble.

Richard Florida, an economist from the University of Toronto, has determined that the areas that suffered the least from the housing crisis were those with the highest number of renters. The FairTax would end the distortion of the housing market, which has brutally distorted our overall economy.

Benjamin Franklin told us the only two certainties in life are death and taxes. But there’s something particularly distasteful about a “death tax.”

Did you know that due to a quirk in the law, 2010 was the only time since 1916 that heirs didn’t have to pay a federal inheritance tax? The reason this came about was nearly as complicated as the tax code itself. The 2001 tax-relief package passed by Congress gradually phased out the inheritance tax over ten years. But because the tax-relief bill was passed under “budget reconciliation rules,” the policy couldn’t extend beyond a ten-year budget window. So in 2011, the death tax—known in more polite circles as the “estate tax”—gets resuscitated, and at full 2001-level strength. Kind of like the end of a
Friday the 13th
movie—just when you think Jason’s dead and the credits are about to roll, he jumps out of the lake to pull an unsuspecting victim down with him.

In 2010, we lost baseball icon George Steinbrenner, owner of the New York Yankees and (just as important to me) a recurring character on
Seinfeld
. Steinbrenner was larger than life and an astute businessman. It’s estimated that his estate at the time of his death was somewhere in the ballpark (excuse the pun) of $1.1 billion. If Steinbrenner had died in 2009, his heirs would have been hit with a tax bill of about $500 million. As it is, they’ll still have to pay capital-gains taxes on assets should they be sold, but what will no doubt be avoided is a repeat of what happened to the Wrigley family in Chicago in the 1970s.

When Chicago Cubs owner P. K. Wrigley died in 1977, the inheritance tax devastated his family and forced them to sell the team to the Tribune Company in order to meet the huge tax burden on the estate. Who knows what would have happened had George Steinbrenner’s family been in a similar position?

Now, admittedly, this is a huge problem of the wealthy. But it’s also a problem for the rest of us because the death tax undermines job creation. A 2003 study by economist William W. Beach found that eliminating the estate tax would create between 170,000 and 250,000 jobs. And a study conducted by Douglas Holtz-Eakin and Cameron Smith in 2009 found that full repeal of the tax would create 1.5 million jobs.

The Heritage Foundation estimates that repealing the death tax would increase small-business capital by $1.6 trillion, increase the probability of hiring by 8.6 percent, increase payrolls by 2.6 percent, and expand investment by 3 percent.

Compare the benefits of repealing the estate tax to the benefits of the $862 billion stimulus funding intended to invigorate the economy, and I think you’ll agree—it’s time to bury the death tax.

In July 2010, the inflatable dam on Tempe Town Lake in Tempe, Arizona, burst, releasing almost a billion gallons of water down the usually dry Salt River bed in just a few short hours. Luckily, no one was injured in the episode . . . well, almost no one—fish casualties were high.

What was left was a stinking, muddy lake bed and shallow pools of flopping, dying fish. Crews had to stay on top of the fish problem because carrion birds see pools of flopping fish as an all-you-can-eat buffet, and the nearby Phoenix Sky Harbor International Airport couldn’t have dive-bombing birds occupying its flight path. So something had to be done. Who wins in a situation like this? Well, in this case, local alligators from the Phoenix Herpetological Society, that get to feast on the stranded fish, making the circle of life complete.

This is not unlike what high taxes are doing to the American economy. Like a dam straining against the pressure of too much water, our economy is straining against the pressure of too many taxes. In 1913, when the Sixteenth Amendment was passed, less than 1 percent of Americans paid income tax and the top rate was 7 percent. In the 1950s and early 1960s, the top tax bracket was a whopping 91 percent. Even during the Clinton years, it topped out at nearly 40 percent.

If we continue to strain our economy like this, the dam will eventually burst, and all of the people who relied on that capital will be left flopping around like dead fish—at the mercy of the big bad alligator called government.

 

 

 

 

I
know all too well about the dangers and struggles of obesity. It’s chased me throughout my adult life. In 2003, I lost 110 pounds and beat back early symptoms of type 2 diabetes. Since then, I have been able to live without any symptoms. As my doctor told me after I aggressively fought back with nutrition and exercise, it’s as if I was never diagnosed. That’s good news and I’m not taking it for granted. After a year of nonstop travel and gaining about thirty of those pounds back, I went back to a more focused lifestyle to again fight the “demon” of food addiction. It is a lifelong battle that many other Americans can relate to.

When I decided to get the thirty pounds off and get back to my marathon-running fitness, I went back and read my own book on the subject,
Quit Digging Your Grave with a Knife and Fork
. I meet people almost every day who tell me that book caused them to change their lifestyle and lose anywhere from twenty-five to two hundred pounds.

Of course, as much as I could probably flatter myself into taking credit for these people’s success, I know they could never have lost the weight without taking some personal responsibility for their own health. I’m sure plenty of doctors and specialists told them, as they did me, that they would face serious health risks if they didn’t take better care of themselves. But in the end, no amount of advice or warnings can make up for a lack of effort on the part of the patient.

And as much as I love hearing weight-loss success stories like these, I know that for every person who has made the commitment to eat right, exercise, and lead a healthier lifestyle, there’s at least one more who still opts for the Twinkies and TV over carrots and cardio. And sooner or later, these folks end up at the doctor’s office or worse, the emergency room, undergoing expensive procedures and treatments that could have been avoided with a few more good decisions.

