Lunchtime Photo

Here's a long exposure of a freeway at night. (It's the, I say the, 405 taken from the Yale overpass.) This picture is practically a cliche, and for various reasons I couldn't even produce a very good one. But I was eager to try it anyway just because I'm so thrilled to once again have a camera that provides enough manual control to do something like this. Technically, my old Canon had most of the manual controls I needed—though not all—but in practice they were all but impossible to use.

One feature the Lumix has is built-in neutral density filters. I had never heard of such a thing before, but it's surprisingly handy. This picture, for example, was taken with the lowest ISO setting and a 64x neutral density setting. It was the only way to get the long shutter time that I needed.

I've been warning for a while that the Republican health care bill could end up destroying the individual market completely. It turns out, however, that the Congressional Budget Office isn't all that concerned. Jordan Weissmann explains:

There are basically two reasons why: First, the Republican plan would nudge a lot of old, costly customers off insurers' rolls. Second, it would fork over a lot of government money to make sure carriers don't lose too much on the extremely sick.

Trumpcare is designed to lower the cost of insurance for young adults while increasing it for older Americans....As a result, the CBO essentially thinks a lot of 60-year-olds will get priced out and replaced by younger customers lured by cheap coverage. The result is a smaller, healthier, more profitable customer base. The Republican proposal would also give states billions of dollars each year for “stabilization funds”—which they could use to compensate insurers for the cost of covering particularly ill customers.

....It's not an absurd theory of the case. But it is a depressing one. Congress's official forecaster thinks that Trumpcare would create a steady market where insurers are happy to sell coverage by making it unaffordable for the older Americans who need help most, while supplementing the system with government cash.

Well...maybe. But Obamacare had stabilization funds too, so that's not really a difference. The big differences boil down to:

  • On the plus side: old people get priced out of the market.
  • On the negative side: old sick people will do whatever they have to in order to remain insured. Basically, this means they'll end up with a lot of financial stress, while old healthy people will skip health insurance and end up with a lot of medical stress. That's quite the win-win for Republicans, isn't it?

So I'm still skeptical. The Republican plan creates a health care market that forces insurers to cover everyone at the same price—even the very sick—but doesn't provide much incentive for healthy people to get coverage. Lowering premiums by a few hundred dollars for young people won't prod them to buy insurance if an $800 penalty didn't do the job.

It's really hard to see how this stays stable. CBO may think that a lot of us oldsters will get priced out of the market, but speaking as an oldster with a $100,000 annual medical bill, there's literally nothing that would stop me from buying insurance. If I were in the individual market and my premium skyrocketed from $5,000 to $15,000, I'd still find a way to stay covered. Even at the higher price it's $85,000 cheaper than going without, and the other alternative is to die. That's a pretty big incentive.

Obviously there are folks at the margins for whom the incentives are different. But if I were a health insurance company, I'd be very, very skeptical about the continued viability of the individual market under the Republican plan.

The latest joke around the Drum household is a question: "Is there any evidence yet?" Marian asks whenever she comes home from an errand. She's waiting diligently for someone to produce evidence that Trump Tower was bugged by President Obama. It looks like she's going to have to wait a long time:

“I don’t think there was an actual tap of Trump Tower,” Rep. Devin Nunes (R., Calif.) told reporters on Capitol Hill Wednesday. “You have to decide, Are you going to take the tweets literally, and if you are, then clearly the president is wrong.”

....By Monday, the White House had walked back Mr. Trump’s allegation. White House spokesman Sean Spicer said that Mr. Trump didn’t believe that Mr. Obama had personally tapped his phone, but instead was talking broadly about surveillance.

“They’ve been all over the map,” said Rep. Adam Schiff of California, the ranking Democrat on the panel. “The reality is, I don’t think they have the foggiest idea of what was behind the president’s claim except maybe something he watched on TV. And I think the rest is designed to downplay, minimize or obfuscate the fact that the president said something that was patently untrue.

