Health Care: Too Big to Fail

In the frenzy over jump-starting the economy, the House stimulus bill includes, among other straws being grasped, $117 billion of spending for health care, most of it to maintain coverage for the disabled and newly poor. Otherwise, the political consensus is that we can't "afford" to reform the system.

If anything, there is a stronger case to be made that we can't afford not to. Paul Krugman scratches the surface today with the argument that "helping families purchase health insurance as part of a universal coverage plan would be at least as effective a way of boosting the economy as the tax breaks that make up roughly a third of the stimulus plan--and it would have the added benefit of directly helping families get through the crisis, ending one of the major sources of Americans’ current anxiety."

He cites research showing that Obama's campaign promise of universal coverage would add “only” about $104 billion to federal spending next year, but this overlooks the huge possible benefits in reforming a system that rewards greed and inefficiency.

Start with health care fraud by hospitals, doctors, pharmacists and other care providers. which the FBI estimates at between $60 and $100 billion a year. Stopping that could be a small growth industry to employ some of the analysts being laid off by the banks and Wall Street, to say nothing of starting to fix a system that has been criminalizing the healing profession in order to let its members survive.

But the big payoff would be in transferring the estimated one-third of the $2.4 trillion-and-counting that goes for insurer overhead and profits into patient care.

In the current economic climate, the SCHIP expansion of coverage for children which George W. Bush resisted on "philosophical" grounds is about to be signed by the new president, and the money in the House stimulus bill has aroused Conservative fears about "nationalizing" the health care system.

Just so, and it opens the way for a healthy debate over whether the current health care system, like greedy Wall Street, is really "too big to fail" and why it can't evolve toward the single-payer system that rational analysts favor.

Krugman cites Rahm Emanuel, the White House chief of staff, declaring that “you never want a serious crisis to go to waste” and points out that FDR "was able to enact Social Security in part because the Great Depression highlighted the need for a stronger social safety net."

In repairing the economy, health care can be both part of the stimulus and the 21st century social safety net.

Scenes From a Spending Spree

The House stimulus bill recalls those old TV game shows with contestants racing the clock to fill shopping carts, items spilling into the aisles in a mad dash to the checkout counter.

In the House, $200 million to re-sod the National Mall and $200 million to extend Medicare to cover family planning services fell out yesterday as Democrats keep ransacking the shelves from what the livid Wall Street Journal calls their "40-year wish list."

Is this the only way to revive a sinking economy--to rush through 647 pages of $825 billion in scattershot spending? The President talks about transparency and accountability, but it's hard to see those elements in a grab bag of what he himself has denounced as "throwing money" at the economy.

The funds for infrastructure are beyond dispute but make up only a small fraction of the whole.

“They keep comparing this to Eisenhower, but he proposed a $500 billion highway system, and they’re going to put $30 billion” in roads and bridges, says the ranking member of the House Transportation Committee. “How farcical can you be? Give me a break.”

After eight years of Bush inaction and deadlock, the exhilaration of rapid movement is understandable, but does everything have to be done at once?

If Democrats have to give up on bipartisanship, as seems inevitable, they should be thinking twice about ramming through a bill with booby traps that are sure to explode in their faces and undermine long-term fixes for the economy.

By all means, start the flow of defensible government spending, provide loans for hard-pressed states and municipalities, and strong-arm the banks into using bailout money for lending, but can't we slow down the drunken-sailor act? The hangover could be painful in the extreme.

Congressional Tap Dancing

Oil drilling, yes. Children's health insurance, no. Economic stimulus, by all means. The priorities of the pre-election Congress this week reflect the political verdict on what will turn on voters in November but promise little of substance.

Democrats will bring to the floor an energy plan that would blunt Republican campaign attacks by opening some areas to coastal drilling while providing incentives for alternative energy and reducing subsidies for oil companies.

Meanwhile, they are letting Republicans off the hook on expanding the Children's Health Insurance Program by not forcing the issue and making them vote up or down on overriding another Bush veto.

Instead, Democrats will focus on another economic stimulus bill to follow the earlier one, which seems to have had no effect whatsoever on the lagging economy.

“This situation is yet another stark reminder that we live in difficult economic times and we must do more to help struggling families reach the American dream,” says Senate Majority Leader Harry Reid. “That is why I urge President Bush, Senator McCain and other Republicans to work with Democrats in the immediate days ahead to enact an economic recovery package.”

All this will translate into campaign rhetoric, but will voters believe that these posturing politicians are doing anything substantive?

Recession Rolls On

As Americans mail in tax returns and wait for their economic stimulus checks, they will find fewer places to spend the money when it arrives. Retail chains are closing stores and going out of business in the face of declining sales and mounting debt, the New York Times reports:

"Since last fall, eight mostly midsize chains--as diverse as the furniture store Levitz and the electronics seller Sharper Image--have filed for bankruptcy protection...

