Links (2 of 2)

I lost 1-2 of the links I planned to show. Drat. But I also found others.

Final love letter to a spacecraft. The Cassini exploratory probe finished its life and mission, which was to send us data about Saturn and its moons. The craft was remotely instructed to crash into Saturn to be sure that it wouldn't contaminate the moons where native life might be possible.

Americans and their white president. A tour-de-force essay by Ta-nehisi Coates. He writes that whites of all kinds, not just working class, gave support to a candidate who reflected bigotry. The essay shows one way to view race relations, but I don't agree with it's the whole story. It's still significant that a black president was elected twice, and with more support than Trump got. Coates does present some chilling facts, however, such as a white felon running in the presidential primary against Obama, and getting a surprising number of votes. The Obama presidency has been difficult for many blacks because they've had to endure heightened disrespect.

More about North Korea. North Koreans have been completely immersed in the propaganda that their only purpose is to serve. That complicates both war and diplomacy. A high-ranking ex-officer suggests a naval blockade to change the dynamic. The comment section is a must-read.

Did voter fraud change this Senate election? That's a good question raised here. There are known weaknesses in New Hampshire election law. The numbers of people using out-of-state IDs were high enough in this very close election. This is plausible, but not enough evidence to say it happened.

US spending. Where the federal spending goes. I'm always looking for this info, so here's a link to a handy graph.

Driverless car crash. This summary and analysis points to the technology not being able to handle complex situations. The driver, however, was lulled into depending on the system. That would happen so easily.

Susan Rice, target of conservative smears. A lot of ugly accusations swirled around her as conservatives tried to win the news cycle when lots of Russia news was coming out. Now she's been cleared, but that information is mostly buried. Blowhard conservatives won't even remember that they defamed her. Amnesia is rampant there.

Migration issues confront Canada. Perhaps for the first time, Canada is dealing with mass migration that is poorly controlled. Will it be too much for this generous, empathetic nation?

Image: bloomberg.com

Rant about healthcare spending

I'm fed up with conservatives who complain that Obamacare is going to bankrupt the country but never turn their gaze on Medicare. The message seems to be that other people can spend buckets of government cash on healthcare, but NOT YOU. You are scum because you don't have employer-provided insurance.

There is no acknowledgement of the real problems in the healthcare system. Here's a big example: how many people know that current Medicare taxes aren't covering current Medicare expenses? I heard this mentioned in passing this week, and it was news to me. If we can't even cover our current Medicare expenses, why isn't that information all over the news? It should be a common point when talking about spending, similar to how everyone mentions the yearly deficit and the national debt now being $17 trillion.

Yet it's not mentioned frequently. The fact is that general revenues are paying for more than 45% of our Medicare costs, meaning that other programs are squeezed. And the BABY BOOMERS HAVEN'T EVEN STARTED GETTING OLD YET.

When are we going to start reining in Medicare? I'd cynically say probably not while we have elections and seniors turn out in high numbers, but I don't think we can wait that long. We need some method to force people and doctors to stop this gorging. We've got to start saying "no," but that means saying "no" when life and health are on the line. I don't know if we can do that. We may believe that we have to spend on our healthcare, no matter how much.

Will it be possible to cut back? If so, how? The easiest way is to cut what's ineffective. That means gathering the statistics, and then convincing or forcing doctors not to order the ineffective treatments. We'll probably need to cut barely effective treatments too. I've read of cancer patients being referred for a fourth round of treatment that's known to extend life for only three months. What is the cost? Would you decrease your own bank account $100K per month to extend your life? If not, then you probably shouldn't decrease the country's resources either.

This also means giving comfort care and end-of-life treatment to frail elders instead of hospital care and expensive ICU treatment. Perhaps we shouldn't be trying to save extremely premature babies and people with very severe head trauma. Yes, we will have all these life-saving and life-extended technology that we will purposefully not use because it costs too much.

As I said above, I don't know if we can do that, just let it alone and not jump in with all that. Our track record isn't good.

Image: smh.com.au

What started this rant? The idea that Ben Carson, the neurosurgeon religious black conservative darling can save us. That and finding out that the Medicare payroll tax isn't covering even 55% of our Medicare spending.

Extra. Healthcare costs are growing faster again after a five-year slowdown.

