Plan To Slash U.S. Health Costs May Be Tough Pill To Swallow

By DAVID HOGBERG
INVESTOR'S BUSINESS DAILY | Posted Thursday, July 02, 2009 4:30 PM PT

When someone takes out a scalpel, it's usually going to hurt — a lot.

Yet Peter Orszag, President Obama's budget director, claims the U.S. could slash $700 billion in annual medical costs without affecting quality.

That would make it much easier to pay for sweeping health care reform, which is struggling on Capitol Hill over cost concerns.

But divining and adopting best practices is trickier than Orszag may realize, some researchers say.

The head of the Office of Management and Budget draws heavily on the Dartmouth Atlas of Health Care. The atlas has found that Medicare spending varies greatly across the U.S., yet higher spending regions have no better and, at times, worse outcomes than regions that spend less. For example, Miami spends 30% more than Minnesota, but patients aren't any healthier.

Less Is More?

Areas with coordinated care and more primary-care physicians tend to use fewer resources than those with more disjointed care and more specialists.

"We would be on a path toward a much more efficient system," Orszag said recently of achieving health care reform. "When you go to see your doctor, that doctor will have much more information about what specifically is likely to work for your diagnosis, and will have better incentive to be providing high-quality care to you rather than just more care."

But knowing the right treatment is often quite difficult.

"The difference is in the utilization of services that are in the 'gray area' of medicine," said Amitabh Chandra, a public policy professor at Harvard who has worked closely with the Dartmouth Atlas. "These are services that don't lend themselves to clinical trials. Reasonable physicians will disagree over what the right rate of treatment is."

Chandra cites CT scans and MRIs. "They are undoubtedly valuable, but there is an unlimited amount of patients you can perform these procedures on."

Greg Scandlen, head of the conservative Consumers for Health Care Choices at the Heartland Institute, said: "It is often impossible to know ahead of time what is going to work and what won't. The notion that a physician should only deliver services that he knows ahead of time will work ignores real-life conditions."

Chandra largely agrees with that but thinks Orszag understands the nuance and difficulty of eliminating medical waste.

Scandlen is less charitable: "It's offensive that a bean counter like Orszag should Monday-morning-quarterback physician decisions."

Dr. Elliot Fisher, principal investigator at the Dartmouth Atlas, has urged the Obama administration to use the buying power of Medicare and Medicaid to inform patients and incentivize providers to adopt the practices of good organized-care centers like the Mayo Clinic.

"If we're thoughtful about creating incentives for organized systems to form . . . we could get the kind of performance that we want," Fisher recently told NPR.

Scandlen responds: "To say we're going to create some kind of management system that will turn everything into the Mayo Clinic is absurd. Bureaucrats miss the human element of all of this stuff. Mediocre people can take any kind of management system and turn it into something not very good."

The Real World

Even assuming that experts can identify best practices, can they impose their will? Doctors, hospitals, drugmakers and patients will all demand that their treatments, their choices, are approved.

It will be hard to resist the media and political pressure when, say, a patient dies because Medicare did not permit a particular drug or test.

Dr. Richard Cooper of the Wharton School says it is unwise to base policy on the Dartmouth Atlas, as Medicare is a poor measure of total health care spending.

"Higher health care spending results in better health outcomes," Cooper said. "Dartmouth is measuring regional variation in sociodemographic characteristics, not health care spending."

He argues that areas with higher Medicare spending tend to be areas that are poorer, have lower total health care outlays and have more medical problems.

Chandra says Cooper's measures aren't reliable and that his own research suggests that areas with higher Medicare spending also have higher total health spending.

Al Franken — Democrat From Acorn

By INVESTOR'S BUSINESS DAILY | Posted Thursday, July 02, 2009 4:20 PM PT

Politics: The former Stuart Smalley becomes the 60th Democrat in the U.S. Senate, thanks to the community organizers at Acorn and the little-known Secretary of State Project. Is the system being rigged?

