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What's Wrong With the Economy?

Why are so many people unhappy and angry? Why is the electorate turning to populist candidates like Bernie Sanders and Donald Trump? Why are they so mad at the Washington D.C. establishment? What’s the problem?

Perhaps the biggest problem is the low growth of the economy leading to fewer job opportunities and little or no growth in family incomes coupled with the rising cost of two family essentials: health care and education. Housing costs have also risen faster than family incomes.

In this first of a series of articles, we will discuss the rapidly rising cost of health care and education. Subsequent articles will discuss the reasons for the low growth of the economy and family incomes.

Attached is a graph from a Foundation for Economic Education article “Why luxury TVs are affordable and health care is not.” It provides some of the answer.

Price Changes 1996 to 2016:  Selected Consumer Goods and Services

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The chart shows that over the past 20 years inflation has averaged about 2.2% per year so that something, on average, that cost $1.00 in 1996 would cost about $1.55 today.

Is inflation of 2.2% per year a problem? It’s very close to the inflation target the Federal Reserve is trying to maintain via monetary policy, 2.0% per year.

There’s more to the story and inflation is a big problem for a lot of people.

First, the inflation rate is based upon consumer purchases of a standard basket of goods and services. This doesn’t measure inflation in financial assets such as stocks, bonds, and commercial real estate. Inflation in housing is measured indirectly looking at a rental equivalent for owner occupied homes. When these financial assets go up, it’s considered a good thing, investors are making money, and is not thought of as inflation by most people. To the extent that the prices of stocks, bonds, and commercial real estate are increasing due to fundamentals such as increases in company earnings, market driven interest rate changes (not manipulated by the Fed), or increases in rental rates for commercial properties this is not inflation but a real increase in value. However, we don’t separate out real versus inflationary increases in financial assets.

Inflation of financial assets increases wealth differentials since it’s high income people who already own most financial assets and gain the most from asset price inflation.

Second, all consumer goods and services are not increasing at the same rate as shown on the chart. Thanks to improving technology, advanced manufacturing methods, low cost labor from China and Mexico, and other factors, most products and services are getting cheaper and better such as flat screen TVs. There are often significant improvements in quality, performance, and features that aren’t even captured by measures of inflation. For example, car prices haven’t increased much in the past 20 years but there have been major improvements in performance, features (mainly electronics), safety, reliability, and durability.

It was only one generation ago that a long distance phone call was very expensive and we counted the minutes we were on the phone. Now, we have portable cell phones and the cost of communications, data as well as voice, is low and decreasing.

Thanks to technology, innovation, and other factors, most of the things we need or want are getting more affordable. However, some things are getting much more expensive in spite of new technologies and other factors that should dramatically reduce their cost. The biggest are education and health care.

Why doesn’t the cost of health care and education exhibit the same trends as most other things we buy? Compare the experience of buying something where companies compete for your business (automobiles, clothes, consumer electronics, entertainment, etc.) to your purchases of health care and education.

A major problem in sectors where there are rising costs is a lack of choice and real competition in the marketplace. Users of health care, for example, are not in a position to act as customers and make intelligent choices based on price, quality, and other measures, choosing from suppliers who have to compete for their business. Health care is increasingly being delivered by large, bureaucratic, highly regulated, near-monopolies.

For health care and education, there are substantial barriers to real competition, innovation, new technologies, and potential new competitors. Is it even possible to have an Uber, Amazon, or Google equivalent for education or health care?

Why can’t a patient communicate with their doctor via e-mail or talk to them by phone? Because in most cases, they aren’t paid for answering an e-mail or talking on the phone. They have to see the patient to get paid.

Why did we even need the Affordable Care Act anyway? If we wanted to cover an additional 30 million uninsured, why not expand Medicaid? Medicaid already covered millions and an estimated 9.0 million of the uninsured were already eligible for Medicaid but hadn’t signed up. Most of the coverage expansion under the ACA is from adding more people to Medicaid anyway. Did we really have to overhaul the health care industry to accomplish this?