Schiff is obviously right. Trump just swatted out something he saw at Breitbart as a way of grabbing a news cycle, and after that he sat back to watch the chaos unfold. On his other Twitter account (the one just for close friends that you and I never get to see) he was probably tweeting something like this:

This is annoying enough even for liberal types, but I wonder how long it's going to be until Republicans start to rebel at this idiocy? Democrats get to just sit back and throw brickbats, after all. It's Republicans who have to waste their time pretending to investigate all this nonsense.

Charles Cooke was not impressed with Rachel Maddow's presentation last night of President Trump's 2005 tax return:

For a moment, it seemed that Rachel Maddow was in possession of a genuine scoop. And then, all of a sudden, it didn’t....Thanks to MSNBC, the suggestion that Trump has “paid no taxes in 18 years” has now been definitively proven to be false. Moreover, Trump seems to have paid a higher tax rate in 2005 than did most political figures, and to have enjoyed a sizeable income to boot. Whether the report was cherry-picked we cannot possibly know. But on the basis of what was presented last night, the president looks both pretty accomplished and perfectly law-abiding. What, one wonders, did Maddow think she was achieving?

David Cay Johnston says he received the tax return in the mail, and he was surprisingly aggressive about suggesting that it might well have come from Donald Trump himself. "It's just a possibility," he said, but it was the very first thing he mentioned on the show.

At first I dismissed it. But then I started to wonder. Maybe 2005 was a year when Trump had both high income and high taxes. If so, anonymously releasing just one page from just that year could be an outrageous but savvy PR move—the kind of thing that Trump is very good at. Besides, there are very few people with access to Trump's taxes, and who would have an incentive to release just this single page? Not someone who's trying to blow a whistle on the guy. It almost had to come from somebody working in Trump's interests.

I dunno. We're all wearing tinfoil hats these days, aren't we?

California has made a lot of noise about being the front line of resistance to President Trump, but mostly it's just blather. This week, however, it's finally getting very real:

President Trump will direct the Environmental Protection Agency on Wednesday to shelve aggressive vehicle fuel economy targets that are a pillar of climate action and anti-pollution efforts in California and nationwide, according to a senior administration official.

...Targeting them puts the White House on a path of direct and costly confrontation with California....Under the Clean Air Act, the state has the authority to impose emissions standards stronger than those set by the federal government, and a dozen other states have embraced the California rules, as the act allows. About 40% of the vehicles sold in America are subject to the rules California sets. Automakers have said repeatedly that it is untenable to manufacture separate fleets of vehicles to meet different standards.

The state had refrained from charting its own course on mileage goals as part of a compromise with auto companies and the EPA early in the Obama administration. That agreement will start to unravel Wednesday with Trump’s action, which will direct the EPA to re-open the rule-making for the mileage standards. If, as environmental and auto lobbyists anticipate, the administration ultimately decides to weaken the rules, California will almost certainly move to invoke its federal waiver.

There are other disputes on the horizon between California and the Trump administration, but this is the first big one. From the very beginning, California has had an exemption under the Clean Air Act to set its own standards, and these standards have often led the nation. The state is pretty jealous of this prerogative, and it will fight to prevent any change to the law that weakens it. However, unless the Trump administration succeeds in doing that, it's likely that California will adopt the current EPA standards and car companies will follow along even if Trump trashes the federal rules. It's either that or build two separate fleets of cars, one for California and its fellow green states, and one for everyone else.

David Frum is a conservative, but he grew up in Canada and lacks an American conservative's instinctive revulsion toward national health care. Today he writes that maybe American conservatives should put aside their revulsion too. After all, the debacle over the Republican health care plan suggests that the public is unwilling to see health coverage withdrawn from millions of people. Democrats seem to have finally won the battle over ensuring health coverage for all, and that means Republicans can't control costs by simply denying health care to anyone who can't afford it. They have to figure out other ways to bring down costs:

Republicans have had too many competing goals in health-care reform. They have wanted to lower costs (to free fiscal room for tax cuts and military spending), but also to avoid tangling with entrenched health-care interests....What that money has bought is a huge and costly health sector....“Patient-centered medicine” sought to transform the user of health-care services as the system’s decisive cost-controller. Confronted with the full cost of medicine, the patient would consume care more prudently—or forgo it altogether.

