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Alyssa

Book Club Part II: Let’s Get Started

Alright folks, Cryptonomicon it is. And as a side note, can I say how glad I am so many folks came out of the woodwork to vote on this one? It’s nice to meet you all!

Programming notes:

1) Next week is Thanksgiving, and the week after that, I’m moving because I did a terrifying and grown-up thing and bought an apartment. So how ’bout we shoot for the first discussion starting on December 3? There’s going to be an awesome crew of guest-bloggers that week, but I’ll be back for the 3rd. Once I get my hands on the book and get a sense of the pace, I’ll let you know where we’ll read to.

2) If you’re going to buy a hard copy of the book, would you consider buying it through this Amazon Associates link?

I realized that I’ve never asked something like this before, and if it feels weird, or you’d prefer to get it at your local bookstore or whatever, I am totally down with that! But I’ve kept this blog ad-free for a year and a half, and things like Amazon Associates make it a little easier for me to keep running this. Thanks for your consideration!

Yglesias

The Importance of Models

David Brooks’ latest column has already been subjected to a lot of solid criticism, but I did want to highlight one thing he says which I think inadvertently illustrates why formal models are important and intuitive thinking about virtue won’t cut the mustard:

It all makes one doubt the wizardry of the economic surgeons and appreciate the old wisdom of common sense: simple regulations, low debt, high savings, hard work, few distortions. You don’t have to be a genius to come up with an economic policy like that.

Try to draw up a model—a simple one, but one where you do try to make sure that your numbers all add up—in which everyone has high savings rather than high debt. Households have high savings. Firms have high savings. The government has high savings. And the governments of your trading partners have high savings. But so do their citizens. And their firms, too. It’s the old wisdom of common sense! You’ll find that it doesn’t add up. Japanese people save by lending money to the Japanese government, which borrows. I borrow to buy a condo, and the money I’m borrowing is the money other people have saved in the bank. You put your money in the bank rather than leaving it under the mattress because the bank pays you interest. But they pay you interest because they can charge interest to other people—people who are in debt.

The old wisdom isn’t nutty or anything. Borrowing a ton of money so you can buy a fancy new car is probably a worse idea than buying a cheap used car and saving your money. But if you’re poor live in a city with bad mass transit and you borrow money to buy a cheap used car so you can make sure you’re on time for work every day, you’re making a prudent investment in your own future. Likewise, if you’ve got a successful store and you take out a loan to open a second location, you’re building the future of the American economy. Thriftiness is a good character trait because it tends to make people averse to accumulating debts for frivolous reasons. But if you try to build a systemic model, you’ll see that universal thrift doesn’t work at all.

Indeed, though thrifty people play an important role in making the economy function, they do so in part because their thrift creates resources that others can use to be venturesome and fuel innovation, entrepreneurship, and prosperity. Capitalist success stories are built on the ability and willingness of people to fail. For every hugely successful startup, you’ve got a dozen or more failures and behind those failures you’ve got bad loans. The willingness to issue those loans makes the world go ’round, and we need the savers because without them there’s no money to lend.

Health

A Comparison Of The Health Care Sections In All 3 Deficit Reduction Proposals

Earlier today, the Bipartisan Policy Center released a new set of recommendations to offer a “comprehensive plan to dramatically reduce America’s deficits and debt and strengthen our economy, enabling the nation to reclaim its future.” The report, titled, “Restoring America’s Future,” is now the third proposal that tries to balance the deficit by purportedly making the kind of difficult decisions that elected officials usually try to avoid. Earlier, the two chairmen of the President’s Fiscal Commission — former Sen. Alan Simpson and former White House Chief of Staff Erskine Bowles — released their draft recommendations for how Congress can achieve “nearly $4 trillion in deficit reduction through 2020″ while reducing “the deficit to 2.2% of GDP by 2015” and Rep. Jan Schakowsky (D-IL) — a member of the committee — issued her own progressive alternative. White House Budget Director and Federal Reserve Vice Chair Alice Rivlin, who helped author the BPC proposal, is also a member of the President’s Fiscal Commission.

