President Obama’s Appearance on 60 Minutes: The Good And The Bad
President Obama and Governor Romney both appeared on 60 Minutes last night in what is being billed as an indirect debate between the two candidates. They interviewed separately, but both used it as an opportunity to level some attacks at one another and to defend themselves against the other’s talking points.
Here are some of the things that struck me about Obama’s performance:
1. The Good
The President subtly distinguished U.S. interests from Israels’:
The President cleverly addressed Steve Kroft’s question regarding Israel PM Netanyahu’s blatant attempts to force the U.S. into war with Iran. Kroft asked him about the pressure being leveled at him during the U.S. elections (a time when a sitting President is most likely to placate deep-pocketed special interest groups). Obama appropriately recast the issue to the interests of the American people.
Although this tact might seem logical and obvious to most Americans — A U.S. President putting U.S. interests above those of a foreign government’s — anyone who follows the Israel / Palestine issue closely, knows this is practically unheard of in Washington, and actually constitutes bravery:
Kroft: How much pressure have you been getting from Prime Minister Netanyahu to make up your mind to use military force in Iran?
Obama: Well, look, I have conversations with Prime Minister Netanyahu all the time. And I understand and share Prime Minister Netanyahu’s insistence that Iran should not obtain a nuclear weapon because it would threaten us, it would threaten Israel and it would threaten the world and kick off a nuclear arms race.
Kroft: You’re saying you don’t feel any pressure from Prime Minister Netanyahu in the middle of a campaign to try and get you to change your policy and draw a line in the sand? You don’t feel any pressure?
Obama:When it comes to our national security decisions, any pressure that I feel is simply to do what’s right for the American people. And I am going to block out any noise that’s out there. Now I feel an obligation, not pressure but obligation, to make sure that we’re in close consultation with the Israelis on these issues because it affects them deeply. They’re one of our closest allies in the region. And we’ve got an Iranian regime that has said horrible things that directly threaten Israel’s existence.
Later in the interview, Kroft brought up Romney’s assertion that Obama was weak on national defense and foreign policy, saying that he “needed to be more aggressive on Iran, he hadn’t done enough to support the revolt in Syria, and that our ‘friends’ don’t know where we stand, and our enemies think we’re weak.” To which Obama replied:
Well, let’s see what I’ve done since I came into office. I said I’d end the war in Iraq, I did. I said that we’d go after al-Qaeda. They’ve been decimated… That we’d go after Bin Laden, he’s gone. So, I’ve executed on my foreign policy, and it’s one the American people agree with. So, if Governor Romney is suggesting we should start another war, he should say so.
Essentially, Obama is turning Romney’s pro-Israel hawkishness around on him, by reminding Americans that war is too important an issue to be championing for mere political expediency. That committing the United States to another unnecessary war in the Middle East, once again driven by fear mongering, would hold severe repercussions for U.S. interests.
2. The Bad
The President was unapologetic about his overarching Neoliberal policies. In fact he bragged about them:
Kroft told Obama that Romney has framed him as someone who doesn’t have a clue about the economy. That he doesn’t understand “that private enterprise is the engine of growth in this country, and that’s what creates jobs, not big government.” And that Obama is “crushing economic freedom with taxes, regulations, and high-cost health care.” Instead of taking issue with Romney’s Neoliberal ideology, he rejected Romney’s depiction of him as someone unkind to Neoliberal values.
Despite all the debt created by George W. Bush’s deep tax cuts, at a time we were engaged in two costly wars, Obama highlighted that he himself has been the true tax-cutter:
Taxes are lower on families than they’ve been probably in the last 50 years. So, I haven’t raised taxes, I have cut taxes for middle class families by an average of $3,600 for a typical family.
And after all the calamity in our economy created by Bush’s deregulatory policies, Obama still touted his own non-regulatory record as more brazen than Bush’s, as if that is something to be proud of:
When it comes to regulations, I issued fewer regulations than my predecessor George W. Bush did during that same period in office. So it’s hard to say I over-regulated.
When Kroft asked him how he will get obstructionist Republicans to agree to raise taxes on the wealthiest Americans, Obama used it as an opportunity to tout his austerity credentials, and the Grand Bargain he plans once reelected:
Ultimately the American people agree with me. The only way to bring down our deficit is in a balanced way. So, keep in mind, I’ve agreed with the Republicans, and we’ve already cut a trillion dollars of spending. And I’ve told them I’m prepared to do additional spending cuts, and do some entitlement reform.
But what I’ve said is, you can’t ask me to make student loans higher for kids who need it, or ask seniors to pay more for Medicare, or throw people off of healthcare, and not ask somebody like me or Mr. Romney to do anything. Not ask us to do a single dime’s worth of sacrifice?
