June 10, 2011


 * 1) Republican claims that only those who want full socialism believe the market fails in health care: Paul Krugman: "Some readers ask why my argument that relatively centralized systems work better for health care than the “free market” isn’t an argument for government ownership of everything. The answer is that health care is different: it’s a sector in which basically every market failure you can think of takes place. And we’ve known that since Kenneth Arrow’s classic analysis half a century ago. It’s shocking, though not surprising, that we keep having to relearn this basic point."
 * 2) Republican claims that "The Republicans have a plan for Medicare, but the Democrats don't. Where's the president's plan?": Ezra Klein: "Democrats don’t just have a proposal that offers a more plausible vision of cost control than Ryan does. They have an honest-to-goodness law. The Affordable Care Act sets more achievable targets, and offers a host of more plausible ways to reach them, than anything in Ryan’s budget. “If this is a competition betweenRyan and the Affordable Care Act on realistic approaches to curbing the growth of spending,” says Robert Reischauer, who ran the Congressional Budget Office from 1989 to 1995 and now directs the Urban Institute, “the Affordable Care Act gets five points and Ryan gets zero.”"
 * 3) Tim Pawlenty's claims that under him the economy will grow at 5%/year and all problems will be solved: Clive Crook: "The moment I say something kind about Mitt Romney ("He is in many ways a capable and effective candidate") he criticizes Obama for throwing Israel under the bus by uttering the phrase "1967 borders" in the course of reaffirming long-standing US policy. That learned me. Now Tim Pawlenty soars to far greater heights of nonsense with his proposals on the economy.... I'm wondering why nobody thought of this before. Just grow at 5% a year. Job done. Also, he says, cap federal spending at 18% of GDP. Meanwhile, cut "just 1% of federal spending for 6 consecutive years" to balance the budget by 2017. See how the problems simply dissolve? Demographic pressures? Capped. Health care costs? Capped. He does mention the need to raise the Social Security retirement age for "the next generation", though one wonders why that would be any more necessary than, say, reforming Medicare (not discussed). It's already capped! Let's not forget revenues. He proposes to cut income tax rates dramatically (without reforming tax expenditures: nice touch) and to eliminate taxes on capital gains, dividends and interest altogether. That might reduce revenues in the short term. It could slightly widen income inequality. But remember the economy would be growing at 5%. Everything would work out, in fact, because the economy would be growing at 5%. And public spending would just be capped. I think it's brilliant. If I were Pawlenty, my only worry would be that somebody now suggests a growth rate of 6%. I'm just doing the sums here and I think that would be even better."
 * 4) Republican claims that Peter Diamond is unqualified to be on the Federal Reserve: Clive Crook: "Peter Diamond's decision to withdraw from contention for a seat on the Fed board is a very low moment in US politics. Diamond is an indisputably brilliant economist with no ideological baggage and highly relevant expertise--contrary to what his GOP critics say, and as he explains in his NYT article. It ought to be shocking, but it no longer is, that a man of his distinction could not get confirmed to the position. At times the US seems a country hell-bent on its own failure."
 * 5) David Brooks's claim that free-market capitalism has to be the best way to manage the health-care system: M.S.: "DAVID BROOKS had an op-ed in the New York Times yesterday that proclaimed the near impossibility of restraining costs in health care through centralised government efficiency evaluations, which is being justly ridiculed by people (Jon Chait, Jonathan Cohn, Ezra Klein) who note that every single one of the world's centralised government-regulated health-care systems is far cheaper than America's relatively decentralised private-sector one. Mr Brooks has surely had this explained to him a thousand times by now, and his failure to process the fact or incorporate it into his worldview seems to me most likely to reflect an absence of the ideological furniture on which the fact could sit..."
 * 6) Claims that austerity produces powerful long-run credibility benefits: Paul Krugman: "The Penalty for Default, the Payoff to Austerity: Ahem: 'The credit default swap (CDS) for the Icelandic state has now dropped to 200 points and has not been lower since many months before the banking collapse in October 2008. The CDS has been in constant decline since January and indicates growing faith in Iceland’s economy.' Meanwhile, the CDS spread for Ireland is 683 basis points. Why, it’s almost as if defaulting on debts run up by runaway bankers and letting your currency depreciate works better — even from the point of view of investors — than socializing private-sector losses and grimly sticking with a fixed exchange rate."