Also, health insurance is not health care. Under the ACA, insurance premiums for low income people are subsidized to reduce their cost. Taxpayers pay the difference and hide the true cost of the program. Even then, the low-income insured have to pay often unaffordable co-pays and deductibles. Some services are excluded and there are often narrow provider networks that limit access to many physicians and hospitals.

Similarly, student loans did little or nothing to improve education or even give many additional people access to a college education or other training. We now have about $1.3 trillion in outstanding student debt, more than total credit card debt. All this money has allowed educational institutions to increase their prices without improving their product (inflation) or to substitute student debt for taxpayer support in the case of state universities. In addition, the national statistic is that it now takes six years on average for someone to earn a four-year BA or BS degree. Even then, less than 50% graduate. This is a major loss of productivity when it comes to a getting a college education.

The cost of K-12 education probably has a trend similar to higher education. The cost per student hasn’t gone up as much but more of the money available is being spent outside the classroom such as for higher teachers’ pensions and health care expenses, more administration and reporting, etc. Programs such as music and sports have been cut to divert funds to other purposes.

In our high-tech world, why don’t students have tablet computers with state-of-the-art, interactive educational software? Most have cell phones. Why don’t we teach computer programming in primary school?

We can see why there is a lot of voter dissatisfaction. In addition to rapid inflation of health care and education costs, average family income hasn’t been growing very fast since about 2000. The cost of educating children or paying for health care is growing much faster than it should be and is rapidly becoming unaffordable to more families.

Raising the minimum wage or providing “free college” isn’t the solution. All this does is shift costs, someone else pays. We need to address fundamental problems that prevent education and health care from benefiting from technology and innovations that would significantly reduce costs, improve quality and convenience, lead to better health care and education outcomes, and make basic, affordable health care and education available to everyone.

What needs to be done? Slowing the growth of health care and education costs isn’t enough. We need major changes that will fundamentally reduce the cost of health care and education. If we don’t solve the cost problem, we can’t afford to give everyone the access to health care and education that most of us would support as policy objectives. Why not try for a 50% decrease? We need creative thinking and some very bold initiatives.

Health care in the U.S. already consumes 18 percent of our GDP compared to 10 to 12% for other developed countries who manage to have universal coverage in spite of spending less. At 18% of GDP, the U.S. spends about $10,000/person on health care, $40,000 for a family of four. Where does all this money go?

For college, why can’t someone get a BA degree in three years attending school full-time, twelve months/year? That should be enough time to take the credits required. What about practical, cost effective job training and apprenticeship programs for careers that don’t require a college degree? Do students need to attend class when most course content can be delivered online? Why can’t they get together for workshops, labs, and discussion groups but get their lectures over the Internet on a schedule of their choosing?

We can’t achieve the goals of universal health care and quality education for all unless we are open to revolutionary improvement in how these services are delivered. Uber anyone?

About the Author:

William Fletcher is a business executive with interests in public finance and national security. He retired as Senior Vice President at Rockwell International where most of his career was spent on international operations and business development for Rockwell Automation. Before joining Rockwell, he worked for Bechtel Corporation, McKinsey and Company, Inc., and Combustion Engineering’s Nuclear Power Division, and was an officer and engineer in the U.S. Navy’s nuclear program. His international experience includes expatriate assignments in Hong Kong, Europe, the Middle East, Africa and Canada. In addition to his interest in California’s finances, he is involved in organizations dealing with national security and international relations. Fletcher is a graduate of Tufts University with a BS degree in Engineering and a BA degree in Government. He also graduated from the U.S. Navy’s Bettis Reactor Engineering School.

Rolls Royce Health Care Plans for L.A. County Public Agencies

SUMMARY:  The price of health insurance in America has consistently risen faster than the rate of inflation and, despite the intentions of the Affordable Care Act (ACA), is projected to continue to do so for the foreseeable future.

