Archive for August, 2009
“You’re Not a Representative — You’re a Bum!”
A classic health care protest:
Read about it in David Hyman’s book, Medicare Meets Mephistopheles.
Obama Channels John Ashcroft
At his town meeting in New Hampshire, President Obama urged people not to listen to those who seek to “scare and mislead the American people.” Meanwhile, his new White House website “Reality Check” — your tax dollars at work, folks, on political propaganda — warns supporters that “the road ahead will surely reveal more aggressive efforts from defenders of the status quo to confuse and scare Americans with half-truths and outright lies.”
I immediately thought of former Attorney General John Ashcroft’s notorious declaration in December 2001: “to those who scare peace-loving people with phantoms of lost liberty, my message is this: Your tactics only aid terrorists for they erode our national unity and diminish our resolve.”
Presidents and their teams don’t like criticism. They have total access to the media — primetime, nationally televised speeches and press conferences, weekly radio addresses, websites, massive party and political organizations, journalists at their beck and call. Their every passing comment is news. Their speeches dominate the headlines. They set the agenda, whether it’s the Patriot Act or health care bills. And yet they can’t abide criticism.
And when the criticism is effective, they lash out. They denounce their opponents for seeking to ”scare peace-loving people with phantoms of lost liberties” or “confuse and scare Americans with half-truths and outright lies.” (Quick: which one of those was 2001, and which was 2009?)
But the fact is that the Bush administration’s actions after 9/11 really did result in a loss of liberty, and the Obama administration’s plans for our health care really should scare Americans. And libertarians have been, and will continue to be, in the forefront of Americans resisting intrusions on liberty by administrations from both parties. They won’t be dissuaded by Nixonian claims that dissent and criticism are divisive and damaging to national unity.
The Answer to Pre-Existing Conditions Is Less Government, Not More
Today’s Wall Street Journal editorializes against the price controls that President Obama would impose on health insurance, noting that such controls have proven a disaster in the states that impose them.
The Journal offers an alternative way of covering people with high-cost conditions:
University of Chicago economist John Cochrane also argues that in a more rational individual insurance market, people could insure not merely against medical expenses but also against changes in health status. This kind of insurance would cover the risk of premiums rising as you get older and your health condition changes.
In turn, that would free insurers to compete for the business of all patients, including those with pre-existing conditions, because then they could charge enough to cover the costs—instead of passing them to others.
You can read about Cochrane’s approach in his February 2009 Cato Institute policy analysis, “Health-Status Insurance: How Markets Can Provide Health Security.”
A Reminder Why We Don’t Want Government-Controlled Health Care
While British health ministers have been quick to applaud the advantages of a “national” health system to fight the swine flu outbreak, the very centralised nature of the service cuts two ways, according to a new report.
Civitas, the think tank, blames the monolithic nature of the National Health Service for “putting the patient last”.
It argues that the “customer” of the NHS business model introduced by Tony Blair and continued by Gordon Brown is the health secretary rather than the patient.
The report sees much in favour of attempting to introduce private provision within the state system and competition between NHS trusts to attract patients. But it says that all this has been stymied by incessant interference from the Department of Health.
American health care needs “reform.” But genuine reform means putting the patient first, not last–as the president and congressional Democrats would do by dramatically expanding federal controls. Sick Americans don’t need a Doctor-in-Chief in Washington.
The Rule of Law or the Rule of a Man?
The Obama administration’s pay czar is busily making plans for America’s financial companies:
Kenneth R. Feinberg has the unprecedented task of deciding executive compensation at seven companies that received large government bailouts. His meetings with American International Group, Citigroup, Bank of America, General Motors, Chrysler, Chrysler Financial and GMAC have been conducted in secret, with neither Feinberg nor the companies willing to say much in public….
Feinberg, who has sole discretion to set compensation for the top 25 employees of each of those companies, has 60 days to make a determination after the proposals are complete. Under the administration’s initiative to curb excessive pay practices, each of the seven companies must also receive his approval for how it pays the rest of its 100 most highly compensated executives and employees. The companies must submit pay plans for these employees by Oct. 12….
