The Agenda - National Review Online

Monday, February 08, 2010

Six Republican Ideas in HCR?

Ezra Klein describes the "six Republican ideas already in the health-care reform bill."

(1) "Let families and businesses buy health insurance across state lines." This is a long-running debate between liberals and conservatives. Currently, states regulate insurers. Liberals feel that's too weak and allows for too much variation, and they want federal regulation of insurers. Conservatives feel that states over-regulate insurers, and they want insurers to be able to cluster in the state with the least regulation and offer policies nationwide, much as credit card companies do today.

So far, this is a fair characterization, though one can also imagine insurers clustering in the state with the best regulation (i.e., regulations that help improve cost and quality) rather than the least regulation per se.

To the surprise and dismay of many liberals, the Senate health-care bill included a compromise with the conservative vision for insurance regulation. The relevant policy is in Section 1333, which allows the formation of interstate compacts. Under this provision, Wyoming, Colorado, Arizona, Utah, and Idaho (for instance) could agree to allow insurers based in any of those states to sell plans in all of them. This prevents a race to the bottom, as Idaho has to be comfortable with Arizona's regulations, and the policies have to have a minimum level of benefits (something that even Rep. Paul Ryan believes), but it's a lot closer to the conservative ideal.

It's unclear how this is remotely close to the conservative ideal. States will presumably create compacts with other states that don't pose a competitive threat. This is an almost entirely cosmetic measure, which should be obvious to the dismayed liberals. One gets the impression that the dismayed liberals are simply confused.

(2) "Allow individuals, small businesses, and trade associations to pool together and acquire health insurance at lower prices, the same way large corporations and labor unions do." This is the very purpose of the exchanges, as defined in Section 1312. Insurers are required to pool the risk of all the small businesses and individuals in the new markets rather than treating them as small, single units. That gives the newly pooled consumers bargaining power akin to that of a massive corporation or labor union, just as conservatives want. It also gives insurers reason to compete aggressively for their business, which is key to the conservative vision. Finally, empowering the exchanges to use prudential purchasing maximizes the power and leverage that consumers will now enjoy.

This is a reasonable point, though it's worth noting that there remains a disagreement as to whether the exchange should be national or state-based. This is not a trivial distinction, as conservatives are wary of creating a single exchange that could become the basis of a unitary health system defined by institutional isomorphism.

(3) "Give states the tools to create their own innovative reforms that lower health care costs." Section 1302 of the Senate bill does this directly. The provision is entitled "the Waiver for State Innovation," and it gives states the power to junk the whole of the health-care plan — that means the individual mandate, the Medicaid expansion, all of it — if they can do it better and cheaper.

This would be a terrific bill on its own. But Section 1302 is rather ambiguous, as Ezra has written in an earlier post.

The waiver was inserted by Ron Wyden and it gives states considerable flexibility to walk away from parts of the bill if they believe they can better address cost and coverage on their own. The legislative language itself is complicated, but during the Senate Finance Committee's mark-up, Wyden clarified it with the committee's counsel. "My reading of what we have in the bill now," Wyden said, "is if a state can demonstrate that they can meet the criteria — particularly on cost containment, improving the delivery system — they can do it without an individual mandate. And can I ask, counsel, is that a correct reading of the Waiver Amendment that I offered?"

Counsel's reply was one word: "Yes."

Reading the waiver, I could imagine some fearing it's too strongly worded. It forces the state to show that compared to current law, a similar number of people would have insurance and the federal deficit would not be adversely affected. But insofar as one of the fears in this debate is that insurers will jack up prices and make insurance less affordable and available, and insofar as one of the positions in this debate is that a fairly similar level of coverage could be achieved through subsidies and regulations, then this may be appealing.

Coverage is the key issue. One can imagine reforms that would make policies more accessible, yet that wouldn't cover two-thirds of the uninsured, the estimate for the Senate health bill, in the absence of a mandate.

(4) "End junk lawsuits."

Here Ezra suggests that there is no real need for malpractice reform, but he notes that the bill allows states to experiment with tort reform.

(5) The tax break for employer-sponsored insurance

Here he suggests that the Cadillac tax does virtually the same thing as President Bush's effort to cap the exclusion for employer-provided healthcare.

(6) This is a private-market plan.

And finally, Ezra reminds us that this is not a single-payer plan and that it doesn't include a public option.

By my count, (1) bears no substantive resemblance to the original idea in question, (2) and (3) and (4) do bear some resemblance to a good Republican proposal, albeit in a form that weakens their impact. On (5), the point is well taken, though it is so compromised and poorly designed already that it raises the question of whether scrapping the proposal and starting with a new one wouldn't be preferable. And (6) strikes me as a non sequitur, insofar as private markets are not, I hope, an exclusive province of Republicans.

I have to say, this doesn't strike me as a compelling indication that this is a "substantively bipartisan" bill, though I am impressed and pleased that Ezra didn't include transitional measures as part of his post. The essential conservative objection to the bill is to the premise that central direction is the way to lower costs rather than more robust competition. Many conservatives also object to a federal mandate that compels individuals to purchase a product from a private entity. A bill that included elements (2), (3), (4), and (5) while also federalizing Medicaid or otherwise improving its incentive structure to finance an expansion of coverage would be great. Let's start talking about it.

02/08 11:25 AM Share

Sunday, February 07, 2010

Frank Rich on DADT

Ever since Frank Rich stopped writing his excellent, richly-informed, often very entertaining theater criticism, I can't say I've read much of his work. There are only so many hours in the day. I did, however, get a chance to read his column on the proposed repeal of the military's "don't ask, don't tell" policy. My impression is that DADT has been a destructive distraction that has undermined the recruitment efforts of the military. I also think that it is possible to have a different view and not be a bigot. Rich disagrees on this last point, but that's not the focus of his column. Rather, his main concern appears to be that Republicans are concealing their secret bigotry by not raising forceful objections to the proposed repeal. One has to assume that the secret bigotry of Republicans extends to a desire to repeal the Nineteenth Amendment that gave women the right to vote.

Having accomplished so much early on in his career as a critic, Rich has turned to investigative journalism. Not content to rely on shoe-leather reporting, his unorthodox investigative method draws on his innate psychic powers to divine the true sentiments of those with whom he disagrees. At some point, Rich will no doubt leave columnizing behind to focus on using ESP on the rich and powerful, whether to engage in a stealthy spin on insider trading or to give brutal dictators and other hated enemies really bad headaches.

I will say this for Rich: his sons Nathaniel and Simon are both brilliant writers, which reflects very well on him. As of yet, however, neither has manifested the ability to levitate objects using only the power of mind. But sometimes these things take a while.

In the column, Rich also suggests that Michael O'Hanlon of Brookings, a leading defense analyst, is not an expert, which, in light of O'Hanlon's long experience, is a bold and provocative view, not unlike the bold and provocative view that deep beneath the Earth's crust there lies a "land of the lost" where dinosaurs and primitive humans co-exist in a trippy fantasia. One hopes that this will be the subject of a future Rich column.

I've had my fun. Frank Rich is clearly a really gifted writer and thinker. What saddens me is that he has so little empathy for the kind of people who will never be in his circle. (How do I know? I'm using my Richian psychic powers.) To be sure, Rich does seem to care about those less fortunate than himself, which could be an admirable byproduct of his very prosperous upbringing. But pity isn't empathy. Empathy is supposed to extend even to those you place on the other side of your self-built barricades. My support for gay rights is rooted in empathy, at least in part. So is my belief that those who oppose ending DADT aren't necessarily irrational bigots.

02/07 11:26 PM Share

Friday, February 05, 2010

Misunderstanding the Ryan Roadmap

This post from The Economist's Democracy in America blog seems pretty compelling on the surface. Unfortunately, it is based on a basic misunderstanding of how the U.S. health system works and the sources of cost growth. The post, by "M.S.," notes that Paul Ryan's plan to transform Medicare from a defined benefit to a limited defined contribution program toward the purchase of insurance is a departure from current practice, which is accurate. She or he then makes a number of interesting extrapolations from said departure.

Under Mr Ryan's proposal, starting in 2021, Medicare would be gradually eliminated. Instead, seniors would be issued vouchers to buy private health insurance. The voucher for a 65-year-old would be worth $5,900, in 2010 dollars. (Mr Ryan's site says the vouchers would be worth "an average of $11,000" in 2010 dollars, but that's the average for the entire 65+ population. Individual health-insurance premiums for a 90-year-old are obviously going to be astronomical.) The voucher would then grow at the average of the annual medical inflation rate (CPI-M) and the general urban inflation rate (CPI-U). In other words, since medical-cost inflation is higher than general CPI inflation, the voucher would deliberately fail to keep pace with medical costs.

What would such a voucher buy? According to the Kaiser Family Foundation, the average individual premium for workers under 65 (ie, a median worker in his early 40s) was $4,824 in 2009. But here's the thing: the voucher is supposed to cover insurance for 65-year-olds, who are much more expensive to insure than younger workers. Kaiser doesn't break down average premiums by age. But according to the Bureau of Labor Statistics, mean health-insurance premiums and health-care expenditures for people aged 55 to 64 in 2008 were a good 50% higher than those for mean individuals between the ages of 35 and 44. (The exact dollar figures in the Census Expenditures Survey can't be used for this purpose because they don't include employer contributions to premiums. And costs for 65-year-olds aren't comparable because they're covered by Medicare; let's assume they're about the same as costs for 64-year-olds.) Assuming a 65-year-old is at least 50% more expensive than the median, the average individual premium could easily be $7,200 (1.5 x $4,800). This jibes with the fact that average medical costs for those 65 and up were over $9,800 annually in 2008.

One can dispute the back-of-the-envelope calculations or note the existence of Medigap plans that offer supplementary coverage, etc. But the real problem is the use of static analysis. "M.S." is suggesting that transforming Medicare into a limited defined contribution would have no impact on the broader health system. Given the size and significance of Medicare, this is a very dubious assumption.

Fortunately, James Capretta wrote a very accessible and comprehensive treatment of the relevant issues for National Affairs.

Instead of building a network of high-quality preferred providers, political control of Medicare has resulted in an open network that pays all licensed providers exactly the same fee, regardless of the quality of the care provided. And the only cost-cutting remedy Congress can ever seem to pass is a fee reduction. If applied more systematically across all of health care, such price-setting would, in time, lead to a reduction in willing suppliers of services, to waiting lists, and to government-driven rationing of care.

The alternative is a functioning marketplace in which consumers choose their insurance and the services they use, and so become far more conscious of the costs of their choices. An essential feature of such a marketplace would be fixed, rather than open-ended, subsidization of insurance by the government. That would mean the conversion of today's Medicare entitlement — as well as of the tax break for employer-sponsored insurance, and even of Medicaid — into limited defined contributions toward the purchase of insurance. With fixed contributions, a consumer who wanted to buy more expensive coverage would have to pay more. Conversely, anyone willing to economize and choose a plan with more controls and a tighter network would keep the money he saved. (Such a switch in Medicare could be phased in with new retirees to prevent disruption for those already in the program.)

Opponents argue that this kind of reform would be dangerous for the middle class, and especially for Medicare recipients, because health-care costs would rise faster than the premium subsidies. But with a functioning marketplace, there would be much greater pressure on doctors and hospitals to reorganize themselves into more convenient, cost-effective, and patient-focused systems of care. It is far more likely that the inefficiency in health care the president so often mentions would be reduced through the power of consumer choice than through bureaucratic regulation.

Now, this could prove an overoptimistic analysis, in which case one assumes that the limited defined contributions would be made larger. The Ryan roadmap generates enormous savings, and thus offers considerable room for maneuver. But for whatever reason, "M.S." doesn't engage with the case for limited defined contributions given fiscal realities. This makes for a punchy blog post, but not a very informative one.

On the off chance that "M.S." is reading, I'd also point to Capretta's brief explanation of how the outsized role of Medicare FFS shapes the broader health system.

In the case of Medicare, most beneficiaries are enrolled in the program's traditional "fee-for-service" insurance arrangement. Medicare FFS allows enrollees to see any licensed service provider, with no questions asked. Medicare does require substantial cost-sharing — including a 20% co-pay to see a physician, and a deductible of more than $1,000 per hospital admission. But this is ineffective, because about 90% of the enrollees also have some form of supplemental coverage, which pays for what Medicare does not. Thus, in most instances, more care does not cost Medicare beneficiaries any more money.

It's not surprising, then, that the Achilles' heel of Medicare is volume. According to CBO, the real price Medicare paid for physician fees dropped between 1997 and 2005 by nearly 5%, but total spending rose 35% because of rising use and more intensive treatment.

Employers have been trying for years to move away from Medicare-style FFS in favor of steering patients to higher-quality, lower-cost networks of service suppliers. The private sector is also well ahead of the federal government when it comes to disease management and wellness efforts. But employers can only do so much when Medicare, the dominant payer in most health-care markets, pushes in exactly the opposite direction. Because Medicare will finance unlimited use, many individual practitioners and institutions see no reason to give up their autonomy and join an organized delivery model. All manner of ancillary service providers — labs, home health agencies, hospices, and others — also survive as stand-alone operations because of Medicare's open network and provider-centric payment systems.

That is, the fact that Medicare is an unlimited entitlement that operates on an FFS basis distort the choices made by all participants in the market for medical care in ways that sharply exacerbate cost growth.

A number of left-of-center observers are delighted by Paul Ryan's entitlement reform proposal, seeing it as a bogeyman that can make various centrally directed proposals look attractive by comparison. This is a debate I'd like to see.

Incidentally, one criticism has been that Ryan exempts workers who are 55 and older from his proposed reforms, a move seen as a sop to today's elderly. One could also see this as a deferential nod to the fact that older workers have developed certain expectations regarding how their medical care will work. This reflects one of the conservative critiques of the extreme policy swings we've seen in the Greenspan-Bernanke era: stable policies are their own reward. The Ryan proposal offers a stable, sustainable course for the welfare state that promises to be far more stable than a centrally directed alternative that burdens the federal government with more complexity than it can successfully manage. Cutting checks — the core business of the Social Security Administration — is something government does well. Micromanaging medical providers, as we've discovered through long experience, is not something government does well.

02/05 02:32 PM Share

Understanding the 'Docfix'

The "docfix" is one of the least understood aspects of health reform. Fortunately, e21 has a primer on the subject.

“Docfix” is the euphemism attached to legislation to increase payments to physicians under Medicare. Under current law, those payments will be cut by 21% this year. Physicians understandably don’t want this to happen, nor do many legislators. The problem is that it costs money to restore those higher physician payments, and lots of it: hundreds of billions of dollars over the next decade alone.

The difficulty, of course, is that health reform is meant to be deficit-improving rather than deficit-worsening.

Proponents then tried what can only be described as a cynical gimmick: they simply split the bills into two parts: a “docfix” bill that would add to the deficit, and a separate health care bill that would be advertised as lowering the deficit. Taken together, it was always the case that the bills would worsen the fiscal outlook. But by pointing only to the “deficit-reducing” bill and ignoring the companion “docfix” bill moving through the Congress, disingenuous claims that health care reform would reduce the deficit continued to be made on both ends of Pennsylvania Avenue.

The House of Representatives played its dutiful role in this charade, separately passing both the health care legislation and the deficit-worsening docfix bill. The Senate, however, balked. When Senate Majority Leader Harry Reid attempted the same maneuver there, several Democrats as well as Republicans refused to play along with the game. Reid’s “docfix” bill – which would have added $247 billion to the debt over ten years – failed on a 47-53 cloture vote last October. No doubt the Senate was influenced by rising public concern about skyrocketing deficits and irresponsible budgeting. But the Senate vote didn’t end the “docfix” issue; it merely left it unresolved. Just how unresolved was revealed again this week with the release of the Administration’s budget.

The budget assumes away the "docfix" problem.

On Table S-2 in the Administration’s budget, the claim is made that health care reform will reduce the deficit by $150 billion over the next ten years.

We’ll set aside the question of whether or not the health care bill will actually pass. More relevantly here, the claim that health care reform will reduce the deficit assumes that the 21% cut in physician payments will actually take place. CBO has already stated their skepticism about this: “The legislation would maintain and put into effect a number of procedures that might be difficult to sustain over a long period of time. Under current law and under the proposal, payment rates for physicians’ services in Medicare would be reduced by about 21 percent in 2010 and then decline further in subsequent years.”

