Governing from the Left

Although mainstream media won't admit it, the US population, in general,  is somewhat right of center politically speaking (not as far right as I would like, but somewhat conservative).  That's what makes governing from the left such a difficult task over the long run.

We've only had two left-leaning presidents in the last 40 years, Carter and Clinton.  I don't remember the specifics of the Carter administration, but the Clinton years were interesting.  Clinton campaigned as more of a liberal than he ended up governing.  Of course, we had the Gingrich-authored Contract With America midway into Clinton's first term, and when Clinton was re-elected in '96, the Republicans re-took the House and Gingrich was Speaker throughout Clinton's last four years.  Although I personally don't care for Clinton's morals or his political leanings, he did manage to move much more to the political center, and the legislative process functioned decently enough throughout his presidency.

We have a much different story today.  We've got a House Speaker who very much wants to control things.  The far-left players are seizing this opportunity to cram through as much social engineering as they possibly can in light of the small window of time they have.  1600 Pennsylvania Ave is filled with a bunch of Chicago thugs intent to use every bullying tactic and political trick to accomplish their agenda.

The sad part is that true cost-controlling changes in health care will never be addressed as long as the Administration presses for their policies.

The topic of finance reform, which I'm more interested in, is even worse.  I'm sure we could have bipartisan agreement on meaningful and productive changes in the regulatory framework, banking capital requirements that aren't punitive and pro-cyclical, derivative clearing that still allows the financial system to function, resolution authority for non-banking but systemically-critical institutions, etc.  The tragedy is that we won't get there because the Administration is intent on waging warfare against the investor class and inciting populist furor against those greedy...(fill in the blank with your favorite villain - Bankers, Insurance Companies, Oil Companies, Hedge Funds, Private Equity Firms, Pharmaceuticals, etc).

With political history as a guide, we should see a sharp turn to the right in the coming years.  The mid-terms should be favorable for the Republicans, and Obama better be a one-termer.  This assumes, of course, the Republicans can put forward candidates who can articulate the virtues of the conservative ideals.  Forty percent of the electorate will always vote Democratic, and forty percent will always vote Republican.  Although Reagan was able to capture a significant portion of southern and working-class Democrats, the battle is usually for the twenty percent in the middle.  I think they're ready to vote Republican so long as the candidate isn't afraid to advocate true conservative principles.

One Conservative's View on the Healthcare Debate

Let me start with the disclaimer that, from an ideological standpoint, I am a social conservative, a fiscal conservative, and very pro-business. I believe that, in general, less government involvement is preferable to more government involvement, and I do not believe that government has an intrinsic right to my money. Although these statements may give the impression that I am a radical libertarian, that is not the case. It just seems that the various initiatives from the current administration and congress (financial regulation, energy proposals, healthcare reform, etc.) illuminate just how wide the philosophical divide has grown.

There are many areas in the current healthcare debate where, I believe, we can find common ground. I certainly agree that health costs need to be contained. Also, the linkage between health coverage and employment is unfortunate. Providing health insurance as an employment benefit became popular following World War II when employers were trying to attract a limited number of workers. Unfortunately, this avenue of health care coverage has become too entrenched within our system. I very much hope we can get to a point where affordable health insurance with no exclusions for pre-existing conditions becomes available to all who want coverage regardless of employment status. I recognize that the universal coverage clause will require a mandate that healthy young folks participate in order for the insurance companies to manage the risk and still offer reasonable premium rates.

With regard to the current healthcare proposals being offered by the White House and the House of Representatives, I take exception with the plan from both the macro perspective and the micro perspective. From the macro side, I am very concerned about any expansion of a national healthcare plan because of the terrible way in which Medicare has been implemented. Medicare is woefully underfunded. Current projections are that Medicare will be bankrupt within 10 years. The amount of unfunded liabilities being piled up is staggering. Add to that the fact that Medicare so underpays medical providers that non-Medicare patients end up paying more for services to essentially make up for the shortfall. Many physicians refuse Medicare patients because payments are so low. A recent Wall Street Journal editorial noted that expanding a Medicare-like system to those under 65 is like an old Marx Brothers routine: “The soup is terrible and the portions are too small.” Overall, the idea of a new massive government healthcare entitlement program is not something I’m comfortable with at all.

