Politics, et Cetera

A publication from The Political Forum, LLC

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Tuesday, June 9, 2015

They Said It:

To-morrow, and to-morrow, and to-morrow,
Creeps in this petty pace from day to day,
To the last syllable of recorded time;
And all our yesterdays have lighted fools
The way to dusty death. Out, out, brief candle!
Life’s but a walking shadow, a poor player,
That struts and frets his hour upon the stage,
And then is heard no more. It is a tale
Told by an idiot, full of sound and fury,
Signifying nothing.

William Shakespeare, “Macbeth,” Act 5, Scene 5, 19-28.

 

THE OBAMACARE ECONOMY.

We know that this is something of a truism, but if you listen only to the Democratic operatives or the mainstream media you are likely to be convinced of a handful of things that are grievously untrue.  The Democrat-media alliance would have you believe, for example, that the economy is humming along well and that only conservative radicals and perpetual pessimists would dare to disagree.  Likewise, they’d have you think that the Affordable Care Act – i.e. Obamacare – is also working quite well and that only those who cannot shake their hatred of Barack Obama would even consider thinking otherwise.  Sure, ISIS may be a problem waaaaaaaaay over there, but here at home, where the important stuff happens, all is well – and getting better.

As a result, we are a little skeptical of anything the members of the mainstream press tells us, and especially anything they tell us about the economy or about the “signature achievement” of the Obama presidency.  You should be too.  For the fact is that all is NOT well, and moreover, no one should be surprised.

It may be difficult to remember now, given the passage of time and the media’s constant drumbeat to the contrary, but the Republican opposition to Obamacare was not based on hatred of Obama or even hatred of “government healthcare” of all sorts.  In fact, the Republican opposition was couched in terms of the damage that further federal government intrusion in the health insurance market would do, both to said marketplace and to the economy more broadly.  Healthcare, we were reminded time and again, constitutes just over 1/6th of the national economy and overhauling that system blindly and radically couldn’t help but cause problems, foreseen and unforeseen.

And thus has it been.

As you may have heard, last week Hawaii became the seventh state to shut down its Obamacare state exchange.  The state’s legislature rejected a new $28 million bailout of the site, and thus did they staunch the bleeding.  As our friends at Americans for Tax Reform recently noted, Hawaii’s exchange was a boondoggle of monumental proportion.  Indeed, it wasted far more money in order to deliver far fewer results than anyone could have possibly imagined.  Beginning with Hawaii’s latest efforts in the “special enrollment” period, ATR describes the mess that is that state’s Obamacare exchange – and all of the exchanges, frankly – as follows:

The numbers are in: Hawaii’s Obamacare Exchange enrolled a grand total of ZERO — yes, zero people during its special enrollment period.

The Obama administration had implemented the special enrollment period from March 15 – April 30 to assist individuals who were unaware they would face a tax penalty for not having “qualifying” health insurance.  In all, less than 250,000 individuals decided to enroll nationwide meaning that millions of Americans would rather pay the tax than enroll in Obamacare.

While Hawaii enrolled zero individuals and is the worst performing state, it is not alone. Vermont signed up only 97 households, while Rhode Island enrolled just 25 households.

Hawaii’s dismal performance should not be surprising.  The website cost taxpayers $205 million but could only enroll 8,592 individuals in year one.  Cost to taxpayers per enroll: $23,899.

The state legislature recently rejected a $28 million bailout for the website meaning that a contingency plan to dismantle the exchange and migrate to the federal exchange will be implemented immediately.  Unfortunately, taxpayers are not off the hook yet as it is expected that moving to the federally run healthcare.gov will cost $30 million.

Hawaii is not the first website to implode.  Oregon’s $305 million exchange was officially abolished earlier this year at an additional cost and of $41 million.  The exchange is currently under investigation by numerous federal organizations for how it wasted so much money.

In all, states received $5.4 billion from the federal government for state-based Obamacare exchanges with no strings attached and zero oversight over spending decisions.

