Tag Archives: Robert Reich

Staring At Shoes In Regards To The Wall Street Journal Article

Heather Horn at The Atlantic with the round-up

Robert Barro at The Wall Street Journal:

The unemployment-insurance program involves a balance between compassion—providing for persons temporarily without work—and efficiency. The loss in efficiency results partly because the program subsidizes unemployment, causing insufficient job-search, job-acceptance and levels of employment. A further inefficiency concerns the distortions from the increases in taxes required to pay for the program.

In a recession, it is more likely that individual unemployment reflects weak economic conditions, rather than individual decisions to choose leisure over work. Therefore, it is reasonable during a recession to adopt a more generous unemployment-insurance program. In the past, this change entailed extensions to perhaps 39 weeks of eligibility from 26 weeks, though sometimes a bit more and typically conditioned on the employment situation in a person’s state of residence. However, we have never experienced anything close to the blanket extension of eligibility to nearly two years. We have shifted toward a welfare program that resembles those in many Western European countries.

The administration has argued that the more generous unemployment-insurance program could not have had much impact on the unemployment rate because the recession is so severe that jobs are unavailable for many people. This perspective is odd on its face because, even at the worst of the downturn, the U.S. labor market featured a tremendous amount of turnover in the form of large numbers of persons hired and separated every month.

For example, the Bureau of Labor Statistics reports that, near the worst of the recession in March 2009, 3.9 million people were hired and 4.7 million were separated from jobs. This net loss of 800,000 jobs in one month indicates a very weak economy—but nevertheless one in which 3.9 million people were hired. A program that reduced incentives for people to search for and accept jobs could surely matter a lot here.

Moreover, although the peak unemployment rate (thus far) of 10.1% in October 2009 is very disturbing, the rate was even higher in the 1982 recession (10.8% in November-December 1982). Thus, there is no reason to think that the United States is in a new world in which incentives provided by more generous unemployment-insurance programs do not matter much for unemployment.

Another reason to be skeptical about the administration’s stance is that generous unemployment-insurance programs have been found to raise unemployment in many Western European countries in which unemployment rates have been far higher than the current U.S. rate. In Europe, the influence has worked particularly through increases in long-term unemployment. So the key question is what happened to long-term unemployment in the United States during the current recession?

To begin with a historical perspective, in the 1982 recession the peak unemployment rate of 10.8% in November-December 1982 corresponded to a mean duration of unemployment of 17.6 weeks and a share of long-term unemployment (those unemployed more than 26 weeks) of 20.4%. Long-term unemployment peaked later, in July 1983, when the unemployment rate had fallen to 9.4%. At that point, the mean duration of unemployment reached 21.2 weeks and the share of long-term unemployment was 24.5%. These numbers are the highest observed in the post-World War II period until recently. Thus, we can think of previous recessions (including those in 2001, 1990-91 and before 1982) as featuring a mean duration of unemployment of less than 21 weeks and a share of long-term unemployment of less than 25%.

These numbers provide a stark contrast with joblessness today. The peak unemployment rate of 10.1% in October 2009 corresponded to a mean duration of unemployment of 27.2 weeks and a share of long-term unemployment of 36%. The duration of unemployment peaked (thus far) at 35.2 weeks in June 2010, when the share of long-term unemployment in the total reached a remarkable 46.2%. These numbers are way above the ceilings of 21 weeks and 25% share applicable to previous post-World War II recessions. The dramatic expansion of unemployment-insurance eligibility to 99 weeks is almost surely the culprit.

To get a rough quantitative estimate of the implications for the unemployment rate, suppose that the expansion of unemployment-insurance coverage to 99 weeks had not occurred and—I assume—the share of long-term unemployment had equaled the peak value of 24.5% observed in July 1983. Then, if the number of unemployed 26 weeks or less in June 2010 had still equaled the observed value of 7.9 million, the total number of unemployed would have been 10.4 million rather than 14.6 million. If the labor force still equaled the observed value (153.7 million), the unemployment rate would have been 6.8% rather than 9.5%.

Karl Smith at Modeled Behavior:

Based on Cable News and a notable NYT column one might think that economists are perpetually at one another’s throats. This is far from the truth. The hierarchical nature of the economics profession lends an ecclesiastical air to many of our interactions. Brilliant figures are treated with enormous reverence.

To wit, when an eminent figure like Robert Barro says something that strikes most of as inane the most common reaction is shoe staring

[…]

For better or worse the blogosphere has changed that. Economists of all stripes will descend upon Barro over the next 36 hours. If he replies, which I suspect he will not, this will be an interesting moment.

Scott Grannis at Seeking Alpha:

Robert Barro has a good article in yesterday’s WSJ, titled “The Folly of Subsidizing Unemployment.” In it, he argues reasonably that “the expansion of unemployment-insurance eligibility to as much as 99 weeks from the standard 26 weeks” has made the economy less efficient “because the program subsidizes unemployment, causing insufficient job-search, job-acceptance and levels of employment.” My chart above helps illustrate the numbers he uses in his article, making it clear that we have never before seen such a large number of people receiving unemployment compensation. The 1981-82 recession saw a higher unemployment rate than we have seen in the recent recession, but one-third fewer people were subsidized for not working. This undoubtedly helps explain why this recovery has proceeded at a very disappointing pace.

Robert Reich:

I have the questionable distinction of appearing on Larry Kudlow’s CNBC program several times a week, arguing with people whose positions under normal circumstances would get no serious attention, and defending policies I would have thought so clearly and obviously defensible they should need no justification. But we are living through strange times. The economy is so bad that the social fabric is coming undone, and what used to be merely weird economic theories have become debatable public policies.

Tonight it was Harvard Professor Robert Barro, who opined in today’s Wall Street Journal that America’s high rate of long-term unemployment is the consequence rather than the cause of today’s extended unemployment insurance benefits.

In theory, Barro is correct. If people who lose their jobs receive generous unemployment benefits they might stay unemployed longer than if they got nothing. But that’s hardly a reason to jettison unemployment benefits or turn our backs on millions of Americans who through no fault of their own remain jobless in the worst economy since the Great Depression.

Yet moral hazard lurks in every conservative brain. It’s also true that if we got rid of lifeguards and let more swimmers drown, fewer people would venture into the water. And if we got rid of fire departments and more houses burnt to the ground, fewer people would use stoves. A civil society is not based on the principle of tough love.

In point of fact, most states provide unemployment benefits that are only a fraction of the wages and benefits people lost when their jobs disappeared. Indeed, fewer than 40 percent of the unemployed in most states are even eligible for benefits, because states require applicants have been in full-time jobs for at least three to five years. This often rules out a majority of those who are jobless – because they’ve moved from job to job, or have held a number of part-time jobs.

So it’s hard to make the case that many of the unemployed have chosen to remain jobless and collect unemployment benefits rather than work.

Anyone who bothered to step into the real world would see the absurdity of Barro’s position. Right now, there are roughly five applicants for every job opening in America. If the job requires relatively few skills, hundreds of applicants line up for it. The Bureau of Labor Statistics says 15 percent of people without college degrees are jobless today; that’s not counting large numbers too discouraged even to look for work.

Barro argues the rate of unemployment in this Great Jobs Recession is comparable to what it was in the 1981-82 recession, but the rate of long-term unemployed then was nowhere as high as it is now. He concludes this is because unemployment benefits didn’t last nearly as long in 1981 and 82 as it they do now.

He fails to see – or disclose – that the 81-82 recession was far more benign than this one, and over far sooner. It was caused by Paul Volcker and the Fed yanking up interest rates to break the back of inflation – and overshooting. When they pulled interest rates down again, the economy shot back to life.

Alex Tabarrok:

It’s not clear to me why we should assume that the share of long-term unemployment in this recession should equal that in 1983.

Barro also argues:

We have shifted toward a welfare program that resembles those in many Western European countries.

In contrast Josh Barro, son of Robert, in How much do UI Extensions Matter for Unemployment, concluded that 0.4% was probably on the high side:

Two Fed studies suggest that [extensions of UI] may have contributed 0.4 to 1.7 percentage points to current unemployment. But a closer look at this research makes me skeptical that the effects have been so large.

…The incentive effects of UI extension must also be weighed against the stimulative effects of paying UI benefits. For some reason it’s become almost taboo to note this on the Right, but UI recipients tend to be highly inclined to spend funds they receive immediately, meaning that more UI payments are likely to increase aggregate demand. UI extension also helps to avoid events like foreclosure, eviction and bankruptcy, which in addition to being personal disasters are also destructive of economic value.

As a result, I am inclined to favor further extension of UI benefits while the job market remains so weak. I am not concerned that this leads us down a slippery slope to permanent, indefinite unemployment benefits (which historically have been one of the drivers of high structural employment in continental Europe) as the United States has gone through many cycles of extending unemployment benefits in recession and then paring them back when the economy improves, under both Republican and Democratic leadership.

I call this one on both counts for Josh.

Arnold Kling:

He claims that the unemployment rate would be much lower now if Congress had not passed any extensions of unemployment benefits. I have not gone through his analysis, but I suspect that I, like Alex Tabarrok, would not find it persuasive. Nonetheless, I think there is a case to be made for allowing people to continue to collect unemployment benefits after they find a new job, until their benefits are scheduled to expire. We can argue about how generous the unemployment benefits should be overall, but for any level of benefits it is possible to reduce the disincentive to find work.

Mark Thoma:

Calling Barro’s claim questionable, as in the title, was probably too generous.

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No Telethon, No Tweetathon, No Nothing

Max Fisher at The Atlantic with the round-up. Fisher:

The United Nations has warned that the biggest challenge in the ongoing relief efforts for the millions displaced by flooding in Pakistan is the lack of money and supplies. Over a million Pakistanis lack even a tent to sleep in, and as many as 13.8 million have no access to clean drinking water, threatening outbreaks of serious diseases such as cholera, particularly among children. In the wake of the earthquake in Haiti, agencies and individuals around the world were far more generous, donating $1 billion USD within days. Why has the world been so much more sparing with Pakistan?

