Pat Allen: The View from Right Field

President Obama Accommodates Catholics – By Making Big Insurance Companies Pay

Here is the latest on the controversy over the Obama administration’s new regulations that require religious organizations, except actual churches, to provide birth control/contraception coverage under any health insurance programs that they provide to their employees:

“The White House has given reporters the rundown on the ‘accommodations’ that President Obama will announce on the health reform law’s requirements for hospitals run by faith-based groups to cover the costs of employees’ contraceptives. Here’s how it works.

As it stands, church-run hospitals are required to cover contraceptives at no cost to employees. A slew of Catholic groups have opposed that requirement. So on Friday, the White House rolled out a new rule, where insurance companies, rather than faith-based agencies, will offer birth-control coverage directly to these employees and foot the bill.

‘If a charity, hospital or another organization has an objection to the policy going forward, insurance companies will be required to reach out to directly offer contraceptive care free of charge,’ one administration official explained. …

The administration thinks this is a good deal for insurance companies since the economics tend to work in their favor.  Numerous studies have shown that covering contraceptives is revenue-neutral, as such preventive measures can lower the rate of pregnancies down the line. Pregnancy and childbirth coverage is, of course, much more expensive.”

Except that what the Administration is proposing doesn’t work.  Maybe providing contraceptives is no more expensive than covering pregnancy and childbirth, but requiring insurance companies to provide contraceptives for free because they won’t have to pay for the additional pregnancies and births that would supposedly otherwise occur only works if the insurance company has already factored in those additional pregnancies and births in its pricing to begin with, which, of course, it hasn’t.  What the insurance company included in its pricing was contraception.  But religious organizations don’t want to pay for contraception (for legitimate religious reasons), so the amount they pay to the insurance company goes down.  It has to go down, or the religious organizations would be paying the same amount for less coverage, which makes no sense. 

So where does the insurance company get the money to pay for the contraceptives that it now has to provide for free?  It doesn’t get them from additional pregnancies that supposedly don’t happen because it never priced those pregnancies in its coverage in the first place.  It priced in contraceptives, but now it isn’t getting paid for those – even though it still has to provide them.

Let me give an example.  A hospital has 100 employees.  Half of them are women.  On average three of the women would get pregnant in any year and ten of the women would use contraceptives.  The insurance company prices the health plan for the hospital, including both childbirth coverage and contraceptives, based on these averages. 

But this hospital is Catholic and it cannot, in line with its religious beliefs, provide contraceptive coverage to its employees.  So it tells the insurance company it does not want to provide that contraceptive coverage to its employees.  And since it is not providing that coverage, it doesn’t want to pay for it. 

But now, the government comes in and tells the insurance company that it has to provide contraceptives to hospital employees free of charge even though the hospital doesn’t have to pay for them.  The Administration says that this is okay for the insurance company because providing contraception costs less than the childbirths that it would otherwise have to pay for.  Except that the insurance company didn’t price those births into its policy.  What it priced into its policy was contraceptives.  But the hospital didn’t want the contraceptive coverage and wouldn’t pay for it.  And now the insurance company has to provide the contraceptive coverage even though it’s not getting paid for either the contraceptives or the alleged extra births it is supposedly avoiding by giving away free contraceptives.

Actually, under the Obama administration’s theory, the insurance company shouldn’t charge the Catholic hospital less even though the insurance company is not providing contraceptive coverage because, without contraceptive coverage, there would supposedly be more births.

Also, a point I saw here:  Some big private employers “self-insure” the health coverage they provide to their employees (mine does), and they just hire an insurance company to administer the program, i.e., to handle the paperwork.  If a big religious hospital chain self-insures its health coverage, who provides the contraceptives in that case?  The insurance company which was hired to just handle the paperwork?

Actually, if the Obama administration thinks that free contraceptives are a great idea, there is simple solution.  The government should provide them and raise general taxes to pay for the program.  That would be honest and above board.  And religious groups wouldn’t have an objection – or at least the objection they have today.  But the Obama administration doesn’t want to do that way.  They want to hide the cost.  So instead of the government providing it, the Obama administration passes a regulation saying that private employers have to provide the coverage and that when they won’t, the big insurance companies have to provide it – for “free”.

Thank You, Eric Holder

Thank you, Eric Holder.  Thank you for providing us a look into the mindset and thought processes of the top leaders of the Obama administration.

Many of you have read about “Fast and Furious” (the United States Department of Justice program, not the movies).  I am not sure I fully understand the program, but it apparently involved the US government sending more than 650 firearms into the illegal gun trade between criminal gangs, etc., in the United States and Mexico.  The idea was, I guess, to somehow trace these guns and prove something.  I am not exactly sure what.  It was, in any case, the kind of really dumb program that it takes a government to do.  The George W. Bush administration had the FEMA response to Hurricane Katrina.  President Obama has Fast and Furious.

