Archive for March, 2009
More Cheap Money from the Fed
The Federal Reserve announced that it would create $1.2 trillion out of thin air and use it to buy mortgage-backed securities and Treasury bonds, even though
Some Fed leaders have resisted buying Treasurys in the past because they were unsure whether it would help reduce borrowing costs and because they feared that it would appear that the central bank was simply printing money to finance the government’s deficit, a hallmark of countries with poorly managed economies.
Obama’s First Signing Statement
President Obama issued his first signing statement last week. While approving the $410 billion omnibus appropriations bill, he reserved the right to reinterpret, evade, or ignore a number of the bill’s provisions. To some conservatives, that smelled like vindication; and some liberals found it fishy. Who’s right? Both, to some extent.
During the Bush years, “signing statements” came to stand for a much broader set of issues than the practice itself. After President Bush used one to basically announce that, veto-proof majority or no, he didn’t have to follow the McCain Detainee Treatment Act, “signing statements” in the public mind became shorthand for the Bush theory that the president is sole constitutional “decider” on all matters related to national security—in much the same way that the PATRIOT Act became shorthand for overzealousness in homeland security. The obnoxiousness of each—open defiance in the signing statement case, the dopey Orwellianism of the acronym with PATRIOT—made them symbols, even though neither represented the worst abuses in the fight against terrorism.
But what really matters is the underlying constitutional theory, not the particular quasi-legislative device it’s reflected in. Which is worse: openly announcing that you’re not going to obey new congressional restrictions on torture—as Bush did with the 2006 McCain Amendment—or secretly violating the old ones for years? The latter, clearly. At least a signing statement puts you on notice.
On the campaign trail in 2008, Obama, unlike McCain, never promised to end the practice of signing statements entirely. Obama’s position was more nuanced. When it comes to signing statements, some nuance is appropriate. I don’t agree with the ABA’s blanket condemnation of the practice. As the Congressional Research Service has pointed out, despite the Supreme Court’s 1983 repudiation of the legislative veto, Congress continues to smuggle legislative vetoes into omnibus spending bills. One could argue that the president’s only recourse is to veto the bill–and more vetoes of spending bills would surely be welcome. But it seems to me that in such cases, issuing a signing statement is a venial sin at worst. There’s a vast difference between that sort of signing statement and one that asserts that the president cannot be bound by a law barring torture.
Most of the objections Obama lodged in his signing statement fall well short of the Bush-Cheney end of the spectrum. But there’s at least one that looks particularly dodgy:
Third-World Accommodations
In the 2003 film The Barbarian Invasions, a patient’s wealthy son offers a handsome bribe to the administrator of a decrepit, chaotic, state-run hospital in Montreal that is (mis)treating his dying father. “This is silly,” the startled administrator exclaims. “We’re not in the Third World.”
Britain’s health-care system is perhaps slightly less state-dominated than Canada’s. Yet today comes the following report:
The British government apologised Wednesday after a damning official report into a hospital likened by one patient’s relative to “a Third World” health centre…
Between 400 and 1,200 more people died than would have been expected in a three-year period at the National Health Service (NHS) hospital, according to an investigation by the Healthcare Commission watchdog.
Receptionists with no medical training were left to to assess patients arriving at the hospital’s accident and emergency department, the report found.
Julie Bailey, whose 86-year-old mother Bella died in the hospital in November 2007, said she and other family members slept in a chair at her bedside for eight weeks because they were so concerned about poor care.
“What we saw in those eight weeks will haunt us for the rest of our lives,” said the 47-year-old. “We saw patients drinking out of flower vases they were so thirsty.
“There were patients wandering around the hospital and patients fighting. It was continuous through the night. Patients were screaming out in pain because you just could not get pain relief.
“It was like a Third World country hospital. It was an absolute disgrace.”
The politicians quoted in the story promised, again, that, you know, they would improve things.
