Friday, September 18, 2009

Meanwhile, in Iran...

Having written what I did yesterday about the possibility of an undeterrable nuclear Iran, the ongoing demonstrations in Tehran give one some hope to the contrary. Michael Ledeen blogs:

Ahmadinejad drools on about the "myth of the Holocaust," while hundreds of thousands of people march, chanting that they will only risk their lives for their own country, not in a crusade against the Jews.

Still, the prospect of revolution in Iran leaves me with at best mixed feelings. Revolutions are tricky things to get right: they usually leave the country no better off. The most common story is that a popular, hopeful uprising ousts one strongman, whose followers wage civil war for a number of years. The period of internal upheaval is followed by the rise of a new strongman. It is often impossible to predict who that new ruler will be. This is not to mention the tremendous suffering that inevitably takes place in the meantime.

In addition, even the best outcome in Iran - a peaceful coup in which Mousavi, or someone like him, became President while Khamenei voluntarily reduced his influence - would be only a modest foreign policy success for the U.S. Mousavi is still committed to Iran nuclear development, so we would still be faced with a new nuclear power threatening Middle Eastern oil. At best, we might hope for a sort of more-stable Pakistan, with a fairly rational central government controlling the nukes, and a substantial Islamofascist, terrorist-supporting faction trying to wrest back control. I suppose that's better than having that faction in control from the get-go, but not by a lot.

Iran won't be like Switzerland anytime soon, that's for sure.

Thursday, September 17, 2009

What Is an Ally?

In the wake of the Obama administration's announcement of the cessation of missile defense plans for Europe, perhaps the President needs to review this very basic question.

To review the situation: the U.S. has finally developed effective defenses against ballistic missiles. They've been tested; they work. We have deployed two defense sites in the U.S., one in Alaska and one in California. But while these protect the U.S., they provide no defense for Europe. These defenses are not (at present) sufficient to defend against a massive Russian attack, which could involve hundreds of missiles. But they would be very effective against a rogue state such as North Korea or Iran.

Iran already has ballistic missiles of sufficient range to strike anywhere in the Middle East and many parts of Europe, and is developing ones that could strike the U.S. Despite their denials, they are also developing nuclear weapons. There is every reason to believe that by 2015, they will have a nuclear ICBM capacity.

Can Iran be deterred as the U.S.S.R. was during the Cold War? Maybe. But a culture that creates suicide terrorists cannot be counted on to be restrained by the mutual assurance of destruction. And even if they could, do we really want to have a Cold War with Iran? The world rejoiced when the Cold War ended because the threat of nuclear armageddon - even by accident - was reduced. Why would we want to return to that world?

Faced with this growing crisis a few years ago, the Bush administration proposed building missile defense sites in the Czech Republic and Poland to protect Europe. These are the sites that have been cancelled by President Obama. The apparent reason we are taking this reckless course of action is Russian worries about growing American hegemony in Eastern Europe.

The best possible result of all this would be a quid pro quo that brings Russian influence to bear against Iranian nuclear weapon development. I wonder if this move will really make a difference, though. Russia is in an odd position in all of this. On one hand, they oppose greater American power, and Iran is an expeditious ally in that effort. But Russia has its own Muslim problem, and surely fears nuclear-armed terrorists as much as, if not more than, we do. It is not clear how a marginal withdrawal of American power from Eastern Europe changes their calculus much.

Meanwhile, our own relations with our new Eastern European allies have suffered a blow. This is yet another example of the general rule that the American system is particularly prone to shafting allies, who have made agreements with one administration only to be disappointed by its successor. The Obama administration has made it clear that it considers it more important to court Russian favor than to have Poland and the Czech Republic as strategic partners. But the likelihood that this will ultimately lead to positive results for American foreign policy is slim.

Wednesday, September 16, 2009

The Role of an Elected Representative

In an interview with the Washington Post, HHS Secretary (and former governor of Kansas) Kathleen Sebelius says:

...[T]he Archbishop in the Kansas City area did not approve of my conduct as a public official and asked that I not present myself for communion.

