Monthly Archives: December 2009

The US system of government has a lot in its favour, in my view, but if you wanted to argue the opposite, the fiasco of healthcare reform has it all.

The measure being fought over in the Senate – if a bill gets passed, ordeal by House-Senate conference comes next – is detested with equal passion by left and right. A majority of the public is now opposed as well. Even its supporters do not like it all that much. Yet if the system fails to spit this thing up for the president’s signature, the country will be deemed ungovernable and the Obama administration will be pronounced dead. Expect the rending of garments either way.

It does not matter that conservatives oppose this reform. Of course they do. Conservatives are unmoved by the plight of the uninsured, want to block this administration’s domestic initiatives regardless, and are incapable of uniting behind an alternative proposal. They have nothing to offer on the issue.

The remainder of this article can be read here.

Climate summit enters crucial stage. BBC

Grading Obama’s Copenhagen speech. Daniel Stone, Newsweek

Obama’s speech: The Collapse of a Deal? David Corn, Politics Daily. “No deal. Not even a fig leaf.”

Update: The fig leaf. Climate deal announced, but… NYT

Meanwhile, Climategate changes nothing. Michael Mann, Washington Post. Mann says he “cannot condone some things that colleagues of [his] wrote or requested in the emails…” Priceless. As if this scandal has nothing to do with him.

My new column for National Journal looks at the report of the Peterson-Pew Commission on Budget Reform. The report is right, I think, but ducks the hard questions.

The Obama administration has promised that its next budget will confront the long-term fiscal problem, and the commission’s report provides some useful advice. It suggests one possible approach to solving the problem and offers some benchmarks for judging what the administration comes up with in February. But the commission chose not to grapple with the key question of how, precisely, the government can best close the gap between projected spending and revenues.

The United States needs to start discussing specific spending cuts and tax increases. The commission is quite right that both will be required. But the issue will remain abstract and artificial — and, above all, will not be acted on — until real, live, deficit-reducing policies are on the table.

David Broder on the same subject: Dishing out some shock on debt.

“Success” on health reform will hurt the Democrats. Matthew Dowd, Washington Post. I doubt it, but an interesting column.

Democrats head for the exits. Michael Barone, RCP.

Refounding Capitalism. Edmund Phelps. (via Arnold Kling at Econlog; see also Arnold’s comments)

Obama Inherited the Deficit. Kathy Ruffing and James Horney, CBPP. A tiresomely familiar idea–but one which is true, nonetheless, up to a point. This is worth reading because it documents the claim very well. Why do I say, true only up to a point? Because Obama now owns the fiscal outlook: the war in Afghanistan, the share of the Bush tax cuts (ie, the larger part) that will not be unwound, and the persisting fiscal effects of the crash. The CBPP’s note does acknowledge this:

While President Obama inherited a bad fiscal legacy, that does not diminish his responsibility to propose policies to address our fiscal imbalance and put the weight of his office behind them. Although policymakers should not tighten fiscal policy in the near term while the economy remains fragile, they and the nation at large must come to grips with the nation’s deficit problem. But we should all recognize how we got where we are today.

Quite right. But at some stage–and I think we are well past it–whining that the fiscal mess was the other guy’s fault not only fails to deal with the problem, it also gains you no political advantage.

Progressive opposition to the health reform likely to emerge from Congress has intensified with Howard Dean’s attack on the Senate bill. (He made the same points on radio and TV earlier in the week.) His criticisms go beyond regretting the things that aren’t in the bill (mainly, an undiluted public option) and the fact that it gives more business to private insurers: he says that the measure “would do more harm than good”.

In Washington, when major bills near final passage, an inside-the-Beltway mentality takes hold. Any bill becomes a victory. Clear thinking is thrown out the window for political calculus. In the heat of battle, decisions are being made that set an irreversible course for how future health reform is done. The result is legislation that has been crafted to get votes, not to reform health care.

I have worked for health-care reform all my political life. In my home state of Vermont, we have accomplished universal health care for children younger than 18 and real insurance reform — which not only bans discrimination against preexisting conditions but also prevents insurers from charging outrageous sums for policies as a way of keeping out high-risk people. I know health reform when I see it, and there isn’t much left in the Senate bill. I reluctantly conclude that, as it stands, this bill would do more harm than good to the future of America.

