Tag Archives: Kent Conrad

Obama Cuts Deal To Reduce Social Security, Medicare, Medicaid

Hopes for any pretense of liberal change from the Obama administration collapsed yesterday, and not only because of the election in Massachusetts. While the Massachusetts voters were casting their ballots to install the upstart Republican Scott Brown to Ted Kennedy’s Senate seat, the White House was hammering out a closed-door deal to cut entitlements. Obama won the support of Democratic leaders for a plan to issue an executive order that would inevitably lead to reductions in Social Security, and especially Medicare and Medicaid.

The plan represents a capitulation to conservatives in both parties, and would leave Democratic liberals accepting unconditional surrender not only on health care, but on the most basic of all New Deal programs.  As hopes of even a tepid health care reform wane, the effect of this  plan, if accepted by Congress, will be to undermine the only single-payer health care programs this nation has ever known–Medicare for elders, and Medicaid for the poor. As an attack on entitlements, it has the potential to go beyond anything the Reagan and Bush administrations were able to achieve.

As the Washington Post explains this morning:

Under the agreement, President Obama would issue an executive order to create an 18-member panel that would be granted broad authority to propose changes in the tax code and in the massive federal entitlement programs — including Medicare, Medicaid and Social Security — that threaten to drive the nation’s debt to levels not seen since World War II.

The accord comes a week before Obama is scheduled to deliver his first State of the Union address to a nation increasingly concerned about his stewardship of the economy and the federal budget. After a year in which he advocated spending hundreds of billions of dollars on a huge economic stimulus package and a far-reaching overhaul of the health-care system, Obama has pledged to redouble his effort to rein in record budget deficits even as he has come under withering Republican attack.

The commission would deliver its recommendations after this fall’s congressional elections, postponing potentially painful decisions about the nation’s fiscal future until after Democrats face the voters. But if the commission approves a deficit-reduction plan, Congress would have to act on it quickly under the agreement, forged late Tuesday in a meeting with Vice President Biden, White House budget director Peter R. Orszag, and Democratic lawmakers led by Senate Majority Leader Harry M. Reid (Nev.), House Speaker Nancy Pelosi (D-Calif.) and House Majority Leader Steny H. Hoyer (Md.).

Senate Budget Committee Chairman Kent Conrad (D-N.D.), who has long advocated creation of an independent budget panel, called the agreement an “understanding in concept” that holds the promise of at last addressing the nation’s most wrenching budget problems.

“This goes to the question of the country’s credibility with managing its own finances. This is essential for the nation,” Conrad said.

The commission is likely to form the centerpiece of Democrats’ efforts to reduce projected budget deficits, which have soared into record territory in the aftermath of the worst recession in a generation. Government spending to bail out the troubled financial sector and to stimulate economic activity have combined with sagging tax collections to push last year’s budget deficit to a record $1.4 trillion. The budget gap is projected to be just as large this year and to hover close to $1 trillion a year for much of the next decade. 

In other words: The national treasury has been driven into deep deficits by a financial crisis caused by Wall Street greed, compounded by two wars, tax cuts for the rich, and the high prices charged by health care profiteers. And where will we turn to make up for this loss? To the poor and the old, who cling greedily to their “entitlements.”

The claim is made that we need to make these entitlements “solvent” and “sustainable” in their own right, so they don’t “run out of money”–but that’s just political flim-flam. Social Security is in fact perfectly solvent, and the fiscal problems of the Medicare and Medicaid programs stem from the excesses of profit-based health care. If cuts are made to these programs, which have saved millions of Americans out of desperate straits, it will be because there’s simply no political will to do anything else to address the deficit.

All this represents a major victory for the corporate take-over mogul Pete Peterson whose foundation has put up $1 billion to lobby the proposal. His efforts have even involved  a financial news service that pushes this rich man’s plan, and that  has wormed its way into the Washington Post.  William Greider, who has long been covering the Peterson story, writes in The Nation:

The retired mogul has created a digital news agency he dubs “The Fiscal Times” and hired eight seasoned reporters to do the work there. “An impressive group of veteran journalists,” Peterson calls them. I hope they have shaken a lot of money out of this rich geezer. Because I predict doing hack work for him will seriously soil their reputations for objectivity and independence.

