ObamaCare Chronicles: California and State Insurance Exchanges

There has been some interesting and insightful debate in the past week or so due to a report by California’s health insurance exchange estimating only a modest increase in premiums for people in the individual insurance market. Armed with a quote from the state exchange’s Executive Director stating, “This is a home run for consumers in every region of California,” lefty commentators took to social media and the airwaves to essentially claim that ObamaCare would be a good deal. Ignoring for a moment that one prospective report on one state’s insurance exchange hardly vindicates the over two thousand pages of ObamaCare, the argument among some smart commentators on both the right and left is worth considering. I’ve summarized the arguments from both sides and will address them below.

Senator Rubio on the Obama Administration’s Scandals and Intimidation

Let’s see, in the past week or so we have learned that Obama administration officials in Libya knew that a video had nothing to do with Benghazi, that the IRS has been targeting conservative political organizations, that the Health and Human Services Secretary has been asking private industry to pay for Obamacare, and that the Department of Justice has been tracking phones of journalists. Senator Rubio is calling this a culture of intimidation.

I’ll let him speak for himself, but his point is this: when a government administration is concerned primarily with politics and will divide people to win politically, it easily turns into an abusive operation that intimidates the people whom it represents.

Even David Axelrod had it right today when he admitted that it’s impossible for a President to be aware of what’s going on in a government this large. Too bad this large government is what this President has pushed for. Axelrod may not know it, but he made a very powerful defense of conservatism by accident.

House Oversight Hearing Strongly Suggests Benghazi Cover Up

It may be because we as a culture have become so desensitized that even true scandals do not surprise or offend us much, or that when one occurs, everyone rallies to whichever side they are on with little concern for the truth. Benghazi may be an example of this. No one would argue that it was not a tragedy, and only the most partisan of people would argue that the administration did not make any mistakes in failing to prevent the attack. What the House Oversight hearing this week revealed strongly suggests that the Obama administration knowingly misled the American public about what happened in Benghazi.

The testimonies of Mr. Hicks, Mr. Thompson, and Mr. Nordstrom, all closely engaged with the situation in Benghazi, were truly heartbreaking and stunning. I submit that the people saying that those testimonies revealed nothing new were going to say that no matter what the witnesses revealed. Those willfully blind deniers are motivated only by their politics, trying to protect mostly Hillary Clinton and President Obama. As Guy Benson points out, there were at least a dozen revelations from the hearing.

Among the most important revelations from the hearing were that Hicks, who was on the ground in Libya, received a call from Hillary and her staff around 2 AM. According to Hicks, during that call–the transcript or recording or which we do not have and should try to obtain–Hicks and Hillary were on the same page about what was happening, and no one even mentioned a demonstration or a YouTube video. The folks on the ground in Libya all realized right away that they were being attacked by terrorists. Hicks testified that he was told that fighter planes were 2-3 hours away, yet never came, and that someone apparently gave a “stand down” order that prevented US forces in Tripoli from coming to help.

Mr. Nordstrom, the head of US security in Libya, testified that it was well-known that the US facility in Benghazi did not meet safety standards, and that Hillary would have known about the requests for additional security at the facility. Thompson, a former Marine, added more head-scratchers, recounting that his unit in the Counterterrorism Bureau was excluded from high level administration meetings and was cut out from the process. Thompson’s unit is supposedly trained and specialized for emergency situations like the one in Benghazi.

The cover up, which it almost certainly was, was confirmed when Hicks said that the YouTube video was a non-factor. Hicks testified that he was embarrassed when Susan Rice went on the Sunday talk shows and blamed a video that had nothing to do with what had happened. When Hicks asked his superiors on Hillary’s staff about why that false narrative was being offered by the Obama administration, he was excoriated and demoted after having received praise from his superiors in the administration for the way he had handled the situation. That this was a cover up was made even more clear by intelligence reports that initially mentioned terrorist attacks, were scrubbed to remove those mentions, and never talked about a video.

Any objective observer of the investigations into what happened in Benghazi who heard this week’s testimonies would conclude that the administration knowingly misled the American public. It is still not completely clear who made which decisions, but the testimonies in this past week’s House Oversight hearing confirm the cover up and other mistakes that were made. It would be a shame if we ignored this simply because we did not want to hurt our favorite political celebrities, which is surely a concern for many media outlets who would rather bury this story to protect their political interests.

