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Kevin Drum

The Healthcare Summit

| Tue Feb. 9, 2010 11:52 AM PST

Jon Chait writes about President Obama's proposed healthcare summit meeting later this month with Republicans:

Skeptics around Washington are already warning that the summit will be nothing more than Kabuki theater, allowing each side to grandstand on television while providing little in the way of substantive debate or additional understanding for the folks watching back home.

That's not the point. Obama knows perfectly well that the Republicans have no serious proposals to address the main problems of the health care system and have no interest (or political room, given their crazy base) in handing him a victory of any substance. Obama is bringing them in to discuss health care so he can expose this reality.

I agree that this is almost certainly Obama's intent. The question is whether it will work. The GOP leadership has already responded to Obama's offer with a list of preconditions for the meeting, a tactic straight out of Negotiation 101, but also one that works pretty well. What's more, if they decide to show up anyway, they'll be a lot better prepared than they were for their Q&A a week ago. My guess is that they'll have some pretty good sounding arguments lined up about consumer focused healthcare, the need for market-driven reforms, the evils of top-down government control, etc. etc. Those aren't things that Obama will be able to conclusively swat down in a few hours.

But we'll see. I don't have high hopes for the summit because Democrats haven't shown much ability to control the media narrative lately, and that's what this is really all about. Hopefully they'll do better than I think.

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The Pain of Spain is Mainly in the....Euro

— By Kevin Drum

| Tue Feb. 9, 2010 11:21 AM PST

Paul Krugman writes about Europe's troubles today:

Most press coverage of the eurozone troubles has focused on Greece, which is understandable: Greece is up against the wall to a greater extent than anyone else. But the Greek economy is also very small....

Well, OK, but Lehman Brothers was also pretty small relative to the rest of Wall Street. A failure in Greece could easily have knock-on effects that start taking out other weak countries and then spreads to not-so-weak countries. Still, point taken. Moving on:

....in economic terms the heart of the crisis is in Spain, which is much bigger. And as I’ve tried to point out in a number of posts, Spain’s troubles are not, despite what you may have read, the result of fiscal irresponsibility. Instead, they reflect “asymmetric shocks” within the eurozone, which were always known to be a problem, but have turned out to be an even worse problem than the euroskeptics feared.

The rest is worth reading if this stuff seems mysterious to you. It's very short, comes complete with some colorful charts, and gets across the main problems very succinctly. Basically, the problem is that Spain is in big trouble and needs to devalue its currency, but it can't because it doesn't have its own currency anymore. It has the euro, and the rest of the eurozone (i.e., Germany) doesn't want to adopt an expansionist monetary policy just to bail out Spain and a few other countries. So they're stuck.

Is Killing Terrorists a Sign of Weakness?

— By Kevin Drum

| Tue Feb. 9, 2010 9:36 AM PST

Yesterday Fred Kaplan wrote a blistering critique of Sarah Palin's demagogic mockery of Barack Obama's anti-terrorist cred:

Obama, after all, has nearly tripled the number of U.S. troops sent to Afghanistan. He has approved nearly twice as many CIA airstrikes against Taliban targets in Pakistan during his first year of office as President Bush did in his final year (65 vs. 36), killing more than twice as many militants in the process (571 vs. 268).

He has sent military trainers to help the Yemeni government fight al-Qaida insurgents. He has continued to boost the military budget. He has maintained the Bush administration's secret surveillance programs (despite protests from many Democrats). And Palin seems to have forgotten the time, last April, when Obama authorized SEAL sharpshooters to kill the three armed pirates who'd hijacked the merchant ship Maersk Alabama off the coast of Somalia.

I didn't get around to commenting on this, but it seemed like a pretty good reply. What right-wing hawk could argue with all this, after all? The answer, it turns out, is former Pentagon apparatchik and torture apologist Marc Thiessen:

Hold the applause. Obama's escalation of the "Predator War" comes at the very same time he has eliminated the CIA's capability to capture senior terrorist leaders alive and interrogate them for information on new attacks. The Predator has become for President Obama what the cruise missile was to President Bill Clinton — an easy way to appear like he is taking tough action against terrorists, when he is really shying away from the hard decisions needed to protect the United States.

But what, exactly, does Thiessen mean here? Matt Yglesias translates:

The piece would make sense if only Thiessen were willing to write in the English language. He is, as we’ve seen, an advocate of torture. He thinks torture is an excellent thing, and like the leaders of the Spanish Inquisition he thinks it’s morally obligatory for the government to torture people. From inside this twisted mental space, the notion that killing terrorists is too soft on terror starts to make sense. After all, in Thiessenland it’s better to let four terrorists go free if that lets you torture a fifth. That’s just how awesome he thinks torture is. But he won’t write the word “torture” or say clearly “the problem with Obama killing these terrorists is that he should be torturing them.”

