Cato’s Alan Reynolds, speaking for angry and selfish cranks everywhere, offers the view that “Health care is cheap: Eat less fat and more veggies, take a daily walk, quit smoking, and drink a little wine with some nuts.”

Well, life is a bit more complicated than that. What’s more, Monica Potts observes that the Affordable Care Act contains a useful provision requiring restaurants with more than 20 locations to do calorie labeling on their menus. No doubt libertarians like Reynolds will denounce this effort to help make it easier for people to eat healthy as a dire infringement on liberty, but as Potts says “The ingredients and recipes used from restaurant on the same items are mysteries, so it’s hard to judge what you’re eating. Now, hopefully, it’ll be easier.”

And it’s true. We’ve got a Cosi on the same block as our office here at CAP. And salad suggests itself as a healthy lunch option. A salad with some grilled chicken should also give you some protein to get you through the afternoon without getting hungry. But unless you go to the Cosi website to look up the facts it’s really kind of a crapshoot. The Shanghai Chicken Salad has 313 calories by the Bombay Chicken Salad has 481. The Grilled Chicken Caesar has 621. The Sesame Ginger Chicken sandwich (480 calories) would actually be a lower calorie option than two of the chicken-equipped salads. And of course the only reason I know that is that Cosi posts its nutrional information online, which a lot of places don’t do.

I’m not really sure how much difference menu labeling will make on a macro scale—it doesn’t accomplish anything unless the will is there, and if you’re determined to eat healthier the lack of menu labeling is hardly an insuperable obstacle—but it does seem like it’ll be helpful to some people. At a minimum, I’m looking forward to it personally.

The Eccles Building (wikimedia)

Joe Gagnon of the Peterson Institute, a former Fed staffer, has a new piece out repeating his argument that monetary policy can and should be doing more to reduce unemployment. First, the “can”:

A new study in which I participated has been posted on the website of the Federal Reserve Bank of New York. It documents how the Federal Reserve lowered long-term interest rates about 50 to 60 basis points last year through its purchases of $1.7 trillion of longer-term bonds. The study reinforces an argument I have previously made: The Federal Reserve and other central banks can apply further monetary stimulus by lowering long-term borrowing costs even when short-term interest rates are stuck at zero.

And then the should:

With unemployment projected to remain far above most estimates of its equilibrium for the next few years and with core inflation having fallen to 1 percent over the past 6 months, the US economy clearly needs more of this medicine. As I argued last December, the Fed could push down long-term yields another 75 basis points by buying a further $2 trillion of long-term bonds. Current yields on 10-year Treasury notes, at 3.7 percent, are far above the zero rates on short-term Treasury bills. The benefits to the economy would be rapid and similar to those already observed from the first round of Fed purchases. Moreover, lower long-term interest rates and a faster recovery would also reduce our national debt.

Does additional Fed action mean that inflation is going to come roaring back? Not unless the Fed forgets everything it learned from the 1970s. But right now, inflation is below the Fed’s target of 2 percent and heading lower. The immediate problem is deflation. As Japan shows, acting too weakly against deflation is a serious error. Yes, the Fed may have to reverse course in a couple years, but that would be better than facing a decade of excess unemployment and entrenched deflation.

It’s true that there are risks of going down Gagnon’s path. But the current path guarantees years of mass suffering for the unemployed and trillions in lost output. And it carries the risk that if some new bad thing hits, we’ll be pushed into a deflationary spiral. The Fed can avoid this outcome, and the Obama administration can help the Fed avoid this outcome by appointing some expansion-minded people to fill the vacancies on the Board of Governors. I think this Joe Gagnon guy might be a good candidate. It’s good that congress is approving some additional stimulus measures, but they’re small beer compared to the size of what’s needed.

Tyler Cowen writes:

Many Americans will receive subsidies for insurance, from what I understand roughly in the range of 6k to 12k. Many other Americans — namely those who already have health insurance — will not receive direct subsidies of this nature. Yet the subsidy-receiving and non-subsidy-receiving Americans will very often belong to the same income classes.

This disparity does not bother me personally (I have other worries about the subsidies), but I believe it will be very unpopular once it is publicly understood. One way or another, the “firewall” between the exchanges and the employer-supplied system will break down. Some people will want to spread the subsidies, others will want to limit them. Yet the former is budgetarily problematic and the latter will be politically difficult.

I think it’s worth clarifying on some of these points, because I think the press coverage hasn’t been very edifying. The breakdown of the so-called firewall isn’t going to be an unintended knock-on effect of the bill, it’s specifically contemplated in the legislation. Specifically, the Senate bill—with or without the reconciliation fix—permits states to allow businesses with more than 100 employees to purchase coverage in the exchanges beginning in 2017. This, combined with the excise tax phasing-in in 2018 should over time cause the system to evolve to one in which everyone is buying insurance on the exchange and eligibility for subsidies is determined exclusively by family income. In other words, there’s no “firewall” that’s going to break down; by design the country will shift from a mixed employer/exchange system to an exclusively exchange-based one.

It’s also not the case that people getting health care through their employer won’t get any subsidies (indeed, employer-provided health insurance already receives a large subsidy in the tax code), though the subsidies will largely be indirect and I agree that it won’t be a stable political equilibrium.

I think public understanding of the transition has been ill-served by the obsession of some media figures (especially Dylan Ratigan) with complaining that the Affordable Care Act doesn’t do enough to disrupt employer-based insurance the way the Wyden-Bennett legislation did. The fact is that ACA doesn’t immediately disrupt employer-based because there’s overwhelming opposition from the public to doing that. What it does, is put us on a steady—and fairly rapid—transition. If it were up to me, I would have tried to make the pace more aggressive, but from the standpoint of 2030 nobody’s going to care that this happened in 2014 & 2017 rather than 2013 & 2015.