Monday, February 22, 2010

President Obama's Health Care Reform Proposal

The proposal can be found here.

Politically it is a middle ground between House and Senate passed bills. Some observations are:

- It is a good attempt to keep things simple - non legal language and 11 pages only.
- Excise Tax proposal of Senate is diluted way too much making it almost insignificant. It seems White House wants to call victory for introducing this tax rather than using it.
- There is no mention of Medicare Cost Control Commission independent of Congress, so not clear whether this will be there or not. House did not have it. Not that Republicans ever cared for this one considering their newly found love for Medicare. As is Senate version of such a commission was weak and now even that is gone as well. This is not a good omen from 'cost containment' point of view.
- In general it seems that White House is more concerned about getting House members on board than Senate. So most concessions are in favor of House and in that regard this proposal is not that good from cost control.

We will see how things develop on Thursday; though they do not look good so far.

Update - Washington Post Editorial says that President's proposal retains 'an independent commission that could recommend savings in Medicare that would take effect unless Congress intervened'. But even after repeated reading, I did not find any such explicit mention in the proposal. So unless Post Editorial is basing this statement on some other information, things are quite unclear on this topic.

Thursday, February 18, 2010

Scintillating Sports News

On Wednesday US Team won 6 medals in Vancouver Winter Olympic game, of which 3 were gold. That was one amazing haul by any single Team in one day. Looks like US Team is on roll.

On Thursday Indian Cricket Team defeated South African Team by an inning on Eden Garden, Kolkata. That is one heck of a come back by Indian Cricket Team to preserve their sterling reputation at home. S. African Amla was phenomenal in this 2 Test Series - 253 not out, 114 & 123 not out. He played 3 innings, scored century in all 3 and was out only once. He was man of the match for both Test Matches. This is Bradmanesque performance, total domination by Amla's bat. Master Blaster Sachin got 2 centuries whereas Sehwag as well got 2. Steyn of S. Africa got 10 wickets in the 1st Test Match whereas Bhajji was the match winner for India in the 2nd Test Match by taking 8 wickets. All in all great Cricket, Test Cricket at it's best.

Monday, February 15, 2010

American Paralysis

We have Peggy Noonan officially declaring Barack Obama as 'one termer' whereas David Brooks lays down possibly impossible path for Barack Obama to survive current political challenges. While Presidency is essentially not able to solve anything domestically, Ezra Klien renders one more consequence of America's 'broken Senate' - broken Federal Administration machinery. Practically American Political System is paralyzed and not at all capable of doing anything to solve people's core problems.

President is slowly lurching towards to make a final play of Health Care on Fed 25 by conducting an open for Media debate with Republicans. No one knows what will be the outcome. As things stand, there is no political wind which can back Administration. It is difficult to see how one single event can change 'public perception' about HCR. In all probability, Obama Administration has to muddle through this and see if anything can be attained in more mundane manner, politically back door manner.

After HCR, the fate of 'jobs bill' is in air too. It seems unlikely that Senate can get anything useful here, they will just complete their drama. Besides, slowly people are realizing that both Administration and Congress cannot (or do not want structurally) do anything about addressing 'unemployment'. Essentially, Americans are on their own and their political system cannot do much about it.

The only meaningful piece which can come out of the American Political System will be some Banking Reform proposals. If not anything, Democrats will push that as a possible defense in coming Nov election.

This leaves only 'budget' for Congress to attend and use as any vehicle to make any change for good. Beyond that anything is unlikely to happen. This is typical 'political paralysis' and America today has succumbed to that. Contrary's to people's hope, Barack Obama is not able to change this at all.

Monday, February 08, 2010

Euro Challenges and America's Fate

With PIGS (Portugal, Ireland, Greece and Spain) under pressure, Euro experiment of 'monetary union' without fiscal consolidation aka political union is coming under stress. By now limits of monetary union without political unity are obvious. Apart from diminishing chances for Turkey to join EU, it makes it very clear that for at least next couple of years Europe will be fully self engrossed in their existential challenges. Not that rest of the world is going to miss anything here, but less capable Europe will make more space for China, India, Brazil, Russia, South Africa, South Korea and Australia in international relations.

No, Euro as a currency will not crumble in the end; it will muddle along. Germany will extend their dough to these laggards of Europe. French, other relatively wealthy nations in Europe an even IMF in the end will lend the money to sick economies of Europe to avoid total breakage of Euro. But chances of Euro becoming any contender for reserve currency are completely gone for now. Potentially the character of Euro and EU would change too. This is because finally people would start realizing corruption, collective deception and in general 'inability to govern' of Greece. Many wealthy Europeans will be reluctant to bail out Greece continuously. Internal fissures within Portugal and Spain can no longer be ignored. The whole issue of collective govern-ability will become important. Because of that, despite crushing debt, functional democracy and governable society would render UK as ultimately a saved basket case. My bet is UK will avoid joining PIGS even though many market analysts suspect so.

Coming to USA, the question is will American political system deliver or will it succumb resulting America as effectively 'non-governable' country failing in the end under the mountain of debt and ever increasing burden of entitlement? So far the performance of Obama Administration and Congressional Democrats have been weak. They have time only till Nov 2010 election to effectively answer this question - whether America joins PIGS (non governable sovereigns with crushing debt) or it is a usual America which renews itself successfully at every turn of crisis.

The victory of long odds New Orleans Saints in Super Bowl at least points to the American Spirit of renewal. We will see whether the same spirit helps American Economy and Political Establishment.