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Life Health > Life Insurance

On the Brink

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A couple of weeks ago, I spoke with a friend of mine who works for the NFL on what the outcome of the lockout was going to be. It was something that I was hesitant to bring up; for me, all a lockout would have meant was not watching the Jets on Sundays. For him, though, a lockout means no work, no mortgage payment and other serious consequences for his young family. I was surprised at how relaxed he was about it, though.

“The players and the owners can go back in forth with this nonsense all they want,” he told me knowingly. “Hell, they can do it all summer, right up until the day before the first preseason game. Every one close knows what priorities they will and will not bend and a deal will fall together quickly. This is just a show they put on for themselves. Don’t worry.”

Brinkmanship has been an age-old bargaining tactic in politics, war, business and labor. By definition, it is the practice of pushing things to the verge of disaster in order to achieve the most advantageous outcome for oneself. Brinkmanship ended when President Obama and Speaker Boehner made their respective prime time speeches barely a week before the nation would go into default. At that point, both parties knew what was going to be on the table and what was not. The president knew that new revenues were not going to be in whatever legislation secured a raised debt ceiling, just as the Speaker knew that there would have to be cuts in defense spending. Yet, the president squandered his opportunity to reassure the country and instead used it to bash the rich. Boehner puffed up his chest and played to his base as well during the press conference. This is where brinkmanship turned into needless posturing.

Congress knew it would strike a deal, just as the NFL knew that it would strike a deal. But after everyone had extracted all they could, they still stomped around and did not sign on to anything until the last minute. This causes people without behind-the-scenes knowledge to worry, and it is a shameful act of selfishness. There is no place for this in any industry, be it government, sport, business or any group of civilized people.

President Obama, after signing the bill, took one last jab at Congress by saying that “Voters may have chosen divided government, but they sure didn’t vote for dysfunctional government.” His statement is flawed for myriad reasons. Harry Reid could have raised the debt ceiling when Democrats were in control of the Senate. Instead, he made a gross political miscalculation by putting it off and trying to use it as a tool to make Republicans look bad, so you can’t blame Republicans for not playing into his hands. There was nothing about this process that was dysfunctional except from when the brinkmanship ended and the posturing began.

Rather than dysfunction I see a vibrant display of democratic principles at work. The Tea Party, love them or hate them, have made their elected politicians beholden to them. That, in and of itself, is refreshing to see. The debate that raged over the summer also did a lot of good by making this obviously less-than-perfect bill better than it could have been.

One potential inclusion into the bill that I am elated did not make it in is the balanced budget amendment. When serious debate about raising the deficit ceiling began I was a huge proponent of the balanced budget amendment. It sounded logical, prudent and well thought out. I remember thinking to myself that I needed to balance my checkbook, so why can’t the government balance its own? Alas, my checkbook is not (yet) the most powerful economy in the world. The more I looked at the balanced budget amendment, the more I realized it only looked good on paper. Kind of like communism, or the NY Mets.

I like to think the life and health insurance industry would feel the same way about the balanced budget amendment in the event of a truly industry-gutting catastrophe, like a global pandemic. Life and health insurers would have to deal with potentially capital-depleting, reinsurance-depleting results as they wrangle with a problem bigger than can be reasonably prepared for by private industry. In such a case, it would not be impossible for the industry to require government help to meet its obligations. Were there a balanced budget amendment constraining such help, however, people’s healthcare and life policies might be in sudden jeopardy. The balanced budget amendment does not take into consideration the disastrous uncertainties that require emergency funding (the basis for all insurance, really). I am glad to see it go.

As I write this, I am sure that I will have many discussions with friends and colleagues who will disagree with some of the positions that I have taken. What I hope will not happen is that after we discuss, deliberate and disagree, perhaps even to the point of brinkmanship, that we do not forget the reason for talking this over in the first place: to reach an accord.


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