Senator from VISA

Steve Novick

Did anyone share my amazement that the Oregonian's lengthy article on Senator Gordon Smith ("Smith stands for beliefs on middle ground," August 22) made no mention whatsoever of Smith's unapologetic support for the war in Iraq?

Smith's position on the war is important not only in itself, but as an illustration of his guiding principle: If the country can't afford something, he's for it. Smith's "moderation" consists of voting for virtually anything that adds to the national debt. He's the Senator from VISA. Although the article mentioned his support for "tax cuts for the rich and strong federal health care for the poor," it failed to point out the fiscal consequences of such a stance (other than with a quote from Mr. Sheketoff toward the end).

Ultimately, the bill HAS TO BE PAID. It is insane to be running deficits now, with a growing economy, and before the baby boomers have retired. As every fiscal analyst has warned, as soon as China runs out of the ability or the willingness to keep us afloat, we're going to have a disaster on our hands. Massive, sudden cuts in services, massive, sudden tax increases, and/or an orgy of inflationary money-printing, a la Germany in the 1920's. The country is headed straight to hell. And Gordon Smith has had his hand on the handbasket every step of the way.

I'd far rather have an honest Republican, who is ready to admit that trillion-dollar wars and massive tax cuts for the rich will ultimately require cuts in health care for the poor.

  • Dave Lister (unverified)
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    I can remember the same dire economic predictions being made when Japanese investors were funding the Reagan deficit. Would you please clarify why this round of off-shore investment is different from that one? Thanks

  • Blah, Blah, Blah (unverified)
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    Just shut up and declare victory. All ya' left wing nuts took Senator Lieberman out in the primary and flexed your liberal muscles. Now move on and find a new cause.

    Now you bash a good moderate Republican because he supports your cause on issues like children and healthcare?

    The funny thing about liberals is that even in victory you manage to find reasons to be angry.

  • Bert Lowry (unverified)
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    Dave Lister:

    I don't remember the same dire predictions being made about the Japanese. Perhaps you could provide a link to some reputable source -- or since that was pre-world wide web, you could quote some reputable source.

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    blah blah blah-- you're aware that 39% of moderate CT Democrats, and 35% of conservative CT Democrats voted for Lamont, aren't you?

  • JHL (unverified)
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    yeah... all the liberals ought to just pop some Lunestaâ„¢ and trust the government to run things from here on in.

    I don't classify myself as a liberal (I'm an indie), but I'd much rather back a party in which dissatisfaction and calling our elected officials to task was a virtue... rather than the Republican Party, which for the last few years has been operating like some Victorian-era priss -- all aghast in mock astonishment whenever it becomes apparent that the Dems and Repubs don't see eye-to-eye.

    If you're not a fan of disagreement, maybe democracy is not the type of government for you.

  • Dave Lister (unverified)
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    Bert, I'll see what I can dig up. My recollections may be anecdotal. I do remember a lot of water cooler talk about what a bad deal it was for the Japanese to be buying most every resort, golf course and hotel in Oregon.

  • djk (unverified)
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    Dave -

    From memory: there was some irrational panic about the Japanese buying up real estate (at inflated prices, driving a bubble) in the 1980s. Thing is, even though title to the property was in the name of a Japanese owner, the property remained here, a large part of the economic benefits (business leasing, hotel space, golf, whatever) remained here, and the owners continued to pay local property taxes. Nothing really to get worried about. In many cases, the Japanese owners had overvalued the property (perhaps considering it to be a bargain compared to real property in Tokyo) and wound up getting hosed. It didn't matter to us; the land stayed here, and when the Japanese owners had to sell (often at a loss) the new owner contineud to pay local property taxes and use the land for business leases or hotel rooms or golf or whatever.

    Here, I think, the concern is that we're borrowing huge amounts of money from overseas sources. They hold the bonds as an investment, and really don't have America's best interests at heart. What happens if foreign bondholders start dumping U.S. bonds as a bad investment, or if we issue another three or four hundred billion dollars worth, find few takers, and have to start raising interest rates to find buyers?

    The good news is America's taxes are so low, we could raise them high enough to generate large surpluses and start paying down the national debt with relatively little economic pain. The bad news is, it appears we don't have enough politicians in either party with the spine to propose even a modest tax increase on the richest 2%-5% of Americans.

