Establishment Coalescing

Here are a couple headlines that I didn't think I'd see. One, Tom Daschle saying that budget reconciliation may be the only way for health care reform to pass. Two, and this one is really a stretch, Terry McAuliffe saying health care reform is a failure without a public option:

Former Democratic National Committee Chair Terry McAuliffe is demanding his party take a stand on health care legislation that the president and many others aren't willing to take: Pass a bill with a public option for insurance coverage or don't pass anything at all.

The long-time adviser to the Clintons, striking an atypically progressive tone, urged the White House to get more assertive in its handling of health care reform and described a bill without a public plan as a "failure."

"If we don't have the public option, we are wasting our time," McAuliffe told the Huffington Post. "To chalk something up and get something that is not the right thing to do is morally wrong... To pass something just so you can go home and go into election saying we passed something is not why lawmakers are sent to Washington."

After a bit of silence following his loss in the Virginia Democratic gubernatorial primary, the former DNC chair has come out swinging on the year's most important legislative issue. On Thursday, McAuliffe agreed to host a fundraiser with the first Virginia pol who insisted that a public option be in the bill. The offer, he said, extends to Sens. Jim Webb and Mark Warner -- both of whom have been sour on the idea of a government-administered option for insurance coverage. He's also involved in whipping support in Congress for the public option.

McAuliffe is the first business-friendly Democrat making the business case for competition in health care, saying that the status quo is bankrupting individuals and companies. But more important, he's a figure with ties to the donor class and the Third Way wing of the party. That he's arguing so strongly for a public option suggests that he's placed a bet that the party would benefit from going that route, and more important, would suffer from failing to do so.

Now it's basically up to the leadership to decide which way to go. Nancy Pelosi has said that her chamber cannot pass a bill without a public option. Steny Hoyer cut her off at the knees yesterday, saying "I'm for a public option but I'm also for passing a bill." Of course, in the House, those two statements are not mutually exclusive, but Hoyer clearly counts on progressives caving. $361,614 says they won't.

As for the Senate, Harry Reid has a choice to make. He can include the public option in the elements of the bill to pass through the reconciliation process, or turn the screws on ConservaDems to invoke cloture on the bill, or he can continue to allow the Baucus caucus to hijack the process. Reid has the ability to bypass the Finance Committee completely, if he chooses, and bring a bill to the floor. And he can use reconciliation for the elements about which Baucus and his cronies feel squishy.

Reid can't do it alone, of course. The President would have to get involved behind the scenes. But Democrats who are losing their base had better think of something to get this through.

Listening To The Serious People

Mike Lux says what needs to be said about Tom Daschle's el foldo move against the public option, and it has weight because Lux worked for Daschle for many years. Caving to Republicans and the insurance industry in the name of getting "health reform" passed just won't work, particularly because you will lose every ally on the left and end up with absolutely nothing. And taking out the most popular part of the bill and the most tangible expression of reform that people can touch, feel and see would have the effect of turning it into dust.

It doesn't surprise me that a man who essentially is an industry lobbyist would side with industry over the people. But the other element here is this irrational fear of Republicans, who have lost almost all of their support in the country, are actually less popular than Dick Cheney, and yet must be placated in the good name of bipartisanship. I believe the metaphor that the President uses is "we will extend a hand if you unclench your fist."

Behold the unclenched fist of the leader of the Republican Party.

"Day to day, there is no health care crisis in this country"

And if you don't think Limbaugh is the leader of the GOP, here's the leader of the RNC, with his opinion of what health care reform would necessarily mean:

STEELE: Well you’ll get issued, Doc, you’re gonna issue, to your patients, a health care card that’s gonna be part of a national ID system that, you know, every time I charge something or use that card, it’s going to show up on a grid what I’ve done and what I have failed to do, according to the government plan. So the government will know whether or not I’ve had my physical at the appropriate time and then probably some health police will come knocking on my door telling me I’m now costing the system money because I haven’t, you know, gone and done my preventive care.

He thinks there's going to be a health care police. And the 76% of Americans who support a public option have to be pushed aside, because Michael Steele is just more serious.

It's important to recognize the undemocratic nature of the Senate, where Dianne Feinstein and Barbara Boxer represent 36 million people and have the same amount of votes as Mike Enzi and John Barrasso, who represent 500,000. That absolutely has a bearing on how the Senate does not listen to its constituents. But In this case, Democrats have the votes; they only need 50 to pass health reform. But they think they have to listen to clowns instead of the people.

...Ezra Klein has an interview up with Daschle where he tries to walk back his opposition to a public plan.

You made headlines the other day for dismissing the need for a public plan. Want to talk a bit more on that?

I don't know where that came from. We've been pushing back on that all day. I didn't say that. I have said emphatically I support a public plan. A Medicare-for-all public plan. Any federal plan. For all the reasons that have been made for years. It's important for cost, for choice, for competition, for popularity. I strongly support it.

What I did say is that I'm willing to compromise on most things to bring the package across the line. The plan we agreed to yesterday was that states could offer public plans with a federal fall back. That's not my first, second, or third choice. But given the concessions my colleagues made on universal coverage and an employer mandate and everything else, that's the essence of compromise.

To focus on that for a moment, for all the controversy around this issue, I think a lot of liberals don't understand why they should have to sacrifice it. After all, private insurers aren't exactly covered in glory, and a Wall Street Journal poll just today showed that three-fourths of Americans support the policy.

This is one time when it makes good politics and good policy. There are two groups primarily opposed to it. Many of the stakeholders view it as real cost cutting. As a result, they're worried about that competition. A lot of other stakeholders are concerned about feeling the effects of a cost constraint. I've said this, and no one has ever disputed it, that I've never seen a study that didn't say the public plan would reduce costs. And we hear so much about costs, and here we are taking it off the table.

The other group is this ideological group of Republicans and conservatives who see it as government intrusion they simply can't support. It's an ideological basis that I will never understand but that that's what it is.

Oh well! It is what it is!

...I can get behind this: Go Away, Tom Daschle

Biting The Good Poll Numbers That Feed Them

To follow up on Tom Daschle's big fold on the public option, which is setting minds in Washington as we speak, the timing is truly impeccable. Not only did the WSJ and NBC come out with a poll finding 75% support for a public option in any reform, but an additional poll - put together by foes of health care reform - found even more support.

The poll — which was just released by the Employee Benefit Research Institute, a D.C. policy think tank — finds that a majority (53%) strongly back the availability of a public plan, while another 30% “somewhat” support it. That’s a total of 83% in favor of a public plan — a staggeringly large majority.

Even more interesting, guess who paid for the poll? From the release:

This survey was made possible with support from AARP, American Express, Blue Cross Blue Shield Association, Buck Consultants, Chevron, Deere & Company, IBM, Mercer, National Rural Electric Cooperative Association, Principal Financial Group, Schering-Plough Corp., Shell Oil Company, The Commonwealth Fund, and Towers Perrin.

Not exactly a band of raging lefties. The American Association of Retired Persons and Blue Cross Blue Shield were among the opponents of HillaryCare in the 1990s.

Meanwhile, instead of looking at those numbers and seeing that the public option must be preserved, Daschle and the Village thinks these guys must be preserved at all costs:

A Texas nurse said she lost her coverage, after she was diagnosed with aggressive breast cancer, for failing to disclose a visit to a dermatologist for acne.

The sister of an Illinois man who died of lymphoma said his policy was rescinded for the failure to report a possible aneurysm and gallstones that his physician noted in his chart but did not discuss with him.

....Late in the hearing, [Bart] Stupak, the committee chairman, put the executives on the spot. Stupak asked each of them whether he would at least commit his company to immediately stop rescissions except where they could show "intentional fraud."

The answer from all three executives: "No."

Rep. John Dingell (D-Mich.) said that a public insurance plan should be a part of any overhaul because it would force private companies to treat consumers fairly or risk losing them. "This is precisely why we need a public option," Dingell said.

Rescission is a serious problem. Here in California, Blue Cross and its parent company HealthNet have settled to the tune of about $37 million dollars in a variety of rescission lawsuits.