A provision of the ACA known as the ‘Cadillac Tax’ is designed to discourage employers from purchasing excessively priced health insurance plans; which is intended to reduce at least one of the factors that contribute to the dramatic increase of price.

This paper draws on a wide array of research that demonstrates government employers are most likely to be affected by the ‘Cadillac Tax’ due to their propensity to purchase the most expensive forms of health insurance available for their employees.

A particularly striking form of excess – a $42,942 plan – for an employee of a small water district in Los Angeles County prompted an inquiry into the health costs for other public agencies in the County.

This analysis reveals that the largest Los Angeles County public employers are paying approximately 71% more for their employees’ health insurance than private employers, at an estimated cost of $676 million a year.

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INTRODUCTION

Despite the warning from the Government Accountability Office (GAO) of the impending burden to state and local governments from rising healthcare costs, many Los Angeles governments are purchasing wildly exorbitant health insurance for their employees, at taxpayers’ expense.

Last year the Water Replenishment District of Southern California (WRD) paid $42,942 for a single employee’s health insurance plan. Nearly half of the District’s full-time employees received a plan that cost at least $30,000 apiece.

In 2011, the WRD had four employees receiving plans that cost at least $30,000. By 2014, that number increased three-fold, demonstrating the $42,942 plan is not a remote outlier, but part of an agency-wide practice of vastly overpaying for health insurance.

Surprisingly, WRD employees are also part of the coveted “3% @ 60” pension plan – which calculates the retirement benefit by multiplying the number of years worked by 3 percent, and then multiplying that number by the employee’s highest salary.

Typically, plans with the generous 3% multiplier are reserved for police and fire employees. In fact, the 3% plan is so expensive that the Pension Reform Act of 2013 eliminated it completely for new hires. New employees at the WRD would be under the reduced, but sustainable, “2% @ 62” formula.

The total compensation package for WRD employees is quite generous as well – full-time WRD employees received an average $180,636 in 2013.

As the data available on TransparentCalifornia.com is making clearer, it is in the often-overlooked smaller, local government agencies where the most dramatic levels of excessive public compensation can occur.

Table 1: Water Replenishment District of Southern California Employee Compensation

Healthcare Graph 2

The problem is widespread

Unfortunately, California governments overpaying on health insurance goes well beyond the WRD. Transparent California previously reported on the numerous $20k+ health plans in Corte Madera and the Contra Costa Community College District, as well as the $30k+ plans found in the cities of Beverly Hills and Sierra Madre.

Pew Research confirms that the problem is nationwide – over the past 25 years, state and local government spending on health insurance increased 447% in inflation-adjusted dollars, and is projected to rise further.

This dramatic increase can be attributed, in part, to government wastefulness – government employers not only purchase the most expensive plans, they also ask their employees to contribute the least to help fund them.

In California’s public sector, this problem is accelerating at an alarming rate. From 2011-2013 the amount spent on health insurance by the State increased by 8% as compared to the average 1% decrease nationwide, according to Pew Research.

While the WRD’s excess is the highest in absolute terms, its impact is limited due to their small size. As such, it is more meaningful to analyze the larger districts in the state.

This analysis will incorporate data from the State of California and the largest government agencies in Los Angeles County – home to both the largest city and county in the state.

Table 2 compares two of the biggest special districts – the Los Angeles County Sanitation Districts and the Metropolitan Water District of Southern California – as well as the Los Angeles Department of Water and Power, the City of Los Angeles and the Los Angeles County government.

The Bureau of Labor and Statistics (BLS) provides comparable information for private employers. However, the information is only reported by geographical region, not individual state. As such, the Pacific regional data, of which California is the largest component, is used in this comparison.

The BLS data is by coverage type only. Therefore, the average employer cost is estimated assuming a 50/50 split between employees selecting single or family coverage plans, consistent with the trend found by the Medical Expenditure Panel Survey.

