A Disgruntled Democrat’s State of the State of the Union

Prologue:

How quickly things can change.

Two years ago, I was nearly arrested by French Police for a drunken 3:00 AM shouting match with a Hillary Clinton supporter over the future of the Democratic Party.

Just over a year ago, I braved the bitter cold at Inauguration to bask in the political euphoria of Barack Obama’s election.

These days, I’m just pissed.

The current disastrous state of American politics is clearly not all Obama’s fault.  He inherited a collapsing economy and two disastrous wars.  He has to deal with a stubborn Congress, many members of which have been negotiating in abject bad faith.  Boosted by the sagging economy and brute volume, the so-called “teabaggers” and air-headed media outlets have whittled away at Obama’s popularity.

These extenuating circumstances do not change the simple reality of the situation: Obama is simply not the effective and progressive politician I had hoped for.  He has lagged in withdrawing our troops from Iraq, and has escalated our other foolhardy occupation in Afghanistan.  He has failed to investigate and prosecute the Bush-era officials who authorized and committed the torture of detainees and captives.  Worse, he has continued those policies essentially unabated.  He has failed to close Guantanamo Bay, despite its immense symbolic importance (if anyone else tries to tell me  that “we have nowhere to put” the approximately 200 detainees, while more than two million americans remain incarcerated, I am going to scream).

Over a number of months, he let republicans (with no interest in ever supporting him) turn promising healthcare reform into a bulky health-insurance subsidy that is STILL somehow on life support.  And though he was (and is) the clear face and leader of the party, he let a handful of democratic senators walk all over him.  I appreciate his dedication to the cause, though even I question the expediency of pushing for such expensive reform at a time when unemployment is at levels unseen since well before I was born.  It’s hard to sell people on paying more when they’re barely making ends meet — and it has already cost him tremendous political capital.

Don’t even get me started on how he has abandoned the gay community (particularly by failing to abolish “Don’t ask, don’t tell”) at a time when the cause of gay marriage is hitting speed bumps around the country.  I have no idea why a civil rights issue would ever be up for referendum, but Obama seems content to leave homosexuals hung out to dry.

David asked me to comment on tonight’s State of the Union speech.  I suppose all my editorializing above is somewhat unnecessary, but it should provide some background as to how I’m feeling about his presidency before the speech.

*   *   *   *

OK, Obama’s first State of the Union address is in the books.  I have avoided reading or listening to any third-party reaction to the speech.  I’m somewhat unsure how to structure my commentary on the speech, so I’ll try to break it down into smaller categories.

LANGUAGE/TONE:  The speech was rather predictably bookended by Obama’s trademark “hope and perseverance” rhetoric.  It was nice to have some lip-service paid to the frustrations being felt on all sides, but I’ve grown a little impatient with the atmospheric appeals to our past and shared ideals.  Yes, we all “share a stubborn resilience in the face of adversity”. But, as my gruff father intoned as he walked by during that line, “what the fuck are we supposed to do, kill ourselves?”.  I anticipated Obama’s subsequent drop into more blue-collar, populist lingo as the speech wore on: this is, after all, one of the few chances he has had to appeal to the American people without the filter of 24-hour news outlets.  I’m not sure how much credit I’ll give him for “hating the bank bailout” and likening it “a root canal”.  The fact is, more could have been done to ensure its transparency and ensure that billions weren’t being flushed down the drain.  I did enjoy his potshots at the Supreme Court and Republicans for “obstructing every single bill because they can” (he said he meant both parties, but can this make sense in such a skewed body?).  Both congressional republicans and the Supreme Court deserve nothing short of an ass kicking, but I suppose this will have to do.

THE ECONOMY:  Obama spent the biggest chunk of his speech discussing the economy and ways we might improve it.  Frankly, I found his suggestions a little weak.  Of course he’s right that the centerpiece of economic recovery must focus on job creation.  But what did he actually propose?  Helping to secure loans for small businesses should help create some jobs, as should various tax incentives.  But these are small measures, and don’t address the problem of massive structural unemployment.  Obama “urged” the Senate to pass a jobs bill: but is that particularly reassuring given how unbelievably ineffective he has been at getting his most-cherished policy initiatives passed?