From the micro side, there are serious concerns about the specifics of the current proposals. First, there is the cost and the method of paying for the program. The President estimates that the $900 billion price tag will be accounted for by cost savings and added revenues. He specifically indicated that he will not support a plan that adds to the deficit.  The cost savings is supposed to be $470 billion from Medicare in the form of waste, fraud, and abuse elimination. Many previous administrations and legislators have searched in vain for this pot of gold and it has yet to be discovered. I doubt if such savings will materialize in this iteration.

There have been several suggested revenue generating proposals ranging from taxing the rich, to taxing health insurance benefits, to a fee levied on insurance companies for their high-end policies. I have issues with all of these proposals. The House bill includes the tax on high-income taxpayers. Currently, the top 1% of AGI taxpayers account for 40% of the tax receipts, and the top 5% pay 60% of the tax burden. I object to the “let’s tax the rich and fund a new entitlement” mentality. Furthermore, history has shown that increasing the tax rate doesn't necessarily increase revenue. Rich people don’t become rich by being easily separated from their money. Also, I’ve never received a job from a poor person. Needless to say, I also object to being taxed on my health benefits, and I believe that any surcharge levied on insurance providers will simply be passed along to the subscribers.

Finally, there is a whole collection of items that cloud the debate even further. One item is the notion that “if you like your current healthcare coverage, you can keep it.” Although this refrain is heard over and over, there is a part of the House bill that brings this statement into question (which is a more polite way of saying ‘you lie’). As noted in an earlier Wall Street Journal editorial:

The House bill says that after a five-year grace period all Erisa insurance offerings will have to win government approval—both by the Department of Labor and a new “health choices commissioner” who will set federal standards for what is an acceptable health plan. This commissar—er, commissioner—can fine employers that don’t comply and even has “suspension of enrollment” powers for plans that he or she has vetoed, until “satisfied that the basis for such determination has been corrected and is not likely to recur.”

I could go on and on about the idea of rationing health care and other peripheral issues; however, there are enough core policy objections that I don’t need to speculate about the questionable elements.

Perhaps the Senate and the subsequent conference committee activities will result in a better plan. My fear is that the whole thing has become politicized to the point where some bill will get passed containing just enough of the White House elements so that victory will be claimed. Unfortunately, we’ll be left with yet another government program that will never achieve its original goals and will end up costing more than we ever imagined.

Congress Can't Handle the Truth

A CNBC blog mentioned that listening to Hank Paulson testify to Congress today reminded them of Colonel Jessep (Jack Nicholson) answering Lt. Kaffee (Tom Cruise) in "A Few Good Men". I must agree. In fact, I think this is what I heard Hank saying...

Congressman, we live in a world that has markets, and those markets have to be guarded by men with brains. Who's gonna do it? You? You, Congressman Pander? I have a greater responsibility than you can possibly fathom. You weep for taxpayers, and you curse Wall Street. You have that luxury. You have the luxury of not knowing what I know -- that the TARP, while tragic, probably saved money; and my existence, while grotesque and incomprehensible to you, saves jobs.

You don't want the truth because deep down in places you don't talk about at parties, you want me at that bank -- you need me at that bank.

We use words like "systemic risk," "contagion," "liquidity." We use these words as the backbone of a life spent defending something. You use them as a punch line.

I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very prosperity that I provide and then questions the manner in which I provide it.

I would rather that you just said "thank you" and went on your way. Otherwise, I suggest you pick up your voting button and legislate sensibly. Either way, I don't give a DAMN what you think you're entitled to!