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Incumbent Republican Norm Coleman conceded defeat in the mother of all recounts in Minnesota's U.S. Senate race after the state's Supreme Court unanimously rejected his lawsuit.

Arguably, his seat may have been lost the day in 2006 when Democrat Mark Ritchie defeated two-term incumbent Republican Mary Kiffmeyer to become Minnesota secretary of state.

Michael Ritchie's election as secretary of state in Minnesota may have sealed Norm Coleman's fate.

It was Ritchie who orchestrated the recount that gave Democratic challenger Franken a lead some six weeks after Coleman appeared to win by 725 votes on Election Day. Ritchie has extensive ties to the Acorn organization now under federal investigation for vote fraud and was endorsed by the community activist group in 2006.

In 2006, the Minnesota Acorn Political Committee endorsed Ritchie and contributed to his campaign. Other contributors to his campaign included George Soros, along with the likes of Deborah Rappaport, a Saul Alinsky disciple who co-founded the Midwest Academy, a radical Acorn clone.

"Mark Ritchie as we all know is a hard-core liberal who was endorsed by Acorn and funded by Acorn," Matthew Vadum, senior editor of CapitolResearch.org, a nonprofit think tank, recently told NewsMax. "It is not surprising that he has a permissive attitude toward the recount process."

Also contributing to Ritchie was James Rucker, the former director of grass-roots mobilization at MoveOn.org and reportedly a co-founder of the Secretary of State Project that played a critical role in this and other elections and will do so in the future.

Ritchie gave partial credit for his 2006 election to the liberal 527 political organization, the stated goal of which is to replace conservative secretaries of state with liberal Democrats.

"I want to thank the Secretary of State Project and its thousands of grass-roots donors for helping to push my campaign over the top," Ritchie said in a posting on the project's Web site.

After recounts in Florida in 2000 and Ohio in 2004, both of which were key to Bush victories, the left realized that who is secretary of state is as important, if not more so, as which candidate got the most votes. Control the election process and you control the future.

The Secretary of State Project Web site holds up Katherine Harris of Florida and Ken Blackwell of Ohio as the type of people they want to defeat. Naturally, Ritchie is the sort they want to elect. It was ruling after ruling by the Ritchie-led State Canvassing Board that went against Coleman that put Franken in the Senate.

In 2006, along with Minnesota's Ritchie, the SOS project endorsed and helped elect Jennifer Brunner in Ohio. Democrats supported by the group also won that year in the key swing states of New Mexico, Nevada and Iowa.

In 2008, the group helped fund Democratic victories in Montana, West Virginia, Oregon and Missouri, spending some $280,000, according to the watchdog group Center for Public Integrity.

Brunner will be remembered for refusing in October 2008 to hand over to county election boards some 200,000 names on voter registration forms in which the driver's license or Social Security number on the form did not match the name.

Shortly before the 2008 election, Vadum observed in the American Spectator: "Brunner, a Democrat, has declined to enforce the provisions of the Help America Vote Act that requires her to use a database to allow the verification of 600,000-plus registrations from new Ohio voters." Vadum added: "It's a recipe for disaster, but that's exactly the way her allies at Acorn like it."

If this trend continues, our elections may soon be no more honest than the one recently held in Iran. If the Secretary of State Project and Acorn are allowed to so manipulate the process, there will be more "victories" like Al Franken's to come.

Stop The Madness That's Killing Jobs

By INVESTOR'S BUSINESS DAILY | Posted Thursday, July 02, 2009 4:20 PM PT

Stimulus: More grim news — 467,000 jobs lost in June, with unemployment hitting a 26-year high of 9.5%. Some people are rightly starting to wonder: Where's that stimulus we were promised?

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The stock market's reaction on Thursday said it all — with the major indexes plunging 2.4% to 2.9% on the news of a continued job hemorrhage. Despite some economic green shoots here and there, no one's sure when jobs will start growing again.

At this point in a normal downturn lasting 11 months, the economy should be booming — with big jumps in GDP and 300,000 new jobs each month coming mostly from the private sector.

