I speculated a few minutes ago that the momentum might be shifting in Iran. Josh Marshall is thinking along the same lines:

On the face of it, Khamenei could call for a review and then decide that it all checks out and that's the end of it. But it's my experience that that's not how these things play out. When regimes ride these crises out successfully they almost always do so with a united phalanx. You simply do not grant the premise of the critics. Force, much as we like to think otherwise, is often quite effective. (See Tiananmen Square.) Once you do, once you legitimize the premise of the protests, which can quickly shift the momentum of the drama, it's a very slippery slope for the regime.

As Josh emphasizes in his full post, the next 24 hours are crucial. Ahmadinejad has already delayed a visit to Russia—another sign that he might be vulnerable.

The rallies in Iran are very large. Check out this photo from twitter (via the Lede):

CNN has new video from Iran:

The Healthcare Two-Step

Ezra Klein says that Tyler Cowen has a point when he argues that we're running the risk of enacting a healthcare bill without effective cost controls:

But it is baffling to watch him blame this on the Obama administration. As he himself says, the White House is firmly behind the most promising proposals on cost....What stands in the White House's way is Congress. And, more often than not, it's the Republicans in Congress. Liberals, after all, will sacrifice almost anything to radically expand coverage. This leaves cost-conscious conservative facing a bit of a dilemma. They can attack the most vulnerable parts of the policy — the cost controls — in the hopes of bringing the whole thing down. The downside to that, of course, is that liberals simply jettison cost-controls to protect the coverage expansion. For a fiscal conservative, this should be considered the worst of all worlds.

I don't know about Tyler specifically, but this is par for the course for conservatives in general, who basically have two critiques of national healthcare plans.  First, they yell and scream that we're busting the budget if cost controls aren't firm enough.  At this rate, healthcare will be 99% of the federal budget by 2050!  But then, if you concede the point, they yell and scream that your cost controls are rationing medical care.  Do you want to stand in line for months just to get a flu shot, the way they do in all those European hellholes!?

Conservatives can bounce back and forth between these mutually hypocritical positions pretty much forever.  Why?  Because they're effective.  The first makes earnest liberals feel guilty because we basically agree as a policy matter.  The second is the greatest public argument against national healthcare ever invented, regardless of whether or not it's actually true.  The combination of the two has won the day for conservatives for decades.  Why give up a winning strategy now?

Why Steal the Election?

Here's a quick question I haven't really seen anyone address regarding the Iranian election.  Assuming that the conventional wisdom is correct and it was stolen, why did they do it?  If Ahmadinejad stole it on his own, that's easily explainable as a pure coup/power play.  But if the clerical regime went along — which seems likely — what was it they were afraid of?  Mousavi was hardly the first reformist to run for president, after all, and he wouldn't have been the first to win.  What, precisely, was the threat that Mousavi presented to them?

The Latest From Iran

In the wake of continuing mass protests over Friday's elections that many reasonable people have concluded were stolen, the resolve of the Iranian powers that be seems to be faltering. Reversing his earlier proclamations calling President Mahmoud Ahmadinejad's win a "divine assessment," Ayatollah Ali Khamenei, Iran's supreme leader, has called for an investigation into the results. PressTV, the Iranian state-run television network, is now covering the protests sympathetically. You may think that the call for an investigation is just a sop to protesters. But the change in state television coverage is certainly relevant. Via Laura Rozen, we hear this:

[The National Iranian American Council's] Trita Parsi told NPR's Washington affiliate Monday he thinks the momentum is starting to shift in favor of those contesting the elections results. Among the signs: the Guardian Council said it would delay certification for ten days, and Khamenei's order for an examination of the elections results seeming to relax police crackdown on demonstrators that had been occurring. The ultimate outcome is uncertain at this point, Parsi said.

At this stage, uncertainty is good news. It's definitely better than the certainty of an Ahmadinejad re-election. David Corn worries that Iran may only have half an opposition. If that's right, we're about to see how far half an opposition can go.

Today's photo is from Afghanistan.Soldiers navigate across a creek during a dismounted patrol in the Nerkh Valley, Afghanistan, June 4, 2009. The pictured soldiers are assigned to Battery B, 4th Battalion, 25th Field Artillery Regiment on Forward Operating Base Airborne. Photo credit: Staff Sgt. Richard Roman. (Photo courtesy army.mil).

The New York Times reports this morning that President Obama is considering burning his trial lawyer allies to get health care reform passed. That is, he said he would support restrictions on medical malpractice lawsuits because he believes it would help reduce health care costs. If Obama really believes cutting lawsuits would save money, he's not as smart as I thought. Doctors have been making this argument for years, as did President George W. Bush, whose administration claimed restricting lawsuits would cut health care costs by $108 billion a year. But there isn't a lick of data to support these claims. The Congressional Budget Office took a look at Bush's assertions and found in 2004 that reducing lawsuit-related costs by 25 or 30 percent would result in only a tiny .4 percent reduction in health care costs. The CBO concluded that the benefits of reducing lawsuits were vastly overblown.

