Longtime blogger Gary Farber is in really bad straits and could use whatever help you can provide.

Regular readers of his blog know he’s been sick for years — decades, really — with a whole host of issues, most critically “lifelong severe clinical depression, and panic/anxiety disorders to the point of almost complete disability.”

He put off applying for Social Security disability much too long and, as is almost invariably the case, has now been denied subject to appeal. That, of course, takes time, money, and a sense of calm and optimism that someone in his condition doesn’t have.

Meanwhile, he’s been evicted from his apartment.

So, help if you can.

National Journal’s Ron Brownstein sees the recent bout of gridlock in the United States as a sign of a more fundamental shift in how our government operates.

Obama’s first year demonstrated once again that in this deeply polarized political era, big legislative crusades aimed at big national problems produce only big political headaches. President George W. Bush learned that when his failed drive to restructure Social Security helped trigger his precipitous second-term political collapse. And now, like President Clinton, Obama is at risk of cracking his presidency on the immovable rock of health care reform. Democrats control the White House, the House, and, even after the Massachusetts vote, 59 Senate seats, more than either party has held since 1980, except during the past several months. Yet much of Washington assumes, probably correctly, that Democrats are now condemned to gridlock.

Republicans believe that Obama’s problem is that he’s pushing so much government intervention in the economy. That’s undoubtedly part of the story. But Obama’s larger difficulty is that he’s pushing so much change at a time when filibuster threats are so common that it requires 60 Senate votes to pass almost everything — and the minority party won’t provide the president votes on almost anything. We are operating in what amounts to a parliamentary system without majority rule, a formula for futility.

MoJo’s Kevin Drum picks up on this thread:

In a parliamentary system, party discipline is absolute. With a few rare exceptions, you vote with your party at all times, and there’s no such thing as “bipartisanship.” And it works fine. But it works fine because parliamentary democracies have a bunch of machinery that makes it work: majorities are able to pass legislation, no-confidence votes can bring down an unpopular government, party platforms are taken seriously, etc. We don’t have any of that stuff. What we’ve evolved over the past 20 years is a de facto parliamentary system without any of the machinery that makes it work. The result is national gridlock.

Obviously, we don’t literally have a parliamentary system.  Most notably, the president and legislature continue to be elected separately, rather than the legislature choosing the executive.

But it’s certainly true that it’s incredibly hard to get anything done when you combine our system of separation of powers and checks and balances with one with near-lockstep party discipline and a de facto supermajority requirement in the Senate.  As Brownstein continues,

Republicans would likely be facing equivalent troubles if they had the power to advance their goal of retrenching government. Does anyone imagine that a President John McCain would be flourishing if he had spent 2009 attempting, over unified Democratic resistance, to impose his campaign agenda of eliminating the tax incentive for employer-provided health care and reducing the growth of Medicare spending? Or that House Republicans would be thriving if they could enact their 2009 budget proposal to literally end Medicare for Americans now younger than 55 and replace it with a voucher to buy private insurance?

In that alternate universe, Democrats would almost certainly be the ones celebrating off-year upsets. The common thread is that it’s extremely difficult to sell this country on big change, in any direction, without at least some bipartisan validation. That’s especially true in today’s communications maelstrom, where overtly partisan media sources tirelessly incite the opposition party’s base against the president.

The conundrum is that the alternative now seems almost unreachable too: building bipartisan coalitions to address big problems. On health care, the root of the Democrats’ troubles, Obama surely made tactical mistakes. But, by any reasonable measure, he pursued an inclusive bill. He reached out more than any previous Democratic president to the medical community and won endorsements from Republican-leaning groups — ranging from drug manufacturers to, incredibly, the American Medical Association — that had ferociously fought every earlier reform drive. At high cost, he allowed the process to stall last summer while Senate Finance Committee Chair Max Baucus, D-Mont., fruitlessly sought compromise with committee Republicans. Now that an always-tangential public competitor to private insurers has been removed, the final Democratic blueprint broadly tracks the 1993 Republican alternative to Clinton’s health plan while advancing newer cost-control ideas that reformers in both parties favor.

There’s no question that the president and the Senate Democratic leadership tried to pick off a handful of the most liberal Republicans — and keep Joe Lieberman and some Red State Democrats on board.  At the same time, though, the need to keep the progressive wing of their own party on board meant that they had to keep some aspects in the bill — such as punishing people and businesses who don’t buy health insurance — that even the Olympia Snowes considered too radical.

