FRIDAY, AUGUST 27, 2010
KLMNO Washington FORUM
What’s on the ballot? Gridlock.
by Matt Miller
weekend. But it’s more like a grim vision. A vision of nearly zero progress on the major challenges facing the country be- tween Wednesday, Nov. 3, 2010 and Jan. 20, 2013.
I Call it a chronicle of gridlock foretold.
Here’s the chain of logic. It seems clear that Republicans are poised to make big gains in the midterm elections. Not thanks to their soaring vision for the country, mind you – the public’s view of the Republican Party is at one of its low- est points, according to recent polls – but because the Obama administration hasn’t produced enough jobs and growth. It seems equally certain that Repub- licans will over-interpret their victory as a call for “more of the same” in the run- up to 2012. In this case, “more of the same” means relentless Obama-bashing, an invocation of tax cuts as the answer to any woe, a refusal to offer plans that add up or cohere, and in general the kind of vacuous but politically effective maneu- vering of an “out” party on the scent of getting back “in.” To be sure, there will be a responsible GOP voice or two insisting on something more substantive. But so long as Repub- licans hold just the House, or, perhaps better for them, if they simply narrow the Democratic majorities in the House and Senate without actually winning power (and responsibility) in either, neg- ativity and obstruction will prevail. It’s like the laws of physics, or gravity — be- havior baked into the nature of things as the surest route to power in 2012. What about the Democrats? Chas- tened by big losses on Nov. 3, they will begin their orgy of recriminations and finger-pointing the next day. The charg- es will be contradictory and self-serving, as is always the case during party melt- downs. “Obama wasn’t progressive enough.” “Obama governed too much from the left.” You can script the shout- fest on MSNBC already. The question mark is the president.
He’s famously (and admirably) allergic to “small ball.” But, as reality sinks in, he’ll probably come to terms with what Bill Clinton had to accept after his own midterm blowout. The affirmative phase of his presidency will be over. All re- sources must be marshaled for victory in 2012. With luck, Obama will reckon, there will be license to think big again come 2013. In the meantime, it’ll be time for the mandatory White House shake- up, the news conference in which Oba- ma explains that he “gets it,” the public call to Republicans to make progress to- gether and the private plotting to bury them. Bottom line? We’re looking at two years of posturing with an eye to 2012, with next to nothing being done to re- new American competitiveness, rescue the middle class or [insert your favorite neglected agenda item here]. Remember how we moaned that the incentives facing Wall Street led bankers to run risks that made them rich even as they wrecked the economy? Turns out the incentives facing politicians don’t serve us well, either. Winning is a politician’s first duty. But
what it takes to win political power bears no relationship to actually solving public problems. Etch this in stone somewhere. Our problem is that simple —and that complicated. Meanwhile, as we dither for another
two years, China will boost wages and invest in clean energy. Singapore will get even more efficient. Finland will keep educating kids fabulously in ways that prepare them to take jobs American par- ents once assumed were their children’s birthright.
At this point in any soliloquy on grid- lock, someone like me wishes wistfully for a parliamentary form of government, so that when a party wins, it actually gets to enact its agenda and then gets to be held accountable by voters. Conserva- tives usually reply that the “genius” of America’s system is that it’s hard to make anything happen. Well, “genius” is one word for it. But I suspect this kind of genius is no longer useful, in a Darwin- ian sense, to ensure that America flour- ishes. It’s not that we’re no longer the “fittest.” We’re not really fit at all. Martin Wolf, the author and Financial Times columnist, has a great line about the competitive advantage of a nation in a global era being not its natural re- sources or even its people but, ultimate- ly, the quality of its governance — be- cause everything else depends on this. Can anyone on that metric boast “we’re No. 1”? I hope I’m wrong about this. By nature
I’m a cockeyed optimist. My wife thinks it’s a high-serotonin issue. Come Novem- ber, I may need some new meds.
