Krugman Prescribes Big Stimulus

It perturbs me that Paul Krugman advocates for something that doesn't stand a chance. Though I'd like to see us give Krugman's prescription a whirl, he's so out of touch with what Americans want and what Congress is willing to do. Obama is not a dictator. Americans barely backed the first stimulus. The stimulus and the deficit helped birth the tea party. Congress mindlessly follows the noisiest narrative, as does the media. Krugman can prescribe all he wants, but it's useless and it's kind of mean to present a remedy that few people would support. What's the purpose? So that later Krugman can state how right he was? That's all any of these so-called experts care about.

Many economists came under fire for failing to anticipate the recession. Now, New York Times columnist Paul Krugman is taking aim at his fellow economists again — this time for not coming up with ways to help people like Cyndi Norton.

"We should have economists out there saying, 'Here's how we're going to return to full employment,' " he says, "not just, 'Oh, here's the mistakes we made getting here,' or 'Here are the things we need to be worried about.' "

Krugman prescribes "a huge dose of both fiscal and monetary stimulus" — bigger, even, than the $700 billion package Congress approved early last year. "We should be having lots of expansionary policy by the Federal Reserve, a lot more fiscal stimulus than the really massively underpowered measures than we've had so far," he says.

It doesn’t really matter so much what the stimulus money is spent on, he argues, as long as it gets spent. But he does recommend putting some of the money into infrastructure projects. "It's just crazy that we’re talking about possibly canceling a much-needed tunnel under the Hudson at a time when we have mass unemployment, and those construction workers, if not employed building that tunnel, will not be employed doing anything else.”

If the government doesn’t make more stimulus money available, Krugman says, "enormous harm" will come to American families. "You just need to think about how many people are unemployed now for long periods of time. Large numbers of people who have lost their jobs and will never get another if we don't change our policies." More at NPR

Goolsbee Takes Issue With Krugman

Austan Goolsbee says Paul Krugman may have gotten confused, referring to Krugman's latest column.

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Ben Nelson Makes 60 for Healthcare

It looks like they made the bill better by limiting insurance company profits. Wow. We might get healthcare passed for Christmas after all. There is one BUT.

A holdout no more, Democratic Nebraska Sen. Ben Nelson agreed Saturday to provide the 60th vote necessary to clear the way for Senate passage of sweeping health care legislation, capping a year of struggle and a final burst of deadline bargaining.

Nelson had a brief response - "Yeah" - when asked whether he would support the measure as he strode into a private caucus of fellow Democrats.

With that vote, President Barack Obama's Senate allies appear on track to pass the legislation by Christmas, overcoming Republican opposition and a swirling early winter snowstorm.
....
The legislation includes new limits designed to limit insurance company profits and overhead, by requiring them to spend 80 percent of their premium income on medical care for individual insurance policies, and 85 percent for group policies.

On abortion, the measure would let states disallow coverage in new insurance exchanges.

The developments occurred as Republicans dug in to delay the inevitable for as long as possible. They objected when Reid sought permission for Nelson to announce his decision in a speech on the Senate floor, then forced Senate clerks to read aloud the text of the 383-page package of changes in the legislation, a process expected to consume hours NPR

Read the so-called managers amendment healthcare legislation here. See the CBO score here. Olympia Snowe won't vote for the bill.

Paul Krugman offers his blessings:

So, it seems that Harry Reid has done it. What I’m hearing is that the plan for the next few days calls for more or less nonstop action, with a series of cloture votes at crazy times, so as to get the health care bill through the Senate by Christmas Day.

It’s not the bill progressives hoped for. But it’s the bill that can pass, now.

And here’s what happens if a bill isn’t passed now: Democrats lose seats — maybe a lot of seats — in the 2010 midterms. A weakened President Obama wins reelection, maybe - but even that isn’t certain. No way he has the votes for another try at health care before 2015. Quite possibly, there isn’t another chance until 2021.

Some people say that we should throw it away and start over; is this what they have in mind? Because that’s the reality of what would happen.

