There has been a recent debate between conservatives about how they should regard Glenn Beck and other conservative personalities. One side applauds their success, the other is appalled by their antics. Some of this exchange has been hosted at Front Page Magazine which is run by a David Horowitz, Glenn Beck supporter.
The anti-Beck people feel that he is too polarizing and too far to the right. They want a non-threatening Republican party that will attract moderate swing-voters. To them, the Republicans have been losing ground because their message is too focused. Limited government does not attract enough votes. Beck and the others are too shrill and often make mistakes which discredits their side.
The pro-Beck people look at his success in forcing out some of the most ideological members of the Obama administration - people like Van Jones and groups like ACORN. They also support the idea that the Republicans need to stand for something.
So, how do we make sense out of all this?
First, let's admit that Glenn Beck and company are a two-edged sword. They are conservative but they are not automatically Republican. The Tea Party protesters are almost as mad at Bush as Obama. Both presidents pushed unsustainable spending. Some Republicans who tried to co-opt the Tea Parties have been told that they are not welcome. During last year's primaries, Beck, Coulter, Limbaugh, and others made it clear that they were unhappy with John McCain. The fact that these personalities have so much influence but are uncontrolled by the Republican party makes many Republicans nervous. With good reason.
But the question is if the Republicans are better or worse off because of these people. This is a more complicated issue than the anti-Beck moderates make it out to be.
As I said above, the moderates want to appeal to the swing-voters. They want to silence or, at least quiet, the far right who they think scares the swing-voters. They think that the secret to regaining control of Washington is to act as a loyal opposition, trying to moderate the Progrssives' excesses rather than opposing them. There are some severe problems with this strategy.
The first is that it assumes that the Progressives are correct and that the country has moved to the left. These people are trying to move the center to match the new realities. Are they correct in this assumption? The polls don't show it. Also, the idea of playing to the middle was originally proposed by George W. Bush and followed up by John McCain. Bush referred to it as Compassionate Conservatism. Outsiders called it big-government Republicans. It was not particularly successful. Bush lost the popular vote in his first race and won a narrow victory in his second against second-rate opponents.
The 2008 election showed some of the stress lines that this strategy has caused the Republicans. Many conservatives stayed home rather than vote for big-government McCain. Others were not excited about his ticket until he added Sarah Palin to it. Most telling, many Libertarians supported Obama, expecting him to be a pragmatic moderate. I've complained many times that, any time the Democrats can campaign as the party of fiscal restraint, the Republicans have lost their way.
So, the assumption that appealing to the middle and abandoning the principles of Reagan will win elections has not worked very well.
This brings me to the other big problem with the anti-Beck people - demographics. Polls show that the younger voters are far more liberal than the last generation. You can argue, and many have, that this means that the Republicans need to moderate their message in order to attract more younger voters. This is a losing strategy for the reasons I gave above. The Republicans will never win a bidding war against Democrats for more public spending.
The long-term solution is to reach out to the younger generation and start building a new conservative movement. Explain why big government is inherently inefficient and why giving too much control to the government means a loss of liberty. This takes the sort of theatrics that Glenn Beck does. It takes loud, noisy protests. It takes the sort of tactics that the Democrats have been using for decades.
The choice comes down to these two possibilities - move the Republican party to the left or try to revitalize the right. Moving to the left is easy and decorous but it means abandoning many core principles. Revitalizing the right is tougher but has the advantage of a hard-left administration to contrast with. Both options are risky and they are mutually exclusive. Cutting off Beck and the noisy right could result in a new third-party. Embracing them without attracting new outsiders could doom the party to permanent minority status.
Personally, I want the Republicans to stand for something again. I rolled my eyes during most of Bush's deficit budgets and was in shock after the TARP and the other bail-outs. I want to see someone speaking up for limited government and fiscal restraint again.
I don't agree with a lot of what Glenn Beck says but I think that he needs to be given at least as much leeway as the left has given its over-the-top personalities. No one on the left complains about Keith Olbermann and Al Franken was elected to the Senate. We need Beck, Limbaugh, and the others in order to build a new conservative movement and to keep it honest.
Wednesday, September 23, 2009
Monday, September 14, 2009
Economics for Krugman
Last week, Paul Krugman wrote a column on how economists got things so wrong. He got a few things wrong himself.
First there is the ketchup quote:
First, a two-quart bottle of ketchup invariably sells for less than two one-quart bottles. This reflects economies of scale and per-unit costs. As portions become smaller, the cost of packaging, transportation, and shelf space take up a larger proportion of the cost.
Second, supermarkets have been investing heavily in marketing research for decades. What ever price a bottle of ketchup has, it reflects a lot of calculation and experience on the most profitable point. Supermarket prices don't just happen. Krugman thinks that market-based prices arrive at the wrong prince. While they can, and did with the housing bubble, the vast majority of the time they are correct.
Krugman's second problematic example is with a babysitter co-op:
The analysis that Krugman gives is flawed at every level.
First there is the reason that people hold a reserve of 20 coupons. He says that it is so that they can splurge at a future date. I suspect that it is so that they can quit at any time. The rules of the co-op almost mandate a 20-coupon reserve. You are given 20 coupons when you join and you have to return 20 when you leave. Anyone who allows their reserve to fall below 20 is in debt and will have to earn the difference in order to quit. A different way of looking at this is that you start with a balance of zero but a credit limit of 20 which have to be repaid when you quit.
But that's only part of the problem. The other problem is that this is being presented as a closed system when there are external factors.
Any parent can tell you that it isn't much trouble to watch someone else's child along with your own. It does not double your work, especially if the child that you are sitting is close enough in age to play with your own children (remember that everyone in the co-op has children by definition).
On the other hand, going out represents an additional expense. Dinner and a movie will cost at least $40. So, in order for you to get babysitting work from me, I have to spend an additional sum.
Most people do not send their kids to the sitter every night or even every other night and go out. On the other hand, any parent who is not going out is available to babysit. Since the co-op was established with the expectation that the demand for coupons would balance the demand for sitters, it was doomed from the start.
Also, the prices (coupons) were fixed from the start by the co-op so this example has no place in a discussion of market-based economics. There is no market here. If anything, this is an example of why having prices set by an external authority does not work. Also, if it is hard to find work as a sitter then that makes it harder to repay the 20 coupons when you leave.
This should be obvious to a Nobel-Prize-winning economist but Krugman missed it. He just dismisses it as a recession. He goes on to say:
In a normal market, only a subset of the population provides babysitting and they do it for real money instead of hours. The idea of the co-op was to remove the expense of babysitting from the cost of going out. The system that was set up did that admirably. Anyone who needed a sitter would find a large pool of people available. If you stop there then it was a success. It only becomes a failure if you expect an equal number of people to need a sitter and to want to sit. In a population where there was a high demand for sitters and low cost for needed them then this would work. Among a normal population it will always fail.
One final note - any attempt to fix this "recession" is likely to make it worse. There is no way to adjust the co-op rules so that the demand for sitters will match the demand for children to sit. So much for "government" intervention.
First there is the ketchup quote:
Larry Summers, now the top economic adviser in the Obama administration, once mocked finance professors with a parable about "ketchup economists" who "have shown that two-quart bottles of ketchup invariably sell for exactly twice as much as one-quart bottles of ketchup," and conclude from this that the ketchup market is perfectly efficient.I'm not sure if the original problem here is with Summers or Krugman but Krugman quotes it more than once in his article. There are several problems with this example of market economics.
First, a two-quart bottle of ketchup invariably sells for less than two one-quart bottles. This reflects economies of scale and per-unit costs. As portions become smaller, the cost of packaging, transportation, and shelf space take up a larger proportion of the cost.
Second, supermarkets have been investing heavily in marketing research for decades. What ever price a bottle of ketchup has, it reflects a lot of calculation and experience on the most profitable point. Supermarket prices don't just happen. Krugman thinks that market-based prices arrive at the wrong prince. While they can, and did with the housing bubble, the vast majority of the time they are correct.
Krugman's second problematic example is with a babysitter co-op:
I like to explain the essence of Keynesian economics with a true story that also serves as a parable, a small-scale version of the messes that can afflict entire economies. Consider the travails of the Capitol Hill Baby-Sitting Co-op.
This co-op, whose problems were recounted in a 1977 article in The Journal of Money, Credit and Banking, was an association of about 150 young couples who agreed to help one another by baby-sitting for one another's children when parents wanted a night out. To ensure that every couple did its fair share of baby-sitting, the co-op introduced a form of scrip: coupons made out of heavy pieces of paper, each entitling the bearer to one half-hour of sitting time. Initially, members received 20 coupons on joining and were required to return the same amount on departing the group.
Unfortunately, it turned out that the co-op's members, on average, wanted to hold a reserve of more than 20 coupons, perhaps, in case they should want to go out several times in a row. As a result, relatively few people wanted to spend their scrip and go out, while many wanted to baby-sit so they could add to their hoard. But since baby-sitting opportunities arise only when someone goes out for the night, this meant that baby-sitting jobs were hard to find, which made members of the co-op even more reluctant to go out, making baby-sitting jobs even scarcer. . . .
