Kevin Drum - March 2012

Romney Changing His Economic Tune

| Tue Mar. 20, 2012 7:41 PM EDT

Last month I noticed that Mitt Romney seemed to be changing his economic message. Instead of the economy sucks and it's Obama's fault, it had morphed into the economy's recovering but it would be recovering even faster if not for Obama. Today, Mark Barabak and Paul West of the LA Times suggest that this is a pivot that's here to stay:

Mitt Romney entered the presidential contest as Mr. Fix-It, saying his business know-how was precisely what could rescue the struggling economy from its deep and devastating slump....But after months of steady job growth, improved consumer confidence and big gains on Wall Street, the economy seems in less dire need of fixing, and Romney has been forced to alter his message or risk seeming out of touch.

"I believe the economy's coming back," Romney said at a breakfast stop Monday in Springfield....But he gave absolutely no credit to President Obama — "the economy always comes back after recession" — and insisted the administration's policies had made matters worse and the recovery slower than it should have been.

....If the slow but steady improvement continues and Romney hangs on to become the GOP nominee, the choice presented to voters in the fall could rest on a pair of abstract arguments: one candidate saying he would have done better and the other insisting things could have been worse.

Maybe Romney doesn't have a choice, but this is a tough message. The true believers will truly believe, as always, but will anyone else? If the economy really is improving, it's not very convincing to say "Yeah, but I could have done even better." It bodes ill for Romney that he's apparently decided this is his best shot.

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The Very Non-Serious Paul Ryan

| Tue Mar. 20, 2012 3:05 PM EDT

Earlier this morning I said that since Paul Ryan's latest budget proposal caps revenues and cuts Medicare and Social Security only modestly, this means that "everything non-elderly gets whacked hard."

But what does that mean? Well, it turns out that the Congressional Budget Office has put a concrete number to "whacked hard" here. Medicaid and CHIP (children's healthcare) would decline from 2% of GDP today to 1% of GDP in 2050, and everything else — that is, everything other than Social Security and Medicare — would decline from 12.5% of GDP today to about 4% of GDP in 2050.

This is, to put it mildly, nuts. Defense spending alone amounts to 4% of GDP, and it's vanishingly unlikely that this will ever fall much below 2-3% of GDP. This means that all domestic spending will decline from about 8% of GDP to 1-2% of GDP by 2050. That's prisons, border control, education, the FBI, courts, embassies, the IRS, FEMA, housing, student loans, roads, unemployment insurance, etc. etc. It's everything. Whacked by about 80% or so.

This is not a serious plan. I don't care how serious Paul Ryan sounds, or how many numbers he spouts, or how many charts he buries us under. It's not serious.

Paul Ryan's Less Terrible 2012 Take on Medicare

| Tue Mar. 20, 2012 2:26 PM EDT

As I recall, last year's version of the Paul Ryan voucher plan for Medicare basically amounted to mailing seniors a check each year to pay for health insurance. The value of the check went up at the rate of general inflation, which is much lower than the rate of medical inflation. Within a few decades, this means that the checks would cover no more than half or two-thirds of the cost of insurance, and seniors would be forced to pay huge sums out of pocket. Democrats were unamused.

But here's an interesting thing. A few months ago I linked to a Yuval Levin proposal for Medicare reform that basically told his fellow conservatives to put their money where their mouths are. If conservatives really believe that competition is the key to holding down costs, he said, then let's make Medicare competitive. Levin proposed that each year Medicare would define a minimum benefit level, and then providers in each Medicare region would bid for business. The traditional fee-for-service Medicare plan would be among the bidders, and the second-lowest bid would become the value of a voucher sent to each senior. You could pay more for a more generous plan if you want to, but at all times "there would be at least one option that would cost less than the Medicare benefit, and seniors choosing that option would get the difference back as cash in their pockets; [and] there would be at least one plan that cost the same as the benefit, so that seniors could obtain it with only the same out-of-pocket costs they have today."

