Kevin Drum

Killing Healthcare Softly

| Wed Sep. 16, 2009 10:15 AM EDT

With friends like Kent Conrad, who needs Republicans?  WTF?

UPDATE: Oops.  Never mind.

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Why Bipartisanship Matters

| Wed Sep. 16, 2009 12:10 AM EDT

Barack Obama plans to partially pay for his healthcare program by reining in Medicare costs.  Megan McArdle thinks that's a problem:

To my mind perhaps the most worrisome part is that anything Obama does to "pay" for this program is something that cannot be done to "pay" for our growing Medicare problem.  Slashing provider reimbursements, Medicare advantage, etc, if it is done, is something that should be done in order to close the projected 3.4% budget gap in 2019.  Once we've used them for new entitlements, we are less able to pay for the entitlements we've already got.

In other words, if we cut reimbursements as a way of offsetting the cost of Obama's universal healthcare, we can't later cut reimbursements as a way of reducing Medicare costs and reining in the looming Medicare deficit.  The money is already gone.  So what will we do instead?

The answer is obvious: we'll eventually raise taxes.  Or, more accurately, we'll raise taxes more than we otherwise would, since tax increases of some size are now inevitable regardless of what we do.  This is part of the price we're paying for the tactical decision Republicans have made to oppose every Democratic program sight unseen.

Step back for a moment and you'll see why.  Bipartisanship is in bad odor these days because it's associated with a knee-jerk, David Broderish tendency to assume that the answer to any policy dilemma is automatically halfway between the liberal position and the conservative position.  But that sells bipartisanship short.  Where it shines is its ability to allow politicians to make tough decisions.

If all you want to do is hand out goodies — tax cuts, prescription drugs, defense contracts — life is easy.  Everyone loves goodies.  You don't need help from your opposite numbers to get stuff like that through Congress.

But what if you want to pass something tougher?  Something that takes as well as gives?  If you have bipartisan support, you can do it right: you can stand up to special interests and K Street lobbyists and enact real reform.  But you can only do this if you have political cover and plenty of votes.  If, instead, you have to do it in the face of implacable partisan opposition, then you can't afford to make any more enemies.  Every vote is precious, and that means instead of standing up to special interests, you have to buy them off.  All of them.

Take healthcare reform.  Republicans used to be in favor of reining in Medicare costs, which normally means that this would be a fertile area for bipartisan cooperation.  But the Republican Party has decided in recent weeks that its short-term political interests dictate unbending opposition to everything healthcare related.  So suddenly they're Medicare's biggest defender, screaming about euthanasia and death panels and brigades of bureaucrats getting between seniors and their healthcare.  As a result, no Democrat in his right mind will seriously touch Medicare.  Instead, special interests are bribed to cooperate, Medicare is left largely untouched, and the can is kicked down the road.

The same thing has happened with the climate change bill.  Historically, Democrats were the party of command-and-control: if you want to regulate emissions, just pass a law telling everyone how much they're allowed to emit.  Done deal.  It was conservatives who first introduced the idea of cap-and-trade, which uses market mechanisms to reduce emissions more cheaply and efficiently than command-and-control.  Democrats were initially skeptical, but after it turned out to work pretty well on acid rain they decided to throw in their lot with conservatives like John McCain and Newt Gingrich — who until recently were supporters of a cap-and-trade approach to greenhouse gas emissions.

But no longer.  Republicans have decided to unanimously oppose cap-and-trade, and that's left Democrats with no choice but to buy off every special interest on the planet.  The Waxman-Markey climate bill has turned into an orgy of dealmaking and logrolling because that's the only way to get anything done when the loss of even a few votes is enough to sink your whole bill.

When you have bipartisan support, though, you can afford to make tougher decisions.  That's how Social Security got rescued in 1984.  It's how tax reform was passed in 1986.  It's how welfare reform was passed in 1996.