Using China, India, and Germany as examples of countries “not putting their future on hold”, Obama laid out a few ways in which we might make our economy more competitive.  The first is “financial reform” — mentioned in such a vague and cursory way that I had absolutely no idea what he was talking about.  His most specific sentence was: “We can’t allow financial institutions, including those that take your deposits, to take risks that threaten the whole economy. ”  Sure, I guess I can get on board with that.  Great.

President Obama made a reference to spending more on “encouraging American innovation”.  This was something in particular that I was looking for.  Economic growth, despite all Reaganesque bullshit rhetoric about small business, is very much dependent on scientific research and innovation. Hey, remember all that economic growth we got out of the internet? That wasn’t some small business opening up a restaurant in Tampa, it was government research.  I was hoping Obama would offer some major spending initiatives for scientific research and education.  But what did he suggest?

1. Nuclear power plants (given the realities of climate change, this is an obvious one)

2. Offshore drilling (really, are we back on this?)

3. Biofuel subsidies (really, are we going to continue disastrous corn subsidies?)

4. Clean coal (I’m pretty sure this still doesn’t exist…)

5. A climate change bill (this is expensive, unpopular, and dependent on non-existent congressional cooperation)

These are weak scientific initiatives, and Obama made no effort to describe where/how much this funding would come from.  (As I will discuss in a bit, it’s totally unclear how these programs will be affected by the “spending freeze”.)

He then murmured something about doubling our farm and small business exports.  How are we going to do this?  Our high labor costs and environmental standards already make our farmers completely dependent on subsidies (which, incidentally, fuck over farmers all over the world).  Are we really talking AGAIN about increasing farm subsidies?

EDUCATION: This is a bread-and-butter issue for me, and was one of the few bright spots of the speech.  Though Obama’s nods to primary education were rather vague, I liked his idea for a new bill revitalizing community colleges, as well as tax breaks for college tuition and an increase in Pell Grants. Ditto for loan breaks to those pursuing careers in public service. These ideas, backed with real funding, are good steps forward in providing some immediate relief for Americans pursuing college degrees.  The current system — in which banks gauge students yet assume none of the risk– is a total sham, and Obama was right to decry it.

HEALTH CARE: Ah, the big dying elephant in the room.  I have to admit, despite my earlier postulation that health care reform should have waited until the economy recovered, Ole’ Barack was able to pull at my liberal heart strings and remind me that it is truly a pressing need in this country.  But just as I was being reminded that we absolutely need to reform the system, I recalled that the current piece of shit kicking around Congress is only a modest (and expensive) improvement.  After seven months, can Obama REALLY only muster up “many…consider this a vast improvement over the status quo”.  Great.You know what?  Many don’t — many people think it’s bullshit, and expensive bullshit at that. And I thought the lowlight of the whole speech was Obama asking that “if anyone from either party has a better approach … let me know”.  This is your initiative, Barack! Don’t tacitly admit that we should spend countless billions on something just because nothing better has been suggested by the wildly unpopular douches in Congress.

SPENDING FREEZE: I am at a total loss here.  Though the above-mentioned ideas were often vaguely presented, THEY WILL ALL COST MONEY!  As he said rather bluntly, “Spending related to our national security, Medicare, Medicaid, and Social Security will not be affected. But all other discretionary government programs will.” So where will the money for that High-speed railroad come from? The community college vitalization? The Pell Grant and loan forgiveness programs? The funds for research and innovation? The alternative energy exploration? The math and science education programs? The tax-credits for small businesses? The additional farm subsidies? The national export initiative? The healthcare expansion (the “savings”, I presume, would play out over a much longer term)? The help with refinancing homes for people stuck with bad mortgages? The “21st Century Veterans Association”? International humanitarian relief (i.e., Haiti)?

The spending freeze makes zero sense, not when genuine economic recovery — AS HE OUTLINED IT — hinges on pouring  ton of money into the research and education initiatives that will open up new domestic industries. “Let’s try common sense,” he called it.  I honestly have no idea what he’s thinking.

FOREIGN POLICY: I was happy with the concrete dates he set out for troop withdrawal.  Out of Iraq by August, out of Afghanistan by July 2011.  If he can deliver on that, I’ll be satisfied.