The Incredible Expanding Stimulus Programs
Get on a media list, and you get lots of emailed press releases. Like this one today:
APPLIANCE AND RETAIL INDUSTRY URGE QUICK ACTION ON CONSUMER REBATE PROGRAM FOR APPLIANCES
In case you’re wondering, it’s from the Association of Home Appliance Measures (AHAM). And it won’t surprise you to hear that “The Association of Home Appliance Manufacturers (AHAM) and the Retail Industry Leaders Association (RILA) urge the U.S. Department of Energy (DOE) to quickly disburse funding to state energy offices for the Energy Efficient Appliance Rebate Programs so that consumer rebates will be available for the summer months to purchase ENERGY STAR appliances.” Yes, indeed, that’s the way to get the economy moving again: get people out there buying new appliances.
You know what I think would really stimulate the economy? Federal tax credits for contributions to free-market think tanks. Nonprofits are facing diminished revenues and layoffs during these tough times. A tax credit would “create or save up to 4 million jobs.” OK, maybe not quite 4 million, but some number “up to” that. And by focusing the credit on free-market think tanks, you’d help to encourage sound long-term economic policy. It’s a win-win idea. I should get out a press release.
Wednesday Podcast: ‘The Science of Medical Marijuana’
Speaking at a Cato forum Tuesday, Dr. Donald Abrams, director of Clinical Programs at the University of California Osher Center for Integrative Medicine, discussed the science behind medicinal marijuana, and explained why the drug should be allowed for patients who suffer from a variety of symptoms.
After the event, Abrams spoke with Caleb Brown for Wednesday’s Cato Daily Podcast, explaining the promise of marijuana as medicine:
One of the reasons I am in favor of people using the plant is because… we no longer have a health care system in the United States, we have a disease management system, and it is very expensive largely due to pharmaceuticals. If there is a plant that is a medicine that people can grow for themselves in their own backyard then I think we can really go a long way to decrease some of the costs of health care. But if we are saying that a physician is going to be able to prescribe this entity to a patient then unfortunately, or fortunately depending on how you look at it, it does need to be regulated or approved and the only way to do that is through the standard route.
Too Much Hysteria about Trade
The World Bank issued a press release on Tuesday announcing the results of a study published March 2, which concludes that 17 of the 20 so-called G-20 countries have invoked at least some protectionist measures since pledging last November to avoid protectionism for at least one year.
Of course the Washington Post—which now specializes in printing run-of-the-mill stories about trade that rarely come close to justifying the sensational headlines, provocative subheads, or gripping leads — jumped all over the report as evidence that: “Trade Barriers Could Threaten Global Economy: World Bank Finds Protectionist Trend.”
Well, we all know that trade barriers do threaten the global economy — in times of economic expansion and contraction. But most of the measures cited in the report are not particularly spectacular or unusual from a trade perspective. For better or worse, most WTO member countries do have some latitude to raise trade barriers — sometimes unconditionally. But also, in any given year, governments institute policies that happen to have adverse affects on trade (even if the measure wasn’t intended to be protectionist).
Sometimes aggrieved interests in affected countries prevail upon their governments to protest or otherwise seek resolution. And more often than not, under those circumstances, resolution is achieved. But sometimes, a protectionist measure doesn’t even provoke any kind of protest. So, quantifying protectionist measures is one thing, but qualifying them is quite another, more important exercise, if one is interested in making judgments about protectionist trends.
Matt Yglesias on School Choice in Sweden
Following up on Dana Goldstein’s American Prospect blog post, Matt Yglesias calls the Swedish system and U.S. charter schools better education policy models than education tax credits.
He doesn’t say why, and I’d be interested to hear his reasoning. As I documented on Cato-at-Liberty in response to Goldstein, the econometric evidence shows that the greatest margin of superiority over state-run schooling is enjoyed by truly market-like education systems. By that I mean systems that are minimally regulated with respect to content, staffing, prices, etc., and which are funded at least in part directly by the families they serve.
Yglesias also claims that choice supporters want to “eliminate public education.” On the contrary, choice supporters are fundamentally more committed to public education than anyone who refuses to consider the market alternative.
