More Healthcare Myths

November 14th, 2013

We already have a pretty good case for healthcare reform. Under our old employer-based insurance system, the cost to provide healthcare to those who need it was growing at two to three times the rate of GDP.

That’s clearly unsustainable.

So we are faced with a couple of choices.

Before we discuss those choices, let’s first look at what other countries around the world have chosen to do.

The vast majority provide some form of universal healthcare to whomever needs it whether they are citizens, immigrants, or tourists.

That clearly isn’t the only choice, but it is a choice that most of our global competitors have chosen and almost all of them have demonstrated that their versions of universal healthcare deliver better outcomes at lower costs than we do.

We are #1 in costs and % of GDP, but we are 35th or so in outcomes.

That’s because in part we have a lot of people who depend on care through the emergency room rather than primary or preventative care. Some have suggested that we just turn away those who can’t afford to pay for their own care. That opinion has deep ethical issues for a country so steeped in Christian values, but it isn’t a good economic or political solution either.

It’s not a good economic model because our growth depends on how effective we are at leveraging our basic assets which are capital, infrastructure, and people. If we commit to a path where only rich people are healthy, then we will have an economy where a significant portion of our consumers can only buy the bare necessities of life because they are too ill to either improve their skills or work at better paying jobs. We will, in effect, be trying to compete with other countries with one hand tied behind our back. That’s because their health systems allows a higher percentage of their population to be economically productive than we do.

It’s not a good model politically either. Building a permanent underclass that has a significantly compromised quality of life both in terms of income and health is going to have serious political repercussions in a country that calls itself a democracy. The ultimate political outcome of this model has been the grist for science fiction writers for decades.

Some have also suggested that our cost differential is because of an aging population, but that turns out not to be the case. The population across the world is aging, but our costs are growing much faster than any of our competitors. According to a recently released study most of the money in this country is being spent on people UNDER 65 with chronic conditions like diabetes and heart disease.

“In 2011, chronic illnesses account for 84 percent of costs overall among the entire population, not only of the elderly. Chronic illness among individuals younger than 65 years accounts for 67 percent of spending,” they found.

“Price of professional services, drugs and devices, and administrative costs, not demand for services or aging of the population, produced 91 percent of cost increases since 2000.”

When you dig into the numbers of what is really driving cost in the healthcare system today, another dramatic reality emerges.

The reason healthcare is so expensive in this country is because we are one of the few industrialized countries that treat it as a business rather than a service. The result is that our prices for comparable services are the highest here because there is no effective economic counter to the basic capitalistic drive to maximize profit.

“Other countries negotiate very aggressively with the providers and set rates that are much lower than we do,” Anderson says. They do this in one of two ways. In countries such as Canada and Britain, prices are set by the government. In others, such as Germany and Japan, they’re set by providers and insurers sitting in a room and coming to an agreement, with the government stepping in to set prices if they fail.

In America, Medicare and Medicaid negotiate prices on behalf of their tens of millions of members and, not coincidentally, purchase care at a substantial markdown from the commercial average. But outside that, it’s a free-for-all. Providers largely charge what they can get away with, often offering different prices to different insurers, and an even higher price to the uninsured.

and

Moses points to a very big culprit – the standard fee-for-service system that encourages doctors and other caregivers to give lots of tests, individual treatments and to prescribe drugs, instead of keeping patients well. It’s not a new idea, but Moses says his team’s study shows it very clearly.

“This is a very myopic country,” he said. “There are lessons to be learned from other countries. Chronic illness is where the misery is, it is where the money is and it is where the greatest opportunity lies.”

Some have suggested that we are the innovation engine for the rest of the world and if our business model changes, that innovation will cease. Well that’s not exactly true either. Most of that money is just pure profit.

Many researchers are skeptical that this is an effective way to fund medical innovation. “We pay twice as much for brand-name drugs as most other industrialized countries,” Anderson says. “But the drug companies spend only 12 percent of their revenues on innovation. So yes, some of that money goes to innovation, but only 12 percent of it.”

What’s the solution?

Universal healthcare so that everyone has access to preventative care which can prevent the onset of the chronic conditions which drive most of the cost in this country.

A change in the business model where physicians are compensated for outcomes rather than transactions. That will provide significant financial incentives for both patients and physicians to make the sort of lifestyle changes required to prevent the onset of diabetes and heart disease.

Greater awareness of the real costs of care by those who are paying for them. It is possible that consumerism might help drive costs down, but it is likely going to be greater government involvement that will ultimately be required to bring our costs for comparable services in line with the rest of the world. That’s because the medical industry represents a huge lobby and they are not going to willingly live with lower profits. You don’t have to look any further than the Medicare Prescription Drug program where Congress expressly prohibited Medicare from negotiating lower prices.

As just one example, the health insurance lobby secretly funneled over $100M to the Chamber of Commerce to oppose the Affordable Care Act while they simultaneously were trying to cut the best deal they could with the White House on how the marketplace would be structured.

The consequences of inaction are not just felt by those who are sick. It affects everyone.

“There are opportunity costs,” says Reinhardt, an economist at Princeton. “The money we spend on health care is money we don’t spend educating our children, or investing in infrastructure, scientific research and defense spending. So if what this means is we ultimately have overmedicalized, poorly educated Americans competing with China, that’s not a very good investment.”

When Russia beat us to space with Sputnik, it was a wake-up call for the country. We invested in education, funding research, and promoting technology. The result was ultimately the growth of a whole new industry that revolutionized the world. We are facing a similar crisis today. The only difference is that we are talking about human capital rather than technology. Unfortunately we don’t appear to have to the same political will that we did 60 years ago to confront that issue and agree on a path forward. There is at least one reason that might not be obvious. I’ll cover that in a future post.

Obamacare Facts

November 5th, 2013

We need healthcare reform. Our employer-based system failed to manage costs or improve health. Cuba gets better results and spends far less than us.

Republicans proposed a healthcare marketplace in 1989. Romney successfully implemented it in 2006. Now 95% have coverage in Massachusetts.

Obamacare will REDUCE the deficit by $109B over the next decade. The best Republican alternative cost $36B more and covered 17M fewer people.

Most of us (149M) get employer-based health insurance. Because of Obmacare, your paperwork is simpler. Your policy now includes pre-existing conditions, kids up to age 26, free preventative care, smoking and alcohol cessation, birth control, and maternity care. There’s even an appeal process for denied claims.

70% of all health issues are preventable. More preventative services = better health

Employee payroll deductions are projected to go up 9.5% this year because of an improving economy – not Obamacare. As incomes improve, those who put off going to the doctor last year, ARE going this year. That drives up cost. The same dynamic that resulted in a 5% increase last year, is what is driving higher employee costs this year. Those costs will likely return to the 8% average next year. Any double-digit increases that individuals see are from employers shifting more cost to employees. As Obamacare cost containment and reductions in emergency room visits take hold, we should finally start to see the growth rate in healthcare costs come down. That should translate into slower growth in the rate of employee cost increases.

Seniors covered by Medicare will see no change. The 28% who purchase Medicare Advantage plans may see some changes as federal subsidies come in line with standard Medicare cost increases.

