Why We Don't Get No Respect by Fareed Zakaria: "July 3-10, 2006
Why We Don't Get No Respect
'It's not a real conversion,' remarks one senior European politician. 'It's a product of failure.'
By Fareed Zakaria
"The Bush administration must wonder these days if it has a Rodney Dangerfield problem. No matter what it does, it can't seem to get any respect. Secretary of State Condoleezza Rice has engineered a broad shift in American diplomacy over the last year, moving policy toward greater multilateralism, cooperation and common sense on Iran, North Korea and Iraq, and several other issues. And yet it hasn't produced a change in attitudes toward the United States. The recent Pew global survey documents a further drop in America's poor image abroad. President Bush tried to be conciliatory while visiting Europe last week but confronted an angry public. A poll published in the Financial Times on the eve of his visit showed that across the continent, the United States was considered a greater threat to world peace than Iran or North Korea.
Why aren't people noticing the new, improved Bush foreign policy? First, the changes coming out of Washington have been very recent. Perhaps more important, they remain incremental and incomplete. This is probably because they are still contested within the administration. Almost all of those officials who embody the administration's crude and clumsy policies of the first term-led by Donald Rumsfeld and Dick Cheney-remain in office. They merely appear to be lying low, for now. So there's a limit to how much things can change. What appears like a revolution in Bush policy the administration is now finally thinking that maybe, possibly, Guantanamo should be shut down often is just the belated arrival of common sense. "
... In other words, if you set the bar low enough, the American public might applaud you but don't expect the rest of the world to stand up and cheer just because you've improved your performance from Terrible to Merely Mediocre.
Thursday, June 29, 2006
Monday, June 26, 2006
Krugman on Health Care
http://www.nybooks.com/articles/18802
The Health Care Crisis and What to Do About It
By Paul Krugman, Robin Wells
Thirteen years ago Bill Clinton became president partly because he promised to do something about rising health care costs. Although Clinton's chances of reforming the US health care system looked quite good at first, the effort soon ran aground. Since then a combination of factors—the unwillingness of other politicians to confront the insurance and other lobbies that so successfully frustrated the Clinton effort, a temporary remission in the growth of health care spending as HMOs briefly managed to limit cost increases, and the general distraction of a nation focused first on the gloriousness of getting rich, then on terrorism—have kept health care off the top of the agenda.
But medical costs are once again rising rapidly, forcing health care back into political prominence. Indeed, the problem of medical costs is so pervasive that it underlies three quite different policy crises. First is the increasingly rapid unraveling of employer- based health insurance. Second is the plight of Medicaid, an increasingly crucial program that is under both fiscal and political attack. Third is the long-term problem of the federal government's solvency, which is, as we'll explain, largely a problem of health care costs.
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The good news is that we know more about the economics of health care than we did when Clinton tried and failed to remake the system. There's now a large body of evidence on what works and what doesn't work in health care, and it's not hard to see how to make dramatic improvements in US practice. As we'll see, the evidence clearly shows that the key problem with the US health care system is its fragmentation. A history of failed attempts to introduce universal health insurance has left us with a system in which the government pays directly or indirectly for more than half of the nation's health care, but the actual delivery both of insurance and of care is undertaken by a crazy quilt of private insurers, for-profit hospitals, and other players who add cost without adding value. A Canadian-style single-payer system, in which the government directly provides insurance, would almost surely be both cheaper and more effective than what we now have. And we could do even better if we learned from "integrated" systems, like the Veterans Administration, that directly provide some health care as well as medical insurance.
The bad news is that Washington currently seems incapable of accepting what the evidence on health care says. In particular, the Bush administration is under the influence of both industry lobbyists, especially those representing the drug companies, and a free-market ideology that is wholly inappropriate to health care issues. As a result, it seems determined to pursue policies that will increase the fragmentation of our system and swell the ranks of the uninsured.
Before we talk about reform, however, let's talk about the current state of the US health care system. Let us begin by asking a seemingly naive question: What's wrong with spending ever more on health care?
1.
Is health care spending a problem?
In 1960 the United States spent only 5.2 percent of GDP on health care. By 2004 that number had risen to 16 percent. At this point America spends more on health care than it does on food. But what's wrong with that?
The starting point for any discussion of rising health care costs has to be the realization that these rising costs are, in an important sense, a sign of progress. Here's how the Congressional Budget Office puts it, in the latest edition of its annual publication The Long-Term Budget Outlook:
Growth in health care spending has outstripped economic growth regardless of the source of its funding.... The major factor associated with that growth has been the development and increasing use of new medical technology.... In the health care field, unlike in many sectors of the economy, technological advances have generally raised costs rather than lowered them.
Notice the three points in that quote. First, health care spending is rising rapidly "regardless of the source of its funding." Translation: although much health care is paid for by the government, this isn't a simple case of runaway government spending, because private spending is rising at a comparably fast clip. "Comparing common benefits," says the Kaiser Family Foundation,
changes in Medicare spending in the last three decades has largely tracked the growth rate in private health insurance premiums. Typically, Medicare increases have been lower than those of private health insurance.
Second, "new medical technology" is the major factor in rising spending: we spend more on medicine because there's more that medicine can do. Third, in medical care, "technological advances have generally raised costs rather than lowered them": although new technology surely produces cost savings in medicine, as elsewhere, the additional spending that takes place as a result of the expansion of medical possibilities outweighs those savings.
So far, this sounds like a happy story. We've found new ways to help people, and are spending more to take advantage of the opportunity. Why not view rising medical spending, like rising spending on, say, home entertainment systems, simply as a rational response to expanded choice? We would suggest two answers.
The first is that the US health care system is extremely inefficient, and this inefficiency becomes more costly as the health care sector becomes a larger fraction of the economy. Suppose, for example, that we believe that 30 percent of US health care spending is wasted, and always has been. In 1960, when health care was only 5.2 percent of GDP, that meant waste equal to only 1.5 percent of GDP. Now that the share of health care in the economy has more than tripled, so has the waste.
This inefficiency is a bad thing in itself. What makes it literally fatal to thousands of Americans each year is that the inefficiency of our health care system exacerbates a second problem: our health care system often makes irrational choices, and rising costs exacerbate those irrationalities. Specifically, American health care tends to divide the population into insiders and outsiders. Insiders, who have good insurance, receive everything modern medicine can provide, no matter how expensive. Outsiders, who have poor insurance or none at all, receive very little. To take just one example, one study found that among Americans diagnosed with colorectal cancer, those without insurance were 70 percent more likely than those with insurance to die over the next three years.
In response to new medical technology, the system spends even more on insiders. But it compensates for higher spending on insiders, in part, by consigning more people to outsider status—robbing Peter of basic care in order to pay for Paul's state-of-the-art treatment. Thus we have the cruel paradox that medical progress is bad for many Americans' health.
This description of our health care problems may sound abstract. But we can make it concrete by looking at the crisis now afflicting employer-based health insurance.
2.
The unraveling of employer-based insurance
In 2003 only 16 percent of health care spending consisted of out-of-pocket expenditures by consumers. The rest was paid for by insurance, public or private. As we'll see, this heavy reliance on insurance disturbs some economists, who believe that doctors and patients fail to make rational decisions about spending because third parties bear the costs of medical treatment. But it's no use wishing that health care were sold like ordinary consumer goods, with individuals paying out of pocket for what they need. By its very nature, most health spending must be covered by insurance.
The reason is simple: in any given year, most people have small medical bills, while a few people have very large bills. In 2003, health spending roughly followed the "80–20 rule": 20 percent of the population accounted for 80 percent of expenses. Half the population had virtually no medical expenses; a mere 1 percent of the population accounted for 22 percent of expenses.
Here's how Henry Aaron and his coauthors summarize the implication of these numbers in their book Can We Say No?: "Most health costs are incurred by a small proportion of the population whose expenses greatly exceed plausible limits on out-of-pocket spending." In other words, if people had to pay for medical care the way they pay for groceries, they would have to forego most of what modern medicine has to offer, because they would quickly run out of funds in the face of medical emergencies.
So the only way modern medical care can be made available to anyone other than the very rich is through health insurance. Yet it's very difficult for the private sector to provide such insurance, because health insurance suffers from a particularly acute case of a well-known economic problem known as adverse selection. Here's how it works: imagine an insurer who offered policies to anyone, with the annual premium set to cover the average person's health care expenses, plus the administrative costs of running the insurance company. Who would sign up? The answer, unfortunately, is that the insurer's customers wouldn't be a representative sample of the population. Healthy people, with little reason to expect high medical bills, would probably shun policies priced to reflect the average person's health costs. On the other hand, unhealthy people would find the policies very attractive.
You can see where this is going. The insurance company would quickly find that because its clientele was tilted toward those with high medical costs, its actual costs per customer were much higher than those of the average member of the population. So it would have to raise premiums to cover those higher costs. However, this would disproportionately drive off its healthier customers, leaving it with an even less healthy customer base, requiring a further rise in premiums, and so on.
Insurance companies deal with these problems, to some extent, by carefully screening applicants to identify those with a high risk of needing expensive treatment, and either rejecting such applicants or charging them higher premiums. But such screening is itself expensive. Furthermore, it tends to screen out exactly those who most need insurance.
Most advanced countries have dealt with the defects of private health insurance in a straightforward way, by making health insurance a government service. Through Medicare, the United States has in effect done the same thing for its seniors. We also have Medicaid, a means-tested program that provides health insurance to many of the poor and near poor. But nonelderly, nonpoor Americans are on their own. In practice, only a tiny fraction of nonelderly Americans (5.3 percent in 2003) buy private insurance for themselves. The rest of those not covered by Medicare or Medicaid get insurance, if at all, through their employers.
Employer-based insurance is a peculiarly American institution. As Julius Richmond and Rashi Fein tell us in The Health Care Mess, the dominant role of such insurance is the result of historical accident rather than deliberate policy. World War II caused a labor shortage, but employers were subject to controls that prevented them from attracting workers by offering higher wages. Health benefits, however, weren't controlled, and so became a way for employers to compete for workers. Once employers began offering medical benefits, they also realized that it was a form of compensation workers valued highly because it protected them from risk. Moreover, the tax law favored employer-based insurance, because employers' contributions weren't considered part of workers' taxable income. Today, the value of the tax subsidy for employer-based insurance is estimated at around $150 billion a year.
Employer-based insurance has historically offered a partial solution to the problem of adverse selection. In principle, adverse selection can still occur even if health insurance comes with a job rather than as a stand-alone policy. This would occur if workers with health problems flocked to companies that offered health insurance, while healthy workers took jobs at companies that didn't offer insurance and offered higher wages instead. But until recently health insurance was a sufficiently small consideration in job choice that large corporations offering good health benefits, like General Motors, could safely assume that the health status of their employees was representative of the population at large and that adverse selection wasn't inflating the cost of health insurance.
In 2004, according to census estimates, 63.1 percent of Americans under sixty-five received health insurance through their employers or family members' employers. Given the inherent difficulties of providing health insurance through the private sector, that's an impressive number. But it left more than a third of nonelderly Americans out of the system. Moreover, the number of outsiders is growing: the share of nonelderly Americans with employment-based health insurance was 67.7 percent as recently as 2000. And this trend seems certain to continue, even accelerate, because the whole system of employer-based health care is under severe strain.
We can identify several reasons for that strain, but mainly it comes down to the issue of costs. Providing health insurance looked like a good way for employers to reward their employees when it was a small part of the pay package. Today, however, the annual cost of coverage for a family of four is estimated by the Kaiser Family Foundation at more than $10,000. One way to look at it is to say that that's roughly what a worker earning minimum wage and working full time earns in a year. It's more than half the annual earnings of the average Wal-Mart employee.
Health care costs at current levels override the incentives that have historically supported employer-based health insurance. Now that health costs loom so large, companies that provide generous benefits are in effect paying some of their workers much more than the going wage—or, more to the point, more than competitors pay similar workers. Inevitably, this creates pressure to reduce or eliminate health benefits. And companies that can't cut benefits enough to stay competitive—such as GM—find their very existence at risk.
Rising health costs have also ended the ability of employer-based insurance plans to avoid the problem of adverse selection. Anecdotal evidence suggests that workers who know they have health problems actively seek out jobs with companies that still offer generous benefits. On the other side, employers are starting to make hiring decisions based on likely health costs. For example, an internal Wal-Mart memo, reported by The New York Times in October, suggested adding tasks requiring physical exertion to jobs that don't really require it as a way to screen out individuals with potential health risks.
So rising health care costs are undermining the institution of employer-based coverage. We'd suggest that the drop in the number of insured so far only hints at the scale of the problem: we may well be seeing the whole institution unraveling.
Notice that this unraveling is the byproduct of what should be a good thing: advances in medical technology, which lead doctors to spend more on their patients. This leads to higher insurance costs, which causes employers to stop providing health coverage. The result is that many people are thrown into the world of the uninsured, where even basic care is often hard to get. As we said, we rob Peter of basic care in order to provide Paul with state-of-the-art treatment.
Fortunately, some of the adverse consequences of the decline in employer-based coverage have been muted by a crucial government program, Medicaid. But Medicaid is facing its own pressures.
3.
Medicaid and Medicare
The US health care system is more privatized than that of any other advanced country, but nearly half of total health care spending nonetheless comes from the government. Most of this government spending is accounted for by two great social insurance programs, Medicare and Medicaid. Although Medicare gets most of the public attention, let's focus first on Medicaid, which is a far more important program than most middle-class Americans realize.
In The Health Care Mess Richmond and Fein tell us that Medicaid, like employer-based health insurance, came into existence through a sort of historical accident. As Lyndon Johnson made his big push to create Medicare, the American Medical Association, in a last-ditch effort to block so-called "socialized medicine" (actually only the insurance is socialized; the medical care is provided by the private sector), began disparaging Johnson's plan by claiming that it would do nothing to help the truly needy. In a masterful piece of political jujitsu, Johnson responded by adding a second program, Medicaid, targeted specifically at helping the poor and near poor.
Today, Medicaid is a crucial part of the American safety net. In 2004 Medicaid covered almost as many people as its senior partner, Medicare—37.5 million versus 39.7 million.
Medicaid has grown rapidly in recent years because it has been picking up the slack from the unraveling system of employer-based insurance. Between 2000 and 2004 the number of Americans covered by Medicaid rose by a remarkable eight million. Over the same period the ranks of the uninsured rose by six million. So without the growth of Medicaid, the uninsured population would have exploded, and we'd be facing a severe crisis in medical care.
But Medicaid, even as it becomes increasingly essential to tens of millions of Americans, is also becoming increasingly vulnerable to political attack. To some extent this reflects the political weakness of any means-tested program serving the poor and near poor. As the British welfare scholar Richard Titmuss said, "Programs for the poor are poor programs." Unlike Medicare's clients—the feared senior group—Medicaid recipients aren't a potent political constituency: they are, on average, poor and poorly educated, with low voter participation. As a result, funding for Medicaid depends on politicians' sense of decency, always a fragile foundation for policy.
The complex structure of Medicaid also makes it vulnerable. Unlike Medicare, which is a purely federal program, Medicaid is a federal-state matching program, in which states provide on average about 40 percent of the funds. Since state governments, unlike the federal government, can't engage in open-ended deficit financing, this dependence on state funds exposes Medicaid to pressure whenever state budgets are hard-pressed. And state budgets are hard-pressed these days for a variety of reasons, not least the rapidly rising cost of Medicaid itself.
The result is that, like employer-based health insurance, Medicaid faces a possible unraveling in the face of rising health costs. An example of how that unraveling might take place is South Carolina's request for a waiver of federal rules to allow it to restructure the state's Medicaid program into a system of private accounts. We'll discuss later in this essay the strange persistence, in the teeth of all available evidence, of the belief that the private sector can provide health insurance more efficiently than the government. The main point for now is that South Carolina's proposed reform would seriously weaken the medical safety net: recipients would be given a voucher to purchase health insurance, but many would find the voucher inadequate, and would end up being denied care. And if South Carolina gets its waiver, other states will probably follow its lead.
Medicare's situation is very different. Unlike employer-based insurance or Medicaid, Medicare faces no imminent threat of large cuts. Although the federal government is deep in deficit, it's not currently having any difficulty borrowing, largely from abroad, to cover the gap. Also, the political constituency behind Medicare remains extremely powerful. Yet federal deficits can't go on forever; even the US government must eventually find a way to pay its bills. And the long-term outlook for federal finances is dire, mainly because of Medicare and Medicaid.
The chart in figure 1 illustrates the centrality of health care costs to America's long-term budget problems. The chart shows the Congressional Budget Office's baseline projection of spending over the next twenty-five years on the three big entitlement programs, Social Security, Medicare, and Medicaid, measured as a percentage of GDP. Not long ago advocates of Social Security privatization tried to use projections like this one to foster a sense of crisis about the retirement system. As was pointed out last year in these pages,[1] however, there is no program called Socialsecuritymedicareandmedicaid. In fact, as the chart shows, Social Security, whose costs will rise solely because of the aging of the population, represents only a small part of the problem. Most of the problem comes from the two health care programs, whose spending is rising mainly because of the general rise in medical costs.
To be fair, there is a demographic component to Medicare and Medicaid spending too—Medicare because it only serves Americans over sixty-five, Medicaid because the elderly, although a minority of the program's beneficiaries, account for most of its spending. Still, the principal factor in both programs' rising costs is what the CBO calls "excess cost growth"—the persistent tendency of health care spending per beneficiary to grow faster than per capita income, owing to advancing medical technology. Without this excess cost growth, the CBO estimates that entitlement spending would rise by only 3.7 percent of GDP over the next twenty-five years. That's a significant rise, but not overwhelming, and could be addressed with moderate tax increases and possibly benefit cuts. But because of excess cost growth the projected rise in spending is a crushing burden—about 10 percent of GDP over the next twenty-five years, and even more thereafter.
Rising health care spending, then, is driving a triple crisis. The fastest-moving piece of that crisis is the unraveling of employer-based coverage. There's a gradually building crisis in Medicaid. And there's a long-term federal budget crisis driven mainly by rising health care spending.
So what are we going to do about health care?
4.