What does this have to do with health care? It’s simple, really. No matter what kind of health-care system we have, the only way to really manage costs and reduce wasteful procedures and medicines is to take some responsibility for our own health. After all, at the most fundamental level, we don’t really face a health-care crisis; we face a health crisis.

About 75 percent of our health-care costs are from four chronic conditions: heart disease, cancer, diabetes, and obesity. Besides being the most expensive diseases, they are also the most preventable. These four chronic conditions are linked to four behaviors—tobacco use, alcohol use, lack of exercise, and poor diet.

In 1996, the President’s Council on Physical Fitness and Sports found that almost 30 percent of our health-care costs come from lack of exercise and excess weight.

These four chronic conditions are interrelated. For example, being overweight is a cause of diabetes. Diabetes, in turn, increases your risk of heart disease (as well as your risk of kidney disease, stroke, blindness, and leg and foot amputations). But if a diabetic avoids saturated and trans fats, he can lower that increased risk of heart disease. Unless we change our ways, a shocking one-third of Americans born in 2000 will become diabetics.

Being overweight or obese increases your risk of cancer and is considered a factor in about 20 percent of cancer deaths.

Some businesses are trying to hold down health-care costs by rewarding healthy behavior through discounts on health-insurance premiums. In 2005, Safeway began its Healthy Measures plan for nonunion workers. Between 2005 and 2009, when most businesses saw their health-care costs rise almost 40 percent, Safeway’s costs, amazingly, stayed the same. Safeway tests workers’ tobacco use, weight, blood pressure, and cholesterol and gives employees a premium reduction for each test they pass. Steven Burd, Safeway’s CEO, wrote in 2009: “By our calculation, if the nation had adopted our approach in 2005, the nation’s direct health-care bill would be $550 billion less than it is today.” That’s a heck of a better record than
anything
Congress has passed or even proposed! Why didn’t they listen to Burd? He and I both testified at a Senate hearing in 2009. I didn’t expect them to listen to me in Washington, but it’s a pity they didn’t grasp his very compelling facts. But facts and Washington politics are like oil and water.

Besides emphasizing prevention, companies are also cutting costs through better management of chronic conditions. Boeing has reduced its health-care costs by 20 percent for employees with illnesses like diabetes and heart disease by having their doctors ride herd on them to take their medications and modify their unhealthy behaviors. Besides keeping costs down, Boeing is helping these employees enjoy the best possible quality of life despite their diseases.

While prevention is always the goal, better management of chronic conditions is also essential. Right now we have a system that happily pays for a diabetic to have his foot amputated for about thirty thousand dollars but won’t pay for visits to a nutritionist or podiatrist to keep that foot healthy. That’s insane.

One-third of American adults are now obese—almost three times as many as in 1960. If we don’t drop the Twinkies and pick up the carrot sticks, that number is expected to rise to almost one-half by 2020. Obesity rates are 50 percent higher for African Americans than for whites, and 20 percent higher for Hispanics, which explains why these groups suffer from an epidemic of diabetes.

Obesity-related health-care costs in 1998 were $74 billion. They are now $147 billion.

A Duke University study found that medical costs claimed from on-the-job injuries were seven times higher for obese workers.

In addition to diabetes, obesity has been linked to other chronic and degenerative diseases, like Alzheimer’s. A 2010 study from Boston University School of Medicine found a link between stomach fat and a higher risk of Alzheimer’s disease. Dr. Susanne Sorensen, who is in charge of research for the Alzheimer’s Society, responded, “This is not really surprising as a large stomach is associated with high blood pressure, cholesterol and diabetes—all major risk factors for dementia.” Is it so much of a sacrifice to go for a jog or eat a salad if it means being able to stay lucid and vital in your old age?

Obesity is especially dangerous for pregnant women. About one in five women is obese (which means she has a body mass index, or BMI, of at least 30) when she becomes pregnant.

These mothers have much higher rates of Cesarean births, with all the risks of surgery. As BMI rises, women become two (BMI of 30-35), three (BMI of 35-40), and even four (BMI over 40) times more likely to have a Cesarean than a woman of normal weight, for whom the Cesarean rate is 11 percent.

The babies of obese mothers have double the risk of being stillborn and three times the risk of dying in their first month. They are 11 percent more likely to be born with a defective heart, and that gap jumps to 33 percent when the mother is one hundred pounds or more over a healthy weight.

These babies are less likely to be carried to term and thus more likely to need intensive (and expensive) neonatal care. A
New York Times
story about an obese woman who had a stroke and gave birth to her baby prematurely found that while a normal delivery would have cost about thirteen thousand dollars, the costs for this woman and her child were over two hundred thousand dollars!

And this problem doesn’t stop with mothers. One of the most publicized interviews I’ve conducted for my Fox News weekend show was with First Lady Michelle Obama. Shortly after assuming the role of First Lady, she announced that she would make childhood obesity one of her major areas of focus. I was thrilled to hear it. I have taken a lot of heat from fellow conservatives who would demonize the Obamas for anything and everything, but that’s absurd and as appalling as it was for yahoos like Keith Olbermann to do the same thing to President George W. Bush. We do have a serious crisis with childhood obesity in this country, and if you doubt it, here’s an experiment for you. Go through your personal belongings and dig out your class photo from the third grade. The following day, pay a visit to a third-grade class somewhere in America—doesn’t matter what part of the country, doesn’t matter if it’s a private or a public school. Walk into that class and take a look at the kids and compare them to the look of
your
third-grade class. I promise if you do this, you will never again doubt that there have been dramatic changes in the health of children in this country.