Kevin Drum - March 2010

Threading the Healthcare Needle

| Sat Mar. 20, 2010 1:19 PM EDT

Ezra Klein surveys the political landscape behind healthcare reform and concludes that big business doesn't really have that much power after all:

This year, the Obama administration succeeded at neutralizing every single industry. Pharma supports the bill. Insurers are incoherent on it, but there's not a ferocious and united campaign to kill the proposal. The American Medical Association has endorsed the Senate bill. The hospitals have endorsed the bill....[But] it's been almost meaningless when it's come to Republican support. For all that liberals think the GOP is owned by insurers and pharmaceutical companies, this battle has been proof positive that they are owned by their base and they represent industry only when convenient. Imagine the concessions Pharma or the hospitals could have gotten by bringing three Republican senators onto the bill. They could've written the thing. But no such luck. Partisan incentives proved far stronger than industry interests.

Matt Yglesias takes the opposite lesson from the events of the past year:

What happened in the health care debate is that interest groups were able to get their way on most key points without needing to seriously attempt to deliver votes in exchange. The AMA is supporting the bill, but it’s not running ads against opponents. Pharmaceutical companies and insurers haven’t dropped out of the ferociously anti-reform Chamber of Commerce. No interest group that I’m aware of is cutting off the flow of funds to Chuck Grassley to punish him for his role in sabotaging health reform. Nobody is hitting Olympia Snowe for her bait-and-switch. I haven’t read a single story about a single Republican being “in trouble” with supporters for his or her opposition to reform.

I think I'd interpret this a bit differently. Obama had three basic choices when it came to dealing with the big industry groups:

  1. 1993 Redux: Push for the best possible bill and plan on a knock-down-drag-out fight with every interest group out there.
  2. Total Cave-In: Give the interest groups everything they could dream of in an effort buy their active and enthusiastic support.
  3. Centrist Wankerism: Buy off the big interest groups just enough to ensure that they wouldn't actively sabotage reform — at least, not sabotage it too hard, anyway — but nothing more.

Option #1 was obviously impossible. Option #2 was probably never in the cards, and in any case would have been so horrific that public revulsion would have killed it. So Obama chose Option #3. But what that means is that industry groups were pretty much indifferent. They didn't spend a lot of time and energy fighting the bill, but neither did they spend a lot of time and energy trying to persuade their favorite Republican senators to support it. This doesn't mean that industry groups have lost their influence over Republicans (or Democrats) or that their power is so awesome that they get everything they want with barely an effort.

Obviously you can question whether Obama and Senate Dems made the right deal. Could they have pushed a little harder and still kept the big industry groups neutral? Could they have given in on a few small things and earned enough support to have passed the bill months ago with a few Republican votes? Beats me. But from where I sit three thousand miles away, it looks to me like Obama played the game pretty well. There wasn't a lot of wiggle room on either side.

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Spring Has Sprung

| Sat Mar. 20, 2010 12:32 PM EDT

Hooray! 

Friday Cat Blogging - 19 March 2010

| Fri Mar. 19, 2010 1:55 PM EDT

I asked Inkblot to do something interesting this morning so I could take a picture of him, but he just yawned at me. And then fell back asleep. Meanwhile, Domino headed out to the backyard to snooze among the spring flowers.

Speaking of which, spring starts tomorrow. And then on Sunday, the first full day of spring, we should get ourselves a shiny new healthcare reform bill. Nice symbolism, I think.

And now I'm off to lunch, followed by another session of Windows 7 troubleshooting. The upgrade basically went OK, and I'm now working through the list of annoying things that don't work quite right. Like the color balance on my monitor and the fact that I can't get VNC to work. (This is highly detrimental to my maternal tech support duties.) Top of the list, however, is my printer. It doesn't work. Plug it in and nothing happens. Just the little USB thunk sound effect and that's it. No error message, no searching for drivers, no nothing. My computer just sits there, providing no clue about what's wrong. And yet, the USB port works fine with other devices, the printer works fine on a different computer, and I don't think there are any conflicts since everything I own worked fine together on the old computer. Very strange.

