What if Washington Were a Ghost Town?

What FDR and Nixon might say to their partisan heirs.

If Franklin Delano Roosevelt, president of the United States through the Great Depression and World War II—if FDR, that canny old political operator, that shrewd judger of men, that merry spinner (“First thing we do is deny we were in Philadelphia!”) that cold calculator (he put Joe Kennedy to head the first Securities and Exchange Commission, setting the fox among the foxes), that patient and knowing waiter-outer of events—if FDR were advising President Obama right now, what would he say?

He might look at the lay of the land and tell Mr. Obama something like this:

“My friend, you’re in a bit of a fix. Falling polls, decreasing support for health care. Beyond that, you’re stuck in a bit of a lose-lose. If you don’t get a bill along the lines you’ve announced, you’ll look ineffective and weak—a loser. If, on the other hand, you win, if you get what you asked for, it will all be a mess and all be on you. The system will be overwhelmed, the government won’t be able to execute properly, the costs will be huge. The new regime will thoroughly discombobulate things just in time for everyone’s complaints to reach a crescendo by Election Day 2010.

“But I have an idea, and hear me out. You already have Medicare, a single-payer national health-care system for those 65 and older. Little Harry Truman was the first American to get a Medicare card in 1965, did you know that? LBJ hauled him in for a ceremony. Anyway, Americans like Medicare. So here’s the plan. From here on in, every day, start talking about it: ‘Medicare this, Medicare that, Medicare.’ Get your people in Congress to focus on making the system ‘healthier.’ It’s rife with waste, fraud and abuse, everyone knows that. And there’s the demographic time bomb. Come together in a great show of bipartisan feeling with our Republican friends and announce some serious cost-saving measures that are both legitimate and farsighted. Be Dr. Save the System. On thorny issues like end-of-life care, put together a bipartisan commission, show you’re open to Republican suggestions.

“Then, at the end, get your Democratic majorities to make one little change in the program—it’s now open to all. You don’t have to be 65. The uninsured can enroll. Do it in the dead of night if you have to, you’ve got the votes.

“And then, and only because you’ve all made so many institutional and structural changes, you’ll have to give Medicare a new name. I’d suggest ‘The National Health Service.’

“Voilà. You now have the single-payer system you wanted.

“Everybody wins. You get expansion, Republicans get cost control, the system is made more secure, and the public for once isn’t terrified.

“Republicans of course will say they won—they defeated a brand new boondoggle nationalized health system. Fine. But people will start referring to the National Health Service every day, and they’ll believe they have one, and they’ll believe you gave it to them. And you can run in ’12 saying you did. That’s what I’d do!”

Before departing in a cloud of cigarette smoke and martini fumes, FDR just might add, “A second option, though lacking that special spark of deviousness, is the Wyden-Bennett bill. it’s cost-neutral, it’s not single-payer, but everyone gets coverage. And that was the point, wasn’t it? You can brag about health care for all and fiscal prudence. Not bad!”

***

If Richard Nixon—one of the great vote counters, a man who loved policy more than politics but was very good at the latter until he wasn’t anymore, a man who acted so very tough because his heart had been broken, not only by Watergate but by other things (he was right about Alger Hiss and still they wouldn’t honor him; he gave liberals everything in terms of domestic programs and still they wouldn’t love him)—if he met in Washington with the national Republicans of 2009, he might, just might, say something like this:

“Men, and a few ladies, and it’s wonderful to have you here, you’re in a good position and a bad one. Good: The American people are peeling off from nationalized medicine or socialized medicine or whatever you call it. Bad: I’m not sure the peeling off has anything to do with you. There’s something going on that I never foresaw, and it’s the fact that you don’t seem anymore to be the face of the party or of the movements within it. People with TV and radio shows do. Media people! There’s a plus to this but a minus, too. They’re sucking all the oxygen out of the room. You think they’re supporting you, but they’re really supplanting you! You’ve got to figure out how to come to the fore more and break through. But that’s small beer. Big thing is the current debate.

“You still haven’t given the American people coherent alternatives and arguments, or not so the people have noticed. You’ve got to have a strategy, and you’ve got to be serious. Put all internal jockeying aside and remember your philosophy, the thing that made you be a Republican and not a Dem.

They’re calling you all Dr. No, but that’s not really taking off, so don’t worry about it. But they are tagging you as guys who think this is all just about politics. Remember, the majority of the American people don’t care at all about your political prospects. Why should they? Unlike everyone in Washington and the media, they’re not political obsessives. They actually have lives. They care about what happens to them when they’re sick. So stop the ‘Obama’s Waterloo’ stuff—what a mistake that was, to make yourselves look cynical and purely partisan!—and refocus. Come back to first principles and prudent warnings, but always within a context of clear patriotism. At the end of the day, America needs a successful president. It’s dangerous to have a wounded duck six months into a presidency in a dangerous world. So help him by gently instructing him. He’ll hate that, because in his mind he’s the teacher and you’re the student. Point out that there’s a lot the president doesn’t understand, come forward every day with your ideas, talk them up, get them out there.

