1. Cash for Clunkers, probably the best plank in the economic recovery platform (one conservatives have favored from the start), is dissolving into chaos because far more people than anticipated have taken the government up on the deal. Senator Schumer is recommending more funds for the program. He’s right. The Chinese had a program where they gave out vouchers that would count for thousands of yuan toward the purchase of cars, and that too worked swimmingly. They work well because they put the funds directly into the private sector, and the purchasing power into the hands of the people. The money is not funneled through corrupt bureaucracies, not directed by kleptocrats and pork-barrel politicians according to electoral calculations.
My two cents: take money out of so many of the wasteful areas of the stimulus and increase the cash for clunkers program, perhaps even making it available to those who don’t have “clunkers” to trade in. The money would be put directly into the economy, immediately, it would help those who need automobiles for their jobs, and of course it would help the automobile industry.
Republicans have been happy to turn the chaos into an object lesson in how the government cannot be trusted to run anything well (health care reform, hint hint), and some do oppose Cash for Clunkers as “another act of generational theft.” Well, the government is good at running some things (the military, the mail) and very poor at other things. Many on both sides of the aisle like the program, or at least it’s a far better way to spend stimulus money than other ways. But we have a program that is working and we should keep it so.
2. A very intelligent read of Obama’s poll numbers right here.
3. The House of Representatives has voted to restrict pay at banks, mortgage lenders and financial services companies with over $1 billion in assets. This is largely symbolic, since they know full well that no such measure would make it through the Senate and the Oval Office. The House is prone to these sorts of things, as when it passed a 90% tax on bonuses after the AIG bonus debacle. Since I wrote critically about executive compensation at Patheos here, I should clarify that I am not in favor of these sorts of measures. If anything like this actually passed, it would harm banks and financial institutions precisely when we need them to form a stronger backbone for our economy.
But for populist political theater, it’s pure gold. Rep. Melvin Watt said, “This is not the government taking over the corporate sector. It is a statement by the American people that it is time for us to straighten up the ship.”
“This is not the government taking over the corporate sector,” dubbed insurance companies “villains.”, D-N.C, said of the House action. “It is a statement by the American people that it is time for us to straighten up the ship.” On another note, Nancy Pelosi
4. One of the best things I’ve read on the health care reform issue is at Reason online. Shikha Dalmia‘s piece, in an inverse way, agrees with Paul Krugman’s yesterday in the New York Times. If we think we have free market health care right now, we’re mistaken. Krugman made this a reason to have faith in government-run health care; it’s not really that far a leap from where we are presently, he argued, and where health care is presently almost entirely government run–Medicare–people seem pretty happy with it. Not a bad argument. Dalmia argues, rather, that many of the problems we face with our current health care system (especially the high cost, roughly 15% of our GDP, which is higher than any other nation) is due to the peculiar way in which we have cobbled together private and public elements into our system. I quote at length:
The major difference between America and Europe of course is that America does not guarantee universal health insurance whereas Europe does. But this is not as big a deal as it might seem. Uncle Sam, along with state governments, still picks up nearly half of the country’s $2.5 trillion annual health care tab.
More importantly, contrary to popular mythology, America does offer public care of sorts. It directly covers about a third of all Americans through Medicare (the public program for the elderly) and Medicaid (the public program for the poor). But it also indirectly covers the uninsured by—at least in part—paying for their emergency care. In effect, anyone in America who does not have private insurance is on the government dole in one way or another.
This is not radically different from France, where the government offers everyone basic public coverage, of course—but a whopping 90% of the French also buy supplemental private insurance to help pay for the 20% to 40% of their tab that the public plan doesn’t cover.
Meanwhile, in Germany, about 12.5% of Germans who are civil employees or above a certain income opt out of the public system altogether and rely solely on private coverage—even though they know it is well nigh impossible to return to the public system once they switch. And more Germans likely would go private if they were not legally banned from doing so.
The most striking similarity between America, France and Germany, however, is the model of “insurance” upon which their health care systems are based. In other insurance markets, the more coverage you want, the more you have to pay for it. Consider auto insurance, for instance. If you want everything—from oil changes to collision protection—you’d have to pay more than someone who wants just basic collision protection. That’s not how it works in health care.
For the same flat fee—regardless of whether it is paid for primarily through taxes as in France in Germany or through lost wages as in America—patients in all three countries effectively get an ATM card on which they can expense everything (barring co-pays) regardless of what the final tab adds up to.