Sprawl Revisited

| Fri Mar. 19, 2010 1:45 PM EDT

Matt Yglesias responds to yesterday's post about sprawl:

It’s true that the problem of overly restrictive land-use rules is in large part a problem of voter-preference. But it’s not a problem of voter-preference for sprawl per se. It’s a general problem of homeowner eagerness to exclude outsiders.

I know it's wildly unfair to do this, but I didn't get much sleep last night and my brain isn't working. So I'll just say that I think he's wrong. Or, to be a little more precise, I think he's mostly wrong. Sure, exclusion is part of the dynamic here, but by far the bigger part of it is that lots and lots of people actively like living in non-dense developments. Seriously: they really do. It's not a trick. So they vote with their feet and move to the suburbs and then vote with their ballots to keep big-city living at bay. Given an ideal world, of course, they'd love to have a nice 3,000 square foot house with a big yard right in the middle of Manhattan, but one way or another, they want that house.

Obviously not everyone likes living this way, but an awful lot of people do. You can say they like a big house with a big yard, or you can say they like sprawl. It's pretty much the same thing.

Weekend Festivities Roundup

| Fri Mar. 19, 2010 1:29 PM EDT

Hey, have I mentioned that the House will be voting on healthcare reform this weekend? I have? Well, courtesy of Taegan Goddard, here's a summary of the gruesome details:

The House Rules Committee will likely meet on Saturday morning to draft a special rule that allows the House to pass a bill by approving the rule and not necessarily the bill itself. By all indications, this rule will be the now famous "self-executing" rule which "deems" the Senate health care bill passed upon adoption of the rule.

While Republicans on the Rules Committee may try to amend the rule, they're dramatically outnumbered by Democrats 9 to 4.

The House will likely debate the rule for about an hour and hold a vote on whether to end debate. Assuming that passes, the House holds another vote on adopting the rule. If the rule is approved with 216 votes, the House may begin debate on the reconciliation bill that makes fixes to the Senate version of the health care bill.

The House then debates the reconciliation according to guidelines set forth by the rule. Once debate is finished, the House will finally hold an up-or-down vote on the reconciliation bill. If it passes with 216 votes, the original Senate bill goes to the President for his signature.

In other words, to summarize even more, if Nancy Pelosi can round up 216 votes, it passes. If not, not. So if your congress critter is one of the fence sitters, give 'em a call. Today would be good.

The Real Sarah Palin

| Fri Mar. 19, 2010 11:46 AM EDT

Via Dave Weigel, Variety has your Sarah Palin news of the day. She's coming to basic cable!

A&E and Discovery appear to be the front-runners to land the untitled Alaska-themed series, to be produced by Mark Burnett Prods.

....As first reported by Entertainment Weekly, the Palin project will center on interesting characters, traditions and attractions in the 49th state — with the ex-VP candidate as a guide. Burnett and Palin pitched the show to all four major networks — but given the travelogue nature of the series, it ultimately made more sense for a cable network, insiders said.

...What's fueling the interest? Even though the show promises to be completely devoid of politics, Palin has a loyal following -- and even folks who detest her politics may be curious enough to tune in and see what she's up to.

Jon Stewart must be licking his chops over this. And anyone who believes Palin's show will be "completely devoid of politics" is either delusional or lying. What's the over/under on how many episodes it takes before we have one set smack in the blasted hellscape that is ANWR?

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Can Resolution Authority Work?

| Fri Mar. 19, 2010 11:05 AM EDT

I've been trying to decide what I really think of Chris Dodd's financial reform bill, and so far the answer is: not much. Yesterday, for example, Mike Konczal took a look at how it handles the problem of winding up big failed banks. Basically, the bill mandates that large banks write their own "living will," with fines proposed for those who do a lousy job. Here's Mike:

Notice how this strategy would look for FDA if we were creating the FDA now: “Drug companies will be required to submit the effects of their drugs that they market from internal studies that they’ve carried out. That is all.”