Table 2: Average Employer Cost of Health Insurance
Healthcare 1 Graph

Consistent with the nationwide data, Los Angeles governments pay significantly more for health insurance than the average private sector employer.

For just the five Los Angeles governments analyzed, the total amount paid in excess of the average private employer’s cost is approximately $676M, as shown in Table 3 below.

Table 3: Average Public vs Private Cost of Health Insurance and Total Cost of Public Excess, Los Angeles

Healthcare Graph 3


A bad problem gets worse

The forthcoming ‘Cadillac tax‘ provision of the Affordable Care Act is expected to pose a significant burden to government employers – due to their propensity to purchase Cadillac-style plans for their employees. Beginning in 2018, employers must pay a 40 percent tax on the excess of plans that cost more than $10,200 for single coverage and $27,500 for family coverage.

It must be noted that the threshold for the Cadillac Tax applies to the total cost of the plan. The values reported here are only the employer costs. If employees also contribute towards the cost – meaning the total cost is higher than just the employer’s share – the number of plans affected will rise significantly.

The WRD, for example, will have to pay at least $41,000 a year in penalty taxes for just the twelve employees with health care plans over the $27,500 cap at their current rates. Virtually the entire full-time staff – over 1,400 employees – of the Metropolitan Water District of Southern California received health plans that cost more than $10,200; if any of those plans are for single coverage only, they would be hit by the tax too.

Los Angeles County had 56,366 employees – about 67% of staff – who received health insurance that cost at least $10,200. Outside of the WRD, the County had the greatest individual cost – with 192 plans costing $37,148 each. For just these 192 employees, the County would have to pay a penalty tax of at least $740,966 a year beginning in 2018.

Given the recent, and projected, double digit increases in health insurance premiums, merely holding costs to the present level by 2018 would be a remarkable feat.

Finally, the City of Los Angeles appears best positioned to avoid being affected by the tax. In addition to having the lowest average cost, there was not a single plan with a cost of more than $16,400.

CONCLUSION

The increasing cost of healthcare is certainly much more complex than merely being the result of government wastefulness. A comprehensive solution would require an entire rethinking of how healthcare should be provided. Still, having a consumer as big as government routinely overpay for a product will contribute to its rising cost.

As taxpayers are struggling to pay their own health insurance premiums, government should be doing all it can to rein in costs. As bad as the healthcare situation is at the moment, there is simply no justification for a government agency to consistently pay over $20,000 a year, or more, for their employees’ health insurance.

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About the Author: Robert Fellner is Research Director for TransparentCalifornia.com, a joint project of the California Policy Center and the Nevada Policy Research Institute.

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Unions Have Buyers Remorse Over Affordable Care Act

In last year’s blog, The Devil is in the Details: Buyer’s Remorse over Obamacare, Except for SEIU, Big Labor’s dissatisfaction with Obamacare was exposed. The exception being the SEIU, who was allowed to be the architect of the Affordable Care Act as repayment for its role in the President’s 2008 Election. There has been little written about labor union’s dissatisfaction with Obamacare. Big Labor, however, has not been vocal or shown visible support of Obamacare, especially during this time when the President has proclaimed the program’s success. This success has been attributed to 8 million people having signed up — despite the fact approximately 6 million people lost their private health care and that same 8 million is no where close to the 30 million uninsured Obamacare was supposed to cover.

It now appears many of the Big Labor bosses are experiencing buyer’s remorse! As Obamacare becomes a reality, many of the unions are demanding government subsidies to remain competitive at a time when membership is at a historical low. Only 11.3% of the total workforce and 6.3% of the private sector work force are unionized. Apparently most Big Labor bosses forgot the basic fundamental premise “Caveat Emptor” – meaning “let the buyer beware” – when supporting the President’s re-election campaign and backing his signature law, Obamacare (see Some Unions Grow Wary of Health Law They Backed). Evidently those astute business people bought in to Nancy Pelosi’s famous quote, “We must pass the bill so we can find out what’s in it!” Well, that is true for most Big Labor bosses, except for those at the SEIU.

