Archives: February, 2010

Legislative Sausage

How can any member of Congress be expected to cast an intelligent vote on a hodgepodge like this? And how can any voter make a rational judgment about a member of Congress who voted for or against this mess?

A major test of whether Obama’s new strategy will yield legislative results could come when the Senate takes up a job-creation bill, which Senate Majority Leader Harry M. Reid (D-Nev.) had hoped to introduce last week but which was sidetracked by a snowstorm….

The proposed package is expected to cost about $85 billion and would include a payroll tax break for companies that hire new employees, extensions of a variety of expiring tax breaks, and help for small businesses seeking loans. The measure also would extend unemployment insurance and COBRA health benefits by three months and provide a temporary adjustment in Medicare payment rates to physicians to prevent a scheduled cut.

The bill being crafted would reauthorize the Highway Trust Fund for one year, provide money for Build America Bonds and extend the USA Patriot Act, which is scheduled to expire at the end of February. The package also is expected to include $1.5 billion in agriculture assistance sought by Sen. Blanche Lincoln (Ark.), one of the most endangered Democrats facing reelection in November.

The bill is full of things that would make good 30-second ads – “mean-spirited Senator Jones voted against unemployment insurance!” – and it may even include some necessary measures. But really, how can it be responsible legislative practice to put into one bill

  • extensions of expiring tax breaks,
  • extension of unemployment insurance,
  • a better deal for doctors under Medicare,
  • a year’s reauthorization of the Highway Trust Fund,
  • more money, more money, more money,
  • an extension of the Patriot Act (!),
  • a $1.5 billion favor to endangered Sen. Blanche Lincoln,
  • and all for the low low price of just $85 billion in the face of a $1.6 trillion deficit?

Senator Reid should be embarrassed. But this is the way Congress works once it decides to ignore the Constitution and legislate on virtually everything.

Dr. Frankenstein on His Creation: It’s All The Monster’s Fault

As I have explained on numerous occasions, supporters of the Student Aid and Fiscal Responsibility Act (SAFRA) – which would end federal guaranteed student loans, turn everything into lending direct from Uncle Sam, and spend the resulting savings and way much more – have often shamelessly promoted the bill as a boon to taxpayers when it will almost certainly cost them tens-of-billions.  Where they have generally been right is in rebutting criticisms that SAFRA would be a federal takeover of a private industry. With lender profits all but assured under federal guaranteed lending, the vast majority of student loans haven’t been truly private for decades.

Unfortunately, SAFRA advocates are just as clueless – or, more likely, rhetorically unbridled – about what constitutes a private entity as are status-quo supporters. Case in point, an article in today’s Huffington Post that, along with U.S. Secretary of Education Arne Duncan, attempts to portray the suddenly rocky road ahead for SAFRA as a result of evil lender lobbyists dropping boulders in the selfless legislation’s way:

Taking aim at Sallie Mae, the largest student lender in the country and a driving force behind the lobbying effort, Education Secretary Arne Duncan on Tuesday accused the company of using taxpayer funds to lobby and advertise, and cast its executives as white-collar millionaires uninterested in serious education reform.

“Sallie Mae executives have paid themselves hundreds of millions of dollars in the last decade while teachers, nurses, and scientists – the backbone of the new economy – face crushing debt because of runaway college tuition costs,” Duncan said.

Here Sallie Mae is painted in the same ugly hues as Lehman Brothers, AIG, and all the other supposedly rapacious, unscrupulous companies whose unchecked greed, we’re told, brought the American economy to its knees. (We also get the baseless but obligatory pronouncement about “crushing debt” for teachers and other toilers for the “public good.”)

