Every so often, the journalists who cover Washington, D.C., and its maze of federal departments and commissions and bureaus receive a strange sort of invitation. Calling you a "thought leader" or some similarly flattering form of corporate jargon, an agency urges you to attend a briefing about a particular issue -- healthcare, the bank bailout, the latest jobs report. There's only one catch: the entire briefing is to be conducted on "deep background," which means nothing said in the meeting can be quoted. It's a strange little dance: the government asks you to come and hear its side of the story, yet nothing said can be used with the presenting official's name attached to it. Sometimes you can't even quote anything said in the meeting. Then, the information is said to be shared for "informational purposes only."
This is how the Obama administration regularly pushes its various messages. And from reading reports on these not-for-attribution meetings and chatting with friends and colleagues who have attended (I've never been invited), they rarely result in anything journalistically juicy or groundbreaking -- with one exception. That was an August 2010 briefing at the Treasury Department at which bloggers and Treasury officials discussed President Obama's flagship initiative for aiding homeowners facing foreclosure and those who were "underwater" -- that is, owing more on their mortgages than their homes were worth. Remember, the Obama administration had deployed hundreds of billions of dollars to rescue ailing mega-banks and financial firms such as Citigroup, Goldman Sachs, Bank of America, and Wells Fargo. But struggling homeowners? Their lifeline turned out to be Obama's Home Affordable Modification Program (HAMP), a poorly designed, deeply flawed effort to nudge lenders into rewriting the terms of homeowners' mortgages so that they could remain in their homes.
All along the administration argued that HAMP was designed to help middle-class Americans; Wall Street had gotten its bail out, now this was Main Street's lifeline. But at that August 2010 briefing, Treasury officials -- we'll never know who -- made an incredible admission. Here's what economics blogger Steve Randy Waldman, who was in attendance, wrote at the time:
"On HAMP, officials were surprisingly candid. The program has gotten a lot of bad press in terms of its Kafka-esque qualification process and its limited success in generating mortgage modifications under which families become able and willing to pay their debt. Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least... The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks."
In other words, HAMP wasn't really about regular working people scraping and clawing to pay their mortgages. It was another way of keeping the banks, not homeowners, afloat as the global financial system slowly recovered.
The people interviewed by TomDispatch regular Barbara Garson for her latest book, Down the Up Escalator: How the 99% Live (the paperback version of which has just been published), know the failings of HAMP all too well. As Garson writes today, the Obama administration's inclination to rely on the private sector to solve major societal problems can lead to dysfunction, if not chaos, a fact that could spell trouble for Obama's signature policy achievement. Andy Kroll
The Public-Private Profiteers
If You Want to Play Doctor, Don't Hire an Insurance Company as Your Receptionist
By Barbara Garson
Health care isn't the first boon that President Obama tried to give us through a public-private partnership. When he took office, more than 25% of U.S. home mortgages were underwater -- meaning that people owed more on their houses than they could get if they tried to sell them. The president offered those homeowners debt relief through banks. Now he's offering health care through insurance companies.
In both cases, the administration shied away from direct government aid. Instead, it subsidized private companies to serve the people. To get your government-subsidized mortgage modification, you applied at your bank; to get your government-mandated health coverage, you buy private insurance.
Let a Hundred Middlemen Bloom
In other countries with national health plans, a variety of independent health care providers -- hospitals, doctors, and clinics, among others -- deliver medical care, while the government doles out the compensation. They let a hundred healthcare providers bloom, but there's only a single payer. If the U.S. moved to single-payer healthcare, however, what would happen to the private health insurance business?
In the 1990s, the conservative Heritage Foundation floated the idea of extending health coverage to more Americans via government exchanges or "connectors" that would funnel individual buyers to competing, for-profit health insurance companies. In other words, let a hundred middlemen bloom.
On the face of it, such a plan would seem expensive, since it means supporting two bureaucracies, one of which would be obliged to take profits for investors. Meanwhile, doctors would still have the expense of trying to collect from multiple insurers with reasons to stall. But the Heritage plan had one great advantage. Since Harry Truman, American presidents have tried unsuccessfully to get us national health care. The exchange system, however awkward it might be, pacified the insurance companies which had previously spent millions of dollars to defeat other plans for "socialized medicine." With the support of those companies for a program that not only kept them in the picture, but also promised to deliver millions of new, subsidized customers to them, Obama gave us a national healthcare law.
The danger is that it essentially makes insurance companies our medical receptionists, a profit-making face that greets sick people whenever they try to use their government healthcare. That gives private companies a lot of power to make the government look bad.
That's why it's important to understand how banks used Obama's mortgage subsidy program to sabotage debt relief and discredit government. If we grasp how they pulled that off, we may be able to protect the present health plan and someday even get genuine single-payer healthcare out of it. So here's the story.