“Difficult to sustain” doesn’t tell the half of it. If one looks a mere 11 pages forward in the Administration budget, on Table S-7, one finds the higher physician payments magically restored – adding $371 billion to the deficit over ten years, or more than twice the advertised savings of health care reform. The Administration accepts no responsibility for this policy choice, describing it as an “adjustment to reflect current policies.”

But of course "current policies" is not an accurate characterization. These higher physician payments are not current law. Nor are they the policy of the United States Senate, which refused to add these higher payments to the deficit just last October. This is instead an Administration maneuver to surreptitiously add $371 billion in further deficit-spending without shouldering the mantle of responsibility so lavishly extolled throughout the budget’s text.

The editorial goes on to suggest a possible bipartisan compromise.

02/05 01:33 PM Share

The Fake Debate and the Real Debate

As the debate over health reform has unfolded, we've been presented with a straightforward narrative: while the White House has sought to solve the nation's most pressing problems, the congressional minority, allied with Fox News, the insurance industry, and a loose coalition of political extremists, have united to oppose a number of commonsense measures, the most important of which is comprehensive health reform legislation. The Senate bill, we've been told, is "substantively bipartisan," i.e., it includes all or virtually all reasonable measures proposed by Republican legislators. And so the opponents of the reform legislation are, with a few exceptions, offering arguments that are based on falsehoods, highly tendentious, and motivated primarily by political self-interest.

But as we've learned, there are a number of vexing problems with the proposed reform that have been largely overlooked, ranging from adverse selection problems stemming from a weak mandate, the administrative challenges posed by the new health subsidies, and much else besides. You don't have to be under the illusion that all congressional Republicans fully understand the flaws in the legislation to share at least some of their concerns. And given the history of past entitlement programs, the belief that we will be able to fix serious structural problems with little difficulty seems a tad optimistic. It's worth stressing that pointing out these flaws is a way to enrich our debate. One could still conclude that we should pass the legislation, only with a better sense of the difficulties we're likely to face down the road.

The trouble is that the debate so far really has been incredibly black-and-white: if we don't pass the Senate bill, America is incapable of solving problems and our constitutional democracy is broken. If we do, all hell will break loose. Actually, passing the Senate bill will most likely entrench the status quo, albeit with future taxpayers footing more of the bill for inefficient FFS providers that have been spared rigorous delivery-system reform.

Because these issues are very complex, we look to organizations like the Center on Budget and Policy Priorities to clarify and interpret them. This week, I've started working with an organization called e21 that intends to shed some light on the economic policymaking process, with a special focus on highlighting and explaining some of the most difficult-to-understand issues. I hope you'll take a look.

02/05 01:22 PM Share

Thursday, February 04, 2010

E.J. Dionne on Republicans, Democrats, and Joe Biden

E.J. Dionne offers the following in his latest column:

For Republicans, American power is rooted largely in military might and showing a tough and resolute face to the world. They would rely on tax cuts as the one and only spur to economic growth.

Obama, Biden and the Democrats, on the other hand, believe that American power depends ultimately on the American economy, and that government has an essential role to play in fostering the next generation of growth.

Do you know any Republicans who believe that American power is rooted largely in military might and showing a tough and resolute face to the world, or who believe in relying on tax cuts as the one and only spur to economic growth? I've been following politics fairly closely for the last fifteen years, and my sense is that Republicans, like Democrats and unaffiliated voters, generally believe that American power is rooted in the wealth and creativity of Americans, and that productivity-enhancing innovative entrepreneurship is the crucial spur to economic growth, though natural increase also plays a role.

Granted, many Republicans, like many Democrats and unaffiliated voters, believe that marginal tax rates — implicit and explicit — have an impact on work effort. This isn't a terribly controversial observation. But the one and only spur?

I try to offer a good faith interpretation of the views of those with whom I disagree on particular policy issues, in part because the person who disagrees with me on one issue — say, the comprehensive health reform bill backed by congressional Democrats — might agree with me on another — say, reform of copyright laws. I think it's a useful approach.

The column is based on an interview with the vice president, who went on at considerable length about the sources of American strength.

"Washington has been telling us to wait for decades, even as the problems have grown worse," Obama said. "Meanwhile, China is not waiting to revamp its economy. Germany is not waiting. India is not waiting. These nations aren't standing still. These nations aren't playing for second place. They're putting more emphasis on math and science. They're rebuilding their infrastructure. They're making serious investments in clean energy because they want those jobs."

One wonders if the vice president has read Yasheng Huang's Capitalism with Chinese Characteristics to get a sense of how China is revamping its economy. After the Tiananmen uprising, the Chinese abandoned a decade of entrepreneurial growth that saw rural incomes sharply increase in favor of a state-led approach that involved extracting wealth from peasants to subsidize declining state-owned enterprises and FDI. The end result was over a decade in which literacy and health outcomes declined in rural areas despite rapid growth, which was concentrated in favored regions. Hu Jintao has sought to reverse some of these policies, but he's failed to recapture the successes of the 1980s in large part because he has been unwilling to surrender central control. Praising China's efforts to revamp its economy, and citing them as a model for the United States, doesn't strike me as very analytically sound.

Biden suggests that Germany is not waiting. This would come as news to the German officials I've met, who are deeply concerned about their country's economic future. As for India, one should hope that India is moving, in light of its staggering poverty, its shockingly low levels of female literacy, the fact that much of the country is in the grip of violent insurgencies — the Naxalite rebellion and various separatist rebellions in the northeastern states, leaving aside Kashmir — and many other problems besides. Economist Lant Pritchett has said that the inefficiencies plaguing the Indian civil service are a global problem on the scale of climate change. The idea that an India that is not standing still poses a competitive threat to the United States is simply bizarre.

So what exactly would Joe Biden have us do to revamp our economy? For one example, take a look at Neil King Jr.'s Wall Street Journal article on Fisker Automotive, a boutique manufacturer of luxury electric automobiles.

Some young companies are tailoring their business plans to win DOE cash. Private investors, meanwhile, are often pulling back, waiting to see which projects the government blesses. Success in winning federal funds can attract a flood of private capital, companies say, while conversely, bad luck in Washington can sour their chances with private investors. The result is an intertwining of public and private-sector interests in an arena where politics is never far from the surface.

In Delaware, "We had five individuals beating the band — the three members of the [congressional] delegation, the governor and the vice president," said the state's chief of economic development, Alan Levin. "We had in the vice president a secret weapon, except there is nothing secret about Joe Biden."

I sincerely believe that Joe Biden sincerely believes that heavily subsidizing electric sedans that will be made in his home state represents the kind of revamping that America needs to keep India and China and Germany in their place.

But I have to say, I think that there are better ways to achieve the same end. To be sure, the approach I have in mind is complicated. It's not as easy as spending money on corporations with savvy government relations arms. Rather, it involves revamping — there's that word again — our schools so that they do a more effective job of preparing students for the workforce, a process that will involve using more distance education and other low-cost alternatives to a broken school system. That won't fit on a bumper sticker. More broadly, it will involve right-sizing all levels of government to sustainable levels while increasing the capacity of those public institutions that prove capable of doing their jobs well. Frustratingly, saying this is a lot harder than saying, "We're going to kick some German tail."

Even so, I figure that telling the complicated truth is its own reward.

02/04 06:29 PM Share

Tuesday, February 02, 2010

A Misunderstanding Re: Next Steps for the GOP

Alex Massie, one of my favorite bloggers, suggests that I'm right to argue that Republicans should pivot from a stance of robust opposition to a willingness to cooperate on better legislation, e.g., bills modeled on the Capretta-Levin approach to incremental health reform. But I fear that Alex is being a bit more cynical than yours truly.

Messaging matters in politics, but so does timing. Suppose the Republican leadership had worked with the White House this past year to craft a health care bill that, though opposed by both the purer elements of both right and left, could pass the House and Senate; suppose too that this bill actually worked. Who gets the credit for that? Not the Republican party or Republican candidates across the country, that's who. No, it would be the President's triumph and his alone. (I'm assuming, for the sake of this argument that the bill would have covered 30m Americans, controlled or lowered costs etc.) It's Obama who would have reaped the electoral rewards from this process. So what, rationally, does it profit the Republican party to help him achieve that aim?

You might argue that this is a form of political nihilism or that it's putting party before the national interest and you might well have a point. But the country is, much of the time, a secondary concern. Parties exist to win elections and then - and only then - take measures they believe are in the national interest. Helping the other mob win isn't part of their brief.

Actually, I don't think this is about who gets credit. Rather, I think that the approach taken by the White House and its congressional allies was wrongheaded, and that one potential benefit of the Brown victory is that it might chasten the Democrats in a constructive way. The hypothetical example — a reform model that actually works — was not a realistic option after Arlen Specter defected from the Democratic caucus in the Senate and Al Franken won his recount battle. At that moment, the incentives for cooperating with moderate Republican senators weakened tremendously. Granted, it would have been nice for the Democrats to have Olympia Snowe on-side, but as all close observers know, Maine has an unusual set of challenges with regards to the high cost of insurance premiums. Senate Democrats offered "compromises" like interstate compacts that bore little resemblance to robust interstate competition. There wasn't a serious effort to woo Senator Bob Corker, who has explicitly said that he'd be interested in compromise legislation that placed a heavier emphasis on catastrophic coverage (an idea advanced by Michael Graetz and Jerry Mashaw in True Security, among many others), because there was no perceived need a serious effort.

So when Andrew Sullivan writes the following:

I do not believe that, given the fiscal and healthcare crisis we are in, that we should simply surrender to the basest impulses of partisanship. And I believe that was the core message of the Obama candidacy. And if this opportunity is simply thrown away, the bitterness will deepen, the polarization will widen, the public cynicism will explode and the country will truly pass the point of no return on its core and pressing problems.

And when good folks like Reihan and Alex simply endorse all this, it's enough to make one despair.

This isn't my position, and I'm succumbing to the basest impulses of partisanship. Rather, it is about crafting workable solutions to difficult problems. I do not believe that a weak mandate, a sharp increase in implicit marginal tax rates, and a regulation-driven strategy to addressing adverse selection — as opposed to an incentive-driven strategy using state-based high-risk pools and, better still, well-designed public reinsurance — will work. In fact, I believe that it will turn out very badly and that it will prove impossible to reverse.

In this context, opposition is a very responsible position to take, even if Republican legislators are far from flawless or blameless. I have to assume that Andrew takes exception to many of the views, habits, and practices of his political allies in any particular dispute. My guess is that I'd be part of a very different coalition — that is, a coalition that includes more self-described progressives than self-described conservatives — on an issue like the reform of copyright or congestion pricing or any number of other issues. I'm very comfortable with that.

The fact that many people are powerfully invested in passing this reform, for political and financial reasons, doesn't strike me as reason enough for me as a writer and thinker and citizen to acquiesce. And the fact that there are people with political and financial interests on the other side doesn't mean that the basic problems with the Democratic reform model aren't very real.

02/02 11:37 PM Share

What's the Matter with Gottlieb and Grose?

After Thomas Frank wrote What's the Matter with Kansas?, he was subject to withering criticism from Princeton political scientist Larry Bartels, who argued that Frank's portrait of working class voters who vote Republican on culture war grounds was highly misleading. Frank had an effective rejoinder, but it settled nothing. Henry Blodget summarized the exchange at Crooked Timber.

I blogged Larry Bartels’ take-no-prisoners critique of Thomas Frank last week; now Frank has come back with an equally frank rejoinder. It seems to me that Frank’s riposte to Bartels on the issue of how to define the white working class strikes home, although some of his other jabs miss the target. Since the definitional question is key to Bartels’ critique, it looks to me as if Franks comes out ahead (unless Bartels comes back with a more convincing justification). Still, I find some of Frank’s apologia unconvincing. He’s absolutely right to say that working class conservatism is still important, even if it isn’t a majority phenomenon – but there is a tendency (which Frank is by no means immune to) to generalize from the particular and to draw big conclusions on the basis of limited and somewhat impressionistic information. National survey data is imperfect – but it can serve as a very useful corrective to these tendencies, and it’s unfortunate that more pundits don’t use it (or at least acknowledge more directly the limits of the kinds of information that they do refer to).

Drawing big conclusions on the basis of limited and somewhat impressionistic information is, alas, what literary intellectuals do, and it is important. It's not always right. It is not always the basis for sound policymaking. But it offers a useful lens for approaching and understanding a dense, complex social world that can't be captured by the extremely, extremely crude tools of social science. Susan Sontag's "On Camp" offers a story that is hard to tell through rigorous data analysis. Joan Didion's reflections on postwar California weren't the work of a professional sociologist or political scientist. But they resonated with a large audience. While I'm strongly inclined to disagree with Frank's characterization of working-class conservatives — Ross and I have outlined our objections to the Frank thesis — arguments from statistical analysis often miss the point.

Which is why I was struck by Jessica Grose's thoughtful, intelligent, but ultimately puzzling take on Lori Gottlieb's Marry Him in Slate. Gottlieb's book is calculated to generate maximum controversy: it is aimed at a small, affluent, highly influential group of women, and it is essentially an effort to scold many of them. It is hardly surprising that it has become a subject of endless, roiling debate among a certain kind of educated middle or upper middle class person.

Grose is deploying fairly crude statistics to make the case against a highly impressionistic account. We could criticize Gottlieb for not producing a work of social science. But the truth is that we don't have very good statistical tools for capturing the very small and narrow tribe of women that Gottlieb is talking about: for example, not every woman who graduates Duke or UC San Diego occupies the same psychographic niche, though that is masked by statistics.

So what about those screenwriters and female execs? For them, Gottlieb is making a provocative argument: They will lose their last chance at happiness if they don't lower the bar. Built into her argument is the assumption that all women over 40 would be happier as part of a couple, even with a nice bore of a husband. In the Atlantic article upon which her book is based, Gottlieb writes, "Madame Bovary might not see it that way, but if she'd remained single I bet she would have been even more depressed than she was while living with her tedious but caring husband."

Here again, the statistics don't necessarily bear her out. Married women—and here we are talking about upper-class married women—are getting less, not more happy in their marriages. The percentage of college-educated white women who describe their marriage as "very happy" dropped from 74 percent in the 1970s to 68 percent in the 2000s, according to Brad Wilcox, director of the National Marriage Project. Now, this doesn't mean that they would have been happier unmarried. But it does mean that marriage has become a whole lot more complicated for the upper-class woman than it was in the '70s, fraught as it is with time pressures and conflicted roles. Gottlieb talks about women who divorce and then remarry—and found that "most of them reported no increase in satisfaction or that they were less happy than they were in their first marriages." But she doesn't talk about the women who remain single in their 40s and beyond. [Emphasis added.]

Of course the statistics "don't necessarily bear her out." I can't imagine a scenario in which the statistics would necessarily bear her out, as this is confusing, ambiguous, highly uncertain terrain in which we're dealing with lots and lots of very contradictory evidence. And if we're talking about a small but influential group of screenwriters and female execs, it is ethnography, and not statistical analysis, that is our best bet for deriving some rudimentary understanding of what the heck is going on. Ethnography is notoriously difficult, and it invites the possibility of selection and confirmation bias. In very small groups, however, it is pretty much the only game in town.

Is it at least possible that married women are more happy than they would be if there were not in said marriages? A time-slice comparison doesn't make much sense in this context. It could be that married women circa 1975 were happier than married women circa 2005. It's not clear that this has any bearing on Gottlieb's argument.

In fact, levels of well-being have gone down since the '70s for both married and never-married women, according to the happiness study by Wharton economists Betsey Stevenson and Justin Wolfers that got so much press last year. And as Elizabeth Gilbert points out in Committed, married women are more likely to suffer from depression than singletons. Marcus Buckingham, writing about women's happiness in the Huffington Post, notes, "Women's happiness with their marriage sinks below men's at age 39." Rather than settling in unhappily with her snooze of a spouse, this research indicates that modern Mme. Bovary might be better off setting up a bachelorette pad in Paris.

