Tuesday, January 31, 2006

No emphasis on HSAs in the State of the Union after all

Although I gather there is still an HSA proposal, on which I may comment soon.

This is all hearsay, as I couldn't watch the State of the Union. Prior commitments; other important things I had to do. What was it - maybe collecting driftwood, or googling the word "spam" - or was I checking my cats' gums to see if they've been brushing - or was it reading the phonebook? I can't quite remember, but anyway I know it was a much better investment of time than watching 52 minutes of dreck.

Saturday, January 28, 2006


It's nice to be reminded that I'm generally against the Democrats when they're in power, albeit nowhere near as vehemently as I am against today's governing cabal. But a fresh reminder comes from Josh Marshall's Talking Points Memo blog, of which I am generally a fan, but which today is circling the wagons against Bush's reported HSA proposal, and the general conservative position, by saying:

"[T]he core premise of the policies the president is about to lay out is that Americans are over-insured when it comes to health insurance. Over-insured. Got too much insurance."

Josh's point, of course, is that millions of Americans lack any health insurance. But the conservative position concerns something else. Its point is that the Americans who have health insurance have too much, or more specifically too much low-end, health insurance. As in coverage for routine expenditures that reduce cost-consciousness among consumers. I make you pay for treatment that I value at less than its cost, and you do the same for me. We both end up paying for each other (and everyone else who is doing the same thing) through our insurance premiums.

It's not really helpful to miss, be it ignorantly or willfully, the correct point behind the conservative analysis of healthcare. How important the over-insurance problem is compared to the lack of coverage for poorer Americans one can reasonably debate. (Although the two might be linked, in terms of misallocation of resources.) How much correctly oriented cost-consciousness we can really expect in a market as flawed as that for healthcare is another open question. As per my earlier post, I don't think HSAs are a constructive answer to the sector's unsustainable growth and its fiscal consequences. Put me down instead for the Tax Reform Panel's proposal to cap the exclusion for employer-provided health insurance. (Not to say that the reforms and rethinking should stop there.) Another fair point is that it borders on insane, in the current budgetary setting, to address the over-insurance (for the insured) problem by adding more tax benefits rather than by paring them back. But let's not fail to see a genuine problem concerning misaligned incentives that affects not just consumers but the entire healthcare industry. (E.g., why should drug companies chase cost-saving treatments rather than expensive new ones when their market isn't cost-conscious.)

I've wanted to return to being a good-humored plague-on-both-their-houses type, as I was until recently. But the Republicans haven't been willing to help me on this - I can'f warm up to the idea of living in a corrupt dictatorship run by incompetent scoundrels - so I wish that the left & Democrats would hold off for now on doing their part.

Friday, January 27, 2006

Consequences of the fiscal gap

Anyone who takes a serious look at the U.S. government's current budgetary course knows that what we are doing is unsustainable. And we all know "Stein's Law," coined by the late economist Herbert Stein, which holds that anything that cannot happen indeed will not happen. But how will things shake out when the crunch comes?

The scenario that has gotten the most attention, and that I tend to believe, is that the U.S. government can't sell its bonds because its solvency is no longer credible, starts printing money triggering inflation, etcetera. But a second view is that we will avoid all these problems, and keep the bondholders happy, by enacting huge Social Security and Medicare cuts that involve means-testing, and that essentially convert these programs into mere safety nets for the elderly poor.

This might be a better outcome if it heads off larger economic dislocations - at least if you aren't one of the people whose benefits are substantially cut. But why would we expect it? The main argument I hear is that the Federal Reserve Board is independent and would refuse to start printing money (and also importantly, investors in the bond markets would know and rely on this). Thus, politically powerful though seniors are, taking the fiscal gap out of their hide, along with tax increases and the like, would at some point become the political path of least resistance.

Obviously, this depends on just how strongly rooted the Fed's independence actually is. Congress can bring the Fed to heel whenever it likes by changing the enabling legislation. So the question is whether the political commitment to the Fed's independence is (or rather at the key moment will be) stronger or weaker politically than the aversion to cutting benefits. This will depend in part on the political actors in place at the time, including the Fed Chairman, who would have to decide how forcefully to play his hand.

Supine media

Why exactly does today's Washington Post headline say: "Bush Reasserts Presidential Prerogatives," rather than "Bush Stonewalling on Abramoff, Katrina, and Wiretaps"?

