Summer — or Back to School — Reading

The Cato Institute has published thousands of books, studies, articles, and op-eds, and most of them are on our website. But there’s lots of good reading material published elsewhere, and now our analysts are offering handy guides to the best reading in such fields as Principles of Liberty, Constitutional Studies, Health Care, Foreign Policy, and more.

I know that reading lists can sometimes be intimidating — where to start? — and too much of just a list. So these lists are annotated; each recommendation is briefly described. And at my insistence, (almost) all the analysts have started their lists with “Read This First” to suggest a foundational or introductory book or essay. Check them out here.

Pakistani Taliban Commander Dead

While American officials have yet to confirm his death, Baitullah Mehsud, the leader of Tehrik-e-Taliban Pakistan (TTP), which operates as Pakistan’s version of the Taliban, may have been killed Wednesday in an American missile attack in South Waziristan. Pakistan viewed Mehsud as its top internal threat. He was blamed for a wave of attacks that killed nearly 2,000 people in the past two years. He was also suspected of killing former prime minister Benazir Bhutto, and of having connections to al Qaeda.

Three things:

Number one, Mehsud’s death may or may not be a big blow to the TTP. Other deputies can easily take his place. In fact, shortly after Mehsud’s purported death, the Taliban Shura (an advisory council meeting) convened to elect a new TTP chief. (Among those being considered are Hakimullah Mehsud, Azmatullah Mehsud and Waliur Rehman Mehsud. The successor might be announced after Friday evening prayers). Any of these new leaders could quickly pick up where Baitullah left off, which means that picking off high-value targets in any insurgency does not guarantee that jihadists will melt away. We could only hope that a leadership void creates a power struggle among rival factions of the group, but that seems unlikely.

Number two, the drone operation shows improved coordination between the United States and Pakistan, which is welcome news. But the strike exemplifies the binary nature of the discussion surrounding the use of aerial drones: On the one hand, U.S. officials point to the successful killing of high-level al-Qaeda militants, such as Abu Laith al-Libi in January 2008, and chemical weapons expert Abu Khabab al Masri in July 2008. On the other hand, drone strikes have triggered collective armed action throughout the tribal agencies and have added more fuel to violent religious radicalism in this unstable, nuclear-armed country. One U.S. military official, who spoke on the condition of anonymity to McClatchy Newspaper correspondent Jonathan Landay, called drone operations “a recruiting windfall for the Pakistani Taliban.”

Number three, Pakistan might continue the same policy as before, differentiating between the “good Taliban” (those who attack U.S. and NATO forces in Afghanistan) and “bad Taliban” (those who attack the Pakistani military and the government). At the strategic level, Pakistan and the United States are still not on the same page.

The Real Cost of a Government Takeover of Health Care

The Congressional Budget Office estimates that current health care “reform” legislation could cost around a trillion dollars over the coming decade.  But that number likely is low. 

Stephen T. Parente of HSI Network LLC says the CBO did not use the most current data.  HSI figures the cost could be double the CBO estimate. 

Warns Parente:

The biggest player in the health-care debate right now isn’t Nancy Pelosi, Harry Reid, or even President Obama. It’s the Congressional Budget Office, which is responsible for estimating the costs of proposed legislation. After the director of the CBO testified on July 16 that none of the health-reform bills in the House or Senate would reduce the rate of increase in federal spending on health care, congressional efforts fell into disarray. Many policymakers began searching for a way to get costs below the CBO’s frightening estimate of $1.1 trillion over ten years. Others attacked the CBO, calling its estimates irresponsible.

The CBO is actually being kind to the would-be reformers. Its analysis likely understates — by at least $1 trillion — the true costs of expanding health coverage as current Democratic legislation contemplates. Over the last few months, my colleagues and I at the consulting firm Health Systems Innovations have provided cost estimates of health-care reform to both Republican and Democratic members of Congress, and we’ve posted these estimates on our website as well. We believe that the Democratic bills currently under consideration in the House and Senate would cost $2.1 trillion and $2.4 trillion, respectively — much higher than CBO’s figures.

The discrepancies between our estimates and CBO’s stem from our different assumptions about a key issue. The Democratic plans envision a government-run insurance program, modeled after Medicare, that will compete with private insurers. How many people would opt for coverage under this public insurance? We believe that both large and small employers would have powerful incentives to shift their employees out of private coverage and into the public plan. Like the Urban Institute, we estimate that roughly 40 million people would make the shift. CBO seems to assume, however, that large employers would use the public plan only sparingly and that only 11 million people would move from private to public insurance — which would, of course, result in lower costs.

