Joe Scarborough's Vision of the Day After Will Haunt My Dreams
The President and the Speaker have made their case to the American people...and still couldn't seem farther apart. They're both now dug in and appealing to different constituencies. Obama was all Kool and the Gang, quoting Reagan and Jefferson to the beat of "Too Hot" and trying out the 2012 "I'm the only grownup here" stump speech for independents and moderates. Boehner went all Metallica, hands up for some Tea Party love. Eight days left and no path to a resolution. We're screwed.
Like I've said the debt ceiling debate makes for strange bedfellows. Former Florida GOP Rep. Joe Scarborough, host of "Morning Joe" on MSNBC (one of my faves when travelling) laid out a vision in Politico of what happens on August 3 that will haunt my dreams. Had to share.
| The morning after By: Joe Scarborough July 25, 2011 01:49 PM EDT |
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| WASHINGTON, D.C.— Aug. 3, 2011It was a financial storm that even an economics professor could see coming. The debt crisis that had gripped Washington for a month came to a sudden, horrifying climax that left America's economy looking like a nuclear wasteland. Credit markets suffered life-threatening seizures as the stock market dropped a staggering 25 percent. U.S. Treasuries plummeted as Moody's and Standard & Poor's downgraded the United States' credit rating — instantly adding trillions of dollars in interest costs to the national debt. Only gold was on the rise, and its price exploded past $2,000 an ounce.European markets reacted with understandable alarm while shock waves raced across Asia despite the early morning hour. China remained still, issuing little more than bland assurances, while its leaders quietly relished the fact that the United States of America had undermined its economic standing in a way that the Middle Kingdom could never have done on its own.The threat of exploding interest rates on home mortgages, cars, student loans and credit cards caused growing concerns. But it was the gutting of 401(k)'s and pension programs that would soon stir panic. Camera shots of citizens lined up outside banks, credit unions and Social Security offices caused commodity prices to collapse less than 30 minutes after those images began flickering on CNBC — and more than a few news commentators drew parallels between the chaos of this day and the early morning hours after the Sept. 11 attacks.
President Barack Obama went before TV cameras to try to calm Americans. Despite his shaky on-air performance, the president's message was convincing and explained why the overwhelming majority of Americans surveyed in an overnight Gallup Poll blamed Republicans for the financial catastrophe that had quickly brought the world's largest economy to its knees. Obama began his short speech by quoting another president. "Congress consistently brings the government to the edge of default before facing its responsibility. This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veterans benefits. Interest rates would skyrocket, instability would occur in financial markets and the federal deficit would soar. The United States has a special responsibility to itself and the world to meet its obligations." The president paused for effect while Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke stood beside him and watched. "Ronald Reagan said that 24 years ago. It is time that Republicans running the House today follow the 40th president's wise advice and do the right thing." With that, Obama, Geithner and Bernanke left the Rose Garden and walked back into the White House. For the next hour, markets continued to drop. By late afternoon, the New York Stock Exchange and NASDAQ took the extraordinary step of closing their markets. But the damage was already done. In a day's time, America's credit rating had collapsed, the dollar had fallen into disrepute and the life savings of millions of Americans had been wiped out. Inside the office of the speaker of the House, Jamie Dimon and Jeff Immelt joined Geithner and Bernanke to explain in the bluntest terms possible the stakes that lay before John Boehner's Republican caucus. Bernanke summarized their positions. "Mr. Speaker, this Congress can either pass a long-term deal tonight to bring sanity back to the markets or can expect to face unimaginable economic consequences in the morning." The Fed chairman stood up to leave but left Boehner with a final jab. "There is no Plan B. Not after Congress's performance today." Boehner glanced over Bernanke's shoulder to see breaking news on a bank riot in St. Louis. Another screen showed a late-night protest at a Richmond Social Security office. The image of a burning LAPD squad car seemed to be running on an endless loop on Headline News while a commentator was shouting about the "riots caused by the Republicans." The speaker knew his caucus was cornered. By the time he entered HC-5 in the bowels of the Capitol complex, most members sensed they were on the wrong side of an epic political rout. By late July, House Majority Leader Eric Cantor had realized that his future in national politics would depend on how quickly he could bring this crisis — which many on Wall Street were blaming squarely on him — to a close. Boehner entered the grim caucus room and went straight to the podium, telling members that the events of the day had made irrelevant any ideological argument. He was finished in a few minutes and then turned the mic over to Cantor, who told conservatives that the only option left to them was to live to fight another day. Only Michele Bachmann and a handful of freshman members delivered impassioned pleas to keep waging their war on Obama. But those short speeches were written more as fodder for future press releases than to persuade fellow Republicans. The meeting was quickly adjourned with the understanding that Boehner would immediately call a vote to stop the hemorrhaging of world markets by extending the debt ceiling. In so doing, Boehner and his conservative caucus would be giving the president what he had been asking for all along. The $4 trillion deal that the speaker had once hoped for was now nothing more than an opportunity lost. His party could have had a historic deal to reduce the national debt. His caucus could have made a real difference. Instead, their intransigence crippled America's economy and clinched the reelection of Barack Obama. A guest columnist for POLITICO, Joe Scarborough hosts "Morning Joe" on MSNBC and represented Florida's 1st Congressional District in the House of Representatives from 1995 to 2001. |
Givin' Props to End of Life Care
What do you get when you combine Health Policy with Bracketology?
