Rethinking third parties

Everybody knows that the boat is leaking

Everybody knows the captain lied

Everybody got this broken feeling

Like their father or their dog just died

Everybody’s talking to their pockets

Everybody wants a box of chocolates

And a long-stemmed rose

Everybody knows

--Leonard Cohen

We now bask in the victory of health care reform and everybody knows that in the long term it is unsustainable. While some people will be immeasurably helped, others will be irreparably harmed. Trade-offs will occur, health insurance for jobs, immediate tax revenue for sustained economic growth. In the end, we will evaluate this reform based on how it affects us personally. Ironically, that is the appropriate criteria for assessing personal economic decisions, the very ones being limited here.

Americans feel guilty about our cynicism and we seek to suppress the impulse, however justified it may be. Thomas Sowell noted (column 3/24) that the FHA is ‘guaranteeing’ mortgages with woefully insufficient reserves in a market that is currently 14 percent in default. He furthered noted that the FDIC with similarly inadequate reserves is guaranteeing our bank deposits. In fact, they temporarily raised their guarantee (but not their reserves) from $100,000 to $250,000 in the immediate aftermath of the banking crisis.

Everybody knows that the Social Security and Medicare trust funds do not exist anywhere outside the minds of politicians. The trust funds are simply a promise to tax or print money at future dates to meet obligations for which no reserves exist. The cynicism about government is warranted. Faith is government in harder to explain.

Today, our political parties compete to control the machinery of government, the economic army for imposing a social vision. I have always viewed third parties as a social exercise, a harmless venue for expressing discontent. We should rethink that.

It can only work if the third party is about an idea, i.e. government must obey the law, fiscal responsibility that starts when legislation is conceived. We don’t need a third party president in the White House, but we do need a third party presence in Congress. We need a third party committed to governing by law and economic reality, a party that Republicans and Democrats cannot end run. A third party positioned squarely between the incumbent parties and their ambitions. It will have to occupy a space, say, 10 to 13 percent of the Congress.

There comes a point when the patterns are so ingrained that the future is revealed by looking at the past; a point when ‘everybody knows.’ The fix no longer lies inside the Democrat or Republican parties. The remedy? A big voice in America is not represented by anyone currently residing in our Congress. Cull some from the herd.

History is not always so discouraging. The American Revolution was grounded in ‘everybody knows.’ Fortunately, the founders left us a system designed to remedy the current malaise. The rest is up to us.

President Obama: "Preaching to the persuaded"

One appealing element of speechmaking is the long interval between the applause and the analysis. The unchallenged argument is so much less painful than the debated one. It's not surprising that politicians prefer giving speeches to press conferences or television interviews. Sarah Palin and Al Gore shine brightly when preaching in the protected environs of the true believers.

President Obama's delivered a quality speech at Strongsville, Ohio on Monday, but further scrutiny is warranted. Yesterday's speech, while compelling, raises more questions than it answers.

The president said his reform will change three things about the current system. He said "thousands of Americans with pre-existing conditions will be able to purchase insurance for the first time in their lives." If that is true, it will be because the ensuing mandate will fix the price charged to the insured, not because it will control the cost of producing the care. I suspect that insurance is not as unavailable as it is portrayed to be. Insurance companies find it very difficult to market some policies at a price commensurate with their financial risk.

How expensive would your homeowners insurance be if your garage was already on fire? But, the unfortunate woman that President Obama spoke so eloquently about, did not have an access problem, she had a money problem. We can certainly address her problem by assigning the purchase of her coverage in whole or in part to the taxpayers; at the same time, it is disingenous to suggest that you have somehow reduced the cost of providing her medical care.

Mr. Obama cited a second change, free diagnostic care that will catch preventable illnesses on the front end; coupled with the termination of lifetime or annual limits that apply to current policies and allowing uninsured adults to remain on their parent's policy until age 26.

Has government now discovered a way to produce free care? Unlikely. If free checkups prevent illness and thus reduce expenses for the insurance companies, would they not offer these 'free' services of their own volition? The unlimited risk provision will have one predictable result. Fewer companies will offer the coverage.

Permitting adults to remain on their parent's coverage until age 26 is a further example of cost shifting represented as cost control. The beneficiaries will be partially exempted from the requirement to purchase their own coverage as coverage will cost less as an additional insured than as an individual purchaser. On group insurance policies, the number of those covered will expand. Does the president think this mandate will not provoke a corresponding increase in premiums?

The final promised change is that premiums will fall 14 to 20 percent. This claim would be difficult to swallow even in the absence of the changes noted above. In addition, we will 1) add millions to the pool of insured persons 2) enact prohibitions against rescissions of coverage (these are almost always rescissions of the opportunity to renew, not the termination of existing coverage. Those terminations, when they occur, are usually triggered by missed or late premiums. We can debate the morality of canceling coverage during the policy period, but both the insurer and the insured have mutually binding contractual obligations) 3) The Medicaid eligibility limits will be raised from 100 to 133 percent of the poverty level with taxpayer subsidies available to families up to 300 percent of the new eligibility threshold.

The speech concluded with assurances that the bill would guarantee the future solvency of Medicare. To suggest that anything, so far proposed, will help secure the solvency of Medicare is disingenuous, if not dishonest.

Studies have consistently revealed that these rapacious insurance companies operate at fairly modest profit margins (2.5 to 6.0 percent), considering the potential downside.

