Education - Capitalist Style

Written in response to a challenge for privatized education and protection:


Public schools would be replaced by private institutions driven by profit. In order to meet the demands of capitalism, the only admitted students would be those who can pay. Obviously the quality of education would be directly tied to the amount one could pay, as the most expensive schools could afford to recruit and pay the very best teachers. Currently, the average costs for K-12 grade is roughly $8500 spent per student per year. Let’s assume that through capitalism greater efficiencies are realized and the cost drops by 30% (this is very generous). This would equal about $5900 per student. Let’s say since education is now privatized we now spend half on property taxes (savings of $800 on a $300,000 home in AZ). This would equal a net cost of $4900 for one student, $10,800 for two students, and $16,700 for three students.


Obviously households would have to be in the upper middle income bracket to afford the average education premiums, and for the best education, they would need to be an upper income household bracket. With half of the American households making less than $50k a year, paying little to no taxes, this incremental cost would solicit very tough choices. You could send you child to a below average school, at a lower cost, with poor quality teachers, shorter hours, and little to no resources. Or you could elect to forgo substantial costs like healthcare for your family which will then be reflected in emergency room costs skyrocketing (not to mention a poorer quality of life). You could also choose to educate from home, if there is a non-working parent willing to make the sacrifice. In any of these scenarios there is a guaranteed certainty that crime will spike given the lack of education and time spend in a productive environment.


Ultimately privatized education will drive increases in poverty, widening social class divides, and the absorption of the middle class. Even more unfortunate you will not see children from broken homes in Arkansas, become Rhode Scholars, and Presidents of the US. There is a reason that every advanced industrialized nation offers education in a socialized, not capitalistic, manner. Even for-profit institutions like The University of Phoenix rely almost exclusively on government subsidized student loans to generate 80% of their revenue (think about that for a second, your tax dollars are going right to the pockets of UOP shareholders).


Now, there is also the subject of vouchers which mixes government capital with private institutions. However, based on our current conversations about governmental spending, I am guessing government funded vouchers are not the ideal scenario.


There would be similar consequences for privatized protection. Imagine getting charged $200 every time you called 911. If you couldn’t afford the premium then calling 911 for help wouldn’t even be an option. Police wouldn’t even respond if you did not have a payment form on file, and those in danger would weigh whether or not the calling risk is worth the cost. Sounds like potential anarchy to me.


Wake Up Middle Class!

With Obama’s plan to let the Bush Tax cuts expire in 2010, there has been an onslaught of media attention concerning his budgetary decisions. Phrases like “socialism”, “re-distribution of wealth”, and “tax hikes” are being associated with President Obama’s fiscal policies to discredit his approach. Obama has been open and direct concerning who his tax policies are targeting. The interesting part of the situation? There has never been such an uproar from the middle class fighting for the benefits of the wealthy.


Now to be clear I have little issue with the wealthy, or their personal incomes. Athletes, actors, stock brokers, and executives are all paid based on market conditions. I do believe that the wealthy are the largest benefactors of governmental regulation. We live in a mixed market economy, not a free market. The government regulates trade, blocks monopolies, and protects intellectual property. Almost all of the bailout money went to save the shareholders of large corporations and free up credit markets which have the largest impact on the wealthy.


The richest Americans have been the largest recipients of tax cuts over the past 30 years. Starting with Jimmy Carter’s administration, the highest tax rates have been cut in half to present day levels (70% to 35%). The wealthy have also seen the largest jump in income. From 1992 to 2004 upper class income rose from 111,000 to 154,000 (+39%). Over the same time period median wages only increased from 39,000 to 43,000 (+10%). So, over the past 30 years the wealthy have seen their taxes decrease by 50%, and their incomes increase by 39%. (Inflation adjusted for all above examples)


What many Americans do not realize is the vast redistribution of wealth over this period. Whenever tax rates are cut disproportionately, tax burden shifts among classes. Regarding the 2002 and 2003 tax cuts, families making $60,000 saw their tax payments drop by $1,000. In contrast, the wealthiest 1% saw their annual tax bill drop by $58,000. This resulted in a dramatic swing in tax burden to the middle and lower classes and redistributed wealth to the upper class.


President Obama’s plan is to close the gap on the federal deficit by allowing the Bush tax cuts of 2002 and 2003 to expire. This would increase the tax bracket of the wealthiest (single taxpayer making more then $357,000) from 35% currently, to 39%.*** This would return some of the tax burden back to the wealthy, and redistribute the wealth back to the middle class. Before the middle class rejects Obama's policies, they should remember upper class Americans never asked for the Bush tax cuts, and certainly didn't need them.


