The Reciprocal

Nick Miroff of the Washington Post revisited a Venezuelan dream: the Ciudad Guyana.  It was a modernist planned city in the wilderness. “President Rómulo Betancourt, a key partner in John F. Kennedy’s “Alliance for Progress,” founded the city in 1961, inviting his countrymen to turn Ciudad Guayana into a tropical Pittsburgh.” It was a monument to the kind of progress that was in vogue in the 1960s. Instead it became a kind of tropical Detroit.  The Washington Post writes:


When it was founded, Ciudad Guayana and its state-run heavy industries were Venezuela’s best hope for breaking the country’s overwhelming dependence on crude oil exports. It had all the right ingredients: iron ore, bauxite and gold; timber and farmland; and huge rivers to supply cheap hydropower for smelters and factories.

Planners from MIT and Harvard came to lay out the streets. Loans from the World Bank helped finance the dams. The city grew to more than a million residents.

The steelmaking company at the core of the Ciudad Guayana project, Sidor, produced a record 4.3 million tons before it was nationalized by Chávez in 2008.

Today, most of its furnaces sit cold, deprived of raw materials, new technology and reliable labor. The last contract for its 14,000 steelworkers expired four years ago.

Today steelworkers who once earned enough to buy a new car on 3 month’s wages can hardly feed themselves.  They have a guaranteed income, though. “Despite repeated strikes and work stoppages, the government has continued to pay salaries at the aging plant, including for more than 2,000 union officials who draw wages but don’t produce an ounce of steel.”  But there’s nothing you can buy with it and nowhere to go.

Avenidas de Ciudad Guayana en decadencia –‘the crumbling streets of the Ciudad Guyana’ says one headline. The city may no longer be making steel, but it now produces garbage. “Of the 1,200 tons of trash the city produces per day, only 200 are collected”, says another news article.

Progressive dreams are sometimes socialist nightmares wearing a mask. The Huffington Post has an article by Dean Waldeman, a board member of the New Mexico health exchange who thinks Obamacare is threatened by its own success: “Can health care success be health care disaster?”  Can a dream be so beautiful that you have too much of it?

The White House defines health care success as increasing the number of ACA-insured Americans. Based on that definition, Medicaid expansion — a part of the ACA Law — is a triumph…. reputedly more than 6 million Americans signed up through for ACA-supported insurance … On balance, we can call ACA signups a success….

In other words, ACA is a success, so, how is it also a disaster? …

More people demanding more care services and goods increases spending. Reduced spending on health care makes it less available. Thus, increased demand plus decreased supply creates an unbalanced healthcare system: a medical disaster of unmet needs.

Spending more dollars we don’t have combined with commercial suppression – both driven by ACA “success” – produces a financial disaster for our country, at a time when we are already suffering unremitting recession.


Yes a dream — even a dream car or home — can be a nightmare if you can’t afford it.

One of the things Obamacare promised to achieve is bend the cost curve downward.  But that’s not happening. “Within the next ten years, U.S. healthcare spending is expected to hit $5.2 trillion, the Centers for Medicare and Medicaid Services said Wednesday.”  Expansion in health coverage has not been matched by a corresponding decline in the costs of provision. They’ve handed out the health cards, now who’s going to pay for the health care.

The most even supporters can claim is a decline in the rate of increase. Massachusetts, for example, cannot cap its health care spending. “BOSTON — While consumers saw their health insurance premiums and benefit levels stabilize in 2013, overall state spending on health care in Massachusetts climbed to over $50 billion and efforts to move away from fee-for-service care ‘stalled,’ according to a new report.”

Even Sarah Kliff of Vox can only say “the good news: per capita health-care costs grew slower than Massachusetts had hoped. The bad news: medical spending still grew faster than overall inflation in the state.”

The president’s handlers know it is time to get out of the way of the oncoming Dream. Sensing the avalanche of costs rolling down the mountain, the policy gurus of the Democratic Party have decided to pass the hot potato to the states. Let’s hand the infernal thing to the Republicans before it blows up.

Borrowing a Republican idea, a group including former senior Obama and Clinton advisers is unveiling a novel proposal to let states take the lead in controlling health costs.

Individual states would set their own targets to curb the growth of health care spending. If they succeed, they’d pocket a share of federal Medicare and Medicaid savings, ranging from tens of millions to $1 billion or more, depending on the state.

The plan, released Thursday, comes from the Center for American Progress, a public policy think tank closely associated with the White House. The center’s former president, John Podesta, currently serves as counselor to President Barack Obama.

Called “Accountable Care States,” the new option would be voluntary, reflecting longstanding Republican preferences. To address Democratic concerns, participating states would have to maintain insurance coverage levels and enforce consumer quality standards to claim their financial dividends.


In many ways the Podesta concept is nothing more than a Democratic version of the Health Care Compact.

The Health Care Compact moves the responsibility and authority for regulating healthcare from the federal government to the states. Is this a good idea?

Yes, for two primary reasons: Healthcare is simply too large and complex to manage at the federal level. States have generally been shown to be more effective regulators than the federal government.