The Stevenson-Wolfers study is interesting, but it doesn't have any bearing on Gottlieb. Rather, it reflects many of the broader cultural trends that Gottlieb describes. As for Gilbert's observation, one has to assume that there is selection bias involved. I haven't read Gilbert's book, but I imagine that married women are more likely to have comprehensive health insurance coverage that would allow them to get diagnosed for depression. I'm certainly not suggesting that single women are in reality more depressed. Rather, I think we should throw cold water on these statistics.

As for the Gottlieb thesis itself, I'll say only this: the article sparked many conversations, the book will likely sell many copies. I see Gottlieb's argument as part of a continuing conversation about how social roles are evolving and how they should evolve. For whatever reason, her portrait rings true with many people and it frustrates many others. As someone who likes to see people reading and arguing, this doesn't strike me as a bad thing.

02/02 06:48 PM Share

Len Burman on Tax Expenditures

I'm a little obsessed with tax expenditures. In Grand New Party, Ross and I wrote about how many analysts are misled by the role of tax expenditures in shaping the American welfare state. I first encountered this argument in Christopher Howard's The Hidden Welfare State. (The argument is ably summarized at Wikipedia, though perhaps some Wikipedia vandal will edit in some kind of elaborate fan-fiction.) While other advanced democracies engage in explicit spending, we use various tax breaks and tax credits to reward certain behaviors and punish others. So while it looks as though the government is giving you your money back, they're only giving it to you if you use it to buy health insurance. That doesn't sound like much of a concession to me.

But because tax expenditures aren't explicitly seen as spending, we've allowed them to mushroom, and give the government an ever-expanding ability to micromanage our decisions. When you factor in tax expenditures, the American welfare state is comparable in size to those of continental democracies. It's just that our welfare state is less transparent, and more of the resources are directed to affluent households that don't need the money.

With that in mind, Len Burman has proposed a freeze on tax expenditures that would do far more to curb deficits than a freeze on non-security domestic discretionary spending.

Suppose Obama's "freeze" were also applied to tax expenditures. Say we postponed its effect until fiscal 2013 so that the effects do not threaten a nascent economic recovery. Capping tax expenditures at 2012 levels for three years and indexing the cap for inflation after that, as proposed for non-security discretionary spending, would reduce the deficit by about $3.5 trillion. That's right — 14 times as much as what the president's spending freeze would save.

He also makes a strong conservative case for curbing tax expenditures.

Tax expenditures have proliferated in large part because they enable politicians to promote their pet causes while appearing to lower taxes. But tax expenditures require higher tax rates to cover their cost, just like direct expenditures, and they impose higher burdens on those who don't share in the benefits. A study published in 2008 found that eliminating all individual income tax expenditures would permit a 44 percent across-the-board cut in tax rates without reducing revenue. The top marginal rate could drop from 35 percent to 20 percent. Conservatives could stand up and cheer.

Conservatives might also take note because tax expenditures are mischaracterized as tax reductions rather than spending, so the federal government appears to be much smaller than it really is. And the expenditures require the kind of top-down regulation from Washington that conservatives scorn.

My sentiments exactly.

02/02 06:17 PM Share

Ross on Abstinence Education

Following up on his excellent column, Ross channels Popper and Hayek and our own Jim Manzi on the case for decentralization and experimentation. After citing a study that suggests that abstinence education can prove very effective, he does something very rare in a policy debate — he doesn't immediately claim that the result of a study that reflects favorably on his own views must be right and universally applicable.

Does this prove that abstinence-based education always lowers teen sexual activity? No — it proves that one abstinence program designed in a particular way, implemented by a particular group of teachers, and aimed at a particular age group in a particularly area was considerably more effective than a contraception-based approach. And that’s all that any controlled experiment is likely to prove. The data on this question are necessarily deeply particular, and partisans on both sides will probably always be able to find studies that “prove” the superiority of their preferred approach. (Here’s a recent entry for the pro-comprehensive sex ed side, for instance.) Which suggests, to my mind, the virtues of both widespread experimentation and local control, rather than an inevitably polarizing quest for a one-size-fits-all solution.

And when Hanna Rosin, a terrific writer who favors a very different approach to sex education, calls for a fairly neutral curriculum that doesn't involve lying to children, Ross asks the obvious question:

I certainly agree that nobody should lie to a child. But who is this “we” who will design this “fairly neutral” curriculum? Where are the teachers who will implement it, without a trace of pro-chastity or pro-contraception bias? (Besides the fictional Principal Tami Taylor, that is.) And for that matter, is it really possible to imagine a universal just-the-facts program that would fit the incredibly diversity of teenage experience in the United States?

Over the last year, I've noticed a growing frustration among smart liberals with the very idea of federalism. One obvious source of this frustration is that despite large majorities in both chambers of Congress, left-of-center legislators haven't been able to remake the American system of government as some would like. But as Richard Thompson Ford argued in Slate argued shortly after the reelection of George W. Bush, there is a very strong case for federalism from the left.

Many liberals who haven't yet moved to Canada have indulged the fantasy of a "blue state" secessionist movement. But the American legal tradition does offer liberals a practical alternative to secession or a condo in Vancouver. It's called federalism, aka "state's rights." Liberals often have a reflexive distaste for decentralization of political power: State and local autonomy strike them as provincial and regressive. But much of the association of federalism with conservative politics is the result of historical accident: There is nothing inherentlyconservative about limitations on the power of Congress and the executive. And now that both of these branches are firmly controlled by conservatives, perhaps liberals will begin to see the merits of meaningful federalism. They won't need to look far: The president, mounting that favorite hobby horse of conservatives—tort reform—has just proposed federal legislation to limit medical malpractice awards. Even a modicum of respect for the prerogatives of the states should stay Congress' hand: Tort liability has always been a matter of state law, and the effects of supposedly excessive awards in one state should have few consequences for the quality or cost of medical care in other states.

Federalism is not just for conservatives, anymore.

Alas, Ford's "new blue federalism" didn't last for very long.

02/02 06:05 PM Share

Capretta and Levin on the Next Health Reform

In the latest issue of The Weekly Standard, Capretta and Levin offer a roadmap for a bipartisan bill. You should read the editorial in its entirety, but the three basic components are:

(1) Expand state-based high-risk pools to aid individuals with pre-existing conditions

(2) implement medical malpractice reform

(3) and free the states to find new ways to expand coverage

David Herszenhorn outlines the obstacles to a bipartisan bill, yet he identifies a number of possible compromises. As Hersezenhorn makes clear in an excellent and very thorough post, the Republican leadership in both chambers has resisted a variety of compromise measures. Yet individual members have advanced a number of interesting ideas, including the following:

Many Republicans abhor a provision in the Democrats’ legislation that requires virtually every American to obtain insurance or pay financial penalties for failing to do so — a so-called individual mandate.

Some Republicans, instead, have proposed a system of automatic enrollment by which any uninsured American seeking medical care would be entered into a computer system and, provided they qualify, signed up for a government-subsidized health plan.

Would Democrats go along if such automatic enrollment were not optional but mandatory for anyone seeking care who could not pay their doctor or hospital bill on the spot? What if it were coupled with incentives to get people to visit the doctor for an annual physical, or to enroll in a prevention and wellness program?

This strikes me as a very interesting concept, and it's one that doesn't have the flaws of the hilariously weak "mandate" proposed in the Senate health bill — an invitation to free-riding that would likely precipitate a so-called "insurance death spiral."

Moreover, while the Republican leadership has resisted dedicating real resources to state-based high-risk pools, as Capretta and Levin recommend, Herszenhorn notes that are many Republican members who would be open to the idea, not least because, as Capretta and Levin put it, generous funding for risk pools — temporary funding is envisioned in the Senate and House health bills as a transitional step before the regulations are in place — would nevertheless be "nowhere near the scale of Obamacare’s costs."

There are many other areas that seem ripe for compromise.

Interestingly, Jonathan Cohn points to Herszenhorn's post as evidence that the GOP is the "Party of No." But one wonders if it is equally correct to say that Democrats have become the "Party of Our-Way-or-the-Highway." Ezra Klein has the same reaction, and he repeats the notion that the Senate and House health bills really represent a substantive compromise.

First, it asks retiring, knowledgeable conservatives about where the two parties could compromise. The reply? High-risk pools and selling insurance across state lines. It's true that the two parties could compromise on those issues. In fact, they did, and the Senate bill includes versions of both policies. That compromise may or may not be good enough. In any case, neither policy matters very much. The Republican health-care bill included both ideas, and the CBO scored it as leaving 52 million Americans uninsured. As Herszenhorn says, it would "barely make a dent."

This is an interesting characterization. The Senate bill does indeed allow interstate compacts, though of course these compacts are designed to minimize the opportunity that individuals have to free themselves of expensive state-based coverage mandates for various medical procedures. There is a reason for this — limiting adverse selection. But to say that the Senate bill includes a "version" of interstate competition that gives state governments the power to decide which states will be allowed to compete doesn't exactly mesh with conventional understandings of competition. Let's say we gave Halliburton the right to choose the other firms that will bid for large-scale energy contracts.

And it is also true that high-risk pools are included as a transitional measure before the Senate and House health bills ban risk adjustment, a ban that is greatly facilitated by a mandate. But of course the mandate is too weak to actually solve the adverse selection problem.

As a friend explained to me, the goal of the Democratic legislation is to create a universal structure that can be expanded over time. Very few knowledgeable people believe that the weak mandate in the Senate bill will work. Rather, it will lead to sharp increases in premiums that will create political pressure to further expand public programs.

So there you have it: the "Party of No" and the "Party of My-Way-or-the-Highway." The "Party of No" framing is thus vitally important to those who advocate a centralized approach to controlling costs. A bipartisan bill along the lines that Capretta and Levin propose would likely prove popular and, provided it had the necessary resources behind it, it really would dramatically ease the burden on individuals with pre-existing conditions. It would thus forestall a centralized approach for a very long time.

02/02 05:41 PM Share

The Real Health Reform Debate

James Capretta recently wrote a very astute essay on why the health reform debate has proven so contentious. The president maintains that this is yet another episode of party politics run amok. In his telling, the White House has reached out to Republican legislators and embraced their best and most plausible ideas. Rather than cooperate with Democrats, the Republican minority in Congress has chosen to indulge in obstructionism in order to score political points. It's easy to see why President Obama might find this narrative appealing, as it paints him in a very positive light. But as Capretta explains, there really are deep, legitimate differences behind what looks like a merely political dispute.

After explaining that conservatives and liberals in Congress don't actually disagree on the goal of providing universal access to affordable coverage ...

In 2008, presidential candidate John McCain proposed a plan which would have provided to every American household a tax credit which could only be used to purchase a health insurance policy. It was, in a very real sense, a "universal coverage" plan in that it sought to ensure that every American would have the financial wherewithal, provided by the federal government, to acquire some level of health insurance protection. The issue, then, is not over expanding coverage to all.

(One friend of mine objected to this characterization, arguing that the McCain proposal didn't cover all Americans. But of course the Senate health bill only covers two-thirds of the uninsured, and no one disputes that it can be fairly characterized as a "universal coverage" bill, leaving aside generous assumptions regarding the effectiveness of a weak mandate.) Capretta goes on to explain the real dispute.

No, the real sticking point between the two sides is really about allocating resources in the health-care sector. Both sides agree that the status quo is unsustainable, largely because costs are rising much more rapidly than wages or governmental revenues. The crucial question is what to do about the problem. Put differently, the question health-care reform advocates must answer is this: what process will be put in place to bring about continual improvement in the productivity and quality of patient care? That might strike some as something of a technical question, not one of fundamental importance. But, in reality, it's just another way of saying that resources are scarce and must be allocated in some fashion. The only way to slow rising costs without lowering the quality of care provided is to improve the efficiency of the interactions between doctors and hospitals and those they care for. The question before policymakers is what is most likely to lead to better care at less cost.

In short, the Obama administration favors a governmental process and the right favors a market-oriented process. The most lucid proponent of a market-oriented process is Rep. Paul Ryan, Republican from southern Wisconsin who proved most effective when parrying with the president in Baltimore last week.

Ezra Klein, a strong advocate of the president's approach, has described the seriousness of the Ryan approach, and also it's politically problematic implications.

As you all know by now, the long-term budget deficit is largely driven by health-care costs. To move us to surpluses, Ryan's budget proposes reforms that are nothing short of violent. Medicare is privatized. Seniors get a voucher to buy private insurance, and the voucher's growth is farslower than the expected growth of health-care costs. Medicaid is also privatized. The employer tax exclusion is fully eliminated, replaced by a tax credit that grows more slowly than medical costs. And beyond health care, Social Security gets guaranteed, private accounts that CBO says will actually cost more than the present arrangement, further underscoring how ancillary the program is to our budget problem.

I'm not sure it is fair to characterize an 11-year transition as a violent one. It is certainly true that Ryan is calling for a very different approach to financing health expenditures eleven years from now, which will presumably allow many institutions and individuals to adjust their expectations. And firm cost controls will reward business-model innovation that lowers the cost of medical care, including business-model innovations that a governmental process would either ban or render unnecessary by creating far weaker incentives to transition away from fee-for-service.

Being politically savvy, Ezra knows this the Ryan proposal is out-of-bounds in our current political discourse.

It's hard, given the constraints of our current debate, to call something "rationing" without being accused of slurring it. But this is rationing, and that's not a slur. This is the government capping its payments and moderating their growth in such a way that many seniors will not get the care they need. This is, in its simplest form, a way to limit the use of a finite resource: Money.

This is roughly right, though Ezra is glossing over some tough questions regarding what it means to need care. In Arnold Kling's provocative Crisis of Abundance, he notes that a standard of care that would have been considered first-rate in the 1970s would now be considered woefully inadequate. Some of us think that a decentralized process for determining what constitutes necessary care is far more desirable than a centralized process, as a decentralized process allows for experimentation and cheap failure.

Ezra ends with the following:

I wouldn't balance the budget in anything like the way Ryan proposes. His solution works by making care less affordable for seniors. I'd prefer to aggressively reform the system itself so the care becomes cheaper, even if that causes significant pain to providers. I also wouldn't waste money by moving to a private system when the public system is cheaper. But his proposal is among the few I've seen that's willing to propose solutions in proportion to the problem. Whether or not you like his answer, you have to give him credit for stepping up to the chalkboard.

With Capretta's framework in mind, this statement makes a great deal of sense. Believers in the governmental process believe that "aggressively reforming the system itself" must take the form of Medicare payment reforms and pilot programs, and that business-model innovation has, at best, a marginal role to play. Many in this camp have a deep skepticism regarding the long-term role of the private provision of medical insurance, which is one reason why some have suggested that conservatives should hope that the individual mandate approach works — if it doesn't, the argument goes, we'll have to turn to Medicare-for-all.

Those who suspect that a governmental process isn't the best way forward should read The Innovator's Prescription, a book that draws on insights from business-model innovation in other domains to describe how we might promote lower prices and higher quality in the domain of medical care.

I actually do think that there is a hybrid view that bridges Capretta's divide. But that's another post.

02/02 04:41 PM Share

Judis on Obama's Regulatory Revolution

John B. Judis hasn't shied away from criticizing the Obama administration's political missteps, but in his article on "The Quiet Revolution," he suggests that its efforts to strengthen federal regulatory agencies represent a significant accomplishment.

I tend to think that the federal government should generally exercise great restraint when it comes to regulating the private sector, with the special exception of the financial sector. And I take a very different view of some of the controversies Judis raises. That said, he does raise a number of interesting points.

(1) First, he suggests that Republican administrations have tended to underfund regulatory agencies.

Republican presidents didn’t just undermine scientific administration by making poor appointments; they also slashed or held down the regulatory agencies’ budgets, forcing them to cut personnel. This was a particular problem in the all-important area of enforcement: If regulatory agencies can’t conduct inspections and enforce rules, it doesn’t matter how tough those rules are. OSHA’s budget fell 13.1 percent in constant dollars during the Reagan years and 6.8 percent during the administration of George W. Bush. As a result, an agency that had employed 2,950 people in 1980 employed just 2,089 in 2008—and the number of compliance officers had declined 35 percent. According to Michael Silverstein of the University of Washington School of Public Health, this meant that a workplace could expect an inspection only once every 88 year

This reminds me of one of Mark Kleiman's central arguments in the provocative When Brute Force Fails: when it comes to effective punishment, swiftness and certainty are very effective substitutes for severity. So if I know that I'll have to go to jail for two nights every time I do a hit of meth, I'm far less likely to do a hit of meth than if I will go to jail for a year once every 100,000 times I do a hit of meth. Those odds aren't so bad.