Parse that again carefully. He doesn’t promise that young Americans WILL NOT be asked to pay more for student loans, or that seniors WILL NOT be asked to pay more for Medicare. He states you can’t ask these people to suffer even more, unless you also ask the wealthy, like him and Romney, to pay more in taxes.
This is a very significant point. He is willing to cut a Grand Bargain that will further harm those least capable of contributing financially, IF ONLY Republicans will agree that the rich need to toss a bit more tip money into the till. Because to Obama and the rest of the elite establishment this “shared sacrifice” between the “haves” and “have-nothing-to-spares” somehow constitutes a “balanced approach.”
Kroft pointed out that the housing crisis led to Obama bailing the banks out, and yet he decided that very few homeowners should be helped with mortgage-relief. Obama responded by touching on a few things he did do, but mostly distinguished his “modest” approach from Romney’s approach:
[…] We still have a long ways to go, but this is in contrast to Governor Romney’s proposal. When asked about what we should be doing with the housing market, [Romney] said, “Just let it bomb out.” That’s a quote. So, he was opposed to even the modest proposals we put into place.
So, instead of flogging his predecessor and Governor Romney for their irresponsible ideological beliefs, Obama attempted to out-‘W’ them, as if Bush’s Neoliberal economic policies were something to strive for, if not to exceed. In making the points above, Obama gives us a glimpse into his true economic compass, which deeply contradicts the policy platform he ran on in 2008.
Yes, his appointments of Neoliberal Wall Streeters and the policies he championed since he was elected have already confirmed that candidate Obama was a fraud, but it is interesting to see him four years later honestly aligning his rhetoric with his preferred policies.
The long-term damage done in propagating these sorts of pro-Neoliberal messages to the American public — that laissez-faire, non-regulatory, no-tax, pro-austerity policies are credible, responsible and commendable — only works to lend legitimacy to these long-failed policies, which now lie at the heart of our nation’s deep structural economic problems.
Who knows, before long, in order to prove his pro-business mettle, Obama might even begin to boast about his NAFTA-like trade deals (the kinds he panned as a candidate in 2008), and how they’ll help U.S. corporations be more competitive, by encouraging them to lay off Americans and outsource their operations to low labor-cost countries.
A Case For Scrapping Drug Patent Monopolies As Incentive For R&D
It is widely accepted across the gamut of economic ideologies that when a monopoly exists a free marketplace becomes inefficient and fails. It fails, because without competition, a monopolist is all but guaranteed to price-gauge consumers. So it’s no wonder that US anti-trust laws were written to safeguard the marketplace from monopolistic (anti-competitive) behavior.
Yet, for over half-a-century, the idea that the pharmaceutical industry should somehow remain exempt from this monopolistic prohibition, has largely gone unquestioned. By being permitted to patent its medicines, BigPharma enjoys a monopoly in the marketplace for a fixed period (20 years or more per drug), where they are free to price-gauge consumers.
The rationale behind drug patent monopolies rests upon the idea that without huge profits assured by this 20+ year price-gauging period, these pharmaceuticals would lack the incentive to invest in costly research and development. In addition, the actual manufacturing of medication tends to be cheap, so without patent-protection would-be-competitors, unburdened by R&D investments, could easily sell many generics for as low as $10 per prescription.
And thus, the drug patent has been widely accepted as a necessary evil.
But by choosing patenting as the preferred incentive for private R&D investment, the government is knowingly handing ‘for-profit’ corporations monopolistic licenses over vital consumer products.
We are not talking about discretionary goods, here — music downloads, books, or software — which people can live without. We’re talking about medicines that often keep people alive, or help to lessen their pain and suffering. In other words, the consumer CANNOT DO WITHOUT many of these products. And the provider, being shielded from competition, is well-positioned to take full advantage of their desperation.
Which is why the Pharmaceutical industry consistently ranks as one of the most profitable industries in the United States.
In response to public outrage over the fact that drug prices consistently rise at a much faster pace than the rate of inflation, the Congressional Budget Office (CBO) conducted a study in 2006 to assess the industry’s R&D expenses.
The study revealed that Federally-funded research has played a HUGE role in the discovery of nearly all new drugs released by the pharmaceutical industry. In fact, the only industry that receives more Federal subsidies for R&D is defense.
Here were some of the CBO’s findings:
- The federal government expended $25 billion on health-related R&D in the previous year alone (2005).
- “Most of the important new drugs introduced by the pharmaceutical industry over the past 40 years were developed with some contribution from public-sector research.”
