What We Need

On Wednesday, December 16, it was hard to see that there was anything else to talk about but Joe Lieberman and how he had decided the way healthcare should be reconfigured in America, as he had the one and only mother of all swing votes, and a giant chip on his shoulder and the mother of all grudges against anyone who had ever made fun of him, or even questioned any decision he ever made. Revenge is sweet, especially if you’re a flamboyantly Orthodox fellow given to sanctimony and theatrics, and to lecturing anyone and everyone about morality and personal responsibility.

So there would be no public option, and no expansion of Medicare, even if that had been his own idea three weeks earlier. He faked-out everyone. The final healthcare reform bill that he might not filibuster, or might if he felt like it, would now cover many of those now uninsured – he’s not heartless – but do so by mandating that everyone, with no exceptions, buy expensive policies from the private for-profit health insurance cartel, or face a steep fine, and those insurers could charge anything they liked, And they could place a cap on yearly coverage – saying that perhaps they’d pay nothing over five hundred dollars a year on any patient’s care, and after that you’d be on your own. And they could set deductibles as they wished – you pay the first four thousand dollars in costs before you could turn to them and that sort of thing. And although they’d have to take on folks with preexisting conditions, all of them, they could at least triple the premiums for those folks. And they could continue to deny care if they wished, just convene a panel for that, a utilization review committee, as some special treatments or complex therapy is damned expensive, and they’d be foolish to hurt everyone by using all sorts of money from everyone on just one sick person.

So the system would remain private, and not be public in any way, as it should be. It would be as it has been – a place where smart people make good money, protected from any pesky competition by their long-standing exemption from all anti-trust laws. They just get tens of millions of new customers, with the government picking up the tab for those unable to pay the going rate. Sure signing up would be expensive, but the government would help pay the monthly premium of those rather useless poor folks once the cost rose to more than seventeen percent of their gross income. And that was that.

That last part is odd, of course – a new mandatory seventeen percent income tax on all Americas, but not paid to the government. It would be paid directly to the insurance cartel. Sweet – and Joe did that.

Progressives were outraged – this wasn’t reform – and conservative were outraged too – the government doesn’t have the money to do anything like this, and people should take care of themselves, as a matter of personal responsibility – if you can’t afford something you do without, or get rich enough to afford it, like a normal person, not a freeloader. All the talk about morality and doing the right thing is nonsense. It’s like buying a beach house, a second or third vacation home – if you can afford it, you buy it. That’s what Rush Limbaugh told William Shatner on Shatner’s odd show.

The administration, and the Democrats who still supported it, argued that the Lieberman Plan would have to do – at least thirty-one million more Americans would now have health insurance, and that was a good thing. The details were just that – details.

That sounded pretty thin, but marginally plausible. And with Lieberman holding the one key vote that might keep the Republicans from stopping any reform at all, it would have to do. And if you saw Lieberman on television after that, well, the grin on his face could light all of Washington and blot out the sun for a week.

But as much as that was a great story if you’re in the news business – full of drama and conflict and with a central character full of odd personal conflicts and strange and vengeful motives – that wasn’t the only thing going on that day. There was the Climate Change Summit in Copenhagen with this odd tidbit:

Gov. Arnold Schwarzenegger took the stage in Copenhagen today to deliver his speech on combating climate change, but he also created buzz with a series of shots at 2008 GOP VP nominee Sarah Palin’s global warming skepticism.

“You have to ask: what was she trying to accomplish?” he told the Financial Times. “Is she really interested in this subject or is she interested in her career and in winning the (Republican) nomination (for president)? You have to take all these things with a grain of salt.”

On ABC’s “Good Morning America,” he dismissed Palin’s calls for President Barack Obama to boycott the climate talks.

“I think there are people that just don’t believe in fixing and working on the environment. They don’t believe there is such a thing as global warming, they’re still living in the Stone Age, which is OK, we need people like that, too,” he said.

We do?

Of course that begs the question of just what we do need.

The same day, in terms of people thinking about what we actually need, something else actually got done:

Democrats in the House Wednesday muscled through a year-end plan to create jobs, mixing about $50 billion for public works projects with another almost $50 billion for cash-strapped state and local governments.

So people are in trouble and the unemployed would get continued benefits. But Obama’s recently announced proposals to give Social Security recipients a special payment, and a tax credit for small businesses that create jobs, and a program awarding tax credits to people who make their homes more energy efficient – none of that was in there, in hopes of getting some Republican vote. It didn’t matter. Not one House Republican voted for this – they called it the “Son of Stimulus” and would have nothing to do with any of it. House Minority Leader John Boehner said this – “More spending, more debt. Same lousy policies that haven’t produced jobs all year.”