The "consumer-directed" diversion
As we pointed out at the beginning of this essay, one of the two big reasons to be concerned about rising spending on health care is that as the health care sector grows, its inefficiency becomes increasingly important. And almost everyone agrees that the US health care system is extremely inefficient. But there are wide disagreements about the nature of that inefficiency. And the analysts who have the ear of the Bush administration are committed, for ideological reasons, to a view that is clearly wrong.
We've already alluded to the underlying view behind the Bush administration's health care proposals: it's the view that insurance leads people to consume too much health care. The 2004 Economic Report of the President, which devoted a chapter to health care, illustrated the alleged problem with a parable about the clothing industry:
Suppose, for example, that an individual could purchase a clothing insurance policy with a "coinsurance" rate of 20 percent, meaning that after paying the insurance premium, the holder of the insurance policy would have to pay only 20 cents on the dollar for all clothing purchases. An individual with such a policy would be expected to spend substantially more on clothes—due to larger quantity and higher quality purchases—with the 80 percent discount than he would at the full price.... The clothing insurance example suggests an inherent inefficiency in the use of insurance to pay for things that have little intrinsic risk or uncertainty.
The report then asserts that "inefficiencies of this sort are pervasive in the US health care system"—although, tellingly, it fails to match the parable about clothing with any real examples from health care.
The view that Americans consume too much health care because insurers pay the bills leads to what is currently being called the "consumer-directed" approach to health care reform. The virtues of such an approach are the theme of John Cogan, Glenn Hubbard, and Daniel Kessler's Healthy, Wealthy, and Wise. The main idea is that people should pay more of their medical expenses out of pocket. And the way to reduce public reliance on insurance, reformers from the right wing believe, is to remove the tax advantages that currently favor health insurance over out-of-pocket spending. Indeed, last year Bush's tax reform commission proposed taxing some employment-based health benefits. The administration, recognizing how politically explosive such a move would be, rejected the proposal. Instead of raising taxes on health insurance, the administration has decided to cut taxes on out-of-pocket spending.
Cogan, Hubbard, and Kessler call for making all out-of-pocket medical spending tax-deductible, although tax experts from both parties say that this would present an enforcement nightmare. (Douglas Holtz-Eakin, the former head of the Congressional Budget Office, put it this way: "If you want to have a personal relationship with the IRS do that [i.e., make all medical spending tax deductible] because we are going to have to investigate everybody's home to see if their running shoes are a medical expense.") The administration's proposals so far are more limited, focusing on an expanded system of tax-advantaged health savings accounts. Individuals can shelter part of their income from taxes by depositing it in such accounts, then withdraw money from these accounts to pay medical bills.
What's wrong with consumer-directed health care? One immediate disadvantage is that health savings accounts, whatever their ostensible goals, are yet another tax break for the wealthy, who have already been showered with tax breaks under Bush. The right to pay medical expenses with pre-tax income is worth a lot to high-income individuals who face a marginal income tax rate of 35 percent, but little or nothing to lower-income Americans who face a marginal tax rate of 10 percent or less, and lack the ability to place the maximum allowed amount in their savings accounts.
A deeper disadvantage is that such accounts tend to undermine employment-based health care, because they encourage adverse selection: health savings accounts are attractive to healthier individuals, who will be tempted to opt out of company plans, leaving less healthy individuals behind.
Yet another problem with consumer-directed care is that the evidence says that people don't, in fact, make wise decisions when paying for medical care out of pocket. A classic study by the Rand Corporation found that when people pay medical expenses themselves rather than relying on insurance, they do cut back on their consumption of health care—but that they cut back on valuable as well as questionable medical procedures, showing no ability to set sensible priorities.
But perhaps the biggest objection to consumer-directed health reform is that its advocates have misdiagnosed the problem. They believe that Americans have too much health insurance; the 2004 Economic Report of the President condemned the fact that insurance currently pays for "many events that have little uncertainty, such as routine dental care, annual medical exams, and vaccinations," and for "relatively low-expense items, such as an office visit to the doctor for a sore throat." The implication is that health costs are too high because people who don't pay their own medical bills consume too much routine dental care and are too ready to visit the doctor about a sore throat. And that argument is all wrong. Excessive consumption of routine care, or small-expense items, can't be a major source of health care inefficiency, because such items don't account for a major share of medical costs.
Remember the 80–20 rule: the great bulk of medical expenses are accounted for by a small number of people requiring very expensive treatment. When you think of the problem of health care costs, you shouldn't envision visits to the family physician to talk about a sore throat; you should think about coronary bypass operations, dialysis, and chemotherapy. Nobody is proposing a consumer-directed health care plan that would force individuals to pay a large share of extreme medical expenses, such as the costs of chemotherapy, out of pocket. And that means that consumer-directed health care can't promote savings on the treatments that account for most of what we spend on health care.
The administration's plans for consumer-directed health care, then, are a diversion from meaningful health care reform, and will actually worsen our health care problems. In fact, some reformers privately hope that George W. Bush manages to get his health care plans passed, because they believe that they will hasten the collapse of employment-based coverage and pave the way for real reform. (The suffering along the way would be huge.)
But what would real reform look like?
5.
Single-payer and beyond
How do we know that the US health care system is highly inefficient? An important part of the evidence takes the form of international comparisons. Table 1 compares US health care with the systems of three other advanced countries. It's clear from the table that the United States has achieved something remarkable. We spend far more on health care than other advanced countries—almost twice as much per capita as France, almost two and a half times as much as Britain. Yet we do considerably worse even than the British on basic measures of health performance, such as life expectancy and infant mortality.
One might argue that the US health care system actually provides better care than foreign systems, but that the effects of this superior care are more than offset by unhealthy US lifestyles. Ezra Klein of The American Prospect calls this the "well-we-eat-more-cheeseburgers" argument. But a variety of evidence refutes this argument. The data in Table 1 show that the United States does not stand out in the quantity of care, as measured by such indicators as the number of physicians, nurses, and hospital beds per capita. Nor does the US stand out in terms of the quality of care: a recent study published in Health Affairs that compared quality of care across advanced countries found no US advantage. On the contrary, "the United States often stands out for inefficient care and errors and is an outlier on access/cost barriers."[2] That is, our health care system makes more mistakes than those of other countries, and is unique in denying necessary care to people who lack insurance and can't pay cash. The frequent claim that the United States pays high medical prices to avoid long waiting lists for care also fails to hold up in the face of the evidence: there are long waiting lists for elective surgery in some non-US systems, but not all, and the procedures for which these waiting lists exist account for only 3 percent of US health care spending.[3]
So why does US health care cost so much? Part of the answer is that doctors, like other highly skilled workers, are paid much more in the United States than in other advanced countries. But the main source of high US costs is probably the unique degree to which the US system relies on private rather than public health insurance, reflected in the uniquely high US share of private spending in total health care expenditure.
Over the years since the failure of the Clinton health plan, a great deal of evidence has accumulated on the relative merits of private and public health insurance. As far as we have been able to ascertain, all of that evidence indicates that public insurance of the kind available in several European countries and others such as Taiwan achieves equal or better results at much lower cost. This conclusion applies to comparisons within the United States as well as across countries. For example, a study conducted by researchers at the Urban Institute found that
per capita spending for an adult Medicaid beneficiary in poor health would rise from $9,615 to $14,785 if the person were insured privately and received services consistent with private utilization levels and private provider payment rates.[4]
The cost advantage of public health insurance appears to arise from two main sources. The first is lower administrative costs. Private insurers spend large sums fighting adverse selection, trying to identify and screen out high-cost customers. Systems such as Medicare, which covers every American sixty-five or older, or the Canadian single-payer system, which covers everyone, avoid these costs. In 2003 Medicare spent less than 2 percent of its resources on administration, while private insurance companies spent more than 13 percent.
At the same time, the fragmentation of a system that relies largely on private insurance leads both to administrative complexity because of differences in coverage among individuals and to what is, in effect, a zero-sum struggle between different players in the system, each trying to stick others with the bill. Many estimates suggest that the paperwork imposed on health care providers by the fragmentation of the US system costs several times as much as the direct costs borne by the insurers.
The second source of savings in a system of public health insurance is the ability to bargain with suppliers, especially drug companies, for lower prices. Residents of the United States notoriously pay much higher prices for prescription drugs than residents of other advanced countries, including Canada. What is less known is that both Medicaid and, to an even greater extent, the Veterans' Administration, get discounts similar to or greater than those received by the Canadian health system.
We're talking about large cost savings. Indeed, the available evidence suggests that if the United States were to replace its current complex mix of health insurance systems with standardized, universal coverage, the savings would be so large that we could cover all those currently uninsured, yet end up spending less overall. That's what happened in Taiwan, which adopted a single-payer system in 1995: the percentage of the population with health insurance soared from 57 percent to 97 percent, yet health care costs actually grew more slowly than one would have predicted from trends before the change in system.
If US politicians could be persuaded of the advantages of a public health insurance system, the next step would be to convince them of the virtues, in at least some cases, of honest-to-God socialized medicine, in which government employees provide the care as well as the money. Exhibit A for the advantages of government provision is the Veterans' Administration, which runs its own hospitals and clinics, and provides some of the best-quality health care in America at far lower cost than the private sector. How does the VA do it? It turns out that there are many advantages to having a single health care organization provide individuals with what amounts to lifetime care. For example, the VA has taken the lead in introducing electronic medical records, which it can do far more easily than a private hospital chain because its patients stay with it for decades. The VA also invests heavily and systematically in preventive care, because unlike private health care providers it can expect to realize financial benefits from measures that keep its clients out of the hospital.
In summary, then, the obvious way to make the US health care system more efficient is to make it more like the systems of other advanced countries, and more like the most efficient parts of our own system. That means a shift from private insurance to public insurance, and greater government involvement in the provision of health care—if not publicly run hospitals and clinics, at least a much larger government role in creating integrated record-keeping and quality control. Such a system would probably allow individuals to purchase additional medical care, as they can in Britain (although not in Canada). But the core of the system would be government insurance—"Medicare for all," as Ted Kennedy puts it.
Unfortunately, the US political system seems unready to do what is both obvious and humane. The 2003 legislation that added drug coverage to Medicare illustrates some of the political difficulties. Although it's rarely described this way, Medicare is a single-payer system covering many of the health costs of older Americans. (Canada's universal single-payer system is, in fact, also called Medicare.) And it has some though not all the advantages of broader single-payer systems, notably low administrative costs.
But in adding a drug benefit to Medicare, the Bush administration and its allies in Congress were driven both by a desire to appease the insurance and pharmaceutical lobbies and by an ideology that insists on the superiority of the private sector even when the public sector has demonstrably lower costs. So they devised a plan that works very differently from traditional Medicare. In fact, Medicare Part D, the drug benefit, isn't a program in which the government provides drug insurance. It's a program in which private insurance companies receive subsidies to offer insurance—and seniors aren't allowed to deal directly with Medicare.
The insertion of private intermediaries into the program has several unfortunate consequences. First, as millions of seniors have discovered, it makes the system extremely complex and obscure. It's virtually impossible for most people to figure out which of the many drug plans now on offer is best. This complexity, coupled with the Katrina-like obliviousness of administration officials to a widely predicted disaster, also led to the program's catastrophic initial failure to manage the problem of "dual eligibles," i.e., older Medicaid recipients whose drug coverage was supposed to be transferred to Medicare. When the program started up in January, hundreds of thousands of these dual eligibles found that they had fallen through the cracks, that their old coverage had been canceled but their new coverage had not been put into effect.
Second, the private intermediaries add substantial administrative costs to the program. It's reasonably certain that if seniors had been offered the choice of receiving a straightforward drug benefit directly from Medicare, the vast majority would have chosen to pass up the private drug plans, which wouldn't have been able to offer comparable benefits because of their administrative expenses. But the drug bill avoided that embarrassing outcome by denying seniors that choice.
Finally, by fragmenting the purchase of drugs among many private plans, the administration denied Medicare the ability to bargain for lower prices from the drug companies. And the legislation, reflecting pressures from those companies, included a provision specifically prohibiting Medicare from intervening to help the private plans get lower prices.
In short, ideology and interest groups led the Bush administration to set up a new, costly Medicare benefit in such a way as to systematically forfeit all the advantages of public health insurance.
6.
Beyond reform: How much health care should we have?
Imagine, for a moment, that some future US administration were to push through a fundamental reform of health care that covered all the uninsured, replaced private insurance with a single-payer system, and took heed of the VA's lessons about the advantages of integrated health care. Would our health care problems be solved?
No. Although real reform would bring great improvement in our situation, continuing technological progress in health care still poses a deep dilemma: How much of what we can do should we do?
The medical profession, understandably, has a bias toward doing whatever will bring medical benefit. If that means performing an expensive surgical procedure on an elderly patient who probably has only a few years to live, so be it. But as medical technology advances, it becomes possible to spend ever larger sums on medically useful care. Indeed, at some point it will become possible to spend the entire GDP on health care. Obviously, we won't do this. But how will we make choices about what not to do?
In a classic 1984 book, Painful Prescription: Rationing Hospital Care, Henry Aaron and William Schwartz studied the medical choices made by the British system, which has long operated under tight budget limits that force it to make hard choices in a way that US medical care does not. Can We Say No? is an update of that work. It's a valuable survey of the real medical issues involved in British rationing, and gives a taste of the dilemmas the US system will eventually face.
The operative word, however, is "eventually." Reading Can We Say No?, one might come away with the impression that the problem of how to ration care is the central issue in current health care policy. This impression is reinforced by Aaron and his co-authors' decision to compare the US system only with that of Britain, which spends far less on health care than other advanced countries, and correspondingly is forced to do a lot of rationing. A comparison with, say, France, which spends far less than the United States but considerably more than Britain, would give a very different impression: in many respects France consumes more, not less, health care than the United States, but it can do so at lower cost because our system is so inefficient.
The result of Aaron et al.'s single-minded focus on the problem of rationing is a somewhat skewed perspective on current policy issues. Most notably, they argue that the reason we need universal health coverage is that a universal system can ration care in a way that private insurance can't. This seems to miss the two main immediate arguments for universal care —that it would cover those now uninsured, and that it would be cheaper than our current system. A national health care system will also be better at rationing when the time comes, but that hardly seems like the prime argument for adopting such a system today.
Our Princeton colleague Uwe Reinhardt, a leading economic expert on health care, put it this way: our focus right now should be on eliminating the gross inefficiencies we know exist in the US health care system. If we do that, we will be able to cover the uninsured while spending less than we do now. Only then should we address the issue of what not to do; that's tomorrow's issue, not today's.
7.
Can we fix health care?
Health policy experts know a lot more about the economics of health care now than they did when Bill Clinton tried to remake the US health care system. And there's overwhelming evidence that the United States could get better health care at lower cost if we were willing to put that knowledge into practice. But the political obstacles remain daunting.
A mere shift of power from Republicans to Democrats would not, in itself, be enough to give us sensible health care reform. While Democrats would have written a less perverse drug bill, it's not clear that they are ready to embrace a single-payer system. Even liberal economists and scholars at progressive think tanks tend to shy away from proposing a straightforward system of national health insurance. Instead, they propose fairly complex compromise plans. Typically, such plans try to achieve universal coverage by requiring everyone to buy health insurance, the way everyone is forced to buy car insurance, and deal with those who can't afford to purchase insurance through a system of subsidies. Proponents of such plans make a few arguments for their superiority to a single-payer system, mainly the (dubious) claim that single-payer would reduce medical innovation. But the main reason for not proposing single-payer is political fear: reformers believe that private insurers are too powerful to cut out of the loop, and that a single-payer plan would be too easily demonized by business and political propagandists as "big government."
These are the same political calculations that led Bill Clinton to reject a single-payer system in 1993, even though his advisers believed that a single-payer system would be the least expensive way to provide universal coverage. Instead, he proposed a complex plan designed to preserve a role for private health insurers. But the plan backfired. The insurers opposed it anyway, most famously with their "Harry and Louise" ads. And the plan's complexity left the public baffled.
We believe that the compromise plans being proposed by the cautious reformers would run into the same political problems, and that it would be politically smarter as well as economically superior to go for broke: to propose a straightforward single-payer system, and try to sell voters on the huge advantages such a sys-tem would bring. But this would mean taking on the drug and insur-ance companies rather than trying to co-opt them, and even progressive policy wonks, let alone Democratic politicians, still seem too timid to do that.
So what will really happen to American health care? Many people in this field believe that in the end America will end up with national health insurance, and perhaps with a lot of direct government provision of health care, simply because nothing else works. But things may have to get much worse before reality can break through the combination of powerful interest groups and free-market ideology.
—February 22, 2006
Notes
[1] "America's Senior Moment," The New York Review, March 10, 2005.
[2] Cathy Schoen, Robin Osborn, Phuong Trang Huynh, Michelle Doty, Kinga Zapert, Jordon Peugh, and Karen Davis, "Taking the Pulse of Health Care Systems: Experiences of Patients with Health Problems in Six Countries," Health Affairs Web exclusive, November 3, 2005.
[3] Gerard F. Anderson, Peter S. Hussey, Bianca K. Frogner, and Hugh R. Waters, "Health Spending in the United States and the Rest of the Industrialized World," Health Affairs, Vol. 24, No. 4 (July/August 2005), pp. 903–914.
[4] "Medicaid: A Lower-Cost Approach to Serving a High-Cost Population," policy brief by the Kaiser Commission on Medicaid and the Uninsured, March 2004.
The Health Care Crisis and What to Do About It
By Paul Krugman, Robin Wells
Thirteen years ago Bill Clinton became president partly because he promised to do something about rising health care costs. Although Clinton's chances of reforming the US health care system looked quite good at first, the effort soon ran aground. Since then a combination of factors—the unwillingness of other politicians to confront the insurance and other lobbies that so successfully frustrated the Clinton effort, a temporary remission in the growth of health care spending as HMOs briefly managed to limit cost increases, and the general distraction of a nation focused first on the gloriousness of getting rich, then on terrorism—have kept health care off the top of the agenda.
