November 19, 2014

From a 12-year-old NYT article: Jonathan Gruber's "most embarrassing moment in government."

This is from an April 2002 article by David Leonhardt titled "How a Tax On Cigarettes Can Help The Taxed":
For years, economists would have said that actions speak louder than words. Whatever smokers say about quitting, they are rationally deciding that the pleasure they derive from cigarettes exceeds their cost.

Jonathan Gruber was one of these economists when he worked in the Treasury Department in the Clinton administration. Mr. Gruber, a professor at the Massachusetts Institute of Technology, remembers telling other policy makers that economic theory says they should not increase cigarette taxes. People should be allowed to decide for themselves whether they want to smoke, he told his colleagues. Those who smoke may hurt themselves, but they will not drain the country's resources because so many of them will die before running up large Medicare bills.

Mr. Gruber called it his most embarrassing moment in government, and his discomfort with his own argument caused him to begin researching the issue when he returned to academia.....
So, there was an argument for taxation based on the costs that smokers impose on all of us because of the health problems caused by smoking, and Gruber undercut that argument with a truth. Smokers don't cost more overall because they die earlier. Why was that so embarrassing? Well, "embarrassing" is the reporter's word, not a quote from Gruber. Gruber is a very chatty guy. Maybe he said something like:

Did I catch hell for that. Here, they were all justifying their tax on smokers by blaming these people for forcing all of us to pay for their supposedly monumental hospital bills, and I — big, harsh-truth me — I said do you know anything about lung cancer? These people die, they don't hang around for years, they don't get multiple surgeries, they die. They're dead! And when they're dead they don't run up any more bills and they don't burden us all with endless Social Security payments either. We should be paying people to smoke, not taxing smokers more to try to get them to quit. If your argument is make people pay the true cost of their behavior, we ought to tax people for not smoking. They're the ones who will live up into their 70s and 80s — 90s! — collecting Social Security, and getting medical treatments for all their little, survivable ailments. Oh! You'd have though I was proposing to murder everybody's mom and dad. I was right, of course, but what's the use of an argument that can't be used? It doesn't matter that it's true. Does it work? I had to learn to be more aware of my surroundings. I was in government. Smokers die, and, economically speaking, that's great. Ha ha. You can't say that!

45 comments:

rhhardin said...

Thank God he hasn't said anything about protected groups.

Birkel said...

Kip Viscusi agrres.
This analysis is accurate, if impolitic.

Danno said...

Then, a smoker would spread their higher medical costs to the pool of insureds or to the unreimbursed costs that hospitals must swallow by law, or possibly Medicaid.

Now, a smoker would be in a mandated health plan (or Medicaid) and would run up very high medical costs that would be spread to the population of the insured and gov't. backstops (or the Gov't. if Medicaid) and society would pay for their poor decision.

What's different?

Curious George said...

back to back Gruber? Looks like garage will get some work done today.

Bob Boyd said...

Or maybe Gruber would say he was embarrassed because he was so naive.
He thought they wanted an expert to help them decide what to do. He found out they wanted an expert to justify what they had already decided to do.
Apparently he learned from the experience.

Danno said...

Most smokers may not reach Medicare, but they incur very large costs even before they might reach Medicare age so the tax is at least some payback for the extra costs of smoking.

Henry said...

I've been reading Jonathan Haidt's The Righteous Mind on Kindle (hat/tip Althouse).

It's been very relevant this week.

PB said...

Danno,

The difference is two fold:
1. Dying of lung cancer isn't that expensive
2. Current year medical costs vs net present value of future costs.

sparrow said...

Another point smokers frequently die of heart attacks before reaching retirement which save $ for the state. Gruber is not drawing attention because of this factual, if cold, calculation. He's drawing attention for flagrant elitism which is rarely voiced so clearly or on film. He's a snob and deserves his public shaming.

Brando said...

The use that the government gets out of revenues from cigarette taxes creates a conflict of interest for the government that is claiming to wish to stop people from smoking. If the idea is that the only thing government uses the cigarette tax revenue for is to pay for the costs that smokers cause the government, then it would be more direct to simply deny government subsidy of health coverage for illnesses caused by smoking.

In a perfect world, everyone can choose a more risky or hedonistic lifestyle if they prefer, and reap the downsides without imposing costs on anyone else. That goes for the overeaters, the lazy, the risk taking sort of people from Mountain Dew commercials--but the fact that this has only been implemented on smokers indicates that this is really about punishing an "unacceptable" lifestyle that only hurts the politically inconvenient.

Laslo Spatula said...

Smugness leads to butt cancer. Tax the smug accordingly.

Curious George said...

"Brando said...
In a perfect world, everyone can choose a more risky or hedonistic lifestyle if they prefer, and reap the downsides without imposing costs on anyone else. That goes for the overeaters, the lazy, the risk taking sort of people from Mountain Dew commercials--but the fact that this has only been implemented on smokers indicates that this is really about punishing an "unacceptable" lifestyle that only hurts the politically inconvenient."