In short, the co-op fell into a recession.
The analysis that Krugman gives is flawed at every level.
First there is the reason that people hold a reserve of 20 coupons. He says that it is so that they can splurge at a future date. I suspect that it is so that they can quit at any time. The rules of the co-op almost mandate a 20-coupon reserve. You are given 20 coupons when you join and you have to return 20 when you leave. Anyone who allows their reserve to fall below 20 is in debt and will have to earn the difference in order to quit. A different way of looking at this is that you start with a balance of zero but a credit limit of 20 which have to be repaid when you quit.
But that's only part of the problem. The other problem is that this is being presented as a closed system when there are external factors.
Any parent can tell you that it isn't much trouble to watch someone else's child along with your own. It does not double your work, especially if the child that you are sitting is close enough in age to play with your own children (remember that everyone in the co-op has children by definition).
On the other hand, going out represents an additional expense. Dinner and a movie will cost at least $40. So, in order for you to get babysitting work from me, I have to spend an additional sum.
Most people do not send their kids to the sitter every night or even every other night and go out. On the other hand, any parent who is not going out is available to babysit. Since the co-op was established with the expectation that the demand for coupons would balance the demand for sitters, it was doomed from the start.
Also, the prices (coupons) were fixed from the start by the co-op so this example has no place in a discussion of market-based economics. There is no market here. If anything, this is an example of why having prices set by an external authority does not work. Also, if it is hard to find work as a sitter then that makes it harder to repay the 20 coupons when you leave.
This should be obvious to a Nobel-Prize-winning economist but Krugman missed it. He just dismisses it as a recession. He goes on to say:
Freshwater economists are, essentially, neoclassical purists. They believe that all worthwhile economic analysis starts from the premise that people are rational and markets work, a premise violated by the story of the baby-sitting co-op. As they see it, a general lack of sufficient demand isn't possible, because prices always move to match supply with demand. If people want more baby-sitting coupons, the value of those coupons will rise, so that they're worth, say, 40 minutes of baby-sitting rather than half an hour — or, equivalently, the cost of an hours' baby-sitting would fall from 2 coupons to 1.5. And that would solve the problem: the purchasing power of the coupons in circulation would have risen, so that people would feel no need to hoard more, and there would be no recession.Since the demand for babysitting has an external element, price adjustment will only have a marginal impact. Worse, it would encourage hoarding, at least above the 20-coupon level, since it might take you two evenings of sitting to make up for one night out.
In a normal market, only a subset of the population provides babysitting and they do it for real money instead of hours. The idea of the co-op was to remove the expense of babysitting from the cost of going out. The system that was set up did that admirably. Anyone who needed a sitter would find a large pool of people available. If you stop there then it was a success. It only becomes a failure if you expect an equal number of people to need a sitter and to want to sit. In a population where there was a high demand for sitters and low cost for needed them then this would work. Among a normal population it will always fail.
One final note - any attempt to fix this "recession" is likely to make it worse. There is no way to adjust the co-op rules so that the demand for sitters will match the demand for children to sit. So much for "government" intervention.
Thursday, September 10, 2009
"You Lie!"
During last night's speech, when President Obama said that illegal immigrants would not be covered by his proposed health care reform, Rep. Joe Wilson burst out with "You Lie!".
First, this was not appropriate behavior. There was enough of that during the Bush years.
But, what prompted Wilson's outburst? This is where things get tricky. The various health care bills do say that immigrants are not covered but there is no verification. In fact, Republicans have tried to add a verification requirement and the Democrats have rejected it. This means that illegal immigrants probably get coverage even if they are not entitled to it. Obama must know this so he was being disingenuous when he said that they would not be covered.
Obama was disingenuous about other facets of the bills. He continues to claim that early testing will cut costs and save lives. He is only half right there - it will raise costs. He has moderated his promise that the bills will not force individuals or their employers to change coverage but the new taxes and mandates in the bills will certainly force changes.
Regardless, the middle of the President's speech is not the time to argue fine points.
Update - I still think that this outburst was unseemly but it may turn out to be the point where Obama lost the health care debate. The evening news top story was about Wilson instead of Obama. The same thing happened in July when Obama gave a press conference that was mainly about health care but answered one question about a white cop arresting a black professor. Everyone forgot about the rest of the press conference. The same thing seems to be happening - Obama gave a prime-time speech which contained nothing new and was upstaged by two words from the gallery.
Wilson got some action, also. Democrats promised to include some enforcement language in the bills.
First, this was not appropriate behavior. There was enough of that during the Bush years.
But, what prompted Wilson's outburst? This is where things get tricky. The various health care bills do say that immigrants are not covered but there is no verification. In fact, Republicans have tried to add a verification requirement and the Democrats have rejected it. This means that illegal immigrants probably get coverage even if they are not entitled to it. Obama must know this so he was being disingenuous when he said that they would not be covered.
Obama was disingenuous about other facets of the bills. He continues to claim that early testing will cut costs and save lives. He is only half right there - it will raise costs. He has moderated his promise that the bills will not force individuals or their employers to change coverage but the new taxes and mandates in the bills will certainly force changes.
Regardless, the middle of the President's speech is not the time to argue fine points.
Update - I still think that this outburst was unseemly but it may turn out to be the point where Obama lost the health care debate. The evening news top story was about Wilson instead of Obama. The same thing happened in July when Obama gave a press conference that was mainly about health care but answered one question about a white cop arresting a black professor. Everyone forgot about the rest of the press conference. The same thing seems to be happening - Obama gave a prime-time speech which contained nothing new and was upstaged by two words from the gallery.
Wilson got some action, also. Democrats promised to include some enforcement language in the bills.
What Does Health Care Reform Mean to You?
Forget President Obama's speech. The important details are in the bills working their way through Congress. Forbes analyzes them here. The quick summary is that these bills are awful. Congress realized that they will never pass a bill that adds a trillion dollars to the national debt. They are pledged to come up with a bill that is "deficit neutral".
How can you increase health care coverage without decreasing costs and still call it deficit neutral? By taxing everything in sight.
For example, if you get good health care benefits now (more than $8,000 per individual or $21,000 per family) then your insurer will be taxed a 35% excise tax. Does anyone seriously think that this will not be passed on to the insured or that it will not result in a cap on insurance benefits? So much for promises about not forcing you to change coverage.
There are other new taxes. Drug companies will be taxed $2.3 billion per year divided by their market share. Medical device companies will also be taxed this way. These taxes are designed to be passed on as increased costs so that private enterprise will take the blame instead of Obamacare. At the same time, new incentives will force people to sign up for the public option. It will not be forced on people but it will be the only show in town.
Small businesses will be hit hard. I would not say that the Democrats are planning this but they probably aren't losing any sleep over it, either. Since FDR, Democrats have preferred dealing with a few large companies rather than many small ones. It is easier to control an unionize large businesses.
This health care plan must be scrapped. It takes the worst of the current system and make it even worse. This will be a disaster for the country if it passes.
How can you increase health care coverage without decreasing costs and still call it deficit neutral? By taxing everything in sight.
For example, if you get good health care benefits now (more than $8,000 per individual or $21,000 per family) then your insurer will be taxed a 35% excise tax. Does anyone seriously think that this will not be passed on to the insured or that it will not result in a cap on insurance benefits? So much for promises about not forcing you to change coverage.
There are other new taxes. Drug companies will be taxed $2.3 billion per year divided by their market share. Medical device companies will also be taxed this way. These taxes are designed to be passed on as increased costs so that private enterprise will take the blame instead of Obamacare. At the same time, new incentives will force people to sign up for the public option. It will not be forced on people but it will be the only show in town.
Small businesses will be hit hard. I would not say that the Democrats are planning this but they probably aren't losing any sleep over it, either. Since FDR, Democrats have preferred dealing with a few large companies rather than many small ones. It is easier to control an unionize large businesses.
This health care plan must be scrapped. It takes the worst of the current system and make it even worse. This will be a disaster for the country if it passes.
Tuesday, September 08, 2009
What Does the Van Jones Resignation Mean?
A funny thing happened over the weekend. Around midnight on Saturday one of President Obama's advisors resigned. Most people never heard of Van Jones until his resignation and most are probably a little confused about why he resigned. The official story is that he used a bad word when describing the Republicans and signed a petition. People on the far left, such as Keith Olbermann-watchers, think that he was the victim of a smear campaign by Glen Beck and others on the right. Olbermann posted on the really-far-left Daily KOS, declaring war on Glen Beck.
What really happened was that Glen Beck and others had spent days digging up embarrassing details about Jones's political beliefs. He is very radical.
The liberal reaction is mixed. Alan Colmes insists that Jones gave up his radical ways nearly ten years ago. He ignores the fact that most of the quotes and positions that have been used against Jones were made after 2000. One clip that Beck ran several times was from early this year.
David Sirota at Huffington is upset because someone from the Progressive movement was forced out. He attributes it to racism and worries about the chilling effect that the resignation will have on progressives who want to go into politics.