Ben Nelson: "The quality of this debate has not always measured up to the quality of the American people."

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This is all happening amid the snowpocalypse:

Stop the Presses! Paul Krugman Says Healthcare Bill Worth Passing

Obama greets workers at Nestle plant

From Krugman, who has a lot of sway over progressives:

There’s enormous disappointment among progressives about the emerging health care bill — and rightly so. That said, even as it stands it would take a big step toward greater security for Americans and greater social justice; it would also save many lives over the decade ahead. That’s why progressive health policy wonks — the people who have campaigned for health reform for years — are almost all in favor of voting for the thing.

The argument about the evil of the individual mandate is, as Jon Cohn says, all wrong. It was wrong during the primaries, when Obama unfortunately used it to demagogue his rivals — helping set the stage for problems now. And it’s still wrong. Read more at Paul Krugman's blog

Krugman also says liberals need to get the imaginary Obama out of their head. But I disagree with Krugman's conclusion that he won't be transformative. Hello. Not even a year in. You sort of have to not be tied to an ideology to see that. Obama has a ways to go before we judge:

But what’s happening, I think, goes beyond health care; what we’re seeing is disillusionment with Obama among some of the people who were his most enthusiastic supporters. A lot of people seem shocked to find that he’s not the transformative figure of their imaginations. Can I say I told you so? If you paid attention to what he said, not how he said it, it was obvious from the beginning — and I’m talking about 2007 — that he was going to be much less aggressive about change than one could have hoped.

Yes Virginia There is an Option to the Public Option

Howard Dean likes the new option to the public option (see video below). Even Mr. I'm-so-fiscally-prudent-that-I-can't-be-your-commerce-secretary Judd Gregg says it makes sense.

The agreement capped several days of high-stakes negotiations by a group of 10 Democratic senators -- five moderates and five liberals. Senate Majority Leader Harry Reid (D., Nev.) had advanced a bill that would have had the government directly operate a health-insurance plan, while giving states the right to opt out.

In place of that, the senators embraced a more limited proposal that would empower the government's Office of Personnel Management to put in place a new low-cost national health plan, congressional aides said. The office already administers plans offered to federal employees and members of Congress. The new national plan would be run by nonprofit entities set up by the private sector, and would be available to the public on the new insurance exchanges that would be created under the bill. WSJ

But other liberals don't like it one bit that the public option is not on the table (there's still a trigger). At least not as of yesterday.
The public option became a left vs. the right thing, and the left thought they should win this one. They thought that they had already compromised by putting away the idea of a single payer system. They thought Obama should've took a stronger stance advocating the public option. Obama stood strong in not taking a stance for any one thing but rather whatever option would accomplish the goals that he set out.
Both the left and the right forget that their views aren't the only ones or the right ones. It's not an either or thing.

Most Americans don't even think along political lines. While my views are more aligned with the left, I prefer not thinking within an ideological camp.
Now that Dean is on board with the new compromise, liberals will probably follow suit. Even Paul Krugman offers a small blessing. Like Dean says, this is what should've been done in the first place:

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Google, Comcast, Disney, Krugman to Attend Jobs Summit Dec. 3

Obama will hold a jobs summit at the White House Dec. 3. Some of the confirmed attendees:

Eric Schmidt, CEO, Google Inc (GOOG.O)

Randall Stephenson, CEO, AT&T Inc (T.N)

Surya Mohapatra, CEO, Quest Diagnostics Inc (DGX.N)

Frederick Smith, CEO, FedEx Corp (FDX.N)

Brian Roberts, CEO, Comcast Corp (CMCSA.O)

Bob Iger, CEO, Walt Disney Co (DIS.N)

W. James McNerney, CEO, Boeing (BA.N)

Andrew Liveris, CEO, Dow Chemical Co (DOW.N)

Peter Solmssen, Siemens (SIEGn.DE)

Stephanie Burns, CEO, Dow Corning [DOWCR.UL]

Phaedra Ellis-Lamkins, CEO, Green for All

See more at Reuters

Lieberman Isn't a Centrist He's an Odd Man Out

Paul Krugman considers Joe Lieberman a centrist. From someone who considers herself a centrist (that would be me, although I don't like the term "centrist" because it's most often use to slam people. I prefer non ideological, independent thinker, open minded. But those phrases take too long to say), Lieberman is not a centrist. He's self-important. He gets off on being the odd man out:

The people who really have to make up their minds, then, are those in between, the self-proclaimed centrists.