Dean is right on that first point: if a bill does pass, good or bad it will be declared a victory, just as he says. Still his conviction that a law like the Senate bill would be worse than nothing is  hard to understand–if you’re a liberal, I mean. The bill has two core features: it greatly widens insurance coverage and pays enormous sums in subsidies to less prosperous families. From the progressive point of view, that is worse than doing nothing?

Ruth Marcus writes an effective reply to Dean. She asks if he’s lost his mind, and makes this point:

[W]hen Dean was running for president in 2004 — and he launched his campaign in significant part on a platform of health-care reform — the public option was nowhere to be found in his proposal. He wanted to give tax credits to help the uninsured afford coverage and let the uninsured and small businesses join together in insurance pools. Sound familiar? Like, for example, the plan he’s now trashing?

“With my plan, we’ll organize a system identical to the one federal workers and members of Congress have,” he said back then.

That proposal, of course, is in the Senate bill–and Dean now derides it as less than a real public option.

This post by Nate Silver, noted expert on political stats, briefs slow-learning progressives on what’s in this bill for them. He concludes:

So, we’ve talked a lot about what the bill is not. It’s not structural reform. What is it, then? At the end of the day, it’s a big bleeping social welfare program — the largest social welfare program to be implemented since the Great Society. And that’s really what it’s been all along: fundamental reform like single-payer or Wyden-Bennett was never really on the table. The bill comes very close, indeed, to establishing what might be thought of as a right to access to health care: once it’s been determined that people with pre-existing conditions cannot be denied health care coverage, and that working class people ought to receive assistance so that they can afford health care coverage, it will be very hard to remove those benefits. It’s the sort of opportunity that comes around rarely — and one that liberals will greatly regret if they turn down.

That seems about right to me.

Update: EJ Dionne discusses the political implications of the Democrats’ “fractiousness”:

[It] is dispiriting their supporters, which set off this urgent warning bell in the latest Washington Post-ABC News poll: For the first time in his presidency, more Americans strongly disapprove of Obama’s performance in office (33 percent) than strongly approve (31 percent).

Put aside margins of error and the fact that the Dec. 10-13 poll showed a sudden bump in Republican identification that might be a statistical anomaly. The point is that the trend is perilous. In June, strong approvers of Obama outnumbered strong disapprovers by 36 percent to 22 percent. Ardor and energy are switching sides.

There are no instant cures, but there is one thing that must be done fast: Democrats need to agree on a health bill and start selling it with enthusiasm and conviction. Their own turmoil and back-stabbing are making what is a rather good plan look like a failure while persuading political independents that they are a feuding gang rather than a governing party.

Reason’s editor-in-chief on the superiority of the French health care system. He makes many good points, but I was especially struck by this:

What’s more, none of these anecdotes scratches the surface of France’s chief advantage, and the main reason socialized medicine remains a perennial temptation in this country: In France, you are covered, period. It doesn’t depend on your job, it doesn’t depend on a health maintenance organization, and it doesn’t depend on whether you filled out the paperwork right.

Assuming the US enacts health care reform, Americans still won’t be “covered, period”.  All this effort and expense, and they still won’t have that assurance.

Oddly enough, as I argued in the summer, the French system has many structural features in common with America’s: they are not as far apart as you might think. Not that this makes the French model easy for the US to copy.

The success of the French system does not establish the superiority of public insurance. It establishes the superiority of a system that, as much by historical accident as by design, has kept doctors’ pay very low. This, in turn, requires a medical-liability regime that minimizes litigation (so much for patients’ rights in that sense) and guarantees essentially free training for medical professionals.

The idea that France’s system could be grafted onto the American setup is most misleading. To be sure, in organizational terms, it could be. Structurally, the two countries’ systems are not that different. The French scheme is like Medicare on a much larger scale — with all the virtues and drawbacks of that system. But plug American rates of pay into that design and the impressive cost advantage vanishes.

The case for optimism on the economy. Alan Blinder, WSJ

The case for high-frequency trading. Burton Malkiel, FT

Krugman v Eggertsson. Scott Sumner, The Money Illusion (via Greg Mankiw)

The battle to redefine humanity. George Monbiot, Guardian. The stress of Copenhagen begins to tell. Or else George needs to adjust his medication.

