Archives: 09/2007

Bush and Iraq: The Story vs. the Headlines, Part II

President Bush generally got the headlines that he wanted from his speech to the nation last evening:

Alas, the country didn’t get the policy it wanted — and needed — as many of the stories behind the headlines showed. (Kudos especially to the Post’s Glenn Kessler for his “Fact Check.”)

A majority of Americans favor a timeline for withdrawing troops from Iraq, and 55 percent, according to an ABC News/Washington Post poll, would support legislation mandating that all combat forces be removed from Iraq by next spring. Given that Congress lacks the votes to force the president’s hand, it is highly unlikely that the public will get its way.

The support for a withdrawal timeline — any withdrawal timeline — is understandable. Americans want to know “how this ends.” In a FoxNews/Opinion Dynamics poll taken after Gen. David Petraeus and Ambassador Ryan Crocker had completed some of their congressional testimony, only 24 percent of respondents believed that the U.S. should “pull out [only] after Iraqi troops are capable of taking over.” In other words, more than 3 in 4 rejected the conditions-based withdrawal strategy that the president has advanced since the start of the war. (Remember “We’ll stay as long as necessary, and not a day longer” and “As they stand up, we’ll stand down”?) The president’s speech last night reaffirmed that we would only leave when the Iraqis were capable, a process that most experts believe will take many years.

Six in 10 Americans believe that the costs we have already paid far exceed the benefits that we will receive from invading and occupying Iraq. And they now know, as a result of the Petraeus/Crocker testimony from earlier this week, and from the president’s speech last night, that the costs of this war will continue to mount, at least through the end of the Bush presidency.

Now That’s an Interesting Lede

From the cover story in the September 3rd Weekly Standard:

The fascists are coming! Or rather, they’re already here, installed in the White House, planning like mad to subvert the Constitution and extend their reign in perpetuity, having first suppressed and eviscerated all opposition and put all of their critics in jail. Thus goes the rant of America’s increasingly unhinged left. If only, sigh many Bush partisans, wondering when this administration will get out of the fetal position and show some fighting spirit. [Emphasis in original.]

Now of course the Weekly Standard writer is kidding here. I’m sure of it. The folks at the Standard get a kick out of playing off the left’s caricature of neoconservatives as warmongering fanatics who think civil liberties are for sissies. This 2002 Weekly Standard piece, “The Case for the Empire,” is a classic of the genre. The writer is clearly having us on when he explains that, in the Star Wars movies, Darth Vader is actually the good guy:

the truth is that from the beginning, Lucas confused the good guys with the bad. The deep lesson of Star Wars is that the Empire is good….

the most compelling evidence that the Empire isn’t evil comes in “The Empire Strikes Back” when Darth Vader is battling Luke Skywalker. After an exhausting fight, Vader is poised to finish Luke off, but he stays his hand. He tries to convert Luke to the Dark Side with this simple plea: “There is no escape. Don’t make me destroy you… . Join me, and I will complete your training. With our combined strength, we can end this destructive conflict and bring order to the galaxy.” It is here we find the real controlling impulse for the Dark Side and the Empire. The Empire doesn’t want slaves or destruction or “evil.” It wants order.

Funny stuff, and entirely tongue-in-cheek. Right?… Right?


The Problem with Betting on Every Horse

Dick Komer of the Institute for Justice takes issue today with a recent series of NRO op-eds by Cato’s Adam Schaeffer. I’m sure Adam will want to address some of the legal niceties he raised, so I’m going to restrict myself to explaining why Dick and I see the big picture on school choice policy very differently.

Dick’s position, which is the norm in the school choice movement, is captured by the title of his piece: “Educational Freedom by Every Means Available.” Dick argues that it is “unnecessary” and “premature” to favor some school choice policies over others. I disagree, and here’s why:

Like parents saving for their kids’ college years, advocates of educational freedom have limited resources. And like those parents, we have many different investment options — with different returns and different levels of security. What the “any choice is a good choice” mantra implies is that we should be indiscriminate in the way we invest — that we simply don’t know enough to prefer one school choice policy over another.

