Via Brad DeLong, Menzie Chinn compares the CBO's February and March projections of economic disaster and notes that they've become considerably more disastrous in only a month:

Notice that the no-stimulus counterfactual output gap and unemployment rates are noticeably worse now than only a month ago (see this post). For 2010, the February counterfactual was -6.3% of GDP, now around -10%; the February counterfactual for 2010 was 8.7% unemployment, now it's nearly 11% (I'm eyeballing the current counterfactuals off of Figures 2-1 and 2-2)....My guess is that that "massive" stimulus is going to look a lot less "massive" given the severity and duration of this recession.

A month ago CBO estimated that unemployment would hit 8.7% in the absence of a stimulus package.  Now they think it would have been around 10.5%.  With the stimulus, they think it will top out at a little over 9%.

Over at the Wonk Room, Igor Volsky notes that AHIP, a healthcare insurance trade group, has finally announced its position on healthcare reform:

Specifically, by enacting an effective, enforceable requirement that all Americans assume responsibility to obtain and maintain health insurance, we believe that we could guarantee issue coverage with no pre-existing condition exclusions and phase out the practice of varying premiums based on health status in the individual market. While we support transitioning to a reformed system in which health-status-based rating is no longer used, rating flexibility based on age, geography, family size, and benefit design is needed to maintain affordability.

Volsky is pretty unimpressed, but I guess I feel slightly more generous toward this proposal than he does.  If AHIP is serious, this represents a philosophical concession that's worth having.  Unfortunately, the devil is in the details.

AHIP says that in return for making insurance mandatory, the industry is willing to guarantee coverage to everyone, regardless of health status.  But check out that last sentence, which is a loophole big enough to drive an EMT ambulance through.

I'll grant them family size as a reasonable criteria for premium flexibility.  Obviously a big family should be charged more than a single person.  But age?  Health issues rise rapidly with advancing years, so it would be fairly easy to avoid the worst risks by simply making premiums rise dramatically after age 50.  Geography?  Everyone knows that poor people tend to have the worst health, and obviously they cluster in low-income areas.  Benefit design?  Every health insurance company understands where the costs are in the system.  If plans with decent coverage of expensive chronic conditions like diabetes are priced out of reach, then nobody will buy them even if, technically, the premium isn't based on health status.

Now, some of this is simply fodder for regulation.  Maybe you can set minimum standards for plan benefits, or limits on how fast premiums can increase with age. But as Volsky points out, AHIP's position today isn't really very different from its position in 1992, which it abandoned at the first sign of political opportunity.  Liberals, including me, have a fond hope that the political scene is different today than it was in 1992, which might keep AHIP from bolting, but recent events suggest that Republicans are pretty likely to adopt the same "Just Say No" strategy this year that they did during the Clinton administration.  It's possible that the political scene hasn't changed as much as we think.

Bottom line: AHIP's statement is better than no statement.  It's progress of a sort, especially if they're serious about it and willing to accept reasonable regulations on how it gets implemented.  We'll see.

Apparently that's the case, that people are finding kids too spendy right now. The National Network for Abortion Funds, which helps women in need pay for abortions, says that calls to their helpline have quadrupled in recent months. The AP/Google.com puts it this way:
For many Americans, the recession is affecting their most intimate decisions about sex and family planning. Doctors and clinics are reporting that many women are choosing abortions and men are having vasectomies because they cannot afford a child.
First, this is a siren call for prevention, which legislators, and the courts, are hearing. That you have to resort to an abortion when you could be given access to available, affordable, birth control, is a lousy choice to have to make.

Second, how much do abortions cost anyway? Since many states restrict coverage [pdf] of the procedure by insurers, and since the Hyde amendment still prohibits federal funds (such as Medicaid) from covering most abortions, women often have to pay out-of-pocket. First trimester abortions cost in the neighborhood of $300-$500, second trimester ones can run upwards of $5000. And since the price for an abortion goes up pretty much each week once you get into the second trimester the issue of access takes on renewed significance. Waiting periods, parental notification, restrictions that send women across borders, these all take an emotional toll, and a financial one. I wonder if the recession could also be having an opposite effect, women wanting to have the procedure but not doing so because money is tight.

