Economics / Politics

Defense and criticism of the Erskine Bowles – Alan Simpson proposals to reduce government spending is all over the map. Some believe It’s About Time these ideas were advanced, while others decry them as fatcat corporatism-as-usual. Michael Hiltzik leans towards the latter, but his arguments are far more thoughtfully researched and articulated than most of the other talking heads’.

“According to the Congressional Budget Office, the cause of deficit growth in the future won’t be spending on conventional government services, which will consume a steady 8.4% to 8.6% of gross domestic product from 2020 through 2080 (down from today’s stimulus-driven 16%). It’s not Social Security, which has its own revenue source and will stick at 5.3% to 6.1% of GDP over that period. It’s Medicare and Medicaid, which are projected to grow from 5.3% of GDP this year to 17.2% in 2080.
“Yet Simpson and Bowles slash away chiefly at the first two categories. They want to charge admission fees to the Smithsonian, cut funding for the Corporation for Public Broadcasting, cut foreign aid, eliminate federal funds for safety, security and runway improvements at major airports, and eliminate anti-violence and drug-abuse programs at public schools.”

“The co-chairs have very little concrete to say about Medicare and Medicaid, and some of what they do say comes straight from the Republican playbook. One of their bullet points on reducing healthcare costs is to impose tort reform to “pay lawyers less and reduce the cost of defensive medicine.” This hardy perennial is code for shutting the courthouse door to individuals or families seeking appropriate redress for medically induced injuries or deaths. Not coincidentally, it would cut revenue for trial lawyers, who Republicans think are all Democrats.
“How much have lawsuits and “defensive medicine” actually contributed to the rising cost of healthcare? According to CBO testimony in 2008, zero percent. That’s right, zero.”

Now, certainly, the legal mechanisms of medical litigation need some serious adjustment. But I think Hiltzik’s right in calling this out as a partisan political dog-whistle rather than a serious attempt at solving larger governmental cost issues.,0,114763.column


Andrew Sullivan has been as constructively critical of President Obama as most real journalists, left or right. He’s got a good grasp of the big picture. But there’s a word for people who don’t think Obama believes in American exceptionalism: Bullshit.

“If a black Republican president had come in, helped turn around the banking and auto industries (at a small profit!), insured millions through the private sector while cutting Medicare, overseen a sharp decline in illegal immigration, ramped up the war in Afghanistan, reinstituted pay-as-you go in the Congress, set up a debt commission to offer hard choices for future debt reduction, and seen private sector job growth outstrip the public sector’s in a slow but dogged recovery, somehow I don’t think that Republican would be regarded as a socialist.”

Middle East

Sadly, here’s more evidence that the Israeli government isn’t remotely interested in honestly brokering a two-state solution.

“Israel’s parliament has passed a bill setting stringent new conditions before any withdrawal from the Golan Heights or East Jerusalem.
“Israel considers the Golan Heights and East Jerusalem to be under its sovereignty, although Syria claims the Golan Heights and the Palestinians claim East Jerusalem.
“Unlike the occupied West Bank, which Israel has never formally annexed, the Golan Heights and East Jerusalem are considered by the Israeli government to be under its sovereignty.
“The international community considers both the Golan and East Jerusalem to be occupied territory.
“Syria requires the return of all of the Golan Heights as the primary condition for a peace treaty with Israel.
“Palestinians want East Jerusalem as the capital of a future state.
“Israel has occupied the West Bank – including East Jerusalem – since 1967, settling nearly 500,000 Jews in more than 100 settlements. They are considered illegal under international law, although Israel disputes this.”

Economics / Socioculture

When banks are good, they can be very good. But when banks are bad…

“In effect, many of the big banks have turned themselves from businesses whose profits rose and fell with the capital-raising needs of their clients into immense trading houses whose fortunes depend on their ability to exploit day-to-day movements in the markets. Because trading has become so central to their business, the big banks are forever trying to invent new financial products that they can sell but that their competitors, at least for the moment, cannot. Some recent innovations, such as tradable pollution rights and catastrophe bonds, have provided a public benefit. But it’s easy to point to other innovations that serve little purpose or that blew up and caused a lot of collateral damage, such as auction-rate securities and collateralized debt obligations. Testifying earlier this year before the Financial Crisis Inquiry Commission, Ben Bernanke, the chairman of the Federal Reserve, said that financial innovation “isn’t always a good thing,” adding that some innovations amplify risk and others are used primarily “to take unfair advantage rather than create a more efficient market.”
“Other regulators have gone further. Lord Adair Turner, the chairman of Britain’s top financial watchdog, the Financial Services Authority, has described much of what happens on Wall Street and in other financial centers as “socially useless activity”—a comment that suggests it could be eliminated without doing any damage to the economy. In a recent article titled “What Do Banks Do?,” which appeared in a collection of essays devoted to the future of finance, Turner pointed out that although certain financial activities were genuinely valuable, others generated revenues and profits without delivering anything of real worth—payments that economists refer to as rents. “It is possible for financial activity to extract rents from the real economy rather than to deliver economic value,” Turner wrote.”

Politics / Health Care

The good news is that some consolidation of health-care institutions, like hospital systems, will streamline and reduce health care costs. The bad news is that those institutions want the consolidation streamlined by removing lots of anti-trust and fraud regulations. Some of that may serve the greater good, and some of that may be greedy and opportunistic. We’re about to find out how helpful, or destructive, the government can be on balancing these shifts.

“When Congress passed the health care law, it envisioned doctors and hospitals joining forces, coordinating care and holding down costs, with the prospect of earning government bonuses for controlling costs.
“Now, eight months into the new law there is a growing frenzy of mergers involving hospitals, clinics and doctor groups eager to share costs and savings, and cash in on the incentives. They, in turn, have deployed a small army of lawyers and lobbyists trying to persuade the Obama administration to relax or waive a body of older laws intended to thwart health care monopolies, and to protect against shoddy care and fraudulent billing of patients or Medicare.
“Consumer advocates fear that the health care law could worsen some of the very problems it was meant to solve — by reducing competition, driving up costs and creating incentives for doctors and hospitals to stint on care, in order to retain their cost-saving bonuses.
“The new law is already encouraging a wave of mergers, joint ventures and alliances in the health care industry,” said Prof. Thomas L. Greaney, an expert on health and antitrust law at St. Louis University. “The risk that dominant providers and dominant insurers may exercise their market power, individually or jointly, has never been greater.”

“In a recent letter to federal officials, Charles N. Kahn III, president of the Federation of American Hospitals, said, “To provide a fertile field to develop truly innovative, coordinated-care models, the fraud and abuse laws should be waived altogether.”
“These laws are an impediment and, in some cases, “a total barrier” to creation of accountable care organizations, Mr. Kahn said, making it difficult for hospitals to reward doctors for cutting costs or following best practices.”