The announcement this week that the feds have frozen funding for the much-maligned SBINet project, the Boeing-managed program launched in 2005, shouldn’t come as much of a surprise. Costs have already doubled beyond what was originally anticipated, and it still isn’t working.

So far, only a 28-mile prototype of the virtual fence in Arizona has been delivered to the government, and not without snags. Previous GAO reports described cameras with limited ranges that failed in the desert heat and sensors that couldn’t identify nonthreatening movements caused by animals or the wind… Christopher Bronk, a fellow at the James A. Baker III Institute for Public Policy at Rice University who has followed the virtual fence, said a key problem was that the project’s installations were too prominent, with highly visible stationary towers and bulky propane tanks that would-be crossers can spot from far away and therefore avoid.

This is a classic example of a good idea being completely mucked up by government restriction, contractors over-promising on delivering technology, and federal COTS policies. It’s time to start over from scratch.

I talked today with a friend who works in this field personally, and he cited a series of fundamental problems plaguing the Boeing approach to this project. This report from last fall details some of the issues: a basic inability of the technology being used to distinguish between coyote, tumble weed, and homo sapien, vulnerability to wind and rain, obvious rigs which are easy for crossers to avoid, etc. The commercial off the shelf approach may appeal to congressmen and DHS Sec. Janet Napolitano, and it’s the sort of thing contractors are good about promising. But the effect in this case has been a project with dozens of different technologies, from different companies, all of which need to talk to each other.

The upshot: after more than $800 million, Boeing’s been able to cover fewer than 30 miles out of roughly 2,000. The problem isn’t so much the concept as the application:

Still, a video presented by Rep. Michael McCaul (R-Texas) of SBInet’s video capabilities seemed to impress everyone. Recorded in February, the video shows six trespassers into the United States effectively tracked and stopped by US Border Patrol agents. Using the system, agents in a Tucson command and control center where able to guide agents in the field and inform them of possible threats before they were physically encountered.

The idea of a virtual fence isn’t a bad one. Setting aside the social ramifications of the borderland policies — I’ll be writing next week about an interview with Michael Lind about his suggestions for the president’s immigration reforms — a virtual fence could prove to be more effective and efficient than a real-life one in the long term. But it requires a dedication to a higher level of product refinement, comprehensive testing, and use of higher grade products that work together efficiently — and those things will all cost more money, not less. And thus far, the millions in taxpayer dollars haven’t achieved results much better or more consistent than border minutemen whose personal setups from Fry’s Electronics and eBay.

Follow Ben Domenech on Twitter.

At the very least, it appears to be worth a shot. As mentioned, unlike the case in Marshall Field, an actual Constitutional provision–Art. I, Sec. 7–is implicated. As Jonathan Adler notes, the D.C. Circuit Court of Appeals may be willing to analogize any challenge to the one that was issued in Public Citizen, thus causing it to rule the same way that it did in Public Citizen. But since the Supreme Court may well think differently, and since there is ample cause for it to think differently, a Constitutional challenge to the use of the “deem and pass” rule should very much be found to be on the table.

Of course, if we could just have a straight up-or-down vote in the House on health care reform, perhaps we could avoid any litigation altogether. But that apparently is not going to be a luxury we can enjoy, now is it?

So, there may be no vote on the health care package this weekend because House Democrats suddenly decided that they want to wait for the CBO score? I don’t know about anyone else, but I read this as meaning that the House Democratic leadership believes–the pledges of “yes” votes from the likes of Dennis Kucinich notwithstanding–that they don’t have the votes.

Let’s turn over the mike to Yossi Klein Halevi:

Astonishingly, Obama is repeating the key tactical mistake of his failed efforts to restart Middle East peace talks over the last year. Though Obama’s insistence on a settlement freeze to help restart negotiations was legitimate, he went a step too far by including building in East Jerusalem. Every Israeli government over the last four decades has built in the Jewish neighborhoods of East Jerusalem; no government, let alone one headed by the Likud, could possibly agree to a freeze there. Obama made resumption of negotiations hostage to a demand that could not be met. The result was that Palestinian leaders were forced to adjust their demands accordingly.