Also last week, The New York Times reported on the “frustrations” felt by many of Vermont’s residents with respect to their health care and Obamacare.  You see, Vermont was supposed to be the model for a progressive federal government’s ultimate takeover of health insurance.  As Molly Worthen, a professor of history at the University of North Carolina, wrote in April 2014, the progressive utopia of Vermont was going to eliminate private health insurers and was going to prove to the rest of the country that a “single-payer” plan is both possible and better than what we currently have.  Worthen put it thusly:

Three years ago, Peter Shumlin, the governor of Vermont, signed a bill creating Green Mountain Care: a single-payer system in which, if all goes according to plan, the state will regulate doctors’ fees and cover Vermonters’ medical bills.  Mr. Shumlin is a Democrat, and the bill’s passage is a credit to his party.  Yet a small upstart spent years building support for reform and nudging the Democrats left: the Vermont Progressive Party.  The Progressives owe much of their success to the oddities of Vermont politics.  But their example offers hope that the most frustrating dimensions of our political culture can change, despite obstacles with deep roots in American history.

Green Mountain Care won’t begin until at least 2017, but Vermont liberals are optimistic. “Americans want to see a model that works,” Senator Bernie Sanders told The Atlantic in December.  (Mr. Sanders is an independent, but a longtime ally of the Progressives.)  “If Vermont can be that model it will have a profound impact on discourse in this country.”

The main lesson that Americans can learn from Canada is that political cultures can change.  In 1950 Canada was, in many respects, a more conservative country than America, and each step of reform was hard-won.  But as Canadians watched new policies produce results, skeptics became supporters.  “Many policies that emerged in postwar Canada have changed Canadians’ conception of their relationship to the state,” Professor Maioni told me.  “Policies feed political culture.”  If the Vermont experiment works, other states will follow.  American pragmatism will trump ideology.

Of course, a funny thing happened on the way to the “progressive” utopia.  Like all Socialists, the Vermonters simply ran out of other people’s money.  The Times insists that the problem with Vermont’s plan is that the Obamacare interregnum has just screwed things up royally, creating a hybrid monster that serves no one well and does nothing effectively.  Understandably, the paper soft-sells the real issue, which the inimitable Megan McCardle documented last December, when the state of Vermont was forced to admit the failure of its utopian enterprise:

While I was away last week, Vermont decided to scuttle its single-payer health-care plans.  I predicted as much six months ago, for one simple reason: A single-payer system would cost too much.  When faced with the choice of imposing double-digit payroll taxes or dropping his cherished single-payer plan, the governor of Vermont blinked.

“But Megan!” I hear you cry.  “Single-payer systems are cheaper, not more expensive!  Look at Europe!”

Alas, however, as I wrote at the time, there is nothing about single payer that will magically allow us to cut costs to European levels.  People who believed otherwise were substituting a crude eyeballing of international statistics to substitute for reasoned analysis, in part because it told them what they wanted to be true: that they could have the universality and progressiveness of a single-payer system without having to ask the taxpayer for a giant heap of money to provide those benefits.  They were, in the words of one of my favorite public-policy professors, “getting high on their own supply.” . . .

I concede that single-payer systems may well allow you to control the rate of health-care cost growth, thanks to government price controls on supplies and services, along with rationing or denial of expensive treatments.  What it doesn’t allow you to do is easily cut the rate of health-care spending.  None of the single-payer systems that are frequently held up as models for the U.S. have ever managed sustained cuts in health-care spending.  All they’ve done is prevent it from growing so fast.

The problem, as I wrote previously, is that America doesn’t have a health-care cost-growth problem; we had a health-care cost-growth problem.  Right now, our health-care cost growth is right in the middle of the OECD pack. . . .

As it turns out, in order to make a single-payer system work the government has two options: it can either raise taxes or it can cut reimbursement costs.  Whichever it does, it must do so prohibitively.  In the case of Vermont, this would mean that either doctors move out of the state of Vermont, because the careers they borrowed a quarter-of-a-million dollars or more to pursue now pay $80,000/year; or everyone else moves out of the state of Vermont because of the ridiculous taxes.  The Europeans and the Canadians have chosen a mix of the two, meaning that their taxes are higher and disproportionately directed toward health care costs AND that their health care providers earn less than do their American counterparts.  As a result, the Brits, for example, have “free” health care, but they pay for it in taxes and in terms of being forced to recruit doctors from places like Baghdad who, in turn, try to blow up Glasgow International Airport (http://news.bbc.co.uk/2/hi/7773410.stm).

Health care – and especially good health care – is not cheap.  And when the state promises to provide high-quality care to everyone, it also promises to raise the cost of health care for everyone, spreading the costs of insuring those previously uninsured or uninsurable around to the entire insurance pool.

Which brings us back to the economy-crushing disaster that is Obamacare.