The current system is doubtless frustrating.   While the numbers were never quite this skewed, the Republicans controlled the White House and both Houses of Congress for most of the six years from January 2001 to January 2007 and had very little success passing their domestic agenda, with the exception of now-wildly unpopular programs such as No Child Left Behind and the fiscal fiasco that was the Medicare drug benefit.    But those programs are exactly the kind of things that are most likely to break the gridlock:  those which both appealed to the ideological sensibilities of large swaths of the opposition party while coming with no real political price.

It may well be that the political calculations of Republicans are such that they’re simply unwilling to make any movement at all on healthcare, figuring any compromise at all will be seen as a win for the Democrats.   But I doubt it.   Heck, offer to let Olympia Snowe and Susan Collins write the bill!

The problem isn’t just that the opposition party (whether Republican or Democrat) votes in lockstep against the majority.   It’s that both parties’ leadership are drawn from the more ideological elements and that the hard core won’t put up with bills that don’t pass ideological muster.   Indeed, the likes of NOW would much rather have no bill than one that could draw the support of a few moderate Republicans — or even the most conservative Democrats.

Reason’s Nick Gillespie does his best John Stossel impression in explaining why whatever winds up in the final compromise health care bill will be just the beginning.

[Y]ou don’t have to side with those who warn of euthanasia classes to recognize that government programs often end up doing all kinds of things that weren’t in politicians’ original plans. Call it mission creep. Politicians pass a program, and then the scope of the program grows and changes.

It’s happened with everything from state-level health insurance plans to the Troubled Asset Relief Program. TARP’s original mission was spelled out in its name—the government would purchase troubled assets from financial institutions. However, just over a year later TARP’s mission has exploded, and billions in TARP funds have gone to bail out General Motors, Chrysler, and struggling homeowners. TARP money may even fund another stimulus.

He’s right that Social Security, the war on drugs, TARP and other programs radically evolved from their original intent. Lobbying, a bureaucracy run amok, and lack of Congressional oversight are all part of the problem.  So are unintended consequences, like the well-intentioned requirement that insurance plans cover exotic alternative treatments making everyone else’s premiums less affordable.

Frankly, however, that’s the least of the problem with this particular bill.   The reason this thing will morph, rather quickly, into something else is that it doesn’t solve the problems that it set out to solve and for which real political and economic pressures will remain.  First, we’ll still have millions of uninsured people.  Second, health costs are still going to be rapidly accelerating into unsustainable territory.

via Glenn Reynolds

Reuters blogger Felix Salmon contends that our tax system encourages income inequality because it generates more revenue for the treasury.

[W]hen you have a progressive tax system, especially when there are surcharges on people making seven-figure incomes, you also have a system where for any given level of national income, the greater the inequality, the greater the government’s tax revenues. And indeed federal revenues have been rising faster than median wages for decades now, thanks to the rich getting ever richer.

Given the government’s insatiable appetite for cash, it’s only natural that it would prefer to tax plutocrats, spending some of that money on poorer Americans, rather than move to a world where poorer Americans earn more (but still don’t pay that much in taxes), and the plutocrats earn less, depriving the national fisc of untold billions in revenue.

The government’s interests, then, are naturally aligned with those of the plutocrats — and when that happens, the chances of change naturally drop to zero.

Kevin Drum looks at the numbers, though, and contends this is nonsense.

Here’s why: although the top 1% (the four richest groups in the chart) has a lot of income, the 60-80th percentile has about the same amount.  That’s because although their incomes are a lot lower, there are a lot more of them.  So what happens if that group loses, say, 10% of its income and it goes instead to the very tippy-top earners?  Answer: total revenue to the government goes up about 1%.  The same is roughly true for the other income groups as well.

In other words, the federal government doesn’t have much of an incentive to maintain lots of income inequality.  Not much fiscal incentive anyway.  For the most part, the political incentives swamp the fiscal ones, and unfortunately they aren’t very closely balanced.  Pursue policies that raise middle class wages, and the effect is so diffuse and so slow that hardly anyone notices.  Pursue policies that benefit the rich and you get immediately showered with oceans of campaign contributions.  That’s mostly what motivates our political economy, I think, not tiny changes in the total tax take based on changes in income inequality.

