Meals From The Marketplace

            Several weeks ago, I provided a list of possible deficit-reduction moves the federal government could make and what their effect would be on the trillion-dollar-plus deficit the country is currently facing.  My purpose was two-fold: first, to indicate how difficult, if not impossible, it will be even to approach a balanced budget without a major increase in revenues; and, second, to point out how out of touch the tea-bagger crowd is with reality.

            As might be expected, my mail was full of scorn from the members of that movement and their cheerleaders in the Republican Party.  (The two are morphing none-too-gradually into one, as more and more Republicans, either because they feel intimidated or because they are completely Machiavellian, embrace the movement’s talking points.  That the movement is a product of Glenn Beck and his Fox News colleagues makes the morphing all the more plausible, since Rupert Murdoch’s cable network is also the most aggressive champion of the Republican Party.)

            Some of the correspondence I received was respectful, along the lines of “damning with faint praise.”  One writer lauded my rhetorical skills while dismissing the facts I recited as “obfucatory.”  Another suggested Bush wasn’t a true conservative and that whether he was or not doesn’t change the fact (in his opinion) that Obama is a socialist.  Others were just angry, at me and at Obama and the Democrats, because, well, just because, I guess; most of them didn’t provide much in the way of specific reasons.

            That anger is certainly at the heart of the tea bagger movement.  Everyday folks don’t go to rallies carrying signs like “Left My Guns at Home – This Time” unless they are very angry.  How much less anger do they have collectively than Joe Stark (the guy who flew his private plane into the IRS building in Texas last week) had personally?  Hopefully a good bit; but with some of the irrational things they purport to support (and oppose), you have to wonder.

            But because most of them are everyday folks, the hope is that most of them can be educated.  (I’ll mention only in passing the fear that they are far closer to Madame Defarge than Benjamin Franklin in their revolutionary zeal, thus being beyond reason and incapable of hearing rational arguments, let alone learning from them.)

            And so, in an effort to educate those consumed with anger, here is a relatively simple reason (one among many that are all equally pressing and real) that explains why major health care/health insurance reform is necessary to contain health care costs. 

            Let’s start with an indisputable fact.  Under the current system, wherein health care is largely regulated by insurance companies, costs are increasing at an alarming rate. 

            Just last week, as if to drive home the point, one of the largest healthcare insurance companies – Anthem – announced a 39% average increase in insurance premiums for its policies.  Other companies are said to be on the verge of announcing similar increases, holding off only because of the impolitic nature of any such announcements.  (Anthem was severely castigated by Obama and many commentators on the left and right almost immediately after it announced its plan; it has since pulled back on it to “study” the issue.)

            So why are the costs of health care increasing?  Part of the reason, certainly, is the nature of the for-profit system itself.  Companies like Anthem exist to make money for their shareholders, their executives and, hopefully, their employees.  It’s how things are supposed to work in a capitalist economy.  You provide an essential service, you employ people who earn commensurate with the earnings of the company, and you survive because you continue to provide the service to a sufficient number of consumers to keep the business viable.

            But there’s another, probably more significant, reason for the increased cost of health insurance, and it is far more invidious and far less containable in the current system.  It’s called the “insurance death spiral,” and here’s how it works:

            In order to make a profit, insurance companies must secure more in premiums than they pay out in benefits.  In the case of health insurance, that fact means that companies must insure more individuals who don’t need health care than those who do.  (The specific ratio will depend on a variety of factors, but the basic point is indisputable.) 

            Thus, if an insurance company’s customers are primarily a healthy lot, it can keep its premium rates relatively low and still make a profit.  But if the company’s customers are primarily in need of medical care, i.e., if they are unhealthy, the company must increase its premiums to maintain a meaningful degree of profitability.

            Now let’s juxtapose the reality of a struggling economy, with many, especially those likely to be most healthy (young people), seeking ways to make ends meet.  They have absolute needs (food, shelter) that they will use their limited income to meet.  One of the things they may decide they don’t need (or at least are willing to take a chance on not needing) is medical care. 

            And so the pool of healthy customers for the insurance company dwindles, while the pool of the unhealthy remains constant.  To meet its profit goals, the company will have to increase its premiums. 

            But then a second wave of difficulties is likely to emerge as private companies who provide health insurance for their employees are also hit with the weakened economy.  They, too, look for ways to make ends meet, and their employee benefit package, to wit: the health care benefits they provide, is also likely to be cut. 

            And those employees will now be faced with a difficult decision: Do they pick up the costs of insurance or go uninsured?  With premiums escalating, many will choose not to insure, leaving the insurance company with even fewer healthy insureds, and with even more reason to increase premium costs. 

            The insurance death spiral is real.  Anthem is just the tip of the iceberg.  Private industry isn’t capable of solving this problem alone.

