Andy Kroll

Andy Kroll

Senior Reporter

Andy Kroll is Mother Jones' Dark Money reporter. He is based in the DC bureau. His work has also appeared at the Wall Street Journal, the Detroit News, the Guardian, the American Prospect, and TomDispatch.com, where he's an associate editor. Email him at akroll (at) motherjones (dot) com. He tweets at @AndrewKroll.

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A New Lease on Life for Detroit's Auto Dealers?

| Sat Dec. 12, 2009 4:00 AM PST

Update: The Senate passed the omnibus spending bill by a 57-35 vote on Sunday, with the dealer arbitration language intact. The National Automobile Dealers Association said in a statement, "The amendment will provide a fair process to address dealer concerns about the recent closures of General Motors and Chrysler dealerships, and will give affected dealers transparency and the right to arbitrate to regain their dealerships." Mark Reuss, GM's North American president, called the arbitration language "an opportunity for all of us to make the right decisions and move on."

Buried way down in the fine print of the Congress' $1.1 trillion spending bill, passed Thursday by the House, is a lifeline for an endangered species—the American car dealer. A clause inside the the 1,088-page bill would give thousands of General Motors and Chrysler dealerships that have been put on the chopping block the chance to challenge their closure though arbitration. The measure's supporters say it will put the brakes on the Obama administration's controversial attempt to resuscitate Detroit by downsizing its dealerships. "Profitable dealers should have never been terminated in the first place, and I was proud to join the fight to have these short-sighted decisions reversed," said Rep. Chris Van Hollen (D-MD) in a statement last week. "Automobile manufacturers won't be able to get back on their feet without a strong dealer network, and Congress is committed to ensuring that such a network exists."

The dealer-arbitration plan is the latest lurch in the push-and-pull between GM, Chrysler, and their dealers, which began earlier this year when the two automakers emerged from bankruptcy proceedings with plans to shutter more than 2,000 auto showrooms nationwide. Backed by the Obama administration's Auto Task Force, the companies' executives told Congress that cutting unprofitable or underperforming dealers would trim unnecessary dealers, cut costs, and make their firms more competitive with their domestic and foreign counterparts. Fritz Henderson, the then-president and CEO of GM, said dealer closures could save his company more than $2 billion. Michael J. Robinson, a GM vice president and general counsel, told a House subcommittee in July that the move would allow the surviving dealers "to improve the overall customer experience and retain current customers."

However, car salespeople and their allies argue that closing dealerships would have the opposite effect, driving away consumers and possibly even killing the automakers. "When you hear [new GM CEO Ed] Whitacre say, 'Well, we're going to increase market share,' and you don't have as many dealers, you wonder what he's been drinking or smoking," says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan. "It just doesn't compute."

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Harry Reid's Medicare Mess

| Fri Dec. 11, 2009 1:36 PM PST

In lieu of a public option for health-care reform, Senate Majority Leader Harry Reid announced a tentative, still-nebulous compromise this week that allows people 55 to 64 to "buy in" to Medicare starting in 2011. According to the Kaiser Family Foundation, the buy-in could affect 4 million people without health insurance. And while Reid's plan, concocted with five Democratic and five centrist senators dubbed the "Gang of 10," has been assailed as a major step toward single-payer care (and—gasp!—socialism), other critics do in fact raise raise some serious issues on how Reid's plan completely misses the mark.

First, Medicare is hardly well-suited to absorb additional users. As the Medicare Payment Advisory Commission (Medpac) told Congress (PDF) in June, Medicare's financial breaking point is fast approaching, not to mention that 60 percent of people on Medicare now pay for supplemental coverage because of cost-sharing caps. Add to that mess three or four million 55 to 64-year-olds who're likely to need much more care than thirty- or even fortysomethings, and you're looking at a potentially serious viability crisis for Medicare.

The other big unknown with expanding Medicare is whether the health-care system in place—in particular, the physician workforce in place right now—can handle them. To illustrate, I turn to a subject more familiar than the annals of Medicare: the iPhone. When the iPhone arrived in stores (i.e., when people get access to health insurance), millions rushed to the nearest retailer and waited in long lines to buy one. However, when that huge crowd of people then turned on their phones and connected AT&T's network (i.e., newly insured people going to their doctors and receiving care), they overloaded a vastly underprepared system. The result: dropped calls, spotty service, slow loading times, and seething techies. In other words, the infrastructure buckled under the weight of all those new users.