“For instance: As you know, doctors keep fees up and order expensive tests because they’re afraid of malpractice suits. They pay terrible insurance premiums. We have to reform that. Stop calling it “tort reform”; normal people think a tort is something you eat for dessert. Call it the Limiting Lawyers’ Windfalls bill. No one likes lawyers anymore, Perry Mason’s dead. And make it real when you talk. Here you can pinpoints an Obama weakness that you’re not even exploiting. He won’t go near legal reform because his biggest backers and contributors are the trial lawyer’s lobby. He talks about the common good—give me a break. As Jack Kennedy used to say, and so eloquently, here you can really stick it to him and break it off.

And speaking of JFK, try to seize back a bit of the issue of health in general. Remember physical fitness and vigor and 50 mile hikes on the C&O Canal? Completely captured the public imagination. JFK himself didn’t do it, he wasn’t insane, and he had the bad back. He sent Bobby and that fat Pierre Salinger. Anyway, go with that: personal responsibility, strength, health. Steal it from the Dems. But don’t imitate their censorious tone: ‘Ya can’t smoke, put down that doughnut.’ Let me tell you, doughnut eaters are the largest growing demographic in America. Don’t get crossways with them!”

Peggy Noonan, Wall Street Journal

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Full article: http://online.wsj.com/article/SB10001424052970204619004574320743837417378.html

Obamacare’s Tactical Retreat

Yesterday, Barack Obama was God. Today, he’s fallen from grace, the magic gone, his health-care reform dead. If you believed the first idiocy — and half the mainstream media did — you’ll believe the second. Don’t believe either.

Conventional wisdom always makes straight-line projections. They are always wrong. Yes, Obama’s aura has diminished, in part because of overweening overexposure. But by year’s end he will emerge with something he can call health-care reform. The Democrats in Congress will pass it because they must. Otherwise, they’ll have slain their own savior in his first year in office.

But that bill will look nothing like the massive reform Obama originally intended. The beginning of the retreat was signaled by Obama’s curious reference — made five times — to “health-insurance reform” during his July 22 news conference.

Reforming the health-care system is dead. Cause of death? Blunt trauma administered not by Republicans, not even by Blue Dog Democrats, but by the green eyeshades at the Congressional Budget Office.

Three blows:

— On June 16, the CBO determined that the Senate Finance Committee bill would cost $1.6 trillion over 10 years, delivering a sticker shock that was near fatal.

— Five weeks later, the CBO gave its verdict on the Independent Medicare Advisory Council, Dr. Obama’s latest miracle cure, conjured up at the last minute to save Obamacare from fiscal ruin, and consisting of a committee of medical experts highly empowered to make Medicare cuts.

The CBO said that IMAC would do nothing, trimming costs by perhaps 0.2 percent. A 0.2 percent cut is not a solution; it’s a punch line.

— The final blow came last Sunday when the CBO euthanized the Obama “out years” myth. The administration’s argument had been: Sure, Obamacare will initially increase costs and deficits. But it pays for itself in the long run because it bends the curve downward in coming decades.

The CBO put in writing the obvious: In its second decade, Obamacare significantly bends the curve upward — increasing deficits even more than in the first decade.

This is obvious because Obama’s own first-decade numbers were built on arithmetic trickery. New taxes to support the health-care plan begin in 2011, but the benefits part of the program doesn’t fully kick in until 2015. That excess revenue is, of course, one time only. It makes the first decade numbers look artificially low, but once you pass 2015, the yearly deficits become larger and eternal.

Three CBO strikes, and you’re out cold. Though it must be admitted that the White House itself added to the farcical nature of its frantic and futile cost-cutting when budget director Peter Orszag held a three-hour brainstorming session with Senate Finance Committee aides trying to find ways to save. “At one point,” reports the Wall Street Journal, “they flipped through the tax code, looking for ideas.” Looking for ideas? Months into the president’s health-care drive and just days before his deadline for Congress to pass real legislation? You gonna give this gang the power to remake one-sixth of the U.S. economy?

Not likely. Whatever structural reforms dribble out of Congress before the August recess will probably not survive the year. In the end, Obama will have to settle for something very modest. And indeed it will be health-insurance reform.

To win back the vast constituency that has insurance, is happy with it, and is mightily resisting the fatal lures of Obamacare, the president will in the end simply impose heavy regulations on the insurance companies that will make what you already have secure, portable and imperishable: no policy cancellations, no preexisting condition requirements, perhaps even a cap on out-of-pocket expenses.

Nirvana. But wouldn’t this bankrupt the insurance companies? Of course it would. There will be only one way to make this work: Impose an individual mandate. Force the 18 million Americans between 18 and 34 who (often quite rationally) forgo health insurance to buy it. This will create a huge new pool of customers who rarely get sick but will be paying premiums every month. And those premiums will subsidize nirvana health insurance for older folks.

Net result? Another huge transfer of wealth from the young to the old, the now-routine specialty of the baby boomers; an end to the dream of imposing European-style health care on the United States; and a president who before Christmas will wave his pen, proclaim victory and watch as the newest conventional wisdom reaffirms his divinity.

