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May 18, 2009

Economist's View - 5 new articles

"The Health Care Cave-In"

Health care reform legislation must include "a real Medicare-like public option":

The Health Care Cave-In, by Robert Reich: "Don't make the perfect the enemy of the better" is a favorite slogan in Washington because compromise is necessary to get anything done. But the way things are going with health care, a better admonition would be: "Don't give away the store."

Many experts have long agreed that a so-called "single-payer" plan is the ideal... Not surprisingly, insurance and drug companies have been dead-set against a single payer for years. And they've so frightened the public into thinking that "single payer" means loss of choice of doctor (that's wrong -- many single payer plans in other nations allow choices of medical deliverers) that politicians no longer even mention it.

On the campaign trail, Barack Obama pushed a compromise -- a universal health plan that would include a "public insurance option" resembling Medicare, which individual members of the public and their families could choose if they wished. This Medicare-like option would at least be able to negotiate low rates and impose some discipline on private insurers.

But now the Medicare-like option is being taken off the table. Insurance and drug companies have thrown their weight around the Senate. And, sadly, the White House -- eager to get a bill enacted in 2009 rather than risk it during the mid-term election year of 2010 -- is signaling it's open to other approaches. ...

It's still possible that the House could come up with a real Medicare-like public option and that Senate Dems could pass it under a reconciliation bill needing just 51 votes. But it won't happen without a great deal of pressure from the White House and the public. Big Pharma, Big Insurance, and the rest of Big Med are pushing hard in the opposite direction. And Democrats are now giving away the store. As things are now going, we'll end up with a universal health-care bill this year that politicians, including our President, will claim as a big step forward when it's really a step sideways.


Paul Krugman: The Perfect, The Good, The Planet

Is the proposed climate change bill good enough to support, or have compromises watered it down so much that it would be better to hold out in the hopes of getting something better?:

The Perfect, The Good, The Planet, by Paul Krugman, Commentary, NY Times: In a way, it was easy to take stands during the Bush years: the Bushies and their allies in Congress were so determined to move the nation in the wrong direction that one could, with a clear conscience, oppose all the administration's initiatives.

Now, however, a somewhat uneasy coalition of progressives and centrists rules Washington, and staking out a position has become much trickier. Policy tends to move things in a desirable direction, yet to fall short of what you'd hoped to see. And the question becomes how many compromises, how much watering down, one is willing to accept. ...

If we're going to get real action on climate change any time soon, it will be via some version of legislation proposed by Representatives Henry Waxman and Edward Markey. Their bill would limit greenhouse gases by requiring polluters to receive or buy emission permits, with the number of available permits — the "cap" in "cap and trade" — gradually falling over time.

It goes without saying that the usual suspects on the right have denounced Waxman-Markey: global warming isn't real, emission limits will destroy the economy, yada yada. But the bill also faces opposition from some environmentalists, who are balking at the compromises the sponsors made to gain political support. ...

Al Gore has praised the bill... A number of environmental organizations ... have also come out in strong support. But Greenpeace has declared that it "cannot support this bill in its current state." And some influential environmental figures ... oppose the whole idea of cap and trade, arguing for a carbon tax instead.

I'm with Mr. Gore. The legislation now on the table isn't the bill we'd ideally want, but it's the bill we can get — and it's vastly better than no bill at all.

One objection — the claim that carbon taxes are better than cap and trade — is, in my view, just wrong. In principle, emission taxes and tradable emission permits are equally effective at limiting pollution. In practice, cap and trade has some major advantages, especially for achieving effective international cooperation.

Not to put too fine a point on it, think about how hard it would be to verify whether China was really implementing a promise to tax carbon emissions, as opposed to letting factory owners with the right connections off the hook. By contrast, it would be fairly easy to determine whether China was holding its total emissions below agreed-upon levels.

The more serious objection to Waxman-Markey is that ... in the first years of the program's operation more than a third of the ... emission permits would be handed over at no charge to the power industry.

Now, these handouts wouldn't undermine the policy's effectiveness..., polluters ... still have an incentive to reduce their emissions, so that they can sell their excess permits to someone else. ... But handing out emission permits does, in effect, transfer wealth from taxpayers to industry. So if you had your heart set on a clean program, without major political payoffs, Waxman-Markey is a disappointment.

Still, the bill represents major action to limit climate change. ... And by all accounts, this bill has a real chance of becoming law in the near future. So opponents of the proposed legislation have to ask themselves whether they're making the perfect the enemy of the good. I think they are.

