• Money on the Street


    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.

  • Healthcare Behind the Scenes


    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


    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


    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


    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


    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.

  • Healthcare Reform: It’s Complicated


    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


    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


    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


    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.

  • Catcher in the Rye


    Ezra Klein didn’t like Catcher in the Rye:

    Holden Caufield was a miserable punk. It might be an achievement to channel that brand of narcissistic alienation, but there’s no joy to be found in its company. Similarly disappointing was the hushed promise that there was something rebellious and titillating in the book. I can’t remember how that reputation was conveyed to me. Maybe my English teacher explained it explicitly, circling “banned” on the green chalkboard. But by the time I got to “The Catcher in the Rye,” there was nothing rebellious about it. As Malcolm Jones writes, “any allure the book might have had as ‘forbidden goods’ was stripped away the day the first English teacher put it on a required-reading list.”

    I’m the last person who should be commenting on J.D. Salinger, but my first thought when I read this was that the problem wasn’t so much with the book — or with its status as mandatory reading — but with the fact that Ezra read it around 1999. By then it had lost a lot of what made it original. Will makes this point better than I could:

    My defense of Salinger is simple: I think The Catcher in the Rye is the first book that truly captures the vernacular of adolescence. In a media environment that is absolutely saturated with adolescent drama and humor, this may strike you as an unremarkable accomplishment. But The Catcher in the Rye was written just as youth culture was entering into the popular conscious, so Salinger deserves credit for anticipating a pretty significant cultural sea change.

    I think that’s right. In 1951, Catcher in the Rye really was rebellious and titillating. By 1974, when I read it, not so much. By 1999, it might as well have been distributed on folio leaves. It’s become part of the high school canon because it’s a book by a serious author that also seems genuinely appealing to teenage kids, and it’s not as if high school English teachers have a huge selection of books like that to choose from. But frankly, it’s probably not all that appealing anymore. By the time most kids get to their first American lit class these days, they’ve already spent half a decade reading stuff exactly like it. Time to revise the canon.

  • Cell Phone Follies


    Michael O’Hare points today to a study that shows (a) cell phone driving is dangerous, (b) laws that ban it are effective, but (c) these laws don’t reduce accident rates. Why?  Because the laws don’t ban hands-free talking on cell phones, and that’s just as dangerous as talking on a handset. But again: why? Why is talking on a cell phone more dangerous than listening to the radio or chatting with a passenger? Mike takes a swing at answering:

    The party on the other end of the phone conversation is an adult to whom you psychologically owe attention, but unlike the adult passenger, has no idea of what you are seeing through the windshield.  A passenger will subconsciously stop talking if something untoward or just complicated is unfolding on the road ahead, and will expect you to suspend the conversation similarly, so she causes no important distraction at the critical moments when you need to be driving on all neurons, and you are aware of all this. In contrast, the person on the phone can’t do either of these things, and you are aware of that as well.  When you need to navigate a tricky bit of road, there’s no time to ask someone to be quiet, and telling a peer to shut up for a minute, in any terms, is so rude that it absolutely requires an excuse that makes it take even longer (“can you hold on for a minute? one of the kids is playing with my blunderbuss and I think it’s loaded”).

    This strikes me as plausible. As another possibility, I’d add that (for reasons that escape me) people seem to be more excitable talking on the phone than in person. I’m not sure why, but maybe it has to with the nature of not having a face in front of you and not getting any nonverbal feedback. Any other ideas?

    In the meantime, stop talking on your cell phone when you drive. And stop texting too. Just stop. Your signal breaks up a lot and it’s hard to have a decent conversation anyway. So just stop.

  • Obama in Baltimore


    Obama is adressing the GOP retreat in Baltimore right now, and it’s being televised live. It’s remarkable that Republicans agreed to this. The guy at the mike always has an advantage in these kinds of forums, and in any case Obama is better than most at this kind of thing. For the most part, he’s running rings around them. I don’t know if this will have any long-term effect, but it’s good for Obama and, regardless, a good show. Presidents should do this kind of thing more often.

