On the Brink of Disaster – by Jacob Laksin


As this magazine goes to press, Senate Democrats are set to present the country with America’s most unwanted Christmas gift: a shotgun overhaul of the country’s health care system that would hike taxes, inflate the deficit, and raise insurance premiums, all while dramatically expanding the government’s role in health care.

Senate Majority Leader Harry Reid claims that Democrats now have a 60-vote majority that would allow them to trump a Republican filibuster and push the country’s most polarizing piece of legislation toward a final vote this morning. But while that could be a political victory for Democrats and President Obama, who has praised the Senate bill for including “95 percent” of what he wants, the successful passage of the bill would mark a setback for fiscal responsibility and set the stage for a large new burden on American taxpayers. Even without its two most unpopular elements – a government insurance “public option” and a Medicare expansion for those as young as 55 – the Senate bill remains a spectacularly bad deal.

Wishful Accounting

Literally the biggest problem with the legislation is the cost: an expected $871 billion over the next 10 years. Republicans charge that this price tag actually understates the true cost of the legislation, which they peg as high as $2.5 trillion. Not to worry, counsels President Obama:

“For all those who are continually carping about how this is somehow a big spending government bill, this cuts our deficit by $132 billion the first 10 years, and by over a trillion in the second. That argument that opponents are making against this bill does not hold water.”

Appealing as the president’s arithmetic might be, the $132 billion in savings is largely illusory: It is based on the Congressional Budget Office’s (CBO) projections of promised cuts – for instance, a 21 percent reduction in Medicare physician payments scheduled to go into effect in 2010 – that Congress has yet to make and, likely, never will. History offers a sobering guide. Despite repeated Congressional pledges to cut Medicare costs, it is now the country’s largest government program and a perennial drain on the federal budget. With $89 trillion in unfunded future liabilities, it will also remain one for years to come.

That explains why the CBO hedged its projected $132 billion in savings with the conspicuous caveat that this estimate “is subject to substantial uncertainty.” In touting the Senate bill, President Obama has neglected to mention this part of the CBO’s findings. And no wonder: The CBO has warned that its long-term calculations are based on the assumption that the spending cuts promised in Senate bill “are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation.” Thus, the deficit cuts forecast by the CBO are based entirely on assumptions about Congress’s ability to make Medicare spending cuts – assumptions that the CBO itself acknowledges are unsafe. President Obama’s dubious contribution to the health care debate has been to elevate such wishful accounting to the status of hard proof.

The Taxman Cometh

Of course, spending cuts, even if they should materialize, won’t pay for the budget-busting legislation. So the Senate bill includes some $400 billion in tax increases that range from the burdensome to the downright bizarre.

In the former category are insurance mandates that would compel Americans to purchase health insurance or face a fine of $750 for individuals and $2,250 per family. Not only is that a tax in all but name, but it would primarily affect those making less than $250,000 – a clear violation of President Obama’s campaign promise not to raise taxes on those in the lower tax brackets.

Higher-income individuals and small businesses would also see their taxes rise. Individuals earning over $200,000 and families earning over $250, 000 would be hit with a Medicare payroll tax. Small businesses with 50 employers or more who don’t offer health insurance would face a “free rider” penalty that could total $28 billion over the next ten years.

While the wisdom of taxing small businesses in an economic recession may seem questionable at best, the Senate bill applies the formula liberally. Among the odder tax increases in the Senate bill targets the country’s 20,000 indoor tanning salons. Although this would be a large cost for a small industry – about 90 percent salons of have just one owner – Democrats have deemed salons a worthy victim as they seek to collect $3 billion over the next ten years to pay for their health care spending spree. (The cosmetic surgery industry narrowly escaped the taxes thanks to its superior lobbying clout.) Besides spurring additional job cuts, the new taxes are likely to be passed on to consumers in the form of higher prices.

Bigger industries will also feel the strain of new taxes. The medical device industry, one of the country’s more innovative fields, would face the prospect of $20 billion in new taxes over the next decade, the product of a $2 billion annual tax that would rise to $3 billion in 2018. Unsurprisingly, industry representatives have protested that the tax increase could slow research and development in an industry responsible for such lifesaving medical advancements as stents that reduce the rate of heart bypass surgeries. How punishing an industry that has helped improve health care can be considered a worthwhile “reform” is one of the puzzles of the Senate bill.

Paying the Premium

Spending and tax increases arguably could be justified if the Senate bill did what it is supposed to do – namely, reduce health insurance premiums that are rising faster than American’s wages. Instead, it would raise premiums for most Americans.

