Kevin Drum - November 2013

If California Can Make Obamacare Work, Anyone Can

| Mon Nov. 25, 2013 1:58 AM EST

I've mentioned before that Obamacare's rollout problems really are all about the website. Rate shock and network shock may be real problems for some people, but they aren't deal breakers and they aren't as serious or as widespread as Fox News is trying to make them out to be. Fix the website and Obamacare will be in pretty good shape.

Paul Krugman produces some pretty good evidence for this today: California. It is, he says, an excellent test case:

First of all, it’s huge: if a system can work for 38 million people, it can work for America as a whole. Also, it’s hard to argue that California has had any special advantages....[It] came into health reform with 22 percent of its nonelderly population uninsured, compared with a national average of 18 percent.

Finally, the California authorities have been especially forthcoming with data tracking the progress of enrollment. And the numbers are increasingly encouraging.

For one thing, enrollment is surging. At this point, more than 10,000 applications are being completed per day, putting the state well on track to meet its overall targets for 2014 coverage....Equally important is the information on who is enrolling. To work as planned, health reform has to produce a balanced risk pool — that is, it must sign up young, healthy Americans as well as their older, less healthy compatriots. And so far, so good: in October, 22.5 percent of California enrollees were between the ages of 18 and 34, slightly above that group’s share of the population.

What we have in California, then, is a proof of concept. Yes, Obamacare is workable — in fact, done right, it works just fine.

I'd add that California is hardly anyone's idea of the most efficient bureaucracy in the country. During the aughts, for example, California spent a quarter billion dollars trying to build a new payroll system and failed utterly. In Los Angeles, a $100 million DWP billing system has been an epic disaster. California knows how to screw up IT projects.

So the fact that our implementation of Obamacare is working pretty well means that it doesn't require a team of programming supergeniuses to get it off the ground. All it requires are decent coding and project management skills. Krugman is right: If California can do it, so can the federal government.

Advertise on MotherJones.com

We Should Pay Less Attention to Seniors and More Attention to Workers

| Sun Nov. 24, 2013 9:55 PM EST

Our story so far: a few days ago I wrote a post describing the Social Security Administration's MINT forecast of retiree income. As the chart on the right shows, they project that retiree income will continue its steady rise, increasing from $20,000 in 1970 to $46,000 in 2041 (adjusted for inflation). Based on this, I questioned whether the much-talked-about "retirement crisis" was for real.

Dean Baker responded to my post, for which I'm grateful. He basically made five points:

  1. Social Security is a big part of the reason for rising retiree income. No argument there.
  2. Income replacement rates have declined from 95 percent for Depression-era workers to 84 percent for future retirees. This is true. However, as I explained on Friday, this is more because of sluggish income growth among workers than it is because retiree incomes are in any real trouble.
  3. 65-year-olds are living longer and are more likely to be working these days, which is part of the reason for strong incomes among seniors. Again, no argument there. But income is income, regardless of where it comes from. (It's also worth noting that longer lifespans are primary a phenomenon of the well-off, not those with lower incomes.)
  4. Medicare premiums are increasing, which is an added expense for seniors.
  5. The MINT projections include imputed rent as part of income. In some cases this is fine, since living rent-free in a paid-off house does indeed have the same effect as cash income. In other cases, where retirees live in large houses with large imputed rents, it can give an inflated idea of how well off a retiree is.

The first three of these items don't really change the picture. They're just observations about the nature of the income that retirees are likely to have. Item #4 is relevant, but I think it's cherry picking. Every age group has expenses that others don't, and those expenses rise and fall differently. The only way to judge this fairly is to look at overall inflation rates for various age groups, and most efforts to do this have yielded only modest and ambiguous results. Finally, item #5 is a good point. It probably inflates the MINT projections modestly.

Overall, then, I don't think this affects my point too much. If you revised the MINT projections to take into account CPI-E and made an adjustment for possible overestimates of imputed rent, the projected income line would probably go down a bit. But not very much. We'd still be looking at a world in which, relatively speaking, retirees are doing quite a bit better than current workers. In fact, their incomes are growing more strongly than pretty much any other age group.