Well, it was one of the most painful things I have ever experienced in my life, and I am a firm believer in the separation of church and state, and I feel that my actions as a parishioner are different than my actions as a public official and that the people who elected me in Kansas had a right to expect me to uphold their rights and their beliefs even if they did not have the same religious beliefs that I had. And that's what I did: I took an oath of office and I have taken an oath of office in this job and will uphold the law.

There is much to unpack here. Let's start with the "separation of church and state" bit. There is nothing in the Constitution about separating church and state; the closest there is is the First Amendment, which states (in part): "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof...." There is certainly nothing that says, "Elected officials must not inform their actions by their religious beliefs." Wouldn't that be a silly requirement? Other beliefs are not so proscribed. You might as well require a separation of philosophy and state.

Perhaps Sebelius simply means that, while there is no Constitutional requirement, she personally believes that her religious beliefs should be subordinate to the wishes of her constituents. But those who elected her presumably knew she was Catholic and that the Catholic church proscribes abortion, yet they elected her anyway. Furthermore, nowhere is it written that elected officials must always be perfectly aligned with their electorates (which would anyway be impossible). Edmund Burke wrote: "Your representative owes you, not his industry only, but his judgment; and he betrays instead of serving you if he sacrifices it to your opinion."

Finally, there is the bit where she says she will uphold the law. Perfectly fine, of course, except that the issue of abortion is hardly settled law. There is much activity in various corners that does not fall afoul of Roe v. Wade and subsequent decisions, which is one reason why abortion remains a major issue in elections to this day. A Catholic can oppose abortion to the extent possible under the law and presumably would not draw the ire of her Archbishop. The reason Sebelius got in trouble is that she did much to oppose pro-life positions in contravention of Catholic teachings.

Ultimately, Sebelius wants to portray herself as a heroine who remained loyal to her constituents and to the law even when disciplined by her church. But this is clearly not the case. She made a choice and paid the price.

Tuesday, September 15, 2009

Health Care and Freedom

Was talking to a liberal (he would say Progressive) friend the other day about health care. One point I raised was that these debates often devolve into fine points about what system is most efficient at delivering medical care to people, but that individual liberty is of value by itself. This country was founded on the notion that each of us is free. Maintaining that value is worth some inefficiencies, right? Certainly a common leftist attack on free enterprise is that efficiency becomes improperly exalted to deity status, ignoring what's really important to people. But apparently liberty is not one of those really important things.

My friend pointed out that one benefit of universal health insurance coverage is that the insurers would have incentives to get people healthier. There are a couple of problems with this, though. First, so-called "healthier" people are not necessarily cheaper to insure. Eventually, nearly everyone who lives a long time ends up with a chronic condition. It's much cheaper for the insurance company for you to die of a heart attack out of the blue at 55 that to live to 80 with a collection of chronic illnesses. Second, insurers already have an incentive to get people healthier, right? Even though the incentives are poorly aimed, with companies paying with tax-exempt dollars for a portion of the premiums that go to their employees' insurance, still if insurers could reduce claims by encouraging healthier lifestyles, they would be more competitive. And there are cases of them doing just that. But how can this concept be squared with community rating? It's certainly true that if insurers can actually charge you what they think you will cost them, their competitiveness will improve, and your insurance rate will be affected (positively or negatively) by your lifestyle. But the progressives want community rating.

So given community rating and a desire by insurers to get people healthier (let's stipulate they would want this for the sake of argument), how would they bring about their desire? Apparently, through legislation, which is exactly what the U.K. is doing. If you're too fat, N.I.C.E. might not pay for your operation - you're not keeping up your end of the social compact, you see. Nearly any food that might contribute to poor health could be outlawed or taxed in the name of health care savings. My friend's view was that this would be unfortunate, but after all, you have to break a few organic eggs (discarding the cholesterol-laden yolks, of course!) to make this omelette.

The impact this would have on individual liberty would be extraordinary and should be viewed as yet another reason not to combine community rating with universal coverage. Imagine a world in which individual people actually were free to contract with any agency they wanted to obtain health insurance. If wellness programs were financially sensible, no doubt insurers would offer them, just as auto insurers offer discounts for safety and anti-theft devices. Then individual people could choose to adopt them or not as they saw fit. Perhaps I'm willing to forego a hamburger a week to save $10/month on health insurance. Or maybe not. But it should be my choice, not one collectively made for me by Washington and insurance industry lobbyists.

