Relevant and even prescient commentary on news, politics and the economy.

Health Savings Accounts

Mark Schmitt has the definitive explanation of why HSAs are a bad idea:

What the administration is doing, first with health savings accounts, which are now the law, and then with this [catastrophic insurance] proposal, is to confer enormous tax advantages on a type of insurance that is already advantageous, but only for the relatively wealthy. But the consequence of it would be that, as young and healthy people withdraw from the standard, low-deductible insurance market, premiums in that market would go through the roof, insurers would desperately try to find ways to deny coverage to higher-risk people, and the whole delicate balance would surely collapse.

The problem is very similar to the problem with the recently passed Medicare Drug Benefit that I pointed out in this post and the one just before it. Basically, the only way around the adverse selection problems that plague the various Republican health care proposals is to make the programs mandatory, which I doubt will happen.


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More Then and Now

Tonight’s Daily Show cited this quote from the 2002 SOTU (after 9/11 and, apparently, after there were already solid plans for invading Iraq):

To achieve these great national objectives — to win the war, protect the homeland, and revitalize our economy — our budget will run a deficit that will be small and short-term, so long as Congress restrains spending and acts in a fiscally responsible manner.

Contrast that to Bush in the latest SOTU:

In two weeks, I will send you a budget that funds the war, protects the homeland and meets important domestic needs, while limiting the growth in discretionary spending to less than 4 percent.

This will require that Congress focus on priorities, cut wasteful spending and be wise with the people’s money. By doing so, we can cut the deficit in half over the next five years.

Four percent spending growth would require unprecedented sobriety from our spending-like-drunken-sailors Republican Congress and President (from the 11/12/03 Washington Post):

Confounding President Bush’s pledges to rein in government growth, federal discretionary spending expanded by 12.5 percent in the fiscal year that ended Sept. 30, capping a two-year bulge that saw the government grow by more than 27 percent, according to preliminary spending figures from congressional budget panels.

And speaking of McCain, did anyone else notice how he had a hard time saying with a straight face that he would be “supporting President Bush” during an upcoming trip to New Hampshire? He sort of said it once, then did a double-take, and said it again.

Speaking of The Daily Show, here’s Jon Stewart’s reaction to Bush’s “weapons of mass destruction-related program activities”:

[speaking slowly and emphatically] “Dozens of weapons of mass destruction-related program activities?” … “What the f**k is that?”

Overall, I think the reception to this year’s SOTU has been somewhere between fairly negative and mixed, but there is at least some good news for the administration: TV Viewership for Bush State of Union Slips.


UPDATE: For a more substantive, and damning, critique of Bush’s 4%/cut the deficit in half line, see CalPundit, who concludes “Explain to me again why I’m not allowed to call this a lie?”

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Conservatives v. Bush, Part II

So, some Republicans who are also fiscal conservatives have been reacting to the SOTU. This story contains some examples:

WASHINGTON, Jan 21 (Reuters) – U.S. President George W. Bush faced open rebellion on Wednesday from some members of his fiscal conservative base for not laying out concrete plans to reduce government spending and the budget deficit…

Though Bush announced a relatively small number of inexpensive domestic proposals [in the State of the Union address], Heritage analyst Brian Riedl said fiscal conservatives were angry over what Cato estimated to be a nearly 25 percent surge in spending over the last three years — the fastest pace since the Johnson administration of the mid-1960s.

Stephen Moore, president of the Club for Growth, a politically powerful conservative group, called Bush’s State of the Union pledge to tackle the deficit “really unpersuasive.”

“Conservatives were left grumbling,” Moore said.

William Niskanen, the chairman of Cato Institute who advised former President Ronald Reagan, called it “most misleading.”

…”He (Bush) did not identify any cuts. He didn’t demonstrate how in any way the actions he proposed would cut the deficit in half over the next period of time,” Niskanen said.

These reactions conjure up two possibilities for me. The first is to take them at face value, and believe that fiscally conservative Republicans are losing their patience with Bush, and therefore may be less enthusiastic about supporting him for reelection (though I have no doubt that they will still support him over any Democrat).

The second (far more cynical) possibility is that their reaction is simply following a script given them by Rove/Cheney. Maybe their marching orders right now are to help publicly build the case (and perhaps some astroturf) for dramatically cutting domestic spending, which is what the brains of the White House have wanted all along.

What do you think – are the fiscally conservative Republicans supporting or undermining the White House right now? I’m honestly undecided.


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I didn’t listen to the entire SOTU, primarily because it pains me to hear the leader of the Free World say NU-CUE-LAR (yes, Carter did it too, but that doesn’t make it right). But of the parts I did hear, one passage really struck me:

We’re seeking all the facts. Already, the Kay report identified dozens of weapons of mass destruction-related program activities and significant amounts of equipment that Iraq concealed from the United Nations. [emphasis mine]

I’ve long been painfully amused by the administration’s substitution of “WMD Program” for “Actual WMD” but this brought it to a new level. Now, the purported threat to America is not WMD, nor WMD programs, nor even WMD-related programs, but instead WMD-related program activities, whatever that means. Perfunctory but true note: Saddam was in fact a very evil and cruel dictator. But there are many dictators and before deposing them, we must decide which ones are worth 500-and-counting lives of American soldiers (plus several thousand injured) to depose.

