Posts Tagged ‘Steven Pearlstein’

Before You Watch Obama’s Speech Tonight…

Wednesday, January 27th, 2010

Read these three takes on what Obama must or should do. Each piece is worth reading in full – but following are excerpts.

Andrew Sullivan:

If he cannot do that, if he punts on this bill, or if he is passive and uncommitted, then those of us who placed hope in his leadership skills will have to acknowledge we hoped too much. The test of leadership is sometimes staying a course even when all the polls and pols have turned against it on a dime. There are times when a president should preside; but there are also times when he must lead.

I have one simple test: if the health bill dies from neglect and irresolution, Obama is no leader.

Ezra Klein:

Depending on what they think will happen, observers bring up two well-worn narratives from the campaign. The first is Obama’s tendency to patiently let the fury of the news cycle abate before attempting to change its direction. You saw this in the months before Iowa, they say, where a listless campaign recaptured its spark with Obama’s tremendous speech at the Jefferson-Jackson dinner. You saw it in the Summer of 2008, when John McCain and Sarah Palin seemed to be surging, and Obama was holding his money and negative firepower in reserve. You saw it in August, when Obama let the townhalls play out and Congress return to session before giving his first national address on health care.

Pessimists, however, point to a very different narrative. Obama, they say, has not shown himself a fighter for his policy commitments. His time as a national figure was short, adulatory and unmarred by hard causes or lonely battles. During the primary campaign, he was battered by John Edwards and Hillary Clinton on social policy, surviving mainly on the strength of his personal narrative and his opposition to the war in Iraq. His strategy on health care was to compromise with industry, compromise with Congress, and seek the path of maximal consensus, which has resulted in an ugly bill that doesn’t excite supporters and doesn’t comfort voters. This is all, they say, part of a pattern of conflict-aversion that the president’s supporters have refused to acknowledge.

Steven Pearlstein on the “State of the Union speech Obama would give in a more honest world“:

[A]s a country we seem to have completely lost the will and the capacity to collectively confront these challenges. Our union has been torn asunder by a clash of ideologies and special interests and brigades of power-hungry partisans that has resulted in a paralyzing political stalemate. In response, our citizens have become angry, cynical, distrustful and dispirited.

Economists have long recognized that what distinguishes successful and wealthy countries from those that are poor and failing is not their natural endowments or even their level of human capital, but rather the quality of their institutions. By institutions, economists refer not only to governmental, business, educational and civic entities, but also the formal rules and informal protocols by which decisions are made, disputes are resolved, commerce is conducted and people interact. It was the quality of its institutions that led our country to become the richest, most powerful and most admired on the planet. Now the deterioration of those institutions threatens our standing in the world…

No institution, however, has deteriorated more than the one in which I stand now, the U.S. Congress, which has transformed itself into a hyper-partisan swamp that fails to live up even to its most basic constitutional duties — making timely appropriations, confirming nominees for top positions and declaring when we are at war. You have saddled the country with a monstrous debt and projected deficits that will bankrupt the nation, yet you refuse even to allow an independent commission to draw up a reasonable plan to cut spending and raise taxes. You have spent a year deliberating on the urgent issues of health care, global warming and financial regulation, yet so far you have been able to agree on nothing.

My own take: Obama decided to spend his first year playing an inside game getting substantive policies through and legislation passed. 2010 would be about pushing initiatives that might not pass, about idealistic leadership rather than pragmatic deal-making. Tonight marks the pivot between the two. The only real question in my mind is what Obama will choose to do on health care. He can try a short-term political move by offering a re-written and even more modest health care bill that Republicans have demanded – while being prepared to blame them for rejecting it anyway as they likely would do. Or he can focus on the longer-term politically and on policy and ask the House to pass the Senate bill with changes being made afterwards through reconciliation. My bet is – given that most reports suggest that the debate on what approach should be taken is ongoing – Obama will do what he always does and hedge. He’ll say he is willing to consider a stripped down bill but that a bill must be passed even if that means the House has to accept the less progressive Senate version. Of course, he’ll say this in less wonkish terms.