A recent actuarial analysis by management consulting firm Oliver Wyman found that annual premiums will be 54 percent higher five years from now if the Democrats’ “reform” passes. Individuals would see their premiums increase by $1,576, while families would pay an extra $3,341. Young people, ironically among the most steadfast supporters of the Democrats’ reforms, would also come off the worst under the Senate bill. Of all demographic groups, they would see their premiums would rise the most, as much as 35 percent in some cases.

There is no mystery behind the increased premiums. The Senate bill would force insurance companies to provide policies on a “guarantee issue” basis that does not discriminate against those with preexisting or chronic medical conditions. The likely result: Those with chronic conditions would purchase insurance, while younger and healthier people would choose to pay a fine. With a disproportionate number of sick among the enrollees, insurance rates would rise for everyone.

Let’s Make a Deal

Even more unseemly than the substance of the Senate bill is the sleazy and borderline corrupt way it has been brought to the brink of passage.

The most obvious outrage is the undisguised vote buying directed at wayward Democrats, most prominently Nebraska’s Ben Nelson. For agreeing to join ranks with his party on the health care bill, Nelson won a concession from Congress to permanently exempt his state from paying the $45 million annual cost of expanding the Medicaid program for the poor. (Never mind that Nebraska has comparatively low levels of poverty: 35 states have higher poverty rates.) The other 49 states will have only a yawning budget gap to look forward to. Fittingly, the deal has since aroused questions about the constitutionality of such ethically challenged deal making.

The “Nebraska compromise” is only the most blatant example of what Sen. Orrin Hatch has aptly called the Senate bill’s “grab bag of back-room Chicago-style buyoffs.” Slightly less generous but no less scandalous sweetheart deals have also been offered to Vermont, Massachusetts and Louisiana. Vermont and Massachusetts will get temporary increases in the portion of their Medicaid costs paid by the federal government. In Louisiana, once-waffling Democrat Mary Landrieu discovered a sudden appreciation for the health care legislation after her state was presented with a $100 million handout.

The bill has also proved a boon for assorted Democratic allies. AARP, the leading lobby for the elderly, would stand to benefit if Congress made good on its plans to cut payments for programs like Medicare Advantage, since that would drive up demand for the Medigap policies offered by the organization. Unions would also catch a tax break. Although the bill would impose a hefty 40 percent tax on high-cost “Cadillac” insurance plans, it would specifically exclude favored constituencies like the longshoreman’s union. (Policemen, firefighters, construction workers, coal miners, and some farmers and fishermen are already protected from the tax penalty.)

When not bribing their way to final passage, Senate Democrats have tried to achieve victory by legislative fiat. Leading the way is Harry Reid, who snuck the now-notorious “Section 3403” into an amendment to the Senate bill. The section, which refers to the power of the Independent Medicare Advisory Board, also established by the bill, to hold down Medicare costs, stipulates that

“it shall not be in order in the Senate or the House of Representatives to consider any bill, resolution, amendment or conference report that would repeal or otherwise change this subsection.”

In other words, the Democrats’ work is not to be undone. In fairness to Reid, the measure makes a certain amount of sense. To control the runway growth of Medicare, any advisory board would have to be immune from the political pressures of Congress. As a procedural matter, Section 3403 nevertheless represents a dangerous – and transparently undemocratic – breech of Senate Democrats’ authority.

Change We Can’t Believe In

For all its flaws, the one virtue of the Senate bill may be that it differs in some important ways with its predecessor in the House. Indeed, some liberal House Democrats have already complained that they cannot support the Senate bill. Meanwhile, the defection of Alabama Congressman and conservative Democrat Parker Griffith to the GOP earlier this week may be a sign that moderate and Blue Dog Democrats are worried about the electoral consequences of supporting their party’s health care agenda. Since the two versions of the health care bill have to be merged later this January, these factional splits can only delay Obamacare’s final passage.

The bitter irony for President Obama is that most Americans now consider that a good thing. When the administration first announced its plans to transform health care, the country shared a common belief that the system could not be left as is. That belief remained unchanged even as certain elements of the Democrats’ plan, such as the government insurance option, became unpopular.

No longer. According to a recent Wall Street Journal/NBC News poll, a majority not only opposes the Senate bill but, for the first time, more support the status quo over the bill’s passage. The health care “change” that Obama promised has arrived. And Americans, increasingly, hope it doesn’t succeed.

