Op-Ed Contributor: Shifting America from sick care to genuine wellness--By Sen. Tom Harkin (D-Iowa)

June 25, 2009

Washington, DC — With the Senate health committee convening daily to craft a comprehensive health reform bill, the basic outline of this landmark legislation is now clear.

Yes, it will ensure access to affordable, quality care for every American. But, just as important, it will hold down health care costs by creating a sharp new emphasis on disease prevention and public health.

As the lead Senator in drafting the Prevention and Public Health section of the bill, I view this legislation as our opportunity to recreate America as a genuine wellness society – a society that is focused on prevention, good nutrition, fitness, and public health.

The fact is, we currently do not have a health care system in the United States; we have a sick care system. If you’re sick, you get care, whether through insurance, Medicare, Medicaid, SCHIP, community health centers, emergency rooms, or charity. The problem is that this is all about patching things up after people develop serious illnesses and chronic conditions.

We spend a staggering $2.3 trillion annually on health care – 16.5 percent of our GDP and far more than any other country spends on health care – yet the World Health Organization ranks U.S. health care only 37th among nations, on par with Serbia.

We spend twice as much per capita on health care as European countries, but we are twice as sick with chronic disease.

How can this be so? The problem is that we have systematically neglected wellness and disease prevention. Currently in the United States, 95 percent of every health care dollar is spent on treating illnesses and conditions after they occur. But we spend peanuts on prevention.

The good news in these dismal statistics is that, by reforming our system and focusing on fighting and preventing chronic disease, we have a huge opportunity. We can not only save hundreds of billions of dollars; we can also dramatically improve the health of the American people.

Consider this: Right now, some 75 percent of health care costs are accounted for by heart disease, diabetes, prostate cancer, breast cancer, and obesity. What these five diseases and conditions have in common is that they are largely preventable and even reversible by changes in nutrition, physical activity, and lifestyle.

Listen to what Dr. Dean Ornish told our Senate health committee: “Studies have shown that changing lifestyle could prevent at least 90 percent of all heart disease. Thus, the disease that accounts for more premature deaths and costs Americans more than any other illness is almost completely preventable, and even reversible, simply by changing lifestyle.”

It’s not enough to talk about how to extend insurance coverage and how to pay for health care – as important as those things are. It makes no sense just to figure out a better way to pay the bills for a system that is dysfunctional, ineffective, and broken. We also have to change the health care system itself, beginning with a sharp new emphasis on prevention and public health.

We also have to realize that wellness and prevention must be truly comprehensive. It is not only about what goes on in a doctor’s office. It encompasses workplace wellness programs, community-wide wellness programs, building bike paths and walking trails, getting junk food out of our schools, making school breakfasts and lunches more nutritious, increasing the amount of physical activity our children get, and so much more.

I am heartened by the fact that the major players in this endeavor – Democrats and Republicans alike – all “get it” when it comes to prevention and public health. We all agree that it must be at the heart of reform legislation.

As President Obama said in his speech to Congress earlier this year: “[It is time] to make the largest investment ever in preventive care, because that's one of the best ways to keep our people healthy and our costs under control.”

No question, comprehensive health reform is an extraordinarily ambitious undertaking. But what makes me optimistic is that all the major groups are playing a constructive role, including those that opposed the 1993-94 heath reform effort. Everyone agrees that the current system is broken.

Winston Churchill famously said that “Americans always do the right thing – after they’ve tried everything else.” Well, we’ve tried everything else, and it has led us to bad health and the brink of bankruptcy.

Comprehensive health reform legislation is our opportunity to change the paradigm. We are going to extend health insurance to every American. And we are going to give our citizens access to a 21st century health care system – one that is focused on helping us to live healthy, active, happy lives.

Sen. Tom Harkin (D-Iowa) is a senior member of the Senate Health, Education, Labor and Pensions Committee and chairs the Senate panel that funds medical research and health care.

Op-Ed: Health reform will empower families against market constraints--By Health and Human Services Secretary Kathleen Sebelius

July 28, 2009

Washington, DC — For decades, Washington has talked about fixing a broken health care system. And for decades Washington failed to act – allowing the special interests to stall reform while the cracks in the system turned into crevices, then craters.

But today, we are closer than ever to the change we need. Key committees in Congress have reached a striking degree of consensus about how to control costs, guarantee coverage, and provide more choices for every American. America’s doctors and nurses have announced their support. And even hospitals, drug and insurance companies have pledged to do their part to control costs.

Change is never easy and recently, some defenders of the status quo have made themselves heard.

One Republican Senator said, “If we’re able to stop Obama on this, it will be his Waterloo. It will break him.” And a leading political strategist urged fellow Republicans to “resist the temptation” to be “constructive or, at least responsible,” and instead work to “kill” health care reform.

These opponents of change may understand how to score political points in Washington, but they don’t seem to understand the stakes for the country. The health care status quo is unacceptable and unsustainable for our families, our businesses, and our nation as a whole.

Today nearly 46 million Americans are uninsured and are one illness or accident away from losing everything. Millions more are under-insured. Since 2004, the number of under-insured families – those who pay for coverage but are unprotected against high costs – rose by 60 percent.

Even Americans with insurance find themselves paying more and getting less. In the past decade, premiums have doubled, rising three times as fast as wages and leaving families scrambling to close the gap. Last year, more than half of Americans skipped their medications or postponed medical because they couldn’t afford it.

Businesses – especially small businesses – aren’t faring much better. Skyrocketing health costs are making it even harder to compete in today’s global economy and forcing business owners to choose between staying afloat and providing health care for their workers.

At the same time, health care spending today consumes 30 percent more of state and local budgets than it did 20 years ago, forcing governments to choose between cutting services and raising taxes. And our national budget faces the same threat, with health care costs representing the single largest contributor to exploding long-term deficits.

America can’t afford to wait any longer for health care reform.

Some opponents of reform will try to scare Americans into thinking they’ll lose what they already have. Millions of Americans are happy with the coverage they have now, so let’s be clear: under any plan the Obama administration will support, if you like your health insurance you can keep your health insurance; if you like your doctor you can keep your doctor.

In fact, the real threat to what works in our system comes from doing nothing. Without action, prices will continue to spiral out of control. More Americans will not be able to afford insurance at all, and those who can will continue to pay more for less.

So what will reform actually look like?

First, to provide Americans with more affordable choices, we’ll set up a marketplace where you can compare plans and pick the one that’s right for you. None of the plans would be allowed to deny you coverage because of a pre-existing condition. And one of the options should be a public plan that would increase competition and keep private insurance companies honest.

Second, we have to align incentives for doctors and hospitals so that they’re rewarded based on the quality of care they provide, not on how many tests or procedures they prescribe.

Third, we need to move from a sickness system to a wellness system. By investing in prevention and emphasizing healthy lifestyles, we can save money while improving health.

Finally, reform must not add to our deficit over the next ten years. To that end, we have already identified hundreds of billions of dollars in savings – savings from money that’s already being spent on health care, but is funding waste and overpayments to insurance companies.

Put together, these changes will make quality, affordable coverage available to every American while bending the cost curve so that we don’t bury our children in debt. Fixing the system has never been so critical, and it has never been more squarely within our reach. Now it’s time to make reform a reality.

Kathleen Sebelius is the Secretary of Health and Human Services in President Barack Obama's Cabinet. She was the Democratic governor of the state of Kansas from 2003 to 2009.

Job worries persist; Americans gloomy on economy--By ANNE D'INNOCENZIO, AP Retail Writer

Americans are looking past the stock market surge and signs of a stabilizing economy and focusing on something more personal — job worries.

Consumer confidence fell this month, the Conference Board said Tuesday, presenting a big obstacle for already hammered stores as they head into the critical back-to-school shopping season.

The confidence index fell to 46.6, down from 49.3 in June and weaker than what economists were expecting. It takes a reading above 90 to signal Americans believe the economy is on solid footing.

The second straight month of declining confidence followed an upbeat report offering more evidence that the real estate market is showing signs of life. According to a widely watched index, home prices in May posted their first monthly increase since the summer of 2006.

But vanishing job security and reduced work hours continue to plague shoppers, who are relying more on their paychecks as two previous sources of money — credit cards and home equity loans — have shrunk.

When the Labor Department releases its monthly jobs report next week, economists expect it to show unemployment climbed to 9.7 percent in July, up from 9.5 percent in June and within shouting distance of its post-World War II high.

And the job cuts keep coming. Just Monday, Verizon Communications Inc. announced plans to slash more than 8,000 employee and contractor jobs before the end of the year.

Irma Sanches of Milwaukee was once a big spender. But now the 25-year-old single mother is having trouble finding a job that offers her flexibility to take care of her infant daughter. She was looking at toys at TJ Maxx on Tuesday but trying not to spend money.

"I'm a shopper, and right now I'm restricted to what I need," said Sanches.

The weak consumer-confidence reading also pushed stocks lower. The Dow Jones industrial average finished down about 12 points at 9,097. Over the past two weeks, better-than-expected earnings reports have reignited the stock market rally. The average topped 9,000 Thursday for the first time since early January, but worries about the economy are putting the rally on hold again.

Americans' lack of confidence presents a big hurdle for retailers because consumer spending accounts for more than 70 percent of economic activity. Confidence had been rebounding since March after reaching historic lows. But since June, harsh economic realities are catching up with shoppers again.

