Saturday, April 16, 2011

Budget Battle, Budget Prattle

Jonah Goldberg

I cannot remember a more depressing week in Washington. The Republicans boasted a heroic accomplishment: slashing $38.5 billion from the budget, purportedly the largest cuts in history. But the cake was made from sawdust. Strip away the gimmicks and shine a light on the shadows, and it turns out the real cuts amounted to $352 million, or less than 1 percent of what was promised.

America borrows $4 billion a day. So we likely borrowed more than we cut in the amount of time the GOP leadership spent bragging about its "victory."

It is a dismal, dreary, mope-inducing performance that makes one wonder what the point of the 2010 elections were. If this was the best deal possible, fine. Republicans control only one house of Congress, and you can only achieve what is achievable. But they should have said so, admitted it frankly, and sworn to do better. Instead, the leadership touted their salt cracker of a budget cut as a feast, causing many to doubt they really grasp what their own voters want.

But as depressing as the Republicans' performance was, at least they're fighting for the right cause, their sails pointed in the right direction. What can be said of President Obama's speech this week?

Vice President Joe Biden reportedly fell asleep during the president's address. It would speak better of the man if he closed his eyes not out of weariness but as part of a prolonged wince as he listened to his boss spew a farrago of distortions, self-righteous non sequiturs and ideological fatwas in the cause of extending his presidency at the expense of both the country and his honor.

Just two months ago, Obama introduced a $3.73 trillion budget that did nothing to address America's long-term fiscal problems and added $1.6 trillion in debt (an amount roughly equal to Bill Clinton's annual budgets). It was a great and glorious punt, a rhetorical can-kicking of historic proportions. But now the president throws his budget away, concedes the scope of our fiscal wound and then proposes applying a quack's poultice to heal it.

Entitlements, he admits, are gobbling up the budget; they must be "on the table." But even as he puts the plates on the table with one hand, he removes them with the other, insisting his cooks can save the meal with price controls and rationing.

And if that doesn't work, 12 years and three presidential terms from now, a series of fictional "failsafes" will kick in and some magical commission will genie-blink even more fictional cuts.

Obama prefers this to the Republican approach, which would introduce market forces into health care in order to save a calcified system from collapsing under the weight of state controls. Indeed, he couldn't even acknowledge this is the intent of Republican plan, preferring instead to recycle ancient barbs and insults about conservative cruelty and class warfare.

In a speech billed as being full of specifics, it had precious few save the president's passionate desire to raise taxes on "the wealthy." Rhetorically, Obama defines the "rich" as millionaires like himself or billionaires like Warren Buffet. But in reality he sets his sights considerably lower: households (and small businesses) that make more than $250,000 a year.

As for shared sacrifice, it is hard to find any in his proposal. Six out of 10 U.S. households receive more from the government than they pay in taxes. If "shared sacrifice" is the standing order of the day, where is theirs? The president suggests that repealing Bush's tax cuts will save the day. But the vast bulk of those cuts go to people making less than $250,000 a year. The president wants to keep those cuts as his idea while talking about shared sacrifice. Meanwhile, as The Wall Street Journal notes, if you taxed everyone who makes over $100,000 at a rate of 100 percent, you still wouldn't raise enough to balance president Obama's budget, never mind pay off any debt.

The only good news to come from all of this is that the battle is now joined. The president has staked his banner in the soil of reactionary liberalism. Good. By setting his fortifications so far to the left of the middle ground, he gives the forces of reform room to advance far.

The rank and file are ready for battle, with the tea parties at the forefront. The only question is whether the GOP's generals have the stomach for the fight. And that question raises as much dread as hope.



Obama Blows up the Bridge

"Rather than building bridges, he's poisoning wells," said Rep. Paul Ryan, after listening to Barack Obama's scathing attack on his deficit reduction plan as a shredding of America's social contract with the elderly and poor. Ryan is right. Yet, with Obama's partisan savagery, virtually calling the GOP plan immoral, we have clarity.

There will be no grand bipartisan bargain on taxes and spending. The two parties on Capitol Hill and the president will not be coming together to solve the gravest financial and fiscal crisis America has faced since the Great Depression. Between them today is a high wall and a deep ditch.