12M people buy their own insurance. These plans also must meet minimum coverage standards designed to reduce emergency room visits. Compliant plans may cost more, but subsidies will provide most people with better coverage at a lower cost.

The 20M uninsured will get subsidies to cover their costs. Access to primary preventative care will reduce the burdens on our hospitals and businesses and improve overall health.

96% of small businesses are exempt. 90% of all other businesses already provide insurance. The 3% who choose not to provide insurance will pay a penalty in 2015.

While healthcare.gov had rollout problems, it’s now fast and easy to browse prices. Try it yourself. Buying should be just as easy by December.

The CBO predicts 7M will sign up by the March deadline. Consumer subsidies, a reinsurance pool, and risk corridors built into the plan will prevent the death spiral Republicans hope for.

The first leg of the argument that Republicans are now making for a collapse of the healthcare exchanges is around rates. The claim is that insufficient participation of healthy people will drive the rates for everyone else up. That will drive more people out of the exchanges and ultimately they will collapse when no one can afford insurance. Consumer subsidies are going to protect those who buy through the exchanges from rate swings even if participation doesn’t follow the current predicted model. Those subsidies bring down the cost to purchase insurance to a particular percentage of income regardless of the actual costs for the insurance. While this could become a burden for tax payers, the government has built a structure to protect consumers from rate swings that would damage the marketplace.

The second part of the argument is that insurance companies will be saddled with a bunch of expensive customers that they otherwise wouldn’t insure. So they will drive the rates up or worse yet, just exit the marketplace reducing the competition that supposed to keep rates low. The government addresses this issue to with a reinsurance program. That program is funded by a tax on every insurance policy sold in the country. This tax provides the government funds that they can inject into the insurance markets to protect insurance companies from loss if the mix of sick and healthy people threatens to drive up rates.

The last part of the argument is that insurance companies will choose to sit out the first couple of years of the marketplace just because there is no track record that they can use to predict what their costs are going to be. The law addresses this too. The government has entered into a risk sharing agreement with all those companies that are participating in the marketplaces. In that risk sharing agreement, if the risks end up being less than government forecasts, insurance companies pay a portion of their gain into the pool. If in any particular year the risks are higher than forecast, the pool pays the insurance companies.

The whole purpose of these various parts of Obamacare is to minimize the risks and the volatility of the marketplaces as they get up to speed. Clearly the government has created sufficient incentives and protections to attract enough insurance companies to make it work. The same people who designed and implemented the Massachusetts marketplace, helped design and plan Obamacare.

By Election Day a year from now, voters will have an opportunity to hold Republicans accountable for their obsessive opposition to healthcare reform. That includes those who, in an attempt to defund Obamacare, voted twice to close the government and force the country into default. Cuccinelli’s defeat in Virginia and the victory of Chamber of Commerce based Bradley Byrne over the classic Tea Party birther Dean Young are harbingers of a national repudiation of Tea Party philosophy and tactics.

A new report by the Kaiser Family foundation supports this view. That study finds that almost 17M of the 29M people eligible to purchase insurance through the marketplaces will be eligible for tax credits. As a result, many people will discover that their net costs to purchase insurance will go down. Combine this with those covered by expansions in Medicare, and you have a lot of people whose personal experience will be at odds with the current Republican narrative.

That narrative, at its core, suggests that we scrap Obamacare and return to the current system of employer-based care. The problem is people like the current system even less than Obamacare. If Obamacare DOES deliver the projected individual savings, those who have been struggling to obtain or afford insurance under the old system are not going to vote for return to that system. If millions of people do discover that Obamacare DOES lower their net costs, Republicans will lose a lot of credibility and find it very difficult to run on this issue.

The question every Democrat is waiting to ask a Republican incumbent in the fall is, “Tell me again why you voted to close down the government and threatened to throw the country into default?”

The Thrill is Gone

October 18th, 2013

BB King

The Tea Party came into existence after the election in 2008 because of concerns over the financial meltdown, bailout and stimulus spending, and the subsequent passage of Obamacare.

They scored a major victory in the off year 2010 elections and roared into Washington with what they felt was a mandate to bring debt and deficits down and cut spending. Their promise was that they would not permit the government to borrow more without also forcing the government to spend less.

Then a terrible thing happened. They succeeded.

In fairness they weren’t alone. The economy improved. The deals that they struck with Obama included new taxes. Obamacare and the slow recovery reduced the growth in healthcare costs. Slowing the growth in healthcare costs changed Medicare’s long term financial outlook from critical to manageable. Global economic instability kept US interest rates low, so our costs to finance our current debt are not the drain on the treasury previously predicted. The result is that the deficit has fallen faster than any time since WWII.
deficits-2018

Now, according to the CBO, the deficit has not only fallen, but is stabilizing in the totally manageable 2-3% of GDP range for at least the next decade. What that means is that as long as the economy grows at a faster rate than that, our debt as a percentage of GDP will go down. What THAT means is that we now have some breathing room to deal with the longer term issues of Social Security and Medicare without draconian spending cuts that will impact GDP growth or the radical entitlement restructuring that Republicans championed as recently as the 2012 elections.

Our dramatically improved financial condition eliminated the Tea Party’s primary issue. The sky is no longer falling and the Tea Party is adrift. What’s worse, this lack of direction is becoming painfully obvious to the American voter.

That’s the underlying reason for the suicide attack they recently launched on Obamacare. They felt their influence slipping away and responded with a desperate attempt to rally the troops for one last quixotic charge at their old nemesis.

What they discovered though, is that while many voters shared their concern about debt, far fewer were willing to sign on to shut down the government and defund Obamacare.

Without a shared vision of the future, Speaker Boehner was left trying to cobble together a majority by offering some representatives Obamacare delays, others looser drilling regulations, and still others tax reform borrowed from Paul Ryan’s budget. This was the first we even heard from Paul Ryan since his budget ideas crashed and burned in 2012. The fact that Boehner failed to find common ground within his own party when so much was on the line is testimony to the stark reality that, though the Tea Party remains angry and deeply distrustful of Obama, they don’t know what to do about it.

Voters sense that too because, without the debt boogey man, there is no logic to Tea Party passions or positions. Instead of saying, “we won’t let the government borrow more until it agrees to spend less”, we have, “we won’t let the government borrow more to pay it’s now manageable debt unless it blocks net neutrality, agrees to more drilling, and delays implementation of a debt-reducing law that we don’t like.”

Voters were willing to tolerate Tea Party tactics when it seemed that those tactics would in fact reduce spending. Now that spending has been reduced, voters want the Tea Party to demonstrate that they can come down from the barricades, grow up, behave like adults, and be trusted to run the government in a responsible manner. That was the message voters sent in 2012 and the Tea Party has ignored.

What voters have discovered is that these bad boys may have been fun to date in 2010, but they are not the sort of guy you ever marry. They needed these guys to deal with the scary prospect of out of control spending and ballooning debt. Now that this dirty job is largely done, voters are discovering that people who deny science, math, and economics are just as frightening and can do some real damage when they have power.

This is particularly true of the business community. Here’ a selection of comments from a WSJ article.

