Kevin Drum - December 2009

Sleazy Sewers and Healthcare Reform

| Wed Dec. 16, 2009 8:02 PM EST

Glenn Greenwald has this to say about the Senate healthcare bill now that the public option and the Medicare buy-in have been stripped out:

In essence, this reinforces all of the worst dynamics of Washington.  The insurance industry gets the biggest bonanza imaginable in the form of tens of millions of coerced new customers without any competition or other price controls.  Progressive opinion-makers, as always, signaled that they can and should be ignored [...] Most of this was negotiated and effectuated in complete secrecy, in the sleazy sewers populated by lobbyists, industry insiders, and their wholly-owned pawns in the Congress.  And highly unpopular, industry-serving legislation is passed off as "centrist," the noblest Beltway value.

This is pretty much correct.  The individual mandate was a way of getting support from the insurance industry.  The backroom deal with Big Pharma was a way of getting support from the drug industry.  The change in Medicare reimbursement rates was a way of getting support from doctors.  The gutting of the Medicare commission was a way of getting support from hospitals.  Provisions related to biologics, home healthcare, and the prescription drug doughnut hole were a way of getting the support of AARP.

Any honest observer has to concede that all this makes it hard to defend the final product.  Except for one thing: in 1994 Bill Clinton failed to get the support of these groups and healthcare reform died.  If Obama had done the same, it would have died this year too.  There's really just no question about this.  It's ugly, but that's the real world.  Which brings me to the place where I think Glenn is wrong:

Looked at from the narrow lens of health care policy, there is a reasonable debate to be had among reform advocates over whether this bill is a net benefit or a net harm.

From any kind of progressive point of view it's hard to see how you could seriously argue that the current bill is a net harm. Sure, it makes compromises to powerful interests that are hard to swallow.  But that's why they're called powerful interests: because they can kill your legislative priorities if you don't assuage them.  In return, though, the Senate bill brings down insurance rates, expands Medicaid, offers the prospect of moderately priced insurance to tens of millions of the uninsured, forces insurers to take you on even if you have a chronic pre-existing condition, mandates minimum levels of coverage, and takes several small but important steps toward reducing the future growth of healthcare costs.  That's an enormous advance for the progressive agenda.

There's an alternate universe out there in which you could get all this stuff without compromise based on the sheer force of progressive arguments.  Sadly, it's not this universe.  I sure hope we don't have to learn this the hard way yet again.

Advertise on MotherJones.com

Sunspots and Global Warming

| Wed Dec. 16, 2009 6:43 PM EST

I was googling around a couple of weeks ago and happened to end up clicking a bunch of links that took me down a particular rabbit hole of climate change skepticism related to solar cycles.  It was fascinating in a gruesome kind of way, but I never wrote a post about it and eventually it drifted from my mind.  Today, though, Brad Plumer comes through with a link to a piece in the Independent explaining just where this theory originally came from and how it's become so widespread.  Also, why it's wrong.1  Worth a read.

1An explanation largely notable because the scientist who originally advanced the sunspot theory refuses to address his main critic because he "is not a scientist."  Good to see the tables turned here for once.

Cantor to Unemployed: Drop Dead

| Wed Dec. 16, 2009 5:49 PM EST

Dave Weigel notes today that Republican House Whip Eric Cantor sent out an email blast today opposing a bunch of safety net extensions, including extension of unemployment benefits, COBRA subsidies, Medicaid matching rates, and child credits. Says Dave: "Attacking this stuff — and implying that a Republican majority would cut off these benefits — is something an opposition party can do, but something very hard to imagine a Republican congressional majority getting away with."

Maybe.  But this morning on the Imus show Cantor doubled down:

We haven't had a discussion in Washington this year about wealth creation, about job creation. It's all been about trying to provide more safety net, trying to take from those who have been able to create wealth and opportunity and redistribute it. You know, that's not the America that any of us know.

So there you have it: no help for the unemployed, just more tax cuts for the rich.  Sounds pretty Republican to me!

(What's that? you say.  Cantor didn't say anything about tax cuts for the rich?  Sure he did.  He just said it in code.  Read his statement again.)

$80 Grand to Goof Off?

| Wed Dec. 16, 2009 1:49 PM EST

Elizabeth Wurtzel writes about recruiting at the top drawer law firm Cravath, Swaine & Moore:

The class of associates that just joined Cravath was asked to defer their arrival for a year in exchange for a sweet deal: They would receive $80,000 to not work, plus they would get benefits and student-loan payments. This offer was optional.