But no, private insurance must be preserved because it's so efficient. After all, that's why we pay twice as much for health care with worse outcomes than most of the industrialized world! (P.S. I know that doctors ordering up unnecessary treatments and tests contribute to this as well - our system's lack of integration provides perverse spending incentives.) And by the way, all of this is happening despite the fact that the Progressive Caucus has vowed to vote against any health care reform that does not have a robust public option. It's just assumed that they can be steamrolled.

Instead, we have this spectacle of so-called "centrists," supposedly concerned with fiscal responsibility, fighting against reform tooth and nail, even though that would be the only way to reduce cost.

The House's two most conservative caucuses, the Blue Dogs and New Democrats, are banding together to come up with shared principles on healthcare and counter a process many see skewing to the left.

The two groups, which combined have 131 members — more than half the House Democratic Caucus — have been holding meetings to see where they can agree on a healthcare plan [...]

There is concern among centrists in the caucus that the draft bill, to be released Friday, will reflect some of the more liberal ideas in the caucus, although leadership has already rejected the idea of a single-payer system. It is being put together by the House Education and Labor, Energy and Commerce and Ways and Means committees.

"You have a bunch of crazy liberal chairs and their crazy liberal staffers, and they want to lay down a marker," said a senior Democratic aide.

Crazy liberals, wanting to replicate the rest of the industrialized world's policy of less spending and greater effectiveness in health care!

It's really sad to see the Washington consensus just run like a truck over meaningful health care reform. Especially because the public won't buy anything without a public option as real reform, period.

UPDATE: Russ Feingold on the Senate floor:

Frankly, I am disappointed that this has become the topic of so much controversy, because it is such a fundamental part of making sure we provide the reform that my constituents, and all Americans, deserve.  Some have even suggested scrapping a public option in the interest of passing a bill with bipartisan support.  I want to pass health care reform and I hope very much we can do so with bipartisan support.  But I am not interested in passing health care reform in name only.  I am not interested in a bill that allows us to somehow tell our constituents we have done something but doesn’t really address their concerns.  We need real reform, and real reform means a strong public option.

And Americans want a public health insurance option.  According to a recent poll by NBC and the Wall Street Journal, over three fourths of those polled said they would like the ability to choose between public and private health insurance plans.  Providing a public health insurance option that does not discriminate against those with pre-existing conditions and illnesses will significantly improve the ability of people to access health care.

The Big Fold

The very serious people who run our discourse think we have to drop the public option because Republicans and insurance companies don't like it.

Daschle, Dole Say Public Option Must Be Scrapped ABC World News reported, "Former Senate leaders launched a bipartisan push for healthcare reform, but they took issue with a central feature of the President's plan, a public, government-run health insurance program." Bob Dole was shown saying, "If you want to stop this thing dead in its tracks, or dead on arrival, in my view, you put the public plan in it." ABC noted that even Tom Daschle, "once Obama's top healthcare adviser, said the public option probably needs to be scrapped." Daschle: "We've come too far and gained too much momentum for our efforts to fail over disagreement on one single issue."

This just perfectly captures the fact that there's an America inside the Village and one outside. Outside the Beltway, more than 3/4 of all Americans believe "it’s important for Americans to have a choice between a public/government insurance plan and a private one." Inside the Beltway, Republicans and insurance companies don't like it, so we should just scrap it. Daschle is essentially saying that the prospect of reform is too important to actually include reform.

Interestingly enough, Daschle did include a public insurance option in his bipartisan poohbah plan yesterday - but only administered through the states:

Daschle, Dole and Republican Howard Baker released a bipartisan plan today that would tax some employer-provided health-insurance premiums, require individuals and large employers to buy health insurance, and create public insurance pools run by states instead of the federal government [...]

In a bid to blunt Republican opposition to setting up a government-run insurance plan for those without coverage, Dole, Baker and Daschle suggest giving states, instead of the federal government, the option of establishing insurance-purchasing pools. These pools would extend coverage to everyone regardless of their health status or ability to pay, Daschle said.

Not only does it appear optional, but obviously you'd get more leverage and bargaining power to cut costs in a national plan rather than one in, say, Wyoming, and one in South Dakota, and so on. Also, do you trust Sarah Palin or Mark Sanford or Rick Perry to set up a robust state public insurance plan?

Tom Daschle has been folding like a cheap suit since before I was born. But he's no longer in Congress or the White House. It's the scurrying around from Max Baucus, trying to gut his own bill to lower the cost from the CBO budget score, that really threatens reform. And unquestionably, he's taking his cues from Daschle, or at least has the same mindset. Actually, it's worse:

And yet Sen. Baucus is bending over backwards to jettison a public health insurance option to appeal to Congressional Republicans. Despite a bipartisan collection of former Senate Majority Leaders endorsing a $1.2 trillion plan, Baucus is looking to trim $600 billion out of his plan – even if it means that its ability to cover more Americans will be substantially reduced. You can’t cut out a third of your bill without taking the axe to primary care, prevention, subsidies for the middle class to afford premiums, and everything that we know our health care system actually needs, and needs desperately. And what, aside from a couple fewer insults from John McCain, will you have gained?

Simply put: Congress is focusing on the wrong thing. Leaders who are able to get us over the finish line by creating a bill that can substantially improve health care access, cost-control and quality in this country aren’t focused on the best bill – they’re focused on a dog and pony show of interpersonal drama, and looking to placate a constituency with no credibility rather than solve the problem. It's time to turn off Project Runway and start making the change we elected them to create.

Baucus has vowed to keep the cost to $1 trillion over ten years, as if that number has acquired a certain magic. Keep in mind that over the same 10-year spread, we spend $6-$7 trillion on the military. And Baucus' idea for cutting the cost? Cutting the subsidies to the very people forced into buying insurance.

You can cut a $1.6 trillion reform bill down to $1.3 or even $1.2 and still come up with a pretty good program. In fact, some reforms designed to reduce the program's cost would actually make it better. You could, for example, introduce more aggressive payment reforms to reward efficiency and outcomes. You could create a real public plan that controls costs better than private insurers could. You could even do both.

But my suspicion--based on what I've heard and seen over the last few months--is that knocking the price tag all the way down to $1 trillion will mean a lot less money to subsidize insurance for people who can't afford it and far fewer guarantees that insurance would be adequate. In other words, you could end up with many more people still uninsured or underinsured.

Obviously we need a public plan, but this whittling down of the costs shows the real rocky part of this whole thing, the fact that nobody can agree on how to pay for it. The vaunted MedPAC option, which would streamline spending and identify waste, couldn't come up with anything specific in its annual report. And Kevin Drum is right to find this scary:

The New York Times reports that House Democrats are considering a value added tax as a way of financing healthcare reform. A VAT is one of those things that economists and think tankers all love, but it's also one of those things that's never had any real chance of being adopted in the United States. So it surprised me that Dems were even seriously talking about it.

But Tyler Cowen has a take on this that I hadn't thought of:

"From my distant perch out here in Fairfax (and Arlington), I believe this means health care reform is falling apart. It means the unions won't let them tax health insurance benefits and the CBO won't let them punt on the issue of finance."

Financing was always going to be a problem. Cowen's probably rooting for failure, so take his cheerleading with a grain of salt. But watching Baucus run for cover, watching Daschle do the old el foldo, I'm seriously pessimistic that anything out of Washington will meet the expectations of anyone in the country.

...Ezra Klein: "Health reform is, I think it fair to say, in danger right now."

Health Care: Progressive Movement Must Push Back On This Week's Lapses

It's early, and given the clear attention the President is paying to health care reform I ultimately believe something will get done. But without question, this has been a bad week for those who want to see a legitimate reform of the system. This article in The Hill captures some of the movement:

Despite having a popular president in the White House and comfortable majorities in Congress, the Democratic rollout on healthcare reform has encountered significant bumps in the road.

A cost estimate hanging a $1 trillion price tag on an incomplete bill, salvos from powerful interest groups and great uncertainty among key Democrats on what will actually be in the legislation that moves through Congress have emboldened Republican critics.

The Senate Health, Education, Labor and Pensions (HELP) Committee postponed the markup of its healthcare reform bill by one day, to Wednesday. On the eve of that markup, the powerful U.S. Chamber of Commerce publicly ripped the bill.

Senate Finance Committee Chairman Max Baucus (D-Mont.) initially planned to release his bill Wednesday, but he has pushed back his timetable because of cost estimate concerns.