But medical costs are once again rising rapidly, forcing health care back into political prominence. Indeed, the problem of medical costs is so pervasive that it underlies three quite different policy crises. First is the increasingly rapid unraveling of employer- based health insurance. Second is the plight of Medicaid, an increasingly crucial program that is under both fiscal and political attack. Third is the long-term problem of the federal government's solvency, which is, as we'll explain, largely a problem of health care costs.
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The good news is that we know more about the economics of health care than we did when Clinton tried and failed to remake the system. There's now a large body of evidence on what works and what doesn't work in health care, and it's not hard to see how to make dramatic improvements in US practice. As we'll see, the evidence clearly shows that the key problem with the US health care system is its fragmentation. A history of failed attempts to introduce universal health insurance has left us with a system in which the government pays directly or indirectly for more than half of the nation's health care, but the actual delivery both of insurance and of care is undertaken by a crazy quilt of private insurers, for-profit hospitals, and other players who add cost without adding value. A Canadian-style single-payer system, in which the government directly provides insurance, would almost surely be both cheaper and more effective than what we now have. And we could do even better if we learned from "integrated" systems, like the Veterans Administration, that directly provide some health care as well as medical insurance.
The bad news is that Washington currently seems incapable of accepting what the evidence on health care says. In particular, the Bush administration is under the influence of both industry lobbyists, especially those representing the drug companies, and a free-market ideology that is wholly inappropriate to health care issues. As a result, it seems determined to pursue policies that will increase the fragmentation of our system and swell the ranks of the uninsured.
Before we talk about reform, however, let's talk about the current state of the US health care system. Let us begin by asking a seemingly naive question: What's wrong with spending ever more on health care?
1.
Is health care spending a problem?
In 1960 the United States spent only 5.2 percent of GDP on health care. By 2004 that number had risen to 16 percent. At this point America spends more on health care than it does on food. But what's wrong with that?
The starting point for any discussion of rising health care costs has to be the realization that these rising costs are, in an important sense, a sign of progress. Here's how the Congressional Budget Office puts it, in the latest edition of its annual publication The Long-Term Budget Outlook:
Growth in health care spending has outstripped economic growth regardless of the source of its funding.... The major factor associated with that growth has been the development and increasing use of new medical technology.... In the health care field, unlike in many sectors of the economy, technological advances have generally raised costs rather than lowered them.
Notice the three points in that quote. First, health care spending is rising rapidly "regardless of the source of its funding." Translation: although much health care is paid for by the government, this isn't a simple case of runaway government spending, because private spending is rising at a comparably fast clip. "Comparing common benefits," says the Kaiser Family Foundation,
changes in Medicare spending in the last three decades has largely tracked the growth rate in private health insurance premiums. Typically, Medicare increases have been lower than those of private health insurance.
Second, "new medical technology" is the major factor in rising spending: we spend more on medicine because there's more that medicine can do. Third, in medical care, "technological advances have generally raised costs rather than lowered them": although new technology surely produces cost savings in medicine, as elsewhere, the additional spending that takes place as a result of the expansion of medical possibilities outweighs those savings.
So far, this sounds like a happy story. We've found new ways to help people, and are spending more to take advantage of the opportunity. Why not view rising medical spending, like rising spending on, say, home entertainment systems, simply as a rational response to expanded choice? We would suggest two answers.
The first is that the US health care system is extremely inefficient, and this inefficiency becomes more costly as the health care sector becomes a larger fraction of the economy. Suppose, for example, that we believe that 30 percent of US health care spending is wasted, and always has been. In 1960, when health care was only 5.2 percent of GDP, that meant waste equal to only 1.5 percent of GDP. Now that the share of health care in the economy has more than tripled, so has the waste.
This inefficiency is a bad thing in itself. What makes it literally fatal to thousands of Americans each year is that the inefficiency of our health care system exacerbates a second problem: our health care system often makes irrational choices, and rising costs exacerbate those irrationalities. Specifically, American health care tends to divide the population into insiders and outsiders. Insiders, who have good insurance, receive everything modern medicine can provide, no matter how expensive. Outsiders, who have poor insurance or none at all, receive very little. To take just one example, one study found that among Americans diagnosed with colorectal cancer, those without insurance were 70 percent more likely than those with insurance to die over the next three years.
In response to new medical technology, the system spends even more on insiders. But it compensates for higher spending on insiders, in part, by consigning more people to outsider status—robbing Peter of basic care in order to pay for Paul's state-of-the-art treatment. Thus we have the cruel paradox that medical progress is bad for many Americans' health.
This description of our health care problems may sound abstract. But we can make it concrete by looking at the crisis now afflicting employer-based health insurance.
2.
The unraveling of employer-based insurance
In 2003 only 16 percent of health care spending consisted of out-of-pocket expenditures by consumers. The rest was paid for by insurance, public or private. As we'll see, this heavy reliance on insurance disturbs some economists, who believe that doctors and patients fail to make rational decisions about spending because third parties bear the costs of medical treatment. But it's no use wishing that health care were sold like ordinary consumer goods, with individuals paying out of pocket for what they need. By its very nature, most health spending must be covered by insurance.
The reason is simple: in any given year, most people have small medical bills, while a few people have very large bills. In 2003, health spending roughly followed the "80–20 rule": 20 percent of the population accounted for 80 percent of expenses. Half the population had virtually no medical expenses; a mere 1 percent of the population accounted for 22 percent of expenses.
Here's how Henry Aaron and his coauthors summarize the implication of these numbers in their book Can We Say No?: "Most health costs are incurred by a small proportion of the population whose expenses greatly exceed plausible limits on out-of-pocket spending." In other words, if people had to pay for medical care the way they pay for groceries, they would have to forego most of what modern medicine has to offer, because they would quickly run out of funds in the face of medical emergencies.
So the only way modern medical care can be made available to anyone other than the very rich is through health insurance. Yet it's very difficult for the private sector to provide such insurance, because health insurance suffers from a particularly acute case of a well-known economic problem known as adverse selection. Here's how it works: imagine an insurer who offered policies to anyone, with the annual premium set to cover the average person's health care expenses, plus the administrative costs of running the insurance company. Who would sign up? The answer, unfortunately, is that the insurer's customers wouldn't be a representative sample of the population. Healthy people, with little reason to expect high medical bills, would probably shun policies priced to reflect the average person's health costs. On the other hand, unhealthy people would find the policies very attractive.
You can see where this is going. The insurance company would quickly find that because its clientele was tilted toward those with high medical costs, its actual costs per customer were much higher than those of the average member of the population. So it would have to raise premiums to cover those higher costs. However, this would disproportionately drive off its healthier customers, leaving it with an even less healthy customer base, requiring a further rise in premiums, and so on.
Insurance companies deal with these problems, to some extent, by carefully screening applicants to identify those with a high risk of needing expensive treatment, and either rejecting such applicants or charging them higher premiums. But such screening is itself expensive. Furthermore, it tends to screen out exactly those who most need insurance.
Most advanced countries have dealt with the defects of private health insurance in a straightforward way, by making health insurance a government service. Through Medicare, the United States has in effect done the same thing for its seniors. We also have Medicaid, a means-tested program that provides health insurance to many of the poor and near poor. But nonelderly, nonpoor Americans are on their own. In practice, only a tiny fraction of nonelderly Americans (5.3 percent in 2003) buy private insurance for themselves. The rest of those not covered by Medicare or Medicaid get insurance, if at all, through their employers.
Employer-based insurance is a peculiarly American institution. As Julius Richmond and Rashi Fein tell us in The Health Care Mess, the dominant role of such insurance is the result of historical accident rather than deliberate policy. World War II caused a labor shortage, but employers were subject to controls that prevented them from attracting workers by offering higher wages. Health benefits, however, weren't controlled, and so became a way for employers to compete for workers. Once employers began offering medical benefits, they also realized that it was a form of compensation workers valued highly because it protected them from risk. Moreover, the tax law favored employer-based insurance, because employers' contributions weren't considered part of workers' taxable income. Today, the value of the tax subsidy for employer-based insurance is estimated at around $150 billion a year.
Employer-based insurance has historically offered a partial solution to the problem of adverse selection. In principle, adverse selection can still occur even if health insurance comes with a job rather than as a stand-alone policy. This would occur if workers with health problems flocked to companies that offered health insurance, while healthy workers took jobs at companies that didn't offer insurance and offered higher wages instead. But until recently health insurance was a sufficiently small consideration in job choice that large corporations offering good health benefits, like General Motors, could safely assume that the health status of their employees was representative of the population at large and that adverse selection wasn't inflating the cost of health insurance.
In 2004, according to census estimates, 63.1 percent of Americans under sixty-five received health insurance through their employers or family members' employers. Given the inherent difficulties of providing health insurance through the private sector, that's an impressive number. But it left more than a third of nonelderly Americans out of the system. Moreover, the number of outsiders is growing: the share of nonelderly Americans with employment-based health insurance was 67.7 percent as recently as 2000. And this trend seems certain to continue, even accelerate, because the whole system of employer-based health care is under severe strain.
We can identify several reasons for that strain, but mainly it comes down to the issue of costs. Providing health insurance looked like a good way for employers to reward their employees when it was a small part of the pay package. Today, however, the annual cost of coverage for a family of four is estimated by the Kaiser Family Foundation at more than $10,000. One way to look at it is to say that that's roughly what a worker earning minimum wage and working full time earns in a year. It's more than half the annual earnings of the average Wal-Mart employee.
Health care costs at current levels override the incentives that have historically supported employer-based health insurance. Now that health costs loom so large, companies that provide generous benefits are in effect paying some of their workers much more than the going wage—or, more to the point, more than competitors pay similar workers. Inevitably, this creates pressure to reduce or eliminate health benefits. And companies that can't cut benefits enough to stay competitive—such as GM—find their very existence at risk.
Rising health costs have also ended the ability of employer-based insurance plans to avoid the problem of adverse selection. Anecdotal evidence suggests that workers who know they have health problems actively seek out jobs with companies that still offer generous benefits. On the other side, employers are starting to make hiring decisions based on likely health costs. For example, an internal Wal-Mart memo, reported by The New York Times in October, suggested adding tasks requiring physical exertion to jobs that don't really require it as a way to screen out individuals with potential health risks.
So rising health care costs are undermining the institution of employer-based coverage. We'd suggest that the drop in the number of insured so far only hints at the scale of the problem: we may well be seeing the whole institution unraveling.
Notice that this unraveling is the byproduct of what should be a good thing: advances in medical technology, which lead doctors to spend more on their patients. This leads to higher insurance costs, which causes employers to stop providing health coverage. The result is that many people are thrown into the world of the uninsured, where even basic care is often hard to get. As we said, we rob Peter of basic care in order to provide Paul with state-of-the-art treatment.
Fortunately, some of the adverse consequences of the decline in employer-based coverage have been muted by a crucial government program, Medicaid. But Medicaid is facing its own pressures.
3.
Medicaid and Medicare
The US health care system is more privatized than that of any other advanced country, but nearly half of total health care spending nonetheless comes from the government. Most of this government spending is accounted for by two great social insurance programs, Medicare and Medicaid. Although Medicare gets most of the public attention, let's focus first on Medicaid, which is a far more important program than most middle-class Americans realize.
In The Health Care Mess Richmond and Fein tell us that Medicaid, like employer-based health insurance, came into existence through a sort of historical accident. As Lyndon Johnson made his big push to create Medicare, the American Medical Association, in a last-ditch effort to block so-called "socialized medicine" (actually only the insurance is socialized; the medical care is provided by the private sector), began disparaging Johnson's plan by claiming that it would do nothing to help the truly needy. In a masterful piece of political jujitsu, Johnson responded by adding a second program, Medicaid, targeted specifically at helping the poor and near poor.
Today, Medicaid is a crucial part of the American safety net. In 2004 Medicaid covered almost as many people as its senior partner, Medicare—37.5 million versus 39.7 million.
Medicaid has grown rapidly in recent years because it has been picking up the slack from the unraveling system of employer-based insurance. Between 2000 and 2004 the number of Americans covered by Medicaid rose by a remarkable eight million. Over the same period the ranks of the uninsured rose by six million. So without the growth of Medicaid, the uninsured population would have exploded, and we'd be facing a severe crisis in medical care.
But Medicaid, even as it becomes increasingly essential to tens of millions of Americans, is also becoming increasingly vulnerable to political attack. To some extent this reflects the political weakness of any means-tested program serving the poor and near poor. As the British welfare scholar Richard Titmuss said, "Programs for the poor are poor programs." Unlike Medicare's clients—the feared senior group—Medicaid recipients aren't a potent political constituency: they are, on average, poor and poorly educated, with low voter participation. As a result, funding for Medicaid depends on politicians' sense of decency, always a fragile foundation for policy.
The complex structure of Medicaid also makes it vulnerable. Unlike Medicare, which is a purely federal program, Medicaid is a federal-state matching program, in which states provide on average about 40 percent of the funds. Since state governments, unlike the federal government, can't engage in open-ended deficit financing, this dependence on state funds exposes Medicaid to pressure whenever state budgets are hard-pressed. And state budgets are hard-pressed these days for a variety of reasons, not least the rapidly rising cost of Medicaid itself.
The result is that, like employer-based health insurance, Medicaid faces a possible unraveling in the face of rising health costs. An example of how that unraveling might take place is South Carolina's request for a waiver of federal rules to allow it to restructure the state's Medicaid program into a system of private accounts. We'll discuss later in this essay the strange persistence, in the teeth of all available evidence, of the belief that the private sector can provide health insurance more efficiently than the government. The main point for now is that South Carolina's proposed reform would seriously weaken the medical safety net: recipients would be given a voucher to purchase health insurance, but many would find the voucher inadequate, and would end up being denied care. And if South Carolina gets its waiver, other states will probably follow its lead.
Medicare's situation is very different. Unlike employer-based insurance or Medicaid, Medicare faces no imminent threat of large cuts. Although the federal government is deep in deficit, it's not currently having any difficulty borrowing, largely from abroad, to cover the gap. Also, the political constituency behind Medicare remains extremely powerful. Yet federal deficits can't go on forever; even the US government must eventually find a way to pay its bills. And the long-term outlook for federal finances is dire, mainly because of Medicare and Medicaid.
The chart in figure 1 illustrates the centrality of health care costs to America's long-term budget problems. The chart shows the Congressional Budget Office's baseline projection of spending over the next twenty-five years on the three big entitlement programs, Social Security, Medicare, and Medicaid, measured as a percentage of GDP. Not long ago advocates of Social Security privatization tried to use projections like this one to foster a sense of crisis about the retirement system. As was pointed out last year in these pages,[1] however, there is no program called Socialsecuritymedicareandmedicaid. In fact, as the chart shows, Social Security, whose costs will rise solely because of the aging of the population, represents only a small part of the problem. Most of the problem comes from the two health care programs, whose spending is rising mainly because of the general rise in medical costs.
To be fair, there is a demographic component to Medicare and Medicaid spending too—Medicare because it only serves Americans over sixty-five, Medicaid because the elderly, although a minority of the program's beneficiaries, account for most of its spending. Still, the principal factor in both programs' rising costs is what the CBO calls "excess cost growth"—the persistent tendency of health care spending per beneficiary to grow faster than per capita income, owing to advancing medical technology. Without this excess cost growth, the CBO estimates that entitlement spending would rise by only 3.7 percent of GDP over the next twenty-five years. That's a significant rise, but not overwhelming, and could be addressed with moderate tax increases and possibly benefit cuts. But because of excess cost growth the projected rise in spending is a crushing burden—about 10 percent of GDP over the next twenty-five years, and even more thereafter.
Rising health care spending, then, is driving a triple crisis. The fastest-moving piece of that crisis is the unraveling of employer-based coverage. There's a gradually building crisis in Medicaid. And there's a long-term federal budget crisis driven mainly by rising health care spending.
So what are we going to do about health care?
4.
The "consumer-directed" diversion
As we pointed out at the beginning of this essay, one of the two big reasons to be concerned about rising spending on health care is that as the health care sector grows, its inefficiency becomes increasingly important. And almost everyone agrees that the US health care system is extremely inefficient. But there are wide disagreements about the nature of that inefficiency. And the analysts who have the ear of the Bush administration are committed, for ideological reasons, to a view that is clearly wrong.
We've already alluded to the underlying view behind the Bush administration's health care proposals: it's the view that insurance leads people to consume too much health care. The 2004 Economic Report of the President, which devoted a chapter to health care, illustrated the alleged problem with a parable about the clothing industry:
Suppose, for example, that an individual could purchase a clothing insurance policy with a "coinsurance" rate of 20 percent, meaning that after paying the insurance premium, the holder of the insurance policy would have to pay only 20 cents on the dollar for all clothing purchases. An individual with such a policy would be expected to spend substantially more on clothes—due to larger quantity and higher quality purchases—with the 80 percent discount than he would at the full price.... The clothing insurance example suggests an inherent inefficiency in the use of insurance to pay for things that have little intrinsic risk or uncertainty.
The report then asserts that "inefficiencies of this sort are pervasive in the US health care system"—although, tellingly, it fails to match the parable about clothing with any real examples from health care.
The view that Americans consume too much health care because insurers pay the bills leads to what is currently being called the "consumer-directed" approach to health care reform. The virtues of such an approach are the theme of John Cogan, Glenn Hubbard, and Daniel Kessler's Healthy, Wealthy, and Wise. The main idea is that people should pay more of their medical expenses out of pocket. And the way to reduce public reliance on insurance, reformers from the right wing believe, is to remove the tax advantages that currently favor health insurance over out-of-pocket spending. Indeed, last year Bush's tax reform commission proposed taxing some employment-based health benefits. The administration, recognizing how politically explosive such a move would be, rejected the proposal. Instead of raising taxes on health insurance, the administration has decided to cut taxes on out-of-pocket spending.
Cogan, Hubbard, and Kessler call for making all out-of-pocket medical spending tax-deductible, although tax experts from both parties say that this would present an enforcement nightmare. (Douglas Holtz-Eakin, the former head of the Congressional Budget Office, put it this way: "If you want to have a personal relationship with the IRS do that [i.e., make all medical spending tax deductible] because we are going to have to investigate everybody's home to see if their running shoes are a medical expense.") The administration's proposals so far are more limited, focusing on an expanded system of tax-advantaged health savings accounts. Individuals can shelter part of their income from taxes by depositing it in such accounts, then withdraw money from these accounts to pay medical bills.
