The Dish

Tahoe City, California, 9 am

by Patrick Appel

The Democrats caving to Lieberman makes this analysis from a reader all the more persuasive:

For all the talk about Lieberman's position on the health care bill, it seems that much of the analysis has ignored the fact that this might be electorally smart for Lieberman. Sure, in 2009, his derailing of health care seems like a poor choice, but by 2012, it could look pretty smart. It's likely that health care reform will pass in one form or another because it's too important to Democrats for it to not pass in some form. When that happens he can vote for it, claiming to have supported it the whole time, and at the same time, portray himself as a deficit hawk. That's the key here.

By 2012 we should be out of the woods on the Great Recession and it will be a time when watching the budget and reducing the deficit will be critical. He will then use his attacks on the health care reform proposals as evidence of his deficit hawkishness. He was so concerned that he was willing to risk something as important as health care reform because of his deeply held convictions about deficit spending. That position will do him very well by Republicans and will probably sway at least a few moderate Democrats who, in 2012, will be much more concerned about ballooning deficits than health care reform.

Furthermore, as he's launching these attacks, he's securing his place in the hearts of the private health insurance industry. He's going to need a bank roll for the 2012 election to replace what he'd get from Democratic party donors, the DNCC and the DSCC. He could count of some of their help in 2006 as he went through the primary, but now he's totally on his own. So in one move he secures funding for a reelection campaign and positions himself to sound strong on what's likely to be key issue of 2012.

He drives me up a wall, but I have to say, it's probably a pretty smart move for him. Worst case scenario he's probably secured himself a lucrative lobbying gig if he loses reelection.

by Conor Friedersdorf

In the lengthy Vogue profile of Hillary Clinton, this paragraph vexed me:

The evening was a reminder of something about Clinton: She is tough—more hawkish than most liberals; she's comfortable with war talk in a boys'-club environment. "I think Hillary now prides herself on the fact that she's part of the gravitas team," says Chuck Todd, the NBC News chief White House correspondent. "Her, Joe Biden,

Bob Gates…the over-60 crowd."

Secretary Clinton is undoubtedly tough — a survivor who perseveres in politics despite setbacks — but can't we retire this lazy conflation of toughness and hawkishness among civilian policymakers? It isn't as though she'll be doing any fighting in Iraq, Afghanistan or elsewhere, and that she is comfortable with war talk doesn't make her any tougher than Cyrano de Bergerac was a confident pickup artist.

The career politician faces her own tests. Does she put the good of the country before her ambition? Does she persevere in righteous causes that seem lost? Does she keep her integrity and humility? Does she excel despite her grueling workload? Passing those tests and others like them ought to be what earns a Secretary of State the descriptor "tough."

Also noteworthy:

When she first appeared onstage the audience leaped to their feet, and the applause was deafening. "They weren't cheering Bob Gates," said a fellow in uniform sitting next to me. And despite the gravity of the occasion, a young woman bellowed at the top of her lungs, "I love you, Hilllllary!!!!," as if she were at a Lady Gaga concert. Seeming to acknowledge her superstar status, Clinton made a crack at the very end of the proceedings, saying that Gates had served most of his 43 years in public service "in secret" (referring to his CIA days). "And I have no secrets." The crowd roared with laughter.

What a cunning woman. The crowd laughed, but they missed the joke. Upon reflection, does anyone doubt that Secretary Clinton has enough secrets to fill Madison Square Garden? What an expertly inserted, audacious lie!

Perhaps you've picked up on my distrust of Secretary Clinton. In her current job, I haven't any criticism, the profile makes her seem likable enough, and the story of how she became Secretary of State is fascinating. But it is difficult to skip over lines like this from a Clinton staffer: "They started talking about it substantively, looking around the globe, and they were basically in the same place. The things they disagreed about in the campaign? We didn't believe he was actually going to have coffee with Ahmadinejad. It was something he shouldn't have said in the campaign, and we pounced on it. The tiny differences in their foreign-policy ideas during the primaries evaporated during the general election." Ha ha, that was just one of the strategies all politicians use during campaigns, where they shape America's public debate about urgent matters of foreign policy by… what's the word? Ah, yes, blatantly lying about it.

This also seems like a bad idea:

In Cape Town, she threw a party for the press and drank with the best of us, talking for more than two hours, into the night, with surprising off-the-record candor about everything from her husband to her disdain for certain world leaders.

Undiplomatic!