“Will we have something out tomorrow? Not sure,” Baucus said Tuesday. “Thursday or probably Friday,” he added.

Perhaps more importantly, the unity that Democrats touted earlier this year has cracked. As conservatives lambaste Democrats, liberal healthcare groups are not rushing to their defense because so many questions about the legislation have not been answered.

Since then, the Senate Finance Committee postponed their markup until after the July 4 recess. And all kinds of compromise plans and half-measures are swimming around Washington. Apparently, centrists in the House from both sides of the aisle are meeting in secret to hash out one of them. Kay Hagan and Jeff Bingaman are refusing to sign on to the public plan in the Senate HELP Committee, delaying its inclusion in the bill, which is worrying advocacy groups. I'm assuming they prefer a compromise like Kent Conrad's out-of-left-field "health co-ops" plan introduced into the debate and sending a thrill up the leg of centrists last week. And today, old warhorses Tom Daschle and Bob Dole unveiled yet ANOTHER compromise plan:

Daschle, Dole and Republican Howard Baker released a bipartisan plan today that would tax some employer-provided health-insurance premiums, require individuals and large employers to buy health insurance, and create public insurance pools run by states instead of the federal government.

The proposals were put together over 15 months by the Washington-based Bipartisan Policy Center, which was started by Daschle, Dole, Baker and former Democratic Senate leader George Mitchell. Congress is drafting a bill to revamp health care, which President Barack Obama calls “the single most important thing we can do for America’s long-term fiscal health.”

Dole said the U.S. has a rare opportunity this year to enact a comprehensive health-care bill. “Let’s do it now,” he urged, saying it may be five years before lawmakers have a similar political opening.

The state-run insurance pools may run into some trouble due to economies of scale. A state simply cannot bargain the way a single payer federal government can.

There are basically two issues that have bedeviled reformers this week. One is the CBO scoring, based on an incomplete document that should have never been given to them, but causing moderate Dems to simply run for cover. This failure came about largely by the HELP committee offering an incomplete bill to try and get some bipartisan cover.

You might ask what the HELP Committee was thinking, sending Swiss cheese legislation to CBO. Well, the HELP Committee's expectation was that the CBO, in crafting its preliminary score, would assume something similar to the outline it had seen months before. The CBO didn't. In fact, it did the opposite. CBO ran its estimates with no employer mandate and an individual mandate with a laughably small penalty.

Members of HELP were thus shocked by yesterday's score. The specific provisions of the bill that the CBO examined did not look like the bill HELP intends to write. Which means that the numbers aren't correct. If HELP is writing a bill with a strong employer and individual mandate, and CBO scores a bill with no employer mandate and a weak individual mandate, that's not a useful estimate.

By Monday night, members of the HELP Committee were scrambling to give the CBO something closer to the final legislation to examine -- this time including rough details of the employer mandate and the individual mandate. They're hoping to have a new set of estimates by Friday, though that's probably ambitious. Either way, I wouldn't put too much stock in these numbers.

Doesn't matter. The numbers are out there, and the Democrats are running away from them as fast as they can. OF COURSE the Republicans would use the CBO score as a permanent talking point no matter what was changed on the bill. Forevermore, it will be seen as costing a trillion dollars a year and not covering anyone - just check out this piece. Max Baucus essentially pulled his bill so he can cover costs and cut government subsidies.

The other problem has been this continued wrangling over the public plan, which I think a healthy bit of Democrats are simply desperate to torpedo. Hagan and Bingaman won't sign on to it in the HELP Committee, and now Kathleen Sebelius has, perhaps unwittingly, given a bad compromise oxygen:

"I think there is a lot of understanding that the private market has really failed to provide affordable coverage to Americans," Sebelius said. The industry has had "a lot of opportunities" to get rid of coverage restrictions and other unpopular policies, Sebelius said, and really "hasn't served Americans very well."

However, Sebelius stressed that Obama is open to compromise on the shape of the public plan, which doesn't have to be run by the government. She spoke positively of a compromise idea that envisions consumer-owned nonprofit cooperatives, like rural electricity or agriculture co-ops. They would get started with seed money from taxpayers but then compete without government control. The plan by Sen. Kent Conrad, D-N.D., may end up in a health overhaul bill to be unveiled by the Senate Finance Committee this week.

Obama did offer a pretty forceful defense of the public option to the AMA this week. And if he wants to throw his weight around, he could probably muscle something through. But will the desire to create a bipartisan solution, which is supposedly more "durable" than a successful solution, trump the public plan? Bill Clinton hopes not:

If he can’t get a good bill, I wouldn’t give away the store on that. If he can’t get a bill that’s genuine universal coverage, that genuinely is going to cut costs and make health insurers give up some of these unbelievable administrative burdens that they’ve put on people, and that really gets to the guts of the delivery system and does more primary preventive care and actually measures things that work, then I would go for the 51. But I would spend a little time trying to get to 60.

Nyceve has more on this meeting.

So we've had a bad couple weeks, with Democrats scurrying in fear from the cost and the public option clearly being used as a bargaining chip. Enough. Chris Bowers has a proposal:

For years, candidates for, and members of, Congress told us that we needed to elect and re-elect them in order to lower health care costs and provide universal coverage. And so, for years, we dutifully worked our collective asses off, delivering wide majorities for Democrats--who said they would lower health care costs and provide universal coverage--in both branches of Congress.
Now, when it comes time for them to deliver on health care by providing a public option--the care minimum required to reduce costs and provide universal coverage--what we are getting instead are backroom deals, flip-flops, and cop-outs.
Enough.

Today, along with Health Care for America Now, Democracy for America and numerous blogs, a campaign is being launched to put an end to the backroom deals on health care. We made and delivered on a commitment to bring about wide Democratic majorities in Congress. Now, instead of negotiating in secret, this Congress needs to make a public commitment to us on where it stands on health care.
No more dodges. No more vague, open-ended responses. We need every member of the Senate--main obstacle to reform--to answer four questions on the public option:

Do you support a public healthcare option as part of healthcare reform?
If so, do you support a public healthcare option that is available on day one?
Do you support a public healthcare option that is national, available everywhere, and accountable to Congress?
Do you support a public healthcare option that can bargain for rates from providers and big drug companies?

As activists and as constituents, answering these questions are the minimum they owe us. We are entitled to specific, clear, written responses to all of these questions.

Email--don't call, but email--these four questions to your Senators now. Make it clear that you want a written response to all four questions. There needs to be as little room for interpretation as possible. The Senate is going to be the biggest hurdle on health care, as it has proven to the biggest hurdle on all legislation in 2009. That is where we must focus our pressure.

Here's the form to post where your Senator stands. We need a citizen whip count on the public option so we know where everyone stands. Only with this kind of clarity can we embolden, for example, the Progressive Caucus to demand a public option in any reform bill.

This is clearly the biggest domestic policy that will be tackled this year. We MUST not fail.

Health Care Now

Jon Cohn talks to the ubiquitous "senior administration official" who says that Obama will move from the stimulus package right to health care.

The Obama administration’s health care czar may be gone, but here is one hint that its commitment to pursuing major health care legislation in 2009 remains in place. On Sunday, a senior administration official told me that health care would be a “central focus” of Obama’s first budget proposal.

The official didn’t specify precisely what that meant: Would the administration be asking for funds to make sure every American has insurance, or just a portion? Would there be major reforms of the way medical care is delivered? But even with that ambiguity, the statement seems to signal that Obama still takes health care seriously and hopes to pass significant legislation in the next year [...]

In interviews over the past week, administration officials have said repeatedly that the dobuts about Obama’s commitment are unfounded. They say Obama himself has indicated health care is a top priority, to be pursued shortly after the debate over the economic stimulus package is over.

They also say he believes it is important to make sure everybody (or almost everybody) has insurance, because it’s not possible to control costs while so many people lack health benefits. "I've been in meetings with him and it's clear this guy is committed to getting health care and getting coverage to everybody," says one high-ranking member of the administration. "There's no question in my mind."

And while these advisers acknowledged that the question of whether to deal with health care in the next budget had been under discussion, another senior official on Sunday indicated a decision had already been made: “Health care reform will be included--and indeed a central focus--of the budget,” this official said, while declining to offer more details. Another adviser subsequently confirmed that. (All of these sources asked not to be named.)