That pretty much seems to be true. Thiessen's use of the phrase "question them effectively" does indeed seem to be a thin euphemism for "torture them." After all, although the Obama administration has (following the lead of the Bush administration) increased the use of drone strikes, it hasn't, in fact, eliminated the CIA's capability to capture terrorists. What it has done is insist that interrogations of captured terrorists follow the guidelines in the Army Field Manual. In other words, no torture. But for some people, I guess that amounts to the same thing.

Is Twitter Ruining the World?

— By Kevin Drum

| Tue Feb. 9, 2010 9:07 AM PST

George Packer is getting beat up for dissing Twitter, and now he says he's getting beat up for his response to the beatdown:

Just about everyone I know complains about the same thing when they’re being honest — including, maybe especially, people whose business is reading and writing. They mourn the loss of books and the loss of time for books. It’s no less true of me, which is why I’m trying to place a few limits on the flood of information that I allow into my head....The Internet and the devices it’s spawned are systematically changing our intellectual activities with breathtaking speed, and more profoundly than over the past seven centuries combined. It shouldn’t be an act of heresy to ask about the trade-offs that come with this revolution. In fact, I’d think asking such questions would be an important part of the job of a media critic, or a lead Bits blogger.

Instead, the response to my post tells me that techno-worship is a triumphalist and intolerant cult that doesn’t like to be asked questions.

I confess that I just don't get the vituperation on either side. The main response to Packer's original blog post came from New York Times Bits blogger Nick Bilton, and it was just....a response. Nothing to really get upset about. Ditto for Marc Ambinder's response, which Packer also links to. I don't doubt that some of the responses Packer got were triumpalist and intolerant, but that's just the nature of arguments on the internet. Hell, I get comments and emails by the hundreds telling me I'm a douchebag just because I support an excise tax on high-cost healthcare plans.

Beyond that, I have a hard time understanding why people get so worked up about other people's esthetic and lifestyle choices. I watch some crap TV and read some crap books sometimes. Other people prefer opera or stamp collecting. So what?

Likewise, I find Twitter useful because I'm a blogger. My job is to stay plugged into the news cycle throughout the day, and a constant stream of real-time tweets from a select group of people helps with that. For me, it's a lot less distracting than keeping the television going in the background, which is how a lot of people do this. But if I were, say, a medievalist plugging away on the definitive history of Roger Bacon and the birth of modern empiricism — well, Twitter probably wouldn't be very useful. A distraction, in fact. Again, so what?¹

Packer's response, I gather, is that he thinks blogs and Twitter and the new information economy in general aren't just esthetic choices. They're changing the way we live in profound ways, and we ought to question whether those changes are a good thing. That's hard to argue with, but considering the long, unedifying history of cranky elites complaining that new technology is turning our brains to mush and sending the world to hell in a handbasket, surely the burden of proof has shifted? I'm pretty open to Packer's side of things, actually, but I wouldn't give up printed books (16th century), newspapers (17th century), magazines (18th century), the telephone (19th century), or radio, TV, movies, or the internet (20th century) even though they all had their critics at the time too. The critics even made some good points sometimes, but I still wouldn't give up any of this stuff. A few years from now, I might feel the same way about Twitter (21st century).

As a personal choice, read and view what you want. But if you're going to add to the "death of culture" oeuvre, you really need to have a serious argument to make. And if you do, I promise to read it. As long as someone brings it to my attention via email, Google alert, blog trackback, or Twitter first.

¹For the record, this is pretty similar to my usual response about whether blogs are good or bad:

It's also why the endless debate over whether blogs are better or worse than the MSM is pointless. In the same way that newspapers excel at broad coverage of breaking news, TV excels at images, magazines excel at long analytic pieces, and talk radio excels at ranting screeds, blogs also excel at certain things. Trying to compare them to "journalism" is a mug's game, like trying to figure out if a beanbag is really a chair. Who cares? Beanbags are great for certain forms of sitting down and lousy at others.

Same for Twitter. It's good for quick, snarky comments and real-time links to interesting stuff. If that's not what you want, then don't use it.

Mirandizing Abdulmutallab

— By Kevin Drum

| Tue Feb. 9, 2010 7:00 AM PST

Somehow I missed this when it came out, but last week Richard Serrano and David Savage wrote a piece in the LA Times about what really happened during the questioning of Christmas bomber Umar Farouk Abdulmutallab:

FBI agents questioned him at the hospital for just under an hour. They did not give him the Miranda warning, which advises suspects that anything they say can be used against them at trial, citing an exemption that allows them first to seek crucial information on any pending crime...."He was making comments like, 'Others were following me.' And that is a circumstance where you've got a potential disaster, that there are others out there and you don't have to Mirandize him right away."

