Kevin Drum

Waiting for Obama

| Tue Nov. 3, 2009 12:18 PM EST

Politico reports on the timeline for healthcare reform:

Democrats have blown so many deadlines for getting health reform done this year that insiders are increasingly skeptical they can finish by year’s end — and some even suggest the effort might slip to a new deadline, before the State of the Union address.

....In the Senate, Majority Leader Harry Reid is still wrangling with his moderate members to corral 60 votes just to get the debate started. And on Monday, Reid sent a letter to Republicans acknowledging that he is waiting on the Congressional Budget Office’s cost estimates and analysis to finish drafting a bill....Democratic Sen. Kent Conrad said he spoke with CBO Director Doug Elmendorf last week and that it sounded like “it would be quite a while” before the estimates were ready. The news makes a Christmas completion “a challenge,” Conrad said.

Regular reader RPH emails in response:

Was talking to some of the local Democratic Party organizers in Lancaster County, Virginia, aka my parents, and the feedback they hear is that Obama is quickly coming to be viewed as a ditherer, unable to timely make decisions or close the deal.  That he doesn't seem strong enough to push key programs through, etc.  This is the backdrop for why so many Ds in Va this year seem apathetic about voting.  Lancaster is also fairly conservative so I think many Ds are just parroting what their R friends keep spouting, I'm sure, with increasing volume, with the reality being the economy which is devastating that area of Virginia.  For what it's worth, everyone is extremely frustrated by the Ds poor showing in Va this year.

But still.

O needs to get some big things under his belt and soon.  If he can get Afghanistan off his plate, that might buy him some time on Health Care without running the risk of a dangerous loss of momentum.  But right now, every thing seems stuck in an endless loop.  Part of this is the media cycle of course, but that's unfortunately the reality of governing now — where the steady perception of action, decisiveness and competence are key.

Is RPH right?  Is this soon to become the new conventional wisdom?  I certainly don't blame Obama for healthcare, where his leverage to kick the Senate into action is limited, but even I'm getting a little antsy about Afghanistan.  Yeah, I want him to get it right, but there's a limit to how long this stuff can stay simmering on the cooktop.

Anyway, I'm only passing this along, not really endorsing any of it.  Just some raw data to chew over.

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Election Prediction Thread

| Tue Nov. 3, 2009 11:10 AM EST

So who's going to win today?  Leave  your guesses in comments.  The warm glow of being right is your reward if, in fact, you turn out to be right.

I haven't blogged much about any of this because none of it has seemed very interesting up until the last minute soap opera in the NY-23 race.  Even by the standards of off-year elections this is a pretty small one, and though the British press routinely projects the future course of the empire from the results of a single by-election in West Bromwich, we have a hard time pulling off quite the same level of breathless credulity here.  There's just too much obviously local spin to all these races.  Still, I admit that I'll be impressed if Jon Corzine manages to pull out a come-from-behind victory by insinuating that his opponent is fat.

Retiring in Style

| Tue Nov. 3, 2009 1:42 AM EST

Just in case you didn't already hate corporate executives enough, here's the Wall Street Jounal on how the boys and girls on mahogany row have responded to tough economic times:

Pensions for top executives rose an average of 19% in 2008, with more than 200 executives seeing pensions increase more than 50%, according to a Wall Street Journal analysis.

....Executive pensions rose even as the share prices at the companies declined an average of 37% in 2008 and many firms froze employee pensions and suspended retirement-plan contributions.

My friends, that's what we call shareholder value.

Paying for Prayer

| Tue Nov. 3, 2009 1:09 AM EST

From the Los Angeles Times, here's the latest on the healthcare front:

Backed by some of the most powerful members of the Senate, a little-noticed provision in the healthcare overhaul bill would require insurers to consider covering Christian Science prayer treatments as medical expenses.

The provision was inserted by Sen. Orrin G. Hatch (R- Utah) with the support of Democratic Sens. John F. Kerry and the late Edward M. Kennedy — both of Massachusetts, home to the headquarters of the Church of Christ, Scientist....The spiritual healing provision was introduced in the House by Rep. John Shimkus (R-Ill.), whose district includes a Christian Science school, Principia College.

I have a conflict of interest here since I come from a Christian Science background, but holy cow does this seem like a bad idea. Just a really, stupendously bad idea.  It's true that not everything that seems like a slippery slope really is one, but this really is one.  If it passes, can you imagine how this would play out among the Colorado Springs set within a few years?  The mind reels.

The Next Bubble

| Tue Nov. 3, 2009 12:46 AM EST

A year ago, the implosion of the global economy prompted a huge flight to quality.  Nobody wanted risky assets anymore.  All they wanted was nice, safe, United States Treasury bonds.

