Paul Krugman: The health insurance excise tax

OK, clearly I have to weigh in on this. Should there be a limit to the tax deductibility of employer-provided health insurance, which is what the excise tax in the Senate bill is supposed to fix?

My answer is yes, but the final bill should address the criticisms.

The argument for limiting the tax exclusion is that the tax break on health insurance encourages over-spending, so limiting it could help in the process of “bending the curve”. More generally, since we think the United States spends too much on health for not-so-good results, it makes sense where possible to pay for expanding coverage from the health sector itself. Both arguments are reasonable.

Money and Financial Reform

Last week, Ryan Grim and Arthur Delaney wrote a story for the Huffington Post about the difficulty of getting substantive reform through the House Financial Services Committee. They focus on two main things. First, because a seat on the committee is valuable for fund-raising purposes, the Democratic House leadership seems to have stacked it with vulnerable freshman and sophomore representatives from Republican-leaning districts, meaning there are a lot of Democrats who are either personally inclined to vote with the financial services industry or feel a lot of political pressure to do so. Second, a lot of committee staffers end up switching sides to work as banking industry lobbyists, and some of them then come back to be committee staffers, raising the usual questions about the revolving door. Barney Frank comes off as something of a hero; the idea is that Frank and his senior staffers are so smart and skilled that they can get effective legislation through despite the cards being stacked against them.

A social science approach to global warming denialism--Part 1

by: Paul Rosenberg

Sat Jan 09, 2010 at 12:30

On Dec 29, Daniel wrote a diary, "Why the right denies anthropogenic climate change", in which he said:

What's really happening is that anthropogenic climate change is a fundamental assault on right wing ideology and the solution requires a worldwide implementation of liberal policies that will undercut right wing ideas at every level well into the future. Right wingers maybe do not grasp this fear consciously, but intuitively everything about this issue stinks for them. Denial is the only way to save their worldview.

At the time, I responded with a comment stressing conservative identity over ideology:

You're Too Logical

All the above would be true if conservatives really understood it, but they do not. Most importantly, the "instinctively feel" version, which you present, doesn't really improve the argument. It only creates our own "just so" story. (Or a "rational reconstruction" of irrational attitudes, if you will.)

Geithner is asked to testify to Congress about AIG's payouts

By Greg Gordon | McClatchy Newspapers

WASHINGTON — A House of Representatives committee chairman has invited Treasury Secretary Timothy Geithner to testify why, immediately after he was nominated, federal regulators decided not to reveal the generous terms of $62 billion in taxpayer-financed payouts to major banks.

The White House, responding to the release of internal e-mails drawing Geithner into yet another controversy over the government's handling of the nation's financial crisis, reiterated President Barack Obama's support for his treasury secretary. Asked whether Geithner still has Obama's full confidence, presidential Press Secretary Robert Gibbs said, "Of course."

The Uh-Ohs: A Decade of Conservative Failure

Forget about "the Aughts." Never mind "the Naughts." The decade just passed — and which promises to leave a lingering, bitter aftertaste — deserves a far better, more descriptive name. So for what it's worth, I hereby dub the past ten years "The Uh-Ohs: A Decade of Conservative Failure."

It's as good as any of the others I've heard. Perhaps better. Here's why.

Because despite the wisdom of Donald Rumsfeld, "stuff" doesn't just happen. Despite what Joel Achenbach seems to think, the debacle of the last ten years didn't just happen. And, yes, plenty of people did see it coming. Their warnings were ignored. What followed, then, didn't "just happen," but was the consequence of conscious choice. And, despite what Matt Yglesias seems to think, it is important to discuss and determine the causes of the various messes we find ourselves in. (Even if we find along the way the fingerprints of some Democrats Who Should Have Known Better™.)

Cerberus Capital: Literally Blood-Sucking the Poor to Make Their Billions

By Mark Ames, AlterNet
Posted on January 9, 2010, Printed on January 9, 2010
http://www.alternet.org/story/145044/

Wall Street Vampires: Lately, a lot of Americans, myself included, have used the blood-sucking monsters as a metaphor to describe the Wall Street billionaires who rule us, and who are ruining us. Like so many awful stories of the past few years, it turns out that these Wall Street vampire-billionaires really exist, literally. Like all vampires, they live in remote castles, and feed themselves by luring poor, desperate humans into their dens, hooking them into blood-pumping machines, and sucking out their plasma for mind-boggling profits.