Tom Daschle was not the only man in America who could deliver health care reform, the media's focus on personality over policy notwithstanding. What was always needed is a commitment at all levels to pursue reform and to use all instruments in the policy toolkit. While the Presidential budget isn't binding, it speaks to the Administration's priorities. The top leaders in the Congress are putting out joint statements calling for health care reform "this year." And embedding the reform in the budget not only shows the commitment, but raises the possibility that it will be addressed through a budget reconciliation bill, which requires only 50 votes. This is a great sign for comprehensive health care reform. Now we have to see what model that reform will take.

Daschle Post-Mortem

There's a pretty amusing old Tom Daschle ad going around, with him driving to work at the Capitol in his old Pontiac instead of "BMWs and limos," with the final line:

"It's too bad that the rest of Washington doesn't understand that a penny saved is a penny earned."

What's that old adage about power corrupting and absolute power corrupting absolutely?

Eventually, no matter the rhetoric to win votes in South Dakota, Tom Daschle became a DC insider. And because President Obama relied on DC insiders to implement an agenda of change, he got burned. The case is a textbook example of how Beltway privilege - which is also class privilege - is inevitably corrupting and ethically corrosive.

A classic rule of Washington's political culture -- that public service can lead to personal riches -- seemed to collide yesterday with the presidential promise that the time has come for a break with the past.

Former senator Thomas A. Daschle, whom President Obama once called "the original no-drama guy," suddenly was forced to step aside as the president's nominee for secretary of health and human services because of problematic ties to wealthy private interests.

It was a jarring twist to Daschle's 30-year career in Washington, one built on a reputation of integrity and decency. After losing his Senate seat while serving as that body's most powerful Democrat in 2004, he swiftly signed on as a special policy adviser to a 900-member law firm and pulled in a multimillion-dollar salary. It is a well-worn path, trod by dozens of ex-lawmakers in the past decade.

But some observing the debacle wondered if the capital's ways were changing. The story of how he fell in with the monied elite and out with the popular mood involves a longtime Democratic financier, Leo Hindery Jr., and his keen interest in currying influence with powerful politicians. The outcome caught many in Washington off guard.

"I think it's possible this is some sort of bridge between an old Washington and the new Washington," David Arkush of Congress Watch said of the initial backing of Daschle and the sudden reversal.

Somehow this is being spun as a consequence of Obama holding Daschle to too high of a standard with all this talk of ethics during the campaign, and not the fact that Daschle really is ethically compromised, as is his business partner Bob Dole. Not that Daschle's the worst offender, but he's just a symbol of a failed status quo that has pushed this country to the point of ruin:

Dole said the Democrat would be a valuable asset to the firm even though Congress is run by the GOP these days. "He's got a lot of friends in the Senate, and I've got a lot of friends in the Senate, and, combined, who knows -- we might have 51," Dole joked. "It's going to work fine. You need some flexibility and diversity. I don't think any successful firm is all Democrat or all Republican."

That about covers how Washington works: driven by sleazy, bipartisan influence-peddling. And it is, in particular, how the Senate works: members do nice favors for their "friends," who are lavishly paid for asking for those favors (and who ensure that their "friends" still in the Senate are rewarded for granting those favors), and the outcome is our set of laws.

In a way, Obama picked Daschle not in spite of this sleaze, but BECAUSE of it. The thinking was that health care reform could only be accomplished with someone of stature coordinating White House maneuvering, someone who can go get the votes. He wanted someone from the Washington favor factory that would do whatever necessary to get health care reform passed. It would be a turd of a bill, filled with giveaways, but Daschle could do it, and Obama could put a pretty bow on it, and everyone would shout "huzzah."

The buzzsaw that Daschle ran into was a public increasingly given to agree with the populism expressed on the campaign trail, something Washington never saw coming.

So what happened? My guess is that official Washington underestimated the public's pique at what appeared to be the old ways of Washington. Hill staffers tell me that many offices have been inundated with telephone calls, emails, letters and faxes expressing concern (to put it mildly) about Daschle -- not only his failure to pay back taxes but his relationships with major players in the health care industry and rich consulting contracts with the private sector since leaving the Senate, and even the fact that he was given a car and driver by one of them [...]

Typical Americans are hurting very badly right now. They resent people who appear to be living high off a system dominated by insiders with the right connections. They've become increasingly suspicious of the conflicts of interest, cozy relationships, and payoffs that seem to pervade not only official Washington but our biggest banks and corporations. In short, many Americans who have worked hard, saved as much as they can, bought a home, obeyed the law, and paid every cent of taxes that were due are beginning to feel like chumps. Their jobs are disappearing, their savings are disappearing, their homes are worth far less than they thought they were, their tax bills are as high as ever if not higher.

Meanwhile, people at the top seem to be living far different lives in a different universe. They're the executives and traders on Wall Street who have lived like kings for years off a bubble of their own making while ripping off small investors, the financial louts who are now taking hundreds of billions of taxpayer bailout money while awarding themselves huge bonuses and throwing lavish parties, the corporate CEOs who are earning seven figures while laying off thousands of workers, the billionaire hedge-fund and private-equity managers who are paying a marginal tax rate of 15 percent on what they say are capital gains while people who earn a fraction of that are paying a higher rate, and, not the least, the Washington insiders who have served on the Hill or in an administration and then gone on to pocket millions as lobbyists for the same companies they once regulated or subsidized. To the American who's outside the power centers -- the places of entitlement and I'll-scratch-your-back-while-you-scratch-mine deal making -- the entire system seems rotten.

I'm sorry Tom Daschle won't be in the Obama administration. He would have served the public well and with distinction. But the public wants change, real change, big change. There's no tolerance any longer for the way things used to be done.

There is a hope in all of this, in the fact that Obama acknowledged the mistake, and more important the disconnect between one set of rules for public officials and another for the man on the street. That's a big step early in an Administration, to take blame and admit it. Now the action has to follow the words.

Ezra Klein has more.

A Revealing Window Into The Minds Of Washington

In the wake of the Daschle mess, there are a lot of possibilities for both HHS Secretary and the newly created "health care policy czar," ranging from the sublime - Dr. Dean - to the ridiculous - anyone else that the corporate-owned media can come up with.

You have Marc Ambinder and Karen Tumulty ringing the bell for Mitt Romney, because he "can claim the provision of universal health care as a resume line." Which isn't true at all, he sought to derail MassCare at almost every opportunity, it bubbled up directly from the state legislature, and the usual fallacy of attributing everything to the executive is at play. By the way, if you want to go that route, you could mention that Howard Dean provided universal health coverage for children and pregnant women, and unlike Romney he actually drove the policy and did it well before MassCare ever started.

Then Craig Crawford offers up Newt Gingrich, ferchrissake:

Gingrich? Now before you lefties have a collective heart attack, think about it. Something as big as overhauling our entire health care system will be tougher to get done on a purely partisan basis. There are Republicans who want to play.

As much as it would infuriate liberals, picking Gingrich would be a hyper-bipartisan move. Would it confound the GOP into submission on health care? Maybe not, but it would be a bold move to change the political dynamics that has killed reforms in the past.

This is the stupidity of Washington on full display, being conned into thinking a movement conservative like Gingrich would want to do anything but derail an Obama Presidency, believing that bipartisanship for its own sake is the highest good known to man, etc. And Obama has enabled this to a large extent, and now in many ways he's trapped by it, as Republicans use the "bipartisanship" talking point to block fundamental change.

The history-making moment unfolded in the White House press room on January 23, when the topic open for questioning was President Obama's proposed economic stimulus package and whether the administration, which was hoping for a bipartisan effort on the legislation, would be disappointed if the bill passed with little Republican support. And that's when Todd asked if Obama would veto his own bill if it didn't garner enough Republican votes.

If nothing else, though, Todd's absurd query helped highlight the unheard-of double standard that's been constructed by the press specifically for the new Democratic president with regard to the pressing issue of bipartisanship. Virtually all the news accounts are stressing the same story: If there's little or no bipartisan support for Obama's stimulus package, then it's Obama fault, and his fault alone. (No surprise, the media narrative echoes the latest GOP talking point, as dutifully pushed by RNC writers like Peggy Noonan.)