  • Obama’s Blind Spot


    Both Ronald Reagan and Barack Obama finished their first year in office with the economy in trouble and their approval ratings in tatters. And yet, Obama’s troubles seem much worse than Reagan’s. Some of this, I think, is just hindsight bias: we all know that Reagan’s presidency turned out OK in the end, so it’s easy to view his problems as less severe than they were. But Bruce Bartlett argues, convincingly I think, that there’s more to it: Reagan had a compelling and consistent narrative of liberal failure that got him through the bad times and set him up to take credit for eventual recovery. Obama doesn’t:

    I bring up this history because Obama inherited a great many problems from the George W. Bush administration similar to those Reagan inherited from Carter. But rather than draw a clear distinction between his policies and those of the past, as Reagan did, Obama has tended to continue those policies. And in those cases where his policies are sharply different, Obama has tended to downplay those differences.

    Foreign policy is clearly the area where Obama had the most to gain by a break with the past. He could have easily argued that the whole Iran-Afghanistan conflict was ill-conceived, based on bad intelligence and a ridiculously Utopian idea that we could impose democracy by military force in countries that had no experience with it or any of the requisite institutions….On the economy, Obama has done a terrible job of explaining how much of the mess he is dealing with was caused by the Bush administration’s policies….Obama could also have explained how the Federal Reserve’s easy money policy created the housing bubble, the crash of which is at the heart of our current economic problems. Yet he reappointed Republican Ben Bernanke as chairman of the Federal Reserve rather than using the expiration of his term as an opportunity to break from the past and chart a new course by at least appointing a Democrat like San Francisco Fed President Janet Yellen.

    ….Finally, on health care, Obama never once blamed Bush and his party for ramming through a massive unfunded expansion of Medicare in 2003, which in part necessitated the Medicare cuts that were part of his health reform effort….In short, at every point Obama has failed to break sharply with the Bush administration. Indeed the Cato Institute has taken to calling Obama’s administration Bush’s third term.

    There’s a lot to this, though I’d add that Reagan also passed his signature domestic initiatives — big tax cuts and defense spending increases — and rallied his base by firing the air traffic controllers. Obama hasn’t done any of that. But Bruce is right when he says that although Obama may be a liberal, “he is fundamentally a moderate — what we in Washington call a ‘goo-goo,’ a good government person, a pragmatist who deals with problems as they arise without seeing them as part of pattern of failure and without any preconceived idea of what should be done about them based on ideology or political philosophy.” That’s admirable in its way, but it doesn’t get things done in a hyperpartisan political swamp, and it doesn’t set up Obama to take credit for things when the economy gets better. Reagan worked hard to make sure that his tax cuts would be viewed as the driving force of recovery — though Paul Volcker’s interest rate cuts surely deserve most of the credit — but will Obama credibly be able to say that his stimulus package and bank bailouts were responsible for recovery when it appears this time? I doubt it.

    I’m a fan of Obama’s, but this has always been his big blind spot. He came to office convinced — sincerely, it seems — that he could change the tone of Washington DC. That was always a fantasy. The way to get things done is to make a case for them, build public support for them, blast your enemies for opposing them, and just generally fight like hell for them. It can be done with a smile, but it has to be done. Obama seems to have a hard time getting that.

  • How They Do It


    Sen. Dick Durbin is upset that Republicans get to cast controversial votes without any real consequence. Steve Benen comments:

    Durbin’s right; they did. Every reckless, irresponsible, hypocritical, dangerous, and incoherent step Republicans take, they do so “with impunity.”

    They do so because they’re pretty confident that Democrats won’t effectively raise a fuss, the media won’t care, and the public won’t know. And they’re right.