That hope is listing badly. When and if it finally sinks, Republicans may notice something else. The other advanced countries with universal coverage manage to buy significantly better outcomes at the expense of 11 or 12 percent of GDP instead of America’s 16 percent. That extra increment of GDP could pay for a lot of military spending and a lot of tax cuts. Once politics has eliminated coverage reduction as a means of forcing economy, other possibilities open before a center-right party—and indeed have opened for center-right parties across the rest of the English-speaking world. Perversely, the effort to keep government out of health care has empowered health care to consume more and more government dollars. Where government has been deployed more effectively than in the United States, health care has consumed less.

I dissent in part and agree in part. For starters, it's true that the United States has by far the biggest health care bill of any country in the world:

However, our costs are high because we pay more for everything: doctors, nurses, pharmaceuticals, hospital stays, etc. Politically, it's impossible to adopt a system that would suddenly cut everyone's pay by a third. If America were to adopt national health care, our per capita costs would almost certainly start out right where they are now: far higher than any other country in the world.

In the long run, however, Frum is right. It's ironic, but it turns out that central governments are a lot better at keeping a lid on health care costs than the private sector. The reason is taxes. National health care is paid for out of tax revenue, and the public pressure to keep taxes low is so strong that it universally translates into strong government pressure to keep health care costs low. By contrast, the private sector is so splintered that no corporation has the leverage to demand significantly lower costs. Besides, if health care costs go up, corporations can make up for it by keeping cash salaries low. This is part of the reason that median incomes have grown so slowly over the past 15 years. Corporations simply don't care enough about high health care costs to really do anything about it.

Over the course of a few decades, then, our costs would probably converge on the rest of the world if we adopted universal health care. Contra Frum, this wouldn't open any headroom for lower taxes or higher military spending—government spending would still go up even if overall health care spending slowed down—but it would make the country a better, safer, more efficient place. What's not to like?

Tonight's exciting news: David Cay Johnston somehow got hold of the first page of Donald Trump's 2005 federal tax return. He released it on the Rachel Maddow show tonight:

Here are Trump's major sources of income:

  • Interest income: $9 million
  • Business income: $42 million
  • Capital gains: $32 million
  • Rental income: $67 million
  • Miscellaneous: $2 million
  • Total: $152 million

After a writeoff of $103 million, his adjusted gross income clocked in at $49 million. His taxable income came in at $31 million and his tax bill for this was $5 million. That's a tax rate of about 3 percent. Ka-ching!

Sadly for Trump, the Alternative Minimum Tax kicked in, which meant he had to pay $38 million in taxes. I guess it's no wonder that Trump doesn't think very highly of the Alternative Minimum Tax.

Without more pages from his tax return, there's a limit to what we can learn from this. Trump's income of $150 million fits fairly well with the estimates I've seen. But I will add one thing.

Trump's total investment income was $108 million, and Trump claims to be worth $5 billion or so, depending on what day you ask him. That means he earned a return on his assets of about 2 percent. In 2005! During the housing bubble! I'm no tax expert, and maybe he had hundreds of millions in capital gains that he didn't realize that year. Who needs more than $150 million in income, after all? It still seems pretty low, though, and if Trump really did earn a return of only 2 percent he is, by long odds, the most incompetent billionaire in the country.

Alternatively, of course, Trump is actually worth about $1-2 billion and he earned something like a 5-10 percent return. Take your pick.

It is Pi Day, and Megan McArdle laments the decline of pie. The problem, she says, is that pie crust is too labor-intensive for commercial bakeries to do right:

Unfortunately, good pie crust is also hard to do at home. It relies less on ruthless attention to the recipe than on technique....learn the feel...mess around with it a bunch yourself...humidity and temperature...amount of moisture in your fruit.

....You may think that I am myself making the case against pie. Far from it! Pie is not a dessert well suited to our modern era, but that is our loss, not pie’s. Its very difficulty and imperfections of form are part of its charm. They remind us that appearance is not everything, and that some of the most worthwhile things in life can only be attained through our own hard work.

