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Sunday, September 26, 2010
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Wednesday, August 18, 2010
Really Unusually Uncertain
By THOMAS L. FRIEDMAN
Published: August 17, 2010
Over the past few weeks I’ve had a chance to speak with senior economic policy makers in America and Germany and I think I’ve figured out where we are. It’s like this: things are getting better, except where they aren’t. The bailouts are working, except where they’re not. Things will slowly get better, unless they slowly get worse. We should know soon, unless we don’t.
It is no wonder that businesses are reluctant to hire with such “unusual uncertainty,” as Fed chief Ben Bernanke put it. One reason it is so unusual is that we are not just trying to recover from a financial crisis triggered by crazy mortgage lending. We’re also having to deal with three huge structural problems that built up over several decades and have reached a point of criticality at the same time.
And as Mohamed El-Erian, the C.E.O. of Pimco, has been repeating, “Structural problems need structural solutions.” There are no quick fixes. In America and Europe, we are going to need some big structural fixes to get back on a sustained growth path — changes that will require a level of political consensus and sacrifice that has been sorely lacking in most countries up to now.
The first big structural problem is America’s. We’ve just ended more than a decade of debt-fueled growth during which we borrowed money from China to give ourselves a tax cut and more entitlements but did nothing to curtail spending or make long-term investments in new growth engines. Now our government owes more than ever and has more future obligations than ever — like expanded Medicare prescription drug benefits, expanded health care, an expanded war in Afghanistan and expanded Social Security payments (because the baby boomers are about to retire) — and less real growth to pay for it all.
America will probably need some added stimulus to kick start employment, but any stimulus right now must be in growth-enabling investments that will yield more than their costs, or they just increase debt. That means investments in skill building and infrastructure plus tax incentives for starting new businesses and export promotion. To get a stimulus through Congress it must be paired with spending cuts and/or tax increases timed for when the economy improves.
Second, America’s solvency inflection point is coinciding with a technological one. Thanks to Internet diffusion, the rise of cloud computing, social networking and the shift from laptops and desktops to hand-held iPads and iPhones, technology is destroying older, less skilled jobs that paid a decent wage at a faster pace than ever while spinning off more new skilled jobs that pay a decent wage but require more education than ever.
There is only one way to deal with this challenge: more innovation to stimulate new industries and jobs that can pay workers $40 an hour, coupled with a huge initiative to train more Americans to win these jobs over their global competitors. There is no other way.
But the global economy needs a healthy Europe as well, and the third structural challenge we face is that the European Union, a huge market, is facing what the former U.S. ambassador to Germany, John Kornblum, calls its first “existential crisis.” For the first time, he noted, the E.U. “saw the possibility of collapse.” Germany has made clear that if the eurozone is to continue, it will be on the German work ethic not the Greek one. Will its euro-partners be able to raise their games? Uncertain.
Keeping up with Germany won’t be easy. A decade ago Germany was the “sick man of Europe.” No more. The Germans pulled together. Labor gave up wage hikes and allowed businesses to improve competitiveness and worker flexibility, while the government subsidized firms to keep skilled workers on the job in the downturn. Germany is now on the rise, but also not free of structural challenges. Its growth depends on exports to China and it is the biggest financier of Greece. Still, “Germany is no longer the country with the oldest students and youngest retirees,” said Kornblum.
By contrast, America’s two big parties still cling to their core religious beliefs as if nothing has changed. Republicans try to undermine the president at every turn and offer their nostrum of tax-cuts-will-solve-everything — without ever specifying what services they’ll give up to pay for them. Mr. Obama gave us expanded health care before expanding the economic pie to sustain it.
You still don’t sense our politicians are saying, “Wait a minute; stop everything; we have got to work together.” Don’t these people have 401k plans of their own and kids worried about jobs?
The president needs to take America’s labor, business and Congressional leadership up to Camp David and not come back without a grand bargain for taxes, trade promotion, energy, stimulus and budget cutting that offers the market some certainty that we are moving together — not just on a bailout but on an economic rebirth for the 21st century. “Fat chance,” you say. Well then, I say get ready for a long phase of stubborn unemployment and anemic growth.
