Then First Lady Hillary Clinton chaired the group that, in 1993, proposed the last major attempt at health reform before the Affordable Care Act of 2010. The plan was widely panned, and politicians and pundits of every stripe (including Congressional Democrats) rushed to form alternatives. The conservative Heritage Foundation proposed an innovative idea built around insurance exchanges and an individual mandate to carry health insurance. The plan was built in recognition of costs that were inflating rapidly due to a lack of real competition.
It was an interesting idea in 1993; so interesting that when President Obama and others went looking for a politically realistic alternative to single-payer health care, they adopted the concept of exchanges (and the mandate) as the core of their plan. As Mitt Romney had already passed a version of the Heritage Plan in Massachusetts, it seemed like a good idea. The problem, of course, is that it isn’t 1993 anymore; politics isn’t about problem-solving anymore, it is about winning. To make matters worse, it appears that conservatives have abandoned any pretense of creativity or reason in their approach to leadership. Reminiscent of Henry Ford’s position on customer choice (you can have the Model-T in any color you want, as long as its black), conservatives are willing to use any means to solve national problems, as long as the solution is a tax cut.
It has a certain charm that appeals to everyone (even me); who doesn’t like a tax cut or tax credit? But the less one pays in taxes, the less value a tax cut has, and U.S. corporations already pay one of the lowest effective rates in the world (the percentage of firms in this country that pay no income tax is roughly equivalent to the percentage of households whose effective rate is zero…the difference being most of those households loan the government money throughout the year at essentially negative interest rates). The United States is consistently ranked as one of the best nations to do business within in the world. Given that information, it shouldn’t surprise us that U.S. firms aren’t inspired to hire or spend more (in this country anyway) by the Bush tax cuts or ongoing credits; they are simply sitting on the extra profits.
Amazingly, as consumers struggle, U.S. corporations are staging a nearly unprecedented comeback that’s largely escaping notice. The gargantuan, dispiriting job cuts that seem to dominate the news have also been the spur for an epic resurgence in profits. For 2009, the Fortune 500 lifted earnings 335%, to $391 billion, a $301 billion jump that’s the second largest in the list’s 56-year history, approaching the increase in the robust recovery of 2003. For last year the 500 raised their return on sales from less than 1% to 4%. That’s close to the list’s 4.7% historical average.-April 13, 2010 (CNN Money)
All told, the Fortune 500 generated nearly $10.8 trillion in total revenues last year, up 10.5%. Total profits soared 81%.-May 5, 2011 (Yahoo Finance)
It should go without saying, that these growth rates have been achieved without corresponding explosions in jobs. Despite these facts (and they are the same wherever you read), conservatives will still insist that tax cuts are the key to economic prosperity. Saint Ronnie the Gipper slashed taxes in his first 100 days, and saw unemployment continue to climb until the middle of his second summer (unemployment under President Obama peaked during the first month of his first budget year). Mr. Reagan raised taxes (shock horror) in 1982, and watched as the economy boomed. Similarly, Bill Clinton passed a massive tax increase as a core of his 1993 Deficit Reduction Act (yes, passed before Gingrich and the Contract With America); every conservative politician and every conservative member of media predicted, nay guaranteed, economic doom. The years after the hike were times of unprecedented peacetime growth.
Then there was George W. Bush. I am sorry to report that economic growth after his cuts in 2001 and 2003 (and before the recession…lest you think I am juicing the numbers), did not live up to the Clinton example. (All statements on growth can be verified at the BEA site.) The above data does not confirm that tax increases drive growth, but it definitively destroys the notion that increases are fatal to an economy. Beyond that, pick you favorite decade, and label it the “Good Ol’ Days”; taxes where higher then, much higher.
I know tax cuts sound great, I know I like paying less, but the only thing there is proof that they do is inflate budget deficits. Despite the numbers, despite the objective, non-liberally-biased, black and white, plain as day, numbers, conservatives still shout “tax-cut” anytime the public wants an idea. And the limits on creativity don’t stay in purely tax and spend issues; the point of the Heritage papers was a reform of the medical marketplace, and we are still barking over that bone today.
Many have pointed out that the problem central to most of our deepest political divides is not government health care, it is the cost of health care. Arguing about how health care should be paid for (government or private sector) misses the point. Health care costs feature a growth rate that has consistently eclipsed base inflation by four or five times annually for almost three decades. Now matter how hard you work, that explicitly means that a greater share of Americans will be unable to afford care every year. That translates into the largest population of uninsured citizens in the world, and the highest rates of revenue write-downs (by providers) in the world.
The private sector has not fixed the problem, and shows no signs of doing so in the future. Despite this, even bright and reasonable conservatives like ex-Congressman Tom Davis cling to failed notions of “reform” that, in practise, are nothing more than “tax-cuts”.
Mr. Davis recently wrote an op-ed on CNN’s website which supposedly champions bipartisan action, but breaks no ground on the issues that divide us. With no mention of the budget effect of health care cost, Mr. Davis is free to extol the benefits of the Simpson-Bowles idea of deficit management; essentially, balance the budget by privatizing Social Security and Medicare, and diverting the funds to Wall Street.
Simpson-Bowles calls for discretionary spending cuts, tax reform, as well as important entitlement reforms. The plan is a recognition of the seriousness of the problem and at least the beginning of a comprehensive look at how we will deal with this issue in the short, medium and long term.
Consensus can and should be built around lowering health care costs through common-sense approaches such as medical malpractice reform, increased access to health savings accounts, and by promoting competition to lower health care premiums.-June 13, 2011 (Tom Davis via CNN)
It sure doesn’t sound like new stuff to me; a common-sense approach (medical malpractice reform…already done in Texas without any decrease in premium growth), increased access to MSA’s (tax-cuts that are great, except for 90% of working Americans couldn’t afford to put enough in one to handle one major procedure), and promoting competition (which is precisely what the exchanges of the Affordable Care Act were designed, by conservative pundit, to accomplish.)
I just have to believe there are ideas out there, floating around conservative circles, that are ripe for public display. There simply has to be conservative thinkers who have more than “tax-cuts” and stolen libertarian philosophy up their sleeves; but the evidence for my fantasy is stark. We have, in these United States, tried shrinking public expenditures on infrastructure and education, we have tried letting insurers set the market. The evidence on the failures of these ideas is irrefutable, unless you are willing to ignore the evidence. It is time to pay attention again to what is really happening; it is time for solutions to the real problems our democracy faces; no more treating the headache and ignoring the head wound.
The Rational Middle is listening…
(From the Publisher…the RM turns two on June 21, 2011, and we are celebrating. Join us on Facebook for a review of 10 Big Posts the last year! The RM; liberal views espoused, libertarians and conservatives welcomed…and none of the shouting or personal insults of cable news. Thanks for reading!)