"Even though we have seen an improvement in economic indicators, there hasn't been any meaningful improvement in household finances," said Mark Vitner, senior economist at Wells Fargo. "Consumers are not in the position to step up their spending in a major way. This doesn't bode well for the back-to-school season."

Frank Newport, editor-in-chief of the Gallup Poll, said recent surveys have picked up growing skepticism among Americans about the government stimulus plan, hurting confidence.

Both components of the Conference Board's consumer confidence gauge — one that measures shoppers' current assessment of the economy and another that measures shoppers' outlook over the next six months — further declined from last month.

The consumer confidence survey was sent to 5,000 households and had a cutoff date for responses of July 21.

The encouraging news is that the housing market, while far from healthy, is showing some signs of stabilizing. The Standard & Poor's/Case-Shiller home price index of 20 major cities rose slightly in April but is still well below levels of a year ago.

Thirteen cities showed monthly increases, with the best results in Cleveland, Dallas and Boston. On Monday, the government said new home sales increased last month at the fastest pace in more than eight years as buyers took advantage of bargain prices.

But economists believe an improving job picture, not housing, is the vital factor in boosting confidence and getting people spending again.

Jen Ferguson of Milwaukee feels fairly secure in her job as a city planner, but she'll watch closely as budget talks get under way this fall. She recently bought a condo and said she's had to watch her spending habits.

"It's not a total stop, but I'm waiting to know if I have the money before I spend it," she said.
Vitner said he doesn't believe that the job market will begin to bottom out until mid-2010 and doesn't expect confidence to return to healthy levels until 2011 or 2012. "We are going to have a slow and frustrating climb out of this recession," he said.

___
AP Real Estate Writer J.W. Elphinstone in New York and AP Retail Writer Emily Fredrix in Milwaukee contributed to this report.

Where Bailout Money Goes to Die--By Rick Newman

When CIT Group, a medium-sized lender, faced the threat of bankruptcy recently, it raised an uncomfortable prospect for the officials in Washington managing the bailout of the financial system. CIT got $2.3 billion in bailout funds last year--yet it was still failing. And the government decided not to offer any more help. So if CIT declared bankruptcy, taxpayers would be out their $2.3 billion.

CIT averted bankruptcy, for now, but the brush with insolvency highlighted one of the biggest risks of the entire bailout scheme: that taxpayers won't get their money back. That problem has been overshadowed recently by some good news from firms like Goldman Sachs and JPMorgan Chase, which have paid back loans they got under the government's Troubled Assets Relief Program. So far, 34 companies have returned about $72 billion in TARP funds to the government, according to a bailout tracker maintained by journalism site ProPublica.

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But nearly 700 firms have received bailout money, and many of them are still in rough shape. To gauge how much bailout money may be at risk, U.S. News asked the Ethisphere Institute, a private research group that studies corporate responsibility, to identify who the biggest TARP-jumpers are likely to be. Ethisphere publishes a TARP index, updated weekly, that measures the financial performance of all TARP recipients and calculates the "return" to taxpayers if the bailout funds are treated as an investment in the companies that got them. By that measure, the government has been a poor investor, losing about $148 billion so far--$1,233 per U.S. household. Ethisphere analyzed the same data, including results from the Federal Reserve's recent stress tests, to identify firms most likely to write off their debts to the federal government, either partly or completely.

Bailout architects like Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke have argued that the government is likely to get most of the bailout money back, which would make it more like an interest-bearing loan than a giveaway. But since the bailouts began last fall, a number of developments have made it clear that the feds--and the taxpayers--can kiss some of that money goodbye. Ethisphere estimates that the following nine firms could end up costing the government the most when the final bailout accounts are tallied. Together, they account for nearly $220 billion in government bailouts, including TARP money and other funds.

AIG (total bailout received: $85 billion). It's hard to imagine a more complicated bailout than this monstrous money hole. The $85 billion includes $40 billion in TARP infusions and about $45 billion in loans from a government credit line. The Federal Reserve has paid an additional $47 billion for troubled AIG securities, which it hopes to resell at some point in the future. And AIG can still tap another $30 billion in credit lines extended by the government.

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All of that money has bought the feds 79.9 percent of the insurance giant--the most it can own without triggering accounting rules that would effectively nationalize the whole company. To pay back the government, AIG has developed a long-term plan to break itself up and sell off various insurance divisions and other assets. But the horrible economy makes it a fire-sale market, with many bids coming in at less than half the asking price. So it could be three to five years before all of AIG's assets have been spun off. The government's exposure should shrink later this year, when the $45 billion credit line drops to about $20 billion. But Ethisphere still predicts that the government will recoup far less than what it has plowed into the sinking firm.

Chrysler ($14.9 billion). The government gave Chrysler $7 billion to stay afloat prior to its bankruptcy filing in March. That money essentially disappeared when the company declared bankruptcy in April. Then the government provided Chrysler an additional $8 billion in financing to help it exit bankruptcy in exchange for an 8 percent ownership stake in the new Chrysler. The idea is that Chrysler will go public at some point, sell shares, and buy out the government's position. But the return to the government will probably be well below face value, since the government holds a relatively small stake in a company that's still endangered. "The government will get back materially less than its $8 billion principal," says analyst Stefan Linssen of Ethisphere.

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CIT Group Inc. ($2.3 billion). A string of strapped borrowers and a heavy debt load have nearly sunk CIT, a financial firm that lends money to small and medium-sized businesses. The firm escaped a bankruptcy filing in mid-July when bondholders provided fresh funds to keep the firm operating. But the interest rate is high, and many analysts think a bankruptcy filing is still likely. The Treasury Department, meanwhile, has hinted that it has already written off CIT's $2.3 billion in TARP funds.

Citigroup ($45 billion). The huge bank posted a $4.3 billion profit in the second quarter, but that's only because it spun off its valuable Smith Barney brokerage unit. Otherwise, it would have lost money, and by almost any measure, Citi is a deeply wounded bank. Its market value is just $16 billion--one third of the government's cash investment in the company. For the foreseeable future, Citi is likely to wrestle with mounting losses on credit cards and other consumer loans. In addition to $45 billion in TARP funds, the government has guaranteed a humongous pool of dodgy Citigroup assets worth $301 billion. Citi paid $7 billion for the insurance and must absorb the first $39.5 billion in losses. But after that, the government would bear 90 percent of any write-offs. That gives taxpayers long-term exposure to Citi's troubled balance sheet. Chief Executive Vikram Pandit has insisted his firm is on a path back toward sustained profitability, which will allow it to pay back the government. But Citi hasn't announced any timeline for paybacks.

General Motors ($50.7 billion). That long-forgotten $13.4 billion bailout last December was just a down payment, it turns out. Through bankruptcy funding and other expenditures, the government has nearly quadrupled its investment in GM, in the process gaining 60.8 percent ownership of the new company. For the government to get all of its money back, Ethisphere calculates that GM would have to achieve a market value of $80 billion--which would be 43 percent higher than GM's value in 2000 when the automaker was highly profitable and much larger. With half as many divisions now and falling market share, it's hard to see how GM could ever reclaim its former glory (or profits).

Ethisphere estimates that taxpayers will be lucky if they get back $20 billion, a mere 40 percent of their investment in GM. GM argues that its implied market value, taking into account the prices its bonds are trading at and other factors, will allow a higher repayment, closer to $34 billion. And that could go up, GM insists, if the company does well.

GMAC ($12.5 billion). GM's car-financing arm also writes mortgages, which got it into deep trouble, forcing the lender to take more bailout money than any bank except for Citi, Bank of America, and Wells Fargo. Part of GMAC's funding came with the auto bailout, to help ensure that car buyers who want to buy GM or Chrysler vehicles can get loans. But Ethisphere believes that with GMAC's vast exposure to two depressed industries--cars and homes--at least $5 billion of GMAC's TARP funds are a complete write-off. GMAC says otherwise, insisting that it's taking the necessary steps to strengthen its business. "We intend to repay the full TARP investment over time and have been making scheduled dividend payments on the investment," says spokesperson Gina Proia.

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Marshall & Ilsley Corp. ($1.7 billion). This bank holding company, parent of M&I Bank, is based in Wisconsin, but it made thousands of housing, construction, and commercial loans in Arizona, one of its target markets during the go-go years. With a huge housing bust in Arizona, many of those loans are now worth far less than their face value. That makes M&I one of the most vulnerable regional banks. Ethisphere believes the government could lose $1.3 billion, more than three quarters of its investment. M&I says it's confident that the government will get all of its money back, plus dividend payments. The bank also argues that it has higher "capital ratios" than many other banks of its size and points out that it recently raised $552 million through an equity offering, "clearly indicative of the market's belief that the [government's] capital will be repaid."

Regions Financial Corp. ($3.5 billion). This Alabama-based bank has been losing a bundle from bad mortgages and other loans, mainly across the South. And its CEO said recently that losses are likely to get worse for the foreseeable future. Ethisphere believes taxpayers will be lucky if they get half their money back. A Regions spokesman says the bank plans to pay back its government loans in full, pointing out that Regions has $6.9 billion more in reserves than the required minimum, and recently raised $2.5 billion in the private markets.