This is why I'm not on board with calls to expand Social Security. Rhetoric and pretty charts aside, I simply don't see any real evidence of a looming retirement crisis that urgently needs to be addressed, and I think focusing on it just distracts us from our real problem: sluggish wage growth among workers. And the funny thing is that Baker basically agrees:

Seniors income has been rising relative to the income of the typical working household because the typical working household is seeing their income redistributed to the Wall Street crew, CEOs, doctors and other members of the one percent....We can argue about whether young people or old people have a tougher time, but it's clear that the division between winners and losers is not aged based, but rather class based.

That's precisely right. I'm not willing to dismiss the relative problems of young and old quite as quickly—I think the young are being pretty badly screwed these days, and unlike seniors they have no one in Congress who really cares about them—but this is essentially a class problem, not an age problem. We should be doing everything possible to raise low and middle incomes regardless of age. If we do that, retirees will benefit, but so will everyone else.

This is obviously a lot harder than a simple crusade to expand Social Security. But the latter helps plenty of people who don't really need it, while the former helps those who do. If part of helping those with low and middle incomes means changing Social Security payouts to reduce the future growth rates of high earners and increase the future growth rates of lower earners, that's fine with me. But if I can borrow Baker's headline, we need to keep our eye on the ball here. Let's stop inventing crises that don't really exist. If we want to move the Overton Window, let's move it for the thing that really matters: the fact that the fruits of economic growth now accrue almost entirely to the rich, with the rest of us treading water at best. That's the transcendent economic problem of the 21st century.

Western Powers Sign Historic Interim Nuclear Deal With Iran

| Sun Nov. 24, 2013 12:59 AM EST

I wasn't too bothered when negotiators failed to reach a deal with Iran over its nuclear program last week. An interim deal is only worthwhile if it's clear that both sides are likely to progress to a final deal, and Iran's position didn't really inspire a lot of confidence on that front. Today, though, a deal was announced, and it appears to be a good one:

  • From the New York Times: "According to the agreement, Iran would agree to stop enriching uranium beyond 5 percent... All of Iran’s stockpile of uranium that has been enriched to 20 percent, a short hop to weapons-grade fuel, would be diluted or converted into oxide so that it could not be readily used for military purposes." However, Iran can continue to enrich uranium to 3.5 percent.
  • From the Washington Post: "Iran also agreed to halt work on key components of a heavy-water reactor that could someday provide Iran with a source of plutonium. In addition, Iran accepted a dramatic increase in oversight, including daily monitoring by international nuclear inspectors, the officials said." This was a key concern of the French last week, and with good reason. A deal on uranium isn't much good if a plutonium reactor continues to run in the background.
  • From the Guardian: An Obama administration official said Iran has "agreed to intrusive inspections."

In return, the Western allies have agreed to soften their existing economic sanctions to the tune of about $7 billion.

It's too soon to tell whether this will lead to a permanent deal. Iran hasn't agreed, even in principle, to stop enriching uranium, and for our part, the sanctions relief is fairly minor. Still, my sense is that this is the kind of interim deal you might see from two sides that genuinely want to reach a final deal, so we should take it as tentative good news.

It's too early to have much in the way of reactions to this news, but I think we can assume that Benjamin Netanyahu is still unhappy about it. We can probably also assume that Republicans will be unhappy too. Because, you know, they're Republicans. Steve Benen amusingly points out that Sen. John Cornyn (R-Texas), a man who obviously doesn't ever want to be off message, tweeted this reaction: "Amazing what WH will do to distract attention from O-care." Amazing indeed.

A State Department fact sheet on the deal is here. President Obama's remarks are here.

Nice Sunset Over Irvine Tonight

| Sat Nov. 23, 2013 9:05 PM EST

Dreaming of a Majoritarian Congress

| Sat Nov. 23, 2013 1:24 PM EST

Martin Longman wonders what the Senate will be like if, eventually, the filibuster on legislation is eliminated. First he notes that the Employee Free Choice Act got the support of every single Democrat in 2007, when everyone knew it was doomed anyway thanks to a Republican filibuster, but suddenly lost several votes in 2009, when a big Democratic majority and a Democratic president meant that it actually had a chance of passage:

This is the kind of dynamic that is altered by eliminating the filibuster. Hiding behind cloture votes enables you to support things your base wants but that you think are too politically perilous to support if they might actually become law. Blanche Lincoln (D-Walmart) was pro-union when it didn't count, and the Waltons were okay with that…wink, wink, nod, nod.