Friday, September 11, 2009

Here's What You Need to Know

When a salesman says, "Here's what you need to know," you should hear that as: "Here's what I need you to believe." Re-read that fine print before signing on the dotted line.

Remembering 9/11

That morning eight years ago I was at work when the first plane hit. A colleague of mine heard the news and told me, but I just assumed it was a small private plane that had been in some sort of accident. Busy with other projects, I didn't give it much thought.

Then the second plane hit, and it was obvious this was no accident. At a 21st century workplace, naturally the first place we looked for more information was the Web. Ominously, was not responding. But we learned pretty quickly that the two planes were not small aircraft, but huge jetliners.

The Twin Towers were visible from my office building, so we walked over to the window to see what was going on. The towers, normally just mirrored glimmers on the horizon, were clearly on fire, smoke pouring into the clear morning sky. I tried calling my wife on her cell phone, but got the message that all circuits were busy. I left a message at home instead.

By now we were hearing rumors, some peddled by CNN: a plane had been shot down by the Air Force; a plane had crashed into the Pentagon; another half-dozen airliners in U.S. airspace were unaccounted for. News Web sites, overwhelmed with traffic, had reverted to a minimalist text-only mode to make reports, with just a few pictures of the unfolding events. It was there we saw the first close-up images of people jumping, of brave firefighters, of the Pentagon in flames.

My wife called me around the time the south tower fell. She had been running errands that morning and had just heard what was going on when she arrived back home. She was horrified; I will never forget the choked sound of her voice on the phone.

There was a television in one of our offices; a few of us congregated there to watch the efforts to save the north tower. Surreally, from that office we could see the actual tower through the window. When it finally collapsed, I could see the dust and smoke billowing in the distance.

Work had come to a standstill, of course. By now it was clear that the capital markets would be closed that day; our business, dependent on those markets, thus had no real reason to stay open. A few of us discussed the processing consequences of being closed unexpectedly for a day or more. We took the necessary steps, and then we all went home to our families. It was a Tuesday; the office would not open again until the following Monday.

We spent the rest of the day watching the news and calling friends and family to make sure everyone was safe. It was quickly clear that this would be a transformative event in our history: we would for a long time refer to the "post-9/11 world" versus the "pre-9/11 world." On that day we were shaken out of our post-Cold War reverie, and reminded that there was still evil in the world, that demanded to be fought if our way of life was to continue.

Thursday, September 10, 2009

Obama the Entrepreneur

Stephen Spruiell points out Obama's otherworldly understanding of private enterprise. Just to add my two cents: the President's argument could be applied to nearly any industry: consumers are paying too much for pencils, because some of the money goes to cover profits. Therefore, there should be a public option for pencils. Would Obama be able to counter this argument in a debate? I seriously wonder.

Comments on The Speech

This will no doubt be but one small voice among many louder ones, but here follows some thoughts on the speech, based on the text "as prepared for delivery" (so there might be some differences between it and the actual text as spoken).

Typical Obama riff in the early going:

But thanks to the bold and decisive action we have taken since January, I can stand here with confidence and say that we have pulled this economy back from the brink.

Sure. No credit goes to any steps taken before January, like TARP, the bailouts of AIG and the car companies, etc. I'm the first to agree that some of those Bush-era actions were mistakes. But they were purely in line with Obama's later actions, so ignoring them is disingenuous in the extreme.

There are now more than thirty million American citizens who cannot get coverage.

Dana Perino emailed The Corner about this, writing: "So, now it's 30 million? What happened to the other 17 million he's been talking about? We must be doing something right." Answer: the rest are illegal immigrants, not American citizens. Maybe this is a subtle step in the right direction for Obama, since he's been under fire for potentially providing free health care to illegals.

Then there's the problem of rising costs. We spend one-and-a-half times more per person on health care than any other country, but we aren’t any healthier for it. This is one of the reasons that insurance premiums have gone up three times faster than wages.