“Public Education” is a set of ideals. It is not a particular institution. It is the ideal that all children should have access to a good education, regardless of family income; that schools should prepare students not just for success in private life but for participation in public life; and that our schools should foster harmonious relations among the various groups making up our pluralistic society — or at the very least not create unnecessary tensions among them.
School choice advocates are more committed to those ideals than is anyone wedded to the current district-based school system, because that system is inferior in all of the above respects to a universally accessible education marketplace. This is documented in the literature review linked-to above, in my book Market Education: The Unknown History, and in the work of James Tooley, E.G. West, my Cato colleagues, and many others.
The education tax credit programs my colleagues and I have proposed would ensure universal access to the education marketplace, while leaving essentially intact the freedoms and incentives responsible for the market’s success. I know of no other policy capable of achieving this. Certainly charter schools and the Swedish system fail to do it.
Who Owns Cybersecurity?
There is a government brawl underway over cybersecurity.
The Department of Homeland Security’s National Cyber Security Center (NCSC) is legally responsible for cybersecurity for nonmilitary parts of the government. It is also supposed to help state and local government and the private sector protect their networks. But Shaun Waterman reports that the guy running that center just quit because the National Security Agency (the wiretapping intelligence agency) was basically running his office and taking over its function.
According to Walter Pincus’ article in today’s Washington Post, Strategic Command (the nuclear weapons command) is in charge of offensive cyber attacks and defending US military networks from cyberattack. But the NSA oversees Stratcom’s cybersecurity activities, somehow or other.
The White House is conducting a 60-day cybersecurity review, which is being led by an official in the office of Admiral Dennis Blair, Director of National Intelligence. Blair wants a bigger role for U.S. intelligence agencies in cybersecurity. Presumably that means the NSA, which employs some of the nation’s leading cryptographers. Meanwhile, Obama is likely to give General Keith Alexander, head of NSA, his fourth star and make him the White House’s cybersecurity coordinator (aka, the cyberczar).
So it sounds like the review may be moot — the decks are stacked for the NSA to take over. The Federal Times, however, reports that Congress may upset those plans. Congressmen on the homeland security committee still want DHS in the lead.
What about private networks? The White House Review will address that too. Alexander has said that the NSA should play a role. But right now, according to most people, it’s DHS’s job. Pincus writes, “Responsibility of protecting civilian networks currently rests with the Department of Homeland Security.”
I would have thought it rests with the network operators. Missing in this debate, from what I can tell, is any attempt to outline what public goods are at play. Clearly, the federal government should defend its own networks. (Whether it should do so through the leadership of agency recently engaged in vast illegal activity is less clear.) The feds should probably also collect intelligence about cyberattacks, make it available to the public and pursue perpetrators. But providing security to private entities, through technology transfers or consultation, seems akin to providing locks to homeowners. That may be too simple — and the relevant distinction may be whether we are talking about state or non-state threats — but it’s something that the review should consider.
Here’s more on the great cybersecurity freakout.
The Hazards of Expanding the War into Pakistan
This morning, The New York Times reported that the Obama administration may expand the war in Afghanistan deeper into Pakistan in order to target Taliban safe havens in Balochistan.
The war would have a very different character if the Pashtun and Balochi areas of western Pakistan did not act as de facto sanctuaries for the leadership of al Qaeda and the Taliban. As I’ve written before, NATO’s stalemate will continue so long as Pakistan is unable — or unwilling — to uproot militant sanctuaries.
But I’ve also argued about the hazards of the United States using unmanned aerial drones to strike targets within Pakistan. These aerial strikes lead to collateral damage that undermines the authority of sitting Pakistani leaders, fuels violent religious extremism in a nuclear-armed Muslim-majority country and exacerbates anti-American sentiment even among the more moderate elements of the country.
U.S. policy in this region is beyond complicated. It’s a complete mess. Right now, more than three-quarters of provisions for U.S. and NATO troops must travel through Pakistan’s worsening security conditions to make it into land-locked Afghanistan. But after previous U.S. aerial drone strikes within Pakistan, leaders in Islamabad have more than once closed their main supply route.