Colum Lynch at Foreign Policy:

Pakistan’s Foreign Minister Shah Mehmood Qureshi presented the U.N.’s members with a stark challenge: Help Pakistan recover from its most devastating natural disaster in modern history or run the risk of surrendering a key front in the war on terror.

“This disaster has hit us hard at a time, and in areas, where we are in the midst of fighting a war against extremists and terrorists,” Qureshi warned foreign delegates, including U.S. Secretary of State Hillary Rodham Clinton, at a U.N. donor’s conference on the Pakistani flood. “If we fail, it could undermine the hard won gains made by the government in our difficult and painful war against terrorism. We cannot allow this catastrophe to become an opportunity for the terrorists.”

Qureshi provided one of his darkest assessments to date of the political, economic and security  costs of Pakistan’s floods, which have placed more than 20 million people in need of assistance, destroyed more than 900,000 homes and created financial losses of over $43 billion. “We are the people that the international community looks towards, as a bulwark against terrorism and extremism,” he said, adding that Pakistan “now looks towards the international community to show a similar determination and humanity in our hour of need.”

The blunt speech was part of a broader effort by Pakistan, the United Nations, the United States and its military allies in the region to goad the international community into stepping up funding for the relief effort, which has been severely underfunded. U.S. Secretary of State Hillary Rodham Clinton pledged an additional $60 million to the U.N. flood relief in Pakistan, bringing the total U.S. contribution to $150 million. Britain’s development minister, Andrew Mitchell, pledged an additional $33 million, saying that the pace of funding for has been “woefully inadequate.”

Tunku Varadarajan at Daily Beast:

All of this leads me to offer a few socio-cultural and political observations on the floods in Pakistan, and their possible consequences.

1. An obvious reason why so little private money has flowed to Pakistan from the West, and from America in particular, is the absence of Christian charities working in Pakistan. In the event of a natural (or other) disaster abroad, American Christians are the most generous donors of aid: Witness the response, for example, to the earthquake in Haiti. “Americans who practice their faith”—and an overwhelming majority are Christian—“give and volunteer far more than Americans who practice less or not at all,” says Arthur Brooks, the author of Who Really Cares. These Christian Americans often take their cue from their churches; but if these institutions have little or no presence in Pakistan (as they don’t in most radical Islamic countries), a reliable and generous conduit for charitable donation is, quite simply, missing altogether.

2. But what of the “ummah,” the Muslim brotherhood of nations, whose people have given virtually nothing to Pakistan in its time of despair? According to The New York Times, “although the disaster has fallen in the Muslim holy month of Ramadan, when charity is considered a duty, Muslim states have donated virtually nothing via the United Nations and relatively small sums on their own.” One is hardly surprised: Most Islamic charitable giving is ideo-theological, designed to consolidate the Muslim faith, particularly in its Wahhabi manifestation. If money is given to alleviate poverty or distress, it is most often given in the donors’ own neighborhood, and almost always with ideological strings attached.

3. By far the biggest giver of emergency succor to Pakistan is the U.S. One trusts that the Muslim world, as slow to give aid to its brethren in Pakistan as it is reliably unhesitating when it comes time to anathematize America, is paying heed to the immense American contribution. And yet, radical Islamist sections of the Pakistani media have been deranged enough to blame the floods on manipulations of weather patterns by the U.S.

Daniyal Noorani at Huffington Post:

The US media is at least partly to blame for the lack of response from the US public. Instead of spotlighting the plight of the Pakistani people, the media have been focused on how Islamist organizations are stepping in to fill the void in the relief efforts. Their performance is all the more disappointing when compared with the inspiring media campaigns waged to raise awareness – and funds – for victims of other, recent natural disasters.

Take, for example, media coverage of the Haiti earthquake, which set a gold standard in how the media can really drive fundraising efforts. The call-a-thons, TV commercials, and extensive use of social media to drive outreach allowed relief organizations to raise some $1.3 billion in donations. Given the magnitude of the Pakistani floods, it is shocking that similar efforts are not being undertaken on behalf of victims there.

The lackadaisical response is also in part due to the lack of organization among members of the Pakistani diaspora.  Instead of reaching out to the general public, the diaspora has kept its fundraising efforts narrowly focused on the Pakistan-American community. This is a mistake. Now is the time for Pakistani-Americans to step up, get organized, and channel the generosity of their fellow Americans in support of their compatriots back home. And it wouldn’t hurt to have a Pakistani Wyclef Jean: someone visible to champion the cause and raise awareness. Media indifference to the situation in Pakistan – and the Pakistani diaspora’s failure to get its act together in this grave time – cannot persist.

Of course, the ultimate responsibility for helping Pakistanis rests with the Pakistani government. But the US does have a golden chance to kill two birds with one stone. Americans can help out the victims of one of largest natural disasters in recent history and in the process change Pakistanis’ perception of the United States in the long term – something that the US has been struggling to do for many years.

Robert Reich at Wall Street Pit:

This is a human disaster.

It’s also a frightening opening for the Taliban.

Yet so far only a trickle of aid has gotten through. As of today (Thursday), the U.S. has pledged $150 million, along with 12 helicopters to take food and material to the victims. (Other rich nations have offered even less – the U.K., $48.5 million; Japan, $10 million, and France, a measly $1 million. Today (Thursday), Hillary Clinton is speaking at the UN, seeking more.)

This is bizarre and shameful. We’re spending over $100 billion this year on military maneuvers to defeat the Taliban in Pakistan and neighboring Afghanistan. Over 200 helicopters are deployed in that effort. And we’re spending $2 billion in military aid to Pakistan.

More must be done for flood victims, immediately.

Beyond helping to prevent mass disease and starvation we’ll also need to help Pakistan rebuild. Half of the nation’s people depend on agriculture for their livelihood, and a large portion of the nation’s crops and agricultural land have been destroyed. Roads, bridges, railways, and irrigation systems have been wiped out.

Last year, Congress agreed to a $7.5 billion civilian aid package to Pakistan to build roads, bridges, and schools. That should be quadrupled.

While they’re at it, Congress should remove all tariffs on textiles and clothing from Pakistan. Textiles and clothing are half Pakistan’s exports. More than half of all Pakistanis are employed growing cotton, weaving it into cloth, or cutting and sewing it into clothing. In the months and years ahead, Pakistan will have to rely ever more on these exports.

Yet we impose a 17 percent tariff on textiles and clothing from Pakistan. If we removed it, Pakistan’s exports would surge $5 billion annually. That would boost the wages of millions there.

That tariff also artificially raises the price of the clothing and textiles you and I buy. How many American jobs do we protect by this absurdity? Almost none. Instead, we’ve been importing more textiles and clothing from China and other East Asian nations. China subsidizes its exports with an artificially-low currency.

If you’re not moved by the scale of the disaster and its aftermath, consider that our future security is inextricably bound up with the future for Pakistan. Of 175 million Pakistanis, some 100 million are under age 25. In the years ahead they’ll either opt for gainful employment or, in its absence, may choose Islamic extremism.

We are already in a war for their hearts and minds, as well as those of young people throughout the Muslim world.

Stephen Walt at Foreign Policy:

As everyone knows, the United States is widely despised among broad swathes of Pakistani society.  Some of this hostility is unmerited, but some of it is a direct result of misguided U.S. policies going back many decades.  As the U.S. experience with Indonesia following the 2004 Asian tsunami demonstrated, however, a prompt and generous relief effort could have a marked positive effects on Pakistani attitudes.  Such a shift could undermine support for extremist groups and make it easier for the Pakistani government to crack down on them later on.  It is also the right thing to do, and the U.S. military is actually pretty good at organizing such efforts.

The United States has so far pledged some $76 million dollars in relief aid, and has sent 19 helicopters to help ferry relief supplies.  That’s all well and good, but notice that the U.S. government sent nearly $1 billion in aid in response to the tsunami, and we are currently spending roughly $100 billion annually trying to defeat the Taliban.  More to the point, bear in mind that the United States currently has some over 200 helicopters deployed in Afghanistan (and most reports suggest that we could actually use a lot more).

So imagine what we might be able to do to help stranded Pakistanis if we weren’t bogged down in a costly and seemingly open-ended counterinsurgency war, and didn’t have all those military assets (and money) already tied up there?   It’s entirely possible that we could do more to help suffering individuals, and more to advance our own interests in the region, if some of these military assets weren’t already committed.

Of course, Obama didn’t know that there would be catastrophic flooding in Pakistan when he decided to escalate and prolong the Afghan campaign.  But that’s just the point: when national leaders make or escalate a particular strategic commitment, they are not just determining what the country is going to do, they are also determining other things that that they won’t be able to do (or at least won’t be able to do as well).

Thus, another good argument for a more restrained grand strategy is that it might free up the resources that would allow us do some real good in the world, whenever unfortunate surprises occur.   As they always will.

UPDATE:  Doug Mataconis

Reihan Salam

UPDATE #2: More Fisher at The Atlantic

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And The Silver Medal Goes To China… Or Does It?

Heather Horn at The Atlantic with the round-up

Ryan Avent at DiA at The Economist:

CHINA has, at long last, surpassed Japan in terms of nominal GDP, making the Chinese economy the world’s second largest. Second quarter output in China came in at $1.337 trillion, to Japan’s $1.288 trillion (Japan’s output was larger in the first quarter; for comparison, America’s second quarter nominal output was $3.522 trillion). The shift is sure to be widely discussed and widely misinterpreted. There are a few key things to mention.

First, while Chinese growth has been truly impressive in recent decades, the rapid overtaking of the Japanese economy also reflects years of disappointing growth there. This story is as much about Japan’s travails (and the risk to other rich economies facing a descent into Japanese-style stagnation) as it is China’s boom.