But wait! Doesn’t  “Sallie Mae” sound a lot like”Fannie Mae” and “Freddie Mac”? Of course! That’s because just like Fannie and Freddie, Sallie was created by the federal government,  only with Sallie’s job being to furnish lots of cheap college loans. And guess what? Just like Fannie and Freddie, Sallie became by far the biggest kid on her block because her huge federal creator fed her and protected her for decades, not setting her off on her own until 1996. But that part of her story doesn’t fit anywhere into the evil corporation narrative, so it’s just not mentioned.  All we need to know is Sallie is private, her owners and employees make a lot of money, and that is why she is evil and dangerous.

And so the politics of demonization and denial, a staple of the recession blame game, continues. Private institutions are portrayed as malevolent predators and government as a warm, pure, protective father-figure. But there is much more accurate imagery possible when it comes to Sallie Mae: Egomaniacal Dr. Frankenstein furiously blaming the monster he created for doing exactly what he built it to do.

And some wonder why there’s such widespread outrage – the real reason SAFRA is in trouble – about ever-expanding federal power?

Vote Now: Is Obama Failing?

Closing statements are posted at the Economist debate, “This house believes that Barack Obama is failing.” Currently, Obama leads in the voting by a bit less than the margin by which American voters oppose his health care plan. But there’s still time for a rally! So vote now.

I conclude my closing statement this way:

Has Mr Obama failed? Of course it’s too early to say that. But is he headed that way? Let’s go to the tape: His policies are bad for the country; they expand government, reduce freedom and slow the economic recovery. The policies that he cannot implement by executive order have become bogged down in Congress as public opposition mounts. Since he was elected, his party has lost three elections for governor and senator. Public opinion has shifted so sharply against him that last week pundits began speculating that the Republican Party might take back the Senate. Mere months after an outpouring of articles hailing the end of Reaganism and the return of activist government, he has caused the resurgence of small-government attitudes. He aspired to be a transformational president who would “remake this nation”. He may well be doing so in two ways: giving us a substantially larger government, and simultaneously reviving free-market, limited-government ideology among a broader public.

That doesn’t sound like success.

Since I wrote the statement, a few more items relating to Obama’s political decline: The Marist poll now finds that 57 percent of independents disapprove of his performance, sharply down even from December and a sign of his continuing decline among swing voters. A new Washington Post-ABC News poll shows voters trust Obama over congressional Republicans by 47 to 42 percent. Not so bad. Better to be five points ahead than five points behind the opposition. But as Byron York notes, “In November, in the same poll, Obama led by 15 points. Last July, he led by 23 points. And last February, he his lead was 55 points. So in the course of a single year, Obama’s lead over Republicans has shrunk from 55 points to five.

Vote here. Vote now. (Click on “Vote now or add your view,” and a voting box should appear. You’ll have to register, though.)

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McArdle on Whether Health Insurance Affects Health

I’ve blogged previously about the tempest that Ezra Klein stirred up in the teapot of the health care debate when he suggested that Sen. Joe Lieberman “seems willing to cause the deaths of hundreds of thousands of people” by holding up ObamaCare.

In the latest issue of The Atlantic magazine, Megan McArdle notes that the economic literature doesn’t quite support Klein’s assumption that covering the uninsured would save lives:

Quite possibly, lack of health insurance has no more impact on your health than lack of flood insurance…

Government insurance should have some effect, but if that effect is not large enough to be unequivocally evident in the data we have, it must be small…

[W]e should have had a better handle on the case for expanded coverage—and, more important, the evidence behind it—before we embarked on a year-long debate that divided our house against itself. Certainly, we should have had it before Congress voted on the largest entitlement expansion in 40 years. Unfortunately, most of us forgot to ask a fundamental question, because we were certain we already knew the answer.

Read the whole thing.

Healthcare Fraud Summit

U.S. Department of Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder recently convened a “National Summit on Health Care Fraud.” The two-hour event can be viewed at C-SPAN’s website.

There was a lot of talk about protecting taxpayers, and it was clear that HHS is putting a great amount of resources into the problem. The federal lawyers and accountants speaking at the event who are tasked with rooting out abuse seem to be a very dedicated and intelligent group. But this is one of the sad things about complex big government programs—they need intelligent people to administrate them, and that saps the private economy of intellectual resources.