Medical miracle in Maryland

On a radio show this week, I learned that Maryland is the only state with cost controls on hospital charges. The speaker told about how New York once had controls... until a GOP governor put an end to that. Of course I was curious about how cost controls have worked for Maryland, so, as always, I did some research.

Maryland is quite proud of its system. They have their white paper bragging about the results, particularly the lower rate of increase in hospital costs. Their medical system has been more stable too, but perhaps the biggest feature is that there's no cost shifting. That sounds great to me because of the resentment that cost shifting causes. If you're unlucky to work for a small company with a weakling insurance plan, you pay more in the hospital. The government makes this a necessity by being miserly in its Medicare and Medicaid reimbursements--those whales of cost shifting.

In Maryland, all payers pay the same rate, even Medicare and Medicaid. So in one way, the entire nation supports Maryland by paying more there. However, this deal was negotiated decades ago when Maryland's hospital costs were 23% more than the national average. The deal remains in effect because Maryland has done well in lowering its costs and keeping them below average. So it hasn't been a bad deal for the taxpayers either.

Because all payers pay the same rate, the rates are known at hospitals. No insurer wangles a sweet deal at the expense of others. Some hospitals get higher reimbursements, but only due to higher local cost-of-living. That's a consistency I'd love to see. Just imagine, a hospital could easily post its rates in a list, not a complex table accounting for many different classes of insurers or patients.

All this good news was seconded by a (probably) independent review, but what is the bad news? Maryland still has higher than average medical spending than its neighbors. Some costs are displaced from hospitals to outpatient facilities. But I've never heard that Maryland is a hell-hole for medicine, so this cost control approach hasn't ruined life in Maryland.

The Bad News

For a more brutal critique, I had to read a report from the Heritage Foundation. First is a spiel on why cost controls never work. Then the terrible examples from Japan and the Netherlands. Finally, they detail the considerably fewer complaints against Maryland. Cost controls are said to stifle competition and create shortages, yet Johns Hopkins in Maryland has managed to set up surgical centers that allow "the hospitals to circumvent many of the shortages associated with price controls." I read that as saying, well, they don't have the shortages you were warned about. The biggest complaints in the Heritage report are the higher total costs than neighboring states, the waiver from Medicare and Medicaid, and a loss of "care coordination." Weak sauce.

A better critique comes from this healthcare blog. I learn the Maryland has managed to strike a good balance between hospital and taxpayers. Not so with Massachusetts (my state), where "hospitals are so powerful that they ... capture the regulators." The author also tells the history of how other states (all but Maryland) abandoned their cost controls under the illusion of competition between HMOs. Remember how they were supposed to keep medical inflation in check? What went wrong there?

I have to agree--state cost controls sound like a good idea to me. No other method has worked to reduce the inflation in medical spending over the long term. And Maryland provides an example of how to avoid the disadvantages of cost controls. I tend to like market processes, but they haven't worked in healthcare. They may never work in healthcare because it's not your normal market. Let's finally admit that.

Image: northwestern.edu

Hard decisions for the GOP, again!

So both Paul Ryan and Mitch McConnell are making noises about putting up a fight on the debt ceiling increase. One problem--they haven't decided what to demand yet. This is so much the same as earlier this year when the GOP met several times trying to figure out their strategy, and basically ended up with a strategy vacuum that was filled by Ted Cruz's "Defund Obamacare" fiasco.

Probably the GOP will plump for the a different fiasco this time. Just maybe they'll figure that a half-baked idea is worse than nothing at all, and will instead think through their position. Do they want to push for some more spending restraint? Entitlement reform?

They better decide damn quick because it's only 2 months until the debt ceiling is reached, and they can't be unveiling their position one day or one week before the deadline. The GOP looked incredibly stupid with their changing slate of ridiculous demands just before the government shutdown, so the GOP should know not to do that again.

But the problem has always been that having demands isn't enough. You must have specific, sensible demands. If the GOP wants spending cuts, what the hell are they? Is the pain balanced, or targeted only at their political enemies? It's going to be easy for Obama and the Dems to say "no negotiations" to a half-baked list of demands, but much harder if it's a well-considered plan. This should be obvious by now, but the GOP opinion leaders (the noise makers with their legions of dittoheads) are too cloaked in the conservative thought bubble to have noticed it.