But at this point, hedging is exactly what Obama shouldn’t be doing. Sullivan and Klein are largely right. Which is why I hope Obama is finally able to take hold of the political conversation for this moment, to tell a story about his presidency that helps the nation understand him, and that demonstrates why it is essential for the Democrats to pass health care reform immediately.

[Image not subject to copyright.]

Health Care Reform and Its Unintended Consequences

Wednesday, November 11th, 2009

I said I was going to make a point of noting solid criticisms of the Obama administration by mainstream conservatives and right wingers.

Mona Charen of the National Review wrote a solid piece that didn’t resort to blatant falsehoods as far as I could tell that made a solid case against health care reform. Her basic point is that she doesn’t trust the Democrats:

Every single page [of the health care bill] proclaims something that is dubious — that the Democrats know what they are doing.

Rather than talking about death panels, she points out that electronic recordkeeping has overwhelmed doctors with information they are not used to having to sort through – and thus has made hospitals less efficient. (She cites no study, but it is certainly plausible that this would be a short term effect.) Preventive care, she explains, while probably saving lives could end up costing more – as “more and more of us are tested for more and more diseases.”

Her big point is that this health care reform is “brought to you by the same people” who brought you Medicare and Medicaid – and that the costs of these programs were vastly underestimated. As she points out:

In 1965, Congress predicted that by 1990, Medicare would be costing $12 billion. The actual cost — $90 billion.

Long term forecasts of government spending – or really anything – are a fool’s game, and Charen is right to point this out. On a macroeconomic level, there are too many factors to take into account – and that’s not even counting “black swans” that change everything. In this case, the major factor causing the government health care costs to be so off was the explosion of health care inflation in the 1980s which has only gotten worse since. But it’s not clear that Medicare or Medicaid played any role in this – especially as their costs have been below that of private insurance.

Bill Clinton made a similar point to Charen’s yesterday in trying to make the case for why the health care reform should be passed:

There is no perfect bill because there are always unintended consequences…

Yet, Clinton maintained:

The worst thing to do is nothing.

As Steven Pearlstein writing for the Washington Post described the price of doing nothing (and was later echoed by Barack Obama):

Among the range of options for health-care reform, there’s one that is sure to raise your taxes, increase your out-of-pocket medical expenses, swell the federal deficit, leave more Americans without insurance and guarantee that wages will remain stagnant.

That’s the option of doing nothing…

This is the answer Democrats give to the sensible concerns of Charen and those like her: there inherent uncertainty in any attempt to change a macroeconomic trend, but given where we are headed if we do nothing, it’s worth trying.

The only other option is to give up.

This is exactly the sort of sensible criticism that – in my opinion – conservatives should be making. However, the answer should not be to do nothing, but to “tinker” instead of instituting massive top-down changes, and to adopt the measures that work after tinkering. For the most part, this is exactly the approach the current bills take – which is a testament to the fundamental insights of the conservative movement of the past few decades. To take into account this fundamental insight while promoting a liberal agenda is in fact the essence of Obama’s approach: It’s why 40% of the stimulus was tax cuts; it’s why the key health care reform is to create a market that allows individuals to make decisions based on information that is more transparent; it’s why the answer to global warming is a cap-and-trade program that decentralizes authority and whose main mechanism is a market. That this has been Obama’s approach is what has forced the right wing opposition to him to become so unhinged.

Mild-Mannered Columnist Steven Pearlstein Gets Mad

Monday, August 10th, 2009

Steven Pearlstein – normally a mild-mannered columnist – has had enough. Though I can’t endorse his description of opponents of health care reform as “political terrorists,” his overriding point is correct:

The recent attacks by Republican leaders and their ideological fellow-travelers on the effort to reform the health-care system have been so misleading, so disingenuous, that they could only spring from a cynical effort to gain partisan political advantage…There are lots of valid criticisms that can be made against the health reform plans moving through Congress – I’ve made a few myself. But there is no credible way to look at what has been proposed by the president or any congressional committee and conclude that these will result in a government takeover of the health-care system. That is a flat-out lie whose only purpose is to scare the public and stop political conversation.