____________________________________________________
***Now, before you drop your jaw regarding these figures remember this is a bracket, and tax brackets can be misleading. A family of four with household income of $365,000 claiming $100,000 in deductions actually pays about 17% in income tax. In comparison, an average family of four with income of 150,000 and deductions of $30,000 falls into a 25% bracket, but only pays about 12% in tax. An average family of four with income of 70,000 and no deductions falls into a 15% bracket, but only pays about 5% in tax.


What Do Republicans Believe?

In the break room at work we have a TV that runs news programs throughout the entire day.Since the office is primarily Republican, I get an earful from Fox News every second away from my desk. Fox News retains 25% of the population’s attention, and appears to have a clear understanding on whom to market their outrage to. Listening to their undertones and self promotion demonstrates one firm conclusion; the Republicans are starving for an identity.


What exactly do Republicans stand for? Under the Eisenhower era military prudence was tied directly to Republicans. In the Regan era conservatism was embraced. Under the Clinton era Newt Gingrich led the Republican New Deal urging smaller government. Over the past several decades, all of these ideals have been forgotten. George W. and his Republican dominated leadership increased the size and scope of government to record levels. The federal budget under his watch jumped 38% as President Bush did very little to control this rise in spending. Yet when I watch Fox news, I am led to believe that the Conservative ideals are alive and well.


To agree with Frank Rich, Fox News and the Republican Party are screaming into an echo chamber. The louder they scream, the more they believe themselves. Take for instance the stimulus bill that just passed congress. To the Republican right an absolute disaster; to 51% of Americans, a step in the right direction. Or how about Obama’s cluster of tax cheats nominated to cabinet positions? To Rush Limbaugh, a strong demonstration of Obama’s inept decision making ability. To 68% of Americans a forgivable offense in which they still offer support for the president.


Besides identity fallout, what hurts the Republican platform is the negligent insistence on tax cuts to solve all economic problems. We tried that in 2002 and 2003. How did we fare? Many on the right will incorrectly point to the tax cuts as the key driver of the four year boom from 2002-2006. The truth is that falling interest rates and leveraged equity were the real contributors. The tax cuts in 02-03 put money back into the pockets of the super wealthy, who then proceeded to watch it disappear in the securities fallout. Many still cling to the supply side theories of Reagan’s policies to bolster their tax cut claims. Two problems with this belief: Jimmy Carter had already started lowering tax rates on the upper class with little success, and two, Reagan was the recipient of Paul Volkner’s rate-slashing Federal Reserve. What has been forgotten by Republicans is that conservatism at its root does not drive tax cuts. Conservatism preaches smaller government, in which tax cuts are a byproduct.


The GOP’s lack of identity and shrinking base impacted the elections of 2006, 2008, and most likely 2010. The extreme big government policies of the last eight years, coupled with an unfavorable war, pushed moderates to the left. However, the biggest problem for the Republicans going forward is their shrinking base, which is wedging out the younger demographic. Fox News and the Republican leadership had a field day teeing off on Howard Dean in the 2004 primaries. But it was Dean who inspired many of the college age kids who turned out in droves in 2006 and 2008 to vote Democrat. The GOP has kept a single eye on big business and the religious right, and has failed to court their future base.


Republicans need to regroup and tell America what they stand for. The American people are ready for extended dialogue and genuine conversation from both sides of the aisle. If the GOP can’t embrace a persuasive identity, and continue to use tax cuts as a substitute for thinking, change will continue.Unfortunately, it’s probably not the change the Republicans desire.


The Republican Philosophy – One Giant Credit Card

Tax and Spend Liberals. If I had a nickel for every time I heard this phrase, I would be writing this post from an exotic hut with glass bottom floors somewhere in the French Polynesia. This negative connotation has been associated with the Democratic Party for several decades, and will be an effective talking point for elections to come. The irony: I would much rather be a tax and spend liberal, then a free charging conservative.


Recently I had a conversation with a friend whose number one disagreement with the current Democratic candidate was his commitment to let the Bush Tax Cuts expire (one might ask, why were the Bush tax cuts passed with an expiration date?). This, in essence, would be raising taxes.I followed up with a question regarding the consequences of deficit spending; their response, “government needs to be cut.”