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    Dave is right. There were predictions of major economic disruptions if we didn't end the deficit under Reagan. In fact as a result of his policies our manufacturing sector was gutted and a lot of manufacturing blue collar jobs were eliminated and never came back. However there were three tax increases under Reagan and Bush I to try and reduce the size of the deficit and then Clinton finished it off with another tax increase that led to budget surpluses.

    The point now is that in addition to the trade deficits, we have had a growing federal debt with no end in sight since George II took over. As someone once said, "If something can't continue forever, it won't"

  • Dave Lister (unverified)
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    djk and John, Thanks for your posts. Good clarification. I remember a neighbor of mine, years ago, who attributed the out of control inflation in the late seventies to LBJ's not having raised taxes to fund Vietnam.

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    Here's the thing: It's simply not enough to jack up spending on health care for the poor. I mean, that's FINE and GOOD - but it doesn't solve the structural problem with our health care system.

    If health care inflation is something like 17% annually, but overall inflation is only something like 3% annually, then that means that health care is consuming an ever-increasing share of the economy.

    To put it even more simply, if health care spending at, say, the local school district is going up 17% a year, but overall revenues only go up 3% a year, then one of three things will happen: Either we find a way to bring health care spending under control, we jack up revenues (taxes) to pay for it, or health care eventually consumes 100% of the budget -- no teachers, no buildings, no books.

    Given that the third option isn't real, the second option isn't feasible, then the only option is the first option.

    Want to solve the school funding problem? the economic growth problem? the jobs problem? the budget deficit problem? the failing infrastructure problem? .... then solve the health care problem.

    It annoys me to no end that Gordon Smith gets some kind of credit for funding "health care for the poor" when he has actively opposed any structural solution to the crisis.

  • progvoice (unverified)
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    Unfortunately the Iraq war is one instance where Smith IS a moderate when compared to the rest of congress (including Dems,) that voted for and continued to support (fiscally) this war.

  • Ross Williams (unverified)
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    If health care inflation is something like 17% annually, but overall inflation is only something like 3% annually, then that means that health care is consuming an ever-increasing share of the economy.

    If you define the problem as the rising cost of health care it seems to me there are only two ways to reduce it:

    1) Reduce the amount or quality of health care people receive;

    2) Reduce the price providers of health care get for their services. This means doctors, drug companies, hospitals, medical equipment providers, insurers etc all have to make less money. The question is how are price cuts shared among the providers.

    Perhaps there is another way to reduce costs, but I am missing it?

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    3) reduce overhead and middlemen costs by using government purchasing power.

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    This means doctors, drug companies, hospitals, medical equipment providers, insurers etc all have to make less money.

    No, not less money. Just a slower rate of increase. (Oooh, I love it when I get to use rightie framing against 'em!)

    One more time... if revenues are going up 3-5% a year, and costs are going up 17-20% a year, there's a train crash coming.

    It ain't optional, it's on it's way.

    Making up some numbers here... If health care spending is 10% of the total budget, but it's going up 17% a year while revenues go up 3% a year --- you hit 99% of the budget in Year 19. (In the real world, we're well past where most staff-heavy organizations are spending more than 10% of total budget on health care costs.)

    This is true for government agencies, but it's also true for private companies. That's why more and more Fortune 500 companies are starting to talk openly about major health care reform.

  • Ross Williams (unverified)
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    No, not less money. Just a slower rate of increase. (Oooh, I love it when I get to use rightie framing against 'em!)

    Are "righties" framing health care costs in terms of protecting the money doctors and other health care providers make? I don't think so.

    Instead they have framed it in terms of people not having incentives to control costs by reducing their demands for service. The solution to them is obvious, make people pay more of the cost and they will stop sending money on wasteful and unnecssary health care and reduce the costs.

    Of course what that really means is cutting off all but catastrophic care for the middle class and others who are cost conscious, while the drug companies and medical providers continue to get wealthy serving up higher and higher cost medical care for the few who can still afford it.

    One more time... if revenues are going up 3-5% a year, and costs are going up 17-20% a year, there's a train crash coming.

    I think the trained crashed a while ago didn't it? The question is what, if anything, can be done about it. The problem is that moderate politicians are unwilling to address the cost problem because cutting an industry's prices requires a direct attack on the free market. And there are no immoderate politicians.

