Tag Archives: Wall Street Journal

Help Stop This Health Care Train Wreck

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There is no question that health care reform is needed. Is the answer the legislation that is scheduled to be voted on Saturday by the U.S. House of Representatives? Absolutely not.

If you disagree and support the mandates, fees and costs that will add $1.2 trillion (that’s "t" as in trillion) in debt, stop reading. If you don’t think those items should be part of the solution, let your congressional representative know today. The Indiana Prosperity Project has the details.

Why not H.R. 3962? The victims would include small business and their employees (both those who would lose their jobs as well as the ones remaining), insurers, health care providers, manufacturers of medical devices and more. Can we really deliver another devastating blow to companies that are still trying to recover from the recession?

Gov. Mitch Daniels wrote to Indiana’s delegation, saying, "The current House bill is the worst version yet, with truly awful consequences for Indiana." The Wall Street Journal calls the legislation "the worst bill ever."

If this is bad, what is good? Here’s a partial roadmap that should be followed:

The Indiana Chamber believes that, with a few simple reforms and changes in incentives for providers, that market forces will succeed in introducing more competition to the marketplace and ultimately driving down costs.  The Chamber supports an approach where widely accepted reforms are passed first, instead of the "all or none" approach that attempts to force passage of controversial legislation (such as a public option).  If, as President Obama has asserted, 80 percent of reform can be agreed upon, then it is these incremental, common-sense measures that should be pursued. 

The Chamber supports reform that seeks: to foster and preserve efficient private insurance markets; to realign economic incentives from fee-for-service to outcome-based compensation for providers; to enhance the use of medical information technology; and to standardize insurance procedures, as well as introduce more competition between private insurers (e.g., selling health insurance across state lines).  Decisions on treatment and coverage levels should be made cooperatively among patients, providers and insurers. Insurer scrutiny should ensure provider pricing transparency, best practices and the use of evidence-based medicine. Additionally, any real reform of the U.S. health care system must acknowledge and address abusive lawsuits and the rising costs of medical malpractice insurance.

The first step is to stop a very bad piece of legislation from emerging from the U.S. House. You can make a difference.
 

Bayh Urges Democrats to Restrain Spending

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Sen. Evan Bayh (D-IN) offered this advice to Democrats in a Wall Street Journal column today:

Last month the Office of Management and Budget predicted that the national debt will increase by $9 trillion over the next decade—$2 trillion more than forecast just four months earlier. Government net interest payments exceed $1 trillion in 2019, up from $382 billion this year. Because projected deficits exceed projected economic growth, the gap will be self-perpetuating.

The consequences of all this will not be benign. A world saturated with U.S. currency will eventually look elsewhere to invest, causing the dollar’s value to drop; foreign creditors, their confidence shaken by our fiscal profligacy, will demand higher payments to keep holding our debt. The net effect will be "stagflation," that pernicious combination of slower growth, higher inflation and interest rates, and lower living standards Americans suffered through in the 1970s.

These events will diminish our global influence, because fiscal strength is essential to diplomatic leverage, military might and national significance. No great nation can rely upon the generosity of strangers or the forbearance of potential adversaries to meet its security needs. America is doing both. China uses its monetary reserves to curry favor in developing countries once in the U.S. sphere of influence; we must borrow to pay for the wars in Iraq and Afghanistan.

Worst of all is the legacy we will leave. From the "Greatest Generation" we inherited an America that is the strongest, most affluent, freest nation on earth. On our present course, our children will not. We violate a fundamental part of our national character by taking from our children to satisfy our desires today.

Congress’s initial reaction to our fiscal peril has not been encouraging. The $410 billion omnibus spending bill passed in March increased domestic discretionary spending by 8% and included more than 8,000 earmarks. This year’s budget contemplates domestic discretionary increases of nearly 9%, three times the rate of inflation. If the past is any guide, it will include thousands of new earmarks.

