A Blue View

Millions Spent On Ads To Sway Democrats On Health Care

NY Times:

The yearlong legislative fight over health care is drawing to a frenzied close as a multimillion-dollar wave of advertising that rivals the ferocity of a presidential campaign takes aim at about 40 House Democrats whose votes will help determine the fate of President Obama’s top domestic priority.

The coalition of groups opposing the legislation, led by the United States Chamber of Commerce, is singling out 27 Democrats who supported the health care bill last year and 13 who opposed it. The organizations have already spent $11 million this month focusing on these lawmakers, with more spending to come before an expected vote next weekend.

An alliance of groups supporting the health care plan, which works closely with the White House and Democratic leaders, had been spending far less and focusing on fewer districts. But after pharmaceutical companies made a $12 million investment for a final advertising push, spending by both sides for the first time is now nearly the same.

Not only are these swing Democrats being pummeled in the new spate of advertising — which could total $30 million before week’s end — but extensive efforts are under way in Congressional districts, where groups on both sides of the issue are using tactics similar to get-out-the-vote drives to urge constituents to contact their lawmakers. Mr. Obama is calling lawmakers, too, and on Monday is traveling to Ohio to open a weeklong campaign to close this act of the health care debate.

Representative James E. Clyburn of South Carolina, the No. 3 Democrat in the House, said Sunday on “Meet the Press” on NBC that he had yet to lock down enough votes to pass the bill. But he added: “We’ll be working it going into the week. I am also very confident that we’ll get this done.”

Several on-the-fence Democrats said they were scrambling to sort out their constituents’ views as the outside noise grows deafening.

For Fiscal Hawks, The ""risk of doing nothing" exceeds the risk of passing the bill"

Ron Brownstein:

... For fiscal hawks, [the above cost control elements of the Senate bill are] a powerful incentive for action. But equally compelling could be the price of inaction. If Obama's plan fails, as President Clinton's did, it's likely that no president will attempt to seriously expand coverage for many years. The independent Medicare actuary has projected that under current trends the number of uninsured will increase by 10 million, to about 57 million, by 2019. Providing uncompensated care to so many uninsured people would further strain physicians and hospitals -- and inflate premiums as those providers shift costs to their insured patients.

Some fiscal conservatives want to attack rising costs without expanding coverage. But that approach looks impractical, politically and economically. While Republicans controlled Congress after the 1994 election, they never built enough of a consensus to pass the cost-control ideas they are now pressing on Obama, such as medical malpractice reform. Meanwhile, Nichols warns that imposing meaningful cost control on hospitals without reducing the number of uninsured patients they must treat "would bankrupt many and strain most to the breaking point."

Weighing such factors, Nichols concludes that the "risk of doing nothing" exceeds the risk of passing the bill. In interviews, Emory University's Kenneth Thorpe and Stanford University's Alan Garber, two other leading health economists, guardedly echoed his conclusion. Both men believe that the current proposal could move faster to control costs. But both also agree that it contains valuable first steps and establishes what Garber calls "a good platform" for further reform. By contrast, Thorpe says, "under the do-nothing scenario, everything gets worse." For Democratic fiscal hawks uncertain that approving Obama's plan will cure what ails U.S. health care, the real question may be whether defeating it guarantees that the system's chronic afflictions will metastasize further.

"Most sweeping overhaul of financial regulations since the Depression" To Be Unveiled Monday

Talk about doubling down and standing by your principles. In light of all the drama and politics around the health care bill, it's great that Obama and the Dems are still pushing for dramatic changes to education (Obama Proposes Sweeping Changes To 'No Child Left Behind' Law) and, as reported by the  NY Times here, financial regulation (and in the latter, they're still willing to go the Democrat-only route to get what they want):

The chairman of the Senate Banking Committee will unveil on Monday a proposal to revamp the nation’s financial regulations that would empower shareholders to have advisory votes on executive pay and to nominate directors for the boards of public companies through company proxy ballots, several people briefed on the draft legislation said Saturday.

The shareholder provisions, which have been vigorously opposed by many corporations and by Republicans, will be part of a bill that would amount to the most sweeping overhaul of financial regulations since the Depression. In one of the most fiercely debated provisions, the bill would create a consumer financial protection agency under the umbrella of the Federal Reserve, a move certain to disappoint liberal Democrats who believe the Fed failed to safeguard consumers in the years leading up to the banking meltdown.

With no Republican support yet for the proposal, Democratic lawmakers and the White House have been gearing up for a potentially bitter partisan fight.

The impending proposal by the chairman, Christopher J. Dodd of Connecticut, hews in many ways to a proposal advanced last summer by the White House, the people briefed on the legislation said.

Mr. Dodd said Thursday that Democrats would proceed on their own after months of stop-and-start negotiations with Republicans over a bipartisan compromise yielded little progress.

As Senate aides worked through the weekend on drafting the legislation, key elements became clear, according to the people briefed on the negotiations, who spoke on the condition of anonymity because the situation was still fluid.

The consumer financial protection agency would have a director appointed by the president and the ability to write rules governing mortgages, credit cards, payday loans and a wide range of other financial products.<Continue reading.>

Though The Reasons Differ, Divided Congress Mirrors Divided American Public On Obama's Health Reform

From Gallup (read actual pollee comments):

As President Obama begins a final push on healthcare reform, slightly more Americans say they would advise their member of Congress to vote against rather than for a healthcare reform bill similar to the one the president has proposed.

These results, based on a new Gallup poll conducted March 4-7, confirm the generally divided nature of public opinion on healthcare legislation that Gallup has found in recent months. The high point in public support was 51% in October.

"Supporters of healthcare legislation commonly cite a moral imperative as a reason for their support."

President Obama has called for a final up-or-down vote on healthcare legislation, which has dominated the domestic agenda for much of his presidency. Most of the Republican leadership in Congress would prefer that Congress begin work on a new bill rather than try to pass Obama's proposal, which is based largely on a bill the Senate passed last year with no Republican support.

The poll finds that Americans who oppose passing a healthcare bill like the one Obama has proposed do so more because they disagree with that specific approach, rather than the efforts to reform healthcare more generally. Sixty-two percent of Americans who oppose the bill would prefer that Congress start over on new legislation, while 37% say Congress should not work on healthcare legislation at this time.

Reasons Behind Support or Opposition

The poll sought to assess why Americans support or oppose healthcare legislation similar to President Obama's by asking them to say in their own words why they hold the position they do. The actual verbatim responses for all poll respondents are shown here, allowing the interested reader to review in detail the actual words Americans use to discuss their positions on healthcare reform.

Supporters of healthcare legislation commonly cite a moral imperative as a reason for their support. The most frequent specific response -- mentioned by 29% of supporters -- is that people need health insurance and there are too many without it. Another 12% specifically cite a moral obligation to provide it. An additional 4% say it would help senior citizens and 3% say it would help the poor.

Beyond moral concerns, 18% of supporters say more generally that the healthcare system is broken and in need of repair. About one in five cite cost or affordability, including 12% who say costs are out of control and 10% who believe the legislation would make healthcare more affordable.

These views have not changed greatly since September, when Gallup last asked Americans to say why they supported healthcare legislation. At that time, slightly more said there were too many uninsured and slightly fewer cited a moral obligation to provide health insurance.

There has been greater change in opponents' stated reasons for wanting to defeat the president's proposed healthcare legislation. Now, 20% of opponents say it will raise insurance costs, up from 9% in September. Nineteen percent currently believe the legislation will not address the real problems in the system, up from 10% in September.

Fewer Americans today than last fall cite a lack of information about the details of the legislation or cite general concerns about "big government."

Goldman Sachs Investment Analysis Of Insurance Industry To Play Prominent Role In Health Care End Game

NY Times (read the Goldman Sachs report):

To bolster the case for a far-reaching overhaul of the health care system, the Obama administration is seizing on a new analysis by Goldman Sachs, the New York investment bank, recommending that investors buy shares in two big insurance companies, the UnitedHealth Group and Cigna, because insurance rates are up sharply and competition is down.

White House officials on Saturday said that the Goldman Sachs analysis would be a “centerpiece” of their closing argument in the push for major health care legislation. The president and Democratic Congressional leaders are hoping to win passage of the legislation before the Easter recess. Republicans remain fiercely opposed to the bill.

The Goldman Sachs analysis shows that while insurers can be aggressive in raising prices, they also walk away from clients because competition in the industry is so weak, the White House said. And officials will point to a finding that rate increases ran as high as 50 percent, with most in “the low- to mid-teens” — far higher than overall inflation.

The analysis could be a powerful weapon for the White House because it offers evidence that an overhaul of the health care system is needed not only to help cover the millions of uninsured but to prevent soaring health care expenses from undermining the coverage that the majority of Americans already have through employers.

Republicans, however, could also point to the analysis as bolstering their contention that Democrats should be focused more on controlling costs and less on broadly expanding coverage to the uninsured.

The research brief is largely based on a recent conference call with Steve Lewis, an industry expert with Willis, a major insurance broker.

In the call, Mr. Lewis noted that “price competition is down from a year ago” and explained that his clients — mostly midsize employers seeking to buy health coverage for their employees — were facing a tough market, in which insurance carriers are increasingly willing to abandon existing customers to improve their profit margins.

“We feel this is the most challenging environment for us and our clients in my 20 years in the business,” Mr. Lewis said, according to a transcript included in the Goldman brief. “Not only is price competition down from a year ago,” he added, “but trend or (health care) inflation is also up and appears to be rising. The incumbent carriers seem more willing than ever to walk away from existing business resulting in some carrier changes.”

The report also indicated that employers are reducing benefit levels, in some cases by adding deductibles for prescription drug coverage in addition to co-payments, and raising other out-of-pocket costs for employees as a way of lowering the cost of insurance without increasing annual premiums and employee contributions to them.

Kathleen Sebelius, the secretary of health and human services, is expected to discuss the Goldman analysis on two Sunday television talk shows, “Meet the Press” on NBC and “This Week” on ABC ...

Living & Dead Presidents Advice Barack On The Consumer Financial Protection Agency

Funny or Die's Presidential Reunion from Will Ferrell

A Parable For Our Times (cartoon)

 
 

White House To Use Power Of Federal Purse To Drive Up Wages & Benefits

And  surprise, surpise, the GOP is opposed. NY Times:

The Obama administration is planning to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers, according to White House officials and several interest groups briefed on the plan.

By altering how it awards $500 billion in contracts each year, the government would disqualify more companies with labor, environmental or other violations and give an edge to companies that offer better levels of pay, health coverage, pensions and other benefits, the officials said.

Because nearly one in four workers is employed by companies that have contracts with the federal government, administration officials see the plan as a way to shape social policy and lift more families into the middle class. It would affect contracts like those awarded to make Army uniforms, clean federal buildings and mow lawns at military bases.

Although the details are still being worked out, the outline of the plan is drawing fierce opposition from business groups and Republican lawmakers. They see it as a gift to organized labor and say it would drive up costs for the government in the face of a $1.3 trillion budget deficit.

“I’m suspicious of what the end goals are,” said Ben Brubeck, director of labor and federal procurement for Associated Builders and Contractors, which represents 25,000 construction-related companies. “It’s pretty clear the agenda is to give big labor an advantage in federal contracts.”