There is not one current presidential candidate who shares this conservative ideology. Although Obama’s proposals are beyond McCain’s in cost, McCain’s proposals will increase deficit spending much faster that of Obama ($5.7 trillion to the national debt over the next decade -- source: CBO). Why?McCain is proposing vast tax cuts including voiding the AMT, doubling child credits, and lowering the corporate bill. This would be like cutting my salary by 20%, and not changing my spending habits. Needless to say I would rack up vast amounts of debt forcing me to leverage every asset I could to support my current lifestyle.


Think of the national debt as one giant Black American Express. Where does this limitless credit card come from? This is the scariest question of them all.We are currently expanding our money supply by borrowing from foreign countries. We are allowing Saudi Arabia, Japan, and China to become our shareholders. So, during this Olympic season when you are complaining about China’s human rights violations, just remember they are making our mortgage payments.


Looking at the last four presidents, government spending increased 36% under Reagan, 17.2 % under Bush I (only 4 years – 34% for 8 years), 21.2% under Clinton, and 32.4% under Bush II. What is most interesting from this comparison is that the economy was expanding at the fastest rate under the Clinton administration, providing them with the strongest justification to increase spending (higher tax revenues). Yet it was the tax and spend liberal who balanced the budget and kept the National Debt basically stagnant his final year in office.


Two major consequences of a rapidly expanding money supply (national debt) are declining currency value and inflation. When your two dollar milk now cost three, or the gas prices skyrocket at the pump, thank deficit spending and a weakening dollar. This is exactly why economists call inflation “the hidden tax”. However, we should take comfort that the current administration has passed sizeable tax cuts to off-set these cost to households making more then 250,000 a year.


In the upcoming election when sizing up candidates, don’t be so quick to dismiss the tax and spend liberal. Just remember over the last 30 years it has been the tax and spend liberals who have made the most progress on limiting governmental spending, keeping the national debt in check, and maintaining responsibility with America’s money.



Five Reasons Obama/McCain Will Win

With the 2008 presidential election coming into play, I thought I would write five reasons why each candidate will win in November:


Barack Obama:




  1. Money.Money wins elections. Money allows the candidate to reach even the most remote constituents, and control the strategy of the election. Barack Obama is on course to raise more money from donors then any other presidential candidate. Even more remarkable, is his refusal to take lobbyist and PAC money. Many are projecting him to double the intake of opponent John McCain. Barack’s war chest will allow him to play in states previously deemed Republican strongholds. The most recent whisperings is that Obama is trying to putArizona, McCain’s home state, into play!

  2. Voter Turnout. Perhaps the most remarkable statistic in this year's primary season was voter turnout. The Democratic primaries recorded 40 million voters compared to 20 million Republican voters. It is fair to say that the main driver of the vast amount of Democratic votes came from a tight race between Obama and Clinton, however, voter turnout was astounding.

  3. State of the GOP. The GOP’s popularity is alarmingly low. Scandals over the past several years have predominantly come from the GOP side, and President Bush’s approval ratings are at an all time low. History shows that incumbent parties with low popularity numbers have a daunting task toward reelection.

  4. Voter’s number one concern. Barack is favored when the economy is America’s number one concern. Democrats have always been associated with a stronger economy. This can be attributed to two reasons: theory and luck. If there is one positive aspect of the Bush presidency, it will be the crumbling of supply side economic theory. Democrats have always followed a Keynesian approach to the economy, which offers a more stable solution to our economic woes. Luck is also a factor, as the association of a Democratic president controlling the White House through the tech stock boom of the 90’s offer voters a false sense of security.

  5. Lack of experience. I have been approached with concerns from friends and family about Barack’s experience. From my point of view this is one of his greatest assets. When the elections heat up, Obama will have more of McCain’s votes to scrutinize then McCain will have of Obama’s. Many political pundits believe this is exactly why Kerry lost in 2004. There is a reason that the last five of six presidents never served in congress. Compromise and activity are fundamentals of Senate members, each leaving a political trail that can be dissected and rehashed. Obama’s lack of experience also allows him to be painted as an outsider. With Americans disenchanted withWashington’s current political state, electing an official (McCain) deemed part of the problem is favorable to the inexperienced.


John McCain:




  1. Voter turnout (I know I put this for Obama):Over the past several elections Republicans are better at turning out the vote in November. This is largely due to the voter population and key constituents of the Republican Party. Many voters assume that the lower class would provide a boost to the Democrats, given their dedication to bigger government. This is incorrect. The dirty little secret is that the poor do not vote. Republican turnout is also strongest where needed most, in swing states.