I hope that the GOP decides on a small slate of targeted spending cuts. It's doable and they can run a PR campaign on it. There are rumors that they'll try to get some entitlement reform, but they aren't close to ready for that, with the exception of chained CPI. Entitlement reform will take a lot of heavy thinking from a bipartisan commission like Simpson-Bowles or the 80's Greenspan Commission. There's no way the GOP can get any meaningful entitlement reform in the next two months, so why the hell are they pretending otherwise? Again, it makes them look like ridiculous amateurs.

Meanwhile the Dems are just sitting back, letting the GOP shoot themselves in the foot. They're taking advantage to a small degree, but not enough to look greedy and untrustworthy. Somewhere along the line, the Dem leaders learned not to overplay their rather weak hand--not because they became responsible adults, but because they got their asses handed to them in the 2010 election. They learned how quickly the country will turn on them. The leaders learned, that is, not the noisy social justice element. Those guys still think the congressional Dems can play hardball to increase social spending and taxes. Some people never learn. Isn't that the truth.

Rushing to the next tactical mistake

Image: politico.com

Negotiating is tough work

Now that we've got ourselves a three-month postponement on the big fiscal questions for the federal government, what are we going to do? We could waste the time like we did all through the spring and summer. If I remember correctly, there weren't many proposals flying around--just the partisan, DOA budgets from each power center (the House, the Senate, the president).

No one went past their first offer, and those first offers were crap. It would be so easy to repeat that approach because it's the easiest approach. Each group stays within the safe confines of their respective bubbles where they are protected from attacks for not being ideologically pure enough.

It's dangerous to venture outside that bubble and make that first concession. The other side will try to pocket your concession and ask for more. That's a reason to stay rigidly with your first offer, which is probably what happened with the supercommittee. The two sides haven't changed much, so maybe that's exactly what will happen this time too.

Reasons To Do It

But maybe not. I heard a report on NPR (sorry, no link) about how the Republicans really want tax reform and entitlement reform. The Dems really want tax increases, which is a problem because it's no-go territory for the GOP. No matter how much the GOP wants tax reform, they probably won't give up tax increases for it unless it can be done in absolute secrecy, which means not at all.

Entitlement reform is more needed, so the GOP may well be willing to up more to get it. Unfortunately, there are huge obstacles to entitlement reform. The first is the unpopularity of cost containment. Nobody has been saying "enough" to healthcare for grandma for the past 40 years, and now it's practically enshrined. The second is that the Dems and the GOP don't agree on the structure for implementing cost containment. Dems want the decisions in the hands of the federal government. The GOP wants to palm off the hard decisions to anyone else--the states, individuals, and intermediaries like insurance companies.

These are such big differences that the conference committee can't bridge them. We might be some small agreements on entitlements, such as chained CPI and higher premiums for the wealthy, but there won't be a major deal. That seems to be what most reporters and pundits are predicting.

Nonetheless, these are important talks. . . because the two sides are finally talking. These are the first substantial talks in two fucking years--the first talks since the supercommittee failed. The whole of 2012 was devoted to campaigning. Most of 2013 was lost as the GOP warred internally over its strategy. So it's a big step for them just to be talking and more than they managed to do for two years.

Congrats to them, and many happy returns.

Image: reaganpluscats.com

Extras.

• A good summary from the Atlantic Wire.
• Who's on the committee. Strangely, it's heavily weighted with senators.
• Barro says sequestration won't go away.
• Barro quotes committee members.
• Why SS Medicare must be reformed but it won't happen.
• Bernstein notes that the GOP wants three wishes, and can't have them all. 
• There's no economic recovery. Maybe this is not connected, but maybe it is.

Is Obamacare ALREADY a train wreck?

Everyone has heard this. Obamacare is a train wreck. Well, I don't take anyone's word for it. As I frequently tell other internet commenters, your assertion doesn't make it true. So what is the evidence that Obamacare is already a train wreck, even before exchanges crash, subsidy costs balloon, and healthcare providers are so pissed off that they give surly care?