Critics also said the policy would put small businesses, many of which do not provide rich benefits, at a disadvantage. Furthermore, government officials would find it difficult to evaluate bidders using the new criteria and to determine whether one company’s compensation package should give it an edge, said Alan L. Chvotkin, executive vice president of the Professional Services Council, a coalition of 340 government contractors.

From his earliest days in office, President Obama has called for an overhaul of government procurement policy, citing the contracting scandals of the previous decade involving cost overruns and no-bid contracts ...

In testimony last year to the Office of Management and Budget, Mr. Podesta said that 400,000 workers employed under federal contracts — like cafeteria workers, security guards and landscaping workers at federal buildings — earn less than $22,000 a year, the federal poverty line for a family of four, assuming just one paycheck in a household.

“We have a president who is talking about bringing more people into the middle class,” Mr. Stern said. “The government should expect contractors to obey the law, and at the same time contractors should not be building a poverty economy, but should be trying to build a high-road economy.”...

Even as business groups press the administration for more details, they are denouncing the plan, tentatively named the High Road Procurement Policy ...

Randel K. Johnson, senior vice president for labor at the United States Chamber of Commerce, called the plan a “warmed-over version” of President Bill Clinton’s regulations that sought to bar federal agencies from awarding contracts to companies with a record of breaking labor, environmental or consumer laws. President George W. Bush vacated those regulations soon after taking office ...

On Feb. 2, Senator Susan Collins of Maine and four other Republican senators sent a letter to Peter R. Orszag, director of the White House budget office, saying, “We are concerned that the imposition of these requirements, during a time of significant economic turmoil in the private sector and tight federal budgets, could have serious, negative consequences, especially for our nation’s small businesses.”  ...

Surprise! Conservatives Love Government, Too.

The Numerologist:

Conservatives agree that the government spends too much. But ask them what to cut ...

At last week’s Conservative Political Action Conference, Minnesota Gov. Tim Pawlenty called on the attendees to imitate the wife of Tiger Woods: "We should take a page out of her playbook and take a nine iron and smash the window out of big government in this country."

But there’s a problem for Pawlenty and the activists who cheered him: Rank-and-file conservatives actually like big government.

In 2008, the American National Election Study asked a national sample whether federal spending on 12 different programs should be increased, decreased or kept about the same.

As the graph above illustrates, the respondents who identified themselves as "conservative" or "extremely conservative" had little appetite for specific spending cuts.

Very few conservatives said they favored reducing (or cutting out altogether) spending on any program. The least popular program proved to be childcare -- with a grand total of 20 percent of conservatives saying they’d slash it. The most popular is highways; only 6 percent want to cut spending there. Even bugaboos like welfare and foreign aid fare well, attracting the ire of only 15 percent of conservatives. Amazingly, the survey found that, on average, 54 percent of them actually wanted to increase spending.

Political scientist James Stimson has suggested that a fifth of the country consists of what he calls "conflicted conservatives," those who might respond positively to a broad appeal like Pawlenty’s, but not once specific windows start getting smashed.

At CPAC, Glenn Beck turned to 12-step lingo: "Hello, my name is the Republican Party and I have a problem! I’m addicted to spending and big government." But why blame the GOP? After all, the party is being enabled by its own base.

Cause & Effect? While Obama Pushes For Wall St Reform, The GOP Rakes In Their Cash

NY Times:

White House in New Push for Changes on Wall St.

The Obama administration redoubled its efforts on Tuesday to overhaul the nation’s financial regulations, saying it would not back down from its efforts to restrict the trading activities of banks and to create a consumer agency to regulate financial products.

In an attempt to thwart fierce lobbying against those measures, among others, the Treasury secretary, Timothy F. Geithner, summoned leaders of the United States Chamber of Commerce, the American Bankers Association, the Financial Services Forum and other groups to a meeting on Thursday to urge them not to obstruct the legislative effort. <Continue reading.>

Wash Post:

Wall Street shifting political contributions to Republicans

Commercial banks and high-flying investment firms have shifted their political contributions toward Republicans in recent months amid harsh rhetoric from Democrats about fat bank profits, generous bonuses and stingy lending policies on Wall Street. The wealthy securities and investment industry, for example, went from giving 2 to 1 to Democrats at the start of 2009 to providing almost half of its donations to Republicans by the end of the year, according to new data compiled for The Washington Post by the Center for Responsive Politics.

Commercial banks and their employees also returned to their traditional tilt in favor of the GOP after a brief dalliance with Democrats, giving nearly twice as much to Republicans during the last three months of 2009, the data show. At the same time, total political donations by the major banks and investment houses alike dropped in the waning months of that year.

The nascent shift came even before the White House announced proposals for a new tax on banks and a curb on some of their riskiest trading activities. <Continue reading.>

New Credit Card Rules (cartoons)

If you're not sure what the cartoonists are depicting, see Banks Apply Pressure to Keep Fees Rolling In.

Obama Proposes New Federal Oversight Of Health Insurers' Rate Increases

NY Times:

President Obama will propose on Monday giving the federal government new power to block excessive rate increases by health insurance companies, as he rolls out comprehensive legislation to revamp the nation’s health care system, White House officials said Sunday.

The president’s legislation aims to bridge differences between the bills adopted by the House and Senate late last year, and to frame his debate with Republicans over health policy at a televised meeting on Thursday.

By focusing on the effort to tighten regulation of insurance costs, a new element not included in either the House or Senate bills, Mr. Obama is seizing on outrage over recent premium increases of up to 39 percent announced by Anthem Blue Cross of California and moving to portray the Democrats’ health overhaul as a way to protect Americans from profiteering insurers.

Congressional Republicans have long denounced the Democrats’ legislation as a “government takeover” of health care. And while they are likely to resist any expansion of federal authority over existing state regulators, they will face a tough balancing act at the meeting with the president to avoid appearing as if they are willing to allow steep premium increases like those by Anthem.

Republican leaders had not formally accepted the president’s invitation to the meeting. But the Senate Republican leader, Mitch McConnell of Kentucky, said on Sunday that he would attend. “I intend to be there, and my members will be there and ready to participate,” Mr. McConnell said on Fox News ...

The White House has held details of Mr. Obama’s bill extremely tight, leaving even top Democrats in Congress anxiously awaiting the text to be released Monday. But administration officials said it would incorporate legislation proposed last week by Senator Dianne Feinstein, Democrat of California, in response to the Anthem increases. Officials said it would “help make sure that people are not unfairly subject to arbitrary premium hikes.”

Anthem, California’s largest for-profit insurer, has announced premium increases for nearly 700,000 customers, citing the soaring costs of medical care and the effects of a weak economy in which many younger and healthier people are dropping insurance. But the increases, far outpacing the rate of medical inflation, led to outrage among officials in Sacramento and Washington.

The Obama administration has sought to portray the situation as a warning of what could happen to many more Americans if Congress does not act to overhaul the health system.

The president’s bill would grant the federal health and human services secretary new authority to review, and to block, premium increases by private insurers, potentially superseding state insurance regulators. The bill would create a new Health Insurance Rate Authority, made up of health industry experts that would issue an annual report setting the parameters for reasonable rate increases based on conditions in the market.

Officials said they envisioned the provision taking effect immediately after the health care bill is signed into law.

The legislation would call on the secretary of health and human services to work with state regulators to develop an annual review of rate increases, and if increases are deemed “unjustified” the secretary or the state could block the increase, order the insurer to change it, or even issue a rebate to beneficiaries.

The new rate board would be composed of seven members, including consumer representatives, an insurance industry representative, a physician and other experts like health economists and actuaries, the White House said. The board’s annual report would offer guidance to the public and states on whether rate increases should be approved.

But the focus on rate increases is also spotlighting questions about whether the Democrats’ plans do enough to control rising health costs. Anthem and other insurers say they do not.

Today's Health Care Cartoons

 

Insurers' Rate Increases & Profits Used By Sebelius To Make The Case For Reform

Wall St Journal:

A firestorm between the Obama administration and health insurers escalated Thursday, as the Department of Health and Human Services pointed to double-digit price increases or attempted increases in six states to make the case for overhauling the health-care system.

Over the past week, Democrats and WellPoint Inc., the country's largest insurer by members, have sparred over a 39% premium increase for individual plans by Wellpoint's Anthem Blue Cross unit in the individual market in California. At a news conference Thursday, Human Services Secretary Kathleen Sebelius cited more "extreme premium increases," including requests that insurers made to state regulators to raise rates by 56% in Michigan, 24% in Connecticut, 23% in Maine and 20% in Oregon.

"Unfortunately, this is pretty widespread," said Ms. Sebelius.

With the future of the health overhaul uncertain, the insurance industry finds itself in a delicate position. Insurers see little relief in sight to contain sharply rising health-care costs that they had hoped federal legislation would help bring under control. They face pressures from Wall Street to deliver returns to investors, while critics shine a spotlight on unaffordable premiums and coverage denials to the sick ...

WellPoint and other insurers say they are raising prices to keep up with rising medical costs and sicker customer pools. WellPoint runs the Blue Cross Blue Shield plans in Maine and Connecticut, where state insurance regulators denied the company's request to raise prices last year, according to the HHS report.

"The increases in Maine and Connecticut are being driven by the same factors as in California: Underlying medical costs are increasing, and there's the same kind of deterioration in the risk pool," said Brad Fluegel, WellPoint's chief of strategy. As people lose their jobs, he said, younger, healthier individuals are more likely to go without insurance in a difficult economy, skewing the mix of policy holders toward the elderly. After initial rejections from local insurance regulators, Mr. Fluegel said WellPoint wound up with a 17.5% increase in Connecticut and a 10.5% increase in Maine.

Ms. Sebelius countered that the top five publicly traded insurers made $12 billion in profits last year. "While we don't want companies to be insolvent because then no claims would get paid…these profits are wildly excessive, way over anybody's estimates," she said ...

Also on Thursday, the Main Street Alliance, a small business group that supports the health overhaul, held a conference with business owners to draw attention to premium increases they are facing. One small business owner from New Jersey saw his health plan, Health Net Inc., raise his premiums by 124% recently. "The State of New Jersey requires community rates to be based primarily on age and gender," a Health Net spokeswoman said. "This small business had significant employee changes which increased their premiums, as allowed by New Jersey law."

Regence, a not-for-profit plan in Oregon, Washington, Idaho and Utah, was singled out by the administration for requesting a 20% rate increase for individuals in Oregon. In November of last year, a 16% increase was approved by regulators, said Mike Becker, director of legislative and regulatory affairs at Regence BlueCross BlueShield of Oregon.

"Certainly this is a large increase that concerns us and concerns our members," said Mr. Becker, who said the health plan decreased rates in the individual market in 2006 and is losing money on that business.

After The GOP Killed The Congressional Version, Obama's Commission To Cut Debt Gains Steam

NY Times:

President Obama on Thursday officially established a bipartisan commission to propose ways by December to rein in the growing national debt, despite reluctance in both parties to tackling the politically charged issue in a midterm election year.

The Congressional Republican leaders, Senator Mitch McConnell of Kentucky and Representative John A. Boehner of Ohio, after weeks of criticizing the idea as a door to tax increases, signaled in separate statements that they would participate in forming the commission without setting preconditions. Each will name three lawmakers to the 18-member panel next week, aides said.