RIP Archie Green







Over the weekend, Archie Green, grandfather of labor history, passed away in his San Francisco home at the age of 91. Over at Daily Yonder, Julie Ardery has written Green a great eulogy chronicling his many and varied accomplishments:

Archie, as he was universally known, was a scholar of what he called “laborlore” – the expressive culture of working people. For five decades he studied hillbilly music and pile-drivers’ tales. He made inventories of  “tin men” – the showpieces of sheet metal workers -- and analyzed sailors’ slang.  He recorded songs by millworkers and miners’ wives. Working on until just months before his death, he wrote countless articles, both academic and popular, and five books, including Only a Miner, his landmark study of coal-mining music.

Born in Winnipeg to Russian Jewish parents in 1917, Green spent most of his childhood in LA. He attended UCLA and UC Berkeley for college, and spent the first part of his adult life building ships on the waterfront. But in 1959, he went back to school, and over the next few years earned degrees in both library science and folklore. He spent the better part of the '60s and '70s digging up and dusting off forgotten bits of what he called "laborlore"—legends, folksongs, and stories of individual workers. In 1976, he convinced Congress to pass the American Folklife Preservation Act and create the American Folklife Center at the Library of Congress. In recent years, he worked with the San Francisco based Fund for Labor Culture and History and helped organize  Laborlore Conversations, a series of conferences on workers' culture past and present that drew a crowd of historians, activists, union members, and many others.

Mother Jones is especially indebted to Green, since without him, our namesake, Mary "Mother Jones" Harris might have been forgotten—he recovered her legacy in 1960. Check out the folksong "The Death of Mother Jones" here. Sure wish I could hear it. If anyone knows where an MP3 lives, do tell.

Last week, news leaked that Bob Gates, President Obama's Republican Secretary of Defense, is planning to cut several major weapons programs, including the F-22 and the Zumwalt-class destroyer. At last night's press conference, Obama acknowledged that he had "been working with Secretary Gates on this and will be detailing it more in the weeks to come," but warned that "the politics of changing procurement is tough." Rep. Barney Frank (D-Mass.) is a longtime crusader against wasteful military spending. Frank, the powerful chair of the House financial services committee, was dealt a setback in his battle against Pentagon waste when Obama increased the military budget. With the news that several of the programs he and others have criticized may be killed, Frank and other Pentagon spending critics have some reason to be hopeful.

But while he was "very encouraged" to hear that Gates plans cuts, Frank tells Mother Jones that making those cuts will be "very hard." The recession and the fact that defense contractors have "gone and spent money in everybody's district" will make members of Congress reluctant to slash procurement dollars, Frank explained. Even his own dark-blue Massachusetts district has jobs that depend on defense spending. "When I came out publicly wanting military spending cuts, shortly thereafter I was visited by someone who works at a company in my district that makes parts that go into one of the weapons systems I was talking about cutting," Frank said. "It was very polite, and there's nothing coercive about it, but it was clear that they wanted to remind me that I have people in my district that do that, and that's true."

Weapons programs have always been tough to cut. When he was Secretary of Defense, Dick Cheney tried four times to kill the V-22 Osprey, a kind of combined helicopter-airplane troop transport that had several fatal accidents during testing, killing a combined 30 people. Each time Congress resurrected the project, and the Osprey is now operational—albeit over budget and way behind schedule. (The Osprey, at least, is used in Iraq and—starting this year—Afghanistan. The Air Force's F-22 fighter has not been used in either conflict.)

Texas Justice

Wow, Texas:

The charges focus on [Texas] Judge [Sharon] Keller's refusal to keep court offices open past 5 p.m. on Sept. 25, 2007, to receive an appeal in the case of Michael Richard, a convicted rapist and murderer.

Judge Keller, who was first elected to the court in 1994 and campaigned as being tough on crime, left her office that afternoon to meet a repairman at her home. Mr. Richard was put to death that evening by lethal injection.

This is the same judge who once refused to grant a new trial to a mentally retarded man convicted of rape and murder after DNA evidence established it was not his semen in the victim. "We can't give new trials to everyone who establishes, after conviction, that they might be innocent," she said of the case.