But the stupidity of the program is not what I wanted write about.  I’m not even that interested in the whole question of, to coin a phrase, what Attorney General Holder knew (about the program) and when he knew it.  Instead, what is interesting to me are Attorney General Holder’s comments to the Senate Judiciary Committee about Brian Terry, the Border Patrol Agent who was killed last year with one of the Fast and Furious guns and about his responsibility for the program as head of the Department of Justice.

As background, you have to know that in March of this year, a now-former U.S. Attorney told Agent Terry’s parents that none of the Fast and Furious guns were used to kill Agent Terry.   Except that was not true.  One of the Fast and Furious guns was involved.

And so, Attorney General Holder appeared before the Senate Judiciary committee this past week, and it does not appear he was happy about having to do so.  According to one article, he “chided Congress for ‘gotcha games’ and ‘political finger pointing’”.  (Remember, he was appearing before a Senate committee.  The Democrats control the Senate.)

In any case, the article continues:

“Asked if he wanted to apologize to the family [of Agent Terry], Holder declined, saying only he regretted what happened. …

Sen. John Cornyn R-Texas] … asked if Holder thought it was his responsibility to have known about Fast and Furious.

‘There are 115,000 employees in the Department,’ Holder said.  ‘I cannot be expected to know the details of every operation on a day-to-day basis.’”

Obviously, Attorney General Holder’s refusal to apologize did not last long – at least once it hit the media.  The next day (probably after a little coaching from somebody with a better feel for the public relations impact of his refusal to apologize, which would be just about anybody with half a brain), Attorney General Holder sent Agent Terry’s parents a letter saying he was sorry.

But it is not that Attorney General Holder just barely got it right – finally – that is interesting.  Rather, it is his initial response – because that shows his real mindset.  And his initial response was that he was not apologizing.  He wasn’t even saying he was sorry.

Not only that, but when asked, in effect, whether he had any responsibility for the debacle that was Fast and Furious, he said no.  There are a lot of people in the DOJ, he said.  I can’t be responsible for what they do – just because I’m head of the department.

Wow.  There is an elitism and an arrogance in those statements that is mind-boggling – and a lack of caring about the real people that were involved.  Talk about the 1% and the 99%.  Maybe we need an Occupy DOJ.

Also while President Obama is obviously smart enough to not say things like Attorney General Holder did in public, I wonder whether Attorney General Holder’s response doesn’t reflect, in at least some ways, President Obama’s mindset, too.  It certainly fits with those statements that candidate Obama made to a group of supporters in San Francisco about those Pennsylvanians who cling to their guns and religion. 

Finally, think about this:  Attorney General Holder wouldn’t apologize to the parents of a United States Border Patrol Agent who was killed with a gun that was, effectively, put in the hands of his killers by a stupid government program, but his boss, President Obama, wanted to go to Hiroshima to apologize to the Japanese people for dropping the atomic bombs that ended World War II.

Washington Budgeting: Adventure in Fantasy Land

Here is a story about how they do budget numbers in Washington, D.C.  It’s something to keep in mind when the people there start talking about deficits and savings and all those things.

Politicians in Washington almost always support their positions on budget issues by claiming that their numbers are supported or verified by the Congressional Budget Office.  For example, when Congress passed Obamacare in 2010, its supporters claimed that it would save money, and they claimed that the CBO agreed.  One of the reasons that Obamacare was going to “save” money was a new program called CLASS, which was short for Community Living Assistance Services and Support.  CLASS was a voluntary government insurance program that was supposed to cover home health care services for older or disabled adults.  Of course, the reason that the CBO said CLASS was going to save money was that it was going to start collecting premiums right away, but it wasn’t going to pay benefits for five years. 

The important thing to understand about the Congressional Budget Office is that when the CBO “scores” proposals for budget purposes, they only look at the costs and income for the first ten years.  Those are their rules.  (They may even be the law; I don’t know.)  Since the CLASS program was going to collect premiums for ten years and only pay out benefits for five years, it was going to have more money coming in than it would have going out over the first ten years.  Voilá!  It was going to save money – under the rules that the CBO has to operate under.  The fact that the program would be a budgetary disaster later on was irrelevant to the way that CBO counts things.

