Kevin Drum

Public Option Finale?

| Mon Dec. 7, 2009 2:57 PM EST

Healthcare reform took a fairly unexpected detour this weekend.  A consensus seems to be developing, even among liberal senators, that the public option just isn't going to happen, so now a whole bunch of alternatives are being discussed to make up for its loss.  Including this:

Sources who have been briefed on the negotiations say that Medicare buy-in is attracting the most interest. Expanding Medicaid is running into more problems, though there's some appeal because, unlike increasing subsidies, expanding Medicaid actually saves you money. There's also ongoing discussion about tightening regulations on insurers, but I don't know the precise menu of options being considered.

The idea here is that you could buy into Medicare if you're between the age of 55 and 65.  It's the ultimate public option, but only for a subset of the population.  On the bright side, it's a pretty big demographic, and it's also the demographic that, on average, has the most health issues.  On the less bright side, I also imagine that it's a demographic that's pretty well covered by employer insurance already.

In any case, I think it's a great idea, though I have a hard time believing it's going to be suddenly resurrected at the 11th hour like this.  Still — and with the caveat that I'm a lukewarm supporter of the public option in the first place — I'd probably take this over the public option as a straight-up trade any time.  Not only does it do a lot of good, but it sets the stage for possible future age reductions.  Ezra Klein runs down the rest of the possible compromises here.

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TARP Unbound

| Mon Dec. 7, 2009 2:06 PM EST

The much-derided TARP program has turned out to be remarkably successful:

The White House had projected in August that the $700 billion Troubled Assets Relief Program, or TARP, would lose about $341 billion over the next 10 years. But officials scaled back the estimate after once-shaky Wall Street firms began recovering much more quickly than expected. In addition, several TARP initiatives have been funded at a smaller amount than originally planned.

....The new, more optimistic estimates of TARP losses could pave the way for Democrats to tap some of the program's unspent funds for a jobs bill currently being crafted in the House. White House press secretary Robert Gibbs said Friday that President Obama is likely to discuss such a plan during a speech Tuesday at the Brookings Institution.

....Some leading Republicans are opposed to proposals to use TARP funds for job creation, saying it would violate the intent of the law. These lawmakers say they simply want the program to end. "The money went out to financial institutions. Now it's coming back, and as it comes back, what we ought to do with that money is use it to reduce the budget deficit," House Minority Leader John A. Boehner (R-Ohio) said on Bloomberg TV last week.

It was always a mystery to me why so many people insisted that the program was likely to have a net cost of $700 billion, when that was never remotely likely in any scenario short of a full-on rerun of the Great Depression.  In the end, it's been extremely successful and surprisingly cheap, even cheaper than I suspected at the time.

In related news, I'd say that John Boehner is quite correct in theory and abysmally wrong in practice.  But at least that's better than his usual batting average.

The Great BCS Cop-Out

| Mon Dec. 7, 2009 1:07 PM EST

I would like to associate myself 100% with this.  That is all.

McCain the Chameleon

| Mon Dec. 7, 2009 1:02 PM EST

Here's the subhead on today's LA Times profile of John McCain:

The Arizona senator — and political celebrity — takes a spot on the front lines of the Republican Party's opposition to Obama. He's bipartisan no more, especially on healthcare.

And here's a bit of the text:

Gone is the maverick bridge-builder who bucked his party on high-voltage issues such as immigration, climate change and campaign finance reform. As the GOP has settled on a strategy of unremitting opposition to the Obama agenda, McCain has been front and center on the attack.

....Senate Minority Leader Mitch McConnell (R-Ky.), with whom McCain has tangled bitterly over campaign finance legislation, now could not be more effusive in his praise. "He's been a fabulous team player," McConnell said in an interview. "All I can tell you is that, in this Congress and post-campaign era, Sen. McCain has been incredible — on message and effective."

...."I've always seen two John McCains — one who has the partisan, angry side; and a nice, cooperative, bipartisan side," said Sen. Barbara Boxer (D-Calif.), who has been working on climate change legislation that McCain has opposed. "I have not seen the bipartisan side in a long time."

I hope no one is surprised by this.  When McCain is running for president or thinking of running for president, he's a bipartisan maverick.  When he's not, he's a conservative die-hard.  And now that the presidency is plainly out of reach forever, he's taken his non-campaign mode to its natural extreme and become a snarling right-wing pit bull.  This was entirely predictable, since McCain's public persona has always shifted with the political winds, and the political winds have finally spoken decisively about his future.

And yet, somehow he's managed to maintain his reputation for maverickiness through it all.  I wonder if the press will ever figure out just how badly they've been played by this guy over the years?

Quote of the Day: Gold Rush

| Mon Dec. 7, 2009 12:12 PM EST

From Peter Epstein, president of gold reseller Merit Financial Services, on why they don't advertise much on CNN:

Gold resonates more with Fox’s viewers “because it’s the angry white man audience — it’s the conservative audience....They are distrustful of the government, of the regime.”