Zions Bank Corp. ($1.4 billion). Utah has fared relatively well during the recession, but this Salt Lake City-based bank hasn't. That's because its core markets include California, Arizona, and Nevada--ground zero for the housing meltdown. Zions has lost nearly $900 million so far this year and remains exposed to housing woes. Ethisphere tallies Zions as another 50 percent writeoff, meaning taxpayers might get back just $700 million. Zions says it has plenty of earnings power and reserves to offset future losses, and points out that it recently raised $511 million in capital from the private markets. "Zions believes the company has the long-term capacity to repay TARP in full at the appropriate time," says spokesman James Abbott.

Schwarzenegger signs budget with more welfare cuts--By JUDY LIN, Associated Press Writer

Gov. Arnold Schwarzenegger made additional cuts to child welfare programs, medical care for the poor and AIDS prevention efforts Tuesday as he signed an $85 billion compromise spending plan that he called "the good, the bad and the ugly."

Schwarzenegger used his line-item veto authority to save an additional $656 million that will let the state restore a reserve fund he says is needed for tough times.

The vetoes include $80 million from child welfare programs; $61 million in county funding to administer Medi-Cal, California's version of Medicaid; $52 million from AIDS prevention and treatment; $50 million to Healthy Families, the low-cost health insurance program for poor children; and $6.2 million more from state parks.

"Those are ugly cuts and I'm the only one that is really responsible for those cuts because the Legislature left, they didn't want to make those cuts," he said.

Senate President Pro Tem Darrell Steinberg, a Democrat who negotiated the original budget compromise with Schwarzenegger, immediately questioned the legality of many of the governor's line-item vetoes.

"We will fight to restore every dollar of additional cuts to health and human services," Steinberg said in a statement. "This is not the last word."

Schwarzenegger called the budget package aimed at balancing the state's budget through June 30, 2010, the toughest since he took office in 2003. Still, the Republican governor said the package included reforms he has long sought and forces government to live within its means.

He said additional cuts were needed to build a $500 million reserve fund after the state Assembly rejected about $1.1 billion in revenues from local transportation funding and by allowing new offshore oil drilling.

With much of state spending tied up by federal and constitutional requirements, the Schwarzenegger administration wants to ensure the state has a cash cushion in case of emergencies such as earthquakes and wildfires.

California's economy has been hit by the housing market slump and high unemployment, and the latest efforts to close a $26 billion shortfall came just five months after lawmakers and the governor ended months of negotiations to close a previous $42 billion deficit.

The governor and lawmakers hope the revised spending plan will end California's cash crisis and let the state stop issuing IOUs to vendors.

Schwarzenegger's finance director, Michael Genest, warned Tuesday that even with the revised budget deal, California likely will need to borrow $8 billion to $10 billion to cover its cash needs this year, and the state is likely to face another $7 billion to $8 billion deficit in the 2010-11 fiscal year.

Matt Fabian, a bond analyst at Municipal Market Advisors, based in Concord, Mass., said California's plan was filled with accounting tricks and will likely do little to improve the state's poor credit rating.

Fitch Ratings rates California's general obligation bond debt at "BBB," which is still investment-grade. Most states have a higher-quality "AAA" or "AA" rating.

The package lawmakers agreed to included about $15 billion in spending cuts, as well as reforms that include tougher sanctions on CalWORKS recipients who don't meet work requirements. Also, in-home support workers will have to undergo background checks and have their fingerprints taken.

In earlier rounds of cuts, California reduced Medi-Cal reimbursement rates for health care providers and eliminated optional benefits such as dental and eye care for adult recipients.

With the vetoes announced Tuesday, the cut to California's state parks totals about $14 million, which Genest said will likely force as many as 100 of the state's 279 parks, beaches and attractions to close.

The additional cuts Schwarzenegger made Tuesday also include $37.5 million from the In-Home Supportive Services program, $50 million from the Early Start program for developmentally disabled children, and more than $6 million in cuts from programs for the aging.

Top House Democrats struggling on health care bill--By ERICA WERNER, Associated Press Writers

Top House Democrats sought to minimize the impact of a near-certain missed deadline for health care legislation on Tuesday as the leadership struggled to ease the concerns of rank-and-file critics.

"I'm disappointed of course because I really hoped that we could have gotten a bill out of here by the end of this month," said Rep. Charles Rangel, D-N.Y., and chairman of one of the three committees at work on the measure.

"The issue is critical. Whether we do it at the end of July or not, I don't think that's critical except the perception in terms that the Congress didn't respond to the request of the president."

President Barack Obama had asked Congress to advance legislation through both houses by the time lawmakers leave on a monthlong summer vacation, a plea that now appears unlikely to be met.

Obama has worked intensively to reassure the public about his health care proposals at a time when Republicans have stepped up their criticism and polls suggest a leveling in public support. Making his pitch to a crucial constituency, Obama went to the headquarters of AARP, the huge advocacy group for seniors, for a town-hall style event.

"Sometimes I get a little frustrated because this is one of those situations where it is so obvious that the system we have isn't working well for too many people and that we could just be doing better," Obama said to close the hourlong question-and-answer session. "We got to have the courage to be willing to change things."

The president looked to ease seniors' concerns about changes to care, costs and other issues.

"The costs of doing nothing are trillions of dollars in costs over the next couple of decades — trillions, not billions — but trillions of dollars in costs without anybody getting any better care," Obama said. "Now, here's the problem, that in order for us to save money, in some cases, we've got to spend some money up front."

Among the problems facing Speaker Nancy Pelosi and the House leadership is a rebellious group of conservative and moderate Democrats demanding changes in legislation as the price for voting it out of the House Energy and Commerce Committee.

The fiscally conservative Blue Dogs were at odds with the leadership over setting rates for the payments to doctors and other health care providers under a proposed government-run health plan that would compete with private insurance. The House bill models the payments based on Medicare, but Blue Dogs want a negotiated rate similar to private insurance.

"We're not ready to support a bill yet," said Rep. Baron Hill, D-Ind., a member of the Blue Dog group, who added: "We'll get there. We are going to pass a health care bill, whether it's now or in the fall remains to be seen."

Without the backing of the 52-member Blue Dogs, it would be difficult for Democratic leaders to pass a bill, especially since no Republican supports the legislation.

After weeks of secretive talks, three Democrats and three Republicans on the Senate Finance Committee were edging closer to a compromise that excludes a requirement many congressional Democrats seek for large businesses to offer coverage to their workers. Nor would there be a provision for a government insurance option, despite Obama's support for such a plan, officials said.

The Finance senators were considering a tax of as much as 35 percent on very high-cost insurance policies, part of an attempt to rein in rapid escalation of costs. Also likely to be included in any deal was creation of a commission charged with slowing the growth of Medicare.

Obama has outlined two broad goals for legislation he is struggling to win from Congress: expansion of health insurance coverage to millions who lack it, and controlling costs.

The president's top domestic priority has suffered numerous setbacks in recent weeks and a Senate vote has been postponed until September. Administration and Democratic leaders hope to show significant progress before lawmakers begin their monthlong August recess.

In the Senate, officials speaking on condition of anonymity because they were not authorized to discuss private negotiations said any legislation that emerges from the talks is expected to provide for a nonprofit cooperative to sell insurance in competition with private industry, rather than giving the federal government a role in the marketplace.

Obama and numerous Democrats in Congress have called for a government option to provide competition to private companies and hold down costs, and the House bill includes one — another concern for the Blue Dogs.

Officials also said a bipartisan compromise in the Senate would not subject large companies to a penalty if they declined to offer coverage to their workers. Instead, these businesses would be required to reimburse the government for part or all of any federal subsidies designed to help lower-income employees obtain insurance on their own.

The legislation in the House includes both a penalty and a requirement for large companies to share in the cost of covering employees.

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Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.

Judiciary Committee OKs Sotomayor for high court--By JULIE HIRSCHFELD DAVIS, Associated Press Writer

The Senate Judiciary Committee on Tuesday voted to approve Sonia Sotomayor as the first Hispanic Supreme Court justice over nearly solid Republican opposition, paving the way for a historic confirmation vote.

The panel voted 13-6 in favor of Sotomayor, with just one Republican, Sen. Lindsey Graham of South Carolina, joining Democrats to support her. The nearly party-line tally masked deeper political divisions within GOP ranks about confirming President Barack Obama's first high court nominee.

"I'm deciding to vote for a woman I would not have chosen," Graham said. Obama's choice to nominate the first-ever Latina to the highest court is "a big deal," he added, declaring that, "America has changed for the better with her selection."

The solid Republican vote against Sotomayor on the Judiciary panel reflected the choice many GOP conservatives have made to side with their core supporters and oppose a judge they charge will bring liberal bias and racial and gender prejudices to her decisions. Others in the party, however, are concerned that doing so could hurt their efforts to broaden their base, and particularly alienate Hispanic voters, a fast-growing segment of the electorate.

Democrats, for their part, are lining up solidly in favor of the 55-year-old federal appeals court judge, the daughter of Puerto Rican parents who was raised in a South Bronx housing project and educated in the Ivy League.

"There's not one example — let alone a pattern — of her ruling based on bias or prejudice or sympathy," said Sen. Patrick Leahy, D-Vt., the Judiciary Committee chairman. "She has administered justice without favoring one group of persons over another."