Modern Healthcare recently held a public tournament in celebration of its 35th birthday in order to determine what "one person, event, organization or innovation had the biggest impact on the health care delivery system in the past 35 years." The tournament began on April 4 with 64 contestants—16 in each of those four brackets: People, Events, Organizations and Innovations. And the winner? Not EMRs, not the Centers for Disease Control and Prevention, not even the runner-up Institute for Healthcare Improvement. (I guess Don Berwick's pull isn't what it used to be....)
No, it was Hospice. Low cost, humane, person-to-person end of life care. People did it long before the term was coined in 1967. As The Onion famously pointed out a few years ago, the world's death rate is "still holding steady at 100%" guaranteeing that all of us will eventually face these challenges, and hopefully not alone.
All discussion of its impact on costs aside, it's remarkable that with all the advances of medical science, we (or at least the Modern Healthcare readership) still haven't lost sight of what can be fairly called the spiritual dimensions of care--- and most particularly the importance of humane intimacy between a caregiver and a patient in their final days.
The Republicans Have Won. Will They Get Out of Their Own Way?
The GOP came to the debt ceiling fight with goals of avoiding a deal where they have to vote for tax increases and preventing President Obama from getting a political victory. Given what US House Speaker Boehner and Senate Majority Leader Reid are working on today -- new debt-reduction proposals without tax increases -- the Republicans have won. The question is, will they now stop fighting and declare victory? If they keep pushing the Tea Party agenda, they will snatch defeat from the jaws of victory.
Last week pollster Mark Blumenthal examined the findings of last week's various polls of the public on the debt ceiling fight. First: "Americans prefer a deal featuring a mix of tax hikes and spending cuts to a deal featuring just spending cuts." Second: "most of the surveys find strong sentiment in favor of compromise, especially among Democrats and independents." Finally: "the surveys all show Americans expressing significantly more confidence and trust in President Obama's handling of the issue than of either the Republican or Democratic leadership in Congress." Polling today showed economic pessimism in the US at its highest point in 15 years. When asked whether the policies of President Barack Obama and the Democrats or President George W. Bush and the Republicans were more responsible for the economy's current condition, 29 percent pointed to Obama while 57 percent pointed to the GOP.
The GOP has the upper hand now because the debt ceiling needs to be raised and can't be raised without their votes. But the public doesn't support their position or their leadership. Democrats are desperate to avoid a debt crisis that could stall the sputtering economy. But if the GOP overplays their hand, they will lose, as the public is insisting Congress avoid a preventable economic calamity, and they're ready to blame the GOP if one happens.
But there's plenty of evidence that the Tea Party tail is wagging the Republican dog, and that the GOP intends to stay in its foxhole rather than declare victory and go home. Yesterday the House and Senate Tea Party Caucuses introduced a bill that would direct Obama to prioritize federal payments to the nation's creditors, Social Security recipients and soldiers serving in Afghanistan and Iraq. No mention of Medicare in there, by the way.
So how long could this national nightmare go on for? In his remarks Friday, the President insisted that any debt limit extension be 'through the next election, into 2013.' He has threatened to veto a shorter term increase. Over the last 20 years the nation acted 44 times to increase the debt limit. Ten of those 44 times the extension lasted more than a year.
I've always believed markets are the best predictor of events. Over at InTrade, the online futures market, the betting money is that there is only a 28% chance the government will raise the debt ceiling before the August 2 deadline, rising to a 75% chance by the end of August; and a 64% chance that the US's AAA rating will be downgraded by the end of the year.
My call: I don't see a path to a deal in time. I bet we default on August 2 but enact a short-term increase to the debt ceiling sometime in August. It'll be tied to some novel process to make the requisite cuts on a fast track through Congress later this year. The credit ratings agencies will see this continuing drama and begin downgrading US creditworthiness. A month or more goes by where tough decisions on which Federal bills to pay must be made -- and in one of those months, Medicare payments aren't made. Seniors go wolfpack wild and light up the phones on the Hill. Congress sees the mushroom cloud on Wall Street and gets its act together sometime in the fall, agreeing on just enough cuts to satisfy Wall Street.
But the damage will be done, and Obama will sail into 2012 on a campaign of being the last reasonable guy standing in Washington. And he'll win -- all because the GOP didn't know when to stop fighting this week.
Unintended Consequences
Yes, another post on default. But a short one.
