Kevin Drum

The Rich Are Different From You and Me

| Wed Dec. 30, 2009 7:59 PM EST

Thanks to a combination of Republican idiocy (in 2001) and Republican obstinacy (in 2009), the estate tax will go away completely in 2010, only to return in 2011. So if you're rich, and you're close to death, you'd do well to hang on for another couple of days before you expire. Or so the story goes:

"I have two clients on life support, and the families are struggling with whether to continue heroic measures for a few more days," says Joshua Rubenstein, a lawyer with Katten Muchin Rosenman LLP in New York. "Do they want to live for the rest of their lives having made serious medical decisions based on estate-tax law?"

....To make it easier on their heirs, some clients are putting provisions into their health-care proxies allowing whoever makes end-of-life medical decisions to consider changes in estate-tax law. "We have done this at least a dozen times, and have gotten more calls recently," says Andrew Katzenstein, a lawyer with Proskauer Rose LLP in Los Angeles.

Of course, plenty of taxpayers themselves are eager to live to see the new year. One wealthy, terminally ill real-estate entrepreneur has told his doctors he is determined to live until the law changes.

"Whenever he wakes up," says his lawyer, "He says: 'What day is it? Is it Jan. 1 yet?'"

This seems crazy to me. Congress has long had the power to retroactively change tax rates, and they'll almost certainly reinstate the estate tax sometime in 2010. The Journal says that the odds of a successful court challenge to a retroactive increase "is a subject of debate in the estate-planning world," but it's hard to believe that anyone really takes that seriously.

But who knows? Maybe this is all a clever plan on the part of Democrats. Maybe they're just waiting for some rich and unsympathetic person to die (think Leona Helmsley or someone like that) and then they plan to use this person as a poster child for Republican greed and pandering to the rich. The ads write themselves: "You pay taxes on everything you earn. But conservative mogul Richard Mellon Scaife just left $1.2 billion to his kids and they don't have to pay a single cent on it. Today's Republican Party: protecting billionaire contributors while you keep the country running."

Eh. Probably not. But you never know. Someone might be able to make hay out of this.

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Full Body Scanning

| Wed Dec. 30, 2009 3:50 PM EST

As much as I hate both the partisan screeching and the inane rush to pin blame in the underwear bombing case before we really have any idea what happened, I also confess that I don't understand the (bipartisan! international!) hysteria that's prevented full body screening machines from being put in use on a wider basis. They perform "virtual strip searches that see through your clothing and reveal the size and shape of your body," says the ACLU, and earlier this year the House voted to prohibit their use for primary screening. Both Democrats and Republicans voted for the ban by wide margins.

I'll defer to the experts on how and where these devices are best used, but privacy concerns strike me as daft. Yes, the machines show the shape of your body under your clothes. Big deal. That strikes me as way less intrusive than pat-downs, wands, bomb-sniffing dogs, hand inspections, and no-fly lists. If we put up with that stuff, why on earth would we suddenly draw the line at a full body scanner?

We go nuts whenever a terrorist tries to set off a bomb, but we also go nuts over an effective, noninvasive technology just because it gives TSA screeners a brief glimpse of our body fat level? That's crazy.

The End of Health Insurance

| Wed Dec. 30, 2009 12:39 PM EST

"Community rating" is wonkspeak for a requirement that health insurers cover everyone at the same price, regardless of preexisting conditions or health status. James Surowiecki says it makes private health insurance unnecessary:

Congress’s support for community rating and universal access doesn’t fit well with its insistence that health-care reform must rely on private insurance companies. After all, measuring risk, and setting prices accordingly, is the raison d’être of a health-insurance company....Congress is effectively making private insurers unnecessary, yet continuing to insist that we can’t do without them.

The truth is that we could do just fine without them: an insurance system with community rating and universal access has no need of private insurers.

I agree, and it's one of the reasons that, warts and all, I support the current healthcare reform legislation so strongly. My take is that community rating at the national level can eventually lead to only two outcomes: (a) the end of private health insurance completely1 or (b) the transformation of private insurers into regulated public utilities. Roughly speaking, Option A is what you see in Canada or Sweden, Option B is what you see in Germany and the Netherlands. I'd prefer the former, but the regulated utility model works OK too, and it's hard to see how you avoid one or the other in the long run.

It would be nice to have a public option in the current legislation since it would probably speed up the process I'm talking about. But Surowiecki is right: community rating plus universal access makes private insurers obsolete. Soon they'll be doing nothing but basic administrative work, and within a few years this will become too obvious to ignore. At that point, Congress will either enact a public option that eventually grows large enough to put private insurance out of business, or else regulation of the private industry will grow to the point where it becomes a nonissue. It's too bad we'll have to wait so long for this to happen, but today's healthcare legislation puts it on the road to inevitability.