Suckitude Update

Man, does it suck working on a 1024x768 screen with a 1360x768 monitor.  It's like staring at a Dali painting all day long.  I've got a new Acer on its way, though, and I even paid a boatload extra for 2-day delivery.  Now I'm wishing I'd paid a yachtload more for overnight.  Sigh.

This is pretty fantastic. And by "fantastic," I mean awful but very useful.

Rarely do you find an example of the Bush Administration's philosophical approach to the bureaucracy (government doesn't work and we're going to prove it!) illustrated as starkly as it is in this New York Times article on the Labor Department's Wage and Hour Division.

In a report scheduled to be released Wednesday, the Government Accountability Office found that the agency, the Labor Department’s Wage and Hour Division, had mishandled 9 of the 10 cases brought by a team of undercover agents posing as aggrieved workers.

In one case, the division failed to investigate a complaint that under-age children in Modesto, Calif., were working during school hours at a meatpacking plant with dangerous machinery, the G.A.O., the nonpartisan auditing arm of Congress, found.

When an undercover agent posing as a dishwasher called four times to complain about not being paid overtime for 19 weeks, the division’s office in Miami failed to return his calls for four months, and when it did, the report said, an official told him it would take 8 to 10 months to begin investigating his case.

Other examples abound. The whole article (via TNR) is worth reading. Keep in mind, though, that while the mismanagement at Labor may be comical, it is not borne out of incompetence. This is malicious. The government was intentionally allowed to atrophy under the Bush Administration because it suited that crowd's ideological ends. The perversion of the FDA, the EPA, and the SEC all speak to that. And if the mandated inaction desiccated the parts of the government that are designed to protect or help the poor -- like in this instance -- all the better.

From Bank of America CEO Ken Lewis, on the $45 billion in taxpayer capital that they accepted last year:

"As soon as we think the markets normalize, we would very seriously like to pay it all back."

Granted, Lewis left himself the escape hatch of waiting until "markets normalize" to pay back this capital, but even so this statement means one of three things: (1) he's lying, (2) he's crazy, or (3) BofA really is in fairly decent shape.  I report, you decide.

Regulation

Bloomberg reports that new financial regulations are on their way:

The Obama administration is preparing an overhaul of U.S. banking rules that would force financial companies to keep more cash on hand in case their trading bets go wrong.

Treasury Secretary Timothy Geithner told lawmakers yesterday that changes will include “strong oversight, including appropriate constraints on risk-taking.” Federal Reserve Chairman Ben S. Bernanke said the case of American International Group Inc. showed the “intense problem” of trading with insufficient capital to guard against losses.

This is probably good stuff, but one thing that I find persistently missing from these discussions is any sense of guiding principles. There are a million rules you might want to put in place to regulate the financial industry, and every one of them might individually sound sensible.  But what's the big picture?  What are you trying to accomplish?

If you asked me, for example, I'd toss out three big principles.  #1 is firmer regulation over leverage, wherever and however it occurs.  This would produce regulations like the one above that increases capital adequacy ratios, but it would also lead to similar oversight of hedge funds; an overhaul of how capital and assets are calculated; regulation of effective leverage embedded in complex derivatives; rules about off-balance-sheet vehicles; and so forth.

#2 would be a stronger commitment to act countercyclically.  That would produce things like rules designed to force the Fed to keep an eye on asset inflation as well as goods inflation; a dedication to limiting credit expansion as well as credit destruction; capital adequacy rules that weren't merely stronger, but that tightened during expansions and loosened during contractions; and stronger down payment requirements for mortgage loans.

#3, for lack of a better name, is a recognition that the global financial system could stand to have a little more sand in its gears.  Something to slow it down just a little bit.  This might include things like a small transaction tax; exchange trading for credit derivatives; and stronger transparency rules.

Now, I might be wrong about these principles, and I might be wrong about the specific regulations needed to support them.  Fine.  Suggest your own.  But rather than a huge hodgepodge of rules that might be good ideas on their own but might not really work together to accomplish what you want, I'd like to see a moderate, well-targeted set of rules aimed at fixing two or three big things.  The principles should guide what we do, not the other way around.