2011 - %3, June

Scaring Ourselves Out of Growth?

| Fri Jun. 3, 2011 10:23 AM EDT

Stephen Carter has a column up at Bloomberg about the guy sitting next to him on an airplane flight the other day. He's a small business owner and he refuses to hire more workers even though demand for his products is up. Why is that? asks Carter:

“Because I don’t know how much it will cost,” he explains. “How can I hire new workers today, when I don’t know how much they will cost me tomorrow?”

He’s referring not to wages, but to regulation: He has no way of telling what new rules will go into effect when. His business, although it covers several states, operates on low margins. He can’t afford to take the chance of losing what little profit there is to the next round of regulatory changes. And so he’s hiring nobody until he has some certainty about cost.

....My seat-mate seems to think that I’m missing the point. He’s not anti-government. He’s not anti-regulation. He just needs to know as he makes his plans that the rules aren’t going to change radically. Big businesses don’t face the same problem, he says. They have lots of customers to spread costs over. They have “installed base.”

For medium-sized firms like his, however, there is little wiggle room to absorb the costs of regulatory change. Because he possesses neither lobbyists nor clout, he says, Washington doesn’t care whether he hires more workers or closes up shop.

Here's what's remarkable: Carter, a law professor at Yale, apparently never once bothered to ask this guy just what regulations he's talking about. Is he concerned with general stuff like the healthcare law? Or something highly specific to his industry? Or what?

Regardless, I've heard this kind of blowhard conversation too often to take it seriously. Sure, it's possible this guy manufactures canisters for nuclear waste or something, and there's a big regulatory change for nuclear waste storage that's been in the works for years and has been causing everyone in the industry heartburn for as long as they can remember. But the simple fact is that regulatory uncertainty is no greater today than it's ever been. Financial uncertainty is high, but the Obama adminstration just hasn't been overhauling regs that affect the cost of new workers any more than usual. The only substantial exception is the new healthcare law, and if you oppose it that's fine. But it was passed over a year ago and its effects are pretty easy to project.

So I call BS. Even Will Wilkinson, who thinks the regulatory uncertainty theory has some merit, is dubious. He suspects that to the extent any of this is happening at all, it's mostly some kind of Fox effect: Republican business owners have been hearing about the endless socialist evils of the Obama administration for so long that they've actually started believing it now and they're scared to death. There's no real reason for it, but hey — where there's smoke there's fire, right? And if enough different people on Fox and Drudge and Limbaugh, their rantings all passed along via the local Chamber of Commerce or something, keep talking apocalyptically about how Obama is wrecking the country, then there must be something to it. I guess I'd want to see some evidence for this, but it at least sounds plausible. More plausible than the alleged tsunami of new regulations that's preventing people from hiring even when business is booming, anyway.

(Will then goes on to posit that this is a permanent feature of the economy that we ought to take account of, perhaps by electing more Republicans. I think I'd prefer a somewhat different, more reality-based approach to this problem myself.)

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Wait, is Paul Ryan Running for President Now?

| Fri Jun. 3, 2011 9:38 AM EDT

Is Rep. Paul Ryan (R–Wis.) running for President? Like Matt Yglesias, I think that's the clear takeaway from his address to the conservative Alexander Hamilton Society last night. Via the Weekly Standard

Ryan squarely rejected the position of increased isolationism. "Today, some in this country relish the idea of America's retreat from our role in the world," Ryan said. "They say that it's about time for other nations to take over, that we should turn inward, that we should reduce ourselves to membership on a long list of mediocre has-beens."

He continued, "Instead of heeding these calls to surrender, we must renew our commitment to the idea that America is the greatest force for human freedom the world has ever seen."

There's nothing new there substance-wise; what's notable is that it's Ryan who's saying it. He's the chairman of the House budget committee, and that's more or less all he talks about. His views on foreign policy are about as relevant as his views on the planking craze.