Mr. Obama signed an executive order establishing the panel three weeks after the Senate rejected bipartisan legislation to create a similar panel. As he did so, he was flanked at the White House by his choices for co-chairmen, Alan K. Simpson, a former Republican Senate leader from Wyoming, and Erskine B. Bowles, a centrist Democrat from North Carolina who was President Bill Clinton’s White House chief of staff.

“There are some on the left who believe that this issue can be deferred,” Mr. Obama said. “There are some on the right who won’t enter into serious discussions about deficits without preconditions. But those who preach fiscal discipline have to be willing to take the hard steps necessary to achieve it.”

Republicans have complained that Mr. Obama is trying to make it appear in an election year that he is doing something about high annual deficits, which have become a big issue for independent voters especially. Yet whether or not the commission succeeds in sending proposals to Congress after Dec. 1, its deliberations will force both parties to address whether to raise more revenues and make long-range reductions in Medicare, Medicaid and Social Security — the tough steps many economists say are essential to controlling a debt growing larger than the economy.

The president’s economic advisers were the main supporters of a commission; his political advisers initially were opposed. So were liberal Democrats in Congress, including House Speaker Nancy Pelosi of California, largely out of protectiveness over entitlement programs. But Mrs. Pelosi and the Senate Democratic leader, Harry Reid of Nevada, have agreed to put any commission plan to a vote, though the House would vote only if the Senate first approved a package.

The commission will have 10 Democrats and 8 Republicans. In addition to the Republicans’ six picks, it will include six chosen by Democratic leaders and six by Mr. Obama. Besides Mr. Simpson and Mr. Bowles, Mr. Obama will name another Republican and three more Democrats.

Republicans had said the panel should be evenly split. But Mr. Obama proposed that 14 of the 18 members would have to support any recommendations, effectively giving Republicans a veto.

Mr. Obama’s order directs the commission to recommend how to balance the budget by the 2015 fiscal year, not counting interest on the national debt. Those unavoidable and growing costs are projected to be nearly 3 percent of the size of the economy that year, which would mean a deficit that many economists consider the maximum acceptable.

GOP Hypocrisy Alert: Who Is To Blame For The Ticking Debt Time Bomb? Hint, It's Not Obama.

Do you think the facts will deter the GOP or Tea Partiers? I'm not holding my breathe.

First, a synopsis of the Auerbach & Gale analysis from the NY Times:

When George W. Bush took office in 2001, the government projected surpluses of $5.6 trillion for the coming decade. In an analysis of what happened next, the economists Alan J. Auerbach and William G. Gale found that much of the accumulated debt owes to Bush-era policies and to the recession, with its costs in lost income taxes and automatic benefits for the unemployed. The one-time costs of stimulus and bailout measures are “really small stuff” relative to the rest, Mr. Auerbach said.

Then William G. Gale (The Brookings Institution) and Alan J. Auerbach (U.C. Berkeley) themselves:

When George Bush took office at the beginning of 2001, the federal government was running a substantial budget surplus and projected rising surpluses "as far as the eye could see." Now, the United States is facing massive current deficits -- as a share of the economy, the largest since World War II -- and an increasingly dire and unsustainable outlook over the next 10 years and beyond.

How did we get into this fiscal mess? To quote a character in Ernest Hemingway's classic novel, "The Sun Also Rises," when asked by another how he lost his wealth, "Two ways. Gradually and then suddenly."

The gradual part was a series of policy actions adopted during the Bush administration. In 2001, the Congressional Budget Office projected that the 2008 budget would show a surplus equal to 4.5% of gross domestic product. The actual 2008 budget ran a deficit of 3.2% of GDP. Almost all of the reversal was the result of policy changes -- tax cuts and spending increases.

Then, in 2009, the bottom fell out.

Financial markets collapsed and the economy went into a free fall. While the economy is beginning to show signs of stabilizing, the deficit has deepened and is on course to be roughly 13% of GDP this year. About two-thirds of the swing is due to the troubled economy and the other third due to policy responses to the downturn.

During a strong cyclical downturn, big deficits are not just a necessary evil but can actually do a fair amount of good. So, while the current deficit is striking, it is not a problem in and of itself, especially if it falls to more typical levels in the next few years.

The real problem is the medium- and long-term outlook.

Analysts have long emphasized that the country faces a long-term budget problem as a consequence of our rapidly growing old-age entitlement programs.

But now even the 10-year outlook is unsustainable. By 2019, even if everything goes the way the Obama administration wants, and the economy recovers and grows steadily over the next decade, the deficit will be 5.5% of GDP, an extremely high figure in good times, and the debt-to-GDP ratio will hit 82%, its highest level since just after World War II, and will keep rising.

And things aren't as likely to go as well as President Obama hopes. The economy has already performed worse than was assumed in the budget projections, and the projections are based on heroically optimistic assumptions about the political discipline Congress will impose on itself. And, of course, the problem will deepen, continually and inexorably, after 2019, as spending on Medicare, Medicaid and Social Security will grow rapidly.

Partisanship In Washington Blocks Solutions To Long Term, "Hard" Problems. Exhibit A: The Debt.

NY Times:

After decades of warnings that budgetary profligacy, escalating health care costs and an aging population would lead to a day of fiscal reckoning, economists and the nation’s foreign creditors say that moment is approaching faster than expected, hastened by a deep recession that cost trillions of dollars in lost tax revenues and higher spending for safety-net programs.

Yet rarely has the political system seemed more polarized and less able to solve big problems that involve trust, tough choices and little short-term gain. The main urgency for both parties seems to be about pinning blame on the other, before November’s elections, for deficits now averaging $1 trillion a year, the largest since World War II relative to the size of the economy ...

“I used to think it would take a global financial crisis to get both parties to the table, but we just had one,” said G. William Hoagland, who was a fiscal policy adviser to Senate Republican leaders and a witness to past bipartisan budget summits. “These days I wonder if this country is even governable.”

Sensing political advantage, Republicans are resisting President Obama’s call for a bipartisan commission to cut the debt, although recent studies have implicated the tax cuts and spending policies of the years after 2000 when they controlled Congress and the White House. Even seven Republican senators who had co-sponsored a bill to create a commission nonetheless voted against it recently.

The president is not giving up. On Thursday, administration officials say, he will sign an executive order establishing the 18-member National Commission on Fiscal Responsibility and Reform. He also will name as co-chairmen Alan K. Simpson, a former Republican Senate leader from Wyoming, and Erskine Bowles, a moderate Democrat from North Carolina who, as President Bill Clinton’s White House chief of staff, brokered a 1997 balanced budget agreement with Congressional Republicans.

“There isn’t a single sitting member of Congress — not one — that doesn’t know exactly where we’re headed,” Mr. Simpson said in a telephone interview Tuesday just before word of his role got out. “And to use the politics of fear and division and hate on each other — we are at a point right now where it doesn’t make a damn whether you’re a Democrat or a Republican if you’ve forgotten you’re an American.”

While he criticized some liberal Democrats’ refusal to reduce entitlement benefits, Mr. Simpson also dismissed Republicans’ antitax arguments that deficits could be controlled with spending cuts alone. “But they don’t cut spending,” he said, referring to the years Republicans governed with President George W. Bush.

Elected Republicans, however, are under intense pressure from their party’s conservative base to oppose any tax increases — a line in the sand that dims any prospects for bipartisan cooperation. Yet economists, including veterans of past Republican administrations, are vocal in insisting that the debt problem is too great to be solved without increasing revenues somehow and perhaps moving to a new consumption tax system like Europe’s.

The same economists also say a significant deficit-reduction plan is not possible unless Mr. Obama breaks his campaign promise not to raise taxes for households making less than $250,000. Last week, Mr. Obama said he would not impose that condition or any other on a fiscal commission.

The situation is complicated by a debate over how quickly Washington should act even if it could. The Obama administration, Congressional Democratic leaders and many economists are pushing for additional government stimulus measures while the private sector remains weak. But anger about big deficits has stoked the populism roiling politics, and Republicans as well as some conservative Democrats want to cut spending right now as a way of addressing perceptions among voters that government has gotten too big, too intrusive and too profligate. Mr. Obama himself proposed a budget that would freeze spending on some categories of domestic spending for three years.

Many analysts say the president and Congress could send a strong signal to global markets by agreeing this year to a package of both long-term tax increases and spending reductions, especially in the popular entitlement programs, that would not take effect until 2012. That is the recommendation of two new studies, one from a diverse group sponsored by the National Academy of Sciences and a separate joint project of the Peter G. Peterson Foundation, the Pew Charitable Trusts and the Committee for a Responsible Federal Budget.

As debt rises, so do interest costs; by 2014, at a projected $516 billion, they will exceed the budget for annual appropriations for domestic programs. The government will be competing with the private sector for credit, forcing interest rates higher and imperiling future prosperity.

Foreign investors now own more than half of the publicly held debt, and officials for the largest creditor, China, have fretted publicly about the fiscal course of the United States. While few expect foreigners to dump their assets, since the resulting plunge in values would hurt them as well as everyone else, the fear is that investors will demand higher interest payments and reduce or stop future debt purchases, threatening the government’s ability to finance its borrowing.

Lesser financial and fiscal crises have brought the two parties together to compromise on tough choices about taxes and spending.

Poll: 80% Of Americans Oppose The Supreme's Big Wallet Decision

Wash Post:

Americans of both parties overwhelmingly oppose a Supreme Court ruling that allows corporations and unions to spend as much as they want on political campaigns, and most favor new limits on such spending, according to a new Washington Post-ABC News poll.

Eight in 10 poll respondents say they oppose the high court's Jan. 21 decision to allow unfettered corporate political spending, with 65 percent "strongly" opposed. Nearly as many backed congressional action to curb the ruling, with 72 percent in favor of reinstating limits.

The poll reveals relatively little difference of opinion on the issue among Democrats (85 percent opposed to the ruling), Republicans (76 percent) and independents (81 percent).

The results suggest a strong reservoir of bipartisan support on the issue for President Obama and congressional Democrats, who are in the midst of crafting legislation aimed at limiting the impact of the high court's decision. Likely proposals include banning participation in U.S. elections by government contractors, bank bailout recipients or companies with more than 20 percent foreign ownership.

But Senate Minority Leader Mitch McConnell (Ky.) and other Republican lawmakers have praised the ruling as a victory for free speech and have signaled their intent to oppose any legislation intended to blunt the impact of the court's decision ...

Democrats have seized on the ruling as an example of judicial overreach and vowed to enact new limits on political spending by corporations, which have traditionally favored Republicans in their contribution patterns. Obama said in his State of the Union address that the ruling will "open the floodgates for special interests, including foreign corporations, to spend without limit in our elections."

Republicans and business groups have rallied around the ruling, arguing that the decision merely levels the playing field with free-spending unions and other liberal interest groups. The new poll, however, suggests there may be political risks for the GOP in opposing limits that appear to be favored by the party's base.

Nearly three-quarters of self-identified conservative Republicans say they oppose the Supreme Court ruling, with most of them strongly opposed. Some two-thirds of conservative Republicans favor congressional efforts to limit corporate and union spending, though with less enthusiasm than liberal Democrats.

Indeed, the poll shows remarkably strong agreement about the ruling across all demographic groups, and big majorities of those with household incomes above and below $50,000 alike oppose the decision. Age, race and education levels also appeared to have little relative bearing on the answers.