The economy has stabilized since then, and that means that investors with access to lots of cheap money are once again becoming eager to invest in risky assets.  Pimco's Paul McCulley suggests that this makes perfect sense as long as everyone is convinced that the Fed will hold interest rates at zero for a long time, but then he admits that it's all a bit of a paradox.  After all, the Fed will only hold down interest rates if the economy continues to suck, in which case rising asset prices are just a big bubble.  But if the economy recovers, thus justifying the high current prices of risky assets, then the Fed will raise interest rates and the whole thing will come crashing down.  It's a quandary.  In the end, though, he advises a bit half-heartedly that "the time has come to begin paring exposure to risk assets, and if their prices continue to rise, paring at an accelerated pace."

And Nouriel Roubini?  Well, Roubini doesn't do anything half-heartedly.  He says in no uncertain terms that we are completely and irrevocably fucked:

The US dollar has become the major funding currency of carry trades as the Fed has kept interest rates on hold and is expected to do so for a long time. Investors who are shorting the US dollar to buy on a highly leveraged basis higher-yielding assets and other global assets are not just borrowing at zero interest rates in dollar terms; they are borrowing at very negative interest rates — as low as negative 10 or 20 per cent annualised — as the fall in the US dollar leads to massive capital gains on short dollar positions.

....Yet, at the same time, the perceived riskiness of individual asset classes is declining as volatility is diminished due to the Fed’s policy of buying everything in sight....So the combined effect of the Fed policy of a zero Fed funds rate, quantitative easing and massive purchase of long-term debt instruments is seemingly making the world safe — for now — for the mother of all carry trades and mother of all highly leveraged global asset bubbles.

....But one day this bubble will burst, leading to the biggest co-ordinated asset bust ever....A stampede will occur as closing long leveraged risky asset positions across all asset classes funded by dollar shorts triggers a co-ordinated collapse of all those risky assets — equities, commodities, emerging market asset classes and credit instruments.

....This unraveling may not occur for a while, as easy money and excessive global liquidity can push asset prices higher for a while. But the longer and bigger the carry trades and the larger the asset bubble, the bigger will be the ensuing asset bubble crash. The Fed and other policymakers seem unaware of the monster bubble they are creating. The longer they remain blind, the harder the markets will fall.

Now that's a cheery thought, isn't it?  Monstrous amounts of leverage are going to be employed bidding up assets of all kinds, and monstrous amounts of money are going to be made.  As usual, everyone will assume they'll be able to get out in time, and about 99% of those people will be wrong.  Then: kaboom.  The yen carry trade took down Iceland and a few hedge funds, but the dollar carry trade is going to take us down.

Well, maybe, maybe not.  Roubini does seem to have some pretty sizable financial mood swings.  But I have to admit that the stock market sure looks overvalued to me too.  Corporate profits may be up for the moment, but belt tightening will only work for just so long.  Eventually revenues need to rise, and it's a little hard to see where that's going to come from in the short term.

But I'm a pessimist.  Even in good times I'm a pessimist.  So who cares what I think?

The Danger of Purging

| Mon Nov. 2, 2009 5:16 PM EST

The Wall Street Journal editorial board is pretty happy that conservative activists have taught the "GOP's backroom boys" a lesson by forcing moderate Republican Dede Scozzafava out of the NY-23 congressional race in favor of right-wing darling Doug Hoffman.  No surprise there.  However, they also offer a warning:

But that lesson will be for naught if conservatives conclude that their victory is reason to challenge any candidate who doesn’t agree with them on every issue....Democrats did themselves no favors by driving Joe Lieberman out of their party, and conservatives will do their cause no good by forcing GOP candidates in Illinois, California and Connecticut to sound like Tom DeLay. If conservatives now revolt against every GOP candidate who disagrees with them on trade, immigration or abortion, Nancy Pelosi and Harry Reid will keep their majorities for a very long time.

I sort of hate to admit this, but they're right about Lieberman.  It would have been great to get rid of him — and it was worth a try in a liberal state like Connecticut — but in the end all it did was make him even more embittered and more estranged from the party than before. As a result, he's now loudly making the rounds of cable news shows promising to vote against cloture on any healthcare bill that includes a public option.  As near as I can tell, this isn't motivated by any ideological objection to the public option at all.  It's motivated mostly by fact that he's still pissed off about how he was treated in 2006.  If he'd been left alone and had won reelection as a Democrat, he'd probably be going along with the Democratic leadership on this with no real complaints.

You can't win 'em all, I guess.  And it was worth a try.  But there's also a price to pay when you don't judge the chances of success with quite enough of a gimlet eye.

(Via James Joyner.)

UPDATE: Sorry, I meant 2006, not 2008.  Time sure flies, doesn't it?  I've corrected the text.

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Calculus Meets Khamenei

| Mon Nov. 2, 2009 4:36 PM EST

Via Andrew Sullivan, here's a story that got a lot of play among Iranophiles over the weekend:

In a stunning move, Mahmoud Vahidnia (pictured right), a student from the prestigious Sharif university and winner of the International Math Olympics, directly confronted Supreme Leader Ali Khamenei during the question-and-answer portion of a conference that was being held. When Khamenei asked if the audience had any questions, Vahidnia stood up and answered, "Yes, I have some words with you.”