The odd thing about this group is that while its members are clearly uncomfortable with the idea of passing health care reform, they’re having a hard time explaining exactly what their problem is. Or to be more precise and less polite, they have been attacking proposed legislation for doing things it doesn’t and for not doing things it does.

Thus, Senator Joseph Lieberman of Connecticut says, “I want to be able to vote for a health bill, but my top concern is the deficit.” That would be a serious objection to the proposals currently on the table if they would, in fact, increase the deficit. But they wouldn’t, at least according to the Congressional Budget Office, which estimates that the House bill, in particular, would actually reduce the deficit by $100 billion over the next decade. Krugman

Health Reform Won't Pass Without Snowe

That's what Al Hunt of Bloomberg says (see video below). The fact is, if the votes were there in the first place, then no one would've had to seek out republican votes. If democrats want to blame anyone, they can blame themselves.

Frankly, I think that the public option isn't the be-all end-all. The public option has been severely politicized, which I think is what Obama was trying to avoid upfront.
The left wrapped their heads around the public option as health reform's saving grace but there is so much that isn't being addressed in health reform. I'm hoping that whatever is passed is only the beginning. Ultimately, we shouldn't be getting healthcare from our employers. Paul Krugman seems to think whatever health reform legislation we get might only be a building block. He says there are problems with Massachusetts reform but people still want to build on reform:

And reform remains popular. Earlier this year, many conservatives, citing misleading poll results, claimed that public support for the Massachusetts reform had plunged. Newer, more careful polling paints a very different picture. The key finding: an overwhelming 79 percent of the public think the reform should be continued, while only 11 percent think it should be repealed.

Interestingly, another recent poll shows similar support among the state’s physicians: 75 percent want to continue the policies; only 7 percent want to see them reversed.

There are, of course, major problems remaining in Massachusetts. In particular, while employers are required to provide a minimum standard of coverage, in a number of cases this standard seems to be too low, with lower-income workers still unable to afford necessary care. And the Massachusetts plan hasn’t yet done anything significant to contain costs.

But just as reform advocates predicted, the move to more or less universal care seems to have helped prepare the ground for further reform, with a special state commission recommending changes in the payment system that could contain costs by reducing the incentives for excessive care. And it should be noted that Hawaii, which doesn’t have universal coverage but does have a long-standing employer mandate, has been far more successful than the rest of the nation at cost control. Read the whole thing.

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Some Liberals Appear to be Back in Obama's Corner

Steve Hildebrand, former Obama deputy campaign manager, criticized Obama yesterday and many liberals had turned on Obama. Post speech, Hildebrand seems to be ready to redirect his efforts. Interesting that Obama didn't say much new, but what he sold was the idea that health care reform won't be derailed, lies will be debunked and now is the time to take a giant step forward. And thanks to Joe Wilson, democrats rallied. I'm interested to read what Paul Krugman and Robert Reich, two big advocates for the public option, thought of the speech.

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Some hard core liberals, however, are still wrongly focused on the public option. In this video, Anna is wrong. Obama also said there could be subsidies for people who couldn't afford insurance. Penalizing poor people is the last thing Obama would do. The idea of reform is to bring costs down so that insurance is more affordable for everyone. Some have wrapped their brains around the public option as being The ONLY Way to do that. But that's not true. The problem with health care is that it's so complex that few people actually know what they're talking about.