That might be one reason, but it isn't the main reason. The main reasons have to do with skewed incentives in employer-provided health care, lack of inter-state insurance, and increasing government mandates on employer-provided health care.

And it's why those of us with health insurance are also paying a hidden and growing tax for those without it - about $1000 per year that pays for somebody else's emergency room and charitable care.

Danger, President Obama! Danger! These questions of cost are a minefield, aren't they? Maybe it's best not to bring up how much tax we have to pay for somebody else's care when you're trying to sell a system that would, ultimately, tax you to pay for somebody else's care. (Also, his number is incorrect, and I'll be interested to see if mentions this. Total spending on uncollectable medical claims is about 3% of total medical care spending, or about $75 billion. There are over 250 million Americans with health insurance, so the average is more like $300/year.)

There are those on the left who believe that the only way to fix the system is through a single-payer system like Canada's, where we would severely restrict the private insurance market and have the government provide coverage for everyone. On the right, there are those who argue that we should end the employer-based system and leave individuals to buy health insurance on their own.

That's Obama the Centrist talking. I have some lefty friends who will be severely pissed by this. They apparently don't realize that if he wins this argument, Obama does them much more good than they deserve - the sort of health reform he favors will lead inevitably to single payer. He knows this. He's playing a clever long game.

Well the time for bickering is over. The time for games has passed. Now is the season for action.

Wait, this is still a democracy, right?

Anyway, now he moves on to the meat of the proposal. There are three goals:

[1] It will provide more security and stability to those who have health insurance. [2] It will provide insurance to those who don't. [3] And it will slow the growth of health care costs for our families, our businesses, and our government.

OK. Let's keep these points in mind. I've numbered them for later reference (the numbers are not from the speech).

Under this plan, it will be against the law for insurance companies to deny you coverage because of a pre-existing condition.

That's going to impact point (3), isn't it? Presumably, he will offer some mitigating cost control later (and it'll be some form of rationing, mark my words). What stops a person from waiting until they get sick to sign up for gold-plated health care? Stay tuned.

As soon as I sign this bill, it will be against the law for insurance companies to drop your coverage when you get sick or water it down when you need it most.

Interesting. In the past, Obama has mentioned putting off many of the provisions in his plan until 2013 or so - now he says they will take effect "as soon as I sign this bill."

Obviously, this point will impact (3) as well.

They will no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or a lifetime.

Oh yeah, so will this one.

And insurance companies will be required to cover, with no extra charge, routine checkups and preventive care, like mammograms and colonoscopies - because there's no reason we shouldn't be catching diseases like breast cancer and colon cancer before they get worse. That makes sense, it saves money, and it saves lives.

The cost just keeps going up, doesn't it? Now he wants to require insurance to cover checkups. Why not require car insurance to cover oil changes, too? It's also completely incorrect that this saves money. Study after study shows that preventive care costs more money. (I'll let him slide with "it saves lives", although obviously the best it can possibly do with current technology is to extend lives, and there's some question about how much even of this it manages to accomplish.)

That's what Americans who have health insurance can expect from this plan - more security and stability.

...and expect your premiums to double. And expect more employers to drop it as a benefit, especially employers with lots of low-wage employees.

We will [create affordable health insurance options] by creating a new insurance exchange - a marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices.

Great, Mr. President - but any word on differential tax treatment? That's a killer for employees trying to get health coverage other than through their employer, and it's not so great for lower-income self-employed folks, either. This tax benefit is worth as much as 35% of premium cost, so unless you can bring costs down that much with exchanges, getting rid of the tax disparity is better.

This exchange will take effect in four years, which will give us time to do it right.

Ah, there's that 2013 stuff. Is it wrong that I read this as: We have no confidence in this provision, so we're putting off implementation until after the 2012 election, and giving ourselves time to drop it entirely later?

That's why under my plan, individuals will be required to carry basic health insurance - just as most states require you to carry auto insurance. Likewise, businesses will be required to either offer their workers health care, or chip in to help cover the cost of their workers.

If I drive without auto insurance, I have my license taken away. What gets taken away if I'm charged with "living without health insurance"?