If you happen to have the misfortune of having an individual plan under Obamacare, then you already know that premiums are up over the last couple of years, as are deductibles and copays.  Out-of-pocket costs for most Americans in the private insurance market have skyrocketed.  And it’s only just beginning.  This year, as insurers have begun the process of setting premiums for next year, armed for the first time with actual data about their Obamacare customers, prices are expected to soar.  As the Wall Street Journal reported last month:

Major insurers in some states are proposing hefty rate boosts for plans sold under the federal health law, setting the stage for an intense debate this summer over the law’s impact.

In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6% in premiums for 2016. The biggest insurer in Tennessee, BlueCross BlueShield of Tennessee, has requested an average 36.3% increase.  In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4% across its products.  Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25%.

All of them cite high medical costs incurred by people newly enrolled under the Affordable Care Act. . . .

Insurers say their proposed rates reflect the revenue they need to pay claims, now that they have had time to analyze their experience with the law’s requirement that they offer the same rates to everyone — regardless of medical history.

Health-cost growth has slowed to historic lows in recent years, a fact consumer groups are expected to bring up during rate-review debates.  Insurers say they face significant pent-up demand for health care from the newly enrolled, including for expensive drugs.

“This year, health plans have a full year of claims data to understand the health needs of the [health insurance] exchange population, and these enrollees are generally older and often managing multiple chronic conditions,” said Clare Krusing, a spokeswoman for America’s Health Insurance Plans, an industry group.  “Premiums reflect the rising cost of providing care to individuals and families, and the explosion in prescription and specialty drug prices is a significant factor.”

The good news is that this only applies to the roughly 6%  to 7% of the population that purchases private health insurance on the individual market, which is to say that the Obamacare rate hikes do not apply to the overwhelming majority of Americans.  The bad news is that that 6% or 7% works out to about 19 million people, the overwhelming majority of whom are entrepreneurs and small business owners, the type of people who add to the productive economy, but only when they have the money to do so.

The additional bad news – and there is always additional bad news when it comes to Obamacare – is that the increase in across-the-board health care costs stemming from the law’s passage, its mandates, and its general tinkering with the marketplace have forced most employers and especially small businesses to pass on an increasingly larger chunk of their health care costs to their employees, usually in the form of higher deductibles, higher co-pays, and higher out-of-pocket maximums.  And this means that even those Americans who are fortunate enough to have employer-provided health insurance are nevertheless spending a great deal more for their coverage and care than they were prior to Obamacare.  All things considered, employees’ contributions to their health insurance costs have increased in the neighborhood of five to six times faster than incomes over the course of the last five years.

Now, obviously we’re not going to make the argument that the economy continues to sputter just because of Obamacare.  Nevertheless, escalating health care costs are indeed  biting into disposable income at time when this pool is already shrinking.  As our old friend John Crudele pointed out in a recent column for the New York Post, when you cut through all of the statistics and modeling, the big problem with the economy is that people just don’t have any money.  To wit:

Anyone with even a quarter of a brain now understands that the US economy got off to a bad start this year.

There was an economic contraction in the first three months — when the nation’s gross domestic product fell at an annualized rate of 0.7 percent — that some quarter-brainers are still blaming on the cold weather, strikes at ports, the strong dollar, solar flares, Martian landings and (insert your own poor excuse here).

The truth: Most of these excuses are part of the problem, although I didn’t personally see or not see the Martians.

But the biggest part is that people don’t have enough money to spend.  Interest from savings is down to zero, people don’t liquidate stock gains to make purchases, and job and income growth has been sketchy.

Of course, to hear the media and the political operatives tell the story, the only problem with Obamacare is that Republicans still oppose it and do so for petty reasons.  Frankly, we wish that it were so.  Premiums are going up, up, up.  And that suggests to us that economy probably won’t be going up any time soon.

In 2009, when he began his push, Barack Obama insisted that health care reform was an integral part of reviving the economy.  He was wrong then.  But he may well be right now.

 

SEVENTEEN MONTHS IS A LONG TIME.

We are, as of today, roughly seventeen months from the 2016 presidential election, which will pit Hillary Clinton against . . . . well . . . . who cares, right?  It’s all about Hillary.  She’s the odds-on favorite.  She’s the one with all the money, the name recognition, and especially the “mission” to serve as the nation’s first female President.  She has it all wrapped up already, whomever she faces.  And you don’t have to take our word for it.  You can ask any mainstream prognosticator or talking head.  And they’ll tell you the same thing:  Hillary in a rout.

