Archive for November, 2009
Federal Assumption of Medicaid Costs
From the standpoint of Americans who prefer less government, one of the worst developments of the 20th century was the federal subsidization of state and local spending. The result has been bigger government at all levels. Medicaid represents the largest portion of federal money to the states. The states administer their own Medicaid programs, but the federal government picks up 50 to 83 percent of the tab depending on a state’s income. The estimated price tag of the federal share for fiscal year 2009 is $260 billion.
One result of the federal government paying for half or more is that it encourages the states to expand enrollment and benefits. It also makes it politically difficult to cut state Medicaid spending because of the accompanying loss of federal dollars.
A 2007 analysis on the exorbitant future costs of Medicaid by Jagadeesh Gokhale illustrates how the program’s price tag has skyrocketed since its creation in 1965 (see chart here). Over the decades, the states expanded their programs whenever the economy was growing and the tax revenues were flowing. When the economy went into recession and the revenue dried up, the states generally didn’t scale-back benefits and sometimes they asked for bailouts from the federal government. The 2009 stimulus package provided an estimated $87 billion in federal Medicaid money for the states.
If the economy remains stagnant over the next few years and state tax revenues fail to rebound, further pressure will mount on the federal government to continue bailing out state Medicaid programs. The nightmare scenario would be for the federal government to assume the full costs of Medicaid under state pressure.
California Gov. Arnold Schwarzenegger’s budget director, Michael Genest, recently raised the idea:
Genest, who is retiring at the end of the year, warned that California’s budget problems will persist even after the state works its way through this recession. He singled out Medi-Cal, the state’s Medicaid health-care program for the poor, as unaffordable for the state. If the program’s costs continue to climb 8 percent a year, the state will have little money left for anything other than schools and debt service by 2040, he said.
The health-care reform proposals now before Congress could further strain state budgets because they would expand Medicaid, Genest said.
Genest said Congress should overhaul Medicaid, now funded jointly by state and federal governments but run by the states. The federal government should cover more of the costs, give states more flexibility or even make a drastic switch and let federal officials take over Medicaid completely, he said.
“If you want to imagine a crisis, as a thought experiment, imagine all 50 states writing a letter to the federal government saying, ‘We’re no longer providing Medicaid.’ That would get Congress’ attention. And that’s about the only real leverage we have,” Genest said.
Current health care legislation in Congress threatens to increase state Medicaid spending. In the House passed bill, the federal government would pick up 100 percent of Medicaid’s expansion until 2015 when it would drop to 91 percent. However, the future is unpredictable and it’s not hard to imagine a future Congress keeping it at 100 percent federal funding.
According to the Congressional Research Service, the House bill also contains a provision that could be intended to create a justification for greater federal assumption of state Medicaid spending:
H.R. 3962 would require GAO to study federal matching payments made to state Medicaid programs to make recommendations on the FMAP formula to Congress. By February 15, 2011, GAO would be required to submit a report based on this study assessing the effect on the federal government, states, providers, and beneficiaries of making the following changes to the FMAP formula: (1) removing the 50% floor or 83% ceiling, or both and (2) revising the current FMAP formula to better reflect state fiscal capacity, state efforts to finance health and long-term care services, and to better adjust for national or regional economic downturns.
See this essay on the need for a return to fiscal federalism.
Update: The Washington Post reports this morning that the House health care reform bill contains an additional $23.5 billion Medicaid bailout for the states. The provision would extend by an additional six months (through 2011) the stimulus legislation’s “temporary” increase in the federal government’s share of total Medicaid spending.
The Remnants of “War on Terror”
Former New York City mayor Rudy Giuliani appeared on Fox News Sunday this weekend to argue against the Obama administration’s plan to try some alleged terrorists in New York courts. He did not acquit himself well.
Giuliani argued, for example, that criminal defendants aren’t tried “at the scene of the crime.” Criminal defendants are almost always tried in the jurisdictions where their crimes took place (not at the actual crime scene, of course). Giuliani’s insistence on misstating basic criminal procedure showed that he was twisting to score points against the administration. This is inappropriate political use of terrorism issues.
