Kevin Drum - October 2010

Revisiting McDonald's

| Wed Oct. 6, 2010 1:46 PM EDT

The chart on the right is not a very exciting one, but it's important. It's a followup to last week's post about McDonald's threatening to cancel its current healthcare policy because of the passage of ACA. As you recall, the original story in the Wall Street Journal was wrong in some respects and overblown in others, and in any case, the "mini-med" policy that McDonald's currently offers is pretty sucky. Getting rid of it would be one of the benefits of ACA, not an "unintended consequence."

Today, Aaron Carroll puts some numbers to "sucky" and I've added some bloggy value by converting his numbers into a colorful chart. The current McDonald's policy is the red bar on the right: it costs employees $1,664 per year and offers maximum coverage of $10,000.

Now compare that to what a McDonald's employee can get when ACA kicks in in 2014. At minimum wage, he or she will be eligible for Medicaid and will have to pay nothing. A $9/hour, subsidized private insurance will cost $858. At $10/hour it will cost $1,030. Even at $12/hour — more than virtually anyone makes at McDonald's — the premium is $1,720, only a dollar a week more than the current mini-med policy.

And that's for real health insurance. Under ACA, the vast majority of McDonald's workers will get genuine health insurance that's either free or no more costly than even the laughable micro-med option that offers maximum coverage of $2,000. When 2014 rolls around and McDonald's does away with both its mini and micro-med policies, that won't be an unintended consequence of ACA. It will be the whole point.

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Our Dumb Media

| Wed Oct. 6, 2010 12:16 PM EDT

Howard Kurtz sums up the state of cable news in under 140 characters:

Looks like the biggest news Obama is gonna make all week is that presidential seal falling off his lectern. Still seeing it replayed.

Why is it being endlessly replayed? Because it's the perfect prop for every lazy pundit invested in a narrative about "Obama's presidency falling apart at the seams" or some such. It's the killer rabbit of 2010. We are not just ruled by idiots, we are reported on by idiots too.

The Do-Nothing 111th Congress?

| Wed Oct. 6, 2010 11:55 AM EDT

From a recent National Journal poll:

The perception that bickering is on the rise has doubled since January 2009, when Obama took office and 50 percent of respondents thought the two parties were working together more than in the past. That number had dropped to 25 percent by early April, 2009. This week it came in at eight percent.

Well, that seems accurate enough. I sort of wonder who the 8% are who persist in believing the parties are working more closely than in the past, but still, not bad, American public! Unfortunately, the American public then blew it on the next question:

At first, it's hard to make sense of this. Whether or not you approve of what Congress has done this term, they've done a lot. There's the big three, of course: a huge stimulus package, healthcare reform, and financial reform. And then plenty of smaller things: the Lilly Ledbetter Act, college loan reform, rescuing GM and Chrysler, credit card disclosure, gas mileage improvements, and plenty of other stuff. So why the disconnect?

I'd guess four things are at work here. First, the public has no idea how much major legislation usually gets passed in a single congressional session. So even if they're aware of the three major bills that passed this term, they don't realize that's more than usual.1 Second, they don't perceive that most of this stuff affects them. Stimulus has gotten a bad rap, healthcare reform doesn't take effect until 2014, and financial reform is too abstract to understand. Third, their bar is set high. Sure, three big things got done, but they expected more. What about climate change? And immigration reform? And DADT repeal? And closing Gitmo? And four, the economy sucks. As long as Congress hasn't fixed that, nothing else really matters.

1And in fairness, compare Obama's first two years to George Bush's first two years. Bush got a big tax cut, declared war on al-Qaeda, passed the PATRIOT Act, passed Sarbanes-Oxley, and signed campaign finance reform into law. Compared to that, it's not clear why the average citizen should consider the current Congress any more successful than usual.

What the Market Wants

| Wed Oct. 6, 2010 10:48 AM EDT

Ezra Klein writes about the Independent Payment Advisory Board, a group created by the healthcare reform law that's charged with getting Medicare costs under control and is independent of congressional dysfunction and gridlock:

You'd think people who worry about the market's confidence in our ability to control spending would be shouting about this from the rooftops. The IPAB is the single most significant cost control we've ever imposed on the single most fiscally dangerous program in our budget. But Republicans are specifically targeting it for repeal, even as they praise Bernanke's remarks. Meanwhile, I wonder whether [Ben] Bernanke even knows IPAB is in there.