....I've been told that none of the graduates of Yale Law School who were headed for Cravath accepted their offer of $80,000 to surf and sunbathe, or go forth and save the world. Since no one at either institution is willing to discuss this — and I don't blame them, because I would be embarrassed too — I don't know this for certain. But here's what I'm sure of: Not everybody took Cravath up on this peachy keen opportunity to do anything for a year with pay and benefits. And that by itself is disturbing enough.

Felix Salmon says this piece has been gnawing at him all day.  "What on earth would possess a law student fresh out of Yale Law to decline this offer?" he wonders.  My guess is that Wurtzel answers the question here:

Those who will be joining the firm next year are slightly, but only by a smidge, less lucky: They get $65,000 to put off employment for a year, with the same perquisites, and acceptance is mandatory.

Law students who get offers to join Cravath tend to be super ambitious Type A folks, and that's a big part of why they want to get their careers started right away.  But surely fear is the biggest reason for turning down this offer, isn't it?  Fear #1: this is just a test.  Anyone who takes them up on it will be tagged forever as a slacker.  Who wants that?  Fear #2: if the economy is still bad a year from now — and apparently Cravath has already decided that it will be — will Cravath keep paying me not to work?  Along with yet another class they want to keep on the hook?  And after two or three years of this, what then?  My skills are rusty, my classmates have two or three years of valuable experience and professional networking, and Cravath will toss me aside.  What happens after that?  Will some other top firm take a flyer on someone who's spent the past few years watching reruns of The Wire or lying on the beach?

I'm not nearly the workaholic that a top Yale law student is, but I wouldn't touch this offer with a bargepole.  I'd get my suits pressed, shine my shoes, and show up to work.  When times are tough, who wouldn't?

How To Wreck an Economy in Eight Short Years

| Wed Dec. 16, 2009 12:37 PM EST

Conservatives spend a lot of time whining these days about how Barack Obama is always blaming them for all the problems he faces.  Personally, though, I'd say Obama has been remarkably restrained about the whole thing, especially when it comes to our disastrous fiscal situation.  In a mere eight years, George Bush and the Republican Party managed to take a thriving economy and a federal surplus and turn it into a hair's breadth escape from Great Depression II and an endless fiscal sinkhole.  Rome may not have been built in a day, but it didn't take much longer than that for the modern Republican Party to bankrupt America.

Anyway, here's a nice chart from the wonks at the CBPP to illustrate this.  I think they take the right tone here:

While President Obama inherited a bad fiscal legacy, that does not diminish his responsibility to propose policies to address our fiscal imbalance and put the weight of his office behind them. Although policymakers should not tighten fiscal policy in the near term while the economy remains fragile, they and the nation at large must come to grips with the nation’s deficit problem. But we should all recognize how we got where we are today.

All clear now?

Obama and the Bankers

| Wed Dec. 16, 2009 12:11 PM EST

Matt Yglesias echoes a thought that's been bouncing around in my head lately too: sometimes you need to pick a fight even though you know you can't win.  Big ticket items like healthcare and climate change are bad candidates for that kind of thing, since a public fight with Congress might sink the whole thing.  But:

Financial regulation, it seems to me, would be that issue. In broad terms, the idea of regulating big banks is popular. And substantively speaking, a weak bill that’s full of loopholes would genuinely do very little good. We’re not in imminent danger of a bubble/crash replay but if we do something called “financial regulatory reform” we’re unlikely to do it again until there is a new panic. So there’s a strong case for coming out swinging against denouncing a too-weak bill as a sham and drawing some bright lines. If it doesn’t happen, I’ll do some Taibbi-style denunciations of Geithner & Rahm.

I agree, but I'd spin it a little differently.  Healthcare is an example of a standard issue major bill: it has lots of moving parts that all interlock, and the whole thing is a delicate balance designed to hold together just long enough to get 60 votes.  Screw with one piece and the whole edifice might come crashing to the ground.

