Kevin Drum

Taxing Sugary Soda

| Wed Jul. 7, 2010 2:07 PM EDT

Via Matt Yglesias, here's a chart from a recent Dept. of Agriculture study suggesting that a 20% tax on sugary soft drinks would reduce overall consumption of said beverages and thereby reduce our net calorie intake from all beverages:

By assuming that 1 pound of body fat has about 3,500 calories, and assuming all else remains equal, the daily calorie reductions would translate into an average reduction of 3.8 pounds over a year for adults and 4.5 pounds over a year for children.

Not so fast, I say. Even assuming that all the assumptions in the report are correct, all it does is show that our net calorie intake from beverages would, on average, go down. But if you switch to diet soda, it's pretty likely that you'll just make up the calories somewhere else. In fact, if this study is correct, it's possible that you might increase your total calorie intake.

I'd actually be interested in some large state imposing a tax like this purely for research purposes, and since I don't drink sugared soda I'd be happy to nominate California. We need the money anyway. But my guess is that the results would disappointing. People might end up swilling less high-fructose corn syrup, but they'd probably just eat more corn nuts to make up for it.

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Is Our Kids Studying? – Take 2

| Wed Jul. 7, 2010 12:33 PM EDT

After I posted a couple of days ago on the subject of whether or not college students are studying less than they used to, I got a long email on the subject from Paul Camp, a physics professor at Spelman University. This is pretty far outside my wheelhouse of expertise, but his take was so interesting that I wanted to repost it here just so that everyone would have a chance to comment on it. Here's what he told me:

I've been engaged in a few conversations about this in the past couple of years. I can offer the following data that correlates with anecdotal evidence from other professors at a variety of institutions.

Since the early 1990's, I have pre and post tested all of my introductory mechanics classes using a research based diagnostic instrument, the Force and Motion Conceptual Evaluation. This instrument is based on research by Ron Thornton at Tufts that identified a reproducible sequence of intermediate states that all people seem to pass through in the process of gaining a Newtonian understanding. So it can give me not only a do they get it/do they not measure, but also, along several conceptual dimensions, a measure of how close they are to getting it.

My first job out of graduate school was at an unranked tier 4 institution in Myrtle Beach, South Carolina. Coastal Carolina "University" to be specific. It was the 13th grade. There were a few brilliant students — I've learned that for a variety of reasons you can find exceptional students anywhere — but for the most part the student body was composed of people who were there for financial reasons or because they thought it would be a cool idea to go to school at the beach. The first four pages of our brochure described the beach, not the college. We knew which side our bread was buttered on.

I pretty reliably got 50-60% normalized gains on the FMCE.

Normalized gain is the ratio of how much their scores increased compared to how much they could have increased — (post-pre)/(100-pre). 50-60% is actually pretty stupendous on this particular measure. It means they were typically getting 80-90% of the questions right.

I left that job in a huff. There's a very long story, but the short version is that I was ordered by my dean to give everyone a passing grade and I wouldn't do it. I spent 5.5 years in a research position at Georgia Tech before coming to Spelman.

Spelman is a top 75 liberal arts college, according to US News, and top 10 according to the Washington Monthly. My personal impression of the students is that the average is generally much higher than it was at Coastal. These are students who can think around a few corners. Also, since they are able to cross register in some considerably easier classes at other AUC institutions, I tend to get classes of students who are there because they choose to be there and are therefore more engaged and thoughtful about their efforts.

I think I'm at least as good an instructor as I used to be, and probably a lot better. I know quite a bit more about developmental psychology and cognitive science as a result of my job at Georgia Tech and I think that improves my instruction considerably.

And yet, in a good year I get about 20-30% normalized gains.

I don't really know what is different but something clearly is.

Right now, I'm blaming No Child Left Behind, but that is less because of data than of general suspicion of high stakes testing. In fact, I am also now quite skeptical of pre/post testing (I could send you a research paper on that if you're interested) but not enough that I can account for the difference in the data.

My job at Georgia Tech involved, among other things, observing curriculum implementations in middle schools. I was in the schools at least once a week, and at one point three days out of five for 10 weeks. What I saw was deeply disturbing.

In Georgia, the tests come at the beginning of May so on the first of March all education comes to a screeching halt. From that point on, the entire day is filled with drilling on multiple choice practice tests, pep rallies about how great we're going to do on the tests, and so on. After the test, the school year is over. Until the second week in June, every day is field day, movie day, recess day . . . since you can no longer affect the test, there's really no longer any point in school, now is there?

This means that compared to when I was in school (in Georgia), the school year has been shortened by a third and the one things that students have the most experience with by far is multiple choice testing.

