Timmy Throws a Temper-Tantrum

As reported in yesterday’s Wall Street Journal, Treasury Secretary Tim Geithner called fellow bank regulators, included Fed Chair Ben Bernanke and FDIC Chair Sheila Bair, over for an obscenity-laced rant about their audacity in raising questions about his scheme to fix our financial system.

Reportedly the Secretary told regulators that “enough is enough” and that they’ve been heard, so the time for debate is over.  This sounds eerily like the President’s previous comments about including Republicans in the talks over the stimulus - you’ve been heard, so you were “included,” now shut up.   The shouting down of debate is becoming all too much a signature of this Administration.

The Secretary apparently also told the regulators in attendance that it was the administration and the Congress that sets policy.  Perhaps next he’ll tell us that the power of the purse lies with the Treasury and the Congress.  Secretary Geithner has no more constitutional authority to set policy than do any of the bank regulators.  It is the job of Congress to make laws, not the Treasury Secretary’s.  He can offer his opinion, just as they can, and should, offer theirs.

Of course, Secretary Geithner’s frustrations are understandable, given that his regulatory proposals have hit a brick-wall with both Congress and the Public.  He has made no effort to explain to either Congress or the public how exactly his plan will stop future bailouts.  Instead, any reasonable read of his proposal would lead to the conclusion that we will have more bailouts, rather than less, under the Obama-Geithner plan.  Instead of directing his energies at anger, he should put them toward coming up with solutions that actually increase the stability of our financial system.

We were all told during his confirmation process that we must overlook such facts as his failure to pay taxes, because Tim Geithner was the “boy-wonder” who would save our financial system.  As his recent out-bursts demonstrate, “boy-wonder” is only half-right.

The Boston Globe Misleads Readers About the Cost of Health Reform in Massachusetts

An editorial in today’s Boston Globe announces, “Mass. bashers take note: Health reform is working.” The editors write:

Pundits and politicians who oppose universal healthcare for the nation have a new straw man to kick around - the Massachusetts reform plan that covers more than 97 percent of the state’s residents. In the myth that these critics have manufactured, this state’s plan is bleeding taxpayers dry, creating nothing less than a medical Big Dig.

The facts - according to the Massachusetts Taxpayers Foundation - are quite different. Its report this spring put the cost to the state taxpayer at about $88 million a year, less than four-tenths of 1 percent of the state budget of $27 billion.

Here’s why the claim that the reforms cost Massachusetts taxpayers just $88 million per year is wrong.

  1. According to the Massachusetts Taxpayers Foundation, $88 million is not the annual cost of the law, but the average year-to-year increase in state spending due to the law.  It’s a marginal-cost estimate, not a total-cost estimate.
  2. The foundation used (uncertain) future spending cuts to make the average annual increase in spending appear smaller.  In 2009, the total cost to the state government, according to the foundation, will be $408 million, nearly five times what the Globe claims.
  3. That $408 million is just the cost to the state government.  According to the foundation’s estimates, the state government’s share amounts to just 20 percent of the law’s total cost of $2.1 billion in 2009. The remaining 80 percent is borne by the federal government (20 percent) and private individuals and employers complying with the law’s individual and employer mandates (60 percent).  Since Massachusetts taxpayers also pay federal taxes and must comply with the law’s mandates, state taxpayers pay much more than $88 million to comply with the law.  In fact, the total cost of the law is about 24 times what the Globe says it is.

So the Globe is wrong.  But here’s why the Globe should have known better.

I recently wrote an op-ed where I picked apart the Massachusetts Taxpayers Foundation numbers.  The op-ed hardly “manufactured myths” or “kicked around straw men.”  I reached these conclusions using the foundation’s own data, and by talking with foundation president Michael Widmer.  Widmer agrees with all of these points.  (With one exception: he maintains it’s legitimate to use assumed future savings to reduce the average year-to-year increase in spending.  But really, that’s a minor issue.)

I submitted that op-ed to The Boston Globe.  They sat on it for a week, then rejected it.  Which is fine. (FYI, the op-ed has been accepted at The Providence Journal.)

At a minimum, that raises the question of whether this misinformation was in fact disinformation.

On Health Reform, Massachusetts Is the Model

Last week, former Massachusetts governor Mitt Romney (R) penned a wonderfully misleading oped for USA Today. In response, I submitted this poor, unsuccessful letter to the editor:

If Massachusetts were covering the uninsured for less than $800 a pop, as former Gov. Mitt Romney suggests [“Mr. President, What’s the Rush?”, July 30], then the health reforms he signed in 2006 would truly be a model for the nation.  Yet data from the very watchdog organization Romney cites (the Massachusetts Taxpayers Foundation) indicate something different.

