Ruminations, January 10, 2010

The expense of health care

One of the drivers of health care reform is its high cost. Critics of President Obama’s health care initiative say that it is a government take-over of one-sixth of the economy (actually, according to the Department of Commerce’s Bureau of Economic Analysis, the figure is close to one-eighth but why ruin a good story?) Supporters of the initiative say, at one-sixth or one-eighth of the GDP, we spend too much on health care.

We spend a lot on health care. Is that necessarily bad? Maybe and maybe not.

Looking at it historically, University of Chicago Nobel economics laureate Robert Fogel examined just where Americans have been spending their money. He found that in 1875, 75 percent of consumers’ income went to food, clothing and shelter.. By 1995, the amount spent on food, clothing and shelter dropped to 12 percent.

Why the drop in the percentage we spend on food, clothing and shelter? Did we all go on diets? Did food get that cheap? Did we move from palatial estates to shacks? The answer is that we as a nation, got wealthier and as incomes rise, the percentage spent on food, clothing and shelter drops. As the percentage drops in one area it must increase in another and that area is health care. So the percentage of income that people are willing to spend on health care has risen.

In fact, Fogel posited, for every 1.0 percent rise in income, Americans will increase their heath care spending by 1.6 percent, and reduce their spending in other areas. Therefore, the fact that, on a macroeconomic level, we are spending a higher portion of our income on health care attests to the wealth of the country. On a macroeconomic level.

But, Americans live individually on a microeconomic level. Percentages of GDP spent nationally on health care don’t amount to the proverbial hill of beans if you’re having trouble purchasing health care or health insurance.

Therefore, the problem is not that we are spending too much on health care; it’s that not everyone gets adequate care. And, in order to provide more and better care without cutting back on the care that average American receives, it appears that we will need to spend more on health care through direct or indirect taxes. If we spend more in taxes, that money comes out of our disposable income and we will have less to spend on other areas – including investment in America’s future and lowering the investment in America will reduce the future tax base (on a macroeconomic level). Are we willing to do that?

It’s an interesting conundrum.

Alberto Napolitano

Remember Alberto Gonzales? He was President George W. Bush’s Attorney General from 2005 to 2007. Gonzales, an Air Force veteran, graduated from Rice University and has a J.D. from Harvard. In private, Gonzales may be an extremely capable individual; however, when he appeared before Congress in several hearings, he appeared to be either dissembling or incompetent.

One of the requirements for members of any president’s cabinet is to be able to express faithfully and coherently the position of the administration. Gonzales, in spite of whatever other abilities he had, failed in this respect.

Janet Napolitano is President Obama’s Secretary of Homeland Security. She recently was called upon for public statements regarding the attempted Christmas Day bombing of the airliner over Detroit. Despite the fact that the failure of the trigger mechanism saved the airliner from tragedy, Napolitano said “the system worked.” It would appear that, according to Napolitano’s line of reasoning, our homeland security system is dependent on the incompetence of al-Qaeda.

When given a chance to redeem herself a week later, she said that she was surprised at “the determination of al Qaeda … [and] the tactic of using an individual to foment an attack.” Al Qaeda, if you haven’t been following it, is an organization that declared war on the United States in 1996 and 1998, fomented the September 11, 2001 attack on the United States, fought the United States in Iraq and Afghanistan, fomented an attack on the USS Cole and attempted to foment numerous other attacks both by groups and by individuals. And she is surprised?

Napolitano, the former governor of Arizona, is a graduate of Santa Clara University and has a J.D. degree from the University of Virginia. In private, she may be an extremely capable individual; however, Napolitano makes Gonzales look positively eloquent and forthcoming. She should follow Gonzales’ lead and prove the system works by resigning.

Plea bargaining with Abdulmutallab

John O. Brennan, Deputy Assistant to the President and Deputy National Security Adviser for Homeland Security and Counterterrorism has suggested that Umar Farouk Abdulmutallab, the man charged with attempting to murder 289 people on Christmas Day by blowing up an airliner over Detroit, will provide useful intelligence to the United States.

Because Abdulmutallab is not considered an enemy combatant and is being tried in the U.S. legal system, he has legal counsel who has advised Abdulmutallab to remain silent.

But Brennan thinks that silence won’t last long – we’ll offer him a plea bargain. You know plea bargains from all the TV shows – the prosecutor offers the defendant a lesser charge if the defendant cooperates. Let’s see, how do you plea bargain down the attempted murder of 289 people? Make it 288 or 287? No, that won’t work — we’ll have to drop the charge from attempted murder to something like disturbing the peace.

But wait a minute – if he agrees to a lesser charge, won’t that mean a lesser sentence? You can’t very well sentence a man convicted of disturbing the peace with life in prison. And if Abdulmutallab pleads gets a lesser sentence that means he will be released from prison someday; do we really want Abdulmutallab on the streets again?

In a plea bargain, you must offer the defendant something they really want. What does Abdulmutallab want? To kill himself. We could accommodate him there but he doesn’t want a simple execution – he wants to go down as a martyr – that means he wants to take a bunch of us with him and I don’t think that offer is on the table.

A plea bargain. I’m not sure that Brennan and the Administration have thought this through.

Clinton on the presidency

Back in 2000, President Bill Clinton responded to a couple of reporters’ questions with candor and accuracy. When asked by a reporter if Vice President Al Gore, by virtue of his office, was better prepared to be president, Clinton replied, “Nothing prepares you to be president.” That’s probably true. It’s not only the job, it’s dealing with 535 members of Congress, who – regardless of party, have their own agenda. It’s considering the political implications of your actions and statements have nationally and internationally, knowing more intelligence than you can divulge, keeping the loyal opposition loyal – it’s a tough, tough job.

The second question Clinton was asked was would Bush as president make mistakes. Clinton smiled and said that the president makes so many decisions it was impossible not to make some mistakes.

In looking at the Obama presidency, it is good to keep Clinton’s admonitions in mind. Obama is a man – nothing more and nothing less. He is unprepared for the job of president (for that matter, so was McCain) and is prone to make mistakes. So let’s hope he learns quickly and makes small mistakes.

Quote without comment

Conservative commentator Mark Styn on Senator John Kerry’s (D, MA) coming hip replacement operation: “I thought the Democrats already did that. After Kerry lost the 2004 presidential election, the Democrats told him that he needed a hip replacement and he got Barack Obama.”