Lawsuits are a natural biproduct of incompetent doctors, who are the source of an inordinate amount of expensive medicine. I've written about this extensively here and here, but just to recap: Preventable medical errors cost the country about $20 billion a year. A tiny number of bad doctors account for the vast majority of malpractice suits. If Obama wants to contain lawsuits and save money, he should propose putting those guys out to pasture. Of course, Obama's lawsuit proposal is designed to court the American Medical Association, which has never seen a bad doctor it couldn't love. Any proposal to weed the incompetents out of the medical profession would probably be a deal breaker.

UPDATE: During his speech on Monday before the AMA convention, Obama talked about cutting back on medical malpractice lawsuits without placing caps on malpractice awards--drawing boos from the crowd. From his prepared speech:

Now, I recognize that it will be hard to make some of these changes [in the health care system] if doctors feel like they are constantly looking over their shoulder for fear of lawsuits. Some doctors may feel the need to order more tests and treatments to avoid being legally vulnerable. That’s a real issue. And while I’m not advocating caps on malpractice awards which I believe can be unfair to people who’ve been wrongfully harmed, I do think we need to explore a range of ideas about how to put patient safety first, let doctors focus on practicing medicine, and encourage broader use of evidence-based guidelines. That’s how we can scale back the excessive defensive medicine reinforcing our current system of more treatment rather than better care.

Science, health, and environmental stories from our other blogs you might have missed from Friday and the weekend:


Just because you, dear reader, spent a relaxing weekend mixing organic mojitos and committing random acts of bluegrass doesn't mean the world put its feet up too. Oh no. Indeed, while you were blissfully perfecting vegan recession recipes Iran snuck off and reelected itself Mahmoud Ahmadinejad. (Or so claim the baton-wielding protestor-beating Iranian government goons.)

In lighter recent news, the Senate decided that fruit-flavored cigarettes and cartoonish tobacco ads aimed at tykes might actually be flamingly bad ideas they could stamp out; hilarity continued in the Gibbsian press room; and we remain curious about prom at a high school where studies include Islamic jihadism, nuclear arms, and cyber-crime.

Speaking of nuclear arms, apparently the Nuclear Regulatory Commission rates highest in federal employee satisfaction. Surprised? You won't be by two of the worst rated: Homeland Security and the Department of Transportation.

Obama and Leverage

The Wall Street Journal describes the financial industry regulatory reform that Barack Obama is expected to unveil this week:

The plan stops short of the complete consolidation of power that some lawmakers have advocated. For example, it will allow several agencies to continue supervising banks. It also won't place specific limits on the size or scope of financial institutions, but it will make it much harder for large companies to be so overleveraged that they threaten the broader economy.

....The plan calls on the Fed to oversee financial institutions, products, or practices that could pose a systemic risk to the economy. It will create a "council" of regulators to monitor this area as well. Government officials believe this arrangement will forestall companies from growing large and overleveraged without substantial federal supervision, as happened, for example, in the case of giant insurer American International Group Inc.

The Fed will likely have the power to set capital and liquidity requirements for the U.S.'s largest financial companies and scour the books of a wide range of firms. It is unclear what enforcement powers the central bank will have; that likely will be a point of contention as lawmakers debate the issue.

I'm OK without complete consolidation.  Box drawing exercises often just ignite turf battles without really accomplishing much.  I'm also OK with not trying to limit the size of financial institutions.  I'm semi-persuaded that it might be a good idea to do this, but I also suspect that it's fanciful to think that it could work.  The limits would have to be draconian, compliance would have to be almost perfect worldwide, counterparty connections would have to be monitored as rigorously as size, and companies would almost certainly be able to figure out ways to evade the regulations.  This seems like a tide that's nearly impossible to hold back.

But leverage — that's critical.  For the past two decades we've not only ignored increasing leverage in every nook and cranny of the financial world, we've made it worse.  LTCM blew up in 1998 because of astronomical leverage and afterward Alan Greenspan produced a report saying we should "encourage" financial institutions to limit their leverage.  Result: nothing.  In fact, things got worse.  Basel II followed Basel I and loosened capital adequacy requirements.  In 2004 the SEC allowed big Wall Street investment banks to increase their leverage ratios.  Off balance sheet leverage skyrocketed with no pushback from anyone.  At the consumer level, zero down mortgages became common.  The shadow banking system went almost entirely unregulated.  All this plus a tsunami of cheap money made disaster almost inevitable.

If Obama's plan truly addresses leverage — everywhere and in all its guises — and if he can persuade the rest of the world to follow suit, he will have really accomplished something.  It's not the only thing we need to do, but it's the most important.  When we get the details of his proposals to regulate leverage, that alone will tell us most of what we need to know about whether he's really serious about taking on Wall Street.