The evidence:

1. In a Gallup poll of small employers, 40% are holding back on hiring because of concerns about the employers mandates in Obamacare. Well, maybe this is true, or maybe it's like the polls showing how many people thought that Obama wasn't born in the US. Some of the respondents will have political reasons for complaining about Obamacare. Refuting data: see the graph below showing trend in full time employment. Or maybe the sluggish job growth is due to a combination of Obamacare and poor sales and demand. On the whole, I think there's some validity to this complaint.
2. People are losing their satisfactory healthcare plans and being dumped into exchanges or forced to pay more for plans they don't want. This is true, but for how many? This tweeter says "After over 5 yrs of no group health ins I finally get a job that offers it and here's the thanks I get [a cancellation notice]. If you think about it for a minute, that tweet isn't a slam-dunk against Obamacare.
3. Here's a rehash of reasons from Heritage Foundation, including job losses due to taxes on medical devices and lower Medicare reimbursements. They mention less than 3000 jobs lost, not a horrifying number considering that the US lost 524,000 jobs in December 2008. 

No, Obamacare isn't a train wreck at this point. It's not as though no one knows how to implement it, what the rules are, or when they will have that information (might describe Dodd-Frank, but not Obamacare). It may turn out to be a train wreck, but it's politically motivated jumping-the-gun to call it a train wreck at this point.

Image: oops, lost the link

Graph above:  theatlantic.com

Extra. Obamacare will explode medical spending, just like Medicare did. I have a few obvious questions about this, including asking about the effect of covering mostly the healthy instead of the elderly. But the kicker in this article is that Medicare didn't positively affect mortality rates. Um, does that means Medicare is an expensive failure? Please defund Medicare immediately and see how that turns out.

The only fan of the sequester

It's hard to be for the sequester if you're an elected official. After all, the sequester will send pink slips to somewhere around 600,000 employees in defense-related jobs, both in the Defense Department and Defense contractors. If you have a military base or a military contractor in your district, you can hardly support the sequester. So politicians don't express enthusiasm for it.

So who is this lonely fan of the sequester? Howard Dean, expressing his support from the safety of private citizenship with no official post in government or the Democratic Party. I loved some of the Dean quotes:

About defense cuts: "This is a chance to cut Pentagon spending. We haven’t done it for 30 years... This would not be my favorite timing. I don’t think this is a great solution. I just think it’s the better of any of the ones that are on the table... There are going to be some jobs lost. The fact of the matter is that we will not get this chance again."

About Medicare cuts: "I’m not in the least worried about Medicare provider cuts... Whether this comes from drug companies or provider cuts, we’re going to do those anyway as soon as they get around to doing what really has to be done, which is paying by the patient, not by the procedure." [Wow--how clear and how true]

About the risk of recession: "It will be a short term, light, small recession. Look, we’re in deep trouble financially in this country... You can pay me later or you can pay me now, but paying later is going to be much worse and it’s going to hit much more vulnerable people than this does."

The GOP is generally pro-sequester at this point because it's better than the other alternatives currently being floated. Those alternatives are objectionable because they contain tax increases and fewer spending cuts. However, the GOP can't be whole-hog supporters due to the military jobs in each district, as I said above. Some are trying to connect the sequester, and subsequent job losses, to Obama. The usual phrase is the sequester is "the president's idea."

I'm confident that the sequester will happen. I'm also a fan for reasons similar to those of Howard Dean, though I support broadly cutting jobs in the federal workforce, not just in defense. I also think we shouldn't miss this chance, and I'm willing to weather the consequences. Think of the sequester as the cuts we should have had in the 90's and the 00's, but didn't. We shouldn't put them off any longer, or it's "going to be much worse" as Dean says.

Image: newrepublic.com

Debate 1 reaction

So I made myself watch the entire debate. It wasn't as painful as I was expecting because 1) I was forewarned, 2) I'm well aware of the weaknesses of both candidates, so I'm not surprised to see them.

Romney did the better job covering over his weaknesses during the debate, but he's positioned himself for a lot of uncomfortable followup questions. Obama just needs to sharpen his message and shorten his answers. He also needs to practice with someone other than John Kerry (Mr. Long-Winded Answers). I'm not sure who would be a good stand-in for the short, snappy, but polite answers that Romney gave. No Democrat comes to mind, and that's a sad commentary on the Dems.

