Rush Interviews Dr. Arthur Laffer

Summary

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Podcast Summary

Episode Overview

Podcast: Rush Limbaugh - Timeless Wisdom
Episode: Rush Interviews Dr. Arthur Laffer
Date: January 21, 2022

In this episode, Rush Limbaugh sits down with renowned economist Dr. Arthur Laffer to discuss his research findings on the Obama health care plan and broader economic issues. The conversation blends economic analysis, political critique, and personal insights, focusing on government spending, health care reform, and tax policy. Rush and Dr. Laffer delve into the motives and implications behind major policy decisions, highlighting the consequences for American society and the economy.

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Key Discussion Points and Insights

Introduction and Background

• Rush welcomes Dr. Laffer, recalling their past encounters and Laffer's indirect influence on Barack Obama.
  • Memorable moment: Rush reads from Obama’s "Dreams of My Father," jokingly naming Laffer a "minion" responsible for Reagan-era "dirty deeds" [00:16].
  • Rush: "You were a minion doing dirty deeds."
  • Laffer (laughing): “A minion. Minion. Oh, my gosh.” [00:49]

Analysis of the Obama Health Care Plan

• Cost and Coverage Flaws

  • Dr. Laffer summarizes findings:
    • Raising federal expenditures 5.6% and adding $285.6 billion to the deficit by 2019.
    • National health care costs would rise 8.9%.
    • Despite all this, 30 million Americans would remain uninsured. [01:04]

• Separation from Costs and Economic Consequences

  • Dr. Laffer explains how separating people from the financial impact of their choices leads to overspending and inefficiency.
    • Laffer: “One of the ways you control costs is making people responsible for their own money...and that’s exactly what this program does not do.” [01:43]
    • Cites P.J. O’Rourke: “If you think healthcare is expensive now, just wait till you see how much it costs when it's free.” [02:21]

• Motivations Behind Reform

  • Rush questions the underlying motivation for pushing such costly reforms, but Dr. Laffer stays focused on the economic analysis, highlighting concerns over cost, access, and quality of care. [03:06]

Potential for Positive Impact and Alternatives

• Is There Hope for Stopping It?

  • Dr. Laffer hopes his research offers information to improve or halt the reform, but laments the direction toward single-payer, predicting higher costs and lower quality.
    • Laffer: “I think this type of reform...for having a single payer...is really the wrong direction for America to go.” [03:59]

• Market-Based Reforms Suggested by Dr. Laffer

  • Expanding provider roles for nurses and technicians.
  • Implementing tort reform to lower malpractice costs.
  • Supporting Health Savings Accounts (HSAs).
  • Allowing interstate insurance purchases.
  • Preserving individual insurance ownership.
    • Laffer: “Making it the post office or the Department of Motor Vehicles or making doctors employees of government really doesn’t make it better. Honest.” [05:28]

The Economy and Tax Policy

• Tax Receipts at Historic Lows

  • Rush references plummeting tax receipts, linking the situation to the principles of the Laffer Curve.
  • Rush: “The principle that to a certain point, lowering marginal tax rates stimulates economic activity and generates more revenue...has been proven three times.” [06:10]

• The Laffer Curve and Its Critics

  • Laffer expresses frustration that successful economic principles are routinely dismissed or misunderstood:
    • Laffer: “Everyone knows that you can overcharge for something and collect less money...taxes are no different.” [06:40]
    • Criticizes the proposed 5.4% millionaire’s tax: “That’s about the dumbest idea I’ve ever heard. If you raise taxes...you're going to collect a lot less money.” [06:56]

Critique of Government Approach and Motivation

• Debating 'Stupidity' vs. Intentional Policy Choices

  • Rush challenges the idea that policymakers are simply “stupid,” arguing instead for deliberate, ideologically motivated policy meant to increase government control.
    • Rush: “Nobody is this stupid, not with the history of the world and the history of this country...It’s called get out of the way of the American people and incentivize them. This is the exact opposite.” [07:44]

• Academic Elitism and Disconnect from Reality

  • Laffer likens policymakers to “professors” detached from practical consequences:
    • Laffer: “They may be able to manipulate a Feynman diagram...but they don't know how to pay their lunch bill and they can't tie their shoes...they have no idea of the real world. They've never suffered the humility of their own ideas being wrong.” [08:24]

• Assessing Key Advisors

  • Laffer offers guarded praise for some Obama economic advisers, calling them smart but essentially captive to the party line (e.g., Christina Romer).
    • Laffer: “She's just sitting there now in a position where she has to mouth the party line, which is very sad.” [09:32]