At the time, I suggested that liberals might very well be OK with this idea. After all, it's pretty much how Obamacare works. Within the insurance exchanges set up by PPACA, providers engage in competitive bidding based on a minimum coverage package defined by the government. The size of the federal subsidy for low-income families is set at the value of the second-lowest bid.

So here's what's interesting: this is basically what Paul Ryan is proposing this year. He's not quite willing to trust the free market completely, so his proposal also includes a cap on cost growth that's equal to GDP plus 0.5%. This is similar to the growth cap mandated in Obamacare. I have a problem with using this same number for Medicare, however, because it doesn't contain the word "per capita," and the retirement of the baby boom generation is going to increase the number of Medicare beneficiaries at a higher rate than the rest of the population.

Still, it's a start. The basic competitive framework is worth a look. The growth rate formula is negotiable. The regulatory apparatus is negotiable too. It's not prima facie ridiculous.

Now, given the slowdown in Medicare growth over the past couple of decades, along with the cost controls that are already part of Obamacare, I'm not really in favor of adopting a plan like this. I think we should give Obamacare a chance to work instead. Still, Ryan's plan is a step in the right direction. I'll give him that.

Today's Good News: Finally, a Limit to the Patent Follies

| Tue Mar. 20, 2012 12:49 PM EDT

The Supreme Court ruled today against a Nestle patent on a test that helps doctors set drug dosages:

The high court, in a 9-0 ruling by Justice Stephen Breyer, said the patents were invalid because they made claims on laws of nature, which aren't patentable.

OK then. We've finally set an outside boundary: you can't patent God's inventions. That's a good start! Now how about if Congress eliminates all software and business process patents too? That would make the world a much better place.

Paul Ryan's Path to Penury

| Tue Mar. 20, 2012 12:30 PM EDT
Paul Ryan.

As a blogger, there are days you know you're doomed. Today, for example. Paul Ryan has released the latest Republican budget, and it's a blizzard of numbers, gimmicks, weird comparisons, and obfuscation. It's no more serious than any of Ryan's other budget proposals, no matter how many PowerPoint slides he includes, and yet, this is what everyone will be talking about. I'm pretty bored with Ryan, but I feel like I need to say something too anyway.

Other people with more fortitude than me will eventually pick through his numbers and deliver more precision about his proposals. As near as I can tell from a quick scan, though, it's not a lot different from his previous plans. He makes modest cuts in Medicare and Social Security over the next ten years, zeroes out Obamacare, keeps defense spending high, and then takes huge whacks at everything else.

The single most important number in Ryan's plan, as usual, is his top line limit on spending: 19% of GDP. He will, of course, justify this with a chart showing that this is about the average over the past 50 years, so it's perfectly reasonable that we should be able to stick with this for the next 50. But it's not. For starters, average expenditures over the past 30 years have been more like 20-21% of GDP, with the exception of a few years in the late 90s during the Clinton boom era. What's more, the country is aging. Nothing can stop that, and this means that spending on the elderly is going to go up no matter how good a job of reining in healthcare costs we do. This means that spending over the next 20-30 years is going to be in the range of 23-24%.

This is just pure demographics. There's really not much we can do about it. In fact, it's actually a best-case scenario.

So if we cut spending to 19%, it means that the entire budget outside of Social Security, Medicare, and Defense (which Ryan also doesn't want to cut much) has to be cut by half or more. Ryan will do his best to cover this up, but there's no way around the numbers. The country is aging. We're going to spend more on the elderly. If we cut spending levels at the same time, everything non-elderly gets whacked hard. That's the basic story. It's not a path to prosperity, it's a path to penury.

More later on some of the details of Ryan's plan.

UPDATE: So what does "whacked hard" really mean? It means hard. Details here.

The New York Times Really Wants Your Money

| Tue Mar. 20, 2012 11:03 AM EDT

The New York Times is tightening the noose:

There are enough back doors through the NYT paywall that this may not matter for a lot of people. But this move suggests that those back doors may start to disappear over time, just like the number of free articles is likely to decline. It looks like the Times is dead serious about making sure you pay them if you want to read their content.