Summary

Here is my overall impression of the debate:

• Romney was strong on the attack, but purposefully vague about his own plans.
• Obama was moderately good in his defense. Unfortunately, he let his points get lost in too much detail.

Neither is talking specifically about what they would do if elected because this has pitfalls for both. Neither can definitely deliver what the electorate would like to hear--a low-pain transition to fiscal health. So they each hide the respective pain they'd inflict. Since they're both vulnerable, neither is attacking future plans as forcefully as they should be.

Their Weaknesses

Romney is declaring that he won't increase the deficit. He's not even claiming he'll lower the deficit, as a good fiscal conservative should, but only that he won't be worse than Obama on this score.

Yet he has to be vague because he did promise to cut tax rates by 20%, and he'll need to offset that by removing deductions. It looks to me as though his tax rate cut is no longer a promise, and he can probably be nailed on that. However, once he admits it, then the funny math stops being a disadvantage to him, unless of course it costs him the GOP base.

Romney has similar problems with healthcare for people who aren't covered by employers and the future of Medicare. The solutions he proposed in the primaries don't really hold water in the general. He has no answer for the uninsured, and his Medicare proposal is a voucher program that throws seniors into a tough marketplace.

Obama is mealy-mouthed about spending restraint generally. He states that he wants government to help give people opportunities, and most of us know that translates into lots of programs that suck up revenue. He doesn't sound like he's really committed to fiscal restraint.

He overreached in accusing Romney of supporting a $5 trillion dollar tax cut. He could have scored on some very pointed criticism, but now Romney has him sounding like a liar. Obama might have thrown away a big advantage there, but I hope not, because it's a strong, valid point.

Neither candidate had a strong closing statement. Obama was scattered. Romney basically said that another four years of Obama will be awful, but he (Romney) won't be awful. That didn't resonate with the audience (or CNN's focus group), and it's hardly a positive argument for electing him.

Their Strengths

Romney was detailed about what he wanted to do with Medicaid--block grant with 1% increase per year, and give the states the freedom to develop their own programs and priorities. This sounds a lot like what happened with welfare reform, which was successful in turning a huge ongoing headache into a more respectable social program. Notably, it was the only issue where Romney was specific about what he would do.

Romney is making sure he doesn't sound like a heartless robber baron who'll slash education, Medicare, Medicaid, and most government departments. He's back to saying, as he did last fall before the primary heated up, that he'll shrink the government by attrition of government workers, not by sheaths of pink slips.

Overall, Romney sounds like someone who sensibly sees that government has grown too large, and he doesn't want to grow it anymore. Instead, he wants to slim it down gently. This is a good contrast to Obama, who is still building it up.

In Obama's $90 billion for green jobs, Romney has found a great, multi-purposed stick to bash Obama with. Obama wants to spend more on teachers- bam, that $90 billion would pay for a lot of teachers. Want to close a $2 billion loophole for oil companies, bam, you spent 50 years of that money on green jobs.

Obama's strengths are in his explanation of Obamacare and restraint on Medicare spending. His critique about throwing seniors into a nasty healthcare insurance market with only vouchers rang true over and over. Romney had to keep saying that it wouldn't affect today's seniors (but damnation for the rest).

What They Won't Talk About

Neither candidate talked about the sequester, or the "fiscal cliff"--the combination of the sequester and the expiration of tax cuts. This is the hard stuff, the actual cuts, and neither candidate will touch it. Neither is offering even smaller deficits, even though deficits are still running over $1 trillion per year. There are no medals for courage awarded here.

Neither talked much about what they'd do about the Bush tax cuts, even to attack the other. Only one mention of these tax cuts -- amazing. This must be where both are extremely vulnerable, so neither will make it an issue. The moderator should have put them on the spot.

Romney continues to use Simpson-Bowles as another club with which to beat Obama. However, he doesn't embrace S-B. He pretends that he likes it, only he's got a better version. Considering how well I know Simpson-Bowles, I can declare that this is hogwash, otherwise known as craven, corrupt lying on Romney's part. However, I'm happy that Simpson-Bowles continues to be a touchstone. It doesn't die because it's a great plan.