Charles Krauthammer, Washington Post

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Full article: http://www.washingtonpost.com/wp-dyn/content/article/2009/07/30/AR2009073002819.html

Today in History – July 30

Today is Thursday, July 30, the 211th day of 2009. There are 154 days left in the year.

Today’s Highlight in History

On July 30, 1945, during World War II, the battle cruiser USS Indianapolis, which had just delivered components for the atomic bomb that would be dropped on Hiroshima, was torpedoed by a Japanese submarine; only 316 out of some 1,200 men survived the sinking and shark-infested waters.

On this date:

In 1419, the first Prague defenestration: supporters of the reformer Johannes Huss stormed Prague City Hall and threw the Catholic councillors out of the window. As a result, Huss was burnt at the stake in Constance. The preacher had many supporters and 400 aristocrats wrote a letter of protest to the Constance authorities. The popular belief at the time that the world would end was fuelled by King Wenceslas IV, who was an inept ruler.

In 1540, Lutheran clergyman Robert Barnes was burned as a heretic after being used by Thomas Cromwell and King Henry VIII to gain European support for their antipapal movement in England.

In 1619, the first representative assembly in America convened in Jamestown in the Virginia Colony.

In 1729, Baltimore, Md., was founded.

In 1792, the French national anthem “La Marseillaise,” by Claude Joseph Rouget de Lisle, was first sung in Paris by troops arriving from Marseille.

In 1863, Henry Ford, the American automobile manufacturer who founded the Ford Motor Company, was born.

In 1864, during the Civil War, Union forces tried to take Petersburg, Va., by exploding a gunpowder-filled mine under Confederate defense lines; the attack failed.

In 1898, Otto von Bismarck—who, as prime minister of Prussia (1862–73, 1873–90), used ruthlessness and moderation to unify Germany, founding the German Empire (1871) and serving as its first chancellor (1871–90)—died.

In 1908, the first round-the-world automobile race, which had begun in New York in February, ended in Paris with the drivers of the American car, a Thomas Flyer, declared the winners over teams from Germany and Italy.

In 1918, poet Joyce Kilmer, a sergeant in the 165th U.S. Infantry Regiment, was killed during the Second Battle of the Marne in World War I. (Kilmer is perhaps best remembered for his poem “Trees.”)

In 1932, the Summer Olympic Games opened in Los Angeles.

In 1935, the first Penguin paperback book is published, an early step in the paperback revolution that would take off after World War II.

In 1942, President Franklin D. Roosevelt signed a bill creating a women’s auxiliary agency in the Navy known as “Women Accepted for Volunteer Emergency Service” — WAVES for short.

In 1956, the phrase “In God we trust” legally became the national motto of the United States.

In 1963, the Soviet news service reports that British intelligence officer Kim Philby, recently revealed as a longtime Soviet spy, has defected to the USSR.

In 1965, President Lyndon B. Johnson signed into law the Medicare bill, which went into effect the following year.

In 1971, Apollo 15 astronauts David R. Scott and James B. Irwin landed on the moon.

In 1974, Greek, Turkish and UK foreign ministers sign a peace agreement for Cyprus. 

In 1975, former Teamsters union president Jimmy Hoffa disappeared in suburban Detroit; although presumed dead, his remains have never been found.

In 1996, Actress Claudette Colbert died at age 92.

In 1999, ten years ago, Republicans pushed their $792 billion tax cut through the Senate.

In 1999. Linda Tripp, whose secretly recorded phone conversations with Monica Lewinsky led to the impeachment of President Bill Clinton, was charged in Maryland with illegal wiretapping. (Prosecutors later dropped the charges.)

In 1999, the leaders of some 40 nations gathered in Sarajevo, Bosnia-Herzegovina, pledging to push economic and democratic reforms for the war-ravaged Balkans.

In 2002, expelled from Congress a week earlier, an unrepentant James A. Traficant Jr. was sentenced to eight years behind bars for corruption.

In 2002, WNBA player Lisa Leslie of the Los Angeles Sparks became the first woman to dunk in a professional game during her team’s 82-73 loss to the Miami Sol.

In 2002, in the wake of the Enron and WorldCom scandals, President George W. Bush signs a bill imposing the most sweeping regulation of U.S. businesses since the 1930s.

In 2003, Sun Records founder Sam Phillips, who discovered Elvis Presley, died at age 80.

In 2004, five years ago, leaders of the September 11th commission urged senators to embrace their proposals for massive changes to the nation’s intelligence structure.

In 2004, Mike Tyson was knocked out in the fourth round of a fight in Louisville, Ky., by British heavyweight Danny Williams.

In 2007, Swedish movie director Ingmar Bergman died at age 87.

In 2007, Hall of Fame football coach Bill Walsh died at age 75.

In 2008, one year ago, President George W. Bush quietly signed a housing bill he had once threatened to veto; it was intended to rescue some cash-strapped homeowners in fear of foreclosure.

In 2008, amid corruption allegations and his own plummeting popularity, Israeli Prime Minister Ehud Olmert announced he would resign.