• Comparison to Global Authoritarianism

  • Laffer and Rush compare failed economic governance to regimes in North Korea and Venezuela, suggesting that only power-hungry authoritarian leaders would knowingly persist in such policies.
    • Laffer: “Who benefits from these types of classic mistakes unless you're just a power hungry dictator. Well, I mean, would Kim Jong Il do this? I mean, seriously, he has done it.” [10:24]
  • Rush connects the motivation to redistributionist ideology:
    • Rush: “I think that the objective of Barack Obama is, via redistribution, to return the nation's wealth to its quote unquote rightful owners.” [11:05]

• Unintended Consequences for the Disadvantaged

  • Laffer: “You know, he's destroying it for the poor, for the minorities, for the disenfranchised.” [11:05]

• Government Control via Healthcare

  • Rush posits that health care reform is a means to control Americans:
    • Rush: “If your number one signature issue is health care...with it you'll be able to regulate every aspect of every American's life.” [11:21]
  • Laffer agrees, framing the administration’s error as “hubris.” [11:29]

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Notable Quotes & Memorable Moments

• On cost separation and spending:

  • Laffer: “One of the ways you control costs is making people responsible for their own money.” [01:43]

• On ‘free’ healthcare:

  • Quoting P.J. O’Rourke, Laffer: “If you think healthcare is expensive now, just wait till you see how much it costs when it's free.” [02:21]

• On tax increases:

  • Laffer: “If you raise taxes on those people, you're going to get a lot less people and they're going to figure ways around it and you're going to collect a lot less money.” [06:56]

• On professorial mindsets:

  • Laffer: “They may be able to manipulate a Feynman diagram...but they don't know how to pay their lunch bill and they can't tie their shoes.” [08:24]

• On redistribution:

  • Rush: “I think that the objective of Barack Obama is, via redistribution, to return the nation's wealth to its quote unquote rightful owners.” [11:05]

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Important Segment Timestamps

• [00:16] Rush links Laffer to Obama’s motivation to organize.
• [01:01] Laffer reviews health care plan's shortcomings.
• [01:43] Core critique: separating people from the cost of care.
• [03:26] Discussion on the historical roots and expansion of entitlements.
• [04:38] Laffer outlines alternative reforms.
• [06:10] Rush and Laffer discuss the Laffer Curve and tax policy.
• [08:24] Laffer compares policymakers to out-of-touch academics.
• [09:29] Assessment of Obama economic advisers.
• [10:24] Global comparisons and the redistribution theme.
• [11:21] Rush contends healthcare reform is about government control of life.

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Conclusion

This stimulating discussion offers a critical, economics-focused analysis of the Obama health care plan and broader Democratic economic policies. Dr. Laffer warns of increased costs, reduced quality, and the dangers of government overreach. Rush Limbaugh presses on the ideological motives behind such reforms while Laffer attributes much of the policy to academic disconnect from real-world consequences. Both emphasize the stakes for American prosperity and individual liberty, making this episode an essential listen for those interested in the intersection of economics, politics, and public policy.

Transcript

[A]

We welcome to our program Dr. Arthur Laffer, ladies and gentlemen, who has prepared a research paper on the Obama health care plan. I've admired your work, Dr. Laffer, ever since I first heard of you back in the late 70s, early 80s. It's great to have you here.

[B]

Well, thank you very much, Rush. It's a pleasure.

[A]

By the way, I want to share something with you. You may not know this, but you are partially responsible for Obama becoming a community organizer. From chapter seven, page 54 of his book, Dreams of My Father. There wasn't much detail to the idea of community organizer. I didn't know anybody making a living that way. When classmates in college asked me just what it was that a community organizer did, I couldn't answer them directly. Instead, I'd pronounce on the need for change. Change in the White House, where Reagan and his minions were carrying on their dirty deeds. You were a minion doing dirty deeds.

[B]

A minion. Minion. Oh, my gosh. I don't know if you remember, Rush, but I was on your show in studio in Sacramento, California, many, many years ago.

[A]

Oh, that's right. You know, you're exactly right.

[B]

You impressed me enormously then as well as today.

[A]

Well, I thank you very much for that. It's mutual. Then I have a summary here of your findings. Let me just run through a couple bullet points and then you can take it and expand on this. The current proposals being discussed in Washington, House and Senate would raise the total federal government expenditures by 5.6% more than otherwise. Adding $285.6 billion to the deficit in 2019 would increase national health care expenditures by an additional 8.9%. After all this, it would still leave 30 million Americans uninsured. Fill in blanks here for us.

