Dysfunctional is the New 'Normal'

Michael Grief's 'Next to Normal,' winner of 3 Tony awards and a Pulitzer, provides consumers of New York with a pleasantly refreshing alternative to Les Miserables, Phantom of the Opera, and the other traditional lions of Broadway. This reviewer was advised NOT to read a review or a synopsis of the play (someone must have told him that I 'cheat' by reading the synopses of Operas beforehand), and I would in turn advise the same.

Wow! Is this play shocking! Next to Normal is not your run-of-the-mill "boy-gets-girl," "girl-falls-in-love-with-monster,' 'girl-escapes-poverty-and-overcomes-social-barriers-to-fall-in-love-with-student-in-pre-revolutionary-France,' 'American-soldier-gets-Vietnamese-peasant-pregnant' love story that historically defines Broadway musicals in the past. In fact, its not really much of a story. It's a scathing indictment of the traditional "looks good on the surface" family structure--the type of family that we all used to know or still do. You know, the Cleaver-ish family who lived three houses down who seemingly had it all figured out, but beneath the surface, les démons du sommeil!!!

Next to Normal begins with quotidian travails of a family of four: a detached father who cannot emotive, a hysterical mother toiling to keep the house together, a teenage son crashing the gates of manhood, and an awkward daughter struggling to fend off her pot-smoking suitors with her AP chemistry textbook. Sure, the mother goes to a little therapy. Sure, her shrink gives her few pills. Sure, the father takes just enough care of her in between conference calls at the office. But something is terribly amiss here. The audience discovers that this family is more than just long overdue for a family vacation.

Next to Normal has one of the most innovative sets I have seen in my nascent theater-going career. Rather than having the orchestra play in between the crowd and the action--an arrangement that only adds to the distance between the two--this set places the band IN THE SET. The Set resembles a stainless steel house cut in half, kinda like taking a chainsaw to your little sister's dollhouse so you can see whats going on. Each band member occupies a separate 'room' in the house, and while I am not sure what this does for the acoustics of the play (since this reviewer will be getting cochlear implants in a few short years), it allows the crowd to be closer to the action. Plus the set designer gets muchas felicitaciones for ingenuity.

Tom Kitt's world-class musical score does not disappoint. the music is more modern and contemporary (duh.....the band has an electric bass, electric guitar, a synthesizer, and drum-machine). The music haunts and depresses when the play turns dark. It vivifies when the story ascends. I would not describe the music as "catchy" or "gripping," for they don't necessarily stick in your head for days, as some of the Les Miz songs might be. But the score compliments the acting and the screenplay in the same way that Garden State's soundtrack did with the movie: accentuating and catalyzing without overtaking the actors and drowning the crowd.

This reviewer has a soft spot for the supporting role, and predictably this reviewer enjoyed the actor who portrays the multiple psychiatrists who the mother consults. He slips seamlessly between the boring, prescription-wielding shrink to the faith-healing, almost-evangelical hipster therapist. His singing voice was easily the best of the bunch.

On the contrary, the teenage son was slightly off-key. And while the story is meant to highlight the complex and intimate relationship between himself and his mother, the Oedipus -like infatuation seems a bit creepy and repulsive. As the artist intends, they say.

The Passing Scene Cafe urges its patrons to see Next to Normal before the sputtering Broadway
economy claims yet another victim. But BUYER BEWARE!!! Come to the cafe and have an extra strong latte, a tasty danish, and make sure you are in a good before you see it. You won't be disappointed!

Note to M.D's: Your Labor/Leisure Calculus is Wrong!!!

So says Peter Orszag, the left-leaning economist who served most recently as the head economist for the Congressional Budget Office and as Obama's director of the White House's Office of Management and Budget.

I would prefer not to get into Mr. Orszag's record at his two posts. As the head of O.M.B, his job was decidedly more political and mostly consisted of selling--or spinning---the health care reform efforts by Obama and the Democrats and its putative effects on the long-term fiscal picture of the US economy. He ended up being the first member of Obama's cerebral economic team to leave his job, and he was last seen on the pages of the New York Times arguing for an extension of George Bush's tax rates.

Being a newly minted hospital administrator, I decided to give Mr. Orszag's columns a look this evening. He writes an article entitled "Health Care's Lost Weekend," a cheerful overture to doctors and how they need to about their work schedules and consent to some oversight of their work.

The article mentions New York University's Langone Medical Center as a case study for the first idea.

"First, weekends. It’s never good to be hospitalized, but you really don’t want to be hospitalized on a weekend. There are fewer doctors around, and people admitted on Saturdays and Sundays fare relatively poorly.

One study in 2007 found, for example, that for every 1,000 patients suffering heart attacks who were admitted to a hospital on a weekend, there were 9 to 10 more deaths than in a comparable group of patients admitted on a weekday. The weekend patients were less likely to quickly receive the invasive procedures they needed — like coronary artery bypass grafts or cardiac catheterization"

I can't really quarrel with the numbers in the study. I would like to see these numbers replicated a few more times in other hospitals, but let's assume they are right.

"And then there are the economics of a $750 billion-a-year industry letting its capacity sit idle a quarter or more of the time. If hospitals were in constant use, costs would fall as expensive assets like operating rooms and imaging equipment were used more fully. And if the workflow at existing hospitals was spread more evenly over the entire week, patients could more often enjoy the privacy of single-bed rooms"

The first response I have to this article is: how much is the hospital really closed on weekends? After reading this article I had the impression that hospitals would have a big "CLOSED" sign on the front with the doors locked, the lights out, and no one but the weekend security guard on the premises. That was not my impression of hospitals growing up in the home of a neurosurgeon, whose weekend rounds and emergency cases seemed to have no discernible monday-thru-friday regimen.

But why would a $750 billion/yr sit idle on the sidelines on weekends if it could be put to better use 7 days a week? Why have decades worth of hospital CEOs, administrators, and department chiefs not thought of this idea before.

Hospital resources sit idle on weekends because its a cost-effective way of keeping the hospital services flowing. Mr. Orszag does not say how much more it would cost to keep the hospital open on weekends. He makes the incorrect assumption that the marginal cost of hospitals being open on weekend would be zero, or negative. Wouldn't you have to pay for people to work there? Nurses? Scrub nurses? back office staff? electricity? Pathology? Maintenance for instruments?

Or do all those employees work for free on weekends?

Also, Mr. Orszag discusses the reduce health outcomes for patients admitted on weekends, a fact which may be true. But what about having doctors work 6 or seven days a week? Same thing with PAs and nurses?

What effect would keeping the hospitals open on weekends have on the staffs' family lives? Social lives? Morale. Mr. Orszag does not say. Having doctors, residents, and physician assistants on call while spending time at home is a great way to use their leisure time wisely.

My point is not to hand down a harsh verdict on this column. I think his analysis is incomplete, yet the Passing Scene Cafe anxiously awaits a follow-up to this.

Resurrection

Hello everyone,

I am very sorry for being absent for the last few months. I have been busy doing a "gut-rehab" of my life---period which entailed a career change and a residence change.

The Passing Scene Cafe will now be hosted from the Upper West Side, with a sister cafe in the Coney Island neighborhood of Brooklyn, New York. I am now the Neurosurgery coordinator at Coney Island Hospital. I run a staff of five neurosurgeons and roughly 10 neurosurgical PAs. I truly have the pleasure to work with some incredibly talented and driven individuals, and they have forgotten, or have chosen to to ignore---for the time being---that I really have no qualifications for this job.

BUT!!!!!!! I have always wanted to be on the front lines in the health care system. Sitting on my cozy perch, reading journals and magazines, and ranting against politicians who don't know the slightest thing about consumers and producers is one thing. Now I get to put my ideas where my mouth is...or stethoscope is....or....you get the idea.

Anyways, I am excited to start writing again. I will try my hardest to be not as one-dimensional as I was during the spring, i.e. focusing too much on politics, because I have had the fortune and misfortune of dealing with some pretty interesting questions in my brief time here. I will try to write about them whenever I can.