  • jim

    one thing Canada was involved in ww2 as of sept 39 and while the usa was not involved in the fighting untill after dec of 42 the usa was supplying a lot of goods needed from the start ie. warbirds were needed but because the usa was a neutral they would be flown to the border and pulled into Canada and the rcaf with teams of horses in order to get around the neutral bs and the ban of supplying war matrail to the balgerants so fdr was doing what he could

  • jim

    “That's a fact, like the superiority of the care I, a median income American, get to yours. All the lame insults in the world won't change it.”
    roflol yankee go work for nasa i hear there looking for a perfect vacuum and from your posts its plain you have that between your ears and they need to study it .
    and theres a big difference between being dyslexic and as i am and being a semi illiterate cracker like you FACT because canada has a very good health care system that all canadians have access to the life expectancy is 82.9years the usa is ranked 38th with only 80 years life expectancy just above a ton of 3rd world country's and before you wine bs guess what the figures i just quoted are from the CIA world fact book
    and the world health org. rates the usa 14th in terms of access to health care and quality of care btw canadas rated 8th !!! cowboy i have to ask were your parents brother and sister because your low iq is showing All that you are you owe to your parents. Why don't you send them a penny and square the account?Judging by the old saying, “What you don't know can't hurt you,” your practically invulnerable.
    and canada is ranked 11th in the world the

  • idviking

    “How do you suppose we get a fair share of revenue to pay for our schools”. How about you only pay your taxes when you use it? Why should someone pay taxes for a service they don't use? If the poor people don't have kids or don't want to use that service then they should be able to use what little money they have on food or whatever they decide, not the state.
    I would also submit that using the tax structure of California as an argument for explaining the benefits of socialism is a bit silly since they have taxed themselves into a position where services(including schools) won't be provided and tax refunds are now IOUs.
    History has proven that there is no “good” government version based on the ideals of Marx/Lenin. It is sad to see that Stalin's or Mao's murder of close 100 million people in the name of Communism has not provided the lesson that this kind of government is a mistake and always will be. Or that Hitler was the head of the National Socialist Party(Nazi).
    Read “The Gulag Archipelago or The Black Book of Communism and tell me if you still think wealth redistribution is the way to go.
    Better yet move to China or Cuba for a year and see how you like it.

  • sam000


    Thanks to you on your WWII historic lessons, I have no doubt about the courage and determination of the brave people of the years 40 who fought the Nazism and the Japaneses fanaticism in all around the world,
    the world had USA had sacrificed their best sons and resources to defeat the world threat of Hitler, they could save all those wonderful lives at 1939, if and only if the OBAMA's alike (Chamberlain) hadn't made the shameful pact with HITLER.

    do you want to test the world resistance against the Islamic Fascism armed with nuclear weapon?!

    50 millions of victims on WWII without nuclear weapon, with all it's destruction was stopped with a nuclear explosion at Hiroshima,

    How do you think to terminate the 3erd WW? by cutting the half of the planet!!
    and why? the lessons of the humanitarian disaster of WWII is not enough?
    I know that USA IS STRONG, but this wonderful power is in the hands of the one who appease the devil of the war.

    You are a free nation, with the universal values, and your president appease the most disgusting power and emboldens the most dangerous dictator against the poor people who fights for his freedom, so where is the GREATNESS of this FREE NATION OF USA?

  • sam000

    What I can say is that at least you are honest on the historic events.

    Iran Contra, and IranGate of MacFarlain and WH. and Oliver North and CAKE AND COLT to Khomeiny on 1984,
    do you know what was the deal?
    Reagan offered the incentives and appeased Khomeiny, but the most important part of the Reagan's incentives was LABELING the Resistance!!
    and he was your most respected R. President,

    BLD, how this small worm of Islamism was transformed on this huge SNACK who eats your boys in Iraq and Afghanistan?, who has feedded this worm?

  • CowboyUp

    Wow, Canada's ranked 8th by UN, you must be real proud, and dumb enough to believe it. You'd think Americans would be running to Canada to get their cancer diagnosed and/or treated out of pocket, instead of the other way around. The USA being way 'behind' Sweden should be a clue, and being two behind costa rica and just in front of cuba should be a dead giveaway, if you, “on-ly had a brain.”

    Health care is but one factor among many in life expectancy. Despite the GWOT, so far this century we've lost more people in recreation than war. In America, we're free to live hard and die young, or maximize our lifespan. It's called liberty and pursuit of happiness, apparently it's not something you can handle. Unlike many socialist countries, if you're in a country that's too free, you're free to leave.