These people and others on the left are missing the larger point - that Jones's beliefs may be typical of the progressive movement but they are at odds with the typical American voter. Jones spent the 1990s as a radical communist and never moderated his position very far. Someone who flirted with Deep Ecology (these are code words for "most humans must die") was a special adviser to the President on green jobs. Colmes and the others don't see anything unusual about this. They occupy an echo chamber where everyone is a radical.
This has happened before. Many of Obama's friends and associates are radicals. When they are found out then they are pushed away from the President's inner circle but the big question remains - what sort of man associates with so many radicals?
What really happened was that Glen Beck and others had spent days digging up embarrassing details about Jones's political beliefs. He is very radical.
The liberal reaction is mixed. Alan Colmes insists that Jones gave up his radical ways nearly ten years ago. He ignores the fact that most of the quotes and positions that have been used against Jones were made after 2000. One clip that Beck ran several times was from early this year.
David Sirota at Huffington is upset because someone from the Progressive movement was forced out. He attributes it to racism and worries about the chilling effect that the resignation will have on progressives who want to go into politics.
These people and others on the left are missing the larger point - that Jones's beliefs may be typical of the progressive movement but they are at odds with the typical American voter. Jones spent the 1990s as a radical communist and never moderated his position very far. Someone who flirted with Deep Ecology (these are code words for "most humans must die") was a special adviser to the President on green jobs. Colmes and the others don't see anything unusual about this. They occupy an echo chamber where everyone is a radical.
This has happened before. Many of Obama's friends and associates are radicals. When they are found out then they are pushed away from the President's inner circle but the big question remains - what sort of man associates with so many radicals?
Monday, September 07, 2009
The School Speech
On one hand, this should be a no-brainer. The President of the United States plans to give a speech to school children urging them to stay in school and work hard. Who could object?
But there is another angle. A beleaguered president, the day before he addresses the joint houses of Congress in an effort to save the signature issue of his presidency gives a speech to school children. The accompanying lesson plans suggest that teachers have the students write about the problems facing the president and how they can help him. Is there any chance that their response will not be politicized?
The Obama administration did admit that the lesson plans were heavy-handed and released revised ones urging students to work on their own, personal goals instead of the President's.
Considering that teachers are one of the Democrats' strongest supporters, I will be amazed if a lot of teachers don't ignore the revised lesson plan and come home urging their parents to support the president.
And that's why people object.
Update:
I read an advance transcript of the speech. It was long, boring and over the heads of most children.
But there is another angle. A beleaguered president, the day before he addresses the joint houses of Congress in an effort to save the signature issue of his presidency gives a speech to school children. The accompanying lesson plans suggest that teachers have the students write about the problems facing the president and how they can help him. Is there any chance that their response will not be politicized?
The Obama administration did admit that the lesson plans were heavy-handed and released revised ones urging students to work on their own, personal goals instead of the President's.
Considering that teachers are one of the Democrats' strongest supporters, I will be amazed if a lot of teachers don't ignore the revised lesson plan and come home urging their parents to support the president.
And that's why people object.
Update:
I read an advance transcript of the speech. It was long, boring and over the heads of most children.
Thursday, September 03, 2009
Health Care and Burning Houses
it is becoming common for left-leaning columnists to dismiss complaints about the public option for health care by comparing it to the fire department. Nicholas Kristof is the most recent to make this comparison. According to this argument, we are happy allowing the government to run the fire department so why not let it run health care? There are four major problems with this apples to oranges logic.
1) You can use this to justify a government takeover of everything. If you trust the government to put out fires, why not trust it to run your supermarkets/banks/TV stations? Reasonable people agree that there has to be some limit to government intrusion into people's lives. Otherwise you end up with Communist Russia which was a failure.
2) Buildings are at fixed locations, people move. Having a single location that will handle fires for a given area makes economic sense. On the other hand, people move all the time and their location has no relation to their insurance carrier. There are other major differences. Fires constitute an emergency. Insurance coverage may involve medical emergencies, but it is paid long after the fact. Geography makes it difficult for rival fire companies to compete but this does not apply to insurance companies.
3) There is no good reason why fire departments are government-run. The historic reason is that steam-powered pumps and horses were expensive. These days, fire departments could easily be outsourced if they weren't heavily unionized. Look at UPS and other delivery services which are slowly killing the US Postal Service.
4) I've been saving the best for last - fire departments are run by local government but the public option will be run by the federal government. There's a big difference in accountability between the two. What do you think the reaction would be if the Obama administration proposed a federal takeover of fire departments? The original question treats all levels of government as a single unit. If you correct for that then the question is: "You don't object to allowing your local government run your fire department so why not let the federal government run health care?" Not half as persuasive when you put it that way, is it?
1) You can use this to justify a government takeover of everything. If you trust the government to put out fires, why not trust it to run your supermarkets/banks/TV stations? Reasonable people agree that there has to be some limit to government intrusion into people's lives. Otherwise you end up with Communist Russia which was a failure.
2) Buildings are at fixed locations, people move. Having a single location that will handle fires for a given area makes economic sense. On the other hand, people move all the time and their location has no relation to their insurance carrier. There are other major differences. Fires constitute an emergency. Insurance coverage may involve medical emergencies, but it is paid long after the fact. Geography makes it difficult for rival fire companies to compete but this does not apply to insurance companies.
3) There is no good reason why fire departments are government-run. The historic reason is that steam-powered pumps and horses were expensive. These days, fire departments could easily be outsourced if they weren't heavily unionized. Look at UPS and other delivery services which are slowly killing the US Postal Service.
4) I've been saving the best for last - fire departments are run by local government but the public option will be run by the federal government. There's a big difference in accountability between the two. What do you think the reaction would be if the Obama administration proposed a federal takeover of fire departments? The original question treats all levels of government as a single unit. If you correct for that then the question is: "You don't object to allowing your local government run your fire department so why not let the federal government run health care?" Not half as persuasive when you put it that way, is it?
Wednesday, September 02, 2009
Numbers Games and Health Care
There are some numbers in the health care reform proposal that should be debated but are not even part of the discussion. The idea of universal coverage is that everyone who is not already insured will be required to purchase insurance. Since employer-provided insurance is cheaper than individual insurance, the government will assist those families that need help. The issue is at what level will we provide help?
First, remember that the actual poor are already covered by Medicaid. The people we are talking about are employed and making good wages. The earnings levels I have seen suggested are $66,000, $88,000 and $110,000 per year for a family of four. To put it into perspective, I checked the census data for 2006 (the most recent available). If your family makes $110,000 per year then you are in the top 20% of wage earners. 80% of the country makes less than that but that 80% will be expected to help you pay your insurance. Think about that for a minute.
Now think about this - what happens if the percentage of families buying their own insurance goes up? What if people decide that they will take the amount that their employer now spends on insurance as pay then uses that plus government assistance to buy their own insurance? Is it possible for everyone to subsidize everyone? Picture a large group of people in a circle. Each one is to take $100 dollars from his pocket and put it in the middle. Then, everyone takes $100 out of the middle. By government reasoning, everyone will be $100 richer.
It's all a numbers game, shifting money from one pocket to another.
The other numbers game is one that has been suggested but dropped. Obama has insisted that he will not sign any bill that is not revenue neutral. That means new taxes on someone. The original suggestion was to tax "gold-plated insurance benefits". The implication is that the government will decide how much health care you need. If you get less then you will be fined. If you get more then you will be taxed (a form of fine).
So who gets the gold-plated benefits? You might assume that they go to the rich. While it is likely that top executives get pretty good insurance, someone who is making $20 million a year isn't really worried about whether his co-pay is $10 or $20. It turns out that the group that would be hit hardest by this new tax is union members. The proposal to tax benefits has been quietly dropped with no word on where the new taxes will come from.
First, remember that the actual poor are already covered by Medicaid. The people we are talking about are employed and making good wages. The earnings levels I have seen suggested are $66,000, $88,000 and $110,000 per year for a family of four. To put it into perspective, I checked the census data for 2006 (the most recent available). If your family makes $110,000 per year then you are in the top 20% of wage earners. 80% of the country makes less than that but that 80% will be expected to help you pay your insurance. Think about that for a minute.
Now think about this - what happens if the percentage of families buying their own insurance goes up? What if people decide that they will take the amount that their employer now spends on insurance as pay then uses that plus government assistance to buy their own insurance? Is it possible for everyone to subsidize everyone? Picture a large group of people in a circle. Each one is to take $100 dollars from his pocket and put it in the middle. Then, everyone takes $100 out of the middle. By government reasoning, everyone will be $100 richer.
It's all a numbers game, shifting money from one pocket to another.
The other numbers game is one that has been suggested but dropped. Obama has insisted that he will not sign any bill that is not revenue neutral. That means new taxes on someone. The original suggestion was to tax "gold-plated insurance benefits". The implication is that the government will decide how much health care you need. If you get less then you will be fined. If you get more then you will be taxed (a form of fine).
