Kevin Drum - February 2013

Yet More Non-Change on Tap From Republicans

| Mon Feb. 4, 2013 3:47 PM EST

The Wall Street Journal reports that Eric Cantor plans to tell his fellow Republicans that they should "begin talking about how the federal government can help American families rather than focusing primarily on the need to reduce federal spending and tackle budget deficits." That seems like good advice. So what's on tap?

Mr. Cantor plans to emphasize existing GOP policies, such as educational initiatives that the party says would mean more school choice for students who often are forced to attend poorly performing public schools, the aide said....The Virginia lawmaker also intends to discuss the need to repeal a tax on medical devices that was introduced as part of the Affordable Care Act, arguing that it was raising health-care costs for people; the need to allow highly skilled foreign nationals educated at U.S. colleges to remain in the country after they graduate; and the need to simplify the U.S. tax code, which would save families money and free up more family time.

So: vouchers, lower taxes, and tax "simplification"—which I assume, as usual, to be code for flatter tax brackets. In other words, just like Bobby Jindal, who made a big show of telling Republicans to stop being the "stupid party" without suggesting even the tiniest change in actual Republican ideology, Cantor is making a big show of telling Republicans to talk differently without suggesting even the tiniest change in the substance of how they act. Good luck with that.

Of course, there's also the bit about allowing highly skilled foreign nationals to stay here after they graduate from college. There's nothing new there, either, but it's not something Republicans usually emphasize much outside of talks to corporate audiences. It'll be interesting to see how that goes over if they start pushing it at their next series of town hall confabs.

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Richard III Stabbed in the Butt After Losing Contested Referendum of 1485

| Mon Feb. 4, 2013 2:07 PM EST

British archaeologists have confirmed that the skeleton of a man found beneath a parking lot in Leicester is King Richard III, who died in battle at Bosworth Field five centuries ago:

There was an audible intake of breath as a slide came up showing the base of his skull sliced off by one terrible blow, believed to be from a halberd, a fearsome medieval battle weapon with a razor-sharp iron axe blade weighing about two kilos, mounted on a wooden pole, which was swung at Richard at very close range.

....But many of the other injuries were after death, suggesting a gruesome ritual on the battlefield and as the king's body was brought back to Leicester, as he was stripped, mocked and mutilated....One terrible injury, a stab through the right buttock and into his pelvis, was certainly after death, and could not have happened when his lower body was protected by armour. It suggests the story that his naked corpse was brought back slung over the pommel of a horse, mocked and abused all the way, was true. Bob Savage, a medieval arms expert from the Royal Armouries who helped identify the wounds, said it was probably not a war weapon, but the sort of sharp knife or dagger any workman might have carried.

Transitions of power were tough affairs back then. I guess that's what comes of being a hated hunchback who murders innocent little princes.

Incentives and Monetary Policy

| Mon Feb. 4, 2013 12:29 PM EST

Paul Krugman takes on his critics:

One quite common statement among the Austrianish horde is something along the lines of “It’s ridiculous to imagine, as Krugman does, that you can create real wealth by printing more pieces of paper.”

Well, it may be ridiculous, but it’s also true, under certain conditions — namely, when the economy is suffering from inadequate demand. And you don’t have to use highly abstruse reasoning to see this, either; all you need to do is think in terms of some kind of model, not necessarily of the mathematical kind.

In a way, things are even weirder than Krugman suggests. The hard money folks certainly believe in the real-world effects of incentives, and one way of looking at monetary policy is simply as a way of changing incentives. It changes the value of saving vs. spending money. It changes the likely value of real-world investment vs. holding government bonds. It changes inflation expectations, which in turn changes behavior. We can argue about the effect of all this—and we do!—but the proposition that printing money changes incentives, which has an effect on economic behavior and therefore an effect on wealth creation, really shouldn't be hard to believe intuitively.

Democrats Still Uneasy Over Playing Political Hardball

| Mon Feb. 4, 2013 11:36 AM EST

Republicans, as we know, have promised to block Richard Cordray as head of the Consumer Financial Protection Bureau. This isn't because they have anything in particular against Cordray. They've promised to block anyone unless Democrats agree to changes that would essentially make the CFPB toothless. They've done the same for nominees to the National Labor Relations Board. The CFPB can't legally operate without a director, and the NLRB can't legally operate without a quorum, so, as Adam Serwer puts it, this is essentially a way to nullify a pair of agencies they happen to dislike "through procedural extortion."

Dave Weigel is puzzled. "I continue to ask why Democrats didn't get concessions on a few nominees in exchange for the filibuster punt," he writes today. Unfortunately, I think the answer isn't hard to find: Harry Reid didn't have the votes for filibuster reform and Mitch McConnell knew it. What's more, Reid himself didn't seem to have the stomach for a filibuster fight in the first place. If Reid had demanded action on the CFPB and the NLRB, McConnell would have just laughed it off. It would have been a bluff and he knew it.