What's wrong with consumer-directed health care? One immediate disadvantage is that health savings accounts, whatever their ostensible goals, are yet another tax break for the wealthy, who have already been showered with tax breaks under Bush. The right to pay medical expenses with pre-tax income is worth a lot to high-income individuals who face a marginal income tax rate of 35 percent, but little or nothing to lower-income Americans who face a marginal tax rate of 10 percent or less, and lack the ability to place the maximum allowed amount in their savings accounts.
A deeper disadvantage is that such accounts tend to undermine employment-based health care, because they encourage adverse selection: health savings accounts are attractive to healthier individuals, who will be tempted to opt out of company plans, leaving less healthy individuals behind.
Yet another problem with consumer-directed care is that the evidence says that people don't, in fact, make wise decisions when paying for medical care out of pocket. A classic study by the Rand Corporation found that when people pay medical expenses themselves rather than relying on insurance, they do cut back on their consumption of health care—but that they cut back on valuable as well as questionable medical procedures, showing no ability to set sensible priorities.
But perhaps the biggest objection to consumer-directed health reform is that its advocates have misdiagnosed the problem. They believe that Americans have too much health insurance; the 2004 Economic Report of the President condemned the fact that insurance currently pays for "many events that have little uncertainty, such as routine dental care, annual medical exams, and vaccinations," and for "relatively low-expense items, such as an office visit to the doctor for a sore throat." The implication is that health costs are too high because people who don't pay their own medical bills consume too much routine dental care and are too ready to visit the doctor about a sore throat. And that argument is all wrong. Excessive consumption of routine care, or small-expense items, can't be a major source of health care inefficiency, because such items don't account for a major share of medical costs.
Remember the 80–20 rule: the great bulk of medical expenses are accounted for by a small number of people requiring very expensive treatment. When you think of the problem of health care costs, you shouldn't envision visits to the family physician to talk about a sore throat; you should think about coronary bypass operations, dialysis, and chemotherapy. Nobody is proposing a consumer-directed health care plan that would force individuals to pay a large share of extreme medical expenses, such as the costs of chemotherapy, out of pocket. And that means that consumer-directed health care can't promote savings on the treatments that account for most of what we spend on health care.
The administration's plans for consumer-directed health care, then, are a diversion from meaningful health care reform, and will actually worsen our health care problems. In fact, some reformers privately hope that George W. Bush manages to get his health care plans passed, because they believe that they will hasten the collapse of employment-based coverage and pave the way for real reform. (The suffering along the way would be huge.)
But what would real reform look like?
5.
Single-payer and beyond
How do we know that the US health care system is highly inefficient? An important part of the evidence takes the form of international comparisons. Table 1 compares US health care with the systems of three other advanced countries. It's clear from the table that the United States has achieved something remarkable. We spend far more on health care than other advanced countries—almost twice as much per capita as France, almost two and a half times as much as Britain. Yet we do considerably worse even than the British on basic measures of health performance, such as life expectancy and infant mortality.
One might argue that the US health care system actually provides better care than foreign systems, but that the effects of this superior care are more than offset by unhealthy US lifestyles. Ezra Klein of The American Prospect calls this the "well-we-eat-more-cheeseburgers" argument. But a variety of evidence refutes this argument. The data in Table 1 show that the United States does not stand out in the quantity of care, as measured by such indicators as the number of physicians, nurses, and hospital beds per capita. Nor does the US stand out in terms of the quality of care: a recent study published in Health Affairs that compared quality of care across advanced countries found no US advantage. On the contrary, "the United States often stands out for inefficient care and errors and is an outlier on access/cost barriers."[2] That is, our health care system makes more mistakes than those of other countries, and is unique in denying necessary care to people who lack insurance and can't pay cash. The frequent claim that the United States pays high medical prices to avoid long waiting lists for care also fails to hold up in the face of the evidence: there are long waiting lists for elective surgery in some non-US systems, but not all, and the procedures for which these waiting lists exist account for only 3 percent of US health care spending.[3]
So why does US health care cost so much? Part of the answer is that doctors, like other highly skilled workers, are paid much more in the United States than in other advanced countries. But the main source of high US costs is probably the unique degree to which the US system relies on private rather than public health insurance, reflected in the uniquely high US share of private spending in total health care expenditure.
Over the years since the failure of the Clinton health plan, a great deal of evidence has accumulated on the relative merits of private and public health insurance. As far as we have been able to ascertain, all of that evidence indicates that public insurance of the kind available in several European countries and others such as Taiwan achieves equal or better results at much lower cost. This conclusion applies to comparisons within the United States as well as across countries. For example, a study conducted by researchers at the Urban Institute found that
per capita spending for an adult Medicaid beneficiary in poor health would rise from $9,615 to $14,785 if the person were insured privately and received services consistent with private utilization levels and private provider payment rates.[4]
The cost advantage of public health insurance appears to arise from two main sources. The first is lower administrative costs. Private insurers spend large sums fighting adverse selection, trying to identify and screen out high-cost customers. Systems such as Medicare, which covers every American sixty-five or older, or the Canadian single-payer system, which covers everyone, avoid these costs. In 2003 Medicare spent less than 2 percent of its resources on administration, while private insurance companies spent more than 13 percent.
At the same time, the fragmentation of a system that relies largely on private insurance leads both to administrative complexity because of differences in coverage among individuals and to what is, in effect, a zero-sum struggle between different players in the system, each trying to stick others with the bill. Many estimates suggest that the paperwork imposed on health care providers by the fragmentation of the US system costs several times as much as the direct costs borne by the insurers.
The second source of savings in a system of public health insurance is the ability to bargain with suppliers, especially drug companies, for lower prices. Residents of the United States notoriously pay much higher prices for prescription drugs than residents of other advanced countries, including Canada. What is less known is that both Medicaid and, to an even greater extent, the Veterans' Administration, get discounts similar to or greater than those received by the Canadian health system.
We're talking about large cost savings. Indeed, the available evidence suggests that if the United States were to replace its current complex mix of health insurance systems with standardized, universal coverage, the savings would be so large that we could cover all those currently uninsured, yet end up spending less overall. That's what happened in Taiwan, which adopted a single-payer system in 1995: the percentage of the population with health insurance soared from 57 percent to 97 percent, yet health care costs actually grew more slowly than one would have predicted from trends before the change in system.
If US politicians could be persuaded of the advantages of a public health insurance system, the next step would be to convince them of the virtues, in at least some cases, of honest-to-God socialized medicine, in which government employees provide the care as well as the money. Exhibit A for the advantages of government provision is the Veterans' Administration, which runs its own hospitals and clinics, and provides some of the best-quality health care in America at far lower cost than the private sector. How does the VA do it? It turns out that there are many advantages to having a single health care organization provide individuals with what amounts to lifetime care. For example, the VA has taken the lead in introducing electronic medical records, which it can do far more easily than a private hospital chain because its patients stay with it for decades. The VA also invests heavily and systematically in preventive care, because unlike private health care providers it can expect to realize financial benefits from measures that keep its clients out of the hospital.
In summary, then, the obvious way to make the US health care system more efficient is to make it more like the systems of other advanced countries, and more like the most efficient parts of our own system. That means a shift from private insurance to public insurance, and greater government involvement in the provision of health care—if not publicly run hospitals and clinics, at least a much larger government role in creating integrated record-keeping and quality control. Such a system would probably allow individuals to purchase additional medical care, as they can in Britain (although not in Canada). But the core of the system would be government insurance—"Medicare for all," as Ted Kennedy puts it.
Unfortunately, the US political system seems unready to do what is both obvious and humane. The 2003 legislation that added drug coverage to Medicare illustrates some of the political difficulties. Although it's rarely described this way, Medicare is a single-payer system covering many of the health costs of older Americans. (Canada's universal single-payer system is, in fact, also called Medicare.) And it has some though not all the advantages of broader single-payer systems, notably low administrative costs.
But in adding a drug benefit to Medicare, the Bush administration and its allies in Congress were driven both by a desire to appease the insurance and pharmaceutical lobbies and by an ideology that insists on the superiority of the private sector even when the public sector has demonstrably lower costs. So they devised a plan that works very differently from traditional Medicare. In fact, Medicare Part D, the drug benefit, isn't a program in which the government provides drug insurance. It's a program in which private insurance companies receive subsidies to offer insurance—and seniors aren't allowed to deal directly with Medicare.
The insertion of private intermediaries into the program has several unfortunate consequences. First, as millions of seniors have discovered, it makes the system extremely complex and obscure. It's virtually impossible for most people to figure out which of the many drug plans now on offer is best. This complexity, coupled with the Katrina-like obliviousness of administration officials to a widely predicted disaster, also led to the program's catastrophic initial failure to manage the problem of "dual eligibles," i.e., older Medicaid recipients whose drug coverage was supposed to be transferred to Medicare. When the program started up in January, hundreds of thousands of these dual eligibles found that they had fallen through the cracks, that their old coverage had been canceled but their new coverage had not been put into effect.
Second, the private intermediaries add substantial administrative costs to the program. It's reasonably certain that if seniors had been offered the choice of receiving a straightforward drug benefit directly from Medicare, the vast majority would have chosen to pass up the private drug plans, which wouldn't have been able to offer comparable benefits because of their administrative expenses. But the drug bill avoided that embarrassing outcome by denying seniors that choice.
Finally, by fragmenting the purchase of drugs among many private plans, the administration denied Medicare the ability to bargain for lower prices from the drug companies. And the legislation, reflecting pressures from those companies, included a provision specifically prohibiting Medicare from intervening to help the private plans get lower prices.
In short, ideology and interest groups led the Bush administration to set up a new, costly Medicare benefit in such a way as to systematically forfeit all the advantages of public health insurance.
6.
Beyond reform: How much health care should we have?
Imagine, for a moment, that some future US administration were to push through a fundamental reform of health care that covered all the uninsured, replaced private insurance with a single-payer system, and took heed of the VA's lessons about the advantages of integrated health care. Would our health care problems be solved?
No. Although real reform would bring great improvement in our situation, continuing technological progress in health care still poses a deep dilemma: How much of what we can do should we do?
The medical profession, understandably, has a bias toward doing whatever will bring medical benefit. If that means performing an expensive surgical procedure on an elderly patient who probably has only a few years to live, so be it. But as medical technology advances, it becomes possible to spend ever larger sums on medically useful care. Indeed, at some point it will become possible to spend the entire GDP on health care. Obviously, we won't do this. But how will we make choices about what not to do?
In a classic 1984 book, Painful Prescription: Rationing Hospital Care, Henry Aaron and William Schwartz studied the medical choices made by the British system, which has long operated under tight budget limits that force it to make hard choices in a way that US medical care does not. Can We Say No? is an update of that work. It's a valuable survey of the real medical issues involved in British rationing, and gives a taste of the dilemmas the US system will eventually face.
The operative word, however, is "eventually." Reading Can We Say No?, one might come away with the impression that the problem of how to ration care is the central issue in current health care policy. This impression is reinforced by Aaron and his co-authors' decision to compare the US system only with that of Britain, which spends far less on health care than other advanced countries, and correspondingly is forced to do a lot of rationing. A comparison with, say, France, which spends far less than the United States but considerably more than Britain, would give a very different impression: in many respects France consumes more, not less, health care than the United States, but it can do so at lower cost because our system is so inefficient.
The result of Aaron et al.'s single-minded focus on the problem of rationing is a somewhat skewed perspective on current policy issues. Most notably, they argue that the reason we need universal health coverage is that a universal system can ration care in a way that private insurance can't. This seems to miss the two main immediate arguments for universal care —that it would cover those now uninsured, and that it would be cheaper than our current system. A national health care system will also be better at rationing when the time comes, but that hardly seems like the prime argument for adopting such a system today.
Our Princeton colleague Uwe Reinhardt, a leading economic expert on health care, put it this way: our focus right now should be on eliminating the gross inefficiencies we know exist in the US health care system. If we do that, we will be able to cover the uninsured while spending less than we do now. Only then should we address the issue of what not to do; that's tomorrow's issue, not today's.
7.
Can we fix health care?
Health policy experts know a lot more about the economics of health care now than they did when Bill Clinton tried to remake the US health care system. And there's overwhelming evidence that the United States could get better health care at lower cost if we were willing to put that knowledge into practice. But the political obstacles remain daunting.
A mere shift of power from Republicans to Democrats would not, in itself, be enough to give us sensible health care reform. While Democrats would have written a less perverse drug bill, it's not clear that they are ready to embrace a single-payer system. Even liberal economists and scholars at progressive think tanks tend to shy away from proposing a straightforward system of national health insurance. Instead, they propose fairly complex compromise plans. Typically, such plans try to achieve universal coverage by requiring everyone to buy health insurance, the way everyone is forced to buy car insurance, and deal with those who can't afford to purchase insurance through a system of subsidies. Proponents of such plans make a few arguments for their superiority to a single-payer system, mainly the (dubious) claim that single-payer would reduce medical innovation. But the main reason for not proposing single-payer is political fear: reformers believe that private insurers are too powerful to cut out of the loop, and that a single-payer plan would be too easily demonized by business and political propagandists as "big government."
These are the same political calculations that led Bill Clinton to reject a single-payer system in 1993, even though his advisers believed that a single-payer system would be the least expensive way to provide universal coverage. Instead, he proposed a complex plan designed to preserve a role for private health insurers. But the plan backfired. The insurers opposed it anyway, most famously with their "Harry and Louise" ads. And the plan's complexity left the public baffled.
We believe that the compromise plans being proposed by the cautious reformers would run into the same political problems, and that it would be politically smarter as well as economically superior to go for broke: to propose a straightforward single-payer system, and try to sell voters on the huge advantages such a sys-tem would bring. But this would mean taking on the drug and insur-ance companies rather than trying to co-opt them, and even progressive policy wonks, let alone Democratic politicians, still seem too timid to do that.
So what will really happen to American health care? Many people in this field believe that in the end America will end up with national health insurance, and perhaps with a lot of direct government provision of health care, simply because nothing else works. But things may have to get much worse before reality can break through the combination of powerful interest groups and free-market ideology.
—February 22, 2006
Notes
[1] "America's Senior Moment," The New York Review, March 10, 2005.
[2] Cathy Schoen, Robin Osborn, Phuong Trang Huynh, Michelle Doty, Kinga Zapert, Jordon Peugh, and Karen Davis, "Taking the Pulse of Health Care Systems: Experiences of Patients with Health Problems in Six Countries," Health Affairs Web exclusive, November 3, 2005.
[3] Gerard F. Anderson, Peter S. Hussey, Bianca K. Frogner, and Hugh R. Waters, "Health Spending in the United States and the Rest of the Industrialized World," Health Affairs, Vol. 24, No. 4 (July/August 2005), pp. 903–914.
[4] "Medicaid: A Lower-Cost Approach to Serving a High-Cost Population," policy brief by the Kaiser Commission on Medicaid and the Uninsured, March 2004.
Thursday, June 15, 2006
The Greenland ice cap IS melting, but that's just the tip of the iceberg
Politics - World - s.f. bayarea forums - craigslist: "The Greenland ice cap IS melting
This has been well documented for years, e.g.,
'Greenland's ice sheet could disappear within the next 1,000 years if global warming continues at its present rate, a report in Nature magazine suggests.
Jonathan Gregory and colleagues from the University of Reading, UK, say their studies forecast an 8C increase in Greenland's temperature by 2350.
They believe that if the ice cap melts, global average sea level will rise by about 7m (23ft).
Even if global warming was halted the rise could be irreversible, they say. '
http://news.bbc.co.uk/2/hi/science/nature/3607335.stm
The really, REALLY bad news:
It's rapidly creating moulins through the ice which will accelerate the process by a couple of orders of magnitude. (By comparison, the Larsen B ice shelf, all 7000' feet thick and 20 miles across, melted suddenly and unexpectedly in the summer of 2002 in just 35 days flat.)
'Ice is melting in Greenland faster than we
ever thought possible, fast enough that it?s alarming,?
Box believes. ?What controls the speed of a
glacier?s advance toward the sea is what?s going on
down at its bed. Adding liquid water to the bases
of glaciers via meltwater lakes that flow into moulins
is making these glaciers race along.
?What we have in Greenland is nothing short
of galloping glaciers.'
http://www.tos.org/oceanography/issues/issue_archive/issue_pdfs/19_2/19.2_ripplemarks.pdf
When (not if) Greenland finally goes, sea level will rise over 20' REAL FAST.
"The era of procrastination, of half-measures of soothing and baffling expedients, of delays, is coming to its close. In its place we are entering a period of consequences." - Winston Churchill
This has been well documented for years, e.g.,
'Greenland's ice sheet could disappear within the next 1,000 years if global warming continues at its present rate, a report in Nature magazine suggests.
Jonathan Gregory and colleagues from the University of Reading, UK, say their studies forecast an 8C increase in Greenland's temperature by 2350.
They believe that if the ice cap melts, global average sea level will rise by about 7m (23ft).
Even if global warming was halted the rise could be irreversible, they say. '
http://news.bbc.co.uk/2/hi/science/nature/3607335.stm
The really, REALLY bad news:
It's rapidly creating moulins through the ice which will accelerate the process by a couple of orders of magnitude. (By comparison, the Larsen B ice shelf, all 7000' feet thick and 20 miles across, melted suddenly and unexpectedly in the summer of 2002 in just 35 days flat.)
'Ice is melting in Greenland faster than we
ever thought possible, fast enough that it?s alarming,?
Box believes. ?What controls the speed of a
glacier?s advance toward the sea is what?s going on
down at its bed. Adding liquid water to the bases
of glaciers via meltwater lakes that flow into moulins
is making these glaciers race along.
?What we have in Greenland is nothing short
of galloping glaciers.'
http://www.tos.org/oceanography/issues/issue_archive/issue_pdfs/19_2/19.2_ripplemarks.pdf
When (not if) Greenland finally goes, sea level will rise over 20' REAL FAST.