UPDATE: Andy McCarthy adds commentary about the call between Hicks and Hillary, summarizing the situation concisely:

To sum up: State’s main guy on the ground in Libya tells Clinton in Washington that State’s people in Benghazi are under attack by the local al Qaeda franchise, Ansar al-Sharia, which might have captured the U.S. ambassador. Yet, over the next few days, with what we now know to be monumental input from the State Department, the Obama administration purges references to Ansar al-Sharia from the talking points that it uses to explain the attack to the American people. Instead, it concocts a story claiming the anti-Islamic Internet video was the culprit.

McCarthy interestingly notes that shortly after Hicks spoke to Hillary–a phone call that Hicks testified had them on the same page about the terrorist attack–President Obama called Hillary. Shortly after the President’s call, a statement was released for Hillary that blamed the video. It is not hard to come up with the subsequent question.

Contrasting Center-Right Healthcare with the Affordable Care Act

Ezra Klein has considered an outlined center-right healthcare plan offered by Ramesh Ponnuru and Yuval Levin, and a summary of Republican healthcare priorities provided by Bob Domenech. In response, Klein displays a misunderstanding of (or just misrepresents) the true center-right market approach to healthcare while still highlighting the important contrast between such an approach and the Affordable Care Act. As Klein suggests, the center-right approach to healthcare isn’t a direct replacement policy to achieve the same goal as the Affordable Care Act, but is directed to a different goal. That goal, however, is actually better than the one the Affordable Care Act is meant to achieve.

Scott Walker at CPAC 2013: What the GOP Is About

I wasn’t able to attend CPAC this year and, to be honest, wasn’t as enthusiastic about it as I was last year because of the election results from November. But this year’s CPAC was important; it was a chance for the center-right to debate how to move forward during a crucial time when the country needs a strong alternative to the ever-growing entitlement state that is leading us towards more government dependence and a potential debt crisis.

Paul Ryan, Bobby Jindal, Marco Rubio, Mitch McConnell, and Dr. Ben Carson delivered some of the most important speeches of the weekend. Ryan continued and expanded on the important message of why Republicans are trying to reduce debt with responsible budgets: it’s not about making numbers add up, but about creating the kind of society where the vast space between the individual and the government can thrive. Governor Jindal, repeating some hilarious lines from a speech he had given earlier that week, continued his message of shifting focus away from the daily battles in DC to the local level where most Americans live. Rubio addressed the oft-repeated criticism of the left–that conservatives offer only the same ideas over and over–by saying that the idea of American doesn’t need to change.

Senate majority leader McConnell, apparently worked up over some racial attacks against his wife, went on offense by suggesting that Republicans aren’t the party that holds down the poor and less fortunate. Dr. Carson, perhaps the most dangerous non-political figure in the country right now, addressed the crowd as if in a conversation, reminding people that the reason that folks who grew up poor could make it in America wasn’t because of government, but because of the opportunities that America provides through its limited government.

Perhaps the best and most important speech, however, was the one delivered by a guy who may have given the best speech last year as well. Governor Scott Walker of Wisconsin, who gave a keynote at one of last year’s banquet dinners (which I was fortunate to have attended), was fantastic again. Governor Walker explained that his financial and bargaining reforms in Wisconsin have made it easier for people to find jobs.

He told a powerful story of a young teacher who had lost her job after receiving an award of a top teacher. Why? Because the teachers unions had made it too difficult to replace older teachers and, because of a need to save money, the younger ones are the first ones with their heads on the chopping block. He addressed the main criticism of the left about Republicans: that the GOP’s efforts to cut government mean they don’t care about the poor.

Walker’s no-nonsense demeanor in rejecting that characterization is perfect. He responded to that criticism by saying that Republicans don’t want to get people off government programs because the party wants them to be left alone, but because the party wants them to have the dignity that comes with having a job and being independent of government. That’s the correct answer, and one that all Republicans should master.

Despite some of the questionable decisions about CPAC guests that the media will focus on, there were some important messages delivered at CPAC this year. Scott Walker was out in front, and we shouldn’t be surprised if we see him in that position more and more heading towards 2016.

Rand Paul’s Important Drone Filibuster

What Senator Rand Paul did this week in a filibuster of the CIA Director nomination of John Brennan was unique, bipartisan, enlightening, and politically brilliant. Let’s not forget that it was also a risk, as Senator Paul talked for the better part of over half a day, something that a lot of members of Congress can’t and probably shouldn’t do, lest they say something really harmful to their reputations. No, Senator Paul was impressive, talking and facilitating discussion on the question of Executive branch war power in general, and specifically the use of drones on US citizens on American soil.

