My sources tell me that reconciliation — pushing through HC in the Senate with 51 votes with a special parliamentary procedure — isn’t going to happen. So the big votes will need 60, including just opening debate. And rest assured that if Reid thinks he has 60 to pass, the debate will immediately come to an end.

Keith Hennessey gives his odds update:

I am lowering from 60% to 50% my projection for the success of comprehensive health care reform.

1. Pass a partisan comprehensive bill through the House and through the regular Senate process with 60, leading to a law; (was 40% –> 30%)
2. Pass a partisan comprehensive bill through the House and through the reconciliation process with 51 Senate Democrats, leading to a law; (steady at 20%)
3. Fall back to a much more limited bill that becomes law; (was 20% –> 15%)
4. No bill becomes law this Congress.  (was 20% –> 35%)

I think there is zero chance a bill makes it to the President’s desk before 2010.  If a bill were to become law, I would anticipate completion in late January or even February. …

I have lowered my projection of Leader Reid succeeding for three reasons:  Pretty much everything has to go right for him to win on cloture in mid-December. He has no more wiggle room on the schedule, and new intra-Democrat policy fights are popping up.

I think his members are going to get beat up about health care and jobs over Thanksgiving recess, then return to Washington to face another bad jobs day Friday the 4th. If moderates demand large substantive concessions for their votes, liberals like Senators Rockefeller and Boxer may refuse. They may tell Reid they will oppose cloture if the bill moves toward the  center, and instead advocate abandoning regular order and starting a clean reconciliation process in January. House liberals might join this effort.

Some of the best things I read today:

1) Tyler Cowen gives his version of healthcare reform. Ideas 3-10 are particularly strong.

2) Noam Scheiber agrees with Summers that budget deficits are not a big deal since less private borrowing mean no crowding out. I wouldn’t get too satisfied with this explantion.

3) IBD’s Jed Graham has  great post that speculates “come 2013, we might begin to see help wanted ads that emphasize the lack of employer-provided insurance as a perk.”

4) Matthew Yglesias looking how Republicans will try to roll back HC reform if it ever passes. The delayed-start will make this easier.

5) Joel Kotkin again show how California is doing everything wrong to boost growth. Just look at Northern California:

Indeed by some accounts, most embarrassingly in a recent Time magazine cover, the shift to green technologies has already created a “thriving” economy.

Time extols Google, Apple, Facebook, Twitter and the other Silicon Valley companies as exemplars leading to a glorious prosperity; somehow the article missed the empty factories, vacant offices and abandoned farms across the state.

For Apple’s Steve Jobs, Google’s Eric Schmidt and venture capitalists connected to Al Gore, these could well be the best of times. Fed policy prints money for investment bankers to speculate; stock prices rise as people have nowhere else to invest. And for the much celebrated venture community, there’s also an Energy Department that pours hundreds of millions into “green” start-ups that build things like expensive electric cars.

California’s high-tech greens may talk a liberal streak in terms of diversity and social justice, but their prescriptions offer little for those who would like to build a career and raise a family in 21st century California. Their policies in terms of land use regulation and greenhouse gas emissions will make it even harder for existing factories, warehouses, homebuilders and other traditional employers of the middle- or working class.

Yet the “greenest” parts of the country–places like the northern end of the Bay Area–are among the toughest places to build or manufacture anything, without huge public-sector subsidies. Indeed, California’s new green requirements, compared with places like Texas or China where manufacturing has other advantages, would further undermine an already struggling sector. Few businesspeople see much growth in the near future in office or residential construction.

From the astounding Arnold Kling:

The bill I would propose would be one that encourages experimentation at the state level. Offer to support an experiment that allows an individual state to adopt single-payer, while allowing another state to offer deregulated insurance and medical practice.

What is frustrating to me is that many people would agree that the Massachusetts health experiment failed, and yet that is the experiment that is being used as the model for the current bill. The original promise in Massachusetts was that by eliminating the “free-riding” of the uninsured and by setting up an efficient government insurance exchange, insurance costs would go down. Instead, insurance costs there soared.

The current health care bill is viewed skeptically by every reputable health care economist. My guess is that even someone like Peter Orszag, who obviously is not free to speak his mind, is somewhere between disappointed and appalled at what is coming down the pike.

It would make sense to try more state-level experiments before choosing a model for a national system.

“We no longer expect Congress to pass impactful health reform legislation this year, or even in this political cycle.” That is the opinion of Sector & Sovereign analyst Richard Evans:

1. Voter attitudes are shifting away from both Democrats and health-reform; placing the considerable number of Dems from conservative states and districts in increasingly untenable positions.

2. Substantial time should pass before a vote on final legislation; the Senate is unlikely to vote on a bill by year end, and a final vote on a conference bill is virtually impossible before late January. If trends in voter opinion continue, this is almost certainly too late.

