President Bush has caught a great deal of flak for vetoing the SCHIP program. He may very well hate poor people, but I don’t think this veto was driven by a hatred of wee Horatio Algers.

I can’t believe I’m going to say this, but:

George was right.

Please don’t take that as an endorsement of his asinine leadership. When Bush claimed that he was vetoing the bill because her was financially responsible, I laughed at his dishonesty. The drug hand-out to seniors was twenty times more expensive than the SCHIP. The real difference is that old people can vote and poor kids can’t.

However, the SCHIP program was too generous. Setting the bar at three times the poverty level was way to high. Supposedly a family of four with an income of 60 odd thousand dollars is within three multiples of the poverty level. As George Will points out, when the median income is 48 thousand, saying that the bill is to help poor people is silly.

The numbers projected for its cost were based on adding uninsured kids to the system. The real cost would have been much more. Our Congress, being economic retards, failed to understand that other people might react to incentives.

Economics, after all, is the study of human responses to incentives.

Let me ’splain.

I’m a public school teacher and a farmer. My wife prepares taxes during tax season.

We also pay $330 a month in health insurance through my school job. The school system kicks in about twice that, so the dollar value of my health insurance is close to $1000 a month. If we only got insurance for ourselves and left the kids off the bill, our contribution would drop to $140/month.

We would have qualified for SCHIP. I earn 50k as a teacher, 5k as a farmer, and my wife pulls in around 5k during tax season. We are withing three multiples of the poverty level for a family of five.

Mrs. Smallholder is a bit to the left of your humble Smallholder. She was enraged by Bush’s veto. I argued, respectfully of course, that old George was right (even a blind pig occasionally finds a chesnut). I pointed out that we would qualify. Mrs. Smallholder said that we wouldn’t join the system because we already have health coverage for the kids. Your humble son of the soil replied that we’d save over two thousand dollars a year - of course we would take it.

And here’s where I got in trouble. I linked children’s insurance to drought payments to farmers. Mrs. Smallholder, you see, has been after me to fill out paperwork to claim our share of “drought emergency” payments. Sweet Seasons Farm doesn’t have a drought emergency. I stock appropriately and don’t overgraze. I’ll be grazing deep into December. But the heavy hand of government subsidies pays you per cow owned. I find this abhorrent. The government is basically subsidizing overstocking and erosion and the term emergency is a joke. We have had an “emergency” four of the last five years. So I refuse to take the government dime.

Don’t think I’m too noble. It is easy to take a principled stand to turn down $280. If I owned a hundred cows, I would probably take a hit from Uncle Sam’s breast.

So I told Mrs. Smallholder that if she wanted me to take drought insurance then she would of course save $2000 by shifting the kids into socialized health care. Best of all, her mother agreed: “You pay your taxes. Take every dime to which you are entitled.”

Incentives.

It is all about incentives.

If you give away health insurance, many families will drop their expensive employer-provided plans and glom on to the government teat. Anyone who tells you otherwise doesn’t understand economics or human nature.