In the meantime, I keep both a tumblr page and a twitter page. Please visit and comment!!!

Good to be back!

Take America Back Youtube Video

Evidently, liberals are trying to purge this from Youtube.com. So much for free speech.

Senator Robert Bennett of Utah, Republican

What does his loss mean in the Utah Republican Primary?

"Senator Robert Bennett and the Story of 2010"

Posted by: Hugh Hewitt at 9:25 AM

The Monday morning column from Clark Judge:

Senator Robert Bennett and the Story of 2010
By Clark S. Judge, managing director, White House Writers Group, Inc. (www.whwg.com ) and chairman, Pacific Research Institute (www.pacificresearch.org)

Over the weekend, Washington received the first of what are likely to be many wake up calls in advance of the November elections. The Utah Republican Party convention declined to re-nominate three-term U.S. senator Robert Bennett. It didn’t give him even enough votes to qualify for a place on the party’s primary ballot.

The Mainstream Media reported this amazing turn of events as the work of the Tea Party movement. And it is true that former House Majority Leader Dick Armey’s FreedomWorks, which has taken up the Tea Party banner, was a presence at the convention, as was another champion of fiscal conservatism, the Club for Growth.

But the Tea Party is more than a couple of advocacy groups and its significance extends beyond turnout at a few rallies. It goes beyond those who would ever consider joining with the Tea Partiers. To see what I mean, consider this apparently arcane question: Why did George W. Bush win in 2000?

Forget about Florida, hanging chads, and Supreme Court rulings. How was it that Bush got close enough to a majority of the Electoral College to open the gates for that circus to parade though town? The country was at peace; the economy appeared strong; the Federal budget was in surplus. In other words, all the fundamentals said, don’t rock the national boat.

Yes, thanks to Monica and her West Wing romp, there was a general disgust with the Clinton Administration. We all heard the stories, and, after hearing them, we all wanted to take a shower.

But Al Gore wasn’t Bill Clinton. The only woman he was known to kiss with any passion was his wife – a point the two of them made much too graphically on the Democratic convention stage the night he accepted the party’s nomination.

Yet Gore wasn’t Clinton in another, more critical and politically fatal respect. Clinton had run as a centrist and, thanks more to the Gingrich Congress than to his own initiative, had delivered a centrist government. In retrospect, this meant, especially, that he had delivered budget surpluses. “People v the Powerful” Gore ran against that legacy.

So in the 2000 campaign, George W. Bush was promising more of what the American people wanted to continue of the Clinton years. With the GOP having gone to the government shutdown mat over excessive Federal spending in 1995 and with the budget surpluses that followed several years after they took charge, a majority of the public – in particular swing voters -- trusted Republicans to deliver restrain of government and growth of the economy if put 100 percent in charge.

It is not too much to say that the Washington-based political establishment has misunderstood the last three presidential elections. The 2000 outcome was for continuity with course correction, not major change. The 2004 election went to the candidate who was more faithful to that agenda, with slack cut him because of 9/11. In 2006 patience ran out with the GOP’s profligacy, and in 2008 this same electoral majority wanted to teach the GOP a lesson it wouldn’t forget.

They still do.

You can’t put together a winning campaign with just the people who have shown up a Tea Party rallies. Impressive as those gatherings have been, when it comes to the numbers needed to prevail in elections, the rallies have been little more than media events. The key to their power is that they reflect a much broader body of opinion. That opinion is once more disgusted by the Democrats, this time by their spending, not their cavorting.

But as the GOP is their last best hope, they are not prepared to embrace GOP candidates who will once more dash those hopes. Senator Bennett voted for the Troubled Asset Relief Program. He looked all too ready to embrace a budget-busting healthcare bill, even if it was not the bill the President, House Speaker Nancy Pelosi, and Senate Majority Leader Harry Reid put forward. He did not seem ready to assert the proper limits of Federal power. And so he lost.

This is not just the story of Robert Bennett. In a different way is also the story of Charlie Crist in Florida. It looks as though it will be played out in Kentucky very soon. Elements of it can be detected in the Indiana primary vote. The swing vote in American politics is looking for a Congressional majority that will return the national to a government of limits – limits in spending and equally important limits in power. This is the story we are seeing played out in 2010.

The Goldman Sachs Hearings

I wholeheartedly agree with the boys at PowerlineBlog.Com.

1) There was no scandal. There is nothing inherently wrong with taking a short position in a market...whether it is a directional bet, or especially to hedge a 'long' position in the mortgage market.

2) Senator Carl Levin (D., Mich) should be nowhere near a committee of finance or economics, let alone chair one.

Demonizing Goldman Sachs

I've now read most, although not all, of today's proceedings before the Senate's Permanent Subcommittee on Investigations at which a number of Goldman Sachs employees testified. The proceedings were revealing in many ways. Here are some thoughts, more or less at random:

1) This was one of the rare Congressional hearings where it isn't easy to tell the Democratic questioners from the Republicans. There is no political percentage in sticking up for Goldman Sachs, and I'm tempted not to do it either, since they have been a major supporter of the Democratic Party for some time, and currently are, I believe, lobbying in favor of the Democrats' "regulatory reform" legislation. But, what the heck: we call them as we see them.

2) Questioning by the Senators was, as usual, ineffective. Mostly, they tried to cross-examine the Goldman employees based on emails that the government has obtained via subpoena. The process was painful due to the Senators' lack of skill. It's also probably true that the Goldman folks didn't say quite everything that they knew. But, as one who spends much of his life poring over emails and other documents, looking for evidence I can use in depositions, I can say authoritatively that the Goldman emails aren't bad. This is a relatively tame collection on which to try to hang some sort of scandal.

3) Today's inquisition was a sideshow. Here is what really happened: there was a bubble in housing prices. The bubble was mostly the result of government policy--loose money, combined with pressure on banks to make bad loans to unqualified home buyers. It all worked for a while because Fannie Mae and Freddie Mac, under the leadership of Congressman Barney Frank and others, created a secondary market for shaky mortgages. Goldman Sachs participated in this market, downstream, along with many other players. But the whole thing wasn't an accident or a conspiracy, it was government policy. The home price bubble could have only one possible result. All bubbles burst--there is nothing else they can do--and the bursting of a bubble is always painful. The whole disaster that began in 2008 was the inevitable result of government policy, which is why Senators are so anxious to pass the buck to Goldman Sachs.

4) The Senators, seemingly without exception, are embarrassingly ignorant of modern risk management techniques. They really don't seem to understand how and why firms like Goldman Sachs hedge their exposure to various economic trends. The most coherent explanation of what Goldman did came from the firm's Chief Financial Officer, David Viniar:

I'd like to give you a sense for how we managed our risk during the period leading up to the crisis.

Through the end of 2006, we were generally long in exposure to residential mortgages and mortgage-related products. In that December, however, we began to experience a pattern of daily losses in our mortgage-related P&L. P&L can itself be a very valuable risk metric, and I personally read it every day.

I called a meeting to discuss the situation with the key people involved in running the mortgage business. We went through our positions and debated views on the mortgage market in considerable detail.

While we came to no definitive conclusion about how the overall market would develop in the future, we became collectively concerned about the higher volatility and recent price declines in our subprime mortgage-related positions. As a result, we decided to attempt to reduce our exposure to these positions. We wanted to get "closer to home."

We proceeded to sell certain positions outright and hedge our long positions in an attempt to achieve these results. As always, the clients who bought our long positions or other similar positions had a view that they were attractive positions to purchase at the price they were offered. As with our own views, their views sometimes proved to be correct and sometimes incorrect.

We continued to reduce our positions in these products over the course of 2007. We were generally successful in reducing this exposure to the extent that on occasion our portfolio traded short. When that happened, even if these short positions were profitable, given the ongoing high volatility and uncertainty in the market, we tended to attempt to then reduce these short positions to again get closer to home.

This situation reversed itself in 2008, however, when the portfolio tended to trade long. And as a result, despite the fact that our franchise enabled the firm to be profitable overall, we lost money on residential mortgage-related products in that year.

