Jobs Jobs Jobs

So today Obama announced his new jobs program.  It includes (a) a bunch of tax cuts for small businesses, (b) increased spending on infrastructure projects, and (c) new incentives for both private and commercial investments in energy efficiency.  I wonder which of these will get enthusiastic bipartisan support?  Hmmm.....

Making Bankers Pay

The British government aims to get tough with bankers making big bonuses at bailed-out banks:

Alistair Darling will try to force a "permanent culture shift" in the City as he announces a one-off punitive super-tax of more than 50% on the bonuses of tens of thousands of bankers as the centrepiece of the pre-budget report.

....The tax will be set higher than the 50% income tax rate coming in from April for those earning more than £150,000 a year [about $250,000 –ed], sources indicate.1

....But City accountants said there was a strong likelihood of a legal challenge against a punitive tax aimed at one sector of the workforce. Bill Dodwell, head of taxation at accountants Deloitte said: "We have had calls from bankers asking about what action they might take under the Human Rights Act. There's never been a precedent."

Hey, this means that conservatives might finally find something they like about the EU Convention on Human Rights!  Assuming, of course, that they can convince a judge that making bankers pay high taxes on high incomes is a violation of human rights.  Seems a stretch to me, but I know zilch about EU law or the British implementation of it.  Anyone who knows more should feel free to chime in.

1Just so you know, Darling announced a few months ago that the basic tax rate for income above £150,000 would rise from 40% to 50% starting next April.  The new super tax would be above and beyond that.

Old Dogs, Old Tricks

Matt Yglesias says it's puzzling that Ben Bernanke isn't adopting a more expansionary monetary policy in order to jumpstart the job market.  Brad DeLong says, "I am puzzled too."  A bunch of other liberally inclined economists have said similar things recently.

I dunno.  I guess I wish we could stop pretending to be surprised by this.  Ben Bernanke may be a specialist in economic contractions, but he's also a mainstream conservative economist.  And mainstream conservatives have always been more concerned with inflation than with unemployment.  Likewise, they tend to be opposed to entitlement spending, opposed to serious financial regulation, and opposed to expanded consumer protections.  And guess what?  Bernanke is more concerned with inflation than with unemployment and he's opposed to entitlement spending, serious financial regulation, and expanded consumer protections.

This was all pretty plain several months ago, when virtually every liberally-minded economist supported Bernanke's reappointment.  So what's the point of bellyaching about it now?

For what it's worth, I'm surprisingly bitter about this and I keep stewing over it.  Maybe I'm just being an asshole.  But I've been reading liberal economists yammer on for years about liberal economic policies, so when an actual opportunity came along to appoint a liberal economist to an important position it was really disappointing to see them all circle the wagons around Bernanke almost instantly.  It felt like the worst kind of professional backscratching.

I guess I should get over it.  But we all have our dumb little pet peeves to be bitter about, don't we?

Controlling Healthcare

Will the Medicare cost control measures in the Senate healthcare bill actually stick?  Past history says they might, but Tyler Cowen is skeptical.  Sure, some cost-control measures have made a difference for a few years at a time, but the long-term growth rate of Medicare has been pretty steep regardless.  Plus there are these points to consider:

1. The period of Medicare cost savings, in the early to mid 1990s, coincides roughly with a more general period of cost savings in health care, due to managed care.  This was soundly rejected by the American public, both in their roles as consumers and voters.

2. There will be more and more older voters in the years to come.

3. We should give at least some consideration to a "mean reversion" theory, by which current cost savings increase the pressure for future splurges.  I don't want to push this view too hard, but the aggregate data, as I eyeball them, seem to imply "do not reject" for this hypothesis.

For what it's worth, I don't really disagree.  Not much, anyway.  But I'd make a few points in rebuttal.  First, past measures haven't really been intended as long-term game changers.  They've mostly been small compromises here and there meant to save a bit of money as part of some larger deal.  And even at that, they have made a difference.  Just not a big one.