Forgive me if I point out that this isn't really the best preparation for college.

I can't really say that this is a correct account. I can say that many faculty I have spoken with have expressed similar observations without me prompting them, but the difference between me and them is that I have data. I know what I used to get at a crappy college with surfer students, and I know what I now get at a top tier college with highly engaged students, and it isn't consistent with ought to be happening, all other things being equal.

So that's my data point. I suppose I could always have had some kind of mental excursion and become a bad teacher without knowing it, but I don't think so and my students don't think so either, and neither do my peers in and out of the physics department. So I'm going to provisionally discount that explanation.

I left Coastal in 1998. I started at Spelman in 2004. You tell me what changed during that time frame.

Donald Berwick (Temporarily) Appointed CMS Head

| Wed Jul. 7, 2010 12:23 PM EDT

Yesterday Barack Obama decided that the Center for Medicaid and Medicare Services really couldn't go leaderless any longer, so instead of waiting fruitlessly for Senate Republicans while they obstructed his nominee for another few months he made a recess appointment. Donald Berwick is now the head of CMS.

And what do I think of Berwick? Who cares? I mean, what do I know about the guy? He seems to be a serious, well-respected wonk who's an expert on healthcare delivery and eminently qualified to run CMS, and I don't think the Senate should be wasting its time confirming positions like this anyway. It should just be a straight presidential appointment. But via Ezra Klein, Berwick wins my heart forever by making this #2 on his list of proposed hospital reforms:

Patients would determine what food they eat and what clothes they wear in hospitals

The rest of his reforms are pretty good too — though I guess I'm not sure how practical #5 is. In any case, sign me up as a Berwick fan!

And on a less lighthearted note, I repeat that he appears to be a serious, well-respected wonk who's an expert on healthcare delivery and eminently qualified to run CMS. It's way past time to put an end to the farcical regime of Senate confirmation that prevents the president from appointing a guy like this. Ezra:

If Berwick cannot find a smooth confirmation, then no industry leaders who are nominated in a time of political polarization can. And that'll mean, in the long run, that the best people will hang up the phone when they get that call from the White House, as they don't want to see their past quotes pulled out of context and picked apart, and they don't want to spend a year in limbo only to settle for a recess appointment, and they won't be under any illusions that respect from both sides of the aisle and an unimpeachable record will be armor enough.

Roger that.

Quote of the Day: Arizona's Legislature

| Wed Jul. 7, 2010 11:56 AM EDT

From Ken Silverstein, describing a state that was effectively taken over by the Tea Party years ago:

The general unsightliness of the capitol makes it a fitting home for today's Arizona legislature, which is composed almost entirely of dimwits, racists, and cranks.

C'mon Ken, don't hold back. Tell us what you really think.

The Problem with GPOs

| Wed Jul. 7, 2010 1:32 AM EDT

Controlling healthcare costs is hardly a new concern. In the 90s the hot topic was HMOs. In 80s it was capitation and vertical integration. And in the 70s it was GPOs, or group purchasing organizations. In the current issue of the Washington Monthly, Mariah Blake explains:

The underlying idea was simple: because suppliers generally give price breaks to customers who buy large quantities, hospitals could get better deals on, say, gauze or gloves, if a group of them came together and bargained for ten cases, rather than each hospital buying a case on its own.

A good idea! But then things changed: hospital collectives started spinning off GPOs as standalone for-profit subsidiaries that other hospitals could join by paying dues. By the end of the 70s, virtually every hospital in America belonged to a GPO — which might still have been a positive development if it weren't for one further thing:

In 1986 Congress passed a bill exempting GPOs from the anti-kickback provisions embedded in Medicare law. This meant that instead of collecting membership dues, GPOs could collect “fees” — in other industries they might be called kickbacks or bribes — from suppliers in the form of a share of sales revenue. (For example, in exchange for signing a contract with a given gauze maker, a GPO might get a percentage of whatever the company made selling gauze to members.) The idea was to help struggling hospitals by shifting the burden of funding GPOs’ operations to vendors. To prevent abuse, “fees” of more than 3 percent of sales were supposed to be reported to member hospitals and (upon request) the secretary of health and human services.