In a similar vein, one could argue that instead of sharply increasing the staff at the regulatory agencies, we should more effectively deploy existing staff by scaling back some regulations and tightening the enforcement of those that remain on the books.

One problem we're facing in scaling up our nuclear power sector is the fact that the US Nuclear Regulatory Commission is very overstretched — they don't have the resources they need to quickly evaluate new designs, etc. This is a bottleneck on growth. So to some extent, we can work together on this issue.

(2) Judis goes on to suggest that the right misused the idea of cost-benefit analysis, or offered an excessively narrow and tendentious view of it.

The conservative version of cost-benefit analysis stressed costs rather than benefits and subjected only regulation—not deregulation—to cost-benefit scrutiny. Conservatives also sometimes adopted bizarre formulas for assessing costs and benefits. They assigned less monetary value to improvements or protections in poor communities because the residents were willing (that is, able) to pay less for them, and they used a spurious correlation between a society’s wealth and the health of its citizens to argue that the costs of regulation outweighed the benefits. Under George H.W. Bush, for example, OIRA argued that OSHA regulations on chemical contaminants would end up harming workers more than exposure to chemicals. Wrote James McRae, the acting head of OIRA, “If government regulations force firms out of business or into overseas production, employment of American workers will be reduced, making workers less healthy by reducing their income.”

I'm actually not so sure that the connection between a society's wealth and the health of its citizens is entirely spurious. My guess is that McRae could offer a fairly persuasive defense of his stated view. That said, Judis makes a reasonable point when he suggests that the question of how we weight different impacts is ultimately a value question and not a technical question, and it is possible that Republican administration didn't settle on the right balance.

I tend to think that long-term joblessness is so severe a problem — the social costs are so extremely high — that we ought to weight the reduction of employment opportunities very, very heavily.

02/02 03:49 PM Share

Stroebel and Taylor on Price-Keeping Operations

John Taylor, the Stanford economist best known for devising the Taylor rule, has co-authored a short paper with Johannes Stroebel on "the impact of the Fed's mortgage-backed securities purchase." The aim of the purchase was to reduce mortgage interest rates. But Taylor and Stroebel suggest that the program has had no significant effect, and that it was the impact of changing levels of prepayment risk and default risk that did virtually all of the work. This is hardly dispositive, but it does raise interesting questions regarding some of the Fed's recent hyperactivity. This is one reason why I wish we were thinking more rigorously about our broader regulatory framework.

02/02 03:46 PM Share

Monday, February 01, 2010

Afghanistan, Schumer-Hatch, the Debt Burden

(1) Is Afghanistan turning a corner? As Iraq gets worse, early indications suggest that the new strategy of U.S.-led forces and the Afghan government is actually having an impact.

An opinion poll published this month by the BBC found a leap in optimism among Afghans, with 70% believing the country was going in the right direction, compared with 40% a year ago. Support for Nato troops rose from 59% to 62%. Meanwhile, opium production dipped in 2009, with the area of poppy cultivation down by a third in Helmand – the province under British control that has hitherto been the poppy centre of the country. Also in Helmand, district centres that were run or threatened by the Taliban until a few months ago are now under Afghan army and police control, and peaceful enough for the shops and bazaars to reopen. At the same time, anecdotal evidence from the villages suggests an increasing number of Taliban fighters – battle-weary or drawn by new jobs – are returning home to their families.

Taliban elements seem to recognize that they are losing the ideological struggle, and so they're making efforts to reduce civilian casualties. This is progress. The question is whether it is sustainable.

(2) Is Schumer-Hatch the right way forward?

Keith Hennessey has raised serious doubts about the president's proposal for a "Small Business Jobs and Wages" tax credit.

If enacted quickly, the President’s new Small Business Jobs and Wages tax credit proposal will therefore create fewer (and maybe far fewer) than 165,000 – 297,000 jobs this year. For comparison, remember that the U.S. economy has lost 2.7 million jobs since a year ago, and 7.2 million jobs since the beginning of the recession in December 2007. 297,000 is 4.1% of 7.2 million, so you’re talking about a policy change that at best would restore fewer than 1 out of 25 jobs lost since the recession began.

Now for the bigger problem: the White House fact sheet is correct– CBO says this is the job creation policy with the greatest job creation bang per deficit buck. Other policies are less efficient.

One wonders if the CBO also considered the Schumer-Hatch proposal, which bears a close resemblance to Michael Boskin's call for an alternative stimulus last fall.

(3) Carmen Reinhart and Kenneth Rogoff offered a sobering perspective on the extraordinary debt levels that the leading economies will be carrying post-crisis.

Given these risks of higher government debt, how quickly should governments exit from fiscal stimulus? This is not an easy task, especially given weak employment, which is again quite characteristic of the post-second world war financial crises suffered by the Nordic countries, Japan, Spain and many emerging markets. Given the likelihood of continued weak consumption growth in the US and Europe, rapid withdrawal of stimulus could easily tilt the economy back into recession. Yet, the sooner politicians reconcile themselves to accepting adjustment, the lower the risks of truly paralysing debt problems down the road. Although most governments still enjoy strong access to financial markets at very low interest rates, market discipline can come without warning. Countries that have not laid the groundwork for adjustment will regret it.

This reminds me of the most persuasive argument against the Recovery Act, from Jeffrey Sachs of Columbia University's Earth Institute.

In short, although the sharp downturn will unavoidably last another year or even two, we will not need zero interest rates and mega-deficits to avoid a depression or even to bring about a recovery. In fact, the long-term, sustainable recovery will be accelerated by a policy framework in which the budget credibly returns to balance over several years, the government meets its critical responsibilities in social services, infrastructure and regulation, and the Fed avoids dangerous swings in interest rates that actually contribute to the booms and busts we seek to avoid.

To be sure, Sachs advocates a higher tax take and heavy public investments. Yet he also makes the case against deficits that exceed 5 percent of GDP as a mark of "instrument instability." He also makes the case against efforts on the part of the Fed to smooth out business cycles, efforts that have contributed to the cycle of extremely sharp bubbles and busts.

In the U.S., we don't really have anyone advocating for a stable policy framework. Conservatives rightly want to pare back the size of the federal government over time, yet congressional Republicans have soft-pedaled the case for voucherizing Medicare while attacking the Obama administration for proposing notional cuts to Medicare cost growth. The next decade will see a painful liquidation of malinvestments in housing and other declining sectors, and government will be expected to cushion the blow. But rather than do this in a manner that delays liquidation and restructuring, we ought to try to facilitate the process by, for example, pursuing, as Edward Glaeser has put it, people-based rather than place-based policies.

02/01 11:53 AM Share

Wednesday, January 27, 2010

McDonnell's Agenda

There was only one line I didn't like in the McDonnell response.

Republicans in Congress have offered legislation to reform healthcare, without shifting Medicaid costs to the states, without cutting Medicare, and without raising your taxes.

We really do need to trim Medicare, my friends. I don't necessarily like the president's approach and I am fully aware of the political landscape. Still, this is stuck in my craw. The rest of the response was near-flawless, including the decision to praise the Obama administration for solid first steps on education and Afghanistan. My favorite passage, of course, was the following:

Top-down one-size fits all decision making should not replace the personal choices of free people in a free market, nor undermine the proper role of state and local governments in our system of federalism. As our Founders clearly stated, and we Governors understand, government closest to the people governs best.

This reminded me of Alex Castellanos's manifesto on "New Republicanism," and I'm very glad to see the right turn from making bigger, better promises regarding what a lumbering and expensive government can do to calling for cheaper, more responsive, more resilient ways of solving age-old problems.

Another passage certainly sounded politically appealing, but it led me to raise an eyebrow:

Government should have this clear goal: Where opportunity is absent, we must create it. Where opportunity is limited, we must expand it. Where opportunity is unequal, we must make it open to everyone.

This reminded me of William Easterly's distinction between "planners" and "searchers." Rather than bring in trained experts to transform a neighborhood through shock-and-awe, searchers recognize that the only enduring solutions — the solutions that have legitimacy and that fit the particularities of the actual people involved — are homegrown.

One thing I would've liked: McDonnell endorsing a proposal first advanced by John Kitzhaber, Oregon's once-and-future Democratic governor. In short, Kitzhaber asked the federal government to give the money it spends on medical insurance and care for Oregonians to the state government. As a loyal partisan, I assume that Kitzhaber has fallen in lockstep behind the president's proposal. But the idea was a very powerful one.

01/27 11:50 PM Share

I'm With Alito

There's a lot to talk about — expect a flood of blog posts in the near future — but I just want to say that if Samuel Alito really did mouth "not true" while listening to President Obama's characterization of Citizens United, I'm with him. This was a genuine, entirely understandable response, and while I'm guessing he's slightly embarrassed by the "incident," if you can call it that, it is the president who should feel embarrassed. Politico's Kasie Hunt and Martin Kady II have more. The following is the passage that Mr. Alito found objectionable.

"Last week, the Supreme Court reversed a century of law to open the floodgates for special interests – including foreign corporations – to spend without limit in our elections," Obama said. "Well I don’t think American elections should be bankrolled by America’s most powerful interests, or worse, by foreign entities. They should be decided by the American people, and that’s why I’m urging Democrats and Republicans to pass a bill that helps to right this wrong."

I actually agree that our elections shouldn't in an ideal world be bankrolled by America's most powerful interests. Yet I understand that public employees, both as individuals and in organized groups, enjoy First Amendment protections under our Constitution, and I appreciate that tampering with this arrangement could represent a grave danger to our freedoms.

I'm reminded of Ross's excellent column from Monday, in which he praised one of my favorite books on government. Basically, the "special interests" are us.

Once you’ve enticed Big Pharma and Big Insurance inside the tent, you still have to contend with everyone else who might stand to lose from health care reform.

This means seniors who get Medicare and hospitals that accept it. It means patients and doctors in states that spend “too much” on health care, according to the Office of Management and Budget, and who would bear the brunt of cost controls. It means upper-income taxpayers who object to being singled out for tax increases. It means union members who like the current health-insurance tax deduction exactly as it is. And judging by last week’s election, it means the citizens of Massachusetts, who already pay for semi-universal health care and don’t see why they should subsidize Mississippi and Montana as well.

Chances are that you belong to at least one of these “special” interest groups.

Rather than offer a thoughtful discussion of the dilemmas facing a constitutional democracy, the president offered a crude, simplistic portrait that, for most State of the Union viewers, will be the sum total of everything they hear about the State of the Union.

Fortunately, voters have grown skeptical of the promises made by presidents. Some see this as a deficiency on the part of the public that badly needs to be remedied. I'm not so sure.

It could be that I'm overreacting. But from Mr. Alito's perspective, I can see how he might think that his integrity had been impugned. Granted, conservatives strongly believe that the Supreme Court has overreached in many instances, not least when it comes to legislation relating to the intimate sphere. I have to assume that conservative presidents have had harsh words for decisions that I would find equally distasteful. I like to think that I'd have the same reaction.

In light of the president's concern regarding the power of U.S. corporations and "foreign entities," he might consider not channeling vast resources in their direction through the stimulus and a variety of other bailouts and "public investment programs." He could also call for the elimination of various tax provisions that help entrench and enrich corporate interests. Let's hope this is a subject President Obama tackles in the next speech.

01/27 11:23 PM Share

Tuesday, January 26, 2010

More on Nihilism

In 2005, President Bush attempted to start a dialogue on reforming Social Security and changing the tax treatment of employer-provided health insurance in an effort to place federal spending on a more sustainable footing and expand access to quality health coverage. Democrats decided that they'd prefer holding out for a more propitious political moment, when they'd have a stronger hand to offer their own solutions. Does this mean that the congressional Democrats of 2005 were nihilists? My sense is that Andrew Sullivan thinks that the answer is no, and I agree with him.

A more convincing story runs as follows:

(1) congressional Democrats felt powerless and thus unable to constructively shape the relevant proposals,

(2) they sensed that President Bush was weak and thus vulnerable to a united front in the minority party that offered principled and consistent opposition,

(3) they didn't trust a conservative president who seemed more interested in entrenching and extending the power of his political party,

(4) they believed that the proposals in both domains were so wrongheaded that there was little sense in trying to tweak them at the margins — e.g., they believed both that Social Security was not really in crisis and changing the tax treatment of employer-provided health insurance would hurt key Democratic constituencies while not offering sufficient benefits as a trade-off — and

(5) differences in other domains, most prominently national security, lingering cultural mistrust of the president's religiously-infused public rhetoric, and a frustration with what they saw as the president's relentless partisanship, masked by what struck many as an unconvincing if not cloying and maddeningly thin veneer of bipartisan politesse, disinclined them towards cooperation.

Is it possible that Republicans — rightly or wrongly — feel roughly the same way about President Obama? Is it really true that the Democratic reform model, which was embraced in the 1990s by liberal to moderate Republicans like Nancy Kassebaum and John Chafee at a time when we knew even less than we do now about the macroeconomic impacts of implicit marginal tax rates among many other things, is the only responsible course for increasing access to health insurance? Or that a regime that marries carbon-pricing to green industrial policy is the only way to address climate change?

I'm advancing a very simple proposition here. Conservatives can be really, really wrong about everything, and centralized solutions could be the only responsible course of action across every policy domain. But is it possible that we conservatives are sincerely wrong, and that we care about more than "power and status"?

I'm trapped in this cycle of thinking that our political leaders, regardless of partisan affiliation, are people, with all the foibles and limitations that this entails. While I do think that a bottomless hunger for power and status exists in the world (we can call this "evil" as a shorthand), I know enough liberals and conservatives to suspect that something else might be at work in our domestic political conflicts.

And while the nihilism framework makes it easier to get angry at those with whom we disagree — in some cases it can make it easier to dehumanize them, but that's another story — I'm not sure that ratcheting up the anger level in our discourse is always the right course of action. I think that public sector unions are not a constructive force in our public life. I also know and love many members of public sector unions, and I'm convinced that they believe that they're doing their best to better the lives of the poor and vulnerable.

01/22 04:05 AM Share

Bills of Attainder and a New Glass-Steagall

Two links for your perusal:

(1) John Carney on "The Bank Tax and The Constitutional Ban on Bills of Attainder."

and

(2) Mike Konczal's "Towards a 21st Century Glass-Steagall."

01/22 03:28 AM Share

John B. Judis on the Populist Moment

Not surprisingly, John Judis, easily the best thing about The New Republic and one of the most insightful, historically informed writers working today, has written the definitive take on the fundamental dilemmas facing President Obama, with a focus on the rising alienation of working class whites and older voters.

These two groups of voters have not viewed Obama’s presidency in a fundamentally different way from many other voters, but they, and particularly working-class whites, have been the prime source of a populist anger against the Obama administration. They have perceived Obama as robbing Peter to pay Paul—or more concretely, taking benefits from and imposing higher taxes on them in order to provide greater income and benefits to others. And we are talking here about perceptions. I don’t intend to get into an argument about what is actually in the various health plans, some of which do benefit senior citizens and the white working and middle class.

Working-class populism in America has always taken two forms: The first—let’s call it left-wing populism—has typically been directed at speculators who make money from people who work in factories and offices and who don’t seem to contribute to the actual wealth of society. The second form—let’s call it right-wing populism—has targeted immigrants, black sharecroppers, the unemployed, and other out groups who are seen as trying to deprive those who work of their rightful earnings. These two strains often appear together, as they did in the original American populist movement. And these sentiments are most concentrated among the embattled classes—those that see themselves threatened from above and below.

Obama has provoked both left-wing and right-wing populism. He provoked left-wing populism by using tax dollars to sustain the banks and auto companies and to reward their managers who had already shown themselves to be incompetent—and then by acquiescing when the bankers paid themselves additional bonuses. In a poll [10] taken in early January by Allstate/National Journal, 1,200 respondents revealed whom they thought had “benefited most” from the government’s response to the financial crisis. Banks, investment companies, major corporations, and the wealthy were way out in front.

