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National

Don’t Rely on the Altruism of Baby Boomers

David Brooks must have thought yesterday was April Fools Day – that or he thinks he’s getting old so he decided to pen a column painting a rosy picture for seniors by coming to a senile conclusion. In The Geezers’ Crusade he comes to this wildly impossible conclusion:

It now seems clear that the only way the U.S. is going to avoid an economic crisis is if the oldsters take it upon themselves to arise and force change. The young lack the political power. Only the old can lead a generativity revolution — millions of people demanding changes in health care spending and the retirement age to make life better for their grandchildren.

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culture National

An Affordable Health Care System

On Sunday, July 5, Paul Krugamn laid out his argument that affordable health care for everyone was an achievable goal.[quote] Many people would be surprised to learn that I agree with him on that. He correctly argues that we already cover the bulk of the most expensive health care patients by covering the elderly under Medicare. He also argues that the uninsured already receive much care that we are already paying for so we are already paying much of the costs for their care. Finally he argues (as a corollary to the first point) that many of the uninsured are generally young and healthy so that insuring them would cost less per person than our current per-person cost of public insurance (bringing down the average cost per person and increasing the overall cost only slightly).

His conclusion is that “extending coverage to most or all of the 45 million people in America without health insurance — should, in the end, add only a few percent to our overall national health bill.” He would be right at the beginning but eventually the nightmare spiral of skyrocketing costs would take over because the fundamental problem in our health care system would not be addressed – overuse and the disconnect between the source of payment and the subject of care.

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General

Economic Contradiction

Paul Krugman and I agree on little politically (I have at times agreed with him when he was arguing that TARP was a bad idea – although we disagreed on the reasons why) and despite the fact that my assumptions about the nature of sound economics differ from his most of the time I recognize that he has a lot of expertise in the field that I can learn from. For example, I have not known enough about economics to be aware of the Setser point that he is looking at. For those like me who are new to the term, the idea is this:

high government borrowing is more than offset by net negative borrowing from the private sector

As far as I can tell, Krugman is among those who believe that the flow of money defines the health of the economy – the more the money moves (borrowing, spending, and creating) the healthier the economy. Krugman and those who believe like him will doubtless argue that when the private sector borrowing declines governments must borrow more to keep the economy healthy. In other words, lower private sector borrowing causes (or rather necessitates) higher government borrowing. Unfortunately for them the numbers appear to paint a different story. If the cause and effect relationship is not simply the reverse of that assertion then the relationship is at least symbiotic with governments trying to manage or compensate for the actions of the private sector causing an opposite, but more than equal, reaction as the private sector tries to outguess the government.

On the other hand, I believe that people in the aggregate (meaning many individuals over a sustained period of time) make economically beneficial decisions (not always the best decisions necessarily, but better than rolling government loaded dice).

What the Setser point tells me is that government borrowing drags the economy down because of the opposite but more than equal principle noted by Sester and Krugman and it prolongs the agony when those in the private sector – for whatever reason – determine that we need to slow the borrowing to set the economy back on a fundamentally sound foundation.

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National

Banks Giving Back

While it is good news that 10 banks will be allowed to repay billions in bailout funds I would be much more excited if I didn’t already know what was likely to happen as a result.

The banks were deemed strong enough to leave the Troubled Asset Relief Program, or TARP, after months of lobbying and strong performances on recent stress tests. The banks are expected to return about $68.3 billion to the Treasury Department, more than double the administration’s initial estimate of about $25 billion in funds to be returned this year. The timetable is also earlier than government officials originally intended.

. . .

The $68.3 billion represents about a quarter of the TARP money given to banks.

That last figure tells me that we still have over $200 billion illegally given by our government to our banking system.

My lack of enthusiasm for this news comes from two concerns. First, the administration will use this news as evidence that the bailouts are working better/faster than expected. The truth is that the banks have been working furiously to find a way to get rid of that money ever since they read the regulations that came with it. Second, having that money will be used as a way to help fund other illegal activities by the federal government such as propping up the UAW by buying GM (the money being returned covers everything we’ve put into GM so far) and even worse than that is the possibility that some smart government people might take the news as an excuse to say, “hey, we have $68 billion more than we expected,” and then go on to fund another $58 billion in projects that they did not dare to fund previously. That’s like buying a $500 LCD monitor when you can only afford $100 and then buying an $80 printer when the $100 rebate arrives early.

So the banks are giving back more and earlier – that’s good for them (and “good for them” is what they are paid to do) but that does not mean there’s a chance that the government will start giving back or being financially responsible in any way.