That is, unless he's got something bigger on his mind. Although he's previously denied any interest in entering the race, those denials are beginning to take a less definitive tone. Asked last night by Fox News' Neil Cavuto whether he'd consider running, Ryan offered a non-answer: "I want to see how this field develops." This morning, meanwhile, he addressed Ralph Reed's Faith and Freedom Conference, where he shared the bill with GOP presidential contenders Michele Bachmann and Herman Cain—not the kind of place you'd expect to find a congressman with a (carefully crafted) reputation as an affable budget wonk.

It's no secret that Republicans are unhappy with their current field of candidates. Hence the constant pining for Chris Christie, or Mitch Daniels, or Jeb Bush, or Rick Perry (that Rick Perry). And in that sense, the Wisconsin congressman seems like a natural choice. Ryan's budget, which would phase out Medicare, has quickly become the centerpiece of the GOP's domestic agenda. Who better to lead the party into the 2012 election than Ryan himself?

Lousy Jobs Numbers Show It's a Bad Time To Play Debt Politics

| Fri Jun. 3, 2011 9:33 AM EDT

The other day, an economist who works for a nonpartisan congressional committee ran down the road to intercept me outside my house so we could talk about the debt ceiling debate. If the Republicans block raising the limit, he said, it would be economic disaster. How so? I asked. He walked me through the economics, but essentially it boils down to this: if the United States stops paying its bills, there will be instability in the financial sector that causes a severe constriction of the flow of credit, and that will trigger a repeat of the Bush-Cheney crash of 2008.

One lesson we learned—or should have learned—from the economic collapse is how the whole economy is held hostage by the pirates of Big Finance. If they freak out, economic contraction follows. (We've also seen that they can rebound much faster than the average working-class mug. Corporate profits were soaring two years after the 2008 calamity, yet unemployment remained stuck at historic high levels.) When Wall Street catches a cold, it can cause a pandemic for the rest of us. This unhealthy—and abusive—relationship might call for fundamental restructuring. But until then, Main Street does rely on the credit flow manipulated and exploited by Wall Street.

This ought to be kept in mind when reviewing the current jobs numbers. The report out this morning is lousy. Employers added only 54,000 jobs in May. The economy needs to gain about 150,000 jobs a month to keep up with population growth—and much more to recover the 8 million or so jobs lost in the recession. No matter what the Republicans say, messing around with the debt ceiling will not stimulate growth and job creation. And if it does look as if the Republicans will take the extreme step of preventing the debt ceiling from rising, there will be more, not less, uncertainty in the markets, which will inhibit economic activity. The Rs keep bleating that the markets need "certainty"—that was one of their arguments for permanently extending the Bush tax cuts for wealthy Americans—yet on this crucial matter they're willing to put the economy on a roller coaster ride, at a time when the jobs market seems to be weakening.

Heather Boushey, the senior economist at the Center for American Progress, put it this way:

Today’s data from the Bureau of Labor Statistics show that the job market has weakened considerably as employers added only 54,000 jobs in May. Yet Congress is dithering on increasing the debt ceiling. Failing to do so will lead to a sharp and immediate drop in economic output due to reductions in government spending and investment and their effects on the private sector. Employers’ confidence in the ability of Congress to act may be already shaken. Clearly, today’s data show that the labor market would be unable to handle such a large shock. Policymakers should focus first and foremost on doing no harm and acting to sustain, not derail, the economic recovery.

Though the jobs report is bad news for President Barack Obama and his Democratic colleagues, it also shows that it is a particularly dangerous time to playing political games with the economy.

Live Tweets from Ralph Reed's Faith and Freedom Conference

| Fri Jun. 3, 2011 8:00 AM EDT

The great thing about politics is that it seems there are few scandals large enough to permanently knock someone out of the business permanently. Exhibit A is this week's Faith and Freedom Conference, organized by none other than disgraced GOP foot soldier Ralph Reed, where virtually ever GOP presidential contender will be trying to court evangelical voters. It wasn't so long ago that Reed, the former head of the Christian Coalition, was getting shellacked in a 2006 race for lieutenant governor of Georgia in no small part because of his close ties to the felonious lobbyist Jack Abramoff.

