Health Care Reform: Finance Next?

There is not much I can possibly add to the outpouring of analysis and pseudo-analysis in the media this morning. So I will restrict myself to a few comments:

It is about time.

For the richest country on earth to consign so many of its people to ill health or bankruptcy because it wants to cling to an outworn and increasingly dysfunctional system for healthcare delivery is just stunning. The notion that Americans do not like large government programs is false on the evidence: every time Social Security or Medicare come under fire, voters react quickly and strongly to preserve them. The Republicans, who still smart from their defeat seventy years ago over the New Deal, have learned that lesson well. Which is why they always package their attempts to eliminate entitlements in ways to hide the true intent. Plus they always kick up dust over the cost of the programs – they never offer cost control reforms, they simply cry that we must destroy the programs. This seems to be either an abject pessimism over their inability to reform, or an expression of some inner Leninist tendency where they need to destroy something in order to save it. I find it offensive either way.

This visceral opposition to anything vaguely social resonates with the public’s false image of itself as being, and wanting to be, free of government intervention. As if the middle class tax subsidy on home ownership – that infamous tax credit for mortgage interest paid – is not a government hand out. The fact is that our middle class is propped up by a web of government programs designed to limit the cost of key aspects of everyday life: Social security reduces the need to save as much for retirement; Medicare means we do not have to set aside savings to cover end of life health care; and things like the mortgage welfare program reduce the true cost of home ownership. Kick away just these three programs and the middle class is instantly reduced: most of it would shrink its standard of living in order to save to cover these expenses. Failing that,; many more would have to go without those benefits all together.

So the ongoing right wing opposition to social programs has a dark side to it that is never made explicit: our middle class only exists because of the government’s ability to shelter it from the volatility and cost of the free for all of the wider market place.

We have empirical evidence of this: all we need do is to look back in time. Before these programs were put in place our society was much more divided, with the middle being much less evident. The disparity between top and bottom was much more extreme.

We have yet more evidence: as the right wing ideology retook the policy heights, and free market deregulation gathered steam, we saw a marked return to the same deeply divided social structure of yore.

That most people do not reflect on this I attribute to complacency. As we lost touch with the generations who experienced the deprivation of the Great Depression, and the poverty that preceded it, we also lost touch with the reasons for placing well defined and strongly policed boundaries around the ‘free market’. We laughed at Hobbes because we had the benefit of Locke, Hume, and Smith. We derided those who reminded us that what we have is a veneer, and came to believe that we all were part of the American Dream.

One of the telling observations about Americans is their ongoing optimism. This sometimes prevents them understanding reality. When asked in surveys Americans routinely over-estimate their own status: 20% of the population thinks it is the top 1% of income earners. This inflated sense of accomplishment presents a massive obstacle to supporting socially provided benefits. To someone so evidently at the top, those programs appear not just unnecessary, but a burden also. They see costs, red tape, and bureaucracy, they do not see the platform those programs provide. Perhaps they would be more supportive if they realized the precarious nature of their own financial and social status. But the program’s success hides the precipice just enough for us to pretend it doesn’t exist.

Until a huge economic crisis reveals the truth.

One of the great consequences of the crisis we are living through – it is far from over – is the slowly accumulating disillusionment that it implies. The longer the crisis lingers, the worse this disillusionment will become.

The bitterness of the opposition to health care reform finds its roots in this disillusionment. The crisis has opened up or aggravated fissures in the socio-economic structure of society. For instance, the sub-group hit hardest by unemployment has been white males. Other groups still fare worse, but white males have seen the most change in fortune. The near complete collapse in the construction industry alone has accounted for nearly 1.5 million of the total 8.5 million lost jobs. Add this sudden shift to the decades long steady loss of traditional blue collar employment in manufacturing, and the potential for a volatile alienation from society as a whole is easily accounted for. Perhaps this explains the fervor and extremism of the Tea Party opponents of health care reform: they are not reacting to HCR, they are reacting to the long term erosion of their social status.

This extreme group emerged as the motor driving the entire Republican strategy. The result being that the GOP found itself marooned on an island with a variety of incoherent, yet very angry, fellow travelers. The loss being the centrists who often brought a softer touch to the GOP efforts to eliminate social programs.

