This is a joint post of Justin Gardner (Donk Quixote) and Mike Wallach (Phanto), wherein they endeavor to tilt at windmills (with many apologies to Miguel de Cervantes):

“And no sooner did Donk Quixote see them that he said to his squire, “Fortune is guiding our affairs better than we ourselves could have wished. Do you see over yonder, friend Phanto, the hulking healthcare insurance giants? I intend to do battle with them and slay them. With their spoils we shall begin to have healthcare for all, for this is a righteous war and the removal of so foul a brood from off the face of the earth is a service God will bless.”

“What giants?” asked Phanto.

“Those you see over there,” replied the blogmaster. “With their long corporate arms. Some of them have arms well nigh two leagues in length.”

“Take care, sir,” cried Phanto. “Those over there are not giants but bureaucrats and political windbags. Those things that seem to be their arms are purses which, when they are filled with contributions, weigh heavily on the laws that control our lives.”

Those familiar with Justin and Mike from reading this blog, know that we are generally at odds, disagreeing more than we agree. Justin is a registered Democrat, and considers himself a liberal with independent leanings. Mike most recently registered as a Republican, but considers himself primarily a fiscal conservative, deficit hawk, and a libertarian leaning independent.

But lo and behold: We found common ground in the Health Care Reform debate.

If we were starting with a blank slate, we would support vastly different and incompatible health care systems. But we are not starting there. We have different objections to the existing system, but agree that the current system is in need of reform. We also agree that the reform most Americans want includes three critical criteria:

1. Universal coverage for all Americans
2. Insurance against financial ruin if struck with an illness.
3. The reform program be fiscally responsible, manageable and have understandable costs.

What currently existing bill hits all three?

Wyden-Bennett.

Yes, we both support (S-391) The Healthy Americans Act and agree it represents a good foundation on which to build rational Health Care reform.

Donk Quixote (JG):

“Wyden-Bennett has my support because it does away with the pre-existing condition clause, reigns in costs and has the potential to cover more Americans than the current legislation being proposed.”

Phanto (mw):

“Wyden-Bennett has my support because it meets the critical criteria for reform, does it better than HR 3200 and does it without increasing the deficit or requiring net new taxes. Wyden-Bennett has my support because it directly and honestly attacks the central problem of employer based health care insurance as the primary delivery vehicle for non-public health care in America. Wyden-Bennett has my support because it is not (yet) saddled with questionable deals for big pharma, big insurance, and payoffs for big union contributors.”

Saying we support Wyden-Bennett does not mean we have no reservations about this bill. Au contraire mon frère…

Donk Quixote:

“Wyden-Bennett feels like it’s the co-op idea only it takes EVERYBODY’s health coverage away who currently has it through their employer and makes them buy it again. Basically, no more tax breaks for health care. I’m in favor of the principle of that, especially if it could cut costs, but I do think that the radical restructuring of the system would be opposed by many more Americans because it’ll be seen as taking something away from them and would require a lot more work on their part. How do you think a plan that starts off with “First, you lose your insurance…” would play with Americans? Because you know that’s how it would be positioned. This could be a non-starter for many. And to that point, do you really think members of the right wing who kept on saying “Obama is going to raise your taxes!” would stay quiet and accept Wyden-Bennett?

Also, getting back to the co-op idea…does anybody really think creating a system that would dump EVERYBODY off of their insurance is more politically palatable than one that simply opens up options and provides subsidies for those w/o health insurance or those working for small businesses? Bipartisan or not, this bill represents a VERY radical reshaping of how we buy and sell health insurance in this country and such a seismic shift doesn’t seem politically feasible to me.

Phanto:

“I describe myself as a “libertarian-leaning independent”. There are elements of Wyden-Bennett that cannot be reconciled or rationalized with anything that resembles libertarian principles. This is where I have my greatest heartburn with this bill. Chief among them, this bill has mandated coverage. The bill does not work financially without mandated coverage. It works very well with it. It could be rationalized that individuals will have a much wider range of choices under Wyden-Bennett. But I won’t call that a libertarian argument, because individuals will not have the option to not participate.

The trade-off for this mandated coverage is that we get a fiscally sound health care system that covers everyone, that puts no one at risk of financial ruin from getting sick, and does it without raising the deficit or requiring net new taxes. I am willing to take that trade-off. This is why I describe myself as libertarian-leaning as opposed to libertarian or Libertarian. Once in a while, I feel compelled to lean another way.”

Are the politics of Wyden-Bennett within the “art of the possible”?
No idea. It feels like it should be. Universal coverage for all, catastrophic illness protection for all, no increase in the deficit and no net new taxes. What’s not to like?

Clearly there is a constituency on the left who will find nothing less than a Single Payer system to be acceptable. They will never accept this bill and are excluded from the pool of potential supporters. Clearly there is a constituency on the right who will find nothing less than a market based system with little or no government participation to be acceptable. They will never accept this bill and are excluded from the pool of potential supporters. But for the rest, for the wide range of liberals, conservatives and independents who would like to find some common ground and believe there is a need to reform our healthcare system – this presentation is for you:

(There is a four slide “Keep It Simple Stupid” version linked here and embedded at “Divided We Stand United We Fall”.)