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Recently big labor bosses have received a new wake up call, as those collective bargaining contracts signed before Obamacare was put into law are now expiring, and they are facing a new hurdle of deciding whether to negotiate increased health care costs due to Obamacare mandates such as dependent children must be kept on their parents health insurance until age 26 as well as increased future costs for premium plans and other mandates as chronicled in Unions, employers square off over ObamaCare costs, or to continue to press for employee wage increases as they have traditionally done. Unions, including the SEIU, representing housekeepers, transit workers, flight attendants and more are waking up to the fact that their buddy in the White House steamrolled them, just as he has in his support of climate change and rejection of the keystone pipeline (as chronicled in Obama and NLRB Continue to Cost Union Jobs).

Ironically, the SEIU was the President’s major supporter for the Democratic Presidential Nomination in 2008. In fact, Andy Stern, then President of the SEIU, made it very clear that the SEIU would not support any candidate that would not make universal health care its primary objective during the first term of office. Then Presidential candidate, Senator Barack Obama, leapt on board, knowing full well he not only needed the financial support of the largest union in the country, but also its vaunted ground game! Although his campaign was supported by the other unions, all of which also supported universal health care, the devil was in the details. When the SEIU saw an opportunity, they took it.

The difference between the SEIU and the other major players now wary of Obamacare, unions such as the Teamsters, AFL-CIO, Unite Here, The Sheet Metal Workers International, International Union of Operating Engineers and others, is that the SEIU represents a majority of unionized workers in the U.S. health care industry! The SEIU not only represents nurses, orderlies and other medical personnel at healthcare facilities, but also other important and necessary support positions at these facilities such as janitors, security personnel and food service workers. Additionally, the SEIU represents home health care workers and health insurance employees in many states (see Is Obamacare Redistributing Wealth to Big Labor?).

Universal health care was envisioned as a veritable jackpot by the SEIU as the positions mentioned previously would expand exponentially with the projected 30 million new Americans on health care, and to date, are looking at a net increase of approximately 2 million. This would have served as a means to substantially increase the SEIU’s membership and subsequent revenues from dues in a relatively short period of time. What a let down for the SEIU! Of course that bonanza also meant increased political donations and ground game foot soldiers for the President and the Democratic Party.

Incidentally, it is common knowledge that very rarely were people turned down care at emergency facilities and that Medicaid was already available for those in need, obviously one of the major reasons Medicaid was insolvent. Don’t misunderstand; it is important that affordable health care be available to all Americans who wish to be covered. However, available coverage for all could have been achieved through allowing freedom of choice, and not a mandate. As for affordability, we could have accomplished this feat by removing barriers to the free market, utilizing ideas to eliminate restrictions on competition across state lines, developing legislation for tort reform and producing meaningful modifications to the immigration laws. Unfortunately, this common sense style approach does not work for the President, liberal democrats or unions like the SEIU, who all depend upon each other for survival.

Don’t be surprised if the President and his Administration don’t reverse field in an attempt to find a way to placate the currently disenfranchised big labor bosses before the 2014 Mid Term Elections, where maintaining a majority in the Senate is imperative to both the Administration and the big labor bosses. After all, it is vital that they keep the circular money pump in motion in order to stay in power and avoid extinction, no matter the expense to the American people, including rank and file union members.

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David A. Bego is the President and CEO of EMS, an industry leader in the field of environmental workplace maintenance, employing nearly 5000 workers in thirty-three states. Bego is the author of “The Devil at My Doorstep,” as well as the just released sequel, “The Devil at Our Doorstep,” based on his experiences fighting back against one of the most powerful unions in existence today.