3. On top of this, efforts to keep abortion as a neutral issue have failed. 20 pro-life House Dems have put the issue ahead of health reform, refusing to support legislation that does not completely bar abortion coverage in plans that receive Federal funding.

4. Pro-choice House Dems outnumber their pro-life House Democratic peers nearly 8 to 1. As any final legislation will certainly be well to the right of the House bill, this means House progressives may be asked to support a final bill whose healthcare provisions they find lacking in appeal, and to surrender ground on choice in the process. We bet at least a few refuse.

5. Immigration is a less potent but still meaningful wild-card; 20 House votes rely on the Senate ultimately agreeing to loosen its language and let illegal immigrants purchase coverage on the exchanges with their own money, and to extend subsidies not only to citizens, but to anyone who is in the US legally. 15 Senate Democrats hail from states that Obama either lost, or carried with a 5 percent margin or less. These swing-votes hold inordinate power, and are much more conservative on immigration than their blue-state peers; we believe they may balk at these House provisions.

6. The House bill’s largest source of funding is an incremental tax on the wealthy, which the aforementioned 15 Democratic Senators from red- or swing-states cannot support. The Senate Bill’s largest source of funding is taxes on relatively more expensive ‘Cadillac’ health plans, which the union friendly House cannot support. In effect, each has settled on a plan that the other cannot pass.

Me: Never underestimate the power of numbers. And the Ds do have a big majority in the Senate. And what do they fear more, passing the bill or not passing it? Obama might still sign something, but it might not resemble comprehensive healthcare reform anymore. We await the CBO score ….

Guess what? It turns out the Chinese are kind of curious about how President Barack Obama’s healthcare reform plans would impact America’s huge fiscal deficit. Government officials are using his Asian trip as an opportunity to ask the White House questions. Detailed questions.

Boilerplate assurances that America won’t default on its debt or inflate the shortfall away are apparently not cutting it. Nor should they, when one owns nearly $2 trillion in assets denominated in the currency of a country about to double its national debt over the next decade.

Nothing happening in Washington today should give Beijing any comfort or confidence about what may happen tomorrow. Healthcare reform was originally promoted as a way to “bend the curve” on escalating entitlement costs, the major part of which is financing Medicare and Medicaid. That is looking more and more like an overpromised deliverable.

For instance, a new study from the U.S. government’s Centers for Medicare and Medicaid Services finds that the healthcare reform bill recently passed in the House of Representatives would increase healthcare spending to 21.3 percent of GDP by 2019 compared with 20.8 percent under current law. That’s bending the curve the wrong way. The study also questions the “long-term viability” of the $500 billion in Medicare cuts meant to help pay for expanded insurance coverage.

In addition, the CMS study gives a clearer cost estimate than the one provided by the Congressional Budget Office. According to the CBO, the 10-year cost of PelosiCare is $894 billion. But that analysis includes early years with little government spending, According to the CMS, the House approach would cost $1 trillion from 2013-2019, or some $140 billion a year when fully put into effect.

Few realists in Washington think any of the current reform plans make a significant dent in the long-term healthcare cost to government. Indeed, the Senate Budget Committee recently held hearing about creating a bipartisan commission to find solutions to America’s entitlements problems.

If healthcare reform really bent the curve, there would be a no need for such a commission to do Healthcare Reform 2.0.

The Chinese might want to keep up the questioning.

A few thoughts on healthcare reform:

1) Just talked to a very insightful Capitol Hill Watcher who doesn’t think Harry Reid has the votes in the Senate to pass anything resembling comprehensive healthcare reform. You can count out Lieberman, Landrieu, Nelson and maybe even Bayh.

2) First, of course, comes the CBO’s analysis of various proposals. Any of them that boosts the deficit or healthcare premiums are DOA. Remember, healthcare reform was supposed to expand coverage, lower premiums and bend the curve on the long-term deficit.

3) Assuming Reid can get 60 votes to proceed to the floor sometime next week, we are talking December being taken up with debate on amendments concerning the public option, abortion, taxes. As it is, Reid is reworking the Senate bill on the fly. One day it is a new version of a PO trigger, the next a hike in payroll taxes. Reconciliation? “That ship has sailed.”

5) Time does not help.  Once the Congress goes homes, members could be inundated with complains and protests, just like in August. Also, the rising unemployment rate continues to sap public confidence in the Obama agenda and Washington, in general.

If you care about bending the curve of long-term healthcare costs – downward, I should emphasize – then it is tough not to conclude that Democratic efforts at healthcare reform are a failure. The essential money-sucking structure of US healthcare would remain intact. As the NYTimes finally figures out:

Experts — including some who have consulted closely with the White House, like Dr. Denis A. Cortese, chief executive of the Mayo Clinic — say the measures take only baby steps toward revamping the current fee-for-service system, which drives up costs by paying health providers for each visit or procedure performed. …

Among other innovations being considered is a cost-cutting method known as bundling, in which health providers receive a lump sum to care for a patient with a particular medical condition, say, diabetes or heart disease. The House bill calls for the administration to develop a plan for bundling, while the Senate Finance Committee version of the bill gives it until 2013 to create a pilot program.

