Kevin Drum

All This and College Loans Too

| Thu Mar. 25, 2010 10:56 PM EDT

The House passed the final component of Affordacare1 tonight. Yawn. So what has Congress done for me lately, anyway?

Oh yeah, this:

Ending one of the fiercest lobbying fights in Washington, Congress voted Thursday to force commercial banks out of the federal student loan market, cutting off billions of dollars in profits in a sweeping restructuring of financial-aid programs and redirecting most of the money to new education initiatives.

....Since the bank-based loan program began in 1965, commercial banks like Sallie Mae and Nelnet have received guaranteed federal subsidies to lend money to students, with the government assuming nearly all the risk. Democrats have long denounced the program, saying it fattened the bottom line for banks at the expense of students and taxpayers.

This is, to coin a phrase, sort of a big effin deal. The student loan program has been a disgrace for a long time, essentially insuring a fat stream of profits to banks by allowing them to make risk-free loans thanks to guarantees from Uncle Sam. It was a pretty nice racket while it lasted. Republicans, of course, denounced the end of this gravy train, demonstrating once again, as Bruce Bartlett said a few years ago, that they are "incapable of telling the difference between being pro-business and being for the free market."

Bottom line: if the taxpayer are taking the risk, then the taxpayers ought to get the profit too. Now they do, and it's going to be used to expand access to college for low and middle income students. It's a reform that's long overdue.

1aka the Patient Protection and Affordable Care Act of 2010 aka the Affordable Care Act aka ACA

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David Frum Fired From AEI

| Thu Mar. 25, 2010 5:03 PM EDT

David Frum, onetime coiner of the phrase "axis of evil," but more recently a persistent critic of the increasing Palinization of the Republican Party, was fired today by the American Enterprise Institute, the conservative think tank he's worked at since leaving the Bush administration. Bruce Bartlett, another reform conservative who was fired by a think tank for being too critical of Republicans, comments:

Since, he is no longer affiliated with AEI, I feel free to say publicly something he told me in private a few months ago. He asked if I had noticed any comments by AEI "scholars" on the subject of health care reform. I said no and he said that was because they had been ordered not to speak to the media because they agreed with too much of what Obama was trying to do.

It saddened me to hear this. I have always hoped that my experience was unique. But now I see that I was just the first to suffer from a closing of the conservative mind. Rigid conformity is being enforced, no dissent is allowed, and the conservative brain will slowly shrivel into dementia if it hasn't already.

This shouldn't come as any big surprise. As many, many people have pointed out, the reform bill we ended up with is very similar to both the 1993 Republican counterproposal to Clintoncare and to Mitt Romney's healthcare plan for Massachusetts. Of course there were lots of honest conservative health wonks who, even if they opposed parts of it, were basically sympathetic to the overall superstructure.

But this wasn't a battle where wonks were welcome on the conservative side. It was a battle for political dominance. It was a battle to see if Sarah Palin would be the new face of the conservative movement. And now she is.

Scahill on Healthcare

| Thu Mar. 25, 2010 4:45 PM EDT

Glenn Greenwald commends to us Jeremy Scahill's take on healthcare reform:

BD: Given the political divisiveness of issues like health care, there's a lot of pressure for progressive publications to fall into what you have called a "blue state" mentality. What are the hazards of this?

....Health care is a perfect example of this. Obviously, we want to have pre-existing conditions covered. Obviously, we want young people to be able to continue on their parents' health care plans. There are many things that are going to be improvements.

But let's be clear here: This is a complete and total sellout to the interests of the insurance lobby by the Obama administration. This is, as Michael Moore has said, a complete victory for the ultra-capitalists. Yet, if you look on the liberal blogosphere, people like Jane Hamsher are attacked mercilessly for having the audacity to stand up and say "this is a Democratic sellout."

So you have this blind allegiance to ... what? To Obama as a man? To the Democrats as a party? To me, it's very dangerous when you start going down the road of unquestioning support for any powerful individual or any politician. The moment you cede your conscience to a politician is the moment you stop struggling for a better society.

I've got nothing but props for Scahill's work, but this is just wrong. There are, obviously, plenty of partisan hacks on both sides of the aisle, but most of us who supported the current healthcare bill — warts and all — did so because it was, plainly, not only an enormous first step1 forward, but the only way to make that first step. A government-run single-payer solution was never even remotely politically plausible, and anyone who insisted on jettisoning our current framework of private insurers as a condition of reforming healthcare would never get any serious reform passed. End of story.

Supporting the legislation we got doesn't make anyone a sellout, and it doesn't make anyone a blind supporter of St. Barack. It makes us people who actually want to create a better society, not just struggle for it.

As for the private insurance industry, I'll make a prediction: within 20 years it will be gone in all but name. Either the federal government will fund the vast majority of health insurance, or else private insurers will essentially be regulated utilities, as they are in Germany or the Netherlands. This bill is the beginning of the end for all of them, and this week's reform bill is what set that train in motion.