So who gets the gold-plated benefits? You might assume that they go to the rich. While it is likely that top executives get pretty good insurance, someone who is making $20 million a year isn't really worried about whether his co-pay is $10 or $20. It turns out that the group that would be hit hardest by this new tax is union members. The proposal to tax benefits has been quietly dropped with no word on where the new taxes will come from.
Obama - LIberal or Moderate?
This "analysis" from the AP purports to show that President Obama isn't a far-left liberate. He can't be if he has appointed Bush carry-overs. How should we react to this?
The two top posts mentioned are Fed chief Ben Bernanke and Defense Secretary Robert Gates.
The other appointees mentioned are Sheila Bair, chair of the Federal Deposit Insurance Fund; Ray LaHood, Transportation Secretary; John McHugh, Secretary of the Army and Jon Huntsman, ambassador to China. Francis Collins, director of the National Institutes of Health is also listed even thought he is not a Republican. This shows that the list is being padded.
I'm going to ignore the "other appointees" list outright. They make good windows dressing but none of these is in a position to affect policies that are important to the Obama administration.
These choices do shed a lot of light on the Obama administration and its paradoxes. Obama has aggressively pushed for major changes in some areas while keeping Bush policies and, in some cases, Bush hold-overs in others. In many cases, Obama has kept policies that he campaigned against. His Iraq policy is a continuation of Bush's. He campaigned against rendition and tribunals but has allowed both.
I think that there is a very simple explanation. Obama came to office as an ambitious but inexperienced president. He has several areas where he wants to make his mark. There are others that he campaigned on but doesn't really have strong views. That's where the seeming paradox lies. If Obama cares about something then he puts his own man in charge and puts his own stamp on it. If he doesn't really care about it then he appoints a moderate or even a Bush hold-over and lets it continue with little change.
This approach has its uses. The White House can defend itself against charges that it is radical by pointing to the moderates it has appointed. Here's an example:
This will eventually come back to haunt Obama. Single-issue voters have long memories and Obama is seen to be forsaking many of them.
The two top posts mentioned are Fed chief Ben Bernanke and Defense Secretary Robert Gates.
The other appointees mentioned are Sheila Bair, chair of the Federal Deposit Insurance Fund; Ray LaHood, Transportation Secretary; John McHugh, Secretary of the Army and Jon Huntsman, ambassador to China. Francis Collins, director of the National Institutes of Health is also listed even thought he is not a Republican. This shows that the list is being padded.
I'm going to ignore the "other appointees" list outright. They make good windows dressing but none of these is in a position to affect policies that are important to the Obama administration.
These choices do shed a lot of light on the Obama administration and its paradoxes. Obama has aggressively pushed for major changes in some areas while keeping Bush policies and, in some cases, Bush hold-overs in others. In many cases, Obama has kept policies that he campaigned against. His Iraq policy is a continuation of Bush's. He campaigned against rendition and tribunals but has allowed both.
I think that there is a very simple explanation. Obama came to office as an ambitious but inexperienced president. He has several areas where he wants to make his mark. There are others that he campaigned on but doesn't really have strong views. That's where the seeming paradox lies. If Obama cares about something then he puts his own man in charge and puts his own stamp on it. If he doesn't really care about it then he appoints a moderate or even a Bush hold-over and lets it continue with little change.
This approach has its uses. The White House can defend itself against charges that it is radical by pointing to the moderates it has appointed. Here's an example:
The notion that he is moving the government to the left "is laughable, it's utterly laughable," said Thomas E. Mann, a government scholar at the Brookings Institution. Mann said the decision to keep Bernanke and Gates "doesn't buy him a thing with Republicans but was a sign of good judgment in both cases" because Bernanke and Gates were doing good jobs.There are drawbacks. Many of the issues that Obama doesn't care about loom large in the eyes of his supporters. Cindy Sheehan has already pronounced Obama as bad as Bush about ending the wars. Others are upset about the continuation of rendition and the tribunals.
This will eventually come back to haunt Obama. Single-issue voters have long memories and Obama is seen to be forsaking many of them.
Friday, August 28, 2009
The Worst Reasons
If you are a parent then your child must have desperately wanted something impractical. It didn't matter how you explained things, your child still wanted it. If you asked why your child wanted it you probably got the answer, "I just want it." or "The other kids have it." When my daughter was very young this could lead to a red-faced crying fit.
The Democrats are like this about health care. They've been wanting it so long that they don't remember why, they just want it. You can hear this in the different cases they have made. "All the other countries have it," is high on the list. In fact, that and variations on "fairness" pretty much make up the list. All of the talk about reducing costs or "bending the curve" are disingenuous since the current legislation is guaranteed to drive costs up instead of down.
This is also why the Democrats are so confused at the growing resistance to health care reform. They assumed that the entire country has been stewing over the issue since it failed under the Clintons.
Now the Democrats are adding a new reason - it should be passed as a memorial to Ted Kennedy. This is the worst of the reasons since it asks principled Republicans and Blue Dog Democrats to pass something that will affect the entire country against their better judgment as a memorial. Go ahead and name a building after him but don't reshape a big portion of the nation's economy as a memorial to one man. No one was that important and sentiment should not determine the shape of the US economy.
The Democrats are like this about health care. They've been wanting it so long that they don't remember why, they just want it. You can hear this in the different cases they have made. "All the other countries have it," is high on the list. In fact, that and variations on "fairness" pretty much make up the list. All of the talk about reducing costs or "bending the curve" are disingenuous since the current legislation is guaranteed to drive costs up instead of down.
This is also why the Democrats are so confused at the growing resistance to health care reform. They assumed that the entire country has been stewing over the issue since it failed under the Clintons.
Now the Democrats are adding a new reason - it should be passed as a memorial to Ted Kennedy. This is the worst of the reasons since it asks principled Republicans and Blue Dog Democrats to pass something that will affect the entire country against their better judgment as a memorial. Go ahead and name a building after him but don't reshape a big portion of the nation's economy as a memorial to one man. No one was that important and sentiment should not determine the shape of the US economy.
Tuesday, August 25, 2009
FDR, Reagan, and Obama
Last year, Obama said that he wanted to be a transformational president like FDR or Ronald Reagan rather than a caretaker president. At the time it looked likely. His campaign bordered on a religious crusade and he was the most ideological candidate in years. His followers were expecting great things from him. His party won Congress with a wide majority.
So, eight months later, how is the transformational part working out? Not so well.
FDR set a standard during his first 100 days but his real changes came about during his follow-up, the so-called Second New Deal. That's when Social Security passed. The first 100 days were all about stabilizing the economy.
Reagan's first actions were similar. He got tax cuts and budget cuts (technically they were cuts in growth) passed even though the Democrats controlled the House. He continued the deregulation that had started under Carter. He also beefed up the military.
In contrast, Obama's successes so far have been pretty meager. He ran on changing America, not on economic recovery but most of his early actions were economic. He signed a patchwork stimulus bill and a pork-laden spending bill. He took over the banks and two domestic auto makers. None of these were part of his platform nor were they particularly popular. The White House modus operandi has been to push bills through Congress fast and sign them quickly before the opposition has a chance to resist. This has worked against him. Credit card reform and the expansion of SCHIP passed before most people were even aware that they were being debated. Obama's approach garnered him little credit and no new political capitol.
Obama tried the same approach with health care reform, breaking several promises about transparency, but found that it was too big to push through quickly. Currently it is languishing with major portions still being debated.
This doesn't sound like a transformative president to me. What happened?
The first problem is that Obama has no message. Hope and Change are nice vague terms for winning an election but they don't give much of a mandate. Obama did make specific promises - over 500, more than twice the typical candidate's platform. This further watered down his mandate. Were people voting for him because he promised health care reform or because he promised to get the troops out or Iraq?
FDR had a strong message - "Competition is keeping prices too low. We need to reduce the number of businesses so that the remaining ones can charge higher prices. At the same time we will strengthen the unions so that they can demand higher wages."
Reagan had his own strong message, "Competition is good. It keeps prices down. We need more businesses and less burden from government and unions so that the demand for workers raises wages."
Both men expressed their visions in no uncertain terms. If they had problems getting their legislation through Congress, they appealed to the American people to pressure Congress.
Obama probably agrees with FDR but he has only hinted at it. In fact, whatever his personal beliefs are, he only hints at them. When he does make unguarded comments they reflect badly on him. Obama will never pass legislation while expressing his beliefs about bitter people clinging to guns and religion.
Both FDR and Reagan inspired generations of followers. In fact, they defined the current debate about the proper role of government (FDR=more, Reagan=less). During the campaign, Obama was so coy about his beliefs that most Libertarians voted for him thinking that he would be a pragmatic centrist.
In order to be a transformative president, you have to have a clearly defined philosophy. Without that, you are a caretaker administration.
Now, there's nothing wrong with being a caretaker. Most presidents are. That's why only four of them were carved on Mount Rushmore. The country can't handle new transformations every 4-8 years. It's hard enough to be a successful caretaker president. In the last 50 years, only three presidents have managed to serve a full two terms. The others are usually counted as failed presidencies. Even Kennedy who probably would have been reelected couldn't translate his popularity into political results.