Does Wyden-Bennett actually have bipartisan support?
Commenter Mike (not mw) kicked off an interesting discussion among the Donklephant commentariat, questioning whether there is sincere bipartisan support for this bill, or whether Republicans were simply using it for political cover. There is one way to find out. Get behind it, and if there is enough popular support, we will see what happens. Our guess, the compelling fiscal calculus – true reform with no net new taxes and no increase in the deficit – permits the inner fiscal conservative of many Republicans (and Blue Dog Dems) to overcome their other concerns.

Outside the halls of Congress, bipartisan support in the new and traditional media is visible, broad and deep:

• “[Wyden-Bennett] is probably a better approach than the consensus Democratic plan, which doesn’t have hard cost controls at all, and so doesn’t really explain how it’ll save enough money to be sustainable over the long haul.”
  - Ezra Klein
• “Now you might think that in these circumstances someone might take a second look at the ideas incorporated in the Wyden-Bennett plan, which already has a good C.B.O. score, bipartisan support and a recipe for fundamental reform”
  - David Brooks
• “The Senate’s smartest health-care wonk, Ron Wyden of Oregon, believes we should move away from job-based insurance. He has introduced a bill that would do this by converting the tax deduction for employer-provided health insurance into a tax credit and requiring individuals to use it to buy insurance. This would achieve universal coverage, apply meaningful cost controls, and—according to the Congressional Budget Office—pay for itself within a few years.”
  - Jacob Weisberg
• “The Wyden-Bennett bill is less expensive, covers just as many people and has actual bipartisan support. So far nine Democrats and five Republicans are sponsors, while no Republicans have backed the president’s plan yet.
  - Salt Lake Tribune
• “Despite being the darling of health policy bloggers and the first bill to be certified by the Congressional Budget Office as covering nearly everyone and fully paying for itself, the measure is being roundly ignored by those actually trying to put together a health overhaul measure on Capitol Hill and in the White House.”
  - NPR
• “A divorce of health care benefits from employment would increase social mobility, provide more individual investment in our health, and the reforms present in the Wyden-Bennett proposal would also ensure that people, regardless of pre-existing conditions or age, could still attain health benefits.”
  - E.D. Kain
• “Under the Wyden-Bennett system, health dollars would be controlled by the individual (a long-time conservative goal) and used within a restructured, heavily regulated, totally universal, insurance marketplace (a longtime liberal goal). Each state would create Health Help Agencies, who would provide easy access to insurance products, along with information, guidance, and advice on how to choose. Insurers would have to meet a minimum standard for comprehensiveness (equivalent to the standard Blue Cross/Blue Shield plan currently offered to members of Congress), and they could not discriminate based on pre-existing conditions, occupation, genetic information, gender or age. Nor could they deny insurance to those who ask for it. In return, every American would have to buy health insurance, and there would be hefty subsidies for those further down the income ladder.”
  - American Prospect
• “The idea has a lot of appeal. It would give most people far greater choice than they have now, and they could take their benefits with them when they change jobs. It also provides generous subsidies for those who cannot afford to purchase health care on their own, and yet the Congressional Budget Office has said the proposal would be “revenue neutral,” which means it wouldn’t add to the deficit. It would include a minimum defined-benefits package, with no exclusions for pre-existing conditions.”
  - TIME

UPDATE: Simon complains in the comments that the right is underrepresented in this sampling. We strive to please and are adding two more quotes:

• “The plans favored by Massachusetts Sen. Ted Kennedy or President Barack Obama rely on a “public option” in which government insurance would supposedly “compete” with private insurers, a move many see as leading to a single-payer system. By contrast, the Wyden-Bennett Healthy Americans Act relies on the private insurance market while imposing a series of regulations to squeeze savings from the private sector… The idea, Mr. Wyden says, is to harness the Democratic desire to get everyone covered to the Republican interest in markets and consumer choice. “Everything I’ve been up to with this coalition is designed to make reconciliation irrelevant,” he explains, referring to a political maneuver whereby Democrats might try to force through health reform on a bare majority of 51 votes rather than the filibuster-proof 60 votes normally required. ‘People can’t be tricked into fixing health care.”
  - WSJ
• “Republicans should embrace universal healthcare by supporting the Wyden-Bennett Healthy Americans Act. There is no another viable way to get rid of the tax-free treatment of employer-provided healthcare benefits that is severely distorting the healthcare market. Once you throw in on top of that greater benefits than those currently offered for families and individuals, consumer choice among competing healthcare plans, portability of health insurance, and (adding in the inevitable under-estimate of total cost) a price tag that costs a trillion dollars less in the next decade than any Democratic plan, you end up with the best bill in either chamber.”
  - Tom Church

It should also be pointed out that, unsurprisingly, there is bi-partisan opposition to this bill. :END UPDATE

In the end, tilting at windmills can be an exercise in futility, but oddly, we still feel pretty good about it.

With that, Donk Quixote and Phanto ride into the sunset.

