Kevin Drum

Fighting the Zombies

| Wed Jul. 15, 2009 9:02 PM EDT

Bryan Caplan offers up a criticism of the House healthcare reform bill:

The Krugman we've got is sold on the House health bill.  But the Krugman we had, the thoughtful economist who wrote The Accidental Theorist, would have responded differently.  Krugman Past, unlike Krugman Present, would have pointed out that when the unemployment rate is 9.7%, it's a bad idea to legislate an 8% payroll increase on businesses that fail to offer health insurance.   Employers are reluctant to hire workers at today's wages; how are they going to feel once the marginal worker gets 8% pricier?

It's not just Krugman who should be against such legislation at a time like this; so should any sensible Keynesian.

"At a time like this."  I think I've read critiques similar to this about a thousand times now.  I guess it sounds mighty clever, hoisting Keynesians by their own petard or something.  But it's nonsense.  The "pay-or-play" payroll tax increase doesn't go into effect until 2013 — and if the recession isn't over by then we've got way bigger things to worry about than a minor increase in payroll tax receipts.

Ditto for Waxman-Markey, which frequently gets the same treatment.  But W-M won't have any effect on energy prices for years, and even when it does the impact will be tiny at first.  Like healthcare reform, it won't have the slightest effect on the recession because it won't take effect until well after the recession is over.

If you want to argue that higher payroll taxes are bad in general, then fine.  I might even agree with you depending on what alternative you offer up.  But leave the recession out of it.

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Reid on DADT

| Wed Jul. 15, 2009 1:15 PM EDT

Harry Reid says he'd support a permanent repeal of the Pentagon’s “don’t ask, don’t tell” policy on gays in the military:

“We’re having trouble getting people into the military,” Mr. Reid told reporters when questioned about whether he could support an 18-month moratorium on enforcing a prohibition on gays in the armed forces. “And I think that we shouldn’t turn down anybody that’s willing to fight for our country, certainly based on sexual orientation.”

Mr. Reid said he would go the proposal, being considered by Senator Kirsten Gillibrand, Democrat of New York, one better and support a permanent repeal of the ban.

This is a useful bellwether.  Reid doesn't generally stick his neck out on stuff like this, and up until recently he's been distinctly lukewarm about even engaging with the issue.  So if he's decided to take a firm stand, it's probably because he doesn't think there's really much risk in it anymore.  It's become a pretty mainstream position.  If we can just get the Pentagon brass to say the same thing, maybe we'll finally make some progress on this.

Web Design Woes

| Wed Jul. 15, 2009 12:51 PM EDT

I came to the conclusion some time ago that news site redesigns are always bad.  Compared to the previous site, redesigned sites are almost invariably slower, more annoying, harder to use, or a combination of all three.

But Time magazine really takes the prize.  Their old site was plain but basically fine.  The new one is so ugly, squashed, and badly laid out that I can hardly stand to read it anymore.  So I guess I'll do what I always do in these cases: add it to my RSS feed and never go back again.  Yeesh.

UPDATE: No joy.  The new site engages in one of my pet peeves: cutting off all posts after the first paragraph so you have to click each and every post separately if you want to see what the Swamplanders are talking about today.  RSS to the rescue!  But no.  They only offer a partial feed.  Jesus.

Explaining Al Gore

| Wed Jul. 15, 2009 12:29 PM EDT

Bob Somerby, employing his traditional royal we, makes an announcement today:

After Labor Day, we plan to roll out a new product; at a new web site, we plan to start posting our (largely written) book about the press corps’ coverage of Campaign 2000.

That's good news — though I confess I'd personally prefer to simply read the whole thing at once instead of getting it a chapter at a time on the web.  How about a Kindle version, Bob?

Robin Hood

| Wed Jul. 15, 2009 11:18 AM EDT

Ezra Klein spots a trend:

My colleague Binyamin Appelbaum noticed something interesting yesterday: Robin Hood movies are tied to recessions. We're talking here about the adult Robin Hood movies. So set aside "Men in Tights" and the Disney cartoon. Instead, look at first major Robin Hood film, "The Adventures of Robin Hood". Release date? 1938. Similarly, "Prince of Thieves" came out in 1991, another recessionary year. And I ran a quick Google search: Sure enough, there's another Robin Hood movie slated for May of 2010.