There’s an obvious agency problem: if you are a large, complex company and you’ve failed, you want the regulators to be as confused, scared, and uninformed as possible so they will bail you out. It’s worked before. What’s the penalty for a failed firm that doesn’t do this well? They are already failed. If you are less cynical about the financial markets than I am, it’s still costly, time consuming and kind of a pain in the ass to collect this information well, so you will probably half-ass it.

I'd add something even more fundamental: can this work even in theory? Mike is right that banks have lots of reasons to do a self-serving job when it comes to drafting their plans, and when times are good it's unlikely that the Fed or any other regulator is going to be especially tough on them. But beyond that, is it even possible to set forth a plan in advance that would, say, unwind Citigroup cleanly and without a big government bailout? I have my doubts, and I'd sure like to hear a few skeptical experts weigh in on this. What would a real resolution plan for Citigroup look like?

In another post, I think Mike gets to the key issue: we really ought to be more concerned with detection than with resolution. Once a gigantic bank has started to spiral out of control, it's probably going to need some kind of massive government support no matter what kind of resolution plan it has in place. So what's really important is stopping that spiral before it starts. But that gets us back to things like limiting leverage, insisting on more robust capital requirements, insisting that derivatives are traded openly and only by firms with the collateral to back them up, etc. Resolution authority is something the federal government needs — regardless of whether or not it's messy — but I'd put it somewhere in the bottom half of the top ten things we should be concerned about.

I am, however, extremely persuadable on this point. So: is resolution authority more important than I think? And if so, what would it take to do it right? I'll try to follow up on this later.

Reporting on Oil

| Fri Mar. 19, 2010 1:02 AM EDT

Here's a story that shows the value of the Freedom of Information Act:

The U.S. government faces shortcomings in producing its oil-inventory data, according to internal Department of Energy documents, casting doubt on figures that affect the production and prices of the world's most important industrial commodity.

The documents, obtained through a Freedom of Information Act request, expose several errors in the Energy Information Agency's weekly oil report, including one in September that was large enough to cause a jump in oil prices, and a litany of problems with its data collection, including the use of ancient technology and out-of-date methodology, that make it nearly impossible for staff to detect errors. A weak security system also leaves the data open to being hacked or leaked, the documents show.

....On Sept. 16, the EIA released data showing almost four million barrels of oil had vanished from the Cushing storage hub in Oklahoma during a single week. The market paid particular attention because Cushing is the nation's most important commercial storage facility. Its oil is used to fill orders from buyers on the New York Mercantile Exchange. Oil futures jumped 2.2% after the report.

But out of the sizable drop at Cushing, 1.7 million barrels represented a correction made after the EIA discovered a previous error in one company's reporting, according to the emails. James Beck, who heads the team that conducts the weekly survey, confirmed the correction in an interview.

Good to know.

Zoning and Sprawl

| Thu Mar. 18, 2010 6:28 PM EDT

Matt Yglesias has been making the case recently that zoning and land use laws encourage suburban sprawl, and if we did away with them we'd have a greater number of dense, walkable neighborhoods. Cato's Randall O'Toole took exception, so Matt condensed his argument into PowerPoint form:

  • Throughout America there are many regulations that restrict the density of the built environment.
  • Were it not for these restrictions, people would build more densely.
  • Were the built environment more densely built, the metro areas would be less sprawling.

There's a lot I could say about this, but that's a mistake in a blog post. So I'll stick to one main point: these regulations aren't something that's been imposed by "government." They exist because people really, really, really want them.

