According to the Associated Press, Senate Finance Committee Chairman Max Baucus has managed to find a way to make even less sense than Obama on the subject of healthcare.  Assuming that the AP article is an accurate reflection of what Senator Baucus actually said, he has just added another huge contradiction to the healthcare debate.

From the article:

A key Senate chairman says he hopes to convince President Barack Obama that taxing some employer-provided health benefits will help control escalating health care costs  … Baucus says the tax-free benefit packages Americans now enjoy are a big factor in the high costs of the country’s health care system, because they provide workers free or low-cost access to too many health care services.

So, according to Senator Baucus, a “big factor” which makes healthcare more expensive are “tax-free benefit packages … [that] provide workers with free or low cost access to … health care services.”  Put another way, healthcare costs so much because people don’t  have to spend a lot of money to get it.  Yet a third way, healthcare is expensive because it’s not.

Senator Baucus’s solution, which I guess is pretty obvious if you can swallow the contradiction above, is to tax private healthcare benefits.  The line of reasoning is certainly sound: Make healthcare more affordable by increasing the price.  Of course, with President Obama wrangling with care providers to knock costs lower, the only way to jack up the price is to do so artificially, with a tax.

Of course, it is possible that I misrepresented the Senator, and honesty demands that I address his “too many” straw man.  While some people certainly do behave this way, I know of very few people who seek out medical services that they do not actually need.  Indeed, part of the reason America’s emergency rooms are so full is the fact that most people don’t seek out medical services until they’ve long past needed them.  Even if you assume that people are overconsuming healthcare, are they doing so to the tune of offsetting nearly 46 million people who are not insured at all, and for whom President Obama wants to guarantee “free or low-cost” coverage?  And even if the answer is somehow, astonishingly, yes, exactly how is the government going to determine when a person has used “too many … services”?  And why wouldn’t private insurers do the same thing if they could?

The string of illogic given to us by Senator Baucus is only reconcilable with the proposition that he wants to end private insurance without saying so.  If President Obama goes back on his campaign rhetoric mocking McCain for supposedly having similar ambitions, it will be proof even stronger that his goals are the same.

Perhaps we should have given honest debate a health insurance plan ages ago.

It’s been all but impossible to go anywhere in the past few days without hearing about the Swine Flu.  It’s been in the news.  It’s all over the blogosphere.  The Department of National Security has declared a national emergency.  It’s even got the President spending his time suggesting school closures.  And despite his admonition that the swine flu is “not a cause for alarm,” the sheer volume of chatter about this disease is itself a fair bit alarming.

From a research standpoint, I suppose that it is fair to say that the Swine Flu is potentially quite interesting.  As its name rather directly indicates, a primary characteristic of the Swine Flu is that it owes its lineage to swine, including the average farm pig.  In the pork farming context, it seems that this bug is a disease that we’ve known about for a rather long time.  It gets into farms, it infects pigs, and usually stays there.  This one, strangely enough, didn’t.  Plus, in an additional and even more interesting twist, this version of Swine Flu seems able to jump from human to human; a trait which, I gather, is fairly rare.  For people who want to know more about the animal to human pathway for disease, or who are into viral research in general, Swine Flu has all the makings of a very interesting case study.

Things all start to get a lot less interesting when you get down to the people whose only interest in the flu is a desire to not get sick from it.  For those of us out here in the larger world, all indications seem to be that the Swine Flu is, well, the flu.

For the average American, the flu is a pretty easy thing to understand.  If someone near you  has the flu, you should probably stay away from them and wash your hands a lot.  If you have the flu, you should probably stay away from other people, drink plenty of water, avoid doing things which are physically demanding, and try to sleep.  If you are at increased risk of complications from the flu because you are very young, old, or have a weak immune system, you should probably see a doctor, just as you would for any other illness.  If you work in a place where diseases spread easily (like a school), you should certainly wash your hands more often and encourage the people around you to do the same.  If things do start to get out of hand, we have effective antiviral drugs.

In all, this is the same game we play every winter when “flu season” rolls around.  Except that it probably isn’t even that bad; the World Health Organization tells us that “human infection with swine influenza was generally mild but is known to have caused severe illness such as pneumonia, ” and that “[n]one of the confirmed cases in the United States have had the severe form of the disease and the patients recovered from illness without requiring medical care.” (emphasis added)  Indeed, to date, the only reported death in the United States is a toddler visiting from Mexico.

