Kevin Drum - December 2011

New Mercury Rules Even Better Than You Thought

| Fri Dec. 23, 2011 12:21 PM EST

Earlier this morning I wrote that even with estimated benefits of $90 billion per year, the EPA may be selling short its new rules limiting emissions of mercury and other airborne toxins. (Most of that $90 billion estimate is due to reductions in particulate matter, not mercury.) After all, mercury is a dangerous neurotoxin, and the cost of cognitive and social defects, negative autoimmune effects, genetic effects, and heart attacks goes beyond just the EPA's estimate of lost earnings due to lower IQs.

All true. But Matt Yglesias says that even I'm underestimating the benefits of the new rules:

The EPA's official analysis of the impact of mercury on kids' brains is limited to the impact on wages of children born to families that catch freshwater fish for their own consumption. The impact they find is, not surprisingly, pretty small since most families don't each much self-caught freshwater fish. But the entire analysis simply skips the impact of mercury toxins ingested through commercial fishing which, obviously, is the vast majority of the fish that people eat.

They did it this way because it's extremely difficult to trace oceanic mercury to specific power plants and because the rule (easily) passes cost-benefit scrutiny for separate reasons so there was no need for the EPA to produce a guesstimate about it. But a 2005 study that attempted to quantify this estimated $8.7 billion per year in lost wages wages due to mercury-related IQ loss. There is huge potential low-hanging fruit here to build an entire better next generation of Americans, but this entire subject was completely excluded from the EPA's analysis which is overwhelmingly focused on the respiratory impact of particulate inhalation. That's a big deal. It means less asthma, thousands fewer premature deaths from older people, etc. But the main channel through which mercury does neurological damage to infants and fetuses is basically neglected for technical reasons.

So there you go. President Obama's early Christmas present was even better than you thought. Ho ho ho.

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Does Cutting the Payroll Tax Endanger Social Security?

| Fri Dec. 23, 2011 11:31 AM EST

Does the recently extended payroll tax cut harm the solvency of the Social Security trust fund? Answer: no it doesn't. The shortfall is made up with payments from the general fund, so the trust fund suffers no loss of income at all.

But wait! There's another, subtler argument about why it's a bad idea to reduce the payroll tax. Here is conservative Michael Walsh:

Democrats have undermined their own arguments about the true nature of the Social Security program (turns out it really is a tax-based welfare program, not a dedicated, contribution-based retirement program), and [] Republicans either ought to take them up on it, or flip the thing one more time and pose as the principled champions of Keeping Social Security Solvent.

The complaint here is that Social Security is generally sold as a program that's funded solely by money that you've paid into the system during your working life, which means you have an ironclad claim to Social Security benefits when you retire. As FDR put it: "We put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program."

Walsh's objection is one that several liberals have also made about the payroll tax holiday. Echoing FDR, they say that if Social Security is funded out of ordinary tax revenues, then the historical "legal, moral, and political right" to Social Security benefits is broken. Social Security is just another social welfare program.

I don't buy this for two reasons. First, I just don't believe that a small, temporary cut in the payroll tax has any effect on how people view Social Security. But second, I doubt that even a permanent switch to general fund support would have any serious effect on the program. In 1935, when Social Security was brand new, FDR might have had a point. But today? With Social Security as firmly a part of the American political system as anything this side of the Army or the Treasury? I don't think so. I just don't believe that the funding source matters any longer. Social Security is safe because millions of the elderly count on it and more millions of the non-elderly expect it to be there when they retire. It's safe because it's an enormously popular program, not because payroll taxes mean that you "deserve" your benefits when you retire. It's safe because any politician who tries to cut it finds himself very quickly on the business end of a million postcards from AARP members.

So the payroll tax holiday doesn't bother me. Anyone who's "paid taxes all my life" is going to feel that they deserve their Social Security, and it won't matter a bit what taxes they've paid all their life. Hell, most people don't even know what taxes they pay, and "FICA" might as well refer to a newly found gene for why men won't ask for directions as it does to a funding stream for Social Security. So cutting the payroll tax is fine. Technically it doesn't make any difference, and morally I very much doubt that it changes anyone's view of what they deserve when they turn 65. This is just not something to worry about.

President Obama's Christmas Present to America

| Fri Dec. 23, 2011 6:00 AM EST
President Barack Obama and First Lady Michelle Obama pretend to sing with an a cappella group in the Diplomatic Reception Room of the White House during a holiday reception.