Mark Thierer, chairman and CEO of Catamaran Corp., a major pharmacy-benefit manager, said business’s relationship with the GOP “is going to need a retooling,” adding that he would continue to make modest contributions to centrists. “I am not going to give up on the Republican Party—I am going to encourage moderation,” he said.

Bruce Josten, the Chamber of Commerce’s top lobbyist, said he has pushed members of Congress to keep the government open and to understand that flirting with default is “just plain stupid.” To Republicans who tried to use the budget battle to unravel the health care law, he said: “They’ve accomplished nothing.”

John Engler, the former Republican governor of Michigan who now heads the Business Roundtable, a trade group, said the normal legislative process—where bills are debated and passed by each house of Congress, and then married together—encourages compromise. “Today we have a significant number of people who don’t want to compromise because they think they can win something that’s been unwinnable,” he said.

Hal Sirkin, a senior partner with the Boston Consulting Group, said his conversations with executives in a range of industries suggest widespread frustration with the Republican party. The budget battle “is giving them pause to reconsider everything that they believed” about conservative support for business, he said. Some executives have told him they plan to pull back their support for the party “as a message to say, this is not acceptable. You can’t trash the business community,” he added.

David French, top lobbyist at the National Retail Federation, guesses that business lobbies will back somewhere between 12 and 25 business-friendly Republicans in primaries next year. “We don’t like having a very high stakes poker game where we’re dealt out and nobody’s going to win,” he said.

Several business executives said they were counting on establishment GOP leaders, including House Speaker John Boehner of Ohio and House Budget Committee Chairman Paul Ryan of Wisconsin, to move immigration and future fiscal legislation. But those same leaders struggled to steer the House toward a fiscal compromise and struggled to pass another business priority, the farm bill, amid conservative demands to curtail food stamps.

The painful truth is that the voters’ love affair with the Tea Party is over. The tighter the Tea Party tries to hold onto this relationship, the more distant and resentful the American voter will become. It has all of the earmarks of a breakup that is only going to get uglier as the big 2014 dance approaches.

Madness

October 16th, 2013

‘‘Of all the damage to be done politically here, one of the greatest concerns I have is that somehow John Boehner gets compromised,’’ said Sen. Lindsey Graham, R-S.C., a former House member and a Boehner supporter.

Something interesting happened over the past couple of weeks.

First a little bit of background.

Congress failed to pass a budget this year. The result of that failure was predictable. The government ran out of budget authority to continue to operate.

At the same time, the government was also exhausting its ability to borrow money through the sale of bonds in order to pay its bills. This was also predictable based on the rate at which the government was authorized to spend money compared with the rate at which tax revenues were coming in.

While these two things are related, they reflect two VERY different dynamics. In the first case, budget authority reflects the government’s ability to incur NEW debts. In the second case, the credit limit is the government’s ability to borrow money to pay bills that have come due as a result of the exercise of the budget authority that the government already had.

In other words, raising the government credit limit DOES NOT affect the deficit.

Giving the government more budget authority potentially DOES affect the deficit.

Ted Cruz seized on these two financial events as a political opportunity to enhance his standing with conservatives and perhaps position himself for a 2016 presidential run. He did this using the Madman Theory by suggesting that Republicans in the House and Senate were willing to shut down the government AND prevent the government from paying its bills if Senate Republicans and the President didn’t agree to their demands. They then made good on their first promise and shut down the government.

What happened next was also predictable.

Tea Party Republicans rallied around Ted Cruz.

More seasoned politicians questioned whether this plan would work based on past history and the fact that there weren’t even close to enough votes in the Senate to support the plan.

As the reality of the government shutdown spread throughout the country, Ted Cruz and his supporters including Glenn Beck and Fox News tried to convince the country that it was the fault of the President and the Democrats.

Everyone suffered losses in the polls, but Republicans suffered the most with historic new lows in popularity.

“The only reason why the Democrats don’t look terrible is we look even worse,” said Sen. Roy Blunt (R-Mo.), a member of Senate GOP leadership.

As it became obvious that the President and the Democrats were willing to call the Republican’s bluff, House Republicans began distancing themselves from this plan. At last count there were more than enough with Republican support to pass a simple bill to re-open the government and raise the credit limit.

Republican Senator Kelly Ayotte called the tactic of tying Obamacare to the shutdown legislation “an ill-conceived strategy from the beginning, not a winning strategy.”

“It’s very, very serious,” Senator John McCain, Republican of Arizona, warned on Tuesday. “Republicans have to understand we have lost this battle, as I predicted weeks ago, that we would not be able to win because we were demanding something that was not achievable.”

“We took some bread crumbs and left an entire meal on the table,” said Senator Lindsey Graham, Republican of South Carolina. “This has been a really bad two weeks for the Republican Party.”

“Let’s just say sometimes learning what can’t be accomplished is an important long term thing, and hopefully for some of the members they’ve learned it’s impossible to defund mandatory programs by shutting down the federal government,” Republican Senator Burr said.

The last steps are now playing out.

Boehner failed to craft a bill in the House because the 30 or so Tea Party Republicans were unwilling to support any compromise even though it would further weaken the political position of their party.

Democrats and Republicans will pass a bi-partisan bill in the Senate. Ted Cruz will vote against it, but he won’t filibuster it because he isn’t a Madman, just an opportunistic politician.

That bill will come up for a vote in House and will pass with a comfortable majority comprised of all the Democrats and a large number of Republicans.

This particular bill will set up another potential confrontation in six months, but it will not be a repeat of what we’ve just seen. Those who would threaten to use this strategy again will not have the support to even start.

Finally after five years of political dysfunction, Congress will start working again. That’s because more Republican members are now more afraid of the voters in their districts than they are opposition from Tea Party. Mitch McConnell will be the hero and emerge as the leader of “rational” Republicans. Compromise will become the new badge of honor with the Senate modeling that behavior. Getting things done will become the new measure of success.

It will prove, however, too little and too late. The Tea Party will run candidates in Republican primaries against those they feel betrayed them. It won’t matter whether they win or lose because voters in November are NOT going to re-elect anyone who behaved like a Madman. The Democrats will win the seats they need to take control of the House and retain control of the Senate and government will begin operating again. Unemployment will come down. The economy will grow robustly in the last two years of the Obama administration. Immigration reform will pass. Healthcare will roll out. The tax code will get re-written and address income inequality. We’ll fix Medicare and Social Security and take the first substantive steps to deal with climate change. Deficits will come down and debt as a percentage of GDP will drop to safe manageable levels. As long as the Democrats can avoid shooting themselves in the foot, they will be well positioned to retain their majorities and the White House in 2016 regardless of who Republicans choose.

On the Republican side, we’ll see if the Tea Party retains enough influence to get one of their candidates nominated in 2016. If so, it will be a Democratic landslide. If not, there is a very real possibility that the Tea Party may align with the libertarians or start their own third party. If that happens, it will virtually guarantee a Democratic win and confirm what we have known about the Tea Party from pretty much the beginning. They ARE mad.

Democracy will again begin to work in predictable ways as the Tea Party retreats back to the shadows of fringe politics. History will later attribute this moment in time as the point at which conservative radicalism was defeated by Obama’s firm resolve.

