Obamacare + 7.8%: Can Obama Recapture the Race at Debate #2

October 10, 2012

By Melissa Bynes Brooks

A decreased unemployment rate to 7.8 percent in September is the perfect backdrop for underscoring President Obama’s credibility and record during the second presidential debate on October 16, 2012. This will be another opportunity for President Obama to passionately state why his model for governing is the best investment in the long term sustainability in the future of America. The success of his polices may be measured by what they have accomplished in terms of growing the economy, creating jobs, supporting small businesses, providing affordable healthcare, and improving government efficiency.

Before President Obama took office, the economy was losing 800,000 jobs a month. Since then, there have been 31 consecutive months of job growth and 5.2 million new private sector jobs.

Current conditions point to a potential US manufacturing renewal: Industrial output has been slowly rising over the last three years. The US remains one of the world’s largest and most attractive marketplaces: Sales of autos and durable goods are up; factory orders have increased; and the housing market is improving, lifting related construction and retail sectors. The American Auto Industry is thriving again.

The US still boasts the most skilled, highly trained workforce in the world. To maintain that edge, government policies and private initiatives are being implemented. In summer 2011, the Obama administration outlined the expansion of an industry-led worker-training program, Skills for America’s Future, intended to improve partnerships with community colleges and create easier-to-understand, uniform job-training requirement standards for prospective manufacturing employees. They also launched the Advanced Manufacturing Partnership (AMP), an initiative to provide more than $500 million to encourage investments in promising technologies. The plan’s objective was to partner with industry to create high-quality, good-paying jobs for American workers.

On September 16, 2011, President Obama signed into law one of the most significant legislative reforms to the patent system in our Nation’s history. The America Invents Act  was passed with the President’s strong leadership last year, after nearly a decade of effort. A year later, the U.S. Patent and Trademark Office is implementing the legislation in a manner that makes it easier for American entrepreneurs and businesses to bring their inventions to the marketplace sooner, converting their ideas into new products and new jobs while avoiding costly delays and unnecessary litigation, letting them focus instead on innovation and job creation.

Outlays for Social Security and the major federal health care programs are projected to total 12.2 percent of GDP in 2020 under the alternative fiscal scenario, compared with an average of 7.3 percent over the past 40 years, placing increasing pressure on the federal budget. Obamacare reduces costs, manages risks, and improves efficiency in the healthcare delivery system. Contributing factors include a transition from a fee for services payment model to a bundle payment model, incentives for insurance providers and hospitals geared towards pay for performance and quality over quantity, and incentives for the use of health information technology which reduces medical errors. The estimated amount of deficit reduction under Obamacare will be $5 billion. Starting in 2014, insurance companies can no longer reject people with pre-existing conditions.

If Gov. Romney repeals Obamacare, he will add $109 billion to the federal budget deficits over the next 10 years and an estimated 60 million nonelderly people would be uninsured. His current plan would cover pre-existing conditions for people who had health insurance and continue to purchase it, as long as there’s no interruption in coverage of more than 63 days.

The Medicare Program is solvent for a period of 8 more years because President Obama cut $716 billion in wasteful spending from the fee-for-service sector (other than physicians’ services). Payment rates were set up in Medicare Advantage to provide low-income beneficiaries with a sufficient choice of plans without incurring a premium liability. There are reduced Medicare Disproportionate Share Hospital for state DSH payments which are more than the hospital’s eligible uncompensated care costs. Gov. Romney’s promise to restore $716 billion of wasteful spending back into the Medicare program is not congruent with his promise to decrease the federal deficit.

Who should bear the burden of proposed changes in spending cuts and tax increases?

A national survey by the Pew Research Center for the People & the Press, conducted July 12-15 shows the public supports President Obama on the issue of fairness and tax policies.  By two-to-one (44% to 22%), the public says that raising taxes on incomes above $250,000 would help the economy rather than hurt it, while 24% say this would not make a difference. Moreover, an identical percentage (44%) says a tax increase on higher incomes would make the tax system fairer, while just 21% say it would make the system less fair.

SCOTUS is also relevant to the fairness issue. The Supreme Court’s Impact on the 2012 Presidential Election, conducted on behalf of civil rights groups by Hart Research Associates, found that more than half of the 1,007 people surveyed online in late August, 54 percent, believe that the current Court majority “tends to side with corporations” as opposed to individuals. Thirty-six percent said the Court had struck a balance, and just 10 percent believe the Court favors individuals. Between the two candidates, 46 percent swing voters polled said they have “a great deal” or “a fair amount” of confidence that Obama would nominate good federal judges and Supreme Court justices if he wins. Only 35 percent of those swing voters said the same about Romney.

It is the role of government to ensure that organizations observe relevant laws and act ethically. Organizations must be legally, socially, and environmentally responsible. It is illegal to mislead consumers who purchase goods and services.

In February 2012, the Obama Administration oversaw the largest consumer financial protection bipartisan settlement in US history which provides $25 billion in relief to distressed mortgage borrowers. The historic joint state-federal settlement was with the country’s five largest mortgage servicers who routinely signed foreclosure related documents outside the presence of a notary public and without knowing whether the facts they contained were correct.  Both practices violate the law.  The mortgage servicers were Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo.

On January 29, 2009, President Obama signed the Lilly Ledbetter  Fair Pay Act of 2009 (“Act”).The Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work. Compensation discrimination on the basis of race, color, religion, sex, national origin, age, or disability is illegal.

For the next debate, President Obama must ensure that voters understand and arrive at an implicit understanding of the role of government and public policy which can guide coordinated and measured change towards a stable outcome when the invisible hand fails to restore equilibrium.

There are no quick fixes.


Book Reference

Dixit, A. K. and Nalebuff, B. J. (2008). The Art of Strategy: A Game Theorist’s Guide to Success in Business and Life. New York, NY: W. W. Norton, Inc.