Matt Miller, a senior fellow at the Center for American Progress and co-host of public radio’s "Left, Right & Center," writes a weekly column for The Post. He can be reached at
mattino2@gmail.com.
wish I could say “I have a dream,” what with the anniversary of Dr. King’s famous speech coming this
tives. Yet the recovery has lost momentum, and while the end of the year will not be as gut- wrenching as the final 31
T STEVE GERSTEL/UPI
Martin Luther King Jr. gives his "I Have a Dream” speech in front of the Lincoln Memorial. EUGENE ROBINSON
It’s still King’s moment Even Glenn Beck can’t diminish the man and his dream T
he majestic grounds of the Lincoln Memorial belong to all Americans — even to egomaniacal talk-show hosts who profit handsomely from stoking fear, re-
sentment and anger. So let me state clearly that Glenn Beck has every right to hold his absurdly titled “Restoring Hon- or” rally on Saturday. But the rest of us have every right to call the event what it is: an exercise in self-aggrandizement on a Napoleonic scale. I half-expect Beck to appear before the crowd in a bi- corn hat, with one hand tucked into the front of his jacket. That Beck is staging his all-about-me event at the very spot where the Rev. Martin Luther King Jr. delivered his im- mortal “I Have a Dream” speech — and on the 47th anniver- sary of that historic address — is obviously intended to be a provocation. There’s no need to feel provoked, however; the appropriate response is to ignore him. No puffed-up blab- bermouth could ever diminish the importance of the 1963 March on Washington or the impact of King’s unforgettable words.
Lincoln and King will always have their places in Amer- ican history. Beck’s 15 minutes of fame and influence are ticking by. The most offensive thing about the rally is Beck’s in-your- face boast that the event will “reclaim the civil rights move- ment.” But this is just a bunch of nonsense — too incoher- ent to really offend. Beck makes the false assertion that the struggle for civil rights was about winning “equal justice,” not “social justice” — in other words, that there was no eco- nomic component to the movement. He claims that today’s liberals, through such initiatives as health-care reform, are somehow “perverting” King’s dream. But Beck’s version of history is flat-out wrong. The full name of the event at which King spoke 47 years ago was the “March on Washington for Jobs and Freedom.” Among its organizers was labor leader A. Philip Randolph, the found- er of the Brotherhood of Sleeping Car Porters and a vice president of the AFL-CIO, who gave a speech describing the injustice of “a society in which 6 million black and white people are unemployed and millions more live in poverty.” Rep. John Lewis (D-Ga.), then an official of the Student
Nonviolent Coordinating Committee, was the youngest speaker at the march. “We march today for jobs and free- dom, but we have nothing to be proud of, for hundreds and thousands of our brothers are not here — for they have no money for their transportation, for they are re- ceiving starvation wages,” he told the crowd. Referring to proposed civil rights legislation, Lewis said: “We need a bill that will provide for the homeless and starving people of this nation. We need a bill that will ensure the equality of a maid who earns five dollars a week in the home of a family whose total income is $100,000 a year.” From the beginning, King’s activism and leadership were aimed at securing not just equal justice but equal op- portunity as well. When he was assassinated in 1968, King was in the midst of a Poor People’s Campaign aimed at bet- tering the economic condition of all underprivileged Americans, regardless of race. But why am I wasting my breath? Glenn Beck isn’t in- terested in history, and he certainly isn’t interested in the truth. He just likes to set off little rhetorical firebombs that grab attention — and boost the ratings for his television and radio shows.
Since Beck has called President Obama a “racist” and
accused him of having a “deep-seated hatred for white people,” it’s safe to assume that some people will attend Saturday’s rally because of a sense of racial grievance and an urge for some kind of payback. But many will attend for other reasons, and they’re the ones I feel sorry for. As the growth of the Tea Party movement clearly demonstrates, millions of Americans feel alienated from their govern- ment, distressed about the economy and frightened of the future. Their concerns deserve to be heard. Instead, their anxieties are exploited by hucksters who see fear and an- ger as marketing tools. Saturday night, when the event is done, the Lincoln Me- morial will still be the place where King gave one of the most memorable speeches of the 20th century. People who came to the rally in search of answers will still be looking. And Glenn Beck will still be a legend in his own mind.