In fact, even though the program was a long-term budget-buster, since the CBO only looks at the first ten years, and since that is how things are calculated for Congressional budgeting purposes, when some Republicans were talking about repealing the CLASS program earlier this year (because it is unsustainable on a long-term basis), under CBO rules the Republicans would have had to either raise taxes or cut other spending to balance the loss of budget savings from repealing the program.*  Mind-boggling.

But finally, earlier this month, the Obama administration admitted that they couldn’t come up with a way to make the numbers work for the CLASS program, and they shut it down.  (The Senate had included in the original Obamacare legislation a provision requiring the Department of Health and Human Services to certify that the program had an actuarially-sound premium before they could start it up.  When they couldn’t certify that, the program had to be shelved.)

This is where it gets interesting – and really bizarre.  Once the Obama administration finally admitted what everybody already knew (i.e., that the program didn’t work financially) and said that they were shutting it down, the head of the CBO said this:

“Following longstanding procedures, CBO takes new administrative actions into account when analyzing legislation being considered by the Congress – even if it has not published new baseline projections.  Beginning immediately, therefore, legislation to repeal the CLASS provisions in current law would be estimated as having no budgetary impact.”

In other words, if Congress had passed a bill cancelling the CLASS program before HHS acted, then the cancellation would have counted, for CBO purposes, as an $86 million increase in the 10-year deficit calculation.  But a month later, after the Administration decided to shut the program down, repealing it wouldn’t count toward the 10-year budget projections.

While I am sure that this makes sense in the strange world of federal government budgeting rules, it obviously doesn’t sense to anybody who lives in the real world.  And that is something to remember the next time you hear somebody say that their budget numbers have been confirmed by the Congressional Budget Office.

One final point, not on budgeting but on the Obama administration:  Even though the Administration has admitted that it could not come up with a way to make the CLASS program work financially, President Obama still opposes repealing it.  Why?  According to a White House spokesperson:

“We do not support repeal.  Repealing the CLASS Act isn’t necessary or productive. What we should be doing is working together to address the long-term care challenges we face in this country.”

Which is gobbledygook.  Maybe I am being cynical, but I think the reason that President Obama doesn’t want to repeal the program is because, if the President gets re-elected and doesn’t have a Democratic Congress, he wants the ability to be able to have his new person at HHS look at the CLASS program and come up with a new theory on why it does work and start implementing it – without needing any kind Congressional approval.**

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* “The Definition of Insanity,” The Wall Street Journal, October 4, 2011.

** Some health care “experts” have already criticized the President for shutting the program down, saying that it actually could work (see here).  After the election, there is no reason to believe that the President wouldn’t decide they were right after all and start it up again.

Update (10/23/11 9:25 am):  For a prior comment on the CLASS Act, see here.

Capital “D” Democrats for Less Small “d” Democracy

At least some Democrats (with a capital “D”) seem to be getting frustrated with the democratic (with a small “d”) process.  Democratic Governor Beverly Perdue of North Carolina said this a week ago last Tuesday:

"I think we ought to suspend, perhaps, elections for Congress for two years and just tell them we won't hold it against them, whatever decisions they make, to just let them help this country recover.  I really hope that someone can agree with me on that.  You want people who don't worry about the next election."

And it doesn’t appear she was necessarily joking.

Somewhat similarly, and definitely not a joke, Peter Orzag, President Obama’s former OMB Director, has called for more things to be decided by bureaucrats and appointed commissions:

“To solve the serious problems facing our country, we need to minimize the harm from legislative inertia by relying more on automatic policies and depoliticized commissions for certain policy decisions. In other words, radical as it sounds, we need to counter the gridlock of our political institutions by making them a bit less democratic.”

While Mr. Orzag doesn’t explain why he thinks our political institutions are gridlocked, Governor Perdue talks about people who are too worried about the next election.  Well, if our current politicians are worrying too much about getting re-elected*, instead of what’s right for the country, maybe the problem is some of the people we have elected.

Consider these comments from Representative Paul Ryan (R, WI), chairman of the House Budget Committee, about whether his long-term budget “Road Map” could be a political trap that the Democrats will use against him and other Republicans:

“That’s what everybody says, but I don’t really spend much time thinking about it because I don’t really care. … All the political people tell us this.  Even the Democrats tell us this.  That it’s a trap, it’s rope-a-dope. … It doesn’t matter.

The way I look at things is if you want to be good at this kind of job, you have to be willing to lose it.  Number two, the times require this.  And number three, if you don’t believe in your principles, and applying those principles, then what’s the point?”**

In other words, maybe the problem isn’t all of the politicians in Washington.  Maybe we just don't have enough politicians like Paul Ryan, who are willing to lose their job to do their job.

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* See, for example, this post about President Obama apparently deciding to increase budget cuts from the Defense Department instead of making any cuts in the Department of Veterans Affairs because of the upcoming election.

