Monday, January 18, 2010


Exactly how ridiculous is politics? It is the only profession with its own currency and capital. It began with people simply trying to obtain the best funding, services, goods, or what have you for their constituencies. But as cities became more complex over time, you had to prioritize the needs of your constituency make deals with other politicians to get what your city needed the most. And over time the deals became more complex and involved more people and also coming and possible events. In essence, they became the political equivalent of a mortgage backed security, and were just as difficult to trace and follow. Because of their convolution, they then became easy to abuse. Politicians could use their political capital for personal gain but hide it under the guise of helping their constituency. And that gave rise to political pork.

Political capital and political pork has gotten so bad that you can essentially expect political capital to be traded and some pork to be attached to each and every Congressional bill. You simply cannot expect any politician to act in the best interests of the public. That has led me to my past recommendation to impose term limits on Congressmen. But perhaps that is why President Obama was seen to be a breath of fresh air for the United States government. When talking about pork, President Obama specifically stated that he would veto any bill with pork.

Now enter healthcare reform. A bitter battle has and is still brewing over healthcare reform. The public option has already bitten the dust, not because it actually is a bad idea—that would take time to figure out—but because enough politicians either do not like it or are listening to people with money or political capital. Now the entire reform is in dire straits because Senator Kennedy’s seat in the Congress is up for grabs, and a Republican is currently in the lead to take it. If he does, the Democratic party’s majority rule in the Senate will end. To many this is a big deal because it means that Democrats will no longer be able to power whatever Democrat slanted bill through the Senate. And that would put the final nail in the coffin for the healthcare reform bill.

But this is really just a load of crap. The Democratic majority in the Senate has proved minimally helpful in passing bills. And healthcare reform is also the perfect example why the simple fact of having a majority is negated by political capital. While the general theme of the bill is to try and insure up to 30 million more Americans and cut costs over the next decade, multiple smaller issues have cropped up that extend beyond simple party lines. For instance, abortion is a sticking point for many people, both Democrats and Republicans. Many do not want the new healthcare system to pay for abortions and many do. This fractures the Democrat majority. There are clearly ways around this, say by making the abortion issue a state determined matter. That should appease most politicians and preserve the majority rule.

The bigger problem comes when you bring up Medicaid. This is the suggested method of covering the 30 million uninsured. The thing about Medicaid, however, is that it is funded by the states, and unfortunately, very poorly funded by the states. The federal government does help with subsides here and there, but it is still not a lot of money. So you can imagine that when the politicians discovered that healthcare reform would require their states to pay out more over time, they had to make a decision—accept the trade off or not. Most Senators accepted that part of the bill. But Senator Nelson of Nebraska did not. Instead, he decided to play a little game with the Senate and the public’s money. He decided to hold out until every other Democrat had given his support for the bill. Knowing that his party would need all 60 of their own votes to pass the bill, he held out until he became so important that he could asked for just about anything. So he asked that abortion be removed from the bill. And he asked for federal funding of Nebraska’s Medicaid program forever. That’s right. Forever. And he got it.

So that’s our first lesson in politiconomics. There will be many many more lessons on political capital, political supply and demand, and political cost and profit.