Parsing the Republican Shutdown Message

October 4th, 2013

Spoiler Alert: This article is written from a progressive point of view. I’m not going to try to defend Republican points of view. Only trying to provide some insight into why these talking points are frustrating for those with a progressive point of view. These Republican talking points are clearly designed to do two things. The first is to provide Republicans and their supporters a defensible position. The second is to irritate those who disagree with them. I realize that going through this exercise validates that Republicans are accomplishing their second goal.

I’m not going to spend any time doing a similar analysis of the Democratic view because in general I’m in agreement with it. The Democratic position will be reflected in my responses to the Republican position.

Republican talking points were provided by Cathy McMorris Rodgers of Washington, who chairs the House Republican Conference, in an NPR interview with Audie Cornish.

CORNISH: Earlier today, I spoke with Republican Congresswoman Cathy McMorris Rodgers of Washington State. She’s chair of the House Republican Conference. I asked her what she thought of Obama’s statement about a clean spending bill and if it had bipartisan support, why shouldn’t it be brought before the House for an up or down vote.

REPRESENTATIVE CATHY MCMORRIS RODGERS: Because it doesn’t solve the problem and it doesn’t address the concerns that are on people’s minds. The only thing that is keeping us in this shutdown is the refusal of the Senate Democrats, the president, to come to the negotiation table.

ME: The Republicans have tried to blame Democrats for their unwillingness to negotiation. They fail, however, to state the terms of the negotiation. The terms are stark. In return for funding the government, the Republicans are asking the Democrats to adopt large planks of the 2012 Republican platform which voters rejected in 2012. So what exactly are the Republicans willing to offer in return for Democrats giving up part of the agenda that voters endorsed in 2012? They are offering to allow the government to continue to operate.

The Democrats are not saying that they won’t negotiate. What they are saying is that they will not negotiate on the terms that the Republican put forward. Obama, Reid, and Pelosi have said that there will be NO negotiations until Republicans change the terms of the negotiation by passing the CR to fund the government. This is an important political point because if the minority party IS able to extort something from the majority party without giving up anything more than allowing the government to operate; this tactic will be used again by both Republicans and Democrats.

CORNISH: And you said it doesn’t solve the problem. What did you mean by that?

RODGERS: Because it doesn’t solve the problem that we hear from people that we represent all across this country and those are the concerns of out-of-control spending, the record deficits, the economy, the fact that this economy continues to be sluggish. It doesn’t address the concerns over healthcare. I would say that the overwhelming number of Americans have voiced concerns over this law, would like to see it either repealed, defunded, they want us to be taking action that’s going to protect them from a law that is unworkable, that is unaffordable.

CORNISH: But repeatedly this week, we’ve seen polls from CNN, the National Journal, Quinnipiac yesterday saying that by a margin of 72 to 22 percent, voters don’t want Congress shutting down the federal government to block implementation of the Affordable Care Act. They don’t want those two things linked.

RODGERS: The Republicans don’t want to shut down the government and what you’ve seen us doing…

CORNISH: No. I didn’t say shut down the government, but linking Affordable Care to the continuing resolution. That’s what people don’t want.

ME: Audie Cornish challenged Rodgers specifically on her claim that an “overwhelming number of Americans have voiced concerns over this law, would like to see it either repealed, defunded, they want us to be taking action that’s going to protect them from a law that is unworkable, that is unaffordable.” Rather than engage on this point, you’ll see that Representative Rodgers pivots away from her deception. Yet this deception is at core of Republican justifications for their actions. They claim that they are the ones representing the majority interests of the American people. While it is true that the country is deeply split on Obamacare, it is also true that a large majority of the country opposes shutting the government down as a tactic to delay or change Obamacare.

RODGERS: We need to get to the table. We need to negotiate and that is what we’ve been asking for from the House is for the Senate to come to the table, for the president to come to the table. The Republicans are working hard every day to open up the government. Yesterday, we voted on the legislation to open up our national parks, as well as fund NIH.

We need to start taking these steps and it’s a way where we can come to the table, start finding some common ground and hopefully it will build so that we can address these larger issues related to spending, as well as address the concerns that people have over this healthcare law. And the only message that we’ve gotten from the president is that he’s not willing to negotiate but that’s not a way forward.

CORNISH: Do you dispute his argument that there are the votes in the party for a clean resolution to pass?

ME: What Representative Rodgers pivots to is her other talking point that the government shutdown could be easily resolved by Democrats if they would just come to the table.

What Republicans are asking for in this request for negotiation is validation of this shutdown tactic. By using this term “come to the table”, she is suggesting that Democrats aren’t willing to negotiate because they don’t want to give anything up. That’s not true. The Democrats are saying that the very act of coming to the table while the government is being held hostage validates this tactic. What are Republicans going to be willing to give up in order to START negotiations which balances what they are asking the Democrats to give up?

The Democratic response has been, if you are sincere about wanting to negotiate, you have to be willing to bring something to the table. That “something” is a short-term CR to operate the government while both sides negotiate. In other words, you don’t get a validation of this tactic for free.

BTW, some might suggest that this shutdown tactic in the House is no different than the filibuster rule that exists in the Senate. That filibuster rule gives the minority an opportunity to force the Senate to come up with 60 Senators in favor of cutting off debate in order to pass a bill rather than the normal 51. The difference is that this shutdown tactic is being applied to a LAW, not a bill. It is attempting repeal or amend a law without coming up with the votes otherwise required to do so under normal legislative procedures.

RODGERS: What I see is that the Republicans are united in the House. We’re united in this effort to get this negotiation done between the House and the Senate and the president and we believe that needs to happen.

CORNISH: So despite those calls from Republicans this week to have that up or down vote on a spending bill, you’re saying you’re united.

ME: Audie Cornish again catches Rep. Rodgers in another misleading statement. There are plenty of reports from Republican Representatives that if a clean CR came up in House today, it would pass. If that’s true, it undermines Ms. Rodgers claim that the only ones standing in the way of ending this government shutdown are Senate Democrats and the President. It also undermines her claim that House Republicans are simply doing the will of the people. Instead Rep. Rodgers pivots away from this discussion and points to the fact that Republicans have passed a whole set of mini-CR’s to fund the parts of the government that are most popular. The point of this plan is an attempt to focus attention away from the pain that the shutdown is causing and instead support the false premise that it is all the fault of the Democrats.

RODGERS: We are united. We have voted on numerous spending bills to keep the government open and that’s going to remain our commitment. We’re going to continue to work every day to get this government open as much as we possibly can.

ME: The Democrats are certainly not blameless in this episode. They baited Republicans into this tactic in order to avoid a much more serious debt default. That said, the Democrats are also accurate when they say that this represents the actions of a minority in the Republican Party and a minority of voters in general. They are also accurate in saying that this particular tactic undermines the normal democratic process and if successful, will change the way that government works going forward.

For those who want to keep track of individual issues in this ongoing media war, Politifact has a good list.

They include:

“The American people support defunding Obamacare and oppose shutting down the government,” said U.S. Sen. Marco Rubio, R-Fla. Mostly False.

“The United States Senate — Democrats and Republicans — acted responsibly by voting to keep our government open,” said President Barack Obama. Mostly False.

