Healthcare Reform IS The Economic Stimulus We Need

let's hope the ambulance is coming because there is no time to waste

In today’s NYT, Paul Krugman wonders why we haven’t heard more about major healthcare reform in the first few days of the new administration. His concern is that the economic crisis will only make the oncoming healthcare catastrophe that much more severe. It’s a very good point. Krugman surmises that perhaps solving the economic meltdown is dominating the agenda to the exclusion of almost everything else.

But Krugman doesn’t go far enough. What he fails to mention is that solving the healthcare crisis will, over the medium term, will dramatically help overcome America’s deep economic weaknesses.

It goes like this. Regardless of the plan adopted, and it’s most likely to be a build on Obama’s idea of offering a competitive government plan that will release the grip on our healthcare held by profiteering private insurance companies, the new system will have a very significant downward pressure on healthcare costs.

Healthcare Reform IS The Economic Stimulus We Need

In today’s NYT, Paul Krugman wonders why we haven’t heard more about major healthcare reform in the first few days of the new administration. His concern is that the economic crisis will only make the oncoming healthcare catastrophe that much more severe. It’s a very good point. Krugman surmises that perhaps solving the economic meltdown is dominating the agenda to the exclusion of almost everything else.

But Krugman doesn’t go far enough. What he fails to mention is that solving the healthcare crisis will, over the medium term, will dramatically help overcome America’s deep economic weaknesses.

It goes like this. Regardless of the plan adopted, and it’s most likely to be a build on Obama’s idea of offering a competitive government plan that will release the grip on our healthcare held by profiteering private insurance companies, the new system will have a very significant downward pressure on healthcare costs.

Right now the US spends around 15% of total GDP on healthcare, and have around 50 million uninsured. In the UK, with its single-payer system that figure is around 8%. Nobody is uninsured. It’s a cheaper, more efficient system.

The difference between the US and UK GDP spend is around 7% of GDP. America’s GDP last year was around $13 trilliion. 7% o that is $910 billion. That’s money released back into the economy – to be spent somewhere else.

So now let’s get conservative. Let’s say that over time we’re only able to reduce US healthcare costs to around 11% of GDP. That would still put around $450 billion a year and maybe more back into the economy.

Everyone would have more money in their pockets which would enable them to pay off debts, restoring confidence in lending, and freeing them to spend which would restore economic growth. There are multiplier effects too. US businesses, freed from their legacy costs will be far more competitive in the global marketplace. Oh, and the ranks of the uninsured would be reduced to zero.

It will take a few years to reach this happy place, but for an investment of say $100 billion a year to build this new system for five years (didn’t we just opt for $300 billion in useless short term tax cuts as part of the absurd stimulus package), we’ll break even in a few years. After that we’ll see a major economic boost far into the future, helping to shore up the US economy well into this century.

One more thing. That $450 billion a year freed up by healthcare reform is not borrowed, or printed, it’s not inflationary at all, and it’s not raised from the Bank of China, or some oil-soaked sovereign wealth fund. Instead it’s earned through efficiencies forged right her in America.

Major healthcare reform is an investment in our people, and our economy. It won’t be easy, but the President must not waver, and must not succumb to the myth of bipartisanship that would water down the legislation and dramatically lessen its impact.

Obama needs to act decisively. Our children and grandchildren demand it.

Green Doesn’t Stop in a Recession

own a prius? cough it up, chump.

In the midst of US preparation for the upcoming Copenhagen Treaty on climate change you’d think that we were all laser-focused on trying to combat global warming for once and for all. Uhh, no.

Despite the fact that the lower fossil fuel demand is a boon for reducing emissions it seems that at lower levels of government, reducing our carbon footprint is thrown out with the bathwater when it comes to paying our lowly state and city bills.

I live in Los Angeles. As I drove to drop off my son at school, I heard two news stories. First, the national story – a stirring presentation at the Senate by Al Gore urging Senate support for the Copenhagen treaty. The second was a local story about how money was so tight that the City of LA would no longer offer free meter parking downtown for Hybrids. The amount of money they’ll save will be negligible, but the message is clear. The City of LA doesn’t care if you buy hybrids anymore.

Green Doesn’t Stop in a Recession

In the midst of US preparation for the upcoming Copenhagen Treaty on climate change you’d think that we were all laser-focused on trying to combat global warming for once and for all. Uhh, no.

Despite the fact that the lower fossil fuel demand is a boon for reducing emissions it seems that at lower levels of government, reducing our carbon footprint is thrown out with the bathwater when it comes to paying our lowly state and city bills.

I live in Los Angeles. As I drove to drop off my son at school, I heard two news stories. First, the national story – a stirring presentation at the Senate by Al Gore urging Senate support for the Copenhagen treaty. The second was a local story about how money was so tight that the City of LA would no longer offer free meter parking downtown for Hybrids. The amount of money they’ll save will be negligible, but the message is clear. The City of LA doesn’t care if you buy hybrids anymore.

Now, I’m not a big fan of Hybrids for various reasons which I won’t bore you with here, but in a small way they are still at least a symbolic net benefit to the environment – a statement that industry and citizens are at least trying to do “something”. LA’s decision, for so little gain, says essentially that short-term gain trumps long term environmental concerns.

It won’t be the first time in American history that utterly myopic short-termism has dictated policymaking and sadly it won’t be the last, but there’s one thing governments at every level know; global warming doesn’t stop just because the economy does.

Obama – The Time to be Unpopular is Now

Obama is all about popularity. But he forgets that popularity is least important after you’ve just won an election. He went out of his way to court the GOP on his stimulus bill, and despite an awful lot of bipartisan BS, not one voted knuckle-dragger for it.