What follows is a partial comparison of the health care sections in the three available proposals: the Simpson/Bowles report, Rep. Jan Schakowsky’s (D-IL) progressive proposal, and the Bipartisan Policy Center’s latest report:

Simpson/Bowles Proposal Schakowsky’s Proposal Bipartisan Policy Center’s Proposal
Cost Sharing in Medicare Replace existing cost-sharing rules with universal deductible, single
coinsurance rate, and catastrophic cap for Medicare Part A and Part B.
Does not specify. Increase Medicare B premiums from 25 to 35 percent.
Building on ACA Expansion of successful payment reforms, stronger Independent Payment Advisory Board (IPAB), tort reform, inserting a public option into the exchanges and all-payer rate setting. Robust public option tied to Medicare rates, reduce exclusivity period for biologics from 12 to 17 years, Medicare price negotiation for drugs, establish a Medicare-administered drug plan to compete with private plans. Tort reform to cap non-economic and punitive damages. Federal government will provide grants to states to test other models.
Doc Fix Replace cuts required by SGR through 2015 with modest reductions while directing CMS to establish a new payment system, beginning in 2015, to reduce costs and improve quality. Does not specify. The Task Force plan “accommodates a permanent fix” to the sustainable growth rate (SGR) mechanism, but does not provide additional details.
Tax Exclusion for ESI Capping the tax exclusion “for employer-provided health care at the amount of the actuarial value of FEHBP standard option. Does not specify. Cap the exclusion of employer-provided health benefits in 2018, and then phase it out by 2028.
Long Term Savings

Places a “global target” for total federal health expenditures after 2020 (Medicare, Medicaid, CHIP, exchange subsidies, employer health exclusion),” keeping growth at GDP plus 1%. Does not specify. Beginning in 2018, would limit the rate of increase of federal spending per beneficiary to 1% above the growth rate. Medicare beneficiaries would be charged higher premiums if costs rose faster. Also in 2018, begin reduce the amount by which Medicaid is growing faster than the economy.

By far the biggest disappointment of the BPC proposal is this idea of transitioning Medicare into a “premium support” program. Not only does that undermine the entire concept of social insurance, but it also transfers the entire cost of coverage to the individual. That is, if your costs exceed GDP plus 1%, you are on the hook for paying for the remaining health care expenditures.

Compare that with the more tame Simpson/Bowles approach. First, Simpson/Bowles considers the growth of Medicare, Medicaid, CHIP, exchange subsidies, and employer health exclusion in setting their target. BPC, only looks at Medicare. Simpson/Bowles triggers various policy options if costs increase faster than the GDP+1 target. Under the BPC proposal, the only option is higher premiums. The former requires the President to submit and Congress to consider reforms to lower spending like increasing premiums, overhauling the fee-for-service system, developing premium support for Medicare, adding a robust public option, and/or expanding IPAB.

The BPC’s Medicaid proposal is more interesting. The committee feels that states are gaming the shared financing arrangement between states and the federal government — by finding creative ways to increase their federal matching rate — and proposes an alternative that would allocate a complete component of the Medicaid program to each payer. Under the arrangement, the state, for instance, would fully finance and administer CHIP or long-term care, while the federal government would pay for all disabled beneficiaries in the program. This, BPC believes, would encourage both the state and the federal government to control spending in their respective section and thus lower spending. This idea has been around since the 1990s but it’s unclear that it would save money since each payer would still have to deal with rising costs in their particular section of the Medicaid program.

Update

Merrill Goozner catches an important oversight in my analysis and argues that the Simpson/Bowles proposal is worse:

The Bowles-Simpson plan would cap Medicare expenditures at GDP+1 percent after 2020, which leaves no room for the increase in the number of beneficiaries that is expected in future decades. The number of elderly will rise from 13 percent of the population today to 22 percent in 2050. Rivlin-Domenici, on the other hand, will increase spending PER BENEFICIARY by GDP+1, which is much less onerous. Still, as you point out, it is essentially privatization of Medicare, as will be explained tomorrow in my piece in The Fiscal Times. Nice chart otherwise, though.

Politics

Tea Party, Republican Activists Circulate Anti-Semitic E-Mails Against Presumptive Texas Speaker

In Texas, a leadership battle is brewing over the election of the next state Speaker of the House. State Rep. Joe Straus (R-TX) appears to have the votes to win, but a coalition of Tea Party and right-wing Republican groups — including the state chapter of Americans for Prosperity, the Austin Tea Party Patriots, the Texas Pastor Council, and Texas Eagle Forum — are staging an effort to elect a more radical right Speaker. This morning, the Dallas Morning News reported that several of the Tea Party activists in the aforementioned coalition have been circulating e-mails with anti-Semitic messages against Strauss, who is Jewish:

– “Straus is going down in Jesus’ name,” said one e-mail, whose origins were unclear.