Tax On Cadillac Health Plans Appears Dead; Killed By Mass Voters

NY Times:

An agreement to tax high-cost, employer-sponsored health insurance plans, announced with fanfare by the White House and labor unions last month, is losing support from labor leaders, who say the proposal is too high a price to pay for the limited health care package they expect to emerge from Congress.

But the White House is still urging Congress to adopt the excise tax as a way to help pay for President Obama’s ambitious health care proposals.

With support for the tax eroding, Congressional leaders are searching for alternative sources of revenue.

The search has some urgency because Mr. Obama has said he hopes House and Senate Democrats can resolve their differences and come up with a final version of the legislation before he convenes a bipartisan meeting on the issue on Feb. 25.

When the tax agreement was announced on Jan. 14, White House officials described it as a breakthrough that would help clear the way for passage of sweeping health legislation.

Besides producing a substantial amount of revenue, they said, the excise tax on the most expensive insurance plans would slow the growth of health costs by giving consumers a powerful incentive to shop for cheaper policies.

Under the agreement, which builds on a provision in the larger health bill passed by the Senate on Dec. 24, the federal government would impose a 40 percent tax on the value of employer-sponsored health coverage exceeding certain thresholds. To win the endorsement of labor leaders, White House officials agreed to changes in the tax that would lessen its impact on workers, including union members with collectively bargained health benefits.

But labor leaders have backed away from the proposal in the wake of the special Senate election in Massachusetts.

“I do not believe there will be an excise tax enacted,” said Larry Cohen, president of the Communications Workers of America. “It appears that the administration and Congress will be taking a much more modest approach to health care reform. The cost and value of such reform would not justify using an excise tax.”

A wide range of House Democrats continue to criticize the tax as bad policy, even with the changes negotiated by labor leaders and the White House.

Moreover, House Democrats said, the tax is bad politics because it would set the middle class against the poor — people struggling to keep health insurance against people struggling to get it.

Revenue raised by the tax would help finance coverage for people who are uninsured.

Reid H. Cherlin, a White House spokesman, said he was not aware of any erosion in support for the tax among administration officials.

“The president,” he said, “continues to believe that charging insurance companies a fee for their most expensive polices — an idea that has the support of experts from both parties — will help achieve the core goal of health insurance reform: putting downward pressure on long-term health costs while ensuring that we aren’t placing new burdens on hard-working middle-class families.”

But as a practical matter, labor leaders said, the excise tax was killed by the election in Massachusetts, where the Republican candidate, Scott Brown, won the Senate seat long held by Edward M. Kennedy.

In opinion polls and in conversations with lawmakers, Massachusetts voters expressed deep hostility to the excise tax.

Members of union households voted for Mr. Brown over his Democratic opponent, Martha Coakley, according to a telephone poll conducted on election night for the A.F.L.-C.I.O. He won 49 percent of the vote from union households, while she got 46 percent, the survey found.

Michael A. Podhorzer, deputy political director of the A.F.L.-C.I.O., said Massachusetts should be a warning to Democrats, like “a canary in a coal mine.”

“Fully 42 percent of voters believed the health care bill would tax employer health benefits, and these voters supported Brown by two to one,” Mr. Podhorzer said.

Obama Shifting To Other Levers Of Power To Push Agenda

NY Times:

With much of his legislative agenda stalled in Congress, President Obama and his team are preparing an array of actions using his executive power to advance energy, environmental, fiscal and other domestic policy priorities.

Mr. Obama has not given up hope of progress on Capitol Hill, aides said, and has scheduled a session with Republican leaders on health care later this month. But in the aftermath of a special election in Massachusetts that cost Democrats unilateral control of the Senate, the White House is getting ready to act on its own in the face of partisan gridlock heading into the midterm campaign.

“We are reviewing a list of presidential executive orders and directives to get the job done across a front of issues,” said Rahm Emanuel, the White House chief of staff.

Any president has vast authority to influence policy even without legislation, through executive orders, agency rule-making and administrative fiat. And Mr. Obama’s success this week in pressuring the Senate to confirm 27 nominations by threatening to use his recess appointment power demonstrated that executive authority can also be leveraged to force action by Congress.

Mr. Obama has already decided to create a bipartisan budget commission under his own authority after Congress refused to do so. His administration has signaled that it plans to use its discretion to soften enforcement of the ban on openly gay men and lesbians serving in the military, even as Congress considers repealing the law. And the Environmental Protection Agency is moving forward with possible regulations on heat-trapping gases blamed for climate change, while a bill to cap such emissions languishes in the Senate.

In an effort to demonstrate forward momentum, the White House is also drawing more attention to the sorts of actions taken regularly by cabinet departments without much fanfare. The White House heavily promoted an export initiative announced by Commerce Secretary Gary Locke last week and nearly $1 billion in health care technology grants announced on Friday by Kathleen Sebelius, the health and human services secretary, and Hilda L. Solis, the labor secretary.

White House officials said the increased focus on executive authority reflected a natural evolution from the first year to the second year of any presidency.

“The challenges we had to address in 2009 ensured that the center of action would be in Congress,” said Dan Pfeiffer, the White House communications director. “In 2010, executive actions will also play a key role in advancing the agenda.”

The use of executive authority during times of legislative inertia is hardly new; former Presidents Bill Clinton and George W. Bush turned to such powers at various moments in their presidencies, and Mr. Emanuel was in the thick of carrying out the strategy during his days as a top official in the Clinton White House.

But Mr. Obama has to be careful how he proceeds because he has been critical of both Mr. Clinton’s penchant for expending presidential capital on small-bore initiatives, like school uniforms, and Mr. Bush’s expansive assertions of executive authority, like the secret program of wiretapping without warrants ...

Another drawback of the executive power strategy is that actions taken unilaterally by the executive branch may not be as enduring as decisions made through acts of Congress signed into law by a president. For instance, while the E.P.A. has been determined to have the authority to regulate carbon emissions, the administration would rather have a market-based system of pollution permits, called cap and trade, that requires legislation ...

The use of executive power came to a head this week when Mr. Obama confronted Senator Mitch McConnell of Kentucky, the Republican leader, about nominations held up in the Senate. In a meeting with Congressional leaders at the White House on Tuesday, Mr. Obama turned to Mr. McConnell and vowed to use his power to appoint officials during Senate recesses if his nominations were not cleared.

By Thursday, the Senate had voted to confirm 27 of 63 nominations that had been held up, and the White House declared victory.

Weekly Radio Address: "Pay As You Go"

WhiteHouse.gov (Read the Transcript):

The President, having just signed the “Pay As You Go” law, discusses the importance of this fundamental rule to getting budget deficits in check. Ensuring that new spending and tax cuts are offset was a important factor in creating the budget surplus of the late 1990’s.

Federal Lobbyists Spent Record $3.47 Billion In 2009; $544 Million On Health Care

Katharine Seelye:

final figures on lobbying in 2009 are in. Federal lobbyists spent a total of $3.47 billion lobbying Congress last year — $544 million of which was spent by the health care industry.

The figures have been tallied by the Center for Responsive Politics, which tracks the influence of money in campaigns and elections.

The total amount spent on lobbying in 2009 represented an increase of more than 5 percent from 2008. It is more money than lobbyists have ever spent before in trying to influence legislation. (Recession? What recession?)

The health care industry itself reached a new high, spending 12 percent more in lobbying last year than in 2008. The pharmaceutical industry topped out at $266.8 million, a record high for lobbying efforts by a single industry for a single year.

At the moment, the Democratic efforts to overhaul the health care system have stalled, but the White House is holding a summit on Feb. 25 in an effort to bring the various sides together. The lobbyists still have their work cut out for them.

Evidence That "Evidence-Based Medicine" Does Not Always Change MD Behavior; You Need To Change The Economics

Wall St Journal:

It sounds like such a simple concept: Study different medical treatments and figure out which delivers the best results at the cheapest cost, giving patients the most effective care.

Even before Congress took up the now-stalled health-care overhaul, it appropriated $1.1 billion to fund these studies. Both the Senate and the House included it in their versions of the bill. President Barack Obama backed it.

Yet, an examination of one of the best-known examples of a comparative-effectiveness analysis shows how complicated such a seemingly straightforward idea can get.

The study, known as "Courage" and published in the New England Journal of Medicine in 2007, shook the world of cardiology. It found that the most common heart surgery—a $15,000 procedure that unclogs arteries using a small scaffold or stent—usually yields no additional benefit when used with a cocktail of generic drugs in patients suffering from chronic chest pain.

The Courage trial was led by William Boden, a Buffalo, N.Y., cardiologist, and funded largely by the Department of Veterans Affairs. It tracked 2,287 patients for five years and found that trying drugs first, and adding stents only if chest pain persisted, didn't affect the rate of deaths and heart attacks, although stents did produce quicker pain relief.

Steven Nissen, then chairman of the American College of Cardiology, called the study a "blockbuster." Shares of leading stent maker Boston Scientific Corp. fell on the day the news broke, as many doctors and investors expected stent usage to fall off.

For a brief while, they were right. U.S. stent implants declined 13% in the month after the study's release. But as the headlines about Courage faded, stentings soon began to rise again, and are now back at peak levels of about one million a year, according to hospital surveyor Millennium Research Group.

"Most [cardiologists] haven't voluntarily incorporated the Courage criteria into their practice," says Dr. Boden. "What's going to continue to drive practice is reimbursement."

Without a way to keep insurers from covering procedures that studies find ineffective, projects like Courage face an uphill climb. The health-care bills passed by the House and Senate have provisions to disseminate study results, but wouldn't require private insurers or Medicare to adjust coverage or payments to doctors in response to findings.

Unlike automobile insurers, which pay for crash-tests themselves, or home insurers, which set up Underwriters Laboratories Inc. to test household products, health insurers rarely conduct controlled studies of medical products. America's Health Insurance Plans, a trade group, says it hopes to see the government establish a standardized way of conducting and interpreting comparative-effectiveness research in order to help insurance companies make decisions.

Since the 1970s, the "evidence-based medicine" movement has urged doctors to use studies like Courage as the best way to decide how to treat patients.

Many studies have had a substantial impact, especially those that boost a new therapy and its maker. Examples include studies that found benefits from antidepressants and cholesterol-lowering statins.

Studies that identify dangers have also been influential, including those linking salt to high blood pressure and the government's Women's Health Initiative, which in 2002 warned against overuse of hormone therapy after menopause.

But studies like Courage—that find an already-popular and a lucrative treatment can merely be unnecessary, but not harmful—have rarely altered medical practice to the same degree.

A 2002 government effort comparing treatments for high blood pressure found that generic pills worked better than patented drugs that cost far more, including Pfizer Inc.'s Norvasc. But sales of Norvasc continued to grow, from $3.8 billion in 2002 to $4.9 billion in 2006, before the drug lost patent protection ...

Sanjay Kaul, a prominent cardiologist and researcher at Cedars-Sinai Heart Institute in Los Angeles, estimates that the U.S. could save $5 billion of the $15 billion it spends on stent procedures each year if all doctors followed Courage's guidance—that is, putting certain heart patients on generic drugs and turning to stents only if the pains persists.

The percentage of stent patients who had been prescribed such drugs at the time of their surgery hasn't changed since Courage, and remains at about 45%, according to data maintained by the American College of Cardiology.