"The era of procrastination, of half-measures of soothing and baffling expedients, of delays, is coming to its close. In its place we are entering a period of consequences." - Winston Churchill
Tuesday, June 13, 2006
FT.com / World / US - Housing boom will not end in a crash, says Harvard
FT.com / World / US - Housing boom will not end in a crash, says Harvard: "Housing boom will not end in a crash, says Harvard
By Christopher Swann in Washington
Published: June 12 2006 22:19 | Last updated: June 12 2006 22:19
graphicMarkets seldom disappoint both bulls and bears for long. But over the coming years the US housing market looks likely to do just that, according to a study by Harvard University.
After the slump of the early 1990s and the surge of the past five years, the housing market might prove an anti-climax to all concerned. The long period of stagnation forecast by the survey would disappoint home-owners who expect big price rises but also those who missed the boat and have been hoping for a crash.
“Although housing prices are stretched, it is hard to see the catalyst for a crisis in the market,” says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard. “The overvaluation looks pretty well balanced by longer term supports for house prices, so we may just see a few years with little action. Houses will revert to being something to live in rather than money makers.”
The study begins with some sobering observations about the record run in the US housing market. Over the past five years house prices have outstripped income growth more than sixfold – the median"
By Christopher Swann in Washington
Published: June 12 2006 22:19 | Last updated: June 12 2006 22:19
graphicMarkets seldom disappoint both bulls and bears for long. But over the coming years the US housing market looks likely to do just that, according to a study by Harvard University.
After the slump of the early 1990s and the surge of the past five years, the housing market might prove an anti-climax to all concerned. The long period of stagnation forecast by the survey would disappoint home-owners who expect big price rises but also those who missed the boat and have been hoping for a crash.
“Although housing prices are stretched, it is hard to see the catalyst for a crisis in the market,” says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard. “The overvaluation looks pretty well balanced by longer term supports for house prices, so we may just see a few years with little action. Houses will revert to being something to live in rather than money makers.”
The study begins with some sobering observations about the record run in the US housing market. Over the past five years house prices have outstripped income growth more than sixfold – the median"
Friday, June 09, 2006
None dare call it 'lies'
Truth Is for 'Liberals': "Truth Is for 'Liberals'
Eric Alterman
Here we are, five and a half years into the Bush Administration, and the press corps still hasn't figured out how to handle the White House's primary tactic of media management: lying.
During George W. Bush's first term, reporters had a powerful confluence of motivations for their difficulty in calling the President to task. First was tradition; mere journalists lacked the authority to call a President a liar. Second, post-9/11 they were intimidated by Bush's McCarthyite with-us-or-ag'in-us rhetoric as well as by a bloodthirsty right-wing punditocracy. (New York Times White House reporter Elisabeth Bumiller admitted that she and her colleagues found it 'frightening to stand up there,' and 'no one wanted to get into an argument with the President at this very serious time.')
Finally, though much of what Bush said during his first term was laughable, it was not easily disprovable in a normative sense. Would the poor and the middle class be the primary beneficiaries of tax cuts designed almost exclusively to enrich the extremely wealthy? Could right-wing church groups and ideology factories replace the services provided by traditional government health and welfare agencies? Does abstinence-only education based on disinformation reduce teen pregnancy? Were WMD-infested, bin-Laden-loving Iraqis eager to be 'liberated' by a power that instructs them that our God is bigger than their God? 'Well maybe,' replied most reporters. 'Time will tell.'
Because the mainstream media make a fetish of a particularly brainless form of objectivity, the Bush Administration has been able to deceive the American public on a dizzying array of issues, from war to economics to science to, well, you name it. Lying has usually damaged the Presidents who do it, as I argued in my book When Presidents Lie: A History of Official Deception and Its Consequences. But the media proved so timid in the face of this Administration's deceptions that the reckoning was delayed long enough for Bush to squeak into a second term.
Now the results are in--and reporters, under siege from several directions, are still trapped in self-eviscerating sanctimony. Jim Lehrer explained the peculiar form of "objectivity" he and his colleagues practice to CJR Daily's Liz Cox Barrett not long ago: "I don't deal in terms like 'blatantly untrue,'" he averred. "That's for other people to decide.... I'm not in the judgment part of journalism. I'm in the reporting part of journalism." As Todd Gitlin pointed out on TPM Cafe, Lehrer's interview sounded an awful lot like Rob Corddry lecturing a befuddled Jon Stewart, "I don't have 'o-pin-i-ons.' I'm a reporter, Jon, and my job is to spend half the time repeating what one side says, and half the time repeating the other. Little thing called 'objectivity'--might wanna look it up someday."
Of course, even when they did catch Bush in the occasional bald-faced, easily demonstrable lie, most Washington journalists thought it gauche to make a big deal out of it. Dana Milbank wrote the classic 2002 Washington Post article about Bush's tendency to mislead, deliberately--all without ever using the "L" word. When asked by CNN's Howard "conflict of interest" Kurtz specifically about an incontrovertible lie by Bush about why we invaded Iraq--the President claimed that Saddam Hussein would not allow inspectors in--Milbank excused the liar: "This is just the President being the President." He meant it as a compliment.
Now Bush's lies are news again. When replacing his Treasury Secretary recently, he told another one that reporters have had trouble ignoring. Asked by Bloomberg's Richard Keil, "Has Treasury Secretary Snow given you any indication that he intends to leave his job anytime soon?" Bush responded, "No, he has not talked to me about resignation. I think he's doing a fine job." In fact, as Washington Post.com's Dan Froomkin reported, "Tony Snow [no relation] confirmed that Bush had offered John Snow's job to Goldman Sachs chairman Henry Paulson several days before the press conference, and the spokesman didn't deny that Bush and his treasury secretary had talked about it." Quizzed about the discrepancy, Tony Snow called Bush's response "artfully worded." By Bush Administration standards, that's sad but true.
Froomkin devoted a column to the incident, brazenly titled "Bush's Lie." In it he wondered at all the reasons reporters are reluctant to call a lie a lie. He quoted his own newspaper's coverage by Peter Baker and Paul Blustein, which gave no indication of the President's purposeful mendacity. "Bush, when asked about the Treasury Secretary at his news conference last night, indicated only that he had not spoken directly with Snow and quickly changed the subject to positive economic indicators." In other words: "Thank you, sir, may I have another?" (Also writing about the incident, Slate's John Dickerson explained, mystifyingly, "I'm reluctant to call it a lie, but the President abused our trust.")
Interestingly, Froomkin's attentiveness to the issue of what's true and what's false in the President's statements has earned him the reputation around the office of being an ideologue. Late last year Washington Post executive editor Len Downie spoke of his desire to "make sure people in the administration know that our news coverage by White House reporters is separate from what appears in Froomkin's column." National political editor John Harris admitted at the same time that he had "heard from Republicans" who thought Froomkin "unfair." To offer readers "balance," Post honchos demonstrated just what they consider to be the proper antidote to a twenty-year veteran reporter who submits Administration rhetoric to truth tests: In March they hired a 24-year-old former Bush/Cheney political operative named Ben Domenech, who had little (if any) experience as a journalist but plenty, it turned out, as a plagiarist.
So truth is for "liberals." Were it not for the fact that our democracy is being undermined by the liars in office, we might be flattered. But even the collapse of the President's popularity has not installed much backbone in the press corps. Bush can still lie about whatever he wants whenever he wants; treasury secretaries one day; war the next. It's "just the President being the President."
... it's just more "getting the gov't we deserve" if you ask me.
Eric Alterman
Here we are, five and a half years into the Bush Administration, and the press corps still hasn't figured out how to handle the White House's primary tactic of media management: lying.
During George W. Bush's first term, reporters had a powerful confluence of motivations for their difficulty in calling the President to task. First was tradition; mere journalists lacked the authority to call a President a liar. Second, post-9/11 they were intimidated by Bush's McCarthyite with-us-or-ag'in-us rhetoric as well as by a bloodthirsty right-wing punditocracy. (New York Times White House reporter Elisabeth Bumiller admitted that she and her colleagues found it 'frightening to stand up there,' and 'no one wanted to get into an argument with the President at this very serious time.')
Finally, though much of what Bush said during his first term was laughable, it was not easily disprovable in a normative sense. Would the poor and the middle class be the primary beneficiaries of tax cuts designed almost exclusively to enrich the extremely wealthy? Could right-wing church groups and ideology factories replace the services provided by traditional government health and welfare agencies? Does abstinence-only education based on disinformation reduce teen pregnancy? Were WMD-infested, bin-Laden-loving Iraqis eager to be 'liberated' by a power that instructs them that our God is bigger than their God? 'Well maybe,' replied most reporters. 'Time will tell.'
Because the mainstream media make a fetish of a particularly brainless form of objectivity, the Bush Administration has been able to deceive the American public on a dizzying array of issues, from war to economics to science to, well, you name it. Lying has usually damaged the Presidents who do it, as I argued in my book When Presidents Lie: A History of Official Deception and Its Consequences. But the media proved so timid in the face of this Administration's deceptions that the reckoning was delayed long enough for Bush to squeak into a second term.
Now the results are in--and reporters, under siege from several directions, are still trapped in self-eviscerating sanctimony. Jim Lehrer explained the peculiar form of "objectivity" he and his colleagues practice to CJR Daily's Liz Cox Barrett not long ago: "I don't deal in terms like 'blatantly untrue,'" he averred. "That's for other people to decide.... I'm not in the judgment part of journalism. I'm in the reporting part of journalism." As Todd Gitlin pointed out on TPM Cafe, Lehrer's interview sounded an awful lot like Rob Corddry lecturing a befuddled Jon Stewart, "I don't have 'o-pin-i-ons.' I'm a reporter, Jon, and my job is to spend half the time repeating what one side says, and half the time repeating the other. Little thing called 'objectivity'--might wanna look it up someday."
Of course, even when they did catch Bush in the occasional bald-faced, easily demonstrable lie, most Washington journalists thought it gauche to make a big deal out of it. Dana Milbank wrote the classic 2002 Washington Post article about Bush's tendency to mislead, deliberately--all without ever using the "L" word. When asked by CNN's Howard "conflict of interest" Kurtz specifically about an incontrovertible lie by Bush about why we invaded Iraq--the President claimed that Saddam Hussein would not allow inspectors in--Milbank excused the liar: "This is just the President being the President." He meant it as a compliment.
Now Bush's lies are news again. When replacing his Treasury Secretary recently, he told another one that reporters have had trouble ignoring. Asked by Bloomberg's Richard Keil, "Has Treasury Secretary Snow given you any indication that he intends to leave his job anytime soon?" Bush responded, "No, he has not talked to me about resignation. I think he's doing a fine job." In fact, as Washington Post.com's Dan Froomkin reported, "Tony Snow [no relation] confirmed that Bush had offered John Snow's job to Goldman Sachs chairman Henry Paulson several days before the press conference, and the spokesman didn't deny that Bush and his treasury secretary had talked about it." Quizzed about the discrepancy, Tony Snow called Bush's response "artfully worded." By Bush Administration standards, that's sad but true.
Froomkin devoted a column to the incident, brazenly titled "Bush's Lie." In it he wondered at all the reasons reporters are reluctant to call a lie a lie. He quoted his own newspaper's coverage by Peter Baker and Paul Blustein, which gave no indication of the President's purposeful mendacity. "Bush, when asked about the Treasury Secretary at his news conference last night, indicated only that he had not spoken directly with Snow and quickly changed the subject to positive economic indicators." In other words: "Thank you, sir, may I have another?" (Also writing about the incident, Slate's John Dickerson explained, mystifyingly, "I'm reluctant to call it a lie, but the President abused our trust.")
Interestingly, Froomkin's attentiveness to the issue of what's true and what's false in the President's statements has earned him the reputation around the office of being an ideologue. Late last year Washington Post executive editor Len Downie spoke of his desire to "make sure people in the administration know that our news coverage by White House reporters is separate from what appears in Froomkin's column." National political editor John Harris admitted at the same time that he had "heard from Republicans" who thought Froomkin "unfair." To offer readers "balance," Post honchos demonstrated just what they consider to be the proper antidote to a twenty-year veteran reporter who submits Administration rhetoric to truth tests: In March they hired a 24-year-old former Bush/Cheney political operative named Ben Domenech, who had little (if any) experience as a journalist but plenty, it turned out, as a plagiarist.
So truth is for "liberals." Were it not for the fact that our democracy is being undermined by the liars in office, we might be flattered. But even the collapse of the President's popularity has not installed much backbone in the press corps. Bush can still lie about whatever he wants whenever he wants; treasury secretaries one day; war the next. It's "just the President being the President."
... it's just more "getting the gov't we deserve" if you ask me.
Wednesday, June 07, 2006
Gutless Coulter
“Godless” is Gutless
Greg Palast
June 7th, 2006
Anne Coulter says we’re “Godless” — we “liberals.” And by “liberals,”
she means anyone who wants to keep the government out of our underpants,
out of Iraq, and out of the business of helping Big Business shoplift
America.
It’s time someone took on the blonde bully.
Anne, I realize yesterday was special day for you, releasing your book
on June 6 — 06-06-06.
Going through it, I must, admit, is heavy going: ‘Godless’ is a 300-page
brick of solid meanness and pin-head hatreds packaged like a fashion
magazine: Big Brother wears Prada.
You accuse those who don’t sign on to your list of prejudices as the
Lord’s enemies. That’s not original, Anne: the Taliban thought of it
before you and they too were partial to dressing in black.
You want to talk about Godless? OK, let’s go:
Would the Lord lie us into a war?
Would the Lord let thousands drown in New Orleans while chilling at a
golf resort?
Would the Lord have removed tens of thousands of Black soldiers from the
voter rolls as the Republican Party did in 2004?
You talk about being “Christian” — but with all your zeal to fire up
electric chairs and Abrams tanks, you sound more like a Roman.
I suggest this, Anne: let’s debate. Set the time, set the place, and
I’ll be there. Nose to nose, my facts versus your fanaticism.
But I know you don’t have the guts to do anything but lob idiocies from
your electronic Fox-hole.
Your new book is called, “Godless.” Your autobiography should be called,
“Gutless.”
Greg Palast
June 7th, 2006
Anne Coulter says we’re “Godless” — we “liberals.” And by “liberals,”
she means anyone who wants to keep the government out of our underpants,
out of Iraq, and out of the business of helping Big Business shoplift
America.
It’s time someone took on the blonde bully.
Anne, I realize yesterday was special day for you, releasing your book
on June 6 — 06-06-06.
Going through it, I must, admit, is heavy going: ‘Godless’ is a 300-page
brick of solid meanness and pin-head hatreds packaged like a fashion
magazine: Big Brother wears Prada.
You accuse those who don’t sign on to your list of prejudices as the
Lord’s enemies. That’s not original, Anne: the Taliban thought of it
before you and they too were partial to dressing in black.
You want to talk about Godless? OK, let’s go:
Would the Lord lie us into a war?
Would the Lord let thousands drown in New Orleans while chilling at a
golf resort?
Would the Lord have removed tens of thousands of Black soldiers from the
voter rolls as the Republican Party did in 2004?
You talk about being “Christian” — but with all your zeal to fire up
electric chairs and Abrams tanks, you sound more like a Roman.
I suggest this, Anne: let’s debate. Set the time, set the place, and
I’ll be there. Nose to nose, my facts versus your fanaticism.
But I know you don’t have the guts to do anything but lob idiocies from
your electronic Fox-hole.
Your new book is called, “Godless.” Your autobiography should be called,
“Gutless.”
Friday, May 19, 2006
A Nation of Suspects
by Eric Alterman
May 18, 2006
Back in January, while NBC’s Andrea Mitchell was interviewing New York Times reporter James Risen about his story that blew the lid off the National Security Agency’s secret wiretapping program, she asked a strange question.
In an interview that never actually ran on any NBC affiliate and which the network quickly scrubbed from its Web site, Mitchell asked Risen if he knew anything about reporters being swept up in the NSA’s domestic surveillance operation. He said he didn’t know.
She pressed harder, asking pointedly if he had any information showing that CNN’s Christiane Amanpour had been eavesdropped upon by the Feds. Risen again claimed ignorance. But the questions, and the fact that NBC pulled the transcript from their Web site, ignited a small storm of controversy in the blogosphere that ended up fading from public view almost as fast as it had erupted.
A few days later, an unnamed “senior U.S. intelligence official” would tell CNN that the “National Security Agency did not target CNN's chief international correspondent Christiane Amanpour or any other CNN journalist for surveillance.” And that seemed to be good enough for the rest of the mainstream media.
At least until last week, when USA Today exposed what appears to be a massive internal eavesdropping program directed at American citizens. On Monday, only days after the USA Today’s scoop, ABC News’ Brian Ross and Richard Esposito reported that a "senior federal law enforcement official" had informed them that "the government is tracking the phone numbers [the two reporters] call in an effort to root out confidential sources."
http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=1695725
... A nation of sheep inevitably begets a government of wolves -- Edward R. Murrow
May 18, 2006
Back in January, while NBC’s Andrea Mitchell was interviewing New York Times reporter James Risen about his story that blew the lid off the National Security Agency’s secret wiretapping program, she asked a strange question.
In an interview that never actually ran on any NBC affiliate and which the network quickly scrubbed from its Web site, Mitchell asked Risen if he knew anything about reporters being swept up in the NSA’s domestic surveillance operation. He said he didn’t know.
She pressed harder, asking pointedly if he had any information showing that CNN’s Christiane Amanpour had been eavesdropped upon by the Feds. Risen again claimed ignorance. But the questions, and the fact that NBC pulled the transcript from their Web site, ignited a small storm of controversy in the blogosphere that ended up fading from public view almost as fast as it had erupted.
A few days later, an unnamed “senior U.S. intelligence official” would tell CNN that the “National Security Agency did not target CNN's chief international correspondent Christiane Amanpour or any other CNN journalist for surveillance.” And that seemed to be good enough for the rest of the mainstream media.
