The recent failure in the Senate to repeal the estate tax stands as a rare victory for sane fiscal policy.  The NYT editorialized about the event under the heading "What Passes for Good News."

In fact, the Senate vote came alarming close to ending a tax on inheritances of the richest half-a-percent of households, with a majority of Senators (57--but they needed 60 for a repeal) supporting a measure which would have cost the treasury $800 billion over 10 years at a time of ballooning budget deficits and war.

Of course, the politics of the repeal were the focus of most analyses--would the White House be adhered to or get rebuffed on an issue dear to them--but the economics of the tax cut are deeply revealing of the fundamental flaw of economic policy today.

And that flaw is this: we have, over the past three decades, shifted from we're-in-this-together (WITT) economics to you're-on-your-own (YOYO) economics.

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With their focus solidly on the gay marriage amendment and estate tax repeal, the conservative movement is busy rearranging deck chairs on...well, not quite the Titanic, but on a rotting ship of state.

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What better place for a Republican to kick off a healthcare campaign than at the corporate headquarters of a fast food restaurant? It speaks volumes, no? Well, today Bush brought his traveling roadshow to a more respectable venue, the Department of Health and Human Services.

Having personally been under the impression that Bush was going to make the pitch during the State of the Union for transitioning the healthcare system away from group insurance towards private Health Savings Accounts, I've already done a lot of writing on the topic. Obviously, I think it's a terrible idea.

But beyond the economics of HSAs and the disastrous effects of pulling healthy, young people out of risk pools, I think the thing that bothers me most about this proposal is the fact that it demands even more sacrifice from the sick. This isn't something that Bush hides from. In fact, he brags about it. Clearly, he just doesn't get what this system would mean for the average American.

"When somebody else pays the bills, rarely do you ask price or ask the cost of something," the president said during a panel discussion on his health care initiatives at the Department of Health and Human Services. "The problem with that is that there's no kind of market force, there's no consumer advocacy for reasonable price when somebody else pays the bills. One of the reasons why we're having inflation in health care is because there is no sense of market." ...

"When you go buy a car you're able to shop and compare," he said. "And yet in health care that's just not happening in America today."

George W. Bush is a son of privilege. I don't care that he wears a cute little cowboy hat while he "ranches" and "clears brush." At the end of the day, he's still the Connecticut-born scion of one of America's most prominent political families. His life was a series of failures and bail-outs, with Poppy's friends always waiting with kind words and big checks.

This is Medicare Part D, writ large over the entire American healthcare system. It's just so easy for Bush to talk about the American people comparison shopping in a magical "healthcare marketplace." But it's not so easy for the average working person to actually go out and do that. Not only do we lack the resources, we lack the time. Of course, the wealthy will have an army of lawyers and health advisers holding their hands and walking them through the ins and outs of the system. But what about those less fortunate? And yet they wonder why there's an increasing sense that the GOP just doesn't care about everyday people.

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Some days, the President actually makes my brain hurt. I'm not talking simple headache here. I'm talking full-on, forehead clutching agony. Let me give you an example.

George W. Bush on Health Savings Accounts, January 26, 2005:

"A health savings account enables a person to be in charge of his or her own health care decisions.... Our view is, is that if you're a consumer of health care and you're in the marketplace making health care decisions, it is more likely that there be more cost control in health care..."

George W. Bush on Record Oil Company Profits, February 1, 2006:

"I think that basically the price is determined by the marketplace and that's the way it should be.... There is a marketplace in American society."

So let me see if I've got Bush's economics lesson straight. Health Savings Accounts will help control the cost of healthcare because that's the way "the marketplace" works. But record high fuel prices coupled with record high oil industry profits shouldn't get anybody down because that's the way "the marketplace" works. In other words, leaving the cost of anything -- like healthcare -- to "the marketplace" is in no way, shape, or form a guarantee that prices will actually come down.

Anybody have any Excedrin?

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Much has been made of the fact that President Bush is preparing to announce a plan to shift the burden of paying for healthcare from risk-pooling to personal savings in the form of health savings accounts, or HSAs. For a wide variety of reasons, this is an obviously terrible idea. It won't reduce the cost of healthcare overall, it will mean higher costs specifically for the sick and the elderly, and it will likely lead to bad healthcare decisions by understandably uninformed patients. We're already seeing an outcome similar to the latter with Medicare Part D.

As if to highlight how bad of an idea this is, the Commerce Department released numbers this morning indicating that the personal savings rate has dropped into negative territory. It is, as Martin Crutsinger of the AP puts it, "the lowest level since the Great Depression."

A negative savings rate means that Americans spent all their disposable income, the amount left over after paying taxes, and dipped into their past savings to finance their purchases. For the month, the savings rate fell to 0.7 percent, the largest one-month level since a decline of 3.4 percent in August.

The 0.5 percent decline in savings for the year followed a savings rate of 1.8 percent in 2004. There have only been three years that the savings rate has fallen into negative territory. The savings rate dipped by 0.9 percent in 1932 and the record 1.5 percent decline in 1933, years when Americans exhausted their savings to try to meet expenses in the face of soaring unemployment as the country struggled with the worst economic crisis in its history.

Bush's idea -- that has not yet been fleshed out in an actual policy proposal -- is that people should increasingly leave health insurance plans and put more money into health savings accounts. While this is obviously bad health policy, it's even worse as economic policy. These latest figures from the Commerce Department show that the American people are already at the end of their ropes, dipping into savings to pay their everyday bills. But the Bush administration thinks they're going to find money in the cushions to pay for medical bills? There is no guarantee that workers will see any extra money in their paychecks if they drop their insurance coverage. So they will likely be forced to choose between their HSA, their 401(k), their children's 529, and basics like food, shelter, and clothing. This is what the GOP calls "consumer-driven healthcare."

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