Most stent patients never receive a cardiovascular "stress test" to verify that a clogged artery is the cause of their chest pains, despite professional guidelines that urge such a test before stenting.

"It's certainly remarkable that nothing has been done to put some checks and balances," into the stenting decision after Courage, says Eric Topol, the chief academic officer of Scripps Health, a hospital operator in San Diego. "I have a very strong disagreement with cardiologists who see no reason to do the stress test."

Such views aren't universal in the medical community. The late Donald Baim, Boston Scientific's chief medical officer, said Courage didn't change practice because it repeated what several other studies had already found and affirmed that stents reduced pain for patients with stable chest pain.

Dr. Baim, who passed away after the interview, also said that "the patients studied in Courage had very low levels of angina."

Ajay Kirtane, a cardiologist at Columbia University, believes that American expectations about medical "fixes" makes it hard to follow recommendations such as Courage's. If a doctor attempted to persuade a patient to delay stenting in order to see whether drug treatment would work by itself, he says, the patient would likely drop him and see another cardiologist instead.

Courage's findings apply to roughly a third of the people who get stents—those with chronic, stable chest pain. Others who receive the devices have more serious heart disease or heart attacks.

Doctors and health-care watchers point to several reasons Courage didn't move the needle. Patients have little incentive to decline costly care when insurers are paying. Interventional cardiologists, on the other hand, have a financial incentive to use stents—they receive about $900 per stenting procedure, roughly nine times the amount they get for an office visit.

Insurance companies face their own dilemmas. If they act alone to restrict coverage, private insurers fear employers will switch to insurers that do cover the procedure. And because insurers generally earn a profit by charging a premium on claims they pay, they don't necessarily have an incentive to crack down on excess spending.

Under federal law, Courage's findings about efficacy can't alter the amount Medicare pays doctors for stenting. The government insurance program is legally barred from considering a treatment's benefits when deciding how much to pay doctors for doing a certain procedure. Private insurance carriers, in turn, generally base their rate schedule on Medicare's.

Over the past 10 years, improvements in stents have coincided with an explosion in their use, as the hour-long procedure edged out bypass surgery as the preferred treatment for clogged arteries in all but the sickest patients. The average cardiologist who installs stents made about $500,000 in 2008, up 22% from 10 years prior, adjusted for inflation, according to the American Medical Group Association.

In 2008, the Courage study faced a key challenge. A Washington state agency called the Health Technology Assessment Program, or HTAP, announced it would consider putting Courage's findings into practice.

The agency, empowered to change coverage decisions for the state's Medicaid program and some public-employee health plans, commissioned a review of the evidence backing stents. That process could have led to limiting the procedure's use in the state's Medicaid program and health plans for some state employees.

Certain cardiologists, as well as stent manufacturers, rallied to resist the review. In policy papers submitted to the agency, they argued that the Courage study had not included the latest models of stents, which were introduced after the study began, and should not be used to require all patients to attempt drug therapy first.

Other than Leah Hole-Curry, an attorney who heads HTAP, the agency has only one employee. State law requires it to outsource its reviews to private research firms. For the stent review, it hired a Seattle firm, Spectrum Research Inc.

Spectrum decided it needed more medical expertise to tackle the issue, and convened an August 2008 conference call with Ms. Hole-Curry, representatives of stent makers, and a number of interventional cardiologists.

According to an audio recording of the call, Spectrum's researchers asked for assistance paring down the question of comparing stents to drug therapy, such as what kinds of patients should be considered and how to define different kinds of heart disease.

The industry and doctors declined to help. "We don't want to end up being our own willing executioners," said Mitchell Sugarman, the senior director of health economics for Medtronic Inc., a stent maker, on the call. (Rob Clark, a Medtronic spokesman, later said there was "widespread consensus amongst physician and industry groups that the [agency's] questions were off-base and heavily misguided.")

Steven Goldberg, a cardiologist who directs stenting at the University of Washington, said on the call that the agency's review "borders on the absurd." He and other cardiologists took issue with the agency's choice of terms, and said it was impossible to conduct the review because it was impossible to define "stable" chest pain.

After the conference call, Spectrum concluded that the proposed review wasn't feasible. "There were some sincere and also probably some not-so-sincere questions" about the "definition for stable," says Ms. Hole-Curry. "Even though we wanted to get at the larger question, it didn't seem possible."

The agency eventually settled on a narrower review—one that didn't follow Courage's comparison of stenting versus drugs alone. Instead, the agency compared older bare-metal stents against newer, more expensive models, which are coated with drugs to reduce scar tissue that can reclog an artery.

Despite a number of similar trials, performed before and after Courage and that reinforce its findings, few private insurers have shifted procedure.

"There's no incentive on the part of the insurance company to do that," says George Diamond, a Los Angeles cardiologist who used to implant stents. "They would cause an uproar on the part of the physicians saying insurance companies were attempting to interpose themselves on the medical process."

Among the exceptions are Blue Cross-Blue Shield plans in western and northeastern New York state, where Dr. Boden practices.

In July, the plans began requiring a stress test—which verifies that a clogged artery is the cause of a patient's chest pain—before a stent procedure. This year, the Blue Cross plans intend to implement another rule: Patients having an elective stenting for chronic chest pain must first try drug treatment for 12 weeks.

"Bill Boden has been telling me, we're looking at a potential of $8 billion in savings," across the country, says Cynthia Ambres, the chief medical officer of HealthNow New York Inc., which operates the two Blue Cross plans in upstate New York.

"If someone needs to go to angioplasty, I'm not saying we don't want to pay for that," Dr. Ambres says. But "these are the things that need to be done first."

Google Challenges Telecomms; To Offer 1Gb Internet

Republican Health Care Ideas

Though it's not comprehensive enough to be a "plan," the GOP does have some legitimate-enough-to-debate ideas (mixed in with their more numerous sound-bite-ideas-designed-to-win-elections) according to the NY Times:

When Republicans take President Obama up on his invitation to hash out their differences over health care this month, they will carry with them a fairly well-developed set of ideas intended to make health insurance more widely available and affordable, by emphasizing tax incentives and state innovations, with no new federal mandates and only a modest expansion of the federal safety net.

Representative Paul D. Ryan also would encourage but not require states to set up health insurance exchanges where consumers could compare and by coverage.

It is not clear that Republicans and the White House are willing to negotiate seriously with each other, and Mr. Obama has rejected Republican demands that he start from scratch in developing health care legislation.

But Congressional Republicans have laid out principles and alternatives that provide a road map to what a Republican health care bill would look like if they had the power to decide the outcome.

The different approaches will be on display Feb. 25, when lawmakers from both parties are scheduled to go to Blair House, across the street from the White House, for a televised clash of health policy ideas.

The Republicans rely more on the market and less on government. They would not require employers to provide insurance. They oppose the Democrats’ call for a big expansion of Medicaid, which Republicans say would burden states with huge long-term liabilities.

While the Congressional Budget Office has not analyzed all the Republican proposals, it is clear that they would not provide coverage to anything like the number of people — more than 30 million — who would gain insurance under the Democrats’ proposals.

But Republicans say they can make incremental progress without the economic costs they contend the Democratic plans pose to the nation. As one way to encourage competition and drive down costs, Republican members of Congress want to make it easier for insurance companies to sell their policies across state lines, an idea included in a limited form in the Democratic bills.

Republicans would offer federal money as a reward to states that achieve specified reductions in premiums or in the number of people without insurance.

Republicans would provide federal money to states to establish and expand high-risk pools, for people with chronic illnesses who cannot find private insurance at an affordable price.

Republicans also contend that changes in state medical malpractice laws could lower costs and slow the growth of premiums. However, some of these proposals — like federal limits on damages for pain and suffering and punitive damages — are potentially in conflict with the Republicans’ emphasis on federalism and state autonomy.

In contrast to the bills passed by the House and the Senate, which would remake the health care system, Republican leaders favor a more modest approach.

Senator Lamar Alexander of Tennessee, the No. 3 Republican in the Senate, said he and his colleagues were skeptical of “grand legislative policy schemes” and favored “a step-by-step approach” focused on lowering health costs for families and businesses.

“It is arrogant to imagine that 100 senators are wise enough to reform comprehensively a health care system that constitutes 17 percent of the world’s largest economy and affects 300 million Americans of disparate backgrounds and circumstances,” Mr. Alexander said.

The Republican health care agenda can be inferred from bills they have offered in the last few years and from their criticism of Mr. Obama’s proposals and of Democratic bills passed by both houses of Congress last year.

Republicans want to expand the use of health savings accounts, to cover routine expenses for people who enroll in high-deductible health plans. Democrats denounce such accounts as a tax shelter for higher-income people.

Many Republicans want to expand the role of private insurance companies in Medicare. Insurers already manage Medicare’s prescription drug benefit, and Republicans see that as a model.

Republicans agree on the need to slow the explosive growth of Medicare, but say the savings should be used to shore up Medicare, not to help finance a new entitlement program.

Democrats said the Republican proposals would do little to solve the crisis in health care. The proposals are “as skimpy as a hospital gown,” said Representative Lloyd Doggett, Democrat of Texas.

Representative George Miller, Democrat of California, said, “If the Republicans’ health care plan was a plan for a fire department, they would rush into a burning building, and they would rush out and leave everybody behind.”

Like Democrats, Republicans are divided on some questions, including the taxation of employer-provided health benefits. <Continue reading.>

"For Human Spaceflight, Can Measured Beat Bold?"

NY Times:

President George W. Bush ... After the shuttle Columbia’s disaster in 2003, he introduced a “new vision” to revive the floundering space program. It included post-shuttle propulsion systems and crew-carrying vehicles. The goal was a return of astronauts to the Moon by 2020. Sometime after, to Mars.

But the costs of fighting wars while cutting taxes left little money to support the undertaking. Although several billion dollars have already been invested in advanced hardware, the goals seem illusory, and public support seems thin.

Once again, experience brought reminders, so often overlooked, that Apollo was not a realistic model for future endeavors in space exploration. Going to the Moon had been, above all, a campaign in the cold war. The Soviet Union was the feared adversary, even more so after the Sputnik surprise and after Yuri Gagarin’s flight made him the first man in space, in spring 1961.

Early on, the political scientist John M. Logsdon at George Washington University made a study of the decision-making process leading to Apollo. Dr. Logsdon concluded that Apollo was “a product of a specific time in history” and a singular crash program responding to a perceived threat to the country. It did not represent a firm commitment by society to open-ended space exploration.

Norman R. Augustine, an aerospace industry executive, acknowledged as much when he led a task force that contributed to the first President Bush’s proposals. “The heavy driver for the space program used to be competition with the Soviets,” Mr. Augustine said at the time. “Today, there is not that clear competition but the fundamental values of exploration that drive us. They are less tangible, but no less important.”

If one thing is clear and encouraging in President Obama’s proposals, it is the recognition of Apollo’s exceptionality. Mr. Augustine also served on the committee that advised Mr. Obama, and his point about the changing political matrix has apparently sunk in.

“We’ve been trying to relive Apollo for 40 years, unsuccessfully,” NASA’s deputy administrator, Lori B. Garver, said in an interview with editors and reporters of The New York Times. “For too long NASA overpromised and underdelivered, and now we will be doing things differently.”