1938 marked the first major Robin Hood film?  Please.  I claim a point of personal privilege.  My father's name was Dale Douglas Drum.  His first name was based on the character Allan-a-Dale and his middle name was taken from the actor Douglas Fairbanks.  Why?  Because shortly before he was born my grandparents had seen the 1922 version of Robin Hood starring Fairbanks and the names were fresh in their heads.  It was quite famous in its day.  But was there a recession in 1922?

Decide for yourself.  NBER says there was an 18-month recession from January 1920 to July 1921 and a 14-month recession from May 1923 to July 1924.  So it was a generally contractionary period.  But 1922 itself?  Recession free!  I claim a foul.

In related news, my father was born in 1926, which just goes to show how long it took movies to make their way into smaller cities back then.  The good citizens of Portland get better treatment from Hollywood these days.

The End of CDS?

| Wed Jul. 15, 2009 11:02 AM EDT

Do you think the country would be better off if credit default swaps were banned?  Apparently so does someone in the House, who inserted language into the Waxman-Markey climate bill that would outlaw them.  The intent of the language, apparently, is to ban "naked swaps"; that is, to allow people to buy CDS insurance only on credit instruments that they themselves own.  But the actual language goes further.  Zach Carter reports:

Today, if a bank is worried that a debtor might default on a loan, it can still go to a CDS issuer like American International Group Inc. and buy insurance on that debt. But completely unrelated firms with no interest in the underlying loan can also go to AIG and bet that the debt will not be repaid. This kind of bet is known as a "naked swap" and, by 2007, the market for naked swaps was completely out of control. The notional value of the CDS market had exploded to over $62 trillion, according to the Depository Trust and Clearing Corporation, well in excess of the entire global economic output for a full year.

"Let's say there's $1 trillion worth of obligations in the economy. You can use CDS to create $5 trillion worth of additional obligations," said Joseph Pastore III, a managing partner with the Fox Rothschild LLP law firm who works with CDS. "When you melt it all down, and there's only $1 trillion worth of cash and $5 trillion worth of obligations, it causes absolute economic devastation."

Here's the key passage from Waxman-Markey, buried on page 1,070 of the 1,428-page bill introduced in the Senate on July 6:

[Blah blah blah....]

"Clearly, the intent was to limit the multiplier effect of CDS by requiring only those parties with a risk to be able to insure the risk," Pastore told SNL.

But the restrictions apply to "any person" who would "enter into" a CDS contract, not merely to any company that would purchase one. That means banks are allowed to hedge risks by purchasing CDS, but CDS issuers like AIG are actually forbidden from selling them. When AIG offers insurance protection, AIG is not hedging anything; it's just making a speculative bet that a certain debt will not be repaid. In practice, then, Waxman-Markey would ban any credit default swap whatsoever, hedge or bet.

"A literal reading of it would prevent anyone from entering into a CDS contract, because the party that owns the underlying instrument needs to find somebody else to enter into the swap agreement with," Pastore told SNL.

I assume this language will get cleaned up, and even if it doesn't the courts will likely rule that "enter into" merely means "buy."  But maybe not!  Maybe Waxman-Markey will obliterate the CDS market entirely.  Stay tuned.

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Progressives

| Tue Jul. 14, 2009 9:09 PM EDT

I've finally given up on progressives.

Lenses, that is.  I tried 'em for over a month and just couldn't adjust.  Distance vision was fuzzy everywhere except dead center, and the reading portion didn't work at all.  So I took them back and in a few days I'll have a pair of genuine old-man bifocals.  Just like my hero, Benjamin Franklin.

Innovation in Healthcare Arguments

| Tue Jul. 14, 2009 4:59 PM EDT

Conor Friedersdorf has three reasons he doesn't think he'll be able to support any of the progressive healthcare reforms currently on tap.  Here's #2:

It shouldn't be too difficult to imagine another Dick Cheney or Richard Nixon in the White House. Are we really comfortable assuming that the state will never use its role in health care to pressure political opponents, or collect frightening kinds of data, or politicize medical decisions more than is now the case? Isn't there any size and scope of government that progressives deem to be too big on prudential grounds? Why doesn't this put us there?

