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Obamacare Will Cover About 19 Million People This Year

| Wed Feb. 18, 2015 4:52 PM EST

With the signup deadline now past, we have a pretty good idea of how many people will be getting health care coverage via Obamacare in 2015. Here's a rough estimate:

The Medicaid number will rise throughout the year, and is higher if you use a looser way of counting. Needless to say, it would also be higher if all the holdout states joined in. For now, though, using a strict count just through February, the Obamacare total stands at about 18.6 million people—and will likely rise a bit more thanks to state extensions of the deadline. So call it 19 million or so.

That's a lot of people. If you got into politics to help actual people with actual problems, you should be damn proud of voting for the Affordable Care Act in 2010. No other legislation of at least the past two decades even comes close to its real-world impact.

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Eric Holder Wants All Executions Put on Hold

| Wed Feb. 18, 2015 4:00 PM EST

Attorney General Eric Holder has called for a nationwide moratorium on the death penalty until the Supreme Court makes a decision on the constitutionality of certain lethal injection methods later this year, saying on Tuesday that he opposes capital punishment because he believes the odds of eventually making a mistake and executing an innocent individual are "inevitable."

Here's some of what Holder had to say at a luncheon at the National Press Club in Washington:

It is one thing to put somebody in jail for an extended period of time, have some new test that you can do and determine that person was, in fact, innocent. There is no ability to correct a mistake where somebody has, in fact, been executed. And that is, from my perspective, the ultimate nightmare…I think fundamental questions about the death penalty need to be asked. And among them, the Supreme Court's determination as to whether or not lethal injection is consistent with our Constitution is one that ought to occur.

Holder, who stressed that he was speaking personally and not for the Obama administration, has voiced his opposition to the death penalty before. In November, the attorney general told the Marshall Project that there is always the possibility that a jury will sentence the wrong person to death. "We have the greatest judicial system in the world," he said, "but at the end of the day it's made up of men and women making decisions, tough decisions. Men and women who are dedicated, but dedicated men and women can make mistakes."

The Supreme Court agreed last month to hear an appeal by death row inmates in Oklahoma who say the state's lethal injection methods violate the Constitution. In April, the state botched the execution of 38-year-old Clayton Lockett, who reportedly writhed in pain after receiving a three-drug combination and died 43 minutes later. The court is expected to rule by the end of June.

As my colleague Stephanie Mencimer has reported, states are searching for new capital punishment methods after losing access to sodium thiopental, an anesthetic traditionally used in lethal injections. The only US manufacturer of the drug stopped producing it in 2011, while suppliers in Europe who object to the death penalty will no longer export it to the United States. In a bid to find other options, some states have used untested combinations or bought from unregulated compounding pharmacies, while lawmakers in Utah have even voted to bring back the firing squad for executions. In Ohio, lawmakers passed a "secret execution" law that exempts from public records searches the names of suppliers of lethal injection drugs.

Meanwhile, also on Tuesday, the Florida Supreme Court stayed the execution—scheduled for next week—of a death row inmate convicted of killing four people in Orlando in 1985, pending a decision from the high court.

Here's a Surprisingly Simple Reason that New Regulation Might Spur the Creation of More Startups

| Wed Feb. 18, 2015 2:30 PM EST

Earlier this morning I wrote about a new study suggesting that new federal regulation doesn't inhibit the creation of new startup companies in an industry. In fact, it might actually stimulate the creation of startups. This seems counterintuitive, but a reader with some experience in the education and health care sectors—which were influenced by NCLB and Obamacare, respectively—proposes an explanation for this:

Healthcare startups have absolutely exploded post-ACA....This was pretty well anticipated by venture capital; a bunch of Sand Hill firms started putting together ad-hoc health IT teams shortly after the ACA was passed, on the basic logic that anything that changed an industry as much as the ACA did would necessarily create a lot of startup opportunities.

I worked in education research shortly after the passage of NCLB, and while I can't speak to this nearly as confidently as I can speak to the current healthcare startup landscape, it at least seemed to me that a lot of startups sprung up to help schools/districts/states etc. adapt to the new law.

The general principle I've taken from this is that federal regulation, or at least major federal regulation, changes the landscape of its target industries enough to increase startup opportunities, because incumbents are slow to adapt for all the same reasons incumbents are usually slow to adapt to change. Entrepreneurs and startup investors have a pretty good sense of that dynamic.