    But take a step back: how are Democrats supposed to effectively raise a fuss? Republicans can do it easily: they just start bleating, and within a few hours their complaints are splashed across Drudge, repeated on a 24/7 loop on Fox News, the topic of email barrages from conservative interest groups, and the subject du jour of every talk radio show in the country. At that point the rest of the media picks up on the story because “people are talking about it.” It’s making waves. Which is true: it really is making waves because this kind of attention gets the conservative base genuinely outraged. And if something is getting lots of attention, then that by itself makes it a legitimate story regardless of its intrinsic merit.

    But what megaphone do Democrats have? Virtually none. If they start complaining, some blogs will pick it up. Maybe Maddow and Olberman will talk about it. And that’s it. There’s no noise machine. And so there’s nothing to force the rest of the media to bother with it unless they decide the underlying story itself is important.

    I don’t really want a liberal noise machine in America that’s on the same level as the Drudge/Fox/Rush noise machine. It would make life almost unbearable. But without it, Democrats will never be able to compete in the outrage department. As it is, they can complain all they want and the media will mostly yawn. But when Republicans do it, it’s a story. It’s hard to see that changing anytime soon.

  • R.I.P. Healthcare Reform?


    OK, let’s take one more crack at figuring out the likely fate of healthcare reform.  According to the Washington Post, Harry Reid and Nancy Pelosi are still at loggerheads and “congressional Democrats remained in disarray Thursday about how to move forward, with at least some pointing at the White House as the cause of the legislative standstill gripping Capitol Hill.” OK then. So what’s the direction from the White House? Here’s the New York Times:

    With Mr. Obama’s health care overhaul stalled on Capitol Hill, Rahm Emanuel, the White House chief of staff, said in an interview that Democrats would try to act first on job creation, reducing the deficit and imposing tighter regulation on banks before returning to the health measure, the president’s top priority from last year.

    ….Mr. Emanuel, the chief of staff, said he hoped Congressional Democrats would take up the jobs bill next week. Then, in his view, Congress would move to the president’s plan to impose a fee on banks to help offset losses to the Troubled Asset Relief Program, the fund used to bail out banks and automakers.

    Lawmakers would next deal with a financial regulatory overhaul, and then pick up where they left off on health care. “All these things start and lead to one place: J-O-B-S,” Mr. Emanuel said.

    Given the normal pace of congressional action — including the usual Republican obstruction — this would mean no action on healthcare for at least a month or two. Maybe more like three or four. Or maybe never.

    New pronouncements seem to come almost hourly on this stuff, so I’ll wait for a few other folks to chime in before coming to any conclusions. But if healthcare is now domestic priority #4, it might as well be domestic priority #100. It might not quite be dead, but no matter what Obama said in his State of the Union address, the grim reaper is starting to hover uncomfortably close by.

  • Financial Innovation Watch


    I got distracted by a couple of other books last week, but yesterday I picked up A Splendid Exchange again and ran into a fascinating description of 17th century Dutch financial innovation that should sound eerily familiar to most of my readers. Working for the Dutch East India Company during the spice trading era, it turns out, was so hideously dangerous that they had a desperate and continuous need for raw recruits to man their ships:

    This grisly recruitment effort was run by a specialized corps, composed mostly of women, the zielverkoopers (literally, “soul sellers”). Their marks were the young foreign men, mainly from Germany, who swarmed into Dutch cities seeking their fortune. In return for a cut of their signing advance and future pay from the Company, the women advertised room, board, and the sort of entertainments usually sought by unattached young men, during the weeks and months until they sailed for Asia.

    ….Holland being Holland, this Faustian transaction yielded a financial instrument, in this case the transportbrief — a marketable security entitling the zielverkooper to a cut of the recruit’s wages, paid by the Company as they were earned. Other investors then bought these securities at a discount that reflected the high death rate of VOC1 personnel and assembled them into profitable, diversified pools of human capital. These magnates were called, naturally enough, zielkoopersbuyers of souls. When, in the eighteenth century, the mortality among VOC’s soldiers and sailors soared because of lax Company procedures, many zielkoopers went bankrupt.