  2. Independents. Rewind four years prior and you will find a very different John McCain. McCain was very persuasive in the Senate and deemed the title of Maverick. He worked across party lines and was the first to blast incompetent members of his own party and their policies. It was during this time that he won the respect of Independents, and has managed to keep their loyalty through his current positions. Independents are the sole group that determines the presidency, and McCain has their ear.

  3. Security. The GOP and John McCain are associated with stronger security. With the War on Terror resonating in voter’s minds, McCain is viewed as the candidate tougher on our enemies. The vast stance on Presidential visits to rouge nations between McCain and Obama is one disagreement that will be capitalized this election season.

  4. A Real American Hero. What US citizen is not enchanted with John McCain’s POW story? The son and grandson of Admirals, McCain comes across as the more patriotic candidate and a leader in times of fear and distrust. McCain will prey on Obama’s lack of military experience and paint his opponent as soft on crime and terrorism.

  5. Republicans are better at politics. From Swift Boat malice, to talking point propaganda, the Republicans are better at controlling the conversation. Their sales pitch is sweet and direct, while Democrats are more theoretical and not as constrained. Media outlets are Republican controlled and influenced. Cutting taxes, banning abortion, and stopping gay marriage are direct and unmistakable. WithAmerica’s short attention span, Democrats do not carry the ear of the voter long enough to explain their position.


There you have it, five reasons as to why each candidate will win in November. It will be interesting to watch the election unfold, and I am sure I will have many more posts in the months to come.


Guess Who's Coming to Dinner?

Opening up My Yahoo! this morning yielded quite a surprise. Mahmoud Ahmadinejad visited Iraq? The surprise was not due to the event, but the low attention paid by the conservative media. This event is a witness to how poorly we have progressed in Iraq.


A little history… In the Iraq – Iran contra back in the 1980’s, over one million Iraqis and Iranians lost their lives in a war which brought national attention. Guns were sold to Saddam Hussein to advance America’s denouncement of Iran. One of the more interesting photo ops was snapped, the then Secretary of Defense Donald Rumsfeld greeted Saddam in a friendly handshake signifying America’s support of the conflict. With our current involvement and the events leading up to the war, our press and presidency have portrayed Iraq as a longstanding enemy of the US. In the 2003 State of the Union address, President Bush’s reinvented “Axis of Evil” tied Iraq in with the likes of North Korea and Iran. How did the relationship of the United States and Iraq fall out of sync so quickly? The answer is Desert Storm, the early 90’s conflict between the US and Iraq in which Kuwait was proclaimed Iraqi territory.


When Iraq decided to repossess the small oil-rich country, they did so with the understanding that the United States would remain neutral in the takeover. What happened next was quite surprising to Saddam and the Sunni controlled government. The conflict was sold to the American public as a bloodied takeover by the Iraqis, when in reality the truth was less dramatic. The Kuwaiti defense was minimal at best, and the Iraqis met little to no resistance (some estimate that 200 died in the skirmish). Unlike our current Iraq war, this was actually about oil. Iraq wanted to take back possession of Kuwait and their rich oil fields (in the mid 1900’s, England decided to split Iraq and Kuwait and annexed the country), and America realized the increased scale and power Iraq would possess with the expanding commodity (actually, I am not sure we really understand the underlying driving force).


When the US became engaged in the conflict, Iraq must have felt betrayed by their previous ally and cowardly started firing scud missiles toward Kuwait and Israel. America’s offense increased (Operation “Desert Shield” became “Desert Storm”), and thousands of unequipped and poorly trained Iraqi soldiers lost their lives. America’s casualties numbered in the hundreds, with the majority resulting from accidental weapons malfunctions. Iraqi forces were driven back into Iraq, and the conflict ended as quickly as it began. This was the beginning of the third member of the “Axis of Evil”, as Saddam felt betrayed by the US and revolted against imposed UN sanctions later in the decade.


Fast forward to 2008: Iran has always been at odds with the US as well as with the Sunni controlled Iraq. Saddam, though a terrorizing dictator, was able to keep Iran suppressed and stabile in the region. The conflict between Sunnis and Shiites stems from thousands of years of in fighting and civil unrest. Through America’s influence, control in Iraq was transferred from the Sunnis to Shiites. The majority Shiites are now looking to avenge the Sunni oppression, with civil war appearing inevitable. Currently American troupes stand in the way of widespread chaos, offering stability. However, this proves a tough situation for the Sunnis, who fear retaliation from the majority power Shiites and their once bitter neighbor, Iran.