“Today, the House of Representatives did what Washington pundits only a few weeks ago said was impossible: a strong bipartisan majority voted to defund Obamacare,” U.S. Rep. Ted Cruz, R-Texas. False.

The shutdown is projected to result in “$10 billion in costs to the economy per week, said U.S. Rep. Debbie Wasserman Schultz, D-Weston, and chair of the Democratic National Committee. Mostly True.

“Obamacare is an entitlement like Medicare and Social Security is, and so the entitlement carries on even under a government shutdown scenario, said U.S. Rep. Paul Ryan, R-Wis., who is also the House budget chairman. Mostly True.

So now we wait while both parties try to get their message out and rally public support. Boehner is the key. If the number of Republicans in the house willing to vote for a clean CR continues to grow, Boehner will be forced to act. Then it just becomes what sort of face saving maneuver he is going to be able to negotiate with the Democrats. One option is going to be to blame this whole thing on Ted Cruz. We’ll see how that goes.

Madman Theory

October 1st, 2013

This is actually the name for a foreign policy that Nixon tried to use to bring the Viet Nam war to an end.

In his case, the setup was that Nixon was obsessed about communism and also under great pressure to end the war. As a result, the threat was that he might simply lose patience and nuke North Vietnam back to the Stone Age if the North Vietnamese didn’t come to the negotiating table.

The same strategy is in play right now in the showdown over defunding Obamacare.

Republicans have admitted that this is a political strategy.

Even though they failed to gain the White House or a majority in the Senate in the last election, the fact that they did retain a majority in the House (they feel) entitles them to use whatever means are available to them to advance the agenda of the people who elected them.

That’s where the Madman enters the room. Republicans are willing to shut down the government in order to get some portion of their agenda passed by the Democratic Senate majority and signed by the Democrat in the White House.

“People have to recognize there’s never any compromise until the stakes are high,” said Representative Dana Rohrabacher, Republican of California. “In our society, that’s the nature of democratic government.”

The compromise in this case is that the Republicans agree to allow the government to continue to operate in return for significant legislative concessions by the Democrats.

AND they don’t seem to care whether or not it harms the economy.

“Economists, what have they been doing? They make all sorts of predictions,” said Representative John Fleming, Republican of Louisiana. “Many times they’re wrong, so I don’t think we should run government based on economists’ predictions.”

Nixon faced this same problem in Viet Nam. If your opponent is afraid of dying, and they believe that you are crazy, they will likely negotiate. If your opponent doesn’t care about dying, or at least is willing to call your bluff, you are forced to do something crazy or lose future bargaining power. That crazy act, in Nixon’s case, was invading Cambodia. The Republican crazy act is damaging the US economy in order to bring about legislative change that they couldn’t achieve through the ballot box.

The problem with this Republican strategy is that they are INDEED crazy, but not for the reasons that you might think.

They are crazy because they allowed the Democrats to BAIT them into picking a fight over the continuing operation of the government rather than the government default.

Government default is the BIG DEAL. It is one that Obama might have been willing to give up a year of Obamacare to prevent.

The Democrats, however, don’t care if the Republicans shut down the government. In fact, they prefer it to the other alternatives on the table.

The reason is that the country will survive a government shutdown, but the Republicans won’t.

By the time the REAL battle comes up, which is the debt ceiling, the country will have dealt with several weeks of the government being shut down, will be convinced the Republicans are indeed Madmen, and will demand an end to the lunacy. That end will be passing the CR to get the government running again AND passing a resolution to raise the debt ceiling. The voting public will NOT be willing to listen to Republicans talking about debt, or future generations, or irresponsible Democrats. They will have lost their patience with Republican tactics and it will all be over but the shouting. That’s because the voting public will vote in sufficient numbers in 2014 to make sure this doesn’t happen again.

So in essence, the Republican Madman Strategy was to put a gun to their own head and threaten to pull the trigger. Democrats jumped up and yelled, “Stop. Please don’t do that. Give the gun to me.” Once they were sure the gun was loaded, they handed it back to the Republicans and said, “I believe this is yours.” Last night the Republicans pulled the trigger.

Frankenstein Party

September 21st, 2013

“Beware; for I am fearless, and therefore powerful.”
― Mary ShelleyFrankenstein

Bobby Jindal, the governor of Louisiana, made headlines earlier this year by telling his fellow Republicans that they needed to stop being the “stupid party.”

This week Republicans are demonstrating to the voting public that they not only rejected Jindal’s characterization, they embrace it.

Here’s how Tom Friedman describes it.

We’ve got messes aplenty abroad and the Republican-dominated House of Representatives is totally paralyzed. Indeed, the G.O.P.-led House has become a small-minded, parochial place, where collaboration is considered treason, where science is considered a matter of opinion, where immigration is considered a threat, where every solution is a suboptimal compromise enacted at midnight and where every day we see proof of the theory that America is a country that was “designed by geniuses so that it could be run by idiots.”

Before we proceed let’s recap to put this in perspective.  The Republican Party failed to win the White House in the last election even though voters were living through the worst economy since the Great Depression.  They failed to retake the Senate after winning the House in 2010 and even though there were more Democratic seats being contested than Republican.  They even lost the popular ballot for the House by 1.4M even though through gerrymandering they managed to retain their majority.

The past two elections proved that the Republican base is shrinking while the Democratic base is growing.  The Chairman of the Republican Party addressed this issue earlier this year.

The way we communicate our principles isn’t resonating widely enough…Focus groups described our party as ‘narrow-minded,’ ‘out of touch,’ and ‘stuffy old men.’ The perception that we’re the party of the rich continues to grow.

When Republicans lost in November it was a wake-up call….We know that we have problems. We’ve identified them, and we’re implementing the solutions to fix them.

If the last week is any indication, the Tea Party elected representatives in the house are still asleep.

In no particular order, here’s what we’ve seen.

SNAP cuts

The House cuts $40B cut from the food stamp program.  Conservative Republicans claim that there are people receiving food stamps that should be working, but the data doesn’t support that view.  The SNAP program (current version of food stamps) already has provisions which require those who can work to at least demonstrate that they are trying to find work or suffer the consequence of losing their benefits.

Studies have shown that SNAP is one of the most effective government programs we have.  It has an abuse rate of about 1%.  Most of that is private retailers buying SNAP benefits for cash rather than providing approved groceries.  It has a stimulus multiplier of 1.73, which means that every dollar of benefits generates $1.73 dollars in economic benefit.  That is the highest of any government program.  It’s better than corporate tax giveaways.  It’s better than military spending.  It’s better than bailouts and stimulus.

It also provides essential public health benefits to low-income people and that has an economic impact also.

The Trust for America’s Health, a health advocacy organization that focuses on disease prevention, warned recently of the consequences of cutting food stamps: “If the nation continues to underfund vital public health programs, we will never achieve long-term fiscal stability, as it will be impossible to help people get/stay healthy, happy and productive.”

Indeed, according to a 2011 study by the U.S. Department of Agriculture, “research shows that low-income households participating in SNAP have access to more food energy, protein and a broad array of essential vitamins and minerals in their home food supply compared to eligible nonparticipants.”