In 2008, ex-Bosnian Serb leader Radovan Karadzic was extradited to The Hague to face genocide charges after nearly 13 years on the run.

In 2008, Republican Party stalwart and one-time U.S. ambassador to Britain Anne Armstrong died in Houston at age 80.

Today’s Birthdays

Actor Richard Johnson is 82. Actor Edd “Kookie” Byrnes is 76. Major League Baseball Commissioner Bud Selig is 75. Blues musician Buddy Guy is 73. Movie director Peter Bogdanovich is 70. Feminist activist Eleanor Smeal is 70. Former U.S. Rep. Patricia Schroeder, D-Colo., is 69. Singer Paul Anka is 68. Jazz musician David Sanborn is 64. California Gov. Arnold Schwarzenegger is 62. Actor William Atherton is 62. Actor Jean Reno is 61. Blues singer-musician Otis Taylor is 61. Actor Frank Stallone is 59. Actor Ken Olin is 55. Actress Delta Burke is 53. Singer-songwriter Kate Bush is 51. Country singer Neal McCoy is 51. Actor Richard Burgi is 51. Movie director Richard Linklater is 49. Actor Laurence Fishburne is 48. Actress Lisa Kudrow is 46. Bluegrass musician Danny Roberts (The Grascals) is 46. Country musician Dwayne O’Brien is 45. Actress Vivica A. Fox is 45. Actor Terry Crews (“Everybody Hates Chris”) is 41. Actor Simon Baker is 40. Former NFL player Robert Porcher is 40. Movie director Christopher Nolan is 39. Actor Tom Green is 38. Rock musician Brad Hargreaves (Third Eye Blind) is 38. Actress Christine Taylor is 38. Actor-comedian Dean Edwards is 36. Actress Hilary Swank is 35. Beach volleyball player Misty May-Treanor is 32. Actress Jaime Pressly is 32. Alt-country singer-musician Seth Avett is 29. Actress Yvonne Strahovski (TV: “Chuck”) is 27.

Today’s Historic Birthdays

Giorgio Vasari
7/30/1511 – 6/27/1574
Italian painter, architect, historian and writer

Emily Bronte
7/30/1818 – 12/19/1848
English novelist and poet; wrote “Wuthering Heights”

Richard Burdon Haldane
7/30/1856 – 8/19/1928
Scottish lawyer, philosopher, and statesman

Thorstein Veblen (1857-1929), American economist and social scientist, notable for his historical investigation of the economic structure of society and for his analysis of the contemporary economic system.

Henry Ford
7/30/1863 – 4/7/1947
American industrialist who changed production with his assembly line methods

Robert McCormick
7/30/1880 – 4/1/1955
American newspaper editor and publisher of the Chicago Tribune

Vladimir Zworykin
7/30/1889 – 7/29/1982
Russian-born American inventor and the father of television

Casey Stengel
7/30/1890 – 9/29/1975
American professional baseball player and manager

Henry Moore
7/30/1898 – 8/31/1986
English sculptor; one of the greatest of the 20th century

C. Northcote Parkinson
7/30/1909 – 3/9/1993
English historian, author, and formulator of “Parkinson’s Law”

Michael Morris Killanin
7/30/1914 – 4/25/1999
Irish author and president of the International Olympic Committee

Thought for Today

“In politics people give you what they think you deserve and deny you what they think you want.” — Cyril Northcote Parkinson, British historian and author (born this date in 1909, died 1993).

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Full article: http://www.boston.com/news/history/articles/2009/07/30/today_in_history___july_30/

http://www.nytimes.com/learning/general/onthisday/20090730.html

http://news.bbc.co.uk/onthisday/default.stm

http://www.todayinhistory.de/index.php?tag=30&monat=7&dayisset=1&year=2009&lang=en

http://www.britannica.com/eb/dailycontent/rss

http://encarta.msn.com/encnet/features/onthisday.aspx

Today’s papers – July 30, 2009

New Poll Finds Growing Unease on Health Plan

The New York Times and Wall Street Journal‘s world-wide newsbox lead with new polls that show the American public is growing increasingly concerned that an overhaul of health care would have a negative impact in their own lives.

The NYT highlights that the percentage of Americans who describe health care costs as a threat to the economy has gone down in the past month, suggesting that the public isn’t buying one of President Obama’s central arguments for the plan.

The WSJ points out that last month respondents were evenly divided on the merits of the overhaul but now support has declined, particularly among those who are already insured.

The NYT highlights that it seems opponents of health reform have managed to make their portrayal of the plan as a government takeover that would limit choice stick in the minds of the public. And with advertising against the plan set to increase now that lawmakers will head home for their summer break, these ideas are likely to increase. The WSJ notes that administration officials agree they may have misfired a bit by focusing so much on the difficult-to-understand issue of medical costs. Now, Obama is making more of an effort to talk up the consumer-protection rules for insurance companies in order to appeal to those who already have coverage but are afraid of losing it for an arbitrary reason. In the WSJ poll, only 20 percent said they would have better care after the overhaul.