In any event, contrast tonight’s “weapons of mass destruction-related program activities” to Bush last year:

Before September the 11th, many in the world believed that Saddam Hussein could be contained. But chemical agents, lethal viruses and shadowy terrorist networks are not easily contained.

Year after year, Saddam Hussein has gone to elaborate lengths, spent enormous sums, taken great risks to build and keep weapons of mass destruction. But why? The only possible explanation, the only possible use he could have for those weapons, is to dominate, intimidate, or attack.


UPDATE: Apparently, I wasn’t the only one who found that phrase noteworthy.

UPDATE: The “Kay report” is the report from David Kay, the weapons inspector who failed to find WMD and, along with his team, recently withdrew from Iraq. (See Ken liberal but pre-war Hawk Ken Pollak’s story in the February Atlantic for much more on Kay and the lack of Iraqi WMD.)

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Employment Charts in Thirty Seconds

I just came across a really cool application, Labor Force Statistics from the Current Population Survey, at the Bureau of Labor Statistics web page. There, you can quickly assemble charts and graphs on a number of labor and economic measures collected by the BLS, broken down by a variety of demographic categories. Just to try it out, I thought I’d take a look at the seasonally adjusted number of people looking for full-time work, and within seconds I had a table (then select the “include graph” box for a graph.) My only complaint is that exporting the graph doesn’t work well — it looks great on the BLS page, but there’s no convenient export function. In any event, here it is:

Series Id: LNS13100000

Seasonal Adjusted

Series title: (Seas) Unemployment Level – Looking For Full-Time Work

Labor force status: Unemployed looking for full-time work

Type of data: Number in thousands

Age: 16 years and over

The number looking for full time work climbed by by 2.5 million from 1/01 to mid-2003, before falling by 500k. Notice any similarities between 1993 to 2003? (In fairness to the younger Bush, the population is larger now than in 1993 by about 20 million, so his 7.5 million isn’t as bad as Bush Sr.’s 7.5 million looking for full time work.)


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Iowa’s Effect on the Political Markets

As I’ve mentioned before, the Iowa Electronic Market is a great place to see how events shape the perceived probabilities of each candidate winning the nomination. Here is today’s graph, showing the last night’s Iowa caucus results have affected the shares of all of the candidates. Note that Edwards is contained in the grey ROF line just below Kerry’s line in recent days.

The market apparently now thinks that Kerry and Dean have almost equal chances of winning the nomination now (about 30-35% each) while Clark and Edwards both have around a 20% chance of winning. I agree with AB: This is going to be good – pass the popcorn!


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A Preview of the State of the Union: More Concealed Costs?

Bush has made a specialty of proposing policies that are tremendously expensive without actually addressing their costs. Some examples include:

  • Tax cuts. Stated cost by Bush before the fact: none. The claim was that they would boost the economy so much that tax revenue would increase. Actual cost: hundreds of billions of dollars per year.
  • War in Iraq. Stated cost by Bush before the fact: none. As Paul Wolfowitz said, “Such estimates are so dependent on future, unpredictable circumstances as to be of little value.” Actual cost: $100bn so far and counting.
  • Moon and Mars bases. Stated cost by Bush before the fact: $1 billion. Someone at some point in the future will presumably pay for and accomplish these missions, after all; Bush is just in charge of getting the vision started. Actual cost: We’ll see, but estimates are in the neighborhood of $130 to $250 billion.

So, what new costless, extremely expensive proposals can we expect tonight in Bush’s State of the Union speech? Privatizing Social Security might be one, making the 2001 tax cuts permanent might be another… but we’ll just have to wait and see to know for sure.


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Edwards-Clark or Clark-Edwards?

The title is actually intended to mock the proclivity of the press for taking any event and projecting it linearly into the future: Dean is definitely down, but not out. Also, I remain firm in my conviction that Kerry will not be the nominee (though I will support him if he is). Overall, it’s definitely tough to attribute Dean’s dramatic fall to anything other than the rash of negative press he got, unfairly for the most part (I’m giving Iowa Democrats enough credit to assume that the Club for Growth ads didn’t play a role in Dean’s defeat). And I’d like to attribute Edward’s strong second place finish to his lack of negativity vis-a-vis other Democrats so far, but perhaps that’s too optimistic.

So what does it all mean? Beats me. Where’s the popcorn?

On second thought, I’ll venture a call now: Edwards or Clark will be the nominee, and the winner will choose the loser to complete the ticket. Perhaps my predictive skills will surpass those of Atrios. On the other hand, my Condoleeza Rice Resignation Watch is now in day 175, so my prognistications are questionable at best.


P.S. Just a week ago, Matt Y. predicted that “Dean’s moment of inevitability would be followed by an inevitable moment of evitability which would be followed by victory. Now it really doesn’t look inevitable right now, but I stand by that prediction.” Query: Did Matt predict the Iowa outcome, or not?

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