But Chris Wallace roasted Giuliani—with quotes from Rudy Giuliani. Of prosecuting the 1993 World Trade Center bombers, Giuliani said: “[Y]ou put terrorism on one side, you put our legal system on the other, and our legal system comes out ahead.” Giuliani said that the trial of Zacharias Moussaoui shows “that we can give people a fair trial, that we are exactly what we say we are. We are a nation of law.”
As he did during his failed presidential campaign, Giuliani appears caught in a terror-warrior time warp. He criticized the Obama administration for eschewing the regrettable phrase “war on terror,” and he betrayed no awareness of what has dawned since 9/11 on the rest of the country: Terrorism seeks overreaction on the part of victim states. Cool, phlegmatic prosecution of terrorists deprives them of rhetorical victories that empower them by drawing others to their side.
If the Other Party Took Power
Maggie Mahar asks a good question in Sunday’s Washington Post:
If you’re a progressive like me, and you’re upset by the Stupak amendment, which bars federally subsidized insurance from covering abortions, consider this: What if we had a single-payer health-care system and someone like Jeb Bush or Sarah Palin were running the country?
She worries that if Republicans were in charge of government-run health care, they might not stop with abortion. They might try to limit government-paid access to birth control, fertility treatments, or end-of-life care. They might even (gasp) try to require co-pays to get people to take some responsibility for their health-care decisions. She goes on:
I strongly support increasing our government’s involvement in the health-care system by including a public option in the reform package. I believe that if Congress passes legislation that includes a public option, that option will be stronger than many pundits suggest. Such a plan could help lower costs while lifting the quality of care, and would provide serious competition to private insurers.
But I’m also wary that in four or eight years, someone else — someone less sympathetic to my views — may be in the White House. And conservatives could once again control Congress. So I am relieved that we don’t seem to be headed toward a single-payer system. We simply cannot count on “good government” overseeing our health care. One never knows who the American people will choose to elect. As a progressive, I have been stunned by the people’s pick more than once in the past 30 years. Democracy offers choices but makes no promises.
So I want to hedge my bets. I want alternative insurance options, especially from nonprofits such as Kaiser Permanente. And I don’t want to find myself locked into an insurance plan run by conservatives — or Democrats — who feel they have a right to impose their religious beliefs on my access to care.
It’s a good point. I made the same point a week ago in the Philadelphia Inquirer:
If you still have warm feelings toward Obama and his good intentions, ask yourself this: Will you feel comfortable one day when the appointees of President Romney or President Palin are exercising unconstitutional, unauthorized, unreviewable authority to restructure the economy the way they see fit?
And Bob Levy made the same point to Republicans when they were in power:
advocates of expanded executive power remind civil libertarians that President Bush is an honorable man who understands that the Constitution is made of more than tissue paper. That argument is simply not persuasive – even to those who fervently share its underlying premise. The policies that are put in place by this administration are precedent-setting. Bush supporters need to reflect on the same powers in the hands of his predecessor or his successors.
Indeed, because Republicans are often known as the Stupid Party, and not without reason, I tried to warn them about giving more power to the government while President Clinton was in office:
Let’s not forget that if, say, Coats’s Maternity Shelter Act were implemented next year, Donna Shalala, the secretary of health and human services, would be charged with implementing it. She might appoint HUD assistant secretary Andrew Cuomo to run it, or maybe unemployed ex-congressman Mel Reynolds, or maybe just some Harvard professor who thinks single motherhood is a viable lifestyle option for poor young women. One reason conservatives shouldn’t set up well-intentioned government programs is that they won’t always be in power to run them.
But they never listen. When the Republicans were in power, they brushed aside reminders that some day a Democratic president would be exercising the vast powers that Bush was accumulating in the White House. And when Democrats are in power, they ignore the risks of giving more power to a federal government that will one day be run by conservatives. And then both sides are appalled by the uses that are made of those powers when that day comes.
I guess that’s why the first section of The Libertarian Reader is titled “Skepticism about Power.”