Enter Mahmoud Ahmadinejad. The anti-American dictator now possesses a greater influence within the new Government of Iraq. There have already been reports of Iran supplying weapons to Shiite extremists, a real problem for the US. Ahmadinejad’s growing relationship with Shiites defies America’s best interest, and is an alarming bi-product of the Iraq war. However, it not unreasonable to believe that this specific situation was foreseen and ignored by the White House in making the decision to go to war. Perhaps we underestimated the deep routed conflict between the Shiites and Sunnis, or downplayed the real possibility of civil war. Regardless Mahmoud Ahmadinejad is in Iraq, and He is there to stay.



Email to a Friend on Capital Hill

Wow,
You seem quick to give up the crown. With McCain winning the Republican nomination, I am not so sure Obama can pull it off. He still has to get by Hillary, who I believe, would have even more trouble against McCain.I will take the idealist comment in a positive light, but its more then that. I am tired of partisan politics; I am tired of compromise not being the underlying principal of the congress. What I am really tired of is exactly what we need more of...shorter memories. I find it interesting the current flack that Democrats receive when Republicans have proven themselves even more inept at managing fiscal policy. Earmarks are out of control, and have been for the past decade. I commend your boss' work on this subject, but do not get caught in the trap of partisan rhetoric. I am sure, for the next couple of years, Democrats will mimic their opponents past behavior.But remember, I sat on the side screaming into an abyss through the previous six years when legislation such as the Medicare 2003 bill was passed, and from 05-06 when real legislation was replaced with pork. Does that justify the Dems actions? Probably not. But let's not sit on the side and convince ourselves that the Republicans would not be doing the exact same thing if they still maintained power.

There will be waste, I do not disagree with your comment. But realistically, what corporate entity is running at 100% efficiency? Not even my company would state that waste is not a problem. Short of running every federal agent through six sigma (joke), waste will be a problem. However, do not believe for a second that this is a partisan problem.

Government should be there to help the people it represents. Unfortunately, all I see is corporations being the true beneficiaries of recent legislation. And government should be very leery when dealing with business. Even the passed bill for the mortgage bailout did little to help the people, but much to cut the losses of the banks that undertook the risk. Talk about anti-capitalism. Or how about the fact that the largest buyer of drugs, pays the highest price...Adam Smith is probably rolling over in his grave.

Yes, Democrats might not make the Bush tax cuts permanent, but they never should have passed in the first place. They were based on conditions that were preposterous to begin with (ie. economy would continue at the trajectory of the 90's), and when in the history of the US have tax cuts ever been enacted in war time? I commend John McCain for voting against them. And let's be honest, how much does rolling back the Bush tax cuts impact 90% of the people? And no, I do not believe the Bush tax cuts served any real purpose, especially when discussing impacts on the economy. As far as the comment about looking forward to more tax increases...a solid talking point with minimal credibility. I guess the majority of the right sees the expiration of the Bush tax cuts as raising taxes, but I disagree. Its time for fiscal responsibility and balanced budgets, and though the Dems might not be perfect in this regard, I can not believe it can be any worse then the previous seven years. (I would love to discuss with you the hidden tax of inflation...)

This is not about saving the world, but helping those in need. I don't believe the Democrats have all the answers, but I will say they are a bit more transparent (you don't have to write me on this point, I know you probably disagree). But as Adam Smith was weary of large corporations, so am I (ironic I work for one of the largest). I believe that McCain is the front runner for November, but I take solace in the number of seats that will be picked up in the House and Senate. McCain or Obama are capable of running the country with my support, and even Hillary will be a vast improvement over President Bush. I must say, I like where this country is headed, which is the first time I have made such a statement in about six years.

~Matthew

-----Original Message-----
Sent: Wednesday, February 06, 2008 8:11 AM
Subject: Re: FW: Off to the Races...

Obama looks great, has it all to take it. Kenyan father, Georgian white mother. Father leaves them, works hard in some of our best universities, and takes a pro-bono type job after all is said and done. He's an inspiring, charismatic- leader type. I predict he will be the next pres. Only, I don't agree at all with his policies.
You're right, Dems want to give you the moon, but sometimes there are those that would rather not have the moon--they're shooting for Mars or beyond.

Anyway, this city will be completely different next year--just like when Clinton was in the WH and Dems in majority. I'm not looking forward to more tax increases--and more government organizations that proclaim they will save the world! They are wasteful, I've seen it, lived with those that work with them who also agree. You can be an idealist as a student when it's not real life, but as soon as you start paying the bills--quickly realize sadly, it is about capital.
So congrats to you on your win...and here's to 4, maybe 8 years of "uniting America".