Now, you can decry this all you want.  Maybe Democrats ought to stand up for their principles no matter what the cost.  Death before dishonor.  Etc.  But that's not the way life works, or ever has worked.  If you want healthcare reform that really tackles costs, you need bipartisan support for pissing off the people who are going to lose either money or services from the deal.  If you want a fair and straightforward cap-and-trade bill, you need bipartisan support to keep the special interests at bay.  If you don't get it, then you've got no choice but to watch your flanks like a hawk and ensure that you do nothing that can be used against you at election time.  And the can is kicked down the road.

That's the price we're all paying for the Republican decision to be the Party of No. Instead of difficult decisions on healthcare costs, we get mostly smoke and mirrors.  Instead of serious reductions in greenhouse gases at the least possible cost, we get a porkfest.  It's irresponsible and feckless, but until Republicans are made to pay some kind of price for it, it's not likely to change.

Starting Over in Afghanistan

| Tue Sep. 15, 2009 6:50 PM EDT

Lt. Col. JJ Malevich, a Canadian officer, wonders why the Afghan National Army isn't more capable of running small hit-and-run operations that seriously disrupt Taliban operations.  Bruce Rolston says it's because we've spent the last eight years ruining their ability to do exactly that.  Instead, we've trained them to be adjuncts to sophisticated Western armies:

If we left Afghanistan tomorrow, lock stock and barrel, two things would happen to the security forces. The first would be the ANA and ANP would completely evaporate as functioning institutions in much of the country, probably in a matter of days if not hours. They are still very much artificial constructs that we've imposed, and wholly dependent on our technology for their survival so long as they continue to use the tactics we've taught them. The second would be that the revitalized Northern Alliance and other forces that the ANA replaced would resume doing exactly the kinds of nifty hit-and-run things, to protect their enclaves, that Malevich is talking about. Because that IS how they fight, when left alone.

To get the current Afghan army to do those things, you're talking basically starting over at this point... or taking a good chunk of the country and letting them run it with a bare minimum of Western troop support, operating almost covertly within their ranks. It would have to be a low-risk area of the country, because if you did that right now in the South the insurgents would eat them for lunch, but in another part of the country it might be possible.

Here's what we've trained the ANA to do, instead. They can in some circumstances involving the locals be useful interfaces for our forces. They can hold and defend fixed locations and the immediate environs. They can force-multiply small Western dets, which would be a lot more useful if there weren't more westerners in the south than ANA right now. They can do effective IED sweeps daily, and other such activities where the cumulative risk to Western troops would simply be too high. Umm, that's about it.

Maybe Bruce is too pessmistic.  Who knows?  But this is the kind of conversation I'd sure like to see our top officers in Afghanistan forced to have.  Because what Bruce is saying, essentially, is that the last eight years have been squandered.  Actually, worse than squandered: thanks to us, the Afghans are less capable of disrupting the Taliban than they were in 2002.

At least, that's how it sounds to me.  In the same way that a lot of foreign aid projects in the 50s and 60s were wasted efforts because they couldn't be sustained by local populations, our military training in Afghanistan has been wasted because it's light years beyond what Afghans are able to sustain on their own.  They can act as gofers for NATO units, but that's about it.

So here are a few questions: Is it really true that after eight years the Afghan army is no more capable than it was in 2002?  Is it really true that our current training regimen is completely counterproductive?  Would we better off leaving and just allowing the Northern Alliance to do its thing with arms and materiel that we provide?  If we start from scratch instead, how many years will it take to turn things around?  Petraeus and McChrystal never have to address blunt questions like this — at least, not in public — but it might be time for that to start.  I'm a little weary of the happy talk.

Marketing TARP

| Tue Sep. 15, 2009 2:05 PM EDT

I just love kiss-and-tell articles by low-level White House staffers.  Especially when they're in glossy soft-porn lad magazines.  ("Lad magazines"?  I know that's a Britishism.  But what's the American equivalent?)