Add gays.

Anonymous said...

Call it the Asshat Tax.

Small t truth vs. big T Truth: smoking does not have heavy economic consequences because smokers will be dead (arguable side they are treated at high cost) vs. people who advocate for other's death for economic reasons are asshats.

It is also a big T Truth that people do not exist in a libertarian economic vacuum. Their death from cancer exerts a heavy toll on friends and family / kids/ widows (a.k.a. Society). Surprise!

Having said that, he was only presenting a mainline belief in its more naked (and extreme) form. People rejected their own reflection or maybe knew their constituents would reject it.



exhelodrvr1 said...

Danno,
He is correct - same thing holds true for heavy drinkers.

Lucien said...

Back when the states were trying to sue tobacco companies, they faced a problem with damages: smokers died faster than other people, even though they used medical resources before dying -- but nearly everybody runs up big medical bills just before they die. Because health care costs were rising faster than inflation, when you discounted lifetime healthcare costs to present value, the smokers were actually costing less.

So at least some of the states solved this problem the way politicians do -- by cheating -- they passed laws saying that the tobacco companies could not have evidence admitted showing that smokers cost less in medical bills when lifetime costs were discounted to present value. Problem solved.

Then the states moved on to trying to screw their lawyers out of their fees.

But I think in the end the states said it was For The Children, so no big deal.

Herb said...

http://dailycaller.com/2014/11/18/msnbc-host-literally-screams-no-one-cares-about-jonathan-gruber-video/


I guess this is all too much for MSNBC to handle.

EMD said...

Is it weird that this excerpt makes me like Gruber more (although I don't really like the guy to begin with)?

pm317 said...

Bravo! You are shining a different light on this Gruber character (he sounds like a mini Zeke Immanuel with his death panel for smokers).

So his trick now for Obamacare is to make it unusable for the majority so there are no 'unnecessary' healthcare costs and care but the insurance companies will get their bonanza anyway.

EMD said...

But I think in the end the states said it was For The Children, so no big deal.

That's the laughable part, really.

Hey, let's tax the smokers enough (but not too much that it becomes too expensive a habit) so that we can provide "health care" for their soon-to-be-orphans!

virgil xenophon said...

One of the things I find so interesting from a public policy PR perspective is how those who bring up the fact that money is being saved (net) by the fact smokers die young are labeled as "immoral" for a "green eye-shade" "hard hearted" approach to the problems of the sick based purely on economics when it is those who wail about current medical cost containment and higher taxes who entertain the subject of the economics of health-care in the first place.

n.n said...

Gruber reminds me of Gosnell. Both are an embarrassment to the government. The former to Obamacare, the latter to Planned Parenthood. Maintaining a balance between taxable assets and tax deductions is brutal or brutal-brutal. Trillion dollar deficits and a growing population are evidence of misaligned development.

Brando said...

"Add gays."

Add anyone having unprotected sex, or sex with multiple partners, or work in dangerous jobs, or watch too much TV, or drive everywhere instead of walk, etc. There are many forms of lifestyle we all choose that affect our health and life expectancy, but cigarette smokers seem to be the one that gets the full brunt of the shunning.

Though now in the Bay Area soda drinkers are in the sights.

Anonymous said...

One of my grandfathers was a smoker and died of emphysema at age 64. He was forced to stop working at age 57. He went from upper middle-class steadily downward. My grandmother outlived him by seven years and died broke. They did not benefit from his deadly illness and early death. Thanks, Gruber, for pointing out that socialized medicine is government of the elite, by the elite, and for the elite. Serfdom and slavery as social institutions also have their fans among the elite even today.

Laslo Spatula said...

I was hoping we'd get the good kind of fascism.

traditionalguy said...

The old "smokers save Social Security by dying younger" aphorism is basic knowledge.

Gruber is saying no one wants to hear that truth. So he made himself more marketable by spinning other stories disguised as researched truths:The University as a school of Camouflage

Roost on the Moon said...

I worry about getting too fixated on this Gruber character. How do we know this isn't just an administration ploy to distract conservative media from Benghazi and the Ayers connection?

I mean, if we've got an Alinsky-ite radical terrorist with Kenyan loyalties sabotaging our military from the inside, who cares if some academic doesn't think much of our electorate?

Keep your eyes on the prize, fellow travelers.

EDH said...

A public choice economist would observe, however, that the nonsmoking people who hang around longer also cast more votes over the course of their lifetimes.

n.n said...

Roost on the Moon:

The prevailing thought is that if we blowup the economy, then an invasion is a lesser concern. They may be right; but, historically, either outcome will collapse or change a civilization.

Michael said...

Althouse. Don't crow about defending and being right about the obvious. Any person with an ounce of economic sense knows that self inflicted deaths reduce the herd of the aging.

garage mahal said...

