Kevin Drum - March 2010

How To Talk About Healthcare

Can we make the individual mandate sound like a good idea?

| Wed Mar. 31, 2010 6:23 PM EDT

The individual mandate may be an essential part of healthcare reform, but it's also the part that's easiest to hate. After all, the government is forcing you to spend money to buy something that you might not want. Andy Sabl suggests some better framing:

Here is another way of describing ACA that’s completely accurate but explains the point much better:

“If you or your family aren’t getting health insurance through your job, the government will pay to get you private insurance coverage, just as an employer would. You’ll have to contribute something — but the law guarantees, with specific numbers, that it will be no more than you can afford. It’ll be less than three percent of your paycheck if your family makes $33,000 a year, less than ten percent if you make as much as $88,000. Pre-existing conditions won’t matter. The government will still pay for your insurance, with the same affordable contribution from you.”

That sounds fine. Unfortunately, I have (as usual) some doubts about whether there's any chance of this working. A few comments:

  • For better or worse, the term "individual mandate" has been commonly accepted for years. Trying to change it now isn't likely to be any more successful than Republican attempts to cynically change "private accounts" to "personal accounts" when the former started polling badly.
  • We still have a problem: what do we actually call the policy formerly known as an individual mandate? Andy has provided an explanation for how the overall program works, but not a name for that specific piece of the puzzle. People are going to write about the fact that everyone is required to get coverage whether we like it or not, so there has to be something to call it.
  • In real life, how would this work? Once we reel off Andy's paragraph, the next question from the Fox News anchor interviewing you is still going to be, "But it's not voluntary, is it? You have to get insurance whether you like it or not, right?" What's the answer?

Am I being too gloomy here? It just seems like these attempts at precision framing don't usually survive contact with the real world. Comments?

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Quote of the Day: Corker on Healthcare

Repeal. Not. Gonna. Happen.

| Wed Mar. 31, 2010 5:59 PM EDT

From Sen. Bob Corker (R–Tenn.) on Republican promises to repeal healthcare reform if they take over Congress:

“The fact is that’s not going to happen, OK?” 

Reality based! On the other hand, as Andy Kroll reports, Corker is now firmly toeing the party line on financial reform: "I couldn't support the bill in its current form," he says. "I have no plans to support the current legislation." And that's about a bill already so watered down that the stock market has barely even yawned at the possibility of its passage. Corker may, relatively speaking, be one of the more accomodating Republicans we have left in Congress, but that's not saying much.

Insider Trading

When is a security not a security?

| Wed Mar. 31, 2010 2:56 PM EDT

Some facts for your consideration:

Fact 1: If you trade stocks based on insider knowledge (for example, maybe you know that next week's earnings announcement will be disappointing), that's illegal.

Fact 2: Ditto for bonds.

Fact 3: Credit default swaps are basically insurance on bonds. So buying or selling CDS coverage based on insider knowledge is illegal too. Right?

Well hold on there pardner! You're assuming that credit default swaps are securities. Because insider trading laws only apply to securities. But swaps are — well, they're just private contracts between two consenting adults. Nothing security-ish about them. Capiche? So forget this whole insider trading thing.

Felix Salmon explains further here and then says maybe we ought to do something about this:

The first obvious thing that needs to be done here is to give the SEC formal jurisdiction over single-name CDS....The second thing which ought to be considered is moving CDS trading onto an exchange, where it can be regulated. And it's almost certain, at this point, that that's not going to happen. In fact, I asked Craig Donohue, the CEO of CME Group, about this at yesterday's Reuters Global Exchanges and Trading Summit. He's very keen on clearing over-the-counter CDS trades, but he said that he's come to the decision over the past couple of years that he's not interested in listing CDS on any of his exchanges directly. The big CDS players are his clients, they make lots of money from their OTC trading, and he seems to have no appetite to start competing with them on that front, rather than simply facilitating the clearing of their trades.

Financial regulatory reform is looking better all the time, isn't it? No serious capital or leverage requirements. A consumer protection agency housed at the Fed and barely worth the paper it's implemented on. And no exchange trading of CDS because the exchanges don't want to do it and Congress probably won't force them to. I don't know about you, but I'm about ready to say we should just scrap the whole thing and admit that we're OK with Wall Street plutocrats continuing to run the country for their own benefit until they destroy the country properly. At least that would have the virtue of honesty.

And by the way: Felix will shoot me for saying this, but I've pretty much come to the conclusion that credit default swaps should simply be banned. Their benefits are actually pretty minimal, while their vulnerability to abuse seems almost unlimited. I'm having a harder and harder time these days buying the case that we can regulate them into submission.

