Another Day, Another Tranche of Afghanistan Reading Material
Item: The Coalition for a Realistic Foreign Policy, a group of concerned scholars and authors who work on international security and U.S. foreign policy, have issued an open letter to President Obama warning him not to expand U.S. involvement in that country. (Full disclosure: I was a signatory.) The list of signatories includes many of the scholars who urged President Bush not to invade Iraq. Politico was the first to run the story: see here.
Item: Via Michael Cohen, former CIA counterterrorism honcho Paul Pillar takes to the pages of the Washington Post to think through the concept of “safe havens” in Afghanistan. His conclusion?
Among the many parallels being offered between Afghanistan and the Vietnam War, one of the most disturbing concerns inadequate examination of core assumptions. The Johnson administration was just as meticulous as the Obama administration is being in examining counterinsurgent strategies and the forces required to execute them. But most American discourse about Vietnam in the early and mid-1960s took for granted the key — and flawed — assumptions underlying the whole effort: that a loss of Vietnam would mean that other Asian countries would fall like dominoes to communism, and that a retreat from the commitment to Vietnam would gravely harm U.S. credibility.
The Obama administration and other participants in the debate about expanding the counterinsurgency effort in Afghanistan can still avoid comparable error. But this would require not merely invoking Sept. 11 and taking for granted that a haven in Afghanistan would mean the difference between repeating and not repeating that horror. It would instead mean presenting a convincing case about how such a haven would significantly increase the terrorist danger to the United States. That case has not yet been made.
Item: Michael Crowley offers a piece in the New Republic that strongly implies but doesn’t quite come out and say that President Obama should ignore the skeptics and the political risks and wade deeper into Afghanistan. The piece swallows whole the conventional wisdom narrative on Iraq–that the Surge amounted not to a combination of defining down “victory” and appeasement of Sunni tribes but rather a borderline miracle whereby Gen. Petraeus loosed his wonder-working COIN doctrine on the maelstrom of violence in that country and produced a strategic victory. Crowley then uses this narrative to frame the decision before President Obama. Still, he writes
[I]f the definition of success isn’t clear to the Obama team, the definition of defeat may be. Bush argued unabashedly that Iraq had become “the central front in the war on terror” and that withdrawing before the country had stabilized would hand Al Qaeda not only a strategic but a moral victory. Current administration officials don’t publicly articulate the same rationale when discussing Afghanistan. But former CIA official Bruce Riedel, a regional expert who led the White House’s Afghanistan-Pakistan review earlier this year, cited it at the Brookings panel held in August. “The triumph of jihadism or the jihadism of Al Qaeda and the Taliban in driving NATO out of Afghanistan would resonate throughout the Islamic World. This would be a victory on par with the destruction of the Soviet Union in the 1990s,” Riedel said. “[T]he stakes are enormous.”
Obama may have one last thing in common with Bush: personal pride. Bush was determined to prevail in Iraq because he had invaded it. And, while Obama, of course, had nothing to do with the invasion of Afghanistan, he has long supported the campaign there–including during the presidential campaign as a foil for his opposition to the Iraq war. Speaking before a group of veterans last month, Obama called Afghanistan a “war of necessity”–a phrase which politically invests him deeper in the fight. “The president has boxed himself in,” says one person who has advised the administration on military strategy. “The worst possible place to be is that our justification for being in a war is that we’re in a war.”
Lots to chew on.
Filed under: Foreign Policy and National Security; General
Mr. President, Here Is Our Answer
President Obama continues to portray the debate over health care reform as a choice between his plan for a massive government-takeover of the US healthcare system and “doing nothing.” Those who oppose his plan are said to be “obstructionist” or in favor of the status-quo. Yesterday, the President again said, “I’ve got a question for all those folks [who oppose his plan]: What are you going to do? What’s your answer? What’s your solution?”
Well, I can’t speak for all his critics, but the Cato Institute has a long record of supporting health care reform based on free-markets and competition. If the President wanted to know more he might have read my recent op-ed in the Los Angeles Times or Michael Cannon’s piece in Investors Business Daily. He could have read our book, Healthy Competition. Or he might have just gone to healthcare.cato.org and read our plan:
- Let individuals control their health care dollars, and free them to choose from a wide variety of health plans and providers.
- Move away from a health care system dominated by employer-provided health insurance. Health insurance should be personal and portable, controlled by individuals themselves rather than government or an employer. Employment-based insurance hides much of the true cost of health care to consumers, thereby encouraging over-consumption. It also limits consumer choice, since employers get final say over what type of insurance a worker will receive. It means people who don’t receive insurance through work are put at a significant and costly disadvantage. And, of course, it means that if you lose your job, you are likely to end up uninsured as well.