A bit ironic, isn't it? While addressing the issue of bipartisanship (i.e. "involving cooperation, agreement, and compromise between two major political parties") the press holds only one party accountable: the Democrats. Apparently, that's how the press now views the issue of bipartisanship -- it's something Democrats must bring to fruition.

Meanwhile, by the grand poohbahs in DC, Dean is seen as "too partisan" even though he won in Vermont with 70% of the vote including lots of Republican support, was elected chair of the bipartisan National Governors Association, and was a deficit hawk who balanced budgets in Vermont even though he wasn't constitutionally obligated to do so. But he's out of bounds.

The Day The Music Died

The worst part about today's Daschle/Killefer twin killing is that Obama was scheduled for interviews with every major news channel today, and instead of talking about what he wanted to talk about, the stimulus package and why we have to pass it, he instead took confessional with the media grand poohbahs.

Barack Obama on Tuesday abruptly abandoned his nomination fight for Tom Daschle and a second major appointee who failed to pay all their taxes, fearing a lingering ethics dispute would undercut his claims to moral high ground and cripple his presidency in just its second week. "I screwed up," Obama declared.

"It's important for this administration to send a message that there aren't two sets of rules — you know, one for prominent people and one for ordinary folks who have to pay their taxes," Obama said near the end of a day of jarring developments, little more than 24 hours after he had said he was "absolutely" committed to Daschle's confirmation.

"I'm frustrated with myself, with our team. ... I'm here on television saying I screwed up," Obama said on NBC's "Nightly News with Brian Williams." He repeated virtually the same words in interviews with other TV anchors.

It's great that he can admit mistakes - certainly he's a hell of a lot more of a human being than George Bush ever was. But there's an opportunity cost here. The headlines were about Obama's contrition and falling on the mercy of the court. Nothing about how the reports that the stimulus doesn't spend out enough money in the first two years were bogus and wrong. Nothing about how spending is stimulus and the conservative Senators saying otherwise don't know what they're talking about. Nothing about how tax breaks are, conversely, ineffective as stimulus, despite the bleatings of the right. Nothing about how the economy is dead and this bill is urgent, and the people who broke the economy aren't the ones who can fix it.

What economic talk there was in the interviews was completely disheartening.

President Barack Obama said on Tuesday he did not want to send a protectionist message on world trade and would look at altering "Buy American" language in an economic stimulus bill coming out of Congress.

"I think it would be a mistake ... at a time when worldwide trade is declining for us to start sending a message that somehow we're just looking after ourselves and not concerned with world trade," Obama said on the Fox television network.

This is the typical double standard that America is held to, never allowed to even use normal domestic sourcing standards for our own industries, while the rest of the world goes along protecting their industries to the tune of trillions in subsidies and implementing their own stimulus plans using only domestic materials. It's bullshit and this idiotic study from the Peterson Institute for International Economics - yes, that's Peter G. Peterson's outfit, the right-winger who bankrolled I.O.U.S.A. - which claims that a $825 billion dollar recovery package would only yield 1,000 iron and steel jobs, proves it's bullshit. Corporate lobbyists still rule this country and they rule this President's economic team, sadly.

Meanwhile, in the Senate, where Republicans have been screaming that the package needs more infrastructure spending, they... blocked $25 billion more in infrastructure spending while giving a tax break to consumers to buy cars even though they can't afford cars because they don't have a fucking job. It's a bloodbath in the Senate and it may only get worse.

Barbara Boxer and infamous global warming denier James Inhofe will present an amendment to the Senate stimulus plan that could funnel as much as $50 billion in additional funding to highways, Streetsblog has learned. Friends of the Earth tells us that Boxer's staff confirmed she will introduce the amendment, which could bring the total for highways close to $80 billion, exactly the figure Inhofe demanded last week in a letter to the Committee on Environment and Public Works.

The amendment is expected within the hour, according to Kate McMahon of Friends of the Earth. Inhofe press director Marc Morano didn't deny the number, but said "a lot is going on today and I'll confirm with you shortly."

While Republicans chip away at ridiculously stupid side issues, Senate Democrats are conceding that the bill has to shrink.

Democratic leaders conceded they may soon be obliged to cut billions of dollars from the measure. "It goes without saying if it's going to pass in the Senate, it has to be bipartisan," said Sen. Dick Durbin of Illinois, the second-ranking Democratic leader, adding that rank-and-file lawmakers in both parties want the bill's cost reduced.

One Democrat, Sen. Ben Nelson of Nebraska, said he hoped for reductions "in the tens of billions of dollars."

And Obama is doing nothing but enabling the right's rhetoric by expressing frustration about the bill being a "Democratic wish list". And the one chance he had to message on the bill was caught up in apologies over Daschle.

Man, today is a horrible day for progressive politics.

Daschle Withdraws

Link here. And scalps are collected and there's much rejoicing in Republican-land.

Question: Daschle was also given the title of "health policy czar" or something, with a White House office and responsibility for coordinating health care policy. Is that out, too? Anyone?

On balance, this is good for health care reform in that progressives will now be more likely to get on board. This is really bad for Obama, a chink in the armor that Republicans can point to and repeat incessantly. Daschle is now in that litany of Kimba Wood and Zoe Baird and all the Clinton appointees who were denied. Nancy Killefer is in there now, too.

This is also indicative of the rot in the Democratic Beltway establishment. Daschle and Bill Richardson were always considered stalwarts and sure bets for any cabinet right up to the moment when they had disqualifying parts of their records. We need new blood in the party, which is what Obama's Presidency was expected to deliver, yet in most cases he fell back on the same compromised figures. Experience is a double-edged sword.

...The NYT is dead right in this editorial, and hopefully the greater media can apply this broadly among both parties:

Mr. Daschle’s financial ties to major players in the health care industry may prove to be even more troublesome as health reform efforts proceed. Like many former power players in Washington, Mr. Daschle cashed in on his political savvy and influence to earn $5 million in recent years, including more than $2 million from Alston & Bird, a law and lobbying firm; more than $2 million from the private equity firm, InterMedia Advisors, which provided the car and driver; and hundreds of thousands of dollars for speeches to interest groups, including those representing health insurance plans, medical equipment distributors and pharmacy boards.

Although Mr. Daschle was not a registered lobbyist, he offered policy advice to the UnitedHealth Group, a huge insurance conglomerate. He was also a trustee of the Mayo Clinic in Minnesota, on whose behalf he voiced opposition to a federal loan for a freight rail line near the clinic’s headquarters in Rochester, Minn. The loan was subsequently denied by the Federal Railroad Administration.

Mr. Daschle is another in a long line of politicians who move cozily between government and industry. We don’t know that his industry ties would influence his judgments on health issues, but they could potentially throw a cloud over health care reform. Mr. Daschle could clear the atmosphere by withdrawing his name.

Beltway Ethics and Tom Daschle

Tom Daschle is awfully sorry about overlooking his tax burden and wants to get his high-level cabinet post, please.

Fighting to salvage his Cabinet nomination, Tom Daschle pleaded his case Monday evening in a closed meeting with former Senate colleagues after publicly apologizing for failing to pay more than $120,000 in taxes. President Barack Obama said he was "absolutely" sticking with his nominee for health secretary, and a key senator added an important endorsement [...]

Nobody was predicting defeat for Daschle's nomination as secretary of health and human services, but it was proving an unsavory pill to swallow for senators who only last week confirmed Timothy Geithner as treasury secretary despite his separate tax-payment problems. It's an issue that strikes a nerve among lawmakers' constituents who are struggling with their own serious money problems.

Daschle's tax problem is nothing more than an example of the Washington favor factory used by every out-of-work lawmaker. Trent Lott and Bob Dole and J.D. Hayworth and John Breaux and Richard Pombo and about 20 kajillion other lawmaker-turned-lobbyists aren't up for a cabinet position, but if they were you'd hear the same thing.

Beyond the ramifications for Mr. Daschle’s ascent to the cabinet, the disclosures about Mr. Hindery and the many clients Mr. Daschle advised on public policy offers a new window into how Washington works. It shows how in just four years an influential former senator was able to make $5 million and live a lavish lifestyle by dint of his name, connections and knowledge of the town’s inner workings.

There is no evidence that Mr. Daschle pulled strings for Mr. Hindery. Indeed, Mr. Hindery’s firm appears to have had few interests before the government. But interviews and a review of public documents show that in his work for a Washington law firm, Mr. Daschle did take on an array of clients seeking influence with the government, including concerns involved in Indian gambling, ethanol, health care, telecommunications and federal contracting.