Reed, you will recall, raked in more than $4 million from Abramoff in 2004 to rally Christian voters to fight Native Americans who wanted to open some casinos. Abramoff was representing different tribes who already had casinos and wanted to cut out the competition, and he paid Reed to help in the fight by making gambling a religious issue. Abramoff was eventually convicted of mail fraud and conspiracy and sentenced to six years in prison (he served three, getting out early last year).

Emails released during the criminal investigation did not reflect well on someone who Time dubbed "The Right Hand of God" in 1995. In many of them he's pressing Abramoff to send him clients—and cash. "I need to start humping in corporate accounts!... I'm counting on you to help me with some contacts," he wrote in one. The emails also suggested he had lied about how much he knew about what Abramoff was up to. Reed was never prosecuted or accused of being more than a greedy political consultant, but his downfall among evangelicals and other politicians was pretty fast and furious.

All of that seems like ancient history today, though, as Reed has somehow managed to persuade virtually every Republican hoping to occupy the White House to star in his new show. His Abramoff ties notwithstanding, Reed was a formidable organizer in his heyday. He once described his special approach to mobilizing white, evangelical voters like this: "I want to be invisible. I do guerrilla warfare. I paint my face and travel at night. You don't know it's over until you're in a body bag. You don't know until election night." The GOP candidates are apparently hoping that Reed, nearly 50, can still run the ground war.

Mother Jones will be live-tweeting the conference here, so follow along.

Gem of the Week: Overhauling the Medicare Payment Model

| Fri Jun. 3, 2011 6:01 AM EDT

In this blog post I highlight an illuminating or groundbreaking news article or report on the environment or health from the past 5 days. This week's gem goes to... the National Academy of Science's Institute of Medicine for revealing deep weaknesses in the way Medicare determines how much to pay doctors and hospitals for covered expenses. The report also outlined ways to fix these weaknesses.

For example, as found in the NAS report, Medicare uses geographical market areas to help determine how much a kidney transplant will cost a hospital to perform. However, Medicare divides the US into only 89 geographic markets, and some of those markets are an entire state or a large city. So even though an independent hospital in rural Nebraska incurs more costs to provide an organ transplant, it would be reimbursed the same as a better-funded, corporate-owned hospital in downtown Omaha. The authors recommend revising how these geographical areas are determined, and integrating them other parts of the Medicare payment model.

Another large flaw the report found was the wage index Medicare uses to help determine how much it should pay doctors and staff for procedures. Instead of using survey data from the Centers for Medicare and Medicaid Services, the report's authors recommend using the Bureau of Labor Statistics's data because it's independent and more accurate.

The report is just phase I in a two-part investigation: the final report will be released in 2012. Amid discussions of cutting Medicare entitlements and aging Baby Boomers, the report's recommendations are vital information. Currently Medicare covers 47 million seniors and 8 million people with permanent disabilities. With so many subscribers, making payments more accurate could go a long way toward cutting waste (where it occurs), and making sure all hospitals and staff are fairly compensated Medicare services.

Doctor's Dispatch From Iraqi Kurdistan

| Fri Jun. 3, 2011 5:00 AM EDT

Editor's note: This is the third part of a three-part series of dispatches from Jonathan Dworkin, an infectious diseases fellow at Brown who spent several months in Iraqi Kurdistan in 2006 and returned for a followup visit in May. Read Part 1 here and Part 2 here.

In Sulaimania's directorate of health we play a game with paperwork. My friend drafts a letter in Kurdish. The letter receives an "opening" stamp by a secretary, and then the director signs it. Next we move to another office, where the letter is stamped by the legal manager. Following this, we must "bake the papers," as my friend describes it. This involves having a separate secretary type and print the document. The new printed document is signed sequentially by secretaries in three different offices. We next meet a man who is dressed in traditional Kurdish trousers and a broad belt. Ceremoniously he operates the photocopy machine, keeping several copies and handing us two. Feeling bold, we skip the next step, which is an additional stamp from the legal manager. No one notices, and the director's secretary provides the "closing" stamp. Then the director signs the final copy. Now it is official: I am an American, my name is Jonathan, and I am a doctor.