    I imagine there were people in 17th century Amsterdam who objected to this practice. I also imagine there were 17th century equivalents of Angelo Mozilo making millions from it, 17th century equivalents of Alan Greenspan explaining how it made capital allocation more efficient, 17th century equivalents of CNBC shilling for it, 17th century equivalents of the Gaussian copula to convince everyone that pooling these securities made them safe, and 17th century equivalents of Phil Gramm to make sure nobody stopped it. The names may change, but the product remains the same.

    1That is, Vereenigde Oost-Indische Compagnie, the Dutch phrase for United East Indian Company.

  • He’s Back!


    Ben Bernanke was confirmed for a second term as Fed chairman today by a vote of 70-30. Neil Irwin of the Washington Post answers the first question that popped into my mind:

    Bernanke was confirmed by a narrower margin than any previous Fed chairman. The previous record for most “no” votes was Paul Volcker in 1983, when he was confirmed 84 to 16.

    Bernanke has “more votes against him than any Fed chairman has ever had. And that’s a signal,” said Sen. Richard Shelby (R-Ala.), in an interview. “The Fed is controversial with the American people. Bailouts. Lack of supervision over [bank] holding companies.”

    I hope Shelby is right. But my guess is that this is mostly a manifestation of the fact that confirmations have become more contentious in recent years. Even during a bad recession I’ll bet Bernanke would have been confirmed easily a few decades ago. After all, Sonia Sotomayor was no more liberal then Ruth Bader Ginsburg, but she was confirmed for the Supreme Court 68-31 compared to Ginsburg’s 96-3.

    Anyway, I certainly look forward to a chastened Ben Bernanke coming out strongly in favor of serious financial sector regulation. I’m not taking any bets on it, though.

  • More on the Healthcare Timeline


    Are House and Senate Democrats really planning to debate healthcare for several more months?  A knowledgable observer emails to say that it’s unlikely because any deal involving reconciliation needs to happen fairly quickly:

    The current continuing resolution expires February 23 (or 24). Unless Congress wants to keep doing continuing resolutions (and thus funding Bush budget priorities and not Obama’s), they’ll need to get to get the 2010 budget done (via reconciliation). I would suspect that Feb 23 is the key date, not some spring or summer timeline.

    Hmmm. I’m just tossing this out for comment since I don’t independently know what all the procedural hurdles are here. But if this is right, then the timeline for passing healthcare reform is actually fairly short unless the House is willing to pass the Senate bill based on assurances of doing something to modify it in the next budget year. That doesn’t seem very likely, though.

    Further comments welcome from any congressional process nerds out there.

  • Healthcare: One Step Forward, One Step Back


    It may be irresponsible to blog this, but here’s what Nick Baumann just tweeted:

    Word on the Hill is that after leadership meeting, Baucus said #hcr by spring/summer, immediately regretted it. Hearsay tho…..

    I’ll refrain from going bananas until/unless this is confirmed. But Senate Dems can’t seriously be thinking of spending another 3-6 months on healthcare reform, can they? [UPDATE: Probably not. More here.]

    On the bright side, though, Nick also reports that Kent Conrad, who needs to be on board with any kind of reconciliation strategy since he chairs the Senate Budget Committee, is on board with a reconciliation strategy:

    The Senate “was not designed to have everything require 60 votes,” Conrad said. “It wasn’t designed to prevent important action on the problems facing the country.” If a supermajority is effectively necessary to pass any piece of legislation, he added, this “puts a great deal of pressure on going to more of a reconciliation process to deal with things.”

    Conrad argued that it’s not possible to use reconciliation — which requires merely a straight majority vote — to win passage of an entire comprehensive health care bill, as some progressives have advocated. (There are assorted rules that prevent this.) But Conrad noted that he’s open to using this legislative maneuver to make limited, though significant, changes to a measure the Senate has already passed — provided that certain procedural kinks could be ironed out….He said, “Frankly I think we have to reconsider the rules by which this body is governed,” because the Senate “is in danger of becoming dysfunctional,” and “there’s going to be a building demand in the country to change the system.”

    Baby steps.