Cue “Man of La Mancha”

This is my quest, to follow that star …
No matter how hopeless, no matter how far …
To fight for the right, without question or pause …
To be willing to march into Hell, for a Heavenly cause …

And I know if I’ll only be true, to this glorious quest,
That my heart will lie peaceful and calm,
when I’m laid to my rest …
And the world will be better for this:
That one man, scorned and covered with scars,
Still strove, with his last ounce of courage,
To reach … the unreachable star …

Now that the House has left for summer recess, with the Senate leaving in a week, it’s a perfect time to look back and see what may have gone wrong in the Democrats’ plan to pass a major health care reform package before this week had passed. Most people tend to focus on the policy and the intrigue of ‘the fight’, but I think the failure to pass this bill is more a tactical one rather than mistaken policy or lack of potential votes.

Polling on the issue has been fairly  consistent. A majority do want health care reform this year, but while a majority is willing to pay more in taxes for better coverage, they care more about lowering costs than expanding coverage. A large majority support a public option that competes with private insurance, but an even larger majority are actually satisfied with their current coverage. This creates a situation where people are wary that government coverage may lead to rationing and will lose the relatively free choice they currently enjoy in their health care options now.

Much of the debate has circled around how to try and pay for this health care reform, so it doesn’t lead to more debt. I suggested one way to help pay for some of it, but I am not aware of the idea of taxing the consumption of unhealthy things as a source of funding being discussed as an option (although polling shows the public supports the idea). The idea of taxing the wealthy is still popular and will probably be included in the final bill to pay for part of it. A big wrench was tossed in the gears when the CBO announced that the cost savings touted by Democratic leaders really didn’t exist.

Perhaps as much attention has been given to a coalition of conservative and moderate (or centrist if you prefer) democrats who hold the swing votes to push this piece of legislation over the hump into passage. They’ve been leveraging this situation to push for modifications that lowered costs and squeezed more savings from the system itself before adding taxes on the wealthy or taxing more high cost benefits. The latter idea has hit a brick wall, since some labor unions have extremely good benefit packages that they have negotiated for over the years that would fall into the category of taxable benefits in some of the proposals.

The tipping point for this legislation stands here, at the junction between the more liberal Democratic Party leadership, the so called Blue Dog Democrats and the independent and moderate Republican constituents they need to get reelected. If I had to point out one thing that has had the most detrimental effect on the march towards passage, it would be the misplaced attempted strong-arm tactics against these Democratic swing votes.

When confronted with a powerful enemy, do not fight them head on but try to find their weakest spot to initiate their collapse. This is the weak overcoming the strong.

-Sun Tzu, from The Thirty-Six Strategems

An illustrative example of this fell into our lap yesterday, with moderate Democrat Ben Nelson, of Nebraska (where I live), lambasting ads leveled at him by Howard Dean’s Democracy for America (DFA). I was pretty surprised at how poorly executed the ads are, but the same tired attacks are being leveled at Nelson, that are being leveled against other swing votes across the country, are what make the ads so ridiculous.

We begin with the perennial attack you can level at any politician regarding who donates to their campaigns. Pretending that you know that he’s doing what he’s doing because of who his donors are, rather than the distinct possibility that he’s doing it because many of his constituents (including myself) asking him to slow down passage of the bill, look for more cost savings and make sure we don’t rush this, is plain idiocy. Nobody can read his mind, and I’ve yet to see any evidence that the guy is any more corrupt than any other politician. I would be pushing for many of the same modifications if I was in the senate, and I (unfortunately) don’t get millions of dollars given to me each year by anyone.

Then there is the time pressure argument, that we need to pass this legislation now. I can’t disagree with this sentiment more. If anything we should slow down further still, with more and more coming out as to mistaken estimates of cost savings and details of proposals being made more clear. There is no artificial timetable you can set on something like this, it needs to take however long it takes to be reviewed in great detail.

Regardless of what you believe, this sort of push only works when you have a majority of the public with you. It would work if he was in a weak position, but he’s not. This is Sun Tzu 101 stuff here… you don’t mount a full frontal attack on an enemy in a fortified position unless you have vastly superior forces. Like it or not, the Blue Dogs have the high ground right now.

The groups that are pushing for this with these tactics need to look in the mirror to lay blame when they look back and wonder why they weren’t able to get some of the things they wanted when this finally moves to passage. A public plan pegged on Medicare, with that panel slowing the rate of cost growth, would have saved us an amazing amount of money over the years, and I think the Blue Dogs and Moderates would have been convinced to support that with more work on cost savings and less political pressure. The pressure from liberal groups force them to fight back very publicly, so they don’t look like they are towing the liberal line to the independent and moderate republican supporters they need to get reelected.

Sun Tzu would have advised these groups to use the same tactic that PHARMA used once they saw that a health care bill of some kind was going to pass whether they wanted it to or not. The choice was to go in early, get a seat at the table and get a better deal by offering concessions from the start, or fight a losing battle later on and get stuck with a much worse deal. These groups demonizing Blue Dogs and moderates are doing precisely opposite what they should have done. They should have realized the situation early and negotiated a way for them to show their constituents that they fought for cost savings, like the Medicare panel, which instead took months of fighting to accomplish.

Sun Tzu would have told these groups that they should ‘remove the firewood from under the pot’. Instead of fighting the Blue Dogs head on, they could have weakened their resistance by working with them from the start, rather than turning a soft ally into a potential enemy with these tactics.