Any serious effort to control the deficit must begin with spending restraint. Efficiency and frugality, common virtues in the private sector, must be incorporated into government. Congress should enact health-care reform that actually lowers the deficit. For the next fiscal year, assuming the economy has gathered sufficient momentum, we should freeze domestic discretionary spending, limit increases in defense spending to the rate of inflation, forgo pay raises for federal workers, and institute a federal hiring freeze.

These steps alone won’t put our fiscal house in order; more difficult action is needed. But by showing common cause with middle-class families facing their own budget crises, we can send an important signal that Washington has the will to chart a more responsible course.

Is “Pay to Play” the Future of the Internet?

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An online company’s CEO claims the future will feature more fees for Internet surfers. Bloomberg has the story of how more media giants are insisting the days of free Internet content are going the way of the dinosaur (or dial-up):

Barry Diller, chairman and chief executive officer of IAC/InterActiveCorp, said Web users will have to pay for what they watch and use, joining the refrain of media moguls who say an era of free Internet content is ending.

The media and technology executive, whose company runs the Ask.com search engine and the Match.com dating service, said it’s “mythology” to view the Internet as a system of free communications.

“It is not free, and is not going to be,” Diller said today at the Fortune Brainstorm conference in Pasadena, California. In addition to IAC, he is chairman of Expedia Inc., the online travel service, and Ticketmaster Entertainment Inc.

Diller, 67, joined a group of media chiefs, from Liberty Media Corp.’s John Malone to Walt Disney Co. CEO Robert Iger, who are challenging the accepted model that consumers pay for Internet access and then content is free. Diller predicted there will be three revenue streams: advertising, subscriptions and transactions.

Disney, the world’s biggest media company, is developing a subscription-based product for the Internet, Iger said on July 22 at the conference.

The Burbank, California-based company has opportunities to increase sales from the Web, Iger said. Online advertising can be improved, and marketers can target consumers by tracking their activities and interests. Subscription products are particularly promising to the company.

‘Willing to Pay’

“We have ample evidence both in traditional and new media that people are willing to pay for quality, to pay for choice and to pay for convenience,” Iger said. “And they are willing to pay for what they perceive as value.”

Companies from Disney to New York Times Co. are seeking ways to get more revenue from the Internet and counter the loss of traditional media subscribers and advertisers.

New York Times said in a survey of print subscribers this month that it’s considering a $5 monthly fee for access to its namesake newspaper’s Web site. The company also asked whether existing print subscribers would be willing to pay a discounted fee of $2.50 a month for access to the site. Nytimes.com, the most visited among newspapers’ sites, is currently free.

Yesterday, the newspaper publisher reported second-quarter profit almost doubled as the company cut jobs and wages to cope with a deepening advertising slump. Revenue declined 21 percent.

News Corp.

News Corp., publisher of the Wall Street Journal and owner of the Fox TV and film studios, plans to increase revenue at its Internet businesses by charging customers for news and entertainment, Jonathan Miller, the company’s chief digital officer, said yesterday at the conference.

Going forward, some companies will have material people are willing to pay for, and others won’t, said Miller, chief executive officer of News Corp.’s Digital Media Group.

Journalism will increasingly become a “paid model” online, said Miller. The Wall Street Journal already charges for online subscriptions.

Media is Struggling, But Likely Right Time for Businesses to Advertise

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For media professionals, a The Wall Street Journal’s Media/Marketing page on January 15 was about as uplifting as listening to The Cure while awaiting sentencing, with the jury foreman being a kid you stole lunch money from in 5th grade. Here were the headlines of its top two articles: "Newspapers Move to Outsource Foreign Coverage" and "Magazine Ads Evaporated in 2008, Faster as Months Went On." 

Here were some not-so-fun facts about magazine ads:

  • In 2008, fourth quarter magazine advertising plunged 17% compared to a year earlier
  • 2008 also saw drops in the first three quarters (6.4%, 8.2% and 12.9%, respectively)
  • Automakers bought 24% fewer magazine ad pages during 2008

But let’s also not forget there is an upside to all this; it may be advantageous for your business in terms of magazine advertising. If your competitors are not advertising and you are, you’ll get the most possible bang for your buck. So if you’re waiting to strike while the iron is hot, now is likely the right time.

