How much do votes cost?

This recent Washington Post column by Dana Milbank summarizes the "many backroom deals that were made to buy, er, secure the 60 votes needed to "invoke cloture" -- the legislative term for cutting off debate and holding a final vote." The bill itself has acquired the nickname "Cash for Cloture", while several of the provisions in the bill have their own nicknames:

Louisiana Purchase
Cornhusker Kickback
U Con
Bayh Off
Gator Aid
Handout Montana

So, how does one calculate the cost of buying these votes to the taxpayer? Is it merely the sum of these provisions, or is it the cost of the entire bill, which likely would not pass without them?

An Agnostic's Thoughts on Tithing

In this article on CNN Living, agnostic A.J. Jacobs makes a case for tithing, "the practice of giving 10 percent of your annual income to the needy."

Interestingly, Jacobs notes: "as I gave away money, I think I might have felt God's pleasure. Which is odd. Because I'm agnostic. I don't know if there's a God or not, but still I felt some higher sense of purpose. It was like a cozy ember that started at the back of my neck and slowly spread its warmth through my skull. I felt like I was doing something I should have done all my life."

This year, and in 2010, whatever your personal convictions, consider "saying thank you to the universe -- or to God or to fate or to whatever you believe in" by giving to charity!

Interesting Statistic on Party Affiliation

According to this Rasmussen article, "while Republican voters overwhelmingly consider themselves conservative, only 56% of conservative voters consider themselves to be Republicans. In other words, nearly half of all conservatives nationwide reject the Republican Party label."

Congress Bends the Credibility Curve

Politicians set out to reform the U.S. health care system with two primary objectives: to "bend the cost curve", and to expand health insurance coverage to as many uninsured Americans as possible. The House bill just announced by Nancy Pelosi is expected to do a good job on the second objective, but the more I read, the more I realize that:

1) They constantly confuse "price" with "cost", which leads to rationing of services, and subsidization of government-insured patients by privately-insured ones. This might help the cost curve for people insured by the government, but probably increases costs to overall U.S. health care, and

2) They have almost no credibility when it comes to keeping promises regarding spending restraint, and voters have little reason to believe the bill will really be "deficit neutral", although Obama will make a big point of it at the signing ceremony.

To the first point, various members of Congress say they are controlling "cost" of medical services, when all they are really doing is cutting the "price" they are going to pay for them. For example, if Congress wants to make surgery cheaper, they propose cutting the amount Medicare reimburses for anesthesiologists, surgeons, and equipment (the "price"). However, the "cost" of everything needed to perform the surgery stays the same. The hospital's rent, utilities, salaries, and everything else does not move. Medicare and other government programs often reimburse health care providers less than their costs. For this reason, many hospitals and doctors lose money on Medicare patients, and make it up with their profits from privately-insured patients. For doctors and hospitals practicing in areas with a high percentage of Medicare/Medicaid patients, this becomes an even bigger problem, as they have less profitable patients subsidizing the profitable ones. If Congress continues to cut "cost", while leaving "price" alone, they are forcing many doctors or hospitals to operate at a financial loss, refuse to see Medicare patients (which many doctors do), or simply go out of business. Also, cuts in government insurance contribute to rising premiums for those with private insurance due to the implicit subsidy.

On the second point, Medicare is subject to a "sustainable growth rate" (SGR) according to budget rules which, according to the Wall Street Journal's Health Blog, "says essentially that the amount Medicare pays doctors for an average Medicare patient can’t grow faster than the economy as a whole." This restriction is supposed to keep Medicare spending relatively under control. The various reform bills in Congress rely on the SGR to keep the bills "deficit neutral". However, Congress repeatedly overrides the SGR. Ted Kennedy even showed up to vote to override the cuts after being diagnosed with brain cancer, and they even broke into applause after voting to ignore the SGR. Believing this bill will really be "deficit neutral" requires you ignore all the evidence that a group of people with a 22% approval rating will change their ways overnight.

Also, Obama's proposal to spend $14 billion to pay $250 to seniors because the law on the books would give them no Social Security cost-of-living adjustment this year makes me even more nervous. This New York Times article quotes University of Michigan economist Joel Slemrod as saying: “If the long-term issue is entitlement reform, the fact that the political system cannot say no to $250 checks to elderly people is a bad sign.”

The U.S. is already heavily burdened by growing entitlement programs. Medicare is projected to run out of money in 8 years. If Congress is really concerned about reforming entitlement programs, they have to reduce eligibilty or reduce benefits. This health care "reform" bill does the opposite of both, and kicks all of the existing problems down the road to a future Congress and President.

While the ink is still drying on this round of "reform", Congress will need to get to work tackling the real problems. Or, they can just keep waiting for someone else to take the political hit.