But 18 months into this downturn, we're still losing jobs — with 2.7 million gone in the private sector just since January, when the Democrats took full control of the government.

Shrinking GDP has crushed investment. First quarter gross private domestic investment — a proxy for business investment — plunged 20%, or nearly $450 billion, annually. The outlook is grim.

Worse, the June jobs data mark a milestone of sorts: Our unemployment rate equals that of the no-growth Eurozone nations.

Why is this job decline happening? The private sector — the real engine of economic and job growth — won't hire because it's scared of what it sees coming out of Washington.

On the horizon, as far as the eye can see, are higher taxes, uncontrolled spending and layers upon layers of new regulations.

Who would hire new workers faced with that?

Also, the federal government is meddling in the private sector as never before — in essence, nationalizing two of the three major carmakers with $200 billion in subsidies and capital infusions, turning our banking system into a fourth branch of government through the $700 billion TARP program, spending $200 billion to take over Fannie Mae and Freddie Mac and put them back in the business of lending to people who can't pay their loans — which is how we got into trouble in the first place.

And that's only what's been done in the last half year or so. What really scares private businesses is what's in the pipeline.

• Health insurance reform: Estimates for reforming our medical care range from $1 trillion to $3.6 trillion, with much of the bill footed by businesses. All to take care of 46 million uninsured.

But 10 million of those aren't citizens. And according to former CBO chief June O'Neill, 43% of the total could afford to buy coverage but don't. So the problem is much smaller than people think.

As for current plans to take over our health care system, they'll barely help. According to Congress' own think tank, spending $1 trillion will only remove 16 million from the 46 million uninsured.

• Cap and trade: A major reshaping of our nation's energy policy will include massive new taxes, mostly on businesses, and cause our economy to crater. Most depressingly, despite taxing businesses and consumers to the hilt, the Waxman-Markey climate stabilization act will not remove one ounce of carbon from our atmosphere over the next decade.

It's nothing but a huge scam that will bankrupt any business that relies heavily on energy, boosting fuel prices by 22 cents a gallon and socking the average family with an $1,800 a year tax hike.

As Robert Zubrin of the Foundation for Defense of Democracies wrote last week, "(Waxman-Markey) proposes a massive and highly regressive tax on the U.S. economy, and could potentially cause not only extensive business failures, unemployment and privation within our own borders, but starvation among poorer populations elsewhere."

• Stimulus II: As if the first $787 billion tranche of "stimulus" wasn't enough, some in the Democratic Party are suggesting a second stimulus bill. Are they joking? The first stimulus has failed spectacularly. Personal incomes rose briefly after "stimulus" checks were handed out, but have since resumed their decline.

Meanwhile, hundreds of billions of dollars went to strapped state governments. But according to the National Governors' Association, states are still expected to show $183 billion in red ink in the next two years. Stimulus clearly hasn't worked. Why try another?

Taken together, all these new programs would mean sky-high new taxes, more regulations and the biggest expansion of government since FDR's New Deal.

That's not a good thing. Unemployment during the New Deal averaged 17%, and government meddling turned what should have been a garden-variety downturn into a 27% collapse in GDP — the Great Depression.

Washington seems desperate to duplicate that failure.

For some time we've heard we need to have "hope" for "change" to come. But hope is fast disappearing, and polls show that Americans reject the change the government has in mind for medical insurance and energy. The grand experiment of government control is failing, and people want their economy back.

As for more jobs, it may be a while. Shortly before the new administration opened for business in January, Americans were told by the incoming administration's advisers that without the stimulus, unemployment — then at 7.2% — would peak at 9% in 2010. If the stimulus was passed, they added, the peak would be 8%.

Well, it passed — and today unemployment is 9.5% and likely to go higher. A question arises: Given the obvious failure of the stimulus to stimulate anything, why not dismantle the whole thing?