Also, "basic coverage" will inevitably be defined upwards in the same way that mandates on employer coverage have in states like New Jersey. This is one of those slippery slope items to single payer. As I said before, Obama is playing a long game here. If we're lucky, the impatient Left won't let him succeed at it. But the Right has to pressure him, too, and not let him get away with thes sort-of-reasonable-at-first provisions.

But an additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange. Let me be clear - it would only be an option for those who don't have insurance. No one would be forced to choose it, and it would not impact those of you who already have insurance.

Polling on "the public option" must be terrible. He almost never even says "public option" in the entire speech, and the one time he does it's couched in so much explanatory text that one almost misses it.

But two points about it are still worth making: First, he must really think we're stupid if he thinks we'll believe a non-profit, government subsidized "company" operates on a level playing field with for-profit insurers. Second, if for-profit insurers were so good at squeezing every last dime out of their customers, how come they've been less profitable than the S&P 500 for the last 10 years?

And they'd be right if taxpayers were subsidizing this public insurance option. But they won't be. I have insisted that like any private insurance company, the public insurance option would have to be self-sufficient and rely on the premiums it collects.

Please! And what happens if the public option loses money and can't make it? I suppose he just lets it go under, dusts his hands, and says, "Oh well, we tried." Of course not. It gets the old GNMA treatment, because it'll be Too Important To Fail.

It would also keep pressure on private insurers to keep their policies affordable and treat their customers better, the same way public colleges and universities provide additional choice and competition to students without in any way inhibiting a vibrant system of private colleges and universities.

Guess he learned that the old "post office/FedEx" comparison didn't really work, eh?

Here's what you need to know.

Does this strike anyone else as condescending in the extreme? Obama does this several times in this speech, as if I'm too stupid to comprehend the details (of which, let's face it, there really are none), so here's the gist. But the devil is usually in the details. I'll decide what I need to know, thanks.

First, I will not sign a plan that adds one dime to our deficits - either now or in the future.

Interesting. Polling obviously shows huge concern about mounting deficits, and our Chinese (and other) lenders probably aren't be too happy about them either. But don't be fooled: there's a difference between "deficit reduction" and "cost reduction." He can keep the bill deficit neutral by finding enough additional revenue sources, but the bill would still cost the same thing to the American taxpayer.

Second, we've estimated that most of this plan can be paid for by finding savings within the existing health care system - a system that is currently full of waste and abuse.

Study after study shows this not to be true, unless he's talking about rationing.

...not a dollar of the Medicare trust fund will be used to pay for this plan.... Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan.

There's a logical problem here. Currently, Medicare is our largest unfunded budget item - something like $60 trillion in present value deficit. So unless he reduces waste by more than $60 trillion, he's not going to have a single dime to apply towards paying for his plan, unless he takes some of those trust fund assets. I don't see how he escapes this bind.

Much of the rest would be paid for with revenues from the very same drug and insurance companies that stand to benefit from tens of millions of new customers. This reform will charge insurance companies a fee for their most expensive policies, which will encourage them to provide greater value for the money...

You can see how single-payer is coming, right? Every reform targeted at insurance companies will simply make their businesses less profitable, and to top it off they'll have a non-profit, tacitly subsidized by the taxpayers, pressuring them from the bottom. Give it a decade, and they'll be out of business. Then the government steps in. Very slick, Obama.

And if we are able to slow the growth of health care costs by just one-tenth of one percent each year, it will actually reduce the deficit by $4 trillion over the long term.

Of course, there's that $60 trillion hole already in Medicare...

I will not stand by while the special interests use the same old tactics to keep things exactly the way they are. If you misrepresent what's in the plan, we will call you out. And I will not accept the status quo as a solution.

Would that the President take the same pledge, but in these very sentences he breaks it. We all know reform is needed. But he wants it his way or the highway. His opponents don't want the status quo, they just want reforms that aren't currently on the table. Our only shot is to kill the current plan and try again later when the political environment is more favorable. I won't misrepresent what's in his plan, but it would be nice if he didn't misrepresent his opponents' arguments.