The senior Republican, Sen. Jeff Sessions of Alabama, countered that Sotomayor's speeches and a few of her rulings show she would let her opinions interfere in decisions.

"In speech after speech, year after year, Judge Sotomayor set forth a fully formed, I believe, judicial philosophy that conflicts with the great American tradition of blind justice and fidelity to the law as written," Sessions said.

Republicans pointed with particular concern to Sotomayor's record on gun and property rights, as well as a much-discussed rejection by her appeals court panel of the reverse discrimination claims of white firefighters denied promotions.

The National Rifle Association is opposing Sotomayor and took the extraordinary step last week of warning senators that it would include their votes on her confirmation in its annual candidate ratings, meaning a "yes" vote would hurt their standing.

"Some of her decisions demonstrated the kind of results-oriented decision-making, one that suggests perhaps a liberal judicial activism that has too often steered the court in the wrong direction over the last years," said Sen. John Cornyn, R-Texas.

And every GOP senator alluded critically to the now-infamous remark Sotomayor made in 2001 that she hoped a "wise Latina woman" would often reach better conclusions than a white male without similar experiences.

Sotomayor dismissed the comments during her confirmation hearings as a rhetorical flourish gone awry, a defense that rang hollow with many of her critics.

"I regret that I cannot vote for her ... not she's a Latina woman (or) because she said all those things, (but) because she wouldn't defend what she said, and stand up and say, 'I really believe this, but I can still be a great judge anyway, because I will never let that interfere with my judging,' " said Sen. Tom Coburn, R-Okla.

Health Care in Crisis: Needless Costs, Needless Deaths--By Ed Wallace

Sandra Bogan and Southwest Airlines (NYSE:LUV - News) have enjoyed a long business association. On the airline's first day of operation in 1971 she served passengers as a flight attendant -- and still does: Bogan holds the distinction of being Southwest Flight Attendant No. 1. She was divorced with three children to raise when she met and married soul mate Tom Bogan, a soft drink executive, in the late 1970s. Although Sandra continues to fly, Tom retired to enjoy an active life with their children and grandchildren. As Sandra recalls, Tom was always on the go; even at 82 he gladly hauled the grandkids around to their activities, fully enjoying retirement.

Until March, that is, when he was diagnosed with diabetes -- and soon after, with renal failure. In his youth, Tom smoked and drank, but Sandra had terminated those habits 31 years earlier, when they married. In the spring, Tom was set up to perform home dialysis but, as stepson Lance Anderson said: "The decline in his health was unbelievably quick."

Doctors said Tom Bogan's best hope to recover any sort of normal life would be a quadruple bypass to unblock his arteries. Without the operation, they warned, he was within months of the end. Fully informed of the risks entailed by his other medical problems, Tom agreed to the operation.

It was performed at Baylor Medical Center in Grapevine, Tex. But while the operation was deemed a success, Tom picked up an infection in the hospital and passed away eight days later. The bills totaled $183,679. In spite of the tragic outcome, Sandra Bogan has nothing but praise for the hospital, the cardiologist, and UnitedHealthcare (NYSE:UNH - News).

Near-Absolute Faith in Medicine
Mike Russell's eclectic life once included owning the Kansas City Business Journal, but he is best known as the creator of the Book of Lists, a business directory sold by many business journals across the U.S. He and business partner Dan Carney, one of the founders of Pizza Hut -- now owned by Yum! Brands (NYSE:YUM - News) -- purchased and operated KGBS 1190 in Dallas until 1995, when they sold the station to Salem Broadcasting. Russell pursued other publishing ventures until earlier this year, when he found himself struggling to catch his breath. Tests showed he needed an aortic valve replacement.

Russell agreed to the operation, assuring his wife and business associates that it was nothing to worry about -- a commonplace and routine operation. But something went terribly wrong during the operation that Friday in Kansas City. Two days later, Mike Russell was gone at the age of 69.

Venie Biggers, 73, was a housewife in North Richland Hills, Tex. Husband Bill was an air conditioning repairman. Venie was unique: She had never smoked in her life, nor even had an alcoholic drink, tea, or coffee. Despite this almost Puritanical regimen, Biggers six years ago was diagnosed with cirrhosis of the liver. Although it cannot be medically proven, her husband believes the problem started back in the 1970s, when Venie was treated for rheumatoid arthritis with injections of gold sodium thiomalate. That treatment is no longer used -- possibly because one of the listed side effects of gold injections is liver dysfunction.

Operating with Poor Odds for Comfort
Like Russell, Biggers had started complaining of a lack of energy a few years ago. Although it could have been a symptom of her cirrhosis, her doctors found problems with her aortic valve and recommended its replacement. In June of 2007 she entered Medical City Dallas, but complications followed primary surgery. A second operation was quickly performed to correct leakage around the graft site, but Biggers' blood ammonia levels spiked and then she suffered several minor strokes. Needless to say, the prognosis was poor. So when neurosurgeons suggested further operations to correct the secondary damage, Bill Biggers made the hardest decision of his married life and said no to the operation. Venie Biggers lapsed into a coma and passed away six weeks later. The bills came in at $854,000.

At first blush one might reasonably question why heart operations would even be attempted on individuals of an advanced age with other serious medical problems. Most would assume that even if the primary operation had been successful, the individual's other medical issues could bring into question whether they could recover sufficient health to lead a relatively normal, comfortable life.

It might be a mere cost-benefit equation to most people. But when the families tell their stories, one hears the sadness that fills their voices when they speak of the moment that they lost hope that their loved ones could be healed. For these survivors, it was a near-absolute faith in modern medicine that led them to make decisions that ended in tragedy.

Heart Operations: Most "Are at Best Unnecessary"
It is operations such as these that have sent U.S. health-care costs soaring out of control, certainly when compared to those of other industrialized nations. Dr. Ralph Rashbaum, a renowned back specialist with the Texas Back Institute in Plano, frequently speaks on this issue. Rashbaum is a physician who believes surgery should always be the last resort to correct medical problems -- often counter to what the public wants to believe. People are convinced that somehow the miracle of modern surgery can cure all ills.

Rashbaum also knows the other key reason why U.S. health-care costs are so outrageously high. Some 80% of all spending on health care goes to only 20% of the public -- in the last two years of their lives. Representative Michael Burgess (R-Tex.), a physician, seemed to agree with Rashbaum's analysis of the problematical costs for health care: "I hope we could use this opportunity to educate patients and families of risks before and after illnesses."

As for the costs and risks involved in heart operations, Dr. Michael Ozner, author of The Great American Heart Hoax, lays out the problem: "More than 1.5 million Americans undergo angioplasties and coronary bypass surgeries annually in the U.S." While in many cases these operations save the lives of the patients, he estimates that "70% to 90% of these procedures are at best unnecessary."

Why does he say that? It's been proven in numerous authoritative published studies that bypass operations and angioplasty have never been shown either to prolong life or prevent future heart attacks.

That hasn't been made clear to the public. Americans undergo these operations seven times as often as patients in either Canada or Sweden. When Dr. Ozner lists possible fatal side effects of open-heart surgery, he includes those that took the lives of Bogan, Biggers, and Russell.
Cheaper Alternatives Can Work Better

How could this be such a problem? Dr. Ozner admits that these procedures do save many lives. But for many others, long-accepted medical treatments and lifestyle changes can be equally or more effective in facilitating a patient's long-term recovery.

It's partly due to our faulty memories that we can't accept that not all medical procedures are necessary. We forget that 40 years ago many individuals suffered heart problems, or outright attacks. In the days before stents, bypasses, and angioplasty, the survivors were simply given medicines to alleviate or reverse the problems. My own father lived for 24 years after his heart attack in 1966 and was deemed healthy enough to be returned to flight status in the U.S. Air Force.

Today, America's moral dilemma lies in the high price of trying to save the unsavable life. Some may cynically suggest that this is only because doctors and hospitals want to increase their incomes, but the vast majority of physicians are far more honorable and dedicated than that. In the three cases listed in this column, each patient was given the opportunity to turn down the operation and was fully informed of the potential risks. All chose to undergo the procedure.
Government Could Invite More Spending

Nor will federalized health care fix the issue of high costs. It will simply transfer them. It won't correct the inherent financial waste in the system because we cause much of it. When it is our lives -- or those of loved ones -- on the line, most of us will demand increasingly expensive care, no matter how many studies and statistics show it likely will not be a long-term cure.

As mentioned in the first column of this series, our already broken health-care system will rapidly be devastated as nearly 80 million baby boomers head toward retirement. Aside from the incalculable misery that inadequate health care can cause, the greater danger is that we could divert so much into expanding expensive health care that we could ensure the U.S. economy's destruction.

Our current standard is to try to save the unsavable at the end of their lives, but that is not the standard in other developed countries. Nor do they debate the consequent moral dilemma. This is likely the primary reason that U.S. health care is in such serious trouble.

Job woes sap U.S. consumer confidence in July--By Burton Frierson

U.S. consumer confidence fell more than expected in July, the Conference Board said on Tuesday, recording its second consecutive decline as sentiment remained hampered by a difficult job market.

The Conference Board, an industry group, said its index of consumer attitudes slid to 46.6 in July from 49.3 in June. Economists had expected a reading of 49.0, based on the median of 64 forecasts in a Reuters poll.