Obama is directly responsible for one of the most absurd turns in the history of Middle East negotiations. Though Palestinian leaders negotiated with Israeli governments that built extensively in the West Bank, they now refused to sit down with the first Israeli government to actually agree to a suspension of building. Obama’s demand for a building freeze in Jerusalem led to a freeze in negotiations.

Finally, after intensive efforts, the administration produced the pathetic achievement of “proximity talks”—setting Palestinian-Israeli negotiations back a generation, to the time when Palestinian leaders refused to sit at the same table with Israelis.

That Obama could be guilty of such amateurishness was perhaps forgivable because he was, after all, an amateur. But he has now taken his failed policy and intensified it. By demanding that Israel stop building in Ramat Shlomo and elsewhere in East Jerusalem—and placing that demand at the center of American-Israeli relations—he’s ensured that the Palestinians won’t show up even to proximity talks. This is no longer amateurishness; it is pique disguised as policy.

Who’s briefing the President? Or, more accurately perhaps, what’s the President’s problem?

Anyone really all that surprised to read this?

Roughly five minutes into Shutter Island, I knew more or less how it would end. For a film that invests another two hours and fifteen minutes in building to an ostensibly shocking twist ending, this is not a particularly good thing. All the more so when the film in question is the work of someone who many cinephiles (and I count myself one of them) consider to be the world’s greatest living filmmaker. Shutter Island is most certainly not a bad film, but from the likes of Martin Scorsese, it cannot be considered anything other than a disappointment.

One could argue, of course, that we should simply be grateful to see another Scorsese film at all. In an era when most of his contemporaries from the 1970s New Hollywood era have either burned out (William Friedkin, Peter Bogdonavich), died (Robert Altman), or retreated into comfortable mediocrity (Steven Spielberg, George Lucas), the fact that Scorsese is still making films, and still making them with something like the uncompromising intensity of his youth, often seems like reason enough to be indulgent.

Indeed, now that he has been canonized, it is easy to forget that twenty years ago Scorsese seemed to be finished as a major filmmaker. Until his 1990 comeback with Goodfellas, a film so ferocious that it almost leaps off the screen and attacks the viewer, Scorsese had meandered through much of the previous decade, apparently lost in a Hollywood that had turned to the blockbuster opening weekend and the high concept event picture as the answer to its post-television malaise. In a cinema that had come to be defined by films like Star Wars, Scorsese’s raw, violent, low-tech realist style and his desperate, tortured, sometimes psychotic characters appeared to have no place.

Post-Goodfellas, however, having not only survived but established himself as a veritable living legend, Scorsese has come to represent a great deal more than his individual films. He is a symbol – especially to film critics – of a type of filmmaking which, to a great extent, no longer exists today, although a great many of use sorely wish it did. This may go some way toward explaining the unique attitude of most film critics towards his recent work, which has largely been one of gentle indulgence. For the most part, they have been kind, while quietly noting that Scorsese’s later films are not quite of the same iconic quality as Mean Streets, Raging Bull, Taxi Driver, and even Goodfellas. Even Scorsese’s best director Oscar for The Departed was greeted with a certain temperance, with many noting that it was more of a lifetime achievement award than anything else.

To a great extent this is an unfortunate state of affairs, because it both underrates much of Scorsese’s recent work and ignores his occasional failures. There is no doubt that films such as The Age of Innocence, Kundun, and Bringing Out the Dead, while they have their moments, pale next to the director’s previous masterpieces. At the same time, however, the last two decades have produced films like Casino, Gangs of New York, and The Departed, which are not merely great films, but often display a side of Scorsese that does not appear in his more celebrated works, deepening his legacy and complicating the conventional assessment of his oeuvre. Most notably, while Scorsese has become more “mainstream” than he was in the past, his films have ironically become darker and bleaker than they were before. For all their brutality and realism, films like Mean Streets and Raging Bull nonetheless ended with a sense of redemption for their protagonists; perhaps a bitter and difficult one, but redemption nonetheless. Scorsese’s more recent films, like Gangs of New York, The Aviator, The Departed, Casino, and even Goodfellas, end with their characters either dead or trapped in a metaphoric limbo from which, it is hinted, they may never emerge.