eugenerobinson@washpost.com
⁄2 months of 2008, when
the global economy suffered a cardiac arrest, it will be as consequential in affecting the welfare of millions of people. Throughout the summer, data signals have be- come more alarming. Despite all the rhetoric about job creation, unemployment remains stubbornly high and the problem is becoming structural in nature (and, therefore, harder to solve). Consumer credit continues to contract while small companies find it difficult to access new bank lines of credit. Housing activity is fall- ing, and home values are poised for further de- clines as foreclosures increase. The trade bal- ance has taken an ominous turn, with exports stagnating and imports surging. More Amer- icans are falling through the large holes in the country’s safety net. The equity markets are again under pressure while yields on Treasury bonds have collapsed, reflecting that market’s growing concerns about the weak economic outlook. With such fragility, households and companies have become even more cautious, undermining the “animal spirits” needed for economic expansion. Meanwhile, the United States has received lit- tle help from the rest of the world. Yes, German growth is up, but a significant part reflects its well-functioning export machine. The beneficial spillover effects have been immaterial. And de- spite the political narrative to the contrary, mar- ket concerns with debt solvency in some euro- zone countries (Greece, Ireland, Portugal and Spain) remain high. Even a steadily growing China is proving to be of limited help. While Beijing is implementing additional structural changes to reorient its economy toward domestic consumption, the pace remains measured; what is understandable from a Chinese national perspective does little to help sustainably rebalance the global economy. In sum, the current policy approaches here and abroad are unlikely to deliver a durable and robust U.S. recovery and, critically, create suffi- cient growth in jobs. Yet the main debate in Washington is whether to do more of the same — namely, another fiscal stimulus and another round of quantitative easing by the Federal Re- serve. This clearly conflicts with evidence that a broader and more holistic response is needed. These realities will fuel debate among econo- mists, who already hold unusually divergent views, and reignite the discomforting notion that economic unthinkables and improbables — such as a double-dip recession and a deflation trap — are more of a possibility. What is critical to keep in mind is that this sit-
The wrong prescription for Medicare D
by Michael O. Leavitt
espite the report from Medicare’s trustees this month that the hos- pital insurance trust fund will not
be depleted until 2029, 12 years later than was predicted just last year, Medi- care is no better off than it was a year ago. The administration credits Medicare’s seemingly healthier financial outlook to changes made by the new health-care law. In fact, the legislation has weakened the program. Worse, its changes create the perception of progress, making it more difficult to pursue the reforms that would put Medicare on sound financial footing so future generations of seniors will benefit. The problem begins with double counting. The Congressional Budget Of- fice estimates that the health law will re- duce Medicare spending by about $450 billion over 10 years. But all of those savings, plus massive tax increas- es, are used in the new law to pay for an expansion of Medicaid and a new enti- tlement program to subsidize insurance premiums for low-income households. The Medicare cuts can be used to im- prove the government’s capacity to fi- nance benefits in the future or to pay for another entitlement. But they can’t be used for both — a point the CBO and Medicare’s actuaries made in their cost estimates. On paper, the Medicare trust fund appears to have additional reserves because of government accounting pe- culiarities. But Congress has already committed those funds elsewhere. Then there is the nature of the cuts.
The administration recently penned a taxpayer-subsidized mailer for seniors touting the benefits the health law is to provide. Not mentioned are the deep cuts to Medicare Advantage, the private insurance component of Medicare, that will reduce benefits for the average en- rollee by $800 per year later this decade. Further, the new law imposes about a
half-percentage-point cut every year in the annual increases in Medicare pay- ment rates for hospitals and other insti- tutional providers of care. Those in- creases are meant to cover inflation in the costs of providing services. Over time, the compounding effect of the cuts will be so large that the program’s chief actuary says they are unlikely to be sus- tained. He estimates that if these cuts are implemented, 15 percent of the na- tion’s hospitals would have to stop see- ing Medicare patients. Despite all the talk of “delivery system reform,” these cuts would be applied without regard to quality or performance. Every hospital and nursing home would experience re- ductions, no matter how well or badly they treat their patients. We know full well that this kind of ar-
bitrary cost-cutting in Medicare doesn’t work. Since 1989, Congress has tried to put a lid on total fees paid to physicians. The use of physician services has soared under Medicare’s fee-for-service ar- rangements. The automatic formula has tried to offset the higher costs with low- er fees, across the board. But the cuts are so draconian that they drive physicians out of the program and reduce benefi- ciaries’ access to care. The result is a bi- partisan rush to undo the cuts every year. Why would we expect a different result from arbitrary cost-cutting in the new health law? The administration has also pointed to the Independent Payment Advisory Board as a “game changer” for Medicare and the broader health system. The 15- member board is charged with finding savings in Medicare to keep spending growth below fixed targets, starting in 2015. Its recommendations will take ef- fect automatically unless overruled in a new law.