His piece is probably the best counter to much of the Republican and right-wing spin out there. He chooses here not to defend health care reform against authentic conservatives or against fiscally conservative objections – but only against those extreme views that are taking hold in the imaginations of those inclinded to be opposed to Barack Obama’s success. He explains  the moderation inherent in the plan – seeing the Health Insurance Exchange as the key – rather than the single-payer option which is still being debated. He concludes with the plaintive plea I have seen a number of Democrats make recently:

Health reform is a test of whether this country can function once again as a civil society – whether we can trust ourselves to embrace the big, important changes that require everyone to give up something in order to make everyone better off. Republican leaders are eager to see us fail that test. We need to show them that no matter how many lies they tell or how many scare tactics they concoct, Americans will come together and get this done.

In the past week, the health care reform opponents have grown more strident. Comparisons of Obama to Hitler have become mainstream – made by everyone from Sarah Palin to Senator Jim DeMint to Rush Limbaugh.

As this debate has devolved, the question asked of Americans has become whether you stand with those who believe our system needs to be reformed in a moderate and responsible way or with those who believes Obama is offering nothing but a Nazi-like Final Solution as Americans for Prosperity explains:

Adolf Hitler issued six million end of life orders – he called his program the final solution. I kind of wonder what we’re going to call ours.

There should be a broad middle ground – where Republicans on the right and progressives on the left criticize and attempt to shape Obama’s health care reforms. But the rapid descent into extremism and blatant lies by the Republicans as they attempt to stop Obama for their own political gain has eliminated this sphere of rational commentary.

[Photo by Madi Lussier, used with permission of the creator.]

Stopping the Democrats from Descending to Sarah Palin’s Level

Monday, August 10th, 2009

By using the phrase “un-American,” Nancy Pelosi and Steny Hoyer are undermining the Democratic brand – threatening to bringing themselves down to the level of Sarah Palin, Karl Rove, George W. Bush, and Ann Coulter.

If you read the op-ed currently being misrepresented/hyped by Matt Drudge – “Pelosi/Hoyer op-ed in Monday USATODAY calls townhall protesters ‘un-American’…” he says – you can see they only use the phrase “un-American” once. They write:

Drowning out opposing views is simply un-American.

This statement is uncontroversial. Yet it also is clearly designed to generate attention and it is making news because Democrats so rarely engage in this type of demagoguery – and because Drudge and his allies are trying to create an impression of a thuggish White House pushing its agenda using tactics adopted from the worst Republican politicians (identifying opponents as “un-American,” compiling an “enemies list,” declaring things justified by “national security” when they are really power grabs.) Democrats, liberals, and progressives have largely refained though from calling their opponents “un-American” or “terrorists” – even as matters grow extremely heated. Political attacks and populism are part of politics. Accusing the other side of representing the entrenched interests who their side’s agenda benefits (organized labor, environmental groups, abortion rights groups, etcetera for Democrats; big corporations, the wealthy, pro-life groups, the NRA, etcetera for Republicans) will always be part of the game.

But there are clear lines – and Democrats have largely respected them. John Kerry could have accused George W. Bush of negligently being responsible for September 11 – and he would have won had he done so. But it would have damaged the country. Karl Rove, knowing this is what he would have done, saw this vulnerability and did what he could to counteract it – but he still saw it was Bush’s weakness. Democrats could have made a concerted push to demagogue every policy Bush instituted after September 11 as “un-American” and “giving in to the terrorists.” But instead, they did not cross this line – despite the fact that Karl Rove and George W. Bush and those Republicans running against them equated the Democrats with “therapy for terrorists” and sympathy for the terrorists’ aims. Sarah Palin infamously inflamed crowds talking about Obama’s sympathy for terrorists and asserted that there were anti-American parts of America that wouldn’t vote for her. There are some who claim that these demagogic tactics are equaled by the Democrats who have claimed that Republicans are representing the rich at the expense of the poor and similar claims – but there is a clear difference between the approaches.

