Kevin Drum - January 2011

Repealing Healthcare

| Fri Jan. 21, 2011 9:27 AM PST

Who wrote this?

With this week’s vote to repeal President Obama’s health care reform, House Republicans struck a blow for freedom.

They struck a blow for the freedom of hospitals to avoid financial penalties, no matter how many Medicare patients develop infections under their care. They struck a blow for the freedom of hospitals to avoid consequences, no matter how many Medicare patients are readmitted soon after treatment. And they struck a blow for the freedom of health care providers to receive unending annual increases in their Medicare reimbursements, even if they fail to improve their productivity by even a fraction of what’s occurring in other industries.

Take that, Big Government.

Coming from me or Jon Chait, this wouldn't be worth a second glance. But it's from longtime center-left political columnist Ronald Brownstein, who doesn't normally engage in quite such obvious snark. It's a sign that healthcare reform really is here to stay and mainstream Washington is already tiring of Republican game playing about repeal. It's also, I think, a sign that if Republicans really do try to shut down the government come March, they're not going to have much of anyone besides Fox News on their side.

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Good News From Goldman Sachs

| Fri Jan. 21, 2011 4:00 AM PST

Here's some good news from the Wall Street Journal:

Goldman Sachs Group Inc.'s profit slide of 52% in the fourth quarter showed the securities giant's size and swagger aren't enough for it to escape the tightening squeeze of a regulatory overhaul and jittery clients and investors.

....Hedge funds are weaning themselves from some of the leverage used to make big bets, and U.S. companies are holding more than $2 trillion in stagnant cash. As a result, demand for the vast inventory of stocks, bonds and other investments that Goldman buys and sells on behalf of customers, generating commissions and other fees for the firm, fell in the latest quarter. Trading-related revenue shrank 31% to $3.64 billion from $5.25 billion in 2009's fourth quarter.

....Goldman faces a much longer-lasting threat from regulations spawned by last summer's Dodd-Frank law. While many of the new rules haven't been issued, Goldman already has pruned its proprietary-trading operations and other businesses likely to be reined in by regulators.

It's not snark to call this good news. It is premature, however. What would really be good news is if Dodd-Frank were responsible for Goldman's lower earnings, since the best way of knowing whether Dodd-Frank is working is to look at Wall Street profits. A safer Wall Street, almost by definition, is a less profitable Wall Street, so lower profits are the first sign that financial reform is working.

But we can't say that yet. "Jittery clients" might turn non-jittery as soon as the economy starts to recover, after all, and hedge funds, which aren't heavily affected by Dodd-Frank, might start ramping up their leverage again. Still, it's at least slightly heartening that maybe — just maybe — the changes Goldman has made in anticipation of Dodd-Frank will be relatively permanent. If that turns out to be the case, and Goldman does less prop trading, fewer highly-leveraged derivatives deals, and maintains higher capital ratios, then Dodd-Frank will be at least a minor success. If Goldman and other banks quickly figure out ways to evade the new rules and go back to business as usual, it will be a failure. In the end, profits will be the metric that tells the story.

Quiz of the Day

| Thu Jan. 20, 2011 5:17 PM PST

Suppose you are going to be transported fifty years into the future. What country would you like to be transported to? Don't worry: you'll be magically equipped with the language and cultural skills you need to continue living a nice middle class existence no matter where you end up. But it's your choice: Italy, China, Brazil, Denmark, Egypt, the United States, you name it. Where do you think you'd most likely be best off? Why?

How Should Dems Manage the Healthcare Repeal Circus?

| Thu Jan. 20, 2011 11:02 AM PST

It's a slow day, so let's do some political strategizing. Here's what the LA Times has to say about yesterday's vote in the House to repeal healthcare reform:

The Senate showdown may not begin for several weeks, but promises to be substantially messier and more drawn-out than the debate just completed in the House....In the Senate, Republicans will have to use contentious procedural maneuvers to pressure Democrats to vote on a repeal measure. Democrats retain a 53-47 edge in the Senate, counting two independents who caucus with them, and Democratic leaders firmly oppose repeal.

"The Democratic leadership in the Senate doesn't want to vote on this bill. But I assure you, we will," Senate Minority Leader Mitch McConnell (R-Ky.) said in a statement Wednesday after the House vote.

Here's my take: Democrats are nuts to take this attitude. They should bring the House bill up for a vote quickly, let Republicans speechify about it for a bit, and then vote it down, 53-47. End of story, time to move on.

But wait! With Republicans in control of the House, it's not like the Senate can really get much done anyway. So what's the harm in wasting a bit of time and making this a knock-down-drag-out fight? After all, the House leadership got a nice, clean repeal vote by bringing up the bill under a closed rule and allowing no potentially embarrassing amendments and virtually no debate. In the Senate, by contrast, Democrats control things, and they can bring up all the amendments they want. So maybe they should play along, hold hearings, and force Republicans to vote on, say, an amendment to the repeal bill that would keep the preexisting condition ban in place. And another one that would keep the donut hole fix in place. Etc. etc.

Is that better? Who would benefit more from a bunch of dueling amendments? And since Republicans seem to be dedicated to full and complete repeal, full stop, would they offer any amendments anyway? Comments?

Leave Google Alo-o-o-o-o-ne

| Thu Jan. 20, 2011 10:18 AM PST

John J. Miller at The Corner today:

Google is honoring the 50th anniversary of JFK’s inauguration. Let’s see what (if anything) it does on February 6, which is Ronald Reagan’s 100th birthday.

