Posted Tuesday, November 22, 2011 in Analysis


by Gina Hamilton

WASHINGTON, D.C. — Well, it's official. The vaunted "supercommittee," which was supposed to cure the country's deficit emergency (remember when the deficit was an "emergency" instead of a perennial annoyance?) has failed to reach a consensus.

Predictably, both sides are blaming each other for the impasse. Republicans say that Democrats wouldn't budge on entitlements, Democrats say that Republicans wouldn't compromise on taxes. And so here we are again, just mere months later from when we were all here before.

But the whole notion that the deficit was a het-up emergency in the first place was an absurd distraction from the real issue — something that even Republicans admit after getting screamed at by their constituents during the August recess after the debt ceiling was raised — which is jobs, jobs, jobs. 

And they don't really have a good answer why, with all the tax breaks in the world, American businesses don't seem to be able to create those jobs these days. 

Every now and then one of them will murmur, "uh ... uncertainty?" — the notion that until the skies turn blue and the future is as clear as an unmuddied lake (oh, and government agrees not to impose new taxes, levies, energy requirements, health-care requirements, or regulations of any kind), businesses will refuse to accept any risk. Of course, that's simply nonsense. There is always uncertainty in business. That's why people go into business. If they can't handle uncertainty, they go to work for the government or get a job sorting paperclips for a Fortune 100 firm. Uncertainty may mean that the future is unknown, but unknown can be a really spectacular thing as well as a really awful thing.

What such Republicans mean by blaming uncertainty is that businesses might have to start doing for their employees what they were perfectly happy to do a mere generation ago — provide quality health insurance and some sort of retirement plan and honor labor's contribution to the economy — and do the right thing by the commons — protect clean water and air, play by the financial services rules that are set up to protect all Americans, and safeguard the nation's food supply and energy supply.

I mean, these people have children and grandchildren too, I imagine, and they'll want a world these kids can live in. Perhaps I am giving them too much credit, but does anyone ... including top CEOs ... really believe that businesses are capable of even enlightened self-interest today? Did they really not learn the tragic lessons of 2008?

More likely, as far as the Republicans are concerned, it's just a political ploy to keep from violating their pledge to Grover. Grover Norquist has some fairly deep pockets, and he has succeeded in ending the careers of politicians who signed his "Read my lips: No new taxes" pledge and then reneged. 

Democrats, on the other hand, are guarding entitlement programs like a junkyard dog, and aren't willing to listen to any reasonable solution for solving the ballooning costs of Medicare, Medicaid and Social Security. Not that such ideas are coming out of the other camp, anyhow, but Democrats Past have had some good ideas about how to solve these issues, and the current crop just isn't willing to hear those ghostly voices.

For instance, raise or eliminate the cap on Social Security income so that people who earn more than $106,800 continue to pay the payroll tax of 6.2 percent. The way it works now, people pay 6.2 percent on every dollar they earn until they reach this magical number, then suddenly they are exempt. Another option is to means-test Social Security recipients ... are people with a retirement income of seven figures really going to miss the extra $2,400 per month? Such simple actions would make Social Security solvent without increasing the retirement age or decreasing benefits for anyone.  

Medicare is another story. Most economists favor changing Medicare and Medicaid to a strict HMO plan, not unlike the VA or Kaiser Permanente, which means that some people would lose access to their current doctors, and that something called "best practices" would kick in. People wouldn't be able to watch a new television commercial for the illness du jour and request its medicine from their doctor; they'd actually have to present with a condition and let the doctor diagnose it. Strict HMOs are very careful about things like trying generic drugs before name-brand; about practicing preventative medicine; about trying the least invasive and expensive procedure before ratcheting it up. They usually have really good outcomes, and their costs are low. At a typical Kaiser, everything you could possibly need is in one building — doctor's offices, places to get immunized, radiology, blood tests, urgent care clinics, physical therapy, pharmacy, as well as the hospital with its emergency room and inpatient facility. Kaiser requires that everyone choose a doctor from their employee list and undergoes a yearly physical, gets all recommended tests and shots, etc. When you get strep throat three months later, you come into the urgent care clinic, when you probably won't see your actual doctor. The entire program gets paid per patient per year, not per service, and this cuts down on costs tremendously, as well as providing a strong incentive for "wellness" emphasis on the part of the HMO.

However, seniors' groups don't like this method. It's fine if it's a choice, they say, but no one should be forced into this kind of program. It should be noted that the largest senior lobbying group, AARP (formerly named the American Association of Retired Persons), while decrying "forced" HMO-Medicare, markets its own HMO-Medicare plan through United HealthCare. Conflict of interest, you say? You'd be right. And because this lobbying group is the largest in the nation, commanding the largest block of voters in America, Democrats are queasy about making systematic changes that might bring the seniors out against them in a pivotal election.

Well, that's why the Supercommittee failed; what happens now?

If nothing happens between now and 2013, there will be broad, across-the-board cuts in both defense and domestic programs to the tune of a trillion dollars. President Obama has already said he will veto any attempt to repeal this part of the August agreement.

Maine will be especially hard-hit by the cuts, since shipbuilding will be slowed, according to Defense Secretary Leon Panetta. This may affect Bath Iron Works as well as the Portsmouth Naval Shipyard, and the 10,000 employees between them. Also slowed down will be Medicare and Medicaid payments for Maine's seniors and poor, which will lead to straitend conditions in hospitals and nursing homes throughout the state. Also on the chopping block would be Maine's vibrant Head Start program, the already sadly decimated LIHEAP program, and northern border security.

Across the country, transportation programs would slow, train service would be scaled back, extended unemployment benefits would be at risk, and funding for national parks would be trimmed. 

Adding to the mess is the fact that 2012 is an election year. Expect partisans to stand their ground unless the voting public makes it very clear that they will not be re-elected if they do.

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