This was a rare display of intellectual discussion that was not at all partisan. Senators Ted Cruz and Mike Lee helped start a great discussion of Constitutional history and Executive power, and the GOP’s rising stars were on display. Eventually Democrat Senator Ron Wyden joined them and added to the discussion. By the end of the night, a large number of Republican Senators (including, notably, Rubio, Ron Johnson, Tim Scott, and Mitch McConnell) had shown their support for Paul’s efforts by taking the Senate floor to discuss the issue. It was a fascinating and refreshing display, especially because Paul made it clear that he wasn’t using the filibuster to block Brennan’s confirmation, but only to use the opportunity to generate some explanations from the Obama administration about when drones could be used against US citizens on American soil.

This discussion was politically wise, as Paul not only raised his credibility and public stature immensely, but it showed just how deep and diverse the new generation of Republican Senators is. Cruz and Lee are truly Constitutional law experts. Rubio clearly explained the Legislative branch’s role in the confirmation process for Executive appointees like Brennan. Several others explained the need to discuss the potential consequences of not limiting the circumstances under which the Commander-in-Chief could use drones on American soil. And Paul even distanced himself from many Bush-era war policies, helping himself and some of his colleagues gain more credibility, especially from younger voters who tend to be less hawkish in general.

Brennan was confirmed today, and Attorney General Holder also answered the original question about drone use that started the whole discussion. Life goes on. No one was hurt or offended. And the discussion about war powers with drones will continue in the public sphere.

Good for Senator Paul, who deserves much credit and respect for his efforts, regardless of whether or not one agrees with his positions on such issues.

“We Don’t Have a Spending Problem”

Several Democrat politicians, including the former Speaker of the House, have recently been on the record asserting that our country’s financial and economic problems are not because we are spending too much, but because we are generating insufficient revenue. While it’s obviously true that by definition debt means taking in less revenue than the government spends, the point these politicians are trying to make is that we can’t cut spending because spending is what creates jobs and economic growth that produce revenue. To listen to them say it, we have to keep investing in education, research, and infrastructure to spur job creation and economic growth. This is instructive, so let’s consider this argument.

In order to not have debt, the government must collect at least as much in tax revenue as it spends. Federal tax revenue comes from various sources generally linked to some form of income. People pay a portion of their income, depending on the source, in federal taxes (if the income reaches certain levels). Therefore, to generate tax revenue paid at less than 100% of a person’s income, the taxable income must be higher than the amount of government spending used to generate the income in order for there to be no deficit from that spending. Let’s consider an example with simple numbers to illustrate this.

Say the average amount of income the federal government took in taxes was 25%. If the federal government spent $1 trillion, it would have to generate $4 trillion in taxable income to make a full return on that investment and avoid any deficit (1/tax rate x spending). That’s a 400% return on investment measured in taxable income, which is very high and unheard of. Return on investment for government spending is often measured in financial capital, and is nowhere near that rate of return. Even if the average federal tax liability were 50%, spending would have to produce twice as much in taxable income to avoid a deficit, which is also unheard of. Also, keep in mind that higher tax rates can limit investment and growth.

So we can’t simply find a higher tax rate to reduce the level of taxable income that must be generated by government spending to avoid a deficit. In addition, this hypothetical considers only new investments and ignores the $16 trillion in debt we already have. We also have tens of trillions of dollars in unfunded liabilities for entitlement programs. So any government spending to create jobs would have to produce not only enough taxable income to pay for itself, but for our current liabilities, in order to actually reduce the debt. That level of return is never going to happen.

The problem is therefore not one of revenue, because there will never be enough revenue to pay for the spending that arguably generates it. The problem is that constantly adding debt is holding down the economy and threatening our future, and the source of that problem is spending that can never produce enough revenue to pay for itself. In other words, spending must be reduced.

Krauthammer to Republicans: Do Nothing on Sequestration

Charles Krauthammer offers some solid, although perhaps counterintuitive, advice to Republicans on the sequester: do nothing. This is exactly what President Obama and Senate Democrats did on the fiscal cliff/tax expiration deal at the end of last year because doing nothing meant tax rates would rise on everyone, forcing Republicans to come to the table to avoid that outcome. The shoe is now on the other foot, however, because sequestration is about automatic spending cuts if Democrats don’t come to the table.

One should note as Krauthammer does that sequestration is bad policy. Many of us know people who will be negatively impacted by the arbitrary, across-the-board cuts that come from sequestration. Many of us in particular are concerned about cuts to defense. It was those defense cuts, however, that were designed to make Republicans concede to tax increases; the Democrats never had any intention of real spending cuts, and President Obama’s game of chicken on sequestration was always a bluff when it came to spending reductions.