To demonstrate the challenge of regulating healthcare at the federal level, consider the following facts:

  • A federal system impacts 300+ million people
  • Healthcare spending exceeds $2.3 trillion annually
  • More than 14 million people work in the healthcare industry
  • There are 2,688 pages of regulations for Medicare and Medicaid
  • Centralized planning of an industry that is this large and complex is not possible, and has never been successful in the history of mankind. By comparison, the US military “only” spends about $1 trillion and employs about 2.5 million people – and has the benefit of providing a public good, rather than a consumer service.

By pushing responsibility and authority down to the states, the problem becomes much more solvable. Many states have only a few million citizens, and there are dozens of developed countries in Europe and elsewhere who have effective regulatory regimes operating at this scale.

The crazy thing is it might work, or at least some states will make it work. In which case it will be Podesta’s idea all along. The final months of the Obama administration may see reversals of a similar nature as the ‘narrative’ collapses and reality reimposes itself on policy. The Weekly Standard says that the al-Qaeda “was never on the run”.  The vast number of documents seized from Osama bin Laden’s hideout told a story completely at odds with the administration’s  line.

“They haven’t done anything close to a full exploitation,” says Derek Harvey, a former senior intelligence analyst with the Defense Intelligence Agency and ex-director of the Afghanistan-Pakistan Center of Excellence at U.S. Central Command (CENTCOM).

“A full exploitation? No,” he says. “Not even close. Maybe 10 percent.”

More disturbing, many of the analysts and military experts with access to the documents were struck by a glaring contradiction: As President Obama and his team campaigned on the coming demise of al Qaeda in the runup to the 2012 election, the documents told a very different story. …

Officials at the Defense Intelligence Agency and CENTCOM responsible for providing analysis to U.S. troops fighting in Iraq and Afghanistan wanted to study the documents. But the CIA had “executive authority” over the collection and blocked any outside access to them.

The ensuing bureaucratic fight, reminiscent of the intragovernment battles that led to the reorganization of the intelligence community after 9/11, unfolded over the spring and fall of 2011. It was resolved, at least temporarily, when then-CIA director David Petraeus weighed in on behalf of the team from CENTCOM and the DIA…

The CIA provided access on a read-only basis, but even that limited look into bin Laden’s world made clear to the military analysts that the Obama administration’s public story on al Qaeda reflected the president’s aspirations more than reality.

The narrative heading into the 2012 presidential election was simple. “Al Qaeda is on the path to defeat,” Obama said repeatedly. And “Al Qaeda has been decimated.” And “Al Qaeda is on the run.” And “We have gone after the terrorists who actually attacked us on 9/11 and decimated al Qaeda.” And “Al Qaeda is on its heels.”


The rise of ISIS, like the explosion in health care costs is forcing the administration to rewrite its political line. The next shibboleth to fall may be Green Energy. Bloomberg writes “Saudi Arabia Oil Sales to U.S. Imperiled by Shale Boom”.

After years of keeping the price of crude sold to the U.S. low enough to maintain market share, Saudi Arabia is losing ground as the shale boom leaves U.S. refiners with ample supplies of inexpensive domestic oil…

Shale drilling has boosted U.S. oil output to the highest level since 1986. As refineries turn to lower-priced domestic oil to make fuel at a record pace, the Saudis and other foreign suppliers are left with dwindling slices of the market. In June, imports from Saudi Arabia accounted for the smallest share of crude processed at U.S. refineries since February 2010.

“The Saudis are not going to sell crude at a disadvantage to themselves — they’re not about buying market share anymore,” Mike Wittner, Societe Generale (GLE)’s head of oil market research in New York, said by telephone Aug. 28. “Those days are long gone. They’ll price crude to be competitive with the competing sour grades in every market, and if that means their flows to the U.S. are down, so be it.”

Saudi Oil Minister Ali al-Naimi told reporters in Vienna in December that he expected Saudi shipments to the U.S. to stabilize at an average of 1.4 million to 1.5 million barrels a day this year. Saudi Arabian officials didn’t return at least nine calls between Aug. 28 and yesterday seeking comment on the exports.

If socialist dreams are sometimes nightmares with a mask, then frogs are sometimes Prince Charmings under a spell. Just as real progress in Venezuela may result from a reaction to the debacles of Chavismo, so too may the revival of NATO, the decentralization of health care, a return to the Middle East or the new appreciation of energy independence arise from the ruins of Obama’s policy misadventures.  The thing about systematically choosing the wrong course is that a correction looks very like the reciprocal.

Necessity is the mother of invention, but since not every invention meets the need, a large helping of historical revisionism is necessary to keep the progressive vision intact.  Revisionism is the sincerest form of insincerity.  Reversals mean that given enough time Obama will style himself as the ‘new Ronald Reagan’; the UN will demand control of the once-hated Internet and GPS (and ‘unproven missile defense’). John Podesta will write that he was the father of the Health Care Compact.  And energy independence will have been the brainchild of the Global Warming set all along.


Just you wait. Maybe that’s inevitable, and if that’s the case, so be it. As Deng Xiao Ping once said “it doesn’t matter whether a cat is white or black, as long as it catches mice.”

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