Tuesday, August 17, 2010
No ‘Graceful Exit’
By BOB HERBERT
Published: August 16, 2010
In his book, “The Promise,” about President Obama’s first year in office, Jonathan Alter describes a brief conversation between the president and Vice President Joe Biden that took place last November at the end of Mr. Obama’s long deliberation about what to do in Afghanistan.
Bob Herbert
Readers' Comments
Mr. Biden asked whether the new policy of beginning a significant withdrawal of U.S. troops from Afghanistan in 2011 was a direct presidential order that could not be countermanded by the military. The president said yes.
The two men were on their way to a meeting in the Oval Office with members of the Pentagon brass who would be tasked with carrying out Mr. Obama’s orders. Among those at the meeting was Gen. David Petraeus, then the chief of the United States Central Command, which included oversight of the wars in Afghanistan and Iraq. According to Mr. Alter, the president said to General Petraeus:
“David, tell me now. I want you to be honest with me. You can do this in eighteen months?”
Mr. Petraeus replied: “Sir, I’m confident we can train and hand over to the A.N.A. [Afghan National Army] in that time frame.”
The president went on: “If you can’t do the things you say you can in eighteen months, then no one is going to suggest we stay, right?”
“Yes, sir, in agreement,” said General Petraeus.
Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, was also at the meeting, and he added his own crisp, “Yes, sir.”
That was then. The brass was just blowing smoke, telling the commander in chief whatever it was that he wanted to hear. Over the past several days, at meetings with one news media outlet after another, General Petraeus has been singing a decidedly different song. The lead headline in The Times on Monday said: “General Opposes a Rapid Pullout in Afghanistan.”
Having taken over command of U.S. forces in Afghanistan after the ouster of Gen. Stanley McChrystal, Mr. Petraeus is now saying he did not take that job in order to preside over a “graceful exit.” His goal now appears to be to rally public opinion against the very orders that President Obama insisted, as he told Joe Biden, could not be countermanded.
Who’s in charge here?
The truth is that we have no idea how the president really feels about the deadline he imposed for beginning a troop withdrawal. It always seemed peculiar to telegraph the start of a troop pullout while fighting (in this case, escalating) a war. And Mr. Obama has always been careful to ratchet up the ambiguity quotient by saying the start of any withdrawal would depend on conditions on the ground.
Anyone who has been paying attention knows that conditions on the ground right now are awful, so it looks as though we’re going to be there for a long, long while.
This is a terrible thing to contemplate because in addition to the human toll (nearly half of all the American troop deaths in Afghanistan have occurred since Mr. Obama took office), the war is a giant roadblock in the way of efforts to deal effectively with deteriorating economic and social conditions here in the United States.
Look around at the economy, the public school system, the federal budget deficits, the fiscal conditions plaguing America’s state and local governments. We are giving short shrift to all of these problems and more while pouring staggering amounts of money (the rate is now scores of billions of dollars a year) into a treacherous, unforgiving and hopelessly corrupt sinkhole in Afghanistan.
(I stand in awe of the heights of hypocrisy scaled by conservative politicians and strategists who demand that budget deficits be brought under control while cheering the escalation in Afghanistan and calling for ever more tax cuts here at home.)
The reason you hear so little about Lyndon Johnson nowadays despite his stupendous achievements — Medicare, Medicaid, the Civil Rights Act of 1964, the Voting Rights Act of 1965 — is that Vietnam laid his reputation low. Johnson’s war on poverty was derailed by Vietnam, and it was Vietnam that tragically split the Democratic Party and opened the door to the antiwar candidacies of Eugene McCarthy and Robert Kennedy. The ultimate beneficiaries, of course, were Richard Nixon and the Republicans.