As usual with complicated issues, though, it’s not clear the public really knows what it wants. The WSJ notes that when poll respondents were given details of the proposal, 56 percent said they favored it, while 38 percent opposed it. And the NYT points out that President Obama still has the advantage in winning public support for an overhaul since 49 percent say they support fundamental changes to the system and 66 percent are concerned about losing their own insurance. Respondents also overwhelmingingly—55 percent to 26 percent—think Obama has better ideas on health care than Republicans and is making more of an effort to work in a bipartisan manner.

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Full article: http://www.nytimes.com/2009/07/30/us/politics/30poll.html

http://online.wsj.com/article/SB124890178435291341.html

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Lawmakers Cut Health Bills’ Price Tag

The Washington Post leads with, and the Los Angeles Times off-leads, House Democrats reaching an agreement with conservative members of their party that could help health care legislation pass the energy and commerce committee. The agreement seeks to cut more than $100 billion from the bill and would maintain the government-run insurance plan but change the way it operates.

The deal reached between key conservative Democrats and Rep. Henry Waxman would exclude more small businesses from the requirement that they provide health insurance by extending the exemption to companies that have an annual payroll of $500,000 rather than $250,000. The Blue Dog Democrats agreed to maintain a government-run insurance program but only if it’s de-linked from Medicare because of concern that the government would have such a competitive advantage that it would end up driving private insurers out of business. That means the government insurance program would have to negotiate separately with providers. Many Democrats expressed their displeasure at this compromise, particularly since a Blue Dog leader made it clear it was no guarantee that the majority of his caucus would support the legislation. Meanwhile, the Senate’s group of six continues to negotiate, and Sen. Max Baucus said a draft of their reform package would cost $900 billion over a decade, which is slightly less expensive and comes under the psychologically important $1 trillion mark.

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Full article:

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/29/AR2009072902027.html

http://www.latimes.com/news/nationworld/nation/la-na-healthcare-house30-2009jul30,0,4349602.story

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Texas Hospital Flexing Muscle in Health Fight

The NYT takes a look at how the physician-owned hospital that became famous when it was featured in a not-so-positive light in a much talked-about New Yorker piece is a key donor to Democratic lawmakers. People affiliated with the Doctors Hospital at Renaissance have been donating big sums to candidates on both sides of the aisle and, so far, seem to be getting pretty much everything they wanted out of the health care debate. It’s a minor issue in a huge piece of legislation, but the question is whether, as the New Yorker article claims, physician-owned hospitals make health care more expensive because doctors are motivated to order unnecessary tests and procedures since they get a share of the hospital’s profits. While it looks like some limits will be imposed on physician-owned hospitals, existing facilities are likely to be allowed to continue as they are.

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Full article: http://www.nytimes.com/2009/07/30/us/politics/30mcallen.html

http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande

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Would Tax on Benefits Rein In Spending?

In a front-page piece, the WP takes a look at the question of whether Americans spend more on health care because the insurance they get through their employer isn’t taxed. Many have said yes, and taxing at least some health benefits has received broad support. But what the Post calls a “vocal minority” has been eager to say that the ability of taxes to decrease costs has been overstated because consumers mostly just do what their doctors tell them. To these skeptics, “the dispute is a classic clash between economic abstractions and real-world practice,” notes the paper. While in theory it should make sense that people spend more if it’s tax-free, the reality is that the vast majority of people don’t actually consume health care that way.

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Full article: http://www.washingtonpost.com/wp-dyn/content/article/2009/07/29/AR2009072902035.html

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U.S. shifting drones’ focus to Taliban

The LAT leads with word that the military is shifting some of its Predator drone aircraft away from hunting al-Qaida operatives toward tracking the Taliban and aiding the general war effort in Afghanistan. The scarce drones are one of the military’s “most precious intelligence assets,” and the increased focus on the Taliban shows how U.S. officials now believe that the best way to beat al-Qaida is stabilizing Afghanistan and Pakistan rather than hunting down individuals, although that will also continue. So more drones will be operated by conventional forces in Afghanistan and focus on tracking movements in insurgent strongholds. “We have been overly counter-terrorism-focused and not counter-insurgency-focused,” said one U.S. official.

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Full article: http://www.latimes.com/news/nationworld/world/la-fg-afghanistan30-2009jul30,0,711886.story

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Unpaid property taxes hit localities

USA Today leads with a look at how more Americans are failing to pay their property taxes amid the recession, meaning that many who might have survived the foreclosure wave could eventually lose their homes to tax seizures. There’s no national figure, but many localities have reported a sharp increase in the number of businesses and homeowners who aren’t paying their tax bills at a time when local governments are already strapped for cash.

