Kevin Drum - July 2012

Medicaid Expansion May Turn Out to Be an Offer States Can't Refuse

| Wed Jul. 18, 2012 1:32 PM EDT

Should states sign up for Obamacare's expansion of Medicaid, even though the Supreme Court says they don't have to? The answer depends a lot on how much it will cost them. On the downside, states would have to pay part of the cost of covering new enrollees. On the upside, they'd save some money because Medicaid would start covering some indigent medical expenses that states are currently on the hook for. This is all pretty obvious, but it's also pretty vague. We need hard numbers. Will new costs outweigh new expenses? Or vice versa?

This requires a more detailed accounting, and we don't have that yet. Today, though, Sarah Kliff reports that Arkansas has taken a first cut at estimating both the costs and savings of signing up for the expansion. They figure that in 2015 the new law would cost them $42 million and save them $131 million. So it's a clear winner. But that's because the federal government picks up 100% of the tab for expansion during the first three years. That declines to 90% by 2020, and Arkansas figures that by 2021 the expansion of Medicaid would cost them $3.4 million per year.

Now, that's $3.4 million out of a $4 billion Medicaid budget, of which Arkansas pays $750 million. So it's not a lot of money, especially considering the number of people it would help.

Politically, though, it sets up an interesting dynamic. A lot of states, especially in the South, are resisting the Medicaid expansion. It's going to be tough for them to stick to their guns, however, because there are a lot of interest groups (for example, hospitals who are losing funding for indigent care and desperately need the new Medicaid dollars) who are going to be pushing hard to accept the expansion. But if the Arkansas analysis turns out to be broadly true for other states, it's going to be even harder to resist than we think. How many legislatures will turn down a badly-needed federal funding windfall during tough times if the only downside is a minuscule cost six years down the road? Some, I suppose, but probably not too many.

Arkansas may be a special case, since its share of Medicaid expenses is one of the lowest in the nation (only Mississippi and West Virginia pay a smaller percentage of their Medicaid bills). States with higher expense levels might not do as well. It's also worth keeping in mind that this is just a first-cut estimate. Things might change in either direction as we get a better handle on all the details. So take it all with a grain of salt.

Still, it's encouraging. If other Southern states, most of which also pay a very small share of their Medicaid expenses, come to the same conclusion, Obamacare's Medicaid expansion may turn out to be an offer they can't refuse after all.

Advertise on MotherJones.com

Operation "Piss Off Mitt" Seems to be Working

| Wed Jul. 18, 2012 11:46 AM EDT

McKay Coppins:

"[Romney] has said Obama's a nice fellow, he's just in over his head," the adviser said. "But I think the governor himself believes this latest round of attacks that have impugned his integrity and accused him of being a felon go so far beyond that pale that he's really disappointed. He believes it's time to vet the president. He really hasn't been vetted; McCain didn't do it."

Indeed, facing what the candidate and his aides believe to be a series of surprisingly ruthless, unfounded, and unfair attacks from the Obama campaign on Romney's finances and business record, the Republican's campaign is now prepared to go eye for an eye in an intense, no-holds-barred act of political reprisal, said two Romney advisers who spoke on condition of anonymity. In the next chapter of Boston's pushback — which began last week when they began labeling Obama a "liar" — very little will be off-limits, from the president's youthful drug habit, to his ties to disgraced Chicago politicians.

We can probably dispense with the notion that Obama has never been "vetted." It's been a favorite among the conspiracy-minded right ever since 2008, but it mostly just consists of fantasies about Jeremiah Wright, missing college transcripts, anti-colonialism, secret socialist ties, etc. etc. Romney's team knows perfectly well that it's largely the province of nutcases.

Still, the "vetting" pretense gives them cover to say lots of nasty things about Obama in hopes that eventually some of it will stick. I sort of doubt that it will, since Obama's been in office for four years and most people outside of the hardcore right already have a pretty settled view of him as a cautious, sober-minded, mainstream Democrat. But I guess you never know.