But does Hillary Clinton now put the good of the country before her ambition? Does she persevere in righteous causes that seem lost? Does she keep her integrity and humility? Does she excel despite her grueling workload? In her current role, I've got to concede that she scores pretty well on that test. Tough lady. 

by Patrick Appel

Reihan responds to Ezra:

If we really did argue the issue [of health care reform] in this terrain of number of lives saved, I have to say — I'm pretty confident that we could do much better than $900 billion for 150,000 lives, particularly if we are entirely indifferent to the impact on total employment, economic growth, and personal freedom.

Michael Cannon and Yglesias debate Ezra's data.

 
by Patrick Appel

Bruce Mirken points to a new survey:

More high school seniors report smoking marijuana in the past 30 day than smoked cigarettes: 20.6 percent vs. 20.1 percent. And marijuana use is up (albeit in the same general range it’s been in for several years) while teen cigarette smoking continues to decline, and has dropped markedly since the early ‘90s.

Jacob Sullum jumps in:

To put the recent upward trend in perspective, past-month marijuana use by high school seniors is still only about half as common as it was in 1979. Still, federal officials lament that "the percentage of eighth-graders who saw a 'great risk' in occasionally smoking marijuana fell from 50.5 percent in 2004 to 48.1 percent in 2008 and 44.8 percent this year." It speaks volumes about the scientific basis of our current drug policy that the people charged with implementing it openly pin their hopes for success on their ability to trick 13-year-olds into believing something that is patently false.

(Image by Flickr user Splifr. More of his images here)

by Andrew Sprung

In a too-brief interview with Tim Fernholz, Elizabeth Warren, chair of the Congressional Oversight Panel for the bank bailouts, lays down an important regulatory principle and makes an important distinction. My italics:

Should the government step in and break up the biggest banks?

There are a lot of ways to regulate "too big to fail" financial institutions: break them up, regulate them more closely, tax them more aggressively, insure them, and so on. And I'm totally in favor of increased regulatory scrutiny of these banks. But those are all regulatory tools. Regulations, over time, fail. I want to see Congress focus more on a credible system for liquidating the banks that are considered too big to fail. The little guys aren't immortal; they pay for their mistakes. The big guys can't be immortal either. A free market cannot operate in a too-big-to-fail world.

In other words, it's more important to ensure that regulators can clean up failed banks, no matter how big, without systemic risk than it is to empower them to prevent large banks from failing. That's a conservative principle from the country's foremost financial consumer advocate.  Warren wants to create the conditions that Alan Greenspan believed the market would impose unaided — in which the real possibility of failure itself "regulates" the thinking of bank executives.

Perhaps because of her governmental role, it's hard to find much detail on Warren's assessment of the bills currently pending. I would like to know what Warren thinks of the way the House and Senate bills handle resolution authority for the big banks — and what ancillary legislation is most important in her view. How important is the $150 billion fund that the House bill collects from big banks to cover the possible failure of one of their own? What about the provision that allows for secured creditors losing up to 20% of their loan value in the event of a failure?  What about the proposed so-called "living wills" that would help receivers unwind the assets of big banks that fail?

Perhaps, too, the line is a bit blurry between Warren's "regulations," which "over time, fail" and a "system for liquidating the banks," which would in a sense run on autopilot since it would safeguard the possibility of failure. Take, for example, the  Kanjorski amendment that passed as part of the House banking bill last week, which enables regulators to take pre-emptive action to prevent banks from getting "too big to fail." 

The bill "considers a variety of objective standards to determine if financial firms pose a threat to our financial stability, including the scope, scale, exposure, leverage, interconnectedness of financial activities, as well as size of the financial company" (but does not limit the size of financial institutions, as Peter Boone and Simon Johnson have suggested such a bill might).  While that mainly falls under the heading of 'regulation,' it does include the authority to block mergers and acquisitions or force the breakup of a company if it's deemed a systemic risk.

