Kevin Drum - April 2011

Paying for Medicare

| Thu Apr. 28, 2011 2:19 PM EDT

Bill Galston says upper-middle-class baby boomers are being selfish in our refusal to pay more for retirement medical care:

There’s an obvious rejoinder: Haven’t my wife and I already paid into the [Medicare] system for the benefits we’ll receive over the next two or three decades? Answer: Yes, but not enough. A few months ago, Eugene Steuerle and Stephanie Renanne of the Urban Institute put out a very useful summary, “Social Security and Medicare Taxes and Benefits Over a Lifetime,” calculated for different retirement cohorts. While I’m no methodologist, their assumptions seem straightforward and plausible. Applying them to our own case suggests that the value of my contributions falls short of the actuarial value of our benefits by at least $100,000. And if my wife and I were younger professionals scheduled to retire in 2030, the gap would be far greater.

So who’s going to make up the difference? Answer: today’s workers, many of whom are already struggling to raise their children, pay the mortgage, and save for college.

Yep. Here are Steuerle and Renanne's estimates for a single male retiring last year. Note that this has all been adjusted for inflation:

Given that current and soon-to-be retirees have gotten such a sweet deal, there are several things you can say about Medicare reform. First, if Medicare benefits are going to be reduced, they should be reduced even for current retirees, not just future retirees. Second, if taxes are going to be raised, they should be raised on everyone under 65. There's no reason that those who are between 55 and 65 should get a free pass. Third, some kind of means testing might be appropriate for Medicare. For a variety of reasons I don't think means testing is a great idea for Social Security (one of the reasons is here), but for Medicare it might make some sense. As Galston says, for a lot of upper-middle-class boomers like him, the main value of Medicare is guaranteed issue. Everyone over 65 needs that because everyone over 65 has preexisting conditions, but as long as that stays intact a pretty fair chunk of retirees could afford to pay premiums that more accurately reflect the actual cost of their coverage. Something like that would have to be phased in, and it would also have to constructed carefully, but it definitely ought to be on the table when we discuss reforming Medicare. Elderly well-off retirees are still well-off, after all, and there's not much reason their healthcare should be subsidized by everyone else if they can afford to pay for it themselves.

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In Defense of the Royal Wedding

| Thu Apr. 28, 2011 12:48 PM EDT

Alex Massie is tired of people complaining about all the coverage of the royal wedding:

You could be forgiven for thinking that, at best, the show is being put on for elderly wurzels, corn chandlers and backwoodsmen none of whom could be said to be much "in touch" with what modern Britain is supposed to stand for....And yet actually and quietly and gallingly for some, the people are interested in the wedding. A Guardian poll this week, published with some misgivings one likes to think, tries to spin this interest away but is forced to concede that 47% of the British population plan to watch at least some of the television coverage of the wedding on Friday. That is, by any measure, a strikingly large percentage of the population.

....This being so, it's daft to complain about too much coverage. The public is interested in this. To complain about the coverage is, in some sense, to make the case that journalism should only be concerned with matters that are in the public interest. But unless journalism also panders to — that is, serves — the things in which the public is actually interested there will be no "public interest" journalism at all.

Despite the fact that I don't myself care all that much about the royal wedding, I agree. Here's how I look at things: all of us1 have cheesy crap that we happen to enjoy. For me it's Survivor. For you maybe it's romance novels. Or the Academy Awards. Or the CMAs. For other people it's royal gossip.

And really, who cares? The royal wedding is a harmless pastime, there's lots of great fashion to ogle over, there's gossip galore, and it's a fun diversion from whatever dreary stuff is consuming the chattering classes in our nation's capital (or in Great Britain's capital) at the moment. It's not my cup of tea, but the fact that I don't personally like it2 doesn't instantly fill me with snobbish outrage over the fact that other people do.

So: those of you who are filled with snobbish outrage, get off your high horse. It's all just a bit of glamour and spectacle that does no one any harm3. And really, admit it: you're just mad that you didn't get an invite, aren't you?

1Well, maybe you don't. Maybe you're the second coming of Thomas Jefferson. If so, keep it to yourself, OK?

2My sister very decidedly does, however, and so do my cats — and they'll prove it tomorrow. You can't wait, can you?

3Actually, that's not entirely true. The royal tsotchke industry is certainly getting a boost, but the government has declared tomorrow a holiday in Britain, and according to the LA Times, "Every bank holiday costs Britain as much as nearly $10 billion in lost productivity." That "as much as nearly" formulation sounds a bit dodgy to me, but still, I guess the economy will take a minor hit.

Plus, let's just go ahead and concede that Richard Quest is really, really annoying. His constant appearances on my TV have made my life that much poorer. I'll be very happy when he finally goes away.

Our Economic Kabuki Show Continues

| Thu Apr. 28, 2011 11:30 AM EDT

Well, it looks like Macroeconomic Advisors was right:

The American economy slowed to a crawl in the first quarter, but economists are hopeful that the setback will be temporary. Total output grew at an annual pace of 1.8 percent from January through March, the Commerce Department said Thursday, after having expanded at an annual rate of 3.1 percent in the fourth quarter of 2010.