Tuesday, January 24, 2006

Health savings accounts

Bush is reportedly going to make expanded health savings accounts (HSAs) a central part of his State of the Union address. At this point, it's about the only big-sounding domestic initiative that he can plausibly try to conjure up. This would apparently be coupled with people's choosing high-deductible health insurance plans. E.g., you put $2,000 in the plan, pick health insurance with a $2,000 deductible, and then you are actually paying medical expenses out of your own pocket, albeit with tax-deductible cash. (To make it really out of your own pocket, the HSA rolls over and becomes an expanded retirement saving account.) We already have something along these lines in the law, but presumably he'd expand it significantly.

I have a lot more sympathy for the idea of making people cost-conscious in their healthcare expenditures than many in the liberal blogosphere do. But - it's not clear to me how well this low-information market, in which people don't really know what they need to and are being instructed by medical professionals with incentive structures of their own, can really function even with greater cost-consciousness.

Another criticism in the liberal blogosphere is that Bush, as usual, is trying to save big companies money. The idea is that the high-deductible insurance, which they presumably still pay for, gets cheaper, while the workers are paying more out of pocket. This is only a transition effect (wages and so forth should presumably shake out to a similar equilibrium as before), but politics is all about transition effects, and I suppose companies might gain big time as the adjustment occurred, depending on how locked-in the current terms of employment are in the short term.

To my mind greater cost-consciousness ought to help, although perhaps not as much, in the healthcare industry, as one would like to think. When it does help, while less medical services are being consumed, presumably that reflects that they weren't actually worth the out of pocket cost to the consumer.

One big problem with the Bush plan: as always, is bigger deficits and a worsened fiscal gap. Plus, gaps in insurance coverage would remain. More generally, the pooling of health risks, which is unambiguously socially desirable insofar as the risks are exogenous (not affected by the patient's behavior), and mixed rather than all bad even when it's endogenous, is not helped by the plan and possibly would get worse.

There are 2 potentially sane answers to the healthcare cost expansion crisis. The conservative idea is risk-adjusted vouchers. If A figures to cost the health insurance company $1,000 more a year than B, A's voucher to use towards purchasing the insurance is $1,000 higher. Economist Laurence Kotlikoff advocaes this approach, and the Bush I Administration was working on it for possible consideration after the 1992 election. The problems with this approach are (1) it still requires healthcare markets to work reasonably well in terms of consumer choice, and (2) it requires healthcare markets NOT to work so well that the insurance companies can outsmart the government and cherry-pick the people who are the best risks for them given the gap between voucher differences and actual risk differences.

The other idea is national healthcare, as Paul Krugman keeps advocating in the NY Times. I spent enough time at the University of Chicago to approach this as a huge skeptic. But other countries that provide it do indeed appear to get just as good (or better) healthcare results as we do, adjusted for all relevant variables, for a much lower GDP share and per capita cost. The government solution doesn't have to be absolutely good to be worth considering, just good given the alternatives.

Of course, when you think about how utterly corrupt and depraved our political system is these days (with the Medicare prescription drug bill being Exhibit A through Z), you have to wonder. This is a bill that apparently arbitrarily excludes particular drugs from coverage just because some lobbyist or other, presumably working on behalf of a rival product, got it excluded with no explanation or rationale. We know for certain that, if the current Republicans in Congress designed a national healthcare plan (anathema though this would be to them), they would make it so horrendously bad that the days when doctors bled their patients would acquire a gauzy nostalgic haze by contrast. So the question is how much better legislation written by future Congressiones would be. Are the current Republicans exceptionally depraved when measured against the future as well as the past? Or are they merely the harbinger of how, from now on, things are going to be? I'm not sure I want to know.

Thursday, January 19, 2006

Signs of aging

Need reading glasses for restaurant menus; have to watch diet more carefully; recently confused Devendra Banhart with Sufjan Stevens.

Tuesday, January 17, 2006

Why is Congress so corrupt?

Here is a good column by Bruce Bartlett, discussing why Congress has become so corrupt that the Abramoff was inevitable and (its detection aside) utterly unsurprising. He notes how different the system was in the 1970s when he worked on the Hill, to which I'd add that it was still about 60 to 80% like that, rather than like today, when I was on the Hill in the mid 1980s.

My main quibble with the column is as follows. Bruce blames the Congressional "reforms" of the 1970s that hit the seniority system for starting the slide away from institutional pride and towards corruption, and says that the post-1994 changes did the rest of the damage. While I agree with his assessment of these changes, I suspect the moral collapse was inevitable anyway for broader cultural and institutional reasons. E.g., increasing partisanship for various structural reasons, ever greater move towards soundbite politics, celebrity culture, far greater professional fluidity in all kinds of fields, the stock market bubble culture of the 1990s, etc. Take the likes of Bill Frist, leaving aside that I consider him a disgusting political slut and looking just at the career path. Doctor from super-wealthy family gets a Senate seat, is immediately itching to move onward and upward if he can, etc. Not exactly the same type of story as Everett Dirksen or Russell Long.

