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Long time, no politics…

By Brian | June 13, 2010 | Share on Facebook

It’s been quite a while since I posted about politics around here, but tonight I want to talk a little about two of the hot-button topics that have permeated politics in recent months: health care and financial reform. And while I’m at it, I’ll throw in a little about the oil spill in the Gulf of Mexico, just for good measure.

Not interested? No offense taken. Move on to bigger and better things. Up for the discussion? Read on…

Let’s start with health care. I wonder what would have happened had this story about Canada’s health care system hit the newswires before the American health care reform bill passed into law. Some of the key points:

Pressured by an aging population and the need to rein in budget deficits, Canada’s provinces are taking tough measures to curb healthcare costs, a trend that could erode the principles of the popular state-funded system.

British Columbia is replacing block grants to hospitals with fee-for-procedure payments and Quebec has a new flat health tax and a proposal for payments on each medical visit.

A few provinces are also experimenting with private funding for procedures such as hip, knee and cataract surgery.

“We can’t continually see health spending growing above and beyond the growth rate in the economy because, at some point, it means crowding out of all the other government services. At some stage we’re going to hit a breaking point.”

Healthcare in Canada is delivered through a publicly funded system, which covers all “medically necessary” hospital and physician care and curbs the role of private medicine. It ate up about 40 percent of provincial budgets last year. Ontario says healthcare could eat up 70 percent of its budget in 12 years, if all these costs are left unchecked

As Ottawa looks to repair its budget balance … one could see these one-time allocations to specific health projects might be curtailed.

Provinces are weighing new sources of funding, including “means-testing” and moving toward evidence-based and pay-for-performance models.

Government-sponsored healthcare costs spiraling out of control? Consideration of a move back to a fee-for-procedure system? Alternative (private) funding options? Cutting health projects because they’re too expensive? It all sounds a lot to me like what the opponents of President Obama’s health care bill were warning us would happen.

All of which serves to reinforce the two things which I believe to be true about American health care: first, that our recent reform law will provide insurance to people who otherwise wouldn’t have had it. And second, that the cost of doing this will be orders of magnitude above the “deficit neutral” claims made by the Obama administration, and confirmed by the CBO through the full knowledge of the CBO’s mandate to use the assumptions it was given, rather than weighing in on the validity of those assumptions.


Moving on to financial reform. I’ve written in these pages before about what I felt were punitive attacks by the current administration on the wealthiest and most visible players in the financial markets, usually to inflame public anger and direct that energy toward a political goal.

Now, with oil spilling into the Gulf of Mexico at an alarming rate, the President, like his predecessor, faces unfair criticism about his commitment to responding to an environmental disaster. And, like his predecessor, he cannot resist the urge to respond, telling Matt Lauer of the Today Show, “I don’t sit around just talking to experts because this is a college seminar. We talk to these folks because they potentially have the best answer so I know whose ass to kick.”

And like the financial crisis, “kicking ass” is defined as finding the most visible players in the crisis, emphasizing their role in causing the crisis, and suggesting punishment. Mr. Obama has said publicly that he would fire BP’s CEO, Tony Hayward. The American Justice Department has announced that it is “planning to take action to force BP to withhold its next dividend payment.” The President and others in his administration have publicly called on BP to pay reparations to every individual on the Gulf Coast that was affected by the oil spill, causing some to question BP’s ability to remain solvent. This latest round of remarks sent BP’s stock price plunging yet again (it’s down roughly 50% from when the oil leak began), seriously harming the pension funds of BP’s 80,000 employees, most of whom had never heard of Deep Water Horizon until it exploded a month and a half ago. In Britian, where President Obama was once considered something of a celebrity, the mood is anger and disillusionment:

The stream of condemnations from Washington has stirred a protective backlash, even in this closest of American allies. Boris Johnson, the Conservative mayor of London, said Thursday that he was worried about “anti-British rhetoric” and “name calling” from American politicians. “When you consider the huge exposure of British pension funds to BP, it starts to become a matter of national concern if a great British company is being continually beaten up on the airwaves,” Mr. Johnson told BBC radio’s Today program.

Iain Armstrong, an analyst at Brewin Dolphin, an investment manager here, said that the situation had become “overpoliticized” and had confused the markets about BP’s actual strength. “It’s gotten completely out of hand,” he said. “Ironically, by being extremely strong financially, BP has become a target.”

Here’s an idea, Mr. President: don’t kick anybody’s ass just yet. Meeting with experts is commendable, but not if its sole purpose is to assign blame. The experts can help you minimize the damage to American citizens and find ways to recover as quickly and as efficiently as possible. Where are the blue-ribbon panels to recommend clean-up strategies? Where is the coordinated response of federal and state aid agencies to assist those whose livelihoods have been damaged (again) in the Gulf Coast states, assess and address the environmental impact, and protect our citizens from further harm? And perhaps most importantly, Mr. President, why must these things wait until we’ve finished blaming and punishing BP? Your job is to make things better for American citizens, not to hand out pitchforks and torches to them.