– Straus “clearly lacks the moral compass to be speaker,” said another, written by Southeast Texas conservative activist Peter Morrison. A Morrison e-mail said that Straus’ rabbi sits on a Planned Parenthood board and then pointed out that Straus’ opponents in the Speaker’s race “are Christians and true conservatives.” Morrison is a contributor to the white supremacy website VDARE.

– The Tea Party-backed groups are now running anti-Straus robo-calls and e-mails demanding a “true Christian speaker,” reports News 8 Austin.

– The Quorum Report, an online newsletter, reported extensively late Monday on e-mails that mentioned Straus’ Judaism, his rabbi and the Christian faith of his House critics, who include Rep. Bryan Hughes, R-Mineola.

– Patrick Brendel reported that David Barton, leader of the group WallBuilders, has helped organize much of the anti-Straus campaign. Barton is a frequent contributor to the Glenn Beck program.

– Kaufman County Tea Party Chairman Ray Myers sent an e-mail last week praising a Straus opponent as “a Christian Conservative who decided not to be pushed around by the Joe Straus thugs.”

These Tea Party groups work within the larger mainstream conservative movement. Myers, Morrison, and others have signed letters and worked in conjunction with major right-wing and Republican groups, like Americans for Prosperity. Americans for Prosperity, funded and financed by billionaires David and Charles Koch, is one of the most prominent conservative organizations in the country. Its leader, Tim Phillips, ran a similarly anti-Semitic campaign before being asked by David Koch to manage Americans for Prosperity.

Previously, Phillips maintained a group called the Faith and Family Alliance to slime his political opponents with an organization that appeared to represent a grassroots community. The Richmond Times Dispatch reported that Phillips was hired by State Sen. Stephen Martin to manage his direct mail campaign against State Del. Eric Cantor in the 2000 Republican primary for the congressional seat being vacated by Rep. Tom Bliley (R-VA). Phillips used his Family Alliance to blast robo-calls and mass mailers claiming Cantor — who is Jewish — did not represent “Virginia values” and that his opponent was the “only Christian in the contest.” After Phillips’ anti-Semitic attacks, Cantor went from the clear favorite in the race to winning only by 264 votes. Larry Sabato, a political analyst and the director of University of Virginia’s Center for Politics, called Phillips’ efforts “a despicable, underground campaign that was unquestionably anti-Semitic.”

Tea Party groups want a more conservative Speaker than Straus to push Texas to the far right. State Rep. Leo Berman (R-TX), who ThinkProgress’ Scott Keyes wrote about earlier today, said he wanted a more conservative Speaker than Straus to push through anti-immigrant bills, an anti-Obama birther bill, and an effort to privatize public schools.

Security

Arizona Law And Lack Of Immigration Reform Straining U.S. Relations With Latin America

Yesterday, USA Today reported that Arizona’s immigration law — SB-1070 — may be straining U.S. relations with Latin America. The article notes that ten Latin American countries signed on to a brief opposing SB-1070 in the Department of Justice lawsuit challenging the law. The piece then goes on to quote several noted Latin America experts who express concern over the law’s foreign relations implications:

State Department spokesman Charles Luoma-Overstreet said the law has impacted relations between the United States and Latin American countries, becoming a topic of discussion “in all our interactions” with those nations.

“The countries in Latin America are already perceiving some distance and disengagement from the U.S.,” said Mauricio Cardenas, director of the Latin American Initiative at the Brookings Institution. “(The Arizona law) makes Latin America more and more interested in developing stronger relations with other parts of the world.” [...]

Edward Alden, a senior fellow at the Council on Foreign Relations, worries that Obama’s stance on the law may not be enough to soothe other countries. “I’m sure that Mexico is happy that the Obama administration is challenging these laws. But I’m not sure they’re persuaded that the Obama administration is in control,” Alden said. “The worry is that the states are going to start driving the bus, too.”

Alden said it’s the latest in a long line of slights to the region that started with the Bush administration and has continued under Obama. [...] “If you put (the Arizona law) on top of all that, it’s the latest in a pretty long series,” Alden said.

Alden makes a compelling point. Americans weren’t the only ones hoping for change in 2008. In testimony before Congress delivered earlier this year, Peter Hakim of the Inter-American Dialogue noted that “no event since John F. Kennedy’s election in 1960 was more welcomed in Latin America or held out greater expectations for improving the region’s ties with the U.S. than Barack Obama’s electoral victory in November 2008.” Nonetheless, Hakim also noted, “U.S. policy remains largely unchanged and it is hard to identify a single Latin American country that has a better relation with Washington today than it did during President Bush’s tenure.”