Why the difference in these estimates? We believe that we have better data on this issue than the CBO, which uses simulation models of health-insurance plans based on much older health-plan data — typically from 2001 or even 2000. Our estimates are grounded in 2006 commercial-insurance data to which the CBO doesn’t have access (the data are not publicly available and the CBO didn’t make provisions to purchase them). These data reflect the advent of much cheaper, high-deductible health plans and limited-provider network plans. If the government modeled its public option on these inexpensive plans, the result would be cheap enough to lure far more people away from private health insurance than the CBO estimates.

Yet another reason, as if another reason were necessary, for Congress not to hurry in voting to nationalize the health care system.

Too Risky to Continue

The profits being reported so far this year by the major financial firms appear to be driven by proprietary trading (trading for their own account, as opposed to those of their customers). The recent $3.44 billion profit of Goldman Sachs in the second quarter is a dramatic case in point.

Proprietary trading is a high-risk activity and signals the financial sector is returning to its bad old ways. Returns cannot be systematically high unless risk is correspondingly high.

None of this would matter if it were just private capital at stake. But Goldman, along with other major financial firms, is being guaranteed under the dubious doctrine that it is too-big-to-fail. Better there were no government guarantees. As long as these guarantees are in place, however, high-risk activity must be curtailed.

The simplest solution is that a firm should not be permitted to take insured deposits and operate what amounts to a hedge fund within the institution. Goldman is a difficult case because it is not currently relying on deposits (even though it has a bank charter). It should be told to return to a private partnership.

A firm too big-to-fail is too-big-to-exist (as a federally insured entity).

AARP Members Not Buying Obama Health Care Plan

In Dallas, at least, the AARP staff found it tough going attempting to explain to the organization’s members why the elderly would be better off with Obama-like “reform.”  These people obviously were having trouble with the line, “I’m from the government and I’m here to help you.”  And they were quite vocal in stating their concerns.  But they were acting well within the American political tradition, which seems to be what has spooked advocates of a government medical takeover speaking breathlessly of “mobs” — presumably like the one in Dallas — opposing “reform.”

(H/T to Mark Tapscott of the Washington Examiner.)

It’s All Voluntary But the Taxes

Chester Finn, president of the national-curricular-standards-pushing Thomas B. Fordham Foundation, has a piece on today saying that our colleges would do much better if our K-12 schools gave them better prepared students to work with. I have no problem with that. I also, surprisingly, don’t have much of a problem with Finn suggesting that national standards, in particular those under development by the Common Core State Standards Initiative, could help get students college ready. That’s because he couches the assertion in numerous qualifications – which are most certainly called for – acknowledging that the resulting standards could very well be garbage or evaded.

So what do I have a problem with? This single – but critical – sentence about national standards :

They’ll be voluntary, to be sure, and not every state will embrace them.

No, they will not be voluntary! At least, they’ll be no more voluntary than complying with No Child Left Behind, speed limits, or anything else that states do to get some of their citizens’ involuntarily turned over federal tax dollars back.  Indeed, though the official first draft of the CCSSI standards hasn’t even been released yet, states are being told that signing onto them will greatly improve their chances of getting a piece of the U.S. Secretary of Education’s $4.35 billion “Race to the Top” fund. Secretary Duncan has also said that the feds would consider spending up to $350 million on a national test to go with “voluntary” national standards. And No Child Left Behind hasn’t been reauthorized yet – what are the chances that forces in Washington will try to link much of the law’s funding to states signing on to national standards and tests?

In answer to that question I’d say, to be sure, the chances are pretty good; certainly much better than allowing truly voluntary adoption of national standards and tests.

The Twelve-Minute ID Card Hack

Several people today have sent me the article in the Daily Mail (UK) discussing the twelve-minute hack on a UK identity card. Security consultant/hacker Adam Laurie was apparently able to rewrite the data on the card in very short order.

This would imply that making a more secure card is an improvement. But more security in a national ID card almost inevitably means less security for the individual in terms of privacy and autonomy.

We don’t want a highly secure national ID card. We want a diverse and competitive identity and credentialing system. In such a system, governments may serve as identity providers. But that is not necessary and, given their powers, not desirable.