Cerberus Capital, one of Wall Street’s most notoriously ruthless leveraged-buyout firms (or “private equity firms” in PC-speak), recently made a $1.8 billion killing on their human plasma investment, a company called Talecris, which they bought for a mere $82.5 million just four years earlier. Meaning Cerberus made 23 times their investment on human plasma. They did it by the most savage, heartless means possible: by paying peanuts to their impoverished human plasma donors, who increasingly come from Mexican border towns to blood-pumping stations set up on the American side, jacking up the price of plasma by restricting supply (a lawsuit filed by the Federal Trade Commission accused Cerberus Plasma Holdings of “operat[ing] as an oligopoly”), and then selling the refined products to the most desperately ill, patients suffering from hemophilia, severe burns, multiple sclerosis, and autoimmune deficiencies. The products cost so much—one, IVIG (intravenous immunoglobulin) cost twice the price of gold as of last summer -- that American health insurance companies have been dropping or denying their policy holders in increasing numbers, endangering untold numbers.

U.S. One of Two Countries Where Kids' Educational Attainment is Lower Than Their Parents'

By Daniela Perdomo
Posted on January 8, 2010, Printed on January 9, 2010
http://www.alternet.org/bloggers//145033/

According to a recent report, Americans aged 25–34 have attained less education than their parents' generation.

If the data cited by the American Association of State Colleges and Universities (AASCU) commission report is correct, the United States and Germany are the only two nations in the world where this holds true.

Indeed, while the United States ranks second among all nations in the proportion of population aged 35-64 with a college degree, we rank tenth in the percentage of those aged 25-34 with an associate's or high school degree.

When a 79.9% APR Is Good?

Adam Levitin wrote an informative post on Credit Slips a couple of weeks ago; I missed it but it looks like no one in my RSS reader has mentioned it, so here goes. One provision of last year’s credit card legislation limited up-front fees to 25% of the line of credit being offered. First Premier Bank currently offers a card with a $250 credit line, $124 in up-front one-time fees, a $48 annual fee, and a $7 monthly fee. Oh, and a 9.9% APR on purchases. That adds up to $179 that gets billed immediately, and a total of $256 over the first year–more than the credit line. Because this card will become illegal in February, they are test-marketing a new card that has a $300 credit line, $75 in up-frontfees (to conform with the law; there could be a monthly fee in addition), and a 79.9% APR.

CES: Why the White House is backing away from Net neutrality

Editors' note: This is a guest column. See Larry Downes' bio below.

LAS VEGAS--The Obama administration and its allies at the Federal Communications Commission are retreating from a militant version of Net neutrality regulations first outlined by FCC Chairman Julius Genachowski in September.

That's my reading of a number of recent developments, underscored by comments made by government speakers on a panel on the first day of a Tech Policy Summit at CES in Las Vegas.

Overcoming the Copenhagen Failure

by Joseph E. Stiglitz

Pretty speeches can take you only so far. A month after the Copenhagen climate conference, it is clear that the world’s leaders were unable to translate rhetoric about global warming into action.

It was, of course, nice that world leaders could agree that it would be bad to risk the devastation that could be wrought by an increase in global temperatures of more than two degrees Celsius. At least they paid some attention to the mounting scientific evidence. And certain principles set out in the 1992 Rio Framework Convention, including “common but differentiated responsibilities and respective capabilities,” were affirmed. So, too, was the developed countries’ agreement to “provide adequate, predictable and sustainable financial resources, technology, and capacity-building” to developing countries.

The Clintonites were wrong

The "new economy" was an illusion. Neoliberals have to admit that before they can stop the bleeding

By Michael Lind

Jan. 05, 2010 |

Is the American economy facing a lost decade? That is the wrong question to ask. The right question is this: Is the United States facing another lost decade? During the past 10 years, inflation-adjusted wages have stagnated or declined for working Americans; net job creation has been zero; and temporary, bubble-driven gains in the stock market have been erased.

This isn't what Bill Clinton and the other "New Democrats" of the 1990s promised us.