So where does that leave Obama? He has two choices. He can define exactly what his vision is and try to win the country over to it, then use that, as Reagan did, to push his favored legislation through Congress. This will be tough. Defining visions are what campaigns are all about and Obama has three years before his next campaign starts in earnest. In the meantime, trying to sell a message without a campaign is nearly impossible. The White House has already tried to mobilize its campaign to sell health care. They failed. There is the additional problem that the country might not like what Obama is selling. The Democrats are have moved to the left but polls show that most of the country is still conservative. Admitting that he is a radical might hurt more than it helps.
The other option is to take the Clinton approach. Move to the center. Steal ideas from the right. The left will hate him for it (as they did Clinton) but it is a proven way to salvage a presidency.
So, eight months later, how is the transformational part working out? Not so well.
FDR set a standard during his first 100 days but his real changes came about during his follow-up, the so-called Second New Deal. That's when Social Security passed. The first 100 days were all about stabilizing the economy.
Reagan's first actions were similar. He got tax cuts and budget cuts (technically they were cuts in growth) passed even though the Democrats controlled the House. He continued the deregulation that had started under Carter. He also beefed up the military.
In contrast, Obama's successes so far have been pretty meager. He ran on changing America, not on economic recovery but most of his early actions were economic. He signed a patchwork stimulus bill and a pork-laden spending bill. He took over the banks and two domestic auto makers. None of these were part of his platform nor were they particularly popular. The White House modus operandi has been to push bills through Congress fast and sign them quickly before the opposition has a chance to resist. This has worked against him. Credit card reform and the expansion of SCHIP passed before most people were even aware that they were being debated. Obama's approach garnered him little credit and no new political capitol.
Obama tried the same approach with health care reform, breaking several promises about transparency, but found that it was too big to push through quickly. Currently it is languishing with major portions still being debated.
This doesn't sound like a transformative president to me. What happened?
The first problem is that Obama has no message. Hope and Change are nice vague terms for winning an election but they don't give much of a mandate. Obama did make specific promises - over 500, more than twice the typical candidate's platform. This further watered down his mandate. Were people voting for him because he promised health care reform or because he promised to get the troops out or Iraq?
FDR had a strong message - "Competition is keeping prices too low. We need to reduce the number of businesses so that the remaining ones can charge higher prices. At the same time we will strengthen the unions so that they can demand higher wages."
Reagan had his own strong message, "Competition is good. It keeps prices down. We need more businesses and less burden from government and unions so that the demand for workers raises wages."
Both men expressed their visions in no uncertain terms. If they had problems getting their legislation through Congress, they appealed to the American people to pressure Congress.
Obama probably agrees with FDR but he has only hinted at it. In fact, whatever his personal beliefs are, he only hints at them. When he does make unguarded comments they reflect badly on him. Obama will never pass legislation while expressing his beliefs about bitter people clinging to guns and religion.
Both FDR and Reagan inspired generations of followers. In fact, they defined the current debate about the proper role of government (FDR=more, Reagan=less). During the campaign, Obama was so coy about his beliefs that most Libertarians voted for him thinking that he would be a pragmatic centrist.
In order to be a transformative president, you have to have a clearly defined philosophy. Without that, you are a caretaker administration.
Now, there's nothing wrong with being a caretaker. Most presidents are. That's why only four of them were carved on Mount Rushmore. The country can't handle new transformations every 4-8 years. It's hard enough to be a successful caretaker president. In the last 50 years, only three presidents have managed to serve a full two terms. The others are usually counted as failed presidencies. Even Kennedy who probably would have been reelected couldn't translate his popularity into political results.
So where does that leave Obama? He has two choices. He can define exactly what his vision is and try to win the country over to it, then use that, as Reagan did, to push his favored legislation through Congress. This will be tough. Defining visions are what campaigns are all about and Obama has three years before his next campaign starts in earnest. In the meantime, trying to sell a message without a campaign is nearly impossible. The White House has already tried to mobilize its campaign to sell health care. They failed. There is the additional problem that the country might not like what Obama is selling. The Democrats are have moved to the left but polls show that most of the country is still conservative. Admitting that he is a radical might hurt more than it helps.
The other option is to take the Clinton approach. Move to the center. Steal ideas from the right. The left will hate him for it (as they did Clinton) but it is a proven way to salvage a presidency.
Monday, August 24, 2009
Defaming the Dissidents
Ever since protesters started showing up at town hall meetings, the left has been belittling them. First they were paid "Brooks Brothers" protesters. Then they were a threat to free exchange of ideas.
More recently the left has focused on two things. One is that several protesters carry signs calling President Obama a Nazi. This has caused an uproar from the left. "How dare you compare the President to someone so evil?"
The other thing has been that a few protesters had guns. One was carrying a gun illegally. Others were carrying legally. The left's take on this is that it is meant as intimidation. MSNBC showed one protester with an AR-15 across his back and talked about racist white militia members. The protester in question was black but they had only shown close-ups of his back so that this was not obvious.
One way to react to this is to dismiss it as simple hypocrisy. The left never had any problems with paid protesters. MoveOn seriously considered running an ad during the Superbowl that showed President Push morphing into Hitler. No one on the left complained that this was over-the-top. Democrats don't believe in guns but last November, members of the New Black Panthers stood outside a polling place carrying clubs and shouting racial epithets. Again, no reaction from the left.
So is this just a matter of the left objecting to its own tactics when they are the subject? I don't think so.
I think that this is a concerted, if ineffectual, effort to discredit the protesters. This is a page from Saul Alinsky. It is easier to attack an individual than his ideas. If the left can make the protesters seem like a bunch of nuts then they don't have to defend their health care proposals. They are the ones trying to shut down the debate...
Protester: According to the CBO, your health care proposal will bend the curve up instead of down.
Democrat: You're ugly.
New York Times Columnist: These protestors are ugly so we shouldn't listen to them.
More recently the left has focused on two things. One is that several protesters carry signs calling President Obama a Nazi. This has caused an uproar from the left. "How dare you compare the President to someone so evil?"
The other thing has been that a few protesters had guns. One was carrying a gun illegally. Others were carrying legally. The left's take on this is that it is meant as intimidation. MSNBC showed one protester with an AR-15 across his back and talked about racist white militia members. The protester in question was black but they had only shown close-ups of his back so that this was not obvious.
One way to react to this is to dismiss it as simple hypocrisy. The left never had any problems with paid protesters. MoveOn seriously considered running an ad during the Superbowl that showed President Push morphing into Hitler. No one on the left complained that this was over-the-top. Democrats don't believe in guns but last November, members of the New Black Panthers stood outside a polling place carrying clubs and shouting racial epithets. Again, no reaction from the left.
So is this just a matter of the left objecting to its own tactics when they are the subject? I don't think so.
I think that this is a concerted, if ineffectual, effort to discredit the protesters. This is a page from Saul Alinsky. It is easier to attack an individual than his ideas. If the left can make the protesters seem like a bunch of nuts then they don't have to defend their health care proposals. They are the ones trying to shut down the debate...
Protester: According to the CBO, your health care proposal will bend the curve up instead of down.
Democrat: You're ugly.
New York Times Columnist: These protestors are ugly so we shouldn't listen to them.
Tuesday, August 18, 2009
Centerpiece or Sliver?
President Obama insists that the public option was only a "sliver" of health care reform. The reaction from the left makes you wonder. New York Times columnist, Bob Herbert, seems to think that without a public option, the reform will only make things worse.
I could quote others but their complaint is always the same - we have to have a public plan or we will not have real health care reform. What is there about a public plan that is so appealing?
The obvious starting point is that the left hates to see anyone make a profit and hates it worse if they are making a profit from human misery. Obama describes it this way:
But if that was all there was to it then why create a government-owned and controlled competitor? The government just passed sweeping reforms on what banks can and cannot do with credit cards. Why not do the same thing with health coverage? After all, health care reform is being rebranded as insurance reform. Is there more to this?
The right has been afraid that the public plan was a backdoor way of passing single payer. From the reaction on the left, they thought so, too.
Giving consumers the choice of an efficient, nonprofit, government-run insurance plan would have moved us toward real cost control, but that option has gone a-glimmering. The public deserves better. The drug companies, the insurance industry and the rest of the corporate high-rollers have their tentacles all over this so-called reform effort, squeezing it for all it's worth.
Meanwhile, the public — struggling with the worst economic downturn since the 1930s — is looking on with great anxiety and confusion. If the drug companies and the insurance industry are smiling, it can only mean that the public interest is being left behind.
I could quote others but their complaint is always the same - we have to have a public plan or we will not have real health care reform. What is there about a public plan that is so appealing?
The obvious starting point is that the left hates to see anyone make a profit and hates it worse if they are making a profit from human misery. Obama describes it this way:
{...} a system that often works better for the health-insurance companies than it does for them.