HHS Secretary Sebelius mentioned that funding for anti-fraud measures would go up 80 percent under the president’s new budget. HHS intends to spend money on technology that would do a better job of sifting through the data to detect potential fraud and abuse. But that’s the Catch 22: more taxpayer money has to be spent to “save” taxpayer money.

On Thursday, the head of the House Energy and Commerce Committee, John Dingell (D-MI) had a telling exchange with Sebelius. From Nextgov.com:

“I have wrestled with a number of department agencies over the past [about] their adequacy … to upgrade these matters,” Dingell said. “They’ve had good motivation, noble intentions, but the implementation was also lacking, causing substantial waste and confusion.”

When he asked Sebelius whether the $110 million would be a one-time investment, she said, “This is a multiyear strategy to actually build a 21st century information and data system.”

“Should we anticipate that you will be coming back up here to continue to move toward adequate resources to sustain this project over the years?” Dingell asked.

Sebelius said she would see the project through and later added the department has a new information officer, who is not directly connected to CMS, who is assisting with project supervision. She assured Dingell that HHS would provide proper oversight of vendors and federal employees working on the project.

Dingell’s candor is refreshing, and it serves as a reminder that government officials always promise to “fix” problems if they just get new technology and more money. Instead, the “fix” often ends up getting bogged down in bureaucracy and cost overruns due to poor oversight of contractors.

The fundamental problem with giant government healthcare programs is simple: when you have a giant pot of honey, you attract ants. And when that honey is guarded by someone who didn’t pay for the honey, there’s little incentive for that person to guard it as it were their own.

This difference in incentives was evident when the CEO of a private insurer spoke at the summit. The CEO, James Roosevelt of Tufts Health Plan, pointed out that the chief priority for Medicare/Medicaid is to pay claims as quickly as possible. Public programs lack the capabilities of their private sector counterparts to not only stop improper payments from being made, but also detecting such payments after the fact. Moreover, private insurers aren’t encumbered by the massive bureaucracy and congressional meddling that inhibits the government’s ability to adapt and react to ever evolving fraud schemes.

See this essay for more on fraud and abuse in government programs. See here for recent examples of fraud and abuse in government healthcare programs.

Senate Health Bill May Violate First Amendment

Today, the Cato Institute released “Scientific Misconduct: The Manipulation of Evidence for Political Advocacy in Health Care and Climate Policy,” by George Avery of Purdue University.

Avery points to a troubling provision of the Senate-passed health care bill that Democrats are trying to get through the House:

In a section creating a new Patient-Centered Outcomes Research Institute to conduct comparative-effectiveness research, the bill allows the withholding of funding to any institution where a researcher publishes findings not “within the bounds of and entirely consistent with the evidence,” a vague authorization that creates a tremendous tool that can be used to ensure self-censorship and conformity with bureaucratic preferences….As AcademyHealth notes, “Such language to restrict scientific freedom is unprecedented and likely unconstitutional.”

He warns that government bureaucrats aren’t likely to let that power go unused.

In July 2007, AcademyHealth, a professional association of health services and health policy researchers, published results of a study of sponsor restrictions on the publication of research results. Surprisingly, the results revealed that more than three times as many researchers had experienced problems with government funders related to prior review, editing, approval, and dissemination of research results. In addition, a higher percentage of respondents had turned down government sponsorship opportunities due to restrictions than had done the same with industrial funding. Much of the problem was linked to an “increasing government custom and culture of controlling the flow of even non-classified information.”

Avery observes that such power enables bureaucrats to engage in “data manipulation to cover inconvenient findings,” much as the scientists at the Climate Research Unit at the University of East Anglia appear to have done.  Indeed, he points to evidence of U.S. Environmental Protection Agency officials suppressing an, ahem, inconvenient internal debate.