But, as with many well-intended laws, the shift had some ground-shaking unintended consequences. Most importantly, it turned the incentives for GPOs upside down. Instead of being tied to the dues paid by members, GPOs’ revenues were now tied to the profits of the suppliers they were supposed to be pressing for lower prices. This created an incentive to cater to the sellers rather than to the buyers....This situation only grew thornier in 1996, when the Justice Department and the Federal Trade Commission overhauled antitrust rules and granted the organizations protection from antitrust actions, except under “extraordinary circumstances.” Once again, the idea was to help struggling hospitals, this time by allowing the buying groups to grow big enough to negotiate the best deals for their members. But the decision led to a frenzy of consolidation. Within a few years, five GPOs controlled purchasing for 90 percent of the nation’s hospitals, which only amplified the clout of big suppliers.

The net result, Mariah reports, is that today GPOs sign exclusive sweetheart deals with huge suppliers, and these deals prevent smaller, more innovative companies from breaking into the healthcare market. The exemption from the anti-kickback law was passed with the best of intentions — but then, that's what the road to hell is paved with, isn't it?

Via email, Mariah adds: "Interestingly, despite all the focus on health care costs in the run up to health care reform, GPOs never entered the conversation." But they probably should. The whole piece is worth a read.

How To Pass a Temporary Stimulus

| Tue Jul. 6, 2010 5:04 PM EDT

Matt Yglesias on the problem of credibly committing to a "temporary" stimulus:

If we paid tons of people to dig ditches and then fill them in, I think it would be easy to convince people that we intended to stop doing that once unemployment fell. But conservatives recognize that, in general, liberals think the government should be spending more money on infrastructure projects and public services. So if we get to pass some spending increases at a time when the case for temporary stimulus is strong, who believes we’ll really give the spending up? And the same thing applies to conservatives and tax cuts.

Actually, I think there's an easy solution to this quite aside from automatic stabilizers like extended unemployment insurance, which will automatically come down as the recession eases. And that solution is: a temporary payroll tax holiday paid out of the general fund. At this point, if we're going to pass a second stimulus I think it needs to be something that takes effect quickly, and a payroll tax holiday is about the fastest possible stimulus you could ask for. What's more, it's pretty effective, since the benefits primarily go to middle and working class families, who are more likely to spend it than rich families. And making it credibly temporary isn't hard either. Just set it on autopilot with a gradual phaseout: maybe a full holiday for two quarters, followed by a 75% holiday, a 50% holiday, and finally a 25% holiday. Or something like that. That would be easy to stick to and would avoid the problem of withdrawing all the stimulus at once just as the economy was starting to seriously pick up steam.

Would Republicans agree to this? Probably not. But some of them might, and public opinion would probably be pretty favorable even among the tea partiers, who prefer tax cuts to deficit reduction by a margin of 49%-42%.

Even if you think federal spending is the first best solution to stimulate the economy, a payroll tax holiday is a pretty good second best solution. It's faster, easier, and more likely to get some Republican support. Liberals could do worse than to start putting their weight behind something like this.

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How Dangerous is al-Qaeda in Afghanistan?

| Tue Jul. 6, 2010 3:37 PM EDT

Via Glenn Greenwald, here is Newsweek's Michael Isikoff interviewing Michael Leiter, director of the National Counterterrorism Center, about the current threat from al-Qaeda in the AfPak region:

Isikoff: Let’s get a sense of what the overall threat picture looks like right now. [White House chief of staff] Rahm Emanuel said [recently] that about half of Al Qaeda has been eliminated in the last 18 months. How many people is that, and how many people are left in the other half?

Leiter: I think [CIA director] Leon Panetta said on Sunday, and I agree with him, that in Afghanistan, you have a certain number, a relatively small number, 50 to 100. I think we have in Pakistan a larger number.

How many?

Upwards — more than 300, I would say.

When I wrote about Panetta's estimate a week ago, I cautioned that he had only talked about Afghanistan, not Pakistan. But now Leiter has given us an estimate for Pakistan, and it looks like there's no more than 400-500 al-Qaeda members in the entire AfPak region. This is, obviously, not the only consideration for assessing the continued U.S. presence in Afghanistan, but it's sure a mighty big one. (And the others don't necessarily point in the direction of staying either. See Matt Yglesias here, for example.)

At this point there's not a lot left to say about this that hasn't been said a hundred times before, but just to restate the obvious, it's getting harder every day to justify the continued loss of life and continued multi-billion dollar expense of a full-out counterinsurgency campaign there if it's truly aimed at no more than a few hundred extremists living in caves. Maybe Joe Biden had this one right.

World Cup Thread

| Tue Jul. 6, 2010 2:14 PM EDT

I'll be rooting for the Netherlands for the rest of the World Cup. Why? Because I like tulips and windmills and the kid with his finger in the dike. Because I think it's remarkable that such a small country has such a successful soccer history, and I think it's about time for them to finally get their hands on the top trophy. Because they have such a good healthcare system. Because — at least in my experience — they seem to combine friendliness with a surprisingly robust sense of rationality. Because Switzerland and Denmark didn't make it out of group play. Because I've liked the Netherlands since the first time I visited.

