The ObamaCare issue

Many liberals probably think that President Obama’s re-election assures once and for all that ObamaCare will be implemented. Nothing could be further from the truth. Not only does the bill remain very unpopular (three-fifths of Americans disapprove of it in current polls), but some of the unwieldy and sneaky provisions written into the massive bill in its hasty preparation are already coming apart.

First, although the Supreme Court ruled that the individual mandate was constitutional (but as a tax, not as a power granted under the interstate commerce clause), it also ruled that the federal government could not force states to expand Medicare, nor penalize them if they chose not to.  Many states, perhaps eventually a majority, are using that ruling to refuse to expand Medicare, since it increases the state’s Medicare costs, requiring more taxes.  Since many states are already having trouble funding their existing Medicare obligations, they are quite wisely not about to make the problem worse if they can avoid it.

Now the problem for the administration is this – hospitals, insurance companies and health care providers were counting on the subsidies and added business from this Medicare expansion to offset some of the cuts they agreed to, and some of the new features of the law, like the pre-existing condition clause.  Suddenly this offset is no longer there, and you can bet these lobbies will be back to their Congressmen to change the law to fix this somehow.

Second, ObamaCare expects the states to create health insurance exchanges (but of course without sending the states any money to fund this activity).  Contrary to the bill’s expectations, some 30 of the states have already refused to create such exchanges. Since they don’t have to (the same Supreme Court ruling reaffirmed the principle that Congress cannot command states to run a federal program), most are not going to take on the financial burden of staffing and running a federal program they don’t think they need.  The law requires the federal government to create such an exchange if the states don’t, but didn’t provide any funds for the federal government to do that either.

Now the administration’s problem with this is that these state exchanges were a sneaky way to embed and hide some $800 billion in subsidies and tax credits so that they wouldn’t count against ObamaCare’s total cost.  But suddenly this mechanism isn’t available, so the increased costs are now clearly visible. More than that, the employer penalties for not offering employees adequate insurance were tied to these state exchanges. No state exchange – no employer tax penalties. You can bet companies will soon start to move from any state with a state exchange to neighboring states without the exchanges. 

So this battle is far from over, and in the end it probably won’t be Republican opposition that sinks most of the bill, but the simple unworkability and fiscal unsustainability of it.  The math never did make sense – one cannot insure millions more people without it costing a lot more money, however hard one tries to hide the cost. One cannot expand the Medicare rolls by millions of people without it costing a lot more money, which has to come from somewhere.

Union Madness

The tale of the Hostess Baking Co. bankruptcy is a classic example of what has gone wrong with unions. Originally formed to address a very real problem - outrageous exploitation of workers by large companies, unions have long since become part of the problem rather than part of the solution. All across the country, teacher's unions are obstructing educational reform, and public service unions are driving many cities and states into bankruptcy, and unions have long since driven whole industries, like the domestic steel industry, into extinction. But the madness of the baker's union in this case is simply hard to fathom.

It is true that the company upper management voted itself huge pay and bonus raises last year, probably because they could see the handwriting on the wall for the company and wanted to cash out while they still could.  And it is also true that the market was changing and some of Hostess's products were not as popular as they once were.  But if the Baker's union had agreed to the rather modest cuts that the bankruptcy judge had proposed, at least they would still have jobs.  Instead they are all out of work, and they have put another 12,000 other people out of work as well.

Nor is this the first time the Baker's Union has done this.  Several years ago, the union led its members out on another poorly-conceived strike and drove biscotti-maker Stella D’Oro to close their Bronx facility permanently.

What could the union leadership have been thinking?  And why did the union membership let their leaders get them into this situation?  It boggles the mind!  Certainly it is clear that the union leadership's agenda didn't include keeping their members employed.   And by the way, does the Baker's union leadership also lose their jobs -- I don't think so.

Recommended: Shock the Casbah

Since I have just recommended Adam Garfinkle's ongoing series on our own national troubles, I might as well also recommend his thoughtful article on the current Israel-Palestinian mini-war: Shock the Casbah.