But I think financial reform is different.  You can do it in lots of little pieces if you want, and taking a populist stand on one piece doesn't necessarily endanger everything else.  So why not do it?  Why not pick a signature issue or two and really hammer away?  Make a few fire-breathing speeches about how you agree with Alistair Darling about taxing banks that hand out huge bonuses and will be sending legislation to Congress to make that happen.  It'll probably fail, but at least it moves the conversation forward and gets the public engaged.  The fact that you fought the good fight won't really hurt you (the nation's bankers obviously don't think much of you already), and far from sinking the whole reform effort, it might actually help keep the rest of the bill(s) from getting watered down even more.  A couple million postcards has that effect sometimes.

Of course, this all depends on what Obama really thinks of financial reform in the first place, and that's a bit of mystery.  It would be nice to get a bit of a hint, though.

Advertise on MotherJones.com

Fed Chair of the Year: It's Ben!

| Wed Dec. 16, 2009 11:29 AM EST

A concerned reader writes:

After Stengel announced on Morning Joe that Time's Man of the Year was Bernanke, I heard a pop.  So, I just wanted to make sure that wasn't your head exploding.

First of all, it's Person of the Year, you sexist dolt. But anyway, I'm fine, thanks very much, and happy to see that the Obama administration now has a second Time award to go along with its single (so far) Nobel Peace Prize.  But what I really want to know is: what did Bernanke do this year?  It's true that I didn't want him reappointed, but I freely acknowledge that, a few mistakes aside, he did a helluva job last year.  So what's the deal?  Was 2009 really so boring that Time's editors decided they had to reach back a year to find someone worth putting on their cover?

Is Rising Income Inequality a Problem?

| Wed Dec. 16, 2009 12:08 AM EST

In the American Prospect today, Dalton Conley argues that income inequality doesn't really matter much.  What matters is increased government spending on the poor so they have the same opportunities as everyone else.  Bruce Bartlett comments:

At the risk of getting Conley's membership in the liberal club revoked, I think he is right. I have never understood how I am worse off if the top 1% of households increase their share of national wealth or income as long as the absolute level of wealth and income of the other 99% is unchanged. It may be aesthetically displeasing, but it doesn't impose any actual costs on anyone as long as the pie is not fixed. Of course, were that the case it would be different. Gains by the wealthy would necessarily come at the expense of everyone else.

Implicitly, liberals tend to believe the pie is fixed. But, generally speaking, it isn't. A rising tide does tend to lift all boats even if those at the top get lifted a lot more. But Conley is also right to ridicule the view, common among many conservatives, that enriching the wealthy somehow automatically benefits the poor. That's obviously nonsense....For this reason, I have always been more sympathetic to programs that aid the poor than other conservatives.

I agree that inequality per se is probably overemphasized by liberals.  But I think that both Conley and Bartlett miss something essential.  A strong safety net and a commitment to equal opportunity for everyone is certainly important, and this can be funded to some extent by progressive taxes that end up redistributing income downward.  But something else is crucial too: a robust, thriving middle class.  Not a middle class that receives an ever increasing stream of government bennies to make up for its stagnant wages, but a middle class that's growing organically, one that sees its own future as brighter than its present and its children's as brighter yet.  If you lose that, all the government programs in the world won't make up for it.

Rising inequality, then, is just a symptom of the real problem: sluggish middle class wages in a country that's been growing energetically for decades.  That's the core problem.  Get median wages growing at the same rate as the country itself and inequality will take care of itself because there will automatically be less money left over for the rich.

I don't pretend to know all the reasons why middle income wages have risen so slowly for the past three decades — globalization probably plays a role, as do declining union density and the rising importance of cognitive labor — but I can certainly point a finger at a symptom: the widespread idea that workers don't really deserve to share in national productivity gains because it's management that's really responsible for them.  This is one of those conceits that the rich use to rationalize their enormous income growth, but it's plainly specious.  Ask an economist what's responsible for increased productivity, and the most likely answer you'll get is: new technology.  So if we really wanted to reward the people who are responsible for productivity growth, we'd shower riches on engineers and scientists.  But we don't.  We shower riches on the CEOs who buy their products and make use of them.

But buying a new inventory control system is hardly a sign of managerial brilliance.  It's just something that every company eventually does once a better one is invented, and the CEO who signs the purchase order to buy it is no more responsible for productivity growth than the workers who use it.  They're both piggybacking off of someone else's invention, and there's no special reason why either one should be thought more deserving of sharing in the rewards.  They both should.

Long story short, workers in thriving economies should thrive too.  When they don't, countries almost inevitably decline, and bread and circuses can never make up for it.  I think the key insight here is one that FDR knew well: people want to earn money, not have it given to them, and that's what we should focus on: getting middle class earnings growing again.  A whole lot of other problem will take care of themselves if we do.