Obama’s health care plan has provoked a combination of right-wing and left-wing populism. The middle class and senior citizens see it as a program that taxes and takes benefits away from them in order to help those without insurance—the out groups—and to enrich the insurance companies themselves. They didn’t invent this perception out of thin air: It derived in part from the plan to tax “Cadillac” health care plans (which are sometimes held by unionized middle class workers), penalize workers who don’t buy insurance, and cut future Medicare spending, while providing new subscribers and profits for the insurance companies. Undoubtedly, the prior perception of Obama’s financial policies reinforced these suspicions about his health care plan, which is now as unpopular as the bank bailout.

This is the most perceptive analysis I've read in ages, and impressively free of cant.

01/22 03:16 AM Share

In Ann Arbor

I'll be in Ann Arbor this weekend to take part in a workshop on the role of South Asian Americans in U.S. politics. Though I haven't written much on this subject, it is of great interest to me and I'm very eager to learn from the other participants. I'm not sure if there are any readers of The Agenda in or around the University of Michigan campus, but consider coming by if you can.

01/22 02:40 AM Share

Kim Strassel on RomneyCare

Though I have plenty of problems with the Massachusetts health reform legislation, I really do think that it is important to maintain distinctions between state and federal programs. Kim Strassel writes,

Mr. Romney has at times put forward selective data suggesting the program's costs aren't exploding. At other times he has complained his state hasn't done enough to control costs. By October of last year he was arguing on CNN that "We . . . didn't have any pretense we would somehow be able to change health-care costs in Massachusetts." This, despite promising in 2006 that under his plan "the costs of health care will be reduced."

Through it all, Mr. Romney has never backed away from his individual mandate, which requires people to buy insurance or pay a fine. Yet Republicans and independents despise the mandate, with many believing it is downright unconstitutional.

Mr. Romney's subsidized coverage is meanwhile doing what entitlements do: crowding out private insurers, compounding the cost explosion, walking the state toward rationing. So long as the former governor clings to these central points of his health plan, he's on the wrong side of free-market policy and public opinion.

Are there Republicans and independents who believe that the Massachusetts mandate is unconstitutional under the constitution of the Commonwealth of Massachusetts? That is the relevant question, and I think the answer is no. The beauty of a federal system is that states are allowed to pursue their own understandings of what constitutes sound public policy. The Massachusetts health system is in need of reform, and one assumes that we will see further consolidation of health providers and, one hopes, the emergence of new low-cost providers.

But again, it is entirely consistent to favor a state system built on a strong individual mandate and oppose such a system at the federal level. If Romney does indeed run for president in 2012, and his success during the Brown campaign suggests that he learned a great deal from his last foray in national politics, I certainly hope that he runs as the candidate of a renewed federalism.

While some on the left believe that a federal polity is an outmoded idea — better to build a highly centralized state along the lines of Napoleonic France — I tend to think that rapid technological and demographic change only reinforces the case for more nimble, flexible, responsive governments that navigate between the need for economies of scale and the pitfalls of diseconomies of scale. It is certainly true that we've allowed our federal system to fall into a trap of institutional isomorphism and excessive overlap of responsibilities between the state and federal governments. That must be fixed, and it can be fixed if we can make an effective political case for doing so.

The drift now, of course, is very much in another direction.

01/22 02:35 AM Share

The Chart That Explains Everything

In July of last year, Felix Salmon posted a very useful chart (thanks to Jim Manzi for the pointer) noting which institutions received cash from the cash-strapped California state government and which received IOUs.

People who get California IOUs

Grants to aged, blind or disabled persons

People needing temporary assistance for basic family needs

People in drug prevention, treatment, and recovery services

Persons with developmental disablities

People in mental health treatment

Small Business Vendors

People California pays in cash

University of California

Public Employees’ Retirement System

Legislators, legislative employees, and appointees

Judges

Department of Corrections

Health Care Services payments to Institutional Providers

Think of this as a map of who has power and who does not. Small business owners, the poor, and the disabled are all given near-worthless scraps of paper. Public sector unions, powerful private interests, and a state university system that has great significance for vocal middle and upper-middle-class parents in the state get actual cash.

I'm an optimist. But this chart reveals a broken system, and we can't rely on Barack Obama or Scott Brown to save us. I've been very hard on partisanship from the left lately, but partisanship from the right can be equally counterproductive when it keeps us from confronting the central problem we face, namely a crisis of political irresponsibility. Many of my left-of-center friends and colleagues believe that the health reform proposal and cap-and-trade represent a close approximation of political responsibility. I see gimmicks and giveaways. But the difference between those proposals and the Medicare prescription drug benefit is one of degree, not of kind.

Getting off of this dangerous road is going to be extremely difficult, and I fear that only a handful of elected officials, like Mitch Daniels, actually understand the nature and the scale of the problem. We need more of them. That means, however, that the reflexive cheerleading for politicians who lean heavily on applause lines has to be stopped. The Tea Party movement is an encouraging sign, though I worry that it will just descend into the same old identity politics.

01/22 02:11 AM Share

Daniel Henninger on the Public Sector Machine

Via Mickey Kaus, check out this explosive column by Daniel Henninger of the Wall Street Journal.

The central battle in our time is over political primacy. It is a competition between the public sector and the private sector over who defines the work and the institutions that make a nation thrive and grow.

In 1962, President John F. Kennedy planted the seeds that grew the modern Democratic Party. That year, JFK signed executive order 10988 allowing the unionization of the federal work force. This changed everything in the American political system. Kennedy's order swung open the door for the inexorable rise of a unionized public work force in many states and cities.

This in turn led to the fantastic growth in membership of the public employee unions—The American Federation of State, County and Municipal Employees (AFSCME), the Service Employees International Union (SEIU) and the teachers' National Education Association.

They broke the public's bank. More than that, they entrenched a system of taking money from members' dues and spending it on political campaigns. Over time, this transformed the Democratic Party into a public-sector dependency.

This is extremely tough language that many on the left will find intemperate and overdrawn. It does, as Kaus suggests, explain a great deal about today's political landscape. Henninger, to his credit, also offers a gentle critique of Republicans.

This is why New Jersey's Chris Christie won running on nothing. It's why in California Carly Fiorina is within three points of Sen. Barbara Boxer. It's why the party JFK enabled, "the machine," is hitting the wall.

It really is true that Christie won running on nothing but vaporous promises, and Henninger's implicit suggestion is that Fiorina, a singularly unimpressive candidate, is running on much the same. I would be harsher on Republicans. While it's true that Democrats are more dependent on the public sector workforce and its endless expansion, Republicans are increasingly dependent on segments of the "private" sector that rely heavily on taxpayer dollars and favorable regulations and other invisible transfers, ranging from subsidized agriculture, subsidized resource extraction, subsidized home-builders, and defense contractors.

To the extent we're dealing with a battle between the public sector and the private sector, my sympathies are with the latter, and with civil society more broadly. Yet let's not kid ourselves into believing that the private sector hasn't been shaped — one could say warped — by rent-seeking. This is one reason why I think it is vitally important for conservatives to maintain critical distance from Republicans as well as Democrats. Curbing the growth of government isn't about favoring some industries and regions over others. It is about spending discipline that attacks weak claims and not weak claimants.

One hopes that there might be some common ground between right and left in dealing with the ever-expanding public sector. A few weeks ago, Matt Yglesias, an idiosyncratic thinker who is unrepresentative in many respects, wrote an eloquent post on the dangers posed by the public pensions crisis.

High up on my list of sources of national doom that people don’t talk about enough is the looming fiasco in pensions for state and local public employees. For obvious reasons, no governor or mayor wants to raise taxes or cut spending to give public employees a raise. But a public employee strike is also bad politics. So you can promise people generous amounts of money in the future via a defined benefit pension plan, and kick the can down the road.

The danger for the left, he goes on to suggest, is clear.

I think a high-tax regime is much more politically viable than American conventional wisdom would have you believe. But the viability of high-tax political units is driven by a belief among citizens that they are receiving valuable public services in exchange for their taxes. Paying off pension obligations to now-retired public employees, however, doesn’t fit that bill.

As for whether the left will embrace this message, I recommend taking a look at some of the derisive comments, which condemn Yglesias as an elitist who "hates public employees (and their unions)" and retirees.

Elitism is an interesting charge. There are Salams who've worked in the public sector and Salams who've worked in the low end of the private sector labor market. And I have to say, the advantages of working in the public sector are abundantly clear. This is not a sustainable situation.

Take a look at "An Unexpected Source of Income Inequality" at Political Calculations, a post I found via Will Wilkinson. The expansion of the federal workforce appears to be exacerbating income inequality. In itself, this is far from a dispositive case against the expansion of the federal workforce. But in light of the political incentives at work, it does merit some attention and concern.

01/22 02:08 AM Share

Thursday, January 21, 2010

Tim Lee on Citizens United

I heartily endorse Tim Lee's remarks.

I think supporters of BCRA misunderstand how corporations wield influence and dramatically overestimate the power of television advertisements. It’s true, of course, that a corporation prepared to spend $1 million on ads criticizing a particular legislator will get that legislator’s attention. But there’s nothing unique about this. It can also get his attention by hiring a lobbying firm that employs a former staffer. It can get his attention by arranging $100,000 in bundled contributions from executives, clients, and friends of the company. It can get his attention by creating astroturf organizations. And there are probably lots of other mechanisms I haven’t thought of.

The key difference between independent expenditures and these other mechanisms is that the independent expenditures are the most open and transparent. To run an effective “issue ad,” a corporation has to make an argument that is persuasive voters. I don’t want to sugar coat the situation; sometimes independent expenditures finance ads that are sleazy and misleading. But given a choice between corporations spending their money on ads about how Senator Smith hates America or spending their money on K Street, I’ll take the ads, because at least voters still get the final decision.

Read the whole thing.

More broadly, campaign finance regulations that restrict speech pose the danger of entrenchment, i.e., of present-day majorities binding future majorities in ways that fortify the power of existing political and economic elites.

01/21 02:50 PM Share

Daniel Gross on the GOP

Daniel Gross of Slate has a gift for smart framing devices and contrarian notions, like his inconveniently-timed but nevertheless convincing celebration of the housing boom. He's written an attack on congressional Republicans that gets at a number of themes that we've raised at The Agenda, albeit with a much sharper emphasis.

Throughout, there's been a consistent chorus: Deficits are too high, but we must cut taxes (a move that will increase the deficit), and we must not cut Medicare spending in any way, shape, or form (a move that will increase the deficit), and we must not raise taxes (a move that would narrow the deficit). The Bush-era Medicare prescription-drug benefit funded entirely by deficit spending is fine, but a broader package to expand health insurance coverage that generates long-term fiscal savings would be disastrous. The bailouts were wrong but so are proposals to recoup bailout funds through taxes on banks.

In fact, it's virtually impossible to find an elected Republican official who can speak intelligently and accurately about budget issues. Minnesota Gov. Tim Pawlenty is supposed to be a comer in national politics, but his piece in the inaugural issue of the Daily Caller was a howler. Budget analyst Stan Collender smacked him down for arguing that a $1.4 trillion deficit could be narrowed primarily by reducing "discretionary spending in real terms, with exceptions for key programs such as military, veterans, and public safety." Columnist David Brooks recently tried to elevate South Dakota Sen. John Thune into a serious thinker about fiscal issues. "He doesn't have radical plans to cut the federal leviathan. He just wants to restrain the growth of government to bring deficits down." In fact, Thune, like his colleagues, has no plans to cut the federal leviathan or bring deficits down. When I called his office in December to ask if Sen. Thune had ever laid out any specific combination of spending cuts and revenue enhancers that could reduce the deficit, the answer was a polite, genial no. Last summer, at a dinner with a group of conservatives where I heard frequent complaints about $9 trillion in deficits over the coming years, I asked the assembled if they could come up with budget cuts and/or tax increases that would cut $900 billion from the projected deficits—one-tenth of the total. The response: silence.

A few stray thoughts:

Gross is very right about almost all of this, particularly the sections where I've added emphasis, but I have a few caveats.

The Bush-era Medicare prescription-drug benefit funded entirely by deficit spending is fine, but a broader package to expand health insurance coverage that generates long-term fiscal savings would be disastrous.

Plenty of mainstream Republican candidates would happily object to the Medicare prescription-drug benefit. Also, the whole dispute about the broader package is whether it really will generate long-term fiscal savings, as Gross understands. He doesn't find the criticisms credible, I imagine, but there is a serious debate on the issue. The CBO estimates are constrained by procedural limitations that necessarily undermine its ability to provide real-world assessments re: the macroeconomic impact on employment levels, etc.

The bailouts were wrong but so are proposals to recoup bailout funds through taxes on banks.

This also seems completely plausible. Many people, conservatives and liberals, believe that we should relay on straightforward taxes, preferably consumption taxes, rather than a series of silo-ed taxes targeting particular industries and practices. Some worry that a TBTF tax would exacerbate the moral hazard problem, by turning the tax into something like a TBTF seal of approval. I'm more inclined to think that we should be open to ideas like the Diamond-Kashyap proposal, but again, this isn't quite as boneheaded as Gross suggests.

In fact, it's virtually impossible to find an elected Republican official who can speak intelligently and accurately about budget issues.

I would encourage Gross to contact Paul Ryan's office, or perhaps John Barrasso or, among Republican governors, Mitch Daniels. But let's be honest — he's right to suggest that the general landscape isn't very encouraging. Of course, confirmation bias is at work as well. Kent Conrad, an important player in the health reform debate, has consistently mangled the insights contained in T.R. Reid's The Healing of America. Barney Frank is obviously a clever person, but I don't find his take on the long-term fiscal picture terribly persuasive. The quality of leadership on both sides of the aisle is pretty low. I'll grant that there is much more enthusiasm for raising taxes among Democrats, and that congressional Republicans tend not to understand the need for tradeoffs.

And as for Scott Brown, Gross raises some of the objections that I raised in my Forbes.com column.

Brown is entirely in tune with his future Republican colleagues. He has railed against the proposed $500 billion cuts in Medicare and opposes the proposed tax on banks. In this op-ed, he says that the stimulus has failed to create a single job, rages about the rising debt, and advocates an across-the-board tax cut while offering no specifics on how to reduce the debt.

This is worrisome. I believe that Barack Obama campaigned for a health reform without an individual mandate that would include guaranteed issue and community rating, leaving aside his calls for deep tax cuts and major expansions of the middle-class welfare state. I am very pleased to report that Daniel Gross was adamant about damning the candidate at the time for his inconsistencies.

Wait a second ...

But that's too cute. Conservatives should hold themselves to a higher standard. The fact that many center-left economics journalists have become cheerleaders for the Democrats doesn't mean that the center-right needs to cheerlead for Republicans in every instance.

P.S. I'll add that Gross seems strangely pro-TARP, despite the many persuasive critiques that suggest that opponents weren't nihilists or failure advocates. Gross also believes that the stimulus package was worthy of passage, which, again, is debatable.

Ultimately, his frustration is with the incoherence of the electorate's views. Which is okay. I'll sign up for that. But that's the slow, steady work of persuasion. Gross should be exhorting Democratic candidates to barnstorm the country on behalf of TARP and other crucial aspects of his favored stability and recovery approach.

01/21 02:36 PM Share

Has Paul Krugman Been Paying Attention?

Paul Krugman writes:

As I’ve written before, the pieces of reform are interdependent. You can’t do one or two pieces on their own. Ban discrimination based on medical history, and you get an adverse-selection death spiral, in which healthy people opt out and premiums soar. You can’t solve that without both requiring that healthy people buy insurance and helping those with lower incomes afford the premiums. In short, you basically end up with the Senate bill.

Hasn’t anyone been paying attention here?

There is a small problem here. Given that the individual mandate in the Senate and House bills are very weak, the reform proposal that Krugman endorsed will could very well lead to "an adverse-selection death spiral, in which healthy people opt out and premiums soar." Krugman has devoted little if any effort to strengthening the individual mandate, which is puzzling. If we don't intend to use reinsurance or high-risk pools to change the incentives around adverse selection — if we use a crude ban — a strong mandate is vitally important. Of course, a stronger mandate would be very unpopular for the Democrats.

There are two conclusions one can draw: (a) Krugman is more interested in achieving a partisan victory and the actual policy outcome is secondary or (b) he hasn't been paying attention.