Bruce concludes that the thing to do is bring back the committee system from pre-1974. He notes that, with its demise:

"A lobbyist no longer needed to know the substance of a bill or have long experience with the committee of jurisdiction. He just needed to know one guy in the leadership who could stick his proposal into a bill when no one was looking. By the time the bill was even printed, it would already be law.... [Thus,] a real reform would be to empower Congress's committees once again and make it harder for the leadership to act without proper oversight and deliberation."

Were it up to me, I'd certainly give this a try. But I suspect that Humpty Dumpty cannot in fact be put together again.

I realize that, unlike Bruce, I am not being very constructive here.

Friday, January 13, 2006

Something to look forward to

According to the NY Times:

"The White House acknowledged on Thursday that the budget deficit would climb back above $400 billion this year, erasing the brief improvement last year and complicating President Bush's vow to cut the deficit in half by 2009."

Now for the good news. The Bush White House has a notorious practice of high-balling early estimates of the deficit for the next year, so that when it comes out lower at the end of the year they can crow that things are improving & that their economic "policy" is working. Perhaps they are planning to do this again.

The article also notes:

"[G]overnment spending has climbed sharply, from 18.5 percent in 2001 to nearly 20 percent for each of the past three years. By contrast, tax revenues plunged to as little as 16.3 percent of the nation's economy from 19.8 percent in 2001."

And this even without regard to the $18.2 trillion (over the infinite horizon) Medicare prescription drug benefit that starts this year and can be expected to grow rapidly.

Thursday, January 12, 2006

Light reading

Biographers are notoriously biased towards their subjects, leaving aside the hateography genre of recent years. But even before I started reading Ron Chernow's Alexander Hamilton bio, it was plain to me how Hamilton towered in every way - morally, intellectually, personally, philosophically, politically - over the indolent slaveholder who became our third president.

It seems to have taken two centuries for Hamilton to get his due, and for people to see through the Swift-boating of the late 1790s. That time, rather than a cowardly deserter attacking the military credentials of a war hero, it involved a cosseted Virginia grandee with hundreds of slaves (sold down the river when he died to pay off his debts) portraying someone who came here at age 20, penniless and from a broken family, and who also happened to be an abolitionist, as a sneering "aristocrat."

Wednesday, January 11, 2006

Bush and hearings on the secret domestic wiretapping

The NY Times says that Bush is "resigned" to hearings, and quotes him as saying:

"There will be a lot of hearings to talk about that, but that's good for democracy. Just so long as the hearings, as they explore whether or not I had the prerogative to make the decision I make, doesn't tell the enemy what we're doing. See, that's the danger.''

I suspect that "tell[ing] the enemy what we're doing" actually means "exploring whether the program was restricted to wiretapping suspected terrorists, as opposed to others of interest to the Administration."

Tuesday, January 10, 2006


From the start my thought was, so long as he's competent and not a loony, might as well approve him. And my sense was that he met this standard. But I am starting to wonder.

All that stuff he said in the past and now tries to shrug off gets disturbing, after a while. And for me the make or break issue is, not abortion, but rather Presidential dictatorship.

In today's hearings, based on news reports (I consider my time too valuable to watch these bloviathons), I note that he almost certainly lied about his knowledge concerning Concerned Alumni of Princeton, a conservative group that any alum of a certain era (such as him and me, to name two) knows about. And since he was a member for 8 or 9 years, he should certainly know lots more about them than I do, which is lots less than he apparently admits to.

But I particularly disliked the quote from the news report where, asked if the President has to follow the law, he said: ""The president has to follow the Constitution and the laws."

On its face, what could be more anodyne. But in context, this appears to be an endorsement in code of the Yoo position that the President is an absolute monarch during his term of office (and presumably beyond, if as Commander in Chief he decides to cancel the next election). This is Bush Administration-speak for "The President doesn't have to follow any laws that he doesn't like. Any time he claims constitutional authority to disregard the law, no further inquiry by any branch of government is permissible."

I'm offended both by the dangerously authoritarian cast of this theory and by what I judge to be Alito's disingenuous use of code words to mislead about his true beliefs and intentions. The use of code words suggests that he is a card-carrying member of the White House talking points brigade.

If he's confirmed, I hope I'm wrong.

No small d democrat (or small r republican) he

Has there ever been a president so insistent as Bush on the theme that nearly all criticism of his foreign policy is impermissible?