....Khamenei dodged the questions and instead called Vahidnia dishonest. He claimed that he receives (and is receptive to) criticism every day, and that he always adjusts his behavior to account for errors. Soon thereafter, Khamenei departed behind a curtain before first receiving praise from a Basiji student in attendance. The prayer that Khamenei was scheduled to lead at the end of the ceremony did not occur amid his hasty departure.

Actually, Vahidnia doesn't even seem to have been on Iran's IMO team, let alone a winner, but whatever.  Apparently he really did deliver a 20-minute critique of Khamenei and his administration in front of a considerable audience.  Why Khamenei allowed something like this to happen is a little hard to fathom, but it goes to show that the shockwaves from this summer's demonstrations still haven't died away.

Rushing Things

| Mon Nov. 2, 2009 2:37 PM EST

The emerging favorite Republican tactic for killing reform measures without actually admitting that they want to kill reform is to complain that Democrats are "rushing things."  They're not against reform, they just want enough time to do it right.1

This was the pitch on healthcare reform from the GOP members of the Senate Finance committee, even after hundreds of hours of meeting.  It's the pitch from George Voinovich on climate legislation.  And now it's the pitch from Bob Corker on financial regulation.  Tim Fernholz shakes his head in dismay:

What in the world does he want to talk about? It's not like Corker is pushing some specific agenda or has offered any major ideas, at least publicly. These issues have been at the forefront of the policy debate for a year now, and certainly have been bubbling underneath for a long time. If he doesn't have any specific concerns, its hard to conceive of this as anything but a delaying tactic that simply substitutes vague delays for substantive engagement.

....There's a pretty big argument going on in the Democratic party between those who want to reshape the financial sector fundamentally and those who want to nudge it towards responsibility, which I talk about in my article today. Sometimes, though, it's easy to forget that there is also an opposition party out there that believes we should do virtually nothing.

Well, it's not really that easy to forget.  After all, Republicans remind us of it pretty much every day.  Which is OK!  They're Republicans.  They're the opposition.  They don't support things like providing healthcare for everyone, reducing greenhouse gas emissions, and regulating the financial industry.  The only question is why an opposition that controls 40% of the Senate and represents about a third of the population should be allowed to routinely stop all this stuff in its tracks.

1Unless, of course, the subject is Afghanistan.  In that case, taking the time to do things right is "dithering" and "playing Hamlet."

Quote of the Day

| Mon Nov. 2, 2009 1:38 PM EST

From Sen. Orrin Hatch (R–Utah), explaining why conservatives should worry about the Democratic goal of eventually implmenting a national healthcare system:

If they get there, of course, you're going to have a very rough time having a two-party system in this country, because almost everybody's going to say, 'All we ever were, all we ever are, all we ever hope to be depends on the Democratic Party.'  That's their goal. That's what keeps Democrats in power.

Weird.  I understand that conservatives don't like the idea of a national healthcare system, but guess what? Germany has one. Britain has one.  France has one.  Canada has one.  And the conservative parties in those countries have done just fine.  Republicans would do fine too if we had one.

Via Atrios.  And I promise to do some non-healthcare posts soon.

The Cost of Technology Revisited

| Mon Nov. 2, 2009 1:03 PM EST

A few days ago Ezra Klein quoted the CEO of Kaiser Permanente, George Halvorson, telling us that CT scans cost "a few hundred dollars in Europe and over $15,000 here."  This didn't seem quite right to me, and today Ezra gets the goods straight from Halvorson in lovely chart form.  Turns out the "few hundred dollars in Europe" part is right, but there was some kind of mistake about the U.S. pricing.1  As you can see from the chart, a head CT scan costs about $950 in the U.S. vs. an average of $276 in six other countries.  That's a difference of about 3.5x.

Which is still a very big difference.  As I've mentioned before, here in the U.S. we pay higher fees to our doctors, we pay higher prices for drugs, we pay higher prices for diagnostic tests, and we pay higher administrative costs to our insurance companies.  If we want to reduce healthcare costs, we have to do something about all that, but both Obama and the Democratic leadership in Congress have (quite accurately) decided that doing so right now would earn the undying wrath of doctors, Big Pharma, insurance companies, hospitals, and device manufacturers, and together they could easily kill any chance of passing healthcare reform at all.  So instead we'll pass reform now without addressing prices and then hope that maybe we can do something about it later.

And maybe we can.  But don't bet on it: interest groups fight like crazed weasels to keep what they have, and they usually win.  We might be able to freeze cost increases a bit if we put some serious muscle into it, but that's probably about all we can reasonably hope for.  Or maybe technology will save us.  You never know.

More charts here.  I'm sure everyone will have their own favorite.

1Apparently it was a mistranscription.  Halvorson actually said $1,500, not $15,000.  Ezra has since corrected the original post.