2010-03-26 / Columnists

The Rockaway Irregular

The Road Ahead
Commentary by Stuart W. Mirsky
By Stuart Mirsky

The passage of the health care bill, after a bitter year of partisan battle fought in the halls of Congress and in the media, heralds a massive change to American society.

Like the nations of Europe, America’s government has now taken hold of its health care industry in order to set the terms of provider and insurer performance and mandate that everyone must buy insurance the way drivers are required to have auto insurance before venturing on public roads. Aside from the question of the constitutionality of this latter provision, the larger issue before us remains the sweeping changes envisioned in this bill and their impact on America as we have known it.

For generations we have been changing – from a self-reliant pioneer nation to an independent agrarian one to a complex urban society in which we all depend on one another as never before. It’s arguable that government has inevitably had to grow larger along with these changes though, until now, we could say that we were still more independence minded and individualistic than our European cousins with their cradle-to-grave welfare state. More and more Americans, of course, have come to envy the European style of governance and now, with the advent of Obamacare, our leaders in Washington have begun to recast our society along these very lines.

Well what’s wrong with a paternalistic state? Isn’t it government’s job to look after us? Shouldn’t we all have equal access to quality, affordable medical care? Aren’t we all in this together and shouldn’t we embrace the Euromodel?

Of course, nobody serious in today’s world would argue for poorhouses or that people in distress should be left to their own devices. Or that we shouldn’t help our neighbors, that government ought to turn a blind eye.

The problem is it’s a matter of tradeoffs and the most dramatic of these is the cost.

While the Democrats’ focus has been on expanding access to benefits (and expanding the benefits we have access to), Republicans have worried about costs.

In a recent Fox News interview concerning the advisability of passing Obamacare, a California-based liberal pundit opined that we should care enough about others to just open our checkbooks and do what’s right. Well sure, but isn’t California, itself, on the verge of fiscal collapse thanks to years of spending more than the state takes in and borrowing to compensate? Didn’t we just get through a financial crisis in which individuals and companies who took on more debt than they could handle went under or had to be made whole by the government?

And that’s the crux of this. Few of us want to see others suffer and most of us want to ease the difficulties of others. But benefit programs aren’t free. They come with a tab – and we pay it. We pay it in higher taxes and in the adverse economic impact those taxes entail. We pay it in costs to borrow funds, both in terms of interest and in the loss of our geopolitical and economic clout on the world stage as we fall increasingly into debt.

Well, if taxes and borrowing don’t prove sufficient to cover the costs of new and existing benefits, going forward, we can always follow the time honored practice of inflating our currency, which means printing more dollars and, thus, weakening their purchase power, can’t we?

It all sounds so abstract, so unreal – until you think back a few decades to the mid to late seventies, in the last century, a time many of us lived through, when inflation ballooned and prices of goods and services were driven through the roof, when interest rates exploded to keep pace, making the cost to borrow nearly prohibitive. We all felt a lot poorer in those days, didn’t we? We were.

Throughout history great powers have collapsed into precipitous decline because of economic implosions, often heralded by out of control spending and borrowing and the runaway inflation that inevitably followed.

Sixteenth century Spain, once the greatest and most admired nation on the European continent, fell into rapid decline when King Philip II mismanaged his nation’s finances and had to put Spain in hock to keep it afloat. The Spanish Empire never recovered.

Louis IV’s France so overspent that a successor was driven from the throne and beheaded at the guillotine because France’s overtaxed population was starving in the streets of Paris. In the days of Germany’s Weimar Republic, runaway inflation so devalued the mark that you needed wheelbarrows of paper money to buy enough food for a single day. Hitler followed. Argentina, once the breadbasket of the world because of its rich grazing lands and cattle herds on the Pampas, fell to third world status because of the inflation wrought by its politicians. Today gold, an historic hedge against inflation, has been rising steadily against the American dollar. A nation’s finan- ces matter. And that’s just the problem with the newly passed healthcare bill. Besides adding a slew of new benefits (most of which don’t kick in for a number of years) and collecting new revenue (the higher taxes do kick in at once), cutting Medicare and Medicaid, and delaying the so-called “doc fix” (which Congressional leaders have promised to pass later), the new legislation promises to reduce long-term deficits according to President Obama and his political allies.

But how many Americans really believe that can happen? When has any government program cost less than projected?

After all, aren’t we in deficit today, even before throwing in Obamacare? And aren’t Medicare and Social Security on the road to bankruptcy despite decades of surplus revenues flowing into their coffers? But President Obama and his Democratic allies in Congress assure us that this time it’s different. Is the past year’s spending orgy in Congress that drove national debt levels to unheard of heights evidence it is? Only those who want government control of health care so badly that they think it’s just a matter of opening the government’s checkbook yet again can believe it – or dismiss the obvious fact that the bill just passed by the House of Representatives disingenuously double-dips into the expected Medicare savings by spending the anticipated monies on new benefits instead of being used to reduce the impending Medicare fiscal crisis. Even the Congressional Budget Office told Congress and the White House and anyone else who would listen that you can’t count dollars twice.

It pays to remember that everything in life carries a cost. As much as many of us love the idea of getting something for nothing, especially broader access to health care, it’s not for nothing if you have to pay for it in other ways: through higher insurance premiums and the rationing of care that will likely arrive as part of the usual assortment of unintended consequences, through higher and more taxes, via a sluggish if not sputtering economy, and through the erosion of the very dollars in our pockets. Great empires and nations have fallen for less cause.

How many more checks can this nation afford to write – even if we continue to dream of providing everything to everyone?

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