[B]

Well, you know, it's a fairly straightforward one and without going through the specific numbers, although I'd be more than happy to do that. You know, whenever you separate people from their purchases they make. If you walked into a store and weren't told what anything would cost and you could pick out whatever you wanted free, you know, you're going to be squandrous. You're going to buy things that are way too expensive that you don't want. I mean, one of the ways you control costs is making people responsible for their own money for their own expenditures. And that is exactly what this program does not do. It makes the separation between the patient and the doctor and health services further and further removed and takes away all control of costs. And frankly, P.J. o' Rourke put it, he said, if you think healthcare is expensive now, just wait till you see how much it costs when it's free. And that's exactly what we're doing here.

[A]

You're an economist, accomplished economist, and you obviously did a lot of research here. One of my bugaboos is in a political sense that when somebody like an Obama or any Democrat proposes something massive like this, the premise, which is we have to have health care reform is automatically accepted. And we start analyzing the numbers and we say, well, that's too much here, it's too much there. Do you get into the motivation for people who are behind this monster? Does that interest you at all? Why?

[B]

Well, it interests me, but it's not in this paper. I mean, that's not our purpose. As you say. I'm an economist. I worry about the costs of the program, which are going to be a lot more than anyone else suggests. I'm worried about the access and the availability of the services of the health care and I'm worried about the quality of it. I mean, that's what economists really worry about in this program. It's a real problem.

[A]

Well, your first point about separating people from the cost of things is right on the money. It's, you know, it started 50 years ago with Medicaid and Medicare and it's just expanded and now people consider it a right that their employer has to provide for them. But Dr. Laffer, your research is going to add to what people have already learned on their own and by reading what's in the House bill, and they're outraged by it. Do you think that your research paper has an opportunity to stop this?

[B]

Well, I hope it provides the information and the fodder basically to really make it a lot better if not stopping it. I mean, I'd love to see it stopped. You know, our health care system has things that can improve it a lot, but it's not broken. It provides great health care for many people. And frankly, I think this type of reform, and especially in the direction I think these people are going to for having a single payer, I think it's really the wrong direction for America to go. I think it'll really add costs and provide a lower quality product.

[A]

Now, you have in your paper a lot of solutions that make healthcare more available, make it better without destroying what's already good in the system. What are some of those?

[B]

Well, you know, some of the obvious ones that I think are really big. I mean, I think healthcare providers who aren't doctors, allowing them to do things they're competent to do and not prohibiting them from doing it. Nurses and other healthcare technicians, shots and other things and prescribing low level medicines and that type of stuff. I think tort reform is another one rush. That really is a huge increase in cost. I mean the insurance costs a doctor has just for practicing medicine and how that feeds through in expenses. It's amazing all of these things. There are lots of things we can do to make our system better.

[A]

HSAs, Health Savings Accounts.

[B]

Yes. HSA is another good example.

[A]

There you go. Expressly struck, however, from this, both houses, the House and the Senate, the HSAs are going to be gone precisely because they do give power and control to the patient.

[B]

Sure. And it gives you the power of your own money. It's money that you put in there. I mean, you know, individual ownership of insurance policies, that's an obvious one. I mean the HSAs, as you say, are clear. You know, interstate purchasing of insurance, that's another one that can easily be done. There are lots of other ones that are in there that really will make the system a lot better. But making it the post office or the Department of Motor Vehicles or making doctors employees of government really doesn't make it better. Honest.

[A]

Let me move to the general economy if I can for just a second.

[B]

I'd love it.

[A]

We saw the news yesterday. Tax receipts, corporate and personal, near record lows since the 1930s.

[B]

Surprise, surprise.

[A]

Well, the personal question, the author of the Laffer Curve, the principle that to a certain point lowering marginal tax rates stimulates economic activity and generates more revenue to the treasury has been proven twice. Kennedy and Reagan. It has been. And, well, Bush, Bush, Bush 43. It has been proven three times. Does it frustrate you personally that something, you know, works that has been demonstrated to work to the world, constantly attacked and tried to be overthrown?

[B]

Yeah, but it's, it's silly because I mean everyone knows that you can overcharge for something and collect less money and everyone knows you can undercharge for it and collect less money. You know, there's a pricing mechanism there and taxes are no different. And just let's take the health care. You know, the President wanted to put a 5.4% surcharge on millionaires thinking he'd collect more money. That's about the dumbest idea I've ever heard. If you raise taxes on those people, you're going to get a lot less people and they're going to figure ways around it and you're going to collect a lot less money.

[A]

Dr. Laffer, this gets to a question, the point that really, really bugs me. You just said it's stupid. Anybody with any economic literacy has to conclude by now, and many knew before it was implemented that the whole stimulus theory was bound to fail. It had no chance.