That is not the case. In modern times, international experiences with various forms of school choice date back nearly a century. Other relevant precedents in comparative school governance reach back millennia. There is enough evidence – both qualitative and quantitative – to compare our policy options and determine which are most likely to yield real, lasting dividends, and which have serious and as yet unresolved problems. Because that evidence exists, I see it as my duty as a policy scholar to study it and to make recommendations based on it; just as it is the duty of investment advisors to counsel parents on the most suitable investment options for their own children’s futures. If I did anything less I would consider myself guilty of professional malpractice.

Dick is right that states differ and that the legal impediments to vouchers vary among them. In some states, the legal barriers to enacting vouchers appear to be no higher than those to enacting tax credits. But legal barriers to passage are only one of the many respects in which vouchers are more problematic than education tax credits. The central difference between the policies – that vouchers are public funds while non-refundable tax credits are not – leads to a host of substantive differences in their desirability.

As I have already argued at length, and as Adam will argue in a forthcoming policy analysis, the use of government funding has caused existing voucher programs to begin their lives with much more intrusive regulations on participating schools. Direct parent funding is also associated, in the econometric literature, with greater school efficiency and responsiveness to the demands of families. The compulsion of all taxpayers to fund every kind of government approved voucher school also creates social tension over which sorts of schools will be approved, and adds an incentive for interest groups to lobby to exclude types of schooling they find objectionable. Tax credits provide taxpayers with the freedom to direct their educational funding as they see fit, alleviating this problem. Adam has also pointed to polling data and developed political arguments and evidence suggesting that tax credits are more popular with voters and more likely to mobilize constituencies for their long term preservation and expansion.

Finally, Dick is mistaken if he believes that Adam or I want to permanently and universally foreclose on the voucher option. We wouldn’t even if we could. We respect individual freedom, the marketplace of ideas and the laboratory of federalism. States will pursue different school choice policies and will learn from each others’ experiences. But, given the wealth of existing evidence comparing alternative school governance and funding arrangements, we feel it is counterproductive for the school choice movement not to focus its resources where they can best be invested. Betting on every horse, including the ones that you can see limping around the paddock before the start, is no way to invest for the future of American children.

More Bush Administration Lawbreaking

Over at Ars Technica, I report on the latest allegations of illegal activities by the Bush administration. Back in March, a Department of Justice report revealed that the FBI had sent hundreds of letters to telecom providers requesting that due to “exigent circumstances,” the providers turn over customer records without a warrant. The FBI later acknowledged that these letters were improper (read: illegal) and announced that the use of those “exigent letters” had been suspended.

Now, thanks to a freedom-of-information request by the Electronic Frontier Foundation, we learn that some of the letters not only requested call records for specific phone numbers, but also asked the providers to “provide a community of interest” for each phone number. It’s not clear exactly what information was provided in response to that request, but in a Monday blog post, EFF’s Kurt Opsahl argues that the request was almost certainly illegal—and would have been illegal even if they had been made as part of a legally-authorized warrant or national security letter.

“We need a new word for this,” Opsahl writes, “what do you call an illegality piled on top of another illegality? Illegal squared?”

Asked about the latest allegations of executive branch lawbreaking, White House Homeland Security Advisor Fran Townsend pointed to the creation of a new “compliance unit” in the FBI. It’s good to hear the FBI is taking the law so seriously, but I thought the Constitution already provides for a “compliance unit.” It’s called the judicial branch.

A First Step toward Stopping the Growth of Government Health Programs

The debate over expansion of the State Children’s Health Insurance Program is divorced from the reality of who truly needs assistance and the forces that are making health insurance increasingly unaffordable. In “Sinking SCHIP: A First Step toward Stopping the Growth of Government Health Programs,” Cato scholar Michael F. Cannon concludes, “Rather than expand SCHIP, Congress should (1) make private health insurance more affordable by allowing consumers and employers to purchase less expensive policies from other states, and (2) fold federal Medicaid and SCHIP funding into block grants that no longer encourage states to open taxpayer-financed health care to nonneedy families.”

