“Solely An Oppositional Movement”: Why Winning Elections Is The Last Thing The Tea Party Wants
Keith Humphreys asks a provocative question: Does the Tea Party even want to win elections? This comes up in response to a long article in the National Review by Ramesh Ponnuru and Rich Lowry telling the Tea Party to get its head out of the clouds and start doing things that will help Republicans win. While it’s tricky to ascribe specific desires and intentions to a large, complicated collection of people like the Tea Party, to the extent we can, I think the answer to whether they want to win is pretty clearly no. And there’s a certain logic to it.
The reason is that the Tea Party is an oppositional movement, and oppositional movements only thrive when they’re in the opposition. They can talk all they like about both Republicans and Democrats being part of the problem, and being opposed just to “Washington,” but we all know that at its heart it’s about Barack Obama and everything he represents. If Hillary Clinton or another Democrat becomes president in 2016, most of the anger and resentment that gives the movement life will get transferred to that person, and it will continue. But as I’ve held for a few years now, as a movement the Tea Party has a firm expiration date, which is the inauguration of the next Republican president.
The movement also holds a contempt for compromise of any sort as one of its fundamental pillars, which is fairly easy to stick with when your side is out of power. It’s not like you’re going to be getting much of what you want anyway, so you can scoff at the half-loaves your more reasonable colleagues are offering up. But when there’s a Republican administration the gifts to conservatism will be showering down from every cloud, and they’ll be much tougher to say no to. How about we give you an appointment at the EPA, where you can destroy the agency from the inside instead of railing at it from the street? What say we do the same to the Labor Department? Now that our bills won’t get vetoed, let’s start slashing away at food stamps and CHIP and all those other programs the “takers” suckle on. It’s time to party! In that atmosphere, there’s so much to say yes to that saying no to everything isn’t so attractive anymore.
And when it can’t shout “No!”, the Tea Party will have no more reason for being. Obviously, even if it’s dead as a movement, many of the people who championed it will still be in Congress. But saying no won’t be as attractive for them either. It’s one thing to imagine yourself a brave warrior standing up against Barack Obama and his plan to turn America into a nightmare of socialist misery. It’s another to, say, fight against cuts to Medicaid because you want even bigger cuts to Medicaid. That’s far less romantic.
So no, as a whole the Tea Party doesn’t have much of an interest in winning elections, because if it helped Republicans have a resounding win, it would literally be the last thing the movement ever did.
By: Paul Waldman, Contributing Editor, The American Prospect, October 31, 2013
“Raising The Medicare Age”: A Terrible Republican Idea Exposed As Even More Terrible
Yesterday, the Congressional Budget Office came out with a report assessing the budgetary impact of something many conservatives have supported, raising the Medicare eligibility age from 65 to 67. What they found was that the change would save far less money than had previously been assumed: only $19 billion over the next decade. The main reason is that many of the people no longer eligible for Medicare would be eligible for either Medicaid or insurance subsidies through the health exchanges, so the net effect on the federal budget would be small.
But more important than that, this is an opportunity to remind ourselves that when government is doing something worthwhile, doing less of it isn’t a good idea even if it saved a lot of money. And if cutting back only saves a modest amount of money, it’s a really bad idea. You know what else would save a lot of money? Eliminating the United States Navy. But I’m guessing that most conservatives think having a navy is a good thing. Medicare is a spectacular success, one of the greatest things this country has ever done. Letting fewer people get on it is like the Miami Heat saying, “We won the championship last year, so what we need to do now is get rid of LeBron James.”
Don’t forget, Medicare is more efficient and less expensive than private insurance. Let me repeat that: Medicare is more efficient and less expensive than private insurance. It costs less to administer, its costs have risen more slowly than those of private insurance, and its beneficiaries love it. I realize that these facts cause many conservatives to begin blinking rapidly as their brains threaten overload from the cognitive dissonance produced when they realize that there are places where a government program outperforms its private-sector counterparts. But it’s true.
Yes, Medicare’s costs are projected to rise greatly in the coming decades. But that isn’t because the program doesn’t work, it’s because of the high cost of health care in general, and because there are going to be a lot more old people. And not incidentally, there was one piece of legislation that found ways to save hundreds of billions of dollars from Medicare’s future expenses. It was called the Affordable Care Act, and you may remember that Republicans didn’t think too highly of it. In fact, they even pretended to be terribly opposed to those very savings, falsely characterizing them as cuts to benefits. But instead they’d like to just make the program available to fewer seniors?
If you don’t let people get on Medicare when they’re 65, it isn’t as though they’ll just step into their suspended animation pods for two years and then pop out when they turn 67. Those people will have to get coverage from private insurers. That means they’ll be paying more out of their own pockets. And look, I realize that many conservatives believe that someone getting health insurance from the government is an inherently bad thing, no matter how well the program works. But it isn’t. When a senior goes on Medicare, it’s something to be celebrated. It isn’t free, but it’s government doing exactly what it ought to do.