The worsening of sentiment came as Americans saying jobs were hard to get increased and those who thought jobs were plentiful fell to its lowest in more than a quarter century, hurting their overall assessment of the present situation.

All of this is bad news in the short term for an economy that has been heavily dependent on consumer spending in recent years.

"The U.S. consumer remains the weakest link in the very modest U.S. upswing, and another example of consumer vulnerability is evident in the second consecutive decline in consumer confidence," said Alan Ruskin, chief international strategist, RBS Securities, Greenwich, Connecticut.

"The present situation continued to deteriorate, which together with the jobs plentiful and hard to get measures show closest coincident link to consumer spending."

The "jobs hard to get" measure came in at 48.1 percent -- the highest since March this year -- compared with 44.8 percent the previous month.

Those saying jobs are "plentiful" fell to 3.6 percent from 4.5 percent. That was the lowest number for that measure since February 1983, when it was 2.9 and the economy was still recovering from a particularly nasty recession in the early 1980s.

"People are getting a bit discouraged. Jobs are not coming as quickly as expected," said John Silvia, chief economist at Wells Fargo in Charlotte, North Carolina.

"Consumer strength in the second half could be disappointing."

The Present Situation Index declined to 23.4 from a revised 25.0, its lowest since March this year.

The Expectations Index also deteriorated, coming in at 62.0, its weakest since April, compared with 65.5 in June.

"Overall, consumers remain quite pessimistic about the short-term outlook," the report said.

(Additional reporting by Steven C. Johnson and Richard Leong, Editing by Chizu Nomiyama)

GOP headache: The birther issue--By Daniel Libit, Lisa Lerer

When lawmakers return home for recess in August, they can expect to hear tough questions from constituents on the economy, health care and government spending.

But Republicans are preparing for something else: the birthers.

As GOP Rep. Mike Castle learned the hard way back home in Delaware this month, there’s no easy way to deal with the small but vocal crowd of right-wing activists who refuse to believe that President Barack Obama was born in the United States.

At a town hall meeting in Georgetown, a woman demanded to know why Castle and his colleagues were “ignoring” questions about Obama’s birth certificate — questions that have been put to rest repeatedly by state officials in Hawaii, where the birth certificate and all other credible evidence show that Obama was born in Honolulu on Aug. 4, 1961.

When Castle countered that Obama is, in fact, “a citizen of the United States,” the crowd erupted in boos, the woman seized control of the gathering and led a recitation of the Pledge of Allegiance. The video went viral; by Sunday, it had been viewed on YouTube more than half a million times.
And birthers say members should expect more of the same in the coming weeks.

“Absolutely,” says California resident Orly Taitz, the Russian-born attorney/dentist who has become a kind of ringleader for the movement. “It is a very important issue, one that politicians should have taken up a long time ago.”

Moments after speaking with POLITICO Saturday, Taitz posted a call to arms on her blog:

“I believe it is a serious concern and I hope that each and every decent American comes to town hall meetings with a video camera and demands action,” she wrote.

Having seen his colleague Castle come under attack, Rep. Pete Hoekstra (R-Mich.) is taking no chances.

“Before I got back to Michigan before the break, we’ll go through it, so that we’re versed in it,” Hoekstra said recently. “Just like anything else, if you see a hot issue ... it’s sort of like, ‘Let me go take a look at this and see what the status is.’”

Hoekstra believes there’s no “compelling case” questioning Obama’s origins. But after talking to Castle about his town hall, he knows that he’d better be ready with an answer.

The trick: What do you say?

Of the various approaches a put-on-the-spot pol can take, each carries its own risk of alienating constituents. Pick up a pitchfork in the cause of this conspiracy theory, and you risk damaging your reputation in the mainstream while aligning yourself with a movement some regard as having racist undertones.

Rep. John Campbell (R-Calif.), co-sponsor of legislation that would force candidates to show their birth certificates, was widely mocked after he told MSNBC’s Chris Matthews that Obama is a U.S. citizen — “as far as I know.”

However, members who decide to challenge the conspiracy theory, as Castle did mildly, risk ticking off a shrill minority who can upend their events and then post the video on the Web.

And those who try to split the difference may find themselves getting doubly burned.

At a Wyoming town hall in April, birthers jumped on freshman Republican Rep. Cynthia Lummis.

“I’m not questioning your concern,” Lummis told the crowd, according to the Wyoming Eagle Tribune. “I am questioning whether there is credible evidence.”

The congresswoman ended up asking for anyone who had “evidence” to send it to her.

At a walk-in meeting in Sen. Tom Coburn’s Washington office, birthers gave the Oklahoma Republican’s chief of staff nine pages of documentation in support of their claims. The group later billed the meeting a success on one of Taitz’s blogs.

But when asked about the meeting, Coburn spokesman Don Tatro said that the office was simply trying to be “polite” and that “it is possible to mistake politeness for agreement.”

According to his office, Colorado Republican Rep. Doug Lamborn has received 33 inquiries about Obama’s origins, with 10 coming in over the past week.

So far, Hoekstra hasn’t faced any such questions.

“When you’re in a state with 15.2 percent unemployment,” he said, “most people have other things on their mind than this.”

But as if to illustrate the touchiness of the subject, Hoekstra quickly added: “Not that this isn’t important.”

Sen. Jim Inhofe (R-Okla.) has also tried to find the elusive middle ground.

"They have a point," he said of the birthers last week. "I don't discourage it. ... But I'm going to pursue defeating [Obama] on things that I think are very destructive to America."

Inhofe put out a statement Monday clarifying his comment:

"The point that they make is the Constitutional mandate that the U.S. president be a natural born citizen, and the White House has not done a very good job of dispelling the concerns of these citizens," he said. "My focus is on issues where I can make a difference to stop the liberal agenda being pushed by President Obama."

Out-party politicians have long had to deal with conspiracy theorists on their side — the people who think that the Clintons killed Vince Foster or that the Bush administration helped orchestrate the Sept. 11 attacks.

“Twenty-five percent of my people believe the Pentagon and Rumsfeld were responsible for taking the twin towers down,” said Rep. Collin Peterson, a Democrat who represents a conservative Republican district in Minnesota. “That’s why I don’t do town meetings.”

But the birther phenomenon may present a bigger challenge — a potent blend of race and politics, fueled by conservative TV and radio pundits, and played out in a day when all that stands between a town hall meeting and Web omnipresence is a $100 flip cam.

Republican pollster Whit Ayers says that a member confronted with birther questions should immediately pivot the conversation back to big issues.

“You simply indicate that in a country where our fiscal policy is driving us toward bankruptcy, where we are wrestling with major issues of health care reform and fighting two wars for our safety, you don’t have time to deal with wild conspiracy theories,” he says.

That’s the approach House Republican Conference Chairman Mike Pence of Indiana takes.

“On that issue, I’m pretty distinctive that the president is from Hawaii,” he said. “I just don’t know where he’s coming from on health care.”

Such a response might satisfy many, or even most, but Taitz says that until Obama is removed from office, America’s other problems cannot be addressed. The fact that a few members of Congress have taken up her cause, with 10 Republicans signing onto Floria Republican Rep. Bill Posey’s legislation to amend the Federal Election Campaign Act of 1971, has only encouraged her to buckle down in the fight.

As Taitz sees it, Campbell, who represents her congressional district in Southern California, was moved to co-sponsor the “Birthers’ bill” for fear of people like her.

Campbell spokesperson Muffy Lewis flatly denied that being the case, saying the issue of Obama’s birth certificate is a low priority in the congressman’s district. Plus, Campbell has stressed that the bill would apply only to future candidates — and is really just about avoiding these kinds of controversies in the future.

“It really wasn’t as much about constituents as it was his own principles,” said Lewis. “He thought it was a common-sense bill. Castle had a major issue [in his district], but it hasn’t been much of an issue in ours.”

But Taitz said that lawmakers everywhere should be prepared to “resign or be removed” if they “do not have the guts to stand for the Constitution and this country.”

Asked whether Republican lawmakers should be “afraid” of the birthers, Taitz said: “I wouldn’t say the word ‘afraid.’ I think they should be willing to resign or be removed. That is what they should do. ... Resign if you do not have the guts to stand for the Constitution of this country.”

Taitz has made nine trips around the country to rally support for her cause. In March, she traveled to Washington to personally hand out packets of documents to senators in the Hart Senate Office Building. Additionally, she says she has sent documents by certified mail to each of the members of the Senate Judiciary Committee, arguing that Obama is “totally illegitimate to be president.”

While the movement could be “politically threatening for particular Republicans,” Taitz says that the GOP as a whole has a chance to gain from it if it takes the right course of action.

Obama camp labors to return bad cash--By Kenneth P. Vogel

More than eight months after President Barack Obama won the White House, the remnants of his campaign organization is struggling to deal with some unfinished business: returning about $669,000 in tainted or illegal campaign contributions to a motley assortment of donors, among them a convicted murderer, Washington lobbyists and a number of foreign nationals, including his own aunt.

But the 11 Chicago-based staff members still on the campaign’s payroll are finding it was a lot easier to rake in a record-shattering $750 million than to identify and return donations that ran afoul of federal election laws or Obama’s own strict fundraising standards.