Of course, this would all be so much entertainment if not for the looming specter of big government intervention to “manage” the “public health crisis.”  Egypt has already declared it intention to kill all the pigs, despite the international health community saying quite plainly that such measures are entirely unnecessary.  A bit closer to home, the operation of at least one school district in Texas has already been brought to a screeching halt as state authorities descended in response to two students contracting an illness that “hadn’t seemed that bad,” especially when compared to their winter flu season which dropped attendance among “roughly 11,000 students to 89%.”

Knowing that Obama feeds on public fear and crisis to advance his radical government expansions, is it even debatable that a beautifully manufactured health crisis is not the perfect vehicle to push forward his healthcare agenda?  It may be that the media was a bit too quick with this one, as most of the health bureaucracy’s top seats are still vacant, but it does appear to have helped shuttle at least one nominee through the process to confirmation and it is an educational experience in any case.  It is, if nothing else, just one more excuse for the federal government to spend money.

I see no health crisis here.

In a letter which is the formal equivalent of the entirely too well known Wikipedia decoration bemoaning the statement of unverified facts, Senators Coburn, Brownback, DeMint, Burr, Murkowski, Inhofe, and Vitter point out a comparative element in my previous analysis which I had neglected to mention.  That element is the citation of sources to back up the claims made by the DHS to back up their statements on domestic terror.

In fact, neither the Leftwing nor the Rightwing report do a very good job with citation.  Even granting that Wikipedians can be a bit unpredictable at times, I find it doubtful that either report would survive the Wikipedia review process.  The reports are conclusory, largely unquantified, and appear to offer no authority other than the judgment of the Department itself for most of the statements offered.  The reports, to be sure, contain sufficient information to assist the efforts of law enforcement in identifying and resolving potential terrorist threats.  They lack, however, sufficient transparency of source material to allow for independent review.

That is not to say, however, that the reports are equally poor at citation.

The Leftwing report contains a “Source Summary Statement” which, while not identifying any particular sources, manages to outline the various types of sources that the DHS looked to in producing the report.  The sources apparently include “field agent reporting,” support from “subject-matter experts,” examination of “leftwing extremist media,” and other “open source data” including “business journals and research institute reports.”  Interestingly, “[g]overnment crime data” is expressly mentioned as being “unavailable.”

However poor the Leftwing “Source Summary Statement” is at providing a substitute for actual citations, it is still more than the Rightwing report contains.  Indeed, the Rightwing report contains but a single reference to a document identified only as “a 2007 study from the German Institute for Economic Research.”  The reference, however, is not general in nature.  Its purpose is to backstop a comment made inside an information box which points out a disagreement among “[s]cholars and experts” “over poverty’s role in motivating violent radicalization or terrorist activity.”  The report apparently shows “a strong association between a parent’s unemployment and the formation of rightwing extremist beliefs in their children.”  There is nothing else citation-like in the entire document.

With luck, the DHS will take Obama’s much campaigned on desire for government transparency to heart and respond with specific citations to available data and research or to publish some of the source documents on which they relied in the report.

The news has been spending a fair bit of time recently talking about the recently released report from the Department of Homeland Security regarding Rightwing Extremism.  Following a short sentence at the bottom of a news report mentioning a similar report on Leftwing Extremism, I spent a few minutes searching for the text of that report as well.  When placed side by side, the two are interesting in a number of ways.  The mere existence of the Leftwing report, and its apparent commission during the Bush administration, seems to suggest that if the DHS is playing politics, it is at least playing them on both sides.  Reading the reports turns up some interesting similarities, and some stunning differences, which will be outlined below.  Please note in reading on, however, that my purpose here is not to point out logical or factual errors in either report and, as such, I write assuming that everything written is rational and true.

Beginning at the surface level, both reports are largely similar. From their visual formatting to their tone and tenor, it is clear that both reports were cut from the same cloth.