By: Paul Waldman, Contributing Editor, The American Prospect, October 25, 2013
“Cloaked In Secrecy”: The Myth Of The Medical-Device Tax
In the last few days of negotiations in Congress, repeal of the Affordable Care Act’s tax on medical devices emerged as a key Republican demand. The medical-device industry waged an intense lobbying campaign — even garnering the support of many Democrats who favored the law — arguing that the tax would stifle innovation and increase health care costs.
This argument is doubly disingenuous. Not only can the medical-device industry easily afford the tax without compromising innovation, but the industry’s enormous profits are a result of anticompetitive practices that themselves drive up medical-device costs unnecessarily. The tax is a distraction from reforms to the industry that are urgently needed to lower health care costs.
The medical-device industry faces virtually no price competition. Because of confidentiality agreements that manufacturers require hospitals to sign, the prices of the devices are cloaked in secrecy. This lack of transparency impedes hospitals from sharing price information and thus knowing whether they are getting a good deal.
Even worse, manufacturers often maintain personal relationships (sometimes involving financial payments like consulting fees) with physicians who choose the medical devices that their hospitals purchase, creating a conflict of interest. Physicians often don’t even know the costs of the devices, and individual physicians often choose devices on their own, which weakens a hospital’s ability to bargain for volume discounts.
Such anticompetitive practices help generate a wide variation in the prices of medical devices — and contribute to higher prices in general. For example, the Government Accountability Office found that prices for cardiac implantable medical devices in the United States vary by several thousand dollars. And even the lowest-priced devices in the United States are expensive compared with those in other developed countries. According to the consulting firm McKinsey & Company, the United States spends about 50 percent more than expected on the top five medical devices, compared with Europe and Japan. McKinsey calculates that this amounts to $26 billion in excessive spending each year. Medicare, private health insurers and patients end up paying these inflated prices.
Excessive prices fuel enormous profits — profits that dwarf both the medical-device tax and the industry’s investments in research and development. Consider the device division of Johnson & Johnson, which in 2012 had an operating profit of $7.2 billion. By the company’s own estimate, the device tax would amount to at most $300 million, and its investment in research and development amounts to only $1.7 billion.
There are several ways policy makers could lower device costs. The first step would be to end the anticompetitive practices that prevent hospitals from getting the best deals. Senator Charles E. Grassley, Republican of Iowa, has sponsored legislation that would foster transparency by posting online price information for implantable medical devices.
In addition, instead of simply paying hospitals based in part on what they have spent on devices, Medicare should force manufacturers to compete for business based on a product’s price and quality.
Medicare should also pay hospitals a single lump sum for all of the associated costs of a given procedure (like a hip replacement). This approach, known as “bundling” the costs, would create incentives for hospitals to lower device costs. Savings should be shared with the physicians, so that their incentives are aligned with the hospital’s.
Bundling has been used successfully in pilot programs. Under Medicare’s Acute Care Episode Program — which bundled payments for cardiac and orthopedic procedures — physicians worked together to choose high-quality, cost-effective devices. Baptist Health System in Texas, which participated in the program, used clinical evidence to choose devices and negotiated lower prices for both Medicare and non-Medicare patients.
States could adopt similar payment reforms for private insurance and their Medicaid programs. In Arkansas, the Medicaid program and private payers — including Walmart — have collaborated to adopt bundled payments for several procedures, including hip and knee replacements.
To complement these efforts, the new Patient-Centered Outcomes Research Institute, a nongovernmental body created by the Affordable Care Act, should pay for research that compares the effectiveness of devices so physicians can make informed choices. (Three years into its existence, the institute has initiated few, if any, studies of medical devices.) Medicare or the Food and Drug Administration should also require the use of registries that track when devices fail.
Currently, medical-device manufacturers allocate only a sliver of profits to research and development and often focus on “tweaks” to existing devices, without providing any evidence that they are of better quality. Competitive pressures from public and private payers would provide incentives for the industry to become more innovative, producing technologies that actually lowered costs and offered truly advanced breakthroughs.
Instead of using its clout to lobby against the device tax — which helped foment opposition to the Affordable Care Act — the medical-device industry needs to share the responsibility of lowering costs for patients, businesses and taxpayers.
By: Topher Spiro, Op-Ed Contributor, The New York Times, October 16, 2013
“Dealing With Default”: Let’s Hope We Don’t Find Out What Will Happen If We Hit The Debt Ceiling
So Republicans may have decided to raise the debt ceiling without conditions attached — the details still aren’t clear. Maybe that’s the end of that particular extortion tactic, but maybe not, because, at best, we’re only looking at a very short-term extension. The threat of hitting the ceiling remains, especially if the politics of the shutdown continue to go against the G.O.P.
