Kevin Drum - January 2010

Money on the Street

| Sun Jan. 31, 2010 1:14 PM EST

As the punchline to a nerdy joke about the efficient market hypothesis, Daniel Gross tells a story about noticing something that looked like money lying on the ground at Davos:

And so I bent down and picked up the paper. On one side, the grim visage of Queen Elizabeth. On the other, Charles Darwin. It was a 10 pound note, worth about $16.25. Just lying on the floor, unmolested by Nobel Prize-winning economists, CEOs of Fortune 500 companies, and financial journalists.

In 1967, when I was nine years old, I found a five-pound note lying on a railway platform in England. At the time, the exchange rate to dollars was 4:1, so it was worth $20. Adjusted for four decades of inflation, that comes to $128. This compares very favorably with the dimes I occasionally found at home in the coin return slots of pay phones.

It's also (by a long way) the largest sum of money I've ever found lying on the street. How about you?

UPDATE: Sorry, I must have had a historical blackout. As Anonymous says in comments, the pound in 1967 converted at $2.80. So that's $14 at the time, and $90 today. Still the largest sum I've ever picked up off the street, though.

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Healthcare Behind the Scenes

| Sun Jan. 31, 2010 12:49 PM EST

Here's the latest from the LA Times on the forecast for passing healthcare reform:

President Obama's campaign to overhaul the nation's healthcare system is officially on the back burner as Democrats turn to the task of stimulating job growth, but behind the scenes party leaders have nearly settled on a strategy to salvage the massive legislation.

....House Speaker Nancy Pelosi (D-San Francisco) and Senate Majority Leader Harry Reid (D-Nev.) particularly want to give members time to recover from the shock of Republican Scott Brown's victory in the Massachusetts Senate race two weeks ago. The election cost Democrats their filibuster-proof Senate majority.

But in the coming weeks, Pelosi and Reid hope to rally House Democrats behind the healthcare bill passed by the Senate while simultaneously trying persuade Senate Democrats to approve a series of changes to the legislation using budget procedures that bar filibusters.

....Despite the hurdles, there is a growing consensus that a modified Senate bill may offer the best hope for enacting a healthcare overhaul. "The more they think about it, the more they can appreciate that it may be a viable . . . vehicle for getting healthcare reform done," said Rep. Gerald E. Connolly (D-Va.), president of the Democratic freshman class in the House.

I guess I should stop even pretending to know what's going on. A "growing consensus" about passing the Senate bill and then modifying it sounds crazy to me. How obvious does it have to be that this is the only possible route forward before everyone in the Democratic caucus figures it out? And is giving House members time to "recover from the shock" of Scott Brown's victory really likely to stiffen their spines?

I don't know. Maybe this is the only way to go. And the Times does say that behind the scenes party leaders "are meeting almost daily to plot legislative moves while gently persuading skittish rank-and-file lawmakers to back a sweeping bill." That's good to hear, at least. But honestly, I don't know if reading this piece makes me more hopeful or less. Click the link and decide for yourself.

Healthcare Reform's Final Minutes

| Sat Jan. 30, 2010 6:21 PM EST

From the "agony of defeat" file:

Sen. Tom Harkin, the chairman of the Senate Health Committee, said negotiators from the White House, Senate and House reached a final deal on healthcare reform days before Scott Brown’s victory in Massachusetts.

....Harkin said “we had an agreement, with the House, the White House and the Senate. We sent it to [the Congressional Budget Office] to get scored and then Tuesday happened and we didn’t get it back.” He said negotiators had an agreement in hand on Friday, Jan. 15. Harkin made clear that negotiators had reached a final deal on the entire bill, not just the excise plans, which had been reported the previous day, Jan. 14.

The bad news: this means that if Democrats had taken this stuff even slightly more seriously, healthcare reform would already be a done deal. Idiots. The good news: if negotiations really were complete, it should mean that creating a reconciliation deal to accompany passage of the existing Senate bill ought to be fairly easy. A few parts would probably have to be jettisoned since they wouldn't be allowed under reconciliation rules, but that's life. The vast bulk of the compromise would stay in place and just needs to be turned into legislative language.

Why this isn't happening is a mystery.