Much the same could happen to Medicare which, like all American health care, lacks the capacity to handle a massive influx of new people. Dr. Ted Epperly, president of the American Association of Family Physicians, told me, "If all of a sudden President Obama increases access to the uninsured, there will be a huge capacity that the demand will not be met for. People will have access issues, and they will be sicker"; and though he was referring to health care in general, his quote equally applies to Medicare. As American Medical Association president J. James Rohack said in a statement this week: "Currently, the flawed Medicare physician payment formula will cause a drastic 21 percent cut to physicians caring for Medicare patients in January, and 28 percent of Medicare patients looking for a new primary care physician are having trouble finding one." Rohack added that the AMA doesn't favor Reid's plan because the group "has longstanding policy opposing the expansion of Medicare given the fiscal projections for the future," and instead prefers a health insurance exchange plan.

Perhaps most telling was this statement by Mayo Clinic executive director Jeffrey Korsmo (read by Sen. Lamar Alexander (R-TN)) earlier this week:

"Expanding the Medicare system to persons 55-64 years old would ultimately hurt patients by accelerating the financial ruin of hospitals and doctors across the country. Mayo Clinic alone has begun to limit the number of Medicare patients and their practices, and the growing number of other providers will. This is clearly an unsustainable model."

Coming from one of the most highly regarded health-care institutions in the nation, it makes you wonder whether Reid's policy has less to do with healthy Americans and more to do with politically palatable solutions.

India, China Helped Craft Leaked Draft

| Thu Dec. 10, 2009 3:44 PM PST

After a controversial draft of a climate treaty was leaked from the host Danish government earlier this week, questions were raised about Danish leadership (host nations usually play a crucial role in the talks, i.e., Japan in 1997 at COP3 Kyoto) and the strength of a final Copenhagen treaty. Because the Danish draft allows much higher per capita emissions up to 2050 than previous drafts, and because it gives the UN a lesser role in climate financing for poorer nations, developing nations reacted harshly to the leaked draft, including staging impromptu protests in Copenhagen.

Today, though, the Los Angeles Times reports that major developing nations actually helped craft the same draft they're protesting:

Developing countries including China, India, Brazil, Algeria, Ethiopia and Bangladesh had "input into the process and product" of the proposed agreement, the source [with "deep knowledge of the negotiations"] said.

Representatives of those nations knew about the agreement's most controversial provisions, including commitments for greenhouse gas reductions by developing countries and a reduced role for the United Nations in climate policy, well before the summit began. It was unclear if everyone in the room agreed to every provision.

As many have pointed out, the Danish draft was largely perceived as developed countries applying some pressure on their poorer counterparts as part of the negotiation process. "The rich countries are demanding something in return for the dollars they are promising to spend," the Financial Times' Fiona Harvey recently wrote, "rather than doing what some developing countries and many NGOs demand, which is to give that money for free as 'reparations' for the damage they have already done to the climate." But if several major developing countries had a hand in the Danish text, then perhaps that's evidence of some early agreement bridging the developed-developing chasm—which, if you remember, pretty much sunk the Kyoto Protocol from a US perspective—on what language could make it into a final, necessary treaty.

Worst $75 Billion Investment Ever?

| Tue Dec. 8, 2009 11:49 AM PST

At this point, it's hard to understate how much of a bust the Obama administration's Making Home Affordable program has been. As I've written before, the centerpiece of that initiative is the Home Affordable Modification Program, a $75 billion effort to work with lenders, servicers, and homeowners in order to lower home mortgage payments; when the program was rolled out in March, the administration projected it could help 3 to 4 million struggling homeowners.

Fast forward ten months to yesterday’s testimony by bailout chief Herb Allison. HAMP, Allison told the House financial services committee, has helped "thousands of borrowers" receive permanent changes to their mortgages. That's it? Predicting this response, Allison went on to say, "Although we know that not every borrower will qualify for a permanent modification, we are disappointed in the permanent modification results thus far. We all need to do better at converting borrowers to permanent modifications."

If you recall, the Congressional Oversight Panel, led by Elizabeth Warren, reported (PDF) this fall that as of September 1 the number of permanent modifications was a meager 1,711. For a program with $75 billion at its disposal. Bearing in mind the COP's findings, if the total permanent modifications—i.e., real, sustainable help for homeowners—is still in the thousands as of Allison's testimony yesterday, then maybe it's time to state the obvious: This program is a failure. The administration should cut its losses, ditch HAMP, and find a better use for billions of taxpayer dollars in solving our still-roiling housing nightmare, where foreclosures remain at record levels and experts see the pain continuing well into 2010.

A senior director for Amherst Securities Group who testified alongside Allison yesterday said as much, insisting that HAMP won't help a majority of the homeowners it was intended for. The director, Laurie Goodman, insisted that HAMP was "destined to fail," adding, "If policies continue to kick the can down the road—working with a modification problem that does not address negative equity—delinquencies will continue to spiral with no end in sight."

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