Commentary: Same Old, Same Old

Commentary: Same Old, Same Old

09/27/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

The summer is over and with it the end of re-runs of (some of) our favorite shows. There might even be some original movies, not sequels or prequels.

But, there’s one more re-run we have to endure but with a new twist: Republicans in Congress balking at increasing the debt ceiling and threatening a government shutdown when the federal fiscal year ends October 1 unless – and this is the twist – legislation passed by the Congress and signed into law by the President is tweaked, modified, changed, delayed or otherwise abandoned.

Most notably, Republicans want the Patient Protection and Affordable Care Act (PPACA) – whose name has been corrupted to “Obamacare” – defunded, delayed or otherwise dismantled. Never mind that House Republicans have voted at least 37 times to repeal it, to no avail.

Now the PPACA is by no means perfect. Indeed it has a good many shortcomings, but the underlying premise is sound: to extend health insurance to as many as 25 million Americans who now don’t have or can’t afford coverage.

PPACA has at times been described as health care reform. Would that that were so. The only way it “reforms” health care is by making it possible for more people to see doctors early in an illness when treatments can be most effective. It reduces the likelihood that you will get sick when the person next to you on a bus sneezes, by eliminating the sneeze.

When New York City mayor Michael Bloomberg pushed for an outright ban on smoking in restaurants (previously smoking was permitted in a designated section of the restaurant and at a bar), he did it not so much to try to discourage patrons from smoking as to protect the wait-staff which would be inhaling second-hand smoke throughout their shifts.

And so it is with the PPACA: trying to remove or reduce the impediment of a doctor’s fee which might prevent someone from seeking treatment. (One of the more outrageous moments in the “debate” leading up to the passage of the PPACA was when President Obama caved agreed it would not apply to undocumented workers, prompting Rep Joe Wilson (R-South Carolina) to shout “you lie” when President Obama made that assertion in a speech to a joint session of Congress in September, 2009.

Obama’s agreement to exclude undocumented workers ignored some rules of contagion unless he believes undocumented workers don’t get sick.

Why the rush to scuttle the PPACA before all of its provisions kick in? Republicans – and other opponents understand the history. Once Americans experience and appreciate the advantage of being able to obtain affordable medical insurance regardless of their health history and of being able to cover their children until they turn 26, they would be reluctant to turn back the clock. Recall the protest signs reading: “Take Your Government Hands Off My Medicare.” You can’t put the toothpaste back in the tube.

There’s another bid of history. The Social Security Act was signed by President Franklin Roosevelt on August 14, 1935. Taxes were collected for the first time in January 1937, conveniently after the 1936 presidential election, and the first one-time, lump-sum payments were made in January 1937. Regular ongoing monthly benefits started in January 1940, another presidential election year.

Between the time the bill was signed and the first payments, FDR ran for re-election against Alf Landon who campaigned on a platform to repeal Social Security. FDR received 60.8 percent of the popular vote and 523 electoral votes — all but 8 of the 531 electors. In 1964, Lyndon Johnson received 61.05 percent of the popular vote running on a platform to establish Medicare, which he signed into law just five months after his inauguration. One year after he backed a proposal requiring employers to provide a minimum level of health insurance for their workers, Richard Nixon came close to FDR’s electoral vote total, winning re-election with 520 electoral votes. Ronald Reagan, after winning re-election with 525 electoral votes, in 1988 signed a major expansion of Medicare which was designed to protect older Americans from financial ruin due to illness or disability. (Because the expansion, the Medicare Catastrophic Coverage Act (MCCA), was funded by a surcharge on wealthier seniors, it was repealed a year later after a series of protests across the country.)

Despite the repeal of the MCCA, the overall lesson is clear that benefits once granted are politically difficult, if not impossible, to withdraw.

But the threat the GOP is using is equally if not more unpalatable – and unrealistic. The President is not about to undermine his own signature legislative achievement, so installing it as a demand in the delicate arguments over funding the government or increasing the debt ceiling is and has to be a non-starter.

While in the second quarter the impact of budget cuts under sequester appears to have been a non-event as the economy grew more than twice as fast as the previous pre-sequester quarter (2.5 percent compared to 1.1 percent), that result cannot be sustained. Virtually every aspect of life will be affected if the government shuts down entirely: veterans will go untreated at VA hospitals which have only recently begun to right a foundering ship; food and drug inspections will end abruptly as will monitoring of air and water quality and even a relaxing visit to a national park will be impossible.

Beyond that, the necessary borrowing – to pay for items already purchased – will be impossible. Think of refusing to pay your credit bill and then trying to use it.

The debate over the PPACA has a direct impact on the housing industry by its ability to remove, or at least mitigate, one of the factors often cited for mortgage defaults: unexpected medical bills.

To be sure, achieving legislation in contentious Washington requires compromise. But putting the fiscal future of the country at risk for an unachievable goal is not compromise, it is folly.

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