Second, China remains a very poor country in per capita terms. It uses over four times as many citizens as America to produce less than half America’s output. That’s a bit misleading—urban productivity in China doesn’t lag America by quite as much but is offset by the limited growth contribution of China’s hundreds of millions of rural poor. Still, the total output figures encourage observers to vastly overstate the developmental level of the Chinese economy.

Joshua Keating at Foreign Policy:

The world economy reached a major milestone Monday when China officially became the world’s second-largest economy, displacing Japan, which has held the title for more than four decades. The recognition of China’s new status came after the Japanese government reported that, after a quarter of slow economic growth, the country’s annual gross domestic product (GDP) was estimated to be around $1.28 trillion, slightly below China’s $1.33 trillion. Do all countries use the same method for estimating GDP?

They’re supposed to. The System of National Accounts (SNA), a set of guidelines developed jointly by the United Nations, the European Commission, the International Monetary Fund (IMF), the Organization for Economic Co-operation and Development, and the World Bank, specifies the methods by which countries measure the size of their economies.

There are two main methods for estimating GDP. One involves looking at production. This includes the value of the goods produced by all the firms in the country, the added value of government work projects, and — particularly in developing countries — the value of goods produced for personal consumption, like the crops grown by subsistence farmers. Not all wealth counts toward GDP. For instance, if you build a new house, that’s considered value added to the economy.  If a pre-existing house increases in value, the owner may be better off, but the country’s GDP is unaffected. Of course, companies often have a vested interest in exaggerating their profits, so reliable figures can sometimes be tough to calculate.

The other method of calculating GDP involves measuring total consumption of products by a country’s population. Since it relies mostly on household surveys, this method also has flaws. People tend to underreport the amount they spend on alcohol and cigarettes, for instance. But hopefully, the two measures should come up with close to the same number and when the results from the two approaches are compiled, they should give you a pretty good idea of the size of a country’s economy.

[…]

But for most countries, there’s no international legal authority to ensure that statistical offices are following the SNA guidelines, and international economists largely have to rely on self-reported numbers. While no one’s disputing China’s new status, the country has often been suspected of cooking its books. Although China is not a member of the OECD, it does cooperate with the organization in producing statistics according to the SNA guidelines.

Those guidelines are updated every few years. The most recent edition, which was made in 2008 and has so far only been implemented by Australia, was revised so that a firm’s investments in research and development are considered added value. This means that as the new standard is implemented worldwide over the next four years or so, many countries will see their GDP numbers increase by as much as 1 percent. That’s one way to stimulate growth.

Joe Weisenthal at Business Insider:

Let’s just put some of today’s headlines about Japan’s GDP being surpassed by Chinese GDP in perspective.

In the quarter, Japan had economic output of $1.28 trillion, or $10,085 per capital, based on a population of 127 million.

China?

It had economic output of $1.337 trillion for the quarter, but a population of about $1.3 billion, so per-capita output of… $1000, about a 1/10th as big.

Let us know when China passes Albania.

Derek Scissors at Heritage:

It’s true that simple GDP does matter. The increasing size of China’s economy means the entire world is now affected by its voracious demand for oil, iron ore, and other commodities, as well as its low-cost supply of consumer electronics, clothing, and other goods.

But for successful economic development, what matters far more is the wealth of individuals and families. Japanese economic weakness is not shown in its still impressive 3rd place in world GDP but in its roughly 40th place on measures of personal income. From an economy once thought better managed and better performing than the U.S., the average citizen of Japan is now poorer than the average citizen of Mississippi. American citizens are noticeably richer than citizens of most other developed countries, such as in the EU. But Japan, in particular, is moving backward.

In contrast to Japan’s 20 years of weakness, there has been stunning growth in Chinese GDP per capita for 30 years. Yet China is still a developing economy. Chinese GDP per capita, even adjusted for purchasing power, is about 15 percent the level of the U.S. Further, GDP per capita actually exaggerates China’s performance.

The PRC’s incomplete data revisions undermine comparisons but, from the middle of 2000 to the middle of 2010, GDP per capita increased by more than 9500 yuan or, at present exchange rates, another $2800 in annual income. However, urban disposable income increased less than 6800 yuan, or about $2000 in annual income. And rural income increased less than 2000 yuan, or $600 in annual income.

Razib Khan at Discover

Robert Reich at Wall Street Pit:

Think of China as a giant production machine that’s growing 10 percent a year (this year, somewhat less). The machine sucks in more and more raw materials and components from rest of world – it’s now the world’s #1 buyer of iron ore and copper, and close to the #1 importer of crude oil – and spews out a growing mountain of stuff, along with huge environmental problems.

But because the Chinese consume a smaller and smaller proportion of this stuff, it has to be exported to consumers elsewhere (Europe, North America, Japan) to keep the Chinese working. Much of the money China earns by selling it around the world is reinvested in factories, roads, trains, and power plants that enlarge China’s capacity to produce far more. Another big portion is lent to or invested in the rest of the world (helping to finance America’s budget deficit at very low cost).

But this can’t go on. China’s workers won’t allow it. Workers in other nations who are losing their jobs won’t allow it, either.

The answer is not simply more labor agitation in China or an upward revaluation of China’s currency relative to the dollar. The problem is bigger. All over the world, we’re witnessing a growing gap between production and consumption, while the environment continues to degrade. The Chinese machine is fast heading for a breakdown only because it’s growing fastest.

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Join The Census, See Your Neighborhood, Get Laid Off In The Near Future

Chart from Calculated Risk. Calculated Risk:

This graph shows the job losses from the start of the employment recession, in percentage terms – but this time aligned at the bottom of the recession.

The current recession bounced along the bottom for a few months – so the choice of bottom is a little arbitrary (plus or minus a month or two).

Notice that the 1990 and 2001 recessions were followed by jobless recoveries – and the eventual job recovery was gradual. In earlier recessions the recovery was somewhat similar and a little faster than the decline (somewhat symmetrical).

The dotted line shows the impact of Census hiring. In May, there were 564,000 temporary 2010 Census workers on the payroll. Starting in June, the number of Census workers will decline – and the two red lines will meet later this year.

Felix Salmon:

No single datapoint — not even the monthly payrolls report — can in and of itself mark the beginning of the end of the recovery. But this month’s numbers are still depressing, coming in well below lofty expectations, and having no silver lining: there were no upward revisions to previous months, there was no big fall in the unemployment rate, there was no obvious reason to believe that the 411,000 temporary employees hired in May to work on Census 2010 would otherwise have found private-sector employment.

The really recalcitrant number here is the unemployment rate, which is staying stubbornly near 10% no matter what payrolls do: when they’re healthy, more people start looking for work. But if you want a hint of a glimmer of hope, at least the broad U6 underemployment rate is heading in the right direction: it was 16.6% in May, down from a whopping 17.1% in April. (But it’s still higher than it was at the beginning of the year.) And more generally, of course, this degree of labor-market weakness is yet more reason to believe that inflation simply isn’t an issue for the foreseeable future, especially given the strength of the dollar. So the Fed is going to be happy keeping rates at zero for the time being: remember it has a dual mandate, and that Ben Bernanke should care just as much about bringing the unemployment rate down as Barack Obama does.

Ezra Klein:

If you’re looking for bright spots, you might focus in on the fact that 343,000 workers who were unwillingly part-time got upgraded to full-time. But you really have to be looking.

Doug Mataconis:

Additionally, the U6 unemployment rate, which is the broadest measure of unemployment and includes those who have simply given up looking for a job and part-time workers who would prefer to work full-time stands at 16.6%, down from last month but still incredibly high.

The lack of significant job growth in the private sector is a sign that the recovery, to the extent it exists, is incredibly weak and that employers are still not willing to take the economic risk of hiring additional workers. As long as that’s the case, we’re likely to see the unemployment rate stay well above nine percent for some time to come. Politically, that’s nothing but trouble for President Obama and the Democrats.

David Frum at FrumForum:

This economy is not reviving. President Obama’s so-called stimulus is proving to have been more like a painkiller. It helped some time for a temporary period at enormous cost. But now, NOW, is the moment for Republican alternatives.

Start with

1) Revive the payroll tax holiday

2) Welcome a lower dollar

3) Postpone the implementation date of all mandates in the federal healthcare plan by 36 months

4) Extend the Bush tax cuts for 5 more years

5) A crash program to approve and commence construction of 20 new nuclear power plants within the next 24 months.

Robert Reich at Huffington Post:

The only reason the economy isn’t in a double-dip recession already is because of three temporary boosts: the federal stimulus (of which 75 percent has been spent), near-zero interest rates (which can’t continue much longer without igniting speculative bubbles), and replacements (consumers have had to replace worn-out cars and appliances, and businesses had to replace worn-down inventories). Oh, and, yes, all those Census workers (who will be out on their ears in a month or so).

But all these boosts will end soon. Then we’re in the dip.

Retail sales are already down.

So what’s the answer? In the short term, more stimulus — especially extended unemployment benefits and aid to state and local governments that are whacking schools and social services because they can’t run deficits.

But the deficit crazies in the Senate, who can’t seem to differentiate between short-term stimulus (necessary) and long-term debt (bad) last week shot it down.

In the longer term, we need a new New Deal that will bolster America’s floundering middle class. Expand the Earned Income Tax Credit and extend it up through the middle class. Finance that extension through higher marginal income taxes on the wealthy, who have never had it so good.

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Lefty Bloggers And Harry Reid Spoiling For A Fight

Robert Reich:

Fed Chair Ben Bernanke this week listed the choices. “To avoid large and unsustainable budget deficits,” he said in a speech on Wednesday, “the nation must choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above.”

Bernanke is almost certainly right about “some combination,” but he leaves out one other possible remedy that should be included in that combination: Immigration.

You see, the biggest reason Social Security is in trouble, and Medicare as well, is because America is aging so fast. It’s not just that so many boomers are retiring. It’s also that seniors are living longer. And families are having fewer children.

Add it all up and the number of people who are working relative to the number who are retired keeps shrinking.