While the tremendous volatility in the mortgage market caused periodic large losses on long positions and large gains on offsetting short positions, the net of which could have appeared to be a substantial gain or loss on any day, in aggregate, these positions had a comparatively small effect on our net revenues.

In 2007, total net revenues from residential mortgage-related products, both longs and shorts together, were less than $500 million, approximately 1 percent of Goldman Sachs' overall net revenues. And in 2007 and 2008 combined, our net revenues in this area were actually negative.

For Goldman Sachs, weathering the mortgage market meltdown had nothing to do with prescience or betting on or against anything. More mundanely, it had everything to do with systematically marking our positions to market, paying attention to what those marks were telling us, and maintaining a disciplined approach to risk management.

This explanation is actually pretty clear, but it is doubtful that any of the Senators understood it.

5) While not a single Senator distinguished himself, the most embarrassing was Carl Levin. He repeatedly misread emails and failed to understand the economics of Goldman's transactions. This exchange was typical:

LEVIN: Now, on October 4, 2007, exhibit 46, you wrote the SEC, page three at the bottom. You say that, "It's important to note we're active traders of mortgage securities and loans and, with any of the financial instruments we trade, at any point in time, we may choose to take a directional view of the market and will express that view through the use of mortgage securities, loans, and derivatives."

You may choose to take a directional view of the market. "Therefore, although we did have a long balance sheet exposure" -- long balance sheet exposure -- "to subprime securities in the past three years, albeit small, our net risk position was variously either long or short pending on the changing view of the market." You had a changing view of the market.

For example, now this is the example of choosing to take a directional view of the market. "During most of 2007, we maintained a net short subprime position and therefore stood the benefit from declining prices in the mortgage market." Was that true when you said it?

VINIAR: Absolutely and totally consistent what I said to you before.

LEVIN: All right.

VINIAR: We were largely short across 2007.

Levin and other Senators seemed to think that there was something "evil" about taking a short position--that all investors were somehow required to try to keep the housing bubble going. This is analogous to knowing how to add, but not how to subtract. Actually, of course, Goldman was entirely correct when it shorted securities that were based on rising home prices. A reader who has far more expertise in this area than I do writes:

If there had been easier and earlier shorting....that would have been a market signal possibly producing moderation in the pricing and a softer landing...one of the roles and social benefits of short selling....it lets market pricing more fully reflect views of asset value and puts downward pressure on pricing....in a bubble....that's what you want...some balance to tame irrational exuberance....

These people are either ignorant or dangerous.....

Or, more likely, both.

6) It didn't appear that a single Senator understands what is involved in making a market in a security.

7) News coverage has focused largely on Sen. Levin's repeated quotation of a Goldman email that described a deal that Goldman was involved in as "shitty." Levin's repeated implication was that Goldman wrongfully foisted a "s****y" deal off on its customers. Liberals never seem to wonder whether it is really a great business strategy to sell s****y deals to one's clients. I've invested in any number of deals that have gone bad, but I've never thought that my investment advisers were happy about it.

I can't be sure because I haven't seen the entire email chain, but I think the Goldman employee in question wasn't saying that Goldman sold a s****y deal to its clients, but rather that the transaction had turned out to be s****y for Goldman. Here is the relevant exchange:

LEVIN: OK. Now, before you sold all that stuff that we just described in 166, $600 million of Timberwolf securities is what you sold, before you sold them, this is what your sales team were telling to each other. Got it, 105?

SPARKS: Yes, Mr. Chairman.

LEVIN: Look what your sales team was saying about Timberwolf. "Boy, that Timberwolf was one shitty deal."

(LAUGHTER)

SPARKS: Mister...

LEVIN: They sold that "shitty deal." ...

SPARKS: Some context might be helpful.

LEVIN: Context, let me tell you, the context is mighty clear. June 22 is the date of this e-mail. "Boy, that Timberwolf was one shitty deal." How much of that "shitty deal" did you sell to your clients after June 22, 2007?

SPARKS: Mr. Chairman, I don't know the answer to that. But the price would have reflected levels that they wanted to invest...

LEVIN: Oh, of course.

SPARKS: ... at that time.

LEVIN: But they don't know it's a -- you didn't tell them you thought it was a shitty deal.

SPARKS: Well, I didn't say that.

LEVIN: No. Who did? Your people, internally. You knew it was a shitty deal, and that's what your...

SPARKS: And again, I...

LEVIN: ... e-mail showed.

SPARKS: I think the context, the message that I took from the e-mail from Mr. Montag, was that my performance on that deal wasn't good, and, I think, the fact that we had lost money related to that wasn't good.

LEVIN: How about the fact that you sold hundreds of millions of that deal after your people knew it was a shitty deal? Does that bother you at all, you sold the customers something?

SPARKS: I don't recall selling hundreds of millions of that deal after that.

8) I'm not a particular fan of either Goldman Sachs or Congress, but today's hearing confirms that, given a choice, I'd rather have Goldman Sachs regulating Congress than Congress regulating Goldman Sachs. Goldman's employees are much smarter, considerably more honest, and far more likely to have my interests at heart.

Chris Christie vs. the Teachers' Unions

in the Garden State


Gov. Christie - the Non-Crist

Overtaxed New Jersey voters sent a clear message in yesterday's voting on 479 public school budgets: Enough is enough. A stunning 54% of the budgets went down to defeat, the most since the recession year of 1976. The results have clear implications for a bitter power struggle between New Jersey GOP Governor Chris Christie and the state's powerful 200,000-member New Jersey Education Association.

With turnout up significantly, voters were clearly responding to Governor Christie's call for voters to reject budgets in districts where teachers have not agreed to a plan of "shared sacrifice" proposed by the governor. Given the state's distress, he asked for a one-year wage freeze and teachers to contribute at least 1.5% of their salaries toward their own health benefits. The governor said the cuts were necessary in the face of a massive $11 billion budget gap.

But local school districts have balked at any changes, even though New Jersey has the fourth-highest teacher salaries in the nation. More than 80% of school budgets put before voters instead demanded property tax increases on homeowners at a time when many families are financially strapped. Few of the budgets reflected any of the shared sacrifice the governor asked for. Only 20 of the state's nearly 600 districts have so far implemented a pay freeze on teacher salaries.

In a recent visit to the Wall Street Journal, Governor Christie said he recognizes the political peril he faces because of the tough stands he's taking. "Lots of folks want me to fail so they can go back to budgets as usual," he said. "I'm here to say that's no longer possible and it's time to make tough decisions."

It looks as if New Jersey voters are both watching his back and demanding more accountability from one of the most expensive public education systems in the country.

-- John Fund

How Goes the Senate Fundraising?

Bad Time Charlie

Florida Gov. Charlie Crist, flailing in his Senate primary against Marco Rubio, yesterday appeared to lay the groundwork for an independent run. His veto of a sweeping conservative education reform was a public poke in the eye to the Republican Party he claims to want to represent this fall, and is already losing him his last GOP support.

Crist campaign chairman, former Sen. Connie Mack, was so bitter over Mr. Crist's veto of a bill that would have made it easier to fire bad teachers, he quit the campaign. In a terse note, he informed Mr. Crist that his veto was "unsupportable and wrong," noting that it "undermines our education system in Florida and the principles for which I have always stood." The resignation loses Mr. Crist one his most respected backers.

Mr. Crist's decision to cave to teachers unions also earned him a stinging rebuke from former Gov. Jeb Bush, who supported the measure. "By taking this action, Gov. Crist has jeopardized the ability of Florida to build on the progress of the last decade," he said in a statement. Mr. Bush, who had so far kindly refrained from taking sides in the primary, may well now be moved to come out in favor of Mr. Rubio.