** Paul A. Gigot, "The Weekend Interview with Paul Ryan: Ryan's Charge Up Entitlement Hill," The Wall Street Journal, February 19, 2011.

Update (10/6/11 11:45 am):  I corrected the state that Paul Ryan is from.  Apologies to Wisconsin.

The Best Path for Same-Sex Marriage

I see that the New York legislature has passed, and Governor Andrew Cuomo has signed, a bill legalizing same-sex marriage.  This follows what the Illinois legislature did earlier this year in approving civil unions.  Which brings me to my point.

It appears that same-sex marriage and civil unions are coming.  Public opinion is shifting.  And it is shifting the most among the young, which means it will continue to shift as time passes.  In light of this, and regardless of how one feels about same-sex marriage and civil unions, we would all be better off if they come from the legislatures, instead of the courts.  Let me explain.

According to the Chicago Tribune, in New York:

“[C]onservative lawmakers fought for changes to enhance protection for faith-based groups opposed to recognizing gay marriages.

Late Friday afternoon, lawmakers agreed on an amendment that the bill's sponsor, Assembly member Daniel O'Donnell, said made ‘clearer than clear’ that religious groups would not be required to perform same-sex marriages.”

This is the kind of fine-tuning and adjusting that legislatures can do and courts cannot.  And these kinds of modifications and compromises can make these kinds of changes more acceptable to the majority of people who are in the middle on issues such as this.

I have often thought that it was a good thing the Equal Rights Amendment did not pass.  The fact it didn’t pass did not stop much of what the proponents wanted (and what the opponents opposed) from happening.  But it happened in bits and pieces, in laws and in people’s attitudes, over time, instead of in courts and lawsuits.  And it has allowed the questions to be decided by those in the middle instead of those on the extreme.

I have similarly thought that one of the tragedies of the abortion debate in the United States is that the Supreme Court tried to answer the question with a blanket rule that applied to everybody, in all situations. The result has been constant litigation and politicization of the courts.  

I have wondered where we would be without Roe v. Wade.  It seems possible that, instead of the debate being controlled by those on the extremes, i.e., by those who favor no abortion in almost any situation and those who would allow partial birth abortion, we would have the people in the middle making the decisions.  Abortion would be legal, but there would be limits.  Abortions at 25½ weeks wouldn’t be allowed, and parents would be involved in the case of minors.  Our legislators would be forced to deal with the issue, instead of posturing, and they would, eventually, come up with rules that most of us could agree to and live with.

I realize that same-sex couples want it all now.  I probably would, too.  But they would be better off, and the rest of us would, too, if they would press for their changes in the legislatures instead of in the courts.

“Reckless Endangerment”

A couple of weeks ago National Public Radio interviewed New York Times business correspondent and columnist Gretchen Morgenson about her recent book, Reckless Endangerment: How Outsized Ambition, Greed and Corruption led to Economic Armageddon, which she co-wrote with Joshua Rosner.

Let me quote two excerpts from the interview.  Here is the first:

“[DAVE] DAVIES: What's fascinating about this story is that you have this entity [i.e., Fannie Mae], which you said became the largest and most powerful financial organization in the world, you had this entity, which has government guarantees and government subsidies, although perhaps indirect, but it engages in major political contributions and lobbying expenses. How big a player were they in terms of contributing to politicians and lobbying?

Ms. MORGENSON: They were very large. The numbers might not seem large in today's terms, but they were extremely shrewd and, you know, took great care, especially of the congressmen that were on the House Financial Services Committee and the senators on the Banking Committee.

They knew that these were very important people to their livelihood and to maintaining the government perquisites as they were.

One of the really big beneficiaries, albeit indirectly, was Congressman Barney Frank of Massachusetts. Back in 1991, when Congress was writing the legislation that would, you know, enhance or improve the oversight of Fannie Mae, or so they thought, Frank actually called up the company and asked them to hire his companion, who had just gotten an MBA from the Amos Tuck School of Business.

Of course the company was happy to provide a job for his companion and rolled out the red carpet in a series of interviews with a variety of executives, and it ultimately did hire the man. And he stayed there for I believe seven years.

So that was an example of the kind of thing that Fannie Mae would do. Now, when I asked Mr. Frank about this, I asked him, did it have any impact on his approach to the company. You know, was it a conflict? Did he feel that it had been a conflicted, put him in a conflicted spot? And he said absolutely not, that he didn't really remember being interested or having much to do with the 1992 legislation.