A blogger at The Economist argues that the problem is income taxes themselves.

If the government is desperate for cash, it’s hard to beat the $324 billion per year that would pour in from a 5% VAT.

So if Congress needs all that money, then why doesn’t it adopt a VAT, or something similar? Mr Salmon’s logic would seem to suggest that it’s because the rich understand that a government dependent on them for revenue will continue to enrich them. As such, the rich will actually fight to prevent a less progressive tax system. I’m not sure this is borne out by experience.

Instead, I think that there are serious political difficulties in raising taxes broadly to fund social insurance programmes in a highly unequal society, because the social insurance is perceived as redistributing income over the population, rather than across time. Broad-based tax systems are how most European countries finance their social safety nets; nearly all of the redistributive effect of government programmes results from spending rather than tax policies.

There are all kinds of historical reasons for this, but one key thing to note is that pre-tax inequality in Europe is far lower than in America. Social insurance is much more about redistribution of resources over time than across the population. You pay taxes understanding that you’ll rely on services, be they health care, unemployment benefits, or pensions, at some point in the future. In America, by contrast, the rich will pay far more than they’ll ever demand from the government, while the poor will receive more than they’ll pay in (though Social Security is a bit of an outlier here).

The end result is a society which is reluctant to tax itself, since much of the voting public perceives government taxation and spending as giveaways to the non-taxpaying poor.

This is also, incidentally, a core issue in the current health care reform debate.

Story via memeorandum. Scrooge McDuck drawing by Don Rosa via Who’s who in Duckburg

Paul Krugman has taken some rather interesting stances on the fiscal situation here in the U.S. First up is a piece entitled Fiscal Train Wreck from March 2003,

With war looming, it’s time to be prepared. So last week I switched to a fixed-rate mortgage. It means higher monthly payments, but I’m terrified about what will happen to interest rates once financial markets wake up to the implications of skyrocketing budget deficits.

[…]

Last week the Congressional Budget Office marked down its estimates yet again. Just two years ago, you may remember, the C.B.O. was projecting a 10-year surplus of $5.6 trillion. Now it projects a 10-year deficit of $1.8 trillion.

And that’s way too optimistic. The Congressional Budget Office operates under ground rules that force it to wear rose-colored lenses. If you take into account ? as the C.B.O. cannot ? the effects of likely changes in the alternative minimum tax, include realistic estimates of future spending and allow for the cost of war and reconstruction, it’s clear that the 10-year deficit will be at least $3 trillion.

[…]

That may sound alarmist: right now the deficit, while huge in absolute terms, is only 2 ? make that 3, O.K., maybe 4 ? percent of G.D.P. But that misses the point. “Think of the federal government as a gigantic insurance company (with a sideline business in national defense and homeland security), which does its accounting on a cash basis, only counting premiums and payouts as they go in and out the door. An insurance company with cash accounting . . . is an accident waiting to happen.” So says the Treasury under secretary Peter Fisher; his point is that because of the future liabilities of Social Security and Medicare, the true budget picture is much worse than the conventional deficit numbers suggest.

What does he say today (well at least in August 2009)? Well, lets take a look,

I respect Jim Hamilton a lot, so I take his criticism seriously — and he raises questions that others raise too about my relatively sanguine assessment of the debt situation. Yet I think that he and others are quite wrong, on several counts.

[…]

But let’s take a slightly later start date: in 1950, federal debt in the hands of the public was 80 percent of GDP, which is in the ballpark of what we’re looking at for 2019. By 1960 it was down to 46 percent — and I haven’t heard that anyone considered America a debt-crippled nation when JFK took office.

So how was that possible? Was it through drastic cuts in defense spending? On the contrary: we’re talking about the height of the Cold War (with a hot war in Korea along the way), and federal spending actually rose as a share of GDP. So yes, it wasn’t entitlement programs, but it wasn’t exactly discretionary either.

How, then, did America pay down its debt? Actually, it didn’t: federal debt rose from $219 billion in 1950 to $237 billion in 1960. But the economy grew, so the ratio of debt to GDP fell, and everything worked out fiscally.

[…]

Jim gets scary numbers about the debt burden by assuming that we’ll have to pay off the debt in 10 years. But why would we have to do that? Again, the lesson of the 1950s — or, if you like, the lesson of Belgium and Italy, which brought their debt-GDP ratios down from early 90s levels — is that you need to stabilize debt, not pay it off; economic growth will do the rest. In fact, I’d argue, all you really need to do is stabilize debt in real terms.