Past the constant calls for saving money by eliminating wasteful spending, which never seem to materialize into actual legislation, we need to find new forms of income to pay for this bill. They seem to be failing at convincing enough senators to support taxing benefits and the more affluent, so what else is left?

For the most part, we pay for our governmental services through income taxes (both individual and corporate), property taxes and consumption taxes. Property taxes are used for other things and rightfully shouldn’t be on the table here. The two proposals that were trotted out for discussion by the Democratic leadership were both taxes on types of income. What remains are consumption taxes.

In a way, consumption taxes are the most fair. For instance it makes perfect sense to tax gasoline and tires to pay for roads, as those driving on those roads need those things to do so. So doesn’t it make sense to tax those behaviors that create high health care costs? The American people seem to think so.

Kaiser Family Foundation poll

A poll by the Kaiser Family Foundation, from back in April, found that reforming health care is one of the public’s highest priorities, that a majority of Democrats and Independents believe that we need reform now and that a majority support taxing unhealthy behaviors as an acceptable way to pay for some of these reforms. When asked it they would support raising taxes on “items that are thought to be unhealthy, such as soda, alcohol, junk food and cigarettes,” 61% approved (39% strongly favoring, with 22% somewhat favoring the idea). I’m a huge fan of proposals that kill two (or more) birds with one stone, and I think this is a textbook example of such.

To fund a health care program, it makes much more sense to tax behaviors that lead to health problems than it does to tax income in general. By doing so we can, in one fell swoop, put more of the costs of the system in the hands of those who are causing the most problems, lower the consumption of these products AND help pay for universal health care. We already have taxes on cigarettes, alcohol and items deemed luxuries like jewelry, hotel stays and amusement parks. So why not extend similar taxes to the most unhealthy ‘food’ items in the market? (I put food in quotes because one could argue that high fat and sugar content items like pop, potato chips and many fast food items can hardly be described as food)

First on the cutting block is alcohol, with 68% of respondents strongly or somewhat favoring raising taxes on it to help pay for health care reform. Smoking is more demonized in our country, but alcohol related health costs actually outweigh those related to smoking. The Marin Institute lists several alcohol related health care costs, among them $175.9 billion on alcohol related problems, also saying that they bring about “$184.6 billion dollars per year in health care, business and criminal justice costs, and cause more than 100,000 deaths.” This being the case, I see it as nothing but reasonable to levy a higher tax on alcohol, possibly in relation to which forms of it result in the worst outcomes, that is equal to the cost to society it incurs.

Still with a few hundred billion dollars to go, we come to tobacco. I was a bit surprised that a higher cigarette tax was supported by fewer than the increased alcohol tax, but this may be because tobacco products are already taxed at a high rate. Florida alone loses $20 billion dollars when you compare the taxes it collects to the money it pays out, amounting to nearly $7,000 per smoker. A study released by the CDC in 2002 showed that “For each of the approximately 22 billion packs sold in the U.S. in 1999, $3.45 was spent on medical care attributable to smoking, and $3.73 in productivity losses were incurred, for a total cost of $7.18 per pack.” These numbers are sure to have risen since then, and with somewhere in the neighborhood of 30 billion packs of cigarettes sold in the US last year, it seems more than fair to tack on at least another few dollars per pack.

Whether or not this fills the gap entirely, we also should look at taxing the most unhealthy food items. A study at University of Victoria (British Colombia) found that all income groups would benefit, although more so near the top of the economic spectrum, from a tax on junk foods that sent money towards health care programs. I would suggest that this disparity would be less pronounced in the US, where many people near the bottom of the economic spectrum have much more to gain from such an arrangement, given that it will help pay for health insurance that many of them currently do not have.

Put all of these together, and you might piece together enough to get over the hump. At the very least we could make it easier to pass one of the income tax ideas by lowering the amounts they’d have to raise through it.

One might argue that this would cause people to consume less of these products, thereby reducing the income from the levies. My response would be that we should then increase the taxes to keep up with the costs. This would hopefully create a cycle where more people would consume less, making the purchase of such products even more expensive, driving more out and lowering costs to treat those people over the long run. Herein lies the killing two birds with one stone situation.

One might also argue that this is a regressive tax. In effect it will be that way, at least at first. It is the lower end of the spectrum that spends a larger amount of their overall income on food. They also tend to eat less healthy foods. However, nobody forces them to choose to purchase these particular food items. Nobody should force them to quit, but if they want to continue to lead an unhealthy lifestyle, the rest of society should not be forced to subsidize it.

If people want to smoke, drink or eat themselves to death, then they can make a down payment on the hundreds of thousands of dollars the government will pay to take care of many of them during the last months of their lives. If we can save some of them from that fate by enacting the proposals mentioned above, thats even better.

We’ve been hearing about cellulosic ethanol for several years now, generally with the caveat that were at least a few years, and a few scientific breakthroughs, away from it coming to market and helping wean us from foreign oil. Unlike corn, which breaks down into the sugars necessary to be processed into ethanol relatively easily, cellulose is a hardy material that takes time and energy to break down. Its upside is that there happens to be more cellulose present than any other organic molecule on the planet. This is why millions upon millions of dollars has been poured into cellulosic ethanol research, genetically modifying naturally occurring enzymes to break it down faster and looking for ways to bring the price per gallon down closer to the price of gasoline.