Hakim explicitly pointed to the absence of immigration reform. A similar criticism was put forth by the Council on Foreign Relations (CFR) when George W. Bush was still president in 2008. In its report, “U.S.-Latin America Relations: A New Direction for a New Reality,” CFR wrote that “the failures of U.S. immigration policy have become a foreign policy problem.” CFR noted that though the U.S. tends to think of immigration as a domestic policy issue, it inherently has a “profound impact” on Latin American nations. “The tenor of recent immigration debates and the failure to pass meaningful immigration reform have hurt U.S. standing in the region, as many Latin American nations (including those without large populations in the United States) perceive current laws as discriminatory and unfair toward their citizens,” explained the report, two years before Arizona passed the harshest immigration law in the country. The CFR Task Force recommended enacting immigration reform to meet U.S. security, economic, and foreign policy interests.

The Task Force also pointed out that while the U.S. lags in its response to 21st century migration patterns, Latin American governments are ahead of the curve. “Latin American governments are pushing forward concrete policies to address the accelerating movement of people within the region as well as capitalize on migration to the United States,” wrote CFR. “U.S. policies lag far behind those of Latin American governments in adapting to the realities of increased human mobility.”

Yglesias

Apizza

Had a very nice time up in New Haven, but I was a little bit shocked to meet a Yale senior who’s never managed to walk the fifteen minutes off campus it would take to walk to Wooster Square to sample the real local pizza at Sally’s or Pepe’s. Obviously I’m not going to recommend that anyone actually attend Yale, but if you do choose to make that particular mistake with your life it’s definitely in your interest to have some New Haven-style “apizza” for your trouble. I’m a New Yorker and fundamentally my loyalties belong to John’s on Bleeker Street, but the New Haven stuff is interesting and the places near campus don’t really serve it.

Meanwhile, one beneficial consequence of America’s 8 years of misrule by a Yale alumnus is that a certain amount of apizza is now available in DC. Pete’s in Columbia Heights is the main spot for it but Comet Ping Pong‘s rendition of the clam pie (called the “Yalie”) is also good.

Which is the best apizza joint in New Haven is an issue I hope Michael Symon will address on a “Food Feuds” episode one of these days. I haven’t visited enough to have a real opinion on this.

Security

Barrasso Opposes New START Treaty Because Of The ‘Soviet’ Threat

Appearing on MSNBC with Andrea Mitchell today, Sen. John Barrasso (R-WY) attempted to justify the threatened Republican obstruction of the New START nuclear arms reduction treaty with Russia. But in doing so, he wrongly called Russia the Soviet Union — not once, but twice. Watch it:

While Barrasso may say this was a slip of the tongue and that he knows that the Soviet Union collapsed nearly twenty years ago in 1991, this is not the first time far-right senators have made this mistake when talking about START. Barrasso also tellingly concluded his remarks by asserting that he disagrees “with the component [of START] that weakens our own missile defense against all enemies, not just the Soviet Union.”

Grouping the Soviet Union (meaning Russia) with other “enemies” of the U.S., is reflective of an outdated Cold War mindset that can only lead to renewed tensions with Russia.

Should Republicans kill the New START treaty, the “reset” of U.S.-Russian relations may collapse. This could endanger U.S. troops in Afghanistan, who depend on supply routes through Russia, and could derail Russian cooperation on Iran sanctions. Perhaps most worrying is that without New START, the U.S. will be unable to monitor Russia’s nuclear arsenal as it has since the end of the Cold War, potentially creating significant nuclear instability. As Andrea Mitchell explained to Barrasso:

With all due respect senator…if you believe in trust and verify this enables us to put people back on the ground there and verify what the Russians are doing where as right now we can’t.

Barrasso’s claim that the treaty undercuts missile defense is also just flatly untrue. Gen. Patrick O’Reilly the head of the U.S. Missile Defense Agency — who was appointed under President Bush — said that New START would “reduce the constraints on the development of the missile defense program.” This is why the U.S. military stands in unanimous support of the treaty and is calling on Senate Republicans to support it as well.

Education

Ohio Republicans Tell Schools To Brace For 20 Percent Cuts, Refuse To Look At Tax Increases

Governor-elect John Kasich (R-OH)

Governor-elect John Kasich (R-OH) is riding into Ohio’s capital on a platform of fiscal responsibility and huge tax cuts (without seeing the contradiction between the two). Ohio is already facing a $6 billion to $8 billion deficit, and Kasich’s plan to eliminate the state income tax — which brings in nearly half of the state’s revenue — would cost about $8.3 billion next year alone.