Their intensive effort to refund problem contributions has involved detailed research into lobbying records and passport information, an elaborate accounting system that cancels and reissues stale-dated refund checks and phone calls and letters urging donors to cash their refunds. The effort is unprecedented in modern politics, according to election law compliance experts, and underscores both the logistical challenges of processing so much contribution data and the Obama team’s hypersensitivity to anything that could sully the president’s carefully honed image as a crusader against special interests and a champion of ethics and transparency.

Obama’s oft-repeated commitment to those ideals has been a favorite target for critics. During the campaign, they assailed him for breaking a promise to participate in a government financing program intended to reduce the role of fundraising and for lax screening of prohibited contributions from foreign nationals. Since taking office, he’s come under fire for backtracking on his pledge to keep his administration free of lobbyists, whom he vilified during the campaign, and for lending his fundraising clout to groups that usually don’t adhere to the same strict no-lobbyist-cash standard that he imposed on his campaign and on the Democratic National Committee.

A POLITICO analysis of Obama’s most recent finance report showed that between the beginning of April and the end of June, the campaign sent out more than 800 refunds.

It’s not clear from the report which refunds were successfully processed, nor the motivation for every refund. POLITICO’s analysis identified at least 50 refunds totaling more than $27,000 to lobbyists, 40 refunds totaling nearly $28,000 to foreign donors and at least 13 refunds totaling nearly $115,000 to donors who gave more than the $4,600 maximum. The latter group included Robert Hormats, a Goldman Sachs director whom Obama recently nominated to be an undersecretary of state and who had his $2,300 donation returned because the campaign discovered he had already maxed out on how much he could give.

Most of the refunds are likely over the limit, foreign or lobbyist donations, or some combination thereof, but the campaign also continues to keep an eye out for individual donors whose notoriety could be used by critics against Obama — someone like Phil Spector. The award-winning record producer and songwriter gave a series of contributions to Obama, totaling the maximum $4,600, while facing murder charges — and even wore an Obama pin during his trial. But about one week after the case went to the jury in late March, the Obama campaign refunded $4,350 to Spector. (It had refunded the other $250 in the weeks after Election Day.) A week later, Spector was convicted of second-degree murder, and he’s now serving 19 years to life.

Though Spector and Hormats were mailed refund checks for the first time in the second quarter of 2009, an overwhelming majority of the refunds in the report were reissues of refund checks that donors did not cash the first time, for a variety of reasons.

Some recipients of second-time refunds told POLITICO they never received the first checks, while others speculated they may have mistaken them for direct-mail solicitations and thrown them out. One business lobbyist who is a longtime Democrat told POLITICO he “tore up the check” Obama sent refunding a $200 contribution “because I felt it was not really fair.”

Obama announced to great fanfare during the campaign that he wouldn’t accept contributions from lobbyists or political action committees, because he wanted to decrease the power of special interests in Washington. And the second-quarter report lists refunds to lobbyists representing organizations ranging from the National Council of La Raza and the National Coalition for Women With Heart Disease to huge energy and hospital companies that oppose Obama’s cap-and-trade and health care reform plans, respectively.

The business lobbyist who tore up his first refund subsequently cashed a reissued check sent in the second quarter but said, “People wear two hats, and there were a number of lobbyists who genuinely liked the candidate and wanted to contribute to him.”

Unlike lobbyists, foreign nationals are legally barred from contributing to federal campaigns. But some foreign donors whose checks were returned apparently did not receive or cash them. Obama’s second-quarter report showed reissued refunds to 40 donors with foreign addresses from Argentina to Turkey or foreign nationals living in the United States.

That group includes Obama’s Kenyan aunt, Zeituni Onyango, who has lived illegally in the U.S. for years and is facing deportation. In May 2008, she donated $265 to her nephew’s campaign, listing an address in Boston. The campaign tried to refund her contribution in the final days before the election — on the same day The Associated Press revealed her illegal residency. Obama’s recent report shows the refund was reissued in May, and it’s not clear whether it was cashed.

A White House aide who worked on the Obama campaign said, “We constantly screened our donors for any issues during the campaign and refunded or donated contributions when issues arose,” adding the campaign plans to continue monitoring its donor rolls for new or returning issues for the foreseeable future. “We maintained a fully operational compliance department.”

Most presidential campaigns continue to exist for months or even years after Election Day to handle the myriad issues that come with processing so many transactions in a relatively short time frame, from raising cash to paying off debts to fielding late-arriving invoices to dispensing with over-the-limit contributions.

Campaigns are allowed to donate over-the-limit and other illegal contributions to the U.S. Treasury if they’re not able to find the donors and refund their cash, an option that many candidates choose to exercise after Election Day. Additionally, politicians often give to charity legal contributions from disgraced donors. Former Massachusetts Gov. Mitt Romney has asked the Federal Election Commission to also allow his failed 2008 campaign for the GOP presidential nomination to donate to charity over-the-limit contributions for which refund attempts were unsuccessful.

Obama, who — unlike most presidential candidates — finished the campaign with millions in the bank, “is going to great lengths” to refund contributions, said Jason Torchinsky, who worked on President George W. Bush’s bid for reelection and was the top lawyer in former New York Mayor Rudy Giuliani’s unsuccessful campaign for the 2008 Republican presidential nomination. “It would be a lot easier for the Obama campaign to give illegal money that they can’t seem to return to the donor to the U.S. Treasury, which is the route taken by most campaigns,” he said.

In some cases, the Obama campaign has decided to keep contributions it previously tried to return, including a $1,250 contribution from former lobbyist Ann Kolker. The Ovarian Cancer National Alliance, for which Kolker had been registered to lobby, filed an amended report days after Obama’s victory making clear that Kolker hadn’t lobbied since 2004, and that may have assuaged the campaign’s concerns.

Nick Nyhart, president of Public Campaign, a nonprofit group that advocates for public financing of campaigns as a way to reduce special-interest influence, said the Obama campaign should be commended for “making a strong effort and doing a lot of due diligence. It’s an unusually high standard, and I think they wanted to make good on their word on this. And, in my mind, they are.”

Ironically, Nyhart and another Public Campaign employee are registered lobbyists whose contributions to Obama (Nyhart gave $250, while Susan Anderson gave $33.68) were refunded for a second time recently, according to the campaign’s second-quarter report.

AP sources: Senators near bipartisan health deal--By DAVID ESPO and ERICA WERNER, Associated Press Writers

A bipartisan group of senators is closing in on a health care compromise that omits key Democratic priorities but seeks to hold down costs, as lawmakers on both sides of the Capitol struggled Tuesday to deliver sweeping health legislation to President Barack Obama.

In the House, Democratic leaders continued to negotiate with conservative and moderate rank-and-file party members with time running out for a vote before lawmakers leave Friday for a monthlong vacation.

The fiscally conservative Blue Dogs were at odds with the leadership over how to pay providers in a government-run health plan that would compete with private insurance. The House bill models the payments based on Medicare, but the so-called Blue Dogs want a negotiated rate similar to private insurance. Other issues remain sticking points for the Democrats.

"We're not ready to support a bill yet," said Rep. Baron Hill, D-Ind., a member of the Blue Dog group, who added: "We'll get there. We are going to pass a health care bill, whether it's now or in the fall remains to be seen."

Without the backing of the 52-member Blue Dogs, it would be difficult for Democratic leaders to pass a bill, especially since no Republican supports the legislation.

"I think there's still a bit of daylight between the positions," said Rep. Earl Pomeroy, D-N.D. "I think the bottom line of Blue Dogs has not been met as of this time."

Democratic leaders are still holding out hope of floor passage before the summer break, and Majority Leader Steny Hoyer is looking at keeping the House in session some days past its scheduled Friday adjournment date.

After weeks of secretive talks, three Democrats and three Republicans on the Senate Finance Committee were edging closer to a compromise that excludes a requirement many congressional Democrats seek for large businesses to offer coverage to their workers. Nor would there be a provision for a government insurance option, despite Obama's support for such a plan, officials said.

The Finance senators were considering a tax of as much as 35 percent on very high-cost insurance policies, part of an attempt to rein in rapid escalation of costs. Also likely to be included in any deal was creation of a commission charged with slowing the growth of Medicare.

"We're going to get agreement here," Sen. Max Baucus, D-Mont., the Finance Committee chairman, said Monday. "The group of six really wants to get to 'yes.'"

Obama has outlined two broad goals for legislation he is struggling to win from Congress: expansion of health insurance coverage to millions who lack it, and reining in increases in costs. The president is participating in an AARP town-hall meeting on health care Tuesday.

The president's top domestic priority has suffered numerous setbacks in recent weeks and a Senate vote has been postponed until September. Administration and Democratic leaders hope to show significant progress before lawmakers begin their monthlong August recess.

In the House, seven fiscally conservative House Democrats who have held up action in the Energy and Commerce Committee by demanding more cost savings and other changes negotiated late into the night Monday with the committee's chairman, Rep. Henry Waxman, D-Calif. Waxman's is the only one of three House panels with jurisdiction on the health bill that has yet to act.

The Blue Dogs have enough votes in the Energy and Commerce Committee to potentially block passage there, but time is running out for their negotiations with Waxman. A voting session in Waxman's committee that has been on hold for a week must resume quickly, probably by Wednesday at latest, if there's any chance for the committee to pass a bill and send it to the full House for action before the summer recess.