The understandable but unfortunate decision to treat Scorsese as an icon rather than a developing filmmaker has not only led critics to ignore some of his later films’ virtues; it has also led them to ignore their flaws. This seems particularly glaring in regard to Shutter Island, toward which most critics have reacted in the typical fashion, which is something along the lines of “Its great, but not quite as great as…” before proceeding to cite one of the director’s 1970s triumphs. The truth, however, is that even viewed in the context of Scorsese’s work in the 1990s and 2000s, Shutter Island is a major failure.

The film is, as everyone likely knows by now, a thriller; but it is not a particularly good one. The plot, such as it is, is remarkably cliched: Sometime in the 1950s, federal marshals Teddy Daniels (Leonardo DiCaprio) and his partner Chuck Aule (Mark Ruffalo) are ferried to an isolated island off of Massachusetts which houses a state of the art prison for the criminally insane. A patient has inexplicably gone missing, and Daniels and Aule are charged with finding her. There is no way off the island, a hurricane is bearing down, and as the investigation proceeds, it becomes clear that everything – naturally – is not what it seems. Daniels, who in the finest Scorsese tradition is tortured by traumatic events in his past, quickly becomes convinced that a dark conspiracy is at work. To recount any more of the plot would ruin the film for anyone who has not seen it, but suffice it to say that most of the film’s surprisingly long running time is taken up by red herrings, false trails, and the kind of powerhouse set pieces that Scorsese can direct in his sleep. By the time the twist ending – which, as noted above, is obvious almost from the beginning – rolls around, one has the depressing sensation of having watched a master trying his best to keep us all entertained but, in the end, is just going through the motions.

To be fair, this is not entirely Scorsese’s fault. The film’s story is, to put it bluntly, depressingly generic, and no amount of cinematic pyrotechnics can obscure the fact that, as talented as Scorsese undoubtedly is with the camera, we have seen this story done – usually better – a thousand times before. The film’s acting is equally problematic. While there are some good performances, especially from Ben Kingsley as the prison’s disconcertingly mild-mannered administrator – and it is always a treat to see Max Von Sydow in anything – Leonardo DiCaprio is simply not capable of the kind of emotional intensity and range required by the film’s central character. While his collaboration has been a boon to Scorsese’s recent career, allowing the director to command budgets which he could not acquire otherwise, DiCaprio lacks the preternatural talent displayed by the likes of Robert DeNiro and Daniel Day-Lewis, whose work with Scorsese is justifiably legendary. One cannot imagine DiCaprio giving the kind of titanic performance DeNiro delivered in Raging Bull, and in Gangs of New York he was simply dwarfed by the towering presence of Day-Lewis. Shutter Island is, unfortunately, no exception to this, and while DiCaprio does his best to appear sweaty, tortured, traumatized, and driven, his performance is ultimately a shallow one, never shedding the pretty-boy immaturity which has haunted DiCaprio’s work from the beginning.

Nonetheless, this is a Martin Scorsese picture, and any director as obsessively fixated on his work as he reportedly is must ultimately bear the blame for his failures. In some ways, however, this failure is not surprising. Despite his undeniable brilliance, Scorsese is not particularly good at making thrillers or at making genre films in general. His greatest talent has always been for human drama, and once hemmed in by the rules and regs of a particular genre, his talent often seems to become mechanical and soulless. Even his celebrated gangster films are more about character and sociological observation than adhering to the formal mores of the genre. His one previous attempt at a thriller, 1991’s Cape Fear, is an enjoyable but forgettable potboiler, carried mostly by Robert DeNiro’s charismatic central performance.