This isn't so crazy. The Congressional Budget Office estimates that the current stimulus plans will blow a $9.3 trillion hole in the nation's budget by 2019. That will boost taxes on us and our children for decades to come.

Won't it also boost the economy? Guess again. "The projection for nominal GDP has decreased (since the end of 2008) by more than $7 trillion, or 3.9%, over (10 years)," says the CBO.

In other words, all this spending and taxing will crater the economy — and the estimate doesn't include the spending planned for medical insurance reform and cap and trade.

Nor does it include the dizzying array of new taxes the White House and Congress are considering. They range from a European-style value-added tax, which helped turn the EU into a stagnant mess with virtually no job creation, to new taxes on health care, energy, incomes and a slew of other things.

In the coming weeks, we will tell you how we got into this mess — hint: Government played a key role — and how we can get out of it. It will take huge cuts in spending, a willingness to let bad businesses go bust, and broad tax cuts to get our economy moving again.

This, by the way, worked in the 1920s, it worked in the 1960s, it worked in the 1980s. It even worked after 9/11, and it'll work again.

America needs jobs, but its businesses can't create them as long as they remain under the thumb of a high-taxing, runaway-spending, overregulating, entrepreneur-smothering Big Government.

The End Of The Affair

• MAY 30, 2009

By P.J. O’ROURKE

(See Corrections & Amplifications item below.)

The phrase “bankrupt General Motors,” which we expect to hear uttered on Monday, leaves Americans my age in economic shock. The words are as melodramatic as “Mom’s nude photos.” And, indeed, if we want to understand what doomed the American automobile, we should give up on economics and turn to melodrama.

Politicians, journalists, financial analysts and other purveyors of banality have been looking at cars as if a convertible were a business. Fire the MBAs and hire a poet. The fate of Detroit isn’t a matter of financial crisis, foreign competition, corporate greed, union intransigence, energy costs or measuring the shoe size of the footprints in the carbon. It’s a tragic romance—unleashed passions, titanic clashes, lost love and wild horses.

Foremost are the horses. Cars can’t be comprehended without them. A hundred and some years ago Rudyard Kipling wrote “The Ballad of the King’s Jest,” in which an Afghan tribesman avers: Four things greater than all things are,—Women and Horses and Power and War.

and much more>>>

The Tough Road Ahead for GM and Chrysler

May 27, 2009, 5:00PM EST

Bankruptcy would produce leaner automakers, but it would still leave lots of debt and do nothing to fix their images—or the disastrous marketplace

By David Welch and David Kiley

When President Barack Obama explained in March that his Administration was bailing out General Motors (GM) and Chrysler, he promised that the two battered automakers would "stand on their own, not as wards of the state." He and his team are betting that Chrysler and, likely, GM can use an accelerated bankruptcy process to remake themselves into smaller and nimbler companies that can compete in the global marketplace (and eventually pay back $28 billion-plus in federal loans). The Treasury Dept.'s restructuring plan is creative and comprehensive. Assuming the two car companies do what the government wants them to, they will be much stronger than they were.

Still, getting this far has required the government to lend them billions and possibly take stakes in the companies. The question is when, if ever, they will be able to kick away the state props. After all, the reborn GM and Chrysler will reemerge in a marketplace that is more hostile than anything they have faced before. It's simple arithmetic: Too many auto companies chasing too few buyers—partly, it should be said, because governments from Beijing to Berlin have been propping up their domestic industries. What's more, foreign automakers in many cases are doubling down in the U.S., where GM and Chrysler have typically made most of their money. "It's going to be a horrible marketplace because you won't have a quick rebound," says IHS Global Insight (IHS) analyst John Wolkonowicz. "Then you have the foreign companies trying to figure out how to get their pound of flesh."