The Israelis really are in an impossible position. If Canada or Mexico were lobbing rockets into adjoining US states, you can bet there would be an immediate and overwhelming military response from us.  Any US administration that did anything less would be turned out of office in days, if not lynched in the streets. Yet there continue to be a vocal minority in the world who somehow sees all this as Israel's fault, with an emotional reaction to every civilian death on the Palestinian side but apparently little or no empathy for the Israeli side of the problem.  Some of this, I suppose, is endemic anti-Semitism, which is still very much alive in the world.

In truth, the successive Israeli governments haven't always made the best tactical choices, just as our own government hasn't always done the smartest thing. But they really do face an impossible situation - an enemy embedded geographically in their midst who has sworn to eradicate them from the face of the earth, and is quite willing to kill civilians and children, and even their own people, to achieve this end.  By now the Palestinians have reached the "Northern Ireland" phase, where they have a large cadre of thugs who have fought so long that they know no other life and want nothing more than to keep fighting forever.  It is pretty hard to negotiate any sort of meaningful truce, let alone a permanent peace, with such people.

Recommended: What’s Wrong, and How to Fix It

Adan Garfinkle, writing in The National Interest's blog, is in the process of producing a profoundly interesting series examining the nation's current dysfunction and problems, and proposing a way to think about correcting them. Thus far he has written four parts (which you can read as Part 1, What's Wrong and How to Fix It, Part 2, Political & Institutional, Part 3, Corruption and Plutocracy, and Part 4, Television and Politics).

These are not easy pieces, with glib, simplistic solutions. Our national dysfunction is not simple; it is very complex, rooted in fundamental changes in our culture.  If I were to try to summarize it in a short statement, I would note that democracy, as a form of government, can only work if the culture of the citizens emphasizes duty as much as rights, and we as a nation seem to have lost much of the sense of duty and exalted too much the concept of rights. The last person I can recall stating this balance correctly was President Kennedy: "Ask not what your nation can do for you; ask what you can do for your nation".

In any case, I strongly recommend reading these pieces and thinking about them.  No one, of course, has all the answers, but Garfinkle seems to me to have many good points.

What hasn't changed

Well, we are past the election (Finally, thank goodness!) and basically nothing has changed. We still have the same president, the same administration, and roughly the same Congress, all of them arguing about the same issues. The president wants $1.6 trillion in new revenue over the next decade (meaning new taxes), while the Republican's would like to see at least a token reduction in spending, but not a penny of cuts to the military budget..

But the elephant in the room that still hasn't changed and everyone is still ignoring is the $1+ trillion a year deficit that the federal government is adding to the national debt. Nothing either side is offering makes more than a token dent in that deficit, nor has either side gotten real about the unsustainable future Medicare obligations that are driving us toward a much bigger fiscal cliff than the current one.

Recommended: The GOP has lost its way. Here’s how it can return to its roots.

Here is another thoughtful piece worth reading, from Craig Shirley at The Washington Post:  The GOP has lost its way. Here’s how it can return to its roots. For example:

The Republican Party has more cultural conflicts than the Habsburg Empire. .......

There is no greater example of the contradictions within the national GOP than its position on same-sex marriage. This summer, Republicans put a plank in their convention platform calling for a constitutional amendment defining marriage as between a man and a woman. Meanwhile, Obama said that while he favors gay marriage, it is up to each state to decide what to do about the issue. It is not a federal matter, in the president’s view.

Obama now apparently holds the more correct conservative position on the marriage issue. If the opposition party’s leader understands federalism better than the GOP does, is it any surprise that the Republican Party finds itself adrift, asking, “What do we do now?”

There are lots of other points in this article worth thinking about.

Recommended: The Party of Work

David Brooks, as much a sociologist as a journalist, has once again written an insightful piece, The Party Of Work, in the New York Times. He discusses our Puritan heritage as it evolved into a Southern and a Western vision of hardy independence and individualism that was for many years the bedrock appeal of the Republican party.  This vision is inherently suspicious of government, seeing it as intrusive and potentially sapping initiative.

As Brooks points out (and as the analysis of the polls in this least election bear out), an increasing proportion of the country are immigrants from other cultures who indeed believe in hard work (often far more than those who have been here for more generations, shades of the "Tiger Moms"), but who have a different view of government and don't view it with suspicion.

Republicans apparently need to do far more than just drop their nutty religious and patriotic extremism, their short-sighted immigration views, and their anti-science biases.  They need to fundamentally rethink the bedrock appeal of the Republican party if they are to reshape the party to appeal to these immigrants.