RANDOM PANDERING: I was glad to hear some perfunctory saber-rattling at North Korea and Iran, as well as his latest claim that he will end “don’t ask, don’t tell”.  Then again, I’m unsure why he claims he needs to “work with congress” to end the latter — it was begun, after all, by an Executive Order by Bill Clinton.  Surely, as Commander in Chief, he could unilaterally end it? He should have done so tonight.

CLOSING: I enjoyed the rhetoric here, but was left disappointed from not having heard any substantive policy implications in the speech.  Kudos to his heavy-handed version of the “USA! USA!” chant that was supposedly being heard in Haiti.  I shed a single star-spangled tear.

FINAL THOUGHTS: Considering that Obama has shown very little ability to get his initiatives passed in Congress, I was disappointed that his State of the Union address did not offer more concrete, unilateral plans to create/fund solutions to the policy questions he appears to be so concerned with.  I don’t want him “urging” congress to do anything — that has simply not worked — but that, for the most part, is what he did.  It was not a bad speech, by any stretch, but it gave me little reassurance that I can expect the type of progress that I envisioned when he first took office.  Another year like this would feel like a root canal.

-Thomas

Ask the Audience – Best of NYC Restaurant Week 2010 solicitations

I normally like saving a few posts for later in the week, but this is a bit time-sensitive.

As some of you may know, New York City Restaurant Week begins today, and lasts through next week, January 25–February 7, although reportedly some will go through the end of February. Some of you may also know that I’m a bit of a foodie (Josh as well), and love trying new foods; I attempt to make at least one RW visit each season.

During NYC Restaurant Week, many upscale restaurants and some lesser restaurants will offer three-course prix fixe menus, $24.07 (lunch) or $35.00 (dinner). It’s usually better in the summer, but a quick glance reveals there are some good entrants this winter, including Tabla, Esca, Cafe Boulud, etc.

One place I can recommend to readers, from personal experience, is Aquavit (Cafe or Dining Room); Restaurant Week menu shown here. Chef Marcus Samuelsson‘s cuisine is Scandinavian, so there’s a lot of salmon and Swedish meatballs, in addition to the potent spirit that lends the restaurant its name. The last time I went, there were two tables of Scandinavians (including a leggy blonde, and a silver-maned Bjorn Borg-clone) that took turns toasting each other with hoots of “Skol!”, “Skooool!” and shots of aquavit, which gave the Ikea-esque dining room an extra air of modern Nordic authenticity. It isn’t on the RW menu, but an additional appetizer I enjoyed was the gravlax on flatbread; likely some of the best smoked salmon I’ve had. The crunch of the warm, crispy, and slightly oiled flatbread matched perfectly with the heaping mounds of soft salmon that were kept from sliding off the flatbread by a smear of tomato-dill-ey spread that balanced the richness with a touch of acidity. Service was great, and the decor/ambience was, as you can see from the picture, pretty beautiful and serene.

So questions for the audience:

Continue reading

Ask the Audience – If you had to be someone else, who would you choose?

For this week’s Ask the Audience, I thought I’d throw out a question that I find is always a good conversation piece at dinner or cocktail parties or whanot:

You’re forced to have the life of someone else, living or dead, real or fictional. This doesn’t mean that you’d still be you but in the position of that person; it means that you’d just be them (i.e. have all of their values, life experiences, etc.)  Who would you choose  and why?

Much like asking what movie’s your favorite, there’s not necessarily any one person you’d like to be. Personally, my choices change with my mood. Hopefully it’s an interesting thought experiment, and I’m looking forward to seeing the responses people come up with. I’ll summarize them and write in with my own thoughts on Friday.

Fixing campaign finance rules after Citizens United v. FEC

Recently the Supreme Court decided in Citizens United v. FEC that the government may not ban political spending by corporations on campaigns, based on free speech grounds. Much has been written on it, and will be written on it, by legal scholars. I haven’t read the opinion (or dissent) yet, so I’ll leave the legal analysis to experts, but from a policy point of view there’s a lot to dislike. Supporters of the decision say that corporations have legal and constitutional rights because they are, after all, made up of persons. The shareholders in a company have free speech rights, shouldn’t they be protected? But those persons already had ample means to freely express their political opinions outside of the corporation through individual campaign donations.