Obamacare Provides Unfair Advantage to Unions

Virtually unnoticed and ignored by the media is the fact that big labor benefited tremendously from the deal struck last week to avoid the “catastrophic” fiscal cliff. The President abandoned his own concept of fairness, which of course is nothing more than a hypocritical one way street, in order to reward his big labor buddies and to ease the pressure they have asserted. As discussed in Promises, Promises: Desperate Unions Grow Weary of Phony Distractions, the President clearly understood the displeasure of big labor with respect to Obamacare, and realized that he desperately needed to throw them a bone, and a big one at that!

In his own inimitable way, the President did so at the expense of  roughly 89% of the workers across this great country who are not members of unions. With this gift,  President Obama’s Ego Continues to Trample American Freedoms as he places the burden of the cost of Obamacare on the everyday working person and on small business. Additionally, it provides big labor with the money to continue to inflict Death by a Thousand Cuts and Corporate Campaign tactics on businesses. This is all part of the plan concocted by big labor and the Obama Administration to force unionize employees, as discussed in The Devil at Our Doorstep, and to continue to control political agendas with excessive political donations and massive ground games. It also provides big labor with an unfair advantage to attract potential members with misleading information during collective bargaining negotiations.

Surprise! Unions Get Their Way on Obamacare… In the deal the President struck with Republicansunions were made exempt from paying what is referred to as a “Transitional Reinsurance Fee,” a $63 tax assessed on nearly every health insurance plan enrollee for the next three years. The Affordable Care Act (“ACA”) established programs to provide payments to health insurance issuers that cover higher-risk populations and to more evenly spread the financial risk carried by issuers. These programs, which will be effective in 2014, include the Transitional Reinsurance Program.

The Transitional Reinsurance Program is intended to help stabilize premiums for coverage in the individual market during the first three years of the exchange operation (2014 through 2016) when individuals with higher-cost medical needs gain insurance coverage. This program will impose a fee on health insurance issuers and self-insured group health plans. ACA requires health insurance issuers and third-party administrators (TPA’s) of self-insured group health plans to pay fees to support the reinsurance program. The proposed regulations clarify that, for self-insured group health plans, the plan sponsor is liable for paying the reinsurance fees. In essence, unions and businesses both would have had to pay the fee under the program, but unions have now been given an exemption, providing them with huge cost savings.

The fee is based on the number of members actually enrolled in the medical plan, such membership consisting of employees, their spouses and dependent children covered by the medical plan. As an example, the SEIU, with approximately 2 million members, can expect to save BIG! Assuming that 60% of the membership is enrolled in a union-sponsored health plan, you would have 1.2 million members, plus their eligible family members, estimated at an additional 2.5 covered persons (per member), making the SEIU’s total membership eligible for the reinsurance tax roughly 3 million. Multiply that 3 million, by the $63 per member reinsurance fee, and the initial benefit seen by the SEIU is in the neighborhood of $189 million! Spread that over three years, assuming that the President extends it after next year’s midterm elections, and the total cost savings to the SEIU is $567 million!

It doesn’t seem fair that a President who preaches on the redistribution of wealth to the poor and middle class is, in fact, redistributing $567 million to this labor union — An organization which has historically been shown to utilize that money to force unionize hard-working Americans, and to press its socialistic political agenda at the expense of the middle class the President pretends to support. President Obama, who understands the basic tenant of Control Business, Control the Country, is fully behind the push to provide big labor with ultimate power over employees and businesses, after all it was big labor who enabled him to win a second term.

David A. Bego is the President and CEO of EMS, an industry leader in the field of environmental workplace maintenance, employing nearly 5000 workers in thirty-three states. Bego is the author of “The Devil at My Doorstep,” as well as the just released sequel, “The Devil at Our Doorstep,” based on his experiences fighting back against one of the most powerful unions in existence today.

Ideological Battles Divide Both of America's Major Political Parties

To our progressive friends, it seemed like a century of advocating for government-sponsored universal health care reached fruition when the Affordable Care Act became the law of the land. But triumph turned to tragedy when Progressivism’s signature accomplishment blew up on the launch pad. Not only did this make a shambles of our wounded president’s governing philosophy, it sent the most vulnerable Democratic officeholders scurrying for cover, leaving damage control to a few befuddled party elders.