"But the troubles are quickly spreading to bigger national companies, like Linens ‘n Things, the bedding and furniture retailer with 500 stores in 47 states...

"Even retailers that can avoid bankruptcy are shutting down stores to preserve cash through what could be a long economic downturn. Over the next year, Foot Locker said it would close 140 stores, Ann Taylor will start to shutter 117 and the jeweler Zales will close 100."

As food prices rise at a record rate and gasoline prices keep climbing, they crowd out other purchases--people are spending less on furniture, clothing and electronics. As jobs disappear in these contracting companies, the recession may worsen and snowball beyond the pathetic efforts of a clueless Congress and President to affect them.

Meanwhile, billions of American dollars keep disappearing into the sinkhole of Iraqi corruption. At least business is booming at banks in Switzerland and the Cayman Islands.

The Mideast Money Drain

With the economy in a nosedive, the Democratic Congress is beginning to turn its anti-war focus on the dollars that are being drained by Bush's Mideast policies.

"In a shift from last year’s failed legislative efforts to force a reduction of troops," the New York Times reports, "the Democrats’ new approach is...focusing on the financial cost of military operations and on the war’s implications for the nation’s troubled economy."

This coupling comes on the heels of a new book, "The Three Trillion Dollar War: The True Cost of the Iraq Conflict" by Nobel Prize-winning economist Joseph Stiglitz with Linda Bilmes, which estimates that Iraq has already cost almost ten times as much as the first Gulf War, almost a third more than Vietnam and twice as much as the First World War.

Stiglitz told a British think tank this week that war spending was a hidden cause of the current credit crunch after our central bank responded to the financial drain by flooding the American economy with cheap credit.

"The regulators were looking the other way and money was being lent to anybody this side of a life-support system," he said, leading to a housing bubble and a consumption boom that has driven the economy into recession and saddled the next president with the biggest budget deficit in history.

If this argument is too complicated for politicians to make, Senate committees are beginning to hone in on the billions that have been wasted or stolen during the past five years of presumably protecting us from terrorists--an estimated $3.8 billion misspent by Musharraf in Pakistan along with billions more that have vanished in Iraq.

When voters get their stimulus checks of a few hundred dollars this summer, they may want to think about that.

Democracy at Work

Our taxpayer dollars were spent yesterday embarrassing Larry Craig and humiliating Roger Clemens by people who are siphoning off millions of it to reelect new members of their own party.

That snapshot of Congress comes from the lead items on the website of The Hill, which chronicles the workings of our government:

"The Senate Ethics Committee publicly admonished Sen. Larry Craig (R-Idaho) late Wednesday for attempting to use his public office to get out of his arrest last summer in a Minneapolis airport restroom sting..."

"Roger Clemens, the New York Yankees’ star pitcher, had barely taken his seat Wednesday before the House Oversight and Government Reform Committee when Chairman Henry Waxman (D-Calif.) stunned an already tense hearing into near silence...'Someone isn’t telling the truth,' said Waxman in his opening statement in a hearing that lasted most of the day..."

"Democratic leaders have sent tens of millions of dollars to freshman lawmakers’ districts in hope of protecting the party’s newfound majority..."

There was other news, too:

"President Bush on Wednesday signed the $152 billion stimulus package that he hopes will jump-start the economy in the coming months..."

"Congressional Democrats headed into another clash with President Bush over torture as the Senate cleared a bill Wednesday to force spy agencies to comply with the military’s ban on waterboarding and other harsh techniques..."

"A House committee is expected to vote soon on a program that would allow Hill staff working late to take taxis home and have the cab fares paid out of office expenses..."

It's good to know that our elected representatives are hard at work.

The Economy, Stupid--Again

With the imminent passage and signing of the stimulus bill, both parties have signed on to acknowledging that the economy is the major issue of the Presidential campaign. How will the candidates adjust?

Hillary Clinton has the 1992 "It's the economy, stupid" playbook in place as well as a new, improved Bill Clinton to stump on the good times of his tenure without creating new animosity and resentment.

Barack Obama will be hard-pressed to translate his idealism into leadership on the issue without looking too dreamy on the one hand or too scary with any practical solutions he proposes. FDR would be the most likely template--"nothing to fear but fear itself" with the argument that government can be the solution, not the problem.

John McCain will likely try to overcome his admitted deficiencies as Economist-in-Chief by shielding himself with a panel of Free Enterprise gurus while he hammers away at Republican verities about the wisdom of the marketplace.

Meanwhile, voters will be worrying about whether the downturn is going to be long, as Paul Krugman suggests today, or with rebate money in their pockets lighten up enough to believe that the economy will soon turn around, as it always does.

Shoved into the background will be ugly fact that Iraq continues to consume not only American lives but enormous amounts of money that could be invested in our infrastructure and put people to work.

But as McCain goes about proclaiming "victory" with "honor," making that case may turn out to be a hard sell.