    My health care s*cks so bad, I can walk into the closest 3 hospitals today, get an MRI, wake up a specialist to come interpret it, and be in surgery (even if they have to move me to a downtown hospital 40 miles away) to remove a tumor, or fix a clogged aorta or leaky heart valve before nightfall. I guess my quality and availability standards are different, but I'll keep them.

    I get the impression you don't like my system because it embarrasses yours. Which parent of yours was the sheep?

  • CowboyUp

    Oh, and I repeat, “If private health care is withholding treatment to let unproductive people die, what's a government that's going broke in under two decades trying to pay for social security, medicare, and medicaid going to do?”

  • CowboyUp

    Work, especially manual labor, is the best cure for depression, if I start feeling sorry for myself. Depression for me is usually good, it goads me into effort to change or improve whatever has me depressed.

    I rarely get depressed (I usually even enjoy my nightmares when I have them), I have friends with advanced MS, and I know how well I have it compared to most people in the world, and almost all of the humans that ever walked the earth. Seeing the next sunrise or sunset is reason enough for me to live, as long as I'm free.

    That said, I knew an extremely intelligent man that sat and starved himself until his kidneys shut down, and he didn't live long after that. He wouldn't take happy pills. For me, those would just be trading one problem for another.

  • jim

    unproductive people hmm it sounds like you would take Hitlers approach and kill the old and disabled is that what your trying to say nazi scum?? jerk i worked my ass off for 25 years 18 of witch i spend driving a big rig untill some jerk rendered me disabled when he hit me with his car yet as soon as i can i will try to open and run a hot dog cart as its one of the things i can do from my wheel chair the fumy thing is as a leagle green card holder i had to go back to Canada because the private insurance industry said because i have mild high blood pressure that i could not get medical after a stroke you wine that the government would screw things up hell i think your winning is more based on the fact the south lost in 1865 than anything else grow up cowboy your ancestors may have just shot unproductive and disabled slaves but the days were redneck crackers like you could pull sh*t like that are long gone All of your ancestors must number in the millions; it's hard to believe that many people are to blame for producing you.
    but Keep talking, someday you'll say something intelligent!

  • jim

    “Wow, Canada's ranked 8th by UN”,
    learn to read cracker its ranked 8th by the CIA WORLD FACT BOOK not the un

    you must be real proud, and dumb enough to believe it. You'd think Americans would be running to Canada to get their cancer diagnosed and/or treated out of pocket, instead of the other way around.
    the only time canadians run to the usa or cancer treatments is for some rare cancers that are not being researched in canada because there so rare up north but are more common in the usa because of the wreclass life style

    The USA being way 'behind' Sweden should be a clue, and being two behind costa rica and just in front of cuba should be a dead giveaway, if you, “on-ly had a brain.”
    ya if you had one it would consist of 2 cells both that have lost the fight for who would be boss
    “My health care s*cks so bad, I can walk into the closest 3 hospitals today, get an MRI, wake up a specialist to come interpret it, and be in surgery (even if they have to move me to a downtown hospital 40 miles away) to remove a tumor, or fix a clogged aorta or leaky heart valve before nightfall. I guess my quality and availability standards are different, but I'll keep them.”

    ok you keep them my great uncle came to the usa when he was 12 became a citizen after he served 12 years in the us navy when he was 65 he came down to get a mild heart murmur fixed in the veterans hospital rather than wait 2 months on the waiting list in canada he would have been put on heparin to make sure there were no blood clots but it was not done in the usa to save a few hundred bucks and it killed him , his brother who also came with him had to go bankrupt paying for treatments for his son when my cousin got aids from a tainted blood transfusion before they even had heard of aids the privet insurance you brag about found a way to cut off coverage asap leaving his family with the bills that should have been covered moron i have seen how poorly your privet insurance treats people now you try walking into a hospital like 43 million Americans
    that don't have coverage have to do and see just how quick the hospital is to put you in a mri or wake up a specialist all your for profit hospitals have to do is treat you until you can be safely transported to a county hospital

  • CowboyUp

    You were the one saying that was what was being done now, and hitler was a socialist, you know I'm not one of those.

    Nope again you ingnorant fool, Only 20% of Southerners ever owned slaves, and 2% of those owned 80% of the slaves. My Scot-Irish ancestors were the ones that did the jobs too dangerous to risk losing a $700 slave on. They were glad to be here and weren't the whiney type.