Rachel Maddow:

The Ideologues Against the White House and David Brooks

Gabriel Sherman, writer with the New Republic, writes that David Brooks is considered an ally to the White House because he's the only conservative with an open mind. The rest of the conservatives are ideologues, people who only believe what they believe and that's it. Everything has to fit into their world view or else.

That's why, day after day, they say the same predictable things. I don't even have to read their columns because I already know they're world view. Nothing new comes out of Krauthammer's mouth or any of the conservative writers.

Sherman also contends that Brooks is fairer to the White House than even liberal Paul Krugman. That would be because Krugman is an ideologue on the left. He's predictable as well.

One opinionator in this video suggest that Brooks and Obama are matched by "intellectual arrogance." They both have an interest in philosophy. Watch Brooks and E.J. Dionne talk about theologian Reinhold Niebuhr and Niebuhr's influence on Obama on Speaking of Faith here.

Since when does being fair and open minded make someone arrogant? Just the suggestion that an interest in philosophy makes you arrogant is more dumbing down of America. I think we've had enough of that. I like reading Brooks' columns because, even though I disagree with him, he makes his points like an adult.

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Obama's Problem in Health Care: The Democrats

Interesting debates on the Sunday shows. Someone needs to invent a Lying Hat that will light up when politicians are exaggerating, distorting and outright lying. On Meet the Press, Orrin Hatch was lying through his teeth, exaggerating at best, and for the most part, David Gregory let him get away with it.

The public option debate is way out of control. It's such a simple concept that has been mangled by the right.

On Meet the Press, I think Joe Scarborough nailed the root of Obama's health care problem -- Obama doesn't have all the democrats on board. That's because the democratic party is a larger party, more reflective of America, while the republican party is, as Paul Krugman called them, the "rump." I can't think of a better word.

So now Obama has this bigger divide among democrats to contend with, the liberals on one end and the blue dogs on the other. Liberals, especially, have bailed on Obama. They act as though they own Obama. They only have his back if they get what they want. Tavis Smiley says Obama is backtracking on the public option. I don't think so at all. The media made a big to-do over it last Sunday and liberals got scared. Liberals are scared like the Rump (republicans) is scared. The entire debate of healthcare reform was getting bogged down by the public option because the Rump was able to persuade enough people that the public option was a government takeover.

In the end, the bill will have a public option because it is a small, important sliver of reform. Obama's intention has always been to insure those who can't afford insurance.

I'm glad Obama is on vacation because healthcare reform turned into a side show.

Another side note, Tavis Smiley was dead on about the hate at the Obama rallies. As a society, we can't accept strapping a gun to your leg and then going to a presidential town hall as anger. It's not anger. It's irrational hate. These cockroaches have been drawn out of the woodwork. Scarborough also said that it's wrong and it makes the job of the Secret Service tougher. Scarborough said that most of the angry people have just taken up sides, and they don't even know what they're talking about. They couldn't even define public option.

Watch the entire show here.

Krugman: Obama Weirdly Reluctant to Make Moral Case for Reform

Does Paul Krugman think that people care about the morality of health care? Ha! Few people care if others have health insurance, which is why Obama is running all over telling people what's in it for them. I happen to think Obama has a bigger political strategy on this public option thing. Howard Dean talked about the politics of the public option today.

Partly it’s a matter of style — as many people have noted, he has been weirdly reluctant to make the moral case for universal care, weirdly unable to show passion on the issue, weirdly diffident even about the blatant lies from the right. Partly it’s a spillover from his other policies: by appointing an economic team that’s Rubin redux, by taking such a kindly attitude to the banks, he has squandered a lot of progressive enthusiasm. Read more

Shumer Says Senate Health Care Bill Focused on Cost Cutting

I think the wealthiest among us can stand more of a tax burden but taxing them for the purposes of paying for health care reform (what the House wants to do) just ain't right. That would be taxes on top of taxes. Shumer says the Senate bill is focused more on cost cutting, which seems like the right thing to do.
Shumer says the August deadline on health care is important to strive toward. A group of six senators is asking for more time to achieve a bipartisan bill, including Sen. Olympia Snowe, whom Shumer says, in the video below, Obama respects. Paul Krugman says that's not a good idea. He calls the six senators (including two republicans) the "destructive center." Krugman views them as caving on principles (he says the center also watered down the stimulus). The left views it as a blow to reform.
But that seems a bit ideological to me. Obama is insisting it will get done this year and haven't we had enough of ideology, whether it comes from the left or the right?

