Economic Outlook: Bruising Medicare

By ANTHONY HALL, United Press International
Economic Outlook: Bruising Medicare
Anthony Hall

The dynamics of electoral politics is exposing disagreements within Republican ranks in Washington on Medicare with Democrats standing ready to pounce.

All it took to break the dam was one prominent presidential hopeful named Newt Gingrich, who called Rep. Paul Ryan's Medicare plan "right wing social engineering."


Specifically, Gingrich said, "I don't think right-wing social engineering is any more desirable than left-wing social engineering. I don't think imposing radical change from the right or the left is a very good way for a free society to operate," The Washington Post reported.

Ryan, in turn, called Gingrich an ally he could live without. "With allies like that, who needs the left?" Ryan asked in a radio interview.

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Ryan's budget-cutting plan called for the government to subsidize insurance premiums for those eligible for Medicare, a switch from the system that now pays medical bills directly. The plan would be phased in slowly by making the change applicable to citizens now less than 55-years old.


Gingrich, however, is a can't-help-himself idea man, who is often a bit of a right-wing maverick within the GOP. Soon after announcing he would seek the Republican nomination to challenge President Barack Obama, Gingrich said healthcare costs were being driven higher by individuals earning more than $75,000 per year, but refused to buy health insurance. He said, "All of us have a responsibility to help pay for healthcare," The Wall Street Journal reported.

On Monday, however, he said, "I am against any effort to impose a federal mandate on anyone because it is fundamentally wrong and I believe unconstitutional." He then added he would agree to mandates imposed by states rather than the federal government.

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To the head of the Democratic Congressional Campaign Committee, this is nothing short of music to his ears.

"It absolutely moved the needle in the political landscape," said Steve Israel, D-N.Y. "Whenever you get a far-right Republican like Newt Gingrich saying House Republicans are too far to the right, we will remind people of that," the Journal quoted him as saying.

For Democrats, the greater the divide among Republicans, the greater the chance there is of finding votes for critical budget issues, including raising the U.S. debt limit.


On Monday, the Treasury Department said that debt limit of $14.29 trillion had been breached and it would take extraordinary measures to keep the government solvent until Aug. 2, at which point, the government would run out of options and go into default. In Washington, it is a game a chicken that the Treasury says could end up as a catastrophe if the debt ceiling is not raised.

In the meantime, there appears to be plenty of time to place a bet. The horse-trading to date appears to be going more slowly than a hobbled tortoise.

In international markets Tuesday, the Nikkei 225 index in Japan was flat, rising 0.09 percent, while the Shanghai composite index in China rose 0.13 percent. The Hang Seng index in Hong Kong slipped 0.26 percent while the Sensex in India dropped 1.01 percent.

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In Australia, the S&P/ASX 200 index rose 0.73 percent.

In midday trading in Europe, the FTSE 100 index in Britain lost 0.66 percent while the DAX 30 in Germany fell 1.33 percent. The CAC 40 index in France dropped 0.73 percent while the Stoxx Europe 600 fell 0.62 percent.

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