Second, you have to start somewhere.  The private sector has shown itself completely unable to slow healthcare spending even a little bit, so why not support the current efforts to try something else?  If they don't work, they don't work, and we'll have to try something else.  But there aren't a whole lot of compelling alternatives out there right now.  (And no, I don't really consider tort reform or HSAs compelling alternatives.  Your mileage may vary, but I haven't seen any evidence that the former would have a big effect or that the latter would provide decent coverage.)

Third, and most important, the biggest reason for rising healthcare costs is the simple fact that Americans want more healthcare.  They've made this crystal clear through both the private market and the ballot box.  It seems plain that spending will slow down only when we've collectively decided we're spending enough, and for that to happen people have to understand just how much we're spending.  Employer-based insurance hides this, which is why European national healthcare systems have had a little more luck than we have at controlling expenses: in Europe, the money spent on healthcare is right out in the open and subject to bruising political battles every year.  The cost of higher healthcare spending is higher taxes, and that acts as a natural brake.  The current healthcare reforms in both the House and Senate start to make that clear.

Not everyone will find this persuasive.  But the alternatives all seem like pie in the sky, combinations of special pleading and ideological utopianism.  The national approach, conversely, has a long track record in other countries and holds out at least some hope of controlling costs in the real world.  Right now, it's the best model we've got.

UPDATE: That said, this is not encouraging news.  If we can't even stop ourselves from watering down the best cost-control measures before the reform bill is even passed, what chance to we have of holding on to them when they actually start to bite in?

Public Option Finale?

Healthcare reform took a fairly unexpected detour this weekend.  A consensus seems to be developing, even among liberal senators, that the public option just isn't going to happen, so now a whole bunch of alternatives are being discussed to make up for its loss.  Including this:

Sources who have been briefed on the negotiations say that Medicare buy-in is attracting the most interest. Expanding Medicaid is running into more problems, though there's some appeal because, unlike increasing subsidies, expanding Medicaid actually saves you money. There's also ongoing discussion about tightening regulations on insurers, but I don't know the precise menu of options being considered.

The idea here is that you could buy into Medicare if you're between the age of 55 and 65.  It's the ultimate public option, but only for a subset of the population.  On the bright side, it's a pretty big demographic, and it's also the demographic that, on average, has the most health issues.  On the less bright side, I also imagine that it's a demographic that's pretty well covered by employer insurance already.

In any case, I think it's a great idea, though I have a hard time believing it's going to be suddenly resurrected at the 11th hour like this.  Still — and with the caveat that I'm a lukewarm supporter of the public option in the first place — I'd probably take this over the public option as a straight-up trade any time.  Not only does it do a lot of good, but it sets the stage for possible future age reductions.  Ezra Klein runs down the rest of the possible compromises here.

TARP Unbound

The much-derided TARP program has turned out to be remarkably successful:

The White House had projected in August that the $700 billion Troubled Assets Relief Program, or TARP, would lose about $341 billion over the next 10 years. But officials scaled back the estimate after once-shaky Wall Street firms began recovering much more quickly than expected. In addition, several TARP initiatives have been funded at a smaller amount than originally planned.

....The new, more optimistic estimates of TARP losses could pave the way for Democrats to tap some of the program's unspent funds for a jobs bill currently being crafted in the House. White House press secretary Robert Gibbs said Friday that President Obama is likely to discuss such a plan during a speech Tuesday at the Brookings Institution.

....Some leading Republicans are opposed to proposals to use TARP funds for job creation, saying it would violate the intent of the law. These lawmakers say they simply want the program to end. "The money went out to financial institutions. Now it's coming back, and as it comes back, what we ought to do with that money is use it to reduce the budget deficit," House Minority Leader John A. Boehner (R-Ohio) said on Bloomberg TV last week.

It was always a mystery to me why so many people insisted that the program was likely to have a net cost of $700 billion, when that was never remotely likely in any scenario short of a full-on rerun of the Great Depression.  In the end, it's been extremely successful and surprisingly cheap, even cheaper than I suspected at the time.

