Wednesday, March 31, 2010

Obama divides and conquers, again

From BHO’s remarks on the signing of the Healthcare Reconciliation Bill, which included changes in the law applicable to student loans:

Now, I’ve said before and I’ve repeated this week the health insurance reform bill I signed won’t fix every problem in our health care system in one fell swoop. But it does represent some of the toughest insurance reforms in history.


Now, the debate on health care reform is one that’s gone on for generations, and I’m glad -- I’m gratified that we were able to get it done last week. But what’s gotten overlooked amid all the hoopla, all the drama of last week, is what happened in education -- when a great battle pitting the interests of the banks and financial institutions against the interests of students finally came to an end.

You see, for almost two decades, we’ve been trying to fix a sweetheart deal in federal law that essentially gave billions of dollars to banks to act as unnecessary middlemen in administering student loans. So those are billions of dollars that could have been spent helping more of our students attend and complete college; that could have been spent advancing the dreams of our children; that could have been spent easing the burden of tuition on middle-class families. Instead, that money was spent padding student lenders’ profits.

Now, it probably won’t surprise you to learn that the big banks and financial institutions hired a [sic, at] army of lobbyists to protect the status quo. In fact, Sallie Mae, America’s biggest student lender, spent more than $3 million on lobbying last year alone.

But I didn’t stand with the banks and the financial industries in this fight. That’s not why I came to Washington. And neither did any of the members of Congress who are here today. We stood with you. We stood with America’s students. And together, we finally won that battle.

And this is the President of all the people? All the people except those who oppose anything he wants to take from them. He doesn’t “stand with” the special interests, unless, of course, they’re unions or trial lawyers. No, those bastards in the insurance and financial services biz aren’t like you and me: they’re “unnecessary middlemen,” with sweetheart deals. This Obama is a very zero-sum guy: there’s no getting without taking. It’s a good thing there are so many evil people out there for him to scapegoat, er, I mean win battles with.

The new healthcare bill does not include the “toughest insurance reforms” in the past week, much less in history. It mandates coverage so that insurance companies - who would like nothing better! – can now afford to cover pre-existing conditions, because there won’t be any pre-existing conditions. BHO calls it “reform” so that he can pretend that he is throwing the insurance companies under the bus, when in fact he is throwing them more claims to handle.

The political case against insurers is built on the silly idea that insurance companies bet against their customers. But they don’t. The insurance company processes claims and marks up the transaction. Insurers have an interest in denying claims only because that keeps premiums down so that customers stay so that more claims can be processed. Now, they will have more claims. Tough on them.

The student loan thing does hurt the private lenders. Of course, only the “big” banks and financial institutions sent the armies of lobbyists. The little ones are ok folks, I guess, even though this law removes them from the student loan process, too. Collateral damage – you can’t make an omelet without breaking eggs, right?

I have no idea whether the single-lender approach will be workable. Maybe it will. Certainly, removing the private companies from the process makes it unnecessary to demand repayment, and that’s gotta be nice for the politicians who get to bestow that bit of largesse on future supporters. But, nah, that can’t be what’s going on here. This is about sweetheart deals and, ugh, middlemen. Yeah, right.


  1. Larry- I have been so busy selling my condo and moving that I have missed some of your recent posts. Let me comment on this one first.

    BHO is not God, or even the son of God. He will not rise from his grave three days after he dies.

    BHO is a politician and from the results of the last election campaign, and the past few weeks, a pretty darn good one.

    Does it really surprise you that a politician gives rewards to the base that elected him (Look how 2 Bushes have ruined the Surpreme Court by giving favors to their base), Does it really surprise you that BHO would reward unions and other working people, rather than corporations (See Steven's dissent in the Citizen's Union case- corpoations are not people who vote.)

    I was extremely dissapointed in your misquote of BHO said about insurance reform. You conveniently left out the phrase "some of the" from your quote.

    The insurance reforms are more than just eliminsating pre-existing conditions. What about the inability to cancel, or eliminating llife time limites. They seem to me to be pretty significant reforms

    Your view of insurance companies as nothing more tan innocent clasms processors. They are also in some cases profit generators. If there were only claims processors, then one would expect that their loss ratios wouls be the same as not-for-profit health insurance companies. Alas, that is not the case, their overheads are significantly higher than non-profits and they add a profit factor that can be as high as 6-10%.

    Finally,with respect to the single-lender program, I am surprised that you did not endorse the program in a morer positive amnner. In effect, the elimination of the commercial banks from the food chain of fee payments is quite akin to the removal of featherbedding that unions are always accused of participating in. The role of commercial banks in the student loan program,is a form of corpoate fesatherbedding and should be eliminated for effeiciency reasons alone.

    As to your concern about politicians largesse with writing off outstanding bal;ances; what is the big deal. Qualified young in this country would be far better off if the USA were to emulate what many foreign companies do- provide free college and professional education to those who qualify in return for commmittments of public service for a period of time after graduation. When Arlene and I went to Brooklyn college the cost was $8.00 per semester (unless you had a lsb in which case it was another $25.00). I think that the government came out ahead with respect to the taxes they have received from me over my working lifetime

  2. Irwin -

    I'm not surprised that BHO takes care of his base, and I don't disapprove of it. Not only did they support him, but, presumably, he shares their views. So of course he does things they like. I just don't think the term "special interests" distinguishes his enemies from his friends, and he uses it as if it did.

    "Some of the" is right there in the first quoted paragraph. In my commentary, I left it out because it's irrelevant. Add it back in if you wish:

    The new healthcare bill does not include the “some of the toughest insurance reforms” in the past week, much less in history.

    What's changed? My beef is with the whole idea of toughness. The reforms are a boon to insurers. The reforms are very significant - why do you regard "very significant" as a rebuttal of "not some of the toughest"? - because they enable insurance companies to cover more risks and get paid accordingly. But tough? Not hardly. (Nor should they have been tough. My point is that BHO felt it was necessary to claim toughess in order to maintain his cover as slaughterer of the insurance scapegoat.)

    Where did I say that insurance companies don't make money? I said that they are a cost-plus operation, not gamblers with a direct interest in lowering their pay-outs. I don't believe insurance company profits are a big number in the scheme of things, but I didn't deny they are there; I just asserted that they arise primarily from the mark-up on claims paid, not from money saved on claims denied, as BHO's rants would have people believe.

    You may be right about private banks and student loans. I'm more agitated about BHO treating this as another scapegoat slaughtered. It's the us vs. them in his rhetoric that strikes me as unhelpful for a President.

    I'm fine with politicians writing off student loans, especially as an incentive for some social contribution or another. Like I said, it's the war against people with money that worries me.


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