I think the centrists have it about right. The left wants to do the right things but they don't ever consider costs and they always view business as the bad guy. I don't think Obama is striving for bipartisanship for the sake of bringing everyone together.
Rather, being more inclusive brings more ideas (and sometimes better ones). That's the best part of the Democratic Party--it's a big umbrella. The only folks left under the republican umbrella is the Sarah Palin base and a few stragglers hoping for change.

Deficit Trumps Second Stimulus

The White House says no second stimulus.
We sure are an impatient bunch. Didn't the stimulus bill just get enacted? And didn't money just go out? We all know there's more suffering ahead. But there would've been more without some kind of boost.
This is just politics. Republicans will use unemployment numbers to their advantage and the democrats on the left will tout Paul Krugman.

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Treason Against the Planet

Paul Krugman notes a little denying go on regarding the health of our planet. Haley Barbour told of the republican idea of energy yesterday, nothing that we didn't already know: Drill baby drill and clean coal. Use up our own resources, he said.
It truly will be remarkable if this bill passes the Senate. Apparently, there are a few things still to work out before it's finalized.
Obama will talk more about energy today at 1:15 p.m. eastern.

So the House passed the Waxman-Markey climate-change bill. In political terms, it was a remarkable achievement.

But 212 representatives voted no. A handful of these no votes came from representatives who considered the bill too weak, but most rejected the bill because they rejected the whole notion that we have to do something about greenhouse gases.

And as I watched the deniers make their arguments, I couldn’t help thinking that I was watching a form of treason — treason against the planet.

To fully appreciate the irresponsibility and immorality of climate-change denial, you need to know about the grim turn taken by the latest climate research.

The fact is that the planet is changing faster than even pessimists expected: ice caps are shrinking, arid zones spreading, at a terrifying rate. And according to a number of recent studies, catastrophe — a rise in temperature so large as to be almost unthinkable — can no longer be considered a mere possibility. It is, instead, the most likely outcome if we continue along our present course. Read the rest at NYT

Krugman Says Recession Near End

Most economists are saying the recession is coming to an end but WARNING-- that doesn't mean jobs will return any time soon. Jobs will be last to rebound.

The U.S. economy probably will emerge from the recession by September, Nobel Prize-winning economist Paul Krugman said.

“I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer,” he said in a lecture today at the London School of Economics. “Things seem to be getting worse more slowly. There’s some reason to think that we’re stabilizing.”

U.S. stocks erased an earlier decline after Krugman made his comments. The Standard & Poor’s 500 Stock Index was little changed at 939.14 at 4:07 p.m. in New York after slumping as much as 1.5 percent earlier, and the Dow Jones Industrial Average gained 1.36 points to 8,764.49.

Krugman, a Princeton University economist, has warned recently that the U.S. government hasn’t done enough to help the country’s economy recover. Last month, at a conference in Abu Dhabi, he said the fiscal stimulus is “only enough to mitigate the slump, not induce recovery.” Read more at Bloomberg

Prop 13 and Politicians Ruined California

Paul Krugman worries that as California goes, so does the nation. He suggests the limp--yet now extreme--republican party has helped plunge the state into dire straits:

And while the party’s growing extremism condemns it to seemingly permanent minority status — Mr. Schwarzenegger was and is sui generis — the Republican rump retains enough seats in the Legislature to block any responsible action in the face of the fiscal crisis.

Will the same thing happen to the nation as a whole?

The root of the state's crisis was the passage of Prop 13 and California's politicians have yet to rise up to meet the state's challenges.

