All Blog Posts from Econwatch

The wait is over: the Senate Finance Committee's formal health care bill has finally arrived! Chairman Max Baucus unveiled the Senate version, "America's Healthy Future Act of 2009," which sounds eerily like a breakfast cereal. The 10-year $856 billion Senate plan is a $44 billion savings from the number President Obama quoted last week in his prime time health reform speech.

Here's my first impression of what you need to know about the new bill:

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Here’s what some of the top economists and economics bloggers are saying about President Obama’s heath care reform speech delivered yesterday to the House and Senate:

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It’s no wonder that Americans are struggling to understand health care reform: the stuff is complicated and dense. I learned my lesson on The Early Show this morning, when trying to succinctly describe who will pay for the plan.

I got off the air and was scolded for not providing viewers with a better means for understanding the issue at hand. As penance, I’m going to try to lay it out here.

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According to the CBO, the US budget deficit is expected to rise by something close to a gazillion dollars. OK, the White House expects the ten-year budget deficit to reach $9 trillion, up from the original estimate of $7.1 trillion. Given that there are few plans to cut anything out of the budget, the alternative is to raise taxes.

What the President won’t say about health care reform is the following: there are not enough rich people to float the country’s needs right now. This is not a political statement, it’s a fact. This chart from last week’s Wall Street Journal demonstrates the point that to close the budget gap over the next ten years, tax rates on the rich would need to rise to nearly 69%. Even if you think that would be a good idea, it just isn’t going to happen.

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By S.L. Mintz of CBS MoneyWatch.com.

Today’s cautious optimism sure beats the despair that gripped the stock market a few months ago, says chief economist Diane Swonk (at left) of Mesirow Financial. In her view, the markets reached a turning point in the second quarter, or one is imminent in the third quarter, driven more by the tapering off of bad news than the arrival of good news. But net job creation won’t revive before December or January, “if we’re lucky.”

Swonk has a front-row seat on the nation’s economy, sitting on several advisory committees to the Federal Reserve Board, its regional banks, and the Council of Economic Advisers for the White House. Most recently, she was reappointed to serve on the Congressional Budget Office’s panel of economic advisers, and Swonk is also past president of the National Association for Business Economics (NABE), a title that Federal Reserve Chairman Alan Greenspan and several other Federal Reserve presidents have also held.

Here she discusses whether she thinks the market’s recent rally is sustainable, which market sectors look good and which don’t, and what could derail a recovery.

The markets are now about 50 percent off their lows. What do you think is going on?

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While everyone was celebrating Dow 9000 and deliberating the potential overhaul to the US health care system, I was depressed. What has happened to regulatory reform? Yesterday, the Senate Banking Committee heard testimony from FDIC Chair Sheila Bair, at left, SEC Chair Mary Schapiro and Fed Governor Daniel Tarullo on the regulation of risk.

You probably didn't hear much about it, though. As is often the case, the appetite for reform wanes as time passes and conditions improve. Additionally, with lawmakers overwhelmed by the health care debate, they can't seem to focus on another issue concurrently.

You can almost smell it–the same lamebrain members of Congress who were all too happy to castigate every participant in the crisis, don't have the energy to deal with solutions to help prevent the next crisis. That's a shame, because we need smart regulatory reform and we need it soon.

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I've talked to health care economists, health care providers, insurance and pharmaceutical industry insiders and Americans of all income levels to discuss the current debate about health care reform. The consensus is clear: we need reform, but I/we don't want to bear too much of the burden.

This morning on The Early Show, Maggie Rodriguez and I examined the impact on three types of people to illustrate how, depending on individual circumstances, health care reform may impact different segments of the population. The general categories were: the uninsured, the small business owner and the high income earner.






You can see how everyone agrees that action is necessary, but getting there involves a number of moving pieces. That's why President Obama plans to deliver a prime time press conference tonight to address health care reform. He's going to have his hands full selling the plan.

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In President Obama's weekly radio address, he said: "Under our proposal, if you like your doctor, you keep your doctor. If you like your current insurance, you keep that insurance. Period, end of story."

Really? What happens if your employer decides to change health plans? Isn't this akin to a company switching 401 (k) providers? There are countless instances of firms dumping one retirement plan sponsor for another, often less attractive plan. Sure, you, the retirement plan participant could opt not to use the company's plan, but the more likely scenario is that you would continue contributing to a plan that is not quite as good. My guess is that this is exactly what would happen in health care.

I'm not commenting about whether this is good or bad, rather that Americans deserve to know what the real cost of reforming health care will be–and make no mistake, there will be costs. How could it be otherwise? In order to overhaul the current messy and inefficient system, lots of people who are wealthy or currently have coverage, are going to pay a price. The price may be increased taxes, extra expenses for small business owners (which may affect their employees) or changes in care.

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The Obama administration proudly announced on Monday that the health care industry has made a significant step toward contributing to health care reform by offering to reduce the growth rate of health care costs over 10 years by 1.5 percent a year, or by a total of $2 trillion.

CBSNews.com's Hotsheet asked the administration how curbing the growth of costs--not stopping it--contributes to actual reform. The administration replied that cutting costs is a goal in and of itself. Two trillion dollars is nothing to scoff at, but it helps to keep things in perspective.

Given the rate at which health care costs have skyrocketed for Americans over the past decade, these savings could be a first step toward expanding coverage, some health care advocates say.

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