I lead a mostly peaceful life, but my dreams are haunted by giant aurochs. All those of us whose blood still races are forced to sublimate, to fantasise. In daydreams and video games we find the lives that ecological limits and other people’s interests forbid us to live.

Speak for yourself, George. Still, your piece is spot on about one thing. You rightly draw attention to the “vicious battle” between “road safety campaigners and speed freaks”, regarding it as emblematic of the larger crisis of our civilisation. Yes indeed. This world-historical conflict has received too little attention.

We must include better compliance with all traffic laws in our new definition of humanity. This I believe.

In this column for National Journal I argue that (supposedly) binding quantity caps for GHG emissions are not the most productive way to co-operate on climate change. Converging on a gradually rising carbon price would get better results.

We need a form of cooperation that economizes on momentous international treaties and cross-border obligations — which are difficult to frame in the first place and impossible to enforce once they exist. Instead, we need policies that can be sold to voters country by country, and that conform to a broad international effort, instead of seeming to be dictated by multinational (i.e., other people’s) goals.

Curbing global warming does need to be an international effort — because it is the stock of global gases that drives the process. There is no point in one country cutting its emissions if others do not. But this does not mean that a Kyoto-type approach — a global treaty specifying exact binding limits on emissions, regardless of the consequences — is the way to go. The difficulties in that method are obvious and have been amply demonstrated.

For one thing, achieving equity across countries is difficult. In setting hard targets, allowance has to be made for the fact that poor countries such as India and China emit less per capita than the United States. But how? Putting the political focus on questions like that, and trying to answer them once and for all at events like the Copenhagen conference — then holding the entire process hostage to the answers — is not the way to get things done.

Armed for reality. Robert Kagan, Washington Post

Tax cuts vs public spending. Greg Mankiw, NYT.

Profile of Steve McIntyre. Colby Cosh, Macleans.

Safeguarding the Fed’s independence. Mort Zuckerman, FT

Should the Fed fight bubbles? James Hamilton, Econbrowser

Atul Gawande says health care reformers lack a master plan for controlling costs. But this is not a criticism, he says. It has to be this way.

Sounding too much like Malcolm Gladwell, he says:

There are, in human affairs, two kinds of problems: those which are amenable to a technical solution and those which are not. Universal health-care coverage belongs to the first category: you can pick one of several possible solutions, pass a bill, and (allowing for some tinkering around the edges) it will happen. Problems of the second kind, by contrast, are never solved, exactly; they are managed.

He then develops at New Yorker length an analogy with farm policy, which he seems to regard as a success. That kind of approach is the best one can do when it comes to controlling health costs, he says: it’s an unending process.

Set aside whether farm policy is an encouraging model. In principle, there is surely something to the distinction Gawande draws between the two kinds of problem–but health reform is not an obvious instance. Note that reformers are approaching universal coverage in stages–as a process, not as something you do once and for all. (Look at Massachusetts, the model for this effort: coverage is less than universal.) Equally, if they wanted to, they could adopt a once-and-for-all policy to shift incentives and improve cost control. For instance, single-payer, with a hard budget cap (ie, rationing); or a private system based on health insurance vouchers, financed with an earmarked value added tax (as proposed by Zeke Emanuel). The Medicare cuts in the Senate bill are in this category.

In other words, curbing costs is certainly “amenable” to a “technical solution”, unless you decide for some reason to take that kind of solution off the table. In both cases, coverage and cost control, the obstacles are political–a matter of reconciling conflicting preferences. The methodological distinction is blurry at best.

As this WSJ editorial argues, one can think of over-arching innovations within the realm of the politically feasible that would shift the entire system in the direction of better cost control. The simplest one is abolishing the tax exemption for employer-provided health insurance. If you reject systemic reforms like that, then “managing” the problem–with luck, more effectively than farm policy–is all you have left. But shouldn’t you discuss them before you reject them?

Clive Crook’s blog

This blog is no longer updated but it remains open as an archive.

I have been the FT's Washington columnist since April 2007. I moved from Britain to the US in 2005 to write for the Atlantic Monthly and the National Journal after 20 years working at the Economist, most recently as deputy editor. I write mainly about the intersection of politics and economics.

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