Quote of the Day: Lost

| Sat Jan. 30, 2010 5:42 PM EST

From Carlton Cuse, co-creator of Lost, explaining why they're going to leave a few things still mysterious when the show ends this season:

To sort of demystify that by trying to literally explain everything down to the last little sort of midi-chlorian of it all would be a mistake in our view.

It all sounded like a cop-out until he put it that way. Now I totally approve!

Plus, of course, this approach keeps the door open for Lost specials in years to come. It's always best to leave that option on the table.

Selling Healthcare

| Sat Jan. 30, 2010 1:19 PM EST

Yesterday I took Jon Stewart to task for claiming that instead of proposing a big, comprehensive healthcare reform plan, Obama and congressional Dems should have been content instead with just a few straightforward ideas that could have passed easily ("That's it. Four simple things. Done."). A bunch of you thought Stewart was right and I was missing the point. This comment from JS12 was typical:

Having watched Stewart in context earlier today, I have to disagree. The point he was trying to make was that Obama had not done enough to put his health care message out in a manner straightforward and simple enough for the general public to comprehend exactly how it will help them. It was not my impression that Stewart was pondering why Obama did not simplify and dumb down health care reform itself, only its rhetorical presentation to the public.

Actually, my sense is just the opposite: Stewart was suggesting that healthcare reform could have been radically simplified. A popular meme making the rounds these days is that Obama overreached on healthcare reform and should instead have just proposed a few popular, small-bore fixes that could have gotten through Congress easily. Stewart seemed to be buying into that notion.

But that's a nitpick. Let's say JS12 is right: Stewart was talking solely about messaging, not policy. Unfortunately, that might be even worse. Too many liberals have become addicted to the cult that says messaging is everything, that progressive plans could be implemented if only we learned to talk about them better. And we should learn to talk about things better. But when we start mainlining this Kool-Aid wholesale, we just end up kidding ourselves. It gives us a sugar rush when we're frustrated, but it's not a real solution.

There's no question that Obama could have sold healthcare reform better. But here's the thing: if you actually want to solve real healthcare problems, the policy itself has to be complex. There's just no way around that.

"But the explanation doesn't have to be complex," you say. No, it doesn't. And in fact, if you take a look at the way Obama talks about healthcare reform, it's mostly pretty straightforward and easy to understand. But guess what? The opposition gets to talk about it too. And if the underlying policy is complex — which it has to be — then they get to talk about that. And they do.

So they're going to pick the bill apart. They're going to complain that it's thousands of pages long. They're going to pull out the least popular bits — like mandates and cost controls — and flog them as hard as they can. They're going to tell scare stories about death panels and Medicare cutbacks. They're going to carp endlessly about the horsetrading that's inevitable with any complicated piece of legislation. They're going to stall and delay. They're going to do everything they can to highlight the bill's complexity, nurture doubts about individual provisions, and gin up outrage over the legislative process. The Drudge/Fox/Rush axis is going to beat this drum 24/7. And this is all legitimate because no matter how Democrats try to sell it, the underlying bill really is complicated. Like it or not, Republicans get to take advantage of that.

So: can the bill itself be radically simplifed? No, not if you want to actually solve serious problems. Can the narrative about the bill be radically simplified? Sure, a bit, but nowhere near as much as you think. Because the opposition gets a vote too.

So what were the real problems with healthcare reform? The biggest underlying one is something that we talked about a lot last year but have largely since forgotten: the first, most fundamental choice Obama made was to leave employer health insurance largely untouched. "If you have insurance now and you like it, you can keep it." That was almost certainly necessary, but it also insured that two-thirds of the country would see virtually no benefit from the bill. So we started from inside a big hole.

What else? Well, Democrats chose to be responsible. Unlike Republicans, Obama and congressional Democrats insisted that the bill be paid for. This hurt them badly because (a) nobody likes taxes, (b) there's always a bit of smoke and mirrors involved in this kind of thing, and (c) they ended up getting no credit for this from the punditocracy. Obama also insisted on including serious attempts at cost control. That's also unpopular. The better bet would have been to pass all the benefits and skip both the taxes and the cost controls. That would certainly have been simpler and more popular. But it would also have been wildly irresponsible. I don't know about you, but it's not why I voted for the guy.

