Via Paul Krugman and Reed Abelson, here's a chart from the National Institute for Health Care Reform. Over the past decade, the number of Americans with employer-sponsored health insurance has dropped from about 70% down to nearly 50%. Note that this is for the non-elderly only, so it's not due to the aging of society or the growth of Medicare. This is working-age people only. As Krugman says, our weird employer-based health insurance scheme is "coming apart at the seams."

Most Americans simply have no clue how bizarre it is that we rely on employers to provide health insurance for most people. We've all grown up in this sytem, so it seems completely normal. But it's not. It happened through a weird combination of historical accidents, and it makes no sense. Why should an airplane manufacturer also be in the healthcare business? Why should you lose your health insurance if you get laid off? Why should your choice of doctor be limited by your employer's choice of insurance carrier? (And why should it change whenever your employer decides to change carriers?) Why should your boss be allowed to dock your paycheck if you don't get the medical "counseling" he deems necessary? (Yes, this is real. And it's rapidly making its way to a corporation near you.)

It. Makes. No. Sense. And dozens of countries around the world have shown that there are better, less expensive, more universal ways of providing medical care. It is truly a mystery that we still put up with the archaic, Rube Goldberg mess that passes for health insurance in this country. If the red trendline I added to the NIHCR chart turns out to be accurate, maybe we won't for too much longer.

Felix Salmon writes today that the power of the financial industry goes beyond mere lobbying:

One of the themes running through Noam Scheiber’s new book is the idea that professional technocrats have a tendency to take at face value much of what they’re told by Wall Street. Bankers are very good at capturing/flattering mid-level political operatives.

Yep. But this goes beyond mere regulatory capture. Here's a blast from the past: my take on regulatory capture in "Capital City," two years ago:

[The story of the finance lobby is] about the way that lobby—with the eager support of a resurgent conservative movement and a handful of powerful backers—was able to fundamentally change the way we think about the world. Call it a virus. Call it a meme. Call it the power of a big idea. Whatever you call it, for three decades they had us convinced that the success of the financial sector should be measured not by how well it provides financial services to actual consumers and corporations, but by how effectively financial firms make money for themselves. It sounds crazy when you put it that way, but stripped to its bones, that's what they pulled off.

....Their real power lies in the fact that they've so thoroughly changed our collective attitude toward financial regulation that sometimes they barely need to lobby in the traditional sense at all....Unlike most industries, which everyone recognizes are merely lobbying in their own self-interest, the finance industry successfully convinced everyone that deregulating finance was not only safe, but self-evidently good for the entire economy, Wall Street and Main Street alike. It's what Simon Johnson, an MIT economics professor and former chief economist for the IMF, calls "intellectual capture." Considering what's happened over the past couple of years, we might better call it Stockholm syndrome.

More here from me and David Corn at about 5:00 mark. As near as I can tell, not a lot has changed since then.

From Jeffrey Henig, a professor of political science at Teachers College in New York City:

It's never just about the cupcake.

This might become my favorite new catchphrase to describe fights ostensibly about X that everyone knows are really about Y. Click the link for context.

On the left, Inkblot is giving us his sad face because the food bowl is empty and it's getting close to dinner time. Don't worry: his hunger was assuaged a few minutes later. On the right, Domino is batting away at a piece of string. You'll have to take my word for it, since the string isn't in the picture. But she's watching it intently.

Have a good St. Patrick's day, all. Feed your cats some green cat food tomorrow.

"Potential GDP" is the size of the American economy if it's running at full steam. "Actual GDP" is, as you'd expect, the actual size of the American economy. During the Great Recession, actual GDP fell, and since then it's grown at roughly the same rate as it used to. In other words, it hasn't grown fast enough to make up the ground it lost in 2008-09. So there continues to be a big difference between actual GDP and potential GDP. This is known as the output gap.

So when will GDP start growing fast enough to close the output gap and get us back to our true potential output level? Last month, St. Louis Fed president James Bullard suggested that the answer is never. We lost a chunk of output potential when the housing bubble burst, and that's that. Generally speaking, I think the evidence suggests Bullard is wrong. But not all the evidence points in that direction. It's possible, for example, that potential GDP started slowing down a decade ago, but it was masked by the housing bubble. So instead of seeing a gradual slowdown over the course of several years, we saw the entire slowdown condensed into about 24 months.