I think this outcome of HCR is the most enduring. The Republicans have given themselves a very sharp, and clearly minority, definition. They have been flushed out as being unreconstructed in their opposition to social programs, not in a fiscally responsible way, but in a visceral, almost unthinking, way. They offer no alternative except opposition to whatever is going on. They are so hell bent on opposition that they have forgotten to supply policies of their own. Their claim that they will undo HCR is an odd one given the extreme unlikelihood that they will, any time soon, have sufficient Senate and White House control, at the same time, to followthrough on the threat. By then HCR will be embedded and its benefits manifest, and the GOP will be faced with yet another program to chip away at despite its popularity.

We should all recall the dire consequences that previous generations of right wingers have made about each step along the American development of its safety net: Reagan famously predicted the end of the American way of life, and the destruction of the economy, were Medicare to be enacted.

There are just so many times a party can cry wolf. If these programs are as devastating to the American way of life as the Republicans portray them, sooner or later, we should see the economy implode or the voters rise up in rebellion. Instead we see neither. On the contrary we see the opposite.

When we experience implosion, as in the current crisis, what we find is that social programs perform their task admirably and soften the disaster for a vast number of people. The programs gain in popularity. And the implosion is caused, not by the burden of the safety net, but by the elimination of the boundaries set on the free market.

So HCR exposes a contradiction in the American soul. One side of which espouses individuality and rugged independence from central government, even while the other craves the safety net and its ability to soften the blow of the vicissitudes of the free market. America’s ability to manage this contradiction depends upon the largesse its economy creates. In the good times we favor individuality since the harshness of the wild frontier appears remote. When reality intrudes we retreat towards a more communal and comfortable world in which we see a need for government help.

The transition from one era to the next is bound to be riven with infighting as different groups cling to the one or the other position.

We are living through such a transition.

The Reagan era ended with the Bush tax cuts as its apogee. The split in society was opened wide as one small part benefitted, not just in terms of the tax reduction which was far less serious than many on the left imagine, but it terms of its ability to rise free from control and establish a set of rules that syphoned off wealth in disproportionate ways. The emergence of this new Gilded Class is established fact. The nastiness and the emnity in our politics exists only below this class. The name calling is by one disadvantaged group towards another. The criticism in the media – Investors Daily – that HCR is a huge welfare give away to minorities is an example of the ‘debate’. A significant thread running through the opposition to HCR was the extension of coverage to millions of currently deprived people. The word ‘socialist’ was thrown around carelessly, often by people who have no clue what it means.

Yet this fighting all took place within that part of American society most damaged by the economic crisis. The fighting as so intense because it appears to be a ‘zero-sum’ game at that level.

The people who caused the crisis, the oligarchs who run our banks, and who benefit from their ability to rig the financial markets in their favor, are unscathed. Their coverage was never in doubt. They were never touched by the insurance industry’s quirky and anti-social activities. Their wealth mitigated the effects of the steady decline everyone else experienced. Indeed they actually engineered and benefitted from that decline. They are ideologically agnostic: they talk free markets, yet cling to oligarchic industry structures, they advocate individualism, yet clamor for the rewards that tight school and business kinship garner. They move with the tide and ride free on the backs of the struggle that goes on below them. They have a deep rooted interest in the failure of resolution in that struggle. As long as the energies of the disadvantaged are spent on infighting, as long as the Tea Party types carry their water, they remain able to rent seek on society. They stay safe.

For now.

With HCR done, maybe we can turn our attention towards getting our economy back, and out of the grasp of the financiers whose greed and incompetence ruined it for us all.

To me this is the big fight.

HCR was a necessary completion of the safety net for the middle class. It was a marker that American society was concerned about its own, and that no one should be outside the great flow of riches that its capitalist machine generates. But the true frontier is yet to be tackled. We have yet to rein in the excesses of the beast that caused the crisis. Financial reform is the focus of that fight.

Without a solid resolution to financial reform, any gains elsewhere remain subject to destruction: the engine that supplies the wealth we allocate to various aspects of life needs overhaul. Its dysfunction cost us 8.5 million jobs, countless lost homes, and trillions in dollars of lost wealth. yet it still spewed out billions in wealth to the perpetrators of the collapse. Not only do we need to limit the damage these folks can do, but we need to cut back the banks so as to free up resources for the economy at large. And we need to eliminate – not curtail, but eliminate – the possibility that a single big bank could bring the entire economy to its knees.

So HCR is the first step. Financial reform is now even more vital to make it stick.