"Reform" That Prohibits Reform

The House's health care bill offers to make incentive payments to "to each State that has an alternative medical liability law in compliance with this section." Then the bill defines what kind of medical malpractice reform states need to implement to get this payment from the Feds. Ok, so this bill is making an effort to encourage states to reduce the cost of our crazy malpractice system. Good news? No.

Commentarymagazine.com points out that if states don't get the incentive if they “limit attorneys’ fees or impose caps on damages.” (here) This "reform" bill is effectively saying states can do any kind of medical malpractice reform, as long as they don't actually address the problem. Genius.

So this is what lawyers get for their political contributions and connections...

NPR on Homebuyer Tax Credit Fraud

According to this NPR story, "Thousands of people have gotten first-time homebuyer tax credits they don't deserve ... Some of these suspicious claims come from people who are writing off interest payments on another house." The IRS "highlighted nearly $500 million in homebuyer tax credits claimed by people who don't appear to qualify."

The Wall Street Journal reports:

Among those claiming bogus credits, at least some of them were definitely first-timers. The credit has already been claimed by 500 people under the age of 18, including a four-year-old. This pre-K housing whiz likely bought because mom and dad make too much to qualify for the full credit, which starts to phase out at $150,000 of income for couples, $75,000 for singles.

The NPR article points out that "the IRS doesn't require people applying for the credit to prove they've purchased a house." Frank Keith, a spokesman for the IRS, says "the IRS doesn't have the authority to reject a claim for the tax credit without doing a full audit first." So, "the IRS is reportedly trying to audit almost everyone who claims it this year."

Someday, the government should consider opening offices where you can show up, choose from a menu of government handouts, present ID, and walk out with your check. At least that would be efficient. Oh wait, I forgot about my last trip to the DMV.

"Middle of the road" Partisanship?

This AP story reports that "a key Senate committee Tuesday approved a middle-of-the-road health care plan that moves President Barack Obama's goal of wider and affordable coverage a giant step closer to becoming law". Only one Republican, Olympia Snowe from Maine, voted in favor. The other 9 Republicans in the committee voted against. The headline of the article is "Senate panel OKs middle-of-the-road health plan". Really? Does one person crossing party lines make this a bipartisan plan? Unbelievable.

This bill is so "middle of the road" that a separate AP story says "About 30 unions will run a full-page ad in newspapers Wednesday announcing their opposition to the Senate Finance Committee's health overhaul bill".

I guess the AP decided a bill that is not even supported by a key Democratic constituency and only supported by one Republican is supposed to be praised as an accomplishment.

A 70% Tax on the Poor?

Talk about unintended consequences - the phase-out of subsidies for health insurance in the Baucus bill could end up contributing to a 70% or higher marginal tax rate for people earning between 100% and 200% of the poverty level!

According to James Capretta (here), using the CBO analysis of the Baucus bill, the US government (taxpayers) would provide a $16,500 subsidy for families at the poverty line. As incomes rise, the subsidy declines. A family earning twice the poverty rate would only get a subsidy of $9,072. So, by earning $24,000 more, this family loses $7,428 in government subsidies, or almost 31% of their added income.

Capretta points out other existing government tax breaks that phase out over these income levels, like the Earned Income Tax Credit, which phases out at about $0.21 for each additional dollar earned. This family would lose about $5,000 of their EITC, about another 20% of their added income.

Economist Greg Mankiw (here) adds in additional effects of the payroll tax that bring the marginal tax rate closer to 80%. So, a family of four in 2016 when the Baucus bill would be in full effect, would only get to keep 20-30% of their additional income if they move from the poverty line to double that.

The unintended consequence is that this family has every incentive to just remain poor and beg their Congressmen for additional help. Why work harder if the benefits you lose are almost as big as the extra money you earn? And why not ask for more benefits when you aren't the one paying for them?

Biased Media Coverage of Town Halls: Which Party Does It help?

In today's Washington Post, E.J. Dionne makes the case that "the electronic media went out of their way to cover the noise and ignored the calmer (and from television's point of view "boring") encounters between elected representatives and their constituents". His column, "The Real Town Hall Story", concludes that this is evidence the media are not liberal: "the only citizens who commanded widespread media coverage last month were the right-wingers. And I bet you thought the media were 'liberal.'"

Although I agree the coverage was not balanced, I think Dionne ignores several points, and that the unbalanced coverage could also be evidence to the contrary of Dionne's conclusion.