The question is whether Mr. Crist cares. Mr. Rubio is now beating him by double digits in the polls for the GOP primary and has raised three times as much money as Mr. Crist in the first quarter. A recent Quinnipiac poll suggested Mr. Crist had a better shot running as an independent in the general election against Mr. Rubio and Democrat Kendrick Meeks. Many therefore viewed yesterday's veto as little more than an opportunistic way for Mr. Crist to break with his party, with an eye to an outside run.

Less certain is whether that veto actually helps him as an independent. The governor's office made a big deal out of the number of comments that had poured in, and claimed the vast majority were opposed to the bill. Then again, the teachers unions had mobilized most of that response. The Florida electorate as a whole has been generally supportive of reform, one reason Mr. Bush was a popular governor. The perception that Mr. Crist's veto was nothing but political maneuvering, combined with a possible party switch, can't sit well with an electorate looking for strong leadership. We may be watching a political career go down in flames.

-- Kim Strassel

Palin Hits a Gold Mine

Palin, Inc.

No one knows if Sarah Palin is running for president in 2012, but we do know her decision to resign as governor of Alaska has brought her a bonanza of riches she couldn't have tapped if she had remained in her $125,000-a-year government job.

ABC News estimates that since she left the governor's office just eight short months ago, Ms. Palin has brought in at least 100 times her old annual salary -- or a minimum of $12 million. Her best-selling book, "Going Rogue," was sold to Harper Collins for an estimated $7 million, her deal with Fox News is said to be worth up to $2 million, and she will make about $250,000 an episode for an eight-part Learning Channel show on the culture and sights of Alaska.

Then there are the paid speaking engagements. While Ms. Palin does many events for free or donates the proceeds to charity, she's still hauling in several six-figure fees for speeches to groups ranging from economic conferences to university gatherings. Her clients have included the Bowling Proprietors Association of America, the Complete Woman Expo, the Wine & Spirits Wholesalers of America, and the Sierra-Cascade Logging Conference. Tomorrow, she will cross the border into Canada to speak for an estimated $200,000 at a fundraising dinner for a cancer center and hospital near Toronto. Tickets, priced at $200 each, have sold out.

At the same time, Ms. Palin's political action committee is raising decent but unspectacular amounts. SarahPAC raised $400,000 in the first quarter of this year, a haul smaller than similar PACs run by Minnesota Governor Tim Pawlenty ($566,000) and Mitt Romney ($1.45 million). Both men are likely candidates for the GOP presidential nomination in 2012.

All in all, the available evidence is that Ms. Palin's Excellent Adventure Tour is bringing in too much fun and profit for her to consider giving it up as early as next year to run for president. At age 46, she has the luxury of securing her financial future, repairing cracks in her credibility from the 2008 campaign and waiting for another year to run for president. If I had to bet, she'll still be running for the gold in 2012 rather than the presidential brass ring.

-- John Fund

Jennifer Rubin on Obama's Foreign Policy

Spinning Obama’s Foreign-Policy Flops

Earlier this month, Jackson Diehl detailed Obama’s lack of success in forging productive relationships with foreign leaders. Now Obama’s dutiful flacks and media handmaidens take to the front page of Diehl’s paper to explain Obama was merely making use of his “charisma.” Now he is getting around to those relationships. There is this jaw-dropping bit of spin:

The change from a year ago is stark. In his widely broadcast address in Cairo last June, Obama called Israeli settlements in the occupied territories “illegitimate.” By contrast, he met last week at the White House with Israeli Prime Minister Binyamin Netanyahu for two hours, urging him privately to freeze Jewish settlement construction.

What relationship is Obama making use of there? If this is Obama’s idea of a forging bonds with foreign leaders (condemning his country, reading the prime minister the riot act, twice snubbing Netanyahu during his White House visits), our foreign-policy apparatus surely is guilty of gross malfeasance. Then the blind quotes are trotted out to — surprise, surprise — ding George W. Bush and explain how Obama’s newfound personal diplomacy is vastly superior to his predecessor’s:

“Obama is not the sort of guy who looks for a best buddy, and that’s very different than Bush,” said a European diplomat, who spoke on the condition of anonymity to speak candidly about perceptions of U.S. leaders abroad. “Sometimes being too personal is not a good thing. You can make mistakes.”

No, Obama is the sort of guy who returns the Winston Churchill bust, gives Gordon Brown and the Queen of England cheap-o gifts, bows to dictators, and slams the elected prime minister of Israel. Completely different. But even the Washington Post must concede that Obama has not forged really any productive relationships with world leaders:

Obama, who was an Illinois state senator just four years before he was elected president, knew few world leaders upon taking office. Since then, he has developed mostly arm’s-length relationships with fellow heads of state, including many from developing countries that previous presidents largely ignored or shunned to protect U.S. relationships with more traditional allies.

Let’s get real — Obama has not really used his charisma to promote anything but himself:

Republican critics say the approach has unsettled the United States’ best friends, and failed more than succeeded in promoting American interests on some of the most far-reaching foreign policy challenges of the day.

Obama’s direct appeal to the people of China and Iran[ Did we miss this? Was he championing democracy at some point?], for example, has produced little change in the attitude of their governments, showing the limits of a bottom-up approach when it comes to dealing with authoritarian countries. Middle East peace talks remain moribund after the administration’s so-far-unsuccessful attempts to end Israeli settlement construction or to persuade Arab governments to make even token diplomatic gestures toward the Jewish state.

As Simon Serfaty of theCenter for Strategic and International Studies notes, “He is beginning to face a crisis of efficacy.” In other words, despite all the reverential treatment by liberal elites, Obama has yet to develop effective ties with allies or used public diplomacy to further American interests. His infatuation with dictatorial regimes, his embrace of multilateralism, and his willingness to kick allies (e.g., Israel, Poland, the Czech Republic, Britain, Honduras) in the shins have left America more isolated and rogue states more emboldened than ever before. An assessment from Der Spiegel put it this way, recalling Obama’s Cairo speech (which the Obami still laud as an achievement of some sort):

The applause for Obama’s Cairo speech died away in the vast expanses of the Arabian Desert long ago. “He says all the right things, but implementation is exactly the way it has always been,” says Saudi Arabian Foreign Minister Saud al-Faisal.

Obama’s failure in the Middle East is but one example of his weakness, though a particularly drastic and vivid one. The president, widely celebrated when he took office, cannot claim to have achieved sweeping successes in any area. When he began his term more than a year ago, he came across as an ambitious developer who had every intention of completing multiple projects at once. But after a year, none of those projects has even progressed beyond the early construction phase. And in some cases, the sites are nothing but deep excavations. … Obama can hardly count on gaining the support of allies, partly because he doesn’t pay much attention to them. The American president doesn’t have a single strong ally among European heads of state

Perhaps less time spent crafting stories for the Post and more time working on a viable foreign policy built on American interests rather than Obama’s ego would be in order.

Remember When Dissent Was Patriotic?

How to Pay for ObamaCare?

The Rich Can't Pay for ObamaCare

The president intends to squeeze an extra $1.2 trillion over 10 years from a tiny sliver of taxpayers who already pay more than half of all individual taxes. It won't work.

President Barack Obama's new health-care legislation aims to raise $210 billion over 10 years to pay for the extensive new entitlements. How? By slapping a 3.8% "Medicare tax" on interest and rental income, dividends and capital gains of couples earning more than $250,000, or singles with more than $200,000.

The president also hopes to raise $364 billion over 10 years from the same taxpayers by raising the top two tax rates to 36%-39.6% from 33%-35%, plus another $105 billion by raising the tax on dividends and capital gains to 20% from 15%, and another $500 billion by capping and phasing out exemptions and deductions.

Add it up and the government is counting on squeezing an extra $1.2 trillion over 10 years from a tiny sliver of taxpayers who already pay more than half of all individual taxes.

It won't work. It never works.

The maximum tax rate fell to 28% in 1988-90 from 50% in 1986, yet individual income tax receipts rose to 8.3% of GDP in 1989 from 7.9% in 1986. The top tax rate rose to 31% in 1991 and revenue fell to 7.6% of GDP in 1992. The top tax rate was increased to 39.6% in 1993, along with numerous major revenue enhancers such as raising the taxable portion of Social Security to 85% of benefits from 50% for seniors who saved or kept working. Yet individual tax revenues were only 7.8% of GDP in 1993, 8.1% in 1994, and did not get back to the 1989 level until 1995.