Gold: The Angry White Man's Investment!  Because, apparently, angry white men are the natural audience for an industry whose markups tend to be "so egregiously high the only thing you can call them is shysters."  More at the link.

Big Business and the EPA

| Mon Dec. 7, 2009 2:06 AM EST

In 2007 the Supreme Court ruled that the EPA had the authority to regulate greenhouse gases unless "it determines that greenhouse gases do not contribute to climate change."  But of course, greenhouse gases do contribute to climate change, and the EPA is now close to finalizing a finding that says exactly that.  Big business is not happy:

An "endangerment" finding by the Environmental Protection Agency could pave the way for the government to require businesses that emit carbon dioxide and five other greenhouse gases to make costly changes in machinery to reduce emissions — even if Congress doesn't pass pending climate-change legislation.....Many business groups are opposed to EPA efforts to curb a gas as ubiquitous as carbon dioxide.

An EPA endangerment finding "could result in a top-down command-and-control regime that will choke off growth by adding new mandates to virtually every major construction and renovation project," U.S. Chamber of Commerce President Thomas Donohue said in a statement....EPA action won't do much to combat climate change, and "is certain to come at a huge cost to the economy," said the National Association of Manufacturers....Dan Riedinger, spokesman for the Edison Electric Institute, a power-industry trade group, said the EPA would be less likely than Congress to come up with an "economywide approach" to regulating emissions.

Well, these guys are right about one thing: the Clean Air Act is pretty poorly suited to regulating CO2.  Cap-and-trade legislation designed specifically to address greenhouse gases would be much more efficient, much more predictable, and much less painful all the way around.

But the longer that congressional Republican dawdle and obstruct, the more likely it is that the EPA will end up doing something by default.  So here's some advice for corporate America: if you don't like this, then get off your asses and start pressuring your friends in the GOP to support a cap-and-trade bill that would preempt the EPA and put in place more predictable rules.  After all, I understand that corporate interests have a certain amount of sway with the Republican Party.  Right?

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Counterfeit Bags

| Sun Dec. 6, 2009 8:36 PM EST

Via Felix Salmon, MIT management professor Renee Richardson Gosline says that the market in counterfeit luxury items might actually increase sales of the real thing:

In a working paper she just finished this fall, “The Real Value of Fakes,” Gosline interviewed hundreds of consumers who knowingly bought fake luxury apparel, many at “purse parties” where such goods are sold. Gosline found that within two years, 46 percent of these buyers subsequently purchased the authentic version of the same product — even though other people could not necessarily tell the difference.

Felix calls this finding "astonishing," but it actually seems like it makes a kind of sense to me.  Think about the kind of person who buys a fake Gucci bag.  It's probably somebody who really likes the idea of owning a Gucci bag and would buy one if she had the money.  But she doesn't, so she buys a fake at a purse party.  And she likes it!  She especially likes the fact that other people think she owns an expensive bag.  Still, it gnaws at her.  When people ask if it's Gucci, she has to lie, and she doesn't really like that.  What's more, the longer she owns the fake, the more she understands the subtle differences that identify the real thing.  Eventually she realizes it's possible that really sophisticated people — i.e., the very people she most wants to impress — can tell it's a fake immediately and are laughing at her behind her back.  That makes her nervous.  But she's really gotten attached to Gucci during the time she's carried around the fake.  So she starts saving her money.  Or maybe she gets a raise.  Or something.  And then she goes off and buys a real Gucci, one that not only looks good, but that she can take out in public without feeling nervous that someone will find her out.

That's not everyone, of course.1  There are also people who just flatly can't afford a real Gucci and never will.  But in those cases Gucci isn't losing anything when they buy a fake.  And the genuinely well off who can afford a Gucci bag probably wouldn't be caught dead with a fake no matter how many secretaries and junior account managers seem to be walking down the streets with one.

Obviously this all depends on just how big the counterfeit market is and whether fakes really are largely "starter" pieces that help to keep people brand loyal until they can afford the real thing.  If the market is huge, then it might be taking business away regardless.  If it's small, it probably isn't.  And the answer to that is that the market for counterfeit goods is almost certainly way smaller than the numbers that are routinely tossed around with almost no basis in fact ($200 billion and 750,000 jobs are the usual suspects).  Felix has more here, and Julian Sanchez wrote the definitive debunking here.

1And it's worth noting that this dynamic only applies to luxury goods, not to things like car parts or razor blades.

The Carbon Tax Charade

| Sun Dec. 6, 2009 6:59 PM EST

Speaking of climate change, here's Matt Yglesias on the sudden boom in the number of advocates of ditching cap-and-trade in favor of a "simple" carbon tax:

Their basic point, that the kind of carbon tax proposal that policy wonks would dream up would be superior policy to the kind of cap-and-trade plan that would result from the compromises necessary to get 60 votes in the Senate, is very true. But by the same token, the kind of cap-and-trade proposal that policy wonks would dream up would be superior policy to the kind of carbon tax plan that would result from the compromises necessary to get 60 votes in the Senate.

