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The First Shoe was the health insurance industry. As the economy nosedived it dug into their profits. Employers either cut back on group plans or laid off employees, either case affecting the cash flow. Plus more and more young healthy people, prized by the health insurers due to the loss ratio, were electing to be uninsured. Hence the HIBOB (health insurance bail out bill) mandating people to purchase their product, in exchange for which they will now offer insurance to previously uninsured people. With high deductibles/premiums/copays plus words like “unreasonable” inserted into bills to negate the lifetime and yearly caps, these people may not receive any actual care but the industry will receive the premiums. First Shoe to fall, and a very popular one with Democrats.
Shoe number two is financial reform. Bush officially endorsed TBTF (Too Big To Fail ) which Obama continued. As the call from Main St for reform reached a fever pitch the president sent messages to the financial sector that he was on board. Reappointing Bernanke and cabinet positions for Summers and Geithner brought comfort to Wall St. Obama has shown occasional bluster but watering down derivatives reform and headquartering the Consumer Financial Protection Act within the Fed as well as language in Dodd’s bill cementing TBTF show this round too will go to the financial guys. Second Shoe and likely popular with Democrats too.
Ah but now we come to the Third Shoe and it’s a big one. Andre the Giant might not have fit into this one. Our Third Shoe is Social Security. The New Deal legislation which has kept many a family afloat. It saved my family’s ass when my dad passed away. The Right has demonized SS for years with little luck. Following the tech bubble they pushed hard for “ownership” counting on the fact that most Americans don’t understand SS is social insurance, not some kind of savings plan. Bush tried to privatize it but was opposed by Democrats, AARP and even much of his own party. Keep in mind the economy was booming. Also keep in mind had he won, the privatized accounts he pushed for would be digits in some virtual dumpster in cyberspace.
Things are different now. The economy’s in the tank and people are being frightened by fears of deficits and unfunded liabilities. They’re unfunded because the time hasn’t come to pay them yet. Think of your house payment-if interest and principal are 500,000.00 over 30 years-that’s a 500,000.00 unfunded liability. Cause it isn’t time to pay it yet. If you keep making your monthly house payment you’ll be fine. SS is the same. The most recent Trustee report shows it fully funded for 27 more years. No need to panic.
But that’s what the politicians and Wall St are counting on. Panic and greed and people not understanding that SS is OK. Obama’s position in 2008 was against privatization. He also favored a public option at that time too which went out the window once elected so Caveat Emptor.
The TBTF banks will continue to do what they’ve always done thanks to the coming industry-friendly finance reform bill. But this is key-because they still hold billions in toxic assets off their balance sheets they are effectively insolvent. If you forced them to declare those assets at true market value they would prove to be broke-in spite of the Bailout. So they NEED the SS money. The Republicans already stand for privatization, Bush Style. Funneling increasing percentages of FICA wages to Wall St for investment in equity and bonds. Some Democrats echo the talk of “Fixing” SS. It isn’t broke. When they say “Fixing” they mean give it to Wall St. So watch your president. Watch the Democrats. Third Shoe. It’s the big one.Click here for reuse options!