Forty years ago there were five workers for every retiree. Now there are three. Within a couple of decades, there will be only two workers per retiree. There’s no way just two workers will be able or willing to pay enough payroll taxes to keep benefits flowing to every retiree.

This is where immigration comes in. Most immigrants are young because the impoverished countries they come from are demographically the opposite of rich countries. Rather than aging populations, their populations are bursting with young people.

Yes, I know: There aren’t enough jobs right now even for Americans who want and need them. But once the American economy recovers, there will be. Take a long-term view and most new immigrants to the U.S. will be working for many decades.

Get it? One logical way to deal with the crisis of funding Social Security and Medicare is to have more workers per retiree, and the simplest way to do that is to allow more immigrants into the United States.

Immigration reform and entitlement reform have a lot to do with one another.

Steve Benen:

Senate Majority Leader Harry Reid (D) spoke over the weekend at an immigration rally in Las Vegas, vowing to tackle the reform issue quickly. The senator said he has 56 votes on the legislation, and needs to find “a handful of Republicans.”

Speaking before a crowd of more than 6,000, Reid, a vulnerable incumbent, assured his audience of his commitment. “We’re going to come back, we’re going to have comprehensive immigration reform now,” he said. “We need to do this this year. We cannot wait.”

Reid’s motivations are hardly a secret. The senate leader not only has a genuine interest in the issue, but he’ll also need considerable support from fast-growing Latino communities in Nevada if he has any chance of keeping his job.

Sarah Kate Kramer at Feet In 2 Worlds:

At the rally, Reid tried to find middle ground, simultaneously outlining a path to citizenship and talking about protecting American borders. Under his proposed legislation, to gain legal status immigrants would pay “a penalty and a fine, people will have to work, stay out of trouble, pay taxes, learn English.” In his prepared remarks, Reid also tied immigration reform to the economic recovery, saying,

“It is about jobs.  It is about getting people back to work, getting our economy back on track and helping it grow.”

Some analysts questioned if Reid’s speech was primarily directed at strengthening his Hispanic constituent base, as he faces a difficult election fight this fall. Hispanics helped put Nevada in the Democratic column in the last election, though that could change if Democrats fail to make immigration reform a priority.

Ezra Klein:

I’d say it’s pretty unlikely that comprehensive immigration reform happens this year. But then, who cares what I think? Harry Reid is in charge of the Senate, and he says he’s got 56 votes, and it’s gonna happen. “We need a handful of Republicans,” he told an immigration rally in Las Vegas.

The cynical take, of course, is that Reid is running for reelection in a state that’s about 20 percent Hispanic. But that suggests an important change in the political reality: The cynical thing for Democrats to do in an election year might be to pursue immigration reform. And that would make immigration reform a much likelier addition to the agenda.

As Ron Brownstein frequently points out, Obama won fewer than 40 percent of working-class whites in 2008. Congressional Democrats may well do even worse this year. But it’s hard to believe they can do that much worse, or that they can do much to change their standing among this group. It’s also not clear that immigration is a big motivator for these voters: The GOP tried to use it in 2006 against the Democrats, and the effort pretty much fell flat on its face.

Actually, it did worse than that: It drove Latino voters toward the Democrats. Obama won 67 percent of Hispanics in 2008 — a much better showing than Democrat made in 2004. The fear in 2010, however, is that Hispanics won’t show up to vote. If Democrats actually pursue immigration reform, their participation becomes likelier. And if Republicans — or tea partyers, or conservative talk radio — overreact to the prospect of immigration reform, their participation becomes virtually assured.

Markos Moulitsas at Daily Kos:

There will be tough contested Senate races in many of those states — Reid’s Nevada, of course, but also California, Colorado, Illinois, Florida, North Carolina, and maybe even Iowa, Washington, and Arizona. Meanwhile, we’ll have hot governor races races in California, Iowa, Texas, Illinois, Georgia, New Mexico, and Florida. And almost all of these states will have bitterly contested House races.

Republicans will have a tough choice — either play to the xenophobic nativist tendencies of their teabagger base, or limit damage to a Latino electorate that is growing at amazing rates. As Bush pollster Matthew Dowd told the Chicago Tribune in 2002:

We can’t survive as a party without getting more of the Hispanic vote.

Or, as Dowd told the Wall Street Journal in 2006:

the fact (is) that the Latino vote in this country is the fastest-growing demographic of the electorate — it’s grown 400 percent in the last 20 years. So this is going to keep happening. It’s dynamic, it’s growing. And I think both political parties understand that it’s a demographic that is probably one of the most important — you know, who’s going to have majority status in this country.

It’s actually a good wedge for Democrats. They need Latinos properly motivated to hit the polls this November in order to help stem losses. Republicans need to stop their bleeding with this key and rapidly growing demographic. And without the nativism, the GOP would be well-positioned to compete for the Latino vote on social issues alone.

So both parties have reason to make immigration reform happen. It really will come down to how fearful the GOP’s immigration moderates are of their teabagger base.

Dan Riehl:

Marcos can’t quite seem to write “teabagger” often enough to fully get the taste of it out of his mouth in a post pointing out Harry Reid’s call for immigration reform this year. Kos posits that as an electoral firewall for the Democrats. So, let’s see …. The country is plagued by high unemployment and will continue to be well beyond 2010. A rush in new citizens, many of them under, or un-employed, would also set them up for full health care benefits at taxpayer’s expense. Blacks, the most reliable Democrat constituency, are already un-motivated without Obama on the ballot and many of them have concerns overimmigration reform, as unemployment is even higher among their ranks. And their communities tend to see the greatest influx of illegal immigrants.

And that’s the trump card kos sees Democrats playing in 2010? Good luck with that.

Doug J.:

[…] the real reason do it is long-term. Republicans won’t be so self-destructively xenophobic forever and if enough time goes by, we may end up with a bipartisan immigration reform bill or even a reform bill passed under a Republican president (don’t forget that this is what Rove wanted to do after the 2004 election). That could seriously blunt Democrats’ advantage among Latino voters. If Democrats can pass a good, comprehensive immigration reform bill while teatards are marching around with badly spelled anti-Latino signs and Tancredistas are attempting to mount filibusters, you’re looking at a serious long-term win for Democrats. Now is the perfect time for Democrats to do this.

When God sends you teahad, make teahad-ade.

Digby

Julissa Trevino at The Washington Independent:

None of this has been ignored by the right. Just like the Washington Monthly, the Right Side News reports on Democrats’ use of immigration as a political strategy.

Those wonderful Democrats, now scared witless they are going to be mauled politically at the polls this coming November, have to move as quickly as possible to get those millions of illegal aliens citizenship and, even more important, get them registered to vote so they can vote for the dems who secured their citizenship while overlooking the fact that they are criminals. Remember, Latino voters were crucial to President Obama’s win in 2008.

Whether or not Democrats support immigration reform because of November elections, the reassurance from Reid and Durbin comes at a good time — but activists are going to expect more than words. “The commitment we received from Senate Majority Leader Harry Reid was unequivocal,” said Deepak Bhargava, executive director of the Center for Community Change, in a press release today. “While the words spoken by Sens. Durbin and Reid are welcomed, they must now be backed by actions.”

Christopher Beam at Slate:

The biggest problem is the calendar. Right after stepping off the campaign trail, Reid said that the Senate will not be tackling immigration reform during this work period, which extends through the end of May. Instead, they’ll be tackling jobs bills, food-safety legislation, financial regulatory reform, and a bill that would address campaign finance and the Supreme Court’s Citizens United decision. That leaves June and July for the Supreme Court nomination, an energy bill (which seems to keep slipping down the list), and whatever priorities they didn’t manage to address in the spring. Congress takes August off, and after that the members will be campaigning.

All this is not to say Reid can’t squeeze in immigration reform. But for that to happen, everything would have to go according to plan—which, if health care reform was any indication, is unlikely. Also, Reid’s promise Saturday was eerily similar to one he made last year.

Then there’s the matter of votes. Reid says he has 56 votes for a bill, the exact contours of which remain unclear. He needs four more. But there are enough Democrats firmly against reform that the remaining four would have to be mostly or all Republicans, according to a Daily Kos analysis. You’d think that would be simple, given that 12 Republicans—including Lindsay Graham, Judd Gregg, John Kyl, John McCain, and Olympia Snowe—voted in favor of immigration reform in 2007. But just because they supported it then doesn’t mean they support it now. That was a different bill under a Republican president. For example, Obama’s version probably wouldn’t include a temporary guest worker program favored by Republicans. (Labor unions have always opposed the idea.) It may also include a biometric identification card to help employers verify that their employees are legal immigrants, which freaks out civil liberties advocates on the left and small-government conservatives on the right, despite efforts to pitch it as just a high-tech Social Security card.

Lastly, there’s the politics. Sure, passing a bill would help Reid, whose state is a quarter Hispanic. And the Latino vote has been a “key demographic” for both parties for so long that it can probably retire the title. But Democrats less reliant on Latino turnout would be criticized for putting the economy in danger during a recession. Some economists, including Robert Reich, argue that immigration reform would actually help the economy and reduce the deficit by bringing more young people into the taxpaying fold. Others argue it would boost GDP in the long run. But that’s a tough sell to voters focused on holding down jobs now.

Harry Reid can do whatever he wants, of course. He’s the majority leader. And what he wants may simply be to show he made a good-faith effort, after which everybody can go home. It’s like his recent pledge to revive the public option even though it had no chance of passing. He got points for trying—or appearing to try. Likewise with immigration reform. Whether or not a bill reaches the Senate floor, Reid wins. Actual reform is just a bonus.

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Too Cliched To Keep Saying

movie-big

James Surowiecki at The New Yorker:

In the midst of the crisis, the country’s four biggest banks—Citigroup, Bank of America, JPMorgan Chase, and Wells Fargo—actually got bigger. Thanks primarily to a series of government-sanctioned mergers, they now control almost forty per cent of the country’s total banking deposits and two-thirds of its credit cards, and issue half of all mortgages. Investment banking, too, remains more or less dominated by the usual suspects, which have seen their market share grow as the number of their competitors has shrunk. Firms that were recently on the brink of collapse haven’t had to struggle to hold on to their old customers, as you might have imagined. They’ve had to struggle to keep up with their new ones.