We all know what normally happens to an overcrowded industry when the economy crumbles: Weaklings die or get gobbled up by stronger competitors. That's what's happening with retail. Amid a consumer pullback of historic scale, the U.S. is pockmarked with the boarded-up storefronts of liquidated companies. The auto business has endured its worst recession in memory, so one might expect the mother of all shakeouts to be under way there, too. Yet the industry has shed not one sizable player. "Auto companies rarely die," says GM CEO Frederick A. "Fritz" Henderson. "You'll still have the same number of companies. We're trying to keep only brands we can support."

The Fear of Death>>>

Who Railroaded Amtrak Inspector General?

By MICHELLE MALKIN | Posted Wednesday, July 01, 2009 4:20 PM PT

Watchdogs are an endangered species in the Age of Obama. The latest government ombudsman to get the muzzle: Amtrak Inspector General Fred Weiderhold.

The longtime veteran employee was abruptly "retired" this month — just as the government-subsidized rail service faces mounting complaints about its meddling in financial audits and probes.

Question the timing? Hell, yes.

On June 18, Weiderhold met with Amtrak officials to discuss the results of an independent report by the Washington, D.C., law firm Willkie, Farr & Gallagher. The 94-page report has been made publicly available through the office of whistle-blower advocate Charles Grassley, the Republican senator from Iowa.

It concluded that the "independence and effectiveness" of the Amtrak inspector general's office "are being substantially impaired" by the agency's Law Department.

Amtrak bosses have effectively:

• Gagged their budgetary watchdogs from communicating with Congress without pre-approval.

• Required that all Amtrak documents be pre-screened (and in some cases redacted) before being turned over to the inspector general's office.

• Taken control of the inspector general's $5 million portion of federal stimulus spending.

Also, the report revealed, Amtrak regularly retained outside law firms shielded from I.G. reach.

In another case, Amtrak's Law Department appeared to meddle in an inspector general investigation of an outside financial adviser suspected of inflating fees. The consultant ran to the Law Department when the I.G. demanded documents, and the Law Department repudiated the I.G.'s instructions on complying with a subpoena.

These interventions (ongoing since 2007) have "systematically violated the letter and spirit of the Inspector General Act," according to Grassley.

IG staffers now fear retaliation — and with good reason. Their boss, Weiderhold, lost his job on the very day Amtrak received the Willkie, Farr & Gallagher report.

It may be hot and humid in the rest of the Beltway, but every inspector general's office is feeling an Arctic chill.

The transparent sacking comes just as Amtrak is awash in more than $1.3 billion in new federal stimulus money. It comes on the heels of the unceremonious dismissal of Gerald Walpin, the AmeriCorps inspector general who dared to probe financial shenanigans by Obama cronies.

It also follows the stifling of veteran Environmental Protection Agency employee Alan Carlin, the researcher who dared to question the Obama administration's conventional wisdom on global warming.

Question the timing? You betcha.

So who's behind the railroading of the Amtrak inspector general? As with the story of the AmeriCorps firing, which has first lady Michelle Obama's fingerprints on it, the Amtrak case smells like cronyism.

Investigative journalist Robert Stacy McCain, who has watchdogged the watchdog stories, noted last week that Amtrak's vice president and general counsel is Eleanor Acheson.

Acheson, an old friend of Hillary Clinton, also has close ties to Vice President Joe "Mr. Amtrak" Biden. She hired Biden's nominations counsel, Jonathan Meyer, to serve as her deputy general counsel.

The two had also worked together in the Clinton Justice Department. Meyer called his hiring at Amtrak by Acheson a "happy coincidence," according to Legal Times. (In another "happy coincidence," Biden's lobbyist son, Hunter, sits on Amtrak's board.)

Acheson oversees the very Law Department accused of interfering repeatedly with the taxpayer advocates in the inspector general's office.

Grassley has requested that Amtrak supply information on Weiderhold's unexpected retirement, as well as internal and personal materials related to his departure and the report on Amtrak managers' meddling.

On the House side, Reps. Edolphus Towns, D-N.Y., and Darrell Issa, R-Calif., announced a probe Monday into Amtrak's actions, zeroing in on the choice of Lorraine Green to replace the "retired" Weiderhold.