Take-away

I notice that there isn't a lot of video circulating from this debate. There was no knock-out moment. Romney looks like a stronger opponent, but the same weaknesses are still there. Obama will be able to reverse this setback, and Romney has very little he can capitalize on. Romney may have won the debate on style, but it's not a lasting or substantial victory.

That's either Jim Lehrer or the truth.

Image: politicalhumor.about.com

Transcript here.

Paul Ryan - A serious pick

PJ of Viable Opposition has asked for my opinion on the choice of Paul Ryan for the Republican VP nomination. I can't delve into the strategic and tactical considerations the way professional pundits do. This is just my gut reaction: it's a good, solid pick.

When the GOP didn't know what their fiscal program should look like, this guy provided the roadmap. When the GOP asked themselves WTF were they going to do about Medicare (without being too scary), this guy came through again. The only other Republicans to submit budget plans were Ron Paul and ...  Rand Paul?!? (And the RINOs on the Simpson-Bowles commission, but they don't count in this GOP.)

So there's a bit less pixie dust in the Romney campaign today. But there's still plenty because the Ryan's latest budget has plenty of handwaving.

I also notice that Ryan doesn't want to be the heavy who tells Grandma that she can't have spinal fusion or a kidney transplant or has run out of dialysis days, so he's passing the job on to insurance companies. Great way to handle that difficult issue, GOP. Now you don't even have to try to contain medical costs--that is being outsourced in the traditional GOP fashion.

Nonetheless, Ryan has given the GOP the method for containing Medicare costs. Under his plan, they would soon be deciding how large the pot of money is, and that's what Americans will get for their vouchers subsidized premiums. It's a better solution than the-sky's-the-limit. I can't say much more in its favor than that.

I look forward to a bit more substantial campaign, and a much closer look at the Ryan budget and its fudges. At least there will be some numbers--something for a nerd like me to crunch on.

Image: patheos.com

Flashback: Romney was always going to pick someone solid. At least the campaign should be more substantial.

A Bloomberg summary of Ryan budget positions.

Crude joke that you may want to skip. You can misread the headline as: Paul Ryan - A serious prick. 

Short: Getting to small government

This piece from RedState was the most convincing argument for shrinking government that I've read. It eschews the name-calling, which helps make it readable. It doesn't dwell on resentment and ancient wrongs, but still manages to provide context for how government got as big as it is.

Though I don't share the view that government should be as small as this column advocates, I felt like I was walking in their shoes for the first time. It was a level-headed, compelling read.

The main point is that government growth is on auto-pilot due to the entitlements. To prevent entitlement spending from crowding the rest of the economy, it has to be reformed aggressively. That's a simple, coherent argument with a lot of merit. It neglects an important corollary: the possibly distressing effects for those who are dependent on those entitlements.Nevertheless, an interesting read that I recommend.

Photo credit: www.gettingfreedom.net

Simpson-Bowles economic plan - WIN

I've written about my support of the Simpson-Bowles plan many times, but I'm finally doing a capsule review as I've done of Obama's, Romney's, and Cain's plans. A debt-reduction commission was created by Obama in early 2010 after Congress after the Republicans in the Senate refused to give a mandate for a commission and guarantee a vote on their recommendations.

The commission was bipartisan with members from the House, Senate, business, and economic experts. They worked from April 2010 until December 2010. In the end, 11 of 18 commission supported the report, with the dissenters split nearly equally between Dems and Repubs. (Thanks, Wikipedia, for this background.)

This plan is actually very readable with all major recommendations put into categories and bullet pointed, like this:

RECOMMENDATION 1.1: CAP DISCRETIONARY SPENDING THROUGH 2020. Hold spending in 2012 equal to or lower than spending in 2011, and return spending to pre-crisis 2008 levels in real terms in 2013. Limit future spending growth to half the projected inflation rate through 2020.

Budget Cuts

Roll back discretionary spending to $688 billion for security and $410 billion for non-security spending. Let agency heads recommend the budget reductions for their department; Congress will not be allowed to micromanage and protect a fiefdom.

Cut congressional and white staffing and budgets by 15%. Reduce federal workforce by attrition. Institute pay freezes and much tighter travel budgets.

Tax Reform

Raise gasoline taxes $.15 a gallon for adequate funding for transportation (currently partially funded through borrowing).