Unlike corn, which takes land out of food production, is inefficient as far as how much energy it takes to produce and is a high maintenance crop, finding raw material for a cellulosic plant is easy. Wood chips from sawmills, the kudzu scourge spreading through the hot and humid Southeast, agricultural waste and even up to 80 percent of what ends up in our landfills could be used to make cellulosic ethanol.  Thankfully, the millions of dollars in research and development have begun to bear fruit.

A gas station near Ottawa is the first in the world to begin selling a cellulosic blend, called CE-10, to the public. Iogen, the company behind the demonstration plant that produced the fuel, plans to build its first full scale cellulosic ethanol plant in Saskatchewan. It has reached an agreement with the local government and Royal Dutch Shell to convert an old Mill site to their purposes, with the government even agreeing to purchase any green energy produced at the site. The running demonstration plant only has the capacity to produce about 3 million liters of ethanol each year, using wheat straw agricultural waste, while the new plant will be able to pump out about 75 million liters. It will make use of a more diverse feed stock, including agricultural waste from other crops, grasses native to nearby areas and even wood chips from area mills.

The march of progress continues, with a number of large companies making big investments into these technologies. Last year GM purchased a large share of Coskata, a big player in the emerging cellulosic ethanol industry, who claims to have developed a process that simplefies the complex and costly process of breaking down cellulose and brings the cost of production down to being competitive with gasoline. There are as many as two dozen companies with plans to build plants similar to Iogen’s, but the economic downturn is effecting their ability to finance these projects. Coskata is hoping to get some stimulus money, in the form of loan guarantees, to help finance its plant, with an estimated production of 50-100 million gallons a year.

As President Obama often says, if we intend to be a leader in the green energy industry of tomorrow, we need to move boldly in that direction today. Now is not the time to let companies who wish to lead us in there falter because of financing problems. Some are talking about a new stimulus bill, which most people reasonably see as a terrible idea, that would focus on these kinds of projects and job creation. The first should have done so, and I have little confidence that a new one would make it through congress without being similarly unfocused and pork laden.

We don’t get too many of these chances, where we can kill three birds with one stone. Job creation, independence from foreign oil and environmental progress can all be had with some smart funding priorities. Lets hope the administration recognizes this in time.

Recently, due to a massive budget shortfall, California has had to release billions in IOUs rather than paying real cash to those who’ve done business with the state. Hassett blames the budget crisis on California’s habit of giving the voters whatever they want without ever making the hard choices necessary to pay for new programs. This is not an unreasonable assessment. And Hassett is right to worry that the federal government is on the verge of turning the national system into a monstrous version of California.

Unless, of course, moderate democrats like Evan Bayh, Mary Landrieu, Ben Nelson, Blanche Lincoln, Tom Carper and others end up opposing the public option in health care reform – an option whose costs are likely to give pause to anyone with even a breath of fiscal conservativism inside of them. But, without the public option, will there really be any reform?

That’s the quandary for moderate Democrats. Do they risk not reforming health care and upsetting voters or do they risk getting the nation into the kind of debt which will sabotage our economic future? Or is there a way to fix health care without huge expenditures?

We’ll see. But I do agree with Hassett that the astronomical costs of a public option for health care is going to make it hard to pass the bill – even with 60 Democratic votes in the Senate.

On Thursday, President Obama announced support for a new bill aimed at protecting credit card holders.

As early as next week, House Democrats expect to act on a bill that would make it harder for the industry to slap new fees and rates on cardholders while also requiring clearer disclosure of the costs and risks for cardholders. The bill would codify and expedite rules already proposed by the Federal Reserve Board, rules that would not be implemented until 2010.

Legislation pending in the Senate would go further, barring lenders from imposing interest rate increases on existing balances.

As usual with these things, the specifics will be hashed out in Congress. But the credit card companies are already warning that new restrictions will inhibit their ability to provide credit in these tough times. And Republicans are calling Obama a hypocrite for going after credit card companies when his own policies are unfairly heaping debt onto the American public.

I do not doubt that some credit card companies knowingly participate in ethically questionable business practices. But, in my mind, the central problem isn’t that new fees are created without warning or that finance charges are applied without explanation, but that too many of these companies actively exploit consumers by handing out credit to those without the means of paying off debts and by creating too-good-to-be-true offers which are designed to fool consumers into making bad decisions. Even for savvy credit card holders with good habits, picking through the small print on a new offer can be a frustrating and confusing undertaking. It’s no surprise some people end up with massive bills, choked with unaffordable finance charges.

I’m not sure what the appropriate government solution to these problems would be. Transparency in credit card offers would be a good start. No more advertising 0% finance charges for 18 months while hiding the fact that being late on one payment by one day will cause you to lose the deal and end up with 20-something percent in finance charges.