We already limit individual campaign contributions, recognizing that speech by wealthy individuals can drown out and dilute the speech of others, creating speech inequalities. For example, individuals were limited to $2,400 per federal candidate per election, and $30,400 per calendar year to a national party committee. In addition, corporations were already able to exercise political speech; they just had to establish Political Action Committees (PACs) to do so. Individuals could donate $5000 to any one PAC, or $69,000 in aggregate for a two-year election cycle. These PACs (like the Swiftboaters) could be created by corporations but had to be funded by individual persons, the rights-bearers we want to protect!

To me, rich individuals can pretty effectively influence political races without being allowed, after this ruling, to use their private corporations (or offices in public corporations) to help or harm political candidates and perhaps make more money. If we were willing to limit the speech of individuals in personal donations, why can’t we limit the donations of individuals in aggregate as corporations? One additional problem is that current campaign finance laws also prohibit donations by foreign nationals. That makes sense; we want Americans controlling American elections, not foreigners that might have ulterior motives. But now it’s feared that the decision could create a loophole, allowing foreign nationals to influence U.S. elections though foreign (or more likely multinational) corporations.

It’s clear, to me, that spending can buy elections–just look at Corzine and Bloomberg, and how presidential candidates in 2008 spent a total of $1.7 billion. A small minority are skeptical that corporate spending will change much. Robin Hanson argues that those who fear corporate spending misunderstand modern media. According to Hanson, “There are hundreds of TV and radio channels, thousands of newspapers, magazines, and journals, and millions of web pages.” Surely corporations can’t blanket them all, and certainly not the un-paid newspapers, journals, and web pages! Unfortunately, only a handful of major media outlets and radio stations actually matter for the vast majority of the American vote. The core demographic is not yet nerdy informed college students who surf around on tiny blogs like Stone Soup for their political content; it’s Joe Sixpacks who will decide based on the subliminal barrage of TV advertisements, mailings, phone calls, and door-to-door chats that money buys. Viewed in that way, particularly in local races, there is a decidedly limited amount of media space and time that can be purchased and we want, ideally, to limit the amount any one individual can directly purchase. Hanson recognizes this mid-post, and then tries to give a solution:

For such shallow folks, money-wise the loud can indeed drown out the less loud. But again, your primary complaint here should be about those shallow voters, not the advertisers.  If you believe that some voters care so little about political outcomes that they are willing to sell their political beliefs to the highest advertising bidder, you should believe that such folks have no business voting!…If there are only a few such shallow voters, we can probably just ignore this problem.  If many voters are shallow about politics, however, it seems wiser to restrict the voting franchise to folks whose beliefs are less easily distorted. The opinions of shallow folks who are easily swayed should have almost no additional information value – why let such them make a mess of how we determine policy?

Right… I’m going to say it’d be easier to limit corporate spending than to start taking away the right to vote from “shallow voters”, which we’ve noted in a previous post as being problematic. Matthew Yglesias has a good post on how corporations don’t even have to necessarily spend; they can just threaten to spend money to knock out a candidate, and the candidates will fall in line. I think it’s important to think about more local elections like Senate, House, or even say Mayoral or city council races where the stakes are still high (in terms of government expenditures/decisions/contracts) but the spending has so far been pretty small (where according to Yglesias total spending in all 2004 Senate races was only ~$400 million).

So given that there’s this Supreme Court ruling, I’d like to ask: What should we do? Assuming Congress has the courage to act, and assuming we’re not going to see any constitutional amendments, how can Congress effectively reverse this decision while staying within the limits of the Constitution? Here are a few ideas I came up with:

–Congress can attach a 30% surcharge to corporate spending on political campaigns. We can call it the ‘political capital gains tax’.

–Naked transparency. Congress can require public corporations to mail every shareholder a description of corporate political contributions made that month, divided by political party, and then itemized by individual candidate. Font-size should at least 13-point.

–Name and shame. Before and after every corporate-paid TV or radio ad (in whole, or in part), the announcer must list the companies that contributed to the advertisement (and maybe name the CEOs), similar to an accounting of adverse side effects for drug ads.

–OK, Corporations can contribute to political campaigns. But they should be limited to $X per candidate, etc. just like regular people are limited.

My quick take on Cryogenics.

I think Josh pretty much covered everything in his final summary. Like Josh and others, given the technology, I wouldn’t hesitate to freeze myself, especially if my assets would be taken in the estate tax. But I do have two thoughts to add.