But if that was all there was to it then why create a government-owned and controlled competitor? The government just passed sweeping reforms on what banks can and cannot do with credit cards. Why not do the same thing with health coverage? After all, health care reform is being rebranded as insurance reform. Is there more to this?
The right has been afraid that the public plan was a backdoor way of passing single payer. From the reaction on the left, they thought so, too.
Monday, August 17, 2009
Obama and the Public Plan
Yesterday's top story was that the White House was backing off of the requirement that insurance reform include a public plan. My reaction was that if this was true, it meant that Obama would get his package. By today the message it more mixed. It may be off the table. It may still be on the table. It may even be on the table but hidden to be revealed at the last second.
If the public option is not dropped and Obama's health care plan passes then this will be the biggest reason for the failure. Pundits will talk about death boards and town hall meetings but the public option is the real reason that health care is in trouble.
To conservatives and insurance companies, the public option is a back-door way of implementing single-payer. Conservatives don't want the government running such a large portion of the economy and the insurance companies are sure that they will be forced out of business. There is good reason for these fears. European countries that offer the public/private mix have the majority of the population enrolled in the public plan. The private plans sometimes exist only for the wealthy and government workers.
If you think that the public plan will be comparable to private coverage then explain why the Democrats have consistently rejected amendments that would force them and their staffs to switch to the public plan?
Here's another factoid - when it passed, Social Security only covered around half of the population. Once government programs start, they tend to expand.
Obama's justification for the public plan is that private, for-profit insurance companies can't be trusted. They need competition from the government to "keep them honest". Other, high-ranking Democrats have admitted that the public plan is a back-door to single-payer, just as the other side fears. They tend to say this quietly. I have seen them quoted but I couldn't find and of the quotes when researching this post.
So, by including a public plan, the Democrats have energised conservatives who are willing to work against the reform package. They have also mobilized the insurance companies who are providing the financing. In the meantime the drug makers are funding the pro-reform movement in exchange for not being subject to price controls.
If Obama dropped the public option for real then much of the opposition would vanish. He could make a deal with the insurance companies. They stand to gain millions of new customers from the universal coverage requirement. If they switched sides then the conservatives would find themselves heavily out-spent and missing one of their central arguments against reform.
It shows how heavily Obama was influenced by Saul Alinsky and other socialists in his youth that he is willing to give up easy passage because of an innate distrust of for-profit companies.
There is one possibility why the White House is being so coy about the public plan. Howard Dean suggested that both Houses of Congress pass a measure without a public plan then insert it during the budget reconciliation process. This would only require 51 votes instead of 60 to pass the Senate and wouldn't give health care opponents enough time to re-mobilize. That would be a betrayal of Obama's promises of open government but he turned his back on that one with the first bill he signed.
If the public option is not dropped and Obama's health care plan passes then this will be the biggest reason for the failure. Pundits will talk about death boards and town hall meetings but the public option is the real reason that health care is in trouble.
To conservatives and insurance companies, the public option is a back-door way of implementing single-payer. Conservatives don't want the government running such a large portion of the economy and the insurance companies are sure that they will be forced out of business. There is good reason for these fears. European countries that offer the public/private mix have the majority of the population enrolled in the public plan. The private plans sometimes exist only for the wealthy and government workers.
If you think that the public plan will be comparable to private coverage then explain why the Democrats have consistently rejected amendments that would force them and their staffs to switch to the public plan?
Here's another factoid - when it passed, Social Security only covered around half of the population. Once government programs start, they tend to expand.
Obama's justification for the public plan is that private, for-profit insurance companies can't be trusted. They need competition from the government to "keep them honest". Other, high-ranking Democrats have admitted that the public plan is a back-door to single-payer, just as the other side fears. They tend to say this quietly. I have seen them quoted but I couldn't find and of the quotes when researching this post.
So, by including a public plan, the Democrats have energised conservatives who are willing to work against the reform package. They have also mobilized the insurance companies who are providing the financing. In the meantime the drug makers are funding the pro-reform movement in exchange for not being subject to price controls.
If Obama dropped the public option for real then much of the opposition would vanish. He could make a deal with the insurance companies. They stand to gain millions of new customers from the universal coverage requirement. If they switched sides then the conservatives would find themselves heavily out-spent and missing one of their central arguments against reform.
It shows how heavily Obama was influenced by Saul Alinsky and other socialists in his youth that he is willing to give up easy passage because of an innate distrust of for-profit companies.
There is one possibility why the White House is being so coy about the public plan. Howard Dean suggested that both Houses of Congress pass a measure without a public plan then insert it during the budget reconciliation process. This would only require 51 votes instead of 60 to pass the Senate and wouldn't give health care opponents enough time to re-mobilize. That would be a betrayal of Obama's promises of open government but he turned his back on that one with the first bill he signed.
Thursday, August 13, 2009
Clunkers and Winners
Last weekend I was camping in Indianan. Someone else at the event had his brakes go bad on the drive there from Wisconsin. He had his van checked. The master cylinder and the brake lines needed replaced. The van was a Chevy Astro and GM hasn't made replacement parts for it in years so he would have to find parts from a junked Astro. He decided that this was going to cost way more than the van was worth. Instead he planned to donate the van to a local charity, drive home in a rental car and buy a new car there.
After talking with his family they decided on a different plan. His father-in-law would drive down with a truck and haul the van back home. Then the would trade the van in for Cash-For-Clunker money.
There are several winners and losers here. The big winner was the owner of the van. He was going to get a government check for several times the worth of a van that would have ended up scrapped, anyway.
The losers are the charity that would have gotten the van. They wouldn't have gotten much for it but now they will get nothing. Multiply this by thousands to see the true effect on charities.
I'm not sure about the rental industry. They rented a truck for a round trip instead of a car for a one-way trip. One-way rentals are expensive for the renter and inconvenient for the rental agency. I'll call this one a wash.
Astro owners in general are slight losers. That's one fewer Astro to be broken down for spare parts. Instead it will be crushed. One van doesn't make much difference but multiply that by thousands and you are setting up for a spare parts shortage for years to come.
I don't know if the automobile industry will come out ahead or break even. They were going to sell a new car, regardless. They might sell a more expensive one because of this. Or they might not.
The biggest loser is the US taxpayer. We subsidized a transaction that would have heppened anyway. We paid several times what the van is worth to no real effect since it would likely be scrapped anyway.
After talking with his family they decided on a different plan. His father-in-law would drive down with a truck and haul the van back home. Then the would trade the van in for Cash-For-Clunker money.
There are several winners and losers here. The big winner was the owner of the van. He was going to get a government check for several times the worth of a van that would have ended up scrapped, anyway.
The losers are the charity that would have gotten the van. They wouldn't have gotten much for it but now they will get nothing. Multiply this by thousands to see the true effect on charities.
I'm not sure about the rental industry. They rented a truck for a round trip instead of a car for a one-way trip. One-way rentals are expensive for the renter and inconvenient for the rental agency. I'll call this one a wash.
Astro owners in general are slight losers. That's one fewer Astro to be broken down for spare parts. Instead it will be crushed. One van doesn't make much difference but multiply that by thousands and you are setting up for a spare parts shortage for years to come.
I don't know if the automobile industry will come out ahead or break even. They were going to sell a new car, regardless. They might sell a more expensive one because of this. Or they might not.
The biggest loser is the US taxpayer. We subsidized a transaction that would have heppened anyway. We paid several times what the van is worth to no real effect since it would likely be scrapped anyway.
Wednesday, August 12, 2009
Death Panels, Nazi symbols, and the Health debate
August is traditionally the month for crazy news stories. Normally Congress is out of session and the president is on vacation and there is little actual news to report on so reporters fill the air with stories about shark attacks and anything else they can find.
This year the politicians may not be in Washington but they are not on break. They are trying to drum up support for Health Care Reform. At the same time, opponents are trying to stop them. This is leading to all sorts of irrelevancies. For example:
Death panels. Sarah Palin talked about the establishment of death panels that would rule on who got to live. While her language is colorful, she was probably referring to something like Britain's NICE standards. These attempt to rate cost against quality of life in deciding what treatments will be allowed. When a woman at a town hall asked President Obama about a pacemaker for her then-100 year old mother, she was referring to this sort of cost benefit. Obama's answer wasn't comforting. I assume that Governor Palin was under this sort of pressure when she was pregnant with her son Trig to have an abortion.
While we might see something like this eventually established, it is not part of the current bills.
Nazi Symbols. Nancy Pelosi claimed to have seen protesters carrying Nazi symbols outside a town hall meeting. CNN checked. There was a sign with a swastika that had a circle and a line through it. In other words, it was a "no Nazi" sign. There was also a sign with Obama sporting a Hitler mustache. Pelosi gave the impression that the protesters were neo-Nazis when that's what they were calling her side.
Organized protests. The left has been insisting that the protests are organized and packed with people from outside the district. This is an attempt to discredit the protesters. To date, all that anyone can find is that anti-reformers have sent out email alerts and urged protesters to attend these meetings. This is exactly the tactic used by the supporters. This doesn't matter. The important thing for the Democrats is to get out a message. They know that few people will bother to look for the truth.