Starting Over

| Tue Dec. 15, 2009 6:10 PM EST

I don't want to blog endlessly about healthcare reform today because, really, there's not all that much to say.  I think the Senate bill in its present state is well worth passing, other people don't, and that's that.

But there's one argument that I find perplexing.  Here's Howard Dean:

This is essentially the collapse of health care reform in the United States Senate. Honestly the best thing to do right now is kill the Senate bill, go back to the House, start the reconciliation process, where you only need 51 votes and it would be a much simpler bill.

Here's what I want to know: which one of us is living in dreamland?  If you don't like the Senate bill, fine.  Don't support it.  But in what universe will healthcare reform get revived anytime soon if it dies this year?  2010?  With the legislative plate already jammed, healthcare reform probably polling in the mid 30s, and midterms coming up?  2011?  After Republicans have gained a bunch of seats in both the House and Senate thanks to public disgust with Democratic disarray?  2012?  A presidential election year?  2013?  2014?

I usually don't say much about legislative tactics because I figure you need some serious ground level knowledge before you mouth off about what's possible and what's not on Capitol Hill.  But the fate of failed major initiatives is so obvious that I can't believe anyone is taking this seriously.  When big legislative efforts go down in flames, they almost never spring back onto the calendar anytime soon — and that's especially true when big healthcare bills fail.  It didn't happen in 1936, it didn't happen in 1949, it didn't happen in 1974, and it didn't happen in 1995.  What makes anyone think it will happen in 2010?

If healthcare reform dies this year, it dies for a good long time.  Say what you will about the Democratic leadership, but Harry Reid, Barack Obama, Rahm Emanuel, Nancy Pelosi, and Steny Hoyer all know this perfectly well.  So do John Boehner and Mitch McConnell.  (Boy do they know it.)  But if it passes, here's what we get:

  • Insurers have to take all comers.  They can't turn you down for a preexisting condition or cut you off after you get sick.
  • Community rating.  Within a few broad classes, everyone gets charged the same amount for insurance.
  • Individual mandate.  I know a lot of liberals hate this, but how is it different from a tax?  And its purpose is sound: it keeps the insurance pool broad and insurance rates down.
  • A significant expansion of Medicaid.
  • Subsidies for low and middle income workers that keeps premium costs under 10% of income.
  • Limits on ER charges to low-income uninsured emergency patients.
  • Caps on out-of-pocket expenses.
  • A broad range of cost-containment measures.
  • A dedicated revenue stream to support all this.

What's more, for the first time we get a national commitment to providing healthcare coverage for everyone.  It won't be universal to start, unfortunately, but it's going to be a lot easier to get there once the marker is laid down.  That's how every other country has done it, and that's how we did it with Social Security and Medicare, both of which had big gaps in coverage when they were first passed.

But if we don't pass it, we don't get any of this.  Not now, and not for a long time.  Instead of being actual liberals, we'll just be playing ones on TV.

What's in a Name?

| Tue Dec. 15, 2009 2:47 PM EST

A freelance writer tells a story of how failure finally turned into success:

I had high-quality skills and a good education. I was fast on turnaround and very professional. I hustled and I delivered on my promises, every single time. I worked hard and built the business, putting in long hours and reinvesting a lot of the money I made.

I really, really wanted to make this work. But I was still having a hard time landing jobs. I was being turned down for gigs I should’ve gotten, for reasons I couldn’t put a finger on. My pay rate had hit a plateau, too. I knew I should be earning more. Others were, and I soaked up everything they could teach me, but still, there was something strange about it [...]

One day, I tossed out a pen name, because I didn’t want to be associated with my current business, the one that was still struggling to grow. I picked a name that sounded to me like it might convey a good business image. Like it might command respect.

Instantly, jobs became easier to get. There was no haggling. There were compliments, there was respect. Clients hired me quickly, and when they received their work, they liked it just as quickly. There were fewer requests for revisions — often none at all. Customer satisfaction shot through the roof. So did my pay rate.

Without knowing more about this, it's impossible to say if this is really the whole story.  But the writer is a woman, and the pen name she chose was "James Chartrand."  And suddenly life changed.  It's all very plausible if you also remember stories like this and this.

(Via Ann Friedman.)