According to the Centers for Disease Control and Prevention, “good nutrition can help lower risk for many chronic diseases, including heart disease, stroke, some cancers, diabetes and osteoporosis.” As it is, public healthcare expenses for diet-related diseases such as diabetes and heart disease cost taxpayers more than $100 billion annually.

Cutting SNAP will impact the economy, cost jobs, reduce health, and increase the healthcare costs.  I’ve also posted that the stress associated with food insecurity actually affects brain development in children.  That inhibits academic success and ultimately affects employment prospects.  72% of those receiving benefits today are families with children.

We have enough food.  What we suffer from is a misguided ideology that suggests that benefits create a culture of dependency. According to the Congressional Budget Office, 30% of SNAP recipients worked in 2010, up from fewer than 20% in 1990. Most of the rest are either elderly, children, or disabled.

Fortunately the Senate will not pass this massive reduction in SNAP and a more modest reduction will likely emerge from the conference process.  House Republicans know that too.  This was an ideological vote to re-enforce the conservative Republican position that hungry people chose to be in that state because they are too lazy to find a job.

Defund Obamacare

This is a similar bit of Kabuki Theater.  Senator Ted Cruz was elected based on his pledge to defund Obamacare.  His rants and accusations finally goaded the House into action.  They passed exactly the bill that Cruz has been asking for.  That bill will expose what people have been silently saying for a while.  Cruz isn’t even close of having the votes in the Senate to accomplish what he promised to deliver.  He has already tried to lower expectations.

Harry Reid will no doubt try to strip the defund language from the continuing resolution, and right now he likely has the votes to do so….At that point, House Republicans must stand firm, hold their ground, and continue to listen to the American people.

Boehner would have none of it. He responded.

We’ll deliver a big victory in the House tomorrow. Then this fight will move over to the Senate — where it belongs. I expect my Senate colleagues to be up for the battle.

So at the end of the day, Cruz’s bluff is going to be called.  He doesn’t have the votes and will go down in flames as a result.

John McCain told CNN on Thursday: “In the United States Senate, we will not repeal, or defund, Obamacare. We will not. And to think we can is not rational.”

Senator Richard Burr, Republican of North Carolina, said of the House Republicans’ strategy of threatening a government shutdown to force the defunding of Obamacare, “I think it’s the dumbest idea I’ve ever heard of.”

Senator Jim Risch, Republican of Idaho, has said: “There isn’t anybody that thinks that Obamacare is going to get defunded. It cannot happen.” He added, “It is as impossible as anything can possibly be in Washington, D.C.”

Republicans may have gained some points in the process with their base, but the rest of country will be left scratching their heads over the spectacle.

Regulating Sexual Relationships

Finally last week in Michigan, Republican AG Bill Schuette argued in a brief supporting Michigan’s ban against same sex marriage that states have the obligation “to regulate sexual relationships between men and women so that the unique procreative capacity of such relationships benefits rather than harms society.”

This is really a simple calculation for any rational Republican.

How many of the 47M people receiving SNAP are going to vote for Republicans in 2014?

When the Republicans shut down the government or force the government to default on its debt obligations in an effort to stop Obamacare, how many voters are going to blame Democrats – particularly given what even some Republicans are saying?

Finally, how many people are going to support a party that claims the government has the right to “regulate sexual relationships”?

This is the logical conclusion of the cynicism that began with Nixon’s southern strategy.  Republicans exploited racial backlash to promote the economic goals of low taxes for the rich and deregulation.  They were remarkably successful in convincing low information whites to vote against their self-interests.  Instead they blamed four decades of middle class wage stagnation on the poor, liberals, and unions.  Sustaining this strategy, however, required morphing from racial fear to an embrace of fringe conspiracy group paranoia.  These fringe groups have always existed in US politics, but only gained credence as their apocalyptic fears of a black man in the White House came to pass.

Now the monster that Karl Rove and Fox News created to take back the House in 2010 and continue to promote the agenda of low taxes for the rich and deregulation has broken loose and is running amok.  Even Karl Rove can’t control it.

Any strategy to repeal, delay or replace the law must have a credible chance of succeeding or affecting broad public opinion positively. The defunding strategy doesn’t. Going down that road would strengthen the president while alienating independents. It is an ill-conceived tactic, and Republicans should reject it.

When ideology leads to extremism, it always demonizes its opponents.  Ultimately its opponents includes its previous allies.  It narrows its focus and base of support until it finally collapses under the weight of its own self-destructive rage.  Tea Party driven conservative Republicanism has reached this point.  They are willing to alienate hungry voters and shut down the government to demonstrate the purity of their ideology.  We will suffer the consequences of their actions between now and 2014.  Then voters will hold them accountable and the Tea Party will become another footnote in history.  Frankenstein died because he couldn’t figure out how to live in this world.  Tea Party-backed Republican Conservatism is going to suffer the same fate.

New Balance

September 19th, 2013

I am the product of Jesuit education.

Jesuits taught me to question everything and not be afraid of the consequences.  They taught me how to think deeply about my life in order to develop a set of core beliefs.  They taught me to stand up for what I believe in even if that position is unpopular.  They also taught me that being of service to others is a high calling.  Most importantly, they taught me that you can’t just talk about it.  You have to live your values every day.  I’ve found my service in speaking out in defense of poor, the hungry, the homeless, the stranger, and the imprisoned.

I was raised Catholic but some time ago realized that my church had left me.

I’ve seen that church become increasingly politicized and conservative.

So I have found my own way.

Then something wonderful happened.

The church elected a Jesuit pope from Brazil – Pope Francis.

This pope also has a commitment to the poor.  The pope also cares about the hungry, the disenfranchised, and the imprisoned.

He has refused to take up residence in the papal palace in the Vatican.  Instead he sleeps in the much more modest guest house because, as any Jesuit will tell you, words without deeds are empty.

This new pope cut right to the heart of Catholic thought in his first public interview.

In his opinion, the church has lost its way.  It is so focused on narrow political issues like abortion, gay marriage, and contraception, that it has in his words become a moral “house of cards”.

He said the church should be a “home for all”, not a “small chapel” focused on doctrine, orthodoxy and a limited agenda of moral teachings.

The dogmatic and moral teachings of the church are not all equivalent. The church’s pastoral ministry cannot be obsessed with the transmission of a disjointed multitude of doctrines to be imposed insistently.

We have to find a new balance.

This is straight out of the Jesuit playbook.

The Bible has precious little to say about abortion, gay marriage, or contraception.  It has LOTS to say about our relationships with our neighbors, those less fortunate than us, and even those who disagree with us.  The Christ-message is that we are all God’s children made in the image and likeness of our Creator.  Our job is to embrace that reality and learn to love the God-child in everyone including those who may want to harm us.

That’s what Pope Francis is talking about when he said a “home for all”.

I lived through the amazing changes that the Catholic Church went through as a result of the vision of Pope John XXIII.  He single handedly dragged the church into the 20th century.  It may be time for Pope Francis to reawaken the 21st century Catholic Church to its REAL mission.

It looks like an impossible task, but I’m sure he will take it on with determination and humility.

Gotta love those Jesuits.