This isn’t because the big banks have been making a special effort to be customer-friendly. On the contrary, in the credit-card market they’ve slashed credit lines and jacked up interest rates. In retail banking, they haven’t capitalized on the benefits of size (like lower borrowing costs) to cut prices for their customers, the way big retailers like Wal-Mart do. Instead, they typically pay lower interest rates on deposits than smaller banks do, and charge higher interest rates on loans. Overdraft fees, too, have typically been higher at big banks than they are at smaller ones. In investment banking, there has traditionally been little or no competition on price, and that hasn’t changed. There are no discounts in the M. & A. department.

So why aren’t customers and clients moving on? In the case of ordinary consumers, “switching costs” have a major effect. It’s a serious hassle to shut down a bank account and transfer money to a new one, especially with direct deposit, automatic bill payments, and the like. The same is true of refinancing at a different bank from the one that currently holds your mortgage, or trying to persuade a new bank to give you a business loan. These costs aren’t trivial: a 2001 study showed that the cost of switching a loan came to about a third of the loan’s annual interest rate. Even if people are dissatisfied with their bank, it’s usually cheaper not to fight than to switch. If you’re a restaurant or a retailer, you have to work hard to insure that your customers keep coming back. But once banks get a customer he’s pretty much theirs for good.

The big banks have the further advantage of their brands, however tattered the brands may be. It’s nearly impossible for consumers to evaluate how healthy a bank is. So, at a time when banks are failing with some regularity, the size and ubiquity of these big banks is reassuring. It seems improbable that they will simply vanish (the way a bank like IndyMac did), because the government won’t allow it. It’s possible, in fact, that the crisis, instead of eroding the reputational advantages of the big banks, ended up bolstering them. In times of uncertainty, people are inclined to shun experiment for the safe choice.

Free Exchange at The Economist:

Mr Surowiecki elaborates on these points here, and provides links to some related research. The dynamics of failure amid the ongoing banking crisis have been very interesting, and unfortunate. Among small and mid-sized banks, surer enterprises have generally done better than feeble ones, although even the best run banks in places like California and Nevada face collapse. But at the top of the banking world, the way to survive is to be potentially lethal to the financial system. And because that lethality is a nice guarantee to customers and potential customers that the bank won’t be going anywhere, the big get bigger, even when they go out of their way to wring money from customers in any way possible.

Mr Surowiecki suggests that regulators should address ATM fees and switching costs in order to improve competition, but if bigness is associated with security, then real bank competition means convincing customers, along with everyone else, that the government has a plan to unwind its implicit guarantee for banks and that ultimately the country’s largest banks will be as subject to failure as everyone else. If that can’t be achieved—if real market pressures aren’t ever going to apply—then it may be time to start thinking of large banks as natural monopolies, to be treated like regulated utilities.

Derek Thompson at The Atlantic. Heather Horn at The Atlantic has the round-up on new regulation ideas.

Horn:

“Too big to fail” has become an unavoidable, annoying catchphrase, but the underlying fear–that banks are so large that their collapse would spell the entire economy’s doom–still haunts Washington. As part of a many-fronted financial regulation push in coming weeks, Rep. Barney Frank is introducing legislation that would make it easier for the government to “seize control of troubled financial institutions, throw out management, wipe out the shareholders and change the terms of existing loans,” the New York Times reports. Is Frank merely trying to scare banks into agreeing to gentler controls? As financial heavyweights reap heady profits again, Wall Street-friendly analysts are trying to tamp down the resurgence of interest in regulation, but experts who have been patiently awaiting a crackdown are more hopeful

Lita Epstein at Daily Finance:

The federal government has been trying to figure out how to deal with such major financial institutions for almost 30 years. In 1980, First Pennsylvania was the first bank that the FDIC bailed out because the Federal Reserve and the U.S. Treasury deemed it was too big to fail. This doctrine has continued up to now, with rescues of AIG (AIG), Bear Stearns, Fannie Mae and Freddie Mac, as well as bailout funds for many huge financial institutions including Citigroup (C) and Bank of America (BAC), both of which are still on government life support.

Clearly, the current handling of banks that are too big to fail isn’t the way to go. But is wiping out the traditions of bankruptcy court and the rights of bondholders the best answer to the problem? According to the Times report, Treasury Secretary Timothy Geithner will support Frank’s bill in testimony before the House Financial Services Committee on Thursday.

The Times reports that the White House sees the plan as “the equivalent to setting up living wills for corporations.” These systemically important institutions would be required to come up with their own procedure to be disentangled in the event of a crisis. The Obama administration wants these plans to be laid out for the public in advance.

This proposal sounds like a trial balloon that’s going to quickly burst. Opposition will rapidly grow to such a dramatic change in the handling of failed financial institutions. But the plan just might succeed in getting the the financial industry in the mood to negotiate something less drastic. Bondholders also won’t like to see the government take control from them, so they may be ready to come to the table with more creative ideas.

Robert Reich at Salon:

And now there are five — five Wall Street behemoths, bigger than they were before the Great Meltdown, paying fatter salaries and bonuses to retain their so-called”talent,” and raking in huge profits. The biggest difference between now and last October is these biggies didn’t know then that they were too big to fail and the government would bail them out if they got into trouble. Now they do. And like a giant, gawking adolescent who’s just discovered he can crash the Lexus convertible his rich dad gave him and the next morning have a new one waiting in his driveway courtesy of a dad who can’t say no, the biggies will drive even faster now, taking even bigger risks.

What to do? Two ideas are floating around Washington, but only one is supported by the Treasury and the White House. Unfortunately, it’s the wrong one.

The right idea is to break up the giant banks. I don’t often agree with Alan Greenspan but he was right when he said last week that “[i]f they’re too big to fail, they’re too big.” Greenspan noted that the government broke up Standard Oil in 1911, and what happened? “The individual parts became more valuable than the whole. Maybe that’s what we need to do.” (Historic footnote: Had Greenspan not supported in 1999 Congress’s repeal of the Glass Stagall Act, which separated investment from commercial banking, we wouldn’t be in the soup we’re in to begin with.)

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There Be No Jobs Here

bread_line_depression

Two posts from Calculated Risk, here and here. CR:

Nonfarm payrolls decreased by 263,000 in September. The economy has lost almost 5.8 million jobs over the last year, and 7.2 million jobs during the 21 consecutive months of job losses.

The unemployment rate increased to 9.8 percent. This is the highest unemployment rate in 26 years.

Year over year employment is strongly negative.

Daniel Indiviglio at The Atlantic:

Perhaps the most surprising statistic that I saw was government jobs down 53,000. The one “industry” said to be growing these days is government, but not according to those numbers. Scanning the report, the only sector where I saw jobs increase was health care, up 19,000.

Bob Stein at The Corner:

There are two reasons for the disconnect between the economic recovery and the labor market. First, productivity growth has been rapid of late, part of the ongoing process of technological change that rivals (and may surpass) the industrial revolution. Second, corporate leaders still think the recent spurt in growth will be short-lived and so are being overly cautious.

chart 1 09-09 unemp

Lynn Parramore at New Deal 2.0:

This bitter news comes as a surprise to many (hello, Wall Street Journal), but not to us. In an email to me this morning (how early do people rise in Denver??), Marshall Auerback warned that “we’re doing just enough to prop up financial assets, but insufficient amounts to make a real dent in unemployment and rising aggregate incomes. Geithnernomics in action!”

Auerback notes that if you take the U6 (the broadest measure of unemployment and underemployment from the Bureau of Labor Statistics), which includes underemployment as well as unemployment, the real number is above 16%.

The Keynesian view is that we’re suffering from low aggregate demand for goods and services. The owner of the shoe store can’t hire workers when nobody is buying her stuff. There are other views, of course. Maybe 16% of Americans are just taking a much-need vacation.

Robert Reich:

Unemployment will almost certainly in double-digits next year — and may remain there for some time. And for every person who shows up as unemployed in the Bureau of Labor Statistics’ household survey, you can bet there’s another either too discouraged to look for work or working part time who’d rather have a full-time job or else taking home less pay than before (I’m in the last category, now that the University of California has instituted pay cuts). And there’s yet another person who’s more fearful that he or she will be next to lose a job.

[…]

Which brings us to the obvious question: Who’s going to buy the stuff we make or the services we provide, and therefore bring jobs back? There’s only one buyer left: The government.

Let me say this as clearly and forcefully as I can: The federal government should be spending even more than it already is on roads and bridges and schools and parks and everything else we need. It should make up for cutbacks at the state level, and then some. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.

Yes, I know. Our government is already deep in debt. But let me tell you something: When one out of six Americans is unemployed or underemployed, this is no time to worry about the debt.

James Joyner on Reich:

Even aside from the “Who’s going to pay for all this?” issue — which he explores in great detail in the rest of his post — there’s the question of efficacy. This ain’t 1933.  Most of those hit by the current decline were in service industries — including those requiring rather substantial education and training — rather than unskilled laborers.  Surely, Reich and his follow UCal professors who have suffered salary cuts aren’t going to supplement their income by repairing bridges or cleaning up parks?

No worries, though.  In a few years, the Japs will bomb Pearl Harbor again, which will require a massive investment in our defense infrastructure.  That’ll be just the boost we need.

Jillian Bandes at Townhall

Steve Benen

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The Last Brother (Edward Kennedy 1932-2009)

kennedybrothers

Just a taste of the posts. I will add more later.

Jonathan Cohn at TNR:

A little after 1 a.m., Senator Kennedy’s office sent out this press release:

Edward M. Kennedy–the husband, father, grandfather, brother and uncle we loved so deeply–died late Tuesday night at home in Hyannis Port. We’ve lost the irreplaceable center of our family and joyous light in our lives, but the inspiration of his faith, optimism, and perseverance will live on in our hearts forever. We thank everyone who gave him care and support over this last year, and everyone who stood with him for so many years in his tireless march for progress toward justice, fairness and opportunity for all. He loved this country and devoted his life to serving it. He always believed that our best days were still ahead, but it’s hard to imagine any of them without him.

