The $1 Trillion Health Care Bill: Approximately Half of the Cost of the Iraq War

Not to mention ½ of 1% of GDP.

The $1 Trillion Health Care Bill: Approximately Half of the Cost of the Iraq War

USA Today listed several items that gave readers a basis for assessing the size of the $1 trillion health care bill being debated in the House. It would have been useful to compare the cost to projected GDP over the decade.

GDP is projected to be approximately $190 trillion over the next decade. This means that the cost will be approximately 0.5 percent of projected GDP. By contrast, the combined cost of the Iraq and Afghan wars have been close to 1.0 percent of GDP. This means that the health care bill will cost approximately half as much as the Iraq War.

—Dean Baker

More no recovery

Robert Reich’s post (here yesterday) has gotten a lot of play in the econoblogosphere. Here’s a sampling.

First up: Felix Salmon:

This is related to Mohamed El-Erian’s “new normal” idea — while previous recessions were part of economic cycles within a certain economy, what we’re going through right now is a painful disruption from that economy to something else. I fear that the flat or declining median wages, however, might well survive the transition — at least so long as unemployment continues to remain as high as it is now. Which is one reason not to worry overmuch about inflation: if consumer spending accounts for 70% of the economy, and consumers don’t have any money, it’s really hard for prices to rise very quickly.

Followed by Mark Thoma: Don’t Expect a Quick Recovery

One of the reasons I’ve argued this recovery will be slow is that we cannot simply bounce back to where we were before the problems started as we could in some past recessions. We need to move resources out of housing, out of finance, and out of autos, and those resources need to find productive employment elsewhere in new or growing industries, and that is not very likely until things improve. Consumers need to save more and consume less, as they are starting to do, and this too will require adjustment. So does this mean we should expect a U-shaped recovery instead of a V-shaped recovery? Robert Reich says it’s neither, this is an X-recovery.

Calculated Risk isn’t quite so pessimistic, but then again not exactly upbeat.

Eventually the economy will start growing again … but I think the “recovery” will be very sluggish.

Kevin Drum: The New Economy?

For many years it’s looked as if we were getting closer and closer to an economy in which there flatly wasn’t enough unskilled work left to keep employment at normal levels. Stagnant median wages were the canary in the coal mine, with permanently higher unemployment coming in the future. But I dunno: maybe the future is now.

I’ll write more about this later so that everyone can tell me where I’m wrong. At least, I hope I’m wrong. We’ll see.

And links from Josh Marshall and John Cole.

I don’t exactly have a fair and balanced reading list. But I’m not hearing anyone jump up and shout, “Green shoots!”

When Will The Recovery Begin? Never.

Robert Reich. Don’t you have the sneaking suspicion (if not the outright conviction) that he’s right?

When Will The Recovery Begin? Never.

The so-called “green shoots” of recovery are turning brown in the scorching summer sun. In fact, the whole debate about when and how a recovery will begin is wrongly framed. On one side are the V-shapers who look back at prior recessions and conclude that the faster an economy drops, the faster it gets back on track. And because this economy fell off a cliff late last fall, they expect it to roar to life early next year. Hence the V shape.

Unfortunately, V-shapers are looking back at the wrong recessions. Focus on those that started with the bursting of a giant speculative bubble and you see slow recoveries. The reason is asset values at bottom are so low that investor confidence returns only gradually.

That’s where the more sober U-shapers come in. They predict a more gradual recovery, as investors slowly tiptoe back into the market.

Personally, I don’t buy into either camp. In a recession this deep, recovery doesn’t depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery, V or U shaped.

Problem is, consumers won’t start spending until they have money in their pockets and feel reasonably secure. But they don’t have the money, and it’s hard to see where it will come from. They can’t borrow. Their homes are worth a fraction of what they were before, so say goodbye to home equity loans and refinancings. One out of ten home owners is under water — owing more on their homes than their homes are worth. Unemployment continues to rise, and number of hours at work continues to drop. Those who can are saving. Those who can’t are hunkering down, as they must.

Eventually consumers will replace cars and appliances and other stuff that wears out, but a recovery can’t be built on replacements. Don’t expect businesses to invest much more without lots of consumers hankering after lots of new stuff. And don’t rely on exports. The global economy is contracting.

