When Wall Street loves reform

March 31, 2010

The Democratic Party is celebrating health care reform--and so is Corporate America.

DOES THE passage of the health care bill signal a new era of progressive reform?

Certainly many mainstream commentators think so. "For all the political and economic uncertainties about health reform, at least one thing seems clear: The bill that President Obama signed on Tuesday is the federal government's biggest attack on economic inequality since inequality began rising more than three decades ago," wrote New York Times economic journalist David Leonhardt.

Leonhardt's evidence: an increase on payroll taxes on households making more than $250,000, and an expected decline in medical bankruptcies. The bill also got rid of a few of the insurance industry's more heinous practices, like denying care for pre-existing conditions.

But the fairly mild tax on the rich and new regulations on the insurance companies' practices are dwarfed by provisions that give the health care industry more room for profit, such as mandates that require that everyone buy health insurance under threat of financial penalties.

President Obama and leading Congressional Democrats at the White House signing ceremony for the health care bill
President Obama and leading Congressional Democrats at the White House signing ceremony for the health care bill (Chuck Kennedy)

As noted on Firedoglake.com:

This bill is almost identical to the plan written by AHIP [America's Health Insurance Plans], the insurance company trade association, in 2009. The original Senate Finance Committee bill was authored by a former Wellpoint VP. Since Congress released the first of its health care bills on October 30, 2009, health care stocks have risen 28.35 percent.

That goes a long way toward explaining why Wall Street was so upbeat about a bill that supposedly attacks economic inequality. The day after the House version of the bill passed, stocks related to the health care industry went up.

The Wall Street Journal explained:

"Managed-care organizations, like pharmaceutical companies, made some significant concessions as part of the overhaul, but have the potential of getting 32 million new customers," said Jeffrey Loo, an equity analyst at S&P. "We think overall that the reform will be positive for the managed-care sector," he said.

But the new law isn't so positive for the 23 million or so people in the U.S. who will remain uninsured for at least the next nine years. And that's just one reason why the business-friendly bill that Obama signed was nothing like what real health care reform should look like.

Not only does the law mandate the purchase of insurance, it imposes a 40 percent tax on plans whose value exceeds $10,200 for individuals or $27,500 for families. That means the new law will accelerate the shift in health care costs from employers to workers, forcing more people to switch to inadequate, bare-bones plans.

You wouldn't know all that from the right-wing Neanderthals screaming "socialized medicine," of course. By stirring up the bigots and racists in the tea party crowd, the Republicans managed to make a heath care measure based on their own proposals sound like a radical breakthrough. So it's no wonder that so many people were relieved--and happy--to see the Republicans lose a big political showdown.

Indeed, for many people who are sick and tired of conservatives getting their way, the bill's passage signaled a potential shift in the political winds in Washington. So after months when it appeared that the right was making a big comeback, the health care reform could translate into a growing confidence that working people can make real progress today after all.

THE QUESTION is, how are such gains to be made? If matters are left to the Democrats, we'll see a repeat of the health care reform debacle, in which widespread demand for fundamental change is diverted into weak legislation that leaves powerful economic interests unchallenged.

Consider the financial reform legislation proposed by Sen. Chris Dodd (D-Conn.). His measure would do nothing to break up any of the large "too big to fail" banks that were behind the financial crash and would place the protection of consumers in the hands of the Federal Reserve, which looked the other way while predatory lenders helped inflate the housing bubble.

Wall Street's lobbyists have been following the example of the health care industry, which spent more than $500 million and dispatched some 3,400 lobbyists in Washington in 2009 alone. So long before the final congressional vote on health care, the fix was already in, as Democrats made sure that their supporters in the health care industry got their cut. Now, it's the bank lobbyists' turn.

So while the Democrats and Republicans argue over the shape of health care or financial reform in the halls of Congress, there's far more that they actually agree on. Former Republican strategist Kevin Phillips was on the money when he characterized the Democrats as the "world's second-most enthusiastic capitalist party." While the two parties may clash over specific policies, they're in full accord with the larger project--upholding a system that guarantees corporate profits.

And even if individual Democrats don't directly profit from corporate money--though most of them do--they still accept the confines of a corporate-dominated political system. Thus while a liberal stalwart like Rep. Dennis Kucinich (D-Ohio) may credit his support for the final health care bill to "a change of heart," his decision had very little to do with any personal transformation.

As long as he represents the Democratic Party, Kucinich ultimately plays a part in upholding the status quo. That's why Kucinich turned his back on the Medicare-for-all type single-payer solution that he has long championed--and voted for legislation that puts health care industry profits first.

It's in the context of this two-party straitjacket--where there are no other options beyond two parties that both represent big business--that it's possible for some people to view this lousy health care reform as a victory.

It's too soon to tell whether the proposed toothless financial reform legislation will end up the same way. But with the bankers and Republican politicians again squawking about supposedly radical anti-business measures, the Democrats will once again try and use the legislation to pose as defenders of working people.

We deserve much better. To get it, we have to build independent organizations and movements that take on pro-business, anti-worker policies--whether they're put forward by Republicans or Democrats.

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