Update @1:20pm: Here are a few words from the president today confirming my claim that the administration would use this to show that the bailouts are working better than planned:

Several financial institutions are set to pay back $68 billion to taxpayers. And while we know that we will not escape the worst financial crisis in decades without some losses to taxpayers, it’s worth noting that in the first round of repayments from these companies the government has actually turned a profit.

. . . We’re restoring funds to the Treasury where they’ll be available to safeguard against continuing risks to financial stability. And as this money is returned, we’ll see our national debt lessened by $68 billion — billions of dollars that this generation will not have to borrow and future generations will not have to repay.

He says that the money is being returned to the treasury, but I’m confident it will find a way to sneak out again like a good rebellious teenager despite the president’s best efforts to keep it at home where it belongs. 😉

Categories
culture General National

Change Done Right

With the news yesterday that New Hampshire passed a law to allow gay marriage I sincerely hope that the proponents of gay marriage may begin to see the right way to bring the change they seek – especially when put in context next to Vermont’s legalization of gay marriage, Maine’s legalization, the setback in the California Supreme Court ruling on Prop. 8, and the reaction to Massachusetts’ Supreme Court decision in 2004. While there has been little if any reaction to those three states that legalized gay marriage through the legislative process there was a large push to overturn the Supreme Court decision in Massachusetts through a state constitutional amendment, and the same approach in California succeeded in rolling back the original Supreme Court decision in California that legalized gay marriage temporarily in 2008.

The point is that the right way to enact these changes is to take the time to educate and convince people so that the change may be made through the legislative process and be accepted rather than simply trying to ram “equality” down the throats of your fellow citizens based on an unwillingness to trudge the long path of education and debate.

Although it may seem quicker to use the courts, we should all remember that cutting off the debate through judicial action has not led to any resolution on the abortion issue even after more than 30 years. It may be that 30 years would be enough to take the “slower” route of education and persuasion to peacefully achieve your goals.

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National

GM Surprise (or not)

Back at the end of March David Brooks made a prediction for GM in the New York Times that came due today. I have been waiting to check in on that. He started with this background of the situation as it stood that day:

The Bush advisers decided in December that bankruptcy without preparation would be a disaster. They decided what all administrations decide — that the best time for a bankruptcy filing is a few months from now, and it always will be. In the meantime, restructuring would continue, federally subsidized.

Today, G.M. and Chrysler have once again come up with restructuring plans. By an amazing coincidence, the plans are again insufficient. In an extremely precedented move, the Obama administration has decided that the best time for possible bankruptcy is — a few months from now. The restructuring will continue.

But this, President Obama declares, is G.M.’s last chance. Honestly. Really.

No kidding.

With that background, Mr. Brooks’ reactions was this:

The most likely outcome, sad to say, is some semiserious restructuring plan, with or without court involvement, to be followed by long-term government intervention and backdoor subsidies forever.

Looking at the relevant news today (also from the New York Times) we find that the result is a restructuring plan with court involvement and long-term government intervention including continuing subsidies – initially at least the subsidies are anything but backdoor.

American taxpayers will invest an additional $30 billion in the company, atop $20 billion already spent just to keep it solvent as the company bled cash as quickly as Washington could inject it.

The imagery is all too apropos – like Fannie, Freddie, AIG, and the economy in general GM is and has been addicted to shooting up with public money to feel like a real free-market enterprise. Conveniently too many of our elected leaders are equally addicted to intervening in the markets in order to feel like they are performing a real job for the American tax payer.

Mr. Brooks called the President the “Car Dealer in Chief” in his predictive essay, and now that is more true than before:

Mr. Obama is taking several risks under the plan. None may be bigger than the decision that the United States government will take a 60 percent share of the stock in a new G.M., leaving taxpayers vulnerable if the overhaul is not successful. (Canada, for its part, is taking a 12 percent stake.)

“We don’t think that after this next $30 billion, they will need more money,” one senior administration official said. “But the fact is there are things you don’t know — like when the car market will come back, and how much Toyota and Honda and Volkswagen will benefit from the chaos.”

This is G.M.’s last chance. Honestly. Really. We hope.

Categories
National

U.S. and CA Supreme Court News

The news came last week that the California Supreme Court would issue their ruling related to Proposition 8 so I expected to have a reaction to that news today. I saw news this morning that President Obama would make his nomination for a new judge to replace Justice Souter – that news surprised me. Obama nominated Sonia Sotomayor. So far all I really know about her is that she is a Catholic, Hispanic female. I am not at all confident that we will ever have hearings in the Senate about a supreme court nominee that are more about qualifications than about politics, but if that day ever comes I am convinced that the founders were right to assign the task of confirmation to the Senate rather than the House or the people.