His view is that to get things going again the government has to stop things like money for Amtrak construction, school renovation and job training. And the billion or so for part-time college jobs, summer employment for low-income teenagers and money for workers in national parks and forests didn’t do anything for anyone, really. The same with all the public works projects – those aren’t real jobs. The bill also allows very poor people with as little as no income at all to claim a one-grand-per-child tax credit – and to the Republicans that was simply a welfare payment to sixteen million poor families. Why are we giving anyone money? Why are we giving money away? The underlying idea is that when unemployment is this high it’s nuts to consider welfare payments – that’s like paying unemployment to the unemployed, paying people not to work when you want them working. The incentive is backward.

But now this bill goes to the Senate, where it may well die. The Democrats have fifty-nine votes, and the Republicans forty – and it takes sixty votes for cloture, to agree to stop talking and vote on the damned thing. The only possible sixtieth vote is Joe Lieberman’s vote. There no indication he agrees with the Republicans on any of these stimulus issues, but now that has ceased to matter. If someone pisses him off, some Democrat or pundit or progressive blogger, he can stick it to them again, all of them. This should be interesting.

But Dave Weigel reports on Representative Eric Cantor’s determination to stake out the Republican Party’s general position in these matters – it’s time to cut the crap and severely trim the basic elements of the American social safety net, such as it is, or Weigel quotes this document from Cantor’s office, on how to save the government a cool eighty billion:

The bill includes $79 Billion for safety net programs (more than is actually supposedly dedicated to job creation), including:

— Extension of unemployment benefits through June of 2010;

— Extension of COBRA subsidies through June of 2010;

— Extension of Increased Medicaid Matching Rates (FMAP) from December 31, 2010 to June 30, 2011; and

— Extension of the refundable child tax credit to those with income less than $3,000 (under the original stimulus, families must have at least $3,000 in income to qualify).

His party’s position is that all that must go – extend nothing. And Weigel comments – “Those are all pretty popular programs, and ones that voters would notice if they suddenly vanished.”

Well, yes, and Matthew Yglesias offers two points on the merits:

One, with unemployment at 10 percent it’s not like we’re talking about handouts to people who are too lazy and shiftless to get a job. Millions of Americans were happily working away, when deteriorating global financial conditions they had no control over and nothing to do with, which caused them to be laid off. Making sure that they’re still able to get health care and provide shelter for their families and such strikes me as basic fairness.

That said, it’s also wrong to draw a dichotomy between safety net programs and job creation programs under these circumstances. It’s not like poor people and the unemployed are just hoarding this money. They’re using it to buy stuff, bolstering labor market conditions.

Steve Benen adds this:

Right, and to Cantor the spending strikes him as basic “big government.” That safety-net spending is inherently simulative – people struggling tend to spend unemployment benefits on things like groceries, not stick the money in their 401k – is apparently irrelevant.

Yep, how do these guys think the economy will recover, if they make sure that not much basic spending happens?

Benen adds this:

It’s a surprisingly helpful preview of what the public could expect if Republicans reclaim the House majority in next year’s midterms. When GOP leaders talk about “cutting spending,” they’re usually pretty vague. Cantor is offering a reminder of what he and his colleagues will target: the safety net Americans rely on when they’re most vulnerable.

And then on the Imus show Cantor doubled-down:

We haven’t had a discussion in Washington this year about wealth creation, about job creation. It’s all been about trying to provide more safety net, trying to take from those who have been able to create wealth and opportunity and redistribute it. You know, that’s not the America that any of us know.

See Kevin Drum on that:

So there you have it: no help for the unemployed, just more tax cuts for the rich. Sounds pretty Republican to me!

(What’s that? you say. Cantor didn’t say anything about tax cuts for the rich? Sure he did. He just said it in code. Read his statement again.)

It all depends on what you think we need, and Bruce Bartlett makes an interesting offer:

I think we should simply give up trying to redistribute income on the tax side and accept that it can only be done meaningfully on the spending side. This would require both the right and left to give up some of their pet ideas. The left would accept that the only purpose of the tax system is to raise revenue and the right would accept that a fairly extensive social welfare state is here to stay. In essence, conservatives would raise the revenue and liberals would spend it. That’s more or less the way it works in Europe, where conservatives accepted the welfare state in return for having it financed conservatively through a value-added tax. Liberals accepted this regressive form of taxation in return for conservatives accepting the legitimacy and permanence of the welfare state.

Over the years, I have asked a number of liberal friends if they would take this deal. They would get a pot of net new government spending of some amount – say 1% of GDP – to spend any way they like to help the poor. But in return, they would have to let me have a low-rate consumption-based tax system and I would agree to raise taxes enough to pay for the additional spending. It seems like a free lunch to me, but I’ve never found a liberal willing to even consider the deal. They are too wedded to maintaining steeply progressive tax rates on income as a matter of equity.

Can the left give up the idea of using that tax system to level things out, with our current progressive system where the rich pay higher minimal tax rates than the poor? Sure, let the rich keep their money, as long as there’s a guaranteed pot for a social safety net. Is that what we need?