Eliminate most deductions. All dividend and capital gains will be taxed as the same rate as earned income. The commission offered three choices to determine which brackets to establish:

• If there are no deduction and no credits, the brackets would be 8, 14, and 23%.
• If there are credits for low-wage workers and their families, the brackets would be 9, 15, and 24%.
• If there are credits for low-wage workers and somewhat limited deductions for mortgage interest, health insurance, charitable giving, and retirement savings, the brackets would be 12, 22, and 28%.
• Exemptions would be maintained as is. The standard deduction would become an exemption. A family of four would exempt $26,000 from taxes.
• Business income tax would be 26 or 28%.

Health Care Spending

• Freeze doctor reimbursement for 2013 and have a 1% reduction in 2014. 
• Reform the payment formula. Repeal the longterm care part of ACA (already done). 
• Institute a simpler, higher deductible higher copay. 
• Require the same drug rebate for some on Medicare as already used in Medicaid. 
• Increase fraud division. 
• Decrease contributions to states for Medicaid administration costs. 
• Reform malpractice law and create specialized courts. 
• Start pilot programs for health insurance vouchers for federal workers (already in ACA and part of Ryan plan for Medicare). 
• Create a board like the IPAB payment board to set reimbursement rates. 
• Once reforms are in place, establish hard caps that allow spending increases that match the percentage growth in GDP plus 1% per year.

Mandatory Spending Reforms

Change federal pension rules to bring them in  line with lower rates in the private sector. Reduce spending on agricultural subsidies. There is also a bunch of smaller savings on student loans, general fees, mines, private pension insurance, energy, post office.

Social Security

Change benefit formulas to provide better support for low-income, very old, and long-term disabled. Provide less generous support at the high end. Raise the retirement age, tax more income, make state and local workers join SS.

Enforcement

Cut spending somewhat gradually. Start tax increases after first year of substantial spending cuts. The CBO will score spending bills and send them  back to committee when they exceed the allotment for their category of spending. OMB can require across the board cuts if Congress passes offending bills.

An appointed ongoing committee will recommend 2% cuts every year by identifying programs that are no longer needed or not working as planned. They will also recommend consolidation of redundant programs.

No off-budget spending for wars.

Congress will define what constitutes "emergency" and "disaster" spending. They will establish a special fund for disaster relief based on 10 year average.

My Critique

It's a  great plan. I think the exemptions are a bit low. It doesn't zero out the deficit in its ten-year projection, which I think should be a goal in any plan because we can't pay down our debt until we have a zero deficit. Those are my two specific criticisms. That doesn't decrease my awe at the achievement of the commission. They were actually able to reach agreement in many areas:

• Cutting the federal workforce
• Discretionary spending limits
• Healthcare spending (where agreement is especially hard to reach)
• Social Security
• Provisions to enforce the budget agreements

The one area where they couldn't reach a final agreement was tax reform, and even then, they agreed on a framework and three workable options within that framework. Whittling tax reform plans down to option A, B, or C, and getting agreement to present just those options is still a solid achievement.

You can compare the Simpson-Bowles plan to mine, but I wish you wouldn't. On the other hand, go ahead and compare it to Romney's plan and Obama's plan. For laughs, compare it to Cain's plan. Remember when he was the frontrunner?

The Payoff

Within the first 4 years of the plan, we reduce our deficit to 2.3% of GDP, then down to 0.8% by 2025. In the meantime, normal growth in GDP will make our debt smaller as a percent of the economy.

Green - current trajectory

Red - Bush tax cuts expire

Blue - Simpson-Bowles WIN!

Edit 12/27/11. Added my second criticism, that the plan didn't zero out the deficit.

The 16% Tax on Everything

You don't hear about Republican plans to roll this one back.

This is how much healthcare costs in the US, currently 16% of our GDP and on its way to becoming 20% by 2020. Compare this rate to Canada (perhaps our closest demographic match), which spends 10%, Ireland which spends 8%, and Switzerland, which is probably the Switzerland of health care, 12%.

In some ways, it's not fair to compare the US with other countries because our lifestyle is not as healthy. On the other hand, countries buying or competing with our exports don't care why we spend so much. The only thing that matters is that it makes us less competitive.