The New Tower of London

Is it folly or genius?

| Wed Mar. 31, 2010 1:49 PM EDT

Below I commend to your attention "London's answer to the Eiffel tower," scheduled for completion prior to the 2012 Olympic Games. "The structure will officially be called the ArcelorMittal Orbit, after steel magnate Lakshmi Mittal, the richest man in Europe, who is funding it." Naturally, Boris Johnson is deeply involved too. Its designer says: "There is a kind of medieval sense to it of reaching up to the sky, building the impossible. A procession, if you like. It's a long winding spiral: a folly that aspires to go even above the clouds and has something mythic about it." Though at only 400 feet, it's not clear which clouds it will go above.

Your opinion is naturally solicited.

Shill, Baby, Shill

If conservatives are going to lie about Obama's record, they need to do a better job.

| Wed Mar. 31, 2010 1:24 PM EDT

Over at The Corner, Ilya Shapiro explains Barack Obama's U-turn on offshore drilling in terms that the conservative faithful can understand:

Recall that on the campaign trail in June 2008, candidate Obama declared that, “when I’m president, I intend to keep in place the moratorium here in Florida and around the country that prevents oil companies from drilling off Florida’s coasts.” (See video of that speech here.)

Today, however, President Obama announced plans to lift a 20-year moratorium on oil exploration and development in Atlantic coastal waters running from Virginia to Florida, as well as further activity off Florida’s Gulf Coast.

....To paraphrase John Maynard Keynes [...] the facts have been rammed down Obama’s throat and so he had the good sense to change his mind. Well done, Mr. President.

Jeez, are conservatives really this gullible? Yes, Obama opposed offshore drilling in the summer of 2008, but he then famously changed his tune just a few weeks later. I was there! I remember him doing it! I was even sort of annoyed at the time. In August he hinted at compromise and then, talking about energy strategy in September, he said, "And that means, yes, increasing domestic production and off-shore drilling." This comes via NBC's First Read, which also had to refresh its institutional memory on this subject.

Hey, we all cherry pick. I get it. But you can't claim that the Montgomery bus boycott was caused by the Civil Rights Act without getting laughed at, and you can't claim that "the facts have been rammed down Obama's throat" when his position was set 18 months ago and his interior secretary has been busily working on regs for the past year. Better spin, please.

Preying on the Weak

We could wipe out the refund anticipation loan scam pretty easily if we really wanted to.

| Wed Mar. 31, 2010 12:32 PM EDT

Over at the Washington Independent, Martha White has a good piece about tax preparers who prey on low-income filers by hard selling refund anticipation loans, which typically boast effective interest rates of anywhere from 50% to 1000%. The whole thing is worth reading, but here's an interesting tidbit:

The big appeal of these loans, the Woodstock Institute’s Rand points out, is the prospect of instant money. Already, taxpayers who e-file and elect to receive their refund via direct deposit generally get their returns within two weeks. If the IRS sped up its payments to taxpayers outside the mainstream banking system and allowed them to receive that money on a debit card similar to those used for other benefits, the appeal of RALs would be diminished. “These improvements the IRS could make would eliminate a need for refund anticipation loans,” Rand said.

Here's a guess: an awful lot of low-income taxpayer have simple returns that could be pre-filled out by the IRS. This isn't done today largely because of opposition from tax preparers, who don't want to lose any business. But guess what else they might lose: their RAL business. If you received a pre-prepared statement in the mail and could accept it with a simple phone call or e-filing, there's no reason the feds couldn't get refunds out within days. With no tax preparer pushing the loans, and refunds available quickly in any case, the entire shifty industry would be wiped out. And it would be wiped out by making government more efficient. Who could object to that?

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Running to the Right

Watching two moderates pander to the hardcore right.

| Wed Mar. 31, 2010 11:51 AM EDT

As you may know, eBay zillionaire Meg Whitman is running for governor in California. She's been pretty assiduously avoiding reporters who might ask real questions, but she is running ads and giving speeches:

Whitman was asked by an attendee at a Redondo Beach campaign event whether as governor she would "force your attorney general to file suit" against the [healthcare] reforms, as more than a dozen attorneys general in other states have said they would.

"The answer to that is yes," said Whitman, drawing the most sustained, and loudest, applause of the hourlong event.

This is quite a campaign we're having. In a nutshell, nobody on the Democratic side really wants to run, so Jerry Brown is getting a free ride to an encore nomination. (Jerry Brown!) On the Republican side, we have two mega-rich candidates, Whitman and Steve Poizner, who, as near as I can tell, are basically fairly moderate conservatives. This, however, is completely unacceptable to California's GOP, so they've been spending tens of millions of dollars running ads with one purpose: to position themselves as heirs to Barry Goldwater and their opponent as more liberal than Nancy Pelosi. It's a pretty unedifying spectacle. And what makes it even worse is that despite the fact that they both have enormous trainloads of money to spend, they keep running the same damn ads over and over and over again. It's really boring.