1That is, its end as a primary health insurer. Private insurers will likely stay around to provide supplementary or specialized coverage.

Midterms are Coming

| Wed Dec. 30, 2009 11:15 AM EST

On Monday I twittered:

Why haven't we heard yet from Dick Cheney re: NW 253 bombing? Really feel like we could use his perspective.

Ha ha. Just kidding, of course. But I guess Cheney took me seriously. Here he is yesterday:

As I've watched the events of the last few days it is clear once again that President Obama is trying to pretend we are not at war. He seems to think if he has a low key response to an attempt to blow up an airliner and kill hundreds of people, we won't be at war.

What a loathsome human being. As for the more general calculated Republican freakout over this, credit where it's due to Politico for pointing it out. The GOP is really mining new lows these days.

More here. Or a million other places as well. It's nothing new that Republicans are doing everything they can to exploit terrorism for political advantage, but they sure are stepping up the crassness level these days.

The Financial Lobby at Work

| Tue Dec. 29, 2009 6:48 PM EST

Ryan Grim and Arthur Delaney write today about the House Committee on Financial Services — aka the banking committee — and how Democrats decided to populate it when they won control of Congress in 2006:

The banking committee [...] is known as a "money committee" because joining it makes fundraising, especially from donors with financial interests litigated by the panel, significantly easier. The Democratic leadership chose to embrace this concept, setting up the committee as an ATM for vulnerable rookies. Eleven freshman representatives from conservative-leaning districts, designated as "frontline" members, have been given precious spots on the committee. They have individually raised an average of $1.09 million for their 2010 campaigns, according to the Center for Responsive Politics; by contrast, the average House member has raised less than half of that amount.

....Because the frontline members face the possible end of their careers in November and may be beholden to the whims of powerful donors, the Democrats' 13-seat advantage on the committee is weaker than it appears. If seven members break with the party on a vote, the GOP wins. Rep. Luis Gutierrez (D-Ill.) refers to them as "the unreliable bottom row." (The second row is little better, populated by the Democrats from red-leaning areas who first took office after the 2006 election.)

In short, by setting up the committee as a place for shaky Democrats from red districts to pad their campaign coffers, leadership made a choice to prioritize fundraising over the passage of strong legislation. "It makes it difficult to corral consensus," says Rep. Stephen Lynch (D-Mass.), a subcommittee chairman, of the unwieldy panel.

The whole piece is worth a read, including the explanation of how financial interests these days tend to get local frontmen — realtors, car dealers, farmers, small credit unions — to push for loopholes that would be hard to pass if it were obvious that Wall Street firms were behind them. And for sheer entertainment, don't miss the description of senior members of the banking committee twisting themselves into knots to change their votes on legislation in order to curry favor with industry lobbyists once they've decided they were supporting a lost cause. It's politics at its finest.

But of course, keep one other thing in mind too: Democrats may cave on some of this stuff — and shame on them for doing so — but at least there's still a core group of them willing to do what's right. On the Republican side, the number of committee members willing to what's right is precisely zero.

Quote of the Day: Grandstanding Watch

| Tue Dec. 29, 2009 2:08 PM EST

From Chris Hayes, responding to the mindless blathering of Rep. Peter King (R–Hysteristan) about Obama's response to the underwear bomber:

It sounds like you're saying they've been insufficiently grandstanding on the issue.

"I don't know why you'd say that," King said. And you know what? He probably really doesn't.

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Repealing Reform

| Tue Dec. 29, 2009 1:43 PM EST

Apparently the conservative base is demanding that all good Republicans campaign next year on repeal of healthcare reform. This is probably a good strategy since it (a) makes for good rabble rousing but (b) will never have to be followed up on.  Republicans will never get either the 60 votes they'd need for repeal or the two-thirds they'd need to override an Obama veto, so why not promise the moon?

But since there's not a lot to blog about this week, I guess I'm curious about how exactly they're going to do this. The problem, as other people have also pointed out, is that the current bill has basically been stripped down to the bare minimum you can have once you start from the point that everyone agrees about: reforming the insurance industry. Crudely speaking, the moving parts go together like this:

  • Insurance companies are required to take all comers, regardless of preexisting conditions.
  • This requires regulation of pricing, since taking all comers is meaningless if they're priced out of the market.
  • Regulation of pricing would destroy the private insurance market, since sick people would all buy cheap insurance and bankrupt the companies. So you have to ensure that everyone buys insurance, even the young and healthy. Thus, an individual mandate.
  • But if you're going to have an individual mandate, then you have to include subsidies so that poor people can afford it.
  • And that's the ball game.

