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Health-care playbook and Wall Street reform

Published:Friday | March 26, 2010 | 12:00 AM

Wilberne Persaud, Financial Gleaner Columnist

At the signing of the United States (US) health-care reform bill into law, President Barack Obama, commenting on the difficulties and obstacles faced by US lawmakers recognised that in a country as diverse as the US, of necessity, leaders have to speak to different concerns.

"It isn't always tidy; it is almost never easy. But perhaps the greatest and most difficult challenge is to cobble together out of those differences the sense of common interest and common purpose that's required to advance the dreams of all people - especially in a country as large and diverse as ours," said the US president.

More than once he referred to the bill as "historic legislation"; he is absolutely right. Nothing as far-reaching and potentially defining of the character of the country has been done for many decades.

This bill must take its place alongside the New Deal, the GI Bill, creation of the Interstate Highway System, promulgation of true civil rights for all, social security and Medicare.

They all but succeeded. Extreme right-wing talk shows and the Tea Party movement portrayed health-care reform as socialist power grabbing by the government and Obama himself, as Hitler.

They invoked utterly ridiculous lies about what health-care reform would mean. The device allowing end-of-life consultation with doctors and relevant caregivers to be paid for as part of an insurance contract was dubbed 'death panels' meant to kill granny; and abortion would be paid for by federal government funds.

These were untrue. So, too, was the view that health-care reform was nothing but part of a grand government takeover scheme to come between citizen and doctor; a huge power grab that would see government acquiring more than one sixth of the economy.

This campaign worked so effectively that a mere three weeks ago, there was despair about the bill's passage.

But Obama stuck to his agenda, going out and batting in the game while allowing leaders of the House and Senate to manage their parts of the play. The strategy worked.

What have we learnt from this? The first thing is that, while many are unwilling to admit it, the Barack Obama presidency sits uneasily with a not insubstantial minority of the US population.

This unease is partly based on bigotry, racism and ignorance, but also on the system of governance and US politics itself that gives so much weight to money in politics - made worse by the recent Supreme Court decision that essentially treats a corporation as a person, relative to 'political speech'.

Lawmakers were subject to being called the N-word, and being spat on by fearful, angry demonstrators at the Capitol.

The irony is that these folks' fears have been amplified by millions of dollars per week in lobbying expenditures of the health insurance and pharmaceutical industries. Yet, upon passage of the bill (incomplete - for there are still a few steps left), the health insurance and pharmaceutical companies' stock prices have surged.

The legislation actually guarantees in excess of 30 million additional participants in health insurance schemes. And indeed, the public option, something akin to having universal access to Medicare, as a competitor to private insurance is off the table.

This bill is thought of as a "sell-out" by the liberal and left elements of the Democratic Party.

Actual benefits

Yet, a day after passage, a USA Today-Gallup poll with a +/- 4 per cent margin of error found 49 per cent of respondents thinking that "passing health-care reform" was a "good thing" versus 40 per cent thinking it was a "bad thing".

The big thing going for Obama and the Democrats is the fact that people - voters - will have a chance to experience actual benefits of the bill in comparison to a caricature of falsehoods manufactured by corporate money-generated 'spin'.

The other important facts we need to consider relative to this experience in Washington law-making are these: Wall Street is, as Americans say, 'off the reservation'! It has gone wild, unable to see extreme unwisdom in its ways. There is need for regulatory change.

Unemployment in the US is around 10 per cent overall and higher than 25 per cent for the construction industry. Millions of households are under water in their mortgages and face foreclosure.

The international financial system and world economy are irrevocably tied to the US economy and its financial arrangements, both private and governmental.

If Wall Street's short run-motivated behaviour and bonuses generated by non-productive casino type operations are not addressed, there will surely be another meltdown, sooner rather than later.

Current attempts to create a consumer protection agency alongside tough and binding financial regulation are being either watered down or stymied. Opposition is not based on spinning and creation of 'astro-turf grass-roots organisations' as in health care, but on moneyed lobbying and the unique revolving door of policy makers and Wall Street executives criss-crossing each other with uncanny frequency.

Last week's column mentioned that from mid-March 2008, "after the Bear Stearns near collapse, teams of government monitors from the Securities and Exchange Commission and the Federal Reserve Bank of New York were dispatched to, and took up residence at, Lehman, to monitor Lehman's financial condition with particular focus on liquidity".

If this presence did nothing to prevent what appears, on the face of it, to be fraudulent reporting, how can it be expected that the necessary reforms will be quickly achieved?

An attempt needs to be made to move closer to Glass-Steagall from self-regulation, high paper profits and outrageous bonuses prior to inevitable collapse.

Furthermore, such legislation will not be implemented unless the City of London is subject to similar rules. Gordon Brown's fortunes and British politics complicate this situation. The outlook is anything but rosy.