    I've never heard of anybody shooting old or maimed slaves in the South, did you pull that out of your rear?

  • jim

    “I've never heard of anybody shooting old or maimed slaves in the South, did you pull that out of your rear?”

    nope yankee its in the history books but then its clear you never learned to think or read above grade 6 but i have a idea Let's play horse. I'll be the front end and you be yourself
    but Perhaps your whole purpose in life is simply to serve as a warning to others.
    and you claim to be scots/irish its probably lowland scots and the transplanted English that still claim to irish whats your clan the KKK The inbreeding is certainly obvious in your family.

    The next time you shave, could you stand a little closer to the razor?The overwhelming power of the sex drive was demonstrated by the fact that someone was willing to father you.

  • CowboyUp

    Howard zinn isn't history, goofball, and try moving the razor, instead of your body, it works a lot better that way. Sweet dreams, don't forget to breathe.

  • jim

    Cowboy you do realize that you are depriving a village somewhere of an idiot.
    and you are living proof that man can live without a brain!
    i hear your the first in your family born without a curly tail
    We heard that when you ran away from home your folks sent you a note saying, “Do not come home and all will be forgiven.”Whatever anyone says to you goes in one ear and out the other because nothing is blocking traffic.

  • bushlikesdick12

    I read testimonies from people that actually saw the first event and the few that saw the other events.

    apparantly capitol security erected a wire fence around the capitol building to prevent them from getting too close.

    The grief on his face and the description of betrayal he felt can not be emulated by those who are not of character to yearn peace and yet criticize.

  • bushlikesdick12

    It isn't so much that I want or don't want Iran to have a nuke so mush as to how are we to expect them not to want to have a nuclear bomb?

    First of all, regardless of who did what to who when in how in or around the vicinity of Iran shouldn't be that much of a concern to me.

    There are many countries that have the nuclear option that are not particularly friendly to us and yet we seem to have a understanding with each other of what the consequences are if you should get somewhat too frisky!

    Nobody seems to want to be erased from the map.

    Now, hypothetically speaking, if I was a country that didn't have the nuke and I was in the vicinity of other countries that have the nuke ( Pakistan, Israel, India, China,…) then it would be safe to assume that I am at an extreme disadvantage.

    So Sam if we can agree that the Iranian government has a rightful concern about not having a nuke while others, like Israel, do have one, is an legitimate concern on their part, then we can agree to move towards the next subject which is their personal affairs.

    Regardless who wins or loses this power struggle going on at the moment, is an internal issue that doesn't really belong to the outside community.

    Oh sure if so-and-so gets this then (a) gets that therefor (b) will do this to (c) and we will get (d) up (e)'s ass.

    So, according to you, I'm expose to care what goes up (e)'s ass and like most Americans I don't care.

    What I do care about is respecting the soverignty of a nation and there right to protect their own borders.

    That is what the U.N is for and the body of the U.N. is represented by the nations that vote for peacefull stability.

    If Iran is behaving in such a way that they become a theat to the world and their neighbors in an inbalance way, then it is their duty to intervene.

    Other than that, you don't much of a case.

  • Adheeb

    In recent months people have come to realize the American people were duped in last year's Presidential election. I still ask myself, “How could America elect this calibre of man as President of the United States?” However, the American voter was not misled by candidate Obama … he was very clear about his intentions. The truth is that about one third of the voters in this country are liberal and would not object at all to live under a Communist regime. About one third of Americans adhere to conservative / traditional American values -but- the remaining third are just non-thinking village idiots. These are the people that put Mr. Obama into office. Some really believed that he would pay their mortgage. Some simply listened to “World News Tonight”, every night. Others wanted to prove, in a substancial way that they were not 'racists' and contributed their vote to the 'Black man from Illinois”.

    So, as America languishes through the next few years, I am comforted that although I must suffer as a result of mindless voters, I know they are still out there suffering too. It's almost worth it.

  • CowboyUp

    Oh please, kerry was the liar and betrayer regarding Vietnam, always has been. He and his group were a bunch of frauds (Christmas in Cambodia? Nixon's war?), who also happened to be disastrously wrong. The fool actually said only about 3000 S. Vietnamese would have to leave if it fell. He was off by a magnitude of over 1000. I knew about that traitor before I got out of elementary school.

  • CowboyUp

    Do you have any insultsb that aren't older than granpa's buckskin rubber and as lame as your arguments?