George W. Bush: The Washington Times as the Onion
Yesterday I thought I was reading the Onion. The Washington Times headlined its article “Bush Warns of Dangers of too Much Government”:
Former President George W. Bush said Thursday that America must resist the “temptation” to allow the government to take over the private sector, taking a subtle shot at his Democratic successor by warning that too much state intervention and protectionism will squelch the economic recovery.
As the Obama administration has made far-reaching moves into the auto, real estate, health care and financial sectors to fight the economic recession, Mr. Bush, without mentioning the president by name, said, “The role of government is not to create wealth but to create the conditions that allow entrepreneurs and innovators to thrive.
“As the world recovers, we will face a temptation to replace the risk-and-reward model of the private sector with the blunt instruments of government spending and control. History shows that the greater threat to prosperity is not too little government involvement, but too much,” said Mr. Bush, who has remained out of the limelight since leaving office and rarely criticizes his successor.
Mr. Bush has addressed private groups since leaving the White House in January, but Thursday’s speech, delivered at Southern Methodist University in Dallas, was his first major public policy address since leaving office
Mr. Big Spender, aka George “ break the budget, expand Medicare, centralize control of education in Washington, bail out anyone and everyone, violate civil liberties, treat the president as an elective dictator, and initiate a needless war” Bush, is worried about government doing too much.
I can’t take it any more. I’ve been working in Washington too long.
Iraq: Making Few Friends and Less Profits
When the Bush administration started its misguided adventure in Iraq, the president and his Neocon chorus presumed that the U.S. would be acquiring a loyal, even obseqious ally. With the American-subsidized bank embezzler Ahmed Chalabi in charge, Baghdad would create a Western-style democracy, enshrine women’s rights, recognize Israel, provide the U.S. with permanent military bases, and offer a new market for American businesses.
Alas, we’ve struck out: zero for five. Although America’s uber-hawks bridled at reference to our “occupation” of Iraq, Iraqis had no hesitation in using the word and surprised the Bushies by demanding a deadline for the withdrawal of American forces. And Iraqi opposition to the U.S. occupation has affected their attitude toward Americans in other areas.
Although none of this is, or at least should be, surprising, the lack of success by private U.S. companies should provide a particularly powerful lesson of the perils of intervention. Reports the New York Times:
Iraq’s Baghdad Trade Fair ended Tuesday, six years and a trillion dollars after the American invasion that toppled Saddam Hussein, and one country was conspicuously absent.That would be the country that spent a trillion dollars — on the invasion and occupation, but also on training and equipping Iraqi security forces, and on ambitious reconstruction projects in every province aimed at rebuilding the country and restarting the economy.
Yet when the post-Saddam Iraqi government swept out its old commercial fairgrounds and invited companies from around the world, the United States was not much in evidence among the 32 nations represented. Of the 396 companies that exhibited their wares, “there are two or three American participants, but I can’t remember their names,” said Hashem Mohammed Haten, director general of Iraq’s state fair company. A pair of missiles atop a ceremonial gateway to the fairgrounds recalled an era when Saddam Hussein had pretensions, if not weapons, of mass destruction.
The trade fair is a telling indication of an uncomfortable truth: America’s war in Iraq has been good for business in Iraq — but not necessarily for American business.
American companies are not seeing much lasting benefit from their country’s investment in Iraq. Some American businesses have calculated that the high security costs and fear of violence make Iraq a business no-go area. Even those who are interested and want to come are hampered by American companies’ reputation here for overcharging and shoddy workmanship, an outgrowth of the first years of the occupation, and a lasting and widespread anti-Americanism.
While Iraq’s imports nearly doubled in 2008, to $43.5 billion from $25.67 billion in 2007, imports from American companies stayed flat at $2 billion over that period. Among investors, the United Arab Emirates leads the field, with $31 billion invested in Iraq, most of that in 2008, compared to only about $400 million from American companies when United States government reconstruction spending is excluded, according to Dunia Frontier Consultants, an emerging-market analyst. “Following this initial U.S.-dominated reconstruction phase, U.S. private investors have become negligible players in Iraq,” Dunia said in a report.
So much for the old theory of mercantilism.