Remember "the new economy"? In the second half of the 1990s, after years of stagnation, the U.S. economy briefly boomed. Members of the New Democrat wing of the Democratic Party, associated with the Democratic Leadership Council (DLC) and the Progressive Policy Institute (PPI), made a number of claims.

Pesticides loom large in animal die-offs

Yale’s Environment 360 has a new must-read report by Sonia Shah linking pesticides to the high-profile die-offs among amphibians, bees, and bats. What makes this news timely isn’t necessarily the toxicity of the pesticides per se, it’s the indirect effects on these animals of chronic, low-dose exposure to chemicals:

In the past dozen years, no fewer than three never-before-seen diseases have decimated populations of amphibians, bees, and—most recently—bats. A growing body of evidence indicates that pesticide exposure may be playing an important role in the decline of the first two species, and scientists are investigating whether such exposures may be involved in the deaths of more than 1 million bats in the northeastern United States over the past several years.

Servicers, White House Point Fingers as Foreclosure Plan Fails

Few Borrowers Helped Under Plan Designed for 3 to 4 Million

By Mary Kane 1/4/10 6:00 AM

Only a year ago, hopes were high that a big push by the government to stop foreclosures would be a great success, living up to its billing as “Help for America’s Homeowners.”

Last January started out with a foreclosure moratorium, allowing time for the Obama Administration to put the final touches on Making Home Affordable — its $75 billion signature program aimed at helping 3 to 4 million homeowners. After bailing out banks and the financial system, the administration turned its efforts to borrowers on the verge of losing their homes. The program rolled out with fanfare in the spring.

Paul Krugman: Bubbles and the Banks

Health care reform is almost (knock on wood) a done deal. Next up: fixing the financial system. I’ll be writing a lot about financial reform in the weeks ahead. Let me begin by asking a basic question: What should reformers try to accomplish?

A lot of the public debate has been about protecting borrowers. Indeed, a new Consumer Financial Protection Agency to help stop deceptive lending practices is a very good idea. And better consumer protection might have limited the overall size of the housing bubble.

But consumer protection, while it might have blocked many subprime loans, wouldn’t have prevented the sharply rising rate of delinquency on conventional, plain-vanilla mortgages. And it certainly wouldn’t have prevented the monstrous boom and bust in commercial real estate.

Public Spending Still Key to Economic Recovery

Sunday 03 January 2010
by: Mark Weisbrot | The Center for Economic and Policy Research

There are right-wing voices claiming that the government is an obstacle to economic recovery in the United States, irresponsibly piling up debt, burdening future generations, and ruining the investment climate. For them, we only need to rely on the private sector to get us out of our worst slump since the Great Depression.

It should be recalled that it was the excesses of the private sector, and especially the financial sector, that caused this economic collapse. To the extent that the government is responsible, it is that it failed to contain these excesses, and allowed an $8 trillion housing bubble to accumulate without so much as a simple warning to the public. This made a serious recession inevitable.

The 14 Most Heinous Climate Villains

By Michael Roddy and Ian Murphy, Buffalo Beast
Posted on January 6, 2010, Printed on January 8, 2010
http://www.alternet.org/story/144990/

The science of climate change is pretty basic: humans dig up fossilized carbon to fuel power plants and internal combustion machines, releasing CO2 into the atmosphere. Result: greenhouse effect global heating. Around 50% of all the species on the planet are predicted to become extinct by 2100 in the CO2-as-usual model. Our own species will face drought, famine, rising tides, soaring temperatures, calamity and chaos. Hundreds of millions will become climate refugees. Billions may die from starvation, genocide and war. We have precious little time to mitigate this looming global catastrophe.

Those of us still denying the depressing facts are either tragically stupid or profoundly corrupt or both. If there’s anyone alive to write the history of corporate funded climate science denial, the following list of 15 Heinous Climate Villains will, by the sheer magnitude of death their lies wrought, make the infamous dictatorial monsters of the 20th century seem like incompetent children. Enjoy!