Both reports also seek to cabin the scope of their analysis to apply only to certain subsets of the left or right wing groups. This is, of course, a necessary step if the reports are to be taken seriously as discussions of actual extremists, and not merely as people with divergent opinions. The Leftwing report states in its declaration of scope that its targets of interest are “the animal rights, environmental, and anarchist extremist movements.” The Rightwing report, in a footnote on Page 2, seems to suggest that its target group is “those groups, movements, and adherents that are primarily hate-oriented (based on hatred of particular religious, racial or ethnic groups), and those that are mainly antigovernment.” Rightwing groups of interest “may include groups and individuals that are dedicated to a single issue, such as opposition to abortion or immigration,” and antigovernment may include those who “reject[] federal authority in favor of state or local authority.” Interestingly, anarchits would appear to qualify as both Leftwing and Rightwing extremists.

Also interestingly, while the scope of the Leftwing Extremist report explicitly states that it is talking only about “extremist movements” in “the animal rights, environmental, and anarchist” domains, the Rightwing report offers no such qualification.  Indeed, the Leftwing report is even more narrowly tailored, as the scope statement does not end where I sliced it previously, but goes on to say that it only covers those “extremist movements that promote or have conducted criminal or terrorist activities.” (emphasis added) In stark contrast, the Rightwing report plainly states that there is “no specific information that domestic rightwing terrorists are currently planning acts of violence,” and that “[t]hreats … have been largely rhetorical and have not indicated plans to carry out violent acts.” (emphasis added) The difference in scope is nothing short of the difference between those who have committed acts of violence and those who have not even suggested doing so.

Of course, violence itself is hardly the best lens through which to view these reports.  While the Rightwing report certainly is focused on violence, its primary focus is on recruitment.  The Leftwing report is explicitly focused on economic attacks, examples of which include “animal releases, property theft, vandalism, and cyber attacks … which extremists regard as nonviolent.” Both reports indicate that the greatest threat comes from “lone wolves and small cells” within each respective extremist group. Both reports also offer examples of the type of violence inflicted; the Leftwing report indicated three attacks, at least two of which caused economic damage of over $1 million, while the Rightwing report indicated a single example which occurred shortly before the report’s publication which caused the death of three police officers.

Ultimately, neither report made particularly strong recommendations to decrease the threat level from their respective extremist groups.  As near as I can tell, the Leftwing report made no recommendations whatsoever.  The Rightwing report, in contrast, pointed out that increased government oversight on militia and paramilitary organizations led to decreased enrollment, and also obliquely hinted in the scope declaration about the possibility of “federal efforts to influence domestic public opinion.”

While it is likely that the Leftist report will be held up to demonstrate that Obama’s DHS was, at worst, doing nothing that Bush’s DHS had not done, I think it proper to view any such claims with the utmost skepticism.  The scope of the reports is so astonishingly different that a serious comparison of what the two have to say borders on impossible.  The ebb and flow of conservative thought, and the “recruiting” which most would regard as the ordinary process of persuasion inherent in a society founded on popular soverignty, simply bears no resemblance to the commission of criminal acts which result in legally cognizable damage.

As if it wasn’t already blatantly clear, today brings yet another reminder that if the government hates your company, you should not take their money. Today also re-clarifies the absurd double standard between the government’s approach to bailouts on Wall Street and bailouts to the automotive industry. None of this is news, of course, but it is noteworthy just the same.

If there is anything newsworthy to be seen here, it comes not from the ousting of Wagoner, but from the name of his apparent replacement. Unlike Obama’s automotive team, which does not include a single member with automotive or manufacturing experience, the new man at the helm looks to be someone who actually knows something about the industry. He is, indeed, GM’s now-former COO.

Of course, by being GM’s now-former COO, a natural question which comes to my mind is exactly what the point of the transition might be. While I suppose it is possible that Mr. Henderson will depart from GM’s history to date — like all new leaders, he is bound to want to do some things differently — one does not typically become a COO by holding an agenda significantly different than that of the man in the next seat higher. Plus, with GM already in the middle of a restructuring process which has been, by most accounts, moving in the right direction, a major course adjustment at this point would not only be unlikely, but unwise.

As far as adding value to GM goes, it may ultimately be worth it simply as a way to keep the capriciousness of clueless politicians off of the company’s back while it continues the business of trying to stay in business.  Between this, and the government’s ultimatum to Chrysler, Ford’s decision to leave the government money on the table just keeps seeming smarter all the time.