Hmmm. Here is my Aunt Mary,1 circa 1910 or so, with a pie and a cake used in the wooing of her future husband:

Aunt Mary had a different take on pie crust: it's all in the shortening, and it better be lard. Crisco will never make a good pie crust, no matter how good your technique.

There's probably something to both of these points of view, and they arrive at the same place anyway: pie is not well suited to our modern era. We're too lazy to do it right and we've developed a phobia verging on hysteria of using animal fat in our food. This has ruined both pie and french fries, much to our collective loss. Plus there's a case to be made that all this vegetable oil is killing us.

But ignore all that. It's Pi Day! Thumb your nose at the naysayers and go have a piece of pie.

1Actually my great aunt, but who's counting?

Over at the Wall Street Journal today, Michael Bender has a rare profile of Steve Bannon, focusing on how he became a sworn foe of globalization. It's all because his father, Marty, lost his retirement savings when he sold his cherished AT&T stock at a loss during the 2008 financial crisis:

On Oct. 7, 2008, in the cramped TV room of his modest home here, Marty Bannon watched with alarm as plunging stock markets dragged down his shares of AT&T, the nest egg he built during a 50-year career at the company....As he toggled between TV stations, financial analysts warned of economic collapse and politicians in Washington seemed to mirror his own confusion. So he did the unthinkable. He sold.

Marty Bannon, now 95 years old, still regrets the decision and seethes over Washington’s response to the economic crisis....“That day, I found out how dumb the people were who I thought were smart,” he says. “They couldn’t control the situation, and it escalated during the day. I said, this thing is going so fast I’m going to be totally wiped out.”

Marty Bannon says he lost more than $100,000 because he sold the shares for less than he paid for them. It was a decision he made without consulting a broker or his family....[On] Oct. 6, financial analyst Jim Cramer told “Today” show viewers to pull money from the stock market if they needed any cash for the next five years. Steve Bannon says the warning spooked his father.

God knows I empathize with Marty Bannon. The 2008 financial crisis did indeed demonstrate how dumb a lot of supposedly smart people were. Still, something about this story doesn't add up. Here are two charts showing the price of AT&T stock:

There's no question that October 2008 was a tough month for stocks, including AT&T. Marty Bannon didn't quite sell at the bottom, but he came close. AT&T closed at around $26 on October 7.

But that's about the same price it sold at between 2002 and 2006. And it's more than it sold for during Marty Bannon's 50-year career at AT&T. If he accumulated AT&T stock from around 1945 to 1995, he would have ended up with shares in a bunch of local operating companies after the company was dismembered in 1984, and his split/breakup/spinoff-adjusted cost basis would have been—well, beats me. But by 2008 it couldn't have been more than a few dollars. Unless he bought practically his entire nest egg during the 2007-08 boom or the dotcom bubble of the late 90s, there's really no way that he posted a net loss when he sold, let alone a $100,000 loss.

I realize this sounds like a pedantic response to a retiree's loss during the financial crisis, and I wouldn't bother with it if it weren't being offered as an explanation for the political views of one of the most powerful men in America. But the fact remains: AT&T stock fell during 2008, but only to where it had been in 2006. Anyone who bought AT&T stock during the aughts would have broken even selling at the bottom of the crisis, and anyone who bought their stock during the second half of the 20th century would have made a big profit.

Beyond that, it sounds like Marty Bannon was a victim of Jim Cramer, not the US government or even Wall Street. And what does globalization have to do with any of this anyway? Blame for the financial crisis lies with the mortgage industry, the derivatives hotshots on Wall Street, and the Bush administration for lousy oversight. But that's about it.

So what's going on here? This is a tear-jerking story from Steve Bannon, but it doesn't explain why he suddenly became a sworn foe of globalization, immigration, trade deficits, and Islam. What's the real story?

Lunchtime Photo

My new camera has achieved the unthinkable: it's produced an image of Marian that she's allowed me to post on the blog. Using burst mode, I took 86 photos in about 60 seconds, which produced a grand total of two pictures she was happy with. I made the final choice, which is a little stagey, but still lovely. And check out that very nice bokeh in the background!