That remains to be seen. Congressional committees have not begun to examine the proposals and the modest budget increases for NASA. The administration’s plan may be “bold and game-changing,” in Ms. Garver’s words, but several aspects are likely to stir controversy or at least call for closer study.

In contrast to the past, the new plan sets no definite timetables, cost estimates or destinations. Nor is there extravagant rhetoric about knowledge and adventure. The Kennedy eloquence about sailing “this new ocean” was effective primarily because the nation felt the need to demonstrate its technological superiority in war and peace.

GOP In, Dems Out, Of Wall Street's $ Favor

If the Dems were politically astute, they'd make sure everyone disgusted with Wall Street's behavior or who believes the GOP's interest in the little guy is more than skin deep knew of this NY Times story. I'm not going to hold my breathe.

This year Chase’s political action committee is sending the Democrats a pointed message. While it has contributed to some individual Democrats and state organizations, it has rebuffed solicitations from the national Democratic House and Senate campaign committees. Instead, it gave $30,000 to their Republican counterparts.

The shift reflects the hard political edge to the industry’s campaign to thwart Mr. Obama’s proposals for tighter financial regulations.

Just two years after Mr. Obama helped his party pull in record Wall Street contributions — $89 million from the securities and investment business, according to the nonpartisan Center for Responsive Politics — some of his biggest supporters, like Mr. Dimon, have become the industry’s chief lobbyists against his regulatory agenda.

Republicans are rushing to capitalize on what they call Wall Street’s “buyer’s remorse” with the Democrats. And industry executives and lobbyists are warning Democrats that if Mr. Obama keeps attacking Wall Street “fat cats,” they may fight back by withholding their cash.

“If the president doesn’t become a little more balanced and centrist in his approach, then he will likely lose that support,” said Kelly S. King, the chairman and chief executive of BB&T. Mr. King is a board member of the Financial Services Roundtable, which lobbies for the biggest banks, and last month he helped represent the industry at a private dinner at the Treasury Department.

“I understand the public outcry,” he continued. “We have a 17 percent real unemployment rate, people are hurting, and they want to see punishment. But the political rhetoric just incites more animosity and gets people riled up.”

[Kelly then went on to suggest that riled up people should eat cake.]

A spokesman for JPMorgan Chase declined to comment on its political action committee’s contributions or relations with the Democrats. But many Wall Street lobbyists and executives said they, too, were rethinking their giving.

“The expectation in Washington is that ‘We can kick you around, and you are still going to give us money,’ ” said a top official at a major Wall Street firm, speaking on the condition of anonymity for fear of alienating the White House. “We are not going to play that game anymore.”

The Paradox Of American Financial Exceptionalism

NY Times:

The Debtor the World Still Bets On

For decades — through political upheaval and wars and wild bouts of deficits or inflation — the debt of the United States has always been rated AAA, the gold standard of creditworthiness by which all nations are compared.

That was true before President Obama published his budget on Monday, with its projections of huge American deficits over the next decade and beyond. Astoundingly or not, it was as true after those estimates were published. Of course, had it been the United States Widget Company projecting red ink as far as the eye could see, no one would lend it a dime.

The closest thing Washington got to a brush-back pitch was a warning from Moody’s, an investor service that rates the sovereign debt of nations: Without action to cut the deficit or a faster-than-expected recovery, the projections for the decade “will at some point put pressure on the triple-A government bond rating.” Nobody blinked — not Congress, not the White House, not the investors around the world who keep buying Treasury bonds to finance this year’s $1.6 trillion shortfall, at low interest rates.

What explains this oddity? Why is the world betting that the United States will overcome its political deadlock and solve its problems — believing, it seems, in the truth of Churchill’s biting quip that America will always do the right thing, after exhausting every other alternative? And how long can this aura of invincibility last?

Maybe a long, long time. One of the many things that makes the United States different is that it prints the world’s most important currency and can always print more — one reason investors in government debt remain confident they will be repaid, even if in dollars devalued by inflation or by changing exchange rates.

There is also value in being the one nation on which the world still depends for security. That helps explain why foreign investors, including China, can denounce American politicians, Wall Street bankers and sleepwalking regulators for creating the current mess — and still buy at the next Treasury auction.

This paradox of American financial exceptionalism was unusually clear last week. When the stock market shuddered on Thursday because of worries about national defaults, it wasn’t Washington’s mountain of debt that got everyone rattled. It was the plight of a handful of profligate spenders in Europe — notably Greece, Spain and Portugal — whose comparative foothills of debt suddenly made them dubious credit risks.

Each of those countries knows the meaning of “imperial overstretch.” But it’s been a few centuries since Madrid and Lisbon were centers of vast empires, and a lot longer for the Greeks. What brought them down this time was not global ambition but local gridlock, in which politicians could not, or would not, cut spending at a time of high unemployment and social need. Making things worse, they now are on the euro — meaning they can no longer print their own way out of the problem, either. And it is unclear whether their partners in the euro bloc can afford either to bail them out or to let them default.

“They have no easy option,” said Prof. Simon Johnson of M.I.T.’s Sloan School of Management. “They can cut spending or raise taxes.”

Their problems may be minor compared to those of Japan, a battered economic superpower that prints its own currency and whose newspapers, two decades ago, regularly published charts projecting when Japan might overtake America as the world’s biggest economy. The papers still run such charts, but now the question is when China will overtake Japan for the No. 2 spot (likely later this year).

Today, like Toyota, Japan’s government is having a braking problem — it can’t figure out how to slow spending on a rapidly aging population, and like everyone else has reacted to recession by hitting the spending accelerator.

But unlike America, Japan is no longer considered so indispensible.

"I am not a hypocrite" Says The Politician As He Decries The Deficit While Resisting Cuts In His District

NY Times:

While Senator Saxby Chambliss, Republican of Georgia, said he was all for slowing federal spending, he has no appetite for the substantial cuts in farm programs proposed in President Obama’s new budget.

Representative Todd Akin, Republican of Missouri, issued a press release simultaneously lamenting the deficit spending outlined in the new budget and protesting cuts in Pentagon projects important to his state.

And Senator Jeff Sessions of Alabama, a fiscal conservative and a senior Republican on the Budget Committee, vowed to resist reductions in space program spending that would flow back home.

The positions of these Republicans — and similar stances by dozens of other lawmakers of both parties — are a telling illustration of why it is so hard to control federal spending. Every federal program has a constituency, and even lawmakers who profess to be alarmed by rising deficits will go to the mat to preserve money that provides jobs and benefits to their constituents.

“I am not a hypocrite,” Mr. Sessions said in reconciling his fiscally conservative credentials with his outrage over the administration’s proposal to essentially end the human space flight program and allow private enterprise to take on some of the load — an approach that Republicans typically favor.

Mr. Sessions said money taken from NASA would not be saved but would instead be directed to other Obama administration priorities that he did not support. He said his preference would be to set an overall spending limit and allow Congress to determine what programs should get the money. “Then we can debate it,” Mr. Sessions said.

Others said that the annual tableau in which members of Congress criticize the spread of red ink even as they reassure voters back home of protection for popular subsidies and Pentagon projects exposed the high degree of cynicism and lack of conviction that colors the fight over Congressional spending.

“It shows that in Washington, you can be firm on your opinions; it is your principles you can be flexible on,” said Rahm Emanuel, the White House chief of staff.

The Republican juggling act on spending comes after a legislative proposal for an independent commission to study ways to cut the deficit stalled in the Senate, partly because some Republicans who had originally backed the idea balked.

A Peek Behind The Curtain At How Washington Really Works

Though the Wash Post thinks the big news in this Propublica report is the suggestion that GE lied to investors about the condition of its short term debt, I found the most interesting thing to be how freely and how often Immault, GE's CEO, picked up the phone and spoke directly to Paulson, Bush's Sec of the Treasury. It is this unfair access (how many businesses do you know that have a direct line to the Treasury?), and the resultant ability to influence decisions as this story implies, that is the root of corporate & special interest control of our government.

As the financial crisis worsened toward the end of 2008, chief executive Jeffrey Immelt and other leaders at General Electric repeatedly assured the public there was no need to worry about the company's ability to access credit markets and refinance its massive debts as they came due.

But in private conversations that alarmed then-Treasury Secretary Henry M. Paulson Jr., Immelt laid out a different picture of GE's credit situation, according to Paulson's new book about the crisis.

Instead, Paulson writes, Immelt on at least four occasions expressed worries about GE's short-term debt, known as commercial paper, and eventually lobbied for access to special government guarantees for such debt.

To take one example: On Sept. 15, 2008, the day Lehman Brothers declared bankruptcy, Paulson says he was "startled" when Immelt came to his office and told him GE was finding it "very difficult" to sell short-term debt "for any term longer than overnight." A day earlier, GE sent investors a letter saying its ability to sell commercial paper was "robust."...

NADA Moon Cartoon

 
 

Everything You Need To Know About President Obama, The deficit & The Right

Jonathan Chait:

Pretty much everything you need to know about President Obama and the budget deficit is contained within this chart:

The chart, which is based on Congressional Budget Office figures, shows something which is both incontrovertible yet known by very few people:Obama's budget does not increase the long-term, or even the medium-term, budget deficit. It reduces it slightly.Most of the commentary castigating Obama for the deficit is an attempt to imply, usually without quite saying so, that Obama's policies have caused the red ink. This editorial from National Review is typical:

federal fiscal policy has now run completely off the rails... what had been a chronic problem that all involved knew needed corrective action has now become, in the Obama years, a full-fledged disaster in the making.... If the Obama budget is adopted in full, federal borrowing will top $18 trillion by 2020. Over the period 2011 to 2020, the president’s plan is to run deficits totaling an astounding $8.5 trillion.

Based on the writing of this editorial, NR's editors know full well that Obama's budget does not cause the fiscal disaster. They are blaming him for failing to clean up the mess he inherited. That's a fair thing to blame him for, but it's not a serious enough crime to sustain the rhetorical fury. So the NR has written the editorial in such a way as to lead its readers to the erroneous conclusion that Obama has caused the deficit. It's true that "If the Obama budget is adopted in full, federal borrowing will top $18 trillion by 2020." What the editorial fails to say is what will happen to federal borrowing if Obama's budget is not adopted. We are supposed to think that the debt will be lower, but it won't. It would be higher.

I'm singling out National Review, as I said, not because it's egregious, but because its rhetorical trick is completely typical of the argument coming out of the Republican Party and the conservative movement. Just about every argument you'll hear from the right about the budget will be some version of this rhetorical maneuver.

Today, Obama's Adult, Responsible Budget. Tomorrow, The GOP's Childish, Irresponsible Response.

While I applaud Obama's adult approach to honest budgeting, I'm concerned that he's again giving the childish opposition too much credit: the GOP is not going to reward his honest accounting of a very large number (primarily created by GW Bush) by putting politics aside and solving a crucial national problem; instead Obama will face a sustained chorus of "Obama is making the sky fall" right through November. From the NY Times:

 

In a federal budget filled with mind-boggling statistics, two numbers stand out as particularly stunning, for the way they may change American politics and American power.

The first is the projected deficit in the coming year, nearly 11 percent of the country’s entire economic output. That is not unprecedented: During the Civil War, World War I and World War II, the United States ran soaring deficits, but usually with the expectation that they would come back down once peace was restored and war spending abated.