The Massachusetts reforms cost more than five times what Romney claims, because the state pushed more than 80 percent of the cost off-budget, and onto private individuals and the federal government.  In fact, “RomneyCare” covers a family of four at a cost of at least $27,000 – more than twice the average cost of employer-sponsored coverage ($12,680).

Romney is correct that President Barack Obama has the wrong prescription for health reform.  But that’s because Obama’s approach is Romney’s approach.  Like Romney, Obama would have government force people to purchase health insurance; control the content, terms, and price of “private” health insurance policies; expand Medicaid; and create new government subsidies and bureaucracies.  Like Romney, Obama would push most of the cost off-budget by imposing mandates on states and private individuals – which constitutes a huge tax increase on the middle class.

ObamaCare, like RomneyCare, is socialized medicine with a private façade.

“Ad Audit” Audit

Kaiser Health News has launched a new “Ad Audit” series that critiques the TV ads that various groups are airing both to promote or hinder the health care reforms moving through Congress.  KHN correspondent Jordan Rau makes two solid contributions to the series.  Two other audits leave something to be desired, however, while a fifth audit is just…well, you decide.

One lackluster audit examines an ad by the health-insurance lobby, AHIP.  KHN dings AHIP for making bland statements in support of “bipartisan reforms” and “universal coverage” without offering “policy specifics about what these statements mean.”  But the AHIP ad does make two policy statements that are susceptible to analysis:

If everyone’s covered, we can make health care as affordable as possible. And the words “pre-existing condition” become a thing of the past.

How is covering everybody supposed to make health care more affordable?  Might there be a downside to requiring insurers to cover pre-existing conditions?  KHN provides no analysis of the former statement.  And rather than analyze the latter, KHN offers a spat between a left-leaning analyst and an AHIP lobbyist (I suppose that’s considered a balanced discussion) over whether AHIP’s proposed price controls go far enough.

Another lackluster audit examines an ad by Healthy Economy Now, a coalition comprised of “the Pharmaceutical Research and Manufacturers of America (PhRMA), AARP, the American Medical Association, the Advanced Medical Technology Association, Business Roundtable, Families USA and the Service Employees International Union.”  This ad also provides fertile ground for analysis:

If we don’t act, medical bills will wipe out their savings…she’ll be denied coverage because of a pre-existing condition and he won’t get the chemotherapy he needs…health care costs will rise 70 percent…But we can act. The president and Congress have a plan to lower your costs and stop denials for pre-existing conditions.

Medical bills are wiping out many people’s savings – but would the Democrats’ legislation put an end to that?  Again, are there any trade-offs involved in forcing insurers to cover pre-existing conditions?  Might insurers stint on things like chemo because that would spur cancer patients to switch to other insurers (where they would bring down the competition’s bottom line)?  Would health care costs grow more or less rapidly under the Democrats’ reforms?  What does the Congressional Budget Office have to say?  In place of such useful analysis, KHN merely reports that the ads are meant to influence the Blue Dogs, who had been holding up the Democrats’ health plans.  (Of course, that in itself is interesting: why are these disparate groups so unified in their desire to see the Democrats’ reforms enacted?  It’s a wonderful opportunity to test out the “bootleggers and Baptists” theory of regulation.  But KHN…not interested.)

Yet the worst “audit” has to be KHN’s treatment of an ad by the group Conservatives for Patients’ Rights.  KHN provides all the reasons that people should be suspicious of the ad and its sponsors: CPR was founded by a rich guy, who was ousted from his former gig as a hospital CEO amid fraud investigations, and who hired the “Swift Boat” crew to do his PR.  Fair enough.

KHN goes off the rails, however, when it critiques the ad’s content.  The ad states:

Some of Congress’ health care plans could squeeze you four ways. It could raise taxes by $600 billion—even taxing soda. It could add a trillion to the federal deficit. New rules could hike your health insurance premiums 95 percent. You still might end up on their government-run health plan.

KHN reports, “the facts are largely taken out of context, come from biased industry groups or have been discredited.”

KHN quotes the Urban Institute’s John Holahan as saying, “There’s absolutely nothing here that’s right. It’s unbelievable.”  But regarding the $600-billion figure, KHN then writes, “Holahan says that number could turn out to be right, but it likely will be less.”  Well, which is it?  CPR says the tax hike could reach $600 billion.  Holahan says it could, too.  So how is it that CPR’s claim is absolutely, unbelievably not right?  How could KHN not notice that contradiction?

“And,” KHN ads, “a soda tax is just one of many proposed revenue-raisers, including a cap on the tax deductibility of insurance premiums, a tax on the wealthy and an alcohol tax.” So what?  Does that make the soda-tax claim untrue?  Or even misleading?