I actually don't think that Krugman is a reflexive partisan. He detests the right, yes, but he won't support Democrats in every instance. Yet I also find it hard to believe that he hasn't been paying attention, as he now focuses his efforts on policy debates rather than his old research agendas on trade, economic geography, etc., and he clearly has a high metabolic rate when it comes to consuming information. What we have here is a puzzle wrapped in an enigma.

It could be that I am overestimating the importance of a strong mandate, and that the normative pressure associated with a nominal fine would be enough to make "young invincibles" ignore the powerful incentives to free-ride. But surely that is an argument worth having.

01/21 01:58 PM Share

The Democratic Comeback

Since the start of the Obama presidency, I've made a few arguments, in columns and occasional media appearances, regarding what the president should do if his goal is to maintain and expand his political power and strengthen the Democratic coalition over the long term. Let me stress that I'm not talking about what the president should do in the abstract — in the abstract, I'd like him to govern like a conservative. That is a separate issue. So again, what Obama should do to advance his agenda:

(1) Focus on the right kind of bipartisanship. At the start of health reform, the White House seemed strangely focused on winning over center-right policy wonks by selling health reform as entitlement reform. The idea, I suppose, was to craft a proposal that moderate Republicans could embrace. This was exactly backwards. Conservative-leaning independents had abandoned President Bush for a variety of reasons, from the war in Iraq to — and this is important — Social Security reform. Of course, some conservative voters loved the idea of voluntary personal accounts. Older white voters who've seen their private pensions perform poorly, or go from defined benefit to defined contribution, felt otherwise. Many were Republicans, and that was an early source of discontent on the right in 2005 and 2006.

Rather than focus on Republican legislators, Obama should have focused on Republican voters, particularly older voters. The president performed relatively poorly with older white voters in 2008, and blunting the Republican advantage here was vitally important. Talking at length about trimming Medicare was not the way to do it. Instead, he should have advanced a Medicare buy-in from the beginning, plus an expansion of Medicaid. This was easy to understand and it would put Republican legislators in the same difficult position they found themselves in during the S-CHIP debate. Personally, I think Medicaid expansion should only happen if we federalize the program. But we're not talking about what should happen in the abstract.

Moreover, it would block off the opportunity Republicans gleefully seized over the last year, namely the opportunity to become the defenders of Medicare. Democrats condemn this as a cynical move. But politics is hydraulic — if a large constituency wants something and is not being served, the two-party system creates powerful pressures to exploit that underserved market.

Ezra Klein is now making the case that the White House should pursue this strategy going forward.

Democrats could scrap the legislation and start over in the reconciliation process. But not to re-create the whole bill. If you go that route, you admit the whole thing seemed too opaque and complex and compromised. You also admit the limitations of the reconciliation process. So you make it real simple: Medicare buy-in between 50 and 65. Medicaid expands up to 200 percent of poverty with the federal government funding the whole of the expansion. Revenue comes from a surtax on the wealthy.

And that's it. No cost controls. No delivery-system reforms. Nothing that makes the bill long or complex or unfamiliar. Medicare buy-in had more than 51 votes as recently as a month ago. The Medicaid change is simply a larger version of what's already passed both chambers. This bill would be shorter than a Danielle Steel novel. It could take effect before the 2012 election.

The goal of the reform effort, as Klein has explained, was to create a universal structure. This effort, however, yielded an unworkable universal structure that was — worse still — politically near-toxic.

So again: don't worry about conservative wonks or Republican legislators. Worry about actual voters, who, to the dismay of yours truly, absolutely love Medicare and Medicaid.

(2) Wage war on Wall Street. In August, I wrote a piece that apart from advocating the aforementioned strategic shift on health reform (which I discuss in the aforelinked pieces in greater detail):

Earlier this month, The Washington Post published a fantastic dispatch by Sandhya Somashekhar on Virginia's gubernatorial race. Somashekhar interviewed a number of Obama voters who felt sorely disappointed by what they saw as the president's failures, and they were thus tempted to support Republican candidates. Interestingly, they didn't see Obama's supposed embrace of big-spending liberalism as his central failure; rather, they believed that while he was bailing out rich bankers, he wasn't doing nearly enough for working and middle class families. Stephanie Slater, who according to Somashekhar leans Republican, was most frustrated by Obama's failure to curb excessive Wall Street compensation and to aggressively regulate credit companies. Neither of these are positions you'd associate with the free market right. Rather, we associate attacks on predatory lenders and financial tycoons with the populist left. ...

The political antidote is awfully simple: call for a sweeping right-to-rent for foreclosed homeowners, an idea championed by liberal economist Dean Baker; keep hammering home the notion that only the rich will see tax increases, despite the fact that taxes will eventually have to increase for everyone; and find new and creative ways to stick it to wealthy bankers. On that last front, a number of economists, including Luigi Zingales of the University of Chicago's Booth School of Business, proposed lower-cost alternatives to the bailouts that were never seriously pursued. Going forward, it's hard to think of populist measures that are also good policy, but that's not the central issue: the public wants to know that Obama is on their side.

Granted, this wasn't terribly detailed. But imagine how different the world would look if the president designed to pivot in a more populist direction in August.

Now, of course, the White House is belatedly embracing the war on Wall Street, and my guess is that they will put conservatives in an awkward position. I tend to favor fairly regulations along the lines proposed by Nicole Gelinas and Zingales, so I think Republicans can counter this wave. But I'm not sure they have the time or inclination to do so — and they're getting cocky.

01/21 11:35 AM Share

Mark Leibovich on Scott Brown

Mark Leibovich's profile of Scott Brown is a good read, and a nice contrast with Liz Robbins' effort from just before the special election. It's prompted a few thoughts.

(1) Dig into anyone's biography and you will find tales of woe, whether due to external circumstances — the scarring effects of poverty, growing up without a parent, mental illness or crippling self-doubt, drug or alcohol abuse — and in a sense, our fixation on the lives of celebrities and politicians only serves to train a lens on particular manifestations of these near-universal challenges. Imagine a VH1 Behind the Music episode covering the lives of everyone you've met who has somehow been brought low by a combination of personal demons and unfortunate circumstances. Then consider that most of the well-adjusted, high-functioning adults you know have overcome some unspoken or mostly unspoken misery.

One pattern you find is that some people can't get over what they see as their own victimization at the hands of neglectful parents or broken institutions, and they feel a need to direct their anger and bitterness towards some outside force that serves as a stand-in for the evildoers. This often serves as a powerful motivation for political activists on all sides. Others who've had similarly difficult experiences embrace a different narrative, e.g., the parents and institutions faced problems and limitations of their own, and life is always uneven and occasionally tragic. You have to get on with your life and do your best, etc. Or the only person you ultimately have control over is yourself — your moods, your habits, your behavior can be shaped and disciplined, and if you make the right choices you can avoid making the same mistakes as those around you.

Perhaps the most admirable thing about Barack Obama, as far as I can tell from the biographical accounts and from his own words, is that his self-narrative really does seem to be about making the best of a life that's had plenty of ups and downs. A friend of mine was telling me about her conservative Republican mother came to vote for Obama after reflecting on his biography, and of how proud she'd be if Obama were her son. Now, this isn't how I tend to evaluate candidates, and we can all criticize it and with good reason. But this is worth thinking about. My rather strong disagreements with Obama aside, he does seem like an upstanding family man of strong character, and this reflects active choices that he made about what to do with his experiences.

Reading Leibovich's profile of Scott Brown, I get the sense that he's had a similarly remarkable life. I say surprised because, frankly, I'm as susceptible to stereotypes as the next guy. And though I've found him an impressive candidate from the start, the public image of Scott Brown made him seem like a prosperous suburban dad with a healthy sense of self. One could get the impression that Brown was politically motivated in large part by a desire to keep what he has. Now, there's nothing wrong with that. But it doesn't really resonate with larger themes about patriotism and service. This is an image that plenty of people — including many of my left-wing acquaintances friends who saw Brown's victory as a profound tragedy — find very distasteful. The fact that Brown drove a large truck, a stunt one friend referred to as odious rich-guy populism, was the icing on the cake.

But it turns out that Brown had a long, hard road to his success. As Leibovich reports, Brown had an extremely difficult early life. His parents divorced when he was an infant, and he dealt with a parade of surrogate parents, not all of them pleasant characters. One is reminded of Andrew Cherlin's book The Marriage-Go-Round on how the unstable partnerships of parents can impact the lives of children.

“I grew up fast,” Mr. Brown recalled. “I remember waking up in the middle of the night, and hearing the banging and the screams and having to be the 5- or 6-year-old boy having to save Mom.”

He grew his hair long, listened to Aerosmith and Kiss and, at 12, was arrested for shoplifting a bunch of albums (Black Sabbath, Deep Purple and Grand Funk Railroad) at a local mall.

He went before a judge, Samuel Zoll, who invited him into his chambers and asked him about his life. Mr. Brown responded by saying he loved basketball and had younger half siblings who looked up to him. “How do you think they would like to watch you play basketball in jail?” the judge asked, according to Mr. Brown’s telling. Judge Zoll demanded that Mr. Brown write a 1,500-word essay about the episode and eventually let him go.

Mr. Brown said that experience was a pivot point in his life, leading him to be more serious about school and sports.

And that's roughly when he joined the National Guard, a decision that Brown credits with transforming his life for the better. During the campaign, Brown often mentioned his 29 years of service in the Guard, noting that he was just a few months shy of 30 years. There was something about Brown's pride in his service that seemed — for a politician — strangely uncalculated. Sure enough, Leibovich's profile suggests that Brown credits the Guard with turning things around for him. This helps provide some emotional context for Brown's national security views.

The details of Brown's rise to success are markedly different from Obama's. The president flourished academically from a fairly early age, and the institutions that shaped him most seem to be the unions and community organizations he worked with as a young man in Chicago and Harvard Law School. Brown also attended elite educational institutions, yet you get the impression that the Guard has more to do with his self-perception than Tufts or Boston College Law School.

As many observed during the 2008 presidential campaign, our political divides map onto cultural or even psychographic divides. Barack Obama represented a way of life that many Americans identity with and aspire to — liberal, urban, cosmopolitan, tolerant. Sarah Palin, in contrast, represented a life defined by faith, family, rootedness, a strong sense of right and wrong. Though Brown is by all accounts a social moderate if not a social liberal, his biography resonates with a number of conservative themes. The need for strong, intact families is something that he can appreciate on a visceral level. His rootedness is different from that of a Sarah Palin, yet his Boston accent and Red Sox enthusiasm mark him as a proud product of his surroundings who hasn't strayed far from home for long.

Martha Coakley, incidentally, was a similarly rooted person, yet like most people, she didn't have the gift for connecting with people drawn from different circumstances. Obama's great strength as an organizer may have come from his need to understand and adapt to new environments, the product of a somewhat itinerant childhood that often saw him forced into the role of newcomer. So despite Obama's academic success, he could come to Chicago's South Side and speak the language. For Brown, being the smartest kid in the class wasn't at the core of his identity growing up — rather, it was being a long-haired shoplifting punk. So you can see why he can mix with people at places other than Tufts alumni gatherings.

The more I learn about Brown, the more I think that something very rare and significant has just happened. Chances are that he will fade from view, for better or for worse. But a political personality like his only comes to light very rarely.

(2) Leibovich writes:

Mr. Brown was considered a relatively conservative Republican in the Legislature, which would place him closer to the center among Senate Republicans in Washington.

This, of course, doesn't jibe with Boris Schor's analysis. Schor maintains that Brown is, according to one objective measure, more liberal than Dede Scozzafava. But perceptions count, and I assume that Leibovich interviewed many elected Republicans and Democrats to draw his conclusion.

01/21 10:59 AM Share

Wednesday, January 20, 2010

Jim Manzi on Obama's Gamble

Read the whole thing:

One practical lesson that I believe operational experience teaches people is that you always need a lot more margin for error in any plan than you would rationally believe. In this light, Obama’s decision to push for a health care reform plan that could be threatened by losing one seat in the senate is what is troubling. You couldn’t predict this specific event, but it was always safe to assume that something would go wrong as the legislative process dragged on. It is my theory that his lack of executive experience is showing here, just as it did on cap-and-trade.

Now, it’s possible that there was no realistic alternative available as he was setting out on this a year ago – in effect, he had to go for broke, because there was no 80-vote alternative that he considered to be in any way worthwhile, and all we’re seeing now is that the coin came up tails for him on a bet that was smart at the time. Or, as I said, it might be that he has some way to pull a rabbit out of the hat now. Events will show us whether or not that is true. But barring these alternatives, it seems to me that Ross Douthat offers good advice: basically, take half a loaf and get on with things.

I'm inclined to blame Rahm Emanuel, who ought to have given the president better advice. At least some on the left seem to agree. Suddenly Rahm doesn't seem quite so intimidating.

01/20 06:33 PM Share

Patrick Ruffini Matters

There are many well-regarded Republican strategists out there — Karl Rove, Mike Murphy, Dick Wadhams, and plenty of others that you've no doubt heard of — but new media strategist Patrick Ruffini is a rare strategist who has also emerged as a a formidable writer and thinker in his own right. I think I've learned more reading Ruffini that I have from a dozen other blogs focused on campaigns and elections. As David Weigel observes in an insightful postmortem of the Massachusetts race, the very influential Ruffini played a not insignificant role in Scott Brown's victory.

In late December, not far under the radar, the Brown campaign was sold to influential and far-flung activists as a winnable race–a chance to stop complaining and actually break the back of the Obama administration. In a December 30 blog post titled “Fight Everywhere: Scott Brown for Massachusetts,” GOP strategist Patrick Ruffini–who launched RebuildtheParty.com with Willington after the 2008 elections, and who provided some software support for Brown, made what was, at the time, a dreamy-sounding argument that Brown could win. “Any chance we have to take out the Obamacare abomination,” he wrote, “however remote, is a fight worth fighting.”

I remember the post well. It is vintage Ruffini: terse, tough, and very smart.

The case for a Brown upset can be summed up as follows: A January 19th special election would likely skew the turnout universe more Republican than it ever would be in the Bay State. The race has received comparably little attention, so turnout is likely to be low, and a minor surge in Republican turnout could go a long way.

Because Ruffini did a small amount of work for Brown, the thought crossed my mind that he was engaging in wishful thinking, but only briefly.

Though Ruffini has worked for a wide array of clients, including corporate clients, he does have a strong ideological core — my read is that he's a mix of national security conservative and supply-side libertarian. Suffice it to say, we don't agree on everything. There is, however, no arguing with his success. His work with Mindy Finn for Bob McDonnell's campaign in Virginia was extraordinary: they crafted a new media strategy that allowed the campaign to deploy its resources in an extremely cost-effective manner.

Just as Karl Rove began in direct mail, my guess is that Ruffini is going to graduate from new media strategist to running a major campaign in the near future. I'm noting Ruffini's rise in part because I saw it coming. He first came to my attention when he was an undergraduate student at the University of Pennsylvania in 2000, when he campaigned on behalf of Sam Katz, the Republican candidate for mayor. Some years later, I profiled him in an article that wondered whether the rightroots could ever match the netroots — a possibility that at the time seemed very much in doubt.

Outrage is the logistical backbone of any political movement, he told me—it’s the equivalent of Wal-Mart’s supply chain. No outrage, no ActBlue. No outrage, no Daily Kos. No outrage, no Obama.

“What are we outraged about?” Ruffini mused. “If the underlying message is not right, you can’t sell that. You can’t put a shiny package on it.”

This is not to say that infrastructure-building is trivial. Direct mail didn’t just reflect outrage; it helped deepen and define it. Shrewd political entrepreneurs don’t just push pet causes. They follow the grassroots conversation, whether it happens online or off, and identify potent sources of political discontent.

So what will outrage conservatives enough to spark a rightroots-driven revival? To find out, we may have to wait for an Obama administration.

I have to say, identifying Patrick Ruffini in 2008 as the go-to person for understanding the future of the GOP wasn't rocket science. But I'm glad I landed the interview when I did.

01/20 05:56 PM Share

The Stimulus Consensus?