In the Senate, officials stressed that no agreement has been reached on a bipartisan measure, and said there is no guarantee of one, with numerous key issues remaining to be settled.

The officials spoke on condition of anonymity, saying they were not authorized to discuss matters under private negotiations.

They said any legislation that emerges from the talks is expected to provide for a nonprofit cooperative to sell insurance in competition with private industry, rather than giving the federal government a role in the marketplace.

Obama and numerous Democrats in Congress have called for a government option to provide competition to private companies and hold down costs, and the House bill includes one — another concern for the Blue Dogs.

Officials also said a bipartisan compromise in the Senate would not subject large companies to a penalty if they declined to offer coverage to their workers. Instead, these businesses would be required to reimburse the government for part or all of any federal subsidies designed to help lower-income employees obtain insurance on their own.

The legislation in the House includes both a penalty and a requirement for large companies to share in the cost of covering employees.

___
Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.

Op-Ed: Health care status quo would be disaster for middle class--By House Majority Leader Steny Hoyer (D-MD)

July 27, 2009

Washington, DC — How’s this for a health care plan? It will make your premiums go up—in fact, it will double health costs over the next ten years. It will strip millions of Americans of their coverage. It will send our deficit through the roof.

That, as President Obama recently pointed out, is the health care plan we choose by doing nothing. That is the status quo, and it will be the health care plan we end up with if health insurance reform fails.

And although no one will come out and argue for a plan that doubles costs and cuts coverage, we are being pushed in just that direction by transparent attempts to kill reform for partisan gain. As one Republican Senator put it, “If we’re able to stop Obama on this, it will be his Waterloo. It will break him.” Another said this about efforts to cover millions more Americans: “We can stall it. And that’s going to be a huge gain for those of us who want to turn this thing over in the 2010 election.”

Failure to reform health care might be a boon for some members of Congress, but it would be a disaster for middle-class families, for the 47 million uninsured Americans, and for small businesses across America.

That’s why Democrats are working hard to get a health care bill to President Obama’s desk this fall. The details of that bill are still under strong debate—which is healthy considering the historic challenge we face. But Democrats are unshakably committed to four driving principles: health insurance stability, affordability, quality, and patient choice.

First, we are working to bring stable coverage and peace of mind to every American. No longer will insurance companies be allowed to deny you coverage because they consider you to have a pre-existing condition like pregnancy, heart disease, cancer, or diabetes. No longer will medical bills be a source of personal bankruptcy. No longer will you be forced to make job and life choices based on fear of losing health coverage. And no longer will tens of millions without insurance be forced to put off the preventive care they need, while the rest of us pay to subsidize their care—at about $1,100 per average family premium, each year.

Second, the Democratic plan has the power to reverse the cost inflation that has more than doubled premiums since 2000, while wages have stood still. Cost-saving measures will include the bargaining power of a public insurance option, an end to Medicare co-pays or deductibles for preventive care that keeps patients healthier for the long-term, research to help doctors and patients make informed choices, and electronic medical records that will make it easier for doctors to collaborate. Seniors will see an end to the notorious Medicare Part D “donut hole,” which leaves those with between $2,700 and $6,100 per year in prescription drug expenses without Medicare support. And small businesses will find it easier to afford coverage for their employees, putting them on fairer footing against competitors overseas.

Third, the Democratic plan will mean higher-quality health care. Right now, America pays nearly twice as much for health care per capita as any other industrialized country, without getting better health outcomes in return. In other words, higher quality health care isn’t a matter of spending more money—it’s a matter of spending smarter. That’s why many of the same measures that will bring down costs can also mean better health care for all of us. For instance, electronic records will mean fewer deadly errors, and research on health outcomes will help patients and doctors decide on the most effective courses of treatment.

Fourth and finally, Democrats want to preserve and strengthen patients’ choice of plans and doctors. An option to enroll in a public insurance plan won’t simply give Americans another choice of coverage—its competition will push private insurers toward lower costs and higher quality. And contrary to Republican claims, the Democratic plan won’t force employers to drop millions of employers from coverage; the Congressional Budget Office actually found that employer-provided coverage will increase. As a result, Americans who like the coverage they have will be able to keep it.

Even as you’re reading this, we’re working with President Obama to finish a bill that will hold to the principles of stability, affordability, quality, and patient choice, without raising the deficit. The status quo is getting costlier every day, and that makes our work more urgent.

But anyone who seriously claims that we are rushing through reform needs a reality check. The House held 79 health care hearings in the last two years; just this year, members of Congress have heard from their constituents at more than 550 health care town halls and public events.

And not just that—for decades, health reform has been one of the most-discussed domestic issues in America. In the 2008 election, repairing the economy and expanding access to health care were central issues for all candidates, in both parties. In fact, we, as a nation, have been debating about how to bring affordable health care to every American for most of the 20th century, and into the 21st. This, at last, is our moment. We must not miss it.

Rep. Steny Hoyer (D-MD) is the House Majority Leader and a leading voice in the Democratic party. He is currently serving his 15th term representing the 5th Congressional District of Maryland.

AP sources: Senate group omits employer mandate--By DAVID ESPO, AP Special Correspondent David Espo, Ap Special Correspondent

After weeks of secretive talks, a bipartisan group in the Senate edged closer Monday to a health care compromise that omits two key Democratic priorities but incorporates provisions to slow the explosive rise in medical costs, officials said.

These officials said participants were on track to exclude a requirement many congressional Democrats seek for large businesses to offer coverage to their workers. Nor would there be a provision for a government insurance option, despite President Barack Obama's support for such a plan.

The three Democrats and three Republicans from the Senate Finance Committee were considering a tax of as much as 35 percent on very high-cost insurance policies, part of an attempt to rein in rapid escalation of costs. Also likely to be included in any deal was creation of a commission charged with slowing the growth of Medicare through recommendations that would take effect automatically unless overturned by Congress.

"We're going to get agreement here," Sen. Max Baucus, D-Mont., the Finance Committee chairman, said Monday. "The group of six really wants to get to 'yes.'"

Obama has outlined two broad goals for legislation he is struggling to win from Congress: expansion of health insurance coverage to millions who lack it, and reining in increases in costs.

Like bills drafted by Democrats, the proposal under discussion by the six Finance Committee members would bar insurance companies from denying coverage to any applicant. Nor could insurers charge higher premiums on the basis of pre-existing medical conditions.

But it jettisons other core Democratic provisions in a reach for bipartisanship on an issue that has so far produced little.

The effort received a boost during the day from the U.S. Chamber of Commerce, normally a close ally of Republicans. In a letter to committee leaders, the business group called for the panel to "act promptly, preferably before" the Senate's scheduled vacation at the end of next week. In doing so, the business organization dealt a blow to the Senate Republican Leader Mitch McConnell of Kentucky and other GOP lawmakers who have called repeatedly for Democrats to slow down.

In yet another boost for the drive to enact legislation, PhRMA, which represents drug companies, has purchased more than $500,000 worth of television ads to air during the week in nine states.

Obama's top domestic priority has suffered numerous setbacks in recent weeks, and Republicans have stepped up their criticism. A Senate vote has been postponed until September. Administration and Democratic leaders hope to show significant progress before lawmakers begin their monthlong recess in hopes of regaining momentum.

In the House, the leadership sought to allay concerns among the rank and file. Speaker Nancy Pelosi, D-Calif., said, "We're on schedule to do it now or do it whenever," when asked whether the House would complete its bill before lawmakers leave at the end of the week for their summer break.

In the Senate, officials stressed that no agreement has been reached on a bipartisan measure, and said there is no guarantee of one. They also warned that numerous key issues remain to be settled, including several options to pay for the legislation.

Also unsettled is the question of whether the legislation should address the issue of abortion.

The officials spoke on condition of anonymity, saying they were not authorized to discuss matters under private negotiations.

They said any legislation that emerges from the talks is expected to provide for a nonprofit cooperative to sell insurance in competition with private industry, rather than giving the federal government a role in the marketplace.

Obama and numerous Democrats in Congress have called for a government option to provide competition to private companies and hold down costs. White House spokesman Robert Gibbs said during the day, "I don't believe that the president has come down (on) one versus the other in terms of denoting co-ops equal to or above public option."

One of the senators involved in the talks, Olympia Snowe, R-Maine, confirmed that co-ops are the preferred approach. "It's safe to say that'll probably remain in the final document," she said.

Officials also said a bipartisan compromise would not subject large companies to a penalty if they declined to offer coverage to their workers. Instead, these businesses would be required to reimburse the government for part or all of any federal subsidies designed to help lower-income employees obtain insurance on their own.

"We don't want to undermine (employer coverage) or create a perverse incentive where employers potentially drop coverage because their employees can get subsidies," Snowe said.

Democratic-drafted legislation in the House includes both a penalty and a requirement for large companies to share in the cost of covering employees.

The senators involved in the negotiations are all members of the Senate Finance Committee, and include Baucus and Chuck Grassley, R-Iowa, the senior Republican. Others participating are Democratic Sens. Kent Conrad of North Dakota and Jeff Bingaman of New Mexico, and Republicans Snowe and Mike Enzi of Wyoming.

They have met for hours in recent weeks in Baucus' office, joined by aides and outside advisers such as actuaries summoned to explain arcane details of insurance. Douglas Elmendorf, head of the Congressional Budget Office, has also attended.

