One year ago, John Goodman predicted that with a virtual think tank he and his colleagues could be significantly more productive – especially in the areas of Health, Taxes and Entitlements — while spending only one-fifth as much money. Was he right? You decide.

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Capitol Hill

It has been almost six years since the passage of ObamaCare and in all that time the opponents have still not agreed on an alternative. This past year, the Goodman Institute set out to help legislators find one.

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As we entered the year most Republican proposals were exclusively focused on the 10 million people getting insurance in the ObamaCare exchanges. They mostly ignored the 150 million people who get health insurance at work. Common think tank proposals were not much better.

 

At the request of Sen. Bill Cassidy, John Goodman helped formulate a health reform bill that not only replaces ObamaCare, but also reforms the entire health care system — by minimizing the role of government and allowing decisions to be made by individual choice and competition in the market place. The Cassidy bill has eight Senate cosponsors. At the request of House Rules Committee Chairman Pete Sessions, Goodman helped create a companion bill on the House side. We believe this will become the House leadership bill in 2016.

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The congressional Legislative Counsel has taken many hours to write these bills because they have so many novel elements – reflecting the first ever attempt to create a genuinely free market for health care and health insurance.

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With the help of our Capitol Hill Representative, Charles Sauer, we have been actively engaged with other think tanks and activist groups to try to reach consensus on health reform. This included an end-of year Capitol Hill briefing conducted by John Goodman and Brookings Institution scholar Mark McClellan, who is former Commissioner of the FDA and former director of CMS – which runs Medicare and Medicaid.

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For the coming year we are preparing for a series of committee hearings on the victims of ObamaCare – to highlight problems that need to be solved. Anyone who seriously wants to replace or reform ObamaCare needs to be able to point to problems real people are having and explain.

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The Election

Although we do not promote the election of candidates, we freely respond to requests for information when asked, including most of the Republican presidential campaigns. Most of the candidate’s health reform plans are not very well developed, but almost all of them reflect the idea of a heath tax credit (similar to the child credit), which was first proposed by John Goodman and Wharton School economist Mark Pauly 20 years ago in Health Affairs.

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Our colleague, Boston University economist Laurence Kotlikoff, has handed all the candidates (Democrat and Republican) the best idea we have seen yet on how to raise the income of middle class families: reduce corporate taxes. Kotlikoff and his colleagues have built a first-of-its-kind model of international capital flows and a first-of-its kind model of the US corporate income tax. As he explained in The New York Times, it is workers, not shareholders, who bear the burden of corporate taxes and they will be the biggest beneficiaries of tax reform.

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The idea of taxing consumption rather than income is increasingly popular among the candidates. Kotlikoff and Goodman have shown that in their pure form the flat tax, a national sales tax and a VAT tax are all basically consumption taxes. If implemented properly, any one of these approaches is more progressive than the current system.

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We are also delighted to see some of the candidates adopting proposals made by John Goodman and Wall Street Journal editorial writer Kimberley Strassel in their book, Leaving Women Behind. Had Mitt Romney done the same, he probably could have cut his gender gap in half.

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Entitlement Reform

Thomas Saving, Andrew Rettenmaier and Liqun Liu have produced a first-of-its kind calculation of the value of Social Security to young people in light of the political uncertainty about its future. They conclude that a 21-year-old earning the average wage with a moderate degree of risk averseness would be better off if he could completely opt out of the system by paying a 5.5% payroll tax for the remainder of his work life.

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That means he would forgo all future Social Security benefits and avoid all future Social Security taxes, including the current 12.4% tax he and his employer are now paying. The exit fee he and others would pay would be enough to keep the system solvent and with the payroll tax savings the worker could invest and have better privately financed benefits than under Social Security. Privatization, in other words can be win-win. There do not have to be any losers.

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Could other entitlement programs be reformed in similar ways? That’s the premise of a new book Dr. Goodman has produced for the Independent Institute. It draws on the work of many colleagues he has worked with through the years and will be published sometime next year.

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While you wait, a good read has been produced by Goodman Institute Senior Fellow, Peter Ferrara. Grover Norquist, Steve Moore and John Goodman reviewed Ferarra’s new book, Power to the People , at a Washington, DC briefing this fall.

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More than 1,200 economists, including top economists from every leading economics department in the country and 17 Nobel Laureates, have publicly endorsed Laurence Kotlikoff’s proposal (The INFORM ACT) to require the federal government to regularly account for the unfunded liabilities in our entitlement programs. Latest estimate: the federal government’s unfunded liability is $199 trillion!

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Kotlikoff, by the way, continues to be the go to person for the financial press on Social Security. He told The New York Times that Social Security is “incredibly outdated, sexist and unfair across and within generations,” adding, “Widows can pay into the system over decades, yet get not a penny based on all the money they paid in Social Security taxes.” His book on this subject is an eye opener.

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Tax Reform

Good News: Kotlikoff’s general tax model is up and running. He can now estimate the impact of major tax and budget changes on the federal budget, on the economy and on the personal finances of families at different income levels. (See his comments in the New York Times on the Jeb Bush economic plan.)