This seems pretty plausible. Any major change, whether it's a technological change or a regulatory change, creates a new landscape. And big incumbents are usually slow to react, regardless of where the change came from. This gives startups an opportunity to dive in and take advantage of the change faster than existing firms.

This doesn't mean that regulatory change is necessarily either beneficial or harmful. It might be generally beneficial on the theory that nearly anything which shakes up an industry ends up being useful. Or it might be generally harmful because startups addressing regulatory change don't really add any long-term value. That's a question for another day. Either way, though, it's change, and that might be reason enough to expect an increase in startup activity whenever new federal regulations are introduced.

Testing for Marijuana-Impaired Driving Is About to Get a Whole Lot Easier

| Wed Feb. 18, 2015 1:06 PM EST

This is just a tidbit, but it's an interesting one. Here's the background: Legalized marijuana, which is pretty obviously gaining ground steadily, leads to higher marijuana use (duh) and thus to higher rates of driving while stoned. Or does it? The problem is that THC remains in your system for a week or more after you've smoked a joint, so even if you test positive at a roadside stop it doesn't necessarily mean that you're stoned now—or even that you've smoked within the past day, let alone the past few hours. As a result, drivers who are perfectly safe run the risk of being unfairly convicted of impaired driving, while drivers who are stoned can often escape conviction if they have a good lawyer.

Today, Keith Humphreys passes along the news that this might be about to change. It's from a study in the Journal of Analytic Toxicology:

The JAT paper evaluated a different approach which may resolve these problems: Oral fluid sampling. The driver suspected of impairment is mouth swabbed at roadside and the saliva is placed in a machine, which rapidly prints out a result. This technology is fairer than urinalysis because it is only sensitive to recent marijuana use rather than use that happened a day ago or a week ago.

Of the devices the researchers tested in the study, the Dräger Drug Test 5000 had the best results. Assuming it doesn’t cost a mint, this technology could be a breakthrough for law enforcement as well as an important civil rights protection for people suspected of drug-impaired driving.

Like I said, just a tidbit. But an interesting one, especially given the obvious trajectory of marijuana legalization in America. If this technology pans out, it makes studies of marijuana-impaired driving more feasible and it removes one more argument from the arsenal of anti-legalizers.

The Military Drone Mart Is Now Open For Business

| Wed Feb. 18, 2015 11:50 AM EST

The aerospace industry has finally won its long, twilight struggle to sell drones overseas:

The Obama administration unveiled a new policy Tuesday allowing foreign allies to buy military drones, a move that could have potentially far-reaching implications for global security partnerships and the U.S. aerospace industry.

....U.S. officials suggested the drone sales could become a new tool for expanding American influence overseas. “We are interested in building strong and capable international partners,” said a senior State Department official, who was not authorized to speak publicly on the policy. “Now we have established a process that will help build those partnerships through the acquisition of this technology.”

What could go wrong? Nothing, of course, because we'll be keeping a sharp eye out for abuses:

Each country eager to buy U.S.-made drone technology would also be required to agree to “end-use monitoring and potential additional security conditions.” Those restrictions would be designed to limit potential misuse of drones, such as attacks against a country's own civilian population.

In fairness, America has always sold loads of lethal technology to its allies, and this was probably inevitable. Once a technology becomes available, it's going to spread one way or another. As a result, governments everywhere will be soon able to conduct warfare against weaker states without any of the restraints that possible loss of lives provides today. Progress!

Here's an Odd Result: Strict Regulation Apparently Doesn't Hamper Startup Growth

| Wed Feb. 18, 2015 11:17 AM EST

Does government regulation of an industry impede the creation rate of new startups, and thus reduce innovation and dynamism? Alex Tabarrok passes along a fascinating little nugget of research on the subject:

Could regulation be increasing barriers to entry, raising the costs of reallocation, and slowing the diffusion of productivity innovations? To test the hypothesis that regulation is reducing dynamism Nathan Goldschlag and I combined data on dynamism with an industry level measure of regulation.

Our measure of regulation is produced by an innovative technique that combs the Code of Federal Regulations (CFR) for restrictive terms or phrases such as “shall,” “must,” “may not,” “prohibited,” and “required”. The count of restrictive words in each section is then associated to industries via a machine learning algorithm that recognizes similarities between the language in that CFR section and industry language (e.g. a section of the text with words such as “pipeline” would be associated with the oil and gas industry). In this way, we can associate each industry with an index of regulation derived from the entire CFR.