This is a good article, worth pondering.

Some people just don't get it...

Sure enough, the Tea Party thinks Romney wasn't extreme enough, even though his support grew late in the campaign as he moved to more moderate positions (but too late to help him). Excerpts from a article by Erik Wasson posted today on the website The Hill:

Conservative leaders on Wednesday lashed out at Mitt Romney, saying his attempts to paint himself as a moderate and hide his principles cost him the presidency. They vowed to wage a war to put the Tea Party in charge of the Republican Party by the time it nominates its next presidential candidate.

“The battle to take over the Republican Party begins today and the failed Republican leadership should resign,” said Richard Viguerie, a top activist and chairman of ConservativeHQ.com.

 Jenny Beth Martin of Tea Party Patriots said Romney failed to make the kind of strong case for conservatism that would have won the election.

 She described Romney as a “weak, moderate candidate hand-picked by the country club elite Republican establishment.”

Well, natural selection works in politics just like it does in nature. If the Tea Party people are too dumb, or too blinded by their ideology, to understand the change in the country's demographics and the implication of that change for their party, then they will go the way of the Dodo bird......

Recommended: The Elections, Gridlock and Foreign Policy

I recommend George Friedman's post in the STRATFOR site, The Elections, Gridlock and Foreign Policy.

Several sections seemed especially interesting, including:

...... The United States cannot be the global policeman or the global social worker. The United States is responsible for pursuing its own interests at the lowest possible cost. If withdrawal is impossible, avoiding conflicts that do not involve fundamental American interests is a necessity because garrison states -- nations constantly in a state of war -- have trouble holding on to power. Knowing when to go to war is an art, the heart of which is knowing when not to go to war.

One of the hardest things for a young empire to master is the principle that, for the most part, there is nothing to be done. That is the phase in which the United States finds itself at the moment. It is coming to terms not so much with the limits of power as the nature of power. Great power derives from the understanding of the difference between those things that matter and those that don't, and from a ruthless indifference to those that don't. It is a hard thing to learn, but history is teaching it to the United States.

"Excepts from The Elections, Gridlock and Foreign Policy are republished with permission of Stratfor."

A prescription for the Republican Party

Now that the Republicans have once again been shown that their current right-wing religious extremism can’t win national elections, even against a vulnerable opponent, what prescription would a political doctor prescribe for them to cure the problem?  Here is my prescription:

• Drop the contentious religiously-motivated social issues like abortion and gay rights entirely. Believe what you will, and practice what you believe, but stop trying to force your own beliefs on the rest of the country.  An increasing majority of the country doesn’t agree with you, so continuing to push these issues is just alienating the voters you need.  If you can’t compromise on these issues, then at least keep quiet about them.

• Drop your inflexible opposition to tax increases. There is no way out of our current deficit situation without raising taxes.  Instead push for spending cuts to go along with any tax increases, and try to get as high a ratio of cuts to tax increases as possible, at least $2 in cuts for every $1 in tax increases and more if possible.

•  Learn to compromise again. Republicans used to know how to compromise; how to work across the aisle.  That is the only way democratic politics works. Give a little to get a little.  Be willing to settle for half a loaf rather than nothing. This no-compromise absolutist stand the party has adopted in recent years is just hurting all our futures, and the party’s future in particular, and gaining you almost none of the things you really want.

• Get real about immigration.  America needs immigrants. It is immigrants that are helping us avoid the demographic aging that is decimating other countries.  It is bright, innovative immigrants that are fueling the innovation and entrepreneurship that makes America the dominant economy in the world.  It is just plain dumb to let the world’s best and brightest get their higher education in American universities, and then force them to leave the country. Besides, your stand is alienating the Latino and Asian vote, which is becoming an ever larger share of the population.

•  Get real about climate change. It is by now obvious to most people that the climate is changing. Continuing to deny it just makes you look ignorant and stupid. There are reasonable disagreements about just how much humans are contributing to this change, and about what the most effective response would be, but to continue to deny the problem even exists is counterproductive.

•  Get real about reducing the federal deficit and debt. People are worried about this. Republicans are supposed to be the fiscally conservative and fiscally responsible party, and you talk about it lot on the campaign trail, but in fact the last time you held the presidency you made the problem worse, not better. You are losing credibility on this issue, when it should be one of your strongest positions.