Republicans, however, have already agreed to tax increases in the fiscal cliff settlement. The other part of President Obama’s  ”balanced approach” is spending cuts. There were no spending cuts in the tax increase deal the Republicans allowed to avoid even more tax increases. The President has never had any intention of spending cuts to reduce the debt, but if Republicans are indeed willing to allow the sequestration, President Obama and his side have lost their leverage to extract further tax increases from Republicans.

Could we avoid sequestration? Sure, if the other side of the “balanced approach” — spending cuts — can be agreed upon in a way that replaces the sequestration cuts. Only the House Republicans have offered any such replacement, however, and the Democrat-controlled Senate won’t touch that alternative. Supposedly the Democrats are working on a budget of their own, which would be their first since before the launch of the iPad, but one can only assume that their proposal will include more tax increases and some pretend spending cuts (like not spending on wars that we weren’t going to spend money on anyway).

Right now the President and his party are the ones responsible for the sequester because they have not agreed to the other half of the deal that was supposed to avoid sequestration and have not proposed an alternative for the other half of the balanced approach. No one wants to see the sequestration happen, but unless the Democrats agree to the other part of the balanced approach, the options right now are sequestration or more of the unbalanced approach of tax increases with the prospect of sequestration only further delayed for a subsequent debate over the exact same issue.

Sometimes doing nothing and taking the least bad option is the most responsible move.

Obamacare Chronicles: New CBO Estimates and State Medicaid Struggles

As more of Obamacare rolls out, we learn more about what’s in it as then-Speaker Nancy Pelosi suggested. Unfortunately, much of what we are learning isn’t exactly what we were told would be the case as a result of this healthcare law. The two latest newsworthy stories concerning Obamacare are the CBO’s new (increased) cost estimate and estimate of people losing insurance due to Obamacare, and the difficult decision of governors about whether or not to accept Obamacare’s coercive (in the words of the Supreme Court) Medicaid expansion.

Starting with the latest CBO report, it’s no surprise that the 10-year cost estimates continue to increase. It was well-known by those who understood how the bill was scored in the legislative process that the first 10-year cost of the law was understated. This was because of various reasons, including the delayed benefits that drive the cost of the law. The law started taking in money to pay for itself before many of its benefits started adding to the cost of the law, meaning that the first ten years of the law would cost less than later sequences of ten years after the costs became applicable. There are other assumptions about the cost of the law, including the half a trillion dollars that are supposed to be cut from Medicare, CLASS Act payments that will not occur now that that long-term care portion of the bill has been removed, and a myriad of other estimates about the cost impact of some of the reforms whose many details are yet to be determined.

The bottom line is that the CBO now says Obamacare will cost over $1.3 trillion for the next ten years. The CBO also estimates that seven million people will lose their employer-sponsored insurance due to Obamacare. In other words, if you like your health plan, you can’t necessarily keep it. In addition, the media has been forced to report on the coming “sticker shock” for health insurance premiums, as insurance companies and analysts sound the alarm. Reforms like band compression, guaranteed issue, and medical loss ratio requirements are going to increase insurance costs for many, especially the young (who just guaranteed this by reelecting Obama). It remains to be seen if Obamacare’s other potential reforms will ultimately reduce government healthcare expenditures enough to offset increased costs and if any such spending reductions would be worth the losses in benefits in which they may result, but for now it’s clear that the law is going to cost more than originally marketed.

Much of the cost estimates will depend on how various pieces of the law are implemented and what impact they have. One glaring issue is over Medicaid expansion, which was one of the issues dealt with in the 2012 Supreme Court decision on the new law. The Supreme Court held that Obamacare’s Medicaid expansion plan was too coercive to be constitutional, and so governors may opt out. While avoiding the federal government’s coercion of states is a reasonable goal, the choice for governors isn’t simple.

Obamacare intentionally expanded Medicaid to provide more people with insurance, with the promise to hospitals and providers being less unreimbursed emergency room care. Reasonably rejecting the Medicaid expansion could mean exacerbating the free-rider problem that will come with guaranteed issue and could mean perpetuating the problem of unreimbursed emergency care. In addition, more people may turn to the state exchanges, which the IRS suggests could require steep increase in premiums when compared to the current average insurance plan. So the choice is between bad and worse, with each state left to determine which option is the least bad one. Republican governors like John Kasich in Ohio and Rick Snyder in Michigan have apparently weighed the issue in favor of Medicaid expansion, and while such decisions are met with derision from the media and the left and with frustration from the right, they are somewhat justified in a climate of mostly negative choices.