Punitive tax rates on high-income individuals do not increase revenue. Successful people are not docile sheep just waiting to be shorn.

From past experience, these are just a few of the ways that taxpayers will react to the Obama administration's tax plans:

• Professionals and companies who currently file under the individual income tax as partnerships, LLCs or Subchapter S corporations would form C-corporations to shelter income, because the corporate tax rate would then be lower with fewer arbitrary limits on deductions for costs of earning income.

• Investors who jumped into dividend-paying stocks after 2003 when the tax rate fell to 15% would dump many of those shares in favor of tax-free municipal bonds if the dividend tax went up to 23.8% as planned.

• Faced with a 23.8% capital gains tax, high-income investors would avoid realizing gains in taxable accounts unless they had offsetting losses.

• Faced with a rapid phase-out of deductions and exemptions for reported income above $250,000, any two-earner family in a high-tax state could keep their income below that pain threshold by increasing 401(k) contributions, switching investments into tax-free bond funds, and avoiding the realization of capital gains.

• Faced with numerous tax penalties on added income in general, many two-earner couples would become one-earner couples, early retirement would become far more popular, executives would substitute perks for taxable paychecks, physicians would play more golf, etc.

In short, the evidence is clear that when marginal tax rates go up, the amount of reported incomes goes down. Economists call that "the elasticity of taxable income" (ETI), and measure it by examining income tax returns before and after marginal tax rates claimed a bigger slice of income reported to the IRS.

The evidence is surveyed in a May 2009 paper for the National Bureau of Economic Research by Emmanuel Saez of the University of California at Berkeley, Joel Slemrod of the University of Michigan, and Seth Giertz of the University of Nebraska. They review a number of studies and find that "for an elasticity estimate of 0.5 . . . the fraction of tax revenue lost from behavioral responses would be 43.1%." That elasticity estimate of 0.5 would whittle the Obama team's hoped-for $1.2 trillion down to $671 billion. As the authors note, however, "there is much evidence to suggest that the ETI is higher for high-income individuals." The authors' illustrative use of a 0.5 figure is a perfectly reasonable approximation for most purposes, but not for tax hikes aimed at the very rich.

For incomes above $100,000, a 2008 study by MIT economist Jon Gruber and Mr. Saez found an ETI of 0.57. But for incomes above $350,000 (the top 1%), they estimated the ETI at 0.62. And for incomes above $500,000, Treasury Department economist Bradley Heim recently estimated the ETI at 1.2—which means higher tax rates on the super-rich yield less revenue than lower tax rates.

If an accurate ETI estimate for the highest incomes is closer to 1.0 than 0.5, as such studies suggest, the administration's intended tax hikes on high-income families will raise virtually no revenue at all. Yet the higher tax rates will harm economic growth through reduced labor effort, thwarted entrepreneurship, and diminished investments in physical and human capital. And that, in turn, means a smaller tax base and less revenue in the future.

The ETI studies exclude capital gains, but other research shows that when the capital gains tax goes up investors avoid that tax by selling assets less frequently, and therefore not realizing as many gains in taxable accounts. In these studies elasticity of about 1.0 suggests the higher tax is unlikely to raise revenue and elasticity above 1.0 means higher tax rates will lose revenue.

In a 1999 paper for the Australian Stock Exchange I examined estimates of the elasticity of capital gains realization in 11 studies from the Treasury, Congressional Budget Office and various academics. Whenever there was a range of estimates I used only the lowest figures. The resulting average was 0.9, very close to one. Four of those studies estimated the revenue-maximizing capital gains tax rate, suggesting (on average) that a tax rate higher than 17% would lose revenue.

Raising the top tax on dividends to 23.8% would prove as self-defeating as raising the capital gains tax. Figures from a well-know 2003 study by the Paris School of Economics' Thomas Piketty and Mr. Saez show that the amount of real, inflation-adjusted dividends reported by the top 1% of taxpayers dropped to about $3 billion a year (in 2007 dollars) after the 1993 tax hike. It hovered in that range until 2002, then soared by 169% to nearly $8 billion by 2007 after the dividend tax fell to 15%. Since very few dividends were subject to the highest tax rates before 2003 (many income stocks were held by tax-exempt entities), the 15% dividend tax probably raised revenue.

In short, the belief that higher tax rates on the rich could eventually raise significant sums over the next decade is a dangerous delusion, because it means the already horrific estimates of long-term deficits are seriously understated. The cost of new health-insurance subsidies and Medicaid enrollees are projected to grow by at least 7% a year, which means the cost doubles every decade—to $432 billion a year by 2029, $864 billion by 2039, and more than $1.72 trillion by 2049. If anyone thinks taxing the rich will cover any significant portion of such expenses, think again.

The federal government has embarked on an unprecedented spending spree, granting new entitlements in the guise of refundable tax credits while drawing false comfort from phantom revenue projections that will never materialize.

Mr. Reynolds is a senior fellow with the Cato Institute and the author of "Income and Wealth" (Greenwood Press, 2006).

ObamaCare Passes the House

I'll have lots more to write on this later. Basically, the upshot is that...after looking like the fate of ObamaCare was doomed, the House of Representatives finally passed the Senate version of Health Care reform legislature. The President was able to assuage the concerns of a coalition of pro-life Democrats, led by Michigan Democratic Representative Bart Stupak, by promising to sign an executive order restricting the use of federal funding for abortions (more on that later). Also, wobbly Democrats in the House secured promises from Democrats in the Senate that they would "fix" the Senate legislation, which contains the "cornhusker kickback," the "Louisiana Purchase," and the "Gator Aid," using the reconciliation procedure.

I'll talk about some of the ideas above, but for now I will leave you with an instructive post on the immediate impact of ObamaCare, which the president will probably sign some time this week.

This post comes from a blog of which I had not previously heard, called the Liberty Papers

ObamaCare’s Immediate Impact

by Brad Warbiany

As we all know, most of ObamaCare is pushed out to 2014 or so. But Ezra Klein, ever helpful, points out this nice PDF which explains what will occur nearly immediately. Ezra is always celebrating the cost-control measures of ObamaCare, so let’s see how these provisions stack up:

1. SMALL BUSINESS TAX CREDITS—Offers tax credits to small businesses to make employee coverage more affordable. Tax credits of up to 35 percent of premiums will be immediately available to firms that choose to offer coverage. Effective beginning for calendar year 2010. (Beginning in 2014, the small business tax credits will cover 50 percent of premiums.)

Okay, an immediate hit to Uncle Sugar here, but probably not big unless it really changes behavior immediately. So we start hurting the deficit right away. This is a net hit on government spending, but one might think that it probably won’t do much to private healthcare costs in the short run. I expect this will result in marginally increased coverage and thus will show no real change to health insurance premiums.

2. BEGINS TO CLOSE THE MEDICARE PART D DONUT HOLE—Provides a $250 rebate to Medicare beneficiaries who hit the donut hole in 2010. Effective for calendar year 2010. (Beginning in 2011, institutes a 50% discount on brand?name drugs in the donut hole; also completely closes the donut hole by 2020.)

Another government spending hit on drug coverage. In 2011, a 0% subsidy in this range jumps to 50%. According to Wikipedia, this may affect somewhere in the range of 25% of Medicare Part D enrollees. I’ll leave it to others to quantify this, but this is another spending measure.

3. FREE PREVENTIVE CARE UNDER MEDICARE—Eliminates co?payments for preventive services and exempts preventive services from deductibles under the Medicare program. Effective beginning January 1, 2011.

Oh, look! Another government spending increase subsidy! And as one of Ezra’s colleagues at WaPo points out, preventative care doesn’t really lower total medical spending costs. So overall this is not a cost-control measure for government budgets or spending in general.