I need to be clear here: I'm neither praising nor condemning this, just describing how things are. To get an idea of how strongly people feel about this, you really need to come live in a suburb for a while. But failing that, consider the balance of power here. Corporations would like to be able to build wherever and whatever they want. Wealthy land developers would like to be able to build wherever and whatever they want. And local governments hate single-family neighborhoods because they're a net tax loss: they cost more in services than they return in property tax remittances. And yet, even with corporations, wealthy developers, and local governments all on one side, suburban zoning is ubiquitous. This is a triumvirate that, under normal circumstances, could get practically anything they wanted, but in this case it's not even a close fight. Suburban residents have them completely overwhelmed.

That's how strong the desire is for suburban sprawl. Again: I'm not taking a position on whether this is good or bad. And I'm not saying the fight is hopeless. I'm just saying that everyone needs to understand what they're up against here. It's not zoning per se that causes sprawl, it's the fact that lots of registered voters actively want sprawl and have successfully demanded rules that keep density at bay. These kinds of land use regulations aren't going away without the mother of all knock-down-drag-out fights first.

And now for a second point, even though I said I wouldn't make one: walkability is very difficult to create. It's not enough to build a bunch of houses with shopping nearby. It's not enough to have a few big apartment buildings. And there's no practical way to convert an existing suburb into a high-density area. The thing is, you can't be 90% walkable. You have to be 100% walkable, and for a development of any size you have to jam people together to get enough density to truly make that happen. You will never get this outside a central business core where the price of land is so high that you have no choice.

So....I dunno. Maybe eventually we'll run out of oil and everyone will have to move into urban cores whether they like it or not. Short of that, though, I just don't see how it's going to happen. Working to keep existing city centers walkable seems eminently doable and eminently worth doing. Outside of that, though, building a truly walkable neighborhood strikes me as the next best thing to impossible.

So here's a serious question: outside of a big city core, has anyone ever successfully built a walkable, high-density suburb? Not a village or a small town. I mean something really dense and walkable: a place where sidewalks are busy, mass transit is good, and there are plenty of high-rise apartment buildings. I know the New Urbanist folks talk about this a lot, but do any actually exist? Educate me, peeps.

Reining in Healthcare Costs

| Thu Mar. 18, 2010 1:14 PM EDT

Ezra Klein does a good job of describing why healthcare reform not only should pass, but probably will pass:

If you're a liberal House Democrat, here's what you'd be voting against: Legislation that covers 32 million people. A world in which 95 percent of all non-elderly, legal residents have health-care coverage. An end to insurers rescinding coverage for the sick, or discriminating based on preexisting conditions, or spending 30 cents of each premium dollar on things that aren't medical care. Exchanges where insurers who want to jack up premiums will have to publicly explain their reason, where regulators will be able to toss them out based on bad behavior, and where consumers will be able to publicly rate them. Hundreds of billions of dollars in subsidies to help lower-income Americans afford health-care insurance. The final closure of the Medicare Prescription Drug Benefit's "doughnut hole."

If you're a conservative House Democrat, then probably you support many of those policies, too. But you also get the single most ambitious effort the government has ever made to control costs in the health-care sector. According to the Congressional Budget Office, the bill cuts deficits by $130 billion in the first 10 years, and up to $1.2 trillion in the second 10 years. The excise tax is now indexed to inflation, rather than inflation plus one percentage point, and the subsidies grow more slowly over time. So one of the strongest cost controls just got stronger, and the automatic spending growth slowed. And then there are all the other cost controls in the bill: The Medicare Commission, which makes entitlement reform much more possible. The programs to begin paying doctors and hospitals for care rather than volume. The competitive insurance market.

The cost controls in the bill are a good start. But they're going to have to get better over time to have any chance of seriously reining in healthcare inflation, and it would be nice to think that once the partisan warfare is over and Republicans give up their fantasy of repealing the bill after a November triumph, they'll finally get serious about cost controls too. Because one way or another, it's going to take both parties giving cover to each other to get the job done.