First, when do you freeze yourself? Time and timing are both important. In order to maximize your chance at future resurrection, you should probably freeze yourself before you die, as Josh points out. As soon as you die, your brain cells are deprived of oxygen, and start a rapid cascade into death. In a more compelling example, if you’re shot in the face, chances are future scientists won’t bring you back, cryogenics or no. This means that you basically have to decide at some point before death that you want to go into a deep freeze. There’s a chance that you won’t ever be brought back, in which case you’re basically exchanging a few hours, days, or perhaps months/years of life for the possibility of a presumably longer period of time later. I’d probably have to calculate the expected value of the cryogenically extended life vs. the probably amount of life I’d be potentially giving up by freezing myself before death. I’d be far more worried about that sacrifice than the specific monetary cost, i.e. I don’t know if I’d want to “die early.”

Second, in response to Tom’s idea of downloading a digital copy of your brain, I’m not sure that I’d benefit from that. Josh might blog later about how he believes that the idea of a unified consciousness is false, but the fact is that we perceive ourselves as a unified being, a unified self. I am the same person as I was when I was 5 years old, even though my neuronal patterns are very different. More importantly, I’m making decisions right now… right now, n-now… er, now… that will affect me, my future self. So the downloading thing is only valuable IF I think that I, a unified self, will be able to appreciate being alive in the future. One of Josh’s links had a great example of why this might not be the case. So if you (say, David 1) downloaded your exact neuronal signaling, etc. into a computer, and then uploaded it perfectly into a cloned body, the clone (David 2) would think that it was me. It would perceive that it was David 1, the unified self. But what if I were still alive? It’d be clear to me, the true and original David 1, that David 2 was just an imposter, even though he might genuinely believe himself to be the original. So if I died, and my memories were just transplanted into a cloned body, I think that clone (or even several clones) would think himself to be “me” but…. they’d still be imposters. That means that I wouldn’t enjoy the fruits of the process; I’d still fear the eternal death just the same. The difference is being able to replicate oneself, and being able to live forever as a unified self. And if the only advantage to the “digital download” is there’s someone running around with my genetic material thinking that he’s me… well, like Josh, I think I might as well just have natural genetic progeny.

Cryogenics – Stonesoup Readers Say – Not Really Crazy

Sadly, though our audience seems to treat trendy topics like the football playoffs, the value of Twitter, and the Cadillac tax as catnip for commenting, only a few have deigned to respond to questions about more whimsical topics like zombies and the modern version of mummification. Anyway, the responses we’ve gotten (plus my conversation with others since I’ve posted) seems to confirm my view that cryogenics isn’t  universally considered as kooky (as seemed to be indicated by the New Yorker article that inspired the question). Here’re my views and my impressions (David may add his in later) after hearing comments about the question: what do people think about the idea of trying to freeze yourself after death in the hopes of eventually being resurrected by a futuristic civilization?

Trying to state the question in as plain terms as possible shows the utter weirdness and ridiculousness of the method. Most people who comment are (unsurprisingly, given that I bet StoneSoup’s audience is largely atheistic) enthused about the idea of immortality, but the cryogenic method of achieving it seems like a pretty big long shot. Alex says, concisely, “I’d do it. Gotta keep living,” which most closely mirrors my view. Some people (including my parents) that I’ve talked to about the idea have told me that they don’t want to live forever. I think those people are either extremely depressed or foolish. Personally, I enjoy life a lot and would like it to continue (I certainly prefer it to the alternative of nonexistence). Admittedly, being stuck in a bizarre future world with few if any of the people you knew in life would be strange and lonely, but after a while of moping around, I feel like I’d perservere and make new friends; if I didn’t, I could always decide to die later. I just don’t see the downside of immortality.

Cryogenic preservation is, however, an admittedly feeble vehicle to reach the intended goal. Lepore’s article at one point briefly and devastatingly lays out why this is true; basically, with cryonics you’re hoping that, somehow, after your brain has died (and its electrical impulses silenced) and then endured the enormous cellular damage of being rapidly frozen, your consciousness will then exist to be restored and that that restoration will still be you in a meaningful way. This seems really unlikely, so I totally recognize that my plan of freezing myself has a very very low chance of success (I’d guess about 5-10%). That said, the costs are fairly low (I think it’s about $30K which can be paid from life insurance) and the potential benefits (living forever) are extremely high.

