Friday, September 25, 2009

Why the Public Option is a Bad Idea

I've been thinking a lot about the current status of the health care bills in Congress, and I've come to a surprising conclusion: I don't think the so-called public option is a good idea.

Last night Sen. Charles Schumer went on the Rachel Maddow Show to say that he and Sen. Jay Rockefeller had proposed amendments to the Senate Finance Committee health care bill that would insert a public option into it, and that if the public option passed through the Finance Committee, it had a very good chance of being in the final bill that comes to a vote in Congress.

Polls have shown that most Americans support the public option, which the Obama Administration and many Democrats support as a way to "keep the insurance companies honest." Schumer, in his TV appearance last night, spoke of how the public plan would not need to spend billions on advertising and other things that private-sector companies must do to attract and keep customers, and make profits. Therefore, it should be able to provide lower-cost care and pressure private carriers to become more efficient and cheaper themselves.

And this is precisely the problem.

Private companies in all likelihood will have no hope of ever being able to compete with the government. The playing field will not be level. The government plan, if administered efficiently (and I'll grant you this is a big "if"), should ALWAYS be able to deliver cheaper, better care.

The best example of this dynamic: Fannie Mae and Freddie Mac. These two government-sponsored enterprises, while technically not owned by the government, enjoyed huge advantages over banks and other fully private mortgage lenders. Investors, thinking Fannie and Freddie were backed by the full faith and credit of the US government (because Congress had established both companies in the interest of broadening homeownership), lent them money at lower interest rates than private competitors could garner in the market. This enabled Fannie and Freddie to build gigantic mortgage portfolios that ultimately contributed to massive systemic risk and prompted the US government to bail them out.

I don't think that a public health plan would contribute to that kind of systemic financial risk, but it would have a similar, unfair, advantage over private insurers in the market. Now I'm not saying insurance companies haven't been responsible for some truly heinous behavior. Nor am I saying that our health care system does not have serious, fundamental flaws that need to be reformed. What I am saying is that you cannot force private companies to compete in the market against a government plan that does not have the same profit motive.

We must either go all the way and establish a single-payer, Medicare-for-all-type system, or find a way to achieve reform while preserving free-market competition among private insurers. Perhaps prohibiting insurers from dropping sick people and boosting safeguards against Americans losing coverage when they change jobs, among other steps, could accomplish the latter task. But we can't expect private companies to compete effectively against the government. Sometimes compromises yield really bad outcomes.

Wednesday, September 16, 2009

The Know Nothings Are Back, and They're on Elephant Steroids

Our national political discourse has been hijacked by Sergeant Schultz.

If you're too young to remember the TV sitcom "Hogan's Heroes," a little background: On the show, Sgt. Hans Schultz was the hapless guard that Allied prisoners serially outwitted during their World War II internment in a German prison camp called Stalag 13. "I know NOTHING," Schultz would routinely exclaim when superiors blamed him for failing to halt the POWs' scheming.

Sadly, Schultz's motto — but, unfortunately, not his utter fecklessness — has been taken up with gusto by a small but extraordinarily vocal corps of paranoid, infantile jerks who have somehow managed to gain a measure of influence over public affairs.

They call themselves patriots, purportedly protecting the US constitution from all manner of injury at the hands of President Obama and other Democrats in positions of power. Invoking the mantle of the country's founders, they stage self-styled "tea parties" to protest what they deem to be a takeover of capitalism by the government. The conduct of some of these "teabaggers" has been breathtakingly hateful. Witness a few of the signs displayed at these All-American patriot gatherings:






Many also have rudely disrupted public meetings that members of Congress scheduled to discuss health-care reform with their constituents during the summer recess, by shouting insults, screeching epithets and making not-so-veiled threats of violence — the kind of behavior that even my 3-year-old daughter would dare not broach on her worst day.

All of this childishness is woven together with one very important common thread: the expression of beliefs that have zero basis in fact. Let's examine a few of the most commonly voiced teabagger and town-haller tenets and hold them up to the light of reality here on planet Earth.