Worse, he accepted multiple speaking fees from health care industry groups, the same ones who he would presumably be trying to derail in reforming the system:

Over the past two years, Daschle has made more than $220,000 giving speeches to health care stakeholders. This includes $40,000 for two speeches to America's Health Insurance Plans, $30,000 for a speech to CSL Behring, $16,000 to the National Association of Boards of Pharmacy, $15,000 from a talk at the Principal Life Insurance Co. given policy advice to United Health, and much more. These are payments from the parties with a direct interest in the eventual shape of health reform.

I trust that the guy who spends his weekends reading Health Affairs isn't in this for speaking fees. But Daschle can't rely on every American reading his book and picking through his testimony. He needs prima facie credibility. And Daschle is less credible today than he was a week ago.

It will be harder for him to tell single payer advocates that he neutrally considered their views on the worth of the private insurance industry given that AHIP put $40,000 in his pocket. So too with those concerned by the medical device industry. Indeed, the Washington Post reports that "the Health Industry Distributors Association, a trade association representing medical product distributors, wrote to Daschle last week to express concerns about proposed Medicare changes and reminded him of the $14,000 speech he delivered at its conference last year." It may not be the case that these groups actually succeeded in buying sympathy when they paid Daschle to speak. But it was certainly their intent.

This isn't about Daschle conniving to defraud the government of $100K, it's about a culture of Beltway backscratching that treats life the same way as the horse-trading inside the Capitol. It's why he'll be swiftly confirmed, because his former colleagues in the Senate want the SAME kind of treatment when they are cast out into the "real world". Tom Daschle and his wife epitomize Beltway ethics, which thinks nothing of perks and speaking fees and other corrupting activities. Simply put, there is a premium paid to former lawmakers by those who want to influence the system, to buy their knowledge and expertise. Matt Taibbi has much more on all of this.

In Washington there are whores and there are whores, and then there is Tom Daschle. Tom Daschle would suck off a corpse for a cheeseburger. True, he is probably only the second-biggest whore for the health care industry in American politics — the biggest being doctor/cat-torturer Bill Frist, whose visit to South Dakota on behalf of John Thune in 2004 was one of the factors in ending Daschle's tenure in the Senate [...]

Regarding Daschle, remember, we're talking about a guy who not only was a consultant for one of the top health-care law firms in the country, but a board member of the Mayo Clinic (a major recipient of NIH grants) and the husband of one of America's biggest defense lobbyists — wife Linda Hall lobbies for Lockheed-Martin and Boeing. Does anyone really think that this person is going to come up with a health care proposal that in any way cuts into the profits of the major health care companies?

Daschle is just a symptom of an accountability-free system in Washington and throughout the country among the upper echelons of the elite. They evade taxes like it's their job. They pass favors back and forth to any fellow member of the club. And the working class pays for it. This story is from the UK, but it could just as easily be from the US.

British taxpayers are being left to plug a multibillion-pound hole in the public finances as hundreds of the country's biggest companies increasingly employ complex and secretive tax arrangements to limit the amount they hand over to the exchequer.

An extensive Guardian investigation has examined the accounts of the UK's biggest companies - many of them household names - and discovered a series of sophisticated tax strategies which, critics say, amount to an almost unstoppable tide of perfectly legal corporate tax avoidance.

The veil of confidentiality that covers these tax avoidance schemes is so difficult to penetrate that nobody knows exactly how much tax goes missing each year. But HM Revenue & Customs estimated that the size of the tax gap could be anything between £3.7bn and £13bn. The Commons public accounts committee put it at a possible £8.5bn and the TUC said £12bn.

This is all legally accomplished, through corporate tax laws written by corporate lobbyists, through handshake agreements between those former lawmakers on one side of the revolving door and the others on the insude, and through a general sense of permissiveness and leniency. Practically everyone in Congress is a future recipient of such beneficence, so there's not a lot of effort put into caring. There are hundreds of billions of dollars in unpaid taxes floating around out there, maybe enough to put aside this "grand bargain" of fiscal reform and pay for virtually the entire current deficit. This is the poison that keeps the country from progress on significant issues.

Scenes From The Class Struggle In Capitol Hill

If you're on Twitter, I strongly recommend you find a right-wing mouth-breather Congressman to follow on the site and read them carefully. You'll get the talking points hours or even days before they show up on the teevee. For example, my favorite right-wing Twitterbug, Rep. Pete Hoekstra (R-MI), has offered his sage thoughts on this Tom Daschle tax story.

Daescle(sp?)/Geitner/Rangel all avoided/cheated on taxes!Daescle latest!They don't mind raising taxes because they don't pay them.

He got two of the three names wrong, including Daschle, who was Senate Majority Leader when Hoekstra chaired the Intelligence Committee (!) and therefore was in all the Gang of Eight meetings with him.

But let's get off spelling for a second. The soundbite is that Democrats don't mind raising taxes because they don't pay them. Har giggle snort glorf!! So let's pre-but this statement in case it's used by George Will or David Brooks tomorrow morning.

Because, sigh, if only failure to pay taxes or disclose income had anything to do with party and not class. And this happens through both illegal and legal means.

The average tax rate paid by the richest 400 Americans fell by a third to 17.2 percent through the first six years of the Bush administration and their average income doubled to $263.3 million, new IRS data show.

The 17.2 percent tax rate in 2006 was the lowest since the IRS began tracking the 400 largest taxpayers in 1992, although the richest 400 Americans paid more tax on an inflation-adjusted basis than any year since 2000.

The drop from 2001’s tax rate of 22.9 percent was due largely to ex-President George W. Bush’s push to cut tax rates on most capital gains to 15 percent in 2003.

And as long as we're talking about tax dodgers, let's bring in the biggest group of them bar none, corporations.

The news that more than 60 percent of U.S. corporations failed to pay any federal taxes from 1996 through 2000 when corporate profits were soaring and that corporate tax receipts had fallen to just 7.4 percent of overall federal tax revenue in 2003 – the lowest since 1983 and the second-lowest rate since 1934 – is an outrage. But it should come as no surprise to anyone who has been paying attention to national tax policy over the past few years. The General Accounting Office (GAO) report also found that an astonishing 94 percent of corporations reported tax liability of less than 5 percent of their total income during the same time period. Corporate tax dodging has gone on for far too long. But the policies of the Bush administration have exacerbated the problem by furthering the culture of tax avoidance by big corporations and creating a pervasive unfairness in our tax code.

We have a problem in this country with people not paying their taxes. And irrespective of anything else, those people are by and large rich and connected. They influence politicians in Washington to write breaks and favors into the tax code. They pass special gifts back and forth to one another. They claim that their corporate headquarters can fit into a mailbox in the Cayman Islands.

The tax code is multi-layered and complex. These tax problems happen at confirmation hearings every four years as a result. Because it's easy to evade taxes, by either legitimate oversight or outright theft, and for the wealthy that likelihood is multiplied. Don't take my word for it - take the leader of the Republican Party from 2000 to 2008:

WALLACE: How does [McCain] overcome all of that and...

BUSH: Because there's two big issues. One is, who's going to keep your taxes low? Most Americans feel overtaxed and I promise you the Democrat [sic] party is going to field a candidate who says I'm going to raise your tax.

If they're going to say, oh, we're only going to tax the rich people, but most people in America understand that the rich people hire good accountants and figure out how not to necessarily pay all the taxes and the middle class gets stuck.

We've had -- we've been through this drill before. We're only going to tax the rich and all you have to do is look at the history of that kind of language and see who gets stuck with the bill.

He said this over and over during the 2004 campaign. His team must have thought it was a mighty clever talking point. It was so much fun to see the President of the United States, with control over the IRS, helpfully explain that the rich evade taxes and there's nothing anyone can do about it.