There's actually a surprising amount of evidence for this. For example: median income growth slowed in the mid-70s, but it stalled almost completely around 2000. Real-world investment opportunities began stagnating around 2000. Labor markets slackened permanently starting around 2000. The employment-population ratio among women plateaued around 2000 and continued its long-term decline among men. The labor share of income in the nonfinancial sector dropped steeply starting in 2000 and never recovered. The number of jobs created by new businesses peaked around 2000 and has been falling ever since. State and local government output suddenly stagnated around 2000. Globally, the energy intensity of GDP stopped growing around 2000, which means world economic growth became limited by energy growth.

I bring this up because both Grep Ip and Felix Salmon are starting to wonder if Bullard is right. Maybe we aren't ever going to make up the output gap. Maybe we've lost a certain amount of economic output permanently. Are they just becoming overly pessimistic after four years of lousy economic growth? Maybe. But their posts are worth reading. 

In case you're curious, here's CBO's take on President Obama's proposed budget. The light blue line is their "baseline projection" which assumes that all current laws stay in effect forever and the Bush tax cuts all expire at the end of the year. It shows the federal deficit nearly disappearing by 2017. The dashed line is their "alternative scenario," which assumes extensions of the Bush tax cuts and a few other things as well. It shows the federal deficit improving a bit, but then deteriorating to 6% of GDP by 2022.

The dark blue line is the Obama budget, and it's somewhere in between. But here's an important point that you can't see just from looking at the chart: Obama's budget reaches primary balance in 2018. This means that federal spending is in balance, and the only source of the deficit going forward is interest payments on the national debt. At that point, the debt-to-GDP ratio is stable. That's a big milestone.

The truth is that it's not really that hard to reach long-term balance. If we simply sit back and do nothing, the budget would basically be balanced by 2015. Even if we just allow the Bush tax cuts to expire — all the Bush tax cuts — it would be a huge step forward. Since the economy will probably still be a bit fragile by the end of the year, my preference would be to phase them out over the course of, say, three years. Combine that with spending cuts that Democrats and Republicans have mostly agreed to already and we'd be nearly the whole way there. All that's left then is reining in rising healthcare costs.

But then, that's really all that's ever been left. When it comes to the federal budget, it's all healthcare, baby. It always has been.

Via Suzy Khimm, here's an interesting bit of research from Amine Ouazad and Romain Rancière. During the housing boom of the aughts, it became easier for low-income families to buy more expensive homes. Since African-American families have lower incomes than average, this suggests that the housing boom, on average, should have allowed them to move into less segregated neighborhoods.

And it did. But it also allowed white and Hispanic families to move, and it turns out that Hispanic families mostly moved into Hispanic neighborhoods:

Hispanic families have used the easier access to credit to buy houses in predominantly Hispanic neighbourhoods with the consequence of enrolling their children in schools with fewer black peers, and more Hispanic and white peers. We estimate that, because of the credit boom, black students in 2006 had 2% fewer Hispanic peers....Credit markets enabled a substantial fraction of Hispanic families to live in neighbourhoods with fewer black families, even though a substantial fraction of black families were moving to more racially integrated areas.

The chart below shows the impact of the housing boom on black household segregation. In 1997, black students in public schools had an "isolation" of 50.5%. That is, 50.5% of their peers were black. By 2007, that had dropped to 49%. But the housing boom actually slowed the rate of decline. The authors conclude that if the housing boom had never happened, black isolation would have dropped to 48%. Their conclusion: "The net effect is that credit markets increased racial segregation." 

Washington Post columnist David Ignatius was recently given an early look at captured documents from Osama bin Laden's compound that will be publicly released shortly, and he reports that near the end bin Laden was apparently obsessed with the last resort of failed CEOs everywhere: rebranding.

Bin Laden’s biggest concern was al-Qaeda’s media image among Muslims. He worried that it was so tarnished that, in a draft letter probably intended for [Atiyah Abd al-Rahman], he argued that the organization should find a new name.

The al-Qaeda brand had become a problem, Bin Laden explained, because Obama administration officials “have largely stopped using the phrase ‘the war on terror’ in the context of not wanting to provoke Muslims,” and instead promoted a war against al-Qaeda. The organization’s full name was “Qaeda al-Jihad,” bin Laden noted, but in its shorthand version, “this name reduces the feeling of Muslims that we belong to them.” He proposed 10 alternatives “that would not easily be shortened to a word that does not represent us.” His first recommendation was “Taifat al-tawhid wal-jihad,” or Monotheism and Jihad Group.

So there you have it. Deep-sixing the "war on terror" rhetoric really did hurt al-Qaeda. And bin Laden's only answer was to change their name to the Monotheism and Jihad Group. Somehow I don't think that would have done the trick.