Decades after the American invasion of Iraq, elaborate paperwork completed in Kurdish, Arabic, and English may be the longest lasting consequence of the war. But the comedy of the health directorate has a darker side. My paperwork is the simplest operation, needed only to confirm reality. Doctors with problems involving their salary or faculty appointments face years of hostile inertia. And the ministries are, of course, politicized. A ministry official informed one friend that he could not work in a Sulaimania hospital because of his support for the opposition in the last election. The man told him matter-of-factly, without any apparent sense of embarrassment.

It's important to keep in mind that the Health Ministry is one of the least politicized branches of the Kurdish government. Imagine how the Ministry of Oil functions. Now add to this another peculiarity of Kurdistan, which is that the security forces are still controlled by political parties. In 2006 when I travelled from Erbil to Sulaimania I crossed from one political fiefdom to another. The army checkpoints along the road each carried the flags of their respective parties. Now the checkpoints fly the Kurdish flag, but the change is superficial. The parties remain armed, and there is no professional army independent of the parties. This became apparent in the recent demonstrations, when the two ruling parties, having banded together in an Orwellian merger, used their soldiers to break the opposition.

Since the demonstrations ended, the same parties have used their internal security forces to intimidate protest organizers. As I'm writing this, today's news features images of a rally organizer who was kidnapped last night by masked men in cars with tinted windows. He was beaten with rifle butts and stabbed with knives. The man was lucky to survive, but the message to the opposition couldn't be clearer: Persist and no one can protect you. It is through these actions that Kurdish security is completing its transformation from a force intended to protect Kurds to one intended for internal suppression.

It is difficult for Americans to understand the depth of this system of coercion. The Kurds simply refer to it as "corruption," but the word in English understates the problem. When Americans think of corruption, they often think of bribes, which rarely occur here. In Kurdistan, however, party politics permeate every institution in the country, from police headquarters to the dean's office. A person is forced constantly to choose between their ambition and their independence. Building a promising career means making peace with this system. It means neglecting your own internal sense of justice.

Despite this, in three weeks in Sulaimania I have not met five people willing to defend the government in public. The city has undergone a sea change since 2006 and is simmering in opposition politics. Not everyone agrees on what the future should look like. Many of the people I speak with are secular, but some are observant Muslims. All agree on nonviolence and a constitutional system of some kind, and all point to the ministries and security forces as the prime examples of why change is necessary.

In 2006 I expressed the hope that America would partner with Iraqi Kurds to build stronger and more independent civic institutions. In particular I hoped that the universities could break free of the ministries and allow a space to open for political debate and scientific research. There is no evidence this has happened. Meanwhile American policy has remained fixed on the capital. In the Kurdish government we have a useful counterweight against Iran-backed politicians in Baghdad. Barely a word was uttered by anyone in the White House or State Department during the crackdown here, and in Obama's speech on Middle East reform, he did not mention the words "Kurd" or "Kurdistan."

I'd like to conclude by going back to my last dispatch. The closer you look at the murder of Sardasht Osman, the more monstrous it becomes. That should have been the end of business as usual between our governments. For most people here America's silence during the political repression — particularly when the army entered Sulaimania—has tainted our positive image. I can imagine a future in which anti-Americanism takes root as a popular expression of opposition, or even in which radical Islam finds an audience open to its conspiracies and grievances. This is why it has never been intelligent to focus exclusively on politics in Baghdad and overlook what's happening in Sulaimania and Erbil. Fortunately, most Kurds understand that they must solve their own problems, including the abuses of their government. But American support for that government needs to become a lot more conditional, and soon, or Kurds will conclude for themselves that this is a friendship they'd rather do without.