We have a system where it seems like it would be in everyone's interest to praise and support this reform, but instead, it's mainly been attacked, dismissed or ignored. Republicans would prefer to win the next election than increase the market's confidence in our ability to balance our books. Frankly, if I were the market, this would make me worry.

Well now, that depends on what "the market" is truly interested in. Is the market (a) worried about future deficits and eager to support cost cutting measures, or is it (b) worried about its paycheck and eager to elect a party that's good for rich people? I would say there's scant evidence for (a) and overwhelming evidence for (b). Paul Krugman has endlessly presented evidence that the financial market has demonstrated its lack of concern about deficits by driving down long-term interest rates to historic lows. Meanwhile, political scientists have presented endless evidence that "the market" (with quotes, meaning that I'm now talking about the actual men and women who make trades and run companies) cares mostly about how much money they personally make and is able to make its preferences on this score crystal clear to the political class. That's two different "markets," not one, and if you look at it that way the behavior of the market(s) makes perfect sense.

AfPak Update

| Wed Oct. 6, 2010 12:55 AM EDT

Today's war news:

If you believe all these things simultaneously, Pakistan doesn't really want us talking to the Taliban, they don't especially want us to fight the Taliban either, and they don't want to fight the Taliban themselves. Or something. Plus, Hamid Karzai is corrupt. Onward!

ACA Once Again Working As Intended

| Tue Oct. 5, 2010 10:03 PM EDT

Stephen Spruiell writes:

Janet Adamy of the Wall Street Journal has become the administration’s worst nightmare — a writer for a major newspaper who calmly, straightforwardly, without spin or bias, reports on the unintended consequences of Obamacare as they unfold.

Oh for chrissake. Another "unintended consequence"? I guess I'd better click the link and see what it is this time. Turns out it's a story about 3M's retiree health plan:

While thousands of employers are tapping new funds from the law to keep retiree plans, 3M illustrates that others may not opt to retain such plans over the next few years

...."As you know, the recently enacted health care reform law has fundamentally changed the health care insurance market," the memo said. "Health care options in the marketplace have improved, and readily available individual insurance plans in the Medicare marketplace provide benefits more tailored to retirees' personal needs often at lower costs than what they pay for retiree medical coverage through 3M.

"In addition, health care reform has made it more difficult for employers like 3M to provide a plan that will remain competitive," the memo said.1 The White House says retiree-only plans are largely exempt from new health insurance regulations under the law.

Long story short, 3M is going to stop allowing retirees to buy into its corporate health plan starting in 2014. This is not because of any unintended consequence of ACA. It's because 3M wants to reduce its costs. Starting in 2014, thanks to ACA, high-quality private insurance will become available to everyone, so 3M has decided to give its retirees money to buy into a private plan of their choice instead of carrying them on its company plan. That's all there is to this.

Look: the whole point of ACA is to make high-quality private insurance available to everyone in the country at a reasonable price. And yes, when an alternative like this comes along, some companies will elect to take advantage of it. Others won't. It's a free choice, and it's part of a trend that was happening before ACA was even a gleam in Barack Obama's eyes. As NPR reported today:

Economist Paul Fronstin, who directs the nonpartisan Employee Benefit Research Institute, says 3M is probably the first big company to announce such changes. But he expects more companies will follow, because the new law limits how much premiums can vary based on age and other factors, such as pre-existing medical conditions.

"Employers are looking at that and saying, 'Why do I need to be offering this benefit anymore when my retirees can go out and get something that's actually better for them than what I'm offering," said Fronstin. "They can get something better than what I'm offering them and pay more, or they can buy something that's less comprehensive than what I've been offering and pay less."

Using this as some kind of black mark against ACA is crazy. It's tantamount to saying the government should never provide anything good, because if it does then someone might choose to take advantage of it. If that's the conservative view of government, include me out.

1This claim is almost certainly specious. I don't know of any provision of ACA that would have anything more than a minor effect on 3M's retiree plan.

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The Output Gap

| Tue Oct. 5, 2010 5:09 PM EDT

The financial crash of 2008 has produced lots of grim looking charts, and Neil Irwin has another one today. It shows our current output gap: the difference between where the economy is and where it would be if growth had been normal. At the far left you can see the positive output gap of the late 90s followed by a negative output gap during the ensuing recession. That's fairly normal.

What we have now isn't. The economy didn't overheat during the aughts. It was running at its usual historical rate. So the financial crash opened up a huge gap, and it's one we're not closing. If the economy grows at 6% a year — far higher than its current rate — unemployment wouldn't reach normal levels until 2012. If growth averages 3% a year, unemployment won't reach normal levels until 2020.