Of course, they’ll hedge their bets, noting that “seventeen months is a long time in politics.”  But they won’t mean it.  That’s just a throwaway line meant to make you think that they are not simply spouting their hopes and dreams but have taken some time to analyze the race.

Ironically, seventeen months IS a long time, whether the professional chatterboxes believe it or not.  We were reminded of this again over the weekend, while reading an editorial from Investor’s Business Daily.  It went as follows:

In the latest edition of its propaganda rag, the Islamic State says it has enough cash to buy a nuclear weapon from Pakistan and smuggle it into the U.S. through Mexico.  This is the sum of all fears, and it’s not overblown.

The new issue of “Dabiq,” IS’ English-language webzine, includes a chilling article, “The Perfect Storm,” that claims the group has amassed enough funds to purchase a “nuclear device” from Pakistan.

A Rand Corp. study says IS has more than $2 billion in assets from seized oil fields and refineries, kidnap ransoms and taxation.  The think tank figures the terror group now controls fields with a production capacity of more than 150,000 barrels a day.  It smuggles this oil out in tanker trucks and sells it at steeply discounted rates to buyers in Syria, Turkey, Kurdistan and elsewhere.

Despite falling world oil prices that have slowed IS’ energy revenues to about $2 million a week, the terror group is still raking in more than $1 million a day in extortion and taxes alone.  IS has also stolen some $500 million from state-owned banks in Iraq.

This is far more cash than al-Qaida had access to before 9/11.  And IS is more ambitious — and fanatical enough to actually detonate a nuke inside a U.S. city.

On the one hand, this is disturbing.  If the folks at Rand and IBD are right, then a very, very dangerous moment is upon us and may well change the course of the world forever.  On the other hand, it seems highly unlikely that the Islamic State has the ability to deliver and then detonate a nuclear weapon in the United States, even if it could get its grubby little mitts on one.

The catch is that it doesn’t really matter.  The story itself serves as a symbolic, constant, and frightful reminder that the West has vicious enemies with access to all types of weapons of mass destruction and the undeniable intention to use them against men, women, and children without hesitation or remorse.  It also stands as a testament not just to the uncertainty of the long-term future, which is easily ignored, but to the uncertainty of the near-term future, which affects actions on a day to day basis.

After all, time has a way of shrinking when one has enemies such as this.  Just seventeen months ago Barack called the Islamic State the “JV team” of Islamism.  Today, that JV team controls some $2 billion in assets and has established itself as one of the strongest, fiercest, and most troubling forces in the perpetually volatile Middle East.

The liberal media celebrates the growing acceptability of gay marriages.  It goes gaga over the transformation of a man into a woman.  It is excited over the spread of political correctness in campuses across America.  The liberal dream is coming true, they say.  All the while, ordinary Americans see a president who seems totally unaware that every day the world is becoming more dangerous militarily, more shaky economically, and more unstable socially.

Surprises are no longer surprising in such a world.  Anything is possible.  Will there be a war with Iran…or Russia…or China?  Will the stock market tank?  Will the economy go into a recession?  Will protesters burn down St. Louis or Milwaukee?  Will food prices continue to go through the roof?  Will the local mall get shot up by terrorists?  Is it safe to fly?  Will anyone do anything about any of this?  Does anyone care?

Last week, Newsweek reported that Finland is conducting military drills that suggest it is preparing for something serious.  “The Finnish air force is running live bombing drills against ground targets for the first time since the end of the Second World War,” the webzine recounted.  And all of this comes on the heels of reports late last month that the Finnish government has sent letters to some 900,000 military reservists, informing them of their duties “in case of war.”  War with whom, you ask?  Well, Russia.  As London’s Daily Telegraph reported last month:

In recent months, Russian warplanes have frequently probed Finnish air defences.  In April, the Finnish navy resorted to depth-charging a suspected submarine that was detected near the capital, Helsinki.  Neighbouring countries are also on a heightened state of alert.  Last October, Sweden carried out its biggest military mobilisation since the Cold War to hunt for a mysterious submarine sighted near Stockholm.

Although not a member of Nato, Finland has strengthened its ties with the Atlantic Alliance.  Last month, the country promised more military cooperation with the armed forces of other Nordic countries.  On Thursday, David Cameron joined EU leaders for a summit with six former Soviet states in Riga, the Latvian capital.

Angela Merkel, the German Chancellor, said the EU’s Eastern Partnership was not “directed against anyone”.  But the two-day summit will inevitably discuss the military threat posed by Russia, not just to Ukraine but, potentially, to the Baltic states, which are Nato members.