The seeds of California’s current crisis were planted more than 30 years ago, when voters overwhelmingly passed Proposition 13, a ballot measure that placed the state’s budget in a straitjacket. Property tax rates were capped, and homeowners were shielded from increases in their tax assessments even as the value of their homes rose.

The result was a tax system that is both inequitable and unstable. It’s inequitable because older homeowners often pay far less property tax than their younger neighbors. It’s unstable because limits on property taxation have forced California to rely more heavily than other states on income taxes, which fall steeply during recessions.

Even more important, however, Proposition 13 made it extremely hard to raise taxes, even in emergencies: no state tax rate may be increased without a two-thirds majority in both houses of the State Legislature. And this provision has interacted disastrously with state political trends. Read the whole column at NYT

Republicans are aiming for a national comeback and part of that strategy is winning the governor's race in California next year. California doesn't have a Barack Obama-like candidate in the running, and most of the announced democratic candidates are weak, so republicans might win the state because the people of California are fed up. The state's government needs to be structurally overhauled. The candidate who seems to have the best chance of winning at this point is republican Meg Whitman.
I'm not sure if she has any answers, but politically she seems to have the best shot at winning. I'm not sure if anyone has any answers for California. But democrats need to offer some better choices--fast.

Hope for Healthcare Reform This Year

Obama will make a healthcare announcement at 12:30 p.m. and most that's been written about it so far points to the idea that healthcare reform could really happen this year. Paul Krugman is cautiously optimistic:

What’s presumably going on here is that key interest groups have realized that health care reform is going to happen no matter what they do, and that aligning themselves with the Party of No will just deny them a seat at the table. (Republicans, after all, still denounce research into which medical procedures are effective and which are not as a dastardly plot to deprive Americans of their freedom to choose.)

I would strongly urge the Obama administration to hang tough in the bargaining ahead. In particular, AHIP will surely try to use the good will created by its stance on cost control to kill an important part of health reform: giving Americans the choice of buying into a public insurance plan as an alternative to private insurers. The administration should not give in on this point.

But let me not be too negative. The fact that the medical-industrial complex is trying to shape health care reform rather than block it is a tremendously good omen. It looks as if America may finally get what every other advanced country already has: a system that guarantees essential health care to all its citizens.

And serious cost control would change everything, not just for health care, but for America’s fiscal future. As Mr. Orszag has emphasized, rising health care costs are the main reason long-run budget projections look so grim. Slow the rate at which those costs rise, and the future will look far brighter.

I still won’t count my health care chickens until they’re hatched. But this is some of the best policy news I’ve heard in a long time. Read the whole thing at NYT

Krugman Tempers His Tune

If you read Paul Krugman week to week, you know he isn't a fan of Timothy Geithner or Geithner's plan but in his column today, you can tell that he's softened his stance on the banking fix by a wee little bit:

But whether you actually should feel reassured depends on who you are: a banker, or someone trying to make a living in another profession.

I won’t weigh in on the debate over the quality of the stress tests themselves, except to repeat what many observers have noted: the regulators didn’t have the resources to make a really careful assessment of the banks’ assets, and in any case they allowed the banks to bargain over what the results would say. A rigorous audit it wasn’t.

But focusing on the process can distract from the larger picture. What we’re really seeing here is a decision on the part of President Obama and his officials to muddle through the financial crisis, hoping that the banks can earn their way back to health.

It’s a strategy that might work. After all, right now the banks are lending at high interest rates, while paying virtually no interest on their (government-insured) deposits. Given enough time, the banks could be flush again.

But it’s important to see the strategy for what it is and to understand the risks.

That softening up says to me, Geithner's plan might actually be working out after all. Sure seems to be. The left often uses guilt by association to condemn Geithner, which is odd, seeing that they're the left and they're supposed to know better.
Geithner on Charlie Rose:

Watch the full episode here.

Larry Summers: Krugman Right Armey Wrong

Paul Krugman is right to caution:

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Dick Armey, one of the tea party leaders, is wrong on spending:

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