It's dangerous, though. If Coppins is right, Romney is under the peculiar impression that Obama's attacks on his business background are wildly ruthless and out of bounds. This is odd since Romney has been attacked for his business background repeatedly in the past. If it seems more intense this time, it's only because this kind of thing is always more intense in a presidential race.

Obama is unquestionably running a tough campaign, but if Romney is losing his cool over questions about his taxes and his stewardship of Bain Capital, he's just showing he's not ready for the big leagues. Wild countercharges about Obama's teenage drug use will only confirm that. It's obvious that Obama is hoping to get under Romney's skin and provoke him into doing something stupid, and right now it looks like Romney may be about to take the bait.

Diplomacy Now Officially Being Carried Out Via Twitter

| Wed Jul. 18, 2012 10:48 AM EDT

Yesterday a suicide bomber attacked a meeting of high-level Syrian officials, killing both the defense minister and the military's deputy chief-of-staff, who was also President Bashar al-Assad’s brother-in-law. Several paragraphs down in the NYT story, we get this:

In Moscow, Deputy Foreign Minister Gennady Gatilov, offering Russia’s first official commentary on the bombing, said via his Twitter account that the attack had put consensus between members of the Security Council even farther out of reach.

“A dangerous logic: While discussions on settling the Syrian crisis are being held in the U.N. Security Council, militants intensify terrorist attacks, frustrating all attempts,” he wrote.

This isn't a first or anything, but I don't recall ever getting an official Russian reaction to international events via Twitter before. I wonder how the Cuban Missile Crisis would have gone down if Kennedy and Khrushchev had relied on Twitter instead of diplomatic cables?

Gaming the Electricity Markets, Wall Street Style

| Wed Jul. 18, 2012 1:40 AM EDT

Hey, remember how Enron gamed the California electricity market back in 2000 and 2001, producing rolling blackouts and skyrocketing energy costs — and big profits for Enron? Well, it appears that it happened again in 2010 and 2011. There were no blackouts this time, though, just the big profits part. The profiteer this time around was our old Wall Street friend, JPMorgan Chase.

These are all just allegations at this point, and of course JPMorgan maintains its total innocence. But Michael Hiltzik of the LA Times has unraveled the technobabble in the official complaint from the California Independent System Operator (ISO) and explains JPMorgan's "diabolically simple" scheme:

The alleged scheme involves two related wholesale electricity markets maintained by the ISO. There's the day-ahead market, in which power plant owners place bids to provide power for the California electricity grid in the future; and the real-time market, an auction market through which ISO buys electricity for immediate distribution to homes and businesses.

To give plant owners an incentive to participate in these auctions, ISO guarantees to cover their costs for starting up or running their plants at a minimal level, even if their bids aren't accepted. This is known as "bid cost recovery." ISO rules allow bidders to claim payments of up to twice their real costs.

In simplest terms, JPMorgan submitted bids in the day-ahead market that were so low the firm was certain to be accepted onto ISO's roster of potential electricity suppliers....ISO believes that JPMorgan never intended to make that sale, but the beauty of its low bids was that they made it eligible to collect bid cost recovery payments.

The next step was for JPMorgan to make sure that ISO didn't actually buy its electricity, presumably because the profit margin from the bid cost recovery claim was greater than from actually selling energy. So in the real-time market, it priced its electricity so high that ISO wouldn't buy it.

The bottom line, the ISO says, is that JPMorgan's traders never intended to sell it electricity via these bids. The scheme, it says, seems to have been designed purely to capture a bid cost recovery payment the bank didn't deserve, at a rate that was inflated anyway.

Hooray for Wall Street! When it comes to clever financial manipulation with no socially redeeming value, nobody does it better. It's nice to know that America is still #1 in something.