Some experts would like to see such changes adopted more quickly, and senators of both parties say they will press for more aggressive cost-cutting measures when the bill comes up for debate. But drastic changes in the health care reimbursement system could cost the White House the support of doctors and hospital groups, who have signed onto the legislation and are lobbying hard to keep the current fee-for-service system from being phased out too quickly.

Experts agree that the Senate Finance bill does more to put systemic changes in place. That is because the bill includes two measures that health economists favor: a tax on high-value “Cadillac” health plans, and an independent commission that would make binding recommendations on how to cut Medicare costs.

Dr. Cortese, of the Mayo Clinic, said the bills could do more to reward quality care over quantity. He said he had met with Mr. Orszag and others at the White House and had proposed legislative language that would give Medicare three years to begin rewarding hospitals that are delivering better care at lower cost.

If the Reserve Bank of India’s directors had any doubts about the wisdom of buying 200 tonnes of IMF gold — and likely dumping some U.S. Treasuries in the process — they had only to watch last weekend’s legislative activities on Capitol Hill. The proceedings provided plenty of reassurance that the move was a smart play.

Nothing in the healthcare reform bill that passed the House of Representatives should give investors in dollar-denominated assets any confidence that U.S. policymakers are serious about tackling the government’s structural budget deficit.

And if the dollar’s gradual decline hastens dangerously, deficit fears might well be the catalyst.

Yes, the healthcare plan does slightly trim the 10-year budget deficit from where it would be otherwise. But America’s long-term entitlement problems are such that healthcare reform needs to cut long-term health costs substantially rather than just being “deficit neutral”.

Even worse, to believe in even the modest claims of deficit neutrality, one has to also possess faith that some $500 billion in 10-year Medicare cuts will really happen. That is a monstrously tall order when Congress is working feverishly to restore those cuts in legislative side deals.

Another way the House proposes to pay for reform is through a 5.4 percent income surtax on wealthier Americans and small businesses.

Like America’s alternative minimum tax, this surtax is not indexed for inflation. So every year, the levy will affect more and more taxpayers. Unless, of course, Congress passes a temporary fix every year, as it does with the AMT. Such a move would protect the middle class, but it would also make expanded healthcare coverage a fiscal fiasco.

The House plan will surely be altered by whatever the Senate passes, assuming the Senate is able to pass anything. But the House bill is still a disturbing sign that fiscal rectitude is a low priority for at least half of the legislative branch.

Higher gold prices seem to go hand in hand with bad U.S. economic policy, be it the higher inflation of the Carter years or the budget busting of the Bush II years. And surging gold prices may be giving a thumbs down to Washington economic policy this time as well

Rahm Emanuel famously said that you “never want a serious crisis to go to waste.”  And certainly the sense of crisis earlier in the year helped the White House pass the $787 billion stimulus package. But where stands the rest of the Obama legislative agenda?

Healthcare. The House will likely pass a bill this weekend, but big difference remain with the Senate, including paying for the plan and what to do about a public option.

Cap-and-trade. Kerry-Boxer is going nowhere which is why Kerry and Graham are working on a a dual-track approach.

Financial regulatory reform. The House and the Senate have completely different notions about what to do about system risk regulation. Plus there may be new efforts to try and “shrink” the banks and limit the scope of future activities.

See you in 2010, Obama Agenda!

Here is OMB Director Peter Orszag at NYU yesterday:

Our fiscal future is so dominated by health care that if we can slow the rate of cost growth by just 15 basis points per year (that is, 0.15 percentage points per year), the savings on Medicare and Medicaid would equal the impact from eliminating Social Security’s entire 75-year shortfall.

Right now, we are further along toward our goal of fiscally responsible health reform than ever before. I believe that in the weeks to come, the President will sign a bill that gives those with health insurance stability and expands coverage, and does so while boosting quality and reducing long-term deficits.

But there is mounting evidence that ObamaCare won’t do enough to reduce deficits. The Peterson Foundation just released a study on the Baucus bill that it commissioned from the Lewin Group. The findings:

1) The impact on the Federal budget deficit is positive only if the reductions to reimbursement levels are maintained. More than half of the $404 billion in savings over the 2010 through 2019 period is attributed to reductions in the rate of growth in payments to providers for health services, plus reductions in hospital DSH payments.

2)  Without providing new measures to control the growth in costs, the study estimates that total health spending would rise from about 17 percent of gross domestic product (GDP) in 2010 to 25 percent in 2029.

3) The federal government’s health spending would increase by almost $400 billion over the next 10 years and $1.6 trillion over the 20-year period.

Me: The context here, of course, is that Congress just tried an end-around to make sure doctor reimbursements aren’t cut. Actually, if the cuts were actually made, you would save enough that you would not have to raise taxes to pay for reform — though the goal is to make sure reform actually results in less red ink.