Personal Responsibility

September 3rd, 2013

When the Son of man shall come in his glory, and all the holy angels with him, then shall he sit upon the throne of his glory: and before him shall be gathered all nations: and he shall separate them one from another, as a shepherd divideth his sheep from the goats: and he shall set the sheep on his right hand, but the goats on the left.  Then shall the King say unto them on his right hand, Come, ye blessed of my Father, inherit the kingdom prepared for you from the foundation of the world: for I was an hungered, and ye gave me meat: I was thirsty, and ye gave me drink: I was a stranger, and ye took me in: naked, and ye clothed me: I was sick, and ye visited me: I was in prison, and ye came unto me.  Then shall the righteous answer him, saying, Lord, when saw we thee an hungered, and fed thee? or thirsty, and gave thee drink?  When saw we thee a stranger, and took thee in? or naked, and clothed thee?  Or when saw we thee sick, or in prison, and came unto thee?  And the King shall answer and say unto them, Verily I say unto you, Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.
Matt 25:31-40

For Christians, I don’t know how the message could be any clearer.  This is about salvation.  In my reading, those that provide for the poor, the hungry, the stranger, the sick, and those in prison will be welcomed into heaven.

It is also instructive that Jesus directed this advice specifically at those he called “the righteous”.  These are the people who aspire to perfection, go to church, and keep the commandments.

During Jesus time, many pious Jews thought that bad things happened to bad people.  So they felt no compassion for those that Jesus described.  Instead most blamed the poor, the sick, the hungry, the homeless, and those in prison for their plight.  The self-righteous Jews figured that these people were being punished by God for something.  And clearly who are they to question God.

Jesus was very clear in what he said.  He didn’t qualify those in need in any way.  Instead he said that their NEED is the only relevant qualification.  It doesn’t matter why someone was hungry or sick or homeless or in jail.  Our response is all that is important.  That response will determine how we are judged in the afterlife.

We find ourselves in a very similar situation today when we attempt to have a conversation about race, poverty, and crime.

First a few facts.

According to the Census Bureau, fully 38% of African-American children under 18 now live in poverty.

67% of African-American children live in single parent households, and nearly all of those doing the actual parenting are women.  The courts, according to HHS, have awarded child support to 45% of these African-American mothers, but less than half actually get any money.   Doing the math, that means that 80% of those custodial mothers get no funds from the fathers of those children.  About half of white women actually receive the support the courts have awarded.

This raises the obvious question of where the African-American men are.

A million of them are in prison.  That’s 43% of our prison population even though they represent only 13% of the population.  One out six African American men have at some time been incarcerated.  Even that is a decrease from the past decade.

Maybe because they commit more crimes?

Not exactly.

African-American defendants are more likely to be given jail or prison time for the same or similar offenses for which white folks are given probation. African-American men also receive longer sentences than white men sentenced for the same or similar offenses.

This is, in part, the sorry legacy of our failed war on drugs.  In the 80’s, “ghetto” drugs like crack cocaine carried penalties up to 100 times more severe than a similar offense for a similar amount of the “yuppie” powder version of cocaine.  When these drug laws were originally passed in 1986, the thought was that crack was more potent and addictive.  Studies have since disproven that claim.  The U.S. Supreme Court finally ruled the sentencing disparities unconstitutional.

On the employment front, only 52% of African-American students graduate from high school and the rate for African-American boys is even worse according to the Department of Education. The economic consequences of that lack of formal education are well known – lousy jobs with lousier pay and a downward economic spiral from which there is no escape.  The economic consequences of an arrest record are also severe.  70% of employers run criminal background checks and 50% won’t hire those with a criminal record.

New research also suggests that children raised in poverty actually suffer physician damage to their brains which impair their cognitive abilities as adults.  Testing has already discovered that rich kids perform better than poor kids at a number of standardized cognitive tests.  Researchers have now discovered at least one cause.  During the first couple of years of life, our brains “wire” themselves based in part on the stimulation that we receive from our environment.  Stressful environments inhibit the full development of this wiring.  Even the tone, language, and vocabulary that a young child experiences during the first weeks and months of life can have a profound effect on later academic success.

It’s a statistical avalanche of negativity – grinding poverty, early developmental deficits, poor educational opportunities, failing schools, few jobs, and way too much interaction with the criminal justice system.

We cannot and should not ignore that some of this is self-inflicted even while we acknowledge the historical and socio-economic hurdles faced by African-Americans. Whether or not you respect the women trying to raise you and the young women around you, or if you stay in school, or take responsibility for your own children are all choices that can be made regardless of external pressures.

But it most certainly is not all self-inflicted.

There has to be some other reason why, for example, if a white man and African-American man with the same educational credentials apply for the same job the white man is twice as likely to get the job. Or why, when both African-American and white little girls were given a choice between a white doll or one of color, even the African-American girls preferred the white doll. Or why we still have such a profound ignorance of Africa and African-American history.

There also has to be a reason why race and poverty have become so politicized.  Why African American voters, for example, voted in higher rates than whites in the last two elections.  One opinion is encapsulated in a Romney quote that became a pivotal moment in the 2012 election.

There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it — that that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what. … These are people who pay no income tax. … [M]y job is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.

Romney was correct in suggesting that 47% of those who file income tax forms pay no net income tax, though that doesn’t mean that they aren’t tax payers.  Two thirds of those paying no income tax did pay payroll taxes (FICA and Medicaid) and virtually everyone pays some state and local taxes/fees.   He was also wrong in suggesting that this cohort votes primarily democratic.  55% of the “47%” are elderly.  They voted 56% to 44% for Romney.  Roughly 60% of the “47%” had incomes above $50,000 a year.  They supported Romney 52% to 46% and those with incomes above $90K supported Romney 54% to 44%. 

So what segments are left that voted for the president no matter what?

The voter segment that gave Obama the largest margin of victory was African Americans (93% – 6%).

Even though Obama won two elections, this open issue has not been resolved.  It remains the most difficult one that I think our democracy faces.  One only need look at the range of responses to the Treyvon Martin killing to understand the depth of the division.

What do we do as a country to deal with the stark realities of institutional poverty, crime, and violence in the African American community?

One choice is to blame African Americans for their condition.

This view was summarized by Ted Nugent in his comment about problems of crime and violence in the African American community.  He said African Americans could “fix the black problem tonight,” if they would put their “heart and soul into being honest, law-abiding, [and] delivering excellence at every move in your life.”

And

“racism against blacks was gone by the time I started touring the nation in the late [19]60s” and by the 1970s, “nothing of consequence existed to deter or compromise a black American’s dream if they got an alarm clock, if they set it, if they took good care of themselves, they remained clean and sober, if they spoke clearly, and they demanded excellence of themselves and provided excellence to their employers.”

There is great risk, at least for Christians, in this choice as Jesus explained.

The other choice is to follow Jesus recommendations.  Feed the hungry.  Help the stranger.  Clothe and shelter the homeless.  Heal the sick. Care for those that are in prison.

That’s not to say that these aren’t complex issues.  They are.

This is also not to say that all people need to develop individual responsibility.  They do.

But Jesus said clearly that the individual responsibility He is concerned about is that of the righteous.  THAT responsibility is to care for the less fortunate regardless of how they got there.

Jesus never said this would be easy.  But he did promise that the reward for those willing to take on this task would be great.