Note that in 2003 Krugman was just fine looking at the 10 year budget predictions. Now, why that’s silly we just need to alter our perspective. And the new post mentions nothing about Social Security and Medicare whose fiscal/actuarial position has not changed appreciably since 2003.

Now some might argue, and indeed in the comments to other posts people have argued, that during the fat years you trim the deficits or best of all run surpluses and in the lean years run the deficits. Sure, that is a some what simplified version of Keynesian fiscal stimulus. My response is lets make a list of the two situations,

View from 2003:

1. The economy was in recovery.
2. The fiscal outlook was a $1.8 trillion deficit.
3. Social Security and Medicare were in serious actuarial imbalance (tens of trillions of dollars).

View from 2009:

1. The economy is in recession.
2. The fiscal outlook is $9 trillion deficit.
3. Social Security and Medicare were in serious actuarial imbalance (tens of trillions of dollars).

The view in 2003 terrified Krugman, so much so that he took personal action regarding his own finances. Switch to 2009 and, meh guys like Prof. Hamilton are just being alarmists. The view from 2009 is pretty much worse than it was in 2003, and it seems to me that yes, if one was worried about the fiscal outlook in 2003, then in 2009 it is even more worrisome. I agree with James Hamilton,

If the government tries to double taxes on people like me, it’s in real political trouble. If it doesn’t try to double taxes on people like me, it’s in real solvency trouble.

It looks like we may have a problem here.

Thanks to Scrivner.net for the links, and their article is also well worth reading. And yes, I know that this stuff is rather old, but…well Krugman is basically saying the samethings today he did in August, “No worries, we’ll grow our way out of it.”

In a front piece story in today’s NYT, Edmund Andrews warns that the bill is about to come due on the massive borrowing the federal government has engaged in.

Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.

[...]

With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.

In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan.

[...]

Americans now have to climb out of two deep holes: as debt-loaded consumers, whose personal wealth sank along with housing and stock prices; and as taxpayers, whose government debt has almost doubled in the last two years alone, just as costs tied to benefits for retiring baby boomers are set to explode.  The competing demands could deepen political battles over the size and role of the government, the trade-offs between taxes and spending, the choices between helping older generations versus younger ones, and the bottom-line questions about who should ultimately shoulder the burden.

[...]

The problem, many analysts say, is that record government deficits have arrived just as the long-feared explosion begins in spending on benefits under Medicare and Social Security. The nation’s oldest baby boomers are approaching 65, setting off what experts have warned for years will be a fiscal nightmare for the government.  “What a good country or a good squirrel should be doing is stashing away nuts for the winter,” said William H. Gross, managing director of the Pimco Group, the giant bond-management firm. “The United States is not only not saving nuts, it’s eating the ones left over from the last winter.”

Emphases mine.

This sounds ominous and unsustainable.  But Paul Krugman, recent winner of the Nobel Prize in economics, say these fears are overblown.

As Dean says, the numbers don’t fit the scare story — a decade from now interest payments will reach a level not seen since … 1992. And the market seems unworried, since long-term rates remain low.

The “Dean” is question is Dean Baker of The American Prospect.  He sarcastically titles his post, “In Just a Decade the U.S. Interest Burden Could Be as High as It Was in 1992!!!!!!!”

There is no evidence presented in this article that the rise in interest rates will place the U.S. government in a situation where it will be unable to pay its bills and no one cited in this article makes such a claim.

The article is also completely unbalanced in not presenting the views of any economist who could put the deficit/debt issue in perspective for readers.

Krugman makes the same charge but, oddly, neither of them bother to actually present a counterargument.

Andrews argues that most of the debt is in short-term loans whose price will go up as there becomes more competition for money.  He makes what strikes me as a plausible case that higher interest rates, growth in entitlement spending, and a smaller tax base will make servicing the debt very, very difficult.   Countervailing factors could offset this but neither Krugman nor Baker tell us what they might be.

It’s true that we had gloom and doom forecasts during the 1992 recession.  But we only solved those through the dual magic of the dotcom bubble and the post-Cold War defense drawdown.  It’s not likely that those events will repeat themselves.

Photo by Flickr user kandyjaxx under Creative Commons license.

