Morning Must Reads

Writers Aliza Marcus and Kim Chipman explain that the final offer from the health care industry is a doozy — $2 trillion in lost profits and voluntary agreement to substantial new regulations. Health executives will offer Obama the cost controls at a White House meeting today.

The tradeoff would be that Obama not excercise the public option. But the timing of the release suggests that the health care industry knows where Obama’s weak spot is – growing fears among moderate Democrats of huge deficits. The president’s initial plan has massive up-front costs in exchange for projected savings down the road, but there is a need for cuts right now – as evidenced by skepticism about a largely symbolic $17 billion in spending cuts the president rolled out last week.

“Some lawmakers say the cuts aren’t enough to begin reducing a deficit that the Congressional Budget Office projects will reach $1.38 trillion in fiscal 2010, the second-highest ever. Obama is pledging to cut the deficit in half by the end of his term in 2012.

Senator Kent Conrad, the Democratic chairman of the Budget Committee, said last week that lawmakers ‘shouldn’t lose sight of the far larger threat’ to the U.S. budget from soaring health-care costs, which are rising about 8 percent a year, according to the Congressional Budget Office.”
 
USA Today — White House defends 3.5M job forecast
 
The reason the Obama administration is so keen on health care as the make or break issue of the president’s first year is that, as Fed Chairman Ben Bernanke and others have said, even if we see growth this year, job losses will likely linger well into 2010. Democrats remember beating up George W. Bush for a “jobless recovery” in 2002, so health care will be the president’s answer to those who accuse him of taxing, spending, and regulating but not helping out of work families. Team Obama feels free or cheap health insurance for the middle class would blunt those claims.

As writer Matt Kelley points out, part of the motivation is the understanding that the president’s signature economic initiative so far – a $787 billion emergency spending plan – isn’t seen as a job creator. Action has been slow, accountability has been limited and the outlays have often seemed un-stimulative.

To try to defend the package, the White House today has released an estimate saying the plan will “create or save” 3.5 million jobs. The “save” construction gives the administration considerable wiggle room, and the fact that the estimate happens to coincide with the president’s promise of stimulus job creation has skeptics scoffing.

“Rep. Paul Broun, R-Ga., said at a hearing last week that it may not be possible to accurately determine whether the stimulus hits its job creation target. ‘Very probably, these numbers are just picked out of the clear blue sky and are not authenticated or authenticatable,’ he said.”
 
Wall Street Journal — Republicans and the ‘Public Option’

The Journal’s editorial explaining why Republicans shouldn’t be afraid of a partisan fight on health care reform provides a very useful explanation of the political game that will be picking up steam this week after the groundwork has all been carefully laid.

Health care foreman Teddy Kennedy has been thoroughly lionized, Arlen Specter has switched teams and the president has backed what amounts to the nuclear option for health care – taking over almost a fifth of the U.S. economy without giving the GOP the chance to filibuster, a process called budget reconciliation.

The argument from the Journal is that Republicans shouldn’t allow themselves to be cowed into cooperating because the reconciliation option means passage is inevitable. Democrats need political cover to have the reforms be durable.
If Republicans play along, though, it could be the end of them.

“The Lewin Group consultants estimate that 119 million people who now have private insurance could potentially be captured by the government under the Obama public option. This is on top of the 90 million already in Medicare or Medicaid. This would guarantee a spending explosion that would over time lift federal outlays as a share of GDP into the upper 20% range or higher. Republicans would spend the rest of their days deciding whether to vote for tax increases to finance this, or stand accused of denying health care to the middle class.”
 
New York Times — Shaky Pakistan Is Seen as a Target of Plots by Al Qaeda
 
As Pakistani Army incursions into Taliban-held regions are producing high body counts (700 insurgents killed by Pakistani estimates) and hundreds of thousands of refugees.

New polls suggest that two-thirds of Pakistanis see radicals as a big threat to the country, and in the Punjab heartland of the country there have been few gains for the Talibani Islamists.

But the unsettled atmosphere has created an opportunity for al Qaeda. Where locals had been distrustful of the mostly Arab organization, the turmoil has provided operational cover and the chance for new recruits.

“Intelligence officials say the Taliban advances in Swat and Buner, which are closer to Islamabad than to the tribal areas, have already helped Al Qaeda in its recruiting efforts. The officials say the group’s recruiting campaign is currently aimed at young fighters across the Middle East, North Africa and Central Asia who are less inclined to plan and carry out far-reaching global attacks and who have focused their energies on more immediate targets.

‘They smell blood, and they are intoxicated by the idea of a jihadist takeover in Pakistan,’ said Bruce O. Riedel, a former analyst for the C.I.A. who recently led the Obama administration’s policy review of Pakistan and Afghanistan.”
 
Washington Post — Obama Enlists Biden’s Expertise About High Court

Vice President Joe Biden sat down with writer Michael Fletcher to talk about his role in helping pick the administration’s first Supreme Court nominee.

Biden, who helped lead the Democratic assault on Republican nominees like Robert Bork and Clarence Thomas, says he has counseled President Barack Obama to go with a standard-issue liberal, not the kind of transformational pick that many suggest the president choose. Biden has been playing down “empathy” and playing up consensus.

“Given the strong Democratic majority in the Senate, many conservative activists have conceded that they would have a hard time derailing most any candidate Obama nominates. Still, Biden said, it would be best to avoid an ideological fight by picking a justice with stellar credentials, a mainstream legal view and “an understanding that decisions on the close calls affect individuals.”

‘When you pick someone in that genre, there usually is not a holy war,’ Biden said. ‘That’s the inclination of the president. So I expect things to go rather smoothly.’”