So what are the choices if we do hit the ceiling? As you might guess, they’re all bad, so the question is which bad choice would do the least harm.
Now, the administration insists that there are no choices, that if we hit the debt limit the U.S. government will go into general default. Many people, even those sympathetic to the administration, suspect that this is simply what officials have to say at this point, that they can’t give Republicans any excuse to downplay the seriousness of what they’re doing. But suppose that it’s true. What would a general default look like?
A report last year from the Treasury Department suggested that hitting the debt ceiling would lead to a “delayed payment regime”: bills, including bills for interest due on federal debt, would be paid in the order received, as cash became available. Since the bills coming in each day would exceed cash receipts, this would mean falling further and further behind. And this could create an immediate financial crisis, because U.S. debt — heretofore considered the ultimate safe asset — would be reclassified as an asset in default, possibly forcing financial institutions to sell off their U.S. bonds and seek other forms of collateral.
That’s a scary prospect. So many people — especially, but not only, Republican-leaning economists — have suggested that the Treasury Department could instead “prioritize”: It could pay off bonds in full, so that the whole burden of the cash shortage fell on other things. And by “other things,” we largely mean Social Security, Medicare, and Medicaid, which account for the majority of federal spending other than defense and interest.
Some advocates of prioritization seem to believe that everything will be O.K. as long as we keep making our interest payments. Let me give four reasons they’re wrong.
First, the U.S. government would still be going into default, failing to meet its legal obligations to pay. You may say that things like Social Security checks aren’t the same as interest due on bonds because Congress can’t repudiate debt, but it can, if it chooses, pass a law reducing benefits. But Congress hasn’t passed such a law, and until or unless it does, Social Security benefits have the same inviolable legal status as payments to investors.
Second, prioritizing interest payments would reinforce the terrible precedent we set after the 2008 crisis, when Wall Street was bailed out but distressed workers and homeowners got little or nothing. We would, once again, be signaling that the financial industry gets special treatment because it can threaten to shut down the economy if it doesn’t.
Third, the spending cuts would create great hardship if they go on for any length of time. Think Medicare recipients turned away from hospitals because the government isn’t paying claims.
Finally, while prioritizing might avoid an immediate financial crisis, it would still have devastating economic effects. We’d be looking at an immediate spending cut roughly comparable to the plunge in housing investment after the bubble burst, a plunge that was the most important cause of the Great Recession of 2007-9. That by itself would surely be enough to push us into recession.
And it wouldn’t end there. As the U.S. economy went into recession, tax receipts would fall sharply, and the government, unable to borrow, would be forced into a second round of spending cuts, worsening the economic downturn, reducing receipts even more, and so on. So even if we avoid a Lehman Brothers-style financial meltdown, we could still be looking at a slump worse than the Great Recession.
So are there any other choices? Many legal experts think there is another option: One way or another, the president could simply choose to defy Congress and ignore the debt ceiling.
Wouldn’t this be breaking the law? Maybe, maybe not — opinions differ. But not making good on federal obligations is also breaking the law. And if House Republicans are pushing the president into a situation where he must break the law no matter what he does, why not choose the version that hurts America least?
There would, of course, be an uproar, and probably many legal challenges — although if I were a Republican, I’d worry about, in effect, filing suit to stop the government from paying seniors’ hospital bills. Still, as I said, there are no good choices here.
So what will happen if and when we hit the debt ceiling? Let’s hope we don’t find out.
By: Paul Krugman, Op-Ed Columnist, the New York Times, October 10, 2013
“Wal-Mart Returning To Full-Time Workers”: Obamacare Not Such A Job Killer After All
Wal-Mart, the nation’s largest employer, announced Monday that 35,000 part-time employees will soon be moved to full-time status, entitling them to the full healthcare benefits that were scheduled to be denied them as a result of Wal-Mart’s efforts to avoid the requirements of Obamacare.
While some analysts believe that the move comes as Wal-Mart is attempting to deal with the negative view many Americans have of its worker benefits program, a closer look reveals the real reason for the shift—
Wal-Mart’s business is going south due to the company’s penchant for putting politics and the squeeze on Wal-Mart employees ahead of the kind of customer satisfaction that produces prosperity over the long-term.
In fact, Wal-Mart’s unwillingness to pay most of their workers a livable wage, while avoiding enough full-time employees to properly run a retail outlet, has led to the company placing dead last among department and discount stores in the most recent American Customer Satisfaction Index—a position that should now be all to familiar to the nation’s largest retailer given that Wal-Mart has either held or shared the bottom spot on the index for six years running.