1OK, technically it was the second step. Medicare was the first. But you know what I mean.

Reconciliation Passes

| Thu Mar. 25, 2010 2:53 PM EDT

The healthcare reconciliation bill has passed the Senate and is on its way to the House for final passage. That was quick. Did Republicans just completely give up on all their brilliant plans for obstruction? They only offered up 40 amendments. I thought the plan was for hundreds. I hope their base punishes them for being the sellouts they obviously are.

Chart of the Day: 8th Grade Reading

| Thu Mar. 25, 2010 2:24 PM EDT

Is our kids learning? Probably, but at least when it comes to reading they aren't learning any better than in the past. NAEP reading scores for 2009 have just been released and they're pretty uninspiring. Scores for 8th graders have been flat since 2002, and as the chart on the right shows, they've been flat at pretty much all achievement levels. Good readers are reading as well as they did in 2002 and poor readers are reading as poorly. Black-white and Hispanic-white gaps have narrowed ever so slightly, and the male-female gap has stayed about the same. Broken out by public, private, and Catholic schools, scores still remain flat across the board.

So is there any good news? Well, scores for the worst readers have improved at the 4th grade level, and it's possible that these improvements will eventually filter up to the higher grades as well. That hasn't happened in the past (in fact, gains in the lower grades tend to wash out at higher grades), but you never know. Maybe this time they will.

Of course, there is another bit of good news: American students may not be improving much in reading, but neither has there been a wholesale collapse, as news reports sometimes suggest. Reading scores are slightly up over the past two decades, and math scores are up considerably. But count me as skeptical of this, from the New York Times:

In seeking to explain the lagging reading scores, some experts point to declines in the amount of reading children do for pleasure as they devote more free time to surfing the Internet, texting on cellphones or watching television. Others blame undemanding curriculums.

For example, Susan Pimentel, an expert on English and reading standards who is a member of the governing board that oversees the test, said that American schools were fairly efficient at teaching basic reading skills in the early grades, but that as students matured they need to be consistently challenged to broaden those skills by reading not only complex literature but also sophisticated nonfiction in subjects like history and science.

Reading scores haven't "lagged," they've been flat. And they've been flat for 20 years, which means that the internet and texting are pretty unlikely to be at fault. In fact, to the extent that the internet has replaced TV watching, it seems as if it's likely to be a net benefit, not a problem.

But for whatever reason, we seem to have gotten a lot better at teaching math (scores are up 20+ points over the past two decades, roughly two grade levels) but not at teaching reading. The reasons remain elusive.

Quote of the Day: Death Threats

| Thu Mar. 25, 2010 1:23 PM EDT

From James Joyner, on the violence and death threats that have been aimed at Democrats who voted for healthcare reform:

Unlike Michelle Malkin, Dan Riehl, and others, I do think Republican leaders have some responsibility to condemn violence. No, I don’t think they’re directly responsible for any of it; we don’t yet even know for sure who’s making the threats. But we’ve had over a year of very heated rhetoric over the dire consequences that would flow from a government takeover of one sixth of the economy, death panels, legislation being rammed through with dirty tricks, and all the rest. That’s part and parcel of American politics these days and mostly fine. But, with signs that people are going off the rails evidence, it’s time for leaders to calm their followers.

Amen to that.

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Clean Energy Investment Around the World

| Thu Mar. 25, 2010 12:43 PM EDT

A new Pew report shows that our investment in clean energy tech has started to lag considerably:

For the first time, China led the United States and other G-20 members in 2009 clean energy investments and finance, according to data released today by The Pew Charitable Trusts. Last year, China invested $34.6 billion in the clean energy economy — nearly double the United States’ total of $18.6 billion. Over the last five years, the United States also trailed five G-20 members (Turkey, Brazil, China, the United Kingdom, and Italy) in the rate of clean energy investment growth.

“The facts speak for themselves,” said Bloomberg New Energy Finance Chief Executive Michael Liebreich. “2009 clean energy investment in China totaled $34.6 billion, while in the United States it totaled $18.6 billion. China is now clearly the world leader in attracting new capital and making new investments in this area.”

....The United States’ clean energy finance and investments lagged behind 10 G-20 members in percentage of gross domestic product. For instance, in relative terms, Spain invested five times more than the United States last year, and China and the United Kingdom three times more.

The raw numbers are below. The full report is here (PDF). The table on the right shows clean energy investment as a percent of GDP, and the United States clocks in at 0.13%, just below Italy and Mexico. That's pretty grim. You can argue — unpersuasively, I think, but you can argue — that the U.S. is always going to be behind countries like China and Mexico in any industry that's manufacturing-intensive, but that hardly explains why we're also considerably behind Europe, Britain, and Canada. It's why we need a climate bill regardless of whether you take climate change seriously. Everyone else does, and we ought to be competing for our share of the pie.

