Obama Administration Blames the Messenger
The Obama administration wants to "pivot" to jobs. A bit late, I would say. They wasted a year pushing health care reform. That passed with zero Republican votes in the House and Senate, and about the same number of Republican ideas. When the Democrats controlled both branches of Congress and the White House, they shoved their approach down the throats of Republican in Congress, and an American public that opposed it then, and still opposes the legislation by a 3-to-2 margin.
There was not a lot of concern about a "balanced approach" to health care reform. That is why tort reform was absent, and HSAs and pro-competitive approaches were set back. Rahm Emanuel favored a much more modest, less costly approach than ObamaCare, one that assisted those who were uninsurable to get coverage. But Obama wanted something big, and he got it -- a big and bad approach that will raise health care spending by hundreds of billions a year, at a time when existing spending on government care programs -- on Medicare and Medicaid -- is threatening the fiscal future of both the federal government and many states.
Close to two-thirds of the financing for the new health care entitlement spending comes from new taxes on the wealthy (if you consider 200K a year wealthy). The Democrats never mention the new taxes in ObamaCare, since they do not fit neatly with their "storyline" of the need for a balanced approach and shared sacrifice. Taxes already on the book don't count; only new taxes represent the balance that is needed.
The Democrats had their spokespeople on the Sunday TV news programs to respond to the S&P downgrade of U.S. sovereign debt, and to provide the talking points we can now repeat from memory: we need a balanced approach to deficit reduction; that means revenues from taxing the ill begotten gains of millionaires and billionaires, oil companies, yacht and jet owners, and hedge fund managers. And by the way, they noted, S&P was a major contributor to the subprime collapse, and they made a two-trillion-dollar error, so they have no credibility. We now need to spend hundreds of billions more on jobs and to raise taxes.
The New York Times had its short list of suggested tax increases in an editorial Sunday: income tax rates for everybody, capital gains rates, a new value-added tax, a new carbon tax, higher gasoline taxes, and eliminating all the tax loopholes for corporations and wealthy individuals.
Perhaps the administration thinks it can create anger at S&P, and it can get flash mobs, or its allied union goons (once they are done intimidating people in Wisconsin) to come to New York State and threaten S&P executives in their homes. These S&P rating analysts are like Tea Party leaders in the "minds" of the left -- they are terrorists, financial jihadists, threatening the reelection of the president, and the progressive dream to remake America into a European social welfare state, at exactly the time the European nations are coming to realize they have over-promised, and can no longer afford that vision.
In my health care career, I made many presentations to rating agencies to get hospital bonds rated and answer questions about financial feasibility studies my firm prepared. The analysts were serious, and most of the time, I thought they got it right. Sending out political hacks to insult S&P this weekend is a sign of desperation by the administration. You don't win the future (to use another oft repeated talking point) with a downgrade of your debt.
The Bush administration did a miserable job with the nation's finances, running up over $4 trillion in new debt in 8 years. Obama will blow past that number in a bit over 3 years. The left cannot talk about Medicare and Medicaid and Social Security. They must be off the table, or they will lose the ability to demagogue Paul Ryan and the Republicans and scare seniors, deliberately ignoring the fact that Ryan's plan would not impact anyone over age 55. The Wisconsin congressman had the guts to offer a serious multi-decade plan to get spending in line with historic revenues on a glide path approach, without sudden sharp hits to anyone. This required addressing big entitlements, including the newest one: ObamaCare, whose spending pace guarantees future financial collapse.
We cannot be Germany or France as far as social spending, when our current health care costs are twice as a share of GDP that of other countries, even with gaps in coverage. The big health care problem is cost, not access. The best estimate was that 3 million of the uninsured were uninsurable. ObamaCare provides subsidies for more than ten times that population, creating a vast new middle-class entitlement.
Since the Democrats won't consider serious entitlement reform, we will spend our way to oblivion, and the average standard of living will be reduced sharply at specific future points when buyers of our federal debt decide to pass on new bonds, or demand much higher rates. We will get the kind of standard of living reductions now being enforced in Greece, and Iceland, and Ireland, and Italy.
For the record, I think the private economy is where the engine of job-creation exists. Government jobs are costly and make-work jobs are temporary. Ask Rahm Emanuel about the efficiency of unionized government workers, now that he has inherited the wasteland of the city's financial future delivered to him by Mayor Daley, who basically caved to union demands on wages, pensions, and health care benefits. As, for that matter, Governor Blagojevich did, ensuring Illinois's long-term decline in competitiveness.
For the record, I would eliminate pretty much all the noise in the tax code. Dump all the deductions and special-interest approaches to incentives for real estate or other industries (green jobs and alternative energy, oil and gas companies, hedge funds). In exchange, get a simpler tax code with lower rates that are permanent, for both individual and businesses, and which provide real incentives for work and investment.
A government that serves K Street is a tool of crony capitalism, and serves only the few. Piling on hundreds of thousands of pages of new regulations, issued by unaccountable agencies such as the EPA, will make Al Gore and Barbara Boxer happy, and also inhibit job growth. We can send hundreds of billions to the oil cartel each year, or extract our own resources in shale oil and gas, and create a million or more new private-sector jobs in the process.
The left trusts government to rearrange the wealth and income of society, and believes private industry is greedy and unfair. The left went crazy last week because the debt deal cut future spending by $2 trillion. But it did not cut spending. It cut $2 trillion from a schedule of $13 trillion in new spending, and $50 trillion in total spending. That is what a cut in government spending means. One angry Pennsylvania congressman, Mike Doyle, blurted out that "the other side won't let us spend any money." I guess $3.7 trillion in one year does not count as spending any money. Has a more ignorant comment ever been made by a member of Congress?
One out of every four dollars in GDP is now federal spending, up from one in five 3 years back. And then there is spending by cities, counties and states, another 15% of GDP. But the left says we need more spending -- extending unemployment insurance, some more shovel-ready projects (you know -- the ones that never got created when money from the stimulus was shoveled to the states to allow them to keep the unions happy and defer the day of reckoning for these spendthrifts). The left says to trust big government to get us out of the hole they dug.
Wouldn't you downgrade this mess?