            Health care reform is the only viable solution.

“Life’s but a walking shadow, a poor player

That struts and frets his hour upon the stage,

And then is heard no more.  It is a tale

Told by an idiot, full of sound and fury,

Signifying nothing.”

-Shakespeare, “Macbeth”

            My wife has attended three funerals in the last month, and none of them had to do with the fact that she is an attorney with a certified specialization in probate law. 

            The first was the funeral for her former senior partner.  That one wasn’t too hard to take.  He was well into his eighties, had led a full and rich life, and died after a relatively short illness.  As deaths go, not all that bad.

            The second was for a much younger man, who committed suicide.  She went to that one because he was the son of a friend, a friend whose daughter had been killed by a drunk driver just ten months earlier. 

            The third funeral was the only one of the three I attended.  It was for one of my best friends.

            “Death is a big subject with me,” Woody Allen proclaimed in his classic film, “Annie Hall.”  Me, too.  In fact, the older I get, the bigger it gets in my mind.

            Don’t get me wrong.  It isn’t the thought of what happens after death that keeps me up at night.  I’m not hung up on what death might bring.  You get no Hamlet’s soliloquy from me.

            No, my preoccupation with death is the part that leads up to it – the life part, the part that begins immediately after birth and continues right up until the point that the living ceases.

            We’re born to die; that’s the rub for me. 

            It all started in my mid-20s, when I almost died from a botched appendectomy.  The details aren’t important, but the upshot of the experience was that I went into surgery and woke up to be told that I had almost died.

            Two things occurred to me in contemplation of that news.  The first was that the being dead part of death was nothing to fear.  Had I died that day, I never would have known it. 

            I wouldn’t have missed not being alive, wouldn’t have regretted not completing the project I was consumed with before the surgery, wouldn’t have mourned the loss of the many years I would otherwise have expected to experience.  I wouldn’t have been in any sense sorrowful over my demise because, of course, I wouldn’t have any sense of it, or of anything else for that matter.

            And so, that experience, early in life, freed me of the fear that I have since come to suspect leads many to find solace in religion.  There isn’t anything to be afraid of in death.  It is the literal absence of anything; the complete nothingness of a non-existence.

            And I do not mean to cast any aspersions on religious beliefs by anything I’ve just said.  It’s just what makes sense for me.  I understand that many who have a faith in a spiritual existence believe that death opens doors to a new awareness, a new reality.  I understand that for those with that kind of faith, religion gives hope and provides courage.  But that’s not how it works for me.  Death is the end, the terminus, the point at which nothing can be known or understood or felt or learned.

            It’s the second thing that occurred to me after my near-death experience that keeps me up at night, more so as I grow older and more familiar with sickness and my own frailty.  It’s the things that happen to us that bring us to that point, the dying part.

            I’m probably losing some of you at this point, and I understand if you wonder what all of this has to do with you.  Nothing might be the answer – or everything.  It all depends on your perspective.

            Here’s mine:  All of life is marked by the certainty of death.  From the point at which we gain any understanding at all of our own mortality, we are aware of this fact, either consciously or subconsciously.  Either way, we can’t escape it; it’s an immutable part of the human condition.  We live to die, and die we must.

            And so the question becomes how we deal with this reality.  Do we strive to extend the period we have for as long as possible by living “healthy” and by staying “safe” and by avoiding “risks”?  Or do we seek to experience as much as we can in whatever time we have, figuring that since we can’t know when our time will come, we might as well live every day as if it were our last?  Or do we try to ignore it entirely, thereby living day to day without any sense of purpose other than to take what comes and do what must be done to make it to that next day?

            I’ve found myself in all three of those attitudes at various points in my life, sometimes even incorporating aspects of all three at the same time.  And I’m pretty good at living in the here and now for the most part.  I work hard, play hard, and enjoy everything about the moments of my life that I can.

            But ultimately, when it’s all stripped away and I am alone with my thoughts, I’m left with the reality of death, of the slow march to it that I and all of us are inexorably on.

            Back about 20 years ago, Marlon Brando, then still vigorous and yet already a legend in his own time, gave an interview that gradually drifted into metaphysical ruminations.

            “Here’s how I see it,” he finally said to his interviewer.  “We prance around like big shots, doing our thing, whatever that might be.  We live life to the fullest of our capacities, striving mightily to make a mark of some kind.  And then, in the end, we find ourselves lying somewhere, gasping for our last breath.  And maybe, at that point, we ask ourselves, ‘now what the hell was that all about’?”

            I’m haunted by that thought.

            The Obama administration is taking all kinds of heat these days for the one and a quarter TRILLION dollar budget deficit it has just proposed for fiscal year 2011.  (Actually the projected deficit is a tad higher than that, but what’s a trifling 17 billion or so among friends?)