- “Out of 21 of the most influential drugs introduced between 1965 and 1992, only five were essentially developed entirely by the private sector.”
- “In the past decade, federal outlays on health-related research and development have totaled hundreds of billions of dollars at the National Institutes of Health (NIH) alone.”
- R&D costs for new drugs are usually low, because more often than not, they are merely incremental modifications of already existing drugs.
CBO reported that the amount BigPharma itself contributes towards R&D is a staggering $800 million (2006 dollars) on average per drug release. However, CBO pulled these numbers from a separate study conducted by Tufts Center for the Study of Drug Development, which happens to be financed by — you guessed it — BigPharma itself!
In fact, a recent study published in the journal BioSocieties, entitled “Demythologizing the High Costs of Drug Research,” by Donald W. Light of the University of Medicine and Dentistry of New Jersey and Rebecca Warburton of the University of Victoria, took a hard look at those Tuft numbers. And what they found were HUGE flaws (Note: some of the major flaws are summarized HERE at Slate) which dramatically inflated BigPharma’s R&D costs:
When Light and Warburton correct for all these flaws—well, all the ones that can be quantified—they end up with an average cost of bringing a drug to market that’s $59 million and a median cost that’s $43 million. In 2011 dollars, that’s a $75 million average and a $55 million median.
So the drug companies’ [last stated] $1.32 billion estimate was off, according to Light and Warburton, by only $1.265 billion.* Let’s call it a rounding error.
Therefore, it appears the only credible information that can be gleaned from the CBO study is the taxpayer-funded portion of pharmaceutical R&D, and it is HUGE (to the tune of hundreds of billions of dollars).
A 2008 study entitled “The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditures in the United States,” published by the Public Library of Science, estimated that BigPharma spends nearly twice as much on advertising and promotion than it does on R&D expenditures, contrary to the industry’s claim. Their research reveals that the US pharmaceutical industry is in fact marketing-driven, despite its constant claims that it is research-driven.
In January, BusinessWire published “2011 Trends to Watch in Pharmaceutical Technology” which reported that BigPharma plans to cut R&D costs in 2011, by outsourcing their R&D operations to emerging markets, like China and India.
The CEO of GlaxoSmithKline just announced he’s been aggressively closing R&D operations, and instead partnering with academic research centers (again, government funded) & biotech companies:
One of the more vocal voices in the changing R&D landscape has been GlaxoSmithKline (GSK) CEO Andrew Witty. His company has significantly pared down its fixed R&D costs by closing research facilities, doing less discovery work internally, and pushing more and more responsibility for research to external academic and biotech partners.
It’s the same familiar theme that has come to define much of corporate America: socializing much of the risks and costs, outsourcing the higher-paying technical jobs to low-cost-labor countries, privatizing all the profits, and then evading paying US income taxes (as this Bloomberg article highlights).
Except in this case, the government additionally grants BigPharma a 20+ year competition-free environment with which to fleece the American people, to the detriment of their wallets, their health and their lives.
The US obviously needs to find a new creative way to ensure that financial incentives for private R&D remains, but without granting corporations monopolist-licenses to harm the public. Drug patent monopolies make no economic sense, and have proven to be a resounding failure on every front.
A couple months ago, Vermont Senator Bernie Sanders proposed a major reform bill of the drug patent system that sounds like a winning strategy. The bill would essentially replace drug monopolies with prizes:
He has introduced a bill to create a prize fund that would buy up patents, so that drugs could then be sold at a free market price. Sanders’s bill would appropriate 0.55% of GDP (about $80bn a year, with the economy’s current size) for buying up patents, which would then be placed in the public domain so that any manufacturer could use them at no cost.
This money would come from a tax on public and private insurers. The savings from lower-cost drugs would immediately repay more than 100% of the tax.
The country is projected to spend almost $300bn a year on prescription drugs this year. Prices would fall to roughly one-tenth this amount in the absence of patent monopolies, leading to savings of more than $250bn. The savings on lower drug prices should easily exceed the size of the tax, leaving a substantial net reduction in costs to the government and private insurers.
This would help to bolster R&D investment, by ensuring these firms are handsomely rewarded with all-upfront payouts for their products, which they could then reinvest into their R&D operations. Their huge marketing budgets would evaporate, thus saving them the lion-share of their current expenses. And at the same time, it would inject competition into the drug manufacturer marketplace — essential for ensuring these products remain widely available and affordable to the consumer.
And equally important, it would substantially impact our nation’s runaway healthcare costs by reducing our $300 billion annual pharmaceutical expenditures down to $30 billion. This would help to shore up Medicare and Medicaid, save lives, and put more money back into the pockets of the American people.
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