It's a little hard to know what to say about this aside from the usual: our big problem right now is sluggish growth and high unemployment, but no one seems to care about that anymore. It's all inflation and deficits and the weak dollar. Paul Krugman will undoubtedly write a few blistering columns about this, everyone will shrug because it's just Krugman being Krugman, and then we'll go back to our usual right-wing kabuki show over inflation and deficits and the weak dollar.

And growth will remain lousy and unemployment will stay high and we'll all pretend there was nothing we could have done about it.

Our National Security Farm Team Problem

| Thu Apr. 28, 2011 11:02 AM EDT

Yesterday President Obama announced a reshuffling of his national security portfolio, moving Leon Panetta from CIA to Defense, Gen. David Petraeus from Afghanistan to the CIA, Gen. John Allen from Centcom to Afghanistan, and Ryan Crocker from retirement to active duty as ambassador to Kabul. Fred Kaplan says "it's hard to imagine a shrewder set of moves, both politically and substantively." And maybe so. But then there's this:

What's glaringly obvious about this list is that [...] it's a game of musical chairs. No fresh talent has been brought into the circle. And one reason for this is that the bench of fresh major-league talent is remarkably thin.

There are plenty of smart, capable analysts and bureaucrats in the Pentagon's second tier or in the think-tank community—but very few, arguably none, who possess the worldliness, gravitas, intramural hard-headedness, and credibility on Capitol Hill that a president, especially a Democratic president, would like to have in a defense secretary during a time of two wars and ferocious budget fights....In the past few weeks, I've asked a couple dozen veteran observers—officials, analysts, Hill staffers, other reporters—who they think would be a suitable replacement, from either party's roster. Nobody could think of anybody. This in itself is a bit disturbing.

Yes, that is disturbing. If it's true, that is. And it might not be: it's common to think of second stringers as perpetually second stringers until you actually promote one of them. Then all that gravitas you thought was missing is suddenly there. That might be all that's going on here.

Still, this would be an interesting topic to hear from other national security folks about. Is it really true that the bench of big-league talent in the top tier of the national security world is as thin as all that? And if it is, why?

Manufacturing Outrage

| Thu Apr. 28, 2011 10:00 AM EDT

According to Bloomberg, Republicans are complaining that town hall protests against the Ryan Medicare plan are basically phony:

U.S. House Republicans pushing to overhaul Medicare dismiss the vocal opposition some have encountered from constituents as orchestrated by political foes.

They’re blaming much of the criticism voiced at town-hall meetings, which sometimes turned raucous, on activists dispatched by MoveOn.org and other Democratic allies, even as some of the lawmakers have taken measures to control the tone of forums. “This is not genuine anger over Medicare; it’s manufactured political anger that’s causing the disturbances,” said Representative Lou Barletta, a freshman Republican from Pennsylvania.

You know what? Barletta is mostly right. But that's not really the problem. After all, a lot of the tea party town hall protests in 2009 were pretty much orchestrated too. Here's the problem: liberals are lousy at pretending that their protests are organic. Ever since the Ryan plan has come out, I've been reading endless tweets and blog posts about how liberals need to create a ruckus at congressional town halls. Or, alternatively, complaining that liberals aren't doing a good enough job of creating a ruckus at congressional town halls. Or wondering when liberals are going to rise up in wrath. Or something.

As a result, even I haven't really taken any of these various ruckuses very seriously. They're just too obviously contrived to be our equivalent of the tea party protests. And my guess is that the press is yawning for the same reason. You can't make protest plans in public for a couple of weeks and then turn around and try to convince reporters that this is all a grass roots effort.

The left has always been pretty good at organizing large-scale marches and protests. But fake grass roots uprisings? Not so good. The right has us beat hollow on that kind of thing.

Paul Ryan vs. the Truth

| Wed Apr. 27, 2011 5:08 PM EDT
Rep. Paul Ryan (R-Wis.).

There's a lot of annoying mendacity in Paul Ryan's budget proposal, but the most annoying by far is his repeated insistence that under his plan seniors would get "the same kind of health-care program that members of Congress enjoy." Aside from the fact that he's offered no details about how or why private insurers would magically decide to provide the same kind of benefits to the elderly that they do to members of Congress, he's just flatly lying about the most important part of his proposal: namely that it will force seniors to pay far, far more for Medicare than they do now — and far, far more than members of Congress pay for their health insurance. If you're a millionaire, maybe this counts as the "same kind" anyway, but for the rest of us it doesn't.

Here's the difference: under Ryan's plan, the government pays a set amount for Medicare and you pay for the rest. So far, that's pretty similar to the congressional plan. But that set amount goes up very slowly under Ryan's plan — much more slowly than the actual rise in the cost of health insurance — which means that seniors have to pay a bigger and bigger share of the total premium cost as the years go by. CAP's Tony Carrk and Nicole Cafarella ran the numbers to see how that would have worked out if Ryan's formula had applied to Congress over the past decade, and the dismal results are on the right, below.