In California, the Supreme Court upheld Prop. 8. From what I had heard this ruling was not a foregone conclusion nor was it unexpected. The ruling provided answers to two related questions. One question was whether Proposition 8, which passed with 52% of the vote to define marriage in California as being between a man and a woman, was too far reaching to be added to the Constitution without the participation of the state legislature. As previously stated, the court denied that claim. The second question was whether the same-sex marriages performed before the passage of Prop. 8 would retain their legal recognition. On this the court unanimously agreed that they would still be recognized.

Regardless of my personal opinion on the legitimacy of same-sex marriage (just like the justices are supposed to make their rulings based on the law rather than their own personal feelings) I believe that the court ruled correctly on both questions. I believe that the question embodies in Prop. 8 is perfectly within the right and ability of the people to decide. I also believe that because the same-sex marriages performed before the passage of Prop. 8 were legal based on a previous ruling at the time they were performed the state must feel obligated to recognize those existing marriages (its the principles of ex post facto laws). The only way they could have annulled those existing marriages were if they were to rule that their ruling from last year was in error – which I expect they never will.

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National

Judicial Appointment

Yesterday I wrote about the president’s power to nominate people for important positions in government. Today we get the news that Justice David Souter will be retiring.  (This is doubly convenient as the remaining federalist papers deal with the judicial branch of our government.) I don’t intend to speculate on who the president will nominate but there are a few things we can learn from this confirmation hearing.

During the 2004 election cycle there were a number of conservatives talking up the importance of re-electing Bush because of the probability that at least one justice would be nominated in the next four years. Obama himself said last fall that the selection of a new justice would be “one of the most consequential decisions of the next president.” One difference between Obama and Bush in relation to the opportunity to make a supreme court nomination is that Obama will have a Senate majority large enough to prevent a filibuster (assuming that Al Franken is seated from Minnesota). This means that Obama may not feel any need to moderate his choice as Bush knew that he must. Bush knew that he could not nominate anyone who was too conservative for the Senate. Obama will know that there is virtually nobody with any qualification who is too liberal for this Senate.

Assuming that this confirmation goes smoothly and that the selection proves to be reliably liberal (the new justice can always surprise people on that score), I think we might know what to expect in the next few years in the Supreme Court. The most senior justice, Justice John Paul Stevens, is on the liberal side of the court and is 89 years old. If there is a fresh liberal justice from our new president and a solidly Democratic senate in place I would be very surprised if he did not choose to retire before 2012 (or even before the 2010 elections). I would also not be surprised to see Justice Ruth Bader Ginsburg choose to retire. Like Justice Stevens she is on the liberal side of the court and while she is not the next most senior justice she is the second oldest at 76 and might want to ensure that her replacement is also liberal (especially if at least one other justice is a woman by then) before there is a chance of electing a Republican president or having Democrats lose any seats in the Senate.

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National

An Unbiased Perspective

Admittedly I am a person who does not believe that anyone is unbiased – and I’m fine with that. The closest a person comes to unbiased is when they can state a position which contradicts their biases or while acknowledging how that position does not support their biases. When President Obama said that $100 Million here and there eventually adds up to real money in Washington I could not help but notice when Paul Krugman – not exactly the strongest proponent of smaller government – disagreed. He calculated that $100 million per day for an entire four year term would only be 2% of one year’s budget. His conclusion was perfect:

OK, politics is theater. But you could argue that the president shouldn’t feed the bogus claim that we can close fiscal gaps by eliminating a bit of waste.

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National

Accountability Now

MoveOn.org has proven that they can be a political force, so has The Daily Kos, and long before either of them existed labor unions were already very influential in politics. That made me very interested to read that those three were teaming up to form a new political action committee called Accountability Now.

Their stated goal is to help recruit and promote move liberal democratic candidates in areas where moderate democrats are currently in office. So how soon until they decide to target Jim Matheson? (And who would they get to challenge him in Utah?) One of their founders also raised the possibility of taking action in Republican primaries as well. (I can just imagine if they had been supporting Chris Cannon against Jason Chaffetz.)

So I’m curious about what other people think about this. It’s obviously a part of the internal debate that Reach talked about in comments earlier this week. Do we think that this approach to the internal debate is healthy, or destructive? Is it better news for Democrats or better news for Republicans – or is it simply bad news for proponents of a civil political process?