MB Lockhart's Blog

I’ve been reading material that is surely no snooze: The report of the Financial Crisis Inquiry Commission, a horror story made worse by being true life.  Here’s the effect of the financial collapse of 2008 that led to our current “Great Recession:”

“As this report goes to print, there are more than 26 million Americans who are out of work, cannot find full-time work, or have given up looking for work.  About 4 million families have lost their homes to foreclosure and another four and a half million have slipped into the foreclosure process or are seriously behind on their mortgage payments.  Nearly $11 trillion in household wealth has vanished, with retirement accounts and life savings swept away.

…The collateral damage of this crisis has been real people and real communities.”

The commission’s charge was to determine how and why this collapse occurred, or “…how did it come to pass that in 2008 our nation was forced to choose between two stark and painful alternatives – either risk total collapse of our financial system and economy or inject trillions of taxpayer dollars into the financial system and an array of companies [TARP bailout], as millions of Americans still lost their jobs, their savings, and their homes?”

I recommend reading their report at http://www.fcic.gov/.  I’ll not repeat all the conclusions here but, in sum, they found that the crisis was avoidable, was caused by the mortgage financing industry, investment banks and Wall Street, and was enabled by a regulatory system they politically and ideologically controlled. “… there was a systemic breakdown in accountability and ethics”   similar to the lead-in to the Great Depression.

Yet we don’t hear much about this report from corporate-controlled media, do we.  What we do hear is conservatives and libertarians pushing the same stale economic policies that caused this crisis.  They have no solutions, only misinformation and attacks on the Democrats who DO have proven solutions that are working.

Somebody forgot the lessons in the movie “It’s A Wonderful Life” in which community banker George Bailey discovered his positive impact upon his community.  Let’s hear it for the community banks!  Most of them operate under the regulations enacted after the Great Depression. While making a reasonable profit, most of them handle our checking and savings accounts properly.  Most handle our loans properly because they OWN our loans; if we default it hurts them too.  So they don’t engage in predatory lending to unqualified borrowers.  They don’t sell our loans to others.  They don’t speculate on Wall Street using invented securities.  They’re lending banks, not investment banks, and vital to our economy.  Yet, when they do fail they are quickly restructured and put back on a steady course by the government.

It was the titans of our financial industry – mortgage brokers, credit rating firms, investment banks, holding companies and Wall Street – who engaged in “regulatory capture,” whereby an industry takes political control of the regulatory agencies and corrupts the standards that protect consumers and the country.  These financial titans did everything they were NOT supposed to do using a shadow banking system and artificial securities based on toxic mortgages that violated all reasonable safeguards.

To make matters worse they sold toxic investments around the world and, far worse, they lured elements of our safety net, retirement plans, to participate in the scheme with disastrous results. While most of us learned in kindergarten that rules help us live better lives, these people followed the myth that capitalism can operate properly without regulation.  This myth persists today in conservative and libertarian calls for deregulation. With financial reform we made a few steps to rein in some but not all misbehavior; we got back much of the TARP bailout money but now the stock market is in another bubble.  And conservatives want to go back to square one.

Few of the perpetrators have been prosecuted, but more may be.  Note that few of the truly malfeasant were homeowners who defaulted on loans.  And NONE were workers who lost their jobs.  Yet conservatives would have us believe homeowners caused this crisis and that the unemployed purposely destroyed their own jobs so they could “bask in the glory” of temporary unemployment insurance at a fraction of their earnings.

We haven’t slipped into another Great Depression.  For that we have our safety net of social programs to thank.  At the onset of the Great Depression we had no Social Security, no Medicare and Medicaid, few employee retirement plans, and no unemployment insurance. Wisely we put those in place to build the middle class in America and even out the ups and downs of the economy.

We now also averted a depression by government spending to stimulate demand while meeting known needs such as infrastructure.  The loans – they were NOT bailouts – to the auto industry were elements of that successful stimulus.  Yes, these increase the debt some, but, here’s another truth:  Growing back the economy is the BEST way to pay down that debt.

Yet, hawking the myth that our debt is the major challenge we now face, conservatives demand that the safety net and stimulative spending be cut. Until we get the economy going and employment up, stimulative spending should not be cut and the safety net should be enhanced not reduced.

The truth is that most of our debt, over half of which is owed to our fellow Americans by the way, came first from the Bush tax cuts followed by two unpaid wars and a prescription drug benefit giveaway to drug makers.  The next part of the debt came from spending to save the economy.  None of that was caused by President Obama or the Democrats.