4. HELP FOR EARLY RETIREES—Creates a temporary re?insurance program (until the Exchanges are available) to help offset the costs of expensive health claims for employers that provide health benefits for retirees age 55?64. Effective 90 days after enactment

Another subsidy. This’ll mainly hit government, I don’t see a major change to insurance premiums here. There may be additional companies who provide early-retiree benefits, but only union jobs and government tend to do so. Most who are wealthy enough to retire early on their own will cover their own medical insurance costs — not their employer.

5. ENDS RESCISSIONS—Bans health plans from dropping people from coverage when they get sick. Effective 6 months after enactment.

And here we go. The first of [many] provisions that will raise private insurance premiums. Of course, this depends on how common rescissions are. The left says they happen OMG like ALL THE TIME, so if they’re right, it’s a big hit. I don’t think it’s a huge change, but it’s definitely going to raise premiums.

6. NO DISCRIMINATON AGAINST CHILDREN WITH PRE?EXISTING CONDITIONS—Prohibits health plans from denying coverage to children with pre?existing conditions. Effective 6 months after enactment. (Beginning in 2014, this prohibition would apply to all persons.)

Again, an increase to private health insurance premiums. But hey, who’ll complain? After all, it’s for the children.

7. BANS LIFETIME LIMITS ON COVERAGE—Prohibits health plans from placing lifetime caps on coverage. Effective 6 months after enactment.

Again, if you think anything other than that this will increase premiums up front, you’re smoking something. And you shouldn’t be smoking, because it’s bad for you. But on the bright side, in 6 months you can be assured your lung cancer will be treated with no limits. And don’t worry about lying about that smoking habit on your insurance application, because rescissions are banned too.

8. BANS RESTRICTIVE ANNUAL LIMITS ON COVERAGE—Tightly restricts new plans’ use of annual limits to ensure access to needed care. These tight restrictions will be defined by HHS. Effective 6 months after enactment. (Beginning in 2014, the use of any annual limits would be prohibited for all plans.)

Again, we have a regulation that’ll up private premiums. [Do you see a pattern here?] Costs must be amortized, so this added risk is going to show up in premium hikes rather than limits on annual coverage. Insurance is built to hedge risk, and its increasingly looking like the risks to the insurer don’t expire [until you do].

9. FREE PREVENTIVE CARE UNDER NEW PRIVATE PLANS—Requires new private plans to cover preventive services with no co?payments and with preventive services being exempt from deductibles. Effective 6 months after enactment. (Beginning in 2018, this requirement applies to all plans.)

Ahh, two fun ones here. Immediate premium increase (costs must be amortized, you know), and a probable increase in total healthcare costs, for the aforementioned reason that preventative care doesn’t lower total spending.

10. NEW, INDEPENDENT APPEALS PROCESS—Ensures consumers in new plans have access to an effective internal and external appeals process to appeal decisions by their health insurance plan. Effective 6 months after enactment.

Again, here come higher premiums. Unless you think the external appeals boards are going to rule less in favor of the patient than the insurance companies would have, of course. Since the left believes insurers deny care left and right, this has to be a big impact, right?

11. ENSURING VALUE FOR PREMIUM PAYMENTS—Requires plans in the individual and small group market to spend 80 percent of premium dollars on medical services, and plans in the large group market to spend 85 percent. Insurers that do not meet these thresholds must provide rebates to policyholders. Effective on January 1, 2011.

“Ensuring value for premium payments” sounds a lot nicer than “capping profit margins”, doesn’t it? If the left’s belief that insurers are fat and happy and spend all their money on lavish bonuses instead of medical services, this would in fact be a cost control measure. One story from late last year suggests insurers already spend above 80% (Wall Street analysts say low 80’s, industry says 87%). Overall, my read is that this probably isn’t a major component either way.

12. IMMEDIATE HELP FOR THE UNINSURED UNTIL EXCHANGE IS AVAILABLE (INTERIM HIGH?RISK POOL)—Provides immediate access to insurance for Americans who are uninsured because of a pre?existing condition ? through a temporary high?risk pool. Effective 90 days after enactment.

Initially there’ll be $5B in subsidy for this risk pool. It’s unclear whether some of this funding will replace existing state gov’t funding (35 states already have high-risk pools), so I’m not sure how much of that $5B is a net adder to the total cost. But the simple fact is this — while it might be better for some of those people currently denied due to pre-existing conditions (i.e. 100% risks), much of the cost will come out of *OUR* pockets.

13. EXTENDS COVERAGE FOR YOUNG PEOPLE UP TO 26TH BIRTHDAY THROUGH PARENTS’ INSURANCE – Requires health plans to allow young people up to their 26th birthday to remain on their parents’ insurance policy, at the parents’ choice. Effective 6 months after enactment.

This one just baffles me. Should we really be disincentivizing kids adults to get good jobs where they might be covered? I can understand an exemption for people on the 7+ year college program (hopefully grad school, not this guy), but if your offspring is 24 and not in school, it seems to me that it’s not your employer’s problem to provide them with health insurance (since it’s usually the cheapest method). Perhaps this *IS* actually a cost-control measure, since most 23-25 year olds are healthy and will add to the risk pool. But even so, I can imagine “Employee + Family” or “Employee + Children” plans increasing in premium, because they’re not usually charged based on how many kids are specifically enrolled.

14. COMMUNITY HEALTH CENTERS—Increases funding for Community Health Centers to allow for nearly a doubling of the number of patients seen by the centers over the next 5 years. Effective beginning in fiscal year 2010.

There’s short-run deficit cost here, but the goal is understandable. Clinics are likely a better way of treating immediate non-emergency medical needs than emergency rooms, so there may be some cost-reduction in the delivery method of care. Presumably not all of the supposed “doubling” of patients will be people whose only alternative was a regular doctor visit or ER visit, so there may be some gross increase in the total number of patients served. This one could go either way, and I’ll leave it to the statisticians to score it. But I’ll grant that there’s at least a possibility of cost-control here.

15. INCREASING NUMBER OF PRIMARY CARE DOCTORS—Provides new investment in training programs to increase the number of primary care doctors, nurses, and public health professionals. Effective beginning in fiscal year 2010.

Again, another big subsidy. Gives 10% bonuses to PCP and General Surgeons starting in 2011, and it’s unclear here what “new investment in training programs” really amounts to, but the early notes I’ve seen suggest it’s largely student loan repayment changes. I don’t see that much here that will blunt the existing trend for doctors to head into specialization rather than primary care. 10% is nice but it’s nowhere near the difference between a specialist’s salary and a primary care doctor.

16. PROHIBITING DISCRIMINATION BASED ON SALARY—Prohibits new group health plans from establishing any eligibility rules for health care coverage that have the effect of discriminating in favor of higher wage employees. Effective 6 months after enactment.

This one is also somewhat vague. But usually when I hear about plans to avoid “eligibility rules” that “discriminate”, I think they’re trying to find ways to make it impossible to discriminate against bad health risks. Richer people tend to be healthier people, so it seems that if they accomplish their goal, it necessarily raises premiums.

17. HEALTH INSURANCE CONSUMER INFORMATION—Provides aid to states in establishing offices of health insurance consumer assistance in order to help individuals with the filing of complaints and appeals. Effective beginning in FY 2010.

Ahh, a two-fer! First is the direct government subsidy to states to hire new “consultants”. The second is the premium increase by pushing harder against health providers regarding complaints and appeals, which will likely often be adjudicated by the external appeals boards mentioned in point 10.

18. CREATES NEW, VOLUNTARY, PUBLIC LONG?TERM CARE INSURANCE PROGRAM—Creates a long?term care insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become functionally disabled. Effective on January 1, 2011.

Voluntary? I wonder how long it will remain so. And how exactly does this different from the disability portion of Social Security? All I see here is a big new shiny bureaucracy, that will work as quickly as possible to entrench themselves by making this as involuntary as possible.

Conclusion:

So there you have it, folks. Of 18 highlighted points, most or all of them will increase payments made by government or increase health insurance premiums. This is “bending the cost curve”.