After all the years of denial, after all the years of inaction, we finally have a chance to do something major about climate change. Waxman-Markey is imperfect, it's disappointing in some respects, but it's action we can take now. And the planet won't wait.


"The Paradox of Declining Female Happiness"

Why has women's happiness declined relative to men's?:

The Paradox of Declining Female Happiness, by Betsey Stevenson and Justin Wolfers, NBER Working Paper No. 14969, May 2009 [open link]: Abstract By many objective measures the lives of women in the United States have improved over the past 35 years, yet we show that measures of subjective well-being indicate that women's happiness has declined both absolutely and relative to men. The paradox of women's declining relative well-being is found across various datasets, measures of subjective well-being, and is pervasive across demographic groups and industrialized countries. Relative declines in female happiness have eroded a gender gap in happiness in which women in the 1970s typically reported higher subjective well-being than did men. These declines have continued and a new gender gap is emerging—one with higher subjective well-being for men.


Geithner's Treasury

Not a very flattering write-up of Tim Geithner's management skills:

At Geithner's Treasury, Key Decisions on Hold Many Advisers' Roles Are Undefined And Others Still Awaiting Confirmation, by David Cho, Washington Post: Seven weeks after the Treasury Department announced that it was ousting General Motors chief G. Richard Wagoner Jr. in the federal bailout of the company, he is still technically on GM's payroll.

Wagoner's removal has been held up because senior Treasury officials have yet to decide whether he should get the $20 million severance package that the company had promised him.

The delay is one of many hitches that have slowed a host of important policy actions in the four months since Timothy F. Geithner became Treasury secretary. While Geithner has taken dramatic steps to address flashpoints in the economy, the work of carrying out those policies has bogged down because critical decisions about how to do so aren't being made...

Government officials, inside the Treasury and out, say the unresolved issues are piling up in part because of vacancies in the department's top ranks. But some of the officials also cite the Treasury's ad-hoc management, which is dominated by a small band of Geithner's counselors who coordinate rescue initiatives but lack formal authority to make decisions. Heavy involvement by the White House in Treasury affairs has further muddied the picture of who is responsible for key issues, the officials add.

One of the department's signature initiatives, considered vital for getting at the root of the financial crisis, aims at relieving banks of their toxic assets. But to those familiar with the program, it remains unclear who will decide some of the practical details, such as whether foreign firms will be allowed to participate in the funds that buy the assets. This uncertainty is slowing the rollout of the program, which in any case has proven daunting to design. Announced in early February, it may not launch until July, officials say. ...

And in the wake of the public firestorm over bonuses paid by American International Group, senior Treasury officials have been meeting several times a week all spring to review, one by one, the payments to the company's executives. But the time-consuming discussions have never resolved whether any of the executives should get paid.

Geithner said in interviews that some of the department's internal difficulties result from the intense pressure on officials to develop a raft of rescue initiatives in a very short time. ...

Still, some lawmakers and government officials said Geithner needs to be a stronger manager. ...

Help could soon be on the way. Confirmation hearings for Neal Wolin, the administration's pick for deputy Treasury secretary, began a week ago. Treasury staff members have been impressed by the management skills of former Fannie Mae chief executive Herbert M. Allison Jr., who awaits confirmation as Geithner's pick to lead the bailout operations. The White House is also seeking to bolster the Treasury's ranks by adding former Clinton press secretary Jake Siewert as counselor to Geithner.

Aside from getting officials into place, Geithner still needs to define the roles of his senior counselors and delegate some decisions to lower-ranking officials, several government officials said. ...

Geithner insists he has been tending to his staff, reaching out across the department in a way his predecessor never did. ... "I know everyone would like a little more clarity about who's going to be working for whom, which we are trying to give them," he said. "But in the interim we are just trying to get stuff done the best we can."

No toxic asset plan until July? I probably don't fully appreciate the difficulties involved, but that's too long.

Update: Former Treasury official Brad DeLong:

...Let us be clear: until the Senate confirms an Assistant Secretary, there is no Assistant Secretary to make decisions. Decisions have to go up to the Secretary--in which case he has to ask one of his six roving counselors what they think the lay of the land is. And these six counselors cannot by the nature of their job have portfolios--you would need fifteen of them, and if there were fifteen of them the Senate would be extremely jealous because they would effectively be assistant secretaries.

The problem is not Tim. The problem is not Larry. The problem is not the NEC or the White House. The problem is the Senate.


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