Shutter Island is even more obviously a case of Scorsese being out of his natural element. While the visuals are flawless and the director seems to have packed the film with homages to every thriller ever made, this ultimately leaves the viewer unmoved. While watching it, one cannot help feeling that we have seen this film before – and better – at the hands of Mario Bava, Alfred Hitchcock, Roman Polanski, Roger Corman, and no doubt many others older and more obscure who Scorsese has excavated from his reportedly encyclopedic knowledge of cinema. But homage is not by definition interesting, and ultimately Shutter Island feels like a shallow and pointless exercise; the work of a slumming genius who is capable, and must know he is capable, of a great deal more.

Follow Benjamin Kerstein on Twitter.

When we consider the nature of the problems to be solved in our day, it seems–to many of us, at least–that these un-English arrivals are correct, that intelligence is the virtue we particularly need. Courage and steadfastness we cannot do without, so long as two men dwell on the earth; but it is time to discriminate in our praise of these virtues. If you want to get out of prison, what you need is the key to the lock. If you cannot get that, have courage and steadfastness. Perhaps the modern world has got into a kind of prison, and what is needed is the key to the lock. If none of the old virtues exactly fits, why should it seem ignoble to admit it? England for centuries has got on better by sheer character than some other nations by sheer intelligence, but there is after all a relation between the kind of problem and the means we should select to solve it. Not all problems are solved by willpower. When England overthrew Bonaparte, it was not his intelligence she overthrew; the contest involved other things besides intelligence, and she wore him out in the matter of physical endurance. The enemy that comes to her as a visible host or armada she can still close with and throttle; but when the foe arrives as an arrow that flieth by night, what avail the old sinews, the old stoutness of heart! We Americans face the same problems, and are too much inclined to oppose to them similar obsolete armor. We make a moral issue of an economic or social question, because it seems ignoble to admit it is simply a question for intelligence. Like the medicine-man, we use oratory and invoke our hereditary divinities, when the patient needs only a little quiet, or permission to get out of bed. We applaud those leaders who warm to their work–who, when they cannot open a door, threaten to kick it in. In the philosopher’s words, we curse the obstacles of life as though they were devils. But they are not devils. They are obstacles.

–John Erskine, The Moral Obligation To Be Intelligent.

If Prime Minister Benjamin Netanyahu backs off of building new housing developments in East Jerusalem, his government will fall.

Because the Prime Minister doesn’t want to have his government fall, he won’t back off in response to the Obama Administration’s public denigration efforts.

If the Obama Administration wants to convince the Prime Minister to back off, they will have to use private diplomacy, and throw a sweetener into the deal in order to make it easier for the Prime Minister’s government to survive.

Eric Cantor seems to know this, which is why his advice to the White House to back off in public ought to be listened to. Whether it actually will be listened to is an open question; as the Obama Administration has made clear in a little over a year in office, its actual ability to do foreign policy right is not nearly as great as was advertised during the 2008 Presidential campaign.

Law professor and former Tenth Circuit judge Michael McConnell puts the issue succinctly on Speaker Pelosi’s proposed “deem and pass” scheme. I don’t have a WSJ subscription, but fortunately, Michael Cannon does, and he has excerpted the pertinent analysis:

Under Article I, Section 7, passage of one bill cannot be deemed to be enactment of another.

The Slaughter solution attempts to allow the House to pass the Senate bill, plus a bill amending it, with a single vote. The senators would then vote only on the amendatory bill. But this means that no single bill will have passed both houses in the same form. As the Supreme Court wrote in Clinton v. City of New York (1998), a bill containing the “exact text” must be approved by one house; the other house must approve “precisely the same text.”

And because it is apparently necessary, Cannon helpfully refers us to this:

Really, it is embarrassing that Congress has been reduced to needing Schoolhouse Rock lessons.

