PDHblog This is a place for members of Progressive Democrats of Hawai‘i to express their thoughts, hopes and exasperations about political happenings.

April 29, 2010

Rafael del Castillo Completes PDH 1st Congressional Survey

Filed under: 5Economics,Elections,HI Politics,National Politics — Tags: , — frosty @ 8:44 am


The U.S. is in the midst of a prolonged economic crisis. Globally, we are also facing a long-term environmental crisis. In recent campaigns, there has been talk of creating “green collar” jobs and reducing our carbon footprint.

1. What steps do you think Congress should take to rebuild our economy on a more sustainable, yet economically viable basis?

As outlined in my subsequent remarks, we must eliminate from national economic policy the trickle-down theory at transferred from the Bush Administration to President Obama’s Administration in the bailout elements of the stimulus. Our policy must be recommitted to ameliorating the maldistribution of income. We must undertake tax reforms that eliminate regressive policies from taxation of the vast majority of Americans, as discussed below and on my website. Those policies will stimulate savings and investment and increase income and wealth in the middle and working classes, which is the best policy for moderating the effects of future economic variations. We must be vigilant in eliminating the type of profiteering that turned our financial sector into a free for all, instead of a reliable national partner for economic safety and stability. We the need creativity that resides there to meet the needs of broadening wealth, but we must insist that all financial instruments are regulated and protected by adequate reserves, among other things.

Congress should be providing the type of relief we have provided to Wall Street to small businesses in the form of investment and low interest rates instead of doubly burdening taxpayers who also happen to be borrowers with subsidizing the banking industry that delivered the crisis to our doorsteps.

Congress must reinvest promptly in the environmental sector as we have an opportunity to re-establish America’s leadership in innovation and economic vitality in meaningful development. Our policies must assume that the crisis is larger than we presently believe because there are too many variables for us to predict outcomes and developments accurately. If our prudence is excessive, no one will be the loser. Insufficient prudence, on the other hand, will be disastrous.

As discussed below, some of the health care reforms on which CBO based its predictions of saving about a trillion dollars are regressive and not appropriately paired with incentives. For most of those reforms, we will be waiting for up to five years to see if the results predicted actually begin to occur. Congress must act now to pair incentives with the reforms to ensure that the expected savings materialize as reducing the deficit is one of the essential elements of stimulating the economy (as further discussed below).

We must eliminate real (as opposed to imagined) waste from government-funded programs, by employing leadership principles that improve planning and evaluation, and improve morale and motivate personnel to be efficient and achieve the best possible results, as further discussed below.


1. What are your thoughts on the healthcare reform bills that both houses of Congress have been debating for the past several months? How, if at all, would you suggest improving them?

[No response]

2. Please share your thoughts on the “public option,” “single-payer,” and “triggers.”

Public Option: I believe the public option is necessary for the bill that did pass to accomplish what Americans expect of it. My answer comes from long years of experience with insurance companies, most of it with Hawaii-based companies which are not as draconian as their huge mainland-based counterparts, but which adhere to many of the same, often very peculiar policies, and which have had to concede in class action lawsuits that they engaged in practices with respect to member benefits and providers that would have put an ordinary person in jail for quite a while. The former peculiar practices include things like excluding allogenic bone marrow transplants for symptomatic multiple myeloma, even for very young parents, when that treatment is the undisputed gold standard form of treatment when chemotherapy has failed. Stage IV MM kills virtually every patient within a few years of diagnosis without a tandem transplant (about 40%) have survived 5 years or more with the tandem). Those practices also include things like denying medications for chronic conditions that can lead to stroke or cardiac surgeries that are far more expensive than the drug therapies (apparently betting that the patient will transfer to another insurer in the meantime). The latter practices include automatically denying 10% of claims, denying the second claim when there are two claims on the same day from different doctors forcing specialists to eat th claim or (the sometimes risky practice of) delaying seeing the patient until the next day. I have lists of both categories as long as your arm, all based on personal experience. I have concluded that insurance companies are far more afraid of the public option being used to put an end to the games they play to avoid paying than they are of price competition from a public plan. To a lesser degree, they are concerned about having a benefit package that is not manipulative, and losing their sacred “payment policy” committees, national committees that issue policy on procedures and services. In the multiple myeloma example, BlueCross/BlueShield technical advisory committee had issued a policy against allogenic transplants. I believe the public option would have to adhere to a process very similar to the one Medicare uses for determining the efficacy of treatments. What was regrettably missed in the discussion, although I tried to explain it to some of the advocacy groups in D.C., is the fact that the public option would have some characteristics of what we have in Hawaii: The employer-sponsored plans must obtain the approval of the Prepaid Healthcare Advisory Council and the Director, DLIR [Department of Labor and Industrial Relations], and qualifying “A” plans must offer the same benefits as the prevailing plan. The public option will set a straightforward benefit schedule the plans will have to equal or better to be viable, and they are concerned about that.