At least until last week, when USA Today exposed what appears to be a massive internal eavesdropping program directed at American citizens. On Monday, only days after the USA Today’s scoop, ABC News’ Brian Ross and Richard Esposito reported that a "senior federal law enforcement official" had informed them that "the government is tracking the phone numbers [the two reporters] call in an effort to root out confidential sources."
http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=1695725
... A nation of sheep inevitably begets a government of wolves -- Edward R. Murrow
Monday, May 15, 2006
The 9/11 Secret in the CIA's Back Pocket
Another buried story deserving of resurrection...
The 9/11 Secret in the CIA's Back Pocket: "The 9/11 Secret in the CIA's Back Pocket
The agency is withholding a damning report that points at senior officials.
Robert Scheer
10/19/04 'ICH' -- 'Los Angeles Times' -- It is shocking: The Bush administration is suppressing a CIA report on 9/11 until after the election, and this one names names. Although the report by the inspector general's office of the CIA was completed in June, it has not been made available to the congressional intelligence committees that mandated the study almost two years ago.
'It is infuriating that a report which shows that high-level people were not doing their jobs in a satisfactory manner before 9/11 is being suppressed,' an intelligence official who has read the report told me, adding that 'the report is potentially very embarrassing for the administration, because it makes it look like they weren't interested in terrorism before 9/11, or in holding people in the government responsible afterward.'
When I asked about the report, Rep. Jane Harman (D-Venice), ranking Democratic member of the House Intelligence Committee, said she and committee Chairman Peter Hoekstra (R-Mich.) sent a letter 14 days ago asking for it to be delivered. 'We believe that the CIA has been told not to distribute the report,' she said. 'We are very concerned.'
According to the intelligence official, who spoke to me on condition of anonymity, release of the report, which represents an exhaustive 17-month investigation by an 11-member team within the agency, has been 'stalled.' First by acting CIA Director John McLaughlin and now by Porter J. Goss, the former Republican House member (and chairman of the Intelligence Committee) who recently was appointed CIA chief by President Bush.
The offici"
The 9/11 Secret in the CIA's Back Pocket: "The 9/11 Secret in the CIA's Back Pocket
The agency is withholding a damning report that points at senior officials.
Robert Scheer
10/19/04 'ICH' -- 'Los Angeles Times' -- It is shocking: The Bush administration is suppressing a CIA report on 9/11 until after the election, and this one names names. Although the report by the inspector general's office of the CIA was completed in June, it has not been made available to the congressional intelligence committees that mandated the study almost two years ago.
'It is infuriating that a report which shows that high-level people were not doing their jobs in a satisfactory manner before 9/11 is being suppressed,' an intelligence official who has read the report told me, adding that 'the report is potentially very embarrassing for the administration, because it makes it look like they weren't interested in terrorism before 9/11, or in holding people in the government responsible afterward.'
When I asked about the report, Rep. Jane Harman (D-Venice), ranking Democratic member of the House Intelligence Committee, said she and committee Chairman Peter Hoekstra (R-Mich.) sent a letter 14 days ago asking for it to be delivered. 'We believe that the CIA has been told not to distribute the report,' she said. 'We are very concerned.'
According to the intelligence official, who spoke to me on condition of anonymity, release of the report, which represents an exhaustive 17-month investigation by an 11-member team within the agency, has been 'stalled.' First by acting CIA Director John McLaughlin and now by Porter J. Goss, the former Republican House member (and chairman of the Intelligence Committee) who recently was appointed CIA chief by President Bush.
The offici"
Tuesday, April 18, 2006
Revolt of the Gens (ret) redux
My good friend responds:
to which I must reply, Retaking control of the gov't at this point is a sucker play. Whoever is in power when the tsunami of fecal matter really hits the rotating air circulation device will be permanently saddled with the smell by the suddenly irate electorate. Better to wait for the inevitable denouement and the day the ignamorati finally demand a change. I'd even go so far as to say the elections are crooked and we're not running anyone in '08.
Hypocrisy may be the life blood but it doesn't make it either right or (more to the point) smart in the long run. Just like lying for convenience, eventually the loss in credibility causes more trouble than the temporary convenience was worth. Look at the world's view of the US now: We've already lost the war for the hearts and minds of the mainstream Muslims just by lying about the justification for war -- the islamofascists can blame the CIA for every bad thing that happens and no amount of denials or evidence to the contrary will dissuade the arab street.
Tin
PS: Fun With English Nouns:
* Hypocrite: one who exhibits the characteristic of hypocrisy
* Hypocrisy: the characteristic trait of the hypocrite
* Hypocracy: gov't by hypocrites, presumably
... How's that working for ya?
My take: BETTER LATE THAN NEVER. Besides, at least one of the generals turned down a 3rd star to retire, which is not chump change.
Sure it's the Commander in Chief's fault, but he's not up for re-election this time (more's the pity). With a little luck maybe the Demos can take control of the House of Representatives and impeach the son of a bitch. Not that the Senate would convict, but the late "great" Tom Delay showed us that you can make your point just by impeaching the president, and all you really need is a majority in the House of Representatives who will vote for Impeachment.
It's way overdue for the Military wing of the Republican Party to speak up. Now if the Fiscal conservatives in the Republican party would just grow some balls, we might hope to scale back tax cuts for the rich in order to trim the deficit just a tiny bit. (Fat chance).
Finally, Hypocracy is the life blood of politics. Note, for example that the same Republicans who were SHOCKED, SHOCKED that Clinton might lie about a dalliance with an Intern, indignantly say that Scooter Libby hasn't been charged with releasing classified information, but only with lying to a Grand Jury. (Note that they also almost elected Ollie North to the Senate a few years ago, after he boasted about lying to Congress about a little privately financed war, financed by trading arms for hostages with the Iranians [aka axis of evil member in good standing]).
to which I must reply, Retaking control of the gov't at this point is a sucker play. Whoever is in power when the tsunami of fecal matter really hits the rotating air circulation device will be permanently saddled with the smell by the suddenly irate electorate. Better to wait for the inevitable denouement and the day the ignamorati finally demand a change. I'd even go so far as to say the elections are crooked and we're not running anyone in '08.
Hypocrisy may be the life blood but it doesn't make it either right or (more to the point) smart in the long run. Just like lying for convenience, eventually the loss in credibility causes more trouble than the temporary convenience was worth. Look at the world's view of the US now: We've already lost the war for the hearts and minds of the mainstream Muslims just by lying about the justification for war -- the islamofascists can blame the CIA for every bad thing that happens and no amount of denials or evidence to the contrary will dissuade the arab street.
Tin
PS: Fun With English Nouns:
* Hypocrite: one who exhibits the characteristic of hypocrisy
* Hypocrisy: the characteristic trait of the hypocrite
* Hypocracy: gov't by hypocrites, presumably
... How's that working for ya?
It's the President, stupid.
Palast has a little different on the Revolt of the Generals (Ret.) plus some add'l insight from Gen. Garner below.
My take: it's easy to snipe from the safety of their pensions -- where were they when it might have done some good (with the exception of Zinni, the only one I know of that spoke out while still in uniform)? Buncha careerist chickenshits as far as I'm concerned. Plus, while it's hypocritical of the Kool-Aid Krowd to say they shouldn't be going public now when it was just fine for the brass to attack Clinton, it's also a bit hypocritical for Clintonites who said the brass were speaking out of turn then to support it now (albeit defending our troops from gays was certainly less of a national security issue than defending our troops from getting blown apart in a mismanaged shooting war).
Duncan
--- Greg Palast
Date: Fri, 14 Apr 2006 15:19:29 -0400 (EDT)
From: Greg Palast
Desert Rats Leave The Sinking Ship
Why Rumsfeld Should Not Resign
The Guardian - Comment
Friday, April 14, 2006
By Greg Palast
Well, here they come: the wannabe Rommels, the
gaggle of generals, safely retired, to lay siege to
Donald Rumsfeld. This week, six of them have called
for the Secretary of Defense's resignation.
Well, according to my watch, they're about four
years too late -- and they still don't get it.
I know that most of my readers will be tickled pink
that the bemedalled boys in crew cuts are finally
ready to kick Rummy in the rump, in public. But to
me, it just shows me that these boys still can't
shoot straight.
It wasn't Secretary of Defense Rumsfeld who stood up
in front of the UN and identified two mobile
latrines as biological weapons labs, was it, General
Powell?
It wasn't Secretary of Defense Rumsfeld who told us
our next warning from Saddam could be a mushroom
cloud, was it Condoleezza?
It wasn't Secretary of Defense Rumsfeld who declared
that Al Qaeda and Saddam were going steady, was it,
Mr. Cheney?
Yes, Rumsfeld is a swaggering bag of mendacious
arrogance, a duplicitous chicken-hawk,
yellow-bellied bully-boy and Tinker-Toy Napoleon --
but he didn't appoint himself Secretary of Defense.
Let me tell you a story about the Secretary of
Defense you didn't read in the New York Times,
related to me by General Jay Garner, the man our
president placed in Baghdad as the US' first
post-invasion viceroy.
Garner arrived in Kuwait City in March 2003 working
under the mistaken notion that when George Bush
called for democracy in Iraq, the President meant
the Iraqis could choose their own government. Misunderstanding the
President's true mission, General Garner called for Iraqis to hold
elections within 90 days and for the U.S. to quickly pull
troops out of the cities to a desert base. "It's
their country," the General told me of the Iraqis.
"And," he added, most ominously, "their oil."
Let's not forget: it's all about the oil. I showed
Garner a 101-page plan for Iraq's economy drafted
secretly by neo-cons at the State Department,
Treasury and the Pentagon, calling for
"privatization" (i.e. the sale) of "all state assets
... especially in the oil and oil-supporting
industries." The General knew of the plans and he
intended to shove it where the Iraqi sun don't
shine. Garner planned what he called a "Big Tent"
meeting of Iraqi tribal leaders to plan elections.
By helping Iraqis establish their own multi-ethnic
government -- and this was back when Sunnis, Shias
and Kurds were on talking terms -- knew he could get
the nation on its feet peacefully before a welcomed "liberation"
turned into a hated "occupation."
But, Garner knew, a freely chosen coalition
government would mean the death-knell for the
neo-con oil-and-assets privatization grab.
On April 21, 2003, three years ago this month, the
very night General Garner arrived in Baghdad, he got
a call from Washington. It was Rumsfeld on the line.
He told Garner, in so many words, "Don't unpack,
Jack, you're fired."
Rummy replaced Garner, a man with years of
on-the-ground experience in Iraq, with green-boots
Paul Bremer, the Managing Director of Kissinger
Associates. Bremer cancelled the Big Tent meeting of
Iraqis and postponed elections for a year; then he
issued 100 orders, like some tin-pot pasha, selling
off Iraq's economy to U.S. and foreign operators,
just as Rumsfeld's neo-con clique had desired.
Reading this, it sounds like I should applaud the
six generals' call for Rumfeld's ouster. Forget it.
For a bunch of military hotshots, they sure can't
shoot straight. They're wasting all their bullets on
the decoy. They've gunned down the puppet instead of
the puppeteers.
There's no way that Rumsfeld could have yanked
General Garner from Baghdad without the word from
The Bunker. Nothing moves or breathes or spits in
the Bush Administration without Darth Cheney's growl
of approval. And ultimately, it's the
Commander-in-Chief who's chiefly in command.
Even the generals' complaint -- that Rumsfeld didn't
give them enough troops -- was ultimately a decision
of the cowboy from Crawford. (And by the way, the
problem was not that we lacked troops -- the problem
was that we lacked moral authority to occupy this
nation. A million troops would not be enough -- the insurgents would
just have more targets.)
President Bush is one lucky fella. I can imagine him
today on the intercom with Cheney: "Well, pardner,
looks like the game's up." And Cheney replies, "Hey,
just hang the Rumsfeld dummy out the window until
he's taken all their ammo."
When Bush and Cheney read about the call for
Rumsfeld's resignation today, I can just hear George
saying to Dick, "Mission Accomplished."
Generals, let me give you a bit of advice about
choosing a target: It's the President, stupid.
My take: it's easy to snipe from the safety of their pensions -- where were they when it might have done some good (with the exception of Zinni, the only one I know of that spoke out while still in uniform)? Buncha careerist chickenshits as far as I'm concerned. Plus, while it's hypocritical of the Kool-Aid Krowd to say they shouldn't be going public now when it was just fine for the brass to attack Clinton, it's also a bit hypocritical for Clintonites who said the brass were speaking out of turn then to support it now (albeit defending our troops from gays was certainly less of a national security issue than defending our troops from getting blown apart in a mismanaged shooting war).
Duncan
--- Greg Palast
Date: Fri, 14 Apr 2006 15:19:29 -0400 (EDT)
From: Greg Palast
Desert Rats Leave The Sinking Ship
Why Rumsfeld Should Not Resign
The Guardian - Comment
Friday, April 14, 2006
By Greg Palast
Well, here they come: the wannabe Rommels, the
gaggle of generals, safely retired, to lay siege to
Donald Rumsfeld. This week, six of them have called
for the Secretary of Defense's resignation.
Well, according to my watch, they're about four
years too late -- and they still don't get it.
I know that most of my readers will be tickled pink
that the bemedalled boys in crew cuts are finally
ready to kick Rummy in the rump, in public. But to
me, it just shows me that these boys still can't
shoot straight.
It wasn't Secretary of Defense Rumsfeld who stood up
in front of the UN and identified two mobile
latrines as biological weapons labs, was it, General
Powell?
It wasn't Secretary of Defense Rumsfeld who told us
our next warning from Saddam could be a mushroom
cloud, was it Condoleezza?
It wasn't Secretary of Defense Rumsfeld who declared
that Al Qaeda and Saddam were going steady, was it,
Mr. Cheney?
Yes, Rumsfeld is a swaggering bag of mendacious
arrogance, a duplicitous chicken-hawk,
yellow-bellied bully-boy and Tinker-Toy Napoleon --
but he didn't appoint himself Secretary of Defense.
Let me tell you a story about the Secretary of
Defense you didn't read in the New York Times,
related to me by General Jay Garner, the man our
president placed in Baghdad as the US' first
post-invasion viceroy.
Garner arrived in Kuwait City in March 2003 working
under the mistaken notion that when George Bush
called for democracy in Iraq, the President meant
the Iraqis could choose their own government. Misunderstanding the
President's true mission, General Garner called for Iraqis to hold
elections within 90 days and for the U.S. to quickly pull
troops out of the cities to a desert base. "It's
their country," the General told me of the Iraqis.
"And," he added, most ominously, "their oil."
Let's not forget: it's all about the oil. I showed
Garner a 101-page plan for Iraq's economy drafted
secretly by neo-cons at the State Department,
Treasury and the Pentagon, calling for
"privatization" (i.e. the sale) of "all state assets
... especially in the oil and oil-supporting
industries." The General knew of the plans and he
intended to shove it where the Iraqi sun don't
shine. Garner planned what he called a "Big Tent"
meeting of Iraqi tribal leaders to plan elections.
By helping Iraqis establish their own multi-ethnic
government -- and this was back when Sunnis, Shias
and Kurds were on talking terms -- knew he could get
the nation on its feet peacefully before a welcomed "liberation"
turned into a hated "occupation."
But, Garner knew, a freely chosen coalition
government would mean the death-knell for the
neo-con oil-and-assets privatization grab.
On April 21, 2003, three years ago this month, the
very night General Garner arrived in Baghdad, he got
a call from Washington. It was Rumsfeld on the line.
He told Garner, in so many words, "Don't unpack,
Jack, you're fired."
Rummy replaced Garner, a man with years of
on-the-ground experience in Iraq, with green-boots
Paul Bremer, the Managing Director of Kissinger
Associates. Bremer cancelled the Big Tent meeting of
Iraqis and postponed elections for a year; then he
issued 100 orders, like some tin-pot pasha, selling
off Iraq's economy to U.S. and foreign operators,
just as Rumsfeld's neo-con clique had desired.
Reading this, it sounds like I should applaud the
six generals' call for Rumfeld's ouster. Forget it.
For a bunch of military hotshots, they sure can't
shoot straight. They're wasting all their bullets on
the decoy. They've gunned down the puppet instead of
the puppeteers.
There's no way that Rumsfeld could have yanked
General Garner from Baghdad without the word from
The Bunker. Nothing moves or breathes or spits in
the Bush Administration without Darth Cheney's growl
of approval. And ultimately, it's the
Commander-in-Chief who's chiefly in command.
Even the generals' complaint -- that Rumsfeld didn't
give them enough troops -- was ultimately a decision
of the cowboy from Crawford. (And by the way, the
problem was not that we lacked troops -- the problem
was that we lacked moral authority to occupy this
nation. A million troops would not be enough -- the insurgents would
just have more targets.)
President Bush is one lucky fella. I can imagine him
today on the intercom with Cheney: "Well, pardner,
looks like the game's up." And Cheney replies, "Hey,
just hang the Rumsfeld dummy out the window until
he's taken all their ammo."
When Bush and Cheney read about the call for
Rumsfeld's resignation today, I can just hear George
saying to Dick, "Mission Accomplished."
Generals, let me give you a bit of advice about
choosing a target: It's the President, stupid.
Friday, April 14, 2006
Core Beliefs of the Wadical White Wing
Core Beliefs of the Wadical White Wing
1) Being a drug addict is a moral failure and a crime, unless you're a rich conservative. Then it's an illness and you need our prayers for your recovery.
2) The United States should get out of the United Nations, and our highest national priority is enforcing U.N. resolutions against Iran/Iraq.
3) Government should relax regulation of Big Business and Big Money but crack down on individuals who use marijuana to relieve the pain of illness.
4) Standing Tall for America, means firing your workers and moving their jobs to India.
5) Multi-national corporations can make decisions affecting all mankind without regulation.
6) The best way to improve military morale is to praise the troops in speeches while slashing veterans' benefits and combat pay.
7) A good way to fight terrorism is to belittle our long-time allies, then demand their cooperation and money.
8) HMOs and insurance companies have the interest of the public at heart.
9) Providing health care to all Iraqis is sound policy. Providing health care to all Americans is socialism.
10) Saddam was a good guy when Reagan armed him, a bad guy when Bush's daddy made war on him, a good guy when Cheney did business with him and a bad guy when Bush needed a 'we can't find Bin Laden' diversion.