Geithner and the AIG Emails: Scandal Is Only Tip of the Iceberg

By Eliot Spitzer and William K. Black and Frank Partnoy, NewDeal 2.0
Posted on January 7, 2010, Printed on January 8, 2010
http://www.alternet.org/story/145020/

In a December New York Times op-ed, we called for the full public release of AIG email messages, internal accounting documents and financial models generated in the last decade. This Thursday, a Bloomberg story revealed that under Timothy Geithner's leadership, the Federal Reserve Bank of New York told AIG to withhold details from the public about its payments to banks during the crisis. This information was discovered when emails between the company and the Fed were requested by representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

The emails requested by Issa span five months beginning in November 2008. If five months of emails reveal information key to our understanding of the aftermath of the crisis, imagine what 10 years of emails could contribute to our understanding of its causes. We believe the AIG emails and other internal company documents are the 'black box' of the financial crisis. If we understand the failure of AIG, we will more fully understand the crisis -- what caused it and more importantly how to prevent it from happening again.

Report suggests a year of high unemployment ahead

By Aversa And Christopher S. Rugaber, Ap Economics Writers
2 hrs 29 mins ago

WASHINGTON – Brace for a year of stubbornly high unemployment.

Gripped by uncertainty over the economic recovery, employers chopped 85,000 jobs last month, and difficulty finding work helped chase more than half a million people out of the job market.

The unemployment rate held steady at 10 percent. It did not creep higher only because so many people stopped looking for work and are technically not counted as unemployed.

Walk Away From Your Mortgage!

By ROGER LOWENSTEIN

Published: January 7, 2010

John Courson, president and C.E.O. of the Mortgage Bankers Association, recently told The Wall Street Journal that homeowners who default on their mortgages should think about the “message” they will send to “their family and their kids and their friends.” Courson was implying that homeowners — record numbers of whom continue to default — have a responsibility to make good. He wasn’t referring to the people who have no choice, who can’t afford their payments. He was speaking about the rising number of folks who are voluntarily choosing not to pay.

Such voluntary defaults are a new phenomenon. Time was, Americans would do anything to pay their mortgage — forgo a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible?

Gentrification Hangover

How New York could create affordable housing from its empty glass condo buildings and failed takeover projects.

Alyssa Katz | January 6, 2010

Commuters arriving in Brooklyn via the Manhattan Bridge are greeted with a shiny vision of New York City's future that never came to be: condo buildings with names like the Oro, the Toren, and Forté, towering monuments to real-estate developers' credit-bubble hubris. Two-bedroom apartments in the Oro were priced at nearly $1 million apiece; today, just 90 of 303 units have been sold. The Forté would have gone into foreclosure had its developer not voluntarily relinquished the building to the bank, losing investor Goldman Sachs its $13 million stake. Property records declare 37 of its 108 units purchased, and the high-rise itself feels even lonelier -- as night falls, just a few windows in its upper reaches are illuminated.

Did Demand for Credit Really Fall?

One standard attack against banks is that they have not expanded lending sufficiently to help the economy recover. The standard defense has been that the supply of credit collapsed only in response to a collapse in the demand for credit. The primary measure of demand for credit that I know of is the one compiled by the Federal Reserve by surveying bank lending officers; it shows falling demand for all types of credit from 2006, with an acceleration in the fall in late 2008.

Presumably this is based on the number of people walking into bank branch offices (or calling up on the phone, or applying online, etc.). But Google has another way of tracking demand for credit; the Google Credit & Lending Index measures the relative volume of searches* for certain terms like “credit card,” “loan,” and “credit report.” There’s some seasonality there, but in general the levels look higher in Q4 2008 and Q1 2009 than in Q4 2007 and Q1 2008.

Thomas Frank: Watch Out for GOP Populism

Rep. Paul Ryan an enemy of business?

It's easy to underestimate conservatism's chances in these dark days. Over the last year, the Republican Party has appeared to be either a gang of obstructionists or a confused relic of some prehistoric past; its thinkers seemed to do little more than repeat catch-phrases you've heard dozens of times before; even its most earnest activists sometimes appeared to be the pawns of lobbying organizations.

But the movement might stage a comeback yet. According to the demented logic of American politics, the world began anew with the Obama presidency, and so it is the Democrats who will have to go before the public this fall and defend the bailout of Wall Street. Similarly, it might be the Republicans who seize the opportunity to capture public outrage this time around, denouncing concentrated economic power, insisting on holding big business accountable, and promising to settle scores with the nation's erstwhile financial rulers.