The president focused his outrage on the unfairness of Natoma's outcome. Last year, she paid over $6000 in insurance premiums and $4000 in out-of-pocket expense. The insurer's obligation was limited to $900. Her premium was subsequently raised to over $8000. You get the feeling that the audience felt that if the insurer's outlay had been, say $300,000, it would have been a more equitable outcome.

Consider what actually did happen. Natoma is now in the hospital requiring a month long course of chemotherapy in addition to her inpatient and emergency room care. Her insurance for 2010 would have been a bargain at over $8000 and it is only March. Natoma's problem is more a money problem than a systemic one.

One way to deal with this would be to allow her to deduct all her out-of-pocket medical expenditures directly from her gross income, reducing her tax burden even if she takes the standard deduction. This would return tax dollars to her that could be applied toward the purchase of insurance. If she were in the 25 percent bracket, it would offset her total premium increase. I would also extend the right to deduct medical expenses to include those paid on anyone's behalf, whether or not, the recipient was a dependent. This would encourage private charity and ease the burden on family members who financially assist their loved ones.

This current reform is well-intentioned but poorly conceived. I wouldn't want to take questions either.

Addendum to the last revision of post-summit insurance reform

President Obama's team has a one point lead with time running out. Unfortunately, they committed a foul at the buzzer. The Republicans get to shoot their foul shots on Wednesday. If they miss both free throws, the game is over and the Democrats win. If they make one, the game goes to overtime. If they make two, the Republicans triumph and will, at minimum, have a voice in the next reform effort.

The Republicans will shoot these metaphorical free throws when they respond to President Obama's revised health care initiative. Now, there is nothing scarier than an unscripted Republican in proximity to a microphone (not even Jim Bunning in an elevator or Joe Biden wandering unsupervised among the press).

In the scenario described in the first paragraph, one player totally controls the outcome. Ten players are out on the court, but time has run out and nine players can only watch helplessly while one player determines the outcome. Some time on Wednesday, a Republican spokesperson, most likely Boehner, McConnell or Pence will step to the foul line. It will either be a brick or "nothing but net."

The president will make the case that he has reached out by tacking Republican initiatives on to the current Senate bill. In so doing, he will suggest that he did reach out to the minority and they rejected his overture. Now, he will regrettably be forced to do the people's work via the reconciliation process. It is a good political play in the hands of a star player.

With the game on the line, the Republican statement should read as follows: "We are pleased that President Obama acknowledges some important proposals that need to be considered as we fashion health insurance reform. But the president was listening very selectively. Republicans have consistently and uniformly asserted that the bill before us is a bad bill. It cannot be fixed by adding a little here or subtracting a little there.

No revision or amendment can fix this bill. No Republican promised support for this bill conditioned on the inclusion of any such changes. It is precisely that kind of negotiation that gave us the custom-built fixes that worked their way into the final version of the Senate bill.

Republicans cannot support this bill because it is wildly expansive, financially reckless and constitutionally infirm. It has been our position all along. Further, the voters have called on us, in no uncertain terms , to oppose it.

We will continue to oppose it. It is our responsibility to do so.

Insurance reform is coming. If the effort is to be truly bipartisan, Republicans will have to be invited to the table for more than dessert.

Free speech enthusiasts; Rebels without a cure

The tea party phenomenon has aroused considerable anxiety among the fourth estate. Writers and commentators have weighed in, some questioning the motives of the protestors, some, their intelligence or their sanity and others, their integrity. It seems that free speech has reached the problematic stage.

Dissent is a flame in a society of aggrieved moths. It should come as no surprise, that the aggrieved number among them some with malicious motives, others not so bright and a few who are unprincipled or just obnoxious. That said, how should the disenchanted voice their concern? Should they speak at all? Is it time to contemplate restrictions on free speech?

We somehow survive without any guarantee of free speech rights in the workplace. Our speech is routinely suppressed in private organizations. Only the Congress of the United States is precluded from abridging free speech.

Yes, I find some speech troubling. Scattered tea party participants endorse something bordering on anarchy. Hatemongers, if afforded a forum, will probably use it to promote hate. Politicians abuse the privilege of free speech by lying to us. Bad ideas, poor taste and lies disturb me. But the idea that someone needs to sort through speech and and decide what is permissible truly frightens me.

The fairness doctrine, campaign finance restrictions and hate speech laws all have a common genesis. Some beneficiaries of free speech rights want Congress to limit the exercise of free speech by individuals they perceive as distasteful, uninformed, irritating, influential or wealthy.

There are politicians that believe someone has to play God, to insure that free speech be whittled into fair speech. There are days when I feel particularly well-suited to the task. Despite my unerring moral compass, I do know America is a better and safer place when no one, not even the wise, are allowed to play God. It is not the role of Congress to give weight to anyone's speech. Influence is the province of the consumers of speech, the readers and the listeners.

Appoint me the Secretary of Hate speech supression and I promise that hate speech will be redefined to closely resemble speech that I find offensive. Speech would remain mostly unrestricted except for derogatory remarks directed at the mentally impaired, insults directed at Peggy Noonan and probably the evening programming at MSNBC.

Rush Limbaugh, Alec Baldwin and Rachel Maddow all have a bigger microphone than I have, but we each have but a single vote. I dearly wish that Joy Behar would shut up, but I don't want the law to provide her a megaphone or saddle her with a muzzle.

The founders disdained the idea that wisdom and virtue were concentrated in individuals of a certain station. They dedicated considerable energy to incorporating that belief into the founding documents. The American idea is rooted in "Congress shall make no law." You don't trim a tree at its roots.