But the second number, buried deeper in the budget’s projections, is the one that really commands attention: By President Obama’s own optimistic projections, American deficits will not return to what are widely considered sustainable levels over the next 10 years. In fact, in 2019 and 2020 — years after Mr. Obama has left the political scene, even if he serves two terms — they start rising again sharply, to more than 5 percent of gross domestic product. His budget draws a picture of a nation that like many American homeowners simply cannot get above water.

For Mr. Obama and his successors, the effect of those projections is clear: Unless miraculous growth, or miraculous political compromises, creates some unforeseen change over the next decade, there is virtually no room for new domestic initiatives for Mr. Obama or his successors. Beyond that lies the possibility that the United States could begin to suffer the same disease that has afflicted Japan over the past decade. As debt grew more rapidly than income, that country’s influence around the world eroded.

Or, as Mr. Obama’s chief economic adviser, Lawrence H. Summers, used to ask before he entered government a year ago, “How long can the world’s biggest borrower remain the world’s biggest power?”

The Chinese leadership, which is lending much of the money to finance the American government’s spending, and which asked pointed questions about Mr. Obama’s budget when members visited Washington last summer, says it thinks the long-term answer to Mr. Summers’s question is self-evident. The Europeans will also tell you that this is a big worry about the next decade.

Mr. Obama himself hinted at his own concern when he announced in early December that he planned to send 30,000 American troops to Afghanistan, but insisted that the United States could not afford to stay for long.

“Our prosperity provides a foundation for our power,” he told cadets at West Point. “It pays for our military. It underwrites our diplomacy. It taps the potential of our people, and allows investment in new industry.”

And then he explained why even a “war of necessity,” as he called Afghanistan last summer, could not last for long.

“That’s why our troop commitment in Afghanistan cannot be open-ended,” he said then, “because the nation that I’m most interested in building is our own.”

Mr. Obama’s budget deserves credit for its candor. It does not sugarcoat, at least excessively, the potential magnitude of the problem. President George W. Bush kept claiming, until near the end of his presidency, that he would leave office with a balanced budget. He never got close; in fact, the deficits soared in his last years.

Mr. Obama has published the 10-year numbers in part, it seems, to make the point that the political gridlock of the past few years, in which most Republicans refuse to talk about tax increases and Democrats refuse to talk about cutting entitlement programs, is unsustainable. His prescription is that the problem has to be made worse, with intense deficit spending to lower the unemployment rate, before the deficits can come down.

Scott Brown Raised A Tsunami Of Money From Financial Industry: 80% From Outside Mass.

Scott Brown 's a real man-of-the-people, beholden to no one. That's why he raised as much as the Boston Globe reports he did from the financial industry and why I couldn't resist reposting this cartoon:

In a six-day span just before the US Senate election, Republican Scott Brown collected nearly $450,000 from donors who work at financial companies, a sign the industry is prepared to spend heavily in the upcoming midterm elections to beat back new controls and taxes President Obama wants to impose.

The donations, from hundreds of financial executives, far exceeded what Brown received from doctors and others in the health care industry in the final days of the campaign. While Brown saw donations from all quarters explode in mid-January, as polls showed him closing fast on opponent Martha Coakley, the donations from financial workers coincided with several key developments that would affect their companies.

On Jan. 14, five days before the Senate election, President Obama proposed a fee on large financial firms to recoup the cost of the government’s bailout of the industry, and he angrily demanded that those firms cut executive bonuses.

The president was also pushing the Senate to follow the House of Representatives and adopt sweeping changes that would impose controls on the trading of exotic securities, limit risk-taking by the largest institutions, and create an agency to protect consumers from abusive lending practices.

Martin Gruss, owner of a West Palm Beach, Fla., investment firm, said he gave $2,400 to Brown because he vehemently disagrees with the policies being pursued by Obama and his economic aides.

“They have no real understanding of the business implications of their actions,’’ he said, adding that limits on trading securities would undermine the position of the United States as the world’s financial capital. “I contributed to Scott Brown because his election will help redress the balance of power in the Senate.’’

The industry’s giving could also spell trouble for Democrats in next fall’s midterm elections, especially following the US Supreme Court decision last month that allows corporations to spend unlimited amounts to influence political contests.

Already, the financial services sector is the single largest base of donors to federal campaigns, giving an industry record $476 million in the 2007-2008 election cycle, much more than the second-largest giver, lawyers and lobbyists, who contributed $270 million, according to the Center for Responsive politics.

“People like me are scouring the country for conservative candidates,’’ said John Mumford, a California venture capitalist who gave the maximum $2,400 contribution to Brown four days before the election. “What’s going on in Washington is against everything I believe in, which is small government, balanced budgets, and support for free enterprise.’’

2010: A Space Odyssey (cartoon)

 

When A Toyota Would Come In Handy (cartoon)

 

Weekly Radio Address: "Reining in Budget Deficits"

WhiteHouse.gov:

The President pledges to rein the deficit, citing three specific steps to this end. He praises the Senate for restoring the pay-as-you-go law, discusses his proposal for a freeze in discretionary spending, and calls for a bipartisan Fiscal Commission to hammer out further concrete deficit reduction proposals.

More Obama's Predicament Cartoons

 

Even More Cartoons On The Supreme's First Amendment, Big Wallet Decision

Don't Believe The Wall St Apologists When They Say Obama's Bank Plan Will Hurt US Competitiveness

Wall St apologists are already touting out the "US banks will be disadvantaged against the rest of the world" argument in response to Obama's dramatic plan to restructure the "too big to fail banks." Unfortunately for them, the rest of the world is already doing equivalent things (for their context) so Obama's plans will not make US banks less competitive internationally. In fact, in many ways all Obama will be doing will be leveling the playing field by bringing the US approach back up to the rest of the worlds.

Yesterday there was "Obama bank plan wins tentative support in Europe", and today, this from Reuters:

Financial stability board welcomes Obama bank plan

The Financial Stability Board (FSB), charged by the G20 to coordinate national regulation in response to the financial crisis, on Saturday welcomed U.S. proposals to limit banks' size and trading activities.

The proposals are among a range of options the board is considering as its addresses the risk of banks being "too big to fail," it said in a statement.

Major European economies have offered support for President Barack Obama's plan, which could rewrite the world financial order, but indicated they had no plans to follow suit.

The FSB is considering several other options to address the "too big to fail" problem including targeted capital, leverage, and liquidity requirements, improved supervisory approaches and simplification of firm structures.

"A mix of approaches will be necessary to address the TBTF problem, given the different types of institutions and national and cross-border contexts involved," the FSB said.

"At the same time, these approaches must preserve an integrated financial services market and not create regulatory arbitrage through an uneven playing field."

The FSB will make recommendations to G20 leaders in October and publish an interim report shortly after a G20 summit in June.

Activist Supreme Court Decision: "Dramatic, sweeping, fundamental, seismic—all those adjectives apply to this alteration of the political landscape"

It's hard for me to believe that any news this week could be worse than what happened in Mass on Tuesday. Then the Supreme Court decided American democracy could be auctioned to the highest spender. At least the Mass setback will operate over a relatively short time frame, what the Supreme Court just did will impact us for decades, if not longer. What an unbelievably awful week.

From Katie Connelly:

It's hard to know just yet what the precise impact of the Supreme Court's landmark decision on campaign-finance reform this morning will be. But one thing is for sure: it will be huge. Dramatic, sweeping, fundamental, seismic—all those adjectives apply to this alteration of the political landscape. In all likelihood, Republicans will be the biggest beneficiaries. They've had a long history of taking care of their corporate buddies. And with the Administration today opening a new front in their battle on Wall Street, you can bet the financial industry will happily raid their bursting cash coffers to support Republicans in November.

The decision is a stunning display of judicial activism from a chief justice who promised to engage in anything but. Remember all his promises to respect precedent? Apparently he doesn't. As E.J. Dionne writes: "Remember Roberts saying judges were like umpires calling the balls and strikes? In this case, he and his colleagues canceled the game altogether and decided on their own what the final score would be." Roberts expanded the scope of the initial case before him, Citizens United v. Federal Election Commission, to take on a century's worth of campaign-finance regulation. Dahlia Lithwick describes it perfectly: "The court had to reach out far beyond any place it needed to go....This started off as a case about a single movie. It morphed into John Roberts's Golden Globe night."

For their part Republicans are defending the ruling as rolling back infringements of free speech. They're wrong. The First Amendment protects an individual's right to free speech. Corporations are not individuals, although in this ruling, the Supreme Court equates the two.

Activist Judges On Supreme Court Over Turn Established Precedent & Hand The Keys To America To Big Money

From the NY Times:

The Supreme Court has handed a new weapon to lobbyists. If you vote wrong, a lobbyist can now tell any elected official that my company, labor union or interest group will spend unlimited sums explicitly advertising against your re-election.

"We have got a million we can spend advertising for you or against you — whichever one you want,’ ” a lobbyist can tell lawmakers, said Lawrence M. Noble, a lawyer at Skadden Arps in Washington and former general counsel of the Federal Election Commission.

The decision seeks to let voters choose for themselves among a multitude of voices and ideas when they go to the polls, but it will also increase the power of organized interest groups at the expense of candidates and political parties.

It is expected to unleash a torrent of attack advertisements from outside groups aiming to sway voters, without any candidate having to take the criticism for dirty campaigning. The biggest beneficiaries might be well-placed incumbents whose favor companies and interests groups are eager to court. It could also have a big impact on state and local governments, where a few million dollars can have more influence on elections.

The ruling comes at a time when influence-seekers of all kinds have special incentives to open their wallets. Amid the economic crisis, the Obama administration and Congressional Democrats are trying to rewrite the rules for broad swaths of the economy, from Detroit to Wall Street. Republicans, meanwhile, see a chance for major gains in November.

Democrats predicted that Republicans would benefit most from the decision, because they are the traditional allies of big corporations, who have more money to spend than unions.

In a statement shortly after the decision, President Obama called it “a green light to a new stampede of special interest money in our politics.”

As Democrats vowed to push legislation to install new spending limits in time for the fall campaign, Republicans disputed the partisan impact of the decision. They argued that Democrats had proven effective at cultivating their own business allies — drug companies are spending millions of dollars to promote the administration’s health care proposals, for example — while friendly interest groups tap sympathetic billionaires and Hollywood money.

"In a city that thrives on nonsense, we've heard more of it in the past few days than you normally do in a year"

Steven Pearlstein:

People, let's get a grip!

Okay, so Massachusetts voters elected a hunky, unknown Republican to fill Ted Kennedy's Senate seat. That's no reason to ignore the result of a national general election, throw out a year's worth of hard work on a range of important issues and rush to embrace a bunch of simple-minded solutions meant to mollify an angry electorate.

Honestly, in a city that thrives on nonsense, we've heard more of it in the past few days than you normally do in a year.

One of my favorite bits of Monday morning quarterbacking is that President Obama should have put health care and Afghanistan and climate change and everything else on the back burner for the past year and insisted that he and everyone else focus exclusively on jobs, jobs, jobs. What do you call a $787 billion stimulus package of tax cuts and increased spending, a $50 billion auto industry bailout, a $1 trillion prop to the housing sector and nearly another $1 trillion in old-fashioned monetary stimulus -- chopped liver? And how exactly do you square the idea that the president and Congress should be working 24-7 to "create" jobs with that other nugget of conventional wisdom, that Americans are demanding smaller government, less spending and lower budget deficits?