11) A president lying about an extramarital affair is an impeachable offense. A president lying to enlist support for a war in which thousands die is solid defense policy.
12) The public has a right to know about Hillary's cattle trades, but George Bush's driving record is none of our business.
13) What Bill Clinton did in the 1960s is of vital national national interest, but what Bush did in the '80s is irrelevant.
14) Trade with Cuba is wrong because the country is communist, but trade with China and Vietnam is vital to a spirit of international harmony.
1) Being a drug addict is a moral failure and a crime, unless you're a rich conservative. Then it's an illness and you need our prayers for your recovery.
2) The United States should get out of the United Nations, and our highest national priority is enforcing U.N. resolutions against Iran/Iraq.
3) Government should relax regulation of Big Business and Big Money but crack down on individuals who use marijuana to relieve the pain of illness.
4) Standing Tall for America, means firing your workers and moving their jobs to India.
5) Multi-national corporations can make decisions affecting all mankind without regulation.
6) The best way to improve military morale is to praise the troops in speeches while slashing veterans' benefits and combat pay.
7) A good way to fight terrorism is to belittle our long-time allies, then demand their cooperation and money.
8) HMOs and insurance companies have the interest of the public at heart.
9) Providing health care to all Iraqis is sound policy. Providing health care to all Americans is socialism.
10) Saddam was a good guy when Reagan armed him, a bad guy when Bush's daddy made war on him, a good guy when Cheney did business with him and a bad guy when Bush needed a 'we can't find Bin Laden' diversion.
11) A president lying about an extramarital affair is an impeachable offense. A president lying to enlist support for a war in which thousands die is solid defense policy.
12) The public has a right to know about Hillary's cattle trades, but George Bush's driving record is none of our business.
13) What Bill Clinton did in the 1960s is of vital national national interest, but what Bush did in the '80s is irrelevant.
14) Trade with Cuba is wrong because the country is communist, but trade with China and Vietnam is vital to a spirit of international harmony.
Thursday, April 06, 2006
Court Papers: Bush, Cheney OK'ed Leaks
Court Papers: Bush, Cheney OK'ed Leaks: "Court Papers: Bush, Cheney OK'ed Leaks
SEE ALL POSTS
EMAIL THIS POST
PERMALINK
COMMENTS (79)
President Bush told Vice President Cheney to tell the vice president's chief of staff, I. Lewis 'Scooter' Libby, to disclose highly classified information regarding Iraq intelligence in order to try and discredit legitimate criticism of the administration.
What's this? The latest line from proponents of impeachment?
No, it is what the bible of Washington insiders, the National Journal, is reporting that Libby has testified was the scenario that played out before he began contacting reporters in an effort to undermine the reputation of former Ambassador Joe Wilson.
According to the Journal report published today: 'I. Lewis 'Scooter' Libby testified to a federal grand jury that he had received 'approval from the President through the Vice President' to divulge portions of a National Intelligence Estimate regarding Saddam Hussein's purported efforts to develop nuclear weapons, according to the court papers. Libby was said to have testified that such presidential authorization to disclose classified information was 'unique in his recollection,' the court papers further said.'
| The Journal report, which is based on both court papers and interviews with senior government officials familiar with the investigation of Libby's actions by "
SEE ALL POSTS
EMAIL THIS POST
PERMALINK
COMMENTS (79)
President Bush told Vice President Cheney to tell the vice president's chief of staff, I. Lewis 'Scooter' Libby, to disclose highly classified information regarding Iraq intelligence in order to try and discredit legitimate criticism of the administration.
What's this? The latest line from proponents of impeachment?
No, it is what the bible of Washington insiders, the National Journal, is reporting that Libby has testified was the scenario that played out before he began contacting reporters in an effort to undermine the reputation of former Ambassador Joe Wilson.
According to the Journal report published today: 'I. Lewis 'Scooter' Libby testified to a federal grand jury that he had received 'approval from the President through the Vice President' to divulge portions of a National Intelligence Estimate regarding Saddam Hussein's purported efforts to develop nuclear weapons, according to the court papers. Libby was said to have testified that such presidential authorization to disclose classified information was 'unique in his recollection,' the court papers further said.'
| The Journal report, which is based on both court papers and interviews with senior government officials familiar with the investigation of Libby's actions by "
Friday, March 31, 2006
Politics - World - s.f. bayarea forums - craigslist
Politics - World - s.f. bayarea forums - craigslist: "Malthus was an optimist < RoughJustice > 03/31/06 16:01
Here's more evidence...
WASHINGTON (AP) - A one-two punch of bleaching from record hot water followed by disease has killed ancient and delicate coral in the biggest loss of reefs scientists have ever seen in Caribbean waters.
Researchers from around the globe are scrambling to figure out the extent of the loss. Early conservative estimates from Puerto Rico and the U.S. Virgin Islands find that about one-third of the coral in official monitoring sites has recently died.
'It's an unprecedented die-off,' said National Park Service fisheries biologist Jeff Miller, who last week checked 40 stations in the Virgin Islands. 'The mortality that we're seeing now is of the extremely slow-growing reef-building corals. These are corals that are the foundation of the reef ... We're talking colonies that were here when Columbus came by have died in the past three to four months.'
http://apnews.myway.com//article/20060331/D8GM9UO07.html
... when do suppose Easter Islanders figured out that there would never be any more trees? "
Here's more evidence...
WASHINGTON (AP) - A one-two punch of bleaching from record hot water followed by disease has killed ancient and delicate coral in the biggest loss of reefs scientists have ever seen in Caribbean waters.
Researchers from around the globe are scrambling to figure out the extent of the loss. Early conservative estimates from Puerto Rico and the U.S. Virgin Islands find that about one-third of the coral in official monitoring sites has recently died.
'It's an unprecedented die-off,' said National Park Service fisheries biologist Jeff Miller, who last week checked 40 stations in the Virgin Islands. 'The mortality that we're seeing now is of the extremely slow-growing reef-building corals. These are corals that are the foundation of the reef ... We're talking colonies that were here when Columbus came by have died in the past three to four months.'
http://apnews.myway.com//article/20060331/D8GM9UO07.html
... when do suppose Easter Islanders figured out that there would never be any more trees? "
Thursday, March 09, 2006
Rumsfeld, Rice Say Iraq Not at Civil War
If this isn't one, what is?
My Way News: "Rumsfeld, Rice Say Iraq Not at Civil War
Mar 9, 11:53 AM (ET)
By LOLITA C. BALDOR
(AP) Secretary of State Condoleezza Rice testifies before the Senate Appropriations Committee on Capitol...
Full Image
Google sponsored links
Search military records - Find enlistment records, gravesites regimental histories and more.
Ancestry.com
Should U.S. Leave Iraq? - Take Our Iraq Survey And Get Paid $300 In The Next 15 Minutes!
Ahwa.org
WASHINGTON (AP) - Top members of the Bush administration urged Congress Thursday to quickly pass a $91 billion spending bill that includes money to continue the wars in Iraq and Afghanistan.
Secretary of Defense Donald H. Rumsfeld and Secretary of State Condoleezza Rice said that despite a surge in sectarian violence in Iraq, the process of creating a stable government is proceeding satisfactorily.
Rumsfeld was pressed to explain the U.S. military's plan to respond in the event that Iraq's sectarian violence grows into a full-fledged civil war.
'The plan is to prevent a civil war, and to the extent one were to occur, to have the - from a security standpoint - have the Iraqi security forces deal with it, to the extent they are able to,' Rumsfeld said.
(AP) An unidentified protester interrupts a Senate Appropriations Committee hearing on Capitol Hill,...
Full Image
Sen. Robert Byrd, D-W.Va., repeatedly pressed Rumsfeld to say what U.S. troops would do if civil war broke out, noting that in his own view the country 'only narrowly missed descending into all-out civil war' in recent days.
Rumsfeld said the key to avoiding civil war is for Iraq's political leaders to form a government of nationa"
My Way News: "Rumsfeld, Rice Say Iraq Not at Civil War
Mar 9, 11:53 AM (ET)
By LOLITA C. BALDOR
(AP) Secretary of State Condoleezza Rice testifies before the Senate Appropriations Committee on Capitol...
Full Image
Google sponsored links
Search military records - Find enlistment records, gravesites regimental histories and more.
Ancestry.com
Should U.S. Leave Iraq? - Take Our Iraq Survey And Get Paid $300 In The Next 15 Minutes!
Ahwa.org
WASHINGTON (AP) - Top members of the Bush administration urged Congress Thursday to quickly pass a $91 billion spending bill that includes money to continue the wars in Iraq and Afghanistan.
Secretary of Defense Donald H. Rumsfeld and Secretary of State Condoleezza Rice said that despite a surge in sectarian violence in Iraq, the process of creating a stable government is proceeding satisfactorily.
Rumsfeld was pressed to explain the U.S. military's plan to respond in the event that Iraq's sectarian violence grows into a full-fledged civil war.
'The plan is to prevent a civil war, and to the extent one were to occur, to have the - from a security standpoint - have the Iraqi security forces deal with it, to the extent they are able to,' Rumsfeld said.
(AP) An unidentified protester interrupts a Senate Appropriations Committee hearing on Capitol Hill,...
Full Image
Sen. Robert Byrd, D-W.Va., repeatedly pressed Rumsfeld to say what U.S. troops would do if civil war broke out, noting that in his own view the country 'only narrowly missed descending into all-out civil war' in recent days.
Rumsfeld said the key to avoiding civil war is for Iraq's political leaders to form a government of nationa"
Wednesday, March 08, 2006
Red states & black students continue to lag.
Draw your own conclusions...
"In the nation's public schools, 14.1 percent of the class of 2005 passed at least one AP test, up from 13.2 percent a year before. In 2000, 10.2 percent of high school seniors passed an AP test.
The number of students passing at least one test increased by nearly 120,000 from 2000 to 2005. But black students continued to take the exams at lower rates than white students, and their overall scores remained a level behind whites last year.
Nationwide, black students make up 13.4 percent of the student population, but only 6.4 percent of the students taking AP exams. The percentage of white and Latino students taking the tests more closely mirrored their numbers in the classroom
... meanwhile, red states continue to show why they're red:
Forty-four states and the District of Columbia increased the percentage of students passing at least one AP test last year. The percentage of students passing at least one test declined in five states — Florida, Nevada, Oklahoma, West Virginia and Wyoming. It was flat in Louisiana.
New York led the nation with 22.8 percent of its high school seniors passing at least one test. Louisiana was last with 2.5 percent."
... 2.5% is around a tenth the national average. I guess that explains why La was flat -- it's hard to get any lower.
http://www.cbsnews.com/stories/2006/02/07/national/main1291874.shtml
"In the nation's public schools, 14.1 percent of the class of 2005 passed at least one AP test, up from 13.2 percent a year before. In 2000, 10.2 percent of high school seniors passed an AP test.
The number of students passing at least one test increased by nearly 120,000 from 2000 to 2005. But black students continued to take the exams at lower rates than white students, and their overall scores remained a level behind whites last year.
Nationwide, black students make up 13.4 percent of the student population, but only 6.4 percent of the students taking AP exams. The percentage of white and Latino students taking the tests more closely mirrored their numbers in the classroom
... meanwhile, red states continue to show why they're red:
Forty-four states and the District of Columbia increased the percentage of students passing at least one AP test last year. The percentage of students passing at least one test declined in five states — Florida, Nevada, Oklahoma, West Virginia and Wyoming. It was flat in Louisiana.
New York led the nation with 22.8 percent of its high school seniors passing at least one test. Louisiana was last with 2.5 percent."
... 2.5% is around a tenth the national average. I guess that explains why La was flat -- it's hard to get any lower.
http://www.cbsnews.com/stories/2006/02/07/national/main1291874.shtml
Thursday, February 16, 2006
Confessions of an Economic Hit Man
Index: "
Confessions of an Economic Hit Man: How the U.S. Uses Globalization to Cheat Poor Countries Out of Trillions
Tuesday, November 9th, 2004
http://www.democracynow.org/article.pl?sid=04/11/09/1526251
We speak with John Perkins, a former respected member of the international banking community. In his book Confessions of an Economic Hit Man he describes how as a highly paid professional, he helped the U.S. cheat poor countries around the globe out of trillions of dollars by lending them more money than they could possibly repay and then take over their economies. [includes rush transcript]
John Perkins describes himself as a former economic hit man - a highly paid professional who cheated countries around the globe out of trillions of dollars.
20 years ago Perkins began writing a book with the working title, 'Conscience of an Economic Hit Men.'
Perkins writes, 'The book was to be dedicated to the presidents of two countries, men who had been his clients whom I respected and thought of as kindred spirits - Jaime Rold?s, president of Ecuador, and Omar Torrijos, president of Panama. Both had just died in fiery crashes. Their deaths were not accidental. They were assassinated because they opposed that fraternity of corporate, government, and banking heads whose goal is global empire. We Economic Hit Men failed to bring Rold?s and Torrijos around, and the other type of hit men, the CIA-sanctioned jackals who were always right behind us, stepped in.
John Perkins goes on to write: 'I was persuaded to stop writing that book. I started it four more times during the next twenty years. On each occasion, my decision to begin again was influenced by current world events: the U.S. invasion of Panama in 1980, the first Gulf War, Somalia, and the rise of Osama bin Laden. Howe"
Confessions of an Economic Hit Man: How the U.S. Uses Globalization to Cheat Poor Countries Out of Trillions
Tuesday, November 9th, 2004
http://www.democracynow.org/article.pl?sid=04/11/09/1526251
We speak with John Perkins, a former respected member of the international banking community. In his book Confessions of an Economic Hit Man he describes how as a highly paid professional, he helped the U.S. cheat poor countries around the globe out of trillions of dollars by lending them more money than they could possibly repay and then take over their economies. [includes rush transcript]
John Perkins describes himself as a former economic hit man - a highly paid professional who cheated countries around the globe out of trillions of dollars.
20 years ago Perkins began writing a book with the working title, 'Conscience of an Economic Hit Men.'
Perkins writes, 'The book was to be dedicated to the presidents of two countries, men who had been his clients whom I respected and thought of as kindred spirits - Jaime Rold?s, president of Ecuador, and Omar Torrijos, president of Panama. Both had just died in fiery crashes. Their deaths were not accidental. They were assassinated because they opposed that fraternity of corporate, government, and banking heads whose goal is global empire. We Economic Hit Men failed to bring Rold?s and Torrijos around, and the other type of hit men, the CIA-sanctioned jackals who were always right behind us, stepped in.
John Perkins goes on to write: 'I was persuaded to stop writing that book. I started it four more times during the next twenty years. On each occasion, my decision to begin again was influenced by current world events: the U.S. invasion of Panama in 1980, the first Gulf War, Somalia, and the rise of Osama bin Laden. Howe"
Wednesday, February 15, 2006
Looting and Pillaging in the Boardroom
A tale of two pension plans: regular vs. CEO
http://www.bankrate.com/brm/news/boomerbucks/20060215a2.asp
tale of two pension plans: regular vs. CEO
Corporate promises for a traditional pension benefit can be easily broken for the average worker, but not so for the top brass.
Traditional pension plans for the average Joe are creeping into the Ice Age, as more companies have announced the decision to deep-freeze their pension plans to current or new employees -- or both. General Motors Corp. and Alcoa are among the latest to jump on the frozen-pension bandwagon that includes IBM, Verizon, Sears, Circuit City, Hewlett-Packard, Lockheed Martin, Motorola, Aon Corp. and NCR. Most of these companies are not on the verge of bankruptcy, mind you.
This freeze phenomenon spells disaster for boomers who had been promised a pension and who have 10 years or more left till retirement. That's because benefits under the traditional pension formula ordinarily accrue at accelerated levels for older employees as they approach retirement. The last 10 years are absolutely crucial. With frozen plans, benefits stop building up altogether.
Another trend among companies is to convert defined-benefit plans into cash-balance plans, which substantially reduces a pension's value because the benefit buildup is calculated differently than with a traditional pension plan. Hundreds of companies have chosen to do this in recent years.
But the retirement plans of highly paid executives are not affected at all by these trends. That's because they're a different breed. I mean the retirement plans, not the execs, though I suppose that statement could apply to either. Most top executives have so-called "supplemental executive retirement plans," or SERPs, that are governed by a different set of rules, because they're nonqualified plans.
Qualified pension plans have tax benefits for both employer and employee and have to pass rigorous IRS nondiscrimination tests that ensure some semblance of fairness among highly compensated employees and those that are not highly compensated. Nonqualified plans have no tax benefits and no such fairness standards.
Congress suddenly appalled
Recently, some members of Congress have voiced objections to the retirement pay disparity between top executives and their employees. One bill, introduced by Rep. George Miller, D-Calif., would disallow companies from funding pensions for the top brass if they're unable to adequately fund their workers' pensions. Other bills along similar lines have surfaced.
"This huge disparity between ... protected pensions that CEOs have versus production workers is really immoral," Miller told the Los Angeles Times.
Just how lavish are the retirement deals for top execs? It's not all that transparent because current rules allow their retirement packages to be obscured from investors, financial analysts, the media and everyone else. That might change in the future, as the Securities and Exchange Commission last month proposed that disclosure requirements be improved concerning executives' pay, including their retirement benefits.
As it stands now, shareholders rarely get wind of just how generous executive retirement packages can be until it's too late -- when the executive already starts drawing payments. This information is not included in the summary compensation tables required under current law that are readily available to the public.
Those tables list various forms of compensation awarded to the top five executives in a company, but the retirement plan is not on the radar screen, Lucian Bebchuk wrote in a recent commentary for the Wall Street Journal.
Retirement plans for the rich
Bebchuk, director of the Program on Corporate Governance at Harvard Law School, co-wrote a white paper called "Executive Pensions" with Robert J. Jackson Jr., which was released in December. They collected information from the SEC filings of 51 large corporations.
"We use these disclosures to make estimates of the value of pension plans awarded to the CEOs in our sample," the authors say in the white paper. "But such estimates are not accessible to outsiders without closely analyzing company disclosures and making a series of actuarial assumptions and calculations."