            Figures accompanying the budget that were released from the Office of Management and Budget provide a more significant and meaningful point of departure for any serious discussion about the deficit and how difficult it will be to get it under control.

            Here are a few “savings” that would be realized by taking steps variously proposed/demanded by the president’s staunchest political foes (to include the “tea baggers,” even though most of their rhetoric is of the know-nothing variety).

            Cutting the National Endowment for the Arts to zero funding, i.e., closing it down completely, would save less than $500 million dollars.  Remaining deficit – $1.267 trillion, exactly where we started.

            Completely disallowing Congressional earmarks, meaning absolutely no special projects (such as road improvements or research grants for any of the 435 Congressional districts in the country) would save $10 billion, reducing the deficit to $1.257 trillion.

            Eliminating all welfare payments of any kind (a big talking point from the right) would cut the deficit by all of $29 billion, reducing it to $1.238 trillion.

            Cutting all foreign aid (another point some on the right push) would save $41 billion. 

            What about the big bugaboo that Republicans have long hated, the Department of Education?  Closing it down would save $94 billion, less than eight percent of the total deficit.

            Stopping both wars (Iraq and Afghanistan), a favorite idea from the left, would cut the budget by $135 billion, a little over ten percent of the total deficit.

            Halting the Recovery Act (a.k.a. the stimulus bill) in its tracks and returning all unspent money and all unrewarded tax cuts to the federal treasury would net $258 billion, not quite 20 percent of the total deficit.

            Ceasing all Medicaid benefits (thereby leaving those living in poverty without healthcare) would save $271 billion.

            And so it goes.  The bottom line of this little review of the nation’s fiscal plight is that there is no easy solution.  In fact, even if all domestic spending, other than entitlement programs (Social Security and Medicare being the principal ones), was eliminated, the result would only cut the deficit by $530 billion, not even half of the total.

            But the shocks keep coming, especially for those on the right, because let’s remember what the fiscal state of the country was when George W. Bush became president, just nine years ago.  At the time, the federal budget had been in the black for three straight years.  Sound unbelievable? You betcha, especially when you add in the fact that the economic boom that created that very nice condition had occurred in the wake of the 1993 Clinton tax increases that were enacted with every Republican member of Congress kicking and screaming about how they would destroy the economy and lead to absolute ruin.

            Turns out, business enterprises still function with higher tax rates imposed on them, and individuals still seek ways to improve their personal income situation even when they are taxed at higher rates.  And it also turns out (as witness the results of the Bush tax cuts) that those same business enterprises don’t necessarily function as well even when allowed to keep more of what they make, and individuals don’t necessarily make the wisest decisions even when they are taxed at lower rates.

            In other words, throw all that supply side economic theory in the trash.  It isn’t worth the paper napkin Arthur Laffer wrote it on. 

            Instead, let’s consider what Obama inherited and how the spending decisions he has made were essentially dictated by the disastrous fiscal management of his predecessor.  Or, put another way, how did we get from there (fiscal year 2000, with the entire national debt projected to be paid off in ten years) to here (fiscal year 2010, with a national debt that has grown by over eight trillion dollars in a single decade)?

            Two things happened under the Bush presidency to explode the national debt.  The first was his signature economic initiative, the massive tax cuts he pushed through Congress in his first year in office.  That decision immediately reversed the annual budget surpluses (of approximately $250 billion) that had been occurring and were projected to continue and created budget deficits of a similar amount. 

            The second thing was the Bush decision to go to war in Afghanistan (arguably justified) and, shortly thereafter, Iraq (essentially unjustified) without seeking increased revenues from any source to pay for either or both (completely unjustified and wholly irrational).  In fact, in addition to not paying for the wars, Mr. Bush and his cadre of advisors insisted on keeping the funding of the wars “off the books,” meaning they didn’t even account for them in annual budget requests to Congress.  (Congress didn’t object, since having to deal with the funding sources for the wars would have led to talk of tax increases, heaven forbid!).

            Those decisions (the tax cuts and the unfunded wars) account for approximately half of the current deficit as well as much of the buildup of the national debt. 

            The rest is directly attributable to the recession/financial crisis that Mr. Obama inherited and that was the result of the laissez-faire economic policies championed by Mr. Bush.  In other words, in case you haven’t been keeping score, the current deficit is due entirely to Bush policies and mismanagement.

            Ah, you say, but it’s Obama’s budget that is so heavily in the red.  True, and Obama alone pushed for the $787 billion stimulus bill and supported the Bush administration’s Trouble Asset Relief Program (TARP) to save the nation’s financial industry.  Those measures can be legitimately debated, but any debate on either must honestly factor the likely consequences of having enacted neither. 

            Yes, the deficit would have been smaller without that infusion of federal spending, but so, ultimately, would the nation.