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We're Still at War: Photo of the Day for June 3, 2011

Fri Jun. 3, 2011 5:00 AM EDT

Spc. Myles Gaudet, left, and Spc. Matthew Tempesta pull security as members of Provincial Reconstruction Team Zabul, Arghandab detachment, meet with elders from Deh Afghanan village, May 27. Specialists Gaudet and Tempesta are assigned to the PRT's security force. (U.S. Air Force photo/Staff Sgt. Brian Ferguson)(Released)

Is the FCC Downplaying Potential Risks from Cell Phone Radiation?

| Fri Jun. 3, 2011 5:00 AM EDT

There's been much to-do this week over the announcement from the World Health Organization that the group now believes radiation from cell phone is a possible carcinogen. As my colleague Kiera Butler pointed out, there's not really much news there; we're basically at the same point we've been for a while now—although a few studies have suggested a connection between cell phones and brain tumors, there's not enough proof to firm up a direct link. But have federal regulators been complicit in downplaying the reasons we might want to be concerned?

The consumer watchdogs at Environmental Working Group believe that the Federal Communications Commission, the agency charged with regulating cell phones, may be deliberately shielding information from the public about possible concerns related to cell phone radiation in response to pressure from the Cellular Telecommunications and Internet Association (CTIA), the industry group representing wireless telecom companies. On its website, the FCC says that there is "no scientific evidence that proves that wireless phone usage can lead to cancer." That's true, but the FCC site also does not include much in the way of references to the studies that do suggest there may be some reasons for concern. And, as EWG has documented, the FCC last year deleted information from its website that advised consumers on how to avoid exposure to radiation.

The public battle heated up last June, when the city of San Francisco passed a "Cell Phone Right to Know" ordinance requiring cell phone retailers to prominently display information about the amount of electromagnetic radiation—also known as the "specific absorption rate" or SAR—that each phone releases. (The FCC has a database on its website that lists the amount of radiation emitted from each type of cell phone, but it's nearly impossible to navigate.) The CTIA retaliated, first barring San Francisco from hosting future trade shows and then suing the city, claiming that the ordinance oversteps FCC's regulatory oversight on the issue. Earlier this month, San Francisco backed off the new law in response to the suit.

In the heat of the debate over SF's ordinance, the FCC held several meetings with the CTIA and individual telecom companies. Not long after, the FCC removed information from its website that noted that some parties have suggested buying phones with lower emission levels or taking precautions to limit exposure. EWG submitted a Freedom of Information Act request to the FCC seeking details about those meetings and all contact between the FCC and CTIA regarding the San Francisco ordinance.

The documents released in response to the FOIA request last September revealed that changing the website was one of the requests that the industry group had made of the agency in one of those meetings—though the FCC maintains that they made the change of their own volition to minimize "public confusion" on the issue and because the agency doesn't think that the SAR level is a particularly useful way of measuring radiation exposure. Among the lines removed from the FCC website was one suggesting that consumers should "Buy a wireless device with lower SAR." The FCC also added a line noting that the agency "does not endorse the need" to reduce exposure to these emissions.

While EWG can't say decisively that it was the industry pressure that led the FCC to adjust the website, "the change that took place was very favorable for the industry," says EWG senior scientist Olga Naidenko.

Naidenko says she hopes that the latest news on cell phones from the WHO this week will galvanize new concern about what we do and don't know about the potential problems related to radiation exposure from cell phones. She also pointed to the fact that neither the FCC nor the Food and Drug Administration, which is also charged with oversight on this issue, has conducted their own studies to determine whether and how much we should be concerned about exposure. The FCC's FAQ site notes, in response to the question "Is there any evidence that cell phones cause cancer?" that the agency is keeping an eye on research on the subject. It also says that the FDA is "participating in an industry-funded research project to further investigate possible biological effects"—which doesn't necessarily make one feel all that much safer.