Michael Franc, meanwhile, points out that there is a potential remedy available to House Republicans; the use of a privileged motion that would preempt debate on the health care reform bill, and be considered immediately by the House. One hopes that someone on Capitol Hill is listening.

I mean, the issue is clear-cut:

Representative Chris Van Hollen, Democrat of Maryland and assistant to the speaker, said Republicans were trying to deceive the public about the legislation that Democrats were working on.

“They want to send a signal to the American people that the product that is going to come out of the House is the Senate bill, but the fact of the matter is we are amending the Senate bill,” Mr. Van Hollen said. “We are going to get rid of the Nebraska deal. We are going to get rid of other provisions in the Senate bill that shouldn’t have been there.”

If the House gets to amend the Senate bill, then the Senate gets another crack at the bill. Art. I, Sec. 7 of the Constitution demands no less. If Democrats don’t want the Senate to get another crack at the bill, then they cannot amend it, and must pass the Senate bill word for word, comma for comma, period for period, colon for colon, and semicolon for semicolon.

This isn’t difficult to understand, of course. But policy preferences on the part of Congressional Democrats–and for that matter, on the part of the Obama Administration–have trumped Constitutional requirements. That’s pretty shocking, and not a little embarrassing, given our self-styled image as a nation of law, and our reverence for the Constitution as the supreme law of the land.

For all the talk about China powering a global recovery on a flood of government-driven investment, Chinese authorities have been steadily preparing the country for some tightening in bank lending and monetary conditions. They overstimulated, and they have to get this inflation under control. People are even starting to mutter darkly about a Chinese financial crisis caused by terrible credit quality among the (rampantly corrupt) local government authorities who borrow heavily against land to finance investment, using the central government’s credit.

Against this backdrop, we had one of the mainstream media’s patented story clusters this past week, complete with heavily-publicized statements by favored pundits, innocently timed to coincide with statements by policymakers. Of course, none of this ever happens by design, since we all know the media are objective and only report what they see. PR has nothing to do with it.

It started with Paul Krugman, a man who wields more power outside the Administration (and is able to indulge his weakness for sniping at those in power) than he could from inside. Hearstlike, he just declared war on China’s currency undervaluation from his perch in Princeton, calling for up to a 25% tariff on Chinese imports until they learn their lesson and revalue their money.

Senator Chuck Schumer has been wailing about something like this for years. He and Lindsey Graham would love to put on a little protectionism. The labor unions which underwrite the Democratic Party are all over this too. And a variety of other comments appeared after Krugman’s broadside about the fact that we have the Chinese over a barrel, rather than the other way around, and it’s time to start acting like it.

And there’s a very great deal to that. A lot of people have become fearful that economic power has shifted too far to the East. This is a dangerous over-reading of the true situation. The US, especially with our current indecisive and divided government, often seems paralyzed with fear. But with one fourth the population, we still have an economy three times bigger than China’s, and we’re still their most important market.

So why shouldn’t we start a trade war against them? Because they’re not stupid. They know very well that they have to re-value renminbi, and they’ve carefully “socialized” the idea of perhaps a rise to about 6.50 against the dollar, from the current 6.83.

But the one thing the Chinese authorities simply can not do is appear to be bowing to pressure from the US on the issue. You can’t have missed the anger from Premier Wen Jiabao this weekend, in very unusual remarks which pointedly admonished the US and the rest of the world for criticizing his currency policy. This happened just as Krugman was sensing a soft target and deciding to take his shot.

Wen was forced to say (mendaciously) that China’s currency isn’t undervalued at all, and that policy there was ticking along just fine. Rather, he said, it’s the US that is screwing everything up with huge fiscal deficits that threaten to reduce the value of China’s foreign-exchange reserves. And he went out of his way to call Obama out for snubbing him at the Copenhagen climate summit last December. Everyone else at the time felt that Wen chapped Obama by sending a low-level official to negotiate with him.