Jonathan Chait writes:

But would a $400 billion stimulus consisting of 50% tax cuts really be different than an $800 billion stimulus consisting of 40% tax cuts? The stimulus, remember, is a centrist policy, reflecting an economic consensus, and drawing sharp liberal criticism for its insufficient size.

And the link to "economic consensus" takes you to a news article in the New York Times by Jackie Calmes and Michael Cooper. The article begins by noting that some economists believe that the stimulus package was too small.

No, some conservative-leaning economists counter, we were right: The package has been wasteful, ineffectual and even harmful to the extent that it adds to the nation’s debt and crowds out private-sector borrowing.

These long-running arguments have flared now that the White House and Congressional leaders are talking about a new “jobs bill.” But with roughly a quarter of the stimulus money out the door after nine months, the accumulation of hard data and real-life experience has allowed more dispassionate analysts to reach a consensus that the stimulus package, messy as it is, is working.

The legislation, a variety of economists say, is helping an economy in free fall a year ago to grow again and shed fewer jobs than it otherwise would.

What I find puzzling is this: isn't it obvious that one can believe the first proposition — that "the package has been wasteful, ineffectual and even harmful to the extent that it adds to the nation’s debt and crowds out private-sector borrowing" — and also the second — that it is "helping an economy in free fall a year ago to grow again and shed fewer jobs than it otherwise would"?

Spending vast sums of money will tend to perk up the economy. Questions remain, however: was this a more effective approach than a large Investment Tax Credit or payroll tax relief or some combination of both? Was this more effective than a more front-loaded spending package? Desmond Lachman at AEI has argued for a much more aggressive, front-loaded stimulus, yet this doesn't cut across the conventional divide. My bias was towards a stimulus modeled very loosely on the German kurzarbeit and an ITC.

Martin Feldstein adds:

While some conservatives remain as skeptical as ever that big increases in government spending give the economy a jolt that is worth the cost, Martin Feldstein, a conservative Harvard economist who served in the Reagan administration, said the problem with the package was that some of its tax cuts and spending programs were of a variety that did little to spur the economy.

The first clause gets at one relevant question, albeit in a roundabout way, i.e., whether the stimulus delivered sufficient bang-for-buck. The latter is a matter of the design of the stimulus.

So again: the consensus that some form of stimulus was called for is a trivial observation. Most conservatives favored some form of stimulus. Jeffrey Sachs, who strongly opposed the federal stimulus package, favored some form of stimulus, and the list goes on. There doesn't appear to any consensus regarding the appropriate composition of the stimulus. So does this sentence sound right?

The stimulus, remember, is a centrist policy, reflecting an economic consensus, and drawing sharp liberal criticism for its insufficient size.

I have to assume that "the stimulus" refers to the package passed by Congress. Is it meaningful to say that the package passed by Congress reflects an economic consensus? I'm not sure that's true.

I'll end with a quote from Sachs:

President Barack Obama’s economic team is now calling for an unprecedented stimulus of large budget deficits and zero interest rates to counteract the recession. These policies may work in the short term but they threaten to produce still greater crises within a few years. Our recovery will be faster if short-term policies are put within a medium-term framework in which the budget credibly comes back to balance and interest rates come back to moderate sustainable levels.

Sachs is strongly in favor of sharp tax increases and a variety of other policies that conservatives abhor, but he is certainly a credible voice who speaks for many.

Chait also writes:

Obama's health care plan is the outline of a notion that had significant GOP support before the party successfully whipped its members into withdrawing cooperation. The result is still Romneycare plus cost controls.

It is certainly true that some members, like Grassley and Graham, were sympathetic to something like an individual mandate. Others, like Corker, favored something like universal catastrophic coverage. But as for whether there were half a dozen votes for something like the Senate health bill among Republicans in a less hyperpartisan world, I'm not sure. One obvious issue is that Republicans in the House tend to represent older, whiter constituencies that are very wary of Medicare cuts, Republican rhetoric notwithstanding.

01/20 05:16 PM Share

Is Massachusetts a High-Tax State?

I made that casual assertion yesterday, but I was wrong. This report from the indispensable Tax Foundation suggests that Massachusetts has, as of 2008, a relatively modest state and local tax burden, placing it 23rd in the nation. This reflects activist efforts to restrain growth in taxes, including a near-miss effort to repeal the state income tax in 2002. Given the fact that state spending is growing at a fast clip, it's not clear that state taxes will stay fairly modest, but we'll see.

I still think that eliminating the state and local tax deduction would meet more resistance in Massachusetts than, say, Arizona, but it would encounter far more resistance in heavily taxed New Jersey, New York, Connecticut, and Maryland, the numbers 1-4 most heavily taxed states respectively, leaving aside federal collections.

P.S. It's also worth noting that Massachusetts is, like Connecticut, a relatively affluent state, and so federal tax collections are very high. As a result, Massachusetts has the seventh-latest "Tax Freedom Day," the Tax Foundation's measure of the number of days it takes to pay off your combined state, local, and federal taxes.

I've heard from readers on both sides: some suggest that I factor in environmental and zoning regulations that raise the cost of construction and thus the cost of housing in Massachusetts, counting this as a kind of tax. This strikes me as a coherent view. It does, however, change the terrain of the debate, as one could also factor in the cash value of public safety and an environment relatively free of mercury and particulate matter. Assigning a cash value to these properties is far from impossible, but it will of course be contested.

01/20 08:03 AM Share

Daniel Larison on the Lessons of the Special Election

This is a doozy of a post, and not unconvincing:

The easy analysis of what is happening is to say that “even in deep-blue Massachusetts people are rejecting Obama’s agenda,” but none of this makes any sense. I don’t say this because I have any sympathy for Obama’s domestic agenda, but because I don’t think there is any way to understand this response by voters in a heavily Democratic state except as an expression of pure anti-incumbency sentiment and a desire simply to shake things up. After years of mocking Obama’s signature campaign slogans, Republicans have found that their best path back to power is exploiting the desire to change for change’s sake.

Assuming that Brown will win today, the lesson has to be that no winning party should ever attempt to deliver on its promises, and under no circumstances should it follow through and actually deliver promised legislation. I say this as someone who would be happy to see the current health care legislation fail.

01/20 01:23 AM Share

Tuesday, January 19, 2010

What Brown Should Do Next

Who am I to say? I'm just a blogger. But in our great democracy, I can add my two cents too. So here goes:

(1) Take federalism seriously. If the Democrats don't engineer passage of health reform bill this week, press for steps that would improve the workings of government at all levels, the most important of which would be to federalize Medicaid. A broader federalism agenda would include getting rid of the state and local tax exemption, a move that would strongly encourage states to reform their fiscal policies. But it wouldn't be popular in a high-tax state like Massachusetts.

(2) Prove that you're a centrist. There will be heavy pressure on Brown to move to the right. Yet Brown has a reelection to win in 2012, and this race was very unique. The next time, Massachusetts Democrats will send a far more formidable candidate after him. Brown has to remember the suburban moderates who won him his seat. Conservatives won't always like the direction this takes him in — I imagine it will make me pretty uncomfortable from time to time — but one of the central jobs of a legislator is to faithfully represent the interests of your constituents, consistent with good judgment and a recognition that the national interest should ultimately trump parochial concerns. Voters seemed to like Brown's idiosyncratic mix of positions. Stay New England-y. Have lunch with Olympia Snowe and Susan Collins. Campaign with Kelly Ayotte. Talk to John Sununu. Make it work.

(3) Keep using new media effectively. After a race like this, all of those Tweets and blog posts and YouTube videos will of course fall off. But Brown has built up a formidable new media infrastructure and he shouldn't let it lie fallow. He should help his supporters stay engaged. As for how, I have no clue, but I'll bet Republican strategist Patrick Ruffini does.

One question for Brown is whether he wants to focus on building his national profile — campaigning with Marco Rubio and other star conservative candidates — or building a base in Massachusetts. Very frankly, I think that Brown has demonstrated a real gift for national politics: his biography is compelling, he is an effective speaker, he had the discipline to take the high-road in the campaign. There were no macaca moments this time, and I have to assume that there were many, many strategists and activists very eager to manufacture one. Under this level of scrutiny, Brown thrived. And this after being a purely local politician for years. That's not normal. It is an Obama level of talent and discipline and work ethic. We know how that turned out.

I'm not saying that Scott Brown should run for president tomorrow. Just imagine the mildly perturbed look on Mitt Romney's face! Rather, I'm saying that Brown has an opportunity to do something truly extraordinary. He can help shape the Tea Party movement as it grows and hits the mainstream, by giving it a narrative and a policy substance that it's still yearning for. To me, the right narrative and policy platform is all about federalism and a general deconcentration of power.

That's one reason, incidentally, why I'm disappointed in Brown's stance on the idea of a too-big-to-fail bank tax. But more on that tomorrow.

Also: How the heck did this happen?

01/19 10:39 PM Share

Is There Such a Thing as a Real Federalist?

The implicit view of many smart bloggers, including Matt Yglesias, appears to be no.

But assuming you’re interested in the issue of whether or not the proposed federal health plan will work well on the whole, Brown’s point of view strongly suggests that it will. Massachusetts did something similar a few years back and it’s worked so well that even Republicans like Scott Brown happily embrace it. Canadian Conservatives love Medicare, British Tories love the NHS, and Massachusetts Republicans love Commonwealth Care. There’s a pattern here.

But Brown supported RomneyCare before it happened. (As I noted yesterday, RomneyCare also has a much stronger individual mandate than the Senate bill, which is not trivial.) This wasn't an after-the-fact change of heart or embrace of the status quo. He also fought Romney for cutting education funds. He believes in a big state government that meets the needs of veterans, public school students, and many other constituencies besides. He just doesn't think that the federal government can do as good a job of finding the right policies for Wrentham or Dedham or North Adams or what have you than the local legislature.

Am I the only person who doesn't think that this view is obviously crazy or bankrupt?

01/19 10:21 PM Share

Ayla Brown and the Culture Wars

The fact that Scott Brown has a basketball star daughter who appeared on American Idol reflects in a small way how American conservatism has changed. Many still believe that conservatives are hidebound reactionaries who can't stand the idea of women flourishing in professional life, and Bob McDonnell's thesis briefly resurrected that notion in public consciousness. But of course McDonnell's worldview has changed since 1989, and today most of the independents and Republicans who tilt to the right see equality for women as central to American freedom.

The polls also suggest that Brown performed very well with under-30 voters, which could mean that I won't have to have another endless conversation about whether the right has lost Generation Y for good. My guess is that these voters in their late teens and twenties have scarcely any recollection of the Reagan years — we are now as far from the 1980s as Marty McFly was from the 1950s in Back to the Future — and they are very comfortable in the very mixed, very relaxed hybrid culture that's emerged in the decades since and that's embodied in shows like American Idol.

The fact that America elected an African American president is a tremendous source of pride to these voters, I'm guessing. Yet that doesn't change the fact that many feel disappointed with a technocratic president who hasn't lived up to some of his more grandiose promises about transparency and a revival of grassroots democracy.

P.S. I originally wrote "tremendous source of proud." Very embarrassing.

01/19 10:09 PM Share

Brown vs. Bangladesh?

Matt Yglesias suggests that Bangladeshis will lose if Scott Brown is indeed elected to the U.S. Senate.

Biggest losers by far will be the people of Bangladesh and other low-lying coastal areas. The odds of a cap and trade bill passing in 2010 never looked great, and if Brown wins they’ll look worse.

Because my parents are from Bangladesh, this is a subject of great interest to me. My sense is that the vitally important thing for Bangladeshis is to live in a wealthier world that is capable of solving pressing problems like the emerging phosphorous deficit, and that allows for the kind of human capital investments that make a society more resilient in the face of disaster.

01/19 09:41 PM Share

Glenn Greenwald on David Brooks

One of my bedrock principles is that you should give credit where credit is due. David Brooks is my favorite columnist and he expresses my views with clarity, wit, and insight that I sorely lack. But Glenn Greenwald has written a tough (and pretty intemperate) critique that merits consideration from Brooks and other conservatives. Noting Brooks's argument that the unpopularity of health reform means that Democrats should abandon their current effort, Greenwald writes:

I remember another policy that was even more unpopular with the "Ameican people" than Obama's health care plan. It was called the Iraq War. Throughout 2006 and 2007, overwhelming majorities of Americans were not only opposed to the war, but favored a quick timetable for withdrawal. So intense was the opposition that the Republicans suffered one of the century's most thorough and humiliating midterm election defeats in 2006. Yet there was David Brooks writing column after column demanding that public opinion be ignored,mocking withdrawal as deeply Unserious, advocating continued occupation, insisting that the superior wisdom of a select elite govern our policy rather than ignorant mass sentiment. Brooks and his neoconservative friends wanted to keep sending other Americans (but never themselves) off to that war to die even though only a small minority of citizens supported it. Marie Antoinette indeed. Opposition to Bush's surge was particularly intense — close to 70% — yet Brooks was heaping praise on John McCain for ignoring public opinion and supporting Bush's plan ("when the Iraq war was at its worst, and other candidates were hiding in the grass waiting to see how things would turn out, McCain championed the surge . . . . He did it knowing that it would cost him his media-darling status and probably the presidency. But for years he had hated the way the war was being fought. And when the opportunity to change it came, the only honorable course was to try").

I happen to have agreed with Brooks then and I am sympathetic to his view now. It is important to identify a consistent reason why this is so. For me, the thread is pretty simple. Unlike Greenwald, I think that the Democratic reform model won't work as intended, and that we'd be far better off starting from scratch. I would believe this if the Democratic reform model were far more popular than it is, and I'd want elected officials to act accordingly. In contrast, I believed that the surge strategy would work and I'm glad that President Bush did not embrace the majority view. I don't expect Greenwald or anyone else to accept my conclusion if I don't make an effective, convincing case.

01/19 09:28 PM Share

More Centrist Than Clinton?

David Leonhardt makes the case that Obama's health reform is more "centrist' than Bill Clinton's proposal. The quotation marks are there because I'm not sure exactly what Leonhardt means by the term — I assume he's suggesting that it is further to the right, as suggested by the notion that the Senate and House bills are "substantively bipartisan." Can I argue that opposition is "substantively bipartisan," as many on the left oppose the Obama approach on the grounds that it channels vast resources to private insurers? Somehow I don't think so. But moving along:

The current versions of health reform are the product of decades of debate between Republicans and Democrats. The bills are more conservative than Bill Clinton’s 1993 proposal. For that matter, they’re more conservative than Richard Nixon’s 1971 plan, which would have had the federal government provide insurance to people who didn’t get it through their job.

I'm very happy to acknowledge that there are parallels between the Nixon approach and the Obama approach. Somehow I don't think that this will make it onto Obama for America bumper stickers come 2012. So how is the Obama proposal more conservative than the Clinton proposal? The following is Leonhardt's interpretation.

In 1993, Mr. Clinton pushed for putting a cap on the growth of insurance premiums — an idea similar to having a national health budget, which conservative governments in other countries have done. Today’s Democrats saw that move as too radical. Instead, they have borrowed Nixon’s old push for prepaid group practices, which are now called accountable care organizations.

Together, the cost-control measures are serious enough that the Congressional Budget Office estimates they would save the government $1 trillion in the next 20 years, over and above the cost of covering the uninsured. Some experts remain doubtful of these projections. Others, though, think the budget office is underestimating the savings, as it has with past Medicare changes.

That is one reading of the shift. Another reading, at least equally plausible, is advanced by Michael Cannon of the Cato Institute.

My read of the CBO’s score of the Clinton health plan is that the private-sector mandates accounted for around 60 percent of the Clinton health plan’s total cost, the remainder being (traditional) government spending. So how is it that the CBO made the full cost of the Clinton health plan apparent to the public in 1994, but may now be revealing only 40 percent of the cost of the Obama health plan?

For some time, I’ve suspected the answer is that congressional Democrats have very carefully tailored their individual and employer mandates to avoid CBO’s definition of what shall be counted in the federal budget. Democrats are still smarting over the CBO’s decision in 1994. By revealing the full cost of the Clinton plan, the CBO helped to kill the bill.

That is, the decision to tweak the legislation so the CBO won't count insurance premiums to heavily regulated insurers as taxes made it look far less expensive than the Clinton proposal. This could have been a substantive concession, yet Cannon suggests otherwise.