Who is Lorraine Green? She's a former Amtrak human resources executive and faithful Democrat donor with no experience in the inspector general business. Her expertise? Managing "diversity initiatives" for the agency. Watchdog out. Lapdog in.

Can someone open a window? The fetid odor of Hope and Change is really starting to stink up the joint.

Copyright 2008 Creators Syndicate, Inc

Demands Are Only Growing Bigger For A Shrinking Base Of Taxpayers

By ERNEST S. CHRISTIAN AND GARY A. ROBBINS | Posted Wednesday, July 01, 2009 4:20 PM PT

The old-fashioned term "taxpayers' money" has recently resurfaced in Washington — but only to describe some of the TARP funds used in the government takeover of auto companies and financial institutions.

"Taxpayers' money" is almost never used in Washington to describe any of the other dollars in the $3.5 trillion federal budget. These dollars, divided into familiar categories of entitlement and discretionary spending, are thought of by most Washingtonians as the "government's money."

Washington is awash in money — dollars taken by the IRS from the people who earned them and dollars borrowed all around the world.

In Washington, success is measured by how many new federal spending programs get enacted. Washington's champion spenders — from the president on down — appear to suffer from a delusional psychosis about money. They believe that federal spending is a healing balm. It has magical powers. If applied often enough in large enough quantities, it will cure everything.

Applied in the right places, federal money also enhances their political powers and control. That is the main reason for thousands of spending programs added to the federal budget since 1965. President Obama is now expanding federal spending by a whopping 30%.

Privileged Washingtonians forget that real people have had to work, save and invest, often at great sacrifice, to produce the money that government spends so extravagantly. In pursuit of their careers, federal spenders pretend not to know that the taxpayers of America would have been greatly benefited had they not been forced to send their money to Washington.

Hardworking families could have paid a lot of bills and sent a lot of kids to college with the $300,000 of "taxpayer money" the government spends every week or so to fly Speaker Nancy Pelosi home to San Francisco for a round of political fundraisers and parties.

American taxpayers could do a lot of good for themselves and others with the $400 billion in taxpayer money that Washington spends each year on the 55% of government programs that admittedly fail to accomplish their purposes.

When retained and put to work by the skilled, industrious people who produce it, taxpayers' money tends to multiply — usually by a factor of 3 to 1, according to a study by distinguished economist Christina Romer (now President Obama's chief economic adviser).

When government commandeers the taxpayers' money and spends it, the money tends to shrink. Nearly all modern economic analyses confirm that the "multiplier effect" of government spending is less than 1. Predictably, the highly touted "stimulus" package has not had its hoped-for effect.

Years ago, Milton Friedman told his students that a dollar of government spending produces less than a dollar of economic growth. He was right. The government doesn't create wealth. It just takes money from people who produce it and moves it around.

More than 85% of the personal income tax is paid by a small, overtaxed band of Americans who in number are less than 25% of eligible voters. The total number of income-tax payers is less than 55% of eligible voters. These people also bear the economic burden of nearly all the income tax collected from corporations.

Taxpayers pay government's bills — but they have little control over how much of their money government spends or for what.

Obama plans to spend another $1.5 trillion of their tax money in nationalizing health care, even though the taxpayers who will pay 80% to 90% of that are overwhelmingly opposed to socialized medicine. If the president succeeds in forcing it upon them, they will get less health care (at a higher price) and suffer a backbreaking tax increase to boot.

The plight of taxpayers and their money is likely to get even worse after the next election.

Extrapolating from data compiled by the Congressional Joint Committee on Taxation, and taking into account the president's plan for "credits" that will remove more of his supporters from the income-tax rolls, we estimate that a majority of people who vote in the next election will be nontaxpayers, fully able to tax an oppressed minority with impunity, without themselves paying any income tax at all.

To them, government spending will seem free — and their demand for more of it will be infinite.

Christian is executive director and Robbins the chief economist at the Center For Strategic Tax Reform in Washington, D.C.