Points for originality here: I don't think I've ever heard this objection before.  And around here we like new and different.  Still, while I bow to no man in my contempt for either the Trickster or the Dickster, even I can't really see either one of them scheming to deny Ralph Nader a liver transplant or something.  But then again, maybe my imagination isn't active enough.

On the more conventional front, here's reason #3:

I keep seeing the argument that America is the leading health care innovator, and that if our system looks more like what Europe has, there won't be anyone left making strides in research and development. I haven't seen a convincing rebuttal, though there may well be one. Links?

This is actually the only objection to national healthcare that I find sort of interesting.  But here's the problem: the reason it's hard to find a convincing rebuttal is because the argument itself is purely speculative in the first place.  Sure, it's possible that the only thing keeping medical innovation alive is the (approximately) one-fourth of global healthcare spending accounted for by the quasi-private portion of the American market.  But that's all it is: possible.  There's no real empirical argument at work here, and given the current state of the global healthcare market, there probably can't be.  That makes it pretty hard to construct an empirical rebuttal.

So I guess I'd reframe this.  Instead of simply suggesting that innovation will die if America adopts national healthcare, how about breaking that down into three or four very specific arguments about what kind of innovations we're talking about and why they'd be destroyed if the feds funded 80% of American healthcare instead of the current 45%?  Let's hear some details and some proposed mechanisms.  Then maybe we can take a crack at having a discussion about it.

Selling Healthcare Reform

| Tue Jul. 14, 2009 3:28 PM EDT

The so-called "Tri-Committee" healthcare plan has just been released, and it's so called because it's a joint effort from the House committees on Education and Labor, Ways and Means, and Energy and Commerce.  It looks pretty good at first glance, but honestly, I haven't read through it in any detail yet.  So more on that front later.

For now, though, let's take a look at the PR effort.  Here are the talking points from the "What's In It For You?" handout:

Comments?  I'd spruce up the "national pool" point, since I imagine most people don't really know what that means.  And I'd change "insurance companies" to "insurance company bureaucrats" — or maybe even "greedy, blood-sucking insurance company bureaucrats."  But I suppose that would be a little coarse for members of the United States Congress, no?

Overall, though, pretty good.  An average voter reading this really would come away with the idea that there's something in it for them.  It's a good start.

Sotomayor and the Right

| Tue Jul. 14, 2009 2:54 PM EDT

In the New York Times this weekend, Emily Bazelon interviewed Supreme Court Justice Ruth Bader Ginsburg.  In the LA Times this morning, Jonah Goldberg read the interview, chopped off a Ginsburg quote about Roe v. Wade halfway through, and then asked this:

Unlike Bazelon, I for one would like to know whether Ginsburg believes there were — or are — some populations in need of shrinking through abortion and whether she thinks such considerations have any place at the Supreme Court.

And while we're at it, it would be interesting to know what Supreme Court nominee Sonia Sotomayor thinks about such things.

Yes indeed.  Goldberg is seriously suggesting that maybe Supreme Court Justice Ruth Bader Ginsburg believes we should try to shrink a few of our less desirable ethnic populations by providing them with increased access to abortion.  And then, just for the hell of it, he thinks we ought to find out whether Sonia Sotomayor thinks the same thing.

Needless to say, Ginsburg believes nothing of the sort.  You only have to read the sentence right after the one Goldberg quoted to see that.  And Sotomayor, of course, has absolutely no connection to this at all.  Isaac Chotiner has the details here.

The almost manic eagerness of the right to inject race into the Sotomayor nomination at every opportunity is enough to make you ill.  It started within minutes of her nomination being announced, and it's continued ever since.  Sen. Jeff Sessions took up the reins today.

There's never been any reason for it, of course.  It was ostensibly based on one sentence in a speech and one court decision out of hundreds she's made.  In reality, it's just because she's a Hispanic liberal and conservatives figure that a race-based attack is the one most likely to resonate with their base.  And I suppose they're right, aren't they?