The irony of the discussion regarding payment prioritization in the event of a default on 8/2 is that if we indeed honor our obligations to pay interest on the debt (as is universally acknowledged we would do) first as part of a prioritization scheme.... the effect will be to pay the Chinese and other foreign soverign debt-holders before we pay salaries for the troops (or Medicare, or air traffic controllers). Can't imagine that was the plan.
What is the "advantage" in Medicare Advantage?
All the clamor over cuts in MA reimbursement and audits of MA payments has caused us to lose track of what this program can do that traditional Medicare cannot.
Risk adjustment has made direct, careful clinical assessment of MA members a financial imperative. The Stars program has made measuring quality of care for those members a necessity. MA plans have the unique advantage of being able to: 1) merge claims and clinical data in a single, actionable database and 2) use that data to positively impact the care their members receive.
The recent push to prospectively evaluate MA members' chronic care conditions and the care they receive for those conditions does both—and traditional Medicare cannot do either.
This is a marvelous example of a situation where CMS is using financial incentives to effectively drive care for America's seniors. Maybe there really is a strong case for moving more Medicare beneficiaries into this well-designed model.
Debt Negotiations Collapse. What Does it Mean for Medicare?
Another week, another impasse in debt ceiling negotiations with 9 days to go before default. My favorite wonk, WaPo's Ezra Klein, does a CSI-style autopsy of how we got here and a primer on the issue. We just proved to the world that Washington has become California: ungovernable. Credit agencies aren't grading our ability to raise the debt ceiling, they're grading our ability -- or as now demonstrated, our utter inability -- to deal with our deficit and pressing economic matters in a functional manner.
It's clear that markets are going to have to force the House GOP to swallow a compromise that will satisfy Wall Street. We'll get the first test of that tonight when Asian markets open. And then Monday morning we can pray that Wall Street flirts with mobile network meltdown as GOP donors warn their beneficiaries on the Hill of unmitigated disaster before Standard & Poors and Moody's drop the bomb.
Let's say it takes a few weeks for the credit agencies to weigh in and US bondholders show some admirable restraint. In August the real pain starts as the government literally runs out of money and the President has to start making decisions about which bills to pay. This has never been done before in US history. The Bipartisan Policy Center produced a terrifying report on how it might actually work. Treasury will only be able to pay 55-60% of the federal government's bills in August. So where does Medicare fit in?
It's certainly possible that FFS provider payments or the next month's Medicare Advantage or Part D capitation payments could get held up in one or more months to come. The President may have to decide in the fall that "this month I'm paying interest on the debt, Social Security, military personnel pay, unemployment insurance and Medicaid payments -- those Medicare HMOs and PBMs and all those doctors and hospitals -- not to mention all those Federal employees, the Centers for Disease Control, and air traffic controllers -- will have to wait."
According to the BPC, the federal government needs to roll over $500 billion of debt in August. If we default, no one will want to buy that debt unless we're paying a lot more for it. BPC points out a 10 percent premium would cost us $50 billion.That's only the direct cost -- the indirect costs are far worse. Because most debt instruments are pegged to the Treasury rate, you'll see interest rates spike across the system. Every type of borrowing -- from mortgages and college tuition plans to corporate lines of credit and acquisition financing -- all of it will be hit. It won't just be the federal government that pays. It'll be the economy -- and that goes way beyond Medicare missing a couple months' of accounts payable and then catching up.
If it isn't yet clear: this is really, really bad news.
Options on the Table for Debt Reduction at the 11th Hour
This morning WaPo offered great coverage on the state of play on the debt negotiations and included this terrific visual on the options on the table. Yesterday my colleague Nathan Goldstein wrote about recent polling showing the public's preferences, and it appears class warfare is alive and well in the US. Nathan's right: Democrats are winning this battle -- the public perceives the GOP as more to blame for the debt crisis -- but losing the war.
Rep. Conyers -- My Old Boss -- Faces the Redistricting Music
The man with whom my Washington career began 21 years ago, US Rep. John Conyers from my hometown of Detroit, is in real danger of losing his seat to redistricting, Politico reports this morning. It would be an unfortunate end to a storied and at times controversial career.
Conyers is a prince of a man personally and a liberal fighter borne of the labor and civil rights movements. He may be out of step with the times, and in need of better connection to his recession-nuked district. But there's no question he's been a strong voice of the progressive wing of the party, and a tremendous advocate of issues facing the African-American community. I'm honored to have gotten my Washington indoctrination at John's knee, and I wish him all the best next November.
Amen to that (the US Chamber of Commerce??)!
I'm not usually one to agree with right-wing leaning pro-business groups, but this debt ceiling fight makes strange bedfellows. Republican business allies are growing more restless as the crisis persists, Politico reports.
"Jeopardizing our country's credit rating and fiscal security by refusing to compromise isn't the answer," R. Bruce Josten, U.S. Chamber of Commerce executive vice president for government affairs, said in a posting Thursday.
Amen to that!
Read more: http://www.politico.com/news/stories/0711/59623_Page3.html#ixzz1SqKJdpS9