In the new Senate, particularly if the legislative filibuster soon succumbs, there will many fewer of these free votes, and imperiled senators in the middle will need to break with their party more often and more openly, which should provide more opportunities for bipartisan coalitions in the middle to form to cover each other's asses. Rather than joining together to block legislation, which wasn't even necessary so long as the Republicans remained united in their opposition, these senators will have to join together to mitigate the damage that could be done to their political careers if legislation actually passed. If sufficient mitigation cannot be achieved, they will have to join together to vote the legislation down.

There will certainly be fewer chances for cheap grandstanding if the filibuster is eliminated, though as Longman points out, those chances won't go away entirely. They'll stick around in circumstances when you know the House won't go along or the president has threatened a veto. In some sense, this is good: it means that parties are actually responsible for their rhetoric. If Republicans say they want to cut Social Security or ban abortion, then by God, they'll have to do it if they win control of Congress. It can't just be cheap rhetoric. Ditto for Democrats who say they want to pass labor-friendly bills or gun control legislation.

Will this mean that centrist coalitions will become more important? I'm not sure. I feel like we need to game this out a little more thoroughly to get an answer. But it might!

Friday Cat Blogging - 22 November 2013

| Fri Nov. 22, 2013 3:56 PM EST

Five quilts to go! Our year of quiltblogging is almost over. Today's quilt doesn't have a name, but Marian calls it a picnic quilt because it's squarish and a bit of an odd size. So you should summon up a mental image of this quilt laid out in a park and covered with delicious lunchtime goodies. That's probably what Domino is doing in this picture. In any case, it's constructed out of 1930s repro charm squares, and it's machine pieced and machine quilted.

In local cat news, an LA city councilman wants to allow Angelenos to own five cats, up from the currently allowed three. I have a suspicion that no one has ever paid much attention to this law in the first place, but hooray anyway. Next up: the feline council will be considering a proposal that raises the minimum number of human servants per cat. It's expected to pass easily.

Advertise on MotherJones.com

Do Governors Make the Best Presidents?

| Fri Nov. 22, 2013 3:29 PM EST

Apparently the latest hot topic of conversation among our nation's governors is the indisputable merit of electing a governor as our next president. I don't have a lot to say about this. Instead, I offer only the brief table of postwar presidents below. If anyone can find any reason to prefer one column over the other, I'm all ears.

Obamacare Has a Friend in the Health Care Industry

| Fri Nov. 22, 2013 2:50 PM EST

In the LA Times today, Noam Levey writes that Obamacare has an ace in the hole: the insurance industry. Sure, they have their gripes:

But since 2010, they have invested billions of dollars to overhaul their businesses, design new insurance plans and physician practices and develop better ways to monitor quality and control costs.

Few industry leaders want to go back to a system that most had concluded was failing, as costs skyrocketed and the ranks of the uninsured swelled. Nor do they see much that is promising from the law's Republican critics. The GOP has focused on repealing Obamacare, but has devoted less energy to developing a replacement.

.... For many of these organizations, the prospect of new customers and a more rational system outweighs their sometimes intense irritation with the Obama administration. Insurance executives, in particular, have gnashed their teeth at the president's attacks on their industry....Despite the frustrations, most insurers remain committed to moving to a new market that would achieve the central promise of the Affordable Care Act: that all consumers can buy health plans even if they have preexisting medical conditions.

This is really a crucial point. Like it or not, the entire health care industry has spent the past three years gearing up for the rollout of Obamacare. At this point, they're committed—and doubly so since the Republican Party very clearly has no real alternative for them. This means that all the doom-mongering on Fox News is basically just chum for the rubes: Obamacare isn't going anywhere, and everyone knows it. The health care industry will do everything it can to make it work, and one way or another, it's going to work. Even the Medicaid expansion is almost certain to be taken up eventually by nearly every state as passions cool down a bit and hospitals start complaining about the lost income.

The tea party may not quite know yet that it's lost the war, and Republican politicians have every reason to egg them on in this delusion, but the war is well and truly lost. It's all mopping up now.

Retiree "Replacement Rates" Are Tricky Things (A Bit Wonkish, Sorry)

| Fri Nov. 22, 2013 1:58 PM EST

A couple of days ago I wrote about Social Security MINT projections, which suggest that retiree income will continue on a fairly steady upward path for the next few decades. "It suggests that we don't really face a historic retirement crisis," I said.

Dean Baker has a response up today, which I'll respond to in more detail later. I agree in part and dissent in part with what he says. For now, though, I just want to do two things. First, call attention to his post so you can go read his objections. Second, I want to make a point about "replacement rates" that's subtle enough (and lengthy enough) to require a post of its own.