But the record shows that he was very aggressive and really tough on those who were testifying in Congress about reining in Fannie Mae and Freddie Mac. He was very aggressive to, for instance, the head of the Congressional Budget Office at that time, who was trying to call for increased capital requirements and to call for a focus on safety and soundness at Fannie Mae, that Frank really took him apart in testimony.

DAVIES: Right, and you write there were a number of occasions on which he defended Fannie and their record of promoting home ownership but in the end had a different view of the company, right?

Ms. MORGENSON: Well, after the taxpayers had to take it over, he, you know, came around, finally. But by then it was too late. He said: Well, we should shut them down. But, you know, it really was far too late, and he had been such a vocal supporter for so long that it was sort of an odd turnabout.”

Here is the second:

“DAVIES: This book is replete with examples throughout the '90s and 2000s of voices who saw this coming and alerted regulators - or in some cases, people in the regulatory structure who tried to warn us. And one of them I really found fascinating is this guy Walker Todd, this guy from the Federal Reserve Bank of Cleveland. And this - well, he found an obscure provision in a law that raised a red flag. Tell us that story.

Ms. MORGENSON: It was interesting. It was 1991. So, again, this is after the savings and loan crisis had shaken everyone's, you know, confidence in the financial - our financial system. There was a new law that was being written to beef up the FDIC's ability to take over failing institutions. It was a good law that was really necessary that came out of the S&L crisis, and it gave regulators more power.

So it was an interesting moment in the writing of that law, that there came a sort of an amendment that had been brought to the floor by Chris Dodd which enabled insurance companies, brokerage firms, non-bank financial companies to tap into the Federal Reserve's special powers in time of crisis.

What that means is that these firms that had not been able to gain access to Federal Reserve borrowings in time of crisis - insurance companies did not have access. Brokerage firms had not had access. It was really only banks that were able to call on the Fed in times of trouble. This small, unnoticed part of the bill that was carried by Dodd expanded the federal safety net to include these companies.

It was a moment nobody noticed, except for Walker Todd, who was a research fellow at the Federal Reserve Bank of Cleveland. He thought this was fascinating, because the law that this was buried in was supposed to, you know, restrain the ability of financial companies to harm the taxpayer and to create losses that would be funded by the taxpayer. So it was counterintuitive. It was a paradox to Walker Todd that this small thing was inserted into the bill.

He tried to write about it. He, in fact, did write about it. He discovered that it had been inserted by the financial services companies at their request, and he tried to publish a paper talking about this expansion of the federal safety net. He came up against a buzz saw of criticism from the Federal Reserve Board in Washington. They tried valiantly to prevent the Federal Reserve Bank of Cleveland from publishing Walker Todd's report.

They failed, happily, and the report was published. But it was very, very interesting the degree to which the Federal Reserve Board seemed to want to keep that little amendment under wraps and to keep it from having the sunlight shone on it by this report that Walker Todd had produced.”

Now, consider that the financial reform bill passed last year was called the Dodd-Frank bill.  How does that make you feel?

A New Governor Discovers How His/Her State’s Budget Really Works

What follows is an op-ed column by a new governor on the out-of-control spending process in his or her state.  Read the article.  Try to figure out who the governor is.  Is it something Mitch Daniels wrote when he took over in Indiana six years ago?  Or maybe Chris Christie last year in New Jersey?  Or one of the many new governors elected last November?

Try to guess.  I have deleted the name of the state and the state capital, as well as a couple of comments that may have given away who it is:

“In the past 30 days, as I have prepared the state's budget, I was shocked to learn that the state's budget process is a sham ….

The budget process is a metaphor of [state capital] dysfunction: special interests dominate the process with little transparency; programs continue with no accountability and the taxpayers get the exorbitant bills. The greatest challenge -- and opportunity -- in this year's difficult budget is to expose this chronic problem and reform it once and for all.

Here's how it works. This year it is widely accepted and often reported that the state has a $10 billion ‘deficit’ (I myself have often repeated this number). What does that mean? It is the difference between state revenues and the state's growth in spending in next year's budget.

The next question is: who is responsible for setting the growth in the state's budget? The answer is shockingly, no one. It is dictated by hundreds of rates and formulas that are marbleized throughout {state] laws that govern different programs -- formulas that have been built into the law over decades, without regard to fiscal realities, performance or accountability.

The formulas operate year after year, generating liabilities that when totaled define the state's budget growth. The one thing the rates do well is increase year after year. These formulas (predominantly in education and Medicaid funding) are often inserted into the law by pressure from well-connected special interests and lobbyists.

When a governor takes office, in many ways the die has already been cast. Unbelievably, this year these rates and formulas in total call for a 13 percent increase in Medicaid and a 13 percent increase in education funding next year.