One more thing, sir: Whether or not BP caused this mess, whether they were negligent, greedy, or simply damn unlucky, and whether or not they are viewed negatively by the public right now, they remain one of the very few entities in the world that can help stop the leak. Standing in the corner and poking them with a stick might feel good, but it distracts their leadership from the important job of solving the problem, and while you may not wish to depend on those who allowed such a tragedy to occur, you really don’t have a choice. A successful “ass-kicking” by you, in the form of harsh financial penalties, changes in the company’s leadership, and possibly even the dissolution of the company itself will not make the oil stop flowing. Much like the way the Wall Street banks need to be healthy and profitable in order to absorb the risk of full-scale small-business and mortgage lending, we must balance the human need to blame and punish with the more practical need of allowing our most qualified resources to do what they do best. The criminals will be punished in good time. The unethical will be shamed into retirement. In the meantime, we have no meaningful financial reform and we have no cap on the oil leak.

Topics: Political Rantings | 3 Comments »

3 Responses to “Long time, no politics…”

  1. Joe Woods says at June 13th, 2010 at 9:01 am :
    Obama: (hmmm… …what to do? Time to take a stand. What shall I say? “Against”? No. Looks too negative. “For” No. Then I’ll have to actually support my words with actions. I know!!!) “PRESENT!”

  2. Jeff Porten says at June 24th, 2010 at 8:49 pm :
    Catching up on a few posts in the “better late than never” category.

    Re long-term costs of health care. The problem with your analysis is that we have plenty of *existing* health care commitments prior to the passage of Obama’s reforms. The reform’s impact on the deficit has a lot to do with whether we’re reducing some of those costs, which as I understand it, is how the revenue-neutral claim was made.

    From my perspective, it’s ridiculous that improving the nation’s health has to cost us nothing, but it’s okay to spend a trillion dollars a year for military purposes. But there you go.

    On to oil. There’s a narrative here that you’re ignoring, that the American people are angry at “no drama Obama” for being so damned *reasonable* in public. Apparently, we prefer our presidents to get pissed off from time to time. I’ve been hearing that Obama *is* pretty damned ticked in private. (See also the public civility regarding McChrystal, and what’s been leaked in private about his reaction to the article.)

    So I thought nothing of the “whose ass to kick” comment. He’s established that he uses that kind of language — i.e., the “Kanye West is a jackass” incident — and the question Lauer asked him mentioned “kicking butt”. The *content* of what he said: I’m not going to blame anyone until I know who deserves it. Given that every man, woman, child, and microbe in America already “knows” that BP should be blamed, well, I think he’s being a hell of a lot more reasonable than you give him credit for.

    Regarding the pensioners: it would be interesting if these people were included on the list of people BP has financially harmed. Solves the “don’t hurt the investors” problem — and if stockholders can sue BP for malfeasance when the stock drops, it seems to me that it’s no different for people who rely on that value for income.

    I think you’re buying into a meta-narrative here, blaming Obama for the oil spill, which is a Republican meme that nicely retroactively forgives Bush for Katrina. I don’t buy it at all just yet — it seems to me that Obama *is* doing what the government should do, but most of what is coming out of the federal government is being done in a non-flashy, no sound bite, kind of way. The proof will be in the pudding, as we find out just how badly the people living in Gulf states are harmed.

    Finally — I do *not* buy that BP is the best-qualified to clean up their own mess. It’s apparent that the oil industry has allowed their cleanup technologies to stagnate — according to Maddow, for 20 years — and that the best ideas are coming from third party research. It pisses me off no end that Kevin Costner’s technologies are in the Gulf, while literally thousands of other ideas are not. (Best one I’ve heard: a British scientist who has discovered a microbe which eats oil and shits plankton food. In an oil-rich environment, it’ll naturally reproduce, so just plunk it down into the middle of the spill and it’ll grow large enough to find all the oil. Then it dies off, seemingly without environmental consequence.)

    Presuming that BP is large enough to use both hands when finding its own ass, I fail to understand the idea that Obama is “distracting” BP. They have large departments for public relations, and large departments for science and operations. They should be able to walk and chew gum at the same time. Again, arguments that government is “interfering” strikes me as a Fox meme, and I’m surprised you’re falling for it.

  3. Brian says at June 25th, 2010 at 12:47 am :
    @Jeff:
    The reform’s impact on the deficit has a lot to do with whether we’re reducing some of those [existing] costs, which as I understand it, is how the revenue-neutral claim was made.

    The deficit-neutral claim certainly assumed a lot of effiency gains (i.e., reduction in current costs), as well as a lot of revenue generating rules that go into place years before the cost-generating rules (various taxes and fees start in 2011, while the additional coverage generally starts in 2013/2014). The thing is, the plan also assumes no reaction from the insurance industry, nor from the corporations that buy group plans which represent the majority of health insurance purchased in the country, nor from the public who consume health insurance.