My prediction, then? Not a V, not a U. But an X. This economy can’t get back on track because the track we were on for years — featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere — simply cannot be sustained.

The X marks a brand new track — a new economy. What will it look like? Nobody knows. All we know is the current economy can’t “recover” because it can’t go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin. More on this to come.

Who gets hurt by toxic mortgages?

Felix Salmon points us to Mike at Rortybomb, who “explains just how dangerous mortgages can be, even to people who avoid the toxic ones”:

If I was a degenerate crackhead who snuck into your neighborhood and mugged you for $50, the Wall Street Journal Opinion Page would want me thrown in jail. Now imagine that I’m a degenerate crackhead who took out a subprime loan to move next door to you, in an arrangement that I’m likely not going to pay off. I might not even make one payment. If I default you’ll lose 10% of the value of your home from the externality effect. Assuming your home is worth $300,000, there’s a 20% chance I default in 2 years (realistic numbers), and you lose 10%; 300,000*.2*.1 = I’ve just robbed you for $6,000 while the Wall Street Journal Opinion Page cheered me on. And that’s one house – I’ll have a dozen neighbors. Now mind you, the product was great for me – I got to smoke crack indoors, in a house I could never realistically afford, which was a big plus. The subprime lender sold my loan to a pension fund in Denmark for a nice fee. It goes in the win column for us.

God Bless the Yankees

We live in a strange country.

On Yankee Stadium Restroom Dispute, the City Settles

New York City will pay $10,001 to settle a federal lawsuit on behalf of a Queens man who was ejected from the old Yankee Stadium last August after trying to use the bathroom during the playing of “God Bless America.” In addition, the team has publicly declared that it has no policy prohibiting fans from moving about during the playing of the patriotic song, which the team began playing during games after 9/11.

The New York Civil Liberties Union had filed a federal lawsuit in April on behalf of the man, Bradford Campeau-Laurion, of Astoria, Queens, saying he was the victim of religious and political discrimination. The suit said he was forcibly restrained and ejected from the stadium in the Bronx on Aug. 26, after trying to walk past a police officer as the song was played.

“God Bless America” is played during Yankees games after the visiting team’s at-bats in the seventh inning, which in baseball parlance is known as the seventh-inning stretch. Most of the time at Yankee Stadium, the rendition is a recording by the singer Kate Smith, though the tenor Ronan Tynan has also been there to sing the song in person.

Coffee reverses Alzheimer’s?

In 55 mice, anyway. Maybe.

Coffee ‘may reverse Alzheimer’s’

Drinking five cups of coffee a day could reverse memory problems seen in Alzheimer’s disease, US scientists say.

The Florida research, carried out on mice, also suggested caffeine hampered the production of the protein plaques which are the hallmark of the disease.

Previous research has also suggested a protective effect from caffeine. …

That’s two cups of actual coffee, though:

… The mice were given the equivalent of five 8 oz (227 grams) cups of coffee a day — about 500 milligrams of caffeine.

The researchers say this is the same as is found in two cups of “specialty” coffees such as lattes or cappuccinos from coffee shops, 14 cups of tea, or 20 soft drinks.

When the mice were tested again after two months, those who were given the caffeine performed much better on tests measuring their memory and thinking skills and performed as well as mice of the same age without dementia.
Those drinking plain water continued to do poorly on the tests.

In addition, the brains of the mice given caffeine showed nearly a 50% reduction in levels of the beta amyloid protein, which forms destructive clumps in the brains of dementia patients. …

BBC via Brad Delong

What if the Uighurs were Christian rather than Muslim?

Glenn Greenwald wonders.

What if the Uighurs were Christian rather than Muslim?

According to The New York Times this morning, violent clashes between Chinese government forces and Muslim Uighurs — that country’s long-oppressed minority — have left at least 140 people dead and close to 1,000 injured.  This incident in Western China highlights an important fact about America’s “War on Terror.”