A 13 percent increase, in this economic climate, is wholly unrealistic.

Wouldn't you like your salary or savings account to be based on a formula that gave you a 13 percent increase even though inflation was under 2 percent? The world doesn't work that way -- except in [state capital].

Besides dictating numbers, this process frames the dialogue around the budget and biases the political discourse.

First, the rate of increase is rarely discussed. The 13 percent increase this year is close to a state secret. I spoke with numerous experienced [state capital] hands who had no idea the programs increased 13 percent.

In [state capital] speak, ‘deficit’ means the amount needed to fund the 13 percent increase (as opposed to a normal rate of increase). For example, if one assumed these programs would increase at the rate of inflation (instead of 13 percent) the $10 billion deficit is really a $1 billion deficit.

A ‘cut’ is then defined as anything less than a 13 percent increase. By forcing the debate to start with such a large hike, the final budget ends up spending much more than the year before -- even after the Governor attempts ‘cuts.’

For example, what is called a 7 percent cut in spending is actually a 6 percent increase over the prior year. The expression used to explain this budget process is that the rates are in ‘permanent law,’ and thus, cannot be changed.

‘Permanent law’ is a term to suggest differentiation from the state's annual budget bills which are ‘temporary’ as they only exist for one year.

This ‘permanent law’ is really the way the ‘permanent government’ of lobbyists, special interests and political friends manipulates the entire system and misleads the public in the process.

This is the system that has brought [the state] to the brink … with programs that fail to perform for the people.

This all must end.

We need fundamental reform in the budget system that allows us to recalibrate spending this year to a sustainable level and replace ‘the special interest protection program’ of automatic, unrealistic increases.

There is no such thing as ‘permanent’ laws and they must all be reviewed and replaced or modified when necessary.

The state budget should increase based on objective, fair criteria such as the rate of inflation, enrollment, the Consumer Price Index (CPI) or personal income growth. Programs should be reviewed for effectiveness and terminated if they are not working well.

Reimbursement rates should be negotiated to get the best bargain. Performance should be measured. [State capital] must give up its insistence on pleasing the special interests rather than serving the people.

This is the real budget battle that I will wage this year. We must balance this year's budget but we must also reform the process so that the cycle finally stops.

This year's budget is not merely about the numbers. It's about our values and our future.”

Who is the governor who wrote this?  Governor Andrew Coumo, Democrat of New York.  Here is the article. 

It would appear that governors all over the country, both Democrats and Republicans, are figuring out the cause of their states fiscal problems and are determined to do something about them.  All over the country, that is, except Illinois, where the preferred solution to the state’s fiscal crisis is a huge income tax increase and promises of spending cuts “next year,” which as Cubs fans know, never seems to quite get here.

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Update (2/3/11 12:37 pm):  Fixed typos in the first and last paragraphs.  Inserted "ago" at the end of the fourth sentence in the first paragraph.  Added "out" in the first sentence of the last paragraph and added "fans" in the last sentence of the last paragraph.

A Few Comments on President Obama’s State of the Union Address

As I mentioned on Friday, I got waylaid on my way to commenting on President Obama’s State of the Union address by the projected deficit for 2011.  Now that I commented on the deficit, let me go back to the State of the Union address.  I realize you have already heard the speech or read about it and have heard comment upon comment from professional journalists and other experts.  I am neither a journalist, a professional, nor an expert, so let me at least be brief.

The speech had many parts that talked about bipartisanship and working together and cooperation.  But when President Obama talked of those things, it was usually in generalities.  When he mentioned specific programs or specific ideas, the things he talked about were almost always more spending, more government.

For example, he talked a lot about “investment” – investment by the government.  He wants to “invest” in clean energy, high-speed rail, roads and bridges, etc.  In fact, even when he talked about our free enterprise system, about how “[o]ur free enterprise system is what drives innovation,” he couldn’t help but push for more government spending:

“But because it’s not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support that they need.” 

Sometimes government investments do work.  Not all of them are failures.  One of the problems with government investment, however, is the old saying that people are never as careful with somebody else’s money as they are with their own. 

Also, whether these “investments” work or not, where is the President going to get of the money to pay for them, as well as reducing a deficit that will be $1.5 trillion deficit in 2011?  Freezing 12% of the federal budget for the five years, as he proposed, will save $400 billion over the next decade, which is $40 billion a year or about 1/37th of the 2011 deficit.  I am not saying we shouldn’t do it.  $40 billion a year is a start.  It’s just that we are going to need a lot more $40 billion reductions to get the job done, and the President isn’t suggesting them.