But as Democrats are becoming increasingly frustrated with the hardball politics of the opponents of health care reform, they are clearly tempted to try to tap into the Rovian playbook. For example, even mild-mannered Washington Post columnist Steven Pearlstein wrote (in what was overall an extraordinarly good column) that:

[Republicans have] become political terrorists, willing to say or do anything to prevent the country from reaching a consensus on one of its most serious domestic problems.

The level of frustration on the part of the Democrats – aware that what they are actually proposing is popular – but seeing the public debate beginning to turn against their attempts to put into law these popular measures is growing exponentially. Neither Pelosi nor Hoyer nor Pearlstein have descended to the level of Sarah Palin, Rush Limbaugh, or Ann Coulter.  But by pushing the line – they threaten to undermine the Democratic Party.

Hardball politics is one thing. Calling your opponents “terrorists” or “un-American” is another.

The Federal Reserve, Henry Gates, Popular Policies, Health Care, Krugman on Cap and Trade, and High Times

Friday, July 24th, 2009

1. Down with the Fed! William Greider suggests we “dismantle the temple” that is the Federal Reserve in a piece this week. Greider is not only one of my favorite authors and one of the best writers on economics, he is also one of the foremost experts on the Federal Reserve. They key problem for Greider is that the Federal Reserve is an essentially anti-democratic institution:

The Federal Reserve is the black hole of our democracy – the crucial contradiction that keeps the people and their representatives from having any voice in these most important public policies.

Ezra Klein gives the piece a symapthetic audience, but then explains his reservations:

[F]or a period of time, Ben Bernanke ran our economy under a monetarist’s version of martial law. And the really problematic thing is that it probably worked. It may be all that saved us. You could argue that in the absence of the Federal Reserve, Congress would have been a whole lot more aggressive and responsible because Bernanke wouldn’t have been there to backstop them. But would you really want to bet the U.S. economy on it?

2. Sanity on the Henry Gates Controversy. Jacob Sullum in Reason‘s Hit ‘n’ Run blog gives what I think to be the essential take-away from the Gates fiasco:

[E]ven if we accept the facts as presented by Crowley, it’s clear he abused his authority, whether or not the color of Gates’ skin had anything to do with it.

Let’s say Gates did initially refuse to show his ID (an unsurprising response from an innocent man confronted by police in his own home). Let’s say he immediately accused Crowley of racism, raised his voice, and behaved in a “tumultuous” fashion. Let’s say he overreacted. So what? By Crowley’s own account, he arrested Gates for dissing him.

3. The Appearance of Bipartisanship Creates Popularity. Matt Yglesias has an interesting piece exploring the difference between how the media treats the relationship between public opinon, Congress, and policy issues and how that relationship actually works.

4. Imitation is the Sincerest Form of Flattery. Ezra Klein points out that one passage from Obama’s speech Wednesday night seemed to be taking arguments directly from articles by Steven Pearlstein and David Leonhardt this week that got a lot of traction in the blogosphere. Both columns are worth reading even independent of their apparent influence on the Obama administration’s tactics.

5. Krugman on Cap and Trade Speculation. Paul Krugman takes on doubters encouraged by Matt Taibbi’s piece describing cap-and-trade as a giant scheme:

The solution to climate change must rely to an important extent on market mechanisms — it’s too complex an issue to deal with using command-and-control. That means accepting that some people will make money out of trading — and that yes, sometimes trading will go bad. So? We’ve got a planet at stake; it’s crazy to cut off our future to spite Goldman Sachs’s face.

6. A Laid-back Beat. Lastly, I came across this song in an episode of the British series Skins this week:

[Photo by me.]

