The Head Fake

President Obama plays a lot of basketball. And that has translated into his rhetoric. His favorite move is the rhetorical head fake, and he did it again today when discussing potential Supreme Court nominees. It’s his way of sounding like he is taking a middle of the road path, get you going one way and then take you another. I first noticed this device when I read his book, “The Audacity of Hope.” I did actually read it from cover to cover to get an idea about how he thinks.

In it, Obama uses the phrase, “I’m a believer in capitalism” over and over, but that phrase is always followed by a “but” qualifier that undercuts the main proposition. In “The Audacity of Hope,” when you add up all the qualifiers to his assertion that he believes in capitalism, you doubt very much whether he believes in it at all.

He did it again today, denying that there will be a pro-choice litmus test for his Supreme Court nominee, but then followed immediately by saying, “I want somebody who is going to be interpreting our Constitution in a way that takes into account individual rights, and that includes women's rights.”

Catch the head fake? In liberal jargon, “women’s rights” is code for “the right to abortion on demand.” So, what Obama really said is that he doesn’t believe in a litmus test, but make no mistake, there will be a litmus test.

Listen for the head fake. It generally comes when he feels compelled to show that he has a conservative cell or two in his body. It will be a phrase that begins, “I believe in the free market, but…”, “I believe in a strong defense, but…,” “America has a long friendship with Israel, but…,” and so on. Then he will proceed to undercut his assertion.

I’d actually rather have a president that will be blunt with me. I would respect him more if he said, “I believe in the holding of Roe v. Wade and I will undoubtedly nominate someone that is not very likely to deviate from that.” I could deal with that. But don’t think I’ll fall for a simple move. You see, President Obama, like you, I have South Side roots. I played my share of street basketball. You can’t get me with a simple head fake. I know where you’re going.

It's the numbers, stupid

Have you ever been in a bad car accident? I have. About 12 years ago, my son and I were in Winona, Minnesota at a father-son hockey camp and one day as we drove from the rink, we went through an intersection with no stop lights or stop signs. I failed to see a car with two teenagers barreling toward us. The car broadsided our Jeep and spun us around. The impact was so hard, it lifted two wheels off the ground. Fortunately, we were both strapped in as were the drivers of the other car. No one was badly hurt.

But the trauma of the accident stayed with us. I was sore for a week afterword and I felt emotionally raw from the experience. My eight year old son experienced a form of post-traumatic stress disorder. It was a jarring experience even though neither of us was permanently injured.

That’s about how I feel about the passage of Obamacare. It shook me up to witness the federal government hijack one sixth of our economy, especially coming on the heels of the government’s intrusion into the banking system, the automakers, and appointing a “pay czar” to determine executive compensation. But I’ve let the intellectual violence to my psyche subside so that I can give a fair assessment of Obamacare in a coolly analytical way by looking at the numbers.

Obamacare fails both on a macro and a micro level and the micro and macro effects will interact with each other over the long haul.

On the macro level, the Democrats trotted out the CBO estimates at the last minute to try to demonstrate that the bill reduces the deficit. Upon closer scrutiny, though, the bill will ADD $562 billion to the deficit over the next 10 years according to Douglas Holtz-Eakin, former director of the CBO office in his NY Times Op-Ed piece of March 21, 2010, The Real Arithmetic of Health Care Reform. I won’t go into the detail here, but suffice it to say that the Democrats used accounting gimmickry that would make the guys at Enron blush. Every major poll shows that the American people aren’t fooled either. By large majorities, they believe that this program will add to our already unmanageable deficit. They know reflexively that you can’t add a huge entitlement program and not have budgetary ill effects. My liberal friends are quick to attempt to use a moral argument about why this bill should have been passed. But what about the morality of stealing from our nation’s children and grandchildren and saddling them with $20 trillion in debt and its consequences? How moral is it to saddle them with paying for our current consumption, condemning them to a lower standard of living, fewer opportunities and virtual enslavement to the foreigners that buy our public debt securities?

The bill is even worse on micro level. The Obama crowd appears to be willing to ignore the effects of this program on individual doctors (or, more cynically, as I believe is creating just the effects that it desires.

Dr. Nathan Schatzman in a recent interview on Bloomberg pointed out that a family practitioner at normal overhead rates that has 60% Medicare patient load will see average pay cut from $160,000 a year to $95,000 a year. To maintain current income levels, this doctor will need to work 35% more hours. So under Obamacare, the family practitioner that worked like a dog to get into medical school, pay off his or her student loans, and who works 90 hours a week will now make about the same as a UAW worker at government-run GM. And, unlike the UAW worker, a doctor always runs the risk of being sued and having his or her assets and livelihood exposed.

This is EXACTLY the results that the Obama White House has been attempting to engineer. He wants professionals and the working class to have the same lifestyle. That is the operative ideology of this administration.

What will the longer term results of this plan be? We don’t know for sure how incentives will be distorted until this is implemented. Fundamental economics tells us that there are only limited ways to allocate scarce resources: pricing, queuing, lottery--- and under the Chicago Way, the use of clout. Fundamental economics also tells us that the cost curve doesn’t bend down when demand goes up (more people have access to health care) and supply goes down (doctors leave the system). It’s the reverse.

We don’t know exactly how this will play out, but we can see a sneak preview in two places—Massachusetts and Illinois. In Massachusetts, which has a system similar to Obamacare, costs have gone up, wait times have significantly increased, and emergency room visits have increased.

Most perniciously, we can look to Illinois for a hint as to how health care will likely be administered over the long run. Both the University of Illinois and the Chicago Public School system have been plagued by scandals in the admissions process. In both places, getting a letter or a phone call from Michael Madigan, Rod Blagojevich or other Democratic political heavies puts you in a different place in the queue. The average kid has to get in line like everyone else, but if you have clout, you have a special place in line. That’s the Chicago Way. Pay attention, it’s coming to Washington to infect our health care system.