For example, here is what he said about Social Security:

“[W]e should also find a bipartisan solution to strengthen Social Security for future generations.  And we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities, without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.”

Not what you would call a “Profile in Courage” moment there.

On tax reform, the President said this:

“[T]he best thing we could do on taxes for all Americans is to simplify the individual tax code.  This will be a tough job, but members of both parties have expressed interest in doing this, and I am prepared to join them.”

In other words, we’re not going to see Barack Obama leading on that issue.

And no matter how bipartisan he is trying to sound, you can count on President Obama to bring in a little class warfare/envy in almost every speech:  He wants to “eliminate the billions in taxpayer dollars we currently give to oil companies” (which is a good idea; we should get rid of government subsidies to oil and gas companies), but he has to throw this in, too:  “I don’t know if you’ve noticed, but they’re doing just fine on their own.”  And he wants to use the money to “invest” in “clean energy” (which is a bad idea; we ought to use it to reduce the deficit).

Also, he brought up his favorite policy, increasing taxes on those people who he thinks have enough money; i.e., those making over $250,000 a year:

“And if we truly care about our deficit, we simply cannot afford a permanent extension of the tax cuts for the wealthiest 2% of Americans.”

Of course, what he didn’t say was how we can afford a permanent extension of the tax cuts for the rest of the people, too, especially since their tax cuts are going to cost four or five times more money than the cuts for those making over $250,000 (for a family) or $200,000 (for singles).

What the State of the Union address mostly showed was a feint to the center for the next two years. Then, once he is re-elected, based on those reasonable sounding, work-together, bipartisan type of statements, President Obama will move to the left and govern there for as long as he can – because that is what he really believes in.

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Note:  The quotes from the President’s State of the Union address are from here.

Lame Ducks – Illinois Style

I have commented previously on the lame duck session of Congress.  (And here, too.)  Well, the Illinois version of lame duckery is going on right now in Springfield. 

As I have mentioned before, Illinois is in a terrible mess, mainly because we spend way more than we collect in taxes. Clearly, something has to be done.  (Actually, something doesn’t have to be done.  The sun will come up tomorrow regardless of whether Illinois deals with its budget crisis, which is good news for the world given the quality of the people we have in Springfield.)

In any case, it looks like the Democratic “leadership” in Springfield (I put “leadership” in quotes because if they were all that much of leaders, we wouldn’t in the mess we are in) may have figured what to do:  It looks like they may be planning on having the lame duck session of the legislature that was elected in November of 2008 pass a bunch of new borrowing and gambling and tax laws before the people we elected in November of 2010 get to take office.  Which is, of course, ridiculous.

There is absolutely no reason why people elected on November 2 can’t take office on December 2 – or even earlier.*  The idea of legislators who have retired – or have been retired by the voters – making decisions on these kinds of issues more than two months after their successors were elected is a disgrace.  And it is unacceptable in any kind of proper democracy.

One final point:  Some people will claim that the only way we can solve this problem is with the votes of people who no longer have to face the voters (because they have retired or lost).  They say that people who want to get re-elected won’t make the hard decisions necessary to solve Illinois’ financial problems.  I don’t know if that is true, but even if it is, it is not an acceptable reason for lame duck legislators to be deciding these issues.

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* Some people will protest that, under Illinois law, the election results may not have been officially certified by December 2.  Well, change the law.  Certify the results earlier.  We can use things like the Internet – or fax machines – or FedEx, if necessary, to get things done quickly.  If Warren Buffet can decide to buy companies in two weeks, Illinois can get its elections certified and its new legislators sworn in in a month.

Following Democratic (Small “D”) Norms – The Experience of the Obama Administration

The Obama administration seems to be having trouble with the concept of the people’s elected representatives in Congress actually getting to decide things.  Consider these recent examples:

The version of Obamacare that passed the House in November of 2009 contained a section providing for Medicare to pay for consultations for “advance care” planning once every five years.  When Sarah Palin and others called these “death panels,” the provision was deleted from the bill and was not in the law that finally passed.*  The Obama administration, however, has now used another section of the law, which provides for Medicare to pay for annual wellness visits, to adopt a regulation authorizing payments to doctors for the very same kind of consultation – and to do it annually.  The administration and their supporters realized that this new regulation was contrary to the spirit of what passed Congress, so they have kept it all very quiet.  (No openness and transparency on this one.)

The “net neutrality” regulations that the Federal Communications Commission adopted just before Christmas could have never passed Congress.  Congress held hearings on the issue and wound up doing nothing.  Over 300 members House and Senate (that’s a majority) signed a letter to the FCC opposing FCC regulation of the Internet.**  But FCC Chairman Julius Genachowski, a law school classmate of President Obama, and the other two Democrats on the commission didn’t care.  They adopted the regulations anyway.