  • Don Smith (unverified)
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    The HMO model is killing us, but so is the very ethically challenging notion of who deserves what level of care. We are providing levels of service that are far beyond basic to help people survive cancer or battle parkinson's or just live an extra six months.

    I'm not proposing an answer here, but if you get an expensive test for a rare condition and your health insurance covers it, but it turns out there was nothing to worry about, that drives up costs of premiums. In our society, a doctor has a choice - don't offer the expensive test and take the risk that your patient isn't the 1 in 1000 who will have said condition and sue you to death, or offer the test knowing insurance will likely cover it. The doctor doesn't care if health insurance premiums are skyrocketing, but he does care if he gets sued. Easy choice for him, but not for society as a whole.

    Ross, you're wrong that cutting prices requires price fixing. That never works under any circumstances for anything. Employer-sponsored health care is the problem, not the solution. We need portable, individual health care plans that allow people to get reasonable coverage individually. I prefer the HSA plus high deductible major medical model myself. People pay pre-tax cash for services with no insurance paperwork for the doctor (meaning you usually get a discount) and if you get cancer, you're covered. Money rolls over year to year, unlike Flexible Spending Accounts, which are stupid because it's use-it-or-lose-it (guess what people do at the end of the year...they use it. They buy new glasses, but don't need them, or go get MRI's they don't need, or whatever).

  • Ross Williams (unverified)
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    Ross, you're wrong that cutting prices requires price fixing.

    Am I? Your solutions seem to define the problem in terms of reducing services people buy, not the price of those services:

    We are providing levels of service that are far beyond basic to help people survive cancer or battle parkinson's or just live an extra six months.

    f you get an expensive test for a rare condition and your health insurance covers it, but it turns out there was nothing to worry about, that drives up costs of premiums.

    They buy new glasses, but don't need them, or go get MRI's they don't need, or whatever).

    This is the "rightie" spin - although it is adopted by a lot of others. Its very similar to the claim that you can reduce taxes by getting rid of "waste, fraud and abuse" in government. I suspect the results will be the same, a lot of beneficial services no longer available to those who can't afford to pay for them out of the money left over at the end of the month.

    The HMO model is killing us

    Actually what is killing us is free market medical care. When people's lives are at stake they don't ask "how much will it cost?" Initially non-profit HMO's were a way to reduce medical costs since they provided cost-effective preventative care before the costly life-saving procedures were necessary. They operated for the benefit of their insured - the reduced costs went to reduced premiums. The free market took over when we allowed proprietary HMO's. Not surprisingly, they focused on growth and profits rather than high quality, low cost health care. Reduced costs go to increased profits.

    Employer-sponsored health care is the problem

    Or the lack of it for many people. Emergency rooms still provide an awful lot of free medical care to people who can't afford to pay and don't have insurance.

    I think you reinforce my point. There are two choices. Control costs - which is anti-American and doesn't work. Or reduce services, wasteful or not, necesary or not, life-saving, or not.

  • Bert Lowry (unverified)
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    It seems to me that one of the best ways to control health care costs is to make preventative treatment (which is relatively inexpensive) more accessible to everyone. That way, you end up with fewer catastrophic problems later.

  • Steve Novick (unverified)
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    Thanks to John and djk for explaining differences between now and the 1980's. Another difference is that with the baby boom Social Security / Medicare (and the Medicare part is much scarier, as per Kari's points) demographic tide coming ever closer, we don't have nearly as much time to play with as we did in the 1980's. Re: our dependence on China, see one of a number of Krugman columns (link below): http://www.pekingduck.org/archives/002446.php

  • Ross Williams (unverified)
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    Here is Krugman's conclusion:

    In other words, we've developed an addiction to Chinese dollar purchases, and will suffer painful withdrawal symptoms when they come to an end.

    But the question is why will it be in China's interest to end them and send us into withdrawal? This may well be the question of who owns whom. With all the money China has loaned us, it has a huge interest in maintaining both the value of the dollar and the United States economy as its largest market.

    I think that real danger is the longterm decline in the United States economy. Our market becomes less important and the ability to grow our way out of debt declines as well. If you are making $10,000 a year a $1000 credit card debt is a big deal, if you are making $40,000 it isn't. The danger is that our debt grows and our ability to repay it grows more slowly or worse starts to decline.