Think about it. The U.S. overthrows the dictator, pours in billions of dollars for reconstruction projects, and promotes democratic elections — and instead of applauding America and filling the land with statues to George W. Bush, the locals prefer to buy goods from other people. Maybe invading and bombing other countries, disrupting and wrecking other societies, and killing and injuring other people isn’t the best way to promote good relations with the rest of the world.
‘Has Any of This Made Us Safer?’
In the November 6th Washington Post, Petula Dvorak lamented the effect of REAL ID compliance on women who have changed their names. The Department of Homeland Security is about to give out blanket waivers to states across the country who have not complied with REAL ID requirements — again. But some states have been making it harder to get licenses because of the national ID standards they still think are coming.
“I doubt the most notorious terrorists of our time — the Sept. 11 hijackers, Timothy McVeigh — would have been stopped by these new DMV requirements,” Dvorak writes. ”All these laws have done is make us more harried, more paranoid and more red-faced than ever.”
The FISA Amendments: Behind the Scenes
I’ve been poring over the trove of documents the Electronic Frontier Foundation has obtained detailing the long process by which the FISA Amendments Act—which substantially expanded executive power to conduct sweeping surveillance with little oversight—was hammered out between Hill staffers and lawyers at the Department of Justice and intelligence agencies. The really interesting stuff, of course, is mostly redacted, and I’m only partway though the stacks, but there are a few interesting tidbits so far.
As Wired has already reported, one e-mail shows Bush officials feared that if the attorney general was given too much discretion over retroactive immunity for telecoms that aided in warrantless wiretapping, the next administration might refuse to provide it.
A couple other things stuck out for me. First, while it’s possible they’ve been released before and simply not crossed my desk, there are a series of position papers — so rife with underlining that they look like some breathless magazine subscription pitch — circulated to Congress explaining the Bush administration’s opposition to various proposed amendments to the FAA. Among these was a proposal by Sen. Russ Feingold (D-WI) that would have barred “bulk collection” of international traffic and required that the broad new intelligence authorizations specify (though not necessarily by name) individual targets. The idea here was that if there were particular suspected terrorists (for instance) being monitored overseas, it would be fine to keep monitoring their communications if they began talking with Americans without pausing to get a full-blown warrant — but you didn’t want to give NSA carte blanche to just indiscriminately sweep in traffic between the U.S. and anyone abroad. The position paper included in these documents is more explicit than the others that I’ve seen about the motive for objecting to the bulk collection amendment. Which was, predictably, that they wanted to do bulk collection:
- It also would prevent the intelligence community from conducting the types of intelligence collection necessary to track terrorits and develop new targets.
- For example, this amendment could prevent the intelligence community from targeting a particular group of buildings or a geographic area abroad to collect foreign intelligence prior to operations by our armed forces.
So to be clear: Contra the rhetoric we heard at the time, the concern was not simply that NSA would be able to keep monitoring a suspected terrorist when he began calling up Americans. It was to permit the “targeting” of entire regions, scooping all communications between the United States and the chosen area.
The Week in Government Failure
Over at Downsizing Government, we focused on failures in the following departments and agencies this week:
- Export-Import Bank: Call it the “Boeing Bank”
- HUD: Federal Housing Administration woes continue and housing subsidies for the dead
- Transportation: High-speed rail lobbyists squabble over taxpayer loot
Also, in addition to losing more money, Fannie Mae and Freddie Mac lose their inspector general.
The Missing Leg of Immigration Reform
In a speech this morning in Washington, Homeland Security Secretary Janet Napolitano said the Obama administration remains committed to enacting real immigration reform. In a key passage in her remarks, she said reform must contain three essential components:
Let me be clear: when I talk about “immigration reform,” I’m referring to what I call the “three-legged stool” that includes a commitment to serious and effective enforcement, improved legal flows for families and workers, and a firm but fair way to deal with those who are already here. That’s the way that this problem has to be solved, because we need all three aspects to build a successful system.
The phrase “improved legal flows” is rather vague, but it points toward some kind of expanded visa program to allow future workers to enter the country legally. Our current immigration system offers no legal channel for anywhere near a sufficient number of foreign-born workers to enter the country legally to fill the lower-skilled jobs our economy creates in times of normal growth.