Far-left true believers, putting their faith in hope over experience, are insisting that Obamacare’s woes were brought about by compromise, and are demanding what they wanted all along and expected to get when Obamacare ultimately went bankrupt: single-payer, nationalized health insurance. To lead the charge, they will recruit their newest champion, Elizabeth Warren, anti-banking demagogue and untiring defender of unsustainable middle class entitlements.

The populist professor recently made headlines with the extraordinary claim that Social Security is $2.7 trillion in surplus and could easily provide increased benefits. She will have no trouble doubling down on the hoary promises her fellow progressives so fervently promote. As for the math? Who cares! It’s greedy insurance companies, Republican sabotage, and the wicked one percent who are really to blame for the Obamacare fiasco. Keep your focus on the enemies of the people and all will be well.

Old-bull Democrats, determined to recreate the glory days of the 1990s, will rally around their presumptive presidential nominee, Hillary Clinton. Hillary has been doing her level best to stay out of the line of fire as the wheels come off her former rival’s presidency, leaving it to Bill to prick Obama’s balloon whenever the opportunity arises. Watch these two old hands try to triangulate their party back to the center, perhaps even reaching across the aisle to old-bull Republicans as Clinton Inc. tells an angry and frightened electorate that things will surely get better if adults are put back in charge.

Old-bull Republicans, fearing a Tea Party insurgency even more than the Clinton campaign steamroller, will seek to strike a grand bargain on … well, everything. Remember the good old days when Tip and the Gipper could deliver both guns and butter while maintaining a respectful professional rivalry. So what if this means spending the country into oblivion? Politics is the art of the possible, which makes winning elections more important than defending principles. And wouldn’t life be better if Washington insiders could get back to scratching each other’s backs without having to worry about primary challenges?

And the Tea Party? These Constitution-thumping reactionaries will remain the wild card, biding their time, picking off the weakest of the old bulls, and preparing for the moment when America is finally forced to make hard choices. That moment will come when our QE besotted fiat currency system begins to totter, threatening to take the too-big-to-fail banks down with it. Will they convince America to hit the reset button—scrapping the bankrupt entitlements and crony capitalist policies that are sucking the life out of our economy? Or will they be driven back to their survival cabins to impotently watch the country sink into permanent Eurosclerosis?

Oddly enough, one solution to the Obamacare mess that could produce a stable political outcome is to give both extremes what they want—a government funded, owned, and operated national healthcare service freely accessible by the needy and a deregulated, privately insured health care delivery market where people of means can avoid the poor quality of care a public service will surely deliver. How to unwind the disastrous attempt to glue public and private systems together in an effort to disguise the underlying income redistribution will be the story of the next three years. And figuring out how to honestly pay for a new public healthcare service on top of Social Security and Medicare will force a conversation about means-testing that may eventually get the middle class off the dole, future generations off the hook, and Ponzi entitlement schemes out of bankruptcy.

About the Author:  In the 35 years since Bill Frezza graduated from MIT with degrees in electrical engineering and biology he has been a scientist, an engineer, a product manager, a salesman, a consultant, an entrepreneur, an author, a technology evangelist, and a venture capitalist. His early career on high-tech’s bleeding edge included the development of first generation electronic newspapers, home banking, home shopping, cable modems, multi-user videogames, wireless LANs, and wireless email, all of which became a success – for someone else a decade later. His 15 years as a venture capital investor working with early stage telecom, semiconductor, and biotech startups taught him humbleness, risk aversion, and the ability to identify ten fatal flaws out of five in any startup business plan. Frezza is a frequent guest on CNBC, FOX, and CBN News where he is challenged to reduce complex economic and policy issues into thirty second sound bites. More writing by Frezza can be found at BillFrezza.com. This article originally appeared in Forbes and appears here with permission from the author.