With his great wealth, Peterson could have also bought a newspaper to publish his dispatches, but he did better than that. He hooked up with the Washington Post, which has agreed to “jointly produce content focusing on the budget and fiscal issues.” (This media scandal was first uncovered by economist Dean Baker.) The newspaper is thus compromising its own integrity. It’s like buying political propaganda from a Washington lobbyist, then printing it in the news columns as if it was just another news story. Shame on the Post, my old newspaper. I predict a big stink like the one that greeted the Post when its publisher decided to hold pay-for-access “salons” for corporate biggies.

The deal is based on rickety interpretation of the country’s basic laws governing taxation.  Normally, any change in taxes must be passed first by the House, with legislation wending its way through the Ways and Means Committee up to the floor. This proposed arrangement short cuts—indeed appears to bypass—this procedure. The appointed commission is to make a recommendation on the budget after the election and that recommendation then goes straight to Congress where it might go through hearings,floor debate and a vote,or as some proponents of the idea would like, just get an up or down vote. To rub salt in the wounds, it was largely crafted not by members of the House, but by vice president and former Delaware senator Joe Biden along two senators–Kent Conrad, the North Dakota Democrat, once considered heir to the Great Plains progressive tradition, and conservative Judd Gregg, from New Hampshire. The man behind the commission plan is Pete Peterson.

The National Committee to Preserve Social Security and Medicare, which has been fighting against the creation of the commission, recently sent a letter to Congress, saying in part: 

We appreciate the concerns of legislators who are looking for a means of reducing the federal deficit and slowing the growth in the debt. However, we have significant concerns about any process – including the Conrad-Gregg Commission – that would disenfranchise American voters and subject Social Security beneficiaries to harmful cuts in benefits. As supporters of Social Security, we are surprised to see the federal deficit and the federal debt cited as the reason a commission needs to be established to make cuts in Social Security. The truth is that neither the $1.4 trillion deficit nor the nearly $12 trillion debt has anything to do with Social Security benefits.   

For nearly three decades, Social Security has taken in more revenue each year than it has paid out in benefits. These excess funds have been invested in special issue U.S. government securities. Thus, Social Security has effectively been loaning its excess funds to the federal government to spend on other programs. Rather than increasing the federal deficit, Social Security’s annual surpluses have actually been covering up the true size of the deficit in the general fund.

 

How Health Care Reform Flew the Co-op (OR the Public Option That Isn’t, Part 2)

This week I’ve been writing about the destruction of all the best elements of health care reform in the name of political expediency. Most significant is the bait-and-switch that’s taking place on the “public option”–which was supposed to provide a government-run alternative to private health insurance plans. Through the handiwork of some Senate Democrats seeking bipartisan compromise, the public option is quickly devolving into something that really isn’t public at all.

The latest news on this subject comes via Ezra Klein’s Washington Post blog, which reported last night on the content of a new health care reform bill drafted by the Senate Finance Committee. After an earlier proposal from Ted Kennedy’s Health, Education, Labor and Pensions (HELP) Committee was widely attacked for its liberal ambitions and high price tag, the Finance Committee is floating a cheaper—and, of course, weaker—alternative. According to the highlights provided by Klein, subsidies for the poor have been reduced, Medicaid eligibility has been tightened, and “There’s no public plan mentioned anywhere in the document.”

What is in the Finance Committee’s draft, and slated for further discussion, is a scheme for health care “co-ops” that would pool individuals and businesses together into consumer co-operatives to purchase health insurance and services. (Kaiser Health News has profiled one existing co-op in Seattle.)  The idea was first proposed by North Dakota Democrat Kent Conrad, and supported by Finance Committee chair Max Baucus. Baucus has been talking out of both sides of his mouth on the public plan for some time, and seemed to quickly latch onto the co-op idea as means to having it both ways.

Speaking in Green Bay last Thursday, President Obama said: “If the private insurance companies have to compete with a public option, it will keep them honest and it will help keep their prices down.” On the same day, the New York Times reported:

Senator Max Baucus of Montana…said Thursday that the public plan could take the form of an insurance cooperative that would be owned and operated for the benefit of its members, but not run by the government.