•  Pay attention to demographics. You can’t win national elections with just older white working class male voters and the issues they care about. The demographics of the nation – age, ethnicity, educational level – are changing, and you need to adjust your positions on issues to account for that. You can only win national office if you adequately represent the issues and position of the majority of the nation.

And I strongly suggest you take this prescription right away. Otherwise your condition will continue to deteriorate and might even be fatal by the time the next presidential election comes around.

The election II

Well, President Obama won re-election, more or less as expected and as the polls predicted. No doubt there will be months of analysis and Monday-morning quarterbacking and self-examination among the Republicans, but here is what I take away from the election on the morning after:

• President Obama was highly vulnerable, given the unpopularity of Obamacare and the lackluster economic recovery.  The fact that the Republicans couldn't unseat him despite these handicaps tells us that the Republicans played a very, very weak hand in this game.

• If the original, moderate Romney had run, he might well have won.  The fact that he had to shift so far to the right to win the Republican primaries and keep the Tea Party and religious right base probably doomed his campaign right from the start and lost him much of the independent vote that might otherwise have helped him win.

• What Republicans ought to take away from this (but probably won't) is that this is a moderate country, and extreme political positions, left or right, simply can't garner enough votes to win. There simply aren't enough evangelical Christians and Tea Party stalwarts and white working class men to make a winning coalition out of that combination.  They need to move the party back toward the political center and attract more independents, women, Latinos and Asians or they will soon become irrelevant.

Will the Republicans be smart enough to see this?  I don't know.  If they are smart enough to see this, can they reshape their party in the face of extreme right ideologues and committed Evangelicals? I doubt it.

The "fiscal cliff"

Whoever wins today, the first crisis they will face is the looming "fiscal cliff", in which the Bush tax cuts expire and the "automatic sequesters" occur. If these were both to actually occur at the first of the year, the immediate shock to the economy might well push us back into recession.

But it is worth recalling how we got here.The Budget Control Act of 2011 was supposed to take steps to cut the budget deficit over the next decade by establishing the Joint Select Committee on Deficit Reduction. Their goal was actually quite modest - $1.5 trillion in cuts over the next 10 years, not enough really to make much of a dent in the problem since we are currently running annual deficits of more than $1 trillion a year. Still, it would at least have been a start.

To make sure the committee accomplished it's goal, the law established an automatic "sequester" or series of cuts to come into play if the committee didn't come to agreement.  This was supposed to be enough incentive to assure an agreement was reached -- surely Congress would prefer to select where to cut than to have automatic across-the-board cuts applied indiscriminately. But in fact the committee never could come to agreement, even on the modest goals proposed, so the "sequester" is about to come into play at the first of the year.

Probably what will happen is that Congress will find some way to avoid the "sequester" cuts.  That reduces the risk to the economy, but it means in effect that absolutely nothing at all came out of the Budget Control Act of 2011, and no effective steps at all have been taken over the past four years to reduce the deficit or the debt. The whole thing will have been a political farce.The committee didn't agree to any cuts, and Congress then voided the very incentive that was supposed to make the committee come to agreement. (though, of course, one could argue they might as well void it, since the threat didn't work anyway).

With respect to the Bush tax cuts, the Republicans would like them all extended, while President Obama would like to extend them only for incomes below $250,000 (how he decided that number divided "the rich" from the rest of us is unclear). That division displays clearly the ideological blindness of both parties -- Republicans are blindly against raising any taxes no matter what, while Democrats are oblivious to both the realities of small business (many are chapter S companies, taxed as individuals, and hence caught by the $250,000 divide) and the realities of new business investment (new investment money comes from those who have it - mostly those with high incomes).

In the end no doubt Congress will find some way of avoiding the fiscal cliff, though probably only at the very, very last moment possible, and quite possibly by simply postponing the fight a few months. That will leave us back exactly where were were before -- running an unsustainable federal deficit every year with no plan whatsoever to solve the problem.

Recommended: None of the Above

Francis Fukuyama and Walter Russell Mead have a fascinating dialog in the November/December issue of The National Interest: None of the Above. They discuss the broader picture of the current election; what is happening in the country and how does it compare to other epochs in our history.