I worry about getting too fixated on this Gruber character. How do we know this isn't just an administration ploy to distract conservative media from Benghazi and the Ayers connection?

I mean, if we've got an Alinsky-ite radical terrorist with Kenyan loyalties sabotaging our military from the inside, who cares if some academic doesn't think much of our electorate?

Keep your eyes on the prize, fellow travelers.


Good points.

campy said...

"A public choice economist would observe, however, that the nonsmoking people who hang around longer also cast more votes over the course of their lifetimes."

So? They'll be 100% reliable dem voters after they're dead.

Anglelyne said...

Oh! You'd have though I was proposing to murder everybody's mom and dad. I was right, of course, but what's the use of an argument that can't be used? It doesn't matter that it's true. Does it work? I had to learn to be more aware of my surroundings. I was in government. Smokers die, and, economically speaking, that's great. Ha ha. You can't say that!

Seriously, is there anybody out there with an IQ higher than room temperature who doesn't know that tobacco taxes are opportunistic revenue grabs?

Yeah, I know, dumb question. Apparently he's delivering that "oooh, naughty speaker of forbidden truths" frisson to a lot of people who should know better. But I guess I'm naïve enough to still be shocked at how perplexingly naïve our public discourse is.

buwaya puti said...

This was a very old argument.
I think I first saw it in Fortune magazine in the 70's, may have been Seligman.

Peter said...

I smell a government subsidy for dangerous sports.

Let's pay for BASE jumping!

Achilles said...

You know... If you want people to pay for the burdens they put on the health care system, you could just make it so people pay for their own health care.

Too simple?

C Hopkins said...

"Those who smoke may hurt themselves, but they will not drain the country's resources because so many of them will die before running up large Medicare bills."

I recall Mona Charen making a similar argument.

jimbino said...

If Gruber spoke out on immigration and ISIS, he would no doubt voice the other great unspoken truths:

We need young Latino workers and don't need all those expensive American babies.

Islam is inherently a violent religion that the world would do well to eradicate, root and branch.

President-Mom-Jeans said...

"I worry about getting too fixated on this Gruber character. How do we know this isn't just an administration ploy to distract conservative media from Benghazi and the Ayers connection?

I mean, if we've got an Alinsky-ite radical terrorist with Kenyan loyalties sabotaging our military from the inside, who cares if some academic doesn't think much of our electorate?

Keep your eyes on the prize, fellow travelers.

Good points."

Looks like the Madison Dough Boy has a new sock puppet he can agree with.

Anonymous said...

Are we qualified to be discussing this?

Where's PB&J to tell all of us how ignorant we are and that we need to leave these discussions to the educated in these fields?

Hugh Hewitt was talking on his radio show a few years back about how California is now in the business of trying to figure out how to increase it's number of smokers. They have become so reliant on their cigarette tax that they need more smokers to give them more money.

mccullough said...

The truth is often embarrassing.

Drago said...

eric: "Are we qualified to be discussing this?

Where's PB&J to tell all of us how ignorant we are and that we need to leave these discussions to the educated in these fields?"

The left find itself in a bit of a quandary over all this.

On the one hand moron faux-intellectuals like PB&J keep insisting that we listen to the "experts" and pay homage to the "data and facts and knowledge" those "experts" put forward.

On the other hand, we have one of those fab-u-lous experts in Gruber on video telling us all sorts of things over and over.

And the left is telling us none of what Gruber says in those videos is true.

This is the sort of "thinking" that the left requires of it's foot soldiers.

William said...

Gruber is an unlikely Bond villain. He seems earnest and more boyish than sinister in his braggadocio. He has a quality of lameiability--not quite affable enough to be amiable and not quite threatening enough to be disagreeable.....Perhaps if the tobacco industry had paid him enough he could have produced position papers to further explore the Utopian consequences on early death.

n.n said...

Gruber is the patron economist of Obamacare. Heathens are too stupid to share his faith. Obama is not amused.

JSD said...

Why is anyone surprised at all the Gruberisms. He’s not exactly the sophisticated Dos Equis guy. He’s the socially inept dweeb who owns eight parrots. He must have shit himself when all the progressives started using his shtick to justify raiding people’s health care dollars. Suddenly he became famous and was raking in millions. But it wasn’t for the wonky stuff he wrote, it was packaging toothpaste that was tested and approved by “Gruber, Super Smart Guy From MIT” blah blah blah.

Trashhauler said...

The military used the supposed cost of smoker healthcare as the reason for all sorts of harassment and impediments to smoking. What they totally ignored is the fact that almost all military people separate or retire by their early 40s - long before the effects of smoking affect their health.

Couple that with the fact that the BX/PX pays very little for cigarettes (they pay no tax), yet charges exactly the same as the outside economy, and the duplicity becomes even more clear. The exchange benefits from large amounts of profit selling something the military is officially against.