As to Thomas’s comment about preserving your consciousness as a digital copy, this brings up some really interesting questions that I might write about in depth at some point relating to the ship of Theseus paradox in philosophy and its relationship to consciousness. Suffice it to say for the purpose of this post that (1) there’s no way of doing this currently, whereas there is a way of freezing yourself, and (2) my own consciousness is tied up in my particular physical brain, so a copy of my consciousness would not necessarily continue my experience of life, it might just be the creation of another person who is very very similar to me.  While the preservation of a version of oneself might be someone’s preference, even if they can’t experience it, that doesn’t particularly appeal to me; children seem like enough immortality in that particular sense.

Ask the Audience — Cryogenics: Crazy Like a Fox or Just Crazy?

Today I read this disappointing (and disappointingly paywalled) New Yorker article about cryogenic preservation. For those of you not steeped in science fiction as a child, cryogenic preservation is the idea of freezing your corpse in the hopes that someday an advanced civilization will use their futuristic technology to defrost and then resurrect you. This is a concept that most people (including the author of the piece, Jill Lepore) find ridiculous, and the reasons one might think that are obvious — the prospect of spending eternity stuck in an ice-cold metal canister in storage somewhere sounds pretty silly, and the eventual success of such a project seems dubious.

That said, the reason I was disappointed in the article was that I don’t find the idea of cryogenic preservation absurd; I was a bit surprised by the tone of the article (which talks about the silliness of the concept’s 91-year old chief spokesman and the absurdity of several mid-twentieth century sci-fi works that discuss the idea), since I wasn’t sure that cryogenics was that crazy.

So, out of curiosity about this, I thought I’d ask the readers of this blog to post comments about their thoughts on cryogenic preservation. Does it strike you as farcical? If so, why? Do you understand the motivation behind it but think its ultimately misguided? Any few brave souls willing to admit that they (like me) think it might be a good idea?

I’ll post a rundown of people’s comments as well as my own views this Friday.

isI say disappointing rather than bad because the author approached the subject in a different way than what I had hoped for.

Congress pours haterade on the ‘Jersey Shore’.

I previously blogged that Congress was being sneaky with the revenue sources in the health care bill. The example I gave was the tax on hospitals with a disproportionate number of low-income clients.

Fellow “Jersey Shore” fans will be shocked to learn that Congress also wants to tax a central component of the SeasideHeights lifestyle GTL.

More below the fold. Continue reading

The “Cadillac” tax can’t finance health care reform.

MIT Economist Jonathan Gruber recently wrote in the Washington Post in support of the Senate proposal to enact an excise tax on “Cadillac” health care plans, a “40 percent assessment on insurance plans with premiums of more than $8,500 for singles and $23,000 for families. In the House, the gap is closed with a surtax on those earning more than $500,000.” In some ways the “Cadillac” tax will be good for employees because they won’t “see” the tax themselves; it would be paid by their employers. In fact, employers will be encouraged to divert money from health care benefit spending to wages in order to avoid the tax, which should please wage-earners. But at the end of the day employees will receive less total compensation since the extra earnings will be taxed as income, and because they will have difficulty purchasing the same “Cadillac” level of health insurance, assuming they want it. Gruber argues that the tax works because it bends the curve, is eminently progressive, and because it corrects an existing tax bias.

The assessment proposed in the Senate is not a new tax; it is the elimination of an existing tax break that is provided to exactly these firms. Under current law, if workers are paid in wages, they are taxed on those wages. But if they receive the same amount of compensation in the form of health insurance, they are not taxed. As a result, the tax code has for years provided a large subsidy to the most expensive health plans — at a cost to the U.S. taxpayer of more than $250 billion a year. To put this in proportion, the cost of this tax subsidy to employer-sponsored insurance is more than twice what it will cost to provide universal health coverage to our citizens.

I completely agree that the Cadillac tax will, as Gruber predicts, “bend the curve” and change the incentive structure for employers. As he writes, “it would reduce the incentives for employers to provide excessively generous insurance, leading to more cost-conscious use of health care and, ultimately, lower spending.”