            Sometime around mid-December, give or take a week, President Obama responded to a reporter’s question by saying he’d give himself a B-plus for his first year in office.  He then quickly added that he’d raise the grade to an A-minus if Congress passed the health care reform bill and he signed it into law.

            Now that the first year is behind him, it’s clear that he didn’t get his A-minus.  In fact, that B-plus might be higher than he deserves based on the way his first year ended.

            Lest anyone forgot, Obama’s big health care initiative got stalled in back room negotiations between the divergent members of his own party before it was completely scuttled by the election of a 41st Republican Senator.  That single upset in Massachusetts was loaded with shock value, as the previously unknown Scott Brown defeated the state’s sitting Attorney General in the race to replace Ted Kennedy.  The election occurred on January 19, and was a fitting end to the first year of the Obama presidency.

            It is a presidency that has lost far more than its luster.  It may also have lost its direction, as the “change” that was the single-word mantra of the campaign slowly got buried in a flurry of events, only some of which the administration could claim to have had no control over.

            Consider that in the span of one single year, Mr. Obama has managed to lose the excitement he generated from both the liberal wing of his own party and from the independents who flocked to him in droves (with both their votes and their dollars) during the campaign.  That’s no small task, especially considering that he also managed to engender the near hatred of the other side of the political spectrum, as epitomized by the tea bagger movement.

            And so, in reflecting on the first year of what was supposed to be a transformative presidency, it is only fair, right and proper to posit the simple question – what happened?

            The answer is not nearly as simple as the question, but it has to start with the man himself.  Turns out, he’s a much better campaigner than he is a leader.  As a campaigner, Obama caught a mood and ran with it.  The country was sick of everything that George W. Bush had represented for eight years, and Obama turned that feeling into a reformist battle cry. 

            Unfortunately, campaign slogans, bereft as they often are (and largely were in this case) of substance, don’t bear much resemblance to the nitty-gritty work of governing a nation.  And Mr. Obama, as had been predicted by many, lacked the experience to be president.

            Of course, the same can probably be said of every newly-elected president.  Even succeeding vice-presidents lack the real experience of being the most powerful person in the world.  It’s a job that has no pre-election training program.

            But the other conclusion that emerges from Obama’s first year as president may be a more serious problem.  For while new presidents can, and usually do, figure out the requirements of the job, some just don’t have the skill set.  Mr. Obama may well be stuck with that tragic deficiency.

            It isn’t that the man lacks the smarts.  He’s probably smarter than almost anyone on the political scene today.  And it isn’t that he lacks the energy or interest in the job.  He’s totally committed and has plenty of youthful stamina for the long hours and grueling travel schedule.  And it certainly isn’t that he lacks an understanding of the critical importance of the work.  He knows that the times are perilous for his country and that the future for the entire world may rest on his ability to find solutions to things like environmental degradation, radical Islamic terrorism, nuclear proliferation, and a host of other seething problems that could become Armageddon-like crises in the blink of an eye.

            And it isn’t, despite what his detractors are wont to claim, that he is a radical ideologue, desperately seeking to bring European socialism to his country.  That claim, while it stirs the anti-government legions who populate the tea-bagger rallies, flies in the face of his Clintonesque approach to policy decisions.  He’s a centrist, a veritable clone of the last Democrat to reside in the White House. 

            His centrism is no more evident than in the health care bill that he allowed to emerge from the Congressional wrangling that took fully a year (now with nothing to show for it).  The bill that the Senate passed is loaded with pro-insurance industry goodies and lacks anything that could even remotely resemble a socialized-medicine program. 

            Were Obama the ideologue his critics claim, that bill would be a single-payer plan, or at least would contain a strong public option.  Instead, the bill contains a mandate that will only increase the business flowing to health insurance companies, as the many uninsured in America are forced to buy insurance from the same private insurance companies that were supposedly the focus of the reforms in the first place.

            But let’s not stop there.  Look at the team Obama has surrounded himself with.  On the foreign policy front he has Hillary Clinton at State and Robert Gates holding over from the Bush administration at Defense.  On economic policy, he has Lawrence Summers, Clinton’s former Secretary of the Treasury and Tim Geithner, a protégé of Robert Rubin (another former Clinton Treasury secretary) and a Goldman Sachs alum.  His chief of staff is Rahm Emanuel, another Clinton aide.

            So if he isn’t an ideologue and he doesn’t lack the smarts, or the energy or the interest, what does he lack?

            What Obama lacks, or at least has lacked to this point in his presidency, is the ability to lead.  He has not led his party well or effectively, and he has not led his nation decisively or coherently.  He has been a rudder, seeking to guide ever so gently, while trying, in understated tones, to get everyone to get along. 

            Rudders work well on ships at sea; they tend to be less effective in commanding ships of state.