In related news, I'd say that John Boehner is quite correct in theory and abysmally wrong in practice.  But at least that's better than his usual batting average.

The Great BCS Cop-Out

I would like to associate myself 100% with this.  That is all.

McCain the Chameleon

Here's the subhead on today's LA Times profile of John McCain:

The Arizona senator — and political celebrity — takes a spot on the front lines of the Republican Party's opposition to Obama. He's bipartisan no more, especially on healthcare.

And here's a bit of the text:

Gone is the maverick bridge-builder who bucked his party on high-voltage issues such as immigration, climate change and campaign finance reform. As the GOP has settled on a strategy of unremitting opposition to the Obama agenda, McCain has been front and center on the attack.

....Senate Minority Leader Mitch McConnell (R-Ky.), with whom McCain has tangled bitterly over campaign finance legislation, now could not be more effusive in his praise. "He's been a fabulous team player," McConnell said in an interview. "All I can tell you is that, in this Congress and post-campaign era, Sen. McCain has been incredible — on message and effective."

...."I've always seen two John McCains — one who has the partisan, angry side; and a nice, cooperative, bipartisan side," said Sen. Barbara Boxer (D-Calif.), who has been working on climate change legislation that McCain has opposed. "I have not seen the bipartisan side in a long time."

I hope no one is surprised by this.  When McCain is running for president or thinking of running for president, he's a bipartisan maverick.  When he's not, he's a conservative die-hard.  And now that the presidency is plainly out of reach forever, he's taken his non-campaign mode to its natural extreme and become a snarling right-wing pit bull.  This was entirely predictable, since McCain's public persona has always shifted with the political winds, and the political winds have finally spoken decisively about his future.

And yet, somehow he's managed to maintain his reputation for maverickiness through it all.  I wonder if the press will ever figure out just how badly they've been played by this guy over the years?

Quote of the Day: Gold Rush

From Peter Epstein, president of gold reseller Merit Financial Services, on why they don't advertise much on CNN:

Gold resonates more with Fox’s viewers “because it’s the angry white man audience — it’s the conservative audience....They are distrustful of the government, of the regime.”

Gold: The Angry White Man's Investment!  Because, apparently, angry white men are the natural audience for an industry whose markups tend to be "so egregiously high the only thing you can call them is shysters."  More at the link.

Big Business and the EPA

In 2007 the Supreme Court ruled that the EPA had the authority to regulate greenhouse gases unless "it determines that greenhouse gases do not contribute to climate change."  But of course, greenhouse gases do contribute to climate change, and the EPA is now close to finalizing a finding that says exactly that.  Big business is not happy:

An "endangerment" finding by the Environmental Protection Agency could pave the way for the government to require businesses that emit carbon dioxide and five other greenhouse gases to make costly changes in machinery to reduce emissions — even if Congress doesn't pass pending climate-change legislation.....Many business groups are opposed to EPA efforts to curb a gas as ubiquitous as carbon dioxide.

An EPA endangerment finding "could result in a top-down command-and-control regime that will choke off growth by adding new mandates to virtually every major construction and renovation project," U.S. Chamber of Commerce President Thomas Donohue said in a statement....EPA action won't do much to combat climate change, and "is certain to come at a huge cost to the economy," said the National Association of Manufacturers....Dan Riedinger, spokesman for the Edison Electric Institute, a power-industry trade group, said the EPA would be less likely than Congress to come up with an "economywide approach" to regulating emissions.

Well, these guys are right about one thing: the Clean Air Act is pretty poorly suited to regulating CO2.  Cap-and-trade legislation designed specifically to address greenhouse gases would be much more efficient, much more predictable, and much less painful all the way around.

But the longer that congressional Republican dawdle and obstruct, the more likely it is that the EPA will end up doing something by default.  So here's some advice for corporate America: if you don't like this, then get off your asses and start pressuring your friends in the GOP to support a cap-and-trade bill that would preempt the EPA and put in place more predictable rules.  After all, I understand that corporate interests have a certain amount of sway with the Republican Party.  Right?