R.I.P.

Robert Reich at TPM:

Most Americans will never know how many things Ted Kennedy did to make their lives better, how many things he prevented that would have hurt them, and how tenaciously he fought on their behalf. In 1969, for example, he introduced a bill in the Senate calling for universal health insurance, and then, for the next forty years, pushed and prodded colleagues and presidents to get on with it. If and when we ever achieve that goal it will be in no small measure due to the dedication and perseverance of this one remarkable man. We owe it to him and his memory to do it soon and do it well.

Michelle Malkin:

The U.S. Senator from Massachusetts succumbed to brain cancer at the age of 77 tonight. Put aside your ideological differences for an appropriate moment and mark this passing with solemnity.

There is a time and place for political analysis and criticism. Not now.

Yes, there will be a nauseating excess of MSM hagiographies and lionizations — and crass calls to pass the health care takeover to memorialize his death.

That’s no excuse to demonstrate the same lack of restraint in the other direction. Not now.

Kathryn Jean Lopez at NRO:

Seared in my memory: When I interned at the Heritage Foundation, I would sometimes pop into Mass at Saint Joseph’s on the Hill at noon on a weekday. And I would almost always find myself sitting near Ted Kennedy.

He’s responsible for things that are deeply offensive to my conscience and diametrically opposed to the teachings of the Catholic faith, and he probably led some people astray by his example.But our faith also teaches that we are all sinners and that there is redemption. He had some incredibly good forces in his life, not least among them his sister, Eunice, who just died. I pray for the repose of his soul and for his family.

Bill Bennett at The Corner:

He and I attended the same church, and whenever he saw me he would be pleasant. But in the political battles, he was a fierce and tough — and sometimes a ruthless — operator. When he spoke in the Senate, people paid attention, regardless of party. As CNN reports: “Kennedy was one of only six senators in U.S. history to serve more than 40 years. He was elected to eight full terms to become the second most-senior senator after West Virginia Democrat Robert Byrd. He launched his political career in 1962, when he was elected to finish the unexpired Senate term of his brother, who became president in 1960. He won his first full term in 1964.”

His biography is not complete without noting the tragedies of and in his family. Nor is it complete without saying he was an early and strong supporter of comprehensive health-care reform and also the campaign of Sen. Barack Obama.

There are the personal failings and tragedies that will mark any obituary of his as well, including the death of Mary Jo Kopechne. Were it not for his self-imposed recklessness, he may very well have been president.

He assaulted our causes and nominees with vigor and rancor. Still, in his day he was a powerful orator — and historians will mark his speech to the 1980 Democratic convention as a high water mark and example. To his supporters, I simply give them his words, and leave the rest to historians: “For all those whose cares have been our concern, the work goes on, the cause endures, the hope still lives, and the dream shall never die.” To the American Left, he was their lion. To the American conservative movement, he was our bane. But today, we put the politics aside and wish him and his family God’s peace.

More Lopez

Someone on the BBC’s website linked to my earlier Kennedy comment. More than a few e-mails in response tell me that I deserve to die for spitting on the dead. (I’ll leave out the more colorful language.)

The fact is: I was moved by the sight of Ted Kennedy at Mass. Senator or intern, we’re all facing the same choices and challenges on a basic human level. Maybe I had more in common with Ted Kennedy than I would have ever realized from going to CPAC.

As Bill says, we can’t lie about the facts of life and death in the life of Ted Kennedy. We can’t forget Mary Jo Kopechne. We can’t neglect his treatment of Bob Bork. We can’t pretend that it’s okay to call yourself Catholic (or an “ardent, practicing one“) and be a proponent of legal abortion, for one thing. But some of us are optimistic that there is a hope of redemption. And I say that for the sinner who is Kathryn Lopez as much as anyone.

Steve Benen:

Exactly one year ago today, Kennedy delivered one last national address, making a surprise appearance at the Democratic National Convention. Despite his ailments, Kennedy’s voice still boomed: “There is a new wave of change all around us, and if we set our compass true, we will reach our destination — not merely victory for our party, but renewal for our nation. And this November, the torch will be passed again to a new generation of Americans. So with Barack Obama, and for you and for me, our country will be committed to his cause. The work begins anew. The hope rises again. And the dream lives on.”

A leader, a statesman, and a hero, the irreplaceable Ted Kennedy will be missed.

James Joyner:

That the Chappaquiddick scandal didn’t make the first several paragraphs — or even first page — of several of these obits is quite remarkable. It would be like writing an obit for Richard Nixon that didn’t mention Watergate or one for Michael Jackson that glossed over repeated allegations of pedophilia.

That said, Kennedy was obviously much more than his actions on the worst night of his life. While he could be incredibly partisan, even vitriolically so on some issues, he was almost universally acknowledged even by opponents as an honorable negotiating partner and an outstanding legislator.

Ed Morrissey

Taylor Marsh:

There will be much speculation about what might have been, if Edward M. Kennedy, the Lion of the Senate, had been present to roar once more, able to be out front on the current campaign. There can be little doubt that had he been well enough to become the face and force in public once again we would be looking at reform from a different place, for Edward had all the passion for this legislation that Pres. Obama lacks. But not even Kennedy could have stopped the “death panel” squeal of Sarah Palin, because the era of Kennedy politicians is gone. And I’m not just talking about the name. It’s about the passion to policy over polemics; the mission to work for the people above all else, including ego. There will never be another era of public servants represented by Edward M. Kennedy, who stands as the lion amidst legislative lambs.

UPDATE: David Frum at New Majority (entire post):

I know exactly the hour when my opinion of Sen. Ted Kennedy permanently changed. I had remained very angry at the Massachusetts liberal for many years since his 1986 speech so unjustly vilifying the great conservative justice Robert Bork:

Robert Bork’s America is a land in which women would be forced into back-alley abortions, blacks would sit at segregated lunch counters, rogue police could break down citizens’ doors in midnight raids, children could not be taught about evolution.

For 15 years thereafter I could hardly bear to hear his name spoken. Nor was my temper much improved by his rough handling of another great conservative legalist, Theodore Olson, at Olson’s confirmation hearings as solicitor general. I was always ready to laugh at the harsh jokes conservatives told about the senator’s legendarily self-indulgent personal laugh. It seemed a fair judgment on an unfair man.

Then came 9/11. Among the murdered was the brave and brilliant Barbara Olson. Ted asked some friends to help with the deluge of messages of condolence, and my wife Danielle volunteered for the job. Among the letters: a lengthy handwritten note by the senator so elegant and decent, so eloquent and (fascinatingly) written in so beautiful a hand that as to revolutionize one’s opinion of the man who wrote it. It did not dishonor by ignoring or denying the political differences between the two families. It fully acknowledged them – and through them expressed a deeper human awareness of shared mortality, pain, and grief. Not all chapters of his life revealed it equally, but the senator was a big soul, and in his last years, he lived his bigness fully. He knew and he expressed the sorrow of human life, a sorrow so memorably captured by his brother Robert in a passage of poetry quoted upon hearing of the murder of Martin Luther King, and engraved thereby in the American political memory forever:

Even in our sleep, pain which cannot forget falls drop by drop upon the heart, until, in our own despair, against our will, comes wisdom through the awful grace of God.

Rest in peace, leader of the liberals.

Harold Meyerson in Tapped:

He was, as he lay dying, new again. Ted Kennedy outlived the Reagan-Thatcher conservative era to which for so many years he led the opposition. He played a key role in putting Barack Obama in the White House, creating the possibility for a renaissance of American liberalism, the cause he led for the past four decades. He came to Washington one last time to vote for the kind of Keynesian stimulus that had been out of favor in the age of laissez-faire but that embodied, however imperfectly, Kennedy’s belief that government had the ability and the duty to create an economy that not only mitigated capitalism’s excesses but made it work for ordinary Americans.

He did not get to liberalism’s promised land, of course. The universal health coverage he’d fought for throughout his career is still unrealized; his death may make it harder to realize, at least in the immediate months to come. Labor law remains unreformed, and America’s 12 million undocumented immigrants still live in the shadows with no legal path to citizenship. These were all battles that Kennedy would have led; he was the go-to guy, the champion, the orator, the deal-maker for the uninsured, the undocumented, the unable-to-join-unions; the senior senator from Massachusetts and for all the excluded in American life.

Rod Dreher:

And so, the last brother of that mythical generation of Kennedys is gone, and of the children of Joe and Rose, only Jean Kennedy Smith remains. After the death of his brothers, and until the election of Obama, Teddy Kennedy was the iconic American liberal. We always like to say that it’s the “end of an era” when a historically significant figure passes, but in Sen. Kennedy’s case, it really is true. Whatever else one might say about him, Ted Kennedy was a survivor. He endured the rise and fall of American conservatism, though he did not live to see his signature issue — health care for all — become a reality.

[…]

Kennedy was a figure of novelistic tragedy. All the potential for greatness he possessed he squandered because of his inability to transcend his own all too human weaknesses. Chappaquiddick was only the worst of it. He did, of course, achieve a kind of greatness, and one shouldn’t try to take that away from him. But it’s hard to think of him this morning without thinking about what might have been had he been able to bear the burden of history and his slain brothers’ legacies. He could have done so much more with what he had been given. He was a Kennedy. RIP.

Paul Krugman:

I don’t have much to say, except a personal thought. I remember the days, several decades ago, when Ted Kennedy was treated — mainly, but not only, on the right — as a figure of derision. He was mocked for his appearance, his personal life, his unabashed liberalism.

And now he’s remembered as a great man. The thing is, he didn’t change — he always was.