So in honor of the Netherlands, here's a snapshot taken during that first visit in 1967. This is Madurodam, a miniature city in The Hague that my brother and sister and I were all pretty captivated by at the time. Beat that, Legoland. Judging from their website, Madurodam has been considerably spruced up since our visit, and I suppose that means I should take a trip over to Europe one of these days and check it out. In the meantime, though, I'll settle for rooting for their soccer team.

The Future of Oil

| Tue Jul. 6, 2010 1:11 PM EDT

Mike Konczal notes the startling news that U.S. investment in resource extraction (primarily oil and gas exploration) has now overtaken investment in manufacturing. But I think he goes astray here:

In 2001 we decided to lift a lot of rules and a massive amount of resource extraction went into place in a very short time span. This was done with the privatization of regulation (deregulation). We thought that the capital markets would be enough to oversee this massive change in our resources and handle the risk appropriately, and we did it in a really short amount of time. Instead of an eternal problem facing human society, it’s about a small group getting power in the White House and shredding the laws, oversight and process concerning how our environment and private companies interact, no doubt making themselves rich in the process. Less Icarus, more Cheney. What does this hold for the future? Notice that the regulators were put into crony sleep mode exactly at the moment where they were most needed.

Obviously some of that happened. But the primary shape of this story is pretty obvious. When oil prices skyrocketed following the OPEC embargoes of the 70s, investment in oil exploration went up. When oil prices crashed in the 80s, investment went down. When they skyrocketed again in the aughts, investment went up. Bush/Cheney policies obviously helped, but this is mostly a pretty simple market reaction to high prices.

And the future? I'd count on that blue line continuing to rise. It will certainly have rattles and bumps along the way, but the era of cheap oil is over, and permanently high prices make even expensive investment in hard-to-extract oil worthwhile. The final fate of American manufacturing is still unclear, but I doubt that it will ever match resource extraction again.

David Brooks on Fiscal Stimulus

| Tue Jul. 6, 2010 12:13 PM EDT

David Brooks has one of his patented "arguing with myself" columns in the Times today, and this one is about whether fiscal stimulus is a good idea. Here's where he ends:

These days, debt-fueled government spending doesn’t increase confidence. It destroys it. Only 6 percent of Americans believe the last stimulus created jobs, according to a New York Times/CBS News survey. Consumers are recovering from a debt-fueled bubble and have a moral aversion to more debt.

You can’t read models, but you do talk to entrepreneurs in Racine and Yakima. Higher deficits will make them more insecure and more risk-averse, not less. They’re afraid of a fiscal crisis. They’re afraid of future tax increases. They don’t believe government-stimulated growth is real and lasting. Maybe they are wrong to feel this way, but they do. And they are the ones who invest and hire, not the theorists.

The Demand Siders are brilliant, but they write as if changing fiscal policy were as easy as adjusting the knob on your stove. In fact, it’s very hard to get money out the door and impossible to do it quickly. It’s hard to find worthwhile programs to pour money into. Once programs exist, it’s nearly impossible to kill them. Spending now creates debt forever and ever.

....But the overall message is: Don’t be arrogant. This year, don’t engage in reckless new borrowing or reckless new cutting. Focus on the fundamentals. Cut programs that don’t enhance productivity. Spend more on those that do.

Two things occur to me. The first is that a columnist like Brooks doesn't have to pander to public opinion. He should leave that to politicians. If he thinks more debt is dangerous, he should say so and explain why. If he doesn't, he should say that. What he shouldn't do is throw up his hands and say that since the public feels X, then we must do X. After all, part of the reason the public feels X is because people like David Brooks keep telling them that.

Beyond that, though, I guess my question is what he thinks the downsides are here. That is, what's the downside of more stimulus vs. less stimulus? The downside of less stimulus, I think, is obvious: if the Krugmanites are right, it will mean years and years of grinding unemployment and slow growth. It means pain and destitution for millions.

But what's the downside of more stimulus? No one can say, really. The best answer is that it might lead to future interest rate hikes or future inflation or future tax increases. But there's very little evidence to support this, and Brad DeLong, among others, makes an excellent case that even a trillion dollar stimulus would have only a tiny effect on the federal government's future solvency. So even if a big stimulus has little positive effect — which seems unlikely given current circumstances — it doesn't create much danger either. So why not try it? The fiscal purists sure don't seem to have much in the way of better ideas.