President Obama does not buy the comparison of Afghanistan to Vietnam, and he has a point when he says that the U.S. was not attacked from Vietnam. But Sept. 11, 2001, was nearly a decade ago, and the war in Afghanistan was hopelessly bungled by the Bush crowd. There is no upside to President Obama’s escalation of this world-class fiasco.
We are never going to build a stable, flourishing society in Afghanistan. What we desperately need is a campaign of nation-building to counteract the growing instability and deterioration in the United States.
Sunday, July 04, 2010
Monday, June 28, 2010
Thursday, June 24, 2010
Tuesday, June 22, 2010
Patient Protection and Affordable Care Act (PPACA) - Affordable? Not!
Kaiser Family Foundation
June 21, 2010
Recent Premium Increases Imposed by Insurers Averaged 20% for People Who Buy
Their Own Health Insurance, Kaiser Survey Finds
People who buy their own insurance report that their insurers most recently
requested premium increases averaging 20 percent, according to a new Kaiser
survey examining the experiences and views of people who buy health coverage
in the non-group or individual market.
Most say they paid the increase, but 16 percent of all policyholders say
they switched plans, either buying a less expensive policy from their
current insurer or switching companies altogether. After these so-called
"buy downs" are taken into account, people who faced a premium increase
ended up paying 13 percent more than before.
Many people report being in plans with high deductibles, including one in
four (26 percent) with an annual deductible of $5,000 or more and 6 percent
with a deductible of $10,000 or more.
Overall, the average deductible reported for single coverage is $2,498,
almost four times the $634 deductible reported on average for
employer-sponsored PPO coverage. Those with family coverage whose
deductibles must be met on a per-person basis report an average deductible
of $2,959, while those with a family deductible (the total spending required
across the entire family before coverage kicks in) report an average of
$5,149.
More than one in five (22 percent) say over the past year they or a family
member covered by their plan did not get needed medical care because of the
cost, and a similar share (20 percent) say they skipped filling a
prescription due to cost.
Nearly four in ten policyholders (38 percent) report at least one problem
getting their insurer to pay a bill.
"With people in the individual market being hit with average increases of
20%, the survey shows that the steep increases we have been reading about
over the last several months are not just extreme cases," Kaiser Family
Foundation President and CEO Drew Altman said.
http://www.kff.org/
Comment: This survey is very important because it shows that outrageous
insurance premium increases are not limited to the anecdotes that we have
been hearing, but rather are a pervasive problem, inflicting the nation with
an average 20 percent premium increase in the individual insurance market.
Those who say that the Patient Protection and Affordable Care Act (PPACA)
will fix this had better take a closer look.
With these increases, it is not surprising that many looked for less
expensive plans, usually opting for higher deductibles. But look at the
numbers. The average deductible for a family is now over $5000, and for
some, $10,000 or more. In spite of all of the buy-downs to higher deductible
plans, people still ended up this year paying an average of 13 percent
higher premiums - paying more and getting less.
Will PPACA provide relief from these high deductibles that are impairing
access to needed medical care? No. The plans will be required to have an
actuarial value of only 60 percent, or 70 percent for the exchange plans
eligible for premium credits. When the patients' share averages 30 to 40
percent of the costs (plus the premium), it is inevitable that the plans
will have high deductibles.
Will the cost sharing subsidies of the exchange plans adequately ameliorate
the impact of the deductibles? No. Lower income individuals do not have
adequate disposable income to meet their portion of the cost sharing, even
with the subsidies. For those with incomes over 250 percent of the federal
poverty level ($55,125 for a family of four), there are no cost sharing
subsidies beyond the equivalent of a 70 percent actuarial value. The portion
of the subsidized insurance premium that this family would still have to pay
is $4438 (8.05 percent of income), so with a $5000 deductible, they would
have to pay over 17 percent of their income before coverage begins (except
for limited preventive services), and even then they would still have
coinsurance payments plus costs for non-covered or most out-of-network
services. By any definition, that is underinsurance, which will become the
norm for the United States.