Norwegian Government Attempts Shakedown as Price of Lower Tax on Shipping

In an excellent example of the benefits of tax competition, Bloomberg reports that Norway’s left-leaning government intends to eliminate the corporate tax on shipping because of pressure from Bermuda, Liberia, and other open-shipping registries. But there is a dark lining to this silver cloud. The politicians want to extort $3.5 billion of alleged back taxes as part of the deal. Needless to say, Norway’s shippers are understandably suspicious about any deal that requires higher payments today in exchange for promises of less tax in the future:

The government said after the market closed on Sept. 7 it would seek 20 billion kroner ($3.5 billion) of payments in exchange for scrapping corporate tax on shipping companies. Shippers have been allowed to defer tax since 1996 provided they don’t use the money for dividends. … “The government is reneging on its previous agreement,” said Rikard Vabo, an analyst at Fearnley Fonds in Oslo who has a “sell” recommendation on BW Gas. “We will probably see shippers move abroad. It will also affect related companies, such as suppliers.” … The government wants to abolish corporate tax on shippers because lower rates outside Norway have encouraged companies to register new vessels in countries such as Liberia and Bermuda. … The Oslo-based Norwegian Shipowners’ Association will “consider everything” to reverse the tax ruling, spokeswoman Marit Ytreeide said by phone today.

Response To My USA Today Oped

Regarding my recent USA Today oped about how to reduce the number of U.S. residents who lack health insurance, The Physician Executive writes:

I reviewed the articles which Mr. Cannon offers as references and have trouble connecting the articles to the point being made. There are also some logical inconsistencies.

Some of the confusion stems from the fact that I went on vacation two days before the piece ran, and the mobile phone reception in Zion Canyon is terrible. Thus USA Today had to cut my original oped by about 100 words without any help from me – much to their irritation and that of a few Cato colleagues. Sorry, guys.

So here is my effort to shed some light on some of The Physician Executive’s questions. In each case, I begin with the relevant part of my oped.

“The truth is, there are not 47 million U.S. residents who can’t get health insurance. According to the Department of Health and Human Services, that [Current Population Survey] estimate ‘appears to overstate the uninsured substantially compared to other surveys.’ Those other recent surveys put the number between 19 million and 36 million.”

The Physician Executive notes that the link provided by USA Today takes the reader to a document “which does not support Mr. Cannon’s statement.” True enough, and a result of my being incommunicado. The oped should have linked to this study for the 19 million figure and this study (page 4) for the 36 million figure.

Obtaining the 19-million figure required applying the percentage without any coverage in 2001 as reported by the Survey of Income and Program Participation (6.8 percent of U.S. residents; see page 13 of the former study) to the Census Bureau’s 2001 estimate of the U.S. population, contained here (page 58). Sadly, 2001 is the most recent SIPP estimate of the full-year uninsured that I could locate.

The Physician Executive did miss an error, though. My oped attributes that “appears to overstate” quote to HHS. My original draft attributed that quote to a study prepared for HHS, but the attribution was truncated.

As many as 20% of the ‘uninsured’ are eligible for government health programs, so in effect they are insured.”

Some of those counted among the 47 million “uninsured” are eligible for and enrolled in Medicaid, the mammoth government health program ostensibly for the poor. Other people counted as uninsured are eligible for Medicaid but not enrolled.

The non-partisan Congressional Budget Office notes that the former group – those who are eligible and enrolled in Medicaid – may account for 12-15 percent of the SIPP’s estimates of the full-year “uninsured.” My oped links to a study prepared for HHS that estimates that those who are eligible and enrolled in Medicaid account for 9 million of the 45 million people counted as “uninsured” by the CPS in 2003 (see page 3). That gets you to 20 percent, and we haven’t yet counted the latter group – those eligible for but not enrolled in Medicaid.

“[E]conomists Kate Bundorf and Mark Pauly estimate that as many as 75% of the uninsured can afford to buy insurance.”

The Physician Executive correctly notes that Bundorf and Pauly presented a range of estimates of the share of the uninsured that can afford coverage. The range was 31-76 percent. My original draft gave a range of one-quarter to three-quarters of the uninsured, but I was told to pick a single estimate for clarity’s sake. I picked the larger, and represented it as an upper bound.