Single payer is a goal. Health care financing is presently very complex, perhaps more so than people realize. I have talked with people who are centrally involved in Canada’s conversion (and opposed to it at the time) and it was difficult for a nation with 1/10th to population of the U.S. To achieve single payer without substantial disruption, and while achieving our cost control goals, will require a public-private partnership of unprecedented scale and investment. I believe we must chart a course to attain it rather than converting the system with sweeping legislation. From that effort, we may achieve some synergies and efficiencies we did not foresee. Words cannot express how much I would like to be involved in the process, and I believe the perspective I have from my experience would add materially.

I am not aware of any situations in which triggers have been effective. They may be in connection with some legislation, particularly where government agencies are affected. In the present case, triggers are an excuse for not having a policy or for lacing the courage to adopt one.

3. Do you anticipate meaningful cuts in costs for medical services and drugs as a result of the bills?

I do. First, I am frankly disappointed that, as usual, transparency failed to make the cut in consequential ways. Surely real transparency is absolutely essential to health care cost control. Nonetheless, it is hard to overstate the radical change in the insurance market the Act promises. In the other 49 states, the insurance companies compete for healthy people instead of a representative population, while they set rates based more on the representative population, resulting in huge profits. When they have to insure everyone the competition should reflect reality. You should not get too excited yet, however. That projected market will look similar to the market in Hawaii where we already have those conditions in very large measure because the Prepaid Healthcare Act qualified plans must insure all employees without regard to their preexisting conditions or health status or developments in their health status. The law requires their benefit packages to be the same or very similar. Thus, the plans have to compete on price. My law partner and I have been dealing with the dark side of this equation all of these years. The plans have become adept at refusing to pay for benefits their plans actually cover, and dodging responsibility for doing it. They do it a lot. We only catch the most egregious cases. Of course, it keeps premiums down, but by essentially rationing on a random basis. It is a problem I am anxious to address nationally before the Act is fully implemented and we have to play catch up while people suffer.

Insuring everyone is going to shift costs around, must of that from hospitals to providers who are legally precluded from doing anything about it to entities that have the authority to do so, namely the plans and Congress (or the Medicare Commission) and consumers. Right now, hospitals have to care for the uninsured and they absorb the cost. They get a certain amount back from the government, but that is a terrible way to finance health care because it is never enough and it subsidizes the insurance industry by aiding their efforts to keep chronically ill patients or catastrophically ill patients off of their rolls. Thus, the American Hospital Association last year agreed with the President to slash Medicare costs by over $150 billion if the Act was passed. The Act has provisions (such as the Medicare Commission) aimed at putting the onus on those who have the authority to control costs. I do not think they are particularly clever provisions and I am very skeptical that they will save the nearly $1 trillion the CBO has projected by themselves. However, I do believe that they will be sufficiently effective if we add incentives to the bargain. I believe incentives and partnerships should be used more to implement good government policy and I am anxious to get the opportunity to provide some leadership in adding them to the health care cost control effort, achieving savings without sacrificing quality and accessibility.


1. Do you support Civil Unions for same-sex couples as a step to full marriage equality? Why or why not?

If we cannot have full marriage equality, then I support Civil Unions as a transition measure. I do not think Congress should be in the marriage business, however. In fact, I believe Congress lacks the Constitutional authority to get into the debate. I told the Associated Press: “While I strongly believe that Congressional representatives must provide leadership to advance local goals, they must also refrain from picking sides in controversies which should be resolved by local policy because they represent everyone in the debate. Congressional representatives should confine their debates on matters of national policy clearly within the scope of Congress’ constitutional authority.”

2. Do you support the repeal of DOMA (Defense of Marriage Act) and Don’t Ask Don’t Tell? Why or why not?

I support the repeal of DOMA because, as I stated above, I do not believe the Act is Constitutional. Leaving aside the fact that it singles out a certain group or groups for discrimination, Congress exceeded its limited authority. I look at the law also from the perspective of precedent. Suppose Congress passed a law stating, “No State, territory, or possession of the United States, or Indian tribe, shall be required to give effect to any corporation constituted under the laws of any other state.” The union and commerce require that states recognize each others’ corporations and other entities, judgments, licenses, etc. because to do otherwise would create chaos.

I feel very strongly that we cannot accept the personal sacrifices and patriotism of anyone who has served and wishes to continue serving, and deny them the freedom to publicly claim their identity. No member of the military should suffer any indignity or brutality because he or she is gay, lesbian, transgender, or bisexual, nor should they be discharged from the services on account of the fact that the fact is publicly known. I want to mention further my concern over the continuing abuse of women in the military in Iraq and Afghanistan, and, I must imagine, in the U.S. No woman who volunteers to serve in this country in the military should be subjected to any sexual harassment or abuse. I will spotlight the rampant and rising incidence of rapes in Iraq and Afghanistan until that disgrace is eliminated.

3. Are you wiling to commit to being a strong advocate in Congress for equal rights for gay and lesbian couples?

I am willing to be a strong advocate in Congress for equal rights, period. Justice and equal rights are not optional.


1. What do you think cause the current economic crisis gripping the U.S. and the world economies?

Unbridled genius and too many moving parts. I have a few sound bites about Wall Street, but it was, and is, a very complex problem. The world has an ever-increasing need to manage and distribute its broadening wealth, and balance liquidity against productive capital. There is thus a drive to create financial instruments and creativity is rewarded. We have known for a very long time that the activity of creating financial instruments must be monitored and accountable. The Bush Administration broke with those principles more than any past administration, and adopted the view that the markets will regulate themselves because they would not do anything to destroy their wealth and profits, apparently assuming some sort of collective brain was in charge, or a secret society. Instead, it was a competition to attract wealth because commissions were based on the amount of wealth attracted, and a natural preference for using unregulated instruments. We need the creativity that caused the economic crisis, but we need to regulate it closely. For example, India has gotten through the crisis in fairly good shape according to reports I have read. I believe that India’s financial regulatory authority regulated the instruments that were involved, requiring banks to hold what must have been fairly adequate reserves against their issuance.

Maldistribution of income is another case of the economic crisis, one that is far more troubling to me. I have said that I supported stimulating the economy. However, the “trickle-down” theory was prevalent in the stimulus. We must institute fiscal policies based principally on the trickle up theory (see my website). See my next answer.

2. What are your thoughts on the bailouts of financial institutions that were supported by both the Bush and Obama administrations?

The bailouts were essentially trickle-down based measures. Rather than providing financial institutions very low interest loans with flexible paybacks, a true stimulus based on trickle up principles would have reduced substantially interest rates to small business and consumers because that would have immediately put a tremendous amount of disposable income back into the economy. Instead, the burden of saving the financial institutions was borne by taxpayers and borrowers, and small businesses have and will fail for lack of debt relief equivalent to the debt relief granted to the financial institutions responsible for the crisis.

Financial institutions have too much influence in national fiscal policy because we operate out of the fear of losing their management of the flow of capital and liquidity. I do not presently have a full set of policies formulated to begin addressing the issue, but I am committed to working on a long term plan that liberates policy from that burden.

3. Have adequate reforms been instituted to reduce the chances of a similar crash in the future? What more, if anything, should be done?

We cannot depend entirely on regulation. The reforms implemented are not adequate enough to address the maldistribution of income which is a treat to the stability of the economy. We need tax policy reforms that eliminate the aggressive aspects of taxation that provide disincentives to economic behaviors that assure safeguards against crises. I am advocating some reforms to taxation which must be complimented by regulations that continue to protect savings (please see my website). They are reforms that will make taxation of the vast majority of Americans incrementally more progressive and will stimulate savings and investment by them. Those policies are also part of what is needed to address the maldistribution of income.

4. What other steps, if any, should be taken to stimulate the economy through public spending?

I don’t favor more money for stimulus unless it is to further stimulate the environmental sector (see below). I have outlined measures I believe will stimulate the economy. I also want to emphasize that addressing the growing deficit will provide economic stimulus through restoring faith in the economy and more certainty, and reducing the growth in interest payments on the debt. Ensuring that the health care reform ac meets or exceeds the projections of the CBO is essential. I spent a considerable amount of my private sector career helping public funded programs become more accountable and efficient. I cannot remember meeting a single individual in those programs who was not committed to those goals. I found that leadership was often not trained in how to assess program activities and outcomes, or in how to turn time and personnel into productivity. I believe it generally accepted that there is considerable waste in programs. I don’t suggest it is easy to assess the extent to which that is true, as I know from my experience that programs often create unexpected salutatory outcomes that never get into the assessment and thus are not considered in the waste equation. Nonetheless, I know a lot about planning and evaluation for agencies and programs to actually achieve the objectives for which they are funded, motivating people to buy into the goal of eliminating waste and increasing effectiveness, and making the best use of resources. I believe we can achieve much more with the wealth the taxpayers provide government to work with and that if we do, that will stimulate the economy.

I also am committed to directing more investment and incentives into the environmental sector, even if that requires more stimulus dollars. I believe we have allowed a crisis to develop and we do not necessarily have full grasp of the size or characteristics because the environment has more variables in play that we can monitor or take account of meaningfully.


1. What lessons should we draw from the U.S. war on Iraq? What mistakes did Congress make? Should we disengage from Iraq and, if so, when?

One we should already know, that peace is the most powerful weapon we have. A foreign policy that depends on the threat of violence will predictably stimulate cohesive resistance, even among warring factions. We do not have sufficient clarity on the alternatives. Certainly economic sanctions are ostensibly peaceful, but wind up harming the poorest and most vulnerable populations, and also stimulate cohesive resistance. Our polices in the Middle East remain largely arrogant inasmuch as too few policy makers have troubled themselves to appreciate the people, the cultures, the economies, and the political overlay. Policy mistakes are inevitable. Certainly, Congress either underestimated or disregarded as significant the reaction to our “liberation,” or rather the extent to which Iraqis would not appreciate us intervening in our domestic matters. I support the President’s plan for disengaging in Iraq – I don’t believe I have a better one.

2. How can we apply those lessons to our growing involvement in Afghanistan, Pakistan?

First, Afghanistan and Pakistan are not Iraq, and I do not believe our policy should assume so. Nonetheless, I believe Iraq has taught us that involving the U.S. in Afghanistan militarily will be incredibly expensive (already has) and lengthly, and will cost thousands and thousands of lives. I do not believe some of what I said about understanding Iraqis has come through and we are seeing it reflected in the President’s plan for Afghanistan and Pakistan. I do not like the fact that he has termed the war “necessary” nor do I support military action in Afghanistan. If nothing else, I know of no compelling reason why we should believe we can help Afghanistan achieve what we consider to be political stability and an acceptable regime when no one else has. The best we can hope for is preventing destabilization but I believe that we could transition to peaceful means of preventing destabilization that are more cost effective, and I believe that the largest stage of the conflict in Iraq has shown that to be possible, if not having shown exactly what will work in Afghanistan.

3. Do you see similar dynamics leading us into conflict with Iran?

Iran is another equation entirely. I believe the best policy we can follow with Iran is continued support for the people of Iran demonstrating our faith in their ability to displace extremism with proper Western support. I believe military involvement in Iran would be catastrophic for the region. We do not have sufficient military strength to fight on all of the fronts that could be presented in the Middle East.


1. If you are elected, what other issues will be major priorities for you?

I will focus on justice and fairness. That sweeps to broadly.

Economy: As indicated above, I will focus on economic justice and fairness, eliminating opportunities for a few insiders to plunder the wealth of hardworking Americans, and revising the tax laws to eliminate regressive provisions that favor small powerful groups over the vast majority of Americans, or that encumber long-term economic progress (example: taxing interest earnings and investment income and gains of families earning less that $150,000 per year penalizes saving – all economists agree that savings are essential to long-term economic stability and as a necessary safety net in bad times). I also consider the growing deficit an economic fairness issue. I will focus on accountability and efficiency in government. I will also place the highest priority on abuses by the banking industry and insurance industry diverting capital we need to prepare for the future to a few wealthy individuals. I anticipate that the offsets and exchanges in the environmental legislation will create additional opportunities for profiteering by a relative few such as we have seen in mortgage instruments and in the health insurance industry. I have been recruiting advisors who can assist me in identifying potentials for profiteering from the environmental legislation so that we can address those possibilities with legislation and regulations. I am also concerned about the international plans to use REDD (Reducing Emissions from Deforestation Degradation) credits by simply setting up the type of dole that has had adverse impacts on many indigenous populations and will press for the U.S. to insist on controls that ensure the programs structurally strengthen the rain forest indigenous cultures instead of destroying them.

Health care is now a right, but access will be another story. Health care costs are a main cause of the growth in the deficit. We have other issues to urgently address. With 30 million people added to the rolls of the insured, we will experience significant access problems because we already have access problems due to the insufficiency of practicing physicians and nurses and the, Reconciliation bill, but they are primarily for community health centers, with only token appropriations for medical education. The Act and the reconciliation evidence a strong bias in favor of paraprofessional development, which some term “dumbing-down.” These measures are not enough to address the broader need. I will focus on filling the holes in the health care reform against rationing for the past ten years in the courts, administrative agencies, and the Hawaii Legislature. Thus, although I am solidly committed to reducing health care costs to reduce their impact on the growing deficit, I will push for partnerships with providers such as the partnership the President formed in 2009 with the American Hospital Association to reduce Medicare costs $155 billion if a health care reform act was passed. We do need to change behaviors on all sides to reduce health care costs without reducing quality and access. We need to have a critical access problem as more Americans are insured because we have such a critical shortage of physicians and nurses and man hospital facilities, after years of being squeezed by government health plans and commercial insurers, badly need investment in maintenance and new facilities and equipment to address the demand that will result. I will go to work immediately on increasing the lukewarm provisions in the health care reform act that support medical education and deal with the problems of financing a medical education. I will also work to pass the Waxman-Markey/Kerry-Boxer legislation and will press for standards that address health-related environmental concerns because they contribute substantially to rising health care costs. There are naturally many health-related concerns for passing strong standards and caps on pollutants.

As indicated above, I will focus on justice in the military services. I will also press for the repeal of Don’t Ask Don’t Tell I will also press hard for effective measures to counteract the unacceptable abuse of women in the military. No woman who volunteers to serve in this country in the military should be subjected to any sexual harassment or abuse. I will spotlight the rampant and rising incidence of rapes in Iraq and Afghanistan until that disgrace is eliminated.

I will also focus on immigration reforms which bring an and to the barriers that keep families apart. Uniting families must be a fundamental part of our national policy on immigration.

I will do all that I am able to turn Congress from its excessive involvement in initiatives and national debts that are not within the scope of its Congressional authority and mandate. While I strongly believe that Congressional representatives must provide leadership to advance local goals, they must also refrain from picking sides in controversies which should be resolved by local policy because they represent everyone in the debate. Congressional representatives should confine their debates to matters of national policy clearly within the scope of Congress’ constitutional authority.


  1. I liked some of the things that del Castillo said in this speech at the convention yesterday. But I wish that he would advocate for best solutions rather than politically wise solutions, since he has nothing to lose. There’s not a chance that he can defeat Hanabusa. For example, there’s this thing of gay marriage. Rather than complicating the thing by saying that govt should stay out of marriage (it already is very involved) he should advocate for fair and equal treatment of all minorities. Even health care. OK it’s unrealistic to expect that single payer will pass anytime soon but he should advocate for a public option to make that transition to single payer more easily.

    The other thing is that it’s not too hard to study the economic issues but he seems to make them worse by his comments. For example, he advocates for more bu%%%ss lending by our conservative b^^ks. Why not extend that to the big b^^ks? Why does he shy away for regulation to reduce these speculative der&&&&&ves instead of crafting real l@@ns to bu%%%ss so that they can grow? I volunteered for the County Platform committee and the State resolutions committee on Economy and labor. Great chance to talk to Senator Fukunaga on their legislation. Great that while they sort of killed Act 221 they did try to resurrect the SPIF fund legislation. The fund is a creation of the big b^^ks whereby they contribute funds for high technology VC loans to grow our high tech industry. They are insured against failure of these risky l@@ns by having VC companies manage the funds (rather than banks which have shown that they are incompetent to recognize a billion dollar idea) and the state guaranteeing the l@@ns.

    I’m not sure of the details but what generally happens is that the lender has control of the intellectual property so even if the venture is not a commercial success, the lender can still sell the property and recoup its l@@ns (in theory). Moreover the state guarantees the l@@ns through a tax credit system. Since only big b^^ks would have the revenue to benefit from the credit it is both an incentive and inhibitor of the fund. Small b^^ks would take too much of the risk if they were to participate because their tax benefit is small and big b^^ks would not commit more than they want to cover their tax obligations.

    For this reason, I think that the fund should be targeted to high technology because the IP (intellectual property) generated by the money will increase the wealth of our economy. Small start up companies who have taken say %1 Million through Act 221 to develop their IP say worth %5 million (or a billion?) could use the IP for VC l@@ns from the SPIF fund to commercialize the IP or to continue to develop more related IP through research funded from the to grow to a %200 Million company. Investors here benefit from the growth in income and such a diversified industry will continue to grow here. Bean counters at the state tax department here seem more concerned with how many jobs are created rather than the wealth created by the local startup in granting comfort letters.

    Small bu%%%ss grow to service these new companies. And this is where the real growth in jobs occur. But most b^^ks would rather take collateral in r%%l es%%%e than a good small bu%%%ss idea. I’ve heard a story about a student whose wealthy Chinese father sent him to Hawaii to invest a million dollars so he could get US citizenship.

    The only deal he could find here was a flakey deal to build a small bu%%%ss building. The hui ran out of money and he lost his whole investment. But he did become a citizen. We should give engineering, science, math and technology graduate students from foreign companies US citizenship when they graduate. The future companies that we need to start up to benefit our economy could come from these students– the best of the best students in the world. del Castillio is again to being too reluctant to advocate for the best solution to our immigration needs for the US.

    IIRC there was a recent comment by a retiring Hawaii b^^ks leader that he never made a single bad l@@ns. To me this means that he never took a chance at making any kind bu%%%ss loans except r%%l es%%%e loans because some bu%%%ss l@@ns fail. It’s disappointing to me that many b^^ks would rather put their money into riskier der&&&&&ves that they don’t understand and which der&&&&&ves contribute very little to our economy compared to bu%%%ss l@@ns.

    Comment by Al — May 31, 2010 @ 2:12 pm

  2. I appreciate Del completing the survey, and appreciate him running for CD 1. I support him enthusiastically.

    Comment by Laurie — September 11, 2010 @ 7:21 pm

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