After that, I’d support some form of initiative that holds credit card companies partially liable for extending credit to consumers who clearly lack the means to pay off debts. That’s a subjective matter, so the issue would probably need to be handled through bankruptcy court. But creating some form of shared liability would help prevent cases of blatant exploitation.

Obviously, credit card companies need the freedom to earn profits and wastrel consumers shouldn’t be protected from their mistakes. But I do believe there is an unhealthy imbalance between credit card companies and their consumers. As always, I fear Congress will overreach and/or focus on the wrong aspects of the problem, but I’m not upset that the matter is being considered.

I’ve already seen many scoff at Obama’s pledge to go line by line through the budget, but aren’t those the same people who are calling for less government spending?

It would be heartening to see the following moves applauded instead of ridiculed, especially since all we hear from the right wing these days is how wasteful Washington is.

Here are some of the savings already found…

—The Department of Veterans Affairs has cancelled or delayed 26 conferences, saving nearly $17.8 million. The department will be using less expensive alternatives, like video conferencing.

—The U.S. Department of Agriculture is working to combine 1,500 employees from seven office locations into a single facility in 2011, saving $62 million over a 15-year lease term.

—The Department of Homeland Security estimates that it can save up to $52 million over five years just by purchasing office supplies in bulk.

Yes, I know that the big money programs are what most of the debate is over, but reform in that arena is going to take a lot of time and a lot of effort.

So let’s celebrate those things we can change immediately as a sign that things are progressing towards a reality where we all want them to go, yes?

He also introduces the Chief Performance Officer and Chief Technology Officer, two brand new positions.

And here are their bios…

Jeffrey D. Zients – Chief Performance Officer
Zients has twenty years of business experience as a CEO, management consultant and entrepreneur with a deep understanding of business strategy, process reengineering and financial management. He served as CEO and Chairman of the Advisory Board Company and Chairman of the Corporate Executive Board. These firms are leading providers of performance benchmarks and best practices across a wide range of industries. Currently, he is the Founder and Managing Partner of Portfolio Logic, an investment firm focused primarily on business and healthcare service companies.

Aneesh Paul Chopra – Chief Technology Officer
Chopra serves as Virginia’s Secretary of Technology. He leads the Commonwealth’s strategy to effectively leverage technology in government reform, to promote Virginia’s innovation agenda, and to foster technology-related economic development. Previously, he worked as Managing Director with the Advisory Board Company, leading the firm’s Financial Leadership Council and the Working Council for Health Plan Executives

More as it develops…

Mona Charen of National Review Online notes that major media outside of Fox News either ignored the tax day tea parties or took an adversarial tone in reporting on them. Charen rightly notes that part of the problem is that Fox News promoted and actively participated in the events, giving other news outlets the excuse that the tea parties were illegitimate. But does that make the frustrations of the attendees illegitimate as well?

Charen points out that maybe tea party participants deserve more credit for their concerns. Writing about a specific attendee who was confronted by a CNN reporter, Charen says:

Perhaps [the stimulus and tax credit don’t] buy his support because he is skeptical that his taxes can remain low when the federal government is embarked on a record-shattering spending spree. He may be offended by the bailout culture, and worried that the obligations of taxpayers cannot remain low when it seems that every irresponsible borrower, failed car company, and free spending state is being rescued by the federal government. Additionally, he may be dubious that the government will spend the money wisely. It has been rumored that government spending has produced waste, fraud, inefficiency, and corruption. But he also may simply believe that engorging the government and enfeebling the private sector — no matter who is writing the checks — is not good for the economic or spiritual health of the country.

Or maybe he believes President Obama is leading us towards a socialist, totalitarian state where capitalism will be discouraged and guns will be forbidden. And that’s the problem with these tea parties. From my observations, it’s hard to separate the reasonable complaints from the outlandish accusations. Too many people associated with these groups have reached for ridiculous rhetoric rather than formulating smart, convincing critiques.

That said, the reasonable pro tea party argument laid out by Charen is a difficult one to disseminate without losing people’s attention. Fiscal responsibility is not something on which great slogans or firebrand speeches are built (although Ross Perot did a pretty good job with the issue back in the day). Unfortunately, overstating the risks of fiscal irresponsibility ruins the credibility of the critic. As of yet, the tea party organization has not found the right balance between firing up the populace and presenting a consistently reasonable argument free from rightwing chicanery.

The good news for the tea parties is that they have time to perfect their message and move away from the controlling influence of Fox News and other powerbrokers who make the organization seem more like a coordinated campaign than a grassroots movement. It would be nice to see the group become an alternative to the sedentary, bitter, social-conservative dominated Republican Party. But the group could also just become a MoveOn.org of the right — more partisan tool than positive force.

Who said this? A fiscal conservative appalled at the unrestrained level of spending coming out of congress? Nope. It was the estimable Senate Majority Leader Harry Reid opposing a decrease in the estate tax rate (WSJ editorial here).

The estate tax debate aside, Reid’s comments left me laughing, then crying, then irritated enough to blog about the hypocrisy on display. Apparently, in Reid’s world, “watching every single tax dollar” only applies to those dollars coming in and not at all to those going out. If Reid had shown even a passing interest in restraining some of the profligacy on display in Washington, then maybe he’d have a right to complain about plans to remove revenue. But he’s been happy to guide all manners of spending through the Senate with hardly a flinch.