 * 7) Claims that contractionry policy are expansionary:: Heather Stewart and Daniel Boffey: "Former Tory backers voice concern over government's economic policy as critics say chancellor needs plan B: Some of Britain's leading economists are warning the chancellor, George Osborne, that the economy is too fragile to withstand his drastic spending cuts and that he must draw up a plan B. Experts, including two former Whitehall advisers and two signatories of last year's high-profile letter backing the Tories' cuts, have told the Observer that they have profound concerns about the direction of Treasury policy.... Jonathan Portes... until February was chief economist at the Cabinet Office... said: "You do not gain credibility by sticking to a strategy that isn't working."... Vicky Pryce, the [former] head of the government's economic service... said that ministers would be advised to begin preparing the ground for a U-turn: "It's a very risky situation, and I think that at some stage they'll panic." Professor John Muellbauer... who signed the letter to the Sunday Times last year supporting the Conservatives' approach, said: "Things are going badly. I had hoped that the focus in the budget would be on improving growth in the places where there are growth prospects, and also maintaining infrastructure investment, and that they would tackle failures of planning." Tim Besley, a former Bank of England monetary policy committee member who orchestrated the letter, said: "Everybody has been disappointed with growth." He still believes that the chancellor must stick to his guns, but complained that the Treasury had failed to articulate where growth would come from in the months ahead. "The disappointing growth has almost nothing to do with the fiscal plans of the government – I'm coming to the view that it's just a long, slow, hard slog – but what I would like to see from the government is a much more clearly defined growth strategy." Danny Blanchflower, another former MPC member, said: "Economic policy is in disarray." The increasingly bleak prospects for recovery have also prompted more than 50 prominent leftwing academics to write to the Observer to demand that the government pursues a plan B, to boost jobs and growth..."
 * 8) RERUN: Republican claims that Peter Diamond is not qualified for the Federal Reserve: Andrew Samwick: "When historians look back at our era and write about how a nation so blessed was able to squander those blessings so dramatically, they won't have to look much further than the U.S. Senate. Words, polite ones anyway, cannot really express how how absurd it is that the nomination of Peter Diamond for the Board of Governors of the Federal Reserve System has come down to this.  Even without the Nobel Prize, his qualifications for the position were beyond question -- at least by anyone who could be persuaded by the answers.  I continue to wonder whether our society is resilient enough to withstand many more years of this institutionalized immaturity on important policy matters..."
 * 9) RERUN: "Deficit-Hawk Paul Ryan": Jonathan Chait: "Stop calling Ryan a "deficit hawk." He voted for all of Bush's tax cuts. He voted for all the wars. He voted for Bush's Medicare prescription drug bill. He voted against the deficit-reducing Affordable Care Act. He voted against the Bowles-Simpson plan. He opposes any deficit reduction plan that increases revenue. Ryan is anti-government but he is clearly not a deficit hawk..."
 * 10) RERUN: The claim that it is time for central banks to tighten: The Financial Times Editorial Board: "In recent months, both the European Central Bank and the US Federal Reserve have become more vocal in their desire to raise rates. This temptation must be resisted. The west’s inflation problem stems from the voracious demand from Asia’s new industrial powerhouses. This must give hope that a mild dose of stagflation is simply the temporary symptom of an inevitable economic shift. Squeezing domestic inflation to offset it would be counter-productive. In abnormal times, policymakers should also be alive to the balance of risk between inflation and unemployment. Letting the latter rise and become entrenched at a time of weakness would risk hardening the economic arteries further. The real peril now is a double-dip recession rather than inflation. This is no time for tightening."
 * 11) RERUN: Mitt Romney's claim that we are only inches away from ceasing to be a free market economy: Buce: "[W]hen Mitt Romney says that we are 'only inches away from ceasing to be a free market economy', you'd just have to write it up as an arrogant, insolent, baldfaced lie. Which is pretty much what they are calling it over at Politifact, the Poynter journalistic fact-checker (sourced, ironically, in large measure, to those bomb-throwing insurrectionists at the Heritage Foundation).... [T]he US ranks ninth from the top "freest") out of 179.... None of this is surprising to anyone of even mildly wonky sentiments, a group which clearly includes Romney himself. But here's an extra irony I hadn't noticed before: health care. Namely that every one of those top eight has some kind of universal public health care. And they virtually all get better results than the US has, and at substantially less cost.... I dunno, maybe Romney (who can clearly say anything with the same schoolboy grin) will soon be telling us that Singapore and Hong Kong (and Switzerland, and Denmark, and Canada, and Ireland, and New Zealand, and Australia) are just mired in post-Leninist purgatory. Others might say otherwise: they might say it shows that freedom can be enhanced (even on a Heritage definition) by the right kind of government intervention. Like, say, in Massachusetts..."
 * 12) RERUN: Douglas Holtz-Eakin's claim that it would be reckless to pass a clean increase in the debt ceiling: Let's quote right-leaning Clive Crook again: "Tea Party true believers may be salivating.... Shutting down the government [by blocking the debt-ceiling increase is a button [Republicans] dare not press.... To do it in 2011, with the economy laid low and financial markets still twitchy, would be the limit of irresponsibility. It would be betting the recovery to make a point. This time, political annihilation might follow, and the party would deserve it..."
 * 13) SPEAKS FOR ITSELF: MSNBC: The entire top echelon of Newt Gingrich's presidential campaign resigned on Thursday, a stunning mass exodus that left his bid for the Republican nomination in tatters. But the former House speaker vowed defiantly to remain a candidate. "I am committed to running the substantive, solutions-oriented campaign I set out to run earlier this spring," Gingrich said in a posting to his Facebook page. "The campaign begins anew Sunday in Los Angeles." NBC News confirmed the departures to Gingrich's team, including spokesman Rick Tyler, campaign manager Rob Johnson, and strategists Dave Carney and Sam Dawson.