Anyway: today's K&T blogosphere hit comes from Matt Latimer, a former speechwriter for George Bush.  It's got plenty of good stuff about Bush's nearly complete lack of understanding of the economic crisis, including this amusing bit about TARP:

As Treasury started to use the bailout funds to invest directly in financial institutions, Ed [Gillespie] wanted to come up with a name for the plan that made it sound better to the public, particularly conservatives who thought this was nothing more than warmed-over socialism. Yes, a catchphrase would solve everything. As we were working on this, Ed called a few of the writers on speakerphone with the idea he’d come up with: the Imperative Investment Intervention. “Oh, that sounds good,” one of us remarked, as the rest of us tried not to laugh.

We decided that if a catchphrase must be deployed, surely we could come up with something better than a tongue twister with the acronym III. We started out with dark humor: the “I Can’t Believe It’s Not Capitalism” Plan; the MARX Plan. I suggested that we also apologize to the former Soviet Union and retroactively concede the Cold War. Then one of the writers got serious and came up with the Temporary Emergency Market Protection Program, or TEMP. Not bad as gimmicks go, and Ed liked it. But he decided that instead of dropping it into a speech, we’d leak it to the press that this was the phrase we were using internally. Ed’s logic was that anything Bush said would be ignored, but if the press thought they’d got it from a leak, they’d find it more interesting and newsworthy. TEMP never made it as a catchphrase regardless.

More substantively, Latimer reports that up until someone finally told him directly that he was wrong, Bush was convinced that TARP was a way for Treasury to make a killing by buying cheap bank assets and then making a quick profit off them as soon as the economy recovered.

On the other hand, it turns out that Bush also had a pretty shrewd analysis of Sarah Palin.  Which doesn't surprise me.  Bush never had much interest in how things actually worked, but he was always the ultimate political animal.  If a mastery of Mayberry Machiavellianism had been enough to get things done, he would have had the most successful presidency of the past century.

GDP vs. RMI

| Tue Sep. 15, 2009 12:40 PM EDT

Joseph Stiglitz argues that GDP isn't really a very good measure of the health of an economy.  Ezra Klein comments:

Stiglitz, happily, is involved in a French project to come up with a successor to GDP. But there have been many of these projects in the past and many alternatives proposed. The question isn't developing these measures. It's popularizing them.

I wish them the best of luck.  In the meantime, however, I propose that instead of obsessing over GDP growth, we obsess over real median income growth.  It's simple and easy to popularize, and it could be made available quarterly, just like GDP.  Here's my hypothesis: If RMI is growing at a healthy clip, then the economy is almost certainly doing fine.  If it's not, then most people are going to be unhappy regardless of what GDP figures show.

I should note that I'm willing to accept any reasonable definition of "income" as part of the official RMI calculation.  Regardless of what you include, the bottom line is that if we paid more attention to RMI, we'd all be a whole lot better off than we are now.

UPDATE: I originally said that RMI is available quarterly, which isn't true.  However, I imagine that estimates could be made quarterly if this were something we were more serious about tracking.  The text has been corrected to reflect this.

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Why So Serious?

| Tue Sep. 15, 2009 12:18 PM EDT

Atrios complains about the hassles of flying:

Some of this is not the fault of the individual airlines, such as stupid security theater, but plenty of it is. I mean bag fees, what the fuck? And it isn't simply the money, it's the extra hassle and just general sense of being screwed and harassed throughout the entire process.

If I can put on my Andy Rooney hat for a moment, doesn't it seem as if this describes most of American business these days?  It's not just the airlines.  As near as I can tell, consumer-facing businesses these days virtually never think about how they can make things genuinely more convenient for people.  Rather, they seem almost obsessively concerned with calculating the maximum amount of pain people will put up with before they finally get pissed off enough to take their business elsewhere.  When you venture out into the shopping world these days, you almost feel like you ought to have a lawyer at your side at all times to try and figure out what new and different way you're going to get screwed this time around.  It's sort of exhausting.  Is it any wonder that so many people are so angry all the time?

Up, Up, and Away

| Tue Sep. 15, 2009 11:35 AM EDT

Michael Mandel at Business Week looks at how fast healthcare costs are rising around the world and says:

It’s interesting to see that the UK, with its “socialized medicine,” actually had faster health spending growth than the U.S., at least according to these figures. On the other hand, other countries with single-payer systems, such as Canada, had slower growth.