For a President apparently more politically savvy than most on arrival in the White House, he let himself down badly. He forgot that Bipartisanship BS is only meant to be trotted out for winning elections. After they’re over, you kick the losers when they’re down. But Obama’s flaw is that he hates the idea of being hated. So instead, the President got an earful of whining from the GOP who had ample opportunity to diss the plan, and Obama ends up looking like an unconvincin blowhard, after only a week on the job.

The lesson of the day is pretty simple. The GOP is more right-wing, doctrinaire and disagreeable than ever. They’re MO is very simple. If the President had ignored them they would have bleated on that nobody listens. If the President gives them the time of day, they give him the finger. Neither apporach is without costs, but the former is a far better alternative, considering that right now Republicans are more discredited than at virtually any time since Roosevelt.

Politics is not a pretty business. It never was and it never will be. The sooner Obama realizes that the better, because right now he’s at risk of becoming a victim of his own magnanimity. Most kids learn it in the school yard. There are certain people that are just dangerous to be friends with. Obama apparently missed that memo.

Obama – The Time to be Unpopular is Now

Obama is all about popularity. But he forgets that popularity is least important after you’ve just won an election. He went out of his way to court the GOP on his stimulus bill, and despite an awful lot of bipartisan BS, not one voted knuckle-dragger for it.

For a President apparently more politically savvy than most on arrival in the White House, he let himself down badly. He forgot that Bipartisanship BS is only meant to be trotted out for winning elections. After they’re over, you kick the losers when they’re down. But Obama’s flaw is that he hates the idea of being hated. So instead, the President got an earful of whining from the GOP who had ample opportunity to diss the plan, and Obama ends up looking like an unconvincin blowhard, after only a week on the job.

The lesson of the day is pretty simple. The GOP is more right-wing, doctrinaire and disagreeable than ever. They’re MO is very simple. If the President had ignored them they would have bleated on that nobody listens. If the President gives them the time of day, they give him the finger. Neither apporach is without costs, but the former is a far better alternative, considering that right now Republicans are more discredited than at virtually any time since Roosevelt.

Politics is not a pretty business. It never was and it never will be. The sooner Obama realizes that the better, because right now he’s at risk of becoming a victim of his own magnanimity. Most kids learn it in the school yard. There are certain people that are just dangerous to be friends with. Obama apparently missed that memo.

Nobody Fights in Afghanistan and Wins.

do we look like we're joking?

From a superficial perspective, the idea of diverting US forces to Afghanistan as we draw down troops in Iraq seems like a good idea. But Afghanistan is a deeply inhospitable, corrupt, backward, and highly unstable failed state with an almost feudal social structure. It’s been resisting modernity and foreign control for millenia.

Before we do anything we need to make a strategic decision about our goals. It’s clear that the Taliban must go, but forget democracy, stability is just fine. It’s equally clear that increasing US ground forces by a few combat brigades will not do the job. The war would slog on for many years at great cost in lives and treasure. The Kush would be a graveyard for our grunts. There has to be another way. And there is.

There are two connected ways to beat the Taliban. We need both to win.

Nobody Fights in Afghanistan and Wins.

From a superficial perspective, the idea of diverting US forces to Afghanistan as we draw down troops in Iraq seems like a good idea. But Afghanistan is a deeply inhospitable, corrupt, backward, and highly unstable failed state with an almost feudal social structure. It’s been resisting modernity and foreign control for millenia.

Before we do anything we need to make a strategic decision about our goals. It’s clear that the Taliban must go, but forget democracy, stability is just fine. It’s equally clear that increasing US ground forces by a few combat brigades will not do the job. The war would slog on for many years at great cost in lives and treasure. The Kush would be a graveyard for our grunts. There has to be another way. And there is.

There are two connected ways to beat the Taliban. We need both to win.

The first lies in economics of the Taliban.

The Taliban are really drug traffickers with a mission from God. They rely on weapons and recruits paid for by opium money. No opium. No money. No money. No recruits. No recruits. No power. All we have to do is to bribe the opium farmers not to plant the poppies. Over time we have to make the farmers very, very rich (in Afghan terms).  Of course we’d need to make sure we weren’t being played, but if there’s enough cash in it for the farmers, and we’re able to keep them honest, they’ll become a force we can rely on – just like the Sunni Awakening in Iraq. Afghans are fierce fighters and when there’s money at stake – watch out. Supporting this with a US or WFP strategy to improve agriculture will be very useful. We’ll need Special Forces teams on the ground doling out the money, and ground troops to verify, patrol and protect the farms, but the total investment will be a fraction of the costs planned.

The second part of the solution lies in cutting the Taliban off from their outside suppliers.

These are primarily Iran, Pakistan’s ISI, and other sources of Finance from the underbelly of the Saudi establishment for example. In the case of Iran, weakening their ties to the Taliban will be a part of a US diplomatic offensive to build a new rapprochement with Iran. We won’t have to ask them to choke off Taliban support. If Iran and the US get along (which they should) it will happen automatically. As for Pakistan, we have to help the Civilian government get out from under the heel of the Pakistani Army and ISI. The best way is to support the army not castigate it. After all it’s the first line of defense in Pakistan. There’s nothing a third world army likes more than US training and support. It will buy their loyalty and give the civilian government the breathing rooom it needs to make inroads against the Pakistani Taliban. Finally, Saudi we should put pressure on our Saudi “friends” to stop exporting Wahabbiism. And now we’re planning to go it alone on energy, we have some leverage to get them to do our bidding.

The end result could be that Afghanistant goes back to being a distant and dusty backwater with no strategic role to play. The world would be an awful lot safer.