Difficult Year Gone By

Washington area has been been blanketed by snow. On this weekend before Christmas, instead of being struck in traffic trying to finish that last minute shopping, I am enjoying the breathtaking beauty of the white snow cover combined with bright sun peaking from the sky. Scenery gave me a pause and I started reflecting on the year which has gone by. Undoubtedly it was a tough year. With everything that happened this year, it seems that it has diminished our own confidence in American exceptionalism. Are we still the hope of the world? Can the world look to us for leadership on major challenges of our time? Domestically can we tackle thorny issues of health care and unemployment?

I think on the international front, policies of the current administration are on the right track. We have adopted a "realist" foreign policy approach which takes into account the contraints in which we operate. We have been deliberate in our thinking and multilateral in our approach, almost exact opposite of the operating principles of the last administration.

On the domestic front, the administration has a mixed record in its first year. Fed and the Treasury get good grade for pulling us back from the financial abyss. It is easy in the hindsight to criticize the administration for bailing out banks and shoveling lot of money thru TARP. However it achieved its purpose. Our financial institutions survived and are healthy again. Now we should sit down and devise the kinds of financial regulations which will prevent us from being in the same situation again.

Another major initiative of the administration has been health care reform. Anybody who whole heartedly supports the bill or wholeheartedly opposes the bill, has really not understood the bill. I think it is a very difficult call. While there are a lot of good measures in the bill for health insurance reform, it does not do enough to bend the cost curve in the long run. David Brooks captures this difficult choice very well in his NYTimes article http://www.nytimes.com/2009/12/18/opinion/18brooks.html

If I were a senator, I will vote for the bill giving the benefit of doubt to the current administration. President has shown in his major foreign policy initiative that he is very pragmatic and that gives me the confidence that he will take the issue of cost seriously and implement the provisions of the bill in a way to ultimately reduce the deficit.

All in all, a very tough year has gone by and coming year may not be any easier. However I think we will remain a force of good in the world, our strength will come from our ability to marshell the world opinion and not just thru our arms and our economy will turn around, though at a slower pace.

Happy Holidays and a very Happy New Year.

No More Public Option

Majority leader senator Harry Reid announced this week that a "grand compromise" has been reached between liberal and centrist democrats where they agreed to drop the "public option". They replaced it with two new proposals. One proposal is to expand Medicare for people between the ages of 55 and 64 (currently Medicare is available to people 65 & above). Second proposal will require Insurance companies to create not-for-profit insurance plans in every state to be sold on the "exchange" along side for-profit plans. These plans will be supervised by the Office of Personnel Management which currently administers the health insurance plans offered to federal employees.

There is a very good analysis of this new proposal at http://www.nytimes.com/2009/12/10/opinion/10thu1.html

I will wait to see how CBO "scores" these proposals with respect to the budget deficit but my initial reaction is of a sigh of relief. I have argued in this blog before that public option will not help reduce cost. The biggest lacuna of this bill is its inability to "bend the cost curve" in any significant way and that will undo everything else that is good in this bill in the long run.

However politics is an art of compromise. I am hoping that thru amendments on the senate floor and thru more back-room deals like this, final product will be a major improvement on what is being debated in the senate currently.

Worlds most deliberative body deliberates healthcare reform

Last week senate started debating the healthcare reform bill. Most of the senators agree that this might be the most important vote they will cast in the senate but listening to the debate one does not get a sense of the importance and urgency of the debate. Here is an example of the focus of the debate from last week.

Republicans brought out their big guns to oppose the "big cuts in medicare". They derided almost $500 billion of proposed cuts in medicare. They read thru countless letters sent by seniors who urged them to oppose this bill which will, in their view, bankrupt medicare. Listening to them defend medicare, you will not get a sense that same senators are tooth and nail opposed to any "government involvement in healthcare" and were earlier lambasting medicare for being an entitlement program which is full of fraud, run by "government bureaucrats" who want to come between you and your doctor.

Democrats on the other end read thru their own letters sent by their constituents on how insurance companies are "robbing" common man to pay millions of dollars in compensation to their CEOs. They did not stop there. Senator Blanche Lincoln from Arkansas actually proposed an amendment which will limit the deductibility of executive compensation for insurance companies to $400,000. You wonder why $400,000! Her argument is that if it is good enough for the President of United States (US President makes $400,000 a year), it should be good enough for insurance companies executives. This amendment will raise around $650 million in new taxes which she plans to use to "save" medicare.

This is the tenor of the debate in the most deliberative body in the world when it is debating possibly the most important bill of our generation and you wonder why people are cynical about politicians...