Now, I have some doubts about this. For starters, it's limited to federal regulation. State regulation is the big player in some industries. It also doesn't really test the nature of the various regulations. A routine requirement to submit quarterly tax information gets the same weight as a heavily intrusive requirement to raise capital levels or monitor pollutant levels. Finally, that machine learning algorithm better be pretty good. Is it?

Still, despite these caveats, it's an interesting approach. And what Tabarrok and Goldschlag found was the opposite of what they expected. As the chart above shows, industries with more regulation also had more startups. Stringent regulation doesn't seem to impede dynamism at all. In fact, it encourages it. Further tests confirm this.

But why? I'll toss out a few possibilities:

  1. The research methodology just isn't up to the task. Regulation really does reduce the incentive to create startups, but this particular test is too underpowered to show it.
  2. Lots of regulations explicitly exclude small firms (usually those with under 50 employees). This doesn't matter much in, say, the hospital business, where every firm will be above that threshold. But it does matter in other industries, and it might give startups an advantage over established firms. In other words, regulating the big guys might actually make small startups more attractive than they otherwise would be.
  3. Tabarrok suggests that regulation might be associated in some way with how dynamic an industry is in the first place. That is, especially profitable and growing industries might automatically attract the attention of regulators simply because they're more noticeable. If that's the case, the level of regulation might not be telling us anything aside from the fact that dynamic industries attract more regulation.
  4. Perhaps increased regulation mostly just drives the growth of a consultant class that helps startups create new businesses. Because of this, starting a new business isn't any harder, it's just a bit more expensive. But every other business is paying the same expenses to comply with regulations, so it's not really much of a barrier to entry.
  5. Maybe only certain kinds of regulations affect dynamism and America is pretty good at avoiding those. The ones that are on the books are generally as minimal and targeted as possible and don't much affect startup creation.

Any other ideas? It really is a bit of an odd result, regardless of whether you're temperamentally in favor of regulation or not.

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Quote of the Day: What ISIS Really Wants

| Wed Feb. 18, 2015 9:30 AM EST

From Graeme Wood's 10,000-word exegesis in the Atlantic on the origins and true beliefs of ISIS:

Its rise to power is less like the triumph of the Muslim Brotherhood in Egypt (a group whose leaders the Islamic State considers apostates) than like the realization of a dystopian alternate reality in which David Koresh or Jim Jones survived to wield absolute power over not just a few hundred people, but some 8 million.

A friend recommended I read this, so I plowed through it yesterday afternoon. Here's the main takeaway:

Much of what the group does looks nonsensical except in light of a sincere, carefully considered commitment to returning civilization to a seventh-century legal environment, and ultimately to bringing about the apocalypse....They refer derisively to “moderns.” In conversation, they insist that they will not—cannot—waver from governing precepts that were embedded in Islam by the Prophet Muhammad and his earliest followers. They often speak in codes and allusions that sound odd or old-fashioned to non-Muslims, but refer to specific traditions and texts of early Islam.

Wood says that we benefit in two ways from ISIS holding such sincerely medieval and millenarian views. The first is obvious: it severely limits their potential audience for converts. The second benefit is more recondite: one of those medieval views is that the Koran demands the establishment of a new caliphate. And this is not some wimpy, aspirational caliphate that exists only in the indefinite future. That's for milksops like Al-Qaeda. This is a right-here-and-now caliphate. But it turns out that a caliphate requires control over actual physical territory:

Al‑Qaeda is ineradicable because it can survive, cockroach-like, by going underground. The Islamic State cannot. If it loses its grip on its territory in Syria and Iraq, it will cease to be a caliphate. Caliphates cannot exist as underground movements, because territorial authority is a requirement: take away its command of territory, and all those oaths of allegiance are no longer binding.

This means, for starters, that ISIS is not a big threat to the United States. Unlike Al-Qaeda, it has no particular interest in attacking the West. Its goal—in fact, its religious duty—is to establish control over territory in the Middle East. And that also represents a major weakness:

Given everything we know about the Islamic State, continuing to slowly bleed it, through air strikes and proxy warfare, appears the best of bad military options. Neither the Kurds nor the Shia will ever subdue and control the whole Sunni heartland of Syria and Iraq—they are hated there, and have no appetite for such an adventure anyway. But they can keep the Islamic State from fulfilling its duty to expand. And with every month that it fails to expand, it resembles less the conquering state of the Prophet Muhammad than yet another Middle Eastern government failing to bring prosperity to its people.