Maybe so, and in the American Prospect, Dalton Conley argues that income inequality doesn’t really matter much. He says what does matter is increased government spending on the poor so they have the same opportunities as everyone else. That’ll do.

And Bruce Bartlett comments:

I think he is right. I have never understood how I am worse off if the top 1% of households increase their share of national wealth or income as long as the absolute level of wealth and income of the other 99% is unchanged. It may be aesthetically displeasing, but it doesn’t impose any actual costs on anyone as long as the pie is not fixed. Of course, were that the case, it would be different. Gains by the wealthy would necessarily come at the expense of everyone else.

Implicitly, liberals tend to believe the pie is fixed. But, generally speaking, it isn’t. A rising tide does tend to lift all boats, even if those at the top get lifted a lot more. But Conley is also right to ridicule the view, common among many conservatives, that enriching the wealthy somehow automatically benefits the poor. That’s obviously nonsense…

For this reason, I have always been more sympathetic to programs that aid the poor than other conservatives.

But from the moderate left, Kevin Drum is not that convinced:

I agree that inequality per se is probably overemphasized by liberals. But I think that both Conley and Bartlett miss something essential. A strong safety net and a commitment to equal opportunity for everyone are certainly important, and this can be funded to some extent by progressive taxes that end up redistributing income downward. But something else is crucial too: a robust, thriving middle class. Not a middle class that receives an ever increasing stream of government bennies to make up for its stagnant wages, but a middle class that’s growing organically, one that sees its own future as brighter than its present and its children’s as brighter yet. If you lose that, all the government programs in the world won’t make up for it.

Rising inequality, then, is just a symptom of the real problem: sluggish middle class wages in a country that’s been growing energetically for decades. That’s the core problem. Get median wages growing at the same rate as the country itself and inequality will take care of itself because there will automatically be less money left over for the rich.

Ah, so that’s what we really need, but Drum points out it’s never that simple:

I don’t pretend to know all the reasons why middle income wages have risen so slowly for the past three decades – globalization probably plays a role, as do declining union density and the rising importance of cognitive labor – but I can certainly point a finger at a symptom: the widespread idea that workers don’t really deserve to share in national productivity gains because it’s management that’s really responsible for them. This is one of those conceits that the rich use to rationalize their enormous income growth, but it’s plainly specious. Ask an economist what’s responsible for increased productivity, and the most likely answer you’ll get is: new technology. So if we really wanted to reward the people who are responsible for productivity growth, we’d shower riches on engineers and scientists. But we don’t. We shower riches on the CEOs who buy their products and make use of them.

But buying a new inventory control system is hardly a sign of managerial brilliance. It’s just something that every company eventually does once a better one is invented, and the CEO who signs the purchase order to buy it is no more responsible for productivity growth than the workers who use it. They’re both piggybacking off of someone else’s invention, and there’s no special reason why either one should be thought more deserving of sharing in the rewards. They both should.

Drum thinks that workers in thriving economies should thrive too:

When they don’t, countries almost inevitably decline, and bread and circuses can never make up for it. I think the key insight here is one that FDR knew well: people want to earn money, not have it given to them, and that’s what we should focus on: getting middle class earnings growing again. A whole lot of other problem will take care of themselves if we do.

Cantor may be right then, we don’t really need a social safety net at all, but wrong in that we may need a way for those who work, and create things, and not just move imaginary money around, to get paid for the value they’ve created. Pay those at the top, the glorified administrators, for the value they actually add. Until then however – and that day is not likely to ever come – it does no one any good when those who work hard and lose their jobs, and healthcare, and homes die in the streets, or one day get very angry. And maybe Brain Bartlett is right too – everyone might as well accept that a fairly extensive social welfare state is here to stay, so we all chip in and make sure it hums along without too much fuss and bother. Deal with it. And Joe Lieberman may be right – it’s best that everyone be forced to buy crappy insurance that doesn’t insure much of anything, at a very high price, from a virtual monopoly that funds his campaigns.

No, that last one can’t be right. Take the extreme libertarian Matt Welch, Reason’s editor-in-chief. His problem is that he’s married to a Frenchwoman (disclaimer, I’ve met her and she has sometimes linked to my sites). That changes things, as he grudgingly admits to the superiority of the French health care system:

In France, you are covered, period. It doesn’t depend on your job, it doesn’t depend on a health maintenance organization, and it doesn’t depend on whether you filled out the paperwork right. Those who (like me) oppose ObamaCare, need to understand (also like me, unfortunately) what it’s like to be serially rejected by insurance companies even though you’re perfectly healthy. It’s an enraging, anxiety-inducing, indelible experience, one that both softens the intellectual ground for increased government intervention and produces active resentment toward anyone who argues that the US has “the best health care in the world.”

And Clive Crook comments:

Assuming the US enacts health care reform, Americans still won’t be “covered, period.” All this effort and expense, and they still won’t have that assurance.

But everyone tells us what we need. Right now some scotch would do.

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About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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