    But that is more likely to happen over time than as a crisis where China suddenly pulls the plug. Sort of like the fact that people's wages are falling relative to inflation. It will just slowly erode our prosperity.

  • Don Smith (unverified)
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    Ross:

    I understand your point of view, I simply disagree with it. You'll never get "affordable, universal health care." It's not possible to provide both universal and affordable anything. You're right, though, that people don't ask how much it costs when their life is on the line. The problem is precisely that. The hospitals know that no one asks and charge up the wazoo for items not even used.

    There's a lawyer in Virginia Beach who has a billboard outside of a local hospital advertising to audit hospital bills on a contingency, and he does a brisk business. I don't know what that has done to the hospital charges (I wouldn't know how to research that), but the point is that hospitals routinely overcharge patients largely to subsidize what they have to write off in emergency room losses.

    People go to the emergency room for routinely non-emergency issues and don't pay their bills because they don't have to. A doctor has to see them, and they can't be refused service. Attack that demand-side issue and that will be a start.

    Attack the onerous regulation (both insurance-based and government-based) that goes into the practice of medicine and prices will fall.

    Your suggestion has been tried - it's called Medicare and it's an unmitigated disaster. No accountability. No efficiency. No free market at work. No thanks.

    I'm no rightie, but I do believe in the (true) free market. Not a "regulated" version of it, because that's the wrost of both worlds. The market is efficient and good. That's my mantra. I live and die (metaphorically, Senator Walden) by that. I stand behind it because where it's tried, it works, and it only fails when people in power muck with it.

  • Robert Harris (unverified)
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    Don Smith says:

    "You'll never get "affordable, universal health care." It's not possible to provide both universal and affordable anything."

    I have to disagree here. Almost Every other industrial country has what amounts to taxpayer financed universal health care, with some private care provided as well for those willing top pay for it. The cost is between 8% to 11.5% of their GDP. Our cost is 17% of our GDP yet we have more uninsured, lower age expectnacy and higher infant mortality rate than almost any other industrialized country.

    We don't really have to study our system. There are dozens of health care systems that work pretty darn good for half the cost we're paying systemwide. We just have to pick one to copy. The problem is the entrenched interests who much prefer studies, and nibbling around the fringes, at least until they've made their millions.

    So maybe next year, instead of a 12% incresae, I'll only get a 10% increase in my health care coverage. That slows the train down, it doesn't derail it.

  • Ross Williams (unverified)
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    I'm no rightie, but I do believe in the (true) free market. Not a "regulated" version of it, because that's the wrost of both worlds.

    I understand this idea, the problem is I know of nowhere that such a market exists on any scale. Markets require regulations for function, the only question is what regulations.

    "You'll never get "affordable, universal health care." It's not possible to provide both universal and affordable anything."

    I am not convinced you are wrong, but I don't think you are going to cut costs without taking away needed services, substantially reducing the amount of money the medical care industry gets for its services, or both. I have yet to hear anyone proposing any solution that will cut prices. Everyone is talking about some form of rationing that reduces peoples use of services.

    The problem is the entrenched interests who much prefer studies, and nibbling around the fringes, at least until they've made their millions.

    And there is no one of any political persuasion willing to take them on. That was my point. We have lots of talk, but no action where the real money is, cutting the take of doctors, hospitals, insurance companies, drug companies and medical equipment providers. Whether that is done directly with price controls or indirectly by reducing their power to set prices, the only other alternative is for people to pay more or use less.

  • Bert Lowry (unverified)
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    I find it amazing that people still claim that universal healthcare can't work. Robert is right; most other industrialized nations spend substantially less on healthcare per capita and have substantially better outcomes. And it makes sense if you think about it.

    The healthcare industry has no motive to lower the percentage of the economy spent on healthcare. As in any industry, the CEOs and shareholders want growth. They won't be satisfied until we spend 100% of our GDP on healthcare. That's the nature of private enterprise.

    The reason every other industrialized nation has a system that works better is this: they've realized that you shouldn't let the people who profit from bad health care policy set the healthcare policy. It's like having Enron and Exxon set your energy policy. And no one would be that dumb.