- Changing from employer to individual insurance requires changing the tax treatment of health insurance. The current system excludes the value of employer-provided insurance from a worker’s taxable income. However, a worker purchasing health insurance on their own must do so with after-tax dollars. This provides a significant tilt towards employer-provided insurance, which should be reversed. Workers should receive a standard deduction, a tax credit, or, better still, large Health Savings Accounts (HSAs) for the purchase of health insurance, regardless of whether they receive it through their job or purchase it on their own.
- We need to increase competition among both insurers and health providers. People should be allowed to purchase health insurance across state lines. One study estimated that that adjustment alone could cover 17 million uninsured Americans without costing taxpayers a dime.
- We also need to rethink medical licensing laws to encourage greater competition among providers. Nurse practitioners, physician assistants, midwives, and other non-physician practitioners should have far greater ability to treat patients. Doctors and other health professionals should be able to take their licenses from state to state. We should also be encouraging innovations in delivery such as medical clinics in retail outlets.
- Congress should give Medicare enrollees a voucher, let them choose any health plan on the market, and let them keep the savings if they choose an economical plan. Medicare could even give larger vouchers to the poor and sick to ensure they could afford coverage.
- The expansion of “health status insurance” would protect many of those with preexisting conditions. States may also wish to experiment with high risk pools to ensure coverage for those with high cost medical conditions.
Mr. President, the ball is back in your court.
Housing Bailouts: Lessons Not Learned
The housing boom and bust that occurred earlier in this decade resulted from efforts by Fannie Mae and Freddie Mac — the government sponsored enterprises with implicit backing from taxpayers — to extend mortgage credit to high-risk borrowers. This lending did not impose appropriate conditions on borrower income and assets, and it included loans with minimal down payments. We know how that turned out.
Did U.S. policymakers learn their lessons from this debacle and stop subsidizing mortgage lending to risky borrowers? NO. Instead, the Federal Housing Authority lept into the breach:
The FHA insures private lenders against defaults on certain home mortgages, an inducement to make such loans. Insurance from the New Deal-era agency has enabled lending to buyers who can’t make a big down payment or who want to refinance but have little equity. Most private lenders have sharply curtailed credit to those borrowers.
In the past two years, the number of loans insured by the FHA has soared and its market share reached 23% in the second quarter, up from 2.7% in 2006, according to Inside Mortgage Finance. FHA-backed loans outstanding totaled $429 billion in fiscal 2008, a number projected to hit $627 billion this year.
And what is the result of this surge in FHA insurance?
The Federal Housing Administration, hit by increasing mortgage-related losses, is in danger of seeing its reserves fall below the level demanded by Congress, according to government officials, in a development that could raise concerns about whether the agency needs a taxpayer bailout.
This is madness. Repeat after me: TANSTAAFL (There ain’t no such thing as a free lunch).
C/P Libertarianism, from A to Z
Response to Conor Clarke, Part I
Last week Conor Clarke at The Atlantic blog , apparently as part of a running argument with Jim Manzi, raised four substantive issues with my study, “What to Do About Climate Change,” that Cato published last year. Mr. Clarke deserves a response, and I apologize for not getting to this sooner. Today, I’ll address the first part of his first comment. I’ll address the rest of his comments over the next few days.
Conor Clarke:
(1) Goklany’s analysis does not extend beyond the 21st century. This is a problem for two reasons. First, climate change has no plans to close shop in 2100. Even if you believe GDP will be higher in 2100 with unfettered global warming than without, it’s not obvious that GDP would be higher in the year 2200 or 2300 or 3758. (This depends crucially on the rate of technological progress, and as Goklany’s paper acknowledges, that’s difficult to model.) Second, the possibility of “catastrophic” climate change events — those with low probability but extremely high cost — becomes real after 2100.
Response: First, I wouldn’t put too much stock in analyses purporting to extend out to the end of the 21st century, let alone beyond that, for numerous reasons, some of which are laid out on pp. 2-3 of the Cato study. As noted there, according to a paper commissioned for the Stern Review, “changes in socioeconomic systems cannot be projected semi-realistically for more than 5–10 years at a time.”
Second, regarding Mr. Clarke’s statement that, “Even if you believe GDP will be higher in 2100 with unfettered global warming than without, it’s not obvious that GDP would be higher in the year 2200 or 2300 or 3758,” I should note that the conclusion that net welfare for 2100 (measured by net GDP per capita) is not based on a belief. It follows inexorably from Stern’s own analysis.