    Either way, all of those same factors exist in Canada, which was one of the President’s favorite examples when fighting for the reform bill. My point was simply that solving today’s problems often involve creating (or exacerbating) tomorrow’s problems, and that we are not immune.

    From my perspective, it’s ridiculous that improving the nation’s health has to cost us nothing, but it’s okay to spend a trillion dollars a year for military purposes. But there you go.

    Yeah, yeah – that’s a great sound bite, but like most sound bites, it’s a false choice. Pick whatever spend level you’d like for the military budget; it doesn’t change what health care reform should cost. Now, if we had a balanced budget, and military spending was taking dollars away from health care spending, I’d agree with you in a heartbeat. But if we’re willing to spend $1 trillion more than we take in for a given year (or, in this case, at least two years), then all you’re doing is unfairly tying disagreement for health care reform to support for an unpopular war. And in the same post where you complain about Fox News?

    There’s a narrative here that you’re ignoring, that the American people are angry at “no drama Obama” for being so damned *reasonable* in public. Apparently, we prefer our presidents to get pissed off from time to time. I’ve been hearing that Obama *is* pretty damned ticked in private.

    I am not at all upset about the President using the word “ass.” Unlike some Americans, I was aware when I voted for him that he is, in fact, an adult.

    What bugs me is this idea that “people are angry” that the President is “so reasonable.” Do you know what I’d like to see him get angry about? I’d like to see him hold a press conference and tell the American people that if they want to see drama, they should watch Survivor when it comes back around, because he has a f**king job to do, and he doesn’t need to waste his time throwing temper tantrums to satisfy the media punditry who are (once again) telling us what “the people” think.

    His attempts at feigned “drama” struck me, quite frankly, as very Bush-like. Message-wise, he’s playing defense for the first time in his Presidency, just as Bush wound up doing for most of his second term. It makes him look weak and yes, it is a distraction.

    it would be interesting if these people were included on the list of people BP has financially harmed. Solves the “don’t hurt the investors” problem — and if stockholders can sue BP for malfeasance

    This is where your ignorance of the financial markets shows through. Shareholders not only can sue their management, but they very often do – it’s called a class action lawsuit, and I can’t imagine that BP’s going to get out of this without a whopper of a CAL coming their way. Also, the board of directors represents the shareholders and has the power to fire management at their sole discretion. The stockholders themselves can also vote out the current directors and replace them with others who better represent their views if they disagree, and can also sue the directors if they feel they’ve been misrepresented – that’s called “breach of fiduciary duty.”

    What doesn’t make sense is the amount of italics I’m using in this comment. But what also doesn’t makes sense is for the United States Government to mandate money for the damaged shareholders, bypassing all three of the legal processes I just described in order to claim credit for helping. This is the same argument we’ve been having since the financial crisis.

    I think you’re buying into a meta-narrative here, blaming Obama for the oil spill, which is a Republican meme that nicely retroactively forgives Bush for Katrina.

    Uh, no. Blaming Obama for the oil spill would suggest that he had something to do with running an oil rig. The closest he gets to blame here is for not getting after the regulatory agencies who were having cocaine & sex parties with the oil industry executives and/or citing them for violations, collecting fines and then not following up to make sure the violations didn’t happen again. But those problems have been arond longer than Obama has been President, so blaming him would be ludicrous. Almost as ludicrous as blaming President Bush for a hurricane striking New Orleans, since he has as much control over the weather and Obama has over the oil rig.

    I think the oil spill and Katrina are similar only in the sense that they both made it OK (or more OK) to criticize the President, and opened the floodgates for stupid, unconstructive, and unwarranted criticism (like if Obama plays a round of golf, the spill cleanup effort would be delayed…) There is some legitimate criticism to be leveled – Bush did not redefine FEMA’s mission when it’s standard approach wasn’t working in New Orleans. Obama went after the CEO before he established a commission on identifying ways to clean up the mess (which is, after all, the government’s only true way to help). These are valid points, but they don’t rise to the level of “scandal” or “blame.”

    I fail to understand the idea that Obama is “distracting” BP. They have large departments for public relations, and large departments for science and operations. They should be able to walk and chew gum at the same time. Again, arguments that government is “interfering” strikes me as a Fox meme, and I’m surprised you’re falling for it.

    Public relations and science/operations groups respond to the disaster. The senior management team responds to the President of the United States. As an employee of a company who was recently distracted by the President, I can tell you for certain that the distraction is very real. Right now at BP, there are very likely daily meetings going on about progress on the spill cleanup. There are folks looking into Kevin Costner’s thing, folks looking into the oil-eating microbes, and folks writing press releases, filming PSA commercials, figuring out how to fund the $20 billion relief fund & how to distribute the money. All of these things continue apace regardless of what the President says or does. But the senior management of BP should be monitoring progress in all of these areas, setting priorities, removing roadblocks, authorizing projects, etc. Instead, they’re doing this all day.

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