The main counterargument to all of the negatives of Obamacare is that it will help insure the people who were uninsured, but even that claim is being scaled back. The CBO now estimates that seven million less people than originally estimated will be covered by Obamacare. Coupled with higher costs, higher rates, and bad situations for states, it’s safe to say that Obamacare isn’t off to such a hot start.

Jindal to RNC: Shift Focus from DC to Local Communities

Shortly after the November election I was talking with some disappointed and frustrated people about what one could do to help the country during another four years on the wrong path. People both inside and outside of Washington think that the federal government cannot and will not address the biggest issue of our day, which is the debt that threatens our future and the opportunities of younger generations. There are plenty of maneuvers to try to get the least bad deals in DC, and those tactics should not be ignored, but we concluded that real changes were most likely to occur at the state and local levels, and thus could provide examples of what works and does not for governance.

Governor Jindal, speaking to the RNC last night, echoed this message of focusing on the vast area between the individual and the federal government. His message: instead of focusing so much on battles in DC, focus on the local communities that are the true strength of the country. In an apparent dig at Paul Ryan, Jindal suggested we focus less on zeros and spreadsheets (more on that below), arguing that the internal battles of the federal government are not going to produce the policies we need right now and that so much centralization is undermining local communities. Jindal has a point here; with so much frustration and distrust of the federal government right now, we should naturally emphasize our local communities and governments instead.

That is not to say that the federal government and its policies are not important (and Jindal was quick to emphasize that point), but to say that Americans opposed to the path we are on should fight the battles they can win and that can have a positive impact on their lives. Doing so isn’t acquiescing to the path of managed decline we are on at the federal level, but a way of countering in a practical way the argument advanced by President Obama and other progressives that society is a choice between collective action (federal government) or the lonely and helpless individual.

The GOP is obviously adjusting to the loss from last November and is looking for a path forward as the window for saving the country from its debt problem is rapidly closing. One way to move forward is to contrast center-right policy outcomes with progressive ones, and that is unlikely to happen at the federal level right now. There are now thirty Republican governors, however, many of whom are starting to create contrasts by adjusting outdated labor laws and proposing pro-growth tax policies. Contrast that with bankrupt blue state models like California, New York, and Illinois. Contrast Texas’s job growth with no state tax to Maryland, where supposed Democrat rising star Governor O’Malley recently hiked taxes and hasn’t seen much growth as a result.

Of course, it’s essential to explain why economic growth is more important than the idea of fairness by taking from people who produce. This isn’t something that can be taken for granted; it must be explained to the millions of Americans who may believe in opportunity and hard work, but who think the market is unfair and discriminatory. This is where Jindal’s dig at Paul Ryan comes in.

Ryan is as good as anyone at explaining economic policy and why growth should be the goal over fairness. But Ryan is perceived by many as a really smart guy who sees things in terms of numbers rather than fairness. This is a misguided perception, but it exists nonetheless. Ryan reportedly wanted to talk more about poverty and how center-right growth policies help lift people into upper socioeconomic classes, but he was only able to at the very end of the Romney campaign (the Cleveland speech).

What Ryan said in the Cleveland speech, what Senator Rubio said at his convention speech, and what Governor Jindal said to the RNC are the kind of message that Republicans need to adopt. It’s not a new message, it’s just one that is often forgotten in the daily fights over which party is to blame for whatever the story of the day is, and over which party cares more about a particular group of people based on its support for funding the latest “I Care More” bill.

Jindal, Ryan, and Rubio have all shown the ability to articulate a system of governance that allows the vast space between the individual and the federal government to thrive. That vast space is where neighborhoods, schools, local governments, businesses, churches, and philanthropic organizations all exist and do what they do, and not simply because the federal government compelled them. The center-right must persuade enough people that the space created by a Constitution that limits the federal government to core functions is not only fair, but allows the efforts of communities and individuals who choose on their own to do great things.

Ryan and Rubio are in Congress now, trying to shape the debate internally. Jindal is on the outside at the local level, where most of America operates, and where people can show that policies espoused by Ryan, Rubio, and the center-right actually work. The country needs both, but Jindal is justified and probably wise to emphasize shifting the focus away from DC and towards the places where positive results are actually happening right now. Anyone unhappy with the direction of the country and performance of the federal government ought to pay heed to the likely 2016 candidate here.