It’s a blatant lie that Social Security is bankrupt. It’s not even in trouble, has a $2+ trillion trust fund separate from the general fund, not part of the budget deficit.  It has been the most successful program of its kind in history, never defaulted on benefits and is secure as is until 2037.  The fund is invested in US Treasury notes, not Wall Street.  Can you imagine what damage would have occurred had Social Security been privatized as conservatives want and its funds invested in this toxic soup of mortgage-backed securities?

All this conservative denial and misinformation begs the question:  Are conservatives so intent on winning the next election that they would try to prevent our recovery from an economic crisis THEY created?  Or have they too been “captured” by the financial industry to do its bidding?  Bottom line:  The financial industry should serve the people, not the other way around.

It’s not clear at all that the American people are dissatisfied with the Democratic accomplishments or agenda. In fact, most of them may be both aware and supportive. Why do we always take exit polls of voters as the “will of the American people?” It’s not; it’s the sentiments of the people who voted. If you combined the progressives who voted and clearly support what this Administration has done with the millions who were disenfranchised or left out and thus could not or did not feel motivated to vote, the American people likely have very strong support for Obama and the Democratic agenda. Among the unemployed, which are millions, how many do you suppose would vote Republican? What about the people who have lost their voter registration because they lost their job and/or house and had to move? And the mobile young folk ? (There I will fault Obama for not keeping them and OFA more in the loop.)

Stick to your guns, progressives and Democrats, and fight for ALL the people, those who voted and those who did not.

All this election proves is that

A) hate, fear and lies will motivate significant people to vote against their own best interest; and

B) social disruption on the scale we’ve seen since 2008 disenfranchises millions; and

C) corporate control of the media and the message destroys democracy.

Joan Neubauer, of the Davis Mountains Trans-Pecos Heritage Association has posted an article entitled “Government in My Doctor’s Office” which can be read here:  http://dmtpha.wordpress.com/read-all-about-it/

She also submitted  it to the Alpine Avalanche and it was printed under the title “Address health concerns through free market” in the November 19, 2009 issue of that paper

This article is written in response and will be published in the Alpine Avalanche as well.

Joan Neubauer wins the prize for the most misinformation per square inch of print for her latest column on the US House version of health care reform.  However, rest assured that most of the inaccuracies she repeated didn’t originate with her.  Her entire column was a repetition of talking points corporate America is slipping into the hands of conservative and libertarian spokesmen and pushing on their media subsidiary, Fox News.

Their purpose is simple and it goes like this:  The United States is the only advanced nation that collectively finances health care primarily through corporate, for-profit insurers. (Note, I’m talking about health care financing, not the provision of care by doctors and hospitals and other providers; this is how we PAY for care, not how it’s provided.)  Those for-profit, corporate insurers have pocketed our health care dollars instead of paying for the care we need. Meanwhile, forty-six million Americans are uninsured, and 45,000 die every year because they don’t have access to a doctor. Almost a million Americans have gone bankrupt because of health related costs, and costs are rising such that we are spending almost twice as much per person on health care as any other nation.

Private insurers broke this system and they know it.  They want to keep our money flowing their way so their CEO’s can live in the “manner to which they have become accustomed” and their stockholders can make more money with our money.  The only way they can keep this scam going is to prevent regulation and corner their already restricted market.  There is NO “free market” in health care financing!  We’re talking about an industry that was mistakenly given exemption from anti-trust regulation!

There is only one entity big enough to stand up to mega-corporations (if it will), and that is the US government. So, at the first moves in over a decade to rein them in, their strategy is to demonize the government and elected representatives who are seeking reform. Folks, the US Government is not some beast out there bent upon devouring us; it is the collective representative of us, operated by our elected representatives, with our tax dollars and for the purposes stated in the US Constitution.  In the Preamble to the US Constitution you will see one purpose is to “promote the general welfare.” Ask yourself this:  When was the last time your friendly neighborhood health insurer came to your home town, conducted public town hall meetings or held regular office hours to hear from and help you?  Never!  Did you vote for them?  No way!

Further, Ms Neubauer spoke of the fraud that has been discovered in Medicare, and that certainly is important to control.  But one reason we know about that fraud is because Medicare is a government-run program with some transparency, oversight and accountability.  Just imagine what’s happening in the private health insurance realm where there is less accountability and no incentive to control costs.