How Visa, Using Card Fees, Dominates a Market

By ANDREW MARTIN

Published: January 4, 2010

Every day, millions of Americans stand at store checkout counters and make a seemingly random decision: after swiping their debit card, they choose whether to punch in a code, or to sign their name.

It is a pointless distinction to most consumers, since the price is the same either way. But behind the scenes, billions of dollars are at stake.

University of Nevada, Reno researcher devises new solar pond distillation system

Renewable energy methods hold hope for terminus lake water quality worldwide

RENO, Nev. – Ecosystems of terminus lakes around the world could benefit from a new system being developed at the University of Nevada, Reno to desalinate water using a specialized low-cost solar pond and patented membrane distillation system powered by renewable energy.

Civilian Trials and the So-Called Rule of Law

by Glenn Greenwald

I was wondering if someone could reconcile these three things:

From Obama terrorism adviser John Brennan, on this weekend's Meet the Press:

MR. GREGORY: Why isn't [Umar Farouk AbdulMutallab] being treated as an enemy combatant instead of a criminal?

MR. BRENNAN: Well, because, first of all, we're a country of laws, and what we're going to do is to make sure that we treat each individual case appropriately. In the past Richard Reid, the former shoe bomber; Zacarias Moussaoui; Jose Padilla; Iyman Faris; all of them were charged in criminal court, were sentenced some in -- in some cases to life imprisonment.

Peterson-Pew Commission Uses Jingoism to Advance Budget Agenda

Monday 04 January 2010

by: Dean Baker, t r u t h o u t | Op-Ed

We need to cut the budget deficit because the foreigners are taking over. That is the word according to a new report, "Red Ink Rising," from a commission financed by the Peter G. Peterson Foundation and the Pew Foundation. The commission warns us that foreigners now hold almost 50 percent of the national debt. This is one of the main points of its stern warning that we must get the deficit under control.

Before anyone gets too concerned about the foreign menace, it is important to consider the source of this report. The Peter G. Peterson Foundation was founded by Peter G. Peterson, the billionaire Wall Street tycoon and former Nixon commerce secretary. Peterson has a long history of funding efforts to cut Social Security and Medicare. Before his latest foundation venture, he started the Concord Coalition and wrote books with menacing titles like "Gray Dawn," that foretold of the demographic disaster that would be created by the retirement of the baby boom cohort.

Looting Social Security, Part 2

By William Greider

January 4, 2010

He's baaack--the Wall Street billionaire who wants to loot Social Security. This time, Pete Peterson has invented his own "news network" to promote his right-wing rants about shrinking the only retirement security system available to millions of working people. Peterson styles himself as a patriot saving the nation from fiscal insolvency and has committed $1 billion to that cause (a chunk of the wealth he accumulated at Blackstone Group, the notorious corporate-takeover firm). His efforts might be dismissed as ludicrous--except money does talk in Washington, and Peterson is now buying Washington reporters to spread his dire warnings.

The retired mogul has created a digital news agency he dubs "The Fiscal Times" and hired eight seasoned reporters to do the work there. "An impressive group of veteran journalists," Peterson calls them. I hope they have shaken a lot of money out of this rich geezer. Because I predict doing hack work for him will seriously soil their reputations for objectivity and independence.

17,000 potentially harmful chemicals kept secret under obscure law

By Raw Story
Monday, January 4th, 2010 -- 11:37 am

Of some 84,000 chemicals being used commercially in the United States, some 20 percent -- or 17,000 -- are kept secret not only from the public, but from medical professionals, state regulators and even emergency responders, according to a report at the Washington Post.

And the reason for this potentially harmful lack of openness? Profit.

A 1976 law, the Toxic Substances Control Act, mandates that manufacturers report to the Environmental Protection Agency any new chemicals they intend to market, but manufacturers can request that a chemical be kept secret if disclosure "could harm their bottom line," the Washington Post reports.

Small shops find strength in numbers

Stung by a disappointing Christmas season last year, Evanston store owner Rachel Hershinow decided to get more aggressive, launching a grass-roots "shop-small" effort she hopes will help dozens of fellow merchants.

"Last year sales were down and personally, I felt sheer panic and terror," said Hershinow, owner of Stella, a women's boutique on Central Street. "I thought, I can either succumb to the fear or fight like hell."