The point itself is sound. We do not have a truly free market when it comes to health care. No one in the United States is truly “uncovered,” because he or she can always receive care at emergency rooms. Much of the US is covered by public plans, and much of the private market is profoundly shaped by government mandates. And given a bottomless ATM card, who wouldn’t spend extravagantly? And given patients with bottomless ATM cards, doctors are not incentivized to be thrifty either.
If the point is sound, however, the question is what to do about it. Are we willing to move to a truly free market, where health insurance companies, like auto insurance companies, offer a variety of different plans at different rates–this could be combined with a safety net system, even as one leaves the private insurers free to insure however they wish. We would have to surrender the notion that practically unlimited health care is a right. Yet the American people do not seem ready for this. I can’t say that I blame them. Health care is not quite like automotive care, is it?
5. Larry Kudlow is feeling great about the rise in stocks, seeing a deep and extended movement toward economic recovery. Companies have made adjustments and the fittest are surviving and reaping the benefits:
And here’s the economic deal: Businesses have made the necessary cost-cutting adjustments to jobs, salaries, and inventories to restore profitability. (My hunch is that businesses fired too many people when the credit roof fell in and the economic bottom fell out.) It’s a classic, Austrian, Ludwig von Mises corrective to prices and production. As the economy rises, lean-and-mean companies will reap a profitable harvest. Profits are the mother’s milk of stocks, business, and the economy. As profits heal, consumer incomes and spending will rebound.
Kudlow, a conservative, believes that extravagant government spending will lead to problems with inflation, and tax increases scheduled for the years ahead will make this a slower recovery than previous recoveries. Nonetheless, he thinks, this is a recovery with legs. Let’s hope he’s right. At least one commentator (again, obviously, writing from the Right) believes that the market is rallying in part because it believes that Obama’s health care reform is not likely to be realized–or at least it will emerge in a much milder form.
6. Today’s Two-Sides. Democratic Representative Rush Holt writes at Huffington Post that the same people (or, one presumes, the same sort of people, or people with the same ideology, he thinks) who oppose health care reform now once stood against Medicare.
This week we marked the 44th anniversary of the creation of the Medicare program. With former President Harry Truman — a strong advocate for national health care — at his side, President Lyndon Johnson signed the program into law.
Today, we hear strong echoes of that debate: inefficient and costly government. Putting the government between the doctor and the patient. Socialized medicine.
Although Medicare now is widely seen as a successful program for helping Americans access health care, it was very controversial when it was passed. The same arguments against health care reform today were made then. Some leaders from Bob Dole to Gerald Ford fought the program and voted against its creation.
For another perspective, try Mark Steyn. He might be one of the funniest political writers today, but this one combines a little more seriousness. A health care bill was passed through an important committee last night, though I think the AP overstates the case when it calls it a “triumph” for the Obama administration (I’ve noticed David Espo cheerleading more than once). Neither is it accurate to say that this was a “party line” vote, since 5 Democrats voted against it.
The bill that passed the Energy and Commerce Committee includes the “public option,” where a government health care plan competes with private plans. This remains one of the most contentious issues. The idea is to provide a low-cost alternative that will, through force of competition, keep private insurers from raising their costs too high; the concern on the part of Republicans and some Democrats is, for a variety of reasons, that this will lead to the death of private insurers and eventually a single-player system, where the government plan is the only plan, so there is no more competition, options and freedom. Barney Frank, for instance, said that a public option is “the best way” to get to a single-payer system.
7. John McCain claims that his only regret in choosing Palin is that his team did not anticipate the ferocity of the attacks that would be launched against her (h/t Hot Air). The interview is worth reading in full, though the description at the beginning is especially telling. John McCain really is furious about earmarks and pork. In the article, he objects to how “they are putting $6 million of pork into Homeland Security.” And of course he’s correct–what does a museum in Omaha ($200,000 requested, and almost surely won, by Ben Nelson, Dem. Senator from Nebrasks) have to do with national defense?
$6 million is a pittance when we’re throwing billions and trillions here and there. But I am increasingly convinced (I was at the time of the campaign, and am even more so now) that McCain’s right that this is a “disease” that effects the way everything is done in Washington. It further corrupts what was already a very corrupt political machine, and its effects cannot be measured in the relatively small percentage of the budget it reflects.
Both parties should be upset about pork barrel politics. And McCain is right that the Republican party, in particular, is undermined by it, because they are supposed to be the party of fiscal conservatism. Republicans undermine their own message, show a fundamental hypocrisy, and lose credibility with the voters on a massive scale when they indulge in this sort of waste.