As I argue in a forthcoming Cato policy analysis,
Our dependence on [Pakistan] constrains the usefulness of their support… To make matters worse, Washington’s diminished leverage over Pakistan means that elements of its military and intelligence service will continue to take advantage of America’s dependence by failing to tackle terrorism more vigorously.
Other routes for the Afghanistan mission are currently being considered, but the leaders of these countries bring their own problems, as other scholars have written both here and here.
For the foreseeable future, the war in Afghanistan will remain hostage to events inside Pakistan. And sadly, Washington’s attempts to stabilize Afghanistan will likely continue to destabilize Pakistan.
To Reform Health Care, Obama Must First Convince His Advisers
In The New Republic, Jonathan Cohn makes some interesting observations about how Barack Obama’s campaign and administration approach policy issues, particularly health care.
In early January, most of Barack Obama’s senior staff assembled with the president-elect . . . It was a pivotal moment in Obama’s transformation from candidate to commander-in-chief. Obama’s advisers had taken all of his campaign pledges, factored in his promise to reduce the deficit, and put together a provisional blueprint for governing. For the first time, Obama would get a sense of how his proposals fit together in the real world.
Does Cohn suggest that candidate Obama just threw out proposals without considering their cumulative, real-world impact? That Obama launched a new administration with insufficient planning?? Perish the thought.
Obama . . . said he was mostly happy with what his advisers had produced. Investments in energy and education, plus real progress on reducing the deficit–it was all in there, Obama noted. But then the president-elect turned to his one major concern: a key item that was not, in his opinion, sufficiently funded. “Here’s my guidance to you,” one participant recalls Obama saying to the group. “Protect health care.”
It wasn’t the first time that health care had seemed to get short shrift from Obama’s advisers. Nor would it be the last. Indeed, there were moments during the transition and the early weeks of the administration when it appeared that the push for comprehensive health care reform might collapse before it had even begun. During this time, a debate raged inside the administration, with some senior officials arguing that the new president should wade into health care gingerly–or even postpone it altogether–because it would cost too much, distract from other priorities, and carry huge political risks.
Ultimately, however, these arguments failed to carry the day, and health care reform, against what occasionally seemed like long odds, managed to find a sizeable place in Obama’s budget…
The divide among Obama’s counselors was never over whether to pursue health care reform or even what it should look like in the end . . . What divided Obama’s team was the question of how to pursue reform–in particular, how quickly.
That tension stretched back to the campaign, when Obama’s political strategists advised him to soft-pedal the topic. One of them was David Axelrod. Although personally acquainted with the flaws in our health care system because of his disabled daughter, he also understood public opinion: The middle-class voters whose support politicians covet were worried about the cost of insurance, but their enthusiasm for universal coverage seemed shallow. Obama, though, always insisted on keeping health care prominent in the election.
Why so much dissension in the ranks? Partly because the nation faces much more immediate problems.
Axelrod’s anxiety hadn’t dissipated since the election. And now he had a new ally in Larry Summers, whom Obama had appointed to head the National Economic Council. One concern for Summers was the diversion of presidential and staff attention from other issues, like the economy.
But the dissension is also because Obama’s advisers understand just how difficult it will be to achieve universal coverage.
Mostly, though, Summers worried about money. Experts generally believe it will take years before better use of information technology, more preventive care, and other reforms start to yield serious savings. At least in the short run, health care reform is therefore likely to add to the government’s financial burden–during a time of rising deficits. This made Summers uncomfortable.
How bad was the dissension?
Particularly in Obama’s absence, the voices of the skeptics often predominated. “It was scaring the hell out of the rest of us,” says one of the advisers who favored more aggressive action.
Ultimately, Obama insisted on putting $634 billion in his budget to fund health care reform. But Cohn acknowledges that Obama may be over-reaching.
At a time when the economy is collapsing, perhaps Obama can’t afford the distraction of such a major policy effort; at a time when the government is pumping out so much money for other priorities, perhaps it’s foolish to incur a new obligation that, if carried out by the book, still may not pay for itself in under ten years. And, even if it makes sense to seek health care reform this year, Obama’s decision to allocate health care money now could make the budget tougher to pass–inviting an extra political fight that might make reform even harder to achieve.