According to the Columbus Dispatch, the Republican legislature that will be working with Kasich is very much of the same mind, with potentially devastating effects on the way for the state’s education system. Incoming state Senate President Tom Niehaus has warned school districts to prepare for huge cuts, as “the GOP majority will keep its promise to not raise taxes,” no matter what:

Sen. Tom Niehaus, a New Richmond Republican expected to be the next Senate president, said last week that there will be a projected shortfall of $6 billion to $8 billion in the next state budget and that he is confident the GOP majority will keep its promise to not raise taxes – meaning that deep cuts will be necessary to balance the budget. Asked if some district officials preparing financial forecasts and deciding whether to put levies on the ballot were correct to assume a 15 to 20 percent cut in state aid, Niehaus said that’s what he would plan for if he were in their shoes.

Ohio has already cut both K-12 and higher education funding in response to the Great Recession. To put the new cut that the GOP has proposed in perspective, a 10 percent cut in school funding would amount to districts losing $1 billion. But the Ohio GOP is standing firm against any raising any new revenue, and Kasich himself believes that broadening the tax base or closing tax loopholes qualifies as an unacceptable tax increase.

At the same time that the GOP legislature is telling school districts to prepare for huge cuts, Kasich may also be endangering Ohio’s $400 million Race to the Top grant — awarded as part of the administration’s education reform effort — due to his insistence on dumping some of his predecessor’s policies, which led to Ohio winning the grant in the first place. So Ohio’s schools may be taking a pair of hits from the incoming class of lawmakers.

Alyssa

Rats Saw God

I know I need to get started on Veronica Mars, so much so that it’s on my list of New Years Resolutions and in my Netflix queue. And because I know many people I respect love both that show and Party Down, I suppose I’m happy that Rob Thomas is getting a new television show.

But I kind of wish the guy would get back to high school, particularly to the work he did in two of his young adult novels, Rats Saw God and Slave Day that are two of the most important books I read as a young teenager. The first book tells the story of a troubled but talented kid writing an essay about a failed relationship that lead him to move from his father’s house in Texas to his mother’s house in California. The latter takes place at a high school that holds, instead of a date auction, a fundraising slave auction.

The conceits sound fairly generic, told that way. But those novels were, as a shy suburban kid, some of the first hints I had that high school, and life, could be different. The main characters in Rats Saw God are outcasts in a Texas high school who form a club called the Grace Order of Dadaists. They had cooler lives than I did, but not in a Gossip Girl kind of way: they make art, and actually go to rock concerts, and drank in high school. And Slave Day, though it’s less acclaimed, is maybe even more brilliant and uncomfortable. Set again in a Texas high school, the book moves through the lives of a kid who lives in a trailer park but wants to act, an aspiring black militant, a bitter teacher in the midst of a divorce, and an outwardly golden couple on the cheerleading squad and football team with equal fluidity. It’s a great portrait, and again, gave me a sense that life was richer and more complicated, or at least it would be some day if I sought it out.

These are among the books I’ll give my kids someday for that reason, and because they’re honest about sex, poverty, image, and authority. One of the reasons I find the Twilight series so frustrating is what they represent in terms of escape. They’re a retreat from complexity, rather than the promise that in complexity lies choice, and the chance to define a new identity, and liberation. There are a lot of teenagers out there who want, and deserve the latter.

Yglesias

Open for (Private Equity) Business

Andrew Ross Sorkin, in the course of responding to Malcolm Gladwell, says “the private equity industry and its many lobbyists have been fighting for years to prove their value to the public, producing all sorts of studies and white papers to back up their claims.”

Is this really true? Can I get my hands on some of this money to back up the claims of the private equity industry? It seems to me that they’re clearly correct. Widely dispersed ownership of publicly traded firms presents massive problems of governance and huge misallocations of resources. It’s a necessary evil because it allows for the mobilization of capital that would otherwise be sitting around uselessly. But clearly insofar as private equity dudes are able to mobilize capital in other ways, that’s fine. If there’s a problem of some people getting too stinking rich as a consequence, then those people should pay more taxes. But there’s nothing wrong with there being an industry in that field as such.

I’d say more, but I hereby resolve to not write another word on the subject until someone cuts me a fat check to do so. I’m not too proud to beg.

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