Saturday, June 20, 2009


Health Care Reform's Latest Death

Can this be happening before our very eyes?

Can it truly be possible that despite the most popular Democrat in the White House in 45 years and commanding Democratic majorities in both the House and Senate (the latter nearly filibuster-proof), that the quest for the Holy Grail of politics -- a national health-care insurance program -- is likely to fail yet again?

For the Nth time since Harry Truman first suggested the idea in 1948?

That seems to be the building consensus -- even from Democrats, with phrases like "on the rocks" being uttered.

Barely five months into the Obama administration, how could this be the case? And how could the attempt fall apart in accelerated fashion -- much faster than the much-maligned, abortive Clinton effort of 1993 and '94?

Well, cost is certainly one problem: The Congressional Budget Office estimate of the preferred Ted Kennedy-authored bill -- $1.3 trillion -- over ten years terrified a lot of folks, especially given that it would reportedly only reach one-third of the uninsured population that were the main targets of the legislation. When that figure was added to the multitude of polls reflecting growing anxiety over the deficit and debt, it's not surprising that Congress is balking.

However, my friend Jim Pinkerton also identifies another culprit: Health-care reform -- because of Obama decisions on the economy -- has crashed into the political reality following Wall Street meltdown.

When confronted with a choice between healthcare for the poor and the near-poor on the one hand, and the continued overstuffing of the overclass on the other hand, Obama made a decisive choice: He chose the overclass. He put rich people first.

Such skewed preferences in him were evident last October, when Senator Obama voted for the Wall Street bailout. That was a signal, the first of many, that Obama was supportive of bank bailouts, and a generally Wall Street-centric policy. Since then, the bailouts have grown more and more costly, as the Treasury, Federal Reserve Board, and the Federal Deposit Insurance Corporation—to name just three spigots of off-budget cash to banks and rentiers—all joined in the bailout binge.

By late November 2008, the cost of the bailout was estimated to be $3.5 trillion. But Obama, by then the president-elect, had no objection; indeed, his financial team worked closely with the outgoing Bush team to keep the money coming. Those great minds all thought alike, and so by January, when Obama was inaugurated, the total cost of those bailouts had risen to $8 trillion. The next month, February, the new president added nearly another trillion in spending, signing into law a $787 billion stimulus package. And thus by May, the cost of the various bailouts had swelled to as much as $12 trillion.

That's a lot of money, and not surprisingly, it's driving up interest rates, causing the dollar to fall, and even causing other countries to make plans to convert their assets to currencies other than the greenback—or even to create a new world currency altogether. Such talk has spooked not only the markets, but also the country. And Democrats are getting the message on spending: enough is enough.

Pinkerton places the blame squarely on Obama's shoulders -- though the prototype for the bailouts, of course, was the first TARP in September, under President Bush.

But even so, if Pinkerton is correct, it would mean that -- in an amazing irony -- the rather liberal Democrat Barack Obama has actually helped fulfill a long-term conservative Republican strategy, recently discussed in these parts -- "starve the beast." The rather diabolical, Machiavellian plan reasons that the continued combination of ongoing tax cuts (the preferred Republican policy option) and expanded government spending (the preferred Democratic policy option) is unsustainable. Eventually, the will of the public for never-ending debt cannot last. At that point, it will be impossible for Democrats to build ever-larger public policy programs.

It would seem that we have reached that point -- notwithstanding the attempts of House Democrats to put forward a full plan with a so-called "public option." The fact that the voices of doom are already coming out of the Senate foretells that there are enough moderates to sustain a filibuster, if it came to that.

Who killed Obama's health-care plan? Might it be an assisted suicide?

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