I know many economists support spending during a recession. And I’m not against well-target deficit spending during this period of economic distress. But many Democrats seem to think the more we spend, the better off we’ll be. It’s as if there’s no concept of the law of diminishing returns. Does Reid really think that by opposing tax decreases he’s being fiscally responsible? As if there’s enough tax revenue in the world to pay for the level of spending underway.

To make this screed complete, let me add that, as much as the cluelessness of politicians like Reid frustrates me, I’m equally irritated by the large percentage of so-called conservatives who’ve decided to turn their opposition into a circus of inanities, offering trumped-up or fabricated reasons to scream and shout rather than offering reasonable counter-proposals to combat the over-spending. I know it’s fashionable to use spiteful hyperbole to oppose a sitting president, but it’s meritless. In serious times, we could use a few less clowns.

Okay. I’m done.

This is Danielle Ivory, reporting from the American News Project and Alternet.

Back in February, in the House Financial Service Committee, when asked a question about the value of Citigroup’s assets, CEO Vikram Pandit provided a less-than-clear response: “It’s an extraordinarily difficult question.”

Click the video below to WATCH the exchange between Rep. Louis Gutierrez (D-IL) and Vikram Pandit.

Rob Weissman, director of the corporate watchdog group, Essential Action, and author of a new report called Sold Out: How Wall Street and Washington Betrayed America, said that, in addition to what Pandit said, there’s an additional factor that could fog the test results: off-the-book assets.

“If you don’t include the off-balance sheet assets in the stress test, then it’s not a legitimate stress test,” Weissman said. “It’s pretty plain that the off-balance-sheet operations are a central part of the story of why we don’t know what the banks own.” The Treasury Department declined to comment on whether they would take off-book-assets into account when running the stress tests.

Weissman says that recipients of bailout money, like Citigroup, Bank of America and JP Morgan, have been engaging in “fanciful accounting” of what they owe and what they own by relocating of their less-than-healthy assets off the books, in shadow corporations. Rep. Brad Sherman has described the process as, “apples on one balance sheet and oranges on another.”

According to RGE Monitor, off-balance-sheet operations have skyrocketed over the last 15 years. From 1992 to 2007, on-balance-sheet assets grew by 200 percent, while off-balance-sheet assets grew by 1,518 percent. In 2007, it was estimated that there was 15.9 times more money parked in off-balance-sheet operations than in on-the-book operations. Not all off-book assets are toxic. Some financial institutions might park assets off their books if they are planning, for instance, to sell them. However, in rough economic times, off-balance sheet accounting allows banks to veil their losses from investors, regulators, and even insiders.

“This turns out to be a really important benefit [for a bank] if it happens to be insolvent,” Weissman added. “And many believe that if you total Citigroup’s assets and liabilities, it is insolvent.”

As of July, Citigroup appeared to have the most off-book assets — an estimated $1.1 trillion. But they aren’t alone. As of July 2008, JP Morgan Chase & Co. had more than $400 billion off their books. Bank of America had $48.2 billion off the books before it bought Merrill Lynch. “If you start adding up all the potential exposures, it’s a huge number,” Sam Golden, former ombudsman for the U.S. Office of the Comptroller of the Currency, told Bloomberg. “The banks will say that it was disclosed. Investors are saying, ‘Yeah, but it was cryptic.’”

Disclosure rules for off-balance sheet operations are notably less strict than those for assets on the books. Neri Bukspan, chief accountant for Standard & Poor’s told Bloomberg, “A lot of information tends to disappear.”

The use of the off-balance-sheet assets was a core part of the Enron scandal, where they were able to wrap debt inside of debt, using obscure corporations, so no one could track what they owed and what they owned. After the Sarbanes-Oxley Act of 2002 was set in place, there were efforts to address the problems with off-book assets. But after heavy lobbying by two main trade groups, the Securities Industry and Financial Markets Association and the American Securitization Forum, banks were given special exemptions.

In September of 2008 as the financial crisis was coming into full view, the Senate Baking, Housing, and Urban Affairs Committee held a hearing, discussing off-balance sheet operations. Senator Jack Reed recalled Enron: “This phenomenon of moving assets off the balance sheets is eerily familiar. We recall back in the days of Enron that its schemes to manufacture false profits included special purpose entities that conducted transactions off-balance sheet. The goal was to avoid financial reporting. While no one is necessarily suggesting scandals of the Enron kind, we cannot fail to admit the irony. We are dealing with a similar problem yet again, only six years later.”

George P. Miller, Executive Director of the American Securitization Forum, said that moving assets off-book back on to the books would cause dangerous swelling of balance sheets. He added, “There are many other steps that the industry can and should undertake to promote broader and better transparency about risk exposures in these vehicles, whether they are on or off-balance sheet.”

But Donald Young, former member of the Financial Accounting Standards Board countered, “We just had an investment bank [Lehman Brothers] go bankrupt with a fair value balance sheet that showed it had plenty of assets and liabilities. And it almost seems like financial reporting is out of control and not trusted and not believed in. And I think what we do here has got to establish transparency. If the transparency is such that we’re going to bring out some bad news that wasn’t there before, that’s a risk. But I think the benefits of reestablishing confidence in the markets will overwhelm that.”