During the videoconference with AIG employees, Feinberg mostly avoided giving them detailed answers to their questions. Many of the employees left frustrated because he gave them no sense of whether he would seek to modify contracts that promise them upcoming bonuses, said people familiar with the session….
Senior Treasury Department officials say they do not want Feinberg to set precise prescriptions for how companies compensate employees. Instead, his task is to evaluate pay according to several principles. For instance, does an employee’s compensation reward short-term, risky business behavior? Or, on the contrary, is the compensation tied to longer-term performance goals? Does it allow the company to remain competitive and recruit top talent?
Note also: “Mr. Feinberg’s decisions won’t be subject to appeal.”
Classical liberals often talk about “the rule of law, not the rule of men.” This isn’t even “the rule of men,” it’s the rule of one man. Let us hope that Kenneth Feinberg is a wise, merciful, and incorruptible ruler.
NOTE: I recognize that Feinberg’s authority extends only to companies that have received large government bailouts, and there’s a certainly a case to be made that if companies take taxpayers’ money, they can darn well live with government salaries. But it’s just that kind of political intrusiveness — along with demanding that auto firms keep all their dealerships, or make “green” cars, or build their cars in this country, or whatever — that makes government-run or -dominated companies inefficient. So as Gary Becker says, it’s a “fatal conceit” to assume that Kenneth Feinberg knows better than the market how much top talent should be paid. And some of the people who support the idea of a “pay czar” want his authority to extend beyond the government-supported companies.
No Consensus on Stimulus
Following up on Chris Edwards’ comments, Alan Blinder of Princeton writes in the Washington Post that the stimulus is working and “we need to stay the course.”
But Casey Mulligan of the University of Chicago writes in the New York Post that 90 percent of the stimulus money hasn’t been spent yet, so we could still stop it before it does too much harm:
The best case scenario for the stimulus law gives us results that are miniscule compared with the costs. In the worst case scenario, we actually pay money to further harm an already struggling economy….
It would have been designed better if money had stayed with the taxpayers instead of funneling through dozens of federal agencies — an option that is still available. Otherwise, we are looking at heavy taxes — and further economic damage — down the road to pay for all the borrowing.
Mulligan wrote earlier in the New York Times that “The economy has gotten worse than the Obama administration had predicted it would be even if Congress had spent nothing on ‘fiscal stimulus.’” Mulligan provides more details at his blog stopthefiscalstimulus.com.
Meanwhile, Mario Rizzo of New York University asks
what is the mechanism by which about $70 billion in extra spending (this is the amount of the total stimulus package now spent) reduces the rate of increase in unemployment and reduces the rate of decrease in output in a $14 trillion economy? If my advanced arithmetic is correct this is ½ of 1 percent of the GDP. What kind of Super Multiplier is that?
He goes on to point out that unemployment is now higher than the administration predicted just a few months ago it would be if we didn’t pass the stimulus. So how can we believe today’s econometric claims about the good effects of the so-called stimulus?
Is the Stimulus Working?
Niall Ferguson argues in the Financial Times today that Obama’s “stimulus bill has clearly made a significant contribution to stabilising the US economy.”
How does he know that? We can observe the economic data since the passage of the stimulus, but we don’t know what would have happened without it. The U.S. economy has been in a recession a long time, and so a self-generated recovery is long overdue anyway.
Ferguson favorably observes “without the jump in goverment spending, GDP would still be in a nosedive.” But how does it help the average family if GDP is a little higher than it otherwise would have been only because the government component of GDP is larger? Indeed, government expansions usually cause private sector contractions.
Let’s look at a chart of quarterly GDP data.
Three of the four main components of GDP are shown (net exports are excluded).
- Consumption is down from 2008.
- Government is up very slightly.
- Private investment is plunging. The 2009 2nd quarter value of $1.6 trillion is down sharply from the average quarter in 2008 of $2.1 trillion and the average quarter in 2007 of $2.3 trillion (This is annualized data).