Then there is the big question of what to do about health care now that the voters have allegedly turned against the president's proposal.

One reasonable-sounding idea is that the president should reduce it down to just a few of its most popular provisions, such as the one requiring that insurance companies be barred from refusing to cover people with preexisting conditions or charging them sky-high premiums.

The problem with that, of course, is that if you don't require everyone to buy insurance, then there will be lots of people who will wait to buy their policies until they get sick and then demand coverage at the "community" rate. That's a great way to drive up premiums, which in turn will drive even more healthy people to drop coverage, which will raise premiums even further.

To prevent this kind of debilitating "insurance spiral," you could add one more feature -- a mandate requiring everyone to buy at least a basic insurance package. Unfortunately, there are lots of low-income households for which the newly mandated premiums could eat up as much as a half of after-tax income, which hardly seems fair. So you'd probably want to make sure that there's enough competition among insurers to keep premiums down, which is what those government-supervised exchanges are all about. And you'd want to have some subsidies to limit the financial hit to low-income families. To pay for the subsidies, you'd either have to raise taxes or cut spending in other areas.

And that, basically, is the outline of Obama's health plan, just as it was Clinton's health plan and the Nixon plan before that. In fact, if you want a health-care system that's universal and affordable and based on a competitive market of private insurers and health-care providers, that's pretty much where you have to start. There is no simple solution to this puzzle ...

"Obama bank plan wins tentative support in Europe"

Reuters:

France, Britain and Germany offered support on Friday for U.S. President Barack Obama's plan to limit banks' size and trading activities but fell short of pledging to follow suit on the proposal that has stunned world markets.

Obama's dramatic proposals could rewrite the world financial order but experts said they were light on detail and could cloud the global approach fostered by the Group of 20 nations.

Obama made his proposals on Thursday, saying he was ready to fight resistance from Wall Street banks he blamed for helping cause the global financial crisis.

The plan would prevent banks from investing in, owning or sponsoring a hedge fund or private equity fund.

It would set a new limit on banks' size in relation to the overall financial sector and, perhaps most dramatically, could also bar institutions from proprietary trading operations, which are unrelated to serving customers, for their own profit.

Proprietary trading involves firms making bets on markets with their own money and has been the source of much of banks' bumper profits before and after the financial crisis.

French Economy Minister Christine Lagarde welcomed the proposal, saying it was a "very, very good step forward."

"They see that regulation, which was a taboo word that was difficult to use in financial circles in the United States, is vital to contain ... banking excesses," she said.

UK Treasury Minister Paul Myners said Britain had already acted to address problems in its banking industry.

"He's developing a solution to what he sees as the American issues, we've already taken the necessary action in the UK," Myners said in an interview with Reuters Insider TV.

But Britain's opposition Conservatives, tipped by polls to win an election to be held by June, offered more solid support.

"President Obama has created a lot of space for the rest of the world to come up with what I think would be a sensible system of international rules," Conservative finance spokesman George Osborne told BBC Radio.

"I have said consistently that we should look at separating retail banking from activities like large-scale propriety trading and that this was best done internationally."

Doubts remain as to whether Obama's scheme can be enacted unchanged, not least since his party lost a key Senate seat this week, depriving it of a "super majority" in that house.

But it will strike a popular chord.

Banks' return to paying massive bonuses has prompted public and media outrage in the United States and Europe after taxpayer money was used to bail many of them out.

Wall Street sold off on Thursday and the threat that other countries will follow Obama's lead rattled European lenders.

More Google & China Cartoons

Banker Cluelessness (cartoon)

 

Google & China Cartoons

Weekly Radio Address: Getting Our Money Back from Wall Street

WhiteHouse.gov:

As the President continues to work on immediate job creation, he discusses his proposal for a new fee on the largest financial institutions to ensure that every cent of taxpayer assistance gets paid back. Saying that, "we're not going to let Wall Street take the money and run," he then to discusses the ongoing push to make sure banks can never put our economy at risk again.

How Coakley Could Lose: "Democrats didn’t show up at the polls because they assumed victory." The Impact: "Huge"

Tobin Harshaw:

... After all, in bluer-than-blue Massachusetts, what threat was any Republican challenger, much less a lowly state senator known primarily for an old Cosmo centerfold and a daughter who was deemed “pretty good” by Simon Cowell? ...

“Riding a wave of opposition to Democratic health-care reform, GOP upstart Scott Brown is leading in the U.S. Senate race, raising the odds of a historic upset that would reverberate all the way to the White House, a new poll shows,” reports Jessica van Sack of the Boston Herald.”The poll shows Brown, a state senator from Wrentham, besting Coakley, the state’s attorney general, by 50 percent to 46 percent, the first major survey to show Brown in the lead. Unenrolled long-shot Joseph L. Kennedy, an information technology executive with no relation to the famous family, gets 3 percent of the vote. Only 1 percent of voters were undecided.”

Could this possibly be for real? Let’s beseech the oracle, FiveThirtyEight’s Nate Silver:

Earlier today I tweeted about how there wasn’t enough evidence to describe the Massachusetts special election as a “toss-up”, as some other forecasters have done, based on the information available to us at that time. Well, now there’s some new evidence. And it isn’t good for Martha Coakley. In particular, the evidence is a Suffolk University poll that shows the Republican, Scott Brown, ahead by 4 points, 50-46.

Suffolk is a fairly average pollster, and I’m sure if we looked long and hard enough, we could develop some critiques of the poll. But there are no particular red flags and … c’mon, let’s not be silly, because there are a lot of other polls that you’d also have to critique in order to discredit the notion that the race is too close to call, including the PPP poll that showed Brown up by one point a week ago (since which time he’s almost certainly gained ground), the Rasmussen poll that showed a 2-point race for Coakley, and Coakley’s internals, which reportedly have shown her ahead by just 2-5 points.

... there’s something larger going on here, and it’s hard not to see the race as a referendum on three separate issues: health care reform; the Democratic Party heading into the 2012 midterms; and (the suddenly vulnerable) President Obama himself. The Atlantic’s Derek Thompson lays out the stakes:

Brown’s victory would give Republicans 41 seats in the Senate, enough to break the Democrats’ filibuster-proof margin by a single vote. In other words, Tuesday’s impact would extend beyond health care. It would hurt the Democrats chances to pass a jobs bill, which is already suffering in the Senate; a financial regulation bill which already receive zero Republican support; a cap and trade with dwindling prospects even though there are some Republicans like Lindsay Graham who have expressed interest in working with Democrats on climate change legislation; and immigration reform …

That said, health care reform might be safe — for a while. The interim senator Paul Kirk is a Democrat who has promised to vote for health care if he isn’t displaced first. Massachusetts Secretary of the Commonwealth William Galvin has signaled that a final winner from Tuesday’s vote could take more than a week to determine, because a federal vote allows for 10 extra days for military and absentee ballots to come in. Another source told the Boston Herald that the vote might not be certified until February 20. If that’s true, it gives the Democrats a lot of time to hammer out the final details.

That may be true, but according to Byron York of the Washington Examiner, many Democrats are preparing to avoid the collateral damage of a Coakley loss:

Some Democrats, eager to distance Obama from any electoral failure, are beginning to compare Coakley to Creigh Deeds, the losing Democratic candidate in the Virginia governor’s race last year. Deeds ran such a lackluster campaign, Democrats say, that his defeat could be solely attributed to his own shortcomings, and should not be seen as a referendum on President Obama’s policies or those of the national Democratic party.

The same sort of thinking is emerging in Massachusetts. “This is a Creigh Deeds situation,” the Democrat says. “I don’t think it says that the Obama agenda is a problem. I think it says, 1) that she’s a terrible candidate, 2) that she ran a terrible campaign, 3) that the climate is difficult but she should have been able to overcome it, and 4) that Democrats beware — you better run good campaigns, or you’re going to lose.”

Thompson, too, envisions the Democrats’ worst nightmare:

But here’s the X-factor. If Coakley loses, recriminations follow. Pundits would break down the defeat along various lines: 1) She was a horrible candidate. 2) Democrats didn’t show up at the polls because they assumed victory. 3) Health care reform’s growing unpopularity and the Democrats’ perceived dithering and weakness contributed to Coakley’s erosion. 4) “The Tea Parties Win! In the very state where colonists first rose up against the tyranny of the Old World, the American People took a stand against the Leftist Agenda and dumped the tea of tyrannical over-reach into the Bay of Oblivion…” The first two will be liberal explanations. The third will be the centrist read. And that last one is made ready-to-order for Glenn Beck and his ilk.

Brown’s victory would represent both a tactical blow to the filibuster-proof majority and a mojo killer, which could make liberal Democrats start to wonder whether they could be Coakleyed in November. That would tie huge anchors to the Democrats already plodding economic agenda. Stay tuned. Tuesday is huge.

Deal Reached On Cadillac Health Plan Tax

Wash Post:

Gripped by a building sense that its window of opportunity could be closing, the White House on Thursday broke the last major logjam blocking enactment of far-reaching health-care legislation, cutting a deal with organized labor on how to tax high-cost insurance policies.

The agreement, forged in a marathon negotiating session that included White House officials and seven prominent labor leaders, would exempt union members from a proposed surtax on expensive insurance plans until 2018, five years after the legislation would take effect. The tax is a key source of financing for Democrats' plan to extend coverage to as many as 36 million additional Americans over the next decade.

Thursday's breakthrough came as Democrats rushed to finish the bill in time for President Obama to tout the achievement in his first State of the Union address, expected to be held later this month or in early February. Already under intense pressure to resolve differences between measures approved by the House and Senate last year, Democratic leaders are growing increasingly concerned that they could lose their 60-vote majority in the Senate on Tuesday, when a little-known Republican will face Massachusetts Attorney General Martha Coakley (D) in a special election in the state for the Senate seat that was held by Edward M. Kennedy. A victory by Massachusetts state Sen. Scott Brown would give Senate Republicans a crucial 41st vote -- and the power to block Obama's top U.S. initiative.

Obama expressed that fear in a video e-mailed to Massachusetts Democrats on Thursday, warning that the fate of health-care reform rests in their hands [watch it].

"It's clear now that the outcome of these and other fights will probably rest on one vote in the United States Senate," Obama says in the video. "That's why what happens Tuesday in Massachusetts is so important."...

House and Senate leaders were set to return to the White House on Thursday night to continue working with Obama. White House aides and senior lawmakers said they expect health-care talks to continue through the weekend as negotiators race to deliver a final package to congressional budget analysts, who must attach a cost to the measure before either chamber can hold a final vote on it. Lawmakers expect the final legislation to split the difference between the Senate bill, which would spend $871 billion over the next decade, and the House version, which would devote more than $1 trillion to the biggest expansion of the health-care system since Medicare.

One sticking point of the talks has been the shape of government-run marketplaces in which people could shop for heavily regulated private insurance plans. In a closed meeting with House Democrats, Obama indicated support for a national exchange, as the House prefers, rather than the 50 state exchanges the Senate would like, according to one person present who spoke on the condition of anonymity because of the sensitive nature of the negotiations.