Pickpocket policies

It’s
fun to keep up with the mobster-and-oligarch news from Russia. And things get
really interesting when our market-manic media tie Russia’s economic woes to
the privatization of former state enterprises. (There are limits, of course.
Our media generally see privatization as bad medicine for them, but still necessary for us.)

            Yes, Russia is riddled with rip-off
artists more in-your-face than Bonnie and Clyde. Take what they’ve done with
the country’s energy resources. Just eight years ago, says a Frontline backgrounder, the recently
arrested billionaire Mikhail Khodorkovsky acquired the Yukos oil company for
“a mere $309 million.” Today the company is worth $15 billion, and
Khodorkovsky is worth $8 billion himself.

            Meanwhile, Russian pensioners sell
trinkets on the street to survive.

            These are vignettes from a national
tragedy vast as a Tolstoy novel. I don’t want to trivialize the situation by
making inappropriate comparisons. But I can’t help think that Russia is not the
only superpower whose economy staggers under forced privatization and
inequality.

This leads to
a pair of
very American stories — which broke on the same day, November 25. The top
headline was the Senate’s passage of the final Medicare “reform”
bill, following passage in the House a few days earlier. Though the bill has
many provisions, it was marketed simply as a $400 billion prescription drug
benefit to be paid out over 10 years.

            Before the bill passed, media
reports routinely described it as something the country can barely afford. But
not enough people called it what it actually is: a mountainous theft. The fine
print reveals plenty about the bill’s much-touted “benefits” and
“reforms,” which call to mind the old nightclub shtick: The food here is terrible — and the
portions are so small.

            First, look at the drug benefit. As
widely reported November 26 — naturally, the day after the bill passed — the benefit is a lot less substantial
than proponents let on during the Congressional debates. For one thing, there’s
the infamous “doughnut hole” in drug benefits, which will initially
leave beneficiaries stuck with paying around $4,000 in premiums and
out-of-pocket expenses for the first $5,100 in benefits. Admittedly, there’s a
silver lining: The plan will cover 95 percent of drug costs above $5,100. But
one crucial provision in the bill hasn’t sunk in yet: a phenomenal expansion of
the doughnut hole after 2006.

            According to a Los Angeles Times analysis, the $5,100 cut-off point will have
risen to $9,066 by 2013 — making the doughnut hole several thousand dollars
larger than people have expected, and leaving the majority of participants in
the lurch.

            The doughnut, as opposed to the hole,
goes to the drug companies.

            How so? The bill bans bulk-purchase
agreements within Medicare; it also hobbles the re-importation of cheaper drugs
form Canada. Both provisions mean more money for Big Pharma.

            Moreover, the bill doesn’t address
the wellspring of drug industry profits: publicly subsidized research through
the National Institutes and universities, and government-protected monopolies
untouched by price controls. (In a briefing paper early this year, economists
Dean Baker and John Schmitt of the Center for Economic and Policy Research said
the government could try funding the entire research system and putting the findings into the public domain for use by
manufacturers. Such a new system, similar to what’s done now with generic
drugs, could save Americans $200 billion a year by 2013, the authors said.)

            The Medicare bill also establishes a
pilot program aimed at seducing recipients into HMOs. The prognosis is not
good. “Private insurance companies that participate in the Medicare
program… will gain a huge and unjustifiable windfall,” says a review of
the legislation by Families USA. HMOs and insurers, says the group, will
“cherry pick” the healthiest Medicare participants, decreasing
payouts and inflating profits.

            The program, says Families USA,
could even “lay the groundwork for privatizing Medicare.”

            Don’t be fooled about this being a
“fiscally conservative” political victory, either. The Medicare bill
is meant to funnel the cash-flow toward powerful lobbies. The cash will come in
“non-medical expenses.”

            A new study by the Foundation for
Taxpayer and Consumer Rights notes the average HMO spends 17 percent of revenue
on overhead. Traditional Medicare’s overhead is just two percent. The 15-point
gap will translate into impressive sums for privatizers and their
beneficiaries.

            Time will tell if this upward
transfer of wealth will create new American billionaires — and elderly street
peddlers.

Massive
rip-off number two was George Bush’s November 25 signing of next year’s
defense authorization — lean and mean at $401 billion.

            It’s amazing how the Flight Jacket
in Chief can successfully hawk a measure that costs in one year what the
Medicare drug benefit will cost over a decade.

            If present trends continue, the US
will be spending something like $4 trillion on militarism and war over the next
10 years. Yet the typical take-home message on war-related expenditures is, It’s such a dangerous world, we can’t do any
less.

            Some folks argue that US military
spending as a share of GDP is within reasonable bounds. I disagree. In any
case, the outlays in real live dollars are almost beyond belief.

            The Friends Committee on National
Legislation has determined that US military spending for fiscal 2000 — that
is, before 9/11 and the War on Terror — totaled $547 billion. All by itself,
the Pentagon grabbed $296 billion that year. The remainder, says the FCNL, went
for mandatory payments to the military retirement system, veterans’ benefits,
aid to foreign armed forces, and the military-related portion of the national
debt.

            By the way, the FCNL says that in
1999, the Pentagon budget was “2.6 times greater than the combined
military spending… of the nine largest potential US adversaries — Russia,
China, Iran, North Korea, Iraq, Libya, Syria, Sudan, Cuba.”

            This is old news, of course. We now
own Iraq and are busily leasing it to private contractors. The plump deals will
make our military budget look even more depressing on the international charts.

            The military budget will torpedo
social expenditures, too. Then we’ll be subjected to a national ad campaign
featuring — as Al Franken might say — lying liars pushing lies about
privatization as a cure-all.

            If only we could shove the Pentagon
into an HMO.

This article appears in Dec 3-9, 2003.