Treasury Secretary Tim Geitner Should Go

He has had his hand in every major government-orchestrated bailout in the last 17 years...of which Wall Street Banks have been the main beneficiary.

Geithner's lifelong love of bailouts

By MARK A. CALABRIA

Treasury Secretary Timothy Geithner faces tough hearings next week before the House Oversight and Government Reform Committee. But will any of the Congress members take him to task for his own role in creating last year's financial crisis?

Geithner refuses to take responsibility for "the legacy of crises you've [that is, the Republicans] bequeathed this country," as he told Rep. Kevin Brady (R-Texas) before the Joint Economic Committee in November. He apparently believes that the long string of Wall Street bailouts with which he's been associated -- starting with the Mexican "peso crisis" in 1994 -- had nothing to do with our financial institutions' widespread expectation that Washington would bail them out when they screwed up big-time.

Indeed, Geithner's consistent support for big-bank rescues dooms any real efforts to end "too big to fail." That's why, for the nation to truly move past the crisis, Geithner needs to go.

Although Geithner first came to Treasury in 1988, he didn't hold any leadership positions until 1995. But it was during those early years that he developed his apparent contempt for Congress and representative government.

In 1994, Mexico found itself unable to repay loans to a host of Wall Street investment banks. The Clinton administration pushed legislation to lend Mexico the cash -- but the new Congress voted it down. Geithner, then deputy assistant secretary for international monetary and financial policy, orchestrated back-door assistance to Mexico via Treasury's Exchange Stabilization Fund.

There was a national-interest case for helping out our southern neighbor. But it remains true that Wall Street was a huge beneficiary of that rescue -- it escaped paying a price for tens of billions in foolish lending.

Geithner, meanwhile, soon found himself in the middle of another round of bailouts -- as Treasury Secretary Robert Rubin's point man with the International Monetary Fund on the Asian financial crisis. The claim was that IMF "rescue packages" were needed to stabilize Asian economies -- but US banks again saw their losses reduced as a result.

On leaving Treasury, Geithner soon ended up at the IMF, an organization whose primary purpose seems to be to bail out US and European banks when they suffer losses on their developing-world investments -- a mission Geithner evidently shares.

From 2003 until his 2009 appointment as Treasury secretary, Geithner served as president of the Federal Reserve Bank of New York. The New York Fed's role as the top Wall Street watchdog can't be overstated -- so if regulatory failure contributed to the recent financial crisis, then few regulators contributed more than the New York Fed and its chief, Tim Geithner.

Plus, the New York Fed chief is a permanent member of the Federal Open Market Committee -- the Fed body that determines monetary policy. And Geithner strongly supported the Fed policies of that era -- particularly the overly expansionary monetary policy that directly contributed to the housing bubble.

Yes, the chief blame falls on former Fed Chairman Alan Greenspan (and to a lesser degree with then-Fed governor Ben Bernanke), but Geithner had plenty of chances to voice concerns about the growing housing bubble. He didn't.

Thankfully, Secretary Geithner's efforts to move his financial-regulatory "reforms" through Congress have so far failed. The core of his plan involves giving the Fed permanent bailout authority, which would be an unmitigated disaster: We need to end the cycle of bailouts, not double down on it.

If there's a common thread to almost every bank bailout over the last 15 years, it's that Timothy Geithner was always somewhere in the room. Each of these "rescues" brought short-term stability to our financial markets -- but only at the cost of long-term instability.

Only a handful of individuals could truly be called architects of our financial-regulatory system. Geithner, without a doubt, is one. To pretend he just now arrived on the scene is not only dishonest, it's dangerous. Without an honest assessment of how the long string of bailouts contributed to the current crisis -- an assessment that involves admitting Geithner's role -- we have little hope of avoiding future crises.

Mark A. Calabria is the Cato Institute's director of financial-regulation studies.

Advice for President Obama?

Pay attention to Ronald Reagan? And this is coming from a center-left publication...Time Magazine.


Reagan's Charm Could Teach Obama some Lessons

Back in January 2008, while meeting with the editorial board of the Reno Gazette-Journal right before the Democratic Nevada caucuses, Barack Obama offered some approving commentary on the legacy and influence of the 40th President. Ronald Reagan, he said, "changed the trajectory of America in a way that, you know, Richard Nixon did not and in a way that Bill Clinton did not." Not surprisingly, Obama's remark riled up both Hillary Clinton and her husband, who viewed it as demeaning to the achievements of the Clinton Administration, as well as a cheap tactic to win favor with some of the Silver State's more conservative Democrats.

(See pictures of people around the world watching Obama's Inauguration.)

In reality, Obama (and, for that matter, the Clintons) has a long history of paying public homage to the leadership and political skills of President Reagan, even while disagreeing with his policies.

Now, just as Reagan struggled to find his footing at the start of his own first term, Obama is straining to revive his political mojo. And so, as the President prepares for his second State of the Union address, here are the elements of the Gipper's arsenal that his latest successor would be smart to follow:

1. Stand for a few big things
Obama rode to his party's nomination as the anti-Clinton and won the general election as the anti-Bush without ever having to define his political persona. Reagan's policies didn't always live up to his mantra (lower taxes, stronger defense, family values), but he was able to fit most of his major initiatives and high-profile events under that simple tripartite rubric.

2. Be bigger than life
Obama is in many ways an ordinary guy (not unlike brush-clearing Bush and shorts-wearing Clinton). Scenes of him rhapsodizing about ESPN or headed out for burgers serve to humanize Obama and are certainly an appealing window into his real-life self. But through stagecraft and style, Reagan was able to be both an accessible and a towering figure. The Democrat in the White House now needs to be more imposing and less familiar, in order to wow his friends and strike fear into the hearts of his enemies. Plainspoken speeches, richly symbolic events and well-timed humor are Reagan tools that Obama could employ.

3. Create more Obama Republicans
Candidate Obama had broad appeal for Republicans and conservative-leaning independents. Now, his image and agenda have left him without any calling card to widen his support (essential for winning policy fights and elections). The Gipper wooed so-called Reagan Democrats by finding common cause with them on key issues such as national security and lower taxes while still keeping his political base solidly on board. Education, spending cuts, and maybe even health care are all ripe areas where Obama can make another effort to reach out - to voters, if not to intransigent Republicans in Washington.

4. Don't let the media get you down
By the time Reagan reached the White House, he had been trapped in the glare of press scrutiny from his days in Hollywood through his time in the California governor's mansion. Obama, meanwhile, glided into his Illinois Senate seat and into the White House with very little negative attention from the press (beyond brief isolated incidents such as the Rev. Wright dustup). Now, hammered nonstop by both the conservative and mainstream media, Obama has to thicken his skin. Reagan wasn't crazy about the coverage he got either, but he sloughed it off and followed the actor's credo: Never let them see you sweat.

5. Use national security to strengthen your hand at home
Obama needs to frame future foreign policy successes in way that gives him leverage with voters and Congress. Reagan deployed his standing as a successful Cold War President to rally the public around him, and then used higher approval ratings to advance his agenda. Obama is governing in a more partisan era, but he can break the bonds of a divided Washington to turn his domestic agenda into a patriotic one - by pushing for energy independence, for example - rather than one side of a left-right slugfest.

John Mayer on Vh1 Storytellers

VH1 TV Shows | Music Videos | Celebrity Photos | News & Gossip

Disaster Strikes Haiti

Over 100,000 presumed and many more are trapped. Please reach into your pockets and help

A Debate About Healthcare

First and foremost, sorry for the light posting in recent weeks. Hopefully this topic will spice things up a bit.

Its time for Justin Dantonio and I to step into the ring again. Followers of this blog will recall that he and I discussed the evolutions of the music business and concert ticket industry, primarily in response to an extremely insightful article about Ticketmaster in the New Yorker. He and were primarily in agreement on several occasions---even though I felt, at times, he elided over some of the economic theories explaining the decline of the four major record labels and the enormous pricing power of Ticketmaster and LiveNation, he is generally more knowledgeable on the subject then me and his responses were very thoughtful.