So the stimulus might be said to be “working” by keeping government fat while productive private investment falls off a cliff.
But is that what Americans really want in an economic recovery? Do we want an economy that ”recovers” with a bigger government workforce and a smaller private workforce? Do we want a ”recovery” where the government directs more of the nation’s investment and private businesses less of it? It certainly doesn’t sound like a prescription for long-term growth to me.
Data note: the measure of “government” here is government production as a share of GDP, not total government spending, which includes transfers and has been soaring recently.
Randal O’Toole Assaults Myths of Suburbia
Urban planners want to shape our cities. And they want our cities to shape you. That’s the conclusion of Cato Institute Senior Fellow Randal O’Toole. He argues that the rationales for most urban planning collapses upon examination.
O’Toole — author of the forthcoming Cato book Gridlock — spoke at Cato University at Rancho Bernardo, California.
All Hail the Demise of a Bad Policy!
Well, not actually. Instead, the Washington Post‘s headline says “U.S. Web-Tracking Plan Stirs Privacy Fears.” The story is about the reversal of an ill-conceived policy adopted nine years ago to limit the use of cookies on federal Web sites.
A cookie is a short string of text that a server sends a browser when the browser accesses a Web page. Cookies allow servers to recognize returning users so they can serve up customized, relevant content, including tailored ads. Think of a cookie as an eyeball – who do you want to be able to see that you visited a Web site?
Your browser lets you control what happens with the cookies offered by the sites you visit. You can issue a blanket refusal of all cookies, you can accept all cookies, and you can decide which cookies to accept based on who is offering them. Here’s how:
- Internet Explorer: Tools > Internet Options > “Privacy” tab > “Advanced” button: Select “Override automatic cookie handling” and choose among the options, then hit “OK,” and next “Apply.”
I recommend accepting first-party cookies – offered by the sites you visit – and blocking third-party cookies – offered by the content embedded in those sites, like ad networks. Or ask to be prompted about third-party cookies just to see how many there are on the sites you visit. If you want to block or allow specific sites, select the “Sites” button to do so. If you selected “Prompt” in cookie handling, your choices will populate the “Sites” list.
- Firefox: Tools > Options > “Privacy” tab: In the “cookies” box, choose among the options, then hit “OK.”
I recommend checking “Accept cookies from sites” and leaving unchecked “Accept third party cookies.” Click the “Exceptions” button to give site-by-site instructions.
Because you can control cookies, a government regulation restricting cookies is needless nannying. It may marginally protect you from government tracking – they have plenty of other methods, both legitimate and illegitimate – but it won’t protect you from tracking by others, including entities who may share data with the government.
The answer to the cookie problem is personal responsibility. Did you skip over the instructions above? The nation’s cookie problem is your fault.
If society lacks awareness of cookies, Microsoft (Internet Explorer), the Mozilla Foundation (Firefox), and producers of other browsers (Apple/Safari, Google/Chrome) might consider building cookie education into new browser downloads and updates. Perhaps they should set privacy-protective defaults. That’s all up to the community of Internet users, publishers, and programmers to decide, using their influence in the marketplace.
Artificially restricting cookies on federal Web sites needlessly hamstrings federal Web sites. When the policy was instituted it threatened to set a precedent for broader regulation of cookie use on the Web. Hopefully, the debate about whether to regulate cookies is over, but further ‘Net nannying is a constant offering of the federal government (and other elitists).
By moving away from the stultifying limitation on federal cookies, the federal government acknowledges that American grown-ups can and should look out for their own privacy.
Things Grow Worse So Fast These Days
This morning, Forbes.com posted an op-ed I wrote on the Student Aid and Fiscal Responsbility Act (SAFRA). It lays out a lot of the problems with this horrible bill, but given the blistering pace at which Congress is trying to blow stuff by the public, op-eds can’t be written and posted quickly enough to keep up with all the latest news. Indeed, congressional leaders are moving so fast their own budget office can’t keep up.