I’ve made the argument for expanded legal immigration in a recent op-ed, and in a Free Trade Bulletin when the Senate last debated reform in 2007.
After a promising start, Secretary Napolitano spent most of the rest of her speech touting how much has been done on the enforcement side, and almost nothing about how we can expand opportunities in the future for legal immigration as an alternative to illegal immigration.
Without that crucial third leg, Congress will just be repeating the two-legged failure of the 1986 Immigration Reform and Control Act.
The Hypocrisy of “Well-Fed Activists”
Speaking at a food security conference in Milan, Nestlé chairman Peter Brabeck-Letmathe today criticized “well-fed activists” whose protests and lobbying activities have, in his opinion, held back the adoption of food technologies that could help the starving poor:
It is disheartening to see how easily a group of well-intentioned and well-fed activists can decide about new technologies at the expense of those who are starving.
Nestlé has been subject to intense criticism in recent years, primarily over its strategies to sell infant formula in developing countries, but I think Mr. Brabeck-Letmathe is spot-on here.
Penn & Teller made a similar, if more forcefully put, point in the last few seconds of this excellent video (warning: language may be offensive to some).
Who Will Protect the Women?
As I mentioned here yesterday:
[W]hen some people in Washington hear that nation-building in Afghanistan is not a precondition to making America safer, or that prolonging our presence undermines America’s security, the argument for remaining then shifts to preserving the security and human rights of the people of Afghanistan.
For example, Sen. Barbara Mikulski, (D-MD), a member of the Appropriations Subcommittee on Foreign Aid and Dean of the Senate Women, said last April, “The United States should do everything it can to encourage Afghanistan to respect the basic rights and welfare of women and children.”
But Malalai Joya, an Afghan woman elected to her country’s Parliament, says in yesterday’s Mercury News (via GG):
As an Afghan woman who was elected to Parliament, I am in the United States to ask President Barack Obama to immediately end the occupation of my country.
Eight years ago, women’s rights were used as one of the excuses to start this war. But today, Afghanistan is still facing a women’s rights catastrophe. Life for most Afghan women resembles a type of hell that is never reflected in the Western mainstream media.
In 2001, the U.S. helped return to power the worst misogynist criminals, such as the Northern Alliance warlords and druglords. These men ought to be considered a photocopy of the Taliban. The only difference is that the Northern Alliance warlords wear suits and ties and cover their faces with the mask of democracy while they occupy government positions. But they are responsible for much of the disaster today in Afghanistan, thanks to the U.S. support they enjoy.
Gitmo Prisoners to NY for Trial
Today, Attorney General Eric Holder announced that he plans to move five prisoners from Guantanamo to New York for a civilian trial. Holder says the prisoners masterminded the 9/11 attacks and will now face the death penalty.
Some journalists and commentators are calling this move a wholesale repudiation of the Bush policy. Actually, no. Holder also announced that five other Gitmo prisoners will soon be put on trial before a military commission. Thus, the Bush framework essentially remains in place. The Executive will decide on a case-by-case basis who will be held prisoner (overseas, Gitmo, here in the USA), and who will be tried in civilian court, and who will be tried before a military commission.
By way of background, these prisoner controversies (habeas corpus, waterboarding, trial by commissions) fall into three basic categories: (1) detention/imprisonment; (2) treatment (including interrogation practices); and (3) trial issues. Today’s announcement concerns trials.
If there is to be a trial for persons accused of terrorism, it ought to be in civilian court. Courts martial are for persons actually in the U.S. military (the Fort Hood shooter). Military “commissions” are a hybrid that is nowhere mentioned in the Constitution. It is mistake for Obama to retain the commission system because it is (a) dubious to begin with, and (b) can be whimsical with respect to the people that end up there. Even the former Gitmo prosecutor has voiced his objections to the system!
Bin Laden and his cohorts murdered some 3,000 people on 9/11. It is lamentable that they did not all go down fighting at Tora Bora. But we do have to have policies in place for captures. Boiled down, the U.S. should follow the Geneva Convention for prisoners and, for trials, the procedures set out in the Constitution.
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