For that exact reason, taxing health benefits seems  counterproductive. I think what will likely happen is the market will reconfigure, as Gruber says, and companies will start offering fewer ‘Cadillac’ health plans. The reason they offered them in the first place was that it was the cheapest way of differentiating benefits with other firms since the plans aren’t taxed and taken, as I understand it, out of gross earnings instead of net profit. It  doesn’t seem like a good long-term way of funding public health programs or rebates because if behavior actually changes (as is the goal of any excise tax), then the funding source dries up.

It’s sort of odd that the CBO doesn’t seem to be taking this into account very much. The CBO estimates that revenue from the excise tax will go up every year that it’s collected, from $7 billion in 2013, $13 billion in 2014, all the way to $35 billion in 2019. The numbers should naturally go up as health care becomes more expensive, and with inflation, but there’s no evidence that there is accounting for a reverse effect when employers decide they no longer want to pay the excise tax (at least the CBO isn’t explicit about it, and I guess technically the rate of increase is slowing). Why aren’t the numbers going down every year as businesses stop providing, as Gruber predicts, excessively expensive health care plans? Why would any business keep the Cadillac plans once they are being taxed on it (and which are less visible as a benefit), and not just divert the difference to increased salaries?

Revenue from "Cadillac" tax (in billions)

I started writing this before the recent “accord” in which America’s future is sold out once again to labor unions. Labor unions, which negotiate for these excessively expensive health care plans, would be exempted from paying the new tax for 5 years. According to a union representative (not even the CBO), this would reduce the revenue of this tax by 40 percent, to $90 billion from $149 billion over ten years. I suspect the true revenue reduction would be a lot more, when estimated by an unbiased source. Let’s also keep in mind that while the unions are scheduled to start paying the tax in five years, reasonable people suspect that the Democrats will cave in again and give the unions another exemption when the time comes. As in their analysis for the rest of the health care bill, the CBO must assume Congress will actually keep its word and start charging unions in 5 years, so we can be sure that whatever the new cost estimate is, it will be far less than the true cost to America. If Gruber thinks that it’s unfair that businesses basically steal billions from the taxpayers every year through their lavish tax breaks, he (and the voting public) should be just as incensed now that the unions, like the Nebraskans, are getting special benefits at the cost of the average American taxpayer.

What’s deceptive is that the Cadillac tax in the Senate bill gets a lot of press, but it represents only about 15% of the estimated offsets from revenue expansions and spending cuts that will keep the spending bill in the black. If the tax is as good as affecting behavior as other excise taxes, and Congress caves in as easily to other special interests as it did to unions, I foresee little long-term “deficit reduction” or “deficit neutrality” from  health care reform. The real key to offsets is not reducing overspending by businesses, but by (get this) government-run healthcare plans.

Just as Congress has waived ostensibly “automatic” cuts in Medicare (provided by the Sustainable Growth Rate formula) each year since 2003, politicians in Congress will indubitably start waiving the Medicare spending cuts that make up about 50% of the offsets in the Senate bill as soon as the AMA and AARP start clamoring. They couldn’t stand up to labor. How will they stand up to the AARP? Here’s more fodder for the cynics out there. These cuts aren’t scheduled until 2011, after the midterm elections. Congress is deferring growing a spine until after they get reelected, but there will always be another election after that, and always another reason not to anger the large senior citizen constituent group.

And what about after 2019? Are there still going to be Cadillac plans to tax, or billions more that can be cut from Medicare to keep financing increasingly expensive subsidies? Where will the next ten years of funding come from?

Deficit neutrality is a pipe dream that’s used to sell gullible voters on the health care bill. Federal savings are fungible, and we could be saving money on Medicare cuts or excise taxes even without adding billions in subsidies for health insurance. It’s time for people to face the truth. Don’t get me wrong; I think there are very compelling arguments for expanding coverage, and importantly, creating more efficiency in our health care system. But if we want universal health care in this country, or anything close, Americans need to be told how much it costs, and we need to be willing to pay for it.

p.s.

One final word is that I’d encourage people to actually read the CBO reports on the House and Senate bills, rather than getting all of their information filtered by the press. Check out this insane proposed spending cut in the Senate bill, that I bet you never read in the NYTimes:

“Reducing Medicaid and Medicare payments to hospitals that serve a large number of low-income patients, known as disproportionate share (DSH) hospitals, by about $43 billion—composed of roughly $22 billion from Medicaid and $21 billion from Medicare DSH payments.”