Nice thing about Cohn: he may be a high priest in the Church of Universal Coverage. But he’s a darned good journalist.
An Eminent Domain Injustice
“My name is Susette Kelo, and the government stole my home.”
That was how former New London, Connecticut resident Susette Kelo, who lost her home in one of the most troubling legal battles against eminent domain abuse, began her talk at the Cato Institute in January.
The court ruled that Susette Kelo’s little pink house in New London, and the homes of her neighbors could be taken by the government and given over to a private developer based on the mere prospect that the new use for her property could generate more taxes or jobs.
At this time, the property is still empty.
In this new mini-documentary produced by Austin Bragg and Caleb Brown, those who fought on Kelo’s behalf tell her story.
For an in depth look at Kelo’s case, read Little Pink House: A True Story of Defiance and Courage by Jeff Benedict.
For more videos like this one, subscribe to Cato’s YouTube channel.
More Reasons Not to Nationalize Health Care
Advocates of a government takeover of the health care system routinely offer up horror stories of American medicine, and no system yet has found a way around the problem of human imperfection, especially when operating in a system with such distorted incentives–most from ill-considered government policies. Yet the horror stories in nationalized health care systems are manifold and tend to be more intractable since they result from government policy.
For instance, consider the quality of care delivered by hospitals in one region in Great Britain (with a hat-tip to Philip Klein of the American Spectator for finding this story). According to the Daily Telegraph:
Sir Ian Kennedy, chairman of the Healthcare Commission, said the report is a ‘shocking story’ and that there were failures at almost every stage of care of emergency patients. “There is no doubt that patients will have suffered and some of them will have died as a result,” he said.
The investigation of the trust now called the Mid-Staffordshire NHS Foundation Trust, found overstretched and poorly trained nurses who turned off equipment because they did not know how to work it, newly qualified doctors left to care for patients recovering from surgery at night, patients left for hours in soiled bedclothes, reception staff expected to judge how seriousness of patients arriving at A&E, patients left without food or drink, others who received the wrong medication or none at all, blood and faeces left on lavatories and floors, and doctors diverted away from seriously ill patients in order to treat minor ones who were in danger of breaching the four hour waiting time target.
When high mortality rates triggered questions, the trust board of directors ‘fobbed off’ investigators by saying the rates were a result of statistical errors but the Healthcare Commission found this was not that case.
The report said there was a ‘reluctance to acknowledge or even consider that the care of patients was poor’.
The trust was more concerned with hitting targets, gaining Foundation Trust status and marketing and had ‘lost sight’ of its responsibilities for patient care, the report said.
Sir Ian said: “The resulting report is a shocking story. Our report tells a story of appalling standards of care and chaotic systems for looking after patients.”
While Britain tends to be near the bottom in terms of health care system in industrialized states, there are plenty of horror stories elsewhere. Socialism doesn’t work, whether in health care or elsewhere. As Investor’s Business Daily reminds us:
The Swedish government system is no better. It also refuses to provide some expensive medication and, inhumanely, refuses to let patients buy the drugs themselves. Why? According to a Journal of American Physicians and Surgeons article, bureaucrats believe doing so “would set a bad precedent and lead to unequal access to medicine.”
Like Canadians, Swedes are subjected to long waits. They also have denial-of-care problems that sometimes lead to death.
A reasonable person would see the record of repeated failures in government-run medicine as evidence that such a system is not sustainable. Yet every central planner thinks he or she — or his or her immediate group — is smart enough to correct the flaws of socialist programs and therefore has the moral authority to force others to participate in his experiments. It is the same thinking that will move a person to say we are the ones we’ve been waiting for.
The Obama administration seems determined to waste a lot of money “stimulating” the economy. We can replace money lost. But if the administration succeeds in nationalizing the medical system directly or indirectly, the damage may prove irreversible–and deadly.
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