Friday, June 01, 2012

le deluge

I have said (and so has Angus) that Obama will win in November. That prediction was in part predicated on a belief that the folks in DC could put together some kind of cockamamie "Krugman Model" stimulus that would make measured growth appear to hit the 3% (or so) target required to get the idiots-who-make-up-the-electorate to vote for the incumbent.

Apres November, le deluge. The wheels come off, it gets bad. But not even THAT is happening. Golly. The jobs report is apocalyptic.

So, here is what I think is going to happen. (I have this talk I give to VC groups and annual meetings of investors, and it's really long and has lots of ppt slides. This is the summary, free for all you loyal KPC readers). (And I should also note that my own thinking was influenced by a dinner with LeBron a while back, though of course he is blameless for my getting this wrong).


Problem:

1. Regulatory uncertainty. Prez/Congress are using class warfare rhetoric to argue that every business decision should be disclosed, reported, and scrutinized. It is not clear to anyone just how deep the "crucify them" antagonism goes. So far, no one has seen the bottom. The people the O-bam has appointed are all largely professional activists and cranks, with no conception of what it takes to run a business or create jobs. Businesses are sitting on piles of cash, and the 2008 enthusiasm for Obama has evaporated. He just straight lied about being interested in, or even capable of, bipartisanship.

2. Health care. Republicans in the House and Senate are using class warfare rhetoric to blame poor for needing health care. It doesn't really matter what happens to O-care in the court. In fact, the best thing would be if O-care is found to be unconstitutional. The problem is that real WAGES have stayed flat over the past two decades. But real TOTAL COMPENSATION has skyrocketed, and has stayed the same, basically, as a percentage of GDP. So, workers (the ones who are employed) have no extra income to spend on consumption. But an employer trying to hire (if there were any) has to pay not just the wage, but also that giant wedge of health insurance. So, no new hiring, no new consumption spending.

3. Deficit. Republican in the House and Senate, and the states, and the woodpile, have this amazing ideology that we can't raise taxes. Well, you are DAFT: Deficits are Future Taxes. Conservatism once meant two things: (a) question spending. (b) ensure fiscal responsibility, so that we pay for what we do spend. Sometime around 1980, the Republicans figured out that it worked much better electorally to do THESE two things: (a) question spending (although not really, since spending increases as fast under Republicans as under Democratic administrations) (b) cut taxes. Doesn't matter what the question is, the answer is cut taxes. This is worse than class warfare, this is time machine warfare. We are taking money out of the college funds of children who haven't been born yet. They certainly can't vote. So, while spending is too high, and both the Dems and Repubs share blame for that, taxes are too low, given our level of spending (especially on wars started by Republicans).

Solutions:

1. Single-payer health care. The argument for this is made beautifully by Dr. William Roper. (He's no leftie; served as administrator of the Health Care Financing Administration, where he oversaw Medicare and Medicaid, under President Reagan. He also served on the White House staff for President G. H. W. Bush and directed the Centers for Disease Control and Prevention.) We need single-payer, German or French style, right now. Fold Medicare/aid into it, stop fooling around. End the health care tax on new hires, and rationalize the system. The problem with Obama care is that it is hugely expensive, but doesn't go nearly far enough. O-care makes things worse.

2. Immediately end military occupation of Afghanistan, Germany, Korea, Japan, (I could go on). Cut military spending by at LEAST 30%. Next year. In the budget. (Note: PASS a budget, by the way).

3. Come up with a bipartisan package of tax increases and spending cuts, along the line of the Clinton compromise of 1993-4.   Plus, cap mortgage interest deduction at $25,000 per year. To pay off the debt, we have to cut the deficit. As long as annual deficits grow, we can't begin to address the debt.    

4. Rationalize Social Security. Means test benefits for very high incomes, and tax benefits at moderate incomes. Cut supplementary SS programs dramatically. Raise ceiling on payroll tax.

5.  Announce moratorium on new regulations.  Call of the "crucifiers." 

6.  Cut business income tax rate to 20%, but eliminate all dispensations and set-asides so that the 20% is a predictable, known number, not a starting point for rent-seeking negotiations.

Not saying it's easy. But it IS simple.  Here's the thing:  are these my FIRST best policies?  Nope.  Not my ideal.  But I guarantee you that what we will actually end up doing will be MUCH WORSE than the outcome if we did pretty much any three of the six action items above.

18 comments:

Kevin V said...

Can you explain why you think that a single payer system is more efficient and moral than our present system? And what exactly would a single payer system consist in? What about queueing?

If I had to guess, I suppose that single payer is better because we take the burden of healthcare costs off of employers and distributive the burdens less inefficiently across the general public. Right?

I'm open to the argument that single payer is more efficient than what we have now. I'm just curious.

Natalie said...

curioius- why do you think the republicans became such tax cut monkeys?

Anonymous said...

I'm thinking that we should raise taxes across the board to eliminate the deficit first. Then, everyone might be in a better state of mind to discuss what should be cut.

BR said...