KHN then challenges CPR’s “could add a trillion to the federal deficit” claim again by quoting Holahan:

It’s almost impossible to both say that you’re going to raise taxes by $600 billion and increase the deficit by $1 trillion—that means there’s no savings at all anywhere. That can’t be right.

First, that’s not what the ad claims.  The ad claims only that either could happen.  Second, given the difficulties that Democrats are having in paying for their reforms, and the tendency of government health programs to exceed spending projections, it’s not that unreasonable to think that both could happen.

Regarding the “could hike your health insurance premiums 95 percent” claim, KHN quotes Holahan as saying, “premiums are ‘almost guaranteed’ to grow 95% over a 10 year period” anyway.  CPR’s claim has to do with the effects of imposing price controls on health insurance premiums (i.e., banning exclusions for pre-existing conditions), which would increase premiums for the healthy.  Holahan does not refute CPR’s claim so much as confuse that effect with overall premium growth.  In fact, price controls could very well increase healthy people’s premiums by 95 percent, and then overall premium growth could cause those premiums to rise another 95 percent over the next 10 years.

This is getting exhausting, so I’ll wrap up by noting that KHN’s refutation of CPR’s “You still might end up on their government-run health plan” claim was also a non-refutation.  After insinuating that the Lewin study CPR cites is either biased, discredited, or both, KHN merely notes that the study produced multiple estimates of how many Americans would end up in a new government program.  Oh, and different ways of creating a new program will influence that number.  Well, no duh.  And how on Earth does that impugn CPR’s claim?

KHN was not the only one asleep at the switch here.  My friend Jonathan Cohn also missed the contradictions, shell games, and non sequiturs in this audit when he uncritically blogged about it over at The New Republic.

To sum up the situation, I can’t improve on Cohn’s closing line: “Sadly, it’s pretty typical of what we’ll be seeing and hearing…over the next few weeks.”

No, Please Don’t Think Outside the Box

National Journal’s CongressDaily reports ($$) on a speech by Department of Homeland Security secretary Janet Napolitano:

“We need to be looking at [cybersecurity] not from a traditional standpoint of how we do law and order, but how we need to do it in a new and evolving world,” Napolitano said during the keynote speech at a cybersecurity conference hosted by the Secret Service. “We need to be thinking outside our traditional boxes. We need to be thinking ahead,” Napolitano said … .

Security expert Bruce Schneier sees it differently: “Securing our networks doesn’t require some secret advanced NSA technology. It’s the boring network security administration stuff we already know how to do: keep your patches up to date, install good anti-malware software, correctly configure your firewalls and intrusion-detection systems, monitor your networks.”

Entrepreneurial government officials would like you to think cybersecurity is big and new and all-different—a game-changer. But while there are some real challenges, it’s not anything so different that we need to “think outside of the box,” especially not the box that keeps government in its properly scoped law enforcement and national security roles.

Pessimism About Afghanistan

Despite the happy talk from some government officials, the American people see the situation in Afghanistan as more likely to deteriorate than improve.  Rasmussen Reports tells us:

Voters are less hopeful about the war in Afghanistan these days.

 A new Rasmussen Reports national telephone survey finds that only 22% expect the situation there to get better, down seven points from a month ago.

 The plurality (41%) says things will get worse in the coming months, an increase of two points since the beginning of July. Another 24% say the situation will stay about the same during that time, up from 21% in the previous survey.

 Forty-three U.S. soldiers and 31 soldiers from other Western allies were killed in Afghanistan in July, the highest monthly total for both groups in the eight-year-old war. President Obama began shifting more U.S. troops to Afghanistan shortly after taking office because he contends that the country is the central front in the war on terror.

Unfortunately, there is much to be pessmistic about, as Cato’s Malou Innocent has been reporting.

Ecuador Copies Venezuela on Press Freedom

Ecuadorean President Rafael Correa announced Monday that his government is reviewing the broadcast licenses of radio and television stations and that it is finding “irregularities” to which sanctions will be applied, including revoking licenses. “Some sacred cows will fall,” he warned. The measures could affect hundreds of stations. The announcement was made just days after President Hugo Chavez of Venezuela also used an administrative pretext to close down 34 radio stations critical of his regime. Last week the Venezuelan congress began considering a press crimes law that would criminally penalize with prison sentences of up to four years members of the media “or any other person that expresses himself through any medium of communication” for reporting news that is false, harmful to mental health, or that produces instability. It’s not clear that Correa will also copy Chavez on a press censorship law or that he will close as many stations. But at the very least, Correa is seeking to significantly muzzle the independent press through intimidation and self-censorship.