When will we start looking at trimming our healthcare costs? I can't believe it isn't time yet. The biggest impediment to reform isn't satisfaction with the current system, it's that healthcare is quite the political football.

The Republican Approach

The Republicans, who are bullish on cutting other taxes, are less sanguine on cutting medical expenditures. They have their private-sector solutions: stripping the corruption out of malpractice rewards (and taking fair higher compensation with it), letting people buy overpriced and/or fraudulent health care insurance over state lines, turning Medicaid into block grants to states, and voucherizing Medicare, so that our seniors can try to buy overpriced and/or fraudulent insurance too. Granny won't be thanking them.

The Democratic Approach

The Democrats have some plans too. One (ostrich) wing thinks Congress could  pass a single-payer system if ... er... Fox News didn't inflame the country with lies. Democratic policies have to be negotiated between near socialists like Bernie Sanders and blue-dogs like Ben Nelson. Not surprising then that the Affordable Care Act (Obamacare) is a mish-mash of what they could get through Congress before the Republicans took over the House. It's jimmied to get a good score from the Congressional Budget Office (CBO), but it'll blow up later when we're subsidizing premiums on overly-mandated health insurance and long-term care.

The Super Committee

I fear that the super committee will be skittish about cutting healthcare spending, particularly Medicare. After all, crying foul on Medicare (or death panels!) has won more elections in the last two years than it's lost. That simply means that healthcare for federal workers and Medicaid will be cut more. Considering our Congress, their staff, judges, and the executive branch use federal employee healthcare, somehow I imagine that Medicaid will suffer the most. No, I don't mean Medicaid will suffer, just those on Medicaid, those annoying free-riding poor.

By the way, we don't pay 16% for healthcare on absolutely everything. Imports from other countries don't carry same healthcare burden. But that's not especially comforting.

Establish a global budget for total federal health care costs and 

limit the growth to GDP [growth] plus 1 percent.

--One of the Simpson-Bowles debt commission's recommendations 
to reduce healthcare expenditure

Sacrifice

Are we finally ready to admit that we're in a period of prolonged recession? If so, we will need to adjust our spending accordingly. Families and businesses have already been doing that, starting during the financial crisis of 2008. Businesses in particular have not had the luxury of waiting. 

The federal government, on the other hand, increased spending dramatically in 2008 (with TARP) and 2009 (with the stimulus). This isn't inherently wrong. According to Keynesian economics, the government should spend more in a recession to balance the drop in demand from the private sector.

But a government can't do so year after year without racking up huge debts. At some point, government must recalibrate its spending down to a level that is sustainable in the economy as it stands. I think we are at the point that our budgets have to start reflecting our lower revenue and lower growth prospects. Perhaps we should've started last year, but we didn't: the 2010 budget was almost as high as the 2009 budget.

So, as a nation, what are we going to start sacrificing? With surprising consensus, Congress thinks defense spending is something we don't need so much. We're now considering $950 billion in defense cuts over the next 10 years, roughly 13% of the projected defense budget. Of course, that's just the beginning of the cuts we'll need. I'd like to make a couple suggestions.

First, cut unemployment benefits, which we've been extending, now up to 99 weeks. Normally benefits last 26 weeks, but these are hardly normal times. In most recessions, benefits are extended, sometimes to 39 weeks, sometimes to 52 weeks. I don't think the period of 99 weeks has a precedent, but then this downturn is the worst since the Depression. However, at some point the unemployed person has to finish making the adjustment, retrain, get along on just one salary, or move back in with Mom or Uncle Ted. I think 52-60 weeks should be the cutoff point. Potential savings: I don't know, and I'm not going to research everything.

Another obvious area to trim (to me, at least) is Medicare and Medicaid. Let's be honest here... we all know the healthcare spending in this country has to change, so that means changing Medicare and Medicaid (and the federal employees system, and your health insurance, and everyone's).

Our healthcare system is another beast we've fed way too much, though I don't hear Grover Norquist using those terms. However, that description applies more to the healthcare spending than to any other sector in our economy. Let's knock down the barricades (festooned with signs saying "Hands Off My Medicare") and put this beast on a diet. Potential savings: $12 trillion+ in 10 years depending on how deep we cut. Do we dare?