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This model is far more sophisticated than any other model anywhere. It should prove invaluable as a policy guide.

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Here is one example of what should be an easy policy change – one that would probably pay for itself. Gov. Pete du Pont and John Goodman introduced five tax cut ideas to Newt Gingrich 21 years ago. Those became the core tax proposals in the Contract with America. One of them, eliminating the Social Security earnings test, has been extremely important to retirees.

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Yet as Prof. Kotlikoff explains in a New York Times editorial, the earnings test still exists for early retirees. Between age 62 and age 65, seniors lose 50 percent in benefits for every dollar of wages above a certain level. That’s a whopping 50 percent marginal tax rate – on top of income and payroll taxes. Between age 65 and the normal retirement age, the government takes 33 percent.

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Health Reform

After thinking about the problem for 30 years, Goodman believes he has found a way to completely re-formulate health economics. He laid out the vision in a recent Health Affairs post and over the next couple of months he will complete a formal (mathematical) model. Nothing like this has ever been done before.

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In the meantime, we continue to try to engage the general public on the need to repeal and replace ObamaCare through books, studies, opinion pieces and radio and TV interviews.

• Goodman’s book,Living with ObamaCare: A Consumer’s Guide to the Affordable Care Act continues to sell at Hudson Bookstores in airports around the country.

• His book, A Better Choice: Healthcare Solutions for America was published this year by the Independent Institute.

• His bookPriceless: Curing the Healthcare Crisisis going into its third printing.

• A summary ofA Better Choice(the six worst problems in ObamaCare) is at the Health Affairs blog.

• Many of the ideas in all three books are developed and expanded in his regular columns at Forbes and Town Hall and in editorials he also writes for theWall Street Journaland other publications.

 

The Economy

Scott Sumner has been described as the intellectual heir to Milton Friedman with respect to monetary policy and his papers and blog posts are frequently discussed in John Goodman’s editorials at Forbes and Town Hall. His new book The Midas Paradox is being reviewed for the next issue of the NABE Journal by John Goodman and Thomas Saving.

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The book is a history of the Great Depression – 30 years in the writing and based on never before published data. Its conclusions are very relevant to today’s public policy debates. For example it appears that Franklin Roosevelt’s misguided attempts to artificially raise wages made the Depression last three times longer than would have been the case. Thomas Saving also has a new book out, Live Free and Prosper. It shows that in every voluntary exchange, both parties to the exchange are made better off from their own point of view and the degree to which they are better off is the social surplus generated by the exchange. Almost all forms of government regulation are attempts to seize this surplus, either for the benefit of the rulers or for the benefit of a special interest group.

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The movie, The Big Short, is worth seeing. But read John Goodman’s “Ten Lessons” about the movie first.

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Communications

In 2015, John Goodman posted 116 editorials at Forbes, generating 856,233 page views. He wrote 41 editorials for Town Hall, generating 14,712 social media shares.

 

Over the past two years, Goodman has appeared more than a dozen times on Fox News’ “Special Report with Bret Baier.” He has been interviewed by Mike Huckabee, John Stossel, Neil Cavuto, Stuart Varney, Lou Dobbs, Maria Bartiromo and on Fox and Friends. Many of these television appearances can be viewed at the Goodman Institute Video Library.

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His radio appearances include the “Sean Hannity Radio Show,” the “Kudlow Report,” and the “Geraldo Rivera Radio Show.”

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He has written more than three dozen articles for Psychology Today, as well as editorials for the Wall Street Journal, the Washington Times, National Review, USA Today, The Hill, the San Francisco Chronicle and many other publications. Laurence Kotlikoff appeared recently on PBS News Hour and he has also appeared on TV interviews on TheStreetTV, Three Cents (MSNBC) and in an interview by Steve Forbes. His book, Get What’s Yours: The Secrets to Maxing Out Your Social Security was on the New York Times Best Seller list and reached the top of the list at Amazon. He speaks frequently to business, professional and academic groups.

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Thomas Saving is frequently sought after on Capitol Hill and by news reporters. His most recent editorial in the Wall Street Journal with Phil Gramm took a critical look at the Federal Reserve System.

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Gerald Musgrave is Book Review Editor for the NABE (National Association of Business Economists) Journal, where he frequently publishes reviews of books written by Goodman Institute experts, including books by June O’Neil, Eamonn Butler and Scott Sumner. John Goodman is a frequent reviewer.

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Linda Gorman writes for the National Bureau of Economic Research, translating technical economics papers into lay language for the general public, including papers by such Goodman Institute experts as Mark Pauly and Laurence Kotlikoff.

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See the full list of Goodman Institute experts. Almost all of them maintain a busy schedule of speaking and writing — sharing their ideas with academic audiences and with the general public.

 

2015 Financials (unaudited)

Income Statement:

Contributions: $855,890

Expenses: $615,270

Net: $240,620

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Balance Sheet:

Cash on hand: $223,897

Equipment: $1,097

IRA Estate Commitment; $5,000,000

Total assets: $5,225,904

Accounts Payable: $30,430

Net: $5,184,474