But they also understood that the danger of too much government is matched by the perils of too little; that without the leavening hand of wise policy, markets can crash, monopolies can stifle competition, and the vulnerable can be exploited.

Just representative of some nice finishing riffs. I disagree, but we know Obama is a liberal. This is as good a defense as any, I suppose.

Friday, September 4, 2009

Public Option Hopes Strong at DailyKos

DailyKos has a poll showing the public option still popular. Couple of points, though.

First, the poll question is: "Do you favor or oppose creating a government-administered health insurance option that anyone can purchase to compete with private insurance plans?" Careful wording no doubt helps the poll result. It isn't government run, it's government "administered". And it merely "competes" with private plans, it doesn't set costs or undercut them.

Second, Kos' comment feeds the confusion:

Seems like people like the idea of competition in the insurance market, that would help lower premiums and keep currently unaccountable insurance companies honest.

Hey, that does sound good! Let's think this through, though. Suppose we have a bunch of chair manufacturers, and people complaining about the high cost of chairs. The government creates a publicly run company to "control costs", and to "compete" in the marketplace. How does it do this?

One way would be for the public company - call it "Fanny" Mae - to be a much more efficient producer of chairs, offer better chairs at lower cost, etc., and actually win in the marketplace, driving some of the less-efficient competitors out of business. That's the way Kos seems to think would probably happen. What would actually happen, though, is that Fanny Mae would be less efficient than the private companies. It would produce expensive, poorly made chairs. Once sales turned out to be disappointing, the government would start subsidizing them, or "controlling costs" by dictating prices of raw materials or labor.

It might even "work", sort of, in that the retail cost of chairs might come down. But only at the price of all the subsidies, market distortions, etc. necessary to make it happen. Other private industries would be unwittingly affected, positively or negatively: table manufacturers might be helped by price controls on wood; wood-producers would conversely be harmed. Taxes would have to be directed to pay the subsidies. Meanwhile, many of the chair manufacturers that were competing just fine beforehand would go out of business, and the ones that managed to limp along would constantly be subject to the danger of Fanny undercutting them yet more (and thus would have a difficult time obtaining capital for growth).

That must sound like heaven to Kos. God forbid those chair manufacturers be "unaccountable" (except, oh yeah, to their customers).

But getting back to health insurance, Kos is actually fairly on target with the diagnosis. It's the prescription that's off. Health insurance companies are not as accountable to their real customers - that is, us, the ones covered by insurance - as they should be. But the reason for this is obvious: from their point of view, their customers are our employers. The market is already distorted by the misguided idea of allowing companies to provide health benefits tax-free.

At the time, guess what the purpose of this was? Competition, of course! It was wartime, and to control costs (does that sound familiar) the government was preventing war industries from competing for labor by raising wages. People didn't like that, so instead of wisely getting rid of wage controls, the government allowed this special tax treatment so that companies could compete anyway, just not directly on wages. (This reminds me of a Jay Nordlinger story recently, in which the principal trumpet of La Scala was paid the same monthly wage as any second violinist because the Communist-leaning government at the time would not allow wage disparity. But the trumpeter got eighteen months of wages per year, as a reward for seniority. Proving, yet again, that the Left understand incentives just fine. They're seeking power, not social "justice". When push comes to shove, they do what's necessary to maintain power.)

So to recap: the government was restricting competition (on wages), so they created a loophole to restore some competition (on health benefits). Now Kos (and, of course, much of the Left) has noticed that there's a problem. They want to tweak the competitive juices again by creating the "public option." If the government were running the Olympics, all the sprinters would have their shoes tied together before each race, to prevent unfair advantages. All in the name of "competition". And it would be hard to deny, after a hobbled Usain Bolt beat a hobbled Tyson Gay at the tape in the 100m dash, that the race was exciting. Except maybe by those who noticed that it took them thirty seconds to struggle to the finish.

Once that problem was brought to light, the government solution no doubt would be to enter a publicly-sponsored racehorse. You know, to promote competition.

Continuing Honduran Madness

The Obama Administration continues its maddening course of supporting Chavez-supported wannabe dictator Manuel Zelaya by cutting humanitarian aid to Honduras until the former President is re-instated. National Review is on the case.