Time features an article on the “Five Things the U.S. Can Learn from China” that I can only characterize as surreal. Here are the five lessons:

1. Be Ambitious
2. Education Matters
3. Look After the Elderly
4. Save More
5. Look over the Horizon

For the details you’ll just have to read the article.

On ambition, the article’s author, Bill Powell, returns to a theme often sounded by Tom Friedman which I would summarize as how much you can accomplish when you’ve got an authoritarian government.

On education, the United States spends more on it than any country in the world, more per student, and more as a percentage of GDP than France, the United Kingdom, or China. Whether the money is well spent is another question entirely. We misspend. It is the American way.

However, when you’re a country of more than a billion people you’re bound to have a lot of smart, talented people and the Chinese authorities see the future of a lot of those smart, talented people being in science and engineering so they’re emphasizing it. In the United States opportunities in science and engineering are doubtful, Americans are savvy readers of the market, and, consequently, American students aren’t pursuing science and engineering (except in healthcare where there is clearly a future).

However, China’s elite don’t represent the whole story. China has millions and millions of people who are illiterate and are likely to stay that way, perhaps 30% of the population or more (there are some claims that the rate of illiteracy in China is much, much higher). How should we learn from the Chinese on education? Should we abandon universal education?

Look after the elderly! Forsooth. China has no national system of social insurance. In China looking after the elderly means in the family. Were we to emulate China in this we’d abolish Social Security and Medicare outright. Note: I don’t advocate this. I think that properly constructed social insurance and subsidizing healthcare for the elderly is freedom-enhancing. Needless to say what we’ve got now is not properly constructed.

And that’s intimately related to why the Chinese save. The Chinese save because they’re afraid of the future and because they have little choice. Were we to heed the lesson of the Chinese in this we’d reduce our social safety net rather than extend it.

I do think that there are lessons we should learn from China and many of them are object lessons. China is a great country with great people hobbled by cultural baggage and a corrupt, evil, authoritarian government whose oligarchs hoard the bulk of China’s wealth for themselves and their families. The notion that China is to be emulated is nuts.

While I share Michael Tomasky’s disdain for people carrying signs about “the blood of tyrants” while protesting democratically elected leaders, he goes too far here:

There was an election. One guy one, another guy lost. It wasn’t disputed. It wasn’t decided by an ideologically divided Supreme Court, which gave the win to the guy who won fewer votes. This election wasn’t even particularly close. It means that the side that won is entitled to try to pass its agenda. But the protesters don’t respect the result of the election.

To be sure, there are people, like the Birther conspiracists, who don’t in fact respect the result of the election.  But so what?  So long as they don’t actually engage in criminal conduct to express that disrespect, they’re entitled to be sore losers.

But winning an election doesn’t mean you get to do whatever you want for the term of your office.  Not in America’s system with it’s complicated checks and balances and divided government.  No, winning merely means you have better leverage on the wheels of power, not complete control.

George W. Bush was re-elected in 2004 by a comfortable margin and his party had control of both Houses of Congress.  Rather quickly, with the Katrina debacle and the emergence of a full-blown insurgency in Iraq, his administration got stuck in the mire.  His vaunted “political capital” was gone and he was unable to enact such things as the massive Social Security reforms on which he campaigned.

Beyond the practicalities of enacting public policy, the very idea of a “mandate” is rather silly.  Yes, Barack Obama won and yes, he was and is quite popular.  Yes, he campaigned on fixing health care and yes, fixing health care is popular.  But those who voted for Obama did so for a wide variety of reasons.  Similarly, those who like Obama and who want to “fix” health care may nonetheless disagree, vehemently even, with the particular set of fixes that are being bandied about.  Surely, they’re entitled to let that be known?

Just as surely, those who lost the last election are entitled to try to rally the troops and persuade independents to give them another chance.  That’s the essence of free speech.

Ezra Klein and Steve Benen are recirculating this somewhat interesting chart on political polarization in America by political scientists Nolan McCarty, Keith T. Poole, and Howard Rosenthal.

Ezra argues that “this level of polarization makes it virtually impossible to govern in a system that is designed to foil majorities and require a constant three-fifths consensus. It’s not good if the country is virtually impossible to govern.”  Steve says this is especially true when, pace Harold Meyerson, the opposition party “is dominated by Southern neo-Dixiecrats.”