The whole piece is worth a read.

Most Americans Think the Netanyahu Speech Is a Bad Idea

| Tue Feb. 17, 2015 9:53 PM EST

According to a new CNN poll, 63 percent of Americans think it was a bad idea for Republicans to invite Benjamin Netanyahu to address Congress without first consulting the White House. Even Republicans are only barely on board. That's no surprise, really: it was just a dumb idea on everyone's part. The only thing that took me a little aback was adding up the numbers and learning that fully 96 percent of Americans have an opinion on this matter in the first place. That seems unlikely. But another question in the CNN poll did surprise me:

Americans overall believe the U.S. should stay out of the Israeli-Palestinian conflict, with 66% in the new poll advocating the U.S. remain neutral. Of those who do support picking a side, the majority, 29%, back Israel, while only 2% support Palestine.

Even Republicans, typically seen as the party offering the strongest defense of Israel, are split on whether the U.S. should officially support Israel in the conflict. Forty-nine percent support backing the nation, while 47% say the U.S. should stay out of it.

Have I just not been paying attention? I certainly understand why someone might have given up entirely on the Israeli-Palestinian conflict and decided it's best for us to just stay out of it, but I'm startled that this has become such a widely held view. Have previous polls showed the same thing? Or is this something that's just developed over the past few years?

Clinton Courts Warren

| Tue Feb. 17, 2015 6:00 PM EST

Back in December, Hillary Clinton and Sen. Elizabeth Warren (D-Mass.) reportedly met in private for what is being described as a "cordial and productive" conversation inside Clinton's Washington D.C. residence. The New York Times' Maggie Haberman and Jonathan Martin have the scoop, published Tuesday, which makes clear Clinton did not ask for Warren's endorsement, but instead sought the senator's thoughts on a number of policy issues.

News of the one-on-one conversation comes not only as Clinton continues to build a formidable 2016 campaign team—most recently with the hire of Mandy Grunwald, a longtime Clinton confidant who had lately been advising Warren—but also as liberal activist groups urge the Massachusetts senator to challenge her for the Democratic nomination. While Clinton, who has yet to formally announce her candidacy, is widely viewed as the party's frontrunner, a possible run by Warren and her trademark populist message would certainly complicate her campaign.

Despite calls for her to run, however, Warren has repeatedly said she will not be seeking the nomination. But a sit-down at Clinton's home, sans political aides and initiated by Clinton, is the most clear signal Clinton is well aware she will be needing Warren's deeply popular economic liberalism in order to be successful come 2016, especially at a time when even Republicans appear to be freely borrowing from the senator's populist platform.

Two Paragraphs That Explain Greece vs. Germany

| Tue Feb. 17, 2015 5:09 PM EST

Neil Irwin has a very short and sweet explanation of Europe's continuing fiscal woes:

Europe really does have a big and plausibly unsolvable macroeconomic problem. Germany and a couple of other countries are operating in a radically different economic gear than Southern Europe, and the ways you might normally expect those imbalances to work themselves out are not available. In pre-euro Europe, currency swings would have handled the job. In the United States, continuing fiscal transfers from rich states to poor states do the work. Neither is a palatable option in a Europe that has a single currency and deep aversion among Germans, Finns and Dutch to sending their hard-earned euros to Greece and Spain and Italy.

Either Northern European governments will accept bigger fiscal transfers and higher inflation than their citizens want, or the Mediterranean nations with economic challenges will have to accept falling wages and high unemployment as they try to restore competitiveness, which their citizens very much do not want.

Germany is the most inflation-averse of the big Northern European countries, and Greece is suffering the worst unemployment among the Southern European countries. This is why Greece vs. Germany has become the main front in the ongoing economic trench warfare of North vs. South.

As for myself, I can't bring myself to believe that the euro will break up. But I also find it hard to imagine that Greece can avoid open rebellion much longer if Germany continues to maintain policies that make economic balance nearly impossible. So I don't know. What happens when an irresistible force meets an immovable object?