Paul Mirengoff at Powerline:

With the passing of Sen. Edward Kennedy, we can expect the usual suspects — liberal talking heads, Senate colleagues and the like — to tell us how Kennedy was a giant of the Senate, among the most influential Senators of the 20th century, etc.

This time, the usual suspects will be right.

I first visited the Senate in 1960, in time to see Lyndon Johnson in action. Johnson was the most important Senator of his era. Ted kennedy may well be the most important Senator since LBJ.

A few years ago, I was with a group that was teasing a well-placed Massachusetts Republican about how his state had given the Senate Ted Kennedy and John Kerry. The Massachusetts Republican pushed back. “Don’t lump Kennedy and Kerry together,” he said. He went on to explain that no Senator works harder for his state than Kennedy does for Massachusetts and no Senator is better to have on your side.

A great many people thought Kennedy was on their side and the outpouring of sentiment we are starting to witness will, in part, be reflection of this fact.

Matthew Yglesias about the ’80 speech:

Its closing line is, I think, crucially important: “For all those whose cares have been our concern, the work goes on, the cause endures, the hope still lives, and the dream shall never die.”

I’m never able to express myself nearly that well, but what I take Kennedy to be doing here is trying to offer an alternative to the boom-bust mentality that I think often overtakes American progressives. There’s a tendency to get extremely wound up with optimism about the imminent dawn of sudden and radical change for the better, and then intensely bitter, cynical, and depressed when that fails to materialize. The reality, however, is that change is hard. That’s not an excuse for the people who stand in its way, it’s the reality. But if you respond to the difficulty of making things better by giving up or getting frustrated, then it only gets harder.

Building a better country and a world is work—hard work—and it’s work that goes on. And on. And on.

UPDATE #2: Digby notes that it was one  year ago yesterday that Kennedy spoke at the Democratic Convention:

Digby:

It was a privilege to be there.

RIP Teddy.

Atrios on the speech:

Other people will give better tributes, but I’ll just say that I considered it a privilege to see what I assume was Kennedy’s last major public speech, at the DNC last year. Had a side view of the podium, so could see the stool they had placed there for him to sit on, which he never used.

Rick Moran:

Ted Kennedy, the rogue son of a rogue family has died of brain cancer at age 77. Oftentimes, liberals like to compare the Kennedy family to that other famous political family that featured presidents, and legislators of note; the Adams family.

Pardon me if my outrage can’t quite be held in check. The man who fought longer and harder for American independence than anyone of his time – John Adams – had it all over Teddy as far as personal moral behavior and principled, pragmatic leadership. His son, John Quincy Adams, took stands against slavery that made any “political courage” shown by Kennedy to be minuscule by comparison.

Suffice it to say, that the difference between the two families couldn’t be more pronounced and referring to the Kennedy’s in the same breath as the Adams’s is a travesty.

No doubt Kennedy the man was a despicable cad, a notorious roue, and, until late in life, a certified drunk. As most conservative blogs are reporting this morning, “Mary Jo Kopechne could not be reached for comment.” ‘Nuff said about Kennedy the man.

But history is a relentless bitch of a mistress, holding us to standards of truth and accuracy so that even one so vile as Kennedy must be examined not only in the context of his personal peccadilloes but also for his contributions to his times.

And those contributions were awesome.

There is no doubt that the average Joe working American lives a better life today because of Teddy Kennedy. He is safer on the job, his wages are higher (even non-union workers), his children have more educational opportunities, he is healthier, and wealthier than any working American of any other generation in history. We can certainly criticize liberal excesses in much of the legislation that this master parliamentarian guided through the labyrinthine maze of Congress. But no honest appraisal of Kennedy’s career would be complete without referring to the gigantic impact he had on ordinary, blue collar America.

Jim Geraghty at NRO:

There will be plenty of time to recall all of the reasons Ted Kennedy made enemies in this life, plenty of time for our traditional, “Mary Jo Kopechne could not be reached for comment.” I’ve got the Michael Kelly collection that includes “Ted Kennedy on the Rocks,” his definitive profile from the early 1990s, which showcases all the highs and all the lows. I’ll go through it sometime soon to recall those sides of Kennedy that won’t be showcased in the montages today, stories like that “sandwich” with Chris Dodd, but today’s not the day for that.

A bit of a thought, though: Many of us have siblings, and many of us love them dearly. Many of us find the thought of losing them horrific; to lose two to assassin’s bullets would drive many men mad. From some stories of Kennedy’s behavior in the years immediately after, perhaps he did go a little mad, or at least sought to drown the pain with drink. Hate the man for his legislation, hate the man for his behavior, but save a little room for some sympathy, too; we would never want to walk in those shoes.

UPDATE #3: Jack Ross in TAC:

Yes, he was a liberal’s liberal, both good and bad, but any senator who said the vote they were most proud of was their vote against the Iraq War deserves a hearty “Well done, thou good and faithful servant!”

What must not go unmentioned therefore is the history behind this.  Ted always seemed to have more of his father in him than any of his brothers – and undoubtedly he was haunted to no end by seeing in Dubya’s zeal to avenge his father’s wimpiness an echo of how nearly Jack brought about nuclear armageddon with his eagerness to destroy the legacy of their father, the architect of Munich.

So in the midst of the coming avalanche of Chris Matthews’ barely disguised homoerotic asphyxiation on the Kennedys, let us pause and pay homage to the Kennedys who dared say no to war.

Timothy Noah at Slate:

In large part, the difference between Ted and his older brothers was a matter of temperament. The backslapping conviviality of electoral politics came more naturally to Ted than to the more aloof Bobby or Jack—a reflection, perhaps, of the younger brother’s closer relationship to his maternal grandfather, John Francis “Honey Fitz” Fitzgerald, a onetime mayor of Boston and old-school pol who danced Irish jigs and sang “Sweet Adeline” at campaign events. A darker side to this lack of inhibition was the criminally irresponsible behavior Ted displayed in leaving the scene of the auto accident where Mary Jo Kopechne died in 1969 and in the boozing and womanizing Kennedy indulged in before he married Victoria Reggie in 1992.

Ted’s propensity for partisan bellowing notwithstanding, he was a much less predictable political thinker than is generally understood. It is seldom remembered, for instance, that Kennedy was a prime mover behind deregulation of the airline and trucking industries during the late 1970s—and that some on the left later excoriated him for it. Kennedy also worked closely with President George W. Bush to craft the 2002 No Child Left Behind law, which continues to bedevil the teachers’ unions (for some good reasons and many bad ones), and on various bills with his improbable Mormon sidekick, Sen. Orrin Hatch, R-Utah.

More Dreher:

Many of us like to cite the injustice of Kennedy family privilege for Teddy’s lack of accountability, and of course that’s true. But it’s only a partial truth. If you’re a fan of the show “Mad Men,” you know that Ted Kennedy — a contemporary of protagonist Don Draper — was in some ways an analogue of Don Draper. He enjoyed the privileges of being a white male power elitist in the last great heyday of his kind. Adultery, chronic boozing, casual amorality — these were in no way alien to the social milieu in which Ted Kennedy came of age. It didn’t matter that he was a great liberal; you should read the testimonies of women from the 1960s counterculture, about how piggish movement men were. Having the correct politics doesn’t mean one will behave correctly, or even decently.

Whenever we think of Camelot, and the Kennedy mystique, we edit out the vulgarity and the debauchery of the Kennedy men, who were, I feel safe in saying, not uncommon for their time and place and class. But “Mad Men” is all about the difference between what is and what appears to be. I believe we live in a better world, on balance, because that Ted Kennedy (meaning the Kennedy of Chappaquiddick and the upper room at La Brasserie) is less possible today. But given how accomplished Kennedy was as a legislator, I do wonder how much we have lost because a Ted Kennedy is not really possible today — meaning how many talented but deeply flawed men never go into public life because they couldn’t survive the moral judgment of the public regarding their personal sins and failings, and no longer have the protective veil of social hypocrisy to shield themselves.

Terrance Heath and Dayo Olopade at Bloggingheads

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Does This Mean I Can Sign Up For A Weekend Shift As An Anesthesiologist In Exchange For Cheap Organic Chewing Gum?

COOP

So my health insurance now comes with fresh basil?

Patricia Murphy at Politics Daily:

Never heard of a co-op? Maybe you have. If you shop at REI or TrueValue hardware stores, you’ve been to a co-op. If you have Ocean Spray or Land O’Lakes in your fridge, you’re buying from a co-op. If you read newspapers with articles from the AP, you’re supporting a co-op.

But how would a health care co-op work?

A document circulated to the Senate Finance Committee, obtained by Politics Daily, explains that a co-op would be owned and run by consumers who buy shares in it and elect its leaders. The proposal also says:

* There are no free rides in co-ops. Every person would have to pay dues, whether they use their own money or they get a government subsidy (which would have to be worked out).

* Co-ops could be different sizes — local, regional, or national. NYC might have several, while parts of North and South Dakota could team up to offer one.

* Under this scenario, every state would be required to have at least one co-op option.

Michael F. Cannon at Cato:

The definition of a cooperative is a health plan governed by its enrollees. Since a government chartered co-op won’t have any enrollees at first, it will be governed like any other government program. So when the Obama administration and congressional Democrats say, “We’re going to create a co-op,” what they mean is, “We’re going to create a new government health program but we will turn it over to the members in five years. We promise.”

Ezra Klein:

You could imagine a co-op proposal that actually offered a meaningful alternative to private insurers. Some months ago, Conrad, alongside public plan supporter Chuck Schumer, seemed to be edging in that direction. But I haven’t heard anything similarly encouraging since then. The co-op is now a favored alternative for Republicans who don’t agree that the profit motive is a problem in health insurance and who don’t agree that single-payer or Medicare-for-All represents an appealing alternative to the current situation. Given that constituency, it’s not likely to satisfy people who have the opposite perspective on all of those questions.

As the situation stands, there’s no existing model for co-ops to follow and no policy specifics on Conrad’s idea, so it’s impossible to say whether, or how, they will work. I could imagine very good co-ops or totally useless ones. But given the political forces arrayed around the issue, I think that’s sort of the wrong question. The idea works if it somehow solves the political problem that birthed it.