North Korea's Currency Debacle

| Thu Mar. 25, 2010 11:54 AM EDT

Barbara Demick reports on the aftermath of the great North Korean currency debacle:

North Koreans who recently fled to China say many of their fellow citizens are losing faith in the regime of Kim Jong Il after a disastrous currency revaluation that wiped out savings and left food scarcer than at any time since the famine of the mid-1990s, when as many as 2 million people died.

....By the end of December...Chinese traders who had previously supplied markets didn't want to come into the country because of bans imposed on the use of foreign currency and the wildly fluctuating exchange rates. Food remains in such short supply that a single egg costs a full week's salary for many. Rice remains largely unavailable at state stores and can be purchased only illegally at about the equivalent of more than two weeks' salary.

One North Korean woman interviewed said common laborers under the new system were making about 2,500 won per month, barely more than $1 at the new exchange rates prevailing on the black market. Cooking oil is a luxury, so unaffordable that people buy only a few grams at a time in small plastic bags.

More at the link. Apparently public adoration of Kim Jong Il is still the order of the day, but it's finally taken a hit. And maybe his son's succession chances as well.

The GOP Stands Tall

| Thu Mar. 25, 2010 11:06 AM EDT

A massive, earth-shattering victory for Republicans today:

Senate Republicans have identified two minor violations of reconciliation rules in the final piece of the health-care package. The violations will force the Senate to change the reconciliation bill and ship it to the House of Representatives for final passage.

....Senate Budget Chairman Kent Conrad (D-N.D.) said one of the deleted provisions was a technical item that he considered "as close to a 'nothing' as you can come around here." The second, more substantive provision would have set a formula for establishing maximum Pell Grant awards. But Conrad said the formula would not have taken effect for two years, giving Congress time to restore it in another bill.

[Senate parliamentarian Alan] Frumin deemed both measures to be out of order because they had no budget implications, Conrad said Thursday. The senator said no other Republican challenges to the legislation were still pending before Frumin, raising Democratic hopes that the Senate would take a final vote within hours.

Well, that's what passes for a massive, earth-shattering victory among the Republican base these days, anyway. I'm sure the GOP is proud of its role in delaying passage of the reconciliation rider for another 24 hours or so.

Planning for Climate Change

| Thu Mar. 25, 2010 1:45 AM EDT

So what are the likely economic effect of tighter greenhouse gas regulations and the adoption of a cap-and-trade system for pricing carbon emissions? Conservatives insist it would devastate the economy, but in California, at least, a new report says the effect would be pretty small:

It concluded that the measure will yield modest job gains statewide, will have a negligible effect on the state's overall economy — the eighth largest in the world — and could benefit some sectors like alternative energy businesses.

...."These policies can shift the driver of economic growth from polluting energy sources to clean energy and efficient technologies, with little or no economic penalty," the report said. Thousands of manufacturing, mining and utilities industry jobs will be lost, but service, finance, and other sectors will gain similar numbers, leaving the most populous U.S. state about the same in terms of total jobs, income and growth, the report said. Five scenarios found a maximum effect of tens of billions of dollars on state output of $2.5 trillion in 2020.

So: no economic catastrophe. On the other hand, there are certainly specific sectors that would be affected. Which gives me a good opportunity to plug a new project called The Climate Desk, a collaborative project of Mother Jones, the Center for Investigative Reporting, Grist, Slate, The Atlantic, Wired, WNET, and the Nation Institute. Our website will be up soon, but reporting projects are already underway. In particular, Felix Salmon of Reuters is looking into the ways that not just specific sectors, but specific companies, are preparing themselves for the downside risk of climate change. A few days ago he posted an update on what he's found out so far:

First, there’s the banks. I heard of one Brazilian bank — I’m not sure which one — which was asked for a 20-year loan to fund a major agricultural project in the Amazon, and which responded by asking for an environmental audit. They don’t want to lend money to a coffee project, say, if the land is not going to be arable for coffee in 20 years’ time. Has anybody heard tales of environmental models playing a role in banks’ loan underwriting?

Secondly, there’s the hospitality industry, especially the parts of it which have a lot of assets on islands and beaches and the like. Are any of these companies doing environmental studies on coastal erosion and sea-level rise, and if so, how are they managing those risks? This isn’t a question of insuring against a disastrous event happening in the next year or two — that can be done by writing a check. It’s more a question of positioning the company so that it wouldn’t be devastated by the inability to insure against a disastrous event in the future, if insurers decide the risks are too big.

Finally there’s companies like ADM or Heinz, which are creating new crops designed to cope well with low-water conditions or large swings in temperatures. This is the point at which risk mitigation becomes profitable in and of itself: once you’ve mitigated risks by creating those crops, you can cash in on demand for those crops if and when climate change causes demand for them to rise.

Anybody know of any other examples? The SEC recently decreed that companies have to disclose the effect of climate change in four different areas, which means that more and more companies will be forced to take this seriously. If you know of any interesting corporate reactions to a warming world, leave 'em in comments.