That's a long time to wait. If we want unemployment to come down any time soon, we need sustained economic growth of 4-5% per year for the next five years. Unfortunately, right now we're not doing anything to get us there. Neither Congress nor the Fed is willing to take any kind of serious action. So we're stuck. At the rate we're going now, we're staring at high unemployment rates for the better part of another decade.

Software Patent Insanity Continues Apace

| Tue Oct. 5, 2010 2:15 PM EDT

Software patents need to be done away with. Congress should just ban them. Now. Is there any other solution to this continuing insanity?

Bubble Candidates

| Tue Oct. 5, 2010 2:00 PM EDT

"Do politicians need the media anymore?" I asked a few months ago. Politico's Jonathan Martin reports that the answer is apparently not:

It’s mostly, but not entirely, a Republican phenomenon....As of Friday, Colorado Republican Senate hopeful Ken Buck had gone nine consecutive days without holding a public event....Tea party darlings Rand Paul of Kentucky and Christine O’Donnell of Delaware both surged to primary victories thanks, in part, to national media exposure, but after their own comments got them into trouble, they abruptly canceled post-primary Sunday show appearances and have largely avoided doing non-Fox national TV.

....Senate Majority Leader Harry Reid and his GOP challenger, tea party favorite Sharron Angle, do carefully controlled public events and are loath to face the kind of scrutiny that would come in a free-flowing press conference or debate setting....“Angle’s strategy seems to be: Let the [mainstream press] do what it wants — I have Fox, conservative radio, my ads and Karl Rove,” [Jon] Ralston said, alluding to the former Bush adviser’s independent group, American Crossroads.

....In Wisconsin, the campaign of GOP Senate hopeful Ron Johnson, a first-time candidate who has made some verbal miscues but who leads three-term Sen. Russ Feingold in the polls, has ignored requests from the Milwaukee Journal Sentinel to share his daily schedule.

I expect to see more of this, though I suppose it depends a lot on how these bubble candidates do. Meg Whitman followed this strategy during the Republican primary in California and it worked fine, but she's abandoned it during the general election because it obviously won't work against a well-known Democratic opponent in a blue state. But for conservative candidates especially, who can rely on specific conservative channels to get their message out (Fox, talk radio, deep-pocketed independent expenditure groups), this strategy may represent the future of campaigning.

Celebrating the Old Confederacy

| Tue Oct. 5, 2010 1:28 PM EDT

Jeffrey Goldberg asked Mississippi governor Haley Barbour recently whether he thought the Republican Party could ever attract the support of African-Americans as long as party officials like Barbour continued to celebrate the old Confederacy. Unsurprisingly, Barbour wasn't keen to reply:

The true, spin-free, answer, obviously, is that the Republican Party would rather not risk offending mythopoetic white Southerners by calling the Confederacy what it actually was — a vast gulag of slavery, murder and rape. As an electoral strategy, it's a fine one — an immoral one, but a practical one, something that has worked for the Republicans for more than 40 years (though the gains it has made in the South have been tempered by losses in the Northeast and elsewhere). But what I don't understand is why African-Americans, in the south as well as the north, don't simply rise up as a collective and say: No more. That's it. Stop the veneration of evil men.

Just imagine if this discussion was about the Holocaust. Do we really think the world would allow Germany to venerate the Nazis? Well, slavery was the Holocaust of the African-American experience, and yet, here we are, listening to respectable governors of large southern states rationalize the celebration of evil.

For what it's worth, I'd say Germany is the exception, not the rule, here. Most countries with sins in their past have mixed feelings about it, from French veneration of Napoleon to the longstanding Turkish insistence that no genocide of Armenians ever took place to the Japanese supernationalists who have long baited their politicians to visit Yasukuni Shrine every year. I suspect the almost unanimous German condemnation of the Hitler era is fairly unique in history, partly due to the sheer intensity of its evil and partly due to the fact that it was so short-lived. Unlike the other examples, it was never around long enough to become associated with an enduring cultural or nationalist tradition.

But guess what? Things can change even where enduring cultural and nationalist traditions are at work. Just a few months ago, Japanese prime minister Naoto Kan announced his decision not to visit the Yasukuni shrine on the anniversary of the end of World War II this year. Ditto for the rest of his cabinet. "As Class-A war criminals are enshrined there," he said, "an official visit by the prime minister or cabinet members is problematic. I have no plans to make a visit during my tenure." He seems to have survived this decision just fine. Maybe Haley Barbour should take note.