In 2009 the House of Representatives passed a cap-and-trade bill that would have regulated carbon dioxide emissions, but the Senate didn’t consider the bill, and no law was ever passed.  That didn’t matter to the Obama administration, however.  They decided to have the Environmental Protection Agency do what Congress decided not to do.***  In logic akin to that of many liberals (n/k/a “progressives”), the Miami Herald justified this as follows:

“Last week [the EPA] released a timetable for issuing rules for emissions from new or refurbished power plants and new oil refineries, the nation's top emitters of carbon dioxide. …

[T]he announcement angered House Republicans, who will be in control next year. Some GOP lawmakers have vowed to cut the EPA's funding as a way to scale back its regulatory powers. But someone in Washington has to tackle global-warming threats head-on, and the U.S. Supreme Court, hardly a liberal bastion, has decided that it should be the EPA.” [Emphasis in original]

Contrary to what the Miami Herald said, however, “someone” did not have to do something.  In fact, not doing something is a decision.  It is a decision to not do something.  That was the decision Congress made.  But because the Obama administration did not like that decision, they had the bureaucracy do what Congress wouldn’t do.

Speaking of Congress, the Obama administration wasn’t happy with some of the new people that the voters elected to Congress on election day, so the Administration decided to deal with the Congress that had been elected over two years ago and which had been repudiated by the voters on November 2.  Repeal of “don’t ask, don’t tell”.  Approval of the New Start treaty.  In both cases the Administration was apparently afraid that the representatives the voters had just elected might not vote the way the Administration wanted.  So the Administration got retiring and defeated legislators to help pass things that might not have been approved by the people who won the election.

Some people commented that these decisions of the lame-duck Congress were okay because they were bipartisan.  Republicans voted for them, too.  But that’s not the point.  The point is we had an election, and elections are supposed to have consequences.  After an election, decisions are supposed to be made by the people we elected, not the ones who lost or who are retiring but are still in office for a few more weeks.

Beyond this, why did the Democrats in charge of Congress only call these bills for a vote after the election?  They probably did it because they were afraid that, if they voted for them before the election, the voters would not like it.  But the voters defeated them anyway, even without those votes.  Still, the Democrats came back to pass them in spite of the election and in spite of the fact they did not have the political courage to vote for them before the election.

Democrats will claim that I am just being a sore loser (or sore winner, given the results of the November election).  They will say that if the situation was reversed and the Republicans were doing the same thing, I would not object.  Obviously, there would be Republicans who would not object (see here), but I hope I would not be among them.  For conservatives (or at least some conservatives), the protection of our liberty lies in process.  Following proper process is more important, in the long run, than passing proper policies.  Policies can be changed, but the safeguards of process, once violated, can be hard to reestablish.  The means is more important than the ends.  The end does not justify the means.

What the Obama administration did, and what Congress did, was legal.****  Whether it was proper is another question.

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* I do not think the references to this advance planning as “death panels” are accurate.  This is not to say that the concept of “death panels” is not implicit in the healthcare legislation.  It is, of course, but it is not in the advance planning provisions.  The death panels come elsewhere, particularly where the legislation provides for federal government bureaucrats to decide whether certain treatments should be reimbursed or not by the federal government.  If you need a treatment that federal bureaucrats decide is too expensive for the benefit it provides, then that decision is going to feel like a death panel to you.  Obviously, these decisions are already made being, by governments and insurance companies, but as the federal government’s power in the area grows, the ability to get around an adverse decision is going to become more difficult.

** John Fund, "The Net Neutrality Coup," The Wall Street Journal, December 21, 2010.

*** I should note it was the U.S. Supreme Court that told the EPA to decide whether carbon dioxide and other greenhouse gases were a danger to human health and safety under the Clean Air Act.  However, the Supreme Court did not tell the EPA that they were a danger.  That was up to the EPA to decide that question.  It seems to me that it would have been legitimate for the EPA, in the circumstances, to decide that Congress’s decision to not act was a basis for the EPA to decide not to act either; i.e., to decide that these gases were not, at this point, a danger to human health and safety such that they needed to be regulated under the Clean Air Act.  (For a contrary view, see here.)

**** One caveat to this statement:  It is not at all clear whether the FCC has the authority to regulate the Internet as it is trying to do.  (Amy Schatz, "'Net Neurality' Rules Set to Pass," The Wall Street Journal, December 21, 2010.) 

Note: For some general historical background on lame-duck sessions, see “Lame-duck sessions supposed to be a thing of the past, historians say”.