Both see American society going through a major transition, from what might be called the "post-industrial" age to what might be called "the early information age", and to be the first society to make that transition, so that it is not surprising that we really don't know how to do it right yet.  Both think this election will not solve any of the major problems, or even make much change in the status quo.

It is an article well worth reading and thinking about.

My ideal presidential candidate

Having just complained about the choices on offer in this presidential election, perhaps I ought to suggest what I would like to have seen on offer.  My “perfect” candidate would have:

1.       Offered a plan for progressively reducing the federal deficit and debt over the next decade or so, probably by a mix of higher taxes and reduced government spending along the lines suggested by the Simpson-Bowles commission (which Obama chartered, but then pointedly ignored when he didn’t like the result).

2.       Proposed to massively simplify and reform the income tax system, eliminating all or almost all of the special interest deductions and loopholes, simplifying the nightmare complexity of the 70,000+ pages of tax code, and reducing the corporate tax rate (which almost no one pays because of all the loopholes) to something more in line with our competitors in the world market.

3.       Admitted that entitlement programs, especially Medicare, are on track to bankrupt the country in the coming decades, and proposed at the very least to start a national debate on how best to reform them to make them financially sustainable.

4.       Admitted  that the 2000+ page “Obamacare” bill, well-intentioned as it might have been, is proving to be a disaster (companies are already beginning to shift full-time jobs to part-time jobs – less than 30 hours per week– to avoid the bill’s insurance requirements) , and proposed a much more comprehensive, less ideological  examination of the entire health care issue.

5.       Admitted that private enterprise, especially small businesses, account for most of the jobs in this country and all of the federal revenue, and proposed plans to make federal government regulations less expensive, arbitrary and inflexible and more business-friendly.

6.       Admitted that America needs immigrants, and proposed immigration reforms that would (a) have made it easy for more immigrants, especially high-skill immigrants, to come to this country to work and start businesses, and (b) offered a guest worker visa program for the low skill immigrants we need to pick crops and work in meat packing plants, etc.

7.       Understood that we spend far, far too much on our military, and that we could cut the military budget in half and still spend more than the next 14 nations combined, including China and Russia.  Of course the cuts would need to be made rationally on the basis of what the military really needs, not on the basis of which Congressional delegation has the most influence.

8.       Admitted that climate change is quite evidently going on, and human activity is quite likely a major driver, and proposed at least to fund more basic research to better understand the problem and its consequences.

9.       Understood that in todays’ technologically-driven world, educating our workforce adequately is key to maintaining our economic dominance in the world, and proposed some new and innovative approaches (more than just throwing more federal dollars at the problem) to improving American education, especially in the K-12 range. And that would include breaking the teacher’s union’s opposition to reforms.

Of course, since some of these are anathema to Democrats, and some are anathema to Republicans, any candidate who held these positions would never make it through their own party’s primaries, let alone have a chance in a general election.  More’s the pity…….

The election

Well, we have finally reached election day, although no doubt the legal challenges and recounts will extend the agony for a few days more. If there was ever an example of how dysfunctional our political system has become, it is this election. Set aside the vast amount of money (apparently something like a billion dollars on each side) wasted in nasty, negative, largely untrue or distorted advertising by each side.

What is most notable is that even while our nation is faced with a number of very significant problems (growing federal debt, climate change, Iran's nuclear ambitions, high unemployment, a turbulent Middle East, etc, etc), neither presidential candidate offered any concrete plan at all to address any of these issues.  President Obama spent much of the year demonizing Governor Romney for being a successful business man, while Governor Romney flip-flopped on just about every issue of significance (though in his defense, he probably had to do that to even win the primary).

The press coverage was, predictably, stridently partisan and remarkably devoid of any serious analysis. An analysis I read today reports that the overwhelming proportion of press coverage was negative, even nasty, and often quite unfair and untrue.  And this applied equally to both parties.

And in the end we seem faced with an impossible choice - a Democrat who shows no signs of being willing to address the swelling federal deficit and debt and a Republican who is hamstrung (whatever he may believe privately) by a party captured by the religious right. And whichever one wins will probably face a Congress as bitterly divided, as dysfunctional, and as gridlocked as it has been the past few years.

This is not a hopeful scene, whatever the outcome of the election.