Change in Control

As many of you have probably guessed, the change in the control of the House and Senate is welcomed by me. Oversight, balance, and hopefully bipartisanship will be restored to the federal government, in hopes that the divided America will champion both sides of the argument.


I have also discussed with friends and family the expectations of the new Democratic powers. Interestingly enough, other perspectives are a bit more extensive then mine. I suspect that Democrats will work with President Bush to raise the minimum wage, find common ground on immigration, and work out a plan to fix the Medicare system. For those who believe that the Iraq policy will be reversed, or that taxes will increase, you have watched one too many campaign commercials. There is a larger focus of the Democrats’ control of congress, November of 2008.


Waiting for the Clinton/Obama ticket (just guessing), Democrats in the House will be careful with their oversight. They will not cut funding for the Iraqi war to change policy, as was done withVietnam, and they will not use any pre-war miscalculations to punish President Bush. They will use their political soapbox to weed out corruption, and try to exploit findings involving their Republican colleagues. They will not try to pass any drastic legislation that will hurt their popularity with the moderate voter. Plus, the President maintains veto power, and will probably use it more than just once as in the previous six years. The Democrats will use their renewed power to restage committee heads, and bring legislation to the floor that benefits their agenda. The leadership might sponsor wedge issues that hurt the President’s popularity, like stem cell research.


I believe that the congressional changing of the guard is not a vote for the policies of the Democrats, but a referendum of the actions of the Republicans. Democrats have earned about as much “political capital” as Bush in 2004, and hopefully will maintain a better track record. As Jon Stewart put it, “Democrats played the role of the boy who left the room as his brother is punished for burning the garage down”. I am excited to see the power shift, and hopefully it will lead to a better America.


Humbled, and Unchanged.

One of the most controversial moves of President Bush’s presidency occurred last year. While Congress was on break, President Bush’s nominee of UN Ambassador slid in the back door. During the confirmation hearings John Bolton was accused of harsh treatment of his subordinates. His record was challenged by Democrats and Republicans alike. His nomination left committee not with a stamp of approval, but with a washing of hands. Sending the nomination to the full Senate allowed the committee to play the political game; support the President, but avoid responsibility for his decisions. Bolton was highly unpopular with the minority Democrats and the nomination was resented by the Republicans. The Ambassador’s hearings quickly approached winter recess, which came with no resolve. President Bush played an unusual presidential card, and placed the new US Ambassador without confirmation through an emergency appointment.


Due to the rules of such an appointment, Bolton’s Ambassadorship expires at the end of 2006. President Bush has asked the lame duck session of Congress, to renew the appointment alienating Democrat’s opposition. This interesting political move might backfire on the President. With Republicans crippled by the policies of the President, such a controversial nomination will become a wedge to the congressional body. Even if the nomination is approved within the next two months, Democrats will look at this appointment as partisan politics. They will believe President Bush’s comments about bipartisanship and compromise a media event, with actions speaking louder then words.


If the Democrats Take Back Congress...

Any Fox Network viewer will tell you that the consequences for Democrats taking back the two houses of congress are catastrophic. Partisan fighting would continue, the war on terror would take a massive blow, and the possibility of presidential impeachment would loom. And though each of these concerns are unfounded and almost laughable (do you think the Democrats would impeach President Bush to put Cheney in power?), there will be some major changes that will occur.


The legislation that will be introduced “within five minutes,” as Nancy Pelosi notes, is the proposal to let the government negotiate drug prices. In a country seeded with capitalistic roots, how does the largest purchaser of drugs forfeit negotiating power? The very idea is perplexing. In 2003 when the congress passed a bill banning governmental negotiating, the idea was to let the third party insurance companies use their understanding of the industry to navigate prices. However, what happened next did not surprise the minority party. The drug prices paid by Medicaid/Medicare increased 10% a year since the law went into effect. Even more startling, the Veterans Benefits, which are not part of this legislation, buy their drugs at 50%-60% of the prices Medicare pays, though they purchase a fraction of the volume.


Yes, Big Pharma is worried; and rightfully so. They have already poured $500,000 in to Rick Santorum’s close race (the leading proponent of the 2003 Medicare bill), and multiple others across the country. If the Democrats do impeach President Bush, it will be long after drug prices drop.


(A great article can be found in the Wall Street Journal entitled, “Fearing a Democratic Victory, Drug Makers Fund Key Races.”)



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