Monday, September 22, 2008

McCain Wants Healthcare System to Resemble Banking System

I'm sure that most you have noticed that there has been a wee bit of turmoil in financial markets over the last few days, what with Lehman Brothers filing bankruptcy, Merrill Lynch being bought for pennies on the dollar, the government taking over AIG, and now a proposed plan to bail out financial institutions to the tune of $700,000,000,000 (yes, that's billion). Lucky for us, Sen. McCain (he who thinks that the "fundamentals of the economy are sound") thinks that we can solve the healthcare crisis in America much the same way that we've gotten ourselves into this financial crisis in the banking industry:

Opening up the health insurance market to more vigorous nationwide competition,
as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based
(Emphasis added.) Those words come Sen. McCain himself in an article that he wrote for the September/October 2008 edition of Contingencies, the magazine of the American Academy of Actuaries (page 30, end of 1st column). Not sure about you, but I'd sure love for my healthcare to look like Lehman Brothers or Merrill Lynch or AIG or the rest of the industry ready for a $700,000,000,000 government bail out. Watch this video to see Sen. Obama's response to this statement of Sen. McCain's (along with tackling a host of other recent claims from the McCain campaign):

Look, I'm the first to admit that both banking and healthcare are very complicated and that I'm no expert on either subject. And it may be that Sen. McCain's ideas for healthcare reform are sound. From what I've heard, I prefer Sen. Obama's ideas to Sen. McCain's. But the idea that we should model healthcare reform on banking reform? If that is really the direction that Sen. McCain's plan would lead, then I think making a decision on which plan is better just a got a whole lot easier.

As to this whole banking bail out, I don't know if it is a good idea or a bad idea. I've heard plenty of experts say that it is a bad idea, but that there aren't any better ideas. Again, I'm willing to admit that I'm not an expert and I'm willing to allow my representatives make decisions on the best course on the basis of the recommendations of these experts. But I do have a few caveats to that.

First, I think that we have to feel comfortable that our representatives are making those decisions on the basis of what will be best for (a) the country and (b) their constitutuents. Note that I did not include in that list either (a) lobbyists or (b) the companies that they lobby for. Unfortunately, these days, it is often hard to feel comfortable that our legislators are looking out for us rather than for the industries that spend the most lobbying dollars.

Second, I think that it is important to remember what we're really talking about. If I've done my math correctly, the bailout amounts to $2,293.38 for every US citizen (based on the US Census Bureau's POPClock Projection). Let me repeat that: In order to bail out the banks, the US Government is going to fund the banks with $2,293.38 from each and every one of us. Where will that money come from? Taxes. Who will pay those taxes? Now that's the real question, isn't it?

One article that I found (from 2006) claims that the average employee at Goldman Sachs (one of the investment banks at the heart of the bailout plan) makes ... are you ready for this ... $622,000 per year! Now, I'm sure that the people at the bottom aren't making huge salaries and I know that the firm employs a lot of people. What does that mean? It means that those at the top must be making a lot of money. So who should really be paying for the bailout? The execs who skew that salary average upward (and who profited from the risky investment strategies of recent years) or the middle class working families across the country? Do you want to pay to bail out a banking CEO? If you are part of an average American family of 4, that means that your family would be responsible for $9,173.52 of that bailout. If my tax burden needs to increase to stabilize our nation's economy, well I won't like it but I'm willing to consider it; but if those who have profited the most stand to gain from this bailout and won't feel the pain the way middle class families will, then I'm sure that I can find better ways to spend that cash for my family's future.

Another thing that I've heard about the bailout proposal that gives me some concern is that the Secretary of the Treasury would have almost unfettered discretion to do what he wants with the money. Democrats in Congress have apparently suggested that some Congressional oversight would be appropriate. Republicans and the Bush administration want a "clean" bill. Call me paranoid or cynical or whatever, but it seems to me that if we're going to give away $700,000,000,000 it is reasonable for someone to look over the shoulder of the Treasury Secretary to be sure that the money is used wisely. After all, isn't it deregulationand the lack of oversight that got us into this mess in the first place?

And, on a related note, doesn't it seem fair to be sure none of that money could be used to pay ridiculously excessive CEO salaries or golden parachutes? According to an article from Fortune magazine, Secretary Paulson who, before becoming Secretary of the Treasury was CEO of Goldman Sachs, earned $38,800,000! That same article mentions the $113,000,000 paid by Morgan Stanley to that company's ousted CEO. How much will Goldman Sachs and Morgan Stanley and others pay their current CEOs and other top executives for getting them -- no, strike that -- for getting us into this mess? And how much of those payouts will be from taxpayer funds?

The bailout plan may be the best of a bunch of bad options. I don't know. But if we go forward, I think that it is critical that the bailout be used to fix the problem and not reward the greedy who have already profited from the crisis even as they've led their companies and the world's economy into the Abyss.

And, so long as Congress is talking about saving the banks from financial disaster and bankruptcy, don't you think that it's appropriate to revisist the recent amendments to the bankruptcy bill that the Republican Congress adopted at the behest of the banking industry which made bankruptcy much more difficult for consumers? I don't hear anyone talking about a financial bailout package for taxpaying consumers...


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At Monday, September 22, 2008 5:31:00 PM , Blogger Charles said...

There is a falsehood in the clip you played, and I've been so vocal about McCain's lies that I need to give equal time on Obama's exaggerations and falsehoods as well. The privitization of Social Security as proposed by Bush and supported by McCain, but which is not a keystone of McCain's campaign, would not apply to anyone born before 1950. So the elderly Florida grandmas that Senator Obama talks about losing their homes because of McCain's Social Security investments don't exist at this point in time.

Also, the program was opt-in, so some burden would be on the retiree for not choosing a safer way to go.

That said, I heard on the news that, even though they're looking for billions of dollars in bailout money, at least one of these firms (and I'd have to look for a citation) has an account set aside for executive compensation that's currently valued at $2b and change. So they want us to bail out their stockholders, but they're sitting on a pile of cash to pay themselves. (Which, I'll guarantee you, will be a response when it comes out how much they're making..."Yes, we got $2b in salary and benefits, but none of it was taxpayer money."

At Tuesday, September 23, 2008 4:05:00 PM , Blogger MSWallack said...

You are correct about the inaccuracy in Sen. Obama's claims. However, the inaccuracy is a matter of policy detail and nuance rather than the outright fabrications that have been coming out of the McCain campaign.

I'm still not sure what to think about the proposed bailout.


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