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Full article: http://www.usatoday.com/money/perfi/taxes/2009-07-29-delinquent-taxes_N.htm

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Chinese Workers Say Illness Is Real, Not Hysteria

The NYT fronts a fascinating dispatch from an industrial city in northeast China, where more than 1,200 employees at a textile mill have come down with a variety of strange symptoms, including temporary paralysis, convulsions, and vomiting. Workers are convinced they were poisoned by toxic fumes from a nearby factory that produces aniline, a highly toxic chemical. Chinese health officials say this is all just a case of mass hysteria. And when a group of health experts visited a hospital that has been overwhelmed by patients since the factory opened they told bedridden workers to “get a hold of their emotions.” Outside experts say that while it’s possible that panic could lead people to describe symptoms that don’t really exist, it’s exceedingly rare to affect this many people at once. Plus, if this were indeed a case of paranoia to the extreme, the Chinese government is merely fueling the hysteria by being so secretive about everything.

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Full article: http://www.nytimes.com/2009/07/30/world/asia/30jilin.html

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House Seems To Be Set on Pork-Padded Defense Bill

When the Senate voted to end the F-22 fighter-jet program, many hoped it could signal the beginning of a new era in defense contracting. But today the WP makes it clear that few things have changed as the House gets ready to vote on a military spending bill that includes at least $6.9 billion of equipment that Defense Secretary Robert Gates says is not needed. The White House is urging lawmakers to take a cue from Gov. Arnold Schwarzenegger and grab a huge knife, but both Republicans and Democrats have proven reluctant to cut lucrative programs for contractors that provide jobs and lots of campaign funds. Almost $3 billion of the extra funds would go to financing earmarks—pet projects demanded by individual lawmakers—and around half of that would go to projects specifically requested by private companies. “Members of Congress should not have the ability to award no-bid contracts,” Rep. Jeff. Flake, R-Ariz., who has long been a critic of earmarks, said.

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Full article: http://www.washingtonpost.com/wp-dyn/content/article/2009/07/29/AR2009072902676.html

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Iraq in throes of environmental catastrophe, experts say

The LAT takes a look at how the frequent dust storms in Iraq are a sign of how the country is suffering what some are characterizing as “an environmental catastrophe.” Sandstorms are quite common in the region, but a two-year drought, coupled with years of land mismanagement, means there’s dust everywhere, so storms are more frequent and last longer. The problem is so bad that a country once known for its agriculture has to import most of its food, meaning it has less money for reconstruction. “We’re talking about something that’s making the breadbasket of Iraq look like the Dust Bowl of Oklahoma in the early part of the 20th century,” one expert said.

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Full article: http://www.latimes.com/news/nationworld/world/la-fg-iraq-dust30-2009jul30,0,3137832.story

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White House ‘Beer Summit’ Becomes Something of a Brouhaha

As Obama prepares to have beers with Harvard scholar Henry Louis Gates Jr. and James Crowley, the police sergeant who arrested Gates, the WSJ takes a look at how some aren’t too happy with what they’ll be drinking. There are those who don’t think the president should be promoting alcohol in the first place. Why not just have a friendly conversation over a glass of lemonade or iced tea? But the biggest outcry is coming from brewers. White House spokesman Robert Gibbs suggested that each of the participant’s favorite beers would be on hand: Red Stripe for Gates and Blue Moon for Crowley. The president will be drinking Bud Light. The problem? They’re all made by foreign companies. “We would hope they would pick a family-owned, American beer to lubricate the conversation,” said a spokesman for the Sierra Nevada Brewing Co. The head of Harpoon Brewery wanted to get his beer in the White House but didn’t know how. “I think just showing up at the gate with a case of Harpoon would make them look at us funny.”

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Full article: http://online.wsj.com/article/SB124891169018991961.html

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Full article: http://www.slate.com/id/2223898/

http://www.thebigmoney.com/features/todays-business-press/2009/07/30/yahoo-and-microsoft-finally-team

The Pelosi Jobs Tax

Workers will pay for the new health-care payroll levy.

Even many Democrats are revolting against Speaker Nancy Pelosi’s 5.4% income surtax to finance ObamaCare, but another tax in her House bill isn’t getting enough attention. To wit, the up to 10-percentage point payroll tax increase on workers and businesses that don’t provide health insurance. This should put to rest the illusion that no one making more than $250,000 in income will pay higher taxes.

To understand why, consider how the Pelosi jobs tax works. Under the House bill, firms with employee payroll of above $250,000 without a company health plan would pay a tax starting at 2% of wages per employee. That rate would quickly rise to 8% on firms with total payroll of $400,000 or more. A tax credit would help very small businesses adjust to the new costs, but even a firm with a handful of workers is likely to be subject to this payroll levy. As we went to press, Blue Dogs were taking credit for pushing those payroll amounts up to $500,000 and $750,0000, but those are still small employers.

So who bears the burden of this tax? The economic research is close to unanimous that a payroll tax is a tax on labor and is thus shouldered mostly if not entirely by workers. Employers merely collect the tax and then pass along its costs in lower wages or benefits. This is the view of the Democratic-controlled Congressional Budget Office, which advised on July 13: “If employers who did not offer health insurance were required to pay a fee, employee’s wages and other forms of compensation would generally decline by the amount of that fee from what they otherwise would have been.”

To put this in actual dollars, a worker earning, say, $70,000 a year could lose some $5,600 in take home pay to cover the costs of ObamaCare. And, by the way, this is in addition to the 2.5% tax that the individual worker would have to pay on gross income, if he doesn’t buy the high-priced health insurance that the government will mandate. In sum, that’s a near 10-percentage point tax on wages and salaries on top of the 15% that already hits workers to finance Medicare and Social Security.

