Debt Crisis Hangover: ‘Scary Erosion in Confidence’
Politico had a terrific story last week on the lingering hangover from the debt crisis. New data from The Conference Board suggest that the bitter debt ceiling debate in DC not only drove the US to the edge of default and cost the nation its triple-A credit rating, but crushed American confidence like few recent events and may tip the economy back into recession.
The Conference Board this week reported the biggest monthly decline in consumer confidence since the height of the financial crisis in 2008, its consumer confidence index falling from a reading of 59.2 to 44.5, the lowest in two years. Nearly every poll shows Americans lacking any confidence in the ability of political leaders to agree on significant steps to boost the economy or deal with other significant legislative matters.
GOP pollster Bill McInturff suggested that we are now “entering a new phase of the American political dialogue that has been irrevocably shifted in a way that will prove difficult to predict” and is likely to lead to “unstable and unpredictable political outcomes.”
We’re indeed sailing into some very scary uncharted partisan waters, to McInturff’s point. We got the worst monthly jobs report in years this week, possibly indicating a “double-dip” recession. This will further weaken the President and his standing. Obama and Speaker Boehner can’t even agree on the timing of a Presidential address to Congress on another stimulus package, much less what should be in it. Stimulus is usually comprised of some combination of infrastructure spending and tax cuts. Republicans in this Congress will never agree to the former, and Democrats will never agree to the latter. So I’m not expecting much progress on that front, and the economy will continue to stagger along.
Next up in intractable issues: the Congressional “supercommittee” that’s supposed to figure our way out of the debt crisis. 7 of its 12 members must agree on recommendations to Congress, which must vote up or down. A simple majority in the House and Senate can send those recommendations to the President. But 7 out of 12 seems a stretch, as does even getting a simple majority in either this House or Senate. That means “sequestration”: across the board cuts, including 2% to Medicare provider payments, likely on top of the 29% cut physicians will take in Medicare payments at year end due to the continued inability of Congress to fix the Sustainable Growth Rate methodology. And that’s likely a better scenario than any specific cuts the Supercommittee may come up with. That all adds up to a horrible, no good, very bad day for our favorite program.
Listen to me, it sounds like my confidence is eroded, and I just got back from vacation. It is. I get it that Americans voted for divided government in the 2010 midterms, but I don’t think they voted for dysfunctional government. Like McInturff said, we’re sailing into some very big “unpredictable political outcomes.” And the stakes for Medicare couldn’t be higher.
I’ll be speaking on this and related topics at AHIP’s Medicare conference here in DC on September 13, and again September 26-27 at the Opal Events 3rd Annual Medicare Advantage Strategic Business Symposium. For more information, click here. Hope to see you there.