RE: Health Care…

Esquire wants to know what we think about the current health care debate. Here are my answers:

1) I don't know if they've been 'good' for democracy, but the debates do show the genius of our system. Democrats want to ramrod this thing through, no matter what; our system won't allow it.

2)

(i) No. And serious people know this. But the point of the legislation is not to reduce the deficit. The point is to slow the growth of healthcare costs and provide as near-universal coverage as possible. Moreover, as this recent letter to the President from some leading economists notes:

Taken together, these measures are a serious, multi-faceted initiative to improve the quality and efficiency of American medical care, rein in the fastest growing portion of government and private budgets and provide a valuable platform for future cost-control efforts.

You read it right: "future cost-control efforts." This budgetary sleight-of-hand is akin to what Matt Miller of the WaPo calls the 'magic asterisk'. These are the footnotes placed at the bottom (or worse, at the end) of a government budget proposal in which it outlines how this proposal won't break the bank because of some future cost-saving initiative yet to be invented. Miller explains:

This symbol of budget villainy dates from the Reagan era, when White House budget director and uber-deficit monster David Stockman sought to mask his reckless debts behind a footnote pledging large "future savings to be identified.

The Obama administration has already heavily employed the 'magic asterisk' in its FY2011 budget submission. For example, in the so-called 'temporary' 2009 stimulus bill, the administration attempts to make permanent tax two provisions by folding them into their baseline projections.

All of this is just technical nonsense, anyway. Every administration now does it. But outside of the accounting gimmicks and esoteric budget analyses, here's how to think about it: what entitlement program hasn't burdened the budget and worsened the debt?

I suspect Berchmans will point to the fact that Medicare cuts enacted over the decades have 'stuck' or that the CBO generally underestimates savings in various health bills. But the truth of the matter is, these 'savings' are miniscule compared to the growth in healthcare costs. If fiscal discipline were truly a goal of this administration, then this legislation would not exist.

(ii) For those without health insurance?: a big 'yes'. Overall health care? I doubt it. And so do these other economists.

(iii) I don't know about faith, but it will certainly increase our dependency* on politicians. Some may not see a problem in that. I do.

3)

(i) President Obama has been unusually candid and honest in this debate, for a politician. He can be faulted for taking stats out of context and not being truly forthright about the effect of healthcare on taxes, businesses, and the deficit. But it seems that he truly believes government-aided health care (how else do we call it?) will reduce costs (see 2(i)).

His narrative has been magnificent and almost free from hyperbole.

(ii) Both Nancy Pelosi and Harry Reid are less talented than Obama, which is easy enough to see. So with regard to their public pronouncements: not honest nor compelling. But that's irrelevant. Their job is to see that government-aided health care (seriously, what the hell is it?) gets passed as soon as possible. And to that end, their work behind the scenes, honest or not, is truly the stuff of legends.

(iii) House Republicans are like House Democrats. They'll do anything -- and I mean anything -- they're told. It's the nature of the position.

The distinction lies in the Senate. Look, I think it's sad that the narrative lately has surrounded this notion that Senate Republicans are legislative intransigents and therefore guilty of 'bad governance'. Here's how to see it: if Republicans are philosophically opposed to any interference in health care by government and Democrats forward a bill that proposes one of the largest interventions ever, compromise shouldn't be expected.

(iv) The CBO get a lot of credit for their scoring on various health care bills. Quietly and efficiently, Elmendorf and his staff looked at the numbers, gave us sober reviews, and did it expertly. And they did all this within a heated political environment. They deserve our praise.

(v) Don't get me started on the media. If one wants to look for an industry that illustrates the folly of capitalism, an industry where there is truly a race to the bottom, look no further than our cable media outlets, professional bloggers, and some of our daily newspapers.

*I put together a little graph over a month ago using new data from the BEA. It shows that "transfer receipts" -- personal income that comes directly from government in which no services are performed -- now outpace investment income. That is, in the aggregate, our income is comprised more of government benefits than of dividends, interest, and rent put together. To put it yet another way, Americans get paid more for doing nothing than for investments, making us more dependent on politicians. But more on that in an upcoming post.