Maybe Republicans Will Finally See the Light on Copyright Law

| Tue Jul. 17, 2012 11:01 PM EDT

The Obama campaign recently released a TV commercial that features Mitt Romney singing "America the Beautiful." This is a song that's in the public domain, so it's no problem. The Romney campaign, hoping to do a little musical mockery of its own, responded with a commercial that features Obama singing Al Green's "Let's Stay Together." Boom! This is decidedly not in the public domain, and BMG immediately sent a DMCA takedown order to YouTube. Within hours, the commercial was gone. Adam Serwer comments:

This seems like a straightforward instance of censorship, whatever BMG's politics. There's a doctrine in copyright law called "fair use," which allows limited use of copyrighted material for "purposes of illustration or comment" or "use in a parody of some of the content of the work parodied." Whatever one thinks of Romney's political views, as Ars Technica's Timothy Lee writes, "The Romney ad seems like as clear-cut a case of fair use as can be imagined."

Obama's singing is a core part of the ad's message, and copyright law explicitly mentions commentary and criticism as justifications for fair use....Meanwhile, Lee notes, according to the law, "YouTube is required to wait a minimum of 10 days before putting the video back up." It's hard to see the benefit in allowing companies to unilaterally decide political disputes this way, whatever their intentions.

I agree on the merits. However, where Adam sees lemons, I see lemonade. It's common knowledge that the best way to get Congress to act is to do something that personally annoys a congressman. So maybe this is that thing. Now that modern copyright law is hitting them where it hurts, perhaps the Republican caucus in the House will be outraged enough to introduce a bill that defines fair use more reasonably and eliminates the more draconian abuses of DMCA.

I know, I know: fat chance. But maybe if it happens again, they'll be primed and ready. And if the elephant is annoyed enough times, maybe it will finally do something. Stranger things have happened.

The Tax Cut Wars Have Already Started

| Tue Jul. 17, 2012 4:36 PM EDT

At the end of the year, the Bush tax cuts will all expire unless Congress agrees to extend them. The framing wars have started already:

Republicans accused Democrats of playing politics with the economy, after the No. 4 Senate Democrat warned that her party would let $600 billion in tax hikes and spending cuts take effect in January unless the GOP agrees to raise taxes on the wealthy.

"Has it come to this, that Democrats are willing to hurt jobs and tank our economy for the sake of a small business tax hike1 that would also have disastrous consequences?" House Speaker John A. Boehner (R-Ohio) said in a statement.

I'm not usually a big fan of claims that framing is vitally important to the fortunes of political parties, but this is one case where it probably does make a pretty big difference. The basic facts are perfectly clear: Republicans want to extend all the Bush tax cuts, while Democrats want to extend only the cuts on income under $250,000. This leads to two obvious frames:

Democrats: Republicans are holding the middle-class cuts hostage. They're refusing to support them unless the rich get a tax cut too.

Republicans: Democrats are holding the middle-class cuts hostage. They're refusing to support them unless taxes are allowed to rise on the wealthy.

In theory, Democrats have the better of the argument. They can offer a clean bill that extends only the middle-class cuts and force Republicans to vote against it. Republicans can only offer up a full extension, which Democrats can vote against because they don't want to extend the tax cuts for the rich. This polls pretty well, since a large majority of the population opposes tax cuts for the rich.

But that's only in theory. In practice, it's all in who manages to make their version of events the default way of talking about them. That doesn't usually make a huge difference, but this time it might.

1This is GOP-speak for a tax increase on people making more than $250,000.

Advertise on MotherJones.com

Obama and Romney Both Love Free Trade

| Tue Jul. 17, 2012 1:52 PM EDT

Both Barack Obama and Mitt Romney are doing their best to paint each other as enemies of the American worker, eagerly shipping jobs overseas for either political or financial gain. Does this represent an actual dislike of free trade by the two candidates? Should free traders be trembling at what the next four years will bring? I think Dan Drezner has the beginnings of wisdom here as he struggles to contain his nausea:

Mario Cuomo once said "You campaign in poetry. You govern in prose."....To update his observation for our current needs, we can say, "You campaign as a mercantilist; you govern as a free-trader."

....As stomach-churning as I find this kind of ad, I must reluctantly agree [] that it doesn't matter all that much for governing. Even this Washington Post story that talks about Obama's "rethinking" of free trade doesn't really deliver the goods on significant policy shifts. And it appears that even the Chinese government recognizes campaign bluster for what it is.