Even Democrats are aware that his tax would come out of the wallets of the very workers they pretend to be helping, so they inserted a provision on page 147 of the bill prohibiting firms from cutting salaries to pay the tax. Thus they figure they can decree that wages cannot fall even as costs rise. Of course, all this means is that businesses would lay off some workers, or hire fewer new ones, or pay lower starting salaries or other benefits to the workers they do hire.

Cornell economists Richard Burkhauser and Kosali Simon predicted in a 2007 National Bureau of Economic Research study that a payroll tax increase of about this magnitude plus the recent minimum wage increase will translate into hundreds of thousands of lost jobs for those with low wages. Pay or play schemes, says Mr. Burkauser, “wind up hurting the very low-wage workers they are supposed to help.” The CBO agrees, arguing that play or pay policies “could reduce the hiring of low-wage workers, whose wages could not fall by the full cost of health insurance or a substantial play-or-pay fee if they were close to the minimum wage.”

To make matters worse, many workers and firms would have to pay the Pelosi tax even if the employer already provides health insurance. That’s because the House bill requires firms to pay at least 72.5% of health-insurance premiums for individual workers and 65% for families in order to avoid the tax. A Kaiser Family Foundation survey in 2008 found that about three in five small businesses fail to meet the Pelosi test and will have to pay the tax. In these instances, the businesses will have every incentive simply to drop their coverage.

A new study by Sageworks, Inc., a financial consulting firm, runs the numbers on the income statements of actual companies. It looks at three types of firms with at least $5 million in sales: a retailer, a construction company and a small manufacturer. The companies each have total payroll of between $750,000 and $1 million a year. Assuming the firms absorb the cost of the payroll tax, their net profits fall by one-third on average. That is on top of the 45% income tax and surtax that many small business owners would pay as part of the House tax scheme, so the total reduction in some small business profits would climb to nearly 80%. These lower after-tax profits would mean fewer jobs.

To put it another way, the workers who will gain health insurance from ObamaCare will pay the steepest price for it in either a shrinking pay check, or no job at all.

Wall Street Journal

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Full article: http://online.wsj.com/article/SB10001424052970203609204574316183688201934.html

The Blue Dogs’ Final Dilemma

Do they work for us, or do we work for them?

With the health-care bill faltering in Congress, the ritual weeping has begun over the death, once again, of “bipartisanship.”

The belief that the answer to any problem lies with “the center” may be the greatest superstition in the ever-magical world of American politics.

Mostly it is journalists and pundits who propagate the notion that crazies on the left and right have neutered the problem-solving center, the moderates, the pragmatists.

In fact, the bipartisan center has been dying every year since Congress passed the Medicare and Medicaid bill of 1965. The people who back then were staffers to the politicians and agencies of Lyndon Johnson’s Great Society graduated into the offices they now hold in Congress, the Beltway, many state capitals and academia, taking a second generation into their belief system. That included Barack Obama.

With President Obama’s health-care bill, the forces that across 40 years grew into unbridgeable opposition to each other could not be more plain to see. American politics has arrived at a crossroads.

This struggle over health-care legislation isn’t just another battle between the Democratic and Republican parties. It’s about which force is going to take the United States forward for the next generation: the public sector or the private sector. If by now you haven’t figured out which sector you are in, then you’re a Blue Dog Democrat.

The Blue Dogs and other moderates have been sliding to this final dilemma for years. The issue is not whether one is for or against “government.” The issue is: Do they work for us, or do we work for them?

Mr. Obama has defined the stakes succinctly. The centerpiece of his health-care proposal is the Public Option, a program of federally supplied and administered health insurance. As he has repeatedly stated, anyone is free to remain inside the private health-insurance system. He said yesterday, “Nobody is talking about some government takeover of health care” and to disagree is “scaring everybody.” He is underselling the power of his own idea. That public option is potent competition, a winner-sweep-the-table proposition between the public sector and the private sector.

The clarifying moment in the health-care debate arrived when the Congressional Budget Office said that the legislation lacked adequate financing. After this, the bill’s backers began a search for tax revenue that borders on parody—taxes on soda pop, surtaxes unto eternity on “millionaires,” as if this might actually command the tides to recede of another permanent Medicare/Medicaid-sized entitlement and its flotsam of advisers, measurers and lobbyists.

Washington and the states are now fighting each other to drain revenue out of the same private sector. Back in March, New York’s legislature, amid a deep recession, enacted its own income tax surcharge. These governments are becoming like people from dying planets in “Star Trek,” foraging the galaxy for new sources of whatever life force keeps them alive. A surtax is the ultimate act of public-sector panic.

I don’t think the White House or the Democratic leadership understands the level of despondency in the country now among people who add new wealth—business owners, entrepreneurs or those who invest in new ideas that don’t depend wholly on subsidized choices made by the public sector.