Given this situation, Ezra observes, “Problems don’t stop mounting while we try and figure things out. We could respond to this by making it easier for the majority party to govern and thus less likely that we have some sort of massive crisis that totally realigns our politics.”  He’s not talking about amending the Constitution but rather implementing unspecified rules changes in Congress that would strip power from the minority to get in the way.

Newt Gingrich made a bunch of changes in 1994. Democrats made a bunch of changes in 1975. John F. Kennedy made some big changes in the early 1960s. FDR changed the way Congress worked, and so too did Woodrow Wilson. This isn’t something invented by a bunch of bloggers in the early 21st century.

My recollection of both the Gingrich and post-Watergate reforms is that they were aimed at breaking down the power that came with seniority and to deal with public perception that Members were unduly influenced by outside interests rather than the ability of the opposition party to shape or block legislation.   And I’ve got no idea whatever of what Kennedy did to reform Congress; indeed, I’m not sure how he would have done that from the White House. In the cases of FDR and Wilson, they simply seized power for the presidency during extreme national crises with the acquiescence of Congress.

Regardless, as Thomas Mann and Norman Ornstein document, there have been numerous and nearly-continuous efforts to reform Congressional rules over the years.  And I’d be quite happy, for example, to do away with or seriously limit the use of the filibuster, secret holds, and various other measures which make it easy for the minority to block even relatively minor legislation.  Those are extra-constitutional at best and are not supposed to be used routinely as they now are.

At the same time, however, I disagree with the underlying premise of Ezra and Steve’s complaint.  The fact that we’re more polarized on politics as a nation than we have been in decades, by definition, means that there’s little national consensus.  That’s simply not a time for radical policy changes.  Ramming through unpopular programs in a very polarized nation is a recipe for more polarization.

George W. Bush was re-elected in 2004 along with Republican majorities in both Houses of Congress.  Among the signature programs he ran on was a radical overhaul of the Social Security retirement system that included a private option.   Once we got to the legislative phase, however, and the public saw the actual program rather than an abstract notion, it became decidedly less popular.  And the Democratic minority in Congress was able to block it.   We may well be on the road to the exact same thing happening on health care reform, with the public option failing to catch on for now.

That is how our system is supposed to work.  It’s precisely designed not to allow big change based on a small majority.

Furthermore, the Democrats have a reasonably comfortable margin in both the House and the Senate.  To the extent that they’re failing to get things done, it’s not because “Southern neo-Dixiecrats” in the minority party are using dastardly tricks to foil the popular will but because of fissures within the Democratic coalition.   Which, incidentally, the Republicans faced, too, back when they had the majority.

The nature of putting together a governing coalition in a politically polarized country is that getting over the top requires winning seats in states and districts that are either closely divided or are usually won by the other party.  “Blue dog” Democrats are no more in line with the Progressive wing of their party than the Northeastern Republicans of yore were with the Southern Conservative wing of theirs.

Alex Massie argues that the current inability of the Democrats to pass meaningful health care reform, one of their signature issues, despite overwhelming control of the government shows the system is broken.

It’s more difficult than it was in LBJ’s day, mind you. All the horse-trading that once went on in private now takes place in a world of Twitter and blogs and email and 24/7 news and a permanent campaign that is exhausting to follow, never mind survive. Everything is judged prematurely, nothing has time to settle and there’s very little opportunity for proper contemplation.

[...]

Of course, that broken system is very useful when the other party is in power. Democrats didn’t mind that the system helped defeat George W Bush’s social security reforms. Now, however, the boot is on the other foot. And it’s fair to say that plenty of smart liberal commentators are feeling pretty bad about it.

[...]

Congress, of course, is massively unpopular regardless of which party controls it. The public wants Congress to do stuff but also wants Congress to frustrate the bad or scary ideas the other mob propose. That’s a recipe for confusion and, in the end, legislative constipation. It’s like trying to brake and accelerate simultaneously.

There’s an argument to be made, then, that the United States is currently in the midst of an experiment that will go some way towards demonstrating the limits of liberal democracy. Or, to put it another way, how scaleable is democracy? And how scaleable is it in a country as diverse and disputational as the United States? Can you actually govern a country of 300m people effectively while also operating within the framework of enlightenment thought?

His solution: Send it to the states.