    I expect some people will respond with "socialized medicine" horror stories. I'm confident I can provide 10 horror stories about "profit-driven medicine" for each "socialized medicine" story they provide.

  • Ross Williams (unverified)
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    It's like having Enron and Exxon set your energy policy. And no one would be that dumb.

    uh ... I wish that was true.

    But the truth is that neither the Democrats nor the Republicans are willing to entertain a health care system that substantially reduces the price of medical services.

    In fact, that may be the real barrier to universal healthcare in the United States. No one has figured out how to give everyone the health care they need without cutting the price. Any kind of rational controls on prices, which you have to have to make universal coverage work, are going to be a huge hit to a variety of people in the industry.

    You can't maintain even current service level at the current prices and cut total costs at the same time. Muchless provide necessary services to those who aren't getting them now.

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    On Reagan budget deficits & Reagan-Bush-Clinton tax increases -- the Reagan deficits began like the Bush ones with huge tax cuts that were supposed to generate so much growth that it would result in more revenues. Remember that perfect coincidence of a name, the Laffer Curve? Aka supply-side economics. As with Bush a piece of the agenda was restrict serious consideration of new initiatives or use of government to address or solve problems on grounds that "there's no money." And as with Bush, off-the-books money was found for some huge-ticket items. In Reagan-Bush I case the Savings & Loan crisis (something on the order of half a trillion 1980s dollars) & his huge military spending run-up, causing some to call his deficits military Keynesianism. In Bush II it is the Iraq occupation -- which unfortunately does not even have the ambiguous benefits of military industrial demand that Reagan's hardware-heavy expansion did.

    BTW, on the Medicare & SS issues, an interesting feature of the demographic projections is that no one seems to be taking into account immigration. It may be that a big argument in favor of creating stronger paths to legal status for immigrants whose labor the economy clearly is demanding is that it can help fill the demographic trough of the post-baby boom years. Though, since we're talking about tax policy, the real way to address the burdens of Medicare & SS for the boomers is to abolish the income cap on contributions so that in their peak earning years those boomers who have most benefited from the bifurcating of the economy kick in their fair share to meet the problem.

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    Novick,

    You truly are the most brilliant one out there! You need to write your own Lakeoff book on framing.

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    "People go to the emergency room for routinely non-emergency issues and don't pay their bills because they don't have to. A doctor has to see them, and they can't be refused service. Attack that demand-side issue and that will be a start."

    Actually, that's a supply-side issue. People don't go to the ER for routine or acute care of chronic problems because it's fun--they go because they lack access elsewhere.

  • Ross Williams (unverified)
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    I would think the best "frame" for a candidate would be to say "we both understand we need to do something to reduce the cost of health care. My opponent wants to do it by reducing the services you receive and by eliminating service to some people entirely. I want to do it by reducing the exhorbitant prices we are paying for basic health care services. There is no reason we should be paying 10-20 times as much for the same drug as people in other countries."

  • MB (unverified)
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    OK, I really don't know where to start except, thanks Kari for putting health care out there.

    Health care now consumes 25% of the state budget total US GDP @ 16% and growing.

    We can indeed do something about it- and it was interesting to note that no one brought up the whole issue of PROFIT! In Oregon, most of our Hospitals and Insurance companies are "non profit" yet combined they made 328 million dollars in"excess revenue" in 2004. Now I am not saying that a bit of profit is bad, but at some juncture, where is the accountaility issue to those of us paying the bill, which is ALL OF US, either throughtour taxes or our premium dollars. ANd 328 milion dollars buys alot of health care.

    Medicare is not an unmidigated disaster, it is incredibly efficient (3% administrative costs) and covers all Americans over 65 and our people with disabilities. The only disaster in Medicare, is the "modernization Act" passed in 2003 (in the dead of night) which is driving our elders into the "do-nut hole"

    Oregon has been and should continue to be a leader on health care issues. The 2005 legislature FAILED in reducingthe cost of healthcare- Senate democrats passed bills to expand the Oregon Prescription Drug pool, hold insurance companies accountable and to increase transparency on hospital prices, which now account for 36 cents of every health care dollar. Suprise, suprise, the House, with their friends in the profit driven industry, prevented those bills ( and others) from even having a hearing or an "up or down vote".

    Elect a pro-affordable health care majority, and we'll get the reforms we need to provide health care to all Oregonians.

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