7/14/2004 THE PRESIDENT: ...People need to be aware of this talk out of Washington, D.C. that says, oh, don't worry, we're just going to tax the rich. That's not the way it works in the tax code. The big rich dodge taxes, anyway. It's companies like this who end up paying more taxes.
8/3/2004 THE PRESIDENT: ...He said, tax the rich. You've heard that before haven't you? You know what that means. The rich dodge and you pay.
8/13/2004 THE PRESIDENT:...I'll give you one other thought. Let me just leave you with one other thought about taxing the rich. You know how that works. A lot of the rich are able to get accountants, so they don't -- they're able to dodge. You've seen it before. We're going to tax the rich, and then they figure out how not to get taxed.
8/28/2004 THE PRESIDENT: ...Every time they say, tax the rich, the rich dodge and you pay.
9/1/2004 THE PRESIDENT: ...You know what it means, tax the rich. It means the rich dodge and you get stuck with the bill.
9/3/2004 THE PRESIDENT: Yeah, we've heard that before, haven't we? First of all, you can't raise enough money by taxing the rich to support all his programs. Secondly, the rich figure out a way to dodge it, and you get stuck with the bill.
9/7/2004 THE PRESIDENT:Yes. Oh, don't worry, we'll tax the rich. Well, that's why the rich hire accountants and lawyers. They dodge, you pay...
10/11/2004 THE PRESIDENT: ...Something else about taxing the rich -- the rich hire lawyers and accountants for a reason, to dodge the tax bill and stick you with it.

This is the same guy who eliminated half of the IRS lawyers who audit the rich, and went after the middle class more often with audits and scrutiny.

Since 2000, authorities at the Internal Revenue Service have nearly tripled audits of tax returns filed by people making $25,000 to $100,000 as part of a broad change in audit strategy.

Audits of these middle-class taxpayers rose to nearly 436,000 last year, up from about 147,000 returns in 2000. For these 61 million individuals and married couples, who make up nearly half of all taxpayers, the odds of being audited rose from 1 in 377 to 1 in 140.

I'd be willing to bet that practically everyone of means in Capitol Hill has cheated on their taxes in one way or another. They're the Masters of the Universe and they see it as their due. If Republicans have gotten religion and suddenly want to end the practice, sounds good to me. We'll just put those auditors back to work and start poring over the returns of every corporation and every man and woman of wealth. We can even get rid of those loopholes and complexities that cause a lot of these problems. But don't tell me that this is an issue of party in any way. This is a class issue.

The Return of the Friday News Dump!

Tom Daschle edition:

ABC News has learned that the nomination of former Senator Majority Leader Tom Daschle (D-SD) to be President Obama's Secretary of Health and Human Services has hit a traffic snarl on its way through the Senate Finance Committee.

The controversy deals with a car and driver lent to Mr. Daschle by a wealthy Democratic friend, a chauffeur service the former Senator used for years without declaring their use on his taxes.

It remains an open question as to whether this is a "speed bump," as a Democratic Senate ally of Daschle put it, or something more damaging."

More here. The "wealthy Democratic friend" is Leo Hindery, who was almost Obama's Commerce Secretary. Yikes!

President Obama’s pick for secretary of health and human services, Tom Daschle, filed amended tax returns and paid more than $100,000 in back taxes on Jan. 2, administration officials said on Friday.

Mr. Daschle concluded that he owed the taxes for free use of a car and driver that had been provided to him by Leo Hindery Jr., the founder of a private equity firm known as InterMedia Advisors, the officials said.

Mr. Daschle was chairman of the firm’s advisory board. In a financial disclosure statement filed this month with the Office of Government Ethics, Mr. Daschle reported that he had received large amounts of income from InterMedia, including more than $2 million for consulting and $182,520 in the form of “company-provided transportation.”

The larger problem, perhaps, is how easy it is for reasonably wealthy and well-connected people to cheat on their taxes. Or, if you're more forgiving, how hard it is to untangle the complex web of rules in the tax code.

And, with now three reports of trouble with nominations, you have to wonder how world-class that Obama vetting operation is.

Health Care "This Year"

In between fielding another pointless round of questions on Rod Blagojevich, Barack Obama used today's press conference to introduce Tom Daschle as the next Health and Human Services Secretary and to signal that he would move early in his term to reform health care.

"Some may ask how, at this moment of economic challenge, we can afford to invest in reforming our health care system. Well, I ask a different question -- I ask how we can afford not to....If we want to overcome our economic challenges, we must also finally address our health care challenge [...] This has to be interwoven into our economic recovery program. This can't be put off because we're in an emergency. This is the emergency!"

It's a very important way to look at the health care crisis, which is destroying both American families and American business with its twin outrages of soaring costs and reduced care. The key point, as Ezra Klein notes, is that Obama said he would seek to reform the system "in my first year." That suggests he is determined to move quickly on health care, which is exactly what is needed to secure passage. There are going to be a lot of neo-Hooverists out there calling for delay, but if Obama sticks with his solid rhetoric, he should parry those calls pretty easily. It's amazing what you can accomplish if you take the long view of the subject. If health care costs continue to expand at their current rate, today's recession will look like a small bump in the road.

Nobody really knew what Obama would spend his political capital on early in his term. If it's health care, I'm very pleased.

By the way, Daschle wasn't the only appointee on stage.

He also introduced Jeanne Lambrew's appointment as Daschle's deputy. Lambrew is an incredibly talented and knowledgeable health wonk, and her involvement should cheer liberals. Unlike during the campaign, when Obama's health care team seemed heavy on relatively cautious academics, Lambrew has long White House and executive branch experience, and comes to health care as a crusade as much as a topic of study. As Jon Cohn says, the importance of her presence "goes beyond the fact that she happens to know a heck of a lot about health care. She, too, has a strong commitment to what you might call the 'social justice' side of the debate."

More from Jon Cohn and Robert Pear at the NYT.

...as a side note, one of Obama's core ideas to lower health care costs is electronic medical records. Ezra spells that out pretty nicely here. You wouldn't think that you could achieve as much savings just by putting health records online, but it turns out that the Veteran's Health Administration has gone electronic, and they save $33,000 a year per nurse practitioner, according to this study. That's pretty amazing. And we're finally at a moment where we can swallow the up-front costs:

But the problem is the upfront costs are quite high. Around $50,000 per physician. And that's not to include the time it takes to learn the system, or a doctor's preference for the way he's always done things. Which is why fewer than 20 percent of physicians have adopted the technology. At this point, it's clear you'd need some coordinating authority to help pay some of the upfront cost, and ensure standards and interoperability among systems. An authority like...the government. Even Kevin MD, as free market as they comes, agrees. "The ball is in the government's court. If universal electronic records are the happen, they have the ability to make it so." And now the government, under Obama, is planning to make it so, including real money for health information technology in the stimulus package. This is how the stimulus should be used: To make necessary and needed investments that will have lasting beneifts.

Fantastic.

They've Created A Monster

They've Created A Monster

by dday

Tom Daschle came right out today and said that you can't fix the economy without fixing the health care crisis. Interestingly, health care is one of the only sectors in today's washout of a jobs report where hiring went up. The demand is there, and making the system more equitable, accessible and affordable would not only help every American cope with their bills and move from job to job, but would also make American business more competitive. It's very good that the connection between health care and the broader economy is being made.

"There is no question that the economic health of this country is directly related to our ability to reform our health-care system," Daschle said.

Daschle cited the fact that high health care costs are preventing U.S. businesses from staying competitive and creating jobs. "That's what makes this so urgent and so much a part of the economic recovery process," Daschle said. "I believe that for the first time in American history, health-care reform will be done."

Almost as important as making health care a priority is how Daschle and the transition team is laying the groundwork for getting it done, connecting with the grassroots to push the policy from the bottom up.

Former senator Thomas A. Daschle, Obama's point person on health care, launched an effort to create political momentum yesterday in a conference call with 1,000 invited supporters culled from 10,000 who had expressed interest in health issues, promising it would be the first of many opportunities for Americans to weigh in.

The health-care mobilization taking shape before Obama even takes office will include online videos, blogs and e-mail alerts as well as traditional public forums. Already, several thousand people have posted comments on health on the Obama transition Web site [...]

It is the first attempt by the Obama team to harness its vast and sophisticated grass-roots network to shape public policy. Although the president-elect is a long way from crafting actual legislation, he promised during the campaign to make the twin challenge of controlling health-care costs and expanding coverage a top priority in his first term.