Actually, I'd go even further.  Like it or not, politics is a grungy business.  If you want to pass something big, you have to make lots of compromises and give away lots of goodies.  Cap-and-trade allows this to happen far more easily than a carbon tax while still setting a firm limit on carbon emissions.  It's not pretty.  And it's not the way I'd do things if I were a benevolant dictator. But the plain fact is that in the real world, all the moving parts that make cap-and-trade messy are also the things that allow it to have a chance of passing in the first place.

(There are also other benefits to cap-and-trade, as well as some drawbacks.  My piece earlier this year on cap-and-trade runs down most of the big issues.)

And at the risk of pissing off some decent people, I'll add one other thing.  In the near term, no serious carbon tax will ever pass the U.S. Senate.  Period.  If you believe otherwise, you're just not paying attention to things.  A big part of the surge in interest in a carbon tax is purely cynical, coming from special interests who are afraid a carbon cap might actually pass and want to muddy the waters with pseudo-liberal arguments in order to build an anti-C&T alliance and keep anything at all from passing.  There are plenty of carbon tax advocates who are perfectly sincere, but I gotta tell them: you're being played by people who are the farthest thing imaginable from sincere.  If you win, we're not going to get a carbon tax.  We're going to get nothing.

Going Green

| Sun Dec. 6, 2009 6:31 PM EST

When I saw this headline above Mike Tidwell's op-ed in today's Washington Post:

To really save the planet, stop going green

My heart initially sank.  Another piece of dumb contrarianism?  As if we don't already have enough of that?

But no.  In fact, he's making a very, very good point:

Instead of continuing our faddish and counterproductive emphasis on small, voluntary actions, we should follow the example of Americans during past moral crises and work toward large-scale change. The country's last real moral and social revolution was set in motion by the civil rights movement. And in the 1960s, civil rights activists didn't ask bigoted Southern governors and sheriffs to consider "10 Ways to Go Integrated" at their convenience.

....For eight years, George W. Bush promoted voluntary action as the nation's primary response to global warming — and for eight years, aggregate greenhouse gas emissions remained unchanged. Even today, only 10 percent of our household light bulbs are compact fluorescents. Hybrids account for only 2.5 percent of U.S. auto sales. One can almost imagine the big energy companies secretly applauding each time we distract ourselves from the big picture with a hectoring list of "5 Easy Ways to Green Your Office."

As Tidwell says, personal change is still a good thing.  But it's nowhere near enough.  Not enough people are willing to do it on their own, and even the people who do don't do enough.  Partly this is because calculating carbon footprints is really, really hard, and partly it's because most of us just don't have a good gut feeling for the tradeoffs.  It's like dieting: unless you really pay attention and do the work up front to figure out what you can and can't do, you're going to screw it up.  A week's worth of good eating can be blown in an hour.  And dieting is way easier than cutting your carbon use.  As David Roberts says about building efficiency, which is one of the best and easiest ways of reducing carbon emissions:

The most puzzling behavioral phenomenon to understand when it comes to building efficiency is that Most People Won’t Do Sh*t (MPWDS). “Most people” includes people who could make money by doing sh*t, people who say they will do sh*t, even people who have promised to do sh*t. I’ve heard from people who write about energy efficiency for a living, know exactly what to do to make their homes more efficient, and still don’t do sh*t. It’s hard to disentangle the reasons why — some mix of status quo bias, hyperbolic discounting, and loss aversion to begin with — but it’s clear that public surveys and polls about this tend to be misleading. What people say they’re willing to do and what they demonstrate they’re willing to do are very different things. Attitudes don’t translate into actions.

The only real way to address climate change is to make broad changes to laws and incentives.  It puts everyone on a level playing field, it gives everyone a framework for making their own choices, and it gives us a fighting chance of making the deep cuts we need to.  So listen to Tidwell: "Don't spend an hour changing your light bulbs. Don't take a day to caulk your windows. Instead, pick up a phone, open a laptop, or travel to a U.S. Senate office near you and turn the tables: 'What are the 10 green statutes you're working on to save the planet, Senator?'"

But go ahead and caulk your windows too.  It won't save the planet by itself, but it still helps.

DC Football Update

| Sun Dec. 6, 2009 6:03 PM EST

So I just caught the last few minutes of the Saints-Redskins game.  With two minutes to go and the game seemingly in the bag, the Redskins blow a chip shot field goal, give up a touchdown in 40 seconds, turn over the ball on an interception to send the game into overtime, fumble in their own territory, and then finally lose on a Saints field goal.  Unbelievable.

I think I finally understand what it's like to be a Redskins fan.