Under the actual congressional plan, family premiums have gone up from $2,500 to $5,000. Under Ryan's plan, premiums would have gone up to about $8,300. That's a difference of $3,300 in only ten years. Over the course of 30 years, the difference would be more like $10-15,000.

That's a pretty whopping difference, and it would be even bigger for Medicare beneficiaries since Medicare starts from a bigger base. The result is that lots of seniors just flatly wouldn't be able to afford to buy Medicare. They wouldn't have enough money to pay their share of the premium, and that means they'd be uninsured and uncovered. Ryan has, of course, offered up a bunch of handwaving about how indigent seniors would get bigger subsidies, but unsurprisingly has been pretty sparing with any details. If he explained things, after all, everyone would immediately figure out (a) just how miserly his plan is, and (b) how much it would actually cost to support all those seniors who couldn't afford the astronomical premiums his plan forces on them.

The end result of all this is debatable. What's not debatable, however, is whether his plan is "the same kind of health-care program that members of Congress enjoy." It's not. It's not even close.

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IQ and Incentives

| Wed Apr. 27, 2011 12:10 PM EDT

Via Tyler Cowen, this is a genuinely startling result:

....material incentives in random-assignment studies increased IQ scores by an average of 0.64 SD, suggesting that test motivation can deviate substantially from maximal under low-stakes research conditions. The effect of incentives was moderated by IQ score: Incentives increased IQ scores by 0.96 SD among individuals with below-average IQs at baseline and by only 0.26 SD among individuals with above-average IQs at baseline.

Let me translate this into English. On IQ tests, a single standard deviation equals 15 points. So if this research is right, giving people actual incentives to do well on IQ tests (money, for example) has the following effect:

  • Those with low IQs scored 14 points higher.
  • Those with high IQs scored 4 points higher.

In other words, giving people an incentive to do well collapsed the gap between high and low by ten points — and bigger incentives created even bigger effects. These results are based on a meta-analysis of previous studies, not on new research, and metastudies are notoriously tricky to do properly. So take this with the usual grain of salt until these results get replicated elsewhere.

But ten points is a helluva lot. If this holds up, it's pretty significant.

The Real Message of Obama's Birth Certificate

| Wed Apr. 27, 2011 11:41 AM EDT

A friend of mine reads National Review's leading lights so I don't have to:

The Corner is funny today. No, this is not an embarrassing day for the right. Quite the contrary. That speech was way, way too petulant. (Seriously. Go back and watch it again. Did you see it? ...Okay, try watching it again. ...Still no? Just trust me. He's a ball of rage.) He was so unlikeable when he was releasing his birth certificate. And you know what the real question is: why did he wait so long to release it?

Also, you know why the media covered the Birther issue? It has nothing to do with the fact that the majority of the primary voters in our Party are Birthers, or that they have been kicking this story around for more than two years, or the fact that the presidential "candidate" who is now leading in many polls has made this his main issue. No. That would be embarrassing to admit. Which we don't have to, because the real reason the media covers it is this: because Obama's budget plan doesn't add up!

Plus, you've got to give Trump credit for forcing the issue here. Am I right?

Finally putting the Birther thing to rest: a bad day for Obama.

This is great. And while we're on the subject, I'd like to encourage the rest of my friends to write my blog posts for me too. It really makes my job a lot easier.

Rich Man, Poor Man

| Wed Apr. 27, 2011 11:15 AM EDT

Everyone thinks they're middle class. This isn't a big surprise: the word "rich" has specific connotations (servants, mansions on the Gold Coast, 200-foot yachts, etc.) and even someone making $200-300 thousand a year probably doesn't have any of that stuff. What's more, most people in that income range were likely raised middle class, so culturally they still think of themselves that way even if their incomes give them a pretty comfortable lifestyle.

But Catherine Rampell notes something more interesting today. Researchers surveyed 1,100 households in Buenos Aires and asked them a purely objective question: what decile do you think your income puts you in? The bottom decile means you're part of the poorest 10%, the fifth decile means you're right in the middle, and the tenth decile means you're part of the richest 10%. Here's how things shook out:

Fascinating! The very poorest thought they were actually in the fourth decile — just barely below average. The very richest thought they were in the sixth decile — just barely above average.

If the same thing is true here — and I wouldn't be surprised if it were — it could go a long way toward explaining the political dynamics of taxation and economic policy in the United States. After all, if the poor don't really know they're poor, they're never going to mount much of a fight for more egalitarian public policies. And if the well-off don't know they're well off, they're going to strongly resist more egalitarian public policies. The result can be startling increases in income inequality without anyone really knowing it's happening or caring very much about it.

Vaccines and Ideology

| Wed Apr. 27, 2011 10:52 AM EDT

Is vaccine denial primarily a leftie/hippy/Hollywood phenomenon? There's apparently no really good data on this, but Chris Mooney rounds up what he can and concludes that the whole issue is pretty nonpolitical: "Bottom line: There’s no evidence here to suggest that vaccine denial (and specifically, believing that childhood vaccines cause autism) is a distinctly left wing or liberal phenomenon." More here.