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Lots of Countries Don't Require Prescriptions for Oral Contraceptives

| Tue Mar. 20, 2012 12:59 AM EDT

A few days ago I wrote a post about whether oral contraceptives ought to be available without a prescription. They're pretty safe, it turns out, and several studies suggest that women are a whole lot more likely to use them continuously if they don't have to go in for a doctor's exam every year and aren't limited to buying just a month's supply at a time. Anna Reisman adds some more detail to this issue today, but the most intriguing bit came at the very end of her post. It's a link to a map showing where oral contraceptives require a prescription and where they don't. Here it is:

Here's what's interesting: although prescriptions are required in most of the rich world, there are plenty of middling-income countries where they aren't, including Portugal, Mexico, Brazil, South Africa, Greece, Turkey, South Korea, Russia, and several others. Surely this means that loads of data is available about health outcomes where prescriptions aren't required. Do women in Portugal have a greater number of dangerous pill-related interactions than women in Spain? Do women in South Korea have more allergic reactions than women in Japan? Do women in Greece have more problems with antibiotics than women in Italy?

It's not surprising that rich countries have more formal regulations in place than less-rich countries. But surely this provides us with a wealth of information about whether there are any systematic negative effects from allowing women access to over-the-counter oral contraceptives. So where are the studies?

The WaPo's Debt Ceiling Nothingburger

| Mon Mar. 19, 2012 9:59 PM EDT

So I finally got around to reading this weekend's big Washington Post tick tock about last year's debt ceiling negotiations. Jon Chait goaded me into it by writing a post saying that everyone was missing the real bombshell in the piece. Yes, the deal traded $800 billion in tax increases for $1.7 trillion in spending cuts. Nothing new there. Yes, the deal got derailed after the "Gang of Six" unveiled a more ambitious proposal that suggested Republicans could live with more than $800 billion in tax increases. Nothing new there either. The real news, he says, was that the $800 billion in revenues was mostly just a phantom in the first place, and Obama was willing to sell out the left by accepting this:

In Boehner’s offer Friday night, the taxes came with strings attached. The Republicans wanted Obama to give up plans to raise the tax rate paid by the wealthiest Americans, now set at 35 percent. Instead, they wanted that rate to go down....Another key caveat: Much of the $800 billion would have to come from overhauling the tax code — not from higher tax rates. The Republicans believed lower rates and a simpler code would generate new revenue by discouraging cheating and spurring economic growth. If the White House would agree to count that money, the Republican leaders said, then they might have a deal.

That last condition was a problem. For years, Democrats have mocked the Republican argument that tax cuts pay for themselves by boosting the economy....So there were issues to work out that Sunday but also reason for optimism. In its counterproposal, the White House appeared to accept the $800 billion tax offer and a lower top rate....When Boehner brought up economic growth, arguing that his caucus would not accept tax increases under any other terms, the Republicans saw Geithner as receptive, Jackson said. “It was literally one of the last things discussed when they came in on that Sunday. And Geithner said, ‘Yes, we accept that,’ ” Jackson recalled. “We viewed it as a breakthrough.”

On this point, the two sides are in dispute. Geithner and other administration officials say it never happened. They strenuously deny agreeing to count revenue from economic growth, a process known as “dynamic scoring.” Treasury spokeswoman Jenni LeCompte said the Republicans “were kidding themselves” if they thought the White House would concede that point. “That’s always been a total non-starter for Secretary Geithner and this administration and always will be,” she said.

Meh. The story doesn't say that Obama accepted the notion that the new revenue would mostly come from dynamic scoring. It says the two sides disagree about who accepted what. Big surprise. And anyway, even this isn't new. Here's Jay Newton-Small a few days after the deal fell apart:

Late last Sunday morning, House Speaker John Boehner and his No. 2, majority leader Eric Cantor, found themselves in White House Chief of Staff Bill Daley’s West Wing office talking with Treasury Secretary Tim Geithner about how tax reform, if done right, could produce $800 billion in new revenues over the next 10 years through growth and by closing loopholes. Sensitive to an anti-tax promise taken by most of the House Republicans, the negotiators felt this would be a way to raise revenues without breaking the pledge.