You seem to have been suggesting that the electorate would re-elect Obama based on their evaluation of whether GDP growth % was a good enough number. This confuses cause and effect, doesn't it? If GDP is 40% via bullshat numbers from DC, but folks are broke, do you think they're going to vote to re-elect.

Mike said...

What kind of effect would cutting military spending drastically have on employment? I agree completely that it should happen, but I don't know enough to fully appreciate the effects on the economy.

Anonymous said...

I read this list and it sounds pretty much like the Democratic party platform. I know we can quibble over how much the Democrats care about regulation but I suspect that Obama and most Democrats would accept all this in a heartbeat...

Mr. Overwater said...

So what do the Viet Cong think of this talk? Or did you mean something else by VC?

Lost in the Supermarket said...

Single payer system is making more sense to me. Maybe what we need to consider is that we scrap medicare and medicaid and just issue a blanket hospitalization coverage program for everybody. This would reduce hospital collection problems (8-12 percent of revenue written off) and avoid dreaded personal bankruptcies from hospital bills. The poor have no or few out of pocket costs and any households making more than $50,000 a year pay a $250 deductible for a hospital visit and cost share up to a $2000 a year limit. This also addresses high risk people, such as hemophilia patients or people with rare diseases, by capping their risk. It standardizes hospital administration, simplifies a headache for employers, and forces health insurers to compete on factors where they can improve health (preventive care, eyes, dental, hearing).

Roy Cordato said...

Just out of curiosity, how does one have both a moratorium on new regulations while at the same time implementing a new health care system where the government pays all the bills. Are we to believe that that could be done without any new regulations on health care providers and customers?

Bob Haiducek (hi' da sek) , Bob the Health and Health Care Advocate said...

You wrote "We need single-payer, German or French style, right now." No, thanks. We need a uniquely American truly single-payer system, not with the hundreds of non-profit funds that Germany and France have, but a true one plan and one payer that has maximum efficiency.
http://www.mforall.org/p/Best
- Bob the Health and Health Care Advocate

Woj said...

If only these solutions we're remotely close to what actually gets passed it would be exciting!

@Natalie - Bruce Bartlett suggest an old article by Jude Wanniski: Taxes and a Two-Santa Theory is largely behind the Republicans decision to oppose all tax increases.

Tom said...

Most transparently foolish thing I have ever gotten from Mungowitz: "As long as annual deficits grow, we can't begin to address the debt."

No, until "we" have a surplus we cannot begin to address the debt.

Wishing doesn't make things happen. Higher tax revenue won't lessen CongressCritters' appetite for spending. The 93-94 compromise is actually a good example of why this fails. We got a surplus from it (and from dot-com bubble) and Congress reacted to that the way they always will.

Tom said...

Dr. Bill Roper: "We all want people to have [health] care, because they are entitled to it." He has this exactly backward. Some sort of a "we" wanted all people to have care AND THEREFORE a legal entitlement was inacted.

Also from Roper: "We are a compassonate nation." This is proved by the fact that a legal requirement is needed for poor people to get health care - WTF?

From the evidence in the linked article, Roper DOES NOT support a single payer system. He says "giving 17% [more!] of our economy to the government is madness." Truly, it is, Mungowitz.

In one recent year, UNC Health Care "gave away" $360 million in uncompensated health care. Graedon says to Roper, "You may be stuck with it." ... "You" who? Not Roper, personally. Not UNC Health Care, either -- They add an uptick onto the bills of "paying customers" to get that money. This uptick is a tax, since it results from the government [unfunded] mandate to provide health care to all comers.

Thus, the current system can be summarized as "a special tax on our sick and injured people" AND a competition killing virtual monopoly on health insurance. A worse system is hard to imagine -- and, yet...

In the wake of this total f**k-up, Mongowitz proposes to give federal politicians and bureaucrats EVEN MORE control of (a) our access to health care and (b) control of 17 [and rising] per-cent of our total productive effort. Okay, Mr. Directionist, how is this a step toward greater individual liberty?

JR said...

I don't know William Roper from Al Roker, but I do know a little bit about the health-insurance market pre-Obamacare, and I can tell you that a healthy single male in his mid-20s buying on his own could get quite good catastrophic coverage from California Blue Shield for 51 bucks a month.

Not now.

Anyone who was uninsured without a pre-existing condition had no excuse. And most states already had high-risk pools for people with pre-existing conditions.

This was a manufactured crisis, and you've bought it.

Tom said...

My last post sounds harsh; Mungowitz knows I love him.

BR said...

You weren't harsh enough, Tom. #1 above is weak sauce from Mungo. It's pretty damn rare that Mike writes something that makes absolutely no sense to me, but if there ever was an instance this is it.

Road to Surf Bum said...

My head's been spinning for days that KPC Mung is advocating single payer. Somebody 'splain this to me. I'm open to a libertarian argument for single payer, but.... donde esta?

Anonymous said...

I agree that single payer has to dominate our current system. I'm pretty sure some sort of competition among "insurers" would be preferable, though. The more I read from John Gruber, the more I think he sounds like a partisan advocate.

On the other hand, MM suggested I take my money out of the stock market and so I didn't lose like 3% of my net worth in the past five days.