But the questioning stopped when doctors said they needed to sedate Abdulmutallab to treat his injuries. At that point, the sources said, the agents backed off....When Abdulmutallab awakened, a second team of FBI agents was sent in. Authorities thought he might be willing to say even more to the second set of agents.

"We had to see if he was still willing to talk," another source said. "And it was pretty quickly apparent to them that he wasn't. He had had a change of mind. It was only after establishing that with some confidence that they decided to go ahead and Mirandize him."

But by that time, the second source said, "We had already talked to him for almost an hour and he provided a lot of information."

This is probably old news to most readers, but I figure if I missed, others might have too. So here it is. Bottom line: Abdulmutallab was treated the same way the Bush administration treated Richard Reid and every other terrorism suspect caught on U.S. soil since September 11th.

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"Finish the Kitchen"

— By Kevin Drum

| Mon Feb. 8, 2010 5:53 PM PST

As told by E.J. Dionne, this is a brilliant extended metaphor for why Democrats need to pass healthcare reform. It's about Rep. Jay Inslee (D–Wash.), who lost his House seat after the failure of healthcare reform in 1994 and then won it back four years later:

He recounted all the grief he and his family went through while work on their kitchen renovation dragged on and on and on. "During that time, I had blood lust against my contractor," Inslee said. "Six months went by, and he was still arguing with the plumber. Eight months went by, and there were still wires hanging down everywhere, and he was having trouble with the building inspector."

But eventually, the job got done. "And now I love that kitchen," Inslee recalls saying. "I bake bread in that kitchen. My wife cooks great meals in that kitchen. The contractor's now a buddy of mine, and I've had beers with him in that kitchen."

Inslee looked at his colleagues and declared: "We've got to finish the kitchen." His point was that Americans won't experience any of the benefits of health-care reform until Congress puts a new system in place.

I called Inslee about his kitchen oration after Rep. David Wu (D-Ore.) told me it was one of the turning points in calming Democrats' nerves. "Now," Wu says, "people run into him in the hallway, smile and say, 'Finish the kitchen.' "

Anyone who's ever had any contracting work done understands this sentiment instantly. Likewise, everybody hates the legislative process while it's underway. But once healthcare reform becomes law, the storm will begin to blow over and everyone will start to focus instead on the real, concrete benefits of the bill and the people who made them into reality. And just to remind of you what those benefits are, here's the nickel summary again:

Insurers have to take all comers. They can't turn you down for a preexisting condition or cut you off after you get sick or lose your job.
Community rating. Within a few broad classes, everyone gets charged the same amount for insurance.
A significant expansion of Medicaid.
Subsidies for low and middle income workers that keeps premium costs under 10% of income.
Limits on ER charges to low-income uninsured emergency patients.
Mandates minimum levels of coverage.
Caps on out-of-pocket expenses.
A broad range of cost-containment measures.
A dedicated revenue stream to support all this.

Pass the bill. And the sooner the better. It's time to have a real accomplishment under our belts, not a bunch of exposed sheetrock and arguments over when it's going to be finished.

A Modern Day King Canute

— By Kevin Drum

| Mon Feb. 8, 2010 5:18 PM PST

Ross Douthat suggests that we liberals are being too hard on Rep. Paul Ryan's "Roadmap for America's Future." In particular, we're being too hard on his Medicare proposal:

The difference between the cost-control proposals in the Democratic bill and the cost-control proposals in Ryan’s roadmap isn’t that the former are “complicated and really hard to understand” (read: smart) while the latter are simple, unimaginative and cruel. It’s that the Democratic bill wouldn’t come close to balancing the budget in the long run, and Ryan’s plan would.

But this just isn't true. In fact, Ryan's plan doesn't have any cost controls. It merely has payment caps. Here's a description of how it would work, excerpted from Ryan's summary of the legislative text:

Medicare Payment. For beneficiaries first becoming eligible on or after 1 January 2021, creates a standard Medicare payment to be used for the purchase of private-sector health coverage.

- Payment Amount. Standard payment is the average amount Medicare currently spends per beneficiary, and is indexed for inflation by the projected average of the consumer price index and the medical economic index. For affected beneficiaries, the payment replaces all components of the current Medicare program.

Aside from a few minor bells and whistles related to risk and income adjustments, that's it. Ryan takes the average amount Medicare spends today and sets that as the cap for vouchers that would be given to seniors to buy private insurance. The value of the vouchers would deliberately be allowed to grow at a lower rate than medical inflation.