The problem is not the total cost of health care for our nation. We can
afford it, though we are nearing our collective tolerance. The problem is
the fragmented, dysfunctional financing system that results in tremendous
inequities and runaway cost increases. A single payer national health
program would fix this.
Tuesday, June 15, 2010
So You Think ObamaCare is Wonderful? Think Again. I'd call it Albatrosscare
San Francisco Chronicle
June 12, 2010
Insurance premium hikes hit small business hard
By John Gonzales
California small-business owners expected to be early beneficiaries of
health care reform, with billions of dollars in federal tax relief becoming
available this month to help them purchase medical coverage for their
employees.
The credit is worth up to 35 percent of a small business' premium costs.
But many said the tax credits granted under the legislation have run up
against a new hurdle: a spate of rate increases by insurance companies,
including 58 to 75 percent hikes levied recently by Blue Shield of
California.
The company offered other coverage without the high rate increase, but
included similar deductibles and added co-pays of about 20 percent. The Blue
Shield hikes are in line with increases from all major insurers on small
business health savings plans, said (Tom Epstein, vice president of Public
Affairs for Blue Shield of California).
"Anthem Blue Cross offered this first," he said. "Health Net followed us.
Aetna and United offered products like this. Every one of these insurers had
very substantial rate increases."
"That money is going right back to the insurance companies," said Brad Wing,
co-owner of the San Francisco Advertiser, who received notice of his 58.3
percent increase in April.
"Normally, rates go up 10 to 15 percent and you can swallow it," he said.
"But at 58 percent, there's just no way."
http://www.sfgate.com/cgi-bin/
Comment: The Patient Protection and Affordable Care Act (PPACA) is supposed
to make health care affordable, primarily by subsidizing private insurance
plans. It begins immediately by offering small businesses a credit worth up
to 35 percent of premium costs. With Blue Shield of California increasing
rates by as much as 58 to 75 percent, how is the small business owner going
to find relief when the insurer takes the full subsidy and charges what
amounts to another 23 to 40 percent surcharge?
Several individuals who no longer want to hear our single payer message tell
us that PPACA is now the law of the land, that private plans are here to
stay, and that we need to quit attacking the private insurers and get on
with making PPACA work.
When non-profit Blue Shield of California is the best the industry has to
offer, how can we possibly ever make that work? We can't. We need to quit
supporting PPACA and get on with making an improved Medicare for all work!
Quote-of-the-day@mccanne.org
Saturday, June 12, 2010
The Courage to Leave
By BOB HERBERT
Published: June 11, 2010
There is no good news coming out of the depressing and endless war in Afghanistan. There once was merit to our incursion there, but that was long ago. Now we’re just going through the tragic motions, flailing at this and that, with no real strategy or decent end in sight.
The U.S. doesn’t win wars anymore. We just funnel the stressed and underpaid troops in and out of the combat zones, while all the while showering taxpayer billions on the contractors and giant corporations that view the horrors of war as a heaven-sent bonanza. BP, as we’ve been told repeatedly recently, is one of the largest suppliers of fuel to the wartime U.S. military.
Seven American soldiers were killed in Afghanistan on Monday but hardly anyone noticed. Far more concern is being expressed for the wildlife threatened by the oil gushing into the Gulf of Mexico than for the G.I.’s being blown up in the wilds of Afghanistan.
Early this year, we were told that at long last the tide had turned in Afghanistan, that the biggest offensive of the war by American, British and Afghan troops was under way in Marja, a town in Helmand Province in the southern part of the country. The goal, as outlined by Gen. Stanley McChrystal, our senior military commander in Afghanistan, was to rout the Taliban and install a splendid new government that would be responsive to the people and beloved by them.
That triumph would soon be followed by another military initiative in the much larger expanse of neighboring Kandahar Province. The Times’s Rod Nordland explained what was supposed to happen in a front-page article this week:
“The goal that American planners originally outlined — often in briefings in which reporters agreed not to quote officials by name — emphasized the importance of a military offensive devised to bring all of the populous and Taliban-dominated south under effective control by the end of this summer. That would leave another year to consolidate gains before President Obama’s July 2011 deadline to begin withdrawing combat troops.”