Philip Klein at American Spectator:

Free market advocates see it as a government-run plan by another name, while liberals view it as a toothless cop out. The co-op idea is the result of a typical Washington dealmaking culture that tries to split the difference in any policy dispute, but it simply does not have a constituency outside of the Finance Committee of the U.S. Senate.

Robert Reich:

Senator Kent Conrad’s ersatz public option — his regional “cooperatives” — won’t have the scale or authority to do what a public option would do. That’s why some Republicans say they could buy it. What’s Conrad’s response? “The fact of the matter is there are not the votes in the United States Senate for a public option. There never have been,” he tells “FOX News Sunday.” Conrad is wrong. If Obama tells Senate Democrats he will not sign a healthcare reform bill without a public option, there will be enough votes in the United States Senate for a public option.

Dafydd ab Hugh at Hot Air:

Co-ops already enjoy the heavy advantage of not having to show a profit; the way that private companies compete is by offering a wider range of plans, so that the co-op becomes the insurer of last resort… not the insurer of first resort. If they are turned into de facto conduits for full federal funding, they will be every bit as bad as the government option.

In fact, they may even be worse; the co-ops will have the forged “nihil obstat” of the free market. When things deteriorate rather than improve, Capitalism will be blamed — leading to anti-market hysteria and even more repressive statism.

Chris Good at The Atlantic:

The RNC forwarded a press release/research memo to reporters today claiming that a “‘public option’ by any other name is still government health care.” But does it smell as sweet? Probably not to supporters of a true public option, and it was perhaps out of a desire to alleviate those concerns (and pose a future co-op passage as a White House victory) that Reid deemed co-ops as “some type of public option” in early July–a quote the RNC references prominently.

Neither of them are really right: co-ops would get started with government loans and grants, and the government would come up with the regulations, but they’d be owned by customers. Problem is, it’s hard to say it’s the same as government-run health care without Republicans coming back at you and saying…the same thing.

Reid’s comment was sort of offhand in its phrasing–“call it ‘co-op,’ call it what you want”–but it’s become fodder in the health debate nonetheless.

UPDATE: John Cole

Steve Benen

Mark Thoma

UPDATE #2: Reihan Salam at National Review

David Frum at New Majority

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The Public Option, My Friend, Is Blowing In The Wind

Does Obama support a public plan or not? And is a public plan in the cards?

Paul Krugman

Ezra Klein

At the press conference that finished up a few minutes ago, President Obama fielded a slew of questions on health care in general and the public plan in particular. For supporters of the initiative, his answers were encouraging.

There were two ways he could have responded to the press corps’ queries. The first would be a procedural reply: “All ideas are on the table,” or something of that nature. But that wasn’t his approach. Instead, he defended the plan’s substantive merits. His answer was, in other words, an effort at persuasion rather than diversion. The implication was that he, at the least, is genuinely convinced by the case for a public insurer.

Matthew Yglesias

Meanwhile, Ryan Grim reports that Chuck Schumer and Kent Conrad are working to blur the differences between a “public option” and a “co-op.” Ezra Klein says the compromise they’re looking at would basically amount to a public option. Under the circumstances, I think this would be a good moment for the President and leaders in the House of Representatives to step up their advocacy of a public option and criticism of the co-op concept. The way the Senate works, at least as I understand it, is that a certain number of Senators there are very in love with a “centrist” self-presentation and will insist on acquiring some kind of “major concession” from liberals before voting for a bill. The question then become, what kind of “major concession” is, in fact, minor.

But wait…

Paul Krugman again:

Really bad news on the health care front. After making the case for a public option, and doing it very well, Obama said this:

“We have not drawn lines in the sand other than that reform has to control costs and that it has to provide relief to people who don’t have health insurance or are underinsured,” Mr. Obama said. “Those are the broad parameters that we’ve discussed.”

There he goes again, gratuitously making a big gift to the other side.

My big fear about Obama has always been not that he doesn’t understand the issues, but that his urge to compromise — his vision of himself as a politician who transcends the old partisan divisions — will lead him to negotiate with himself, and give away far too much. He did that on the stimulus bill, where he offered an inadequate plan in order to win bipartisan support, then got nothing in return — and was forced to reduce the plan further so that Susan Collins could claim her pound of flesh.

And what’s going on beyond that?

James C. Capretta at The Corner:

Every bill now being drafted in Congress would establish a “pay or play”-type choice for employers: Employers must either offer government-approved coverage to workers (“play”) or pay a tax to the government instead to partially cover the costs of their premiums for insurance secured through a new “exchange” system. For years, Democrats have argued that this construct would ensure that reform “builds upon” the employer-based insurance system. But, in fact, the Democratic approach to reform would have exactly the opposite effect. Employers would get burdened with new costs and insurance requirements, even as the government used price controls to offer a government-run insurance option with artificially low premiums and provided new subsidies for coverage only for workers getting insurance through the “exchange.” That’s a recipe for dismantling job-based insurance. The Lewin Group has estimated that, assuming certain plausible specifications, some 119 million people would end up leaving job-based coverage for a government-run plan as employers opted to “pay” rather than “play.”

Faced with incontrovertible evidence that he and his allies have no intention or ability to fulfill their commitment to Americans regarding their current coverage, President Obama decided today at his press conference to try to redefine the promise. What he meant, he now says, is that the government wouldn’t force people out of their health-care plan. If tens of millions of people get pushed out of their current coverage, it would be because firms chose to drop their insurance plans — never mind the fact that they would do so based on the financial incentives the government put in place.

Ezra Klein:

I don’t think there’s anything surprising in there. A solid majority support the public plan in theory. If you say it’ll drive their other insurance options out of business, they turn against it. But imagine you had asked that question the opposite way. The reason private insurers would have been driven out of business, after all, is because the public plan would offer much lower premiums. If you asked poll respondents, “What if having the public plan lowered your insurance premiums by 20 to 30 percent,” my hunch is you’d see a sharp shift toward support of the policy.

And that’s not, it should be said, an idle thought about polling. In the long term, the fortunes of Democrats will be decided by whether people like health reform after it passes. If the program is a huge success, if costs go down and coverage shoots up, then that will do much to bind voters to Democrats. (This was the argument that Newt Gingrich and Bill Kristol made in 1994, and they were probably right about it.) If it’s considered a flop, or simply an uneven success, there will be little long-term gain from passing the policy and potentially even some long-term harm.

Jennifer Rubin in Commentary:

All the talk that Obama had built a coalition — everyone was “in the tent” — and that the hapless Republicans were miles behind in the PR war, has proven illusory. Like the Wicked Witch of the West doused with water, healthcare reform — or at least the liberal version of it — has melted with the introduction of a few key facts: the CBO cost estimate, the aversion to a public option plan, the need for massive taxes to pay for it, and a queasy sense that the president’s popularity is fleeting and hasn’t convinced the public that bigger government is the way to go.

Robert Reich in WSJ:

Critics say the public option is really a Trojan horse for a government takeover of all of health insurance. But nothing could be further from the truth. It’s an option. No one has to choose it. Individuals and families will merely be invited to compare costs and outcomes. Presumably they will choose the public plan only if it offers them and their families the best deal — more and better health care for less.

Private insurers say a public option would have an unfair advantage in achieving this goal. Being the one public plan, it will have large economies of scale that will enable it to negotiate more favorable terms with pharmaceutical companies and other providers. But why, exactly, is this unfair? Isn’t the whole point of cost containment to provide the public with health care on more favorable terms? If the public plan negotiates better terms — thereby demonstrating that drug companies and other providers can meet them — private plans could seek similar deals.

But, say the critics, the public plan starts off with an unfair advantage because it’s likely to have lower administrative costs. That may be true — Medicare’s administrative costs per enrollee are a small fraction of typical private insurance costs — but here again, why exactly is this unfair? Isn’t one of the goals of health-care cost containment to lower administrative costs? If the public option pushes private plans to trim their bureaucracies and become more efficient, that’s fine.

Peter Suderman in Reason:

In a press conference this afternoon, President Obama seemed to tacitly allow that, if health-care reform includes a government-administered “public option,” many Americans will end up on plans other than those they’re on now. Previously, Obama had argued that Americans would not be forced off their current plans, saying that they would always have a choice to stay with their current provider. He’s sticking by that story, but in the press conference today, he clarified to say that what he meant was only that the government would not directly require anyone to switch plans: “What I’m saying is the government is not going to make you change plans under health reform.”

That’s true enough. But even if the government doesn’t require you to change your plan, structural changes in the health-care system would likely move many away from their current insurance provider.

How might this happen? In some cases, it might simply mean that individuals, particularly those currently paying the entire cost of their health-care premiums, would choose to switch to the government plan because they believed it better fit their needs. In other cases, employers might decide to stop offering their current health-insurance options, preferring their employees purchase health insurance elsewhere. How often employers might choose to do this would depend on yet to be determined details of the “pay-or-play” employer mandate, which would require employers to either “play” by providing insurance to employees or “pay” by paying into a system that helps fund public health care. Right now, only two of the three notable bills making their way through Congress have an employer mandate, and on one of those, the details — such as how much employers would have to pay — are blank.

Dday:

This teachable moment has a value for those outside the system who want to push for a real public option that can use bargaining power to force competition from insurers. Because now, as Matt Yglesias says, there’s no excuse for Democrats to water down their bills in order to “seek bipartisanship” and make them durable. Republicans have revealed themselves. And given budget reconciliation and the imminent fact of 60 votes in the US Senate, Democrats have nobody else to blame. They can talk about political realities but those have essentially been voted out of existence, with respect to Republicans. Whether it’s because of health industry campaign contributions or a desire to limit competition in small, rural states, a desire to get the glory for saving policy from the brink or just an ideological disinclination, individual Senate Democrats will have the collapse of any health care reform on their hands.

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