In the New York Times, Reed Abelson published an article talking about President Obama’s plan for a government operated healthcare system. The article is a good one which I found to be fair both in its description of President Obama’s proposed system (at least, to the extent that it has a description) and of some of the criticisms which surround it. The bulk of the article is spent discussing how a government healthcare system could coexist with private healthcare with a particular emphasis placed on how the government could be a fair competitor in the marketplace. Although the article raises several good points, I believe it misses certain fundamental flaws in the notion that the government could compete fairly.

As both I and Mr. Abelson understand President Obama’s proposed healthcare plan, the President’s idea is essentially that the government would become a health insurance company. It is distinguished from other healthcare plans proposed by Democrats by the fact that it is not, on its face, a single-payer system. Instead, the government would enter the insurance market as a large nonprofit insurance organization in competition with private insurance. The apparent theory is that the government would be able to use its size to negotiate price reductions with healthcare providers and drug makers while simultaneously having lower overhead than private insurers because the government plan would not be a profit seeking venture. Cost savings would then be passed on to consumers in the form of lower insurance premiums.

From this point, Mr. Abelson spends most of his article presenting one major reason that the government would not be a fair competitor. The government, the argument goes, would have such a size advantage that it would be able to push prices well below anything a private insurer could accomplish. In so doing, the government would effectively out compete private insurance. To the extent that this argument is true, it is ultimately uninteresting. If the government’s competitive advantage is volume leverage, then so be it.

The real threat to fair competition comes not from the first part of the theory, but from the second. Not only would the government not need to seek profit, it would not even need to break even. This immediately gives the government an advantage that even private nonprofits do not have. The government could easily charge below cost and still remain viable by subsidizing the shortfall out of tax revenue. Indeed, a government insurance plan would almost be forced to do this if it is truly going to guarantee some form of coverage to every American, even those with $0 available to spend on premiums.

The only way to have truly fair competition is for the government to restrict its healthcare funding to premiums paid by actual participants in the plan. Of course, there is no chance of that happening, because doing so would entirely defeat the purpose. Private insurers will, therefore, be forced to compete in a market dominated by a competitor which, in the private sector, would almost certainly be found guilty of anti-competitive predatory pricing.

With no meaningful hope that the government would act in the market as a fair competitor, it strikes me as highly unlikely that private insurance would be able to compete. Perhaps private insurance would take on a role similar to what we see now with Medicare gap insurance, with private insurers picking up the slack where government insurance cuts off. For the bulk of coverage, however, the real question will not be if private insurers will be able to compete, but how long they will try before closing their doors.

A lot of noise has been made regarding the AIG bonuses. Obama has expressed his outrage. Congress has weighed in. AIG executives have been harassed in their own homes. So, is there cause for outrage?

Indeed there is, Virginia, indeed there is. However, it may not be directed at who everyone assumes.

As part of the ill-advised bailout plan, AIG has received about $170 billion of taxpayer dollars. One would assume that injecting that much money into a company would buy the American people a little bit of say into how the company is run. And, as far as I’m concerned, one would be right. In fact, Congress has made its wishes known in the stimulus bill. In that, they specifically allowed AIG to make good on pre-exiting bonuses. In fact, these bonuses represent contractual obligations on the part of AIG to its employees. In effect, Obama and Congress are upset that AIG is paying its debts.

It goes beyond that, however. During the uproar, we’ve had President Obama, Senator Chris Dodd (Senate Banking Committee Chairman), who wrote the amendment, and Secretary Geithner (Treasury Secretary) all claim they didn’t know about this. How can this be?

Obama voted for the stimulus bill. Did he not read it?

Dodd was the one who wrote the amendment regarding “excessive” executive compensation, where the exemption lies. After saying that he didn’t know how the exemption got there, he then said it was requested by Treasury. Which is it, Senator Dodd? If you were asked to put it in there, how can you not know how it got there?

Secretary Geithner, for his part, claimed no knowledge, until Sen. Dodd fingered him. Then he acknowledged requesting it.

This means that the Obama administration requested the exemption be placed into law, then made a public outcry when it was followed. On top of that, they tried to cover it up. At best, this screams of gross incompetence. More cynically, it speaks of intentional deception of the American public for purposes of demagoguing the issue for political gain. Is it time to ask “What did the President know, and when did he know it?”

