Wednesday, March 31, 2010

Political Dust, Spring Winds

The healthcare battle in Congress was temporarily concluded with the passage of the Obama-Pelosi-Reid legislation, and it was a major dust-up. The president and his allies have been doing a “victory dance” for several days, and claiming that the momentum, which had been leaking from their political machine in recent months, was now “fixed,” and now they are poised to accomplish more of the same.

Perhaps, but public opinion and corporate reaction to the the so-called healthcare reform does not so far support this contention.

Although the Obama administration and its minions would apparently like to restrict the market place from “doing its thing,” that is, evaluating the new legislation and taking rational and logical steps to adjust to it, the United States is still a capitalist democracy, and initial reactions are that individuals, especially middle class Americans, are increasingly realizing that their healthcare choices are being restricted, their health insurance rates are going up, and that government intervention into the healthcare industry has taken an ominous step forward. Larger corporations, which are now forced to adopt new rules for providing insurance for their employees, are taking prudent write-offs against future and current profits (which will at least temporarily reduce earnings per share) to cover their costs of the new mandates. This, in turn, will be reported in approaching quarterly reports, and will tend to reduce investors’ willingness to invest in these corporations. If the market determines that the write-offs signal a more permanent restriction on profits, the consequences for the stock market in the intermediate term could be severe.

Finally, physicians, nurses, healthcare employees, hospitals and pharmaceuticalcompanies are trying to interpret the consequences of the new rules on their work and livelihoods, and so far there is widespread anxiety. Of course, millions of Americans now have more formal healthcare, replacing emergency room care, but the bureaucratic expansion and cost of government to administer this may soon be seen as prohibitive.

Conventional wisdom is now widespread that, having passed the legislation, the nation simply had better get used to it. Repeal of the most egregious parts of the legislation, owlish pundits assure us, is unthinkable. Look at social security, look at medicare, we are advised. A few savvy voices, however, are pointing out the key differences between that legislation of the past and this new legislation, and they shatter the conventional wisdom that what was passed by so narrow a margin cannot be undone.

Nontheless, the president and his party have stirred the political dust on domestic policy much more than usual, and they now seem determined to transform their “victory’ into remaking the U.S. economy even more along European social models.

Their problem is the oldest obstacle to radical change, that is, the facts. I have argued that the Obama “reform” in American healthcare is not change at all, but simply applying the devices of the past (long-term deficits) to the problem, thus only aggravating it. (I have to add, in fairness, that some parts of the new legislation were acceptable to all sides, and do not need to be rescinded.)

So there is a lot of political dust in the air. It is choking the civility out of political discourse. Bipartisanship has evaporated. Voters in the American political center, many of whom vote independently, are not quite ready to move on. Mr. Obama has successfully nationalized the 2010 midterm elections, and somehow I don’t think this is what he and his advisors had in mind.

On the other hand, the outcome in 2010 and 2012 is far from an accomplished matter. Republicans and independents face a determined band of Democrats who wish indeed to change the American way of life. These Democrats, who now hold so much power in Washington, DC, are not going to suddenly throw up a white flag and go away.

In the spring winds now sweeping the nation, the dust has not settled and the path ahead is not yet clear. Wishful thinking, slogans and indignation will accomplish little this year, and in the next two years.

Campaign discipline, the facts, leaders with clarity, and hard work are ahead for those who would prevent the current dust storm from becoming a national political dust bowl leading to the further and lamentable decline of a great nation.

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