According to the NY Times, Bush says we must restrict ourselves to a debate "that brings credit to our democracy, not comfort to our adversaries." And he adds: "There is a difference between responsible and irresponsible debate and it's even more important to conduct this debate responsibly when American troops are risking their lives overseas."

Isn't preventing "irresponsible" debate, if he judges it overly harmful to our troops and helpful to our adversaries, unambiguously within his interpretation of his commander in chief powers? How could it possibly not be?

Saturday, January 07, 2006

NY moment

While getting my son lunch in Two Boots Pizza, I'm pretty sure it was Quentin Tarantino standing there. I asked him if he had ordered already. He said yes, and a minute later got his takeout in a box.

I thought of asking him if he had ordered Mr. Pink, which is one of the specialty pizzas at Two Boots, but the New York code holds that you neither hassle celebs nor appear too interested.

Friday, January 06, 2006

Quote of the day

From E.J. Dionne in today's Washington Post, brought to my attention by a friend:

"What the Republicans need is 50 Jack Abramoffs," his friend Grover Norquist told National Journal in 1995. "Then this becomes a different town."

I would add a comment on this, but it's just too easy. Creative suggestions welcomed.

Wednesday, January 04, 2006

On a lighter note

One nice thing about being a parent, especially when the kids are of your gender and thus have temperamental similarities, is that you can introduce them to stuff you liked at their age, if (and only if) you think it will work.

I remember, at age 10 or so, being amused by a little comic book by Mad Magazine's Don Martin, called "The Mad Adventures of Captain Klutz." Got it last month on eBay as a holiday gift for the fellas, with 8 other Mad books (4 also by Don Martin), for a cool $3.26 including shipping.

Fellas have enjoyed the books, Captain Klutz especially, just as I did at that age.

Sample quote: Captain Klutz is fighting Sissyman, who, having immobilized our hero with an ice cream gun, says:

"And now I'm off to steal a million dollars. But first, permission! Mommy, can I go out to play?"

"Of course, dearikins. But don't be latesies for din-din!"

(He's Sissyman, you see.)

I remember being delighted by this passage, as they are now, when I was of suitable age. Indeed, it would be bootless to deny that I can still recapture a bit of the old feeling.

Don Martin had some genuine merit as a comic artist. I recall his obsession with the fairy tale in which the princess kisses the frog and he turns into a prince. In one variant, she kisses him and she turns into a frog, and they hop off together. In another, he turns into a prince and they ride off together, but then he sees a fly and zaps it with a 10-foot long tongue. In a third, he turns into a prince and then, in the last frame, we see the wedding. People on her side in the audience, frogs on his side.

I'm sure there were more.

Just 2 quick points about Bush

Yes, I'm trying to cut back on the anger, believe me, but:

1) Bush's signing message for the anti-torture law made it clear once again that he considers all legislation subject to his whim whenever national security, in his judgment, is at issue. His statement made it quite clear that he still considers himself fully empowered to authorize torture whenever he likes. This is a previously unknown legal stance, not only in the US, but also in England since at least 1640.

Why even pass laws?

2) Can anyone seriously doubt for a second that the secret snooping targets included Democrats, journalists, career non-politicals in the Executive Branch, etc.? Why on earth wouldn't they snoop on these people, from their vantage point? There is not even an argument you can make against doing it within their framework.

Further evidence that they did this is Bush's over-the-top non sequiturs about how he can't understand why anyone would doubt that it makes sense to eavesdrop on known al Queda leaders (who, needless to say, could be snooped on without resort to the secret program).

It is so insulting and demeaning when public debate is conducted in such a transparently dishonest way. They don't think they even have to try to make coherent arguments.

My Abramoff wish list

Leaving aside the humdrum likes of Ney and Conrad Burns, I am of course hoping for DeLay, but also Hastert and, obviously, Norquist and Reed. In fact, bagging those last two would mean a lot more to me personally than some of those obscure members of Congress.

Karl Rove hasn't been much named in this setting. But he was close to other key players who are in trouble, and very plausibly (it seems to me) might have been involved in coordinating the matching of donors to desired legislative outcomes. So, assuming the prosecutors have the leeway, might a co-conspirator indictment be possible?

Monday, January 02, 2006

First really good bit of reporting in the NY Times this year

From a January 1 article by Daniel Altman:

"Call it the Altman Curve: the total amount that people will actually lend you rises with the amount you plan to borrow, until you reach a crucial point, after which it falls to zero. The United States is now on the left side of the curve. If Congress keeps cutting taxes by more than it cuts spending, the nation will eventually move to the right side, which, of course, is the wrong side."