This really looks like they're requesting policy ideas from citizens to work into their overall framework, although you never can tell. But by allowing people to invest in the policy, it certainly gives momentum to any effort to get it through Congress. The transition team is soliciting ideas through online comments and community forums. And health care came up quite a bit in the transition team's meeting with community organizers and activists yesterday. Plus, they're providing open access to all meetings, documents, and position papers from various groups, as well as offering the ability to post comments about them.

The most important thing is that the emphasis on building a grassroots movement on health care is unmatched by any other issue. It's clear they want to make a go at this early in the first term, with the help of their supporters.

And that provides an opportunity. There's been a lot of hand-wringing in the traditional media over "what is Obama going to do with his email list," but I think that has it a bit backward. It's really "what is the list going to do with Obama." Already in California I'm seeing a lot of ideas exchanged, ad hoc groups formed, meetings set up, and initiatives set, both on national and local issues. In essence, Obama doesn't have total control over "harnessing" the grassroots network from the campaign; the grassroots will make the determination about what they want to work on and how. Marshall Ganz, who kind of pioneered Obama's community organizing in the campaign and whose roots in community activism go back to Cesar Chavez and the United Farm Workers, had this to say about it:

"Here we have a guy who won who was really propelled into office--I don't want to say that--supported through the creation of a movement. And so, now what? Can he lead it from the presidency? Probably not. There are lots of good reasons why that would be problematic. Or why that would quickly turn into emails from Barack saying 'Please send a letter to X.' Which is just the old form of what we were talking about before, politics as marketing. It could become a network of some kind, it could become an organization. If it became an organization, something like Campaign for a New America, we have to look at questions of finance and governance, as to how to enable something like that to work. But there's a foundation out there that didn't exist before, and it's not going to go away. My colleague Bob Putnam talks about social capital, there's a kind of civic capital that's been created here. It's not going to disappear."

I then asked him where all that social knowledge embedded in the network was going to go--the 23,000 Camp Obama organizers, the super-volunteers, the awareness of all the nodes at the local level. What would it be like to govern with this capacity?

Ganz replied, "I agree. That's what's being debated right now. There's a team of organizers in Chicago right now who are working on this question. The field organizers and a lot of the people who built this thing--not all of them want to go off and have jobs in Washington. A lot of them are committed to an organizing vision here and they fought for it throughout the campaign. That's one reason the campaign adopted much more of an organizing approach than it was inclined to at the beginning....New Hampshire was one of the worst marketing operations that we've seen. And so he lost, and we learned something from that. It was as stereotypically a marketing operation as South Carolina was an organizing operation, or Iowa. The caucuses are interesting because even if you don't believe in organizing, you have to, otherwise you're screwed. You arrive at a lot of organizing elements tactically, not because you necessarily want to create democratic organization." [...]

"People are all so used to thinking, a lot of groups and organizations are sort of saying, 'who's going to get the list? who's going to get the list? They sort of think of 1.5 million names, who's going to get it? You can transfer a list, but you can't transfer people that way. That's what's out there, is people. Over the next few weeks, months, there's going to be some working thru this. It's very important what Obama decides. Whether to try to support some kind of organized effort, that's rooted in the campaign, or not."

I think the way the transition team has approached health care offers an opportunity for grassroots types to "make them do it." Because coming up with something called "reform" would be a waste. Heck, the insurance industry lobby has a reform proposal (their big idea is for the government to subsidize health care to make it affordable while they get to charge the same price for the same kind of crappy care! Brilliant!). Progressives have an opportunity to be in on the conversation for what shape the actual reform will take, and since the Obama Administration is tipping their hand as to how fundamental to success the grasroots will be, progressives have non-trivial leverage over that form. There is a calculation that something as big as reforming the health care industry cannot get done without individuals all over the country playing a part. That process is something new and I would imagine pretty flexible. It's not an actual seat at the table, but it's pretty darn close.

There's a potential to become an active participant in how these issues play out instead of the passive role of commenting and harrumphing after the fact. And yes, the same tools and techniques can be applied when Obama does something many of us don't like. This is going to be a powerful force in the years to come, and it will most certainly not be an adjunct of the President. I don't think it can be fully understood where it will go just yet, but the potential is exciting.

Health Care Conversations

The science is in, to borrow a phrase, on the US healthcare system. It costs more and treats less, and as a result America is less competitive and far less healthy.

"Our health-care system is fraught with waste," says Gary Kaplan, chairman of Seattle's cutting-edge Virginia Mason Medical Center. As much as half of the $2.3 trillion spent today does nothing to improve health, he says.

Not only is American health care inefficient and wasteful, says Kaiser Permanente chief executive George Halvorson, much of it is dangerous.

Those harsh assessments illustrate the enormousness of the challenge that awaits President-elect Barack Obama, who campaigned on the promise to trim the average American family's health-care bill by $2,500 a year. Delivering on that pledge will not be easy, particularly at a time when the economic picture continues to worsen.

That's a paradoxical final statement. Delivering on the pledge should be as simple as removing the inefficiencies in the system, which can be viewed in working models in every other industrialized nation in the world. But that's not how the political ball bounces here in the greatest country since the dawn of man. While it pains me to say that Newt Gingrich is making a bit of sense on this question, he's ignoring the realities of where that useless spending flows.

A high-performance 21st-century health system, they say, must revolve around the central goal of paying for results. That will entail managing chronic illnesses better, adopting electronic medical records, coordinating care, researching what treatments work best, realigning financial incentives to reward success, encouraging prevention strategies and, most daunting but perhaps most important, saying no to expensive, unproven therapies.

"There is more than enough money in the system," said former House speaker Newt Gingrich, who runs the District-based Center for Health Transformation. "We just are not spending it well." [...]

With those sorts of variations, the Dartmouth team concluded that as much as 30 percent of medical spending -- or $700 billion -- does nothing to improve care.

Even if only a third of that could be invested in critical programs, "imagine the possibilities," said Peter Orszag, head of the Congressional Budget Office, who was nominated last week to be director of the Office of Management and Budget in the Obama administration. "Given the scale of it, I am puzzled as to why we are not doing more to improve the efficiency of the health system."

Of course, when Gingrich talks about "not spending money well," he's talking about keeping treatment from those who need it. But what it means in practice is reflected in this horror story, which shows you where that staggering amount of money goes that doesn't improve care - into drug and insurance company coffers:

The study cost $130,000,000 and included 42,000 patients. It compared the effectiveness of four types of blood pressure drugs: a calcium channel blocker, an alpha blocker, an ACE inhibitor, and a simple diuretic. The diuretic performed best. It was the sort of finding worthy of celebration. Health costs are too high, and rising too quick. Our flabby society gets bad readings when it straps on the blood pressure cuff, and soon enough we'll all be on these drugs. And here were study results saying that the diuretic, a generic drug which sells for pennies, outperformed its pricey, patented competitors. So what happened? Not a whole lot [...]

Diuretics sales jumped, but only by a few percentage points. "[They] should have more than doubled," says Curt Furberg, who chaired the study. And in a world where doctors prescribe medications based on a simple reading of the latest evidence, maybe they would have doubled. But we don't live in that world. We live in a world where pharmaceutical companies have big budgets and sophisticated public relations teams. Pfizer, for instance, put up $40 million to ensure that their Cardura, their alpha blocker, was included in the study. That proved a mistake. Patients on Cardura were more than twice as likely to require hospitalization for heart failure [...]

The basic reality was this: The pharmaceutical companies had a skilled team and a lot of money promoting their drugs. No one was promoting the generic diuretics. Folks looking to things like comparative effectiveness review to save the health care system should take the story seriously. Evidence is only effective if physicians use it. And right now, they have no real reason to use it. Even in a system this expensive, there's no internal incentives to aggressively cut costs. Maybe it's time there were. If doctors were paid by capitation -- if they got a fixed amount of money per patient, and they kept whatever they didn't use, as happens in England -- it's hard to imagine they wouldn't have been more interested in these study results.

I believe Peter Orszag, a very sharp economist, and the Obama team are listening to these complaints about efficiency. They've set up discussion forums on the issue and allowed high-level policymakers like Tom Daschle to respond personally. So let's be clear - the best cure-all for the American health care system would be to remove the rapacious greed at the heart of all this wasted money. Drug companies and insurers spend less on care and more on administrative and PR costs because that's where the profit maximizers are. Until profit can either be driven through providing care, or profit is completely removed from the system, there will not be meaningful progress on health care.