Just shoot me now. Can we please please please stop the relentless Google bashing every time they choose to commemorate something with one of their logo doodles? It's gotten way beyond tiresome.

Moral Dilemma of the Day

| Thu Jan. 20, 2011 9:45 AM PST

Keith Humphreys poses a real-life question:

Here is my colleague’s not-as-simple-as-all-that dilemma. He has pilot data showing that a cheap, generic drug has a potentially life saving medical application. He now has a grant from the NIH (i.e., not industry) to study it in a major trial. A for-profit company has a copycat version of the generic drug that is virtually the same but is still on patent and is thus highly expensive. The question is whether he should study the generic version or the proprietary one.

If the experiment proves that the generic version of the drug is effective, he will get a very nice paper in a medical journal. And that will be the end of it. We have a million studies showing that clinical practice is minimally influenced by journal articles alone. In contrast, if he studies the proprietary drug, a profit making company will send out their armies of marketers to physicians and get many of them to use it, making a great deal of money for themselves in the process...but this will also save lives, because aggressive marketing and promotion such as the industry does has been proven to affect clinical practice dramatically.

Italics mine. So what should he do?

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Robot Riots Coming Soon?

| Thu Jan. 20, 2011 9:31 AM PST

If IBM can create a computer with enough truly human-like intelligence to win at Jeopardy, does this mean that semiskilled jobs will soon be a thing of the past? Adam Ozimek asks:

What happens in the future if artificial intelligence means that human-like robots start replacing jobs? When the machine that replaces you has a voice and a name, like Watson, it will feel different than when the machine is a big metal contraption that attaches widget A to widget B. I suspect that the more human-like the technology that replaces human work, the more people will begin to finally heed the arguments of free traders and reconcile their feelings towards technology driven versus globalization driven job destruction. Unfortunately, this won’t be in the direction we want. Instead, people will begin to see technological progress as a “they” who is “taking our jobs”.

I think he's right. Not for another decade or two, probably, but that's not really very far away. Our Caves of Steel future is closer than we think.

Hitlerizing the Discourse

| Wed Jan. 19, 2011 6:05 PM PST

Here is Rep. Steve Cohen (D–Tenn.), speaking late last night to a nearly empty House chamber, on the repeal of healthcare reform:

They say it's a government takeover of health care, a big lie just like Goebbels. You say it enough, you repeat the lie, you repeat the lie, and eventually, people believe it....The Germans said enough about the Jews and people believed it — believed it and you have the Holocaust.

That's pretty inflammatory. But hey — I'm on record as believing that Nazi analogies aren't always that big a deal. So perhaps I should be defending Cohen? Unfortunately, he followed up later with this:

"I said Goebbels lied about the Jews, and that led to the Holocaust," Cohen said. "Not in any way whatsoever was I comparing Republicans to Nazis. I was saying lies are wrong...I don't know who got everybody's panties in a wad over this statement."

Uh huh. My general take is that not all analogies to Nazi practices are necessarily deliberate comparisons of a person (or group) to Nazis. But then again, sometimes they are, and Rep. Cohen's feeble denial to the contrary, that sure seems to have been his intent here. I mean, it sounds an awful lot like he's saying Republicans are as bad as Goebbels, no?

Assignment desk: provide some guidelines for when Nazi analogies are OK and when they're not. Use examples where necessary. Go to it, commenters.

The Month That Never Was

| Wed Jan. 19, 2011 3:51 PM PST

Do you remember, back at the end of 2008, when Goldman Sachs switched its status from investment bank to commercial bank? This provided it with various benefits that allowed it to avoid imminent destruction, and as long as they were doing it, the Goldman partners decided to switch their fiscal year from one that starts on December 1 to one that starts on January 1. Because of that, December 2008 was part of no fiscal year at all, and Goldman cleverly booked huge losses that month that never showed up on any of its annual reports.

But that's not all. The New York Times reported today on a vast trove of stock options that Goldman granted recently to its partners, and guess when they were granted? Felix Salmon:

There’s much more to be said on this matter. For one thing, the monster option grant took place during Goldman’s notorious orphan month, meaning that it would never appear in an annual report. And for another thing, it was very expensive even at the time....Add it all up, and the various stock-related grants given in one month of 2008 (we’re not including annual bonuses here) were worth $1.9 billion at the time, and are worth somewhere in the neighborhood of $7.6 billion now.

Remember that December 2008, when Goldman made these grants, was the worst month in the company’s history: it lost $1.3 billion, and was mired in the depths of the financial crisis. Yet many partners will have received stock and options awards that month which are worth hefty eight-figure sums today. Not bad for a month’s work.

Ain't life grand? It sure is if you work on Wall Street, where planet-annihilating financial crises are a problem only for the little people.

Quote of the Day: In the Crosshairs

| Wed Jan. 19, 2011 1:16 PM PST

From CNN's John King last night:

Before we go to break, I want to make a quick point. We were having a discussion about the Chicago mayoral race. My friend Andy Shaw used the term "in the crosshairs" in talking about the candidates. We're trying, we're trying to get away from that language. Andy is a good friend, he's covered politics for a long time, but we're trying to get away from that kind of language.

Stop it! Stop it stop it stop it! This is just ridiculous. The English language is chock full of martial metaphors, and there's simply no reason to think they have anything to do with actual, nonmetaphoric people taking actual nonmetaphoric shots at other actual nonmetaphoric people. This whole thing has gotten way out of hand, and we need to strangle it in the crib.1

1No, I don't plan to strangle any actual babies in any actual cribs. And no one reading this will be suddenly consumed by the idea of doing so either.