[B]

It's never worked. Whenever you get something for nothing, check, because you're probably not getting.

[A]

I'm back to motivation. I'm back. This may be an area you might not want to get into, but I'm going to chance to question.

[B]

Sure, go ahead.

[A]

I don't believe they're stupid. I think it's being done purposely for a reason. Nobody is this stupid, not with the history of the world and the history of this country within 20 years as a guide. There's a blueprint, how to get an economy going again. It's called get out of the Way of the American people and Incentivize them. This is the exact opposite. We're losing 5 to 600,000 jobs every month. Consumer spending was up 0.4%, but incomes are down 1.3%. Nothing is working. There is no rescue. There is no recovery. And they're talking about doubling down on this. And I, for one, as someone who understands how wrong this is and dangerous, don't understand why it is being continued.

[B]

Well, I'm not really sure, but if you've ever been at a university with fellow professors, I mean, they may be able to manipulate a Feynman diagram or invert a matrix over a banach space, but they don't know how to pay their lunch bill and they can't tie their shoes. And what you see here are these types of mistakes are classic professorial mistakes, lawyer mistakes. They think that if you change a law Rush, all of a sudden things are working in that direction. It's not true. And they have no idea of the real world. They've never made a bad trade. They've never suffered the humility of their own ideas being wrong. Because in their classroom, their ideas are always right. And that's the trouble with this administration. They really don't have a clue.

[A]

Well, you're being generous.

[B]

I am. I like the people very much. I know a number of them very well. They're good friends.

[A]

Does Lauren Summers have a clue?

[B]

I don't think he has a clue. He may be the one that you're right on. By the way, the other one's Jared Bernstein. I know him very well. He's a great guy, an honest man. I think he's wrong, but he's a great guy. Christina Romer, she's Terrific. Her research before has been great.

[A]

Yeah, see, Christina Roemer is an acolyte of you.

[B]

Yeah. But she's great on that stuff. And she's just sitting there now in a position where she has to mouth the party line, which is very sad. I watched Austan Goolsbee defend Obama's firing of the Chairman of the board of gm. Hello? That's not what a President United States is supposed to do, Rush. But that's what they were doing and the economist was justifying. Well, we're a big shareholder now and we. Oh my goodness. It's crazy, isn't it?

[A]

It is. Well, it's crazy and dangerous because you know when you start attaching motive to this grant that you. That they're professorial and academically stupid, ignorant. But something about this is so bad and so wrong and when you look at something that this bad, there are people gonna benefit from it. And when you look at who, then you say, okay, how And.

[B]

But who benefits from this? I see. I don't see who benefits from these types of classic mistakes unless you're just a power hungry dictator. Well, I mean, would Kim Jong Il do this? I mean, seriously, he has done it.

[A]

His people are eating dogs. They're starving to death. They're doing it in Venezuela. It's the history of the world.

[B]

Chavez is a pretty bad guy. There are not many worse than Chavez.

[A]

The history of the world is this. That's why the United States is such an exception. If you have a guy who for whatever reason has a chip on his shoulder about how immoral and unjust this country was. I'll tell you what I think, put it in economic terms. I think that the objective of Barack Obama is, via redistribution, to return the nation's wealth to its quote unquote rightful owners.

[B]

But you know, he's destroying it for the poor, for the minorities, for the disenfranchised.

[A]

Yeah, but he's.

[B]

No, no one's doing better. With 9.5, 10% unemployment rate and the participation rates, the average hours, the average wages, the quality of jobs, it's declining like a submarine.

[A]

Well, let me posit a theory. If your number one signature issue is health care and you want it because with it you'll be able to regulate every aspect of every American's life.

[B]

That's true.

[A]

What better event could you have than massive unemployment and people losing their health insurance, clamoring for more, clamoring for their health because they're scared to death they're going to get sick. I think there's a lot of fraud and deceit that accompanies the professorial stupidity.

[B]

Well, there is a lot of that. It's hubris. I mean, is what it really is. And their inability to admit they're wrong because, frankly, they don't have to bear the consequences of their own hubris and their own mistakes. That's the problem.

[A]

That's a good point. Dr. Laffer, this is great to talk to you again.

[B]

Oh, Rush, it's wonderful talking with you. You're doing a great job. Thank you very much.

[A]

You bet. Have you're going to present this paper at 2 o' clock this afternoon, right?

[B]

I sure am.

[A]

All right, well, we'll have. Where are you doing that? In New York?

[B]

I'm in New York, yes.

[A]

Okay, good. Well, good luck and thanks very much for your time.

[B]

Thank you very much, Rush.

[A]

Dr. Arthur Laffer.