The heart of the Ryan plan is to turn Medicaid into block grants to the states, so each can decide for itself how best to use the funds, and to convert Medicare into a program where the U.S. government would provide citizens with the funds and freedom to chose whatever health insurance they wished to buy. Obama denounced both.

But if the Republican Medicare and Medicaid proposals are dead on arrival in Harry Reid's Senate and Obama's White House, Obama's plan to raise taxes is equally lifeless.

On MSNBC's "Morning Joe," this writer asked Grover Norquist of Americans for Tax Reform exactly how many GOP members of the House had taken his pledge not to raise taxes. His response: "The commitment that 235 Republican members of the House and 40 Republicans in the Senate have signed is the Taxpayer Protection Pledge -- it says no raising taxes. So, taxes are off the table."

Seems clear. But if virtually every GOP member of the House and 40 GOP senators have signed a pledge not to raise taxes, how can they dishonor that pledge? How could they agree to raise the top U.S. income tax rate back up to the 40 percent of the Bill Clinton era, as Obama demands, then go home and tell voters they had no choice, that to get a deal with Reid and Obama they had to let the government take a larger share of the income of American citizens?

They cannot. Put bluntly, a vote by a Republican House to raise taxes as part of a big budget deal would be an act of collective suicide by the party of Speaker John Boehner.

And the Democrats? With the exception of the civil rights acts of the 1960s, no programs are more hallowed in party mythology than Medicare, Medicaid and Social Security. Are Democrats, after the "shellacking" of 2010, going to go home and tell their constituents they voted to cut Medicaid benefits?

Are they going to tell the old folks of the Greatest Generation and the Silent Generation and the retiring baby boomers that Medicare in the future will not be as generous as it has been in the past, that we are going to have to start rationing their health care?

The new Republican governors -- Scott Walker in Wisconsin, John Kasich in Ohio, Chris Christie in New Jersey, Tom Corbett in Pennsylvania -- all have resisted raising taxes, as has Andrew Cuomo, Democrat of New York, who enjoys remarkably high poll numbers for the times we live in.

The praise these governors are receiving, even when embattled, has also steeled the spine of congressional Republicans against any tax increase.

But if Democrats are not going to do even minor surgery on Medicare and Medicaid and Republicans are not going to raise taxes, there is no hope of big budget deal to cut a deficit now running at 11 percent of gross domestic product.

And that raises another question. How long can the Federal Reserve continue financing these deficits? China, choking on U.S. debt, is reportedly beginning to divest itself of U.S. bonds. Japan will need to sell U.S. bonds to get hard currency to repair the damage from the earthquake and tsunami. And the Fed is about to end its QE2 monthly purchases of $100 billion in U.S. bonds.

Where is the Fed going to borrow the $125 billion a month to finance this year's deficit of $1.65 trillion, and another of comparable size in 2012? Bill Gross' Pimco, the world's largest bond fund, has sold all his U.S. bonds and begun to short U.S. debt. Pimco is betting that the value of U.S. Treasury bonds will begin to fall.

We may be about to enter a maelstrom. No big budget deal is brokered. The deficit endures, and another looms in 2012. To finance them, the Fed borrows at the rate of $30 billion a week wherever it can. But as countries begin to choke on U.S. debt, the market starts to dry up. To attract investors, the Fed must raise interest rates, which sends bond prices sinking and forces interest rates up across the economy.

With interest rates rising, gas prices rising and inflation rising, the squeeze is on, and there is talk of a double-dip recession. And if that happens, Obama is toast. But, then, so are we.



The New Health Law: Bad for Doctors, Awful for Patients

While much has been said about the recently passed health care overhaul law and a multitude of cogent arguments have been made as to why the legislation must be repealed, lengthy debates have failed to adequately address how the 2,800 pages will prevent patients from receiving the medical care that they need and want. In fact, in some ways the federal government already hinders the ability of doctors to provide their patients with good care. These trends will no doubt worsen under PPACA. In addition, new regulations and mandates will place unaccountable regulators in between physicians and their patients.

Medicare’s physician reimbursement regimen is fraught with underpayments and perverse incentives. During the health care debate, supporters of PPACA praised Medicare’s ability to exploit its size to obtain lower fees with providers. While it is true that Medicare can bludgeon down physician fees, this is not one of the program’s greatest strengths, but actually one of its greatest weaknesses. These underpayments are ultimately shifted to patients in the form of shorter visits, less doctor face time, quick hospital discharges, and compromised care. Rather than reforming the government’s flawed reimbursement regimen, PPACA merely expands its scope to more people.