Although Congress handed off sub- stantial power to the board, lawmakers did so by removing its potency. The board can change only Medicare’s pay- ment rates for services and products (and it can’t touch hospitals until 2020).
The board can’t change the nature of the Medicare entitlement or try to impose more market-based discipline on the program. That means the only way it can hit the budget targets is with reduc- tions in reimbursement rates for those taking care of patients. That approach never works to control costs because the volume of services used is left un- checked. This undermines quality by pe- nalizing high and low performers alike. The fundamental problem is that
Medicare’s dominant fee-for-service structure rewards volume, not quality or value. Over the past quarter-century, Medicare administrators — appointed by both political parties — have tried to leverage the government’s purchasing power to get more value from what is spent on behalf of seniors. Those efforts have not succeeded in altering the pro- gram’s unsustainable course. The Medi- care bureaucracy, even with the Inde- pendent Payment Advisory Board at- tached to it, does not have the capacity to engineer a more efficient health deliv- ery system through complicated pay- ment regulations. What’s needed is a new vision for
Medicare. Instead of micromanaging prices, the federal government should provide oversight of a marketplace in which cost-conscious seniors choose among competing insurance and deliv- ery system options. That’s how the new drug benefit works, and costs have come in much lower than expected because genuine price competition drives down costs much more than any payment reg- ulation can. What Congress passed this spring is the illusion of Medicare reform. It does not ease cost pressures but papers over them with unsustainable price controls. It will end in disappointment, just as ev- ery other such effort has.
The writer was secretary of health and human services and a member of the Medicare Board of Trustees from 2005 to 2009.
uation is part of a broad, multiyear process driv- en by national and global realignments. It’s a secular phenomenon that needs to be better un- derstood and navigated — by recognizing its structural dimensions and by urgently broad- ening the excessively cyclical policy mindsets that abound. Unfortunately, the approach in too many industrial countries has been to kick the can down the road, seemingly hoping for a series of immaculate economic recoveries. Policymakers must break this active inertia by implementing a structural vision to accompany their current cyclical focus. Measures are needed to address key issues, which include the change in drivers of growth and employment creation; the high risk of skill erosion and lost labor pro- ductivity; financial deleveraging in the private sector; debt overhangs; the uncertain regulatory environment; and the unacceptably high risks facing the most vulnerable segments of society. Specific measures would include pro-growth
tax reform, housing finance reform, increased infrastructure investments, greater support for education and research, job retraining pro- grams, removal of outdated interstate competi- tion barriers and stronger social safety nets. That, of course, is what is desirable; how about what is likely? With the recovery’s visible loss in momentum, more people are coming to appreciate the im- portance of structural issues. Indeed, some ele- ments of the package are visible. Yet, to my dis- may, the prospects for a sufficiently bold policy reaction are doubtful. Post-financial crisis, it is no longer just about the “unusually uncertain” economic outlook and related challenges for a policy approach that remains too reactive and ad hoc. The politics of structural change are now a material impediment.
An already polarized political environment is becoming even more fractured by real and far less substantive issues. There is virtually no po- litical center that can anchor consensus and en- able sustained implementation of policy. Mean- while, as anti-Washington sentiments rise, inter- est in a national agenda is increasingly giving way to the election cycle. Internationally, the im- pressive degree of cross-border coordination seen during the global financial crisis has been reduced to inconsistent — and at times contra- dictory — national responses. This worrisome trio of increasingly ineffective
national and global policy stances, intense politi- cal polarization and growing social pressures speaks to the risk that the economy’s recent soft patch will evolve into something even more troublesome and sinister. I hope that sober policy responses will accom-
pany the coming cooler temperatures. Given the proximity of the November elections, however, I worry they may not.
Mohamed A. El-Erian is chief executive and co-chief investment officer of the investment management firm Pimco and author of the 2008 book “When Markets Collide.”
Time to go beyond a stimulus
by Mohamed A. El-Erian
he great hope a few months ago was for a “recovery summer,” with the economy re- sponding favorably to various policy initia-
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