There is an ironclad law of redistributive politics at play in the ACA (ObamaCare) fiasco.
This law is that concentrated interests almost always conquer diffuse interests. Milk producers are a concentrated interest. Milk consumers are a diffuse interest. Guess which group is favored by the long history of milk price supports? Dairy farmers get fat checks. School teachers and plumbers and accountants pay more for milk.
One corollary to this law is that legislators try to create concentrated benefits and diffuse costs by separating the funding mechanism (taxes on all) from the supply of benefits (a local interest). Perhaps your community benefits from a community center, educational program, or a resurfaced highway. Those projects almost always fail a simple cost-benefit test because if they made sense for local communities to do, they would just do them. If they don’t, they seek assistance from their representatives in Congress.
When the costs and benefits of local expenditures are added up nationally, they don’t make sense. Aggregate costs surpass aggregate benefits. But because the benefits are concentrated in a local area and the costs are diffuse, legislators logroll (trade votes) and the projects get funded by the federal government. [Earmark reform has curtailed this process in recent years, but I remain highly skeptical that such reforms will be 1) effective and 2) persistent.]
Vulnerable Democrats in Congress are starting to panic because they are seeing the consequences of violating the law of diffuse and concentrated interests. Those insurance cancellation letters and the higher prices faced by a portion of those shopping on the exchange are a small portion of the population (probably less than one percent), but they are highly concentrated, not to mention vocal.
If you are, for example, a healthy young man running a small start-up business, you are likely to see your rates on the individual market go up considerably, especially if you are successful enough not to qualify for a subsidy. Under ObamaCare, the transfers from the young to the old increase, as do transfers from men to women and from the healthy to the unhealthy.
We could have a debate on whether those transfers are morally justified or not, but usually politicians are savvy enough not to send voters a bill for the transfers:
You will now pay $4,000 more per year for a policy you like less than your old one so that nice middle-aged lady with knee problems who lives across the Hall in Apartment 5F can get free health insurance. She is very nice, by the way. She is a librarian and doesn’t make too much. We are sure you won’t mind.
Even political hacks who aren’t too bright know that you don’t send people individualized bills for benefits going to other people.
Voters don’t like getting bills. They like to think that other people—rich people who are better off—are paying the bills. Voters want benefits. That great line from a LA Times story a couple of weeks ago quotes a young woman who said, “I was all for ObamaCare until I found I was paying for it.”
Smart politicians know this law. They don’t send bills to voters. They just send newsletters detailing all the wonderful things they have done for their Districts and how they are trying to fight out of control spending in Washington
When the President brazenly violated the law of diffuse and concentrated interests, he illustrated the hubris so characteristic of everything he does. He thinks the ordinary laws of politics don’t apply to him. He can strike a handsome pose, give a charismatic speech, and his problems will go away. Europeans will give him Nobel prizes. The media will fawn. That is how he has understood the laws of politics up to this point.
He is starting to get a lesson in what the real laws of politics look like.
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