ReBranding. Most people are already insured so they rightly wonder what is in it for them? The two points that Obama is insistent on are universal coverage and the government option. Neither of these will help people who are already insured and they know it. Obama finally figured this out and launched a new message - that the whole thing is nothing more than an insurance bill of rights. If that was true then it would have already passed and been signed. This is only a small part of the reform bills. Similarly, Obama tried telling people that he is actually thrifty and will not sign a bill unless it is deficit neutral. While the White House is still trying to convince people that the bill will be paid for through increasing efficiencies in the system, this is an exaggeration (and I'm being kind). There will be a tax increase as part of it and it will hit most of the population.
Health Care Crisis. Obama insists that we are in a crisis. He tosses around the figure of 46 million without insurance. What he doesn't mention is that this includes 10 million illegal aliens. When asked, the Democrats insist that they will not be insuring illegals. So why include them in the count of the uninsured? To make the number scarier. In truth, a large percentage of the uninsured are gambling that they will not need coverage. They prefer to keep their money rather than spend it in insurance premiums. If asked, they would probably prefer to be left alone but they have to be included, also. The bigger the number the more the perceived urgency.
In his first few months in office, Obama took over the financial sector and the big three car makers. Now he is trying to take over energy and health care. People are rightly asking what he will be taking over next year? The speed that Obama is using to take over portions of the economy is scaring people. It doesn't help that the Demcrats made a big thing out of being Progressives and that the fascists rose out of the early-20th century Progressive movement. In pushing a bill that isn't even written yet, Obama is scaring otherwise reasonable people. I've said before that he should be spending his time on the economy. Health Care Reform is something for a country that feels financially strong, not one reeling under mounting debt and unemployment.
This year the politicians may not be in Washington but they are not on break. They are trying to drum up support for Health Care Reform. At the same time, opponents are trying to stop them. This is leading to all sorts of irrelevancies. For example:
Death panels. Sarah Palin talked about the establishment of death panels that would rule on who got to live. While her language is colorful, she was probably referring to something like Britain's NICE standards. These attempt to rate cost against quality of life in deciding what treatments will be allowed. When a woman at a town hall asked President Obama about a pacemaker for her then-100 year old mother, she was referring to this sort of cost benefit. Obama's answer wasn't comforting. I assume that Governor Palin was under this sort of pressure when she was pregnant with her son Trig to have an abortion.
While we might see something like this eventually established, it is not part of the current bills.
Nazi Symbols. Nancy Pelosi claimed to have seen protesters carrying Nazi symbols outside a town hall meeting. CNN checked. There was a sign with a swastika that had a circle and a line through it. In other words, it was a "no Nazi" sign. There was also a sign with Obama sporting a Hitler mustache. Pelosi gave the impression that the protesters were neo-Nazis when that's what they were calling her side.
Organized protests. The left has been insisting that the protests are organized and packed with people from outside the district. This is an attempt to discredit the protesters. To date, all that anyone can find is that anti-reformers have sent out email alerts and urged protesters to attend these meetings. This is exactly the tactic used by the supporters. This doesn't matter. The important thing for the Democrats is to get out a message. They know that few people will bother to look for the truth.
ReBranding. Most people are already insured so they rightly wonder what is in it for them? The two points that Obama is insistent on are universal coverage and the government option. Neither of these will help people who are already insured and they know it. Obama finally figured this out and launched a new message - that the whole thing is nothing more than an insurance bill of rights. If that was true then it would have already passed and been signed. This is only a small part of the reform bills. Similarly, Obama tried telling people that he is actually thrifty and will not sign a bill unless it is deficit neutral. While the White House is still trying to convince people that the bill will be paid for through increasing efficiencies in the system, this is an exaggeration (and I'm being kind). There will be a tax increase as part of it and it will hit most of the population.
Health Care Crisis. Obama insists that we are in a crisis. He tosses around the figure of 46 million without insurance. What he doesn't mention is that this includes 10 million illegal aliens. When asked, the Democrats insist that they will not be insuring illegals. So why include them in the count of the uninsured? To make the number scarier. In truth, a large percentage of the uninsured are gambling that they will not need coverage. They prefer to keep their money rather than spend it in insurance premiums. If asked, they would probably prefer to be left alone but they have to be included, also. The bigger the number the more the perceived urgency.
In his first few months in office, Obama took over the financial sector and the big three car makers. Now he is trying to take over energy and health care. People are rightly asking what he will be taking over next year? The speed that Obama is using to take over portions of the economy is scaring people. It doesn't help that the Demcrats made a big thing out of being Progressives and that the fascists rose out of the early-20th century Progressive movement. In pushing a bill that isn't even written yet, Obama is scaring otherwise reasonable people. I've said before that he should be spending his time on the economy. Health Care Reform is something for a country that feels financially strong, not one reeling under mounting debt and unemployment.
Monday, August 10, 2009
President Bush Saves the World
According to Paul Krugman, the country, and by extension the world, has been saved from a repeat of the Great Depression by big-spending government. He dances around the subject quite a bit and gives credit to Obama's stimulus but that isn't really credible. The stimulus has barely started spending any money and reports show that it is not being targeted very well.
So what did save the economy? It must have been Bush and the TARP. That's what kept the banks in business and TARP money was used to bail out GM and Chrysler. Obama's actions have been more follow-up than leadership on these issues.
Of course, Krugman would rather chew off his right leg than credit Bush with doing anything right so he is left with applauding Obama for a yet-to-be-spent stimulus package.
Since Obama has spent most of his time in the White House complaining about the "mess" that Bush left him, it would be nice to hear something nice about the Bush administration. Not that this will ever happen.
So what did save the economy? It must have been Bush and the TARP. That's what kept the banks in business and TARP money was used to bail out GM and Chrysler. Obama's actions have been more follow-up than leadership on these issues.
Of course, Krugman would rather chew off his right leg than credit Bush with doing anything right so he is left with applauding Obama for a yet-to-be-spent stimulus package.
Since Obama has spent most of his time in the White House complaining about the "mess" that Bush left him, it would be nice to hear something nice about the Bush administration. Not that this will ever happen.
Thursday, August 06, 2009
Stifling Debate
An official starts to address a gathering of people to explain his position. Suddenly a protester stands up and starts making a disturbance. Is this a danger to democratic society? Something that must be suppressed? Or is it an example of constitutionally protected free speech?
Not so strangely, it depends on who is being interrupted. Currently the Obama administration is upset because tea party protesters are disrupting town hall meetings on health care. Several points should be considered:
First, this sort of behavior is nothing new. The left has been doing it constantly for decades. Speakers such as David Horowitz can expect that any time he gives a talk on campus, the front row will be filled with hecklers who have no intention of letting him speak.
The left had a blind spot about this. Talking Points Memo recently debated if they ever did this. Some people felt that they had done it during the Bush proposal for Social Security reform. Others felt that it hadn't happened since the 1960s. No one seemed to realize that it happens regularly.
The second point is that the White House is attempting to stifle the debate on their own terms. The whole purpose of the town hall meetings was to put out a controlled message. The President's town hall meetings are stacked with ringers from his campaign. They are trying to keep opponents from being heard. They even set up a special email address for people to forward anything that looks "fishy" to. It is unclear if this will be used to formulate responses or to threaten people who are disseminating the wrong message. Regardless, with the Democrats controlling the White House and Congress and a sympathetic press controlling CBS, ABC, NBC, CNN, and MSNBC, it is not surprising that people are copying tactics from the left to get their message out.
The third point is that the administration is spreading a lot of misinformation. The protesters are justified in calling them liars when they are not telling the truth. When the President of the United States tells lies on prime time, then what are average citizens to do? (The same thing that they did when no WMDs surfaced in Iraq.)
Finally, the left is insisting that the disruptions are being caused by paid agitators but has so far failed to find any. The closest that they have come is an overlap in volunteers.
For the record, here are a few statements that are being put out:
If you are satisfied with your doctor or health plan then no one will make you change it. Truth - Assuming that your current plan meets the new standards, it is up to your employer whether you will keep it or switch to a different plan or the public one.
Health Care Reform will cut health care costs. Truth - the current proposals are more likely to push future costs up than down.
You will not be forced to pay for abortion. Truth - a news story yesterday said that the public plan probably would include abortion.
This will not lead to single-payer. Truth - Based on other countries such as France, it will probably lead to a de facto single-payer covering 80%-90% of the population.
Not so strangely, it depends on who is being interrupted. Currently the Obama administration is upset because tea party protesters are disrupting town hall meetings on health care. Several points should be considered:
First, this sort of behavior is nothing new. The left has been doing it constantly for decades. Speakers such as David Horowitz can expect that any time he gives a talk on campus, the front row will be filled with hecklers who have no intention of letting him speak.
The left had a blind spot about this. Talking Points Memo recently debated if they ever did this. Some people felt that they had done it during the Bush proposal for Social Security reform. Others felt that it hadn't happened since the 1960s. No one seemed to realize that it happens regularly.