Meanwhile, on the other side of the globe, South Korea:

has been struck by the largest outbreak of the Middle East Respiratory Syndrome (MERS) outside of Saudi Arabia, where the virus was discovered.  And the number of cases grow every day.  On Tuesday, South Korea reported that a seventh person has died from MERS and another eight have contracted the virus, bringing the total number of confirmed cases to 95.

More than 2,500 people remain quarantined, either at home or in health facilities. And more than 2,000 schools remain closed.

You may or may not recall that we mentioned MERS before.  In an article last August ostensibly on Ebola, we mentioned that the conditions in the Middle East and around much of the globe today are reminiscent of the conditions that gave rise to the massive Spanish Flu outbreak at the end of World War I.  Millions of people have been uprooted from their homes and crammed into filthy refugee camps.  Hundreds of thousands of soldiers are shipped hither and yon, often to the same places as the refugees, seeking to end conflicts, but also mingling with local populations and carrying their unique maladies back to the four corners of the globe.

We could go on, we suppose, but we imagine you get the point.

As noted above, Hillary Clinton, like everyone in the media and “official” Washington, is convinced that the presidency is hers for the taking.  Her optimism is based on demographics and scorn for her foes.  The demographic idea is that there are enough women, blacks, Hispanics, Jews, bureaucrats and educators, and large swaths of East Coast and West Coast traditional liberals who support abortion on demand, free lunches for “the poor,” open borders, and Hillary-as-an-icon to put her over the top, no matter what she does or says.  As for the Republicans, she believes that their “mean-spiritedness” and “intolerance” mark them as losers.

We think she is wrong.  We think both her demographic assessment and her view of the likability of her Republican opponents are off base.  But, more importantly, we think she and her fans are assuming that the world seventeen months from now is going be not much different than it is today.  And we think that is wrong.

We are not predicting a black swan here.  And yes, we are aware that trend lines don’t provide a reliable look into the future.  But a few things seem obvious enough to support our contention that U.S. is not in for smooth sailing between now and November 2016.

The first of these is that Obama is going to get nuttier as the end of his term approaches.  Subjective observation?  Yes.  But last week he blamed the Pentagon for not having a plan yet for dealing with IS.  And he claimed that the Supreme Court had no business taking up the suit against Obamacare.  Finally, he said that he is the “closest thing to a Jew that has ever sat in the Oval Office.”  And not long before that, he released six more highly dangerous men from Guantanamo for no reason whatsoever other than his own madness.  These are the words and actions of a man who is out of touch with reality.  And the odds are that he is going to be nuttier.

It is also obvious that the situation in the Middle East is not going to improve in the next 17 months.  It may not result in the destruction of some or all of the oil wells, or war with Israel, or the Saudi royal family moving to London en masse.  But, it is inevitably going to get more dangerous to the interests of the United States and Europe.  How can it not?

Nor are Russia, China, Iran, or North Korea going to suddenly become less threatening to America’s worldwide interests.  In fact, given Obama’s fecklessness, they are likely to push him even further.  Why not?

It also seems likely that the social problems that are plaguing the nation’s cities are going to worsen over the next year and a half.  Police are, ironically enough, handcuffed in the current atmosphere, fearing that any choice they make in a stressful situation will be second-guessed and used to put them in jail.  Crime is up as a result, which means that urban areas are likely to grow more violent and more dangerous over the near term.

In short, while Hillary and the many Republican candidates are running on the assumption that not much is going to change between now and November 2016, this seems unlikely.  The bad news is that this is bad.  The good news is – if you can call it that – is that this will likely hurt Hillary more politically than it will the eventual Republican candidate.  Hillary is, like it or not, running for the “third Obama term.”  She is the candidate of the status quo.  All of which means that she is the candidate who will be forced to defend the past and the present, the latter of which is likely to look even scarier in 17 months than it does today.

 

Copyright 2015. The Political Forum. 8563 Senedo Road, Mt. Jackson, Virginia 22842, tel. 402-261-3175, fax 402-261-3175. All rights reserved. Information contained herein is based on data obtained from recognized services, issuer reports or communications, or other sources believed to be reliable. However, such information has not been verified by us, and we do not make any representations as to its accuracy or completeness, and we are not responsible for typographical errors. Any statements nonfactual in nature constitute only current opinions which are subject to change without notice.