Now, there's more to healthcare reform than just this. There's Medicaid expansion for example, which I suppose Republicans could fight against. But Medicaid is cheaper than subsidies, so costs would go up if they did that. There are also all the cost cutting measures and pilot projects in the bill, and some of them are unpopular. But again, they'd basically be surrendering completely on even the idea of reining in healthcare costs if they attacked that.

So what do they have left to campaign against? Maybe the specific funding sources, but that would be a pretty raw bit of pandering to the rich. The fact is that at any level of real detail, Republicans just don't have much of an argument.

I suppose this doesn't matter, though. It sort of reminds me of the too-clever liberal response whenever conservatives start railing about cutting the deficit without raising taxes. It goes something like this: "OK, fine. But two-thirds of the federal budget is taken up by Social Security, Medicare, national defense, and interest on the debt. You don't want to cut that stuff, so to eliminate the deficit you'd have to slash about half of the remaining stuff. So what are you going to cut?"

Liberals always ask that question, conservatives never answer it since they know perfectly well it would piss off practically every registered voter in the country, and it makes no difference. They just keep saying it anyway, and lots of voters buy it. Probably it would be the same with healthcare reform. They'd refuse to say just exactly what they'd cut, and it wouldn't really make any difference. It's the thought that counts, after all.

More Drama Please, Obama

| Tue Dec. 29, 2009 12:40 PM EST

"I'm not sure you can get more beltway than this article," writes a friend.  Here's the article:

There is a sense of déjà vu in the Obama administration’s response to the attempted terrorist attack on Christmas Day. A by-now familiar pattern has been established for dealing with unexpected problems.

First, White House aides downplay the notion that something may have gone wrong on their part. While staying out of the spotlight, the president conveys his efforts to address the situation and his feelings about it through administration officials. After a few days, the White House concedes on the issue, and perhaps Barack Obama even steps out to address it.

....By the time Obama addressed the public with a brief televised statement, his critics had made such headway that the White House was left with this lede in the New York Times: “President Obama emerged from Hawaiian seclusion on Monday to try to quell gathering criticism of his administration’s handling of the thwarted Christmas Day bombing of an American airliner as a branch of Al Qaeda claimed responsibility.”

It’s the kind of story the White House might have avoided if Obama hadn’t waited so long to forcefully react to the incident.

That's right: if only Obama insisted on immediately grabbing the spotlight and relentlessly overhyping events for his own political gain, maybe the right would leave him alone. Sounds like a solid plan to me.

A Bold Stand from the Journal

| Tue Dec. 29, 2009 11:20 AM EST

As a wise man once said, you could devote your entire life to debunking inane Wall Street Journal editorials once you let yourself get sucked into their gaping maw. But via Ezra Klein, today's editorial is a gem, not pretending to even a germ of reason or sanity:

The White House is now floating a bipartisan commission to reduce federal borrowing, and much of the political class is all for it. We only hope Republicans aren't foolish enough to fall down this trap door....Republicans should respond with their own choice: They'll agree to a deficit commission only if it takes tax increases off the table....

Yeah, I'm sure Democrats will jump at that deal. And I can't wait for the Journal's detailed fiscal plan for cutting federal spending by 30% — especially since they simultaneously seem to think that Medicare should be cut and that it should be preserved as is. Should be a crowd pleaser.

In fairness, plenty of liberals agree with the Journal in a mirror image sort of way: a commission would be nothing but a facade for Pete Peterson to gut Social Security and Medicare and probably throw in a few tax cuts for the rich for good measure. It looks like bipartisanship has as bleak a future in 2010 as it did in 2009.

Miscellany

| Mon Dec. 28, 2009 11:20 PM EST

Three quick items:

  • Yes, the filibuster sucks, but I agree with both Ezra Klein and Bruce Bartlett that the tradition of Senate holds is even more odious. But if it's not possible even to do away with holds, I'll reiterate my suggestion that the Senate scale way, way back on the number of officials that it has to confirm. Maybe the top two officers in each executive department, appellate judges and above, and a few others of similar rank. The rest should just be straight presidential appointments.
  • Can we all, please, chill out about the failed plane bombing, chill out about Janet Napolitano's "the system worked" gaffe, and chill out about Obama remaining in Hawaii? Just. Chill. Out. We don't have to go completely cuckoo every time something like this happens. Instead, let's find out where the system failed instead of hysterically guessing about it, and then figure out what we ought to do about it.
  • For decades now, the initiative process in California has primarily been a tool of the rich and powerful, not the grassroots. Here's the latest outrage.

That is all. You may now return to Monday Night Football.