Democrats could have gotten more out of this. They could have gotten real filibuster reform, or, failing that, at least some concessions in return for a compromise. But they chickened out. Even after winning the fiscal cliff battle, and then forcing Republicans to back down over the debt ceiling, Dems still didn't understand the value of playing hardball. It was an opportunity missed.

Contraceptive Coverage is Probably Not a Freebie for Insurance Companies

| Sun Feb. 3, 2013 6:14 PM EST

On Friday, I wrote that I was skeptical of the notion that insurance carriers could be ordered to cover contraceptives at "no additional cost." After all, contraceptives cost money. They have to be paid for somehow.

I got some pushback on this, all based on the idea that contraceptives actually are cost-free because they pay for themselves in reduced rates of unintended pregnancy. Needless to say, I've always found this idea very appealing. Unfortunately, I'm not sure I believe it. The main reason is simple: If this were true, insurance companies would routinely make contraceptive coverage a feature of all their group policies without even being asked. But they don't. And since insurance companies tend to be fairly good at actuarial calculations, this suggests that contraceptive coverage isn't, in fact, a freebie.

Let's test this out with a bit of arithmetic. The numbers that follow are all made up. I'm just providing a possible scenario here. So then:

Suppose that the average annual cost of contraceptives to an insurance company is $100. Further, suppose the all-in cost of a pregnancy (prenatal, postnatal, and delivery) is $20,000 and the cost of an abortion is $2,000.

Now, suppose that an insurance company has a pool of 10,000 women of reproductive age. Of those women, 60 percent already use contraceptives. When the insurance company adds contraceptives to their policy, that number goes up to 70 percent. So that's 7,000 women at a cost of $100 per year. Total cost: $700,000.

However, we also have an increase of 1,000 in the number of women using contraceptives. If their unintended pregnancy rate decreases from 6 percent to 2 percent, that's a decline from 60 unintended pregnancies to 20. Of that, suppose that 20 would have been brought to term and 20 would have ended in abortion. Total savings: $400,000 +$40,000 = $440,000.

In this scenario, offering free contraceptives doesn't save money. The key thing to keep in mind is that we're not asking whether free or cheap contraceptives pay for themselves in general. They might. Instead, we're asking whether they pay for themselves for an insurance company that's dealing with a population of women who are mostly getting contraceptives one way or another already. In this case, adding insurance coverage increases contraceptive use only a bit, but the insurance company ends up paying for everyone's contraceptives.

Is it plausible that insurance coverage has such a small impact on contraceptive use? Probably. In fact, my little scenario may have been generous on this score. Last year, Emily Gray Collins and Brad Hershbein of the University of Michigan took advantage of a natural experiment in which the cost of contraceptives tripled for a group of college women. Their conclusion: use of contraceptives dropped by only a few percentage points and there was no evidence of an increase in unintended pregnancies. These results would probably be different among low-income women, but low-income women are also the ones least likely to be covered by employer insurance plans. So it's hard to say what the net impact would be for a typical group policy.

In other words, an insurance company would have to do a fairly detailed empirical study to figure out the current rate of contraceptive use among its customer base; the likely change if contraceptives were covered at no cost; and the likely decrease in unintended pregnancies as a result. It's possible that once they crunched the numbers, covering contraceptives would turn out to be a net savings. But it's not at all obvious that this has to be the case, and the fact that insurance companies aren't speaking up on this should give us all pause.

I support universal contraceptive coverage regardless, for most of the obvious reasons. Nonetheless, I'm not at all sure it's really a cost-free proposition for insurance companies.

UPDATE: Eager to learn more? Here's a review of the research on this topic from FactCheck.org. Their conclusion: It's unclear what the net cost of a contraceptive insurance mandate is.

Quote of the Day: Can Hollywood Solve the World's Problems?

| Sat Feb. 2, 2013 1:10 PM EST

From director Steven Soderbergh, singing the glories of Hollywood's ideology-free, can-do attitude:

One thing I do know from making art is that ideology is the enemy of problem-solving. Nobody sits on a film set and says, "No, you can’t use green-screen VFX to solve that because I’m Catholic."....I look at Hurricane Katrina, and I think if four days before landfall you gave a movie studio autonomy and a 100th of the billions the government spent on that disaster, and told them, "Lock this place down and get everyone taken care of," we wouldn’t be using that disaster as an example of what not to do.

Hollywood! The place that brought you Heaven's Gate and Ishtar! The place where a cartoon director was handed $200 million to direct John Carter, no questions asked, because hey, how different can live action be? The place where studio chiefs practically quiver in fear over green lighting a movie that's not a comic book or a sequel. The place with executives so easy to parody that it hardly even seems worth the bother anymore. The place that spent years trying to ban VCRs. The place that's spent the past two decades trying to figure out the internet without any notable success.