Teabagger Truth: President Obama is a socialist. Or, worse, a Communist. Planet Earth Truth: Obama over and over again states his belief in the power of free-market capitalism. But upon taking office, he was confronted by the most severe financial and economic crisis since the Great Depression of the 1930s. The banking system was on the brink of failure, as was the US auto industry. I happen to disagree with the bailout of Detroit, because Asian and European auto makers had already eclipsed the US big three and could easily have carried the industry and absorbed many displaced workers if GM ceased to exist. But the institutions at the very heart of global capital markets absolutely needed to be bailed out, even if their own misdeeds were perhaps the biggest factor contributing to the collapse. Without massive government aid, the economy would have plunged into the abyss. We got a hint of this possibility in the aftermath of Lehman Brothers being allowed to fail one year ago. More broadly speaking, public stimulus was a sorely needed shot of adrenaline for a private sector that had simply stopped functioning. Yes, too much of the stimulus either has yet to be spent or was shamelessly diverted by myopic, greedy legislators to pork projects that didn't do as much to stimulate the economy as investment in infrastructure and renewable energy production would have. But some federal economic stimulus was absolutely necessary. Most importantly, all of this extraordinary government intervention is expressly designed to be temporary — an emergency intervention that will cease once the financial system and the economy recover. Already several banks have paid back billions in TARP money, resulting in substantial investment gains for the federal government. The Federal Reserve is winding down several of its programs that were designed to shore up the financial system during the crisis. Citigroup is pushing a plan that would reduce the government's 34% ownership stake. And Obama has directly and emphatically said that he wants to shed the government's ownership of GM as soon as possible. Next!

Teabagger Truth: President Obama wants to create "death panels" that would euthanize old people rather than provide them with critical care. Planet Earth Truth: There is nothing in any bill, outline of a bill or any public statement ever uttered by the president or anyone affiliated in any way with the White House that would establish, or states an intent to establish, "death panels." This is a heinous distortion of language in one of the Democratic reform bills that would have covered completely benign and quite compassionate end-of-life counseling for the terminally ill. Such counseling would include advice about living wills and durable powers of attorney, for instance. A far cry from slipping some hemlock tea to Great Aunt Tillie.

Teabagger Truth: President Obama wants to replace private health insurance with a system in which the federal government employs all doctors and other health care providers. Planet Earth Truth: A canard. Obama supports (albeit half-heartedly, because of all the fake outrage about "a government takeover of health care") making a government-provided plan one of many health-insurance options for Americans to choose from. The idea is to give private-sector plans an incentive to become more efficient by letting them compete side-by-side with a federal plan. His plan also mandates that everyone have health insurance -- a policy that has insurers, drug companies and other health-care companies positively drooling because it will boost their revenues by billions annually when 47 million people suddenly have to sign up for a plan. So much for socialism.

Teabagger Truth: President Obama's health care plan will use tax revenue to provide coverage for illegal immigrants. Planet Earth Truth: There is absolutely nothing in Obama's plan or any of the bills in Congress — and there never has been — that would permit tax dollars to be spent on covering illegal aliens. Following Addison Graves Wilson's toddler-esque "you lie!" tirade, Democrats went even further and added language expressly prohibiting any such expenditure. Still, this bogeyman continues to be raised regularly on the Fox News/Teabagger circuit.

Teabagger Truth: President Obama's health care plan will create government panels that issue mandatory, un-appealable decisions about whether citizens can see doctors, have surgeries and receive all manner of other care. Planet Earth Truth: Just one of dozens of lies being spread about Democratic health reform plans. Factcheck.org has a great analysis of these that is worth checking out if you want the truth.

So how did so many people grow so far removed from reality?

A big part of the answer is that an alternative reality has been created for them — by elite millionaire entertainers posing as journalists, and by huge, organized Republican and corporate lobbies posing as little grassroots groups.

Let's look first at the entertainers. A cadre of red-faced, hyperventilating, even weeping commentators call the teabaggers to action by exploiting their basest fears and insecurities. Glenn Beck, Rush Limbaugh, Sean Hannity and other entertainers amplify the rankest lies, hatred and misniformation for the masses and, worse, lend them a patina of credibility because their acts happen to be carried by a network that has the word "news" in its name. This is not news. It is hysteria, carefully packaged to appeal to the disaffected, who tune in religiously and support the multi-million-dollar salaries and rich-and-famous lifestyles of the elite broadcasters who purport to "stand up for the little guy."

Then there are the astroturf movements. Groups like Freedom Works, essentially an organ of the Republican party, are the driving force behind the tea parties and town-hall tomfoolery. They not only are promoting the events, but stocking them with professional political operatives who are bused and flown in from around the country to create the impression of grass-roots activism. This exposes the lie that somehow millions of Americans are rising up in a massive, spontaneous movement fueled by disgust at the Obama administration.

Racial animosity is certainly part of the package here. No one can look at the photos above of teabaggers claiming that Obama plans "White Slavery" or holding up signs depicting the president as an ominous-looking assailant threatening to slit the throat of Uncle Sam and deny with a straight face that a significant measure of Obama hatred is in fact racism. This is not, as one family member of mine recently suggested, a case of "lose the argument and blame racism." In fact, there is no argument to win or lose. The core beliefs motivating the teabagger "movement" so obviously lack any basis in fact that there has to be something else going on here. For some, it is undoubtedly the inability to come to terms with the fact that a black man has decisively been elected our president.