As unusual as it was for Wen to show outward anger, he must have been boiling mad inside. The Chinese leadership are insecure in their position. By having such a poor understanding of the internal dynamics of Chinese power, we’ve set back their currency revaluation for maybe 60 or 90 days. Now it’s time for people like Paul Krugman, Chuck Schumer, the editorial page of the New York Times, the Congresscritters howling for Geithner to find that China is a “currency manipulator,” and Barack Obama to shut their pieholes.

China will revalue, but only if their leadership can portray the move as having been determined by themselves, without any foreign pressure. By trying to force the issue, we’ve pushed it back instead.

Dan Twining rips the Administration both for its Asia policy, and for misrepresenting the Asia policy of the Bush Administration. The Obama Administration’s Potemkin pretensions to concern and interest in Asia policy ought to be exposed by more pundits and observers. Here’s hoping that Twining started a trend.

The tea party activists took to DC today in a big way, in person and on the phone. And a lot of their frustration seems to be tied to the so-called “Slaughter strategy,” which Speaker Nancy Pelosi (D-CA) says is great “because people don’t have to vote on the Senate bill,” which the Washington Post calls “dodgy,” and which makes Robert Gibbs duck. The whole thing has served to put Democrats on the defensive for adopting the parliamentary strategy, which has been used on occasion in the past, but never for a sweeping social reform of this magnitude, which will effect so many Americans.

The interesting part is that in reaction to opposition to the approach from within his own party, Majority Leader Steny Hoyer (D-MD) acknowledges this is a tactic that is only taking place because they don’t have the votes for the Senate bill as an “up or down” matter. But that’s been a talking point for the bill’s supporters since day one, and the American people clearly understand it. Does Hoyer really believe they won’t respond?

Today I talked to Maureen Martin, senior fellow for legal affairs with the Heartland Institute, on the latest podcast from Health Care News. We talk about whether the proposed Slaughter strategy is constitutional, the individual mandate, the Health Care Freedom Acts, and other topics — including whether the Supreme Court will rule on these issues, and when. We make reference to this column in the Wall Street Journal, which hashes out the Article I issues involved. You can listen to it here.

Closed Door Negotiations to the End

Michael Cannon at Cato has some questions for thoughtful Obamacare supporters, including: “What does it say that pharmaceutical-industry lobbyists are meeting with House Democrats to write this legislation behind closed doors? Or that the pharmaceutical industry is preparing to spend millions of dollars on advertisements in support of the legislation?”

This should be of concern to more than just reasonable Obamacare supporters. In particular, as Politico notes, it should concern people that:

Drug makers were asked to sign off on multiple solutions, giving Democrats backup options should any of the fixes run into problems passing muster with the Senate parliamentarian, who, because of procedural rules, essentially has the final say over what’s included in the legislative package.

This is jarring stuff — industry getting to sign off on public policy behind closed doors, policies the American people haven’t even been able to see yet? Talk about a disturbing lack of transparency, but that’s par for the course.

Don’t Worry, It’s Not Like Massachusetts

More warnings from the former Massachusetts Treasurer, a Democrat now running as an Independent, about the consequences of this reform package at the national level.

The Massachusetts treasurer said Tuesday that Congress will “threaten to wipe out the American economy within four years” if it adopts a health care overhaul modeled after the Bay State’s.

Treasurer Timothy Cahill — a former Democrat running as an independent for governor — said the local plan enacted in 2006 has succeeded only because of huge subsidies and favorable regulatory changes from the federal government.

He asked, “Who, exactly, is going to bail out the federal government if this plan goes national?”

Cahill’s remarks serve as one more illustration why the people of Massachusetts delivered such a surprising electoral victory to Scott Brown in their primary: disgust with their state’s attempt at reform.