Just imagine if the Uighurs were a Christian — rather than Muslim — minority, battling against the tyrannical Communist regime in Beijing, resisting various types of persecution, and demanding religious freedom.  They would be lionized by America’s Right, as similar Christian minorities, oppressed by tyrannical regimes, automatically are.  Episodes like these — where a declared Tyranny like China violently acts against citizens with whom we empathize — are ones about which, in general, the American political class loves to sermonize.

But the Uighurs are Muslim, not Christian, and hostility towards them thus easily outweighs the opportunity they present to undermine the Chinese Government. …

Cooler?

Steve Benen:

Deniers

National Review’s Victor Davis Hanson explained his rationale yesterday for denying evidence of global warming.

I just spent a few days in the Sierra in May during freezing cold temperatures and snow; a week ago it was quite cool and raining in New York; each time I have passed through Phoenix this spring it seemed unseasonably cool; and just gave a talk on the Russian River and about froze. Meanwhile the grapes look about ten days behind due to unseasonably cool temperatures. Any empiricist would be worried, as Newsweek once was, about global cooling. Will the planet boil, if we slow down a bit, review the science and dissenting views, and consider the wisdom in a recession of allotting nearly a trillion dollars to changing our very way of life (while the Chinese absorb market share)?

It’s items like these that help explain why our political discourse is so routinely stunted. If the left and right disagreed on how best to address policy challenges, that would at least open the door to constructive dialog. But we’re still stuck in a political environment in which prominent conservative voices at high-profile conservative outlets a) don’t recognize the difference between climate and weather; b) find meaningless anecdotes compelling evidence of global trends; and c) are entirely comfortable delaying necessary solutions while trying to continue an already-completed debate. …

Which is by way of context for this graph via Paul Krugman.

One of the favorite arguments of climate-change deniers is “but it was warmer in the late 90s.” In fact, the odds are good that I’ll get that argument from George Will on This Weak tomorrow. I basically know the answer: temperature is a noisy time series, so if you pick and choose your dates over a short time span you can usually make whatever case you want. That’s why you need to look at longer trends and do some statistical analysis. But I thought that it would be a good thing to look at the data myself.

So here’s average annual global temperature since 1880, shown as .01 degrees C deviation from the 1951-80 average.

99434314-D80D-4E6C-9B6C-147F7DBE0A32.jpg

Update: one more thing, also via Krugman.

FEF5F88D-5D49-4DBF-B0BF-B32BB4BC526E.jpg

DeLong to Krugman to Reich

The great thing about procrastinating is that, much more often than not, somebody else does it for you. Better than you can.

Better than I can, anyway.

Who Are You and What Have You Done with the Paul Krugman I Used to Know?

I would have thought it impossible for Krugman to cite Robert Reich completely approvingly, without even a trace of snark. Yet, lo and behold, it has happened:

Read Robert Reich: Just read. He’s right.

Robert Reich:

Robert Reich’s Blog: “What Can I Do?”: Someone recently approached me at the cheese counter of a local supermarket, asking “what can I do?” At first I thought the person was seeking advice about a choice of cheese. But I soon realized the question was larger than that. It was: what can I do about the way things are going in Washington?

People who voted for Barack Obama tend to fall into one of two camps: Trusters, who believe he’s a good man with the right values and he’s doing everything he can; and cynics, who have become disillusioned with his bailouts of Wall Street, flimsy proposals for taming the Street, willingness to give away 85 percent of cap-and-trade pollution permits, seeming reversals on eavesdropping and torture, and squishiness on a public option for health care.

In my view, both positions are wrong. A new president — even one as talented and well-motivated as Obama — can’t get a thing done in Washington unless the public is actively behind him. As FDR said in the reelection campaign of 1936 when a lady insisted that if she were to vote for him he must commit to a long list of objectives, “Ma’am, I want to do those things, but you must make me.”

We must make Obama do the right things. Email, write, and phone the White House. Do the same with your members of Congress. Round up others to do so. Also: Find friends and family members in red states who agree with you, and get them fired up to do the same. For example, if you happen to have a good friend or family member in Montana, you might ask him or her to write Max Baucus and tell him they want a public option included in any healthcare bill.

My memory reaches back to September 18, 1787:

Mrs. Powell: “Well, doctor, what have we got?”

Benjamin Franklin: “A Republic, if you can keep it.”

Power! Ambition! Glory!