How is it that smart people can be so dumb about government? Does Soderbergh seriously think that Hollywood is a poster child for the efficient use of budget dollars? Does he really believe that Hollywood is ideology free? Is he aware, for example, that our copyright law is the shambles it is largely because of Hollywood lobbying? Does he realize that governments deal with problems just a wee more important and less tractable than which green-screen technology works best? Does he have the slightest idea how the real world works? Apparently not. Here's his answer to the obvious follow-up question:

Okay, so here’s your chance: What is the efficient way to run a railroad or a government, as the case may be?

I’m of the minority opinion that presidents should be given more power for less time. Let him—no “her” yet!—put the ideas he campaigned on into play, like a new tax code, and let’s see if it works or fails, quickly. If it doesn’t, then two years later the people who said it would never work get their chance.

Sounds great! I wonder if Soderbergh realizes that lots of other countries work pretty much exactly this way? And that for most problems complicated enough for anyone to care about, figuring out if something "works or fails, quickly" isn't quite the same as releasing a movie and seeing how it does at the box office?

Via Sullivan.

UPDATE: Obviously this particular excerpt from the interview annoyed me a wee bit. Soderbergh is basically saying that if everyone agrees on what needs to be done, things can get done pretty efficiently. And that's often true. But it's hardly an insightful critique of government, which has to deal with lots of hard problems that we all disagree about.

That said, the rest of the interview is pretty interesting. Here's an unexpected admission that comes after Soderbergh has complained that the folks who finance movies these days interfere relentlessly with directors:

An alarming thing I learned during Contagion is that the people who pay to make the movies and the audiences who see them are actually very much in sync. I remember during previews how upset the audience was by the Jude Law character. The fact that he created a sort of mixed reaction was viewed as a flaw in the filmmaking. Not, “Oh, that’s interesting, I’m not sure if this guy is an asshole or a hero.” People were really annoyed by that. And I thought, Wow, so ambiguity is not on the table anymore. They were angry.

So the money folks interfere, but apparently they have a pretty good sense of what audiences want. Fascinating.

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Friday Cat Blogging - 1 February 2013

| Fri Feb. 1, 2013 3:57 PM EST

Here is Domino, looking boldly forward to a future of artificially intelligent robots to cater to her every whim. Not that this would actually make a big difference in her life, mind you. But they'd probably be slightly more responsive when she decides to wake them up in the middle of the night. Her human servants just get grouchy.

In any case, it's a great day to wander around in the morning sun. 75 degrees today. That's my kind of winter.

Next week: the return of quiltblogging!

Money Is Fungible, Contraceptive Edition

| Fri Feb. 1, 2013 1:58 PM EST

Hey, guess what? Contraception is back in the news! HHS proposed a new set of of healthcare rules today that would allow faith-based nonprofits to opt out of contraception coverage entirely. Instead, their insurance carriers would be required to provide contraceptive riders at no cost. If an organization is self-insured, they'll notify their plan administrator, who would find an insurance issuer to provide "separate, individual health insurance policies at no cost for participants." The cost would be offset by adjustments in "federally-facilitated exchange user fees that insurers pay," whatever that means.

As you can imagine, this is likely to have no impact on the debate at all. Conservatives who are outraged about contraceptives being covered by health plans will remain outraged. The rest of us, who think covering contraceptives is a great idea, will be perfectly happy to accept this kludge.

And, let's be honest, it is a kludge. There's no such thing as "no cost." If an insurance carrier covers contraceptives, that's a cost they're going to make up somewhere else. And that somewhere else is in the premiums for the main policy. There's really no way around that.

In other words, money is fungible, a subject that liberals and conservatives alike treat with abandon depending on whether they happen to like the consequences. In this case, liberals are willing to accept the fiction that the money for contraceptive coverage is somehow "segregated," and conservatives aren't. When bailed-out bankers pay themselves big bonuses and swear that not one dime is coming from bailout funds, the roles are reversed. All good fun.

The Man in the Plastic Mask

| Fri Feb. 1, 2013 1:13 PM EST

I know I'm exposing my ignorance of DC folkways here, but I'm curious: who's the dude in the picture on the right, taken during yesterday's Chuck Hagel hearings? Interpreter? Message passer-alonger? Stenographer? Someone who needed a hit of oxygen to stay awake while John McCain was droning on? What's the deal here?

UPDATE: The consensus in comments so far seems to be that this is a stenographer's mask. You can read all about it here.

Chart of the Day: Net New Jobs in January

| Fri Feb. 1, 2013 12:09 PM EST

The American economy added 157,000 new jobs last month, but about 90,000 of those jobs were needed just to keep up with population growth, so net job growth was closer to 67,000 jobs. This was a little less than December's number, which was revised upward to 196,000 (106,000 net). The unemployment number went up a few hundredths of a point thanks to re-benchmarking of BLS's population estimates, which means the headline number ended up a tenth higher at 7.9 percent.

Down in the weeds, there were no big changes. Final revisions to the 2012 numbers were positive but modest. The economy continues to slog along.