For anyone who has not been following the Wal-Mart saga, sales have been sinking dramatically at the retailer as the company has turned to hiring mostly temporary workers (those who must reapply for a job every 180 days) to staff their stores while cutting full-time employees’ hours down to part-time status in order to avoid providing workers with healthcare benefits.
The result?
Empty shelves, ridiculously long check-out lines, helpless customers wandering through the electronics section and general disorganization at Wal-Mart store locations.
This is hardly a recipe for success.
A recent description of a Wal-Mart store in Newark, New Jersey published by Bloomberg, says it all—
“Three days earlier, about 10 people waited in a customer service line at a Wal-Mart in Secaucus, New Jersey, across the Hudson River from New York, the nation’s largest city. Twelve of 30 registers were open and the lines were about five deep. There were empty spaces on shelves large enough for a grown man to lie down, and a woman wandered around vainly seeking a frying pan.”
The description pretty much sums up what you will find at the typical Wal-Mart store in the United States these days.
While the company’s trend toward temporary employees has allowed the retailer to avoid its responsibilities under the Affordable Care Act—a law that Wal-Mart publicly supported only to turn around after passage and work to avoid providing health care benefits to employees—they’ve managed to tank their store sales in the process.
Who would have guessed that a well-staffed store filled with competent and reasonably paid employees might actually have an impact on the success of a company?
Home Depot—that’s who.
According to Zeynep Ton, a retail researcher and associate professor of operations management at the MIT Sloan School of Management, in the early 2000s, Home Depot’s CEO, Robert Nardelli, moved to cut full-time staffing levels while increasing part-time employees in an effort to boost profits by trimming the expense that comes with employing full-time workers. It worked for a short while. However, as Ton notes, eventually customer service declined—and with it, customer satisfaction—leading to a severe decline of same-store sales.
Wal-Mart’s penny wise-pound foolish approach to its business was further well documented in the Bloomberg article referenced earlier where they told the story of Margaret Hancock, a retired accountant from Newark, Delaware, who has always viewed Wal-Mart as her “one stop shopping destination”.
While Ms. Hancock had, for years, been able to get everything she needed at her local Wal-Mart store, recent visits resulted in her failing to locate numerous items as the products were simply not out on the shelves and available for purchase.
As Hancock explained it, “If it’s not on the shelf, I can’t buy it. You hate to see a company self-destruct, but there are other places to go.”
And ‘go’ is exactly what Ms. Hancock did—no doubt to Wal-Mart’s competitor, Costco, a company that experienced a 19 percent increase in profits in Q2 2013 while paying its employees 40 percent more on average (the average Costco wage is $21.96 per hour) than what a Wal-Mart worker can earn. In that same quarter, Wal-Mart numbers revealed the company is going nowhere fast given its current state of operations.
So, where is all that product that once filled Wal-Mart shelves?
Oh, the goods are in the store—either in the back room or in the unopened boxes lining the aisles as they await the availability of a store clerk to get to the rather critical job of moving the merchandise from the box to the shelf where a customer can actually purchase it. But when there are insufficient numbers of store clerks available—due to Wal-Mart’s commitment to using temporary workers or busting its full-time employees down to part-time so as to avoid worker benefit—the products Wal-Mart sells stay off the shelves and unavailable for customers to purchase.
Of course, Wal-Mart’s efforts to keep its workers from earning a decent living while achieving health care benefits has created some full-time work for some.
The company now hires people to work with its employees to help them sign up for Medicaid, the government program that makes healthcare available to Americans who neither get coverage at work or are able to afford it without public assistance.
What that means is that you and I are subsidizing Wal-Mart’s poor treatment of its employees as we pay for their workers health care coverage with our tax dollars and all so Wal-Mart can feather and mask its sinking profits by allowing you and I to pay for their responsibilities, whether we shop at Wal-Mart or not.
The moral to the story?
Wal-Mart is finally learning what all American businesses who seek to avoid their health care responsibilities to employees will soon learn.
It may be a clever enough dodge to cut employees below the 30 hours per week in order to avoid the expectations of Obamacare, but the move comes at a substantial price to be paid in lost revenue and profits. Given that the entire point of business is to show a profit, it is only a matter of time before employers learn what Home Depot learned some years ago and what Wal-Mart is slowly beginning to figure out—you get what you pay for.
Cut back on employees and you will, eventually, cut back on your profits as the savings a business creates by cutting worker hours leads to greatly decreased sales as customer satisfaction disappears.
While there are no shortage of Americans who enjoy deriding the Affordable Care Act as a ‘job killer’, what will soon emerge—and sooner than you may think—is an understanding that the losses experienced by businesses that cut worker hours will far exceed whatever is gained by avoiding giving employees the healthcare benefits their families so badly require.
Don’t believe it?
Just ask Wal-Mart.
By: Rick Ungar, Op-Ed Contributor, Forbes, September 25, 2013
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