The second point is that the White House is attempting to stifle the debate on their own terms. The whole purpose of the town hall meetings was to put out a controlled message. The President's town hall meetings are stacked with ringers from his campaign. They are trying to keep opponents from being heard. They even set up a special email address for people to forward anything that looks "fishy" to. It is unclear if this will be used to formulate responses or to threaten people who are disseminating the wrong message. Regardless, with the Democrats controlling the White House and Congress and a sympathetic press controlling CBS, ABC, NBC, CNN, and MSNBC, it is not surprising that people are copying tactics from the left to get their message out.
The third point is that the administration is spreading a lot of misinformation. The protesters are justified in calling them liars when they are not telling the truth. When the President of the United States tells lies on prime time, then what are average citizens to do? (The same thing that they did when no WMDs surfaced in Iraq.)
Finally, the left is insisting that the disruptions are being caused by paid agitators but has so far failed to find any. The closest that they have come is an overlap in volunteers.
For the record, here are a few statements that are being put out:
If you are satisfied with your doctor or health plan then no one will make you change it. Truth - Assuming that your current plan meets the new standards, it is up to your employer whether you will keep it or switch to a different plan or the public one.
Health Care Reform will cut health care costs. Truth - the current proposals are more likely to push future costs up than down.
You will not be forced to pay for abortion. Truth - a news story yesterday said that the public plan probably would include abortion.
This will not lead to single-payer. Truth - Based on other countries such as France, it will probably lead to a de facto single-payer covering 80%-90% of the population.
Tuesday, August 04, 2009
The Automotive Model
President Obama says that we need health care reform in order to "bend the curve down." By this he means that we need to do something to keep health care costs from rising faster than inflation. The trouble is that none of the proposals being debated really address this. That's why we have all of the talk about rationing. As costs go up, the amount of services available to individuals will have to be reduced.
Will Obamacare solve this? No. France and Germany are close to the various public/private models being debated for Obamacare. They also come in after the US in the amount spent per capita on health care and they face the same problem with rising costs that we face. They also get less for their money. The survival rates for the most cancers range from slightly better in the US to much better for prostate cancer.
There is some talk about cutting Medicare but simply allocating less money means more rationing. This leads to human-interest stories about people being denied care and a return to previous funding.
Obama insists that the problem of rising costs is caused by greedy doctors who order too many of the wrong type of test (and not enough of the preventative tests that Obama insists will lower long-term costs). In his rush to find villains, Obama overlooks the fact that greedy insurance companies are not going to pay for unneeded tests. Obama's distrust of free markets makes him look for him to see rising costs as an indicator of insufficient government control. There are other factors, many of them byproducts of government policy.
One factor is the cost of malpractice insurance and the cost of "defensive medicine" - tests done in case of future lawsuits. Obama announced early on that malpractice reform would not be part of health reform. This kept the trial lawyers happy and they are one of the Democrats' biggest sources of money. It also eliminated a major tool in controlling costs.
A big problem with insurance is how it is handled. Most people do not buy insurance. Their employer buys it on their behalf. This came about mainly due to the progressive tax rates prior to the Reagan administration. The tax rates were not indexed to inflation so it was very easy for a cost of living increase to push someone into a higher tax rate and result in less actual take-home pay. At the time, most benefits were deductible so applying a cost of living increase to a benefit was a way of beating inflation. This gives individuals an incentive to run up their insurance costs. I know people who believe that a benefit is wasted if it isn't used so they try to get as much out of their insurance as they can.
With most people covered through their employer, insurance companies didn't have any incentive to sell to individuals. There is more profit in group sales than individual sales. This makes it harder for individuals to get insurance. This is also where a big part of the 47 million uninsured figure comes from. Anyone who is unemployed for any length of time is included in this figure.
One solution that I have seen being talked about in conservative circles is to treat health insurance like automobile insurance. You are responsible for buying your own instead of it being bought on your behalf by your employer. You would choose the options and amount of coverage that you need and can afford. Many regular things either would not be covered or would have a deductible. You don't expect your insurance to pay for oil changes, brake jobs, or new tires. Why should insurance pay for check-ups?
Many people are already doing this. They buy cheap catastrophic-coverage and pay other expenses out of pocket. This is one way of bending the curve down. If a doctor says that your headache is probably just that but that you could have a CAT scan to be sure, you are much more likely to agree if the test is covered by insurance.
This is the opposite from Obamacare. The President says that he wants more poeple being tested and that he does not want any co-pay for these tests. This represents two different points of view of medical tests. One side wants to leave the choice to the individual. The other side does nto trust the individual to make the correct choice and wants to test everyone.
Complicating this is the fact that most people are healthy so most tests are not needed. Worse, some tests produce a high number of false positives. This can lead to unneeded treatment. The PSA test for prostate cancer is an example of one that has a high number of false positives. It also detects any cancer, no matter how small. Since prostate cancer is slow-growing, a man can have it for decades without needing treatment. A review of PSA tests found that positives were often followed up with unneeded agressive treatment.
All of this should be part of the national discussion. Instead the debate is centered exclusively on insuring the most number of people and regulating minimum coverage.
Will Obamacare solve this? No. France and Germany are close to the various public/private models being debated for Obamacare. They also come in after the US in the amount spent per capita on health care and they face the same problem with rising costs that we face. They also get less for their money. The survival rates for the most cancers range from slightly better in the US to much better for prostate cancer.
There is some talk about cutting Medicare but simply allocating less money means more rationing. This leads to human-interest stories about people being denied care and a return to previous funding.
Obama insists that the problem of rising costs is caused by greedy doctors who order too many of the wrong type of test (and not enough of the preventative tests that Obama insists will lower long-term costs). In his rush to find villains, Obama overlooks the fact that greedy insurance companies are not going to pay for unneeded tests. Obama's distrust of free markets makes him look for him to see rising costs as an indicator of insufficient government control. There are other factors, many of them byproducts of government policy.
One factor is the cost of malpractice insurance and the cost of "defensive medicine" - tests done in case of future lawsuits. Obama announced early on that malpractice reform would not be part of health reform. This kept the trial lawyers happy and they are one of the Democrats' biggest sources of money. It also eliminated a major tool in controlling costs.
A big problem with insurance is how it is handled. Most people do not buy insurance. Their employer buys it on their behalf. This came about mainly due to the progressive tax rates prior to the Reagan administration. The tax rates were not indexed to inflation so it was very easy for a cost of living increase to push someone into a higher tax rate and result in less actual take-home pay. At the time, most benefits were deductible so applying a cost of living increase to a benefit was a way of beating inflation. This gives individuals an incentive to run up their insurance costs. I know people who believe that a benefit is wasted if it isn't used so they try to get as much out of their insurance as they can.
With most people covered through their employer, insurance companies didn't have any incentive to sell to individuals. There is more profit in group sales than individual sales. This makes it harder for individuals to get insurance. This is also where a big part of the 47 million uninsured figure comes from. Anyone who is unemployed for any length of time is included in this figure.
One solution that I have seen being talked about in conservative circles is to treat health insurance like automobile insurance. You are responsible for buying your own instead of it being bought on your behalf by your employer. You would choose the options and amount of coverage that you need and can afford. Many regular things either would not be covered or would have a deductible. You don't expect your insurance to pay for oil changes, brake jobs, or new tires. Why should insurance pay for check-ups?
Many people are already doing this. They buy cheap catastrophic-coverage and pay other expenses out of pocket. This is one way of bending the curve down. If a doctor says that your headache is probably just that but that you could have a CAT scan to be sure, you are much more likely to agree if the test is covered by insurance.
This is the opposite from Obamacare. The President says that he wants more poeple being tested and that he does not want any co-pay for these tests. This represents two different points of view of medical tests. One side wants to leave the choice to the individual. The other side does nto trust the individual to make the correct choice and wants to test everyone.
Complicating this is the fact that most people are healthy so most tests are not needed. Worse, some tests produce a high number of false positives. This can lead to unneeded treatment. The PSA test for prostate cancer is an example of one that has a high number of false positives. It also detects any cancer, no matter how small. Since prostate cancer is slow-growing, a man can have it for decades without needing treatment. A review of PSA tests found that positives were often followed up with unneeded agressive treatment.
All of this should be part of the national discussion. Instead the debate is centered exclusively on insuring the most number of people and regulating minimum coverage.
Why 3 cents?
One proposal to help pay for medical reform is a $0.03/can tax on soft drinks. Why three cents?
It's a bribe for the soft drink companies. Vending machines don't take pennies. Amounts have to be divisible by increments of five cents. If a three cent tax is imposed, they will raise prices a nickel and pocket the difference. All complaints will be directed at the government.
The White House and Congress are already fighting the insurance companies. They don't need new enemies.
It's a bribe for the soft drink companies. Vending machines don't take pennies. Amounts have to be divisible by increments of five cents. If a three cent tax is imposed, they will raise prices a nickel and pocket the difference. All complaints will be directed at the government.
The White House and Congress are already fighting the insurance companies. They don't need new enemies.
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