But that's what it takes to win the admiration of California Republicans these days: faux pandering on idiotic questions like repealing healthcare reform, which Whitman knows perfectly well she can't do and wouldn't work even if she did. I can't wait for Poizner's response, which will probably try to paint her as a sellout for not demanding that California secede from the union if healthcare reform isn't repealed. It's only March, but the silly season is already well underway here.

Obama Opens Up the Coast

Offshore drilling approved off East Coast, Gulf of Mexico, Alaska.

| Wed Mar. 31, 2010 1:38 AM EDT

Drill, baby, drill:

The Obama administration is proposing to open vast expanses of water along the Atlantic coastline, the eastern Gulf of Mexico and the north coast of Alaska to oil and natural gas drilling, much of it for the first time, officials said Tuesday.

....The proposal is intended to reduce dependence on oil imports, generate revenue from the sale of offshore leases and help win political support for comprehensive energy and climate legislation.

I guess this makes me a bad environmentalist, but I've never really had a big problem with opening up these offshore tracts as long as (a) the affected states are OK with it and (b) oil companies don't get sweetheart deals. But here's what I don't get. When it comes to energy, conservatives are crazy about two things: nuclear power and offshore drilling. Now Obama has agreed to both. But does he seriously think this will "help win political support for comprehensive energy and climate legislation"? Wouldn't he be better off holding this stuff in reserve and negotiating it away in return for actual support, not just hoped-for support? What am I missing here?

Quote of the Day: The Afghan Narco State

| Tue Mar. 30, 2010 11:02 PM EDT

From Alfred McCoy, on the fact that opium farming generates 50% of Afghanistan's GDP and supports 20% of its population:

To understand the Afghan War, one basic point must be grasped: in poor nations with weak state services, agriculture is the foundation for all politics, binding villagers to the government or warlords or rebels. The ultimate aim of counterinsurgency strategy is always to establish the state's authority. When the economy is illicit and by definition beyond government control, this task becomes monumental. If the insurgents capture that illicit economy, as the Taliban have done, then the task becomes little short of insurmountable.

That's from "The Opium Wars in Afghanistan," a brief history of the three Afghan wars of the past three decades.

Can Hilda Solis Revive the Labor Department?

So far, she's giving it a pretty good run.

| Tue Mar. 30, 2010 9:15 PM EDT

Nice piece by Esther Kaplan in The Nation about how Hilda Solis and her team are turning things around at the Department of Labor after nearly a decade of pro-business neglect:

Solis and her able deputies have inherited a Department of Labor in tatters. By the time they arrived in Washington, health and safety compliance had become all but voluntary, as had minimum wage and overtime pay. Within two months of taking office, Bush and his labor secretary, Elaine Chao, had rammed through Congress the repeal of a new ergonomics regulation that had been a decade in the making. "It was almost like PATCO [the Professional Air Traffic Controllers Organization] in terms of its symbolic importance," says NYCOSH director Joel Shufro, referring to Ronald Reagan's crushing of the union in 1981. "That sent employers a huge message." After that, the DoL didn't issue a single new regulation unless it was forced to by Congress or the courts.

....Facing badly depleted enforcement ranks, Solis hired 710 additional enforcement staff, including 130 at OSHA and 250 for the crucial wage-and-hour division, upping inspectors by more than a third. Another hundred will come on next year to staff a crackdown on the misclassification of millions of employees as "independent contractors" — a dodge to avoid paying taxes and benefits — a move that has set off enormous buzz on business blogs.

....[Labor Solicitor Patricia Smith is] known especially for her insight that, as Retail union organizer Jeff Eichler, who worked closely with Smith in New York, says, "to impact an entire sector had to involve working with groups outside the bureau." She used labor unions, churches and immigrant groups as her eyes and ears on the ground; they organized plaintiffs, served as liaisons with state investigators and translated big enforcement fines into long-term gains for workers by means of union contracts or sector-wide employer manuals.

In fact, it was these efforts to use community groups as a force multiplier that triggered a furious campaign by business front groups to block her nomination. Senator Enzi obtained reams of e-mails to produce an alarmist forty-page report about one small pilot program Smith had launched, Wage Watch, which trained community members to report wage violations. Conservative groups such as the Heritage Foundation and Americans for Limited Government piled on, the latter issuing an alert that if her concept went national, "it could turn tens of thousands of 'community organizers' into raving vigilantes." Nonetheless, at the new DoL, community partnerships are fast becoming standard operating procedure.

Actually, I sort of like the idea of roving bands of vigilantes turning in employers who mistreat their employees. Sounds like Solis and Smith are on the right track here.