Forget about it. Commanders can’t even point to a clear-cut success in Marja. As for Kandahar, no one will even use the word “offensive” to describe the military operations there. The talk now is of moving ahead with civilian reconstruction projects, a “civilian surge,” as Mr. Nordland noted.
What’s happening in Afghanistan is not only tragic, it’s embarrassing. The American troops will fight, but the Afghan troops who are supposed to be their allies are a lost cause. The government of President Hamid Karzai is breathtakingly corrupt and incompetent — and widely unpopular to boot. And now, as The Times’s Dexter Filkins is reporting, the erratic Mr. Karzai seems to be giving up hope that the U.S. can prevail in the war and is making nice with the Taliban.
There is no overall game plan, no real strategy or coherent goals, to guide the fighting of U.S. forces. It’s just a mind-numbing, soul-chilling, body-destroying slog, month after month, year after pointless year. The 18-year-olds fighting (and, increasingly, dying) in Afghanistan now were just 9 or 10 when the World Trade Center and Pentagon were attacked in 2001.
Americans have zoned out on this war. They don’t even want to think about it. They don’t want their taxes raised to pay for it, even as they say in poll after poll that they are worried about budget deficits. The vast majority do not want their sons or daughters anywhere near Afghanistan.
Why in the world should the small percentage of the population that has volunteered for military service shoulder the entire burden of this hapless, endless effort? The truth is that top American officials do not believe the war can be won but do not know how to end it. So we get gibberish about empowering the unempowerable Afghan forces and rebuilding a hopelessly corrupt and incompetent civil society.
Our government leaders keep mouthing platitudes about objectives that are not achievable, which is a form of deception that should be unacceptable in a free society.
In announcing, during a speech at West Point in December, that 30,000 additional troops would be sent to Afghanistan, President Obama said: “As your commander in chief, I owe you a mission that is clearly defined and worthy of your service.”
That clearly defined mission never materialized.
Ultimately, the public is at fault for this catastrophe in Afghanistan, where more than 1,000 G.I.’s have now lost their lives. If we don’t have the courage as a people to fight and share in the sacrifices when our nation is at war, if we’re unwilling to seriously think about the war and hold our leaders accountable for the way it is conducted, if we’re not even willing to pay for it, then we should at least have the courage to pull our valiant forces out of it.
Friday, June 11, 2010
Don't Listen to the Cheerleaders, the Main Street Economy Isn't Improving
Robert Reich
Posted: June 10, 2010 02:33 PM
Today's most important economic news: U.S. household debt fell for the seventh straight quarter in the first three months of 2010 as Americans continued to respond to the recession's fallout.
But like all economic news, its significance depends on where you're standing -- whether you're a typical American or someone at the top.
The common wisdom is that excessive debt-financed spending was one of the causes of the recent recession, so the news that household debt is dropping is being celebrated by business cheerleaders as reason to believe we're on the mend.
Baloney. The reason so many Americans went into such deep debt was because their wages didn't keep up. The median wage (adjusted for inflation) dropped between 2001 and 2007, the last so-called economic expansion. So the only way typical Americans could keep spending at the rate necessary to keep themselves -- and the economy -- going was to borrow, especially against the value of their homes. But that borrowing ended when the housing bubble burst.
So now Americans have no choice but to pare back their debt. That's bad news because consumer spending is 70 percent of the economy. It helps explain why we so few jobs are being created, and why we can't escape the gravitational pull of the Great Recession without far more government spending.
It's also a bad omen for the future. The cheerleaders are saying that for too long American consumers lived beyond their means, so the retrenchment in consumer spending is good for the long-term health of the economy. Wrong again. The problem wasn't that consumers lived beyond their means. It was that their means didn't keep up with what the growing economy was capable of producing at or near full-employment. A larger and larger share of total income went to people at the top.