The Financial Accounting Standards Board (FASB) are revising the rules so some off-book assets will have to be reported on the books. However, the changes won’t be effective until January 2010 at the earliest. In March at a House Financial Services Subcommittee hearing, Rep. Sherman complained about this lag. He told the chairman of the FASB, Bob Herz, “If you guys can’t act quickly and logically, perhaps the regulatory accountants need to act and depart from what is a somewhat illogical and certainly slow process that you’ve got.”

In the meantime, in a recent letter to his employees, Pandit has said Citigroup is having its best quarter since 2007 and the bank had conducted its own internal stress tests with positive results. But Weissman says something doesn’t add up. “Either they’ve done a lot of due diligence in a short amount of time that they hadn’t done before, or the stories are incompatible.”

Crossposted at Alternet.

The budget numbers are just one more blow to the credibility he worked hard to establish during the election. Back then, people like me handed him kudoes for using numbers that were really much less mendacious than the general run of candidate program promises. Now, he’s building a budget on the promise that this recession will be milder than average, with growth merely dipping to 1.2% this year and returning to trend in 2010. Isn’t there anyone at BLS who could have filled him in on the unemployment figures, or at Treasury who could have explained what a disproportionate impact finance salaries have on tax revenue? These numbers . . . well, I can’t really fully describe them on a family blog. But he has now raced passed Bush in the Delusional Budget Math olympics.

Remember, McArdle is a fiscal conservative, but she’s no Limbaugh-loving right winger. In fact, she makes the excellent point that one of the problems in Washington is that the non-leftist position is sadly represented by a group of Republicans obsessed with the wrong issues.

It’s therefore frankly more than a little disappointing that the free marketers are represented by Grover Norquist, who trots out conservative boilerplate to the effect that we’re all going to hell because of EFCA and marginal tax rate increases. Republicans will not fight delusional accounting by demonstrating that they’re still tangled up in the Laffer Curve. Growth can still hit 1.2%–or even 3.2%–if EFCA passes. But it manifestly cannot in the middle of an ugly recession.

I think many of us centrist types, like McArdle, ended up supporting Obama because we were willing to believe he’d approach the economy from a non-partisan standpoint. But between the leftist agenda items shoved into the stimulus bill, the earmark fest that was the recent spending bill and the budget numbers that are the same kind of wool-over-the-eyes “projections” we have come to expect from the White House, no matter the resident, Obama and his team are leaving the perception that, while they might be a great group of minds, they either lack the political will or the political clout to direct the kind of hard-reality, hard-choice economic policies we really need.

This is not to say Obama’s plans will fail. McCardle’s concerns, like my concerns, might be misplaced. Maybe a leftward agenda, rather than a non-partisan agenda really is the best course. Or maybe it’s the complete lack of a coherent fiscally conservative solution that’s making it too easy for the administration to stick to leftward ideas and/or politics as usual.

As I’ve said before, it’s far too soon to assume Obama’s first 50+ days will define his entire presidency. He has inherited a huge mess and is still learning how to manage congress and present his ideas to the public. Still, those of us concerned with the direction so far can’t keep quiet. Obama needs some nudging from those to his right who share his hopes if not, as of yet, his economic ideas.

It’s not just out-of-touch Republicans and us lonely Centrists who are disturbed by the profligate spending of Congress. Joining the call for fiscal sanity is none other than Democratic Senator (and one-time VP hopeful) Evan Bayh. In a Wall Street Journal editorial, he writes:

This week, the United States Senate will vote on a spending package to fund the federal government for the remainder of this fiscal year. The Omnibus Appropriations Act of 2009 is a sprawling, $410 billion compilation of nine spending measures that lacks the slightest hint of austerity from the federal government or the recipients of its largess.

The Senate should reject this bill. If we do not, President Barack Obama should veto it.

The omnibus increases discretionary spending by 8% over last fiscal year’s levels, dwarfing the rate of inflation across a broad swath of issues including agriculture, financial services, foreign relations, energy and water programs, and legislative branch operations. Such increases might be appropriate for a nation flush with cash or unconcerned with fiscal prudence, but America is neither.

Here’s the thing: you don’t have to be a do-nothing Republican in order to be disturbed by the bloated spending bill making its way through Congress. Just like you didn’t have to be anti-progress in order to have taken issue with the over-indulgent stimulus bill. There is middle ground between not acting and overreacting.

Democrats were not put in power to continue the wasteful ways of Republicans. Bayh understands this. Why doesn’t the rest of his party? And why has President Obama decided not to take a stand against the excesses of this spending bill?

Bayh concludes with:

But the bloated omnibus requires sacrifice from no one, least of all the government. It only exacerbates the problem and hastens the day of reckoning. Voters rightly demanded change in November’s election, but this approach to spending represents business as usual in Washington, not the voters’ mandate.

Now is the time to win back the confidence and trust of the American people. Congress should vote “no” on this omnibus and show working families across the country that we are as committed to living within our means as they are.

Yep. That should be self-apparent. Clearly, it’s not.