If everyone gets to supply ingredients for a cake baked by Congress it’s hardly a surprise that the end result is indigestible. Fewer ingredients and more, but smaller, cakes might produce a better result. National legislation, almost by definition, must ignore local tastes and preferences. Nor, in a country as vast as the US, does national legislation necessarily offer efficiencies of scale that outweigh their drawbacks.

It makes a lot of sense.  Indeed, the bluest states, the ones that want it most, would presumably pass some sort of state-run or state-option system rather quickly whilst the reddest states would remain holdouts.  Everyone, excepting perhaps blues living in red states and vice versa, would be happy.

Patrick Ruffini has used considerably fewer than 140 characters to make an interesting point: “Obama Health Care = Bush Social Security.”

The analogy is a strong one.

You will recall that President George W. Bush, fresh off re-election in 2004 pledged to use his “political capital” to pass a major reform of the Social Security system that included a private option.  Despite having a Republican majority in both Houses of Congress, the deal fell apart owing to united opposition from the Democrats and division among the Republicans.

Fast forward four years and we seem to be having a re-run.  Fresh off a historic election, President Obama pledged a massive reform of the health care system that included a public option.  Despite having a Democratic majority in both Houses of Congress, the deal seems to be falling apart owing to united opposition from the Republicans and division among the Democrats.

Rick Moran argues that “Obamacare” is floundering because Obama is taking his leadership cues from Jimmy Carter.

This president apparently doesn’t know how to govern. He has handed responsibility for getting this bill passed to Pelosi and Reid while he stands on the sidelines kibitzing.

Bottom line: No one is in charge. Committee chairmen have their own ideas about what should be in the bill while Blue Dogs and liberals are rejecting their formulations and want to substitute massively.

Then again, Bush had a plan and allowed himself to be the target of public criticism and still failed miserably.  It may simply be that massive reform efforts are ridiculously hard, especially once there’s an actual bill to shoot at.  There may be mass agreement in theory that we need to Do Something about the problem but there’s much less consensus on What To Do about said problem.  Republicans are mostly against the effort, both for ideological reasons and because killing Obamacare would seriously wound Obama politically.  Democrats, meanwhile, are going to either be disappointed that the bill doesn’t go far enough or think it goes to far.

Kevin Drum patiently explains to the folks at Townhall and NRO that holding a three day convention in a central location for $1071 a person is far from a boondoogle.

That’s unbelievable.  SSA must have some world class penny-pinching accountants and event planners on their staff.  I doubt there’s a corporation in America that would even try to budget less than two grand a head for something like this.

Considering that said figure includes transportation, meals, entertainment, and whatnot, it is indeed quite the bargain.

One wonders, however, whether the taxpayer got $750,000 worth of value added out of the convention.  What sort of “organizational training” do Social Security Administration managers need that involves dancing, skits, and casino gambling?

This isn’t an anti-government rant, per se.  This sort of thing happens in the private sector all the time and, as already noted, at higher cost.  I’m just generally dubious of retreats, conventions, and the like as productive enterprises.

Photo by Flickr user platinum under Creative Commons license.

Since well before I thought the matter one for serious consideration, Andrew Sullivan has been making insightful, compelling arguments in favor of same-sex marriage.  This, alas, is not one of them.

A reader makes an excellent point:

One thing that struck me about the DOJ’s argument that DOMA does not violate the equal protection clause since homosexuals are still able to marry people of the opposite sex, is that this ignores the existence of same-sex marriage on the state level. If two women get married in Iowa, they can no longer enter into opposite-sex marriages, even though they still don’t have federal recognition.So right now, there exist a specific class of people (those who are married to a person of the same sex) who are totally excluded from federal marriage benefits.

Yes. That would be me and my husband. And we may be forced to separate as a result.

So . . . absent the right to marry the man he loves, Andrew would marry a chick in order to get “federal marriage benefits”?  Really?  What benefits are those, exactly?  The right to pass on half his Social Security check some decades hence to some random woman he’s not in love with?

Why would he want to do that?

The only other benefits that come to mind for someone who isn’t a military retiree, disabled veteran, or the like — which Andrew isn’t — are the right to leave property without a will and deathbed hospital visitation.  The first of those is a matter for the states and the second a matter of hospital policy; both are easily remedied.  But even if we grant artistic license here, I’m not sure what a sham marriage to an unspecified woman would accomplish.  I suppose having someone visit you in the hospital is better than no one; but it’s hardly the same as having your life’s partner there.