He provided every righteous Christian a choice.

Just like any other issue of personal responsibility, how you respond is up to you.

Sequester the Sequel

August 22nd, 2013

While many are suggesting that the first year sequester cuts weren’t that bad, they are generally unaware that the sequester bill included five years of scheduled across the board spending reductions.

So let’s take a look at what has happened already and then what is coming.

According to the U.S. Bureau of Economic Analysis, over the first half of 2013, the federal government has subtracted 0.8 percentage point from GDP growth—this as the economy grew a paltry 1.1 percent in the first quarter and 1.7 percent in the second.

The CBO has projected that if the next round of sequester cuts were canceled, we would see another .7% in GDP growth and add another 900,000 jobs by Q3 2014.

As Business Week says, this isn’t rocket science.  “We’re living through the biggest contraction in federal spending in 60 years, and this is one of the weakest recoveries on record. Coincidence?”

Conservatives counter that every dollar that isn’t spent by the government goes back into the pockets of taxpayers.  The implications are that individuals will spend that money in the same ways that the government will, we will see the same growth, and we will be better for it because the government is inefficient and political.  The problem with this simplistic view is that in uncertain times like this individuals DO NOT spend their money.  Instead they reduce their debt and increase their savings.  Businesses respond to reduced demand by doing the same thing.  So we end up with a lot of cash sitting on the sidelines and economic growth slows, which is where we are today.

The CBO says we are operating 6% below our capacity right now.  That is $1T in economic capacity that is sitting idle because of lack of demand.  The problem, for anyone willing to take a look, is clearly NOT too much government spending.  It is too little consumer demand.

Here are a few more quotes if you remain unconvinced.

“The idea that spending cuts generate growth in a demand-constrained economy is nonsense,” says Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities.

“To say the sequester is good for the economy is wrong on a scale that’s impressive,” says Neil Dutta, chief U.S. economist at Renaissance Macro Research.

“I don’t know how you can make that claim,” says Stuart Hoffman, chief economist at PNC Financial Services Group, who estimates that the sequester has stolen about 30,000 jobs from each month’s payrolls total since it was enacted in March.

If there is good news in this story, the economy appears to have survived the assault with a blunt instrument that the first sequester administered.  We are now in a position where the GDP can grow faster than the debt.  That means simple focus on short term economic growth will likely complete the recovery and put us back in a situation where debt as percentage of GDP is going down even though the debt in absolute terms may be going up.

So what is the Republican agenda?

First, threaten to shut down the government if Obama doesn’t repeal Obamacare.

Second, threaten to throw the government into default, if the Obama administration doesn’t agree to ANOTHER round of spending cuts in addition to what is already on the books.

So it doesn’t sound as though there is much political appetite at the moment to replace the sequester with something more constructive and there is certainly the possibility that it will get worse before it will get better.

That said, here’s a short list of the impacts we’re dealing with beyond those already mentioned.

States

This next round is going to impact states even more than the previous cut.  States will see $4.2B less in federal funding.  Targeted programs include public housing assistance, money for schools with low-income students, food inspection, scientific research grants, and environmental protection programs.  While states absorbed a $4.6B cut last year through reductions is staff in reductions in programs, this year they will be forced to start eliminating programs completely.

The other state complication is that most states are required by law to balance their budgets and the 2014 budgets have already been passed.  If the next round of sequestration is implemented, most states will start their fall legislative terms with significant budget shortfalls.

From a USA today article

“They are already in a difficult spot because they already have imposed major cuts to their schools and other public services,” Leachman said. “If they enter those legislative sessions having to deal with additional cuts in federal funding for schools or law enforcement or clean water or programs that help low-income families, that makes their job even more difficult.”

Pennsylvania budget secretary Charles Zogby said his state managed to get through the first round of sequestration budget cuts without massive cuts in personnel—but that may change. “Thus far, that hasn’t been part of the challenge. It may be in round two,” he said.

Headstart

Headstart, one of the most successful programs we have to alter the future of poor kids, is going to have to cut fall enrollment by 57K because of sequestration cuts.

Public Defenders

The federal public defender system has been decimated by the sequester cuts.  According to the WSJ, this ends up costing tax payers more than what has been saved through the cuts because our constitution guarantees that those who cannot afford an attorney will have one appointed for them.  When public defenders are not available, court dates are delayed and courts ultimately hire private attorneys.  We pay for all that.

Overburdened defenders also make mistakes and miss evidence that could have cleared their clients.  These mistakes create more appeals.  As Supreme Court Justice Stephen Breyer noted in March in congressional testimony about the effects in general of the sequester, it is “cheaper to have a decent lawyer in the first place.”

Medical Research

Even George Will decries the effects of reductions in basic medical research caused by the sequester.

For Francis Collins, being the NIH’s director is a daily experience of exhilaration and dismay. In the past 40 years, he says, heart attacks and strokes have declined 60 percent and 70 percent, respectively. Cancer deaths are down 15 percent in 15 years. An AIDS diagnosis is no longer a death sentence. Researchers are on the trail of a universal flu vaccine, based on new understandings of the influenza virus and the human immune system. Chemotherapy was invented here — and it is being replaced by treatments developed here. Yet the pace of public health advances, Collins says, is being slowed by the sequester.

This will be, Collins believes, “the century of biology.” Other countries have “read our playbook,” seeing how biomedical research can reduce health costs, produce jobs and enhance competitiveness. Meanwhile, America’s great research universities award advanced degrees to young scientists from abroad, and then irrational immigration policy compels them to leave and add value to other countries. And now the sequester discourages and disperses scientific talent.

Forest Management

The sequester has also reduced our ability to manage our forests which has contributed to the unprecedented scale of wildfires that we’ve had to fight.

The Hazardous Fuels Reduction Program was $500 million last year, went down to $419 million this year under the automatic budget cuts, and has been proposed to go to $292 million next year.

“The fires that are ripping through Oregon and Idaho and California and the West are just proof that the fire prevention policy is broke,” Sen. Ron Wyden, D-Ore., chairman of the Senate Natural Resources Committee, said from Lincoln City.

“There are years of neglect. The fuel load builds up and it gets hotter and hotter on the forest floor. Then you get something like a lightning strike and a big inferno. Then the bureaucracy takes money from the prevention fund to put the fires out and the problem gets worse. The cycle just repeats itself again and again.”

This brings us to the basic question of why.

The only answer I can come up with is that Republicans have lost touch with reality.  They have won the war against debt.  Rather than take a victory lap and set themselves up for a potential change in control in the senate, they are determined to pump another bullet into the wounded economic recovery.

Their fantasy that cutting government spending would stimulate economic activity has failed.  We can now document the damage it did to the economy.  With the second round of sequester cuts looming, we have an opportunity to reduce the damage.  Just stopping the austerity program will have a positive economic effect.  But we can’t seem to even have a rational discussion on how to do that simple thing because of ideology and politics.

Since it is unlikely that Republicans will unilaterally abandon the ideology that is driving their actions, the only other possible solution is a political one.  If Republicans suffer another defeat in 2014 similar to what they experienced in 2012, maybe then the survivors will finally realize that there are real political consequences to imposing a minority agenda on an unwilling majority.