In other words, you and I wouldn't be able to make heads or tails of these filings. - advertisement -
SERPs take the form of defined-benefit plans -- yes, the very same plans that are heading toward extinction for the average worker. For these plans, the company promises a specific benefit based on tenure and assumes all investment risk.
Except that, for the CEO, tenure is one of those variables that can be fudged. Extra years, in the form of "service credits," can be added on an executive's tenure for the purpose of awarding a larger retirement benefit.
Time Magazine reported last fall on this phenomenon in its cover story, "The Great Retirement Ripoff." The article pointed out that, for example, Leo Mullin, former CEO and chairman of Delta Air Lines, received service credits amounting to 21 years that were added to his actual tenure of about 7.5 years, an allowance that greatly augmented his retirement benefits.
And here's the corker: "Under Mullin's stewardship, Delta killed the defined-benefit pension of its nonunion workers and replaced it with a less generous plan," Time reporters Donald Barlett and James Steele noted.
What stunning leadership!
Anyway, Bebchuk and Jackson set out to determine how much a CEO's retirement benefit compares to his or her total compensation. Was it just a teeny weeny fraction of the big picture, or was it major? They discovered that it was rather significant, not only as a percentage of the CEO's total compensation, but sometimes even as a percentage of the total value of the companies they headed.
The researchers looked at two sets of data. The first comprised CEOs who retired during 2003 and the first five months of 2004. The second included all CEOs between the ages of 63 and 67 at the end of 2003 who would retire soon and who headed companies listed in the S&P 500. In both sets, roughly two-thirds of the CEOs were covered by a company-sponsored pension plan. (Roughly one-third had no pension plan coverage at all, though they may instead participate in a deferred compensation plan -- another type of retirement plan favorable to executives that bypasses public scrutiny.)
It may not shock you to learn that the average payout for CEOs that are already collecting retirement checks is $1.1 million a year. Those CEOs who hadn't begun collecting checks yet are set to get $1.5 million annually.
Bebchuk and Jackson then determined the total pension values of the CEOs' packages, which takes into account their life expectancies as well as those of their spouses, if applicable. The average "actuarial value" of CEO pensions in today's dollars was $15 million for retired CEOs and $19 million for those approaching retirement in the second sample studied.
As an aside, it may interest you to know that firms that are going through bankruptcy proceedings "often choose to assume fully such obligations, even when executives' pensions are unsecured," note the authors.
The averages belie the wide variety in total pension values, which range from $3.3 million (Symbol Technologies) to $73.4 million (Exxon Mobile). "Across our sample of more than 50 S&P 500 companies, the value of executives' pension plans added on average more than 48 percent to total pay during the executive's service as CEO," say the researchers.
Now mind you, these guys aren't exactly hurting for cash to begin with. Without these pensions, if they set aside a mere fraction of their pay, they could easily afford a fantastic retirement with annual trips to Cote d'Azur and round-the-world cruises aboard the QE II, among other extravagant whims.
Among the individual CEOs named in the study were those heading Aon Corp. and Motorola, which recently froze their pension plans to new hires. The retirement plans of these CEOs were valued at $4.8 million and $41.3 million, respectively. Clorox Co. had converted its pension plan to a cash-balance plan some time ago. The value of the top guy's pension? About $23 million, according to the researchers.
Bebchuk and Jackson argue that investors need to have a clear picture of how much the top executives of a firm are getting in compensation that is not linked to their performance. They advocate that firms be required to disclose the value of all retirement plans, whether defined benefit or deferred benefit, as well their increase in value each year.
Yes, they need to be accountable to shareholders. But they also need to be accountable to their employees. The hush-hush deals made in stately boardrooms need to come out in the open. But even beyond that, the top leadership of companies need to, well, lead by example. If defined-benefit plans must get phased out for employees so that a company can be more competitive, then they should get phased out for the top brass, too.
http://www.bankrate.com/brm/news/boomerbucks/20060215a2.asp
tale of two pension plans: regular vs. CEO
Corporate promises for a traditional pension benefit can be easily broken for the average worker, but not so for the top brass.
Traditional pension plans for the average Joe are creeping into the Ice Age, as more companies have announced the decision to deep-freeze their pension plans to current or new employees -- or both. General Motors Corp. and Alcoa are among the latest to jump on the frozen-pension bandwagon that includes IBM, Verizon, Sears, Circuit City, Hewlett-Packard, Lockheed Martin, Motorola, Aon Corp. and NCR. Most of these companies are not on the verge of bankruptcy, mind you.
This freeze phenomenon spells disaster for boomers who had been promised a pension and who have 10 years or more left till retirement. That's because benefits under the traditional pension formula ordinarily accrue at accelerated levels for older employees as they approach retirement. The last 10 years are absolutely crucial. With frozen plans, benefits stop building up altogether.
Another trend among companies is to convert defined-benefit plans into cash-balance plans, which substantially reduces a pension's value because the benefit buildup is calculated differently than with a traditional pension plan. Hundreds of companies have chosen to do this in recent years.
But the retirement plans of highly paid executives are not affected at all by these trends. That's because they're a different breed. I mean the retirement plans, not the execs, though I suppose that statement could apply to either. Most top executives have so-called "supplemental executive retirement plans," or SERPs, that are governed by a different set of rules, because they're nonqualified plans.
Qualified pension plans have tax benefits for both employer and employee and have to pass rigorous IRS nondiscrimination tests that ensure some semblance of fairness among highly compensated employees and those that are not highly compensated. Nonqualified plans have no tax benefits and no such fairness standards.
Congress suddenly appalled
Recently, some members of Congress have voiced objections to the retirement pay disparity between top executives and their employees. One bill, introduced by Rep. George Miller, D-Calif., would disallow companies from funding pensions for the top brass if they're unable to adequately fund their workers' pensions. Other bills along similar lines have surfaced.
"This huge disparity between ... protected pensions that CEOs have versus production workers is really immoral," Miller told the Los Angeles Times.
Just how lavish are the retirement deals for top execs? It's not all that transparent because current rules allow their retirement packages to be obscured from investors, financial analysts, the media and everyone else. That might change in the future, as the Securities and Exchange Commission last month proposed that disclosure requirements be improved concerning executives' pay, including their retirement benefits.
As it stands now, shareholders rarely get wind of just how generous executive retirement packages can be until it's too late -- when the executive already starts drawing payments. This information is not included in the summary compensation tables required under current law that are readily available to the public.
Those tables list various forms of compensation awarded to the top five executives in a company, but the retirement plan is not on the radar screen, Lucian Bebchuk wrote in a recent commentary for the Wall Street Journal.
Retirement plans for the rich
Bebchuk, director of the Program on Corporate Governance at Harvard Law School, co-wrote a white paper called "Executive Pensions" with Robert J. Jackson Jr., which was released in December. They collected information from the SEC filings of 51 large corporations.
"We use these disclosures to make estimates of the value of pension plans awarded to the CEOs in our sample," the authors say in the white paper. "But such estimates are not accessible to outsiders without closely analyzing company disclosures and making a series of actuarial assumptions and calculations."
In other words, you and I wouldn't be able to make heads or tails of these filings. - advertisement -
SERPs take the form of defined-benefit plans -- yes, the very same plans that are heading toward extinction for the average worker. For these plans, the company promises a specific benefit based on tenure and assumes all investment risk.
Except that, for the CEO, tenure is one of those variables that can be fudged. Extra years, in the form of "service credits," can be added on an executive's tenure for the purpose of awarding a larger retirement benefit.
Time Magazine reported last fall on this phenomenon in its cover story, "The Great Retirement Ripoff." The article pointed out that, for example, Leo Mullin, former CEO and chairman of Delta Air Lines, received service credits amounting to 21 years that were added to his actual tenure of about 7.5 years, an allowance that greatly augmented his retirement benefits.
And here's the corker: "Under Mullin's stewardship, Delta killed the defined-benefit pension of its nonunion workers and replaced it with a less generous plan," Time reporters Donald Barlett and James Steele noted.
What stunning leadership!
Anyway, Bebchuk and Jackson set out to determine how much a CEO's retirement benefit compares to his or her total compensation. Was it just a teeny weeny fraction of the big picture, or was it major? They discovered that it was rather significant, not only as a percentage of the CEO's total compensation, but sometimes even as a percentage of the total value of the companies they headed.
The researchers looked at two sets of data. The first comprised CEOs who retired during 2003 and the first five months of 2004. The second included all CEOs between the ages of 63 and 67 at the end of 2003 who would retire soon and who headed companies listed in the S&P 500. In both sets, roughly two-thirds of the CEOs were covered by a company-sponsored pension plan. (Roughly one-third had no pension plan coverage at all, though they may instead participate in a deferred compensation plan -- another type of retirement plan favorable to executives that bypasses public scrutiny.)
It may not shock you to learn that the average payout for CEOs that are already collecting retirement checks is $1.1 million a year. Those CEOs who hadn't begun collecting checks yet are set to get $1.5 million annually.
Bebchuk and Jackson then determined the total pension values of the CEOs' packages, which takes into account their life expectancies as well as those of their spouses, if applicable. The average "actuarial value" of CEO pensions in today's dollars was $15 million for retired CEOs and $19 million for those approaching retirement in the second sample studied.
As an aside, it may interest you to know that firms that are going through bankruptcy proceedings "often choose to assume fully such obligations, even when executives' pensions are unsecured," note the authors.
The averages belie the wide variety in total pension values, which range from $3.3 million (Symbol Technologies) to $73.4 million (Exxon Mobile). "Across our sample of more than 50 S&P 500 companies, the value of executives' pension plans added on average more than 48 percent to total pay during the executive's service as CEO," say the researchers.
Now mind you, these guys aren't exactly hurting for cash to begin with. Without these pensions, if they set aside a mere fraction of their pay, they could easily afford a fantastic retirement with annual trips to Cote d'Azur and round-the-world cruises aboard the QE II, among other extravagant whims.
Among the individual CEOs named in the study were those heading Aon Corp. and Motorola, which recently froze their pension plans to new hires. The retirement plans of these CEOs were valued at $4.8 million and $41.3 million, respectively. Clorox Co. had converted its pension plan to a cash-balance plan some time ago. The value of the top guy's pension? About $23 million, according to the researchers.
Bebchuk and Jackson argue that investors need to have a clear picture of how much the top executives of a firm are getting in compensation that is not linked to their performance. They advocate that firms be required to disclose the value of all retirement plans, whether defined benefit or deferred benefit, as well their increase in value each year.
Yes, they need to be accountable to shareholders. But they also need to be accountable to their employees. The hush-hush deals made in stately boardrooms need to come out in the open. But even beyond that, the top leadership of companies need to, well, lead by example. If defined-benefit plans must get phased out for employees so that a company can be more competitive, then they should get phased out for the top brass, too.
Tuesday, February 07, 2006
Soldiers for the Truth
Armor Money Can't Buy: "01.14.2006
Army Orders Soldiers to Shed Dragon Skin or Lose SGLI Death Benefits
By Nathaniel R. Helms
Two deploying soldiers and a concerned mother reported Friday afternoon that the U.S. Army appears to be singling out soldiers who have purchased Pinnacle's Dragon Skin Body Armor for special treatment. The soldiers, who are currently staging for combat operations from a secret location, reported that their commander told them if they were wearing Pinnacle Dragon Skin and were killed their beneficiaries might not receive the death benefits from their $400,000 SGLI life insurance policies. The soldiers were ordered to leave their privately purchased body armor at home or face the possibility of both losing their life insurance benefit and facing disciplinary action.
The soldiers asked for anonymity because they are concerned they will face retaliation for going public with the Army's apparently new directive. At the sources' requests DefenseWatch has also agreed not to reveal the unit at which the incident occured for operational security reasons.
On Saturday morning a soldier affected by the order reported to DefenseWatch that the directive specified that 'all' commercially available body armor was prohibited. The soldier said the order came down Friday morning from Headquarters, United States Special Operations Command (HQ, USSOCOM), located at MacDill Air Force Base, Florida. It arrived unexpectedly while his unit was preparing to deploy on combat operations. The soldier said the order was deeply disturbiing to many of the men who had used their own money to purchase Dragon Skin because it will affect both their mobility and ballistic protection.
'We have to be able to move. It (Dragon Skin) i"
Army Orders Soldiers to Shed Dragon Skin or Lose SGLI Death Benefits
By Nathaniel R. Helms
Two deploying soldiers and a concerned mother reported Friday afternoon that the U.S. Army appears to be singling out soldiers who have purchased Pinnacle's Dragon Skin Body Armor for special treatment. The soldiers, who are currently staging for combat operations from a secret location, reported that their commander told them if they were wearing Pinnacle Dragon Skin and were killed their beneficiaries might not receive the death benefits from their $400,000 SGLI life insurance policies. The soldiers were ordered to leave their privately purchased body armor at home or face the possibility of both losing their life insurance benefit and facing disciplinary action.
The soldiers asked for anonymity because they are concerned they will face retaliation for going public with the Army's apparently new directive. At the sources' requests DefenseWatch has also agreed not to reveal the unit at which the incident occured for operational security reasons.
On Saturday morning a soldier affected by the order reported to DefenseWatch that the directive specified that 'all' commercially available body armor was prohibited. The soldier said the order came down Friday morning from Headquarters, United States Special Operations Command (HQ, USSOCOM), located at MacDill Air Force Base, Florida. It arrived unexpectedly while his unit was preparing to deploy on combat operations. The soldier said the order was deeply disturbiing to many of the men who had used their own money to purchase Dragon Skin because it will affect both their mobility and ballistic protection.
'We have to be able to move. It (Dragon Skin) i"
Wednesday, February 01, 2006
how do civilizations collapse?
Try failure to recognize changes in the ecosystem, failure to react, and ineffective reactions...
Off Southern California, zooplankton are down 70 percent, fish larvae 50 percent, and there have been massive die-offs of kelp.
In Puget Sound, the number of seabirds has dropped by nearly half since the 1970s.
At Triangle Island in British Columbia and California's Farallon Islands, scientists saw a third seabird, the Cassin's auklet, show signs of starvation, said Bill Sydeman of the Point Reyes Bird Observatory.
The Farallon auklets started the breeding season late. Only half as many as normal even tried. Then they abandoned the nests.
Researchers recorded low catches of juvenile salmon and rockfish, and there were sightings of emaciated gray whales. Those findings were preceded by the first appearance in Washington waters of thousands of squid normally not found north of San Francisco. And a plankton typically found near San Diego bloomed along Northwest beaches.
In Washington, the state's largest colony of glaucous-winged gulls suffered when the normal fledge count plummeted from 8,000 chicks to 88 last year.
... tick, tick, tick...
Off Southern California, zooplankton are down 70 percent, fish larvae 50 percent, and there have been massive die-offs of kelp.
In Puget Sound, the number of seabirds has dropped by nearly half since the 1970s.
At Triangle Island in British Columbia and California's Farallon Islands, scientists saw a third seabird, the Cassin's auklet, show signs of starvation, said Bill Sydeman of the Point Reyes Bird Observatory.
The Farallon auklets started the breeding season late. Only half as many as normal even tried. Then they abandoned the nests.
Researchers recorded low catches of juvenile salmon and rockfish, and there were sightings of emaciated gray whales. Those findings were preceded by the first appearance in Washington waters of thousands of squid normally not found north of San Francisco. And a plankton typically found near San Diego bloomed along Northwest beaches.
In Washington, the state's largest colony of glaucous-winged gulls suffered when the normal fledge count plummeted from 8,000 chicks to 88 last year.
... tick, tick, tick...
Don't cry for Natalie
She's going to a better place ...
'Every day a soldier dies, I am more proud that I spoke out. For the last three years, I am at a loss for words as to... what this country is. Who we are. I really think people have just gone insane. And they think we've gone insane. I think it's sad that you have to truly seek out the truth these days, because CNN and Fox News don't give it to you. So you can't really point a finger at individuals, because it's exhausting to seek out fact from fiction. I used to try and make sense of it but when Bush got reelected, I just didn't know what to do. Keep livin'. It's gotta change back. Politics ? I just think it's all corrupt. The entire country is controlled by money. And I think that's what people feel, their voice isn't heard. They don't have a say. It's corporate America.'
... No, Natalie, it DOESN'T have to change back. Things are always darkest just before they go completely black."
'Every day a soldier dies, I am more proud that I spoke out. For the last three years, I am at a loss for words as to... what this country is. Who we are. I really think people have just gone insane. And they think we've gone insane. I think it's sad that you have to truly seek out the truth these days, because CNN and Fox News don't give it to you. So you can't really point a finger at individuals, because it's exhausting to seek out fact from fiction. I used to try and make sense of it but when Bush got reelected, I just didn't know what to do. Keep livin'. It's gotta change back. Politics ? I just think it's all corrupt. The entire country is controlled by money. And I think that's what people feel, their voice isn't heard. They don't have a say. It's corporate America.'
... No, Natalie, it DOESN'T have to change back. Things are always darkest just before they go completely black."
Tuesday, January 24, 2006
Army has become a 'thin green line'
My Way News: "WASHINGTON (AP) - Stretched by frequent troop rotations to Iraq and Afghanistan, the Army has become a 'thin green line' that could snap unless relief comes soon, according to a study for the Pentagon.
Andrew Krepinevich, a retired Army officer who wrote the report under a Pentagon contract, concluded that the Army cannot sustain the pace of troop deployments to Iraq long enough to break the back of the insurgency. He also suggested that the Pentagon's decision, announced in December, to begin reducing the force in Iraq this year was driven in part by a realization that the Army was overextended.
As evidence, Krepinevich points to the Army's 2005 recruiting slump - missing its recruiting goal for the first time since 1999 - and its decision to offer much bigger enlistment bonuses and other incentives."
Andrew Krepinevich, a retired Army officer who wrote the report under a Pentagon contract, concluded that the Army cannot sustain the pace of troop deployments to Iraq long enough to break the back of the insurgency. He also suggested that the Pentagon's decision, announced in December, to begin reducing the force in Iraq this year was driven in part by a realization that the Army was overextended.
As evidence, Krepinevich points to the Army's 2005 recruiting slump - missing its recruiting goal for the first time since 1999 - and its decision to offer much bigger enlistment bonuses and other incentives."
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