In fact, this article from Wisconsin-based InBusiness Magazine sums it up quite aptly:

Since 1949, there have been many studies of the effects of advertising spending during recessions, and most studies have come to a similar conclusion: advertisers win business from those who don’t advertise (duh!), and advertiser sales and market share grow at a dramatically faster rate than non-advertisers for the next 3-5 years.

In one study, the advertisers sales growth was 14 times greater than non-advertisers. Holy competitive advantage, Batman!

(Truth be told, Batman has never needed to advertise, as far as we know. Although, come to think of it, he may need to take some serious PR measures following his outburst at a photography director that went public last week.)

Shameless plug:  If you’d like information about advertising in our popular BizVoice magazine (approximately 15,000 subscribers), just e-mail Jim Wagner at jwagner@indianachamber.com.

Wall Street Journal: Nationalized Health Care on the Way

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In a recent column, The Wall Street Journal’s Kimberley A. Strassel explains how the financial crisis/stimulus efforts could be the Trojan Horse that allows nationalized health care to be pushed forward by its proponents. The concept is interesting from a political perspective. The results, however, could be catastrophic from businesses’ and taxpayers’ perspectives.

The bill even takes a whack at the private market. Under the guise of money for "health technology," the legislation makes the government the national coordinator for electronic health records, able to certify what platforms are acceptable. This is an attempt to squelch a growing private market that is competing to improve transparency and let consumers compare providers and costs. In liberal-world, only government should be publishing (and setting) health-care prices.

Add it up, and Democrats may move 10 million more Americans under the federal health umbrella — in just four weeks! Good luck ever cutting off that money. Meanwhile, the Democratic majority is gearing up for a Medicare fight, where it may broach plans to lower the eligibility age to 55. Whatever costs accrue, they’ll pay for by slashing the private Medicare Advantage option.

Also noteworthy:

Under "stimulus," Medicaid is now on offer not to just poor Americans, but Americans who have lost their jobs. And not just Americans who have lost their jobs, but their spouses and their children. And not Americans who recently lost their jobs, but those who lost jobs, say, early last year. And not just Americans who already lost their jobs, but those who will lose their jobs up to 2011. The federal government is graciously footing the whole bill. The legislation also forbids states to apply income tests in most cases.

House Democrat Henry Waxman was so thrilled by this blowout, it was left to Republicans to remind him that the very banking millionaires he dragged to the Hill last year for a grilling would now qualify for government aid. His response? A GOP proposal to limit subsidies to Americans with incomes under $1 million was accepted during markup, but had disappeared by final passage. In this new health-care nirvana, even the rich are welcome. CBO estimates? An additional 1.2 million on the federal Medicaid dime in 2009.

1.2 million more people on Medicaid? What could possibly go wrong?

Rupert Murdoch: Media Dug Its Own Hole

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For those of us with a media/newspaper background, the following comments from Rupert Murdoch — whose company owns Fox News, Wall Street Journal and MySpace — are quite interesting. He basically claims the media’s condescension toward its readers paved the way for its sharp decline and the emergence of private blogs as news sources:

"It used to be that a handful of editors could decide what was news-and what was not. They acted as sort of demigods. If they ran a story, it became news. If they ignored an event, it never happened. Today editors are losing this power. The Internet, for example, provides access to thousands of new sources that cover things an editor might ignore. And if you aren’t satisfied with that, you can start up your own blog and cover and comment on the news yourself. Journalists like to think of themselves as watchdogs, but they haven’t always responded well when the public calls them to account."

To make his point, Murdoch criticized the media reaction after bloggers debunked a "60 Minutes" report by former CBS anchor, Dan Rather, that President Bush had evaded service during his days in the National Guard.

"Far from celebrating this citizen journalism, the establishment media reacted defensively. During an appearance on Fox News, a CBS executive attacked the bloggers in a statement that will go down in the annals of arrogance. ’60 Minutes,’ he said, was a professional organization with ‘multiple layers of checks and balances.’ By contrast, he dismissed the blogger as ‘a guy sitting in his living room in his pajamas writing.’ But eventually it was the guys sitting in their pajamas who forced Mr. Rather and his producer to resign …

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Economic Redistribution: How Far is Too Far?