This is all many people in the most dynamic corners of the private sector talk about now. Their beef is not with recession but the feeling that this presidency and Congress have no interest in them. If we get another jobless recovery, we’ll need the job-creating impulses of these people. The do-good but not-for-profit mentality of the current government looks either hostile to or oblivious of these private-sector fast runners.

The Obama approval rating is falling toward 50% and below that for his handling of the economy and even lower on health care. He will be told, probably this weekend by pundits from planet public sector, that this is due to “lies” from the right. But I think this president needs to find a concrete way fast to show he has a real sense of the private sector’s importance. That promise of “green jobs” isn’t it. His line about “sacrifice” is a euphemism for high tax levels to the horizon. Where’s the upside for new, private entrants?

The problem is that in Washington and many states the public sector’s revenue needs have arrived at a point where space for the private economy is more or less beside the point. That is the clear message of the California and New York budget crises and the difficulties of financing the Obama health-care plan.

For centrists in both parties the moment has come to decide which side of the public-private divide they want the U.S. and its future workers to be on. Trying to live in both has brought us, inevitably, to that decision.

Daniel Henninger, Wall Street Journal

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Full article: http://online.wsj.com/article/SB10001424052970203609204574316403627684602.html

Fannie Med

The bipartisan Senate negotiators are leaning toward proposing a health-care Fannie Mae.

The details of the Senate Finance Committee’s hush-hush health talks aren’t fully known, but leaks suggest that one all-but-certain highlight will be new federally created health “cooperatives” to compete against private insurers. The onus is on Republican negotiators Chuck Grassley and Mike Enzi to explain why this isn’t merely the House “public option” in a better suit.

North Dakota Democrat Kent Conrad floated the co-op concept last month, to attract Republicans who oppose President Obama’s state-run plan. According to Mr. Conrad, these nonprofits—modeled on local electricity or rural farm co-ops—fulfill the liberal goal of competing against private insurers, yet avoid “government control,” since they will be member-owned. Presto, a Beltway splitting of the political baby.

And in theory, health-care co-ops needn’t be destructive. Blue Cross and Blue Shield began as nonprofit health insurers, and some state Blues still are. Organizations like the Group Health Cooperative of Puget Sound are consumer-owned and compete with private plans.

But the Senate is talking about government-sponsored co-ops, and that means multiple devils are in the details. Mr. Conrad confirmed this week that the current plan is to have the feds provide $6 billion in start-up cash, then appoint an “interim” national board to set policies for a network of state or regional co-ops. Mr. Conrad said this new network could attract 12 million people, making it the third-largest health insurer in the country.

Here’s where the trouble starts. At least with the public option, Washington acknowledges that taxpayers are subsidizing public plans. With co-ops, the government role is more subtle, if nearly as corrosive. Start with Mr. Conrad’s $6 billion in “seed money,” which is more than the total annual revenue of all but 20 of the nation’s private plans. This would provide a lower cost of capital than private firms and an implicit claim on any other money the co-ops need. The feds may also exempt co-ops from the taxes that private insurers pay, which average about 1.2% of premiums. This would let co-ops offer lower prices and poach customers with government-subsidized premiums.

The Senators may also exempt co-ops from the state mandates that now drive up the cost of private policies. We’ve long wanted the feds to let individuals or groups (such as the National Federation of Independent Business) form risk pools and buy insurance across state lines free of these costly requirements. But liberals have killed attempts at such Association Health Plans, which suggests their goal in exempting these “government-sponsored health enterprises” from state mandates is merely to give them another pricing edge.

Mr. Conrad suggests the federal board overseeing this network would be temporary, meaning at some point government appointees would be replaced by elected private directors. Mr. Grassley is said to be resisting federal control, but even if he succeeds for now, neither he nor Mr. Conrad can bind a future Congress. When was the last time government supervision became less onerous over time, especially in health care?

All of which makes these co-ops sound a lot like a health-care Fannie Mae and Freddie Mac, which Congress created because there was supposedly no secondary mortgage market. The duo proceeded to use their government subsidy to dominate the market and drive out private competitors.

And all of this is before Congressional liberals get their hands on these co-ops. “We’re going to have some type of public option, call it ‘co-op,’ call it what you want,” Senate Majority Leader Harry Reid said earlier this month. New York’s Chuck Schumer wants $10 billion to seed a single, nationwide co-op that will be governed by a federal board and have the authority to impose price controls. At the very least, liberals will demand to load up co-ops with the minimum-coverage mandates they’ve already included in the House and rival Senate legislation—from maternity care to government-funded abortion.

Messrs. Grassley and Enzi and Maine’s Olympia Snowe are under great pressure to agree to a deal, as Democrats grow more desperate to get political cover for reform that is sinking fast in the polls. The co-op idea might have begun as a benign proposal, but it is likely to become a mini-me public option. Senate Republicans can best serve the cause of bipartisan reform and fiscal sanity by opposing any form of new government health care, and urging Mr. Baucus to turn to the Plan B of helping the uninsured with tax credits.

Wall Street Journal

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Full article: http://online.wsj.com/article/SB10001424052970204619004574318474224065070.html