Our Wall-Street Run Health Care

Friday, July 24th, 2009


There are quite a few ways to explain what is causing our health care and health insurance costs to skyrocket, but in terms of crude political terms, there are really only two possibilities: either health care costs are skyrocketing because the government is involved in a major way – with Medicare, Medicaid, the prescription drug benefit, the subsidy for employer-based coverage, etc.; or the market for health care and health insurance is inefficient independent of government interference.

I don’t have the expertise to resolve the issue – but to me it is telling that the costs of health care and health insurance began to rise exponentially not shortly after Medicare and Medicaid were begun, but during the early years of the Reagan administration with his derogatory fervor. Then the medical loss ratio began to decrease – as health insurance companies began to squeeze as much profit as they could from their businesses. In other words, the prices for health care and health insurance began to rise precipitously as Wall Street began to take a more assertive role in running the economy including health insurance. At the same time, the costs of government insurance has risen slower than that of private insurance companies.

Economists long ago discovered that health care markets are not efficient on their own – as most individuals do not treat health care as a typical service. Rather if people have a choice, they avoid using the service until they absolutely need it – and then are willing to pay whatever is necessary to get better. This also is demonstrated by the fact that despite the fact that America spends far more on health insurance than nations with similar health care systems, statistics show our overall level of care is generally lower than in these countries (fewer doctors per patient; a lower life expectancy; etcetera). At the same time, most individuals treat some level of health care as a right. Even right-wingers – as they decry the attempts to make health care a right in America – implicitly treat it as one when they tell the anecdotes about the 21-year old alcoholic who was denied a liver transplant under Britain’s system because the bureaucracy in place required him to prove he would not endanger his new liver. But unless getting medical treatment to extend this young man’s life is a right, why would anyone be outraged over it?

Because of these various factors, health care operates as an inefficient market as demand does not appreciably respond to changes in price. This helps explain how the health insurance industry began to fall under the sway of Wall Street and take on the telltale characteristics of a Wall Street-run corporation that exists primarily to generate exorbitant profits instead of to provide a service or product. When Wall Street focuses on an indursty, there follows certain predictable steps:

  • as a precondition, there needs to be a market inefficiency that Wall Street can exploit; for example, the inflexibility of demand for a product or service allows the creation of a rapidly inflating bubble in costs;
  • the pay of top corporation executives rises exponentially above that of most employees;
  • increasingly, these executives began to make decisions that benefit their shareholders in the short-term so as to maximize their paychecks and keep their jobs;
  • the product or service is degraded as corporations turn their focus to creating mass short-term profits;
  • the inefficiences present initially are exacerbated;
  • most important, many major risks and costs are deliberately externalized to the public so as to maximize private profits;
  • at some point, this becomes unsustainable and the bubble bursts.

This is exactly what we saw in Exxon’s massive profits during the surge in oil prices in 2008; and it is very similar to what we saw in the housing market; and it is also clearly what we have seen with health care in America for the past twenty to thirty years as the inflation in health care costs far outpaced all else.

I actually don’t like the idea of blaming everything on Wall Street – but the telltale signs are here:

  • health care demand is generally inflexible, although when costs are paid can be shifted as most people see health care as a right and medical facilities and doctors swear an oath to provide care to everyone;
  • health insurance companies – rather than maintaining their large dollar profits as prices skyrocketed in the 1980s and 1990s instead began to increase their percentage of the profit – as a Wall Street-run company always does, thus exacerbating the inefficiencies already present;
  • rather than seeking to reduce the costs of care while providing the best service possible, they sought to exclude as many sick individuals as possible and to cancel coverage for as many individuals who got sick as possible and to use other means of artificially lowering their costs without lowering the price of their service;
  • by refusing to pay for so many sick individuals, many of these costs are externalized to the public; by refusing to cover those who have preexisting conditions – and thus those who are more likely to need to use health care resources – the costs of taking care of these individuals is put upon hospitals and the public; while doing all of this, the insurance industry sought greater and greater government subsidies.