Just a quick update: a few days ago I suggested that California might be fertile territory for Rick Santorum because California Republicans are pretty hardcore conservatives. And they are. Nevertheless, Conor Friedersdorf points out that our delegate apportionment rules work pretty heavily in Romney's favor:

Perhaps he's right. I'd never have predicted Santorum would get this far. Still, I'm willing to buy Drum lunch at Orange County's finest purveyor of tacos if Santorum wins more California delegates than Romney. The vast majority of Golden State delegates (159, to be exact) are apportioned by congressional district. Each district has three delegates, and it's winner-take-all within the district.

Click the link to read the rest, but the takeaway is pretty simple: Santorum might well win in the roughly one-third of California's congressional districts (mostly inland and in Northern California) that are solidly right-wing, but he won't do so well in, say, congressional districts in the Bay Area that have smaller numbers of Republicans but still get three delegates each.

So there you have it. Since I mentioned this the other day I figured I should provide an update. California probably isn't as much in play as I thought. Conor, the tacos are on me.

David Corn's latest book, Showdown, is a detailed account of the aftermath of the 2010 midterms and President Obama's clash with a rejuvenated Republican Party. But it's decidedly not a tour d'horizon of the entire political landscape during the following 12 months. It's told almost entirely from the viewpoint of Obama and the Obama White House, and this is where its greatest value lies. Through the lens of policy battles, you get a remarkably vivid pen portrait of Obama himself and how he thinks.

Here's an excerpt from near the beginning of the book. It's December 2010. Obama wants to extend the Bush tax cuts for the middle class but not the tax cuts for the rich. Republicans have made it clear that they'll spend the entire month until Christmas delaying and filibustering unless Obama agrees to extend all the cuts. That would mean no time to get anything else done, followed immediately by the seating of a new Congress with a Republican majority in the House. So Obama cuts a deal that includes a payroll tax holiday, an extension of unemployment insurance, and a slew of tax credits:

Obama had arguably won the immediate policy battle with the Republicans. For yielding on the tax cuts for the rich, he had gained $238 billion in stimulus....The Republicans had pocketed $91 billion in the top-bracket tax cuts and $23 billion for the estate tax measure.

The math was on Obama's side. But could the president now win the political and messaging war?....Progressive activists accused Obama of betrayal. Bending on the Bush tax cuts for the rich and conceding on the estate tax was what mattered for them, not the other side of the deal. Nor did they realize that Obama was trying to clear the path for a wider agenda: Don't Ask/Don't Tell, New START, and more.

....[The next day] Obama held a press conference to discuss the deal....Obama was riled up — the public option controversy still stung — and he continued defending compromise as a necessary means of reaching long-term progressive goals....He was not just defending the tax-cut deal. He was defending his entire presidency — not from the barbs of his rabid Obama-is-a-secret-Muslim-socialist foes on the right, but from the criticism of his purported allies on the left: "To my Democratic friends, what I'd suggest is, let's make sure that we understand this is a long game."

It looked as if Obama was more upset with the Left for not applauding this deal than he was with the inflexible, filibustering Republicans for causing the dilemma. Obama believed he deserved more credit for this hard-fought compromise and for his previous accomplishments — and he wanted more backing from the Left for the tough decisions he'd have to make in the coming years while dealing with recalcitrant GOPers.

Obama was right on this: the tax-cut deal had become a defining moment for his presidency.

I've long considered the 2010 lame duck session to be an almost perfect distillation of everything Obama-related. David is right: Obama got a lot of flack from the lefty base over his budget deal. But look what it did. It produced an additional mini-stimulus, probably the biggest anyone could have squeezed out of Congress at that point. It paved the way for the repeal of DADT and the ratification of New START. It made time for the food safety bill, the 9/11 first responders bill, and the Child Nutrition Reauthorization package to pass.

And the cost? A bum deal on the estate tax, granted, and a temporary extension of the Bush tax cuts for the rich. That's it. The Bush tax cuts didn't get extended forever, only for two years, when we get to fight it out all over again. And the truth is that the economy was fragile enough in 2010 that extending the cuts — even the high-end cuts — was arguably the right thing to do anyway.

So that's Obama: quietly driving pretty good deals; willing to take public lumps as long as he gets something worthwhile out of all the dealmaking; giving up surprisingly little; and then getting surprisingly little credit for it all. It's no wonder he gets a little annoyed sometimes.