Baucus has been under intense pressure from the White House and Senate Democrats in recent weeks to convene the committee to vote out legislation. He has so far declined to do so, opting to give the bipartisan negotiations as much time as needed to succeed.

Several Democratic officials have said he recently pledged to Majority Leader Harry Reid, D-Nev., that the committee would meet next week to vote on legislation, a timetable that implies time is growing short for the bipartisan group to wrap up its work.

Much of the cost of the proposal would come from curbing the growth in fees to insurance companies and other providers under Medicare.

But congressional aides in both parties as well as lobbyists said a proposal limiting Flexible Savings Accounts to $2,000 annually is also a strong possibility. FSAs permit the use of pretax income to pay for items such as health care and child care.

Negotiators also are considering fees on the manufacturers of medical devices and on the makers of both brand name and generic drugs coming onto the market.

To cut down on the cost of the bill, the bipartisan group may include only one year of a long-term plan to adjust reimbursement fees under Medicare.

Officials said the legislation under discussion in a series of private meetings would likely cost under $1 trillion, include an expansion of Medicaid, and provide federal subsidies for individuals and families up to 300 percent of poverty to spread health care more broadly.

Individuals would have a mandate to buy affordable insurance.

___
Associated Press writers Ricardo Alonso-Zaldivar and Erica Werner contributed to this report.

AP IMPACT: Dodd, Conrad told deals were sweetened--By LARRY MARGASAK, Associated Press Writer Larry Margasak, Associated Press Writer

Despite their denials, influential Democratic Sens. Kent Conrad and Chris Dodd were told from the start they were getting VIP mortgage discounts from one of the nation's largest lenders, the official who handled their loans has told Congress in secret testimony.

Both senators have said that at the time the mortgages were being written they didn't know they were getting unique deals from Countrywide Financial Corp., the company that went on to lose billions of dollars on home loans to credit-strapped borrowers. Dodd still maintains he got no preferential treatment.

Dodd got two Countrywide mortgages in 2003, refinancing his home in Connecticut and another residence in Washington. Conrad's two Countrywide mortgages in 2004 were for a beach house in Delaware and an eight-unit apartment building in Bismarck in his home state of North Dakota.

Robert Feinberg, who worked in Countrywide's VIP section, told congressional investigators last month that the two senators were made aware that "who you know is basically how you're coming in here."

"You don't say 'no' to the VIP," Feinberg told Republican investigators for the House Oversight and Government Reform Committee, according to a transcript obtained by The Associated Press.

The next day, Feinberg testified before the Senate Ethics Committee, an indication the panel is actively investigating two of the chamber's more powerful members:

• Dodd heads the Banking Committee and is a major player in two big areas: solving the housing foreclosure and financial crises and putting together an overhaul of the U.S. health care system. A five-term senator, he is in a tough fight for re-election in 2010, partly because of the controversy over his mortgages.

• Conrad chairs the Budget Committee. He, too, shares an important role in the health care debate, as well as on legislation to curb global warming.

Both senators were VIP borrowers in the program known as "friends of Angelo." Angelo Mozilo was chief executive of Countrywide, which played a big part in the foreclosure crisis triggered by defaults on subprime loans. The Calabasas, Calif.-based company was bought last July by Bank of America Corp. for about $2.5 billion.

Mozilo has been charged with civil fraud and illegal insider trading by the Securities and Exchange Commission. He denies any wrongdoing.

Asked by a House Oversight investigator if Conrad, the North Dakota senator, "was aware that he was getting preferential treatment?" Feinberg answered: "Yes, he was aware."
Referring to Dodd, the investigator asked:

"And do you know if during the course of your communications" with the senator or his wife "that you ever had an opportunity to share with them if they were getting special VIP treatment?"

"Yes, yes," Feinberg replied.

Bryan DeAngelis, Dodd's spokesman, said Feinberg has repeatedly made allegations of special treatment that were not true.

"As the Dodds have said from the beginning, they did not seek or expect any special rates or terms on their loans and they never received any. They were never offered special or sweetheart deals and if anyone had made such an offer, they would have severed that relationship immediately."

DeAngelis also repeated Dodd's statements from last February that an independent report showed the terms received by the senator and his wife were widely available at the time.

Conrad's spokesman, Chris Gaddie, said Monday that the senator "never asked for, expected or was aware of loans on any preferential terms" and has "worked overtime to set the record straight."

"He went with Countrywide simply because they already had his financial information," Gaddie said. He added that a Countrywide official had told Conrad that "it is not unusual for them to make exceptions for good customers if they could sell the loan in the secondary market. We now know that they did sell the apartment building loan in the secondary market."

The ethics committee determines whether senators violated standards of conduct. The outcome of the investigation could hinge on whether the mortgage violated strict limits on gifts to lawmakers or ran afoul of other Senate rules. The committee typically just issues a report. It could recommend a censure vote by the Senate, but that is rare.

Feinberg could face criminal prosecution if shown to have made false statements. He was questioned closely by three of the ethics committee's six senators: Democratic Chairman Barbara Boxer of California; the panel's senior Republican, Johnny Isakson of Georgia, and Republican Jim Risch of Idaho, according to Elana Goldstein, one of Feinberg's attorneys who accompanied him to both closed-door committee appearances.

The ethics questioning was intense at times, and Boxer asked the bulk of the questions. When Feinberg described a conversation he had with Dodd, she demanded to know how he remembered it. Feinberg said he recalled Dodd saying he had to leave to make a speech.

Boxer asked whether Dodd and Conrad received VIP treatment because they were senators. Feinberg said that was not the case; they received breaks as other influential people in Countrywide's "friends of Angelo" VIP program.

Isakson, a one-time real estate executive, asked more detailed questions about the mortgage agreements' terms.

Countrywide VIPs, Feinberg told the committees, received discounts on rates, fees and points. Dodd received a break when Countrywide counted both his Connecticut and Washington homes as primary owner-occupied residences — a fiction, according to Feinberg. Conrad received a type of commercial loan that he was told Countrywide didn't offer.

"The simple fact that Angelo Mozilo and other high-ranking executives at Countrywide were personally making sure Mr. Feinberg handled their loans right, is proof in itself that the senators knew they were getting sweetheart deals," said Feinberg's principal attorney, Anthony Salerno.

Two internal Countrywide documents in Dodd's case and one in Conrad's appear to contradict their statements about what they knew about their VIP loans.

At his Feb. 2 news conference, Dodd said he knew he was in a VIP program but insisted he was told by Countrywide, "It was nothing more than enhanced customer service ... being able to get a person on the phone instead of an automated operator."

He insisted he didn't receive special treatment. However, the assertion was at odds with two Countrywide documents entitled "Loan Policy Analysis" that Dodd allowed reporters to review the same day.

The documents had separate columns: one showing points "actl chrgd" Dodd — zero; and a second column showing "policy" was to charge .250 points on one loan and .375 points on the other. Another heading on the documents said "reasons for override." A notation under that heading identified a Countrywide section that approved the policy change for Dodd.

Mortgage points, sometimes called loan origination fees, are upfront fees based on a percentage of the loan. Each point is equal to 1 percent of the loan. The higher the points the lower the interest rate.

Dodd said he obtained the Countrywide documents in 2008, to learn details of his mortgages.

In Conrad's case, an e-mail from Feinberg to Mozilo indicates Feinberg informed Conrad that Countrywide had a residential loan limit of a four-unit building. Conrad sought to finance an eight-unit apartment building in Bismarck that he had bought from his brothers.

"I did advise him I would check with you first since our maximum is 4 units," Feinberg said in an April 23, 2004, internal e-mail to Mozilo.

Mozilo responded the same day that Feinberg should speak to another Countrywide executive and "see if he can make an exception due to the fact that the borrower is a senator."

Feinberg said in his deposition with House Oversight investigators last month that exceptions for the type of loan Conrad received were not allowed for borrowers outside the VIP system.

"If there was a regular customer calling, and of course you say, 'No, we're a residential lender. We cannot provide you with that service,'" Feinberg said.

Feinberg also told House investigators that Countrywide counted both of Dodd's homes as primary residences.

"He was allowed to do both of those as owner-occupied, which is not allowed. You can only have one owner-occupied property. You can't live in two properties at the same time," he said.

Normally, Feinberg said, a second home could require more equity and could have a higher mortgage rate.

Rep. Darrell Issa of California, the senior Republican on the House Oversight Committee, had his investigators question Feinberg as part of a broader investigation into Countrywide's VIP program.

Other names that have surfaced as "friends" of Mozilo include James Johnson, a former head of Fannie Mae who later stepped down as an adviser to Barack Obama's presidential campaign, and Franklin Raines, who also headed Fannie Mae. Still other "friends" included retired athletes, a judge, a congressional aide and a newspaper executive.

Conrad initially said in June 2008, "If they did me a favor, they did it without my knowledge and without my requesting it."

The next day, Conrad changed course after reviewing documents showing he got special treatment, and said he was donating $10,500 to charity and refinancing the loan on the apartment building with another lender. He also said then it appeared Countrywide had waived 1 point at closing on the beach house.

Gaddie said Feinberg has previously made statements to the news media that Countrywide waived 1 point without the senator's knowledge.

Feinberg testified that VIPs usually were not told exactly how many points were being waived, but it was made clear to them that they were getting discounts.