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Adam Lerrick’s Ayn Rand-ish column in the Wall Street Journal asks a very valid question: How much economic redistribution will the American taxpayer take? From a business perspective, how much can American employers tolerate before the country sees a painful — perhaps even more crippling — backlash? Are we about to find out?

Calculating how far society’s top earners can be pushed before they stop (or cut back on) producing is difficult. But the incentives are easy to see. Voters who benefit from government programs will push for higher tax rates on higher earners — at least until those who power the economy and create jobs and wealth stop working, stop investing, or move out of the country.

Other nations have tried the ideology of fairness in the place of incentives and found that reward without work is a recipe for decline. In the late 1970s and throughout the 1980s, Margaret Thatcher took on the unions and slashed taxes to restore growth and jobs in Great Britain. In Germany a few years ago, Social Democrat Gerhard Schroeder defied his party’s dogma and loosened labor’s grip on the economy to end stagnation. And more recently in France, Nicolas Sarkozy was swept to power on a platform of restoring flexibility to the economy.

The sequence is always the same. High-tax, big-spending policies force the economy to lose momentum. Then growth in government spending outstrips revenues. Fiscal and trade deficits soar. Public debt, excessive taxation and unemployment follow. The central bank tries to solve the problem by printing money. International competitiveness is lost and the currency depreciates. The system stagnates. And then a frightened electorate returns conservatives to power.

The economic tides will not stand still while Washington experiments with European-type social democracy, even though the dollar’s role as the global reserve currency will buy some time. Our trademark competitive advantage will be lost, and once lost, it will be hard to regain. There are too many emerging economies focused on prosperity and not redistribution for the U.S. to easily recapture its role of global economic leader.

No word yet from John Galt on the matter.

Phelps Demonstrates True Revenue Power of Sports

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NEWS ALERT: Apparently, Michael Phelps is a big deal.

While his accomplishments in the pool have rendered him an archetype in his sport with legendary status, it’s the personal revenue machine he’s generated that might be equally appealing to capitalists everywhere. This article on ESPN.com is quite telling, and explains how Phelps could end up taking in over $100 million from the global business community.

Eight gold medals in one Olympiad are cool, I guess. I’ll only take mild offense that similar financial accolades were never tossed my way when my Lil’ Steelers bested the previously undefeated Lions in the 1986 Boone County Pee Wee Youth Football Championship. Pretty impressive milestone, but whatever.

Saving the World One Idea at a Time

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After having the chance to interview Newt Gingrich a few weeks ago (the full story will be online and in our September-October edition of BizVoice on August 29), it wasn’t too surpising to read that he had some grand ideas in response to the Wall Street Journal question: How would you spend $10 billion of American resources over the next four years to help improve the state of the world?

Gingrich has an uncanny ability to define a challenge, craft a solution (usually relying heavily on technology and/or the Internet) and put together the people to try and execute. Do those solutions and his tactics (especially during his term as U.S. Speaker of the House) work? Not always. He is the first to admit as much.

Frank Luntz, the communication guru who worked closely with Gingrich on the famed Contract with America, may have put it best, describing the silver-haired Georgian as probably the "smartest politican" he has ever come across. Luntz added that the strong understanding of issues would also be a drawback as sometimes Gingrich "would go over the head of his audience."

No such concerns when Gingrich appears at the Chamber’s 19th Annual Awards Dinner on November 6, two days after the election. He will provide an early, in-depth look at where our country is headed — a message you won’t want to miss.

For now, check out the "prizes" Gingrich would offer with the $10 billion.

No Mincing Words on Union Spending

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A Wall Street Journal editorial on the political spending habits of the National Education Association (NEA), the nation’s largest teachers’ union, contained the following: "It’s a shame the NEA doesn’t spend as much money and effort trying to improve lousy schools as it does trying to keep taxes high."

Nothing else needs said. See a summary of the editorial.