Felix Salmon points us to an entertaining takedown of Steve Forbes.

33B72E25-5524-40A0-9786-C7250AC31B8C.jpg… And how does Caesar figure into the Finkelstein saga, exactly? Well, there was that whole flap over the inhouse Macy’s clothing brand, just for starters. Under Finkelstein’s power-mad reign, you see, Macy’s “began pushing its own private labels despite the fact that customers still wanted traditional brands…. Private labels in department stores often connote ‘cheap.’ But Finkelstein kept the prices on Macy’s private labels so high that even customers who, to save some money, might have overlooked the stigma of in-house brands chose not to buy them.” The launch of a dubious clothing line and a plot among senators to do in a dictator-in-perpetuity: This, indeed, is a stunning parallel.

But that’s nothing next to the principle adduced from the whole affair: “Once you decide on your plan and take action, don’t look back or second-guess yourself”—i.e., precisely the behavior that got both Caesar killed and Finkelstein shitcanned. …

An Interview With Atul Gawande

In an interview with Ezra Klein, Atul Gawande discusses reaction to his article on disparate health care costs, and suggests a few simple things to help bring costs in line.

You’ve gotten some pushback on your article about McAllen, Texas. Today, in fact, some doctors from the area held a press conference rebutting your claims, and you published a blog post re-rebutting theirs. What have you found to be the most convincing counterarguments against your piece?

The three lines of criticism were ones I anticipated or even talked about. The idea that these people in McAllen are unhealthier. The idea that it’s all malpractice. The one point I didn’t get into was the snowbirds [retirees from colder areas who summer in Texas], but they’re not in the spending calculations anyway because Medicare counts them in their home area.

The criticisms I’d been hearing and seeing but that hadn’t been going away was pointing out that McAllen is the poorest county in the country. They’d say you couldn’t compare it to Mayo. But I didn’t. El Paso, which I did compare it to, was the sixth poorest in the United States. They’re very closely similar in poverty, in immigration, in physician supply, in rates of disease, and so forth.

Krugman: Live long and prosper

Paul Krugman, with a concise response to the idea that we shouldn’t be comparing health outcomes in other countries with our own.

Live long and prosper

Via Andrew Gelman, Greg Mankiw describes the use of international comparisons of life expectancy as part of the argument for reform as “schlocky.”

Grrr. Not many serious advocates of reform use the life expectancy differences to argue that health care is clearly better in other advanced countries than it is in the United States; when it comes to care, the general assessment seems to be that it’s comparable, with no advanced country having a clear advantage. The reform argument actually goes like this:

1. Every other advanced country has universal coverage, protecting its citizens from the financial risks of uninsurance as well as ensuring that everyone gets basic care.

2. They do this while spending far less on health care than we do.

3. Yet they don’t seem to do worse in overall health results.

So Greg suggests that maybe it’s all because we have an unhealthier lifestyle — what Ezra Klein calls the well-we-eat-more-cheeseburgers argument.

Three things. First, surely the burden of proof here is on Greg. I mean, we’re spending 6 or 7 percent of GDP more on health care than other countries — call it a trillion dollars a year — without any clear advantage. That’s not the sort of thing you wave away with a casual suggestion that maybe we have bad habits.

Second: you know, people have thought about this — and tried hard to measure it. For example, the huge McKinsey Research Institute study on the cost of US healthcare tried to quantify the costs of lifestyle-related issues — and found that it didn’t explain much.

Third, read Atul Gawande!

Bottom line: this is the most important domestic policy issue we face. It deserves more than casual just-so stories about how the kids American health care might, despite all appearances, be alright.

Dan Walters: Historic tax overhaul plan to hit Capitol

This is, um, interesting.

Dan Walters: Historic tax overhaul plan to hit Capitol

… The California Commission on the 21st Century Economy, better known as the Parsky Commission for its chairman, businessman Gerald Parsky, is on the verge of proposing a massive tax system overhaul to Gov. Arnold Schwarzenegger and legislators.