This isn't cost control. Regardless of what you think about Democratic cost control proposals, there's nothing in Ryan's plan that even attempts to reduce medical costs.¹ There's simply an arbitrary cap on how much the government will pay. In 30 years that cap will be about half what it takes to actually buy insurance, and if you can't afford to pay the other half yourself then you're out of luck.

Now it's true that if we adopted Ryan's plan and stuck to it, it would balance the budget. But not by reining in medical costs. It would balance the budget by simply refusing to pay for medical treatment for all seniors. The same is true for Ryan's discretionary budgeting proposal: he simply sets a cap and declares that the domestic discretionary budget has to meet it.

This is silliness. Anybody can pick up a piece of paper, write down some cap numbers, and declare the budget balanced. But that does nothing to bind future congresses and provides no plausible mechanism for actually reducing spending. It's just a number, not a serious proposal.

¹Actually, elsewhere in his plan there are two proposals that might reduce the growth of medical costs a bit: full transparency on pricing and tort reform caps. But whether or not you like these ideas, they're a fringe part of Ryan's plan that would have only a minor impact on cost control. What's more, they don't matter. Ryan's plan specifically limits voucher growth to less than medical inflation no matter what medical inflation is. So even if these things lower medical inflation a bit, they'd lower the voucher cap at the same time. No matter how you slice it, his plan relies on simply capping payments and then letting seniors sink or swim.

Goldman Sachs vs. the Taxpayers

— By Kevin Drum

| Mon Feb. 8, 2010 2:10 PM PST

In the New York Times this weekend, Gretchen Morgenson and Louise Story write about how Goldman Sachs both helped along the collapse of AIG and profited from it at the same time. Basically, Goldman acquired lots of mortgage-backed securities they thought were likely to tank, then bought CDS contracts from AIG to insure against that decline. Megan Carpentier summarizes the rest:

When Goldman’s investments declined, they submitted insurance claims for the losses, but insisted on determining the amount of their damages on their own, without any input from AIG, any auditor or the market.
After Goldman got as much money out of AIG as they thought they could, their stock analysts issued a report about how AIG was bleeding cash and their creditors wouldn’t negotiate, without mentioning that AIG was bleeding cash because of them and that Goldman was the creditor that wouldn’t negotiate. AIG’s stock tanked.
The government stepped in, took an 80 percent share in AIG and then paid Goldman and the other creditors all the money they’d asked AIG for at the start of the negotiations in 2007, without using their power to force AIG’s creditors to negotiate.

Given the scope of AIG's problems, I guess I doubt if any of this really mattered in the long run. AIG was going to collapse no matter what Goldman did or didn't do, so in a sense this is a bit of sideshow. But then there's this:

When the federal government, including then-Treasury Secretary Hank Paulson (who once served as chairman and CEO of Goldman Sachs), directed AIG to pay Goldman exactly what it wanted, it overrode significant and long-standing misgivings by AIG’s lawyers and accountants that Goldman’s estimates of its losses were correct. Morgenson and Story note that the prices on the very securities for which Goldman demanded insurance payments have since rebounded — but under the terms of the deal struck by the federal government, Goldman doesn’t have to pay a cent of its insurance settlement back to either AIG or the taxpayers. That’s quite the sweetheart deal for Goldman Sachs, if not taxpayers.

Now, of course, the question is what did Tim Geithner know about this and when did he know it? That story is still developing.

Quick Hits

— By Kevin Drum

| Mon Feb. 8, 2010 11:38 AM PST

A few quick hits:

The Economist's Erica Grieder is at a Sarah Palin rally in Houston and reports that she's a lot better in person talking to an adoring crowd than she is on television being grilled by skeptical journalists. (And who wouldn't be, after all?) But there's also this: "Although Mrs Palin often attacks other politicians and says that her policies would be better than theirs, she doesn't welcome debate, and her preferred oppositional strategy is abrupt withdrawal. Think about the resignation from the Oil & Gas commission and from the statehouse, or her choice to "go rogue" rather than convince the McCain campaign of the merits of her approach. That's how you get 30% of the vote, not 51%."
A state department SUV plowed into a Daily Caller reporter last week. Result: a broken left knee, lacerations, bruises, and a ticket for jaywalking. Nice.
Healthcare premiums paid by employers aren't taxed. This lowers its effective cost, and simple economics says that it therefore increases consumption of employer-based healthcare. Austin Frakt is trying to figure out how much less healthcare we'd consume if we did away with its tax subsidiy, and comes up with a rough guess of $100 billion per year. "And that’s the price tag of health reform." So we'd spend less and the government would get an additional revenue stream. That's why so many of us like the idea of the excise tax, which is basically a start at taxing employer healthcare premiums like ordinary income.
Felix Salmon reports that Citigroup plans to start selling risk protection against a financial crisis. What could possibly go wrong?

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