Third, despite my skepticism of long term estimates, I have, for the sake of argument, extended the calculation to 2200. See here. Once again, I used the Stern Review’s estimates, not because I think they are particularly credible (see below), but for the sake of argument. Specifically, I assumed that losses in welfare due to climate change under the IPCC’s warmest scenario would, per the Stern Review’s 95th percentile estimate, be equivalent to 35.2 percent of GDP in 2200. [Recall that Stern’s estimates account for losses due to market impacts, non-market (i.e., environmental and public health) impacts and the risk of catastrophe, so one can’t argue that only market impacts were considered.]
The results, summarized in the following figure, indicate that even if one uses the Stern Review’s inflated impact estimates under the warmest IPCC scenario, net GDP in 2200 ought to be higher in the warmest world than in cooler worlds for both developing and industrialized countries.
Source: Indur M. Goklany, “Discounting the Future,” Regulation 32: 36-40 (Spring 2009).
The costs of climate change used to develop the above figure are, most likely, overestimated because they do not properly account for increases in future adaptive capacity consistent with the level of net economic development resulting from Stern’s own estimates (as shown in the above figure). This figure shows that even after accounting for losses in GDP per capita due to climate change – and inflating these losses — net GDP per capita in 2200 would be between 16 and 85 times higher in 2200 that it was in the baseline year (1990). No less important, Stern’s estimate of the costs of climate change neglect secular technological change that ought to occur during the 210-year period extending from the base year (1990) to 2200. In fact, as shown here, empirical data show that for most environmental indicators that have a critical effect on human well-being, technology has, over decades-long time frames reduced impacts by one or more orders of magnitude.
As a gedanken experiment, compare technology (and civilization’s adaptive capacity) in 1799 versus 2009. How credible would a projection for 2009 have been if it didn’t account for technological change from 1799 to 2009?
I should note that some people tend to dismiss the above estimates of GDP on the grounds that it is unlikely that economic development, particularly in today’s developing countries, will be as high as indicated in the figure. My response to this is that they are based on the very assumptions that drive the IPCC and the Stern Review’s emissions and climate change scenarios. So if one disbelieves the above GDP estimates, then one should also disbelieve the IPCC and the Stern Review’s projection for the future.
Fourth, even if analysis that appropriately accounted for increases in adaptive capacity had shown that in 2200 people would be worse off in the richest-but-warmest world than in cooler worlds, I wouldn’t get too excited just yet. Even assuming a 100-year lag time between the initiation of emission reductions and a reduction in global temperature because of a combination of the inertia of the climate system and the turnover time for the energy infrastructure, we don’t need to do anything drastic till after 2100 (=2200 minus 100 years), unless monitoring shows before then that matters are actually becoming worse (as opposing merely changing), in which case we should certainly mobilize our responses. [Note that change doesn’t necessarily equate to worsening. One has to show that a change would be for the worse. Unfortunately, much of the climate change literature skips this crucial step.]
In fact, waiting-and-preparing-while-we-watch (AKA watch-and-wait) makes most sense, just as it does for many problems (e.g., some cancers) where the cost of action is currently high relative to its benefit, benefits are uncertain, and technological change could relatively rapidly improve the cost-benefit ratio of controls. Within the next few decades, we should have a much better understanding of climate change and its impacts, and the cost of controls ought to decline in the future, particularly if we invest in research and development for mitigation. In the meantime we should spend our resources on solving today’s first order problems – and climate change simply doesn’t make that list, as shown by the only exercises that have ever bothered to compare the importance of climate change relative to other global problems. See here and here. As is shown in the Cato paper (and elsewhere), this also ought to reduce vulnerability and increase resiliency to climate change.
In the next installment, I’ll address the second point in Mr. Clarke’s first point, namely, the fear that “the possibility of ‘catastrophic’ climate change events — those with low probability but extremely high cost — becomes real after 2100.”
Kennedy’s Health Bill: A First Look
A draft of Sen. Ted Kennedy’s health care reform bill is finally available, and it is difficult to overstate how far he would move us to a government-run health care system. An initial read-through reveals among the key provisions:
- An individual mandate, requiring that every American purchase a “qualified” insurance plan. (Sec. 161(a)) The mandate will be enforced through the tax code with Americans required to pay a penalty if they fail to comply. In an extraordinary delegation of congressional authority, the Kennedy bill would give the Secretaries of Treasury and Health and Human Services the power to determine what this penalty should be. Individuals would be required to submit information on their insurance status over the previous year to the Secretary of HHS, along with “any such other information as the Secretary may require.” (Sec. 6055(b)(2) and (3)). Individuals who already have insurance could keep it. However, if they changed plans (or presumably changed jobs), their new insurance would have to meet the definition of “qualified.”
