Hope on the Hill?

Yesterday, a newly released poll shows 86% of Americans now believe our political system is broken -- the highest percentage ever. On the same day, a handful of Republican Senators broke from party ranks and gave their support for a $15 billion jobs bill. Among those who gave their support were moderate, New England Republicans Olympia Snowe and newcomer Scott Brown. It is not yet known whether the New England Republicans will be the bridge for further legislative action in the gridlocked Senate, nonetheless, some see the passage of the jobs bill as a sign of hope.

Before getting too excited, first consider that the $15 billion jobs bill is literally a water drop in the waterfall-sized spending by Washington to save Wall Street, and it comes nowhere close to addressing the serious unemployment problem on Main Street. Recall, between TARP and other federal bailout measures, the U.S. Government spent well over $1 trillion to prop up Goldman Sachs, Citigroup, Bank of America, among other financial institutions. Also note, that real unemployment in America currently sits at around 17% -- meanwhile, bonuses on Wall Street were up 17% to over $20 billion in 2009. Further, roughly 2.7 million will lose unemployment benefits in April; over 6 million Americans have been unemployed for over 6 months -- four times as high as the average over the last 50 years and the highest level since the Great Depression. In this context, the $15 billion jobs bill is a complete joke.

We will know soon enough whether this New England Republican coalition has any substance, when the healthcare debate seriously ramps up to another level in the days ahead. One way that Main Street can be helped is passing a comprehensive healthcare reform. Talk to any federal bankruptcy judge and they will tell you that one of the primary burdens on American families filing for bankruptcy today are medical expenses; latest studies show that over 60% of Chapter 13 filings is linked to medical expenses -- those with healthcare insurance report medical expenses in excess of $18,000, and those without insurance report medical expenses over $27,000. So the key word here is "comprehensive." Unfortunately, what has been proposed so far by the House and Senate, and now the White House, only goes to a part of the problem. Unless Democrats will accept Republican proposals for tort reform, and unless other needed measures are adopted like medical and legal education reform as well as a public option for high-risk insureds, I don't see the cost of healthcare for American families coming down a meaningful level.

Meanwhile, what does the $15 billion jobs bill actually do? It provides payroll tax benefits for employers at a time when the government is running severe deficits from tax revenue shortfalls and overspending. (In a previous blog, you will find that under the right circumstances, I do favor eliminating corporate earnings taxes altogether and increasing marginal rates of individual taxpayers.) We are in a mess of historic proportions with no easy solutions. But some see the bi-partisan support for the $15 billion jobs bill as a step in the right direction and a sign of hope on the Hill. We shall see.

Peace

Jeremy