Wednesday, November 18, 2009

Economy and Politics

Things seem to be going largely as I would expect with the economy. We are seeing nice growth in the markets, GDP is rising, and there are plenty of signals that things like the housing market and job market are starting to turn. Both of the latter are obviously tied to one another and as I have said many many times employment is a lagging economic indicator.

The major piece of legislation that needs to get done is health care reform. The current system is putting a major drag on economic activity in this country. We spend 17 percent of GDP on health care - far higher than any other country. It is expensive and costs to the insured are rising by double digits every year. So it is unsustainable over the long term the way it is now. On top of that, if you lose health insurance it is very difficult and even more expensive to get it again. There are would-be entrepreneurs that don't start businesses because they are concerned about losing health insurance - that is a crazy fact that is depressing economic growth.

The worst part about the ongoing debate in Washington is that big special interest money is successfully muddying the debate. Look, any reform is going to be complicated, but throwing out mistruths and purposefully deceiving folks makes reform even more difficult to achieve. Then you have the RepubliCANTs openly saying they just won't vote for any type of reform. The end result is a political mess.

The Dems are on the right side of history. The question is whether they will pull it together and pass legislation that reforms the system this year. I still believe we will end up with reform and that it will include a strong public option. If the Dems cannot pull it together, it will be a major loss for the American people, but rather than being punished in the mid-terms, the Dems can easily make gains if they hammer the RepubliCANTs for blocking reform. It will be an easy sell to say that it is RepubliCANT opposition that killed health care. I know this, people want health care and this is an increasing number. The choice will be put more Dems in place and get health care, or vote Dems out and go with the status quo.

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