- A “pay or play” employer mandate requiring employers to provide all workers with health insurance and pay a minimum amount of the premium, or pay a tax (Sec 162). Again, the amount of the new tax is left to the discretion of the Secretaries of HHS and Treasury. Some small employers would be exempt from the mandate, but the size of those firms remains TBA. (Sec. 3113(g)) Companies with fewer than 250 workers would be forbidden to self-ensure. (Sec. 2720)
- A new federal bureaucracy, the Medical Advisory Council, which would determine what benefits will be required to be part of your “qualified” insurance plan. (Sec. 3103(h) and (i)). Lest anyone think Congress won’t get involved. The Council’s decisions can be disapproved by Congress if, say, they don’t mandate inclusion by a favored provider group or disease constituency. (Sec 3103(g)).
- Massive new federal subsidies. Medicaid would be expanded to individuals earning 150 percent of the poverty level, and the federal government would pay all incremental costs of the increased enrollment. (Sec 152.) Single, childless adults would become eligible for Medicaid. Even more egregious, individuals and families with incomes between 150-500 percent of the poverty level ($110,250 for a family of four) would be eligible for subsidies on a sliding scale-basis.(Sec. 3111(b)(1)(A-G)).
- Insurers would be required to accept all applicants regardless of their health (guaranteed issue) and forbid insurers from basing insurance premiums on risk factors (Community rating). There does not appear to be any exception for lifestyle factors, such as smoking, alcohol or drug use, diet, exercise, etc. Thus, not only will the young and healthy be forced to pay higher premiums to subsidize the old and unhealthy, but the responsible will be forced to pay more to subsidize the irresponsible.
- A “public option” operating in competition with private insurance (Section 31__). How this plan would be funded, the level of premiums, etc. is left mostly TBA. In response to criticism, the Kennedy bill does require that the public plan pay providers 10 percent above Medicare reimbursement rates. (Sec 31__(B)). That would still allow for a considerable degree of cost-shifting to private insurance. And, we should recall that such promises are ephemeral. When Medicare began, proponents promised it would reimburse at the same rate as insurance. That promise didn’t last long.
- States would be prodded to set up “gateways,” similar to Massachusetts’ “connector.” (Sec 3104(a)) If a state fails to do so, the federal government will set one up for them. (Sec. 3104(d)) The federal government would provide grants to states to help them set up these gateways. The amount of the grants is, you guessed it, left to the discretion of the Secretary of HHS. Gateways may also fund their operations by assessing a surcharge on insurers. Sec. 3101(b)(5)(A)/
- A new federal long-term care program (Sec 171).
Kennedy does not include any estimate of how much his plan would cost, nor any proposal for how to pay for it.
More details will undoubtedly emerge, but it is very clear that the Kennedy plan would put one-sixth of the US economy and some of our most important, personal, and private decisions firmly under the thumb of the federal government.
Cheney vs. Obama: Tale of the Tape
In case you missed it, President Obama and former Vice President Dick Cheney spoke separately today on terrorism and national security. Like two boxers at a pre-fight press conference, they each touted their strength over their opponent. They espoused deep differences in their views on national counterterrorism strategy.
The Thrilla in Manilla it ain’t. As Gene Healy has pointed out, they agree on a lot more than they admit to. Harvard Law professor and former Bush Office of Legal Counsel head Jack Goldsmith makes the same point at the New Republic. Glenn Greenwald made a similar observation.
However, the areas where they differ are important: torture, closing Guantanamo, criminal prosecution, and messaging. In these key areas, Obama edges out Cheney.
Filed under: Foreign Policy and National Security; Law and Civil Liberties
What We Have Here Is a Failure to Communicate
There are two parts to securing a country: making the country secure and making the country feel secure.
The head of U.S. Strategic Command, General Kevin Chilton, failed at the latter when he talked about security in a way that produced the following headline: U.S. General Reserves Right to Use Force, Even Nuclear, in Response to Cyber Attack.
As a theoretical matter, every element of military power should be on the table to respond to attacks. But the chance of responding to any “cyber attack” with military force is vanishingly small. To talk about responding with nuclear weapons simply helps spin our country into a security tizzy.
Politicians and military leaders should stop inflating the risk of cyber attack.
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