12 jul. 2009

Weekly Address: Recovery and the Jobs of the Future

President Barack Obama on Saturday touted his administration’s economic stimulus spending, saying that it pulled "our financial system and our economy back from the brink."

His remarks in an unusually long edition of his weekly radio and internet address came after a week in which unemployment hit 9.5 percent and Republicans increasingly denounced the stimulus as a failure.

After beginning with a recap of his "progress on these challenges abroad" during his trip overseas this week, Obama quickly pivoted to the stimulus and offered a direct challenge to right-wing critics of the government spending, saying they "have yet to offer a plausible alternative."

First, he sought to reframe the public’s expectations for the spending program. “The Recovery Act wasn’t designed to restore the economy to full health on its own, but to provide the boost necessary to stop the free fall,” Obama said. “It was designed to spur demand and get people spending again and cushion those who had borne the brunt of the crisis.”

And then he pronounced the stimulus plan a success: “In a little over one hundred days, this Recovery Act has worked as intended. It has already extended unemployment insurance and health insurance to those who have lost their jobs in this recession. It has delivered $43 billion in tax relief to American working families and businesses. Without the help the Recovery Act has provided to struggling states, its estimated that state deficits would be nearly twice as large as they are now, resulting in tens of thousands of additional layoffs – layoffs that would affect police officers, teachers, and firefighters.”

That’s in part a rebuke of GOP lawmakers like House Minority Leader John Boehner (R-Ohio) who pounced on rumblings in Washington of a second stimulus package. “All of this talk of a second stimulus bill, I think, is an admission on the part of the administration that their stimulus plan is not working,” Boehner said earlier in the week.

The president, though, said it’s too soon to label the stimulus a failure, and offered a response to both "those who felt that doing nothing was somehow an answer" and also those who wanted a bigger stimulus and "are already calling for a second recovery plan":

“As I made clear at the time it was passed, the Recovery Act was not designed to work in four months – it was designed to work over two years,” Obama said. “We also knew that it would take some time for the money to get out the door, because we are committed to spending it in a way that is effective and transparent.”

What's So Scary About Offering People the Option of a Public Health Plan?

By Dean Baker, AlterNet Independence Day is a time to reflect on the United States and to ask what it is that we really value about our country. Most people would probably list the freedoms that it has usually guaranteed to most members of society. The opportunities for economic success, while not as great as often touted, are nonetheless impressive.

However, some members of Congress were apparently celebrating our system of employer-provided health insurance last weekend. Or, at least that is what they want us to believe.

As Congress starts to delve into the dirt of a health care reform package, the clearest point of conflict is over the existence and structure of a public health care plan. Some members of Congress have thrown down the gauntlet, insisting that they could never allow the public to have the option of buying into a government-run plan.

These members tell us that a government-run plan will be like having the post office manage our health care. While the post office actually does a pretty good job where I live, if the point is that a government-run plan is going to be bureaucratic and inefficient, then why are opponents of a public plan so worried about giving people the choice to buy into it? If the public plan is bad, then people will just stay with the options currently available in the private sector. As those of who believe in the free markets like to say: "what's wrong with giving people a choice?"

In addition to the members who just say "no" when it comes to a public plan, there are also members who are willing to allow a public plan, but only if they can be sure that it will not provide real competition with existing private plans. This route involves crippling the public plan in various ways to make it less competitive.

For example, one proposal is to establish a series of health insurance cooperatives, which would be prohibited from acting jointly to maximize their bargaining power. The idea is that a newly formed Nebraska health insurance cooperative, insuring a few thousand people, will not be able to put too much pressure on Pfizer or the American Medical Associations when negotiating prices. It also will not be able to provide much competition for Aetna, Cigna, and the other major insurers.

Several members of Congress have made protecting these insurers and the current system of employer-provided health insurance into a basic principle. Max Baucus, the head of the Senate Finance Committee, who will probably have more to say in the final bill than anyone else in the Senate, falls into this camp. Senator Baucus has explicitly said that he would not support a bill that jeopardized our system of employer-provided health insurance.

This is truly bizarre. The United States has employer-provided health care insurance as an accident -- it came about as a way to evade wage controls during World War II -- it was not some grand principle.

It is almost impossible to imagine why someone would consider employer-provided insurance as an end in itself. I say this both as an economist and as an employer. I am going to waste several hours tomorrow discussing my center's health insurance plan with an insurance broker.

It is very difficult to compare the merits of the different insurance plans that we are considering. There is an endless list of conditions that are or are not covered (which can change after the fact). There are also issues about how quickly and consistently the insurer will pay bills. We can ask people with other insurers about their experience, but there is no guarantee that our experience will be comparable.

Of course, our broker is of little use. She will only get paid if she persuades us to change insurers. How much can we trust her?

I am trying to do research and run a think tank. Senator Baucus might think that it is a good idea that I have to waste my time dealing with insurance brokers, but I don't, and I suspect that millions of other small employers feel the same way.

So, why not give us a choice of a good, simple, public plan? Employers that want to read through insurance contracts will still have that option. The rest of us can get back to our work.

Dean Baker is co-director of the Center for Economic and Policy Research.