Christmas is only a couple of days away, and this week the Obama administration delivered a last-minute Christmas present to all of us, one that's been 20 years in the making. On Wednesday, following a tortured history, the EPA finally released new standards that sharply reduce the emissions of mercury and other airborne toxins from power plants. David Roberts is jubilant: 

This one is a Big Deal. It's worth lifting our heads out of the news cycle and taking a moment to appreciate that history is being made. Finally controlling mercury and toxics will be an advance on par with getting lead out of gasoline. It will save save tens of thousands of lives every year and prevent birth defects, learning disabilities, and respiratory diseases. It will make America a more decent, just, and humane place to live.

The new standards for airborne toxins are expensive: they'll cost upwards of $10 billion annually and will require dozens of old coal-fired power plants to shut down. The power industry, aided and abetted by the conservative press, has spent years retailing horror stories about blackouts all along the Eastern seaboard as the new rules take effect, but this is, unsurprisingly, little more than the usual doom-mongering. Brad Plumer provides the reality:

[An AP] survey found that the coal plants set to be mothballed are mostly ancient — the average age was 51 — and largely run without modern-day pollution controls, as many of them were grandfathered in under the Clean Air Act. What’s more, many of these plants were slated for retirement in the coming years regardless of what the EPA did, thanks to state air-quality rules, rising coal prices, and the influx of cheap natural gas. “In the AP’s survey,” she writes, “not a single plant operator said the EPA rules were solely to blame for a closure, although some said it left them with no other choice.”

Crucially, none of the operators contacted by the AP seemed to think that huge swaths of America were on the verge of losing power, as Jon Huntsman claimed. An official from the North American Reliability Corporation put it this way: “We know there will be some challenges. But we don’t think the lights are going to turn off because of this issue.” This jibes with an Edison Electric Institute study, as well as a Department of Energy study (which focused on worst-case scenarios), a study from M.J. Bradley & Associates, and the EPA’s own modeling (PDF). Utilities will manage to keep the power running, in part by switching to natural gas, as plenty of gas plants currently operate well below capacity.

So that's the downside: $10 billion annually in costs and a difficult but manageable shutdown of obsolete power plants. And the upsides are enormous. Here's the EPA's estimate:

The total health and economic benefits of this standard are estimated to be as much as $90 billion annually....Combined, the two rules are estimated to prevent up to 46,000 premature deaths, 540,000 asthma attacks among children, 24,500 emergency room visits and hospital admissions. The two programs are an investment in public health that will provide a total of up to $380 billion in return to American families in the form of longer, healthier lives and reduced health care costs.

Much of this is due to reductions in particulate matter, not mercury, which suggests that, if anything, the EPA may be underestimating the benefits of the new rules. As Michael Livermore points out, mercury is a dangerous neurotoxin for small children, and the EPA's analysis of that danger is limited to quantifying lost future earnings due to lower IQs. But even a grinch wouldn't pretend that the cost of this kind of neurological damage is limited to lower wages. "There are," says Livermore, "also risks of cognitive and social defects, negative autoimmune effects, genetic effects, and heart attacks that are not quantified."

Those of us on the left have had plenty of opportunity to be disappointed with politics in general and with President Obama in particular over the past year. But although I think Dave Roberts exaggerates a bit comparing this rule to getting rid of lead in gasoline, he's right that it's a huge positive step for our country's health, and one that's long, long overdue. Merry Christmas, everyone.

Our Scandalous Shortage of Teenage First Sons

| Thu Dec. 22, 2011 5:38 PM EST

Over at New York, Noreen Malone provides us with "A Brief History of Teenage First Daughters." Why not teenage first sons? Well, oddly enough, there haven't been enough in recent years to bother with. Here's a list of all the teenagers to inhabit the White House in the postwar era:

  • Malia Obama (Sasha will join the ranks if Dad gets reelected)
  • Barbara and Jenna Bush (barely!)
  • Chelsea Clinton
  • Amy Carter
  • Susan and Steven Ford
  • Luci and Lynda Bird Johnson

Weird. Steven Ford is the only male child on the list. You have to go back to FDR to find a couple more. I blame humorless feminists for this indefensibly one-sided state of affairs.