Worse than that, however, is the decision by the House of Representatives to pass an ex-post-facto tax of 90% on those who received the bonuses. That’s right, congress writes the law to give them the money, then they take it back. That would be disgusting enough, however, even without the blatant disregard for the constitution that such a move demonstrates. Using the tax code as a weapon to punish those that the Congress doesn’t like is not just a disgusting piece of legislative abuse, it is also a Bill of Attainder, which is explicitly prohibited in the Constitution. It is also in violation of the equal protection clause and the prohibition on ex-post-facto laws.

What is surprising (or, alas, not-so surprising) is the number of Republicans who have voted for this law, including Virginia’s Eric Cantor. To disregard the Constitution in such a way, in pursuit of crass political points shows that they have learned nothing from the losses in 2006 and 2008. Cantor, and the rest of the Republicans who voted for this, need to find themselves in the unemployment line, come 2010.

The silver lining in all this, however, is the comic value for those who have been paying attention. Not only for the rank sanctimony, but also for the cognitive dissonance. Especially amusing is President Obama telling his Secretary of Treasury, despite all his screw-ups in such a short time, that he would not accept Geithner’s resignation. Yeah, you’re doing a heckuva job, Brownie.

As I was on the road to an appointment this morning, I happened to flip on the local talk radio station in my car.  The show that was on at the time was doing some sort of a call-in segment which included what at first sounded like a rather confused sounding businessman arguing with the radio show host.  As the argument went, the businessman was saying that the bank had foreclosed on his business mortgage even though he was making all of his payments, with the radio show host insisting that banks just don’t do that.  Since banks really don’t just do that, I figured that the guy had something else going on that he wasn’t telling anyone, and it wasn’t too disappointing when the host hung up on the guy.  When a second guy called in saying the same thing happened to him, the radio show host sat there confused, and I got to wondering what might make this make sense.  I think the answer lies in the time value of money.

To begin with, there was certainly nothing incorrect about the radio show host insisting that banks don’t foreclose mortgages against people who are making their payments even if they have the right to.  The way lending programs work, banks give you a lot of money right now, and profit when you pay it back with interest later.  To a bank, foreclosure is generally an outcome best avoided and most will go to considerable lengths to avoid foreclosing on a property.  The reason, quite simply, is that banks have very little desire to own real estate; it’s expensive to maintain, not easy to convert into another type of asset, laden with taxes, and bothersome to sell.  As a result, banks sell them for prices well below market rate in order to get them off the books quickly.  In the end, the owner is out the property and the bank suffers a substantial loss on the loan.  Since everyone loses in foreclosure, it seems as though it would be most irrational for banks to foreclose on companies which are making their payments.

However, what might make the move make sense is the time value of money.  A central axiom of finance is that a dollar today is worth more than a dollar tomorrow.  From the bank’s point of view, a mortgage is a series of promises that they will receive a dollar today, a dollar tomorrow, a dollar the day after that, and so on until the mortgage is paid off.  This is normally good for steady cash flow, but not so good for getting money right now.  With the economy still in crisis mode, banks have a strong desire to have cash available to them immediately, and one way to do that and to reduce their liabilities at the same time is to demand final payment on mortgages, foreclosing where necessary.

To understand why a bank would close out mortgages of well paying borrowers, it is only necessary to consider where else the banks might get money from.  Borrowers who aren’t making payments are probably in a financial position where they can’t afford to make payments, which means they certainly aren’t in a position to repay the mortgage in full.  Borrowers who are making payments and who have enough capital will likely find a way to repay or refinance the mortgage rather than suffer major damage to their credit rating, so the bank will get their money.  Borrowers who are making payments but do not have enough capital to cover the mortgage, borrowers like the call-in businessmen, get caught in foreclosure.  Banks could be gambling for money between the second and third class of borrower.

While I have no particular insight to know if my conclusion is correct, it does at least seem plausible that banks are making a money play to get some cash on hand today rather than waiting for it to trickle in on schedule later.  Banks do have a need for immediate cash and there is a class of borrower which can supply money after sufficient arm twisting.  It certainly appears to be a horrible business practice, but at least it might make sense.

I see what you are doing.  Quit it.