As both Baker and I point out, the MINT projection suggests that future retirees will be better off than current retirees in absolute dollar terms (adjusted for inflation, of course), but will have lower income replacement rates. In particular, MINT projects that past retirees, on average, received 95 percent of their working-age income. Future retirees will receive only 84 percent. What's going on?

Part of the answer has to do with stagnant wages. In the past, wage growth was strong, so workers could expect to see their incomes grow strongly throughout their lifetimes (again, adjusted for inflation). More recently, wage growth has been weak. Incomes still rise over a worker's lifetime, but not as much.

So take a look at the stylized chart on the right. Our first worker started out earning $50,000 and ended up at $100,000. (Yes, those are big numbers. I'm using them to make the math come out nice.) Her average lifetime income is $75,000.

Our second worker started out earning $75,000 and ended up at the same $100,000. Her average income is $85,000.

They both retired making $100,000. And suppose their retirement incomes are also identical at $71,000. What does that mean? Replacement rates are calculated as a percentage of average lifetime income, so worker #1 is receiving a 95 percent replacement. Worker #2 is receiving an 84 percent replacement.

It seems like our second worker has gotten the shaft. But did she? Both workers ended their careers making the same amount of money, and both are receiving the same retirement income. The difference in replacement rates is more a statistical artifact than a meaningful number.

Now, you can draw different conclusions from all this. It's just raw data. But I want to make the point that replacement rates can be tricky things. In many cases, I think they tell us less about retirement income per se, and more about the fact that working-age incomes have suffered from sluggish growth over the past four decades. My underlying concern in this conversation has always been to wrest liberal attention away from retirees, who I think are doing relatively well, and keep it focused like a laser on rising income inequality and sluggish wage growth among middle-class workers.

In a sense, this is more a matter of emphasis than real dispute, since I doubt that Baker seriously disagrees here. But I do think the emphasis is important. It's a thriving and vibrant middle class—and by this I mean the working-age middle class—that's truly critical to a healthy modern democracy. If we get that, everything else will follow. I'll have more to say about this later.

The Senate Really Can't Get Much More Dysfunctional at This Point

| Fri Nov. 22, 2013 11:45 AM EST

The New York Times reports that the Democratic change to the filibuster may turn Republicans even more obstructionist than in the past:

The rule change lowered to a simple 51-vote majority the threshold to clear procedural hurdles on the way to the confirmation of judges and executive nominees. But it did nothing to streamline the gantlet that presidential nominees run. Republicans may not be able to muster the votes to block Democrats on procedure, but they can force every nomination into days of debate between every procedural vote in the Senate book — of which there will be many.

And legislation, at least for now, is still very much subject to the filibuster. On Thursday afternoon, as one Republican after another went to the Senate floor to lament the end of one type of filibuster, they voted against cutting off debate on the annual defense policy bill, a measure that has passed with bipartisan support every year for decades.

The Senate is such a bizarre institution that there's always something more the minority party can do to gum up the works. But honestly, it's hard to see what it is at this point. Sure, legislation is still subject to filibuster, and Republicans have been filibustering every piece of legislation they can. What can they do next? Filibuster everything twice? And nominees can be slowed down in committee, but Republicans are already doing that too. I suppose Republicans can start making a fuss over every single assistant deputy sub secretary, but hell, they've done that too. All that means is that the executive branch will end up being more understaffed than it is now.

Besides, there's a point at which this stuff goes beyond the traditional (filibusters, blue slips, holds, etc.), which the press mostly ignores as boring procedural issues, and turns into antics (refusing to let committees meet, filibustering post offices, threatening the credit of the United States, etc.). Right now, I think Republicans don't have much left in their obstructionist toolkit except antics, and that could backfire. The press will pretty gleefully report this stuff, and it makes the GOP look childish, not principled.

But we'll see. As long-time readers know, I just flatly oppose the filibuster, and I think the only thing Democrats did wrong yesterday was not getting rid of it completely. Majority rule is fine. It works for presidential elections, it works for the House, it works for the Supreme Court, and it works in every other country in the world. "Senate tradition" is just a euphemism for "weird historical accident," and I'd sweep the whole rulebook clean if I could. I'm keenly aware that this means the other party can do stuff if it wins elections, and that's OK. That's what elections are for.