Those estimates were based on different definitions of affordability, which are of course inherently subjective. Nevertheless, I used this (apparently credible) estimate by two distinguished economists to support my claim that “there are not 47 million U.S. residents who can’t get health insurance.” I am not sure why The Physician Executive describes my use of that estimate as an “inexplicable peripatetic diversion.” I looked up peripatetic, and I’m still not sure. Perhaps she would prefer an essay on this point. (USA Today would not.)

[M]any economists can find no evidence that [simply expanding coverage] is a cost-effective way to improve health.”

Here I linked to a working paper that The Physician Executive describes (in part) as “a non-peer reviewed piece of secondary literature.” It is in fact an early draft of a chapter in this book, published by the left-leaning Urban Institute. (Both the working paper and the final product reach the same conclusion. I linked to the former so people could read the author’s perspectives without purchasing the book.) That chapter concludes:

It is clear that expanding health insurance is not the only way to improve health…Policies could also be aimed at factors that may fundamentally contribute to poor health, such as poverty and low levels of education. There is no evidence at this time that money aimed at improving health would be better spent on expanding insurance coverage than on any of these other possibilities.

In other words, if your aim is to improve people’s health, it is not clear that expanding health insurance coverage is the way to do it. (As far as I know, that claim is not controversial among economists.) Of course, if your aim is to pump more money into the health care sector, expanding coverage is the way to go.

“Simply expanding coverage would have little effect on the quality of care, health disparities, or how long we live, nor would it stop free-riders from shifting costs to others.”

The Physician Executive raises questions about each of these claims. Here’s more information about each:

  1. The “quality of care” link takes the reader to a well-respected study that observes: “We found that health insurance status was largely unrelatedto the quality of care among those with at least minimal accessto care. Although having insurance increases the ease of accessto the health care system, it is not sufficient to ensure appropriateuse of services or content of care. Indeed, within systems whereaccess to care is more equitable … substantial gaps between observedand optimal quality remain.”
  2. The “health disparities” link refers to a study that observes: “Although increasing insurance coverage and access to care would most likely contribute to narrowing disparities … the available data suggest that the variation in health plan coverage … is small relative to the very large gradient in health outcomes. It is likely that expanding insurance coverage alone would still leave huge disparities in young and middle-aged adults.”
  3. How long we live” links to a New York Times article where the invaluable Gina Kolata writes that health economists find that health insurance “pale[s] in comparison” to education when it comes to extending longevity. Kolata quotes Rand Corporation health economist James Smith as saying that health insurance “is vastly overrated in the policy debate.”
  4. Free-riders from shifting costs to others” links to a study by two Urban Institute scholars who estimate that uninsured free-riders account for just 2.8 percent of health care spending. Moreover, 1.2 percent of health care spending is attributable to insured free-riders. Thus, despite there being precious little free-riding to begin with, expanding coverage to everyone still wouldn’t eliminate it.

“[A]ccording to data from the Kaiser Family Foundation, that family spends $11,000 for its own employer-controlled coverage.”

The Physician Executive is puzzled:

The Kaiser Family Foundation says that the average family of four spends $11,000 a year. Individuals are pegged at $4,000. What the average cost per employee is, I just don’t know. Using one number without the other is not an honest presentation of the problem and I may be a little dense here… what was the point? Health care is expensive? We know that.

Obviously, self-only coverage is cheaper and all coverage is expensive.

My point, however, was not about families versus individual workers, nor is it about how much health insurance actually costs. My point is about who controls the money. My initial draft read:

the average family of four will spend roughly $25,000 on health insurance this year: $14,000 in taxes to fund government programs for others; and $11,000 for its own employer-controlled coverage.

More than 200 million Americans have public or employer-controlled coverage, and all are essentially purchasing it with someone else’s money. And that’s the problem …

A substantial chunk of workers’ earnings go to health care, but workers own and control essentially none of that money. We would have a far more efficient, accessible, and useful health care sector if they did.

Actually, the Kaiser Family Foundation today released an updated estimate of the average cost of employer-controlled family coverage: $12,106 (see page 24). So we might make the total $26,000. Or not. My point is qualitative, not quantitative.

Much of what we believe about the uninsured and expanding coverage is deeply ingrained, intuitively appealing, and wrong. You can’t challenge that kind of conventional wisdom without getting some very educated and incredulous blowback.