Understanding the Shutdown

The Washington Monument.

The problem with the press coverage around the government shutdown these days is that it over-simplifies the issues.  Reporters are looking to cover the story in fifteen-second soundbites, and because the politicians have learned that the soundbites are an effective means of controlling the message, that’s pretty much the only way that they communicate with the public these days.  Occasionally one or more will write a book or have their staffs put together a policy paper, but though the books may well be effective in illuminating the mindsets of our country’s statesmen--if one believes that they’re trustworthy narrators, that is--the policy papers are invariably a mishmash of generalities and dubious assumptions that would never pass muster a company that actually cared about the quality of it analysis.  And in any case, for all that I liked Faith of my Fathers, it didn’t do much to explain John McCain’s position on immigration.

Bottom line, the American public has shit for information.

I don’t love Obamacare--or the Affordable Care Act, if you prefer--but I will say this: it was worth trying something.  The problems came in the way that the law was created and passed.

To my mind, there are/were at least four separate problems with the way healthcare is arranged in this country, and each was--and is--worth tackling.

1. 1.  Healthcare isn’t priced according to any standard.  What you pay depends largely on who you are, how your healthcare is covered, and which specific hospital you happen to wind up going to.  If you walk into an Emergency Room and try to pay ala cart, you will be charged the maximum possible fee^[1].
2. 2.  Item 1 is purely ironic because almost no one goes into an Emergency Room anymore who can actually afford to pay.  And no one buys healthcare ala cart.  Folks go into Emergency Rooms when they don’t have insurance because Emergency Rooms cannot by law refuse them treatment if they really need it.  So the costs for those folks gets socialized onto the rest of the healthcare system, and worse, Emergency Rooms get overcrowded with folks who are not actually having emergencies.
3. 3.  Like healthcare costs in general, prescription drug costs appear to follow no rhyme or reason.  I’m sure that one of my friends in the drug sales world could disabuse me of this notion, but what it looks like from the outside is that the rest of the world has held the line on drug costs, leaving Americans alone to foot the bill for global research and development.  What’s worse is that there’s a perverse incentive for both doctors and drug companies to constantly sell new, more expensive drugs instead of older medications that may be equally effective.  For doctors, higher costs pay the bills, and for drug companies, higher costs equal higher profits, margins, and commissions.  And yeah, I get that it’s a business, but these kinds of perverse externalities are still what’s driving America into the ground.
4. 4.  Finally, between the costs of malpractice insurance and the constant squeeze from the Federal government, being a doctor is a Hell of a lot less lucrative than it used to be.  I personally still think that it’s a heck of a prestigious profession, but I’m not convinced that the best and brightest still dream of being heart surgeons.  And that’s bad.  

Like it or not, we need for heart surgeons to make something like $400,000/year.  Because that’s what it takes to keep the best and the brightest moving into the profession.  Because the profession itself takes loads of schooling, that schooling is expensive, and after it’s over, you’re left with massive debts.  All of which makes it less attractive to the best talent, who’re these days heading into finance.

So.  You may disagree with some of the particulars above, but I think we can all agree that it’s worth trying something to make some changes before the whole country goes down the tubes.  Because if you haven’t noticed, the country itself is a little strapped right now, and healthcare and governmental pension costs are the majority of the reason why.

The problem, however, is that while you can easily break the issues down at least four separate ways, the White House decided to tackle them with one single, omnibus bill.  That pretty much guaranteed a massive fight in Congress, leading to a confrontation and crisis.  An alternative means of dealing with the issues would have used separate bills with separate but linked goals, around which details could have been negotiated using give and take.  And yeah, that might not have resulted in quite so useful a whole, but then again, it’s very much an open question how useful the current whole is anyway.  And in any event, the thing I think most people are missing about this situation is the simple reality that this President likes crises.

His former Chief of Staff, Rahm Emanuel explains it thus:

Or, to put it another way, it’s very hard to force sweeping changes with the American form of government without either a national crisis or a broad-based national mandate.  The President does not have a broad-based national mandate, so that has left him time and again to fall back on manufactured crises in order to get through his agenda.  Take that for what it’s worth.

Unfortunately, his partners in this are a subset of the Republican Party who are all too eager to watch the world burn.  These are the same guys who star on Doomsday Preppers, only at the upper class level and acting at the behest of the monied classes of America.  I don’t have much that’s good to say about the Tea Party, but I will say that when the President talks about “hard political realities”, he’s the one who’s missing the point.  The Tea Party were elected by people who hate him, who’ve stocked their basements and prepared for the worst, and who frankly appear to think it’s a push as to which is worse, compromise or just setting the whole thing on fire.  

Tea Party Republicans are not the ones who’re gonna be punished at the polls for shutting down the government.  The ones who’ll be punished are the moderate Republicans who’re ready to compromise.  Perhaps that means fewer and fewer Republicans will be elected over time--and actually, I suspect that is exactly what it means--but the guys who do get elected in the future are not going to be the ones who reached across the aisle to come to some sort of sensible compromise.  That’s just not the way we’re headed as a country.

But.  What does the President care?  Last I heard, he was delighted with the shutdown and felt his party was winning.  As of mid-week, Democrats had raised more than $2 million from small donors, and they were looking at this as a real fund-raising opportunity.  This--again--does not bode well for the spirit of compromise.

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Last thing I’ll say on this topic is on the National Debt.  The government right now is borrowing at rates that are well below inflation.  Inflation nationally is probably about 2.5%, and the government is borrowing at about .5%, meaning that the Federal Government is actually borrowing at a profit these days--a substantial one.  If it were a business, it would be borrowing all that it could and investing in as many safe returning investments as it could find.  Nationally, I think that means education and infrastructure, but your mileage may vary.  

It’s never good policy to borrow and spend on unnecessary short-term luxuries, but long-term investments in the current climate make sense, all things considered.

As to why the government is able to borrow so cheaply, well…  That’s a story for another day.

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[1] I’ve had to do this exactly once, right after Sally and I got married and before we had her insurance card from my company’s healthcare provider.  She got really sick one night, so I took her to the Hoboken Emergency Room, where they took her temperature and then sat us in a corner for four hours.  Finally, we left--once we realized that there wasn’t actually a doctor in the hospital that night--and I took Sally home, put her to bed, and prayed.  As it happened, she survived.  But the hospital sent us a bill for $400 for “triage.”  That triage took roughly five minutes and consisted mostly of paperwork, and it involved no doctors.  For those five minutes, the hospital charged roughly $5000/hour.  Our provider later paid $250 to settle the bill.