Although revenue-neutral – that is, not changing the amount of money now collected – the plan will probably propose abolishing corporate income taxes and the state sales tax in favor of a “net receipts” tax that’s similar to the value-added taxes common in European countries, replacing the steeply progressive personal income tax with a flat tax, perhaps 6 percent, and adding a “carbon tax” to reduce fuel use. …

You might be forgiven for not knowing what the hell a Parsky Commission is.

Juan Cole on Iran

It’s a little hard to follow the news from Iran these days, let alone figure out what it all means. One way to do it is to follow Juan Cole’s reporting and commentary. Here’s this morning’s installment; you could do worse than subscribe to his blog.

Day of Mourning, Protests, Called by Mousavi on Thursday

Mir-Hosain Mousavi, who maintains he won last Friday’s presidential election despite official assertions that he lost 2 to 1 to Mahmoud Ahmadinejad, is calling for another rally Thursday, this time in part to honor the persons killed by hardliners or security forces in the course of previous demonstrations.

Mourning the martyr is as central to Iranian Shiite religious culture as it was to strains of medieval Catholicism in Europe, and Mousavi’s camp is tapping into a powerful set of images and myths here. The archetypal Shiite martyr is Imam Husayn, the grandson of the Prophet Muhammad, who championed oppressed Muslims in Iraq and was cut down by the then Umayyad Muslim Empire. Recognition that a Muslim state might commit the ultimate in sacrilege by beheading a person who had been dangled on the Prophet’s knee has imbued modern political Shiism with a distrust of the state. When Husayn’s head was brought to the Umayyad caliph Yazid and deposited before his throne, older companions of the Prophet are said to have wept and remarked, “I saw the Prophet’s lips on those cheeks.” Shiites ritually march, flagellate, and chant in honor of the martyred Imam or divinely-appointed leader.

Today’s protesters are wearing green, which symbolizes Mousavi’s descent from the Prophet Muhammad. (Mousavi’s family name refers to the Seventh Imam (descendant of the Prophet with claims to divine knowledge), Musa Kazim, whose tomb is in Kazimiya, north Baghdad. Sayyid families, those claiming descent from the Prophet, often take one of the Imams’ names as a family name to honor them, though of course they are also claiming descent from the previous Imams right back to the Prophet.) The repertoires of protest the reformists are using echo those of the 1978-79 Islamic Revolution — they are chanting “God is Great,” mourning pious fallen martyrs, etc. — another sign that this movement is not just alienated secularized elites.

But now Mousavi’s his supporters are also sporting black ribbons to indicate that they are in mourning for the fallen. Typically, the dead will be commemorated again at one month and at 40 days. In 1978 such demonstrations for those killed in previous demonstrations grew in size all through the year, till they reached an alleged million in the streets of Tehran. Since the reformists are already claiming Monday’s rally was a million, you wonder where things will go from here.

The regime’s attempt to paint the protesters as nothing more than US intelligence agents underlines how wise President Obama has been not to insert himself forcefully into the situation in Iran. The reformers and the hard liners are not stable groupings. The core of each is competing for the allegiance of the general Iranian public. If the reformers can convince most Iranians of the justice of their cause, they will swing behind the opposition. If the hard liners can convince the public that the reformers are nothing more than cat’s paws of a grasping, imperialist West — i.e. that they are Ahmad Chalabis trying to bring Iran foreign occupation so as to get power themselves — then the reformists will be crushed. Iranians value national independence above all, having suffered with a CIA-installed goverment for decades in the mid-twentieth century.

The prescriptions of John McCain and Faux Cable news for muscular US diplomacy at this point are tone deaf to Iranian realities and would backfire big time, harming both the reform cause and US interests. Anyway, after the basket case to which the US Republican Party reduced Iraq, no one in the global South is likely to want them meddling in their internal affairs.

Reports are streaming in of the arrest of over a hundred opposition figures and of hard line militia men following protesters home and breaking into their homes to terrorize them. See e.g., Basij paramilitary forces terrorize residential complex. The Basij militiamen are said to be afraid to come out in numbers during the opposition demonstrations, but sneak around at night to trail protesters and harass or arrest them.

Supreme Leader Ali Khamenei had met Tuesday morning with the representatives of all four presidential candidates, urging them to make up but continuing to insist that Ahmadinejad was the winner by 24 million to 14 million votes. He portrayed the massive post-election demonstrations and charges of ballot fraud as a minor tiff.