The effectiveness of that provision depends on the human judgment of  the Financial Services Oversight Council that would exercise its powers. But to the extent that it's effective, it would help keep banks from getting too big to fail as well as presumably helping to keep them from failing.

by Patrick Appel

TNC responds to my criticism and admits that Lieberman's actions are fueled not just by spite for Democrats. One of TNC's commenters takes issue with my reading:

When you ask "What about the Connecticut insurers? They make up a sizable part of contributions to his office" you imply that protecting the profits of an industry in a Senator's state or those of his contributors is a motivating factor in his voting on a bill. Setting aside Lieberman's claims that the millions he's received from insurance and pharmaceutical interests play no role in his decision (ahem), I think it's worth looking at Connecticut's other representatives on Capitol Hill:

Senator Dodd: Insurance: $1,249,006 (#3), Pharmaceuticals/Health Products: $222,950 (#16), Health Professionals $327,800 (#12)

Rep. John Larson (CT-1): Insurance $73,200 (#2), Pharmaceuticals / Health Products $19,296 (#13), Health Professionals $66,050(#3)

Rep. Joe Courtney (CT-2): Insurance: $10,000 (#16), Pharmaceuticals / Health Products $15,267 (#9), Health Professionals: $24,000 (#4)

Rep. Rosa DeLauro (CT03) Insurance: $13,250 (#11), Pharmaceuticals / Health Products $7,250 (#17), Health Professionals $40,550 (#2)

Rep. Jim Himes (CT-4): insurance : $64,787 (#3), Pharmaceuticals / Health Products: $25,846 (#14), Health Professionals $16,600 (#18)

Rep. Chris Murphy (CT-5): Insurance: $28,000 (#8), Pharma (not in top 20), Health Professionals: $64,820 (#2)

Lieberman: Insurance: $427,894 (#7), Pharmaceuticals / Health Products $297,090 (#10), Health Professionals: $359,370 (#8)

Lieberman's contributions are right in line with the others'. Dodd represents the exact same industries, while both Larson (Hartford) and Himes (Stamford / Greenwich) have a very large insurance industry presence in their districts. All the others voted or would vote for Health Care (House and current Senate versions).

Yes, but Lieberman isn't getting money from the Democratic Senatorial Campaign Committee or Democratic Congressional Campaign Committee and therefore isn't captive to the Democratic party's agenda. Money doesn't tell the whole story and part of the equation is Lieberman's particular brand of centrism and his loathing a rather large segment of the Democratic party, but I don't by that Lieberman is acting entirely out of spite; he's acting out of political expediency and spite. Another reader writes:

Some have made the obvious connection of why Joe might want to scuttle recent health care proposals, that he is representing one of the largest industries in his state, but few have elaborated on why these companies might oppose it. Namely, the proposal to institute a brand new 1.16% premium tax effective next year is driving the industry mad, and for good reason.For one thing, no one budgeted it and it will mean huge dollars that can’t be recouped via premium increases.  Also, the industry is operating at a tight 2% margin, despite what most believe, and this will slash it in half.  Actually, no one seems to recall that it might be a good idea to have insurance companies that are financially secure. They are the ones that have to be around in the future to pay our skyrocketing bills.

I asked where this reader got his numbers and he followed up:

Looks like last years profit number was 3.3%, according to this article by Ezra Klein. I was an actuary at a very large plan and we explicitly priced for a 2% margin. The premium tax is in the Reid proposal, Sec. 9010, Imposition of annual fee on health insurance providers. The 1.16% is an estimate of the percentage of 6.7 billion that will be raised annually to the total premium for the industry of around 505 billion (that number comes from AHIP, I believe. The 1.16% is not exact but its close for many insurers). This starts in 2010. Insurers will have to add it to premiums as soon as possible, which will probably be later next year or January 2011. In the meantime it eats into slim margins. Not to mention the fact that its payable whether the insurer makes money or not, since its based on premium.

by Patrick Appel

Hasan Khan reports from Islamabad:

Mullah Baradar, the deputy to the Afghan Taliban's leader Mullah

Muhammad Omar and de-facto operational commander of the movement, is leading those who favor talks with the Afghan government. Mullah Baradar and his allies believe the political situation for starting peace talks is in the Taliban's favor because several provinces in Afghanistan are virtually controlled by the Taliban, thus allowing them to negotiate from a position of strength.

And the politically savvy Mullah Baradar reportedly wants to exploit the opportunity presented by the vigorous debate in the United States over President Obama's controversial recent announcement that he is sending 30,000 more U.S. troops to the Afghan theater.

However, Siraj Haqqani, the powerful son of the well known Afghan militant commander Jalaluddin Haqqani, is opposed to entering peace talks with the coalition. The younger Haqqani is reputedly the strongest commander in eastern Afghanistan, and has the support of large numbers of Arab fighters who oppose negotiating with coalition forces absent a total withdrawal, and Hizb-e-Islami leader Gulbuddin Hekmatyar.