And this has them seriously considering abandoning their marriage?

Being unable to form a legal union with the person you love and/or being denied the benefits that traditional marriages convey is a legitimate gripe.  I’m not sure, however, that the fact that being legally married — with all attendant benefits — to that person  in one’s state denies one the right to also be married to someone one doesn’t wish to marry is a substantial additional burden.

Photo: Australian News and Information Bureau

Mohamed El-Erian points out that there are good reasons for Bernanke to be worried about the future with regards to fiscal policy.

Mr Bernanke acknowledges that, despite the ”green shoots”, there are still question mark over which components of demand will kick into gear once the cyclical inventory pick-up runs its course, as it will inevitably do so over the next few months. Indeed, the chairman notes that ”businesses remain very cautious and continue to reduce their workforces and capital investments.”

Concerns about a sustainable recovery are not limited to the dynamics of the immediate cyclical recovery. Mr Bernanke also notes that ”even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while, implying that the current slack in resource utilisation will increase further.”

Yet he stops short of addressing what, increasingly, will be on many people’s minds going forward. Specifically, the longer-term question goes well beyond the notion of a prolonged period of below-potential growth. The level of potential growth itself is likely to decline. Indeed, this is a central element of what we, at Pimco, call the ”new normal”.

The “New Normal” refers to lower potential growth due to constraints from the increased national debt.

When it comes to fiscal issues, the chairman is not timid about worrying about longer-term questions – and rightly so. He is explicit about the need for greater clarity on how fiscal sustainability will be restored after this period of emergency policy actions.

Mr Bernanke states that ”even as we take steps to address the recession and threats to financial stability, maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance. Prompt attention to questions of fiscal sustainability is particularly critical because of the coming budgetary and economic challenges associated with the retirement of the baby-boom generation and continued increases in medical costs.”

He does not stop here. He goes on to warn that ”near-term challenges must not be allowed to hinder timely consideration of the steps needed to address fiscal imbalances. Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth.”

Almost all projections show the U.S. national debt doubling by 2019 and that the outlook in terms of deficits goes from declining as a percentage of GDP to increasing after 2013. Significant parts of the problem are the fiscal imbalances caused by Social Security and Medicare with Medicare being the much larger contributor. And there is nothing even hinting at how these issues will be handled. The claim that President Obama is going to reduce the deficit by half by the end of his first term is offset by the worsening fiscal projections after that.

The chairman’s challenges on this count are neither easy nor amenable to quick solutions. Moreover, as markets increasingly look into the underlying factors, as inevitably they will, they will recognise the difficulty that the government faces in credibly committing to the needed primary fiscal adjustment in the absence of high economic growth.

The bottom line is that we should come away from Mr Bernanke’s testimony with at least two conclusions: the chairman seems more cautious about the growth outlook when compared with other recent public statements; and he wants to push fiscal sustainability issues clearly away from the Fed’s domain and back where they belong, with Congress and the administration.

Indeed, there is little the Fed Chairman can do regarding the fiscal situation. If the Congress and the Administration do not step up and start to show some signs of moving towards a sustainable fiscal policy economic growth could be considerably lower for quite some time.

Tyler Cowen has three health care fallacies and the first one is something I’ve mentioned before (and tooke quite a bit of heat for),

Today’s report is this:

The financial outlook for Medicare and Social Security has significantly worsened, as the bad economy and mounting job losses have pushed both programs years closer to insolvency, according to a grim report issued Tuesday by the Obama administration.

Maybe you once argued that “Social Security is fine,” but dollars are fungible and the budget must be judged as a whole. The consumption tax is coming, I am sorry to say.

In other words, we can’t simply ignore Social Security in trying to get a handle on the long term fiscal imbalances facing the country. While in isolation Social Security might be “fine” and need only some minor adjustments, the entire budget is looking rather bleak. So, taking Social Security off the table might make the problem intractable.

I also like this part as well,

I’m seeing nascent signs of a new (but actually old) fallacy, namely that since health care costs can (will?) crush the budget, we don’t have to worry so much about other expenditures. The mental story runs something like this: “if we don’t cure health care cost inflation, it doesn’t matter; if we do cure health care cost inflation, we can afford it.” That’s exactly the kind of false mental framing that behavioral economics identifies as irrational in other settings.