But there is also a broader anxiety being exploited here. Anxiety over the massive social, economic and cultural changes that began in the post-World War II era but accelerated drastically over the past decade. The economy has grown more efficient, more globalized, more dependent upon technology, information and a highly educated — often foreign-born — workforce. At the same time it has become less dependent upon manufacturing, industry and unskilled, less-educated workers. Computers, the internet and other technology have so permeated our culture that many who lack technological savvy not only find themselves losing in the global economy but also feeling left out of popular culture. And all of these forces are triggering dramatic social change. Perhaps the most significant manifestation of this has been the drastic growth in income inequality and shrinkage of the middle class in the United States. The great irony here is that this is patently the outcome of the Reagan Revolution. The idea that government is always bad, and should get out of the way of the private sector, freed giant corporations and Wall Street to lobby for policies that allowed them to eviscerate the American middle class. Laws and rules that were put in place following the Great Depression to ensure it did not happen again, including the Glass-Steagall Act, were repealed. The unfettered capitalism that resulted gave us today's financial crisis and Great Recession.

And the folks who have drawn the short straws as a result of all of this change are often the very same people who, in some cases, see in Obama the "other" to blame for their degraded lot in life. They can't possibly be worse off and have dimmer prospects than their parents because supposedly 'conservative' politicians have spent decades dismantling sensible government regulation of the private sector and drastically increasing income inequality. It must be because this black, Jesus-hating, baby-killing Communist managed to get elected president — in a landslide — by the Sauvignon Blanc-sipping coastal elites, even though we all know he is a militant Muslim that has been plotting to destroy "the America I grew up in" since the very day he was born in Kenya.

Reason and truth matter not to these people. This is how we wind up with Samuel Wurzelbacher, a.k.a. "Joe the Plumber," rejecting the Obama fiscal policy that would cut his income taxes and somehow becoming a hero to others like him and a desperate, late-inning centerpiece of the hapless McCain 2008 campaign. It's how GOP governors including South Carolina's Mark Sanford, the holier-than-thou-Bible-thumper-turned-very-public-adulterer-and-duty-shirker, justify rejecting federal stimulus funds — In the Palmetto State's case, funds that would have provide desperately needed help to millions of unemployed and the nation's 39th-out-of-50-ranked public school system. And it is the ugly foundation beneath last week's outburst on the floor of the House of Representatives by Rep. Addison Graves Wilson, also of South Carolina (he's known as "Joe" to the good ol' boys flying the Confederate flag over the state capital building), during which he yelled "you lie!" at the president, who had just told the truth about his health care plan not covering illegal immigrants.

The saddest part of all this is that the virulent teabagger movement is quite small. Glenn Beck's audience on a good day is about 2.8 million people — less than one percent of the current US population of 305 million. And the teabaggers are clearly self-conscious about their size, as evidenced by the fake photo they circulated to create an aura of ample attendance despite official estimates that only about 70,000 people showed up for their recent march on Washington. But organized Republican and corporate interests, teamed with Fox News and other paid liar-entertainers, whip up such hysteria among this small group, and make so much money doing it, that the rest of the media goes along for the ride. When they're not wasting time on celebrity non-news and promoting the other products of their conglomerate-owners, supposedly respectable newspapers and broadcast outlets devote precious space and time to covering the outbursts of the Know Nothings. All this comes at the expense of serious coverage and debate of the real, considerable problems that confront us as a nation.

We've seen this movie before in the United States. Other periods of swift, deep socioeconomic change have triggered paranoia that expresses itself politically. Candidates of the Know Nothing Party, formed in the mid-19th Century by well-off Protestant New Yorkers who were alarmed about an influx of poor, Irish Catholic immigrants, actually won election to mayoralties in Philadelphia and San Francisco and the governor's mansion in California before the Lincoln-led Republicans muted their influence (the likes of Limbaugh would ravage a politician like Honest Abe as too effete, too eloquent and too tolerant, ensuring he'd never make it through a GOP primary for dog catcher in Osh Kosh today). Industrialization and continued waves of immigration in the late 19th century gave rise to populist Democrats like William Jennings Bryan, who preyed on the fears of southern and agrarian America that cities were growing to be the dominant force in the country. Demagogues like Father Coughlin exploited the sheer economic privation of the Great Depression to conjure opposition to the New Deal. And more recently, the success of the civil rights movement, feminism and the 1960s counterculture helped launch George Wallace's Dixiecrats and the "Silent Majority" of disaffected ethnic and suburban whites that Nixon rode to power. A similar dynamic influenced the Reagan Democrats of the 1980s.

Most of the time these political movements don't amount to much. It seems, however, that the teabaggers are exerting an outsized influence on public affairs today. Some argue that the best way to combat this is to simply ignore them, which will cause them to go away. I've tried that. I don't think it works in this case. The organized interests whipping up this faux hysteria will keep doing it until the rest of the non-wacko country — another Silent Majority, if you will — speaks truth to its mounting power.