My Little Dog Bo

| Thu Dec. 22, 2011 3:26 PM EST

I get that a blog post is just a blog post. And sometimes blog posts are nothing more than water cooler blather. But this post from Shannon Coffin perfectly encapsulates the deranged Obama hatred currently consuming the American right:

Now, this may not be the biggest story of the year, and in all likelihood, it probably isn’t even true.  But did the President really order the first dog back from Hawaii to the White House to be a prop for a Petsmart photo op? According to a report, Bo (a dog whose name is an acronym for his owner — coincidence?) [actually, yes: just coincidence –ed.] was spotted one day in Hawaii, where Mrs. Obama had gone for vacation in advance of her husband, and in a “regular guy at the pet store” photo op with Mr. Obama in Virginia the next.

Now, granted, this could be accomplished with no cost to the taxpayer, if Air Force Two (which would have flown Mrs. Obama to Hawaii) was returning home to Andrews AFB anyway.  And reports of Bo (the dog, not the President) being in Hawaii could very well prove false, thus mooting Bo-gate as an election year political scandal. But let’s say it is true. Really, Mr. President? And shouldn’t some advance staffer be fired for letting the dog get on the plane in the first place?

So let me get this straight. First, we don't even know if this is true. Second, even if it is true, it didn't cost taxpayers anything. Nevertheless, someone should be fired over it.

I recommend Obama go on TV and give the following speech:

Republican leaders have not been content with attacks on me, or my wife. No, not content with that, they now include my little dog, Bo. Well, of course, I don't resent attacks, and my family don't resent attacks — but Bo does resent them. You know, Bo is Portuguese, and being a Portuguese water dog, as soon as he learned that the Republican fiction writers in Congress and out had concocted a story that I'd left him behind on a Hawaiian island and had sent a 747 back to find him — at a cost to the taxpayers of two or three, or eight or 20 million dollars — his Iberian soul was furious. He has not been the same dog since. I am accustomed to hearing malicious falsehoods about myself — such as that old, worm-eaten chestnut that I'm constantly apologizing for America. But I think I have a right to resent, to object, to libelous statements about my dog!

What do you think? Pretty good, huh?

UPDATE: Guess what? Bo was never in Hawaii in the first place! Imagine that.

At least, that's what the liar-in-chief says, anyway. I suppose most of my lefty readership will be gullible enough to believe him.

Chart of the Day: Blame Oncology!

| Thu Dec. 22, 2011 1:39 PM EST

Sarah Kliff points us to an article in the New England Journal of Medicine that tries to isolate the reason that Medicare payments for physician services have gone up faster than Congress predicted in the late 90s. The chart below tells the basic story. General surgery, anesthesiology, and internal medicine have basically done OK. Emergency medicine, geriatric medicine, and radiation oncology have skyrocketed.

Using this data, the authors draw the following conclusion about the Sustainable Growth Rate formula adopted by Congress (and temporarily rescinded every year when they pass the annual "doc fix"):

We do not mean to suggest that the SGR physician-payment system should be restructured according to either state or specialty. For example, the arrival of new technologies in one area of medicine may justify faster growth in some specialties relative to others. Rather, our analysis illustrates that across-the-board cuts in fees are too blunt an instrument to restrain the growth of spending on physician services. In fact, any form of target expenditures for physicians who are not part of a coherent risk-bearing organization that is responsible for patient care will produce pathologies similar to those revealed in the graphs.

Unfortunately, that sentence in bold is key. It's not clear to me that the data here justifies any conclusion at all, because it measures total spending, not the amount spent specifically on physician fees, which is the subject of SGR. If hospitals are eagerly building $100 million proton therapy centers for cancer treatment — and they are — then Medicare spending on radiation oncology is going to skyrocket. But does that mean that oncologist fees should go up? Not really.

Now, the SGR formula might well be broken regardless. Doctors set their fees to cover their overhead, and if overhead is going up faster in some areas than in others then that means fees will go up faster in some areas than in others. But I'm not sure how looking at total spending allows us to draw conclusions about that one way or the other.

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A Game of Chicken That Democrats Can Finally Win

| Thu Dec. 22, 2011 12:05 PM EST

House Republicans are holding President Obama's payroll tax cut hostage and are getting hammered for it. What makes them think this is a winning strategy? Dave Weigel puts it like this:

Democrats want to re-elect the president, so they’ll ultimately give up a lot to extend a tax cut and unemployment benefits....Despite how it looks right now, it doesn’t make sense to doubt them. After all, they’ve had a lot of practice at this.