The corporate insurers know the real facts, but they don’t want YOU to know.  So they make things up.  I’ll just run through a few of the tales, but, in sum, Neubauer’s column contains nothing BUT misinformation.  Here’s one whopper:  Health care reform is “government intrusion into one of the most private of human relationships, that between a patient and doctor.”  Talk to some folks who receive health care financed by Medicare, Medicaid, Tricare, SCHIP and the VA (all of them government managed) and you will find patient satisfaction is high.  The government ENABLES doctor/patient relationships to exist where none would otherwise exist at all!  Yet the for-profit insurers intrude in that relationship daily, as any doctor who has had to negotiate to get their patients care will tell you.  And they prevent millions from even seeing a doctor.  Furthermore, decisions on coverage by government programs are based on patient care, while decisions made by private health insurers are based on corporate profits.

Here’s another:  It is not Speaker of the House Nancy Pelosi who established that health care reform would lower our deficit.  It’s the non-partisan Congressional Budget Office who analyzes and scores federal bills.   And they also confirmed that our deficit will be far, far worse without reform because we would continue to fund the corporate profits and there will be no downward pressure on prices.  How genuinely concerned can conservatives be about the deficit anyway, since they endorsed Bush’s tax cuts for the wealthiest Americans, two unjustified wars and the TARP giveaways.   By the way, if we would end those wars, we could easily pay for health care for all.

And another:  The planned cuts in Medicare are cuts in payments to certain providers who are now being overpaid, not in benefits to patients.  Instead of harming those 65 and older, reform will make Medicare coverage more secure.

Here’s another:  Health care reform does not contain ANY federal funding of abortion.  It enables the current status whereby 85% of private insurance plans, using private funds, cover abortions along with other reproductive health services.

The public option is a non-profit plan some can choose that provides competition for corporate insurance.  There is no plan for it to become mandatory.  On the contrary, as it stands now, the public option will only be available in the individual market, not in the much larger employer-paid insurance market.  While they tout the free market, insurers have already weakened the competition of the public option.

Finally, health care reform will help, not hurt, small businesses (and employers of all kinds, such as state and local government) and it will boost, not cut, employment and wages. And health care provider jobs will increase as those needing care finally get it.

Multiple columns would be required to detail all the points of health care reform winding its way through Congress.  It’s not perfect, but it’s a real start, long overdue.  I urge everyone to become informed of the true facts and to back genuine reform that serves the interest of ordinary Americans, not the corporations.  They have tremendous clout – about 2.5 lobbyists for every member of Congress. They’re using our money to spread misinformation.  But we know where they’re coming from and the facts are on our side.  We have to insist that our government enact true health care reform now!

President Obama

Your speech was excellent!  And, you have my full support for reform as long as it is real reform, not reform in name only.  I’ll just focus here on my suggested improvements.

You talked about the economic downturn.  Great, but I would suggest making a connection between those economic conditions and health insurance reform.  The fact is that genuine assurance of health care (single-payer) would be the greatest aid to the economy across the board for individuals, businesses small and large, cities, counties, states, organizations and anyone who employs someone or manages tax dollars and elements of the health care system.  It would meet ALL of your goals thoroughly.  I realize that we’re not going to implement single-payer now, but the point remains.  We’re only taking half measures here, and, in absence of single-payer, a national government-run public option is essential.

You implied in your speech that it was only people on the left who favored single-payer.  Not so – fully 75% of people favor at least a government-operated public health assurance option.  A substantial number of those folks have insurance now and a substantial number must be conservative and moderate. Single-payer is not the far left idea you portrayed it to be.  We, the citizens, have been very clear about what we want.

As it stands now, our plan is a boon for the for-profit health insurers who are not in need of financial help.  There are some consumer-friendly changes to be sure.  However, I caution that what is said in speeches be matched by what is in the bills.  For example, I understand that, although we have been repeatedly told that people will not be excluded from coverage due to pre existing conditions, the bills don’t contain that reform.

Your goals are 1) Security and stability for those who have insurance 2) Insurance for those who don’t have it and 3) Holding down costs.  Simply put, you cannot achieve 3) without the government-operated public health assurance option available widely.

Exactly what the public option will be, or even IF it will be, is unclear.  For example, you said that it should compete with the private insurance programs on a level field by being funded primarily by premiums.  That’s fine, but next we were told that people who have private insurance cannot choose the public option.  Thus, the only market in which it can compete is the uninsured market.  That immediately means that it will provide no incentive for private insurers to control premium costs; in other words it won’t be the competition we need.  Simply put, the public option must be available to everyone.  Co-ops just won’t accomplish anything.