PPACA establishes the Patient-Centered Outcomes Research Institute to conduct research comparing the efficacy of medical and surgical interventions. The potential harm from this depends how it is used.

Federal regulators could easily use this research to ration care by financially punishing physicians prescribing these “less effective” treatments. This research coupled with reimbursement changes could easily pave the way for the government dictating to patients the medicines, tests, and procedures that they can and cannot have, regardless of willingness to pay and personal preference. This would replace the professional judgment of physicians with rigid rules set by regulators in Washington DC. This one-size-fits-all approach will limit choice and result in poor quality care.

The soon-to-be established health insurance exchanges will also give the federal government vast new control over physician practices. PPACA states that starting January 1, 2015, a qualified health plan can contract with a provider “only if such provider implements such mechanisms to improve health care quality as the Secretary may by regulation require.” Depending on the guidelines, this gives the federal government unprecedented new authority over not just those physicians accepting Medicare and Medicaid, but any provider accepting any third party payer offered through the exchange. Of course quality care is a good thing, but who should determine the definition of “quality?’ Who knows best? This regulation seems to be based on the notion that bureaucrats at HHS from afar know better than the doctor actually talking to and examining the patient. This will coerce physicians to practice medicine not the way they were taught, but the way the government tells them. Ultimately, this too will lead to poor quality, standardized care and restrict choice.

PPACA will strip away physician autonomy, drown doctors in bureaucracy, and drain job satisfaction. As the profession deteriorates, older doctors will retire while younger doctors will look to switch careers. Many young people considering a career in medicine will pursue other opportunities. The supply of providers will dwindle as demand for services reaches an all-time high. Ultimately, the consequences of the health overhaul law will be passed along to patients through restricted access, long wait for appointments, and rationed care.

The United States boasts the world’s premier health care system. With that said, of course there is room for improvement and efforts must be implemented to control spiraling costs. A better prescription for reform would be to build off the success of the current system while targeting its inevitable shortcomings.

Ultimately, there are only two ways to lower costs. One approach empowers bureaucrats to make tough decisions for doctors and patients. This has grave ramifications on quality of care and choice.

Unfortunately, the administration chose to pursue this route. Yet, patients would be better served if doctors were held more accountable by transparency and choice, rather than bureaucratic fiat. A more practical approach to lowering costs empowers and incentivizes patients to be smarter health care consumers. This entails solutions such as expanding health savings accounts, creating a national market for health insurance, and leveling the tax playing field. These could bend the cost curve down while simultaneously strengthening the patient-doctor relationship.

The time has come for a long-overdue, honest discussion on not just the impact that government will have on patients, doctors, and the practice of medicine, but the impact it already has had over the past forty-five years. The importance cannot be undersold as the Patient Protection and Affordable Care Act is indeed bad for doctors, but it is always the patient that suffers the most.




End the war on dying cancer patients: "Stopping all war is not just something we need to do in the Middle East. It is something we need just as badly here at home. When I say 'stop all war,' I’m not just talking about the bombing and fighting overseas; I’m talking about the wars that the U.S. Government wages against its very own citizens. I am talking about how bureaucrats kill Americans, not with guns and bombs, but with laws and regulations."

UN: More than thirty killed in Iraqi raid on Iranian Communists: "An Iraqi army raid last week on Camp Ashraf left 34 Iranian exiles dead, according to a U.N. spokesman who on Thursday offered the first independent death toll for the attack that drew sharp rebukes from Baghdad's Western allies. The April 8 raid targeted the People's Mujahedeen Organization of Iran, which seeks to overthrow Iran's clerical leaders"

Class warfare: "In his speech yesterday, Obama brought up income inequality to justify higher taxes on the rich: 'In the last decade, the average income of the bottom 90% of all working Americans actually declined. The top 1% saw their income rise by an average of more than a quarter of a million dollars each. And that’s who needs to pay less taxes?' But even if the numbers are accurate, Obama portrays a much more divided America that really exists, because ... today’s top income earners today are often completely different people from yesterday’s top income earners."


List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)


The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


No comments: