But the Bush administration, especially under EPA head Stephen Johnson, has weakened ozone standards and ignored a U.S. Supreme Court order to use the law to regulate greenhouse gases that cause global warming.  Even though Johnson and the EPA have been pilloried for their actions, it appears the administration is using its last two months to further weaken air pollution controls.

The Wall Street Journal reports today that EPA will loosen pollution curbs on power plants:

Under current policy, power plants that make upgrades to operate longer and increase emissions must install pollution-control equipment.

The proposed rules, which seek to make it easier for older power plants to extend their life span and upgrade without installing costly new equipment, are tired to an hourly rate of emissions. As long as a power plant’s hourly emissions stay at or below the plant’s historical maximum, the plant would be treated as if it were running more cleanly, even if its total annual emissions increased as plant operators stepped up operations.

Some in Congress are incensed, especially Barbara Boxer, (D-Calif.), chair of the Senate environment committee, and Henry Waxman, (D-Calif.), chair of the House oversight committee.

Boxer and other Democrats on her committee have already called for Johnson to step down. She promises an investigation of any air-pollution rule changes made in the next two months.

Waxman fired off a caustic letter to Johnson last week that itemized the 18 air-pollution decisions the EPA has made that a federal court subsequently overturned.

The message from Waxman and Boxer is clear: Johnson has lost credibility, and his last-minute decisions won’t survive congressional scrutiny or the courts.

The administration apparently has some confidence that its decisions will be upheld. That — or it just wants to lock in its anti-regulatory legacy for posterity.

Medical costs are rising at a faster clip than both wages and inflation. (flickr)

Health-care reform — an expensive and politically thorny proposition in any environment — could be particularly tough in the face of a plunging economy.

Yet to hear the candidates tell it, the next president will usher in an era of sweeping changes. Both Sens. John McCain and Barack Obama are pushing overhauls of the health-care system that purport to save families thousands of dollars while covering millions of the uninsured. Some estimates put the cost of their plans in the trillions. Neither candidate has said specifically how he would pay the tab.

The financial storm arrives at an inopportune time in the health-care debate. Nearly one in six Americans is uninsured. If the unemployment rate increases, in a system where coverage is tied jobs, that could well go higher.

Illustration by: Matt Mahurin

Meanwhile, employers facing stiff overseas competition are increasingly limiting health coverage for employees or dropping it altogether. Medical costs are rising at a faster clip than both wages and inflation. Under the next president, the oldest baby boomers will become eligible for Medicare, which is projected to go belly up in a decade. Powerful voices in Congress are pushing for a comprehensive shakeup to save the sinking ship.

With the economy in turmoil and a budget deficit likely to top $500 billion next year, many health-policy experts question how far Obama or McCain could push their health-care plans.

“There’s no doubt,” said Mark V. Pauly, economist at the University of Pennsylvania’s Wharton School, “that the reduction in revenues will make it harder to accomplish health-care reforms.” As for available taxpayer dollars, “Well, there aren’t going to be any,” Pauly added.

He’s not wrong. Faced with the economic turmoil, Congress has intervened in the economy and in the financial system in ways not seen in generations. Since January, Washington has stepped in with a $168-billion stimulus package, nationalized Fannie Mae and Freddie Mac, bailed out American International Group and enacted a $700-billion Wall Street bailout, which will add hundreds of billions of dollars to the deficit.

And there may be more to come. Today, Democratic leaders will meet in Washington to discuss the possibility of a second stimulus package. Early estimates its cost at $150 billion.

The result?

The country is broke — at least as it concerns new spending proposals. In fiscal year 2008, which ended Sept. 30, Washington spent $438 billion more than it collected in revenues. The government must borrow money — largely from abroad — to make up the difference.

Next year looks worse. The projected deficit for 2009 is $482 billion, and that doesn’t take into account the $700-billion bailout program. Some economists have floated the possibility that the imbalance could hit $1 trillion.

Into that maelstrom will walk either McCain or Obama, their health-reform plans in tow. Many details of those plans remain fuzzy, but independent analyses indicate their costs will be enormous. The Tax Policy Center, a collaboration of the Brookings Institution and the Urban Institute, estimated that Obama’s plan will cost $1.6 trillion over 10 years, while McCain’s will run $1.3 trillion.

The Lewin Group, a nonpartisan health-care consulting firm, released its own analysis last week. It tallied the Obama and McCain plans at $1.2 and $2.1 trillion, respectively, over 10 years.

“They haven’t explained how they’re going to pay for all these changes,” said John Shiels, senior vice president of the Lewin Group. If the candidates had offered a financing plan, he added, the numbers “would be dramatically different.”

The return on those investments would be substantial. The Lewin Group estimates the Obama plan would reduce the number of uninsured Americans — almost 46 million in 2007 — by 26.6 million people. McCain’s plan would reduce the uninsured by 21.1 million, Lewin found, though that figure is far higher than other analyses.

With so much at stake, patient advocates and many health-policy experts say the up-front costs of overhauling an unsustainable health-care system are well worth it.

Sens. Barack Obama and John McCain

“It is essential to improving the economy,” said Jacob Hacker, political science professor at the University of California, Berkeley, and the author of “The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream.”

Still, in the face of the economic crisis, many experts say, budget considerations will dictate the debate at least as much as the policy details. “In this case, we’re not talking about health-care policy,” said Robert Blendon, professor of health policy at Harvard University. “We’re talking about economic policy.”

An impasse on health care would come at a terrible time for the nation’s economy. Policy experts have long warned that health-care spending poses the single greatest threat to the nation’s fiscal health. Medicare and Medicaid spending amounted to 4 percent of the gross domestic product last year. That percentage is projected to jump to 12 percent by 2050 and 19 percent in 2082, according to the Congressional Budget Office. The longer Congress puts off enacting reforms, the more dramatic the changes will have to be — and the more severe the effects.

Private spending on health care follows a similarly unsustainable trajectory. While the nation’s total health-care spending amounted to 16 percent of GDP in 2007, it is expected to be 25 percent in 2025 and 49 percent in 2082, CBO projects. Unlike the housing market, experts don’t expect the health care market to deflate.

“I wish I thought health-care spending were a bubble,” Alice Rivlin, former CBO director and now Brookings Institution scholar, said during an economic discussion in Washington last week. “It is not.”

Much of what will be possible on the health-care reform front hinges on a slew of fiscal unknowns. No one’s sure, for example, how long the current economic downturn will last. Nor does anyone know how much of the $700 billion in bailout cash will be returned to the federal coffers — or when.

If the Treasury has to pay more that it wants for the bad loans it plans to buy from financial institutions, there will be less money available to cover other federal programs.

Many experts say the financial crisis could play to Obama’s advantage in the health-care debate. That’s because the crisis has made voters, once wary of too much government intrusion, more receptive to tighter federal regulation of private markets.

“There’s going to be much more public support for regulation over the next four years than there was in the last eight,” Blendon said. “I can’t imagine that that won’t trickle down to the health-care debate.”

There is evidence that such regulation is needed. Last month, Families USA, a health-care advocacy group, released a report that found that insurance premiums in Virginia rose 83 percent between 2000 and 2007, while median incomes rose 20 percent. “[Consumers] want something that will more directly affect their pocketbooks,” said Ron Pollack, Families USA executive director, “and health care is central to that.”

McCain, by contrast, has a very different vision for health-care reform, pushing a plan that greatly expands the role — and freedoms– of private insurers. Writing in Contingencies magazine recently, the GOP presidential hopeful said, “Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.”

That position might rally McCain’s most conservative base. But in an economic environment where Americans are increasingly anxious about their finances — and increasingly wary of unregulated private enterprise to manage it — such an argument might find more opposition than just a Democratic Congress.

What’s really going on? To some economists, middle class anxiety is real, and it has many causes. EconomistMom explains it by citing David Leonhardt’s recent piece in the New York Times Magazine. The story detailing Democratic nominee Barack Obama’s economic thinking. From Leonhardt:

The fact that the economy grows — that it produces more goods and services one year than it did in the previous one — no longer ensures that most families will benefit from its growth. For the first time on record, an economic expansion seems to have ended without family income having risen substantially. Most families are still making less, after accounting for inflation, than they were in 2000. For these workers, roughly the bottom 60 percent of the income ladder, economic growth has become a theoretical concept rather than the wellspring of better medical care, a new car, a nicer house — a better life than their parents had.

Americans have still been buying such things, but they have been doing so with debt. A big chunk of that debt will never be repaid, which is the most basic explanation for the financial crisis. Even after the crisis has passed, the larger problem of income stagnation will remain. It’s hardly the economy’s only serious problem either. There is also the slow unraveling of the employer-based health-insurance system and the fact that, come 2011, the baby boomers will start to turn 65, setting off an enormous rise in the government’s Medicare and Social Security obligations.

Most of these problems aren’t immediate, which helps explain why they have gone unaddressed for so long. And the United States remains a fabulously prosperous country, relative to almost any other country, at any point in history. Yet Americans seem to realize that something has gone wrong.

If Republicans next week are going to try to convince people that the economy is in better shape than they think, they’ll be facing a tough challenge.