In the meantime, EWG has published its own rankings of how much radiation specific cell phone models emit and other advice for reducing exposure. And while the latest WHO news does not bring us any closer to knowing whether our cell phones cause cancer, I'm sure I'm not alone in preferring to limit exposure where possible.

Hat tip: SEJ Watchdog.

Winning the (Very Near) Future

| Thu Jun. 2, 2011 7:59 PM EDT

So how do Democrats get back on top in the soundbite wars over the economy? Beats me. But Democracy Corps says they tested a bunch of messages and blaming Republicans for getting us into this mess is a loser. The three big winners are below. Take 'em for what they're worth.1

1But it's worth noting that "Old Politics," which scored about the best, seems to be Barack Obama's chosen message. I guess he must have commissioned a poll just like this one. And China bashing, of course, also scored well. It's the little black dress of campaign demagoguery.

Winners and Losers in the Charter School Lottery

| Thu Jun. 2, 2011 5:14 PM EDT

Adam Ozimek points today to a study of KIPP charter schools that finds good outcomes for KIPP students and concludes that none of it is attributable to "skimming." That is, it's not the case that KIPP schools are getting good scores because poor students are prodded to leave at higher rates than good students.

This is obviously good news, though, as usual, there are reasons to be cautious. For one thing, the sample size of this study is extremely small: one school. For another, although the math results seem to be very good and very robust, the reading scores are much less certain. As the chart on the right shows, the 2005 cohort of kids actually shows a negative reading result at every grade level, and the more recent cohorts show positive but modest results with the exception of a single data point (the 2006 cohort's fourth year). Still, the results overall are generally positive and they confirm other studies that have also found good results from KIPP schools. What's more, KIPP's effectiveness, if anything, seems to be higher for low-income kids than for higher-income kids.

But something has been on my mind for a while about these studies, and this is a good chance to toss it out. This isn't related to my longstanding skepticism that the KIPP model can ever be scaled enough to be a broad-based solution, and it's not really meant to be a criticism of KIPP at all. In fact, all the evidence I've seen suggests that KIPP really does work well.

Rather, it's about the way these studies are done. Basically, you want to compare test results of charter kids to test results of public school kids, but first you want to make sure the kids themselves are similar. If charter kids, on average, are just smarter than public school kids, then good test results don't mean anything. One way of doing this is to control for the kinds of things that we think matter for success in school: income level, gender, race, English proficiency, etc. The problem is that no matter how many variables you control for, you never know for sure if you're really controlling for everything important.

Because of this, the gold standard for charter school research is to study schools that rely on lotteries to decide who gets in and who doesn't. Since selection is random, there's no difference between the kids who get in and the kids who don't. Nor are there systematic differences between the parents: all of them care enough about their children's education to apply to a charter school in the first place. So if the charter kids do better than the public school kids, it's almost certainly due to the schools themselves, not some inherent difference in either the children or their families.

But ever since seeing Waiting for Superman, I've had a nagging question about this. That documentary, if it's accurate, made it clear that parents who apply to charter schools are almost desperately anxious for their kids to get in. In fact, many of them view it as practically their only chance to escape their local schools and get their kids a real education. The ones who lose the lottery are profoundly deflated.

So here's my question: is it possible that the mere act of losing out in a charter school lottery changes some parents' behavior? With their hopes dashed, do they give up? Do they gradually stop taking an interest in their child's education? Do they become fatalistic about the prospect of success and stop prodding their kids to do their homework, behave in class, and get to school on time? And if some substantial fraction of them do, how much overall impact does this have on the aggregate test scores of the lottery-losing children?

I know this is a virtually unanswerable question, and I don't mean to use it as some kind of all-purpose, non-falsifiable objection to charter schools. I'm just curious. It never really occurred to me before I saw Superman, and I understand that the film may have overdramatized things for effect. Still, the losing parents sure did seem crushed. I have no idea how you could study this effectively, but I'd sure like to know whether the mere act of losing a charter school lottery has a negative effect on kids all by itself.