In my op-ed, I offer the following warning about the likely, true impact of the bill, which supporters say won’t end up costing a new dime thanks to $87 billion in savings to be achieved by ending federal guaranteed student lending and going completely to direct lending:
Finally, roughly $10 billion is supposed to go toward reducing the federal government’s deficit, a ludicrously small figure considering that it recently surpassed $1 trillion for fiscal year 2009 and the SAFRA bill supposedly creates savings without causing current beneficiaries any pain. If all the proclaimed savings don’t appear, the last two words in ‘Student Aid and Fiscal Responsibility’ become an even bigger joke.
Well, reading the bill, and then taking in two CBO analyses of it released after the House Education and Labor Committee passed it, shows that the latter half of the bill’s title really is laughable.
First off, the bill doesn’t say one word about reserving bucks for deficit reduction.
Next, looking at the first CBO estimate released after Education and Labor passed the bill, it’s clear that once one considers all the new spending in it, SAFRA will cost taxpayers many additional ducats. While the bill is expected to save a net $7.8 billion in direct spending over ten years, it’s expected to cost $13.5 billion in additional appropriated funding, such as administrative costs, for a net new cost to taxpayers of $5.7 billion. And that’s not all….
In a letter to Senator Judd Gregg (R-NH) written a few days after the official cost estimate, the CBO said that had its estimate fully accounted for additional risk to the government of doing all direct lending, the projected savings would have been about $33 billion lower than projected. Add that greatly reduced savings to the net costs in the previous estimate, and suddenly a bill being touted as a deficit reducer is a deficit grower, to the estimated tune of almost $40 billion!
Of course, those probably won’t be the final numbers, so there will no doubt be more news on this bill to come.
A Transparency Reality Check
David Axelrod, senior adviser to President Obama, emailed me yesterday (along with perhaps several million others) to tell me about a new effort on Whitehouse.gov to dispel “rumors and scare tactics” from people opposing even more government regulation of the health sector. I think the opponents of expanded regulation have the better arguments on the merits.
I was struck, though, by the effort that has gone into creating an entirely new section of Whitehouse.gov for a “Health Insurance Reform Reality Check,” complete with fancy graphics and videos. (I have modified one of those graphics to illustrate this post. Fun!) Meanwhile, the White House still hasn’t brought itself to do something that President Obama promised on the campaign trail: post bills online for five days before signing them.
Since I last updated the chart, President Obama has signed seven more bills. None of them were posted online for five days, though two were held at the White House for that long before they got the president’s signature.
It’s the president’s prerogative to use Whitehouse.gov for PR, of course. The site and the PR on it would have more legitimacy, though, if it were also a basic resource for information about the legislative business the president conducts — as he promised.
Because the White House has established no uniform location for posting bills, there’s always a chance that I missed postings. I welcome corrections.
In my search for posted bills I did find this blog post, which says “The President believes that a piece of legislation as important as the Recovery Act must be implemented with an unprecedented degree of transparency.” But as you can see below, he denied the public a chance to review the Recovery Act as he promised, making it Public Law 111-5 within a day of its presentment.
Read the rest of this post »
Another Indictment of the Bush-Obama Years
Here’s a depressing little blurb from the New York Times about the disparity between anemic job growth in the private sector and rising payrolls in the bureaucracy.
For the first time since the Depression, the American economy has added virtually no jobs in the private sector over a 10-year period. The total number of jobs has grown a bit, but that is only because of government hiring. …For the decade, there was a net gain of 121,000 private sector jobs, according to the survey of employers conducted each month by the Bureau of Labor Statistics. In an economy with 109 million such jobs, that indicated an annual growth rate for the 10 years of 0.01 percent.
At some point, of course, the rising number of people dependent on government will overwhelm the shrinking number of people producing real wealth in the private sector. Nations such as France and Italy may be perilously close to that tipping point. Yet since politicians rarely think beyond the next election cycle, they have little incentive to arrest the downward slide. Instead, as the current health care debate demonstrates, they seek to add more fuel to the dependency fire.
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