The Emergency Room Myth

A strongly worded piece from Robert Samuelson today, worth noting because of its rebuke of one of the oft-repeated justifications for nationalized reform which, like so many others, falls apart upon further study:

How often, for example, have you heard the emergency-room argument? The uninsured, it’s said, use emergency rooms for primary care. That’s expensive and ineffective. Once they’re insured, they’ll have regular doctors. Care will improve; costs will decline. Everyone wins. Great argument. Unfortunately, it’s untrue.

A study by the Robert Wood Johnson Foundation found that the insured accounted for 83 percent of emergency room visits, reflecting their share of the population. After Massachusetts adopted universal insurance, emergency room use remained higher than the national average, reports an Urban Institute study. More than two-fifths of visits represented non-emergencies. Adult respondents to a survey said it was “more convenient” to go to the emergency room or they couldn’t “get (a doctor’s) appointment as soon as needed.” If universal coverage makes appointments harder to get, emergency room use may increase.

The Pro Life Case

Pro-life groups are pushing back against arguments that the Senate bill’s protections against abortion funding are acceptable (they aren’t). Groups are organizing events and running ads, and the Catholic Bishops released a statement detailing their opposition:

The American people and the Catholic bishops have been promised that, in any final bill, no federal funds would be used for abortion and that the legal status quo would be respected.

However, the bishops were left disappointed and puzzled to learn that the basis for any vote on health care will be the Senate bill passed on Christmas Eve. Notwithstanding the denials and explanations of its supporters, and unlike the bill approved by the House of Representatives in November, the Senate bill deliberately excludes the language of the Hyde amendment. It expands federal funding and the role of the federal government in the provision of abortion procedures. In so doing, it forces all of us to become involved in an act that profoundly violates the conscience of many, the deliberate destruction of unwanted members of the human family still waiting to be born.

The Job Ramifications

We’re not just talking about physicians jobs — though the fallout of health care reform for those are significant, according to the latest news from the New England Journal of Medicine:

46.3% of primary care physicians (family medicine and internal medicine) feel that the passing of health reform will either force them out of medicine or make them want to leave medicine.

But the latest piece from Yuval Levin and James Capretta outlines why the reform package is essentially an anti-jobs measure:

Beyond taxes and spending, Obama-care would also wreak havoc on the labor market. Because employers would get penalized if any of their low- and moderate-wage workers ended up in the new subsidized insurance pool, they would avoid hiring such workers. Democrats claim they want to jam through health care reform so they can turn their attention to jobs, but the bill provides a strong disincentive for businesses to hire those who need jobs the most.

The plan would, moreover, trigger an inefficient and costly re-sorting of American labor. Under the bill, despite the enormous cost of subsidizing coverage in the new government-run “exchanges,” only 18 million people would be getting such subsidized coverage in 2016—even though there are 127 million Americans today with incomes in the targeted range of between one and four times the poverty rate. The vast majority of workers would still be in job-based plans and get no additional help. Gene Steuerle of the Urban Institute estimates that a worker making about $60,000 per year in 2016 would get $4,500 more in federal aid if he were able to get his insurance through an exchange rather than through his employer. That’s a powerful incentive for workers and firms to rearrange their operations to take advantage of the federal money. In time, the American economy would be divided into companies with low-wage workers getting government-subsidized health care and others with higher-wage workers who continue to get employer-based plans. This would make the labor market far less efficient (harming productivity), and it would mean that the subsidies themselves would cost far more than the CBO now estimates.

And for those workers who do end up getting federal subsidies for their insurance, the program is a trap. If they get a pay raise, they will lose some of their insurance subsidy. Indeed, the schedule of subsidy withdrawal is so severe that it will push many low-wage families into effective tax brackets of 60 percent to 80 percent, according to a CATO Institute analysis. Obama-care would thus provide a strong disincentive to work and so undermine the most successful policy initiative in generations: welfare reform.

This follows on the same path that my own piece at CBS did this week, on Obamacare’s Two Americas.

crossposted at Health Care News.