Choosing to fight, Hershinow started a Shop Small Stores campaign, an idea she said has been adopted by many of the almost 75 business owners who belong to the Central Street merchants association.

Will Disappointment on the Left Hurt Obama and Dems in 2010?

David Corn

Over the past few weeks -- as I traveled abroad, attended holiday parties, and went through my appointed rounds -- I kept encountering people who posed the same question: "What's happened with Obama?" These were liberal Democrats, and they feel, depending on the person, somewhat, partially, or fully betrayed by the president whom they helped elect with their small donations and/or volunteer sweat. These people were truly troubled, some by the expansion of the Afghanistan war, some by the emasculation of the health care reform legislation, some by President Obama's embrace of corporate-world advisers. (This means you, Larry Summers.) I know that my sampling is rather unscientific. But none of the worriers are bloggers or professional progressives who make their living fretting about a presidential drift to the center. They merely are foot-soldiers (or ex-foot soldiers) in Obama's base, and now they find themselves quite perplexed and in desperate need of explanation. (I'm getting a steady stream of e-mails from readers expressing the same concerns.)

Paul Krugman: That 1937 Feeling

Here’s what’s coming in economic news: The next employment report could show the economy adding jobs for the first time in two years. The next G.D.P. report is likely to show solid growth in late 2009. There will be lots of bullish commentary — and the calls we’re already hearing for an end to stimulus, for reversing the steps the government and the Federal Reserve took to prop up the economy, will grow even louder.

But if those calls are heeded, we’ll be repeating the great mistake of 1937, when the Fed and the Roosevelt administration decided that the Great Depression was over, that it was time for the economy to throw away its crutches. Spending was cut back, monetary policy was tightened — and the economy promptly plunged back into the depths.

This shouldn’t be happening. Both Ben Bernanke, the Fed chairman, and Christina Romer, who heads President Obama’s Council of Economic Advisers, are scholars of the Great Depression. Ms. Romer has warned explicitly against re-enacting the events of 1937. But those who remember the past sometimes repeat it anyway.

Think tank: Force the big banks to shrink

We have to get tough to avert another crisis

Simon Johnson and Peter Boone

The global financial system remains on track for a devastating collapse. The core problem is that we bail out big banks each time they fail, so — not surprisingly — they dust themselves off and gamble madly with our futures once more.

Each time we have a near-collapse, the UK government is forced to do more to save the day. This time, interest rates have ended up near to zero, meaning pensioners and other savers get no return on their funds, and we will double our public debt. The UK needs a cheap pound for a long time to get out of its mess — partly to encourage foreign investors to finance those large budget deficits. We simply cannot continue such bailouts and the level of fiscal spending that these imply. Most of the developed world is today on a policy path that, unless changed, will lead to big crises.

The core problem is worse than it was prior to the failure of Lehman in September 2008. The financial sector in Europe and the US has learned that all big banks are truly too big to fail. These financial institutions now have great incentive to start taking risks again and can easily raise huge amounts from credit markets because lenders know there are implicit government guarantees.

This Time Is Different: Eight Centuries of Financial Folly

By Carmen M Reinhart and Kenneth S Rogoff

Reviewed by Andrew Gamble - 30 December 2009

Credit where it’s due

The credit crunch of 2007 became the financial crash of 2008 and the recession of 2009. But there has been much debate about the scale of this crisis, and how it ranks against previous events. Reinhart and Rogoff have produced the most detailed study yet of financial crises, going back as far as 12th-century China. This is a quantitative and statistical analysis; it does not attempt to provide a historical narrative of crises, but rather seeks to lay bare their anatomy, by systematically assembling all the facts known about them. The authors construct a large database of historical crises, and the book is copiously illustrated with tables and charts. There are a hundred pages of data appendices alone.

This book will be a vital source of reference in debates on the causes and consequences of financial crises.

Mortgage foreclosures still swamping federal efforts to help

By Chris Adams | McClatchy Newspapers

WASHINGTON — Banks and other lenders are still foreclosing on Americans' homes at a rate that's outpacing the Obama administration's main effort to stem the crisis.

In fact, while the Treasury Department's Home Affordable Modification Program, or HAMP, has started the mortgage modification process on almost 760,000 homeowners who are at risk of losing their homes, less than 5 percent of those workouts have become permanent, government data show.