Ron the Republican

Why doesn’t Ron Kind just switch parties?

Kind is leading a drive to repeal the medical device tax, part of Obamacare, which he defends like a mama bear with her cubs. Guy Boulton writes a lengthy look at this effort in Monday’s Journal-Sentinel.

The medical device tax was a key element of Obamacare’s convoluted financial swindle – a part of crafting the illusion that the monstrous law was paid for and “deficit neutral.” It slaps a 2.3 percent surtax on items like hardware used in surgery, diagnostic devices from blood sugar readers to CT scanners, and a variety of other items without which our medical system would rely on leeches and ritual sacrifice.

Kind, with Boulton’s help, makes a great case for the repeal of this tax. “Kind and other opponents of the tax contend it has cost jobs and forced companies to cut spending on research and development,” Boulton writes. It’s an excellent point, one that is true of all taxes on every industry. By making it, Kind acquiesces to a core premise underlying the Republican economic message.

Boulton also quotes a medical device lobbyist: “[Healthcare] is not an environment and industry where you can just pass on additional costs to customers.” Neither is fast food. Or salons. Or the bar and restaurant industry. Or telecommunications. Or any other highly competitive industry with thin margins into which new taxes universally cut deeply and dampen the return on investments for any business that wants to grow.

In other words, onerous taxes force employers to scale back their ambitions, pay their people less, and eliminate non-essential jobs – especially the highest-paying ones. Onerous taxes create a race to the bottom.

Boulton goes on: “AdvaMed says one-third of companies have reduced their research and development budgets and the industry has lost 33,000 jobs because of the tax.” One wonders whether a Democrat who concedes this fact in the healthcare industry would also concede that business taxes – socking it to the big corporations – would also concede that research and development investments and employment gets suffocated in any industry socked with even a seemingly small extra tax or mandated cost – such as Obamacare itself.

But then again, investments in Democrat vernacular are something done when Barack Obama throws $831 billion down a rabbit hole on a “stimulus” package after which America has even more pot holes, rustier bridges, and crumbling earthen dams.

As if to reinforce the thesis that unfolded in the prior column inches, the article states, “Kind cited an industry study that says the tax accounts for 29% of what the industry spends on research and development. He also said the tax disproportionately affects small start-ups.” It’s impossible to argue that private sector R&D isn’t a pathway to efficiencies, economic development, and most importantly a better way of life for everyone – particularly poignant when it’s medical R&D.

Conservatives were not loud enough in criticizing Obamacare for the stifling effect it will have on medical advancement, most of which happens when American companies spend money to make it happen, but when they did speak up on the topic it was deemed too byzantine and weedy to wade into. Nay-sayers, such people were.

The whole argument about taxes in this case can and should go far beyond the healthcare industry, but Kind and other doctrinaire Democrats compartmentalize the healthcare business from others for the sake of expediency in a “people, not profits” kneejerk. During his 2014 re-elect, Kind wasn’t reticent to parrot the Obama pablum about “asking the rich” to “pay their fair share.”

But here, Kind concedes the economic folly of that.

Kind all but admits that the tax was part of the house of smoke and mirrors that made Obamacare’s finances appear balanced – he said, “One of the hardest things we had to do in putting together the Affordable Care Act was to make sure it was completely paid for,” he said. Now that it’s passed and in full effect, he’s pushing to dismantle that carefully crafted illusion, couching his intentions in a cushy aura of feel-goodery.

In reality, this is almost certainly not a courageous stand on principle against the tide of Democratic politics; rather, it’s the completion of a quid pro quo arrangement Kind has with some of his largest donors who are hurt by the medical device tax.

General Electric, for example, gave Kind $16,450 in the recent cycle. GE is a major manufacturer of medical devices. The same goes for 3M, a top Kind donor. Here’s the full list of Kind’s PAC contributors, which collectively gave the congressman $1,554,207, nearly three-quarters of his fundraising haul.

The following chart shows the health products industry’s influence over Kind:

Screen Shot 2015-01-26 at 2.08.54 PMDemocrats like to criticize Republicans for being the “corporate” party seething with sell-outs who spend their lunches smoking cigars and clinking glasses with Wall Street bigwigs while counting piles of ill-gotten campaign cash. The reality is that Kind’s epiphany about the depressive effects of new taxes makes him a Johnny-come-lately.

Republicans support lower taxes for all businesses and the rich (i.e., small business owners struggling to survive the dual impact of big government and big corporate competitors) because they have a realistic idea of how taxes put a boot on the neck of job creation and economic development; they don’t compartmentalize their views on the free market and taxes the way Kind seems to.

With notable exceptions, the GOP and its populist wing (the Tea Party) is seething with an anti-cronyism upswell that eschews being pro-business in favor of being pro-free market. For their efforts against these arrangements, the mainstream media paints conservative populists as kooks and praises corporatists like Kind. As opposed to the days of Teddy Roosevelt, the government today is an enabler of monopolies and oligopolies by erecting barriers for small businesses and startups.

Barriers like the medical device tax, new regulations, and rigid faux-populist minimum wages that hurt not only small businesses, but their employees, and society as a whole as less money is available for capital expansions, pay raises not mandated by the government, and the research that finds better ways of doing things – which leads to a dynamic, growing economy.

Even if his motives are corporatist, Kind is to be applauded. Perhaps soon Kind will change his views on taxes in general and vote with the GOP not only on gun rights, but also on matters of taxation and regulation. As a member of the Ways and Means Committee, perhaps his epiphany will inspire him to work with Paul Ryan to lower taxes on all employers, not just those who donate money to his re-election campaigns.

Kind obviously won’t switch parties any time soon, unless the Democratic Party breaks into corporate and progressive wings, in which case Kind would certainly join the Corporate Democrats. At his core he’s a political pragmatist who licks the hand that feeds him, and he’d only have a place in the Republican Party that exists in Democrats’ press releases.

About the writer: Chris Rochester has worked in communications and finance for a state Senate and congressional campaign, consulted on numerous Assembly and local races, and has held leadership roles in his local Republican Party. He's communications director for the MacIver Institute. Commentary here is strictly his own.
  • Clyde Fromona

    Remember, despite all his ObamaCare listening sessions he did not hear anything that would stop him from voting for it.

    NOW, shazzaam, WHAT, medical devices are taxed? That’s not fair, Sir Ron has to fix that!

    Rotten thing is the Republicans will go along, but I say if the Emperor does not want the medical device tax in his signature legislation he doesn’t need Sir Ron’s help, the Emperor should just will it away with all the other exemptions he has so mercifully granted.

    Shame on Dr Jeff Thompson for bilking sick people. My new Gundersen plan, I get to pay an administrative fee before each appointment and it does not show up on the bill. Plus I get a deductible before insurance pays anything. It used to be flat 80/20, not anymore with ObamaCare! Thank you Sir Ron.