National Journal's Ben Terris is even blunter:

The House, influenced by a new mentality ushered in after the 2010 wave elections, stood its ground on issues like spending and the debt ceiling all year, watching as Democrats conceded time and again. But, depending on how Senate Majority Leader Harry Reid, D-Nev., and President Obama act now, their intransigence on extending tax breaks for the middle class could either be another feather in their cap, or a failure for the Republican Party. Either way, the freshman class doesn’t see a downside.

There's no question that a stalemate is dangerous for Democrats. For starters, it would hurt the economy, and in an election year that hurts the president no matter whose fault it is. What's more, voters tend to blame presidents for gridlock whether it's their fault or not. After all, once Republicans make a counterproposal (and they have: a conference committee to work out a one-year deal before the end of the year), they can plausibly argue that it's the other side that's not willing to deal. Both sides are keenly aware of both of these dynamics, and they definitely point in the direction of Democrats caving yet again.

But that's exactly why I suspect Democrats won't cave. At some point, whether it's strictly rational or not, you simply have to let the other side know that you can't be pushed around forever. And this is about the best chance Dems have had to send this message in a while. Nothing is going to get shut down if they hold out, the nation's credit won't be wrecked, and even if takes until January to make a deal it won't have much effect on the economy. What's more, House Republicans have shown weakness by making sure the Senate's two-month deal is still on the table. If they'd voted it down, it would have been like ripping the steering wheel off the car, but they carefully made sure not to do this. And to make things even worse for Republicans, they're plainly losing the PR battle over this. Even the Wall Street Journal isn't on their side, and even Mitch McConnell is pretty disgusted over being double-crossed once again by the lunatics in the House GOP caucus.

So: no huge consequences for holding out; weakness and panic on the Republican side; and public (and press) opinion very clearly on the Democratic side for the first time in a while. This is the best chance Democrats have had all year to stand firm and actually profit from it. That's why I think they will.

Euphemisms in America

| Thu Dec. 22, 2011 11:30 AM EST

Yesterday I bought a copy of the Economist's annual holiday issue, which is always full of good stuff. It includes a piece about euphemisms around the world, and it started off a bit oddly by suggesting, among other things, that Americans routinely call false teeth "dental appliances." Really? Well, I thought, maybe we do. What do I know about what dentures are usually called? But then I ran across this:

The richest categories would centre on cross-cultural taboos such as death and bodily functions. The latter seem to embarrass Americans especially: one can ask for the “loo” in a British restaurant without budging an eyebrow; don’t try that in New York.

Say what? We don't use the word "loo," of course, but here in Southern California I ask waiters for directions to the men's room all the time. The only thing that happens is that they.....tell me where it is. Unless this is some kind of weird New York thing, I'm pretty mystified by this. I hope the rest of their reporting on global euphemisms is more accurate than this.

Cars and the Man

| Thu Dec. 22, 2011 11:03 AM EST

From Bloomberg, after reporting that American banks are in pretty good shape these days:

Consumers also are in better financial shape, thanks to reductions in debt and the Fed’s record-low interest rates. Household-debt payments as a share of disposable income stood at 11 percent in the third quarter, the lowest since 1994 and down from a peak of 14 percent set in 2007, according to data from the central bank.

That has freed up money for spending, and the automobile industry is a beneficiary....The average age of cars and light trucks on the road today has risen to 10.6 years, Jenny Lin, senior U.S. economist at Dearborn, Michigan-based Ford Motor Co., said on a Dec. 1 conference call. That’s above the seven-to-7.5 years Ballew says is the long-term average.

“We are going to see more and more of this pent-up demand realized,” Lin told analysts and reporters.

Karl Smith keeps telling me that this is what's going to spark a strong recovery in 2012. At some point, all those cars just have to be replaced, and that spending will drive improvement in the economy. Ditto for pent-up demand for houses and apartments.

I really want to believe this. I do, I do, I do. But with wages stagnant, credit tight, unemployment high, and the world economy flatlining, where's the money going to come from? I want to have faith in Smithianism, but my faith is tested whenever I open a newspaper — and I open a newspaper a dozen times every day. It is a stern and demanding creed, Smithianism is.

Happy Winter Solstice!

| Thu Dec. 22, 2011 12:30 AM EST

And now, finally, the days will start getting longer again. Hopefully this is a metaphor for our politics too.