First, most of the media coverage I saw about the protesters marginalized them, calling them ingorant, extremists, or worse, and many of the TV talking heads expanded this to include anyone else who thought like the protesters, or even entire regions or political parties. CNN regularly had panel discussions among pundits about it. The panel was often the show's host, 2 or 3 people criticizing the protesters, and one person meekly defending them. On CNN, I often saw the host interrupt and/or rebut the defender, while letting the criticizer take their time and finish their point. Instead of what Dionne is concluding, it's just as easy to conclude that the excess coverage of the protesters was an attempt to color all dissent as idiotic, while the President and others are calm and above the fray.

Second, the media are entertainment. If they're boring, nobody will watch. Dionne should know this, since the newspaper industry he works for is suffering as a result. So, nobody should be surprised at the absence of coverage of boring meetings. But, what really surprised me was how little people were aware of all the hatred that went on during the Bush years. The ignorance about how tame the town hall protests were in comparison supports the story that the town hall protesters were extremists. By covering one party's extremists, while ignoring the others, do the media make the party they cover look better or worse than the one they ignore? This website has excellent coverage of how extreme Bush-hating became during his presidency, and how little of it was covered by the media. I also commented on the assymetric coverage of "crazies" here, in response to a Washington Post article claiming only the Republican party has crazies.

Third, Dionne continues the storyline that all dissent is extremist by ignoring all the more mainstream forms of protest against the current version of health care reform. If the media were trying to cover only "right-wingers" in order to stop health care reform, why would they spend so much time on the protesters that are easiest to dismiss, and not on everyone else?

Opposition is far more widespread than a few outspoken people at town hall meetings - if the media's agenda was what Dionne suggests, they would focus on opposition from more serious groups. The AARP is very hesitant to back reform (my note here), many medical associations are against it (my note on one group of anesthesiologists here), and many feel tort reform should an important part of the bill, but Obama has ruled it out (here, here).

At http://www.freeourhealthcarenow.com/, there is a petition with more than 1.2 million signatures against Obamacare. By the time the petition is finished, it may be the largest such petition ever. John Goodman, one of the petition's organizers, wrote an op-ed in the Wall Street Journal last week, and describes the signers:

These are a very diverse group of people. Some of them are part of a 40,000-person network of former Obama supporters who are experiencing buyer's remorse. Others are part of various disease networks, including patients concerned about the future of cancer care. There are networks of senior citizens worried about cuts in Medicare and the possible closing of their private Medicare insurance plans. There are Christian conservatives worried about taxpayer-funded abortions and subsidies for euthanasia. And there are an enormous number of people who are simply concerned about their health care.

While you might disagree with many of these reasons, the diversity of the opposition proves that dissent is not limited to a few, like-minded people.

I also think the media is de-emphasizing the fact that the Democrats could pass heath care reform without any support from Republicans, if they could just agree among themselves. They have the White House and both houses of Congress. An August 1 Washington Post article (my note on the article) about the legislative process behind HR 3200 said: "Democrats have large majorities in both chambers, but they have discovered the perils of being a party that yokes together Northern California liberals and Deep South good ol' boys." If the right-wing dissenters are not the deciding factor in the debate, why cover them far more than the fighting within the Democratic Party?

Finally, Dionne does everyone a disservice by encouraging political debate based on ad hominem arguments, where citizens judge the message based on the messenger, not on the content. The more time people spend trying to figure out who is biased and how, the less time they spend analysing the message and seeking out diverse opinions. Partisan or personal attacks make for better entertainment than coverage of a quiet town hall meeting, but they probably don't give voters the information they need to make wise decisions at the ballot box, which is the purpose of a free media. I prefer to assume everyone is biased (because everyone is), find someone with the opposite bias, and listen to both. Let everyone speak honestly and openly, so everyone can make an informed decision.

President Obama wanted more transparency in the health care debate, and promised to televise much of it to keep people informed and involved. He broke that promise, and you have to wonder if the current situation would be improved if he had kept it.

Most useless "news" story ever?

What would we do without CNN? The lead story on CNN.com right now is "Obama aims to reset health care debate, aides say". In the article, an unnamed White House official says Obama is "considering all of his options on how to advance the debate and get reform passed. This includes possibly laying out a more specific vision." The chief executive of our country is considering being specific? That would really be novel. Also, hasn't his line all along been that everything's on the table? How is this a change worth reporting?

The article says David Axelrod thinks: "Obama is contemplating giving a major speech detailing what he would like to see included in health care legislation." Contemplating yet another speech! Why didn't anyone think of that before? I guess the way to deal with "wavering support" is to finally tell people what you are asking them to support?

If you keep reading, trying to figure out what makes this fluff newsworthy, the article says "No decisions have been made yet". Whew - I thought I was missing something in all the earlier certainty!

Near the end of the article, it says "Obama has come under growing pressure from liberal activists and leading congressional Democrats to provide more specifics". Ok - now I see the news - the Democrats are upset that their leader isn't providing any leadership.

Why didn't CNN just say so?