Finally — and in my mind, this was the worst mistake — Democrats didn't control the process. A bill like this is always going to get less popular the longer it's in the public eye, but Dems dawdled forever, thinking they could negotiate with Republicans to get a bipartisan agreement. Obama encouraged this effort, and it was disastrous. It gave Republicans months and months of time to build up opposition and complain that they weren't being taken seriously, and it predictably went nowhere. If Democrats had kept a tighter control of things, conference negotiations would have taken place in September at the latest and a final bill would have been passed in October.1 Dems screwed the pooch badly on this, and Obama did too. That's what killed healthcare reform, not the lack of a killer PowerPoint presentation.

1And Obama could have made his pivot to jobs and financial reform and bank bashing months earlier. The delay on healthcare hurt a whole lot of liberal initiatives on a whole lot of different levels.

Cat Fighting in Davos

| Sat Jan. 30, 2010 1:15 AM EST

If the Wall Street Journal is to be believed, there's at least a smidgen of justice in the world. Here's their latest report from Davos:

Not so long ago, financiers ruled the roost at the glitzy annual gathering of the global economic elite here in the Swiss Alps. At this year's gathering of the World Economic Forum, the unofficial theme seems to be, "First, kill all the bankers."

....The scorn poured on the industry at this year's get-together in the Swiss ski resort is a sign of a mounting international backlash against the financial sector. Popular anger about banks' role in the financial crisis, and their behavior in its aftermath, has spilled over to the world's elite business executives, politicians and regulators. Since gathering here Wednesday, they have been aiming sometimes bitter recriminations at the tainted masters of the banking universe.

Unfortunately, the most likely explanation for this isn't that Davos attendees are genuinely appalled by what bankers have done, but rather that they're appalled that bankers have managed to taint Davos itself, and by extension the rest of them. That's unforgivable. These are not people who like being mocked.

Still, even if this is just a bit of mega-millionaire cat fighting, it's better than nothing. At least the rest of us can enjoy the show for a bit.

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Healthcare Reform: It's Complicated

| Fri Jan. 29, 2010 7:29 PM EST

We all love Jon Stewart, and a big part of the reason is that he's funny and he knows his stuff. So I was pretty disappointed to hear him flogging nonsense like this during his interview with Doris Kearns Goodwin last night:

I still don't understand why, with things like healthcare reform, they don't say "Here's the four things that are broken." If you have a preexisting condition, we're going to fix that. They don't let us negotiate drug prices. We'll fix that. We'll expand Medicare til you're 55. We'll do that. And we'll do tort reform. That's it. Four simple things. Done.

I assume that Stewart wasn't just being rhetorical, that he really doesn't understand why Obama hasn't taken this approach. And if someone as smart as him doesn't get it, we're doomed. For the record then:

  • Preexisting conditions. If you require insurance companies to take on all comers, even those with preexisting conditions, what happens is that people will stay uninsured until they get sick or need an expensive operation. Then they'll buy insurance, get taken care of, and drop back out. This is pretty obviously a recipe for driving insurance companies out of business.1 So to make this work you need a mandate to make sure everyone is insured all the time, not just when they get sick. And if you have a mandate then you need subsidies for poor families so they can afford to obey the law. And if you have subsidies then you need some kind of funding mechanism. And once you do all this, you have about 80% of the current legislation.
     
  • Drug prices. I'll give him this one. You could allow Medicare to negotiate drug prices without doing anything else. Republicans would vote unanimously against it, of course, since it would hurt pharmaceutical industry profits, but we could do it.2
     
  • Expanding Medicare. Medicare is already going broke. If you expand it to age 55, it'll go broke even faster. So if you're going to do this, you need to add in (a) a new funding stream, which means taxes, and (b) a basket of cost control measures, which means putting limits on treatment that people aren't going to like. Needless to say, taxes are unpopular and cost control is extremely complex.
     
  • Tort reform. As Barack Obama said today, medical malpractice costs are a nit. "The CBO or other experts say to me, at best, this could reduce health care costs relative to where they're growing by a couple of percentage points, or save $5 billion a year, that's what we can score it at, and it will not bend the cost curve long term or reduce premiums significantly." To be exact, CBO estimates savings to the government of $54 billion over ten years and a reduction in total U.S. healthcare spending of 0.5% per year. And that's a high-end estimate. Other estimates are lower.