So in the longer term, it's hard to see where the buying power will come from unless America's vast middle class has more take-home pay. Yet the economy is moving in exactly the opposite direction: Businesses continue to slash payrolls. And the hourly wage of the typical American with a job continues to drop, adjusted for inflation.
Here's more news: A Federal Reserve report Thursday showed the net worth of Americans rose a fourth straight quarter in January-March. Don't be fooled by this one either. That increase was almost entirely based on the stock market's rise in the first quarter. But the market has since fallen back to where it was at the start of the year. More to the point, most Americans don't have many assets in the stock market. To the extent they have any net worth, it's in their homes. And home prices continue to languish.
Don't be fooled by the cheerleaders. The economic news continues to be dismal.
This post originally appeared at RobertReich.org.
Monday, June 07, 2010
Ending the Longest War
Rep. John Conyers
Posted: June 6, 2010 11:33 A
This past week, the United States recognized a dubious milestone in our country's history as direct war spending for the wars in Iraq and Afghanistantopped $1 trillion. Unfortunately, we have reached a second milestone, with the War in Afghanistan passing the Vietnam War to officially become thelongest military conflict in American history.
Most historians agree that the Vietnam War began with the enactment of the Gulf of Tonkin Resolution, ended with the withdrawal of the last American troops in March of 1973, and lasted a total of 103 months. The War in Afghanistan began on October 7, 2001 when President George W. Bush ordered air strikes against militant camps. As of today, June 7, 2010, the war has just ended its 104th month.
For many, the Vietnam War conjures up images of war fatigue, when a larger ideological and strategic rationale for going to war devolved into a sense that our country was trapped in a military quagmire that lacked a clear purpose, identifiable goals, and deliverable objectives. After nearly nine years of war, many Americans are beginning to have many of the same impressions about our military operations in Afghanistan and Pakistan.
We should remember that the United States originally attacked Afghanistan to disrupt the Al Qaeda terrorist network. In an interview with CNN last October, National Security Advisor, General James Jones, acknowledged that "fewer than a hundred" Al Qaeda militants remain in Afghanistan. And yet, the war continues.
Like Vietnam, America's political leadership struggles to justify the lives and treasure sacrificed in Afghanistan. Clear objectives have been replaced with murky concept-slogans, like "securing the population" or implementing "government in a box" in previously lawless areas, which seem to have only a tangential connection to allowing our troops to complete their mission and come home. For example, as we prepare for a new offensive in Kandahar, the failure of the Afghan police to impose order following the recent operations in Marja should cause Americans to question whether the current troop surge is helping to bring the war to a close.
In an interview with C-SPAN taped before his death last year, former Secretary of Defense McNamara noted that one of the Vietnam War's fatal flaws was the failure to recognize the existence of a civil war:
"We were fighting -- and we didn't realize it -- a civil war. Now, true, obviously there were Soviet and Chinese influence and support and no question that the communists were trying to control South Vietnam, but it was basically a civil war. And one of the things we should learn is you can't fight and win a civil war with outside troops, and particularly not when the political structure in a country is dissolved. So it wasn't the press that was the problem. The problem was that we were in the wrong place with the wrong tactics.''
McNamara's words should haunt us today, as we recognize this new standard for military occupation. No amount of firepower will convince the Afghans to decide how to coexist with each other. Political conflicts do not have military solutions.
The Vietnam War took 58,000 American lives, weakened America's image abroad for many years afterward, and sapped the ability of multiple presidents to pursue a robust domestic agenda at home. The War in Afghanistan is having a similar effect on our country.
Despite his many flaws, Richard Nixon recognized that there was a tipping point when our military presence in Vietnam could no longer be sustained. I believe we are close to a such a tipping point today. Many Members of Congress and citizen-activists are calling for withdrawal. I hope that you will join us. Securing a sustainable future for Afghans and Americans starts with bringing the troops home now.
Rep. John Conyers, Jr. is the chair of the Out of Afghanistan Caucus.
Rep. John Conyers, Jr. is the chair of the Out of Afghanistan Caucus.
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