Proposals that would result in a complete cost estimate — such as the proposal by Sen. Rockefeller discussed in the Medical Loss Ratios memo — are dropped. Because we can’t let the public see how much this thing really costs.

More centrist is one way of putting this. Learning from experience how to create the appearance of centrism is another. It's possible that Cannon is being unfair. I'd love to see a reform advocate at the Times seriously address his contention.

I wish that I had the same trust in the wisdom of our public officials as many of my colleagues. But I lived through the Bush years, when many conservatives weren't nearly skeptical enough of expansions of federal power. The fact that members of the Obama administration are said to be smarter, hipper, and nicer is interesting, but that doesn't have much bearing on the dysfunctions that derive from the extreme centralization of power.

01/19 09:18 PM Share

A Thought on the Massachusetts Race

One often hears complaints about mudslinging in campaigns, and an excessive focus on personal missteps rather than policy differences. My impression has been that the special election in Massachusetts has been unusually focused on the latter. And that's a very good thing. The narrative about Bush-Rove hardball tactics is still invoked, as is the canard about the supposed insanity of people like me who think that government spending should be sustainable. Yet there is overwhelming evidence that the Brown campaign has spent very little time raising legitimate questions about Coakley's judgment based on her record, sensing, perhaps, that it's best to focus on pressing national issues.

Consider this in the context of Keith Olbermann's colorful description of Scott Brown.

"In short, in Scott Brown we have an irresponsible, homophobic, racist, reactionary, ex-nude model, teabagging supporter of violence against woman and against politicians with whom he disagrees. In any other time in our history, this man would have been laughed off the stage as an unqualified and a disaster in the making by the most conservative of conservatives. Instead, the commonwealth of Massachusetts is close to sending this bad joke to the Senate of the United States."

Given that a far more effective line of criticism against Brown is that he is too soft on taxing and spending — more effective because it reflects reality — the "reactionary" line is puzzling. By now, I suppose the use of crude sexual innuendo is a commonplace on Olbermann's program, so that shouldn't come as a surprise. The homophobic line is presumably in reference to a Brown blunder, when he foolishly said that the following.

Mr. Brown narrowly won his State Senate seat in 2004 in a special election when his predecessor, Cheryl Jacques, left to become president of the Human Rights Campaign. Three years earlier, he had enraged gay rights activists by saying that it was “not normal” for Ms. Jacques, who is a lesbian, to have a baby with her partner.

That's from a Liz Robbins profile in the New York Times, paired with a profile of Martha Coakley. Matt Welch has characterized the twin profiles as a clear example of media bias.

I won't necessarily go as far as Welch. But consider this: Robbins mentions the Brown remark, and that he opposes same-sex marriage. She did not, however, mention that Brown is a supporter of civil unions, which is salient information.

And in the Robbins profile of Coakley, she fails to even glancingly mention the greatest political challenge Coakley has faced to date, vividly described by Michael Rezendes in the Times' sister newspaper, the Boston Globe.

In October 2005, a Somerville police officer living in Melrose raped his 23-month-old niece with a hot object, most likely a curling iron.

Keith Winfield, then 31, told police he was alone with the toddler that day and made additional statements that would ultimately be used to convict him.

But in the aftermath of the crime, a Middlesex County grand jury overseen by Martha Coakley, then the district attorney, investigated without taking action.

It was only after the toddler’s mother filed applications for criminal complaints that Coakley won grand jury indictments charging rape and assault and battery.

Even then, nearly 10 months after the crime, Coakley’s office recommended that Winfield be released on personal recognizance, with no cash bail. He remained free until December 2007, when Coakley’s successor as district attorney won a conviction and two life terms.

This prompted the late Larry Frisoli, a Cambridge attorney who has represented families in sex abuse cases, to run against Coakley as a Republican. Rezendes is very fair to Coakley in the story, and she defended her actions in the case:

Coakley pointed out that Winfield had no prior convictions, had deep roots in his community, and had appeared voluntarily at his arraignment after a 10-month investigation, leaving her office with scant reason to ask for cash bail and little reason to believe that a judge would order it.

Yet doesn't this seem at least a little relevant to a profile concerning Coakley's record as attorney general? It was, again, the last time she faced a serious challenge. Does this seem as important as a boneheaded remark that Brown made in a state senate campaign?

P.S. I clearly wrote too soon. Looks like Brown's opponents have found a misstep that they can exploit.

01/19 01:36 PM Share

Andrew Sullivan on Scott Brown and Tea-Partyism

Andrew writes:

I can see no alternative scenario but a huge - staggeringly huge - victory for the FNC/RNC machine tomorrow. They crafted a strategy of total oppositionism to anything Obama proposed a year ago. Remember they gave him zero votes on even the stimulus in his first weeks. They saw health insurance reform as Obama's Waterloo, and, thanks in part to the dithering Democrats, they beat him on that hill. They have successfully channeled all the rage at the massive debt and recession the president inherited on Obama after just one year. If they can do that already, against the massive evidence against them, they have the power to wield populism to destroy any attempt by government to address any actual problems.

This is a nihilist moment, built from a nihilist strategy in order to regain power ... to do nothing but wage war against enemies at home and abroad.

I am far from convinced that Brown will win tomorrow. But I want to suggest that he represents not nihilism, as Andrew suggests, but rather a belief in competitive federalism. I believe, and I get the strong impression that Brown believes, that health reform is an issue that should be handled differently in different regions of the country. The Massachusetts reform model might prove to be a decent fit for Massachusetts — the jury is still out, and it's a commonplace that the model is in desperate need to delivery-system reform. But perhaps Hawaii will want to experiment with a single-payer system and Texas will want to experiment with universal catastrophic coverage and Minnesota will choose something in between.

I understand the frustration that Andrew feels with conservative elites, who can be at least as hypocritical and incompetent as liberal elites, and there's a decent case that the Bush administration took steps that centralized power in Washington, D.C. to a truly dangerous degree. But as someone who has an enduring distrust of centralized bureaucracies, one-size-fits-all solutions, and the technocratic ideal, I think that Andrew should be more skeptical of the Democratic health reform effort. Moreover, these principles should go beyond left and right. Excessively centralized power, whether in the hands of the federal government or large private sector firms that actively shape the regulatory structure, should concern all of us.

And I sense that at least some of the impetus behind Brown's (still unproven) popularity comes from the view that we've gone too far in a centralized direction.

There are many, many ironies in the Brownthusiam, but the most notable is the fact that this suburban father with a rather blandly centrist voting record has become the target of apocalyptic rhetoric from both sides. Really, the question is whether or not he has decent judgment. His record suggests that he's good at making fine distinctions and voting in a pragmatic, constituency-focused manner. I'd prefer a more cost-conscious legislator myself, but he certainly doesn't come across as a nihilist bent on the destruction of government.

I'll happily acknowledge, as I did in my Forbes.com column, that there are some aspects of the Brown campaign that are discouraging, including the fact that he doesn't balance talk of tax cuts with serious talk of spending cuts — indeed, he is adamantly opposed to even very modest Medicare cuts. But does his record suggest that he's capable of being an effective legislator? I think the answer is yes.

Moreover, as Ross suggests in a blog post, Brown could represent the revival of northeastern Republicanism. Daniel Larison, going further, suggests that this could represent a turn from evangelical identity politics — a tendency that Andrew has decried:

So Tea Party activists in the Northeast are backing a viable candidate in Massachusetts to seize the opportunity of competing for an open Senate seat. This should make clear that the nature of the Tea Party agenda is going to depend on the region where the activists are operating, and it should also emphasize how relatively unimportant social conservative issues are to the Tea Party agenda, whose focus is heavily fiscal and economic. The willingness to acknowledge regional political differences is an encouraging sign that these activists could combine their anti-establishment populists instincts with attention to local political conditions and grievances. That shows the flexibility needed to rebuild a national political coalition.

That is, the Tea Party movement, as David Brooks argued, is not a primal scream from an insane rump. Rather, it reflects a number of classical liberal ideals of fairly longstanding.

The tea party movement is a large, fractious confederation of Americans who are defined by what they are against. They are against the concentrated power of the educated class. They believe big government, big business, big media and the affluent professionals are merging to form self-serving oligarchy — with bloated government, unsustainable deficits, high taxes and intrusive regulation.

Brooks acknowledges that he is "not a fan of this movement," and he does tend to have more faith in our governing class. I increasingly have a more favorable view.

Andrew thinks that the Tea Party movement has been unfair to the president, and he has a point.

They have successfully channeled all the rage at the massive debt and recession the president inherited on Obama after just one year.

Where were the Tea Partiers during the Bush years? One assumes that many of them were conservative independents who abandoned President Bush in droves, and who helped put Jim Webb and Jon Tester and other populist Democrats over the top in 2006. But as for the Republican refusal to vote for the stimulus, I think the case against the actual federal stimulus package — as opposed to the theoretical virtues of a well-designed, sustainable stimulus package — was fairly strong, and it was made by left-of-center scholars like Jeffrey Sachs as well as many on the right, including scholars who favored some kind of fairly large stimulus like Greg Mankiw.

I understand that Andrew, like many friends I admire and respect, has a great deal of faith in the Obama administration, and he seems to believe that the Democratic health reform model represents the only good-faith compromise imaginable given the nihilistic role played by the Republicans. I very strongly disagree. Rather, I think that it is a misguided effort that will exceedingly difficult to undo. And a good number of voters across the country, not just in Massachusetts or for that matter the Deep South, are similarly convinced. We could be wrong. But I don't think we're insane.

01/19 12:21 AM Share

Monday, January 18, 2010

Last Krugman Thought (for Today)

One day I'll stop blogging about the man all the time, but he's an object lesson in so many different pathologies of opinion journalism that I really can't help it.

A friend — one of my smartest friends, I might add — raises the following point. In Krugman's concluding paragraph of the "More on Jon Gruber" post, he writes:

And here’s the thing: by claiming that there’s a huge scandal when nothing worse happened than insufficient care about disclosure, Greenwald and the people at FDL are actually reducing our ability to call foul on real corruption. After all, if everything is a scandal, nothing is a scandal. One of these days, perhaps soon, we’ll have a genuinely corrupt administration again — but when whistleblowers try to call attention to the misdeeds, you can be sure that there will be claims that “even liberals said that Obama did things just as bad or worse.” The crusade against Gruber is getting really destructive.

To which my friend replies: "In other words, no enemies to the left, because it makes it harder to trash the right."

Had Krugman been born under more propitious circumstances, he could have served as an excellent Minister of Discursive Management and Enforcement. Recall that Nobel laureates who disagree with him are self-marginalizing "freshwater" thinkers he deems irrelevant, and everyone else who disagrees with him is a corporate shill. The system is airtight!

01/18 07:36 PM Share

Seeing Massachusetts in a New Light

As a Brooklynite, I've never had particularly warm feelings towards Massachusetts. Not to say that I have a problem with the place per se — it's just never been my thing. But Dave Weigel's reporting from the campaign trail is starting to change my mind.

And later I met Chris Wim from Lubbock, Texas, who said he’d come up because “these guys are firing the second shot heard round the round. First Scott Brown wins here, then we bring this to Texas.” Informed that he was from Texas, some of the Massachusetts activists gently ribbed Wim and told him to find an ACORN volunteer and get registered.

There's lots more at Weigel's blog, which offers a smart and often harshly critical take on goings-on among conservatives, the GOP, and much else.

01/18 06:11 PM Share

Jason Zengerle on Bay State Democrats

Jason Zengerle has written an excellent, informative Daily Intel post that is worth a look:

There’s no better illustration of the Massachusetts Democratic Party’s decrepitude than its state legislators. For most state parties, the legislature is an incubator for political talent and the place to develop a deep political bench, but for Massachusetts Democrats, it’s been a breeding ground for pathological behavior and corruption. The last three speakers of the Massachusetts House of Representatives — Democrats all in a legislative body their party has now controlled for 55 years — have had to resign because of scandals that resulted in their indictments. Meanwhile, over in the State Senate, in the last two years, one Democrat lost his job after being arrested for sexual assault; another was forced from office after FBI surveillance cameras caught her stuffing a $1,000 bribe into her bra; and a third (and my personal favorite) recently bid the Senate adieu after a three-month stretch during which he was involved in a hit-and-run car crash that injured a 13-year-old boy, failed a breathalyzer test he had to take as part of the house arrest he was under stemming from the hit-and-run, and then tried to blame the failed test onthe alcohol in his toothpaste — an explanation the judge rejected in sending him to jail, which finally led to his resignation.

It was from this talent pool that Martha Coakley emerged to become Massachusetts attorney general and now her party’s nominee for the U.S. Senate. So, while the second-guessing has already begun about how Massachusetts Democrats could nominate a candidate as lame as Coakley, it’s worth remembering that she actually bested three challengers in the Democratic primary last December. If those three couldn’t even beat Coakley, why does anyone think they could have beaten Brown?

I actually disagree with this pretty strongly. My guess is that Michael Capuano, a smart, apparently pretty unpretentious and likable strongly left-of-center Democrat who represents Cambridge, Somerville, and part of Boston, would have crushed Brown. Though Brown is a strong candidate, he needed room to maneuver. Coakley's failure to campaign aggressively after winning the Democratic primary gave Brown the opening he badly needed. Capuano wouldn't have made the same mistake.

In re: the Zengerle thesis, it's worth noting that Capuano served as Mayor of Somerville, a very different kind of office that presumably contributed to his talent for retail politics.

As for Massachusetts Democrats writ large, I remember the 2002 in which Shannon O'Brien, a staunchly pro-life Democrat, flipped to become pro-choice and then proceeded to attack Romney for being insufficiently pro-choice. Then, of course, Romney flipped a few years later. You can't make this stuff up, my friends.

01/18 06:00 PM Share

Brief Thought on Gruber

I recall raising my eyebrows when I read this passage in Ron Brownstein's much-cited take on the Senate health bill.

When I reached Jonathan Gruber on Thursday, he was working his way, page by laborious page, through the mammoth health care bill Senate Majority Leader Harry Reid had unveiled just a few hours earlier. Gruber is a leading health economist at the Massachusetts Institute of Technology who is consulted by politicians in both parties. He was one of almost two dozen top economists who sent President Obama a letter earlier this month insisting that reform won't succeed unless it "bends the curve" in the long-term growth of health care costs. And, on that front, Gruber likes what he sees in the Reid proposal. Actually he likes it a lot.

"I'm sort of a known skeptic on this stuff," Gruber told me. "My summary is it's really hard to figure out how to bend the cost curve, but I can't think of a thing to try that they didn't try. They really make the best effort anyone has ever made. Everything is in here....I can't think of anything I'd do that they are not doing in the bill. You couldn't have done better than they are doing."

(Briefly, I'll note that this strikes me as obviously false and strangely over-the-top. Harold Luft's proposal for a Major Risk Pool struck me as politically viable and clearly more effective as a way to restrain costs, and that's just one of many examples.)

Indeed, Gruber has been consulted by both parties. But he has also been, as I noted at the time, a prominent advocate of the Massachusetts reform model, and that he has argued, in The New Republic and elsewhere, for an approach that places coverage expansions first and cost controls second as an explicit political strategy. I'm sorry to say that I can't find his piece on TNR's website, but here is Gruber in aninterview with Ezra Klein.

That's also because the people who mainly care about coverage now have something they need to protect from health-care costs, right? If costs aren't controlled, you can't keep the coverage.

The same thing happened in Massachusetts. We passed our bill. The lobbying group Health Care for All was incredibly important in that. But they were primarily about coverage. But then they realized that they would lose all this coverage they'd gained if it didn't control costs. So they got behind real cost-control measures. A global budget, even.

People say you can't do coverage without cost control. I think it's the opposite. You can't do cost control before coverage. We would do a huge amount for the cause of cost control just by covering people.

Jonathan Cohn noted the popularity of the Massachusetts reforms, and rightly so. Yet the cost control mechanisms haven't taken effect quite yet. One wonders if the popularity of the Massachusetts model will remain similarly stratospheric.

I mention Gruber's political argument because it is, well, a political argument, and it deserves to be evaluated as such. One of the reasons so many conservatives opposed Medicare Part D is because of it's cart-before-horse structure. But it worked politically! For a while, at least.

01/18 05:40 PM Share