“I am inclined, and I think the committee is inclined, toward a co-op,” Mr. Baucus said. “It’s not going to be public, we won’t call it public, but it will be tough enough to keep insurance companies’ feet to the fire.”…

By the time the Sunday morning news shows aired, HHS Secretary Kathleen Sibelius was speaking of co-ops as a road to bipartisan compromise—and with the advent of the draft bill from the Finance Committee, it seems like the fix is in. Especially with Ted Kennedy absent from the fight, this is all we are likely to get in the way of a “public option.”

True to this spirit of bipartisanship, the co-op scheme is a weak, tired, nearly meaningless idea that would represent no real alternative to business-as-usual in the health insurance industry. In the best-case scenario, which is far from guaranteed, the co-ops might have a less corporate governance structure than other insurers and receive federal subsidies for startup costs and more expansive coverage. In the worst case scenario, they would in effect be private insurance companies by another name. And at least some of the initial capital, in all likelihood, will come from the members. You can be sure all the Americans who are out of work and too poor to buy insurance people will appreciate that—and with the lower subsidies in the Finance Committee’s draft bill, most of them will still be on their own.

Much is being made of the fact that the co-ops would be non-profits. But really–so what? Almost half of Americans with private health insurance are currently covered by non-profit plans.  As a whole, they haven’t proven themselves much—if any—better or cheaper than the for-profit insurers, and they still fail to cover 50 million Americans.

The giant Kaiser Permanente is a non-profit. And while some of them have privatized, many of the Blue Cross-Blue Shields are still non-profits as well—and, in fact, got started as co-ops. Some of these non-profit insurers are well known for paying huge executive salaries and hoarding huge reserves, while charging the same high rates and offering the same rationed care as private plans—and enjoying tax exemption to boot. One report by the Consumers Union found the non-profit “Blues” stockpiling billions in cash even as they raised premiums and co-pays.

Supporters of the co-ops also insist that they will offer real competition to the private insurers, and bring down costs for their members by giving them bargaining power with health care providers. Tim Foley made short work of this claim in a post on Change.org:

Former Labor Secretary Robert Reich articulates well most people’s gut-reaction: “Nonprofit health-care cooperatives won’t have any real bargaining leverage to get lower prices because they’ll be too small and too numerous.” Conrad’s answer to that has been consistently to say, “But you know, one of the interesting things when we talk to experts, is that they say critical mass is probably around 500,000 members.” Let’s skip over the difficulties in finding half a million people for a co-op. Let’s just say that 500,000 non-profit customers doesn’t change the game. Know how I know? Because, as pointed out by Bob Laszewski, Conrad’s home state of North Dakota has 475,000 people enrolled in the not-for-profit North Dakota Blue Cross Blue Shield. That’s not just competition–it’s a monopoly, 60% of the market. Guess what? It hasn’t helped. Premiums jumped 74% in the past seven years.

In fact, as the State of the Division blog  points out, it’s conceivable that private, for profit companies could “get in the back door” of the co-op plan: What’s to stop a co-op from actually licensing itself out to a private insurance company–or hiring one to administer its fledging business? The publicly traded (and scandal-ridden) Wellpoint is currently the largest Blue Cross and Blue Shield licensee. (In an instance of true bipartisanship, Wellpoint’s Board of Directors includes the wife of Democratic Senator Evan Bayh, as well as George W. Bush’s uncle.)

Although the demise of a real public option will likely be blamed on Republican opposition, it’s moderate Democrats who came up with the phony co-op plan. This should hardly be surprising coming from Max Baucus, who, as the Montana Standard reported this week, has received more campaign money from health and insurance industry interests than any other member of Congress. But the so-called liberal Democrats–again, in the absence of Kennedy–also look likely to cave all too soon, along with the White House.

So much for “incremental” health care reform. At this rate, the increments will soon be so small that they’ll be invisible.

(Incidentally, Karl Marx toyed with the idea of cooperatives as a means to worker control of production, and Lenin supported them for a time as an incremental step in the transition to socialism. But things got out of hand, and what we got instead was the Russian Revolution.)