The toxic effect of this inflating cost bubble coupled with the attempts to externalize as many costs as possible have created the twin problems of a growing number of uninsured Americans and rapidly growing federal deficit fueled almost entirely by health care costs.

This is the status quo that we need to change. As Steven Pearlstein explained:

Among the range of options for health-care reform, there’s one that is sure to raise your taxes, increase your out-of-pocket medical expenses, swell the federal deficit, leave more Americans without insurance and guarantee that wages will remain stagnant.

That’s the option of doing nothing…

Doing nothing means leaving our Wall Street-run health care in place; and while right-wing critics focus on the specter of rationing by government bureaucrats and government bureaucrats in between you and your doctor and complain about the complex system the Democrats are proposing – they fail to acknowledge that this Wall Street-run health care rations care by cost and interjects bureaucrats reporting to CEOs imbued with the culture and ethos of Wall Street as they attempt to exploit every inefficiency in our current extremely complex system as much as possible, externalizing as much cost to the public as they can.

If the problem with our current system is not that the government is too involved – as right-wingers assert – but that the market is inefficient in providing health care – and that these inefficiencies are being exploited by Wall Street-run health insurance companies – and if with the economy still fragile from the bursting of the bubble in home prices and with radical changes not feasible or desired – then you turn to the various plans that the Obama administration and Democratic Congress are looking at which attempt to introduce various processes and incentives that will gradually shape the health care system into a more rational market – creating regulated markets for individuals to buy health insurance; eliminating abusive practices that artificially decrease medical costs for insurance companies; creating a public option to compete with these private companies; empowering an independent body (MedPAC) to regulate Medicare prices and practices; creating a body to look at and disseminate information on the comparative effectiveness of treatments and medicines.

It’s clear that our Wall Street-run health care industry isn’t working. More of the same – more deregulation as the Republicans propose – isn’t going to fix this problem. We need change. We need to take back our health care from Wall Street and make it responsive to consumers again. Our system won’t be perfect – and it won’t happen overnight – but the Democrats are clearly working to reform this system. The Republicans are merely seeking to obstruct.

The Option of Doing Nothing on Health Care

Thursday, July 23rd, 2009

Steven Pearlstein began his muchremarked column yesterday morning with a basic observation that most deficit-hawk opponents of Obama’s “experiment” with health care reform don’t seem to acknowledge:

Among the range of options for health-care reform, there’s one that is sure to raise your taxes, increase your out-of-pocket medical expenses, swell the federal deficit, leave more Americans without insurance and guarantee that wages will remain stagnant.

That’s the option of doing nothing…

I have yet to see any opponent of health care reform acknowledge that our current health care system is unsustainable and getting worse, or to acknowledge that the situation has reached a point where it undermines the very legitimacy of America’s model of the state.

Opponents of any of the Democratic health care reform proposals often argue that they are actually in favor of reform – just not this “fast” and not any of the plans being considered at the moment. They don’t have much of a response as to why they showed no concern for this issue when those more inclined to accept their ideas were in power. There have been some attempts to come up with an alternative health care reform, but it doesn’t seem like any actual plan will be offered. For example, Representative Roy Blunt, head of the GOP’s Health Care Solutions Group, is suggesting that no plan will be offered by the Republicans as he asks rhetorically:

[W]hy start diverting attention from this really bad piece of work they’ve got to whatever we’re offering right now?

This is good politics – as long as you’re not serious about reform. As long as your goal is to “break” Obama rather than to fix health care and our growing deficit problem.

I try to take things that people I disagree with politically seriously, assuming their good faith on the issue. But if opponents of the reforms on the table now don’t offer an alternative, talk about “breaking” the Democrats, and refuse to acknowledge the basic fact that the status quo which their opponents are trying to reform is leading to a disaster – all while simultaneously blaming Obama for this looming disaster – what other explanation is there for this behavior than “bad faith”?