In other words, Cantor was hellbent on raising revenue without breaking the Republicans' no-higher-taxes pledge. Instead, some of the additional revenue would come via higher growth and some would come from broadening the tax base by closing loopholes and reducing tax expenditures. Did they end up agreeing on this? Nobody knows.

To be honest, I'm not sure there's anything new in the WaPo piece. There are a few details here and there, and a bit more recreated dialog, but nothing substantive. It's the same story we've heard from the very beginning: It was a lousy deal; the revenue increases were dubious; it got derailed after the Gang of Six released its plan and Obama asked Boehner for more revenue; and it got scuttled completely when Boehner refused to accept Obama's offer to go back to the original deal. Unless I'm missing something, we already knew all this.

It is Now Officially OK to Make World War II References

| Mon Mar. 19, 2012 5:44 PM EDT

Earlier today, David Axelrod described Mitt Romney's wall-to-wall advertising campaign in Illinois as a Mittzkrieg. The Romney campaign immediately cranked up the high dudgeon meter to 11:

At a time when there is so much talk about the need for civility in political discourse, it is disturbing to see President Obama's top campaign advisor casually throw Nazi imagery around in reference to a Republican candidate for President. Holocaust and Nazi imagery are always inappropriate in the political arena. Axelrod should apologize for his offensive language.

We call on Debbie Wasserman Schultz, the chairman of the Democratic National Committee, to publicly rebuke Axelrod for his language. We hope that the National Jewish Democratic Council will join us in denouncing Axelrod's comment, as they have frequently denounced Holocaust imagery in politics in the past.

That's it. I've had enough. I officially declare that it's now OK to use World War II imagery anytime you want. It's OK to make Nazi references. It's OK to compare people to Hitler. Go ahead! You have my blessing.

This whole thing is ridiculous, and I'm sick of it from all sides. WWII references are handy shorthand because everyone immediately understands them. There's nothing wrong with this. If you go overboard, people will mock you. If your analogies are wrong, people will correct you. If you literally say that someone is as bad as Hitler, you will be called an idiot. (Unless, of course, you're really talking about someone as bad as Hitler. But that's a pretty short list.) But the mere fact that you used a WWII/Hitler reference? Not an issue any longer.

It's probably still wise to take it easy on Holocaust imagery. But merely making a comparison of some modern-day event to something that happened in WWII, or something that Hitler did, or some well-known practice of Nazi Germany? If it's the obvious analogy to use, then use it. And let's all quit the pearl clutching, OK?

The eBooks are Too Damn Expensive!

| Mon Mar. 19, 2012 5:07 PM EDT

I got an iPad last week, and I intend to use it primarily as a book reader. Naturally I wanted to download a book and try it out, so I bought Matt Yglesias's new Kindle single, The Rent is Too Damn High. So far, I'm very pleased with the book-reading abilities of the iPad1, but I wonder if publishers are setting too high a price for these miniature volumes? Matt's book is $3.99, and in one sense that's cheap. It's about the price of a magazine, and has a roughly similar amount of content. On the other hand, you could also say it's more similar to a single magazine article — a long one, granted — and people aren't generally willing to pay four bucks for one article.

Unless you're a big name, or you happen to generate some serious buzz, it seems as if these kinds of books might do better as impulse buys. Maybe 99 cents, or $1.99. On the other hand, the real investment here is time more than money, and for anyone willing to spend three or four hours reading something like this, three or four dollars shouldn't be much of a hurdle.

I guess I'm not sure. Maybe all I really wanted was a chance to write the headline for this post. But I'm curious to get some feedback. Has price ever deterred you from downloading any Kindle singles? Or is this a non-issue?

1My big problem with the original Kindle was that it sucked for nonfiction books. Tables, charts, and images of all sorts rendered so badly as to be nearly illegible. But the Kindle app for the iPad appears to have solved this problem. My test case was A Farewell to Alms, and although some of the images were surprisingly low-res, they were all readable. And the tables were all readable too: columns actually lined up properly and pages are big enough to have enough to room show the entire thing. So far, so good.