Another important aspect of controlling costs is to prevent insurers from charging differential premium rates for people based on pre existing conditions or other characteristics of the person – age, sex, etc.  There is nothing in your plan about this at all.  While insurers may not be able to deny coverage to those with pre existing conditions, what’s to keep them from charging so much that effectively people are still bankrupted for being/getting sick.  So-called “high risk pools” are running the same scam right now.  They are often the functional equivalent of “death panels.”

If you use high-risk pools to help people in immediate need, we will have the very sick over here in one pool and the relatively well over there being covered by private insurance.  Instead, if you make the real, complete reforms of the insurance industry immediately, there’s no reason why they can’t take on those who previously would have been denied by them and dumped into a high risk pool.  After all, isn’t that what the reforms are intended to accomplish?  This can be done day one from your signing of the bill.

Premiums need to be stable within a reasonable range for ALL people. This is NOT the same as car or home insurance where the risk of using benefits can govern the premium prices people pay.  This is health care financing where ASSURANCE of care should be the focus, not financial stability of insurers.  It’s not just catastrophic insurance as car and home insurance are.   Almost everyone will be using the system from day one.  Premium prices thus cannot be based upon the “risk’ of using the benefits.  Otherwise you will be taxing the sick for being sick as we are right now.

And without the public option widely available, there can be no controls on drug costs.  I can understand why that particular can is being kicked down the road, politically, but we should position ourselves so that programs to save drug costs can be pursued in the future. Having a public assurance option large enough to negotiate drug prices is essential.

You said that individuals and small businesses who could not afford health insurance would be given tax credits to help them buy it.  This is economic nonsense.  Tax credits only help people who earn enough to pay taxes greater than the credits.  And they do nothing to help with upfront costs, coming as they do a year later than the person has incurred the costs.  The only effective scheme is to have the government provide direct assistance to buy the insurance on a sliding scale.

The mandate for individuals to obtain insurance coverage is frankly unworkable and political suicide.  The truth is that most people who aren’t covered want to be; they just can’t afford it.  Even young people who see themselves as invulnerable see the rationale for having insurance so that when they do need the care it’s there.  I’ve been told that, under the plans Congress is working on, individuals would be fined $3800 if they didn’t buy the insurance.  Whether it’s $100 or $3800 that should not be a fine, it should instead buy them the insurance they need.  If people can’t afford it, how is a fine going to help that?  The point I’m making is that a mandate is only ethical if there is a sliding scale upfront to help people buy the insurance.  Imagine how angry at us people will be when enforcement of this provision starts.

And how can we justify a mandate to buy insurance if the only source of insurance is the for-profit health insurers?  We will be mandating that people send a significant portion of their health care dollars out of the health care system (into the profits of the insurers).  The health insurers are NOT in need of a bailout and the American people and businesses ARE; this plan runs in the opposite direction of who needs to help whom.  Again it spells doom for the Democrats once people have experienced enforcement of this mandate.  It’s a poison pill.

How we will pay for costs beyond the saving that can be achieved within the system?  The answer should be very simple really:  If the private insurers are going to continue to make their profits, then their taxes need to go up to fund the health care system.  Some of what they are taking out of the health care system needs to be restored to it.  You mentioned the high price of the Bush tax cuts; they need to be undone.  And stick by your idea that deductions should be limited for the very wealthy.

This picture is being needlessly muddled; and too much of it is about preserving the status quo of corporate for-profit insurance dominance.  Single-payer would simplify everything and provide more economic benefit to everyone except big insurance. And it would not disrupt any part of the system that does not critically need disrupting.  Again, what is this really about:  Assuring health care for Americans or preserving the insurance companies profits?  If they could have given us a good system, they should have done it long ago.  The fact that they did not says volumes about how they will behave in the future.

As it stands right now, we’re putting in place some reforms for the existing insurers.  I predict, that, unless the changes I suggested above are made, the opponents of reform will use the individual mandates and the lack of real cost reductions to defeat the Democrats.  Then when the Republicans return to power the reforms placed upon the insurers will be rolled back.  If we’re going to kick some cans down the road, we’d better look down the road first to see what’s there.

By the way, why is no one mentioning that either single-payer health care ASSURANCE or the public option would actually be operated by the private insurers and that private insurers would continue to handle supplemental insurance?  Medicare, Tricare, Medicaid are all operated by private companies under contract to the government, are they not?
Seeing our failure to make these points clear, leads me to believe that someone is just not trying hard enough to give us what more than 75% of Americans have said they want:  a government public option to the for-profit health insurance. Co-ops just won’t cut it, folks.

Kind Regards,

Mary Bell Lockhart/