Monday, March 8, 2010

"The economy, not health care, should be the priority"

Sydney M. Williams

Thought of the Day
“The economy, not health care, should be the priority.”
March 8, 2010

While recent economic activity – capped on Friday with a fall in jobless claims and a rise in productivity – and a strong stock market in February (and the first week in March) has emboldened the President to persist in pursuing his health care agenda, the Economic Cycle Research Institute (ECRI) suggests growth will slow by mid year. In Friday’s Investor’s Business Daily, their leading indicator for the U.S. economy fell to a 30-week low. No index is infallible, but this index has made some early and accurate forecasts. It called the current recession in March 2008, a full nine months before the National Bureau of Economic Research on December 1, 2008 (a year late) officially said we were in recession. And last April, the Index forecast the recovery that began during the third quarter.

Economists are generally calling for 3.5% GDP growth this year and 3% next. That may be true and certainly I hope it is, but the risk of a double dip recession exists. Despite reported fourth quarter GDP of 5.9%, Paul Volcker yesterday suggested it is still too early to begin tightening either monetary or fiscal policy. This morning Bloomberg Radio reported that the National Federation of Independent Business Research Foundation (NFIB) released a survey indicating 80% of those surveyed cited uncertainty in Washington, not access to capital, as the principal reason for concern. And that uncertainty is largely based upon the swelling, society-changing health care bill that, though apparently on life-support, continues to divert attention from jobs and the economy.

There is little question that the current employer-based health care system is tremendously flawed, largely, in my opinion, because it removes the consumer from the pricing equation. (When something is “free” people will consume vast quantities.) The current system leaves uncovered too many people and penalizes those who self-insure. However, the proposed system further distances the consumer from making cost-value decisions, has little public support, will add a trillion dollars or more to the deficit, may well weaken existing government programs such as Medicare and, at 2700 pages, will prove a lawyer’s delight. To suggest that the government, which will set prices and likely ration care, will be a more efficient dispenser of health care than the private sector, begs credibility.

Why the simple and cost-effective suggestion of permitting interstate competition among insurance companies is not allowed and why tort reform is not addressed in those 2700 pages remains a mystery? Perhaps because common sense and government are rarely mentioned in the same sentence. Commendable goals, untempered with reality, rarely achieve hoped for goals.

The risk is that while Washington fiddles with health care, the economy slips backward.

Labels:

0 Comments:

Post a Comment

Subscribe to Post Comments [Atom]

<< Home