Gary Sick wonders if Khamenei really is the supreme leader any more, and hints that the hard line tack of stealing the election was directed by the Iranian Revolutionary Guard Corps, the country’s religious national guard.

Reports are coming in from Iran that allege that the regime is tracking down and destroying satellite dishes, using helicopters for aerial surveillance of neighborhoods and Basij, the right wing militia (sort of like Mussolini’s Black Shirts) to do the breaking and entering. Kindly neighbors who have tried to warn suspected satellite dish owners that the militiamen were coming have sometimes reportedly themselves been arrested.

SF Techie helps Iranian protests.

The most hypocritical thing?

I dunno; there’s an awful lot of competition for the title. Maybe.

Paul Krugman: Taking the Hypocritical Oath

I know it’s a tough competition, but this just might be the most hypocritical thing I’ve seen in the past year:

On Monday, Sens. Jon Kyl (R-AZ), Mitch McConnell (R-KY), and Pat Roberts (R-KS) introduced the “Preserving Access to Targeted, Individualized, and Effective New Treatments and Services (PATIENTS) Act of 2009,” a new bill prohibiting Medicare or Medicaid from using “comparative effectiveness research to deny coverage.”

How bad is it? Let me count the ways.

1. Politicians who rail against wasteful government spending are taking action to prevent the government from reining in … wasteful spending.

2. Politicians who warn that the burden of entitlements is killing the federal budget are stepping in to block … the single most painless route to reducing the growth of entitlements.

3. They’re doing it in the name of avoiding “rationing of health care” … but they’re specifically addressing taxpayer-funded care. If you want to go out and buy a medically useless treatment, Medicare won’t stop you.

4. These same politicians are, of course, opposed to efforts to expand coverage. In other words, it’s evil for government to “ration care” by only paying for things that work; it is, however, perfectly OK, indeed virtuous, to ration care by refusing to pay for any care at all.

Depressing to be Krugman

Well, maybe so, but this is an especially acute angle on the question. This is John Hinderaker writing at Power Line in August 2005. I forget how I got there.

61B15090-93BB-41A7-B35B-B4305AAA9C15.jpgIt must be depressing to be Paul Krugman. No matter how well the economy performs, Krugman’s bitter vendetta against the Bush administration requires him to hunt for the black lining in a sky full of silvery clouds. With the economy now booming, what can Krugman possibly have to complain about? In today’s column, titled That Hissing Sound, Krugman says there is a housing bubble, and it’s about to burst:

Meanwhile, the U.S. economy has become deeply dependent on the housing bubble. The economic recovery since 2001 has been disappointing in many ways, but it wouldn’t have happened at all without soaring spending on residential construction, plus a surge in consumer spending largely based on mortgage refinancing. Did I mention that the personal savings rate has fallen to zero?

Now we’re starting to hear a hissing sound, as the air begins to leak out of the bubble. And everyone — not just those who own Zoned Zone real estate — should be worried.

Well, if we believed anything Krugman writes, we’d be worried all the time. …

What, we worry? But wait, there’s more:

There are, of course, obvious differences between houses and stocks. Most people own only one house at a time, and transaction costs make it impractical to buy and sell houses the way you buy and sell stocks. Krugman thinks the fact that James Glassman doesn’t buy the bubble theory is evidence in its favor, but if you read Glassman’s article on the subject, you’ll see that he actually makes some of the same points that Krugman does. But he argues, persuasively in my view, that there is little reason to fear a catastrophic collapse in home prices.

Krugman will have to come up with something much better, I think, to cause many others to share his pessimism.

Lubbock Lights

91284A7D-3A45-404A-BD7E-8DFF4FD69E39.jpg

154B79CE-FF76-48A7-8B88-E56EBBDFC5D0.jpgThe Flatlanders (Jimmie Dale Gilmore, Joe Ely, Butch Hancock) (isn’t that a fine photo?). Terry Allen, Tommy X Hancock. David Byrne(!).

A sweet documentary of the Lubbock-area music scene as exemplified by a bunch of fine musicians, every one a mensch. Great music making, and great movie making. You know I haven’t steered you wrong before; why would I this time?