Monday, September 30, 2013

Obama Shouldn't Negotiate Over the Debt Ceiling Because the Debt Ceiling Isn't Negotiable


You see, this is part of the problem. In case you missed it, the main message of this video is this: 
"How can President Obama negotiate with Vladimir Putin over Syria, but not with Congressional Republicans over Washington's spending problem?"
There are a few obvious problems with this. First of all, as Matt Yglesias so sagely pointed out a few days ago, not raising the debt ceiling wouldn't cause the United States government to spend less money: 
"The debt ceiling has zero impact on either the appropriations process or the Social Security Act and other major pieces of entitlement spending. Those laws are all on the books, and those are the laws that determine the volume and pace of government spending. As a separate matter, we also have tax laws that bring money in to the government. Then we also have a borrowing process through which Treasury can plug the gap between the money it's legally entitled to collect and the money it's legally required to spend."
For that to change, you have to change the laws that appropriated the money in the first place. Not raising the debt ceiling just causes debt to pile up through channels other than U.S. Treasury bills. 

But even beyond this most elementary of mistakes the above ad makes, it ignores the much larger problem--as the title of this post says, the President shouldn't have to negotiate over the debt ceiling, because it fundamentally is not negotiable. In 2011, Obama made the mistake of negotiating over it and we got the lovely mess that is the sequester. This time around, he's (hopefully) learned his lesson and is calling the GOP's bluff. 

My ultimate point here is this: the difference between Obama negotiating with Putin over Syria and Obama not negotiating over the debt ceiling is that when it comes to the debt ceiling, avoiding a potential financial and constitutional crisis in the richest nation on earth isn't a Democratic party policy--it's just common sense. It isn't a concession by Republicans to not let the US default on its debts, therefore there's no need for there to be a negotiation over it, let alone for Obama to concede to the laundry list of conditions that was the GOP's opening bid. Imagine if the GOP had won the presidency, the Senate, and the popular vote in the House in 2012, and then Democrats refused to raise the debt ceiling until more gun control laws were put in place. And Medicare for all. And to raise taxes by 20% on top earners. And on and on. If that sounds ridiculous, that's because it is. (I'm not drawing a false comparison here--look at the GOP's demands in that link)

All of this reminds me of how, back in 2011, Republican leaders were insisting that economic uncertainty was holding back the economy. I believe the exact words John Boehner used were:
"I believe our mission as legislators is to liberate our economy from the things that impede growth...to provide clear policies, so that innovators and entrepreneurs have the green light to move forward and create jobs, without having to worry about second-guessing from Washington."
So naturally the best way to achieve this is to consistently try to hamstring an overhaul of our healthcare system, threaten a government shutdown, and (twice) raise the prospect of a U.S. default, right? But I digress...

In 2011, Obama made a fatal mistake in negotiating over the debt ceiling, which had repercussions we'll likely feel for years to come. Let's hope he's learned his lesson this time.

Thursday, September 26, 2013

Public Opinion is Meaningless, Exhibit #138640

XKCD gets it.
I was giving this Greg Sargent post a read just now in which he delves into the often incoherent polling responses that people have been giving about Obamacare. Specifically, he points out that in spite of the fact that polls show a majority disapprove of Obamacare, a majority of Americans oppose defunding it all the same. It's an excellent post and Sargent makes some great points, but there was one part in there that really stuck with me and I don't think that Greg really addressed the larger issue it brings up:
"The CNBC poll, by the way, has some fascinating other findings. For instance, while 46 percent say they view "Obamacare" negatively, that number drops to 37 percent when the law is described as the "Affordable Care Act."
 A 9 percent drop in disapproval percentages just because of a different name? That's well outside of the poll's margin of error, so there's something else afoot here, I think.

I would argue that this is another example of how, when it comes to complex policy issues, public opinion means almost nothing. Don't mistake what I'm trying to say here--I'm not saying that polling is always useless--just look at Nate Silver's work during the election. It most certainly is not useless. BUT--and this is a really important but--a complete overhaul of an already complicated health care delivery system is not something easily explained to non-wonks (in spite of my best efforts!). 

My ultimate point is this: your average, everyday person don't know that much about the ACA. Most people get their news from TV, and TV news is not a great place to learn about complicated topics--let alone a complicated law that's been wrapped in a swathe of misinformation before the ink could even dry. As such, most people don't know that much about the actual law, and when they're asked about it, they end up flailing and you get incoherent responses like the one above.

Just to further prove my point, when people were asked about the individual components of the law, well, see for yourself: 

Like I said, meaningless.

Wednesday, September 18, 2013

GOP Replacement for Obamacare, A (Market) Failure

Rep. Steve Scalise R-LA.

I know that it's been quite some time since I've weighed in on any particular policy debates on my blog, but this one was just too egregious to pass up. Today, the Republican Study Committee announced that it was at long last unveiling a bill that would fully replace the Affordable Care Act. Here's what the RSC's chairman, Steve Scalise, had to say about what their bill would have in it: 
“We address that to make sure that people with pre-existing conditions cannot be discriminated against,” he said.
He promised, however, that it would not “put in place mandates that increase the costs of health care and push people out of the insurance that they like.”
It took them three and a half years to come up with that? A plan that virtually guarantees a market failure, higher costs, and ultimately does push people out of insurance that they like? 

Long-time readers of the blog will recall my defense of the individual mandate on many separate counts (see here and here). Without the mandate, outlawing discrimination in the health insurance market would be a colossal market failure. Simply put, Scalise and the RSC are trying to have their cake and eat it, too. They're simply promising something that is demonstrably impossible.

Allow me to draw upon my old explanation of why the mandate needs to exist for insurance discrimination to be outlawed:
"A health insurance plan is basically a bunch of policyholders who pay premiums that all go to the same place--the insurance company. All of these policyholders are put into one big risk pool as a means to "balance out" the healthiness of the pool as a whole, because they don't know for sure how healthy everyone is (people sometimes lie, that's where the asymmetric information comes in). So everyone pays and the company basically uses the premium money to pay for hospital procedures where it is needed. Where's the problem, you ask? Well, let's say that the younger people decide that, hey, I'm healthy, why do I need to pay thousands of dollars for this health plan? I'll talk about the problems with this later, but what this does is that the overall level of risk is driven up in the pool as the healthy leave it. With higher risk, comes higher expected costs for the insurer, so they have to raise premiums. That in turn leads to more younger people who value the insurance less to drop coverage, raising riskiness, raising the premiums again, and so on. Eventually, the premiums rise to a point that even those who desperately need insurance will be priced out of the market. That's what's known as an insurance death spiral. Congrats, the market for insurance has just collapsed."
That's what would happen if people with pre-existing conditions were to be guaranteed insurance coverage without having an insurance mandate in place. Healthy people wouldn't insure themselves and thus balance the risk pool out. Prices would skyrocket, and more people would drop their insurance because they simply couldn't afford it. 

This isn't just theoretical, either. It's been tried in states before. New Jersey, Kentucky, Maine, New Hampshire, New York, Vermont, and Washington have all tried enacting guaranteed insurance coverage without mandates. In every single case, premiums rose dramatically, insurers left the market, and the number of people with health insurance coverage actually decreased

They say that the definition of insanity is trying the same thing over and over again and, well, you know...