So — to repeat a theme — I don't think the mercantilist campaign rhetoric will amount to much.

Agreed. China-bashing is a perennial topic among presidential candidates, but it never amounts to much. It just makes for good stump speeches. Ditto for trade-bashing. Obama and Hillary Clinton both swore mighty oaths that they hated NAFTA back when they were competing for blue-collar votes in the 2008 Ohio primary, and then never mentioned NAFTA again after election day. As with China-bashing, it's good red meat for the masses, but means nothing.

The current round of outsourcing/offshoring speechifying is similarly meaningless. It's good campaign fodder, but Obama and Romney will both follow fairly traditional trade policies over the next four years regardless of what they say now. If you're a fan of trade agreements, you should just turn down the volume on your TV set for the next few months and not worry about things. None of it matters.

Republicans and the Disclosure Fig Leaf

| Tue Jul. 17, 2012 12:50 PM EDT

Republicans used to be all in favor of disclosing the names of campaign donors, but these days they aren't. Dave Weigel explains the about-face from John McCain and other former fans of disclosure:

McCain had previously talked about disclosure in a "pox on both houses" kind of way — we've got billionaires, they've got unions — but we're in a fairly new climate where "disclosure" means "shaming mega-rich donors." That's something correctly seen as a populist Democratic attack on the GOP. So the bipartisan space you used to have for CFR has eroded, and even John McCain won't stand in it.

I really don't think this is quite right. The DISCLOSE Act was initially a response to the Supreme Court's Citizens United ruling, which permitted unlimited contributions to independent expenditure groups but explicitly allowed Congress to require disclosure of those contributions. From the very start, though, the DISCLOSE Act was opposed more-or-less unanimously by Republicans. The thing is, disclosure had always been something of a fig leaf for them, a way of demonstrating that they had a reasonable policy alternative to contribution limits. But once they had the Supreme Court on their side, making contribution limits a dead letter, they suddenly didn't need the fig leaf anymore and support for disclosure evaporated. That happened the very first time the DISCLOSE Act was introduced in 2010, and it's been the solid Republican position ever since. It really doesn't have anything to do with the current campaign season.

But that's not the whole story. The current Republican position is not merely that Democrats want to "shame" rich donors, but that Barack Obama has compiled a Nixonian "enemies list" and is secretly using the full power of the United States government to harass and intimidate anyone who dares to oppose him. Because of this, it only stands to reason that America's richest and most powerful citizens need to keep their campaign contributions in the shadows. Whether the Republican leadership has actually talked themselves into believing this fantasy, or merely trots it out to gull the Fox News set, is anyone's guess.

Quote of the Day: Obama Not American Enough for John Sununu

| Tue Jul. 17, 2012 11:47 AM EDT

From John Sununu, former New Hampshire governor and now designated attack dog for the Mitt Romney campaign, on a conference call with reporters:

I wish this president would learn how to be an American.

Sununu long ago developed a sort of political version of Tourette's syndrome, but even for him this is pretty vile. And there's still three and a half months to go before November.

No, Obama Isn't Taking Credit For Building Your Business

| Tue Jul. 17, 2012 11:27 AM EDT

Out-of-context quoting is a time-honored tradition in American politics — and everyone else's politics too, I assume — but sometimes it simply gets unbearable. Here is President Obama yesterday:

Look, if you’ve been successful, you didn’t get there on your own....If you were successful, somebody along the line gave you some help. [Etc. etc.]

....Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

Conservatives are going absolutely nuts over the bolded sentence. But can we please stop the idiocy? What Obama meant — obviously, plainly, clearly — is that you, the business owner, didn't build the roads and bridges. Just like you didn't build the internet that you also use as part of your business. This is consistent with the entire theme of his speech, which is dedicated to the proposition that all of us benefit from outside help, including stuff that the government provides. Not only is this uncontroversial, it's positively banal.

In a nutshell: Obama didn't say that someone else built your business. He did say that someone else built the roads that benefit your business. All clear now?