Probably the safest thing to say is that healthcare costs are rising at a pretty good clip everywhere in the world, no matter how different countries organize things.  The main drivers of rising costs, after all, are global in nature.

Beyond that, though, you need to be aware of specific local issues too.  When Tony Blair came to office in 1997, for example, one of his campaign promises was specifically to increase funding for the NHS.  Britain was spending too little on healthcare, and he wanted spending to rise quickly.  So it's no surprise that spending went up.

Likewise, South Korea, which is #1 on the chart, spent the 80s and 90s implementing a national healthcare plan.  Their spending rose considerably, but again, that was because they deliberately chose to extend coverage universally.  They wanted to spend more money.

On the other hand, the timeframe in Mandel's chart excludes the late 80s, when U.S. healthcare spending exploded, and includes the years 1994-2000, when the great HMO revolution in the United States suppressed healthcare costs somewhat.  So our numbers probably look a little lower than they really are.  But the HMO revolution turned out to be a one-shot deal: costs shot back up in the early 2000s and have since come back down only a bit.

None of this is meant to really argue a lot with Mandel.  Roughly speaking, as his chart shows, the biggest increases have been in countries that currently spend the least on healthcare (Poland, Greece, Mexico, etc.) or in countries that were deliberately trying to spend more (South Korea, UK).  Contrariwise, with the exception of Norway, most of the big-spending countries are in the bottom half of the graph.  The United States is an obvious outlier, with enormous spending and a high growth rate, but everyone is having trouble controlling costs.  We're not the only ones who want all the latest treatments, after all.

UPDATE: It's also worth keeping in mind the power of compound growth.  Even a seemingly minuscule difference adds up over the years.  France's growth rate is only 0.3% less than ours, but $100 of healthcare in 1990 would now cost $276 in the United States and $262 in France.  That's nearly a 10% difference.  Germany is even more impressive: $100 of healthcare in 1990 would cost only $213 in Germany today.  That's a whopping 23% less than we're paying.  And of course, their costs were a lot lower to begin with.

How the Economy Feels

| Tue Sep. 15, 2009 10:37 AM EDT

Bob Herbert writes about the unemployed:

Fifteen million Americans are locked in the nightmare of unemployment, nearly 10 percent of the work force. A third have been jobless for more than six months. Thirteen percent of Latinos and 15 percent of blacks are out of work. (Those are some of the official statistics. The reality is much worse.)

....A national survey of jobless workers by a pair of professors at Rutgers University shows just how traumatized the work force has become in this downturn. Two-thirds of respondents said that they had become depressed. More than half said it was the first time they had ever lost a job, and 80 percent said there was little or no chance that they would be able to get their jobs back when the economy improves.

....It’s eerie to me how little attention this crisis is receiving. The poor seem to be completely out of the picture.

It is kind of eerie, and I've noticed the difference in mood too.  It's true that the unemployment rate isn't quite as high (yet) as it got in 1981-82, but it's pretty damn close — and yet the tone of news coverage seems quite different.  My recollection of the early 80s is of lots and lots of coverage of plant closures, homelessness, food banks, and a serious sense of panic and despair.  This time, not so much.  Has this been purely a difference in media coverage?  A difference in the way unemployment is distributed?  The fact that hard times have only been with us for about a year so far?  A genuine difference in the way people are reacting?  Or what?  I really don't know the answer.  But yes, it feels quite different than it did in 1981.

Help me out, fellow oldsters.  Does it feel different to you too?  Or am I just imagining this?

Quote of the Day

| Mon Sep. 14, 2009 8:00 PM EDT

From Sen. Tom Harkin, Ted Kennedy's replacement as chairman of the HELP committee, to a crowd cheering about healthcare reform at his annual steak fry:

You might as well stay standing because that strong health reform bill — mark my word, I'm the chairman, it's gonna have a STRONG PUBLIC OPTION!

Those are stirring words.  I don't really believe them, unfortunately, since being HELP chairman doesn't exactly make Harkin emperor of the Senate.  But even if it's just steak fry talk, it's nice to hear.