    But it's even worse than that. If you did real tort reform — that is, making the system genuinely fairer for everyone — you'd end up reducing junk lawsuits but increasing payouts to the many people who are victims of malpractice but never sue. This would probably be a good thing, but on net it's not likely to save any money. In fact, it might even end up raising costs. More here and here.

And of course, nothing in Stewart's bullet points would solve the biggest problems of all: covering the 30 million uninsured and getting the skyrocketing growth of medical costs under control. If you don't do that, it's hardly worth bothering with.

Unfortunately, the world is a complicated place. As Obama repeatedly told the Republican caucus today about their healthcare plan, the question is, "is this something that will actually work, or is it boilerplate?" Talking points just aren't enough. It has to actually work in the real world.

1Which would, of course, be fine with me. But I'm pretty sure that's not what Stewart had in mind.

2That is, we could have done it before Scott Brown won the Massachusetts Senate race. To do it now would require at least one Republican vote to break a filibuster, and that's vanishingly unlikely.

The Echo Chamber

| Fri Jan. 29, 2010 7:04 PM EST

A regular emailer writes in with a theory about why Republicans allowed their Q&A with President Obama to be televised live:

I am surprised there is so much joking around about Obama creaming the GOP caucus on national TV today. I am not surprised, of course, by the jokes themselves — I am surprised that some of the underlying context is missing. Has everyone forgotten that, since the presidential campaign, the Fox News and congressional Republicans' line on Obama has been that he looks like a great orator in front of the teleprompter but is completely naked when taken off-script. It is with this in mind that we have to look at today's invitation — they wanted Obama on their home turf with their script and they thought they could humiliate him on national TV. They expected him to fumble and fail. In a sense, it was not dissimilar from the Democrats' campaign in Massachusetts.

This sounds plausible. Obama does use a teleprompter a lot, and conservatives have been drinking their own Kool-Aid for so long that they ended up believing their own puerile mockery about it being a crutch for a narcissistic, empty suit of a president. I guess that's the downside of living in the Drudge/Fox/Rush echo chamber.

The funny thing, though, is that if you watch the Q&A with your eyes (and ears) open, it's pretty obvious why Obama uses a teleprompter. It's not that he doesn't have the answers. He demonstrated today that he knows his stuff cold. But he does grasp for words sometimes, hesitating for extended periods and then coming up with some real clunkers. For example:

I raise that because we're not going to be able to do anything about any of these entitlements if what we do is characterized, whatever proposals are put out there, as, well, you know, that's — the other party is being irresponsible; the other party is trying to hurt our senior citizens; that the other party is doing X, Y, Z.

"The other party is doing X, Y, Z" is not going to go down in history as great oratory. Obviously Obama and his communications team are aware that he's prone to this kind of thing sometimes, and they'd just as soon avoid it. Thus the teleprompter.

Friday Cat Blogging - 29 January 2010

| Fri Jan. 29, 2010 3:01 PM EST

Inkblot and Domino are waiting. And waiting. And waiting. For something. I'm not sure what. Probably dinner, though this picture was taken around two in the afternoon, so dinner was a very long way away.

In the meantime, who knows? Maybe someone will come out and do some gardening. Maybe someone will walk their dog on the sidewalk beyond the far wall. Maybe a hummingbird will come flitting around. All sorts of possibilities. And if they wait long enough, dinner will arrive! It always does eventually.

The First and Last Question Time

| Fri Jan. 29, 2010 2:42 PM EST

Luke Russert tweets:

GOP aides telling me it was a mistake to allow cameras into Obama's QA with GOP members. Allowed BO to refute GOP for 1.5 hours on TV

Probably so. Which is why, even though it was fun to watch, it's unlikely to happen again. It didn't just put Obama on an equal footing with Republican attacks; in fact, the format forced Republicans to tone down their attacks and then gave Obama an inherent advantage in responding since he was guy at the mike. The guy at the mike always has the advantage.

This gets back to what I was saying earlier about the Drudge/Fox/Rush noise machine. Right now Republicans have a built-in advantage when it comes to attack politics and they'd be fools to give it up. A format like this, which puts the president front and center, allows him to directly call out distortions and lies, and rewards conversation rather than machine-gun style talking points, is something Republicans should justifiably be very afraid of. Unless they're suicidal — or somehow figure out a way to take better advantage of the format — they'll never allow this to happen again. Without the noise machine, they're lost.