But now, the gloves come off....




Once again, the impetus for this discussion is an article in the New Yorker about John Mackey, the enterprising CEO and founder of Whole Foods Market. With the debate over health care reform swirling, John Mackey wrote an op-ed in the Wall Street Journal (a quick note, the editorial page of the Wall Street Journal is considered the conservative intelligentsia of print media--low taxes, free trade, sensible regulations, and limited government)back in august briefly discussing Whole Foods's employer-based plan and then proceeded to highlight 8 reforms he thought would be crucial to controlling the escalating costs of health care. I will copy and paste them below:

• Remove the legal obstacles that slow the creation of high-deductible health insurance plans and health savings accounts (HSAs). The combination of high-deductible health insurance and HSAs is one solution that could solve many of our health-care problems. For example, Whole Foods Market pays 100% of the premiums for all our team members who work 30 hours or more per week (about 89% of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees' Personal Wellness Accounts to spend as they choose on their own health and wellness.

Money not spent in one year rolls over to the next and grows over time. Our team members therefore spend their own health-care dollars until the annual deductible is covered (about $2,500) and the insurance plan kicks in. This creates incentives to spend the first $2,500 more carefully. Our plan's costs are much lower than typical health insurance, while providing a very high degree of worker satisfaction.

• Equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits. Now employer health insurance benefits are fully tax deductible, but individual health insurance is not. This is unfair.

• Repeal all state laws which prevent insurance companies from competing across state lines. We should all have the legal right to purchase health insurance from any insurance company in any state and we should be able use that insurance wherever we live. Health insurance should be portable.

• Repeal government mandates regarding what insurance companies must cover. These mandates have increased the cost of health insurance by billions of dollars. What is insured and what is not insured should be determined by individual customer preferences and not through special-interest lobbying.

• Enact tort reform to end the ruinous lawsuits that force doctors to pay insurance costs of hundreds of thousands of dollars per year. These costs are passed back to us through much higher prices for health care.

• Make costs transparent so that consumers understand what health-care treatments cost. How many people know the total cost of their last doctor's visit and how that total breaks down? What other goods or services do we buy without knowing how much they will cost us?

• Enact Medicare reform. We need to face up to the actuarial fact that Medicare is heading towards bankruptcy and enact reforms that create greater patient empowerment, choice and responsibility.

• Finally, revise tax forms to make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance and aren't covered by Medicare, Medicaid or the State Children's Health Insurance Program.

These reforms perfectly echo the market-oriented ideas pushed by conservatives and classical liberals alike, and is therefore 100% endorsed by the Passing Scene Cafe. To my knowledge, the current reform efforts in both the House and the Senate do NOTHING to advance any of these ideas, let alone control costs or improve care.

For writing this article, John Mackey was absolutely savaged by the jack-booted left-wing shock troops and practically drowned in the fever swamp of the Left. Liberals all off a sudden discovered their hatred for organic foods and fruits sans pesticides and called for mass boycotts of all the Whole Foods stores. This particular piece of advice by Bill Clinton's counsel Lanny Davis is both illustrative and comical:

"Before submitting the op-ed, he showed it to Lanny Davis, the former Clinton White House special counsel, who represented Whole Foods in its antitrust battle. Davis told me that he “prodded John a little to think like a liberal,” and he reckons that the Thatcher quote was ill-advised. Still, he blames “left-wing McCarthyism” for the outrage that greeted the piece."

The overture by Lanny Davis is especially touching, isn't it? Can't you just hear him him saying, "Listen, John, I know you are doing a good job...but can't you just try and see the world like the rest of us??? Puhhhlleeaassee!!???"

Enter Justin Dantonio--Bob Dylan fanatic, North Carolina hoops enthusiast, and committed dyed-in-the-wool liberal---who has this to say about the aforementioned articles. I will comments in between his articles:

"Liked the article and like whole foods, specifically the way they treat their employees. I do think Mackey is right that a company can pursue profits and still better the lives of their employees & consumers and it is ultimately better for everyone than if the gvt steps in. Very Ayn Randian.

Wow. Score that one for the Cafe!!! The relationship between profit-seeking and the maximization of social/consumer welfare is often lost on large swaths of the Left and increasingly more on the Right. High five to Justin for acknowledging the connection. On on a side note, I bought Ayn Rand's Atlas Shrugged over Thanksgiving and I am not looking forward to reading 1000 pages of fiction.


"That said, I guess my question would be 'What should happen when the overwhelming majority of consumers do not feel like an entire industry is looking out for them?" I have no problem with megacoporations with what I feel is fair pricing and a product I want/need. If i don't want to shop there, i wont; freedom of choice. But insurance companies don't give you that choice to a large extent."


I took issue his contention that an "overwhelming majority of consumers do not feel like an entire industry is looking out for them." Polling by the Kaiser Foundation consistently shows that satisfaction with one's own health care is north of 80 %---and that includes two thirds of women. Even Ezra Klein, a liberal blogger over at the American Prospec, acknowledges this, and correctly highlights that the prospects for reform are quite dim as long as people generally regard their insurance coverage as sufficient.

After asking Justin to substantiate his claim, he pointed me to another poll which claims that 3 out of 4 people are dissatisfied with the overall cost of health care in this country. In fact, the poll results are slightly nuanced :

More than eight in 10 Americans questioned in a CNN/Opinion Research Corp. survey released Thursday said they're satisfied with the quality of health care they receive.

And nearly three out of four said they're happy with their overall health care coverage.

But satisfaction drops to 52 percent when it comes to the amount people pay for their health care, and more than three out of four are dissatisfied with the total cost of health care in the United States.

Note that over half of poll responders say that they are satisfied with what they pay for health. That 48% of people who are either dissatisfied or unsure. Furthermore, I hypothesized that that particular question polls highly because many folks are being fed a narrative by politicians and the mainstream media that there is a looming crisis when it comes to health care costs and the time for reform is now. He responded that an increased level of attention to the issue cannot account for all 75 % of that poll result. This might be a case where he and I are both right.

Look i don't think the health care thing has gone well AT ALL. Its a mess and its going to create more problems than solutions (my premiums will surely be going up quite a bit).

What he says is spot on. Little does he know that he would get vilified by his fellow travellers for acknowledging such an observation.

All I am saying is that in all the research I have done on insurance for my own personal benefit, I cant get what I feel is a fair shake and it doesn't seem like there are other companies I can turn to. The status quo was not adequate and hasn't been for some time (Nixon gave a big speech in the 70s about the problems w/ the insurance industry so its been on the radar for decades). That said, the proposed solution will not be adequate either (and yes, potentially worse)

I think all of John Mackey's reform ideas would help. The only phenomena that throughout history, has helped to lower costs and put downward pressure on prices over time are free markets, competition, and innovation. Despite what many people think, the private insurance market in this country is NOT an unfettered free market. It is a highly regulated market with price controls, 50 different sets of rules for each state, and numerous barriers to enter the market. The solutions seem obvious to me and to those endangered species of liberals who mistrust government.

To sum it up: We need outside the box thinkers. The things Republicans want and Democrats want are so by-the-book Republican and Democrat that this mess almost seemed inevitable in a depressing sort of way. Unfortunately outside the box thinkers have a tough time getting into and/or wanting to be in the government. So very Plato via Philosopher-Kings.

I'm not entirely sure I agree with all of this. Most of the reforms posted above are reforms that the right-wing intelligentsia has been touting for years. I consider them to be 'by-the-book Republican.' I don't know of any ideas that are MORE 'Republican' than these. Also, there exists some variation within the Democratic party about what the future of the health care industry should look like. Some Democrats want a single-payer system. The Clintons wanted "managed competition" between four big insurers. Others want a private market but highly regulated and micromanaged to suit their ideals--a market replete with individual mandates and compulsory enrollment.

As usual, Justin went over my head very quickly with the Greek philosophy reference.

Thoughts please....