Monday, November 29, 2010

Musing on Political Centrism

Kathleen Parker, writing in the Washington Post, wonders if a centrist political movement could succeed in the U.S. As a progressive, I would welcome the chance to work with centrists to get the country back on track with sensible public policies.

That having been said, I want to work first and foremost to create sensible public policies. Parker claims that many moderate Democrats were "purged" in state and local elections. That may well be. But let's consider the cases of Sens. Blanche Lincoln and Joe Lieberman. Both are moderate Democrats in the Senate. During the health reform debate, both eventually voted with the Democrats. However, Sen. Lincoln opposed the public option, despite earlier appearing to endorse it on her website. Sen Lieberman opposed the public option as well. When Sen. Reid, the majority leader, proposed replacing that with a Medicare buy in for people aged 55 and older, Lieberman essentially threw a fit and demanded that the Medicare buy in be removed. When campaigning as a Vice Presidential candidate with Al Gore in 2004, Lieberman endorsed a Medicare buy in.

Both a public insurance plan and a Medicare buy in could have reduced national health expenditures significantly and the deficit, assuming they were designed properly. Most of the long run deficit is driven by health care costs covered by the Federal government. These options would reduce compensation to doctors, hospitals and pharmaceutical companies. Insurance companies would have to adapt, and they would see very significant competition with a public plan. But there's no intrinsic reason why providers, insurers, and healthcare companies couldn't adapt.

The public plan and Medicare buy in were arguably sensible public policies, or at least they had sensible goals, Lieberman and Lincoln opposed them. That opposition appeared to be protecting business interests over the public interest. And for what? They never articulated a clear reason behind their opposition. The logical conclusion is that their opposition was solely for political reasons. They could have said, a public plan's lower payment rates could lead to problems with people being able to see doctors. Lower payment rates could constrain medical innovation. They could have counter proposed: let's raise the excise tax on high cost health insurance plans instead. If you do that, you'll get my vote. That would arguably have been good public policy as well. But they chose to vote based on politics, not good policy.

Lincoln was defeated in Arkansas' Senate race. Lieberman is not up for re election, but I understand that he will probably have difficulty winning re election in Connecticut in 2012. Perhaps they will complain that they were "purged". But these two may have deserved it.

I have disagreements with the policies endorsed by some on the left, and in particular I disagree with those on the left who are intrinsically suspicious of business. However, most of the left's excesses are aimed at protecting vulnerable populations. Most of the right's excesses are clearly aimed at promoting the interests of the powerful, often at odds with the interests of the general public. It is clear to me which set of excess is the most pernicious.

Wednesday, August 11, 2010

Thoughts on the 14th Amendment

Last time I blogged, it was only the madmen who were talking about modifying the 14th Amendment. Now, Sen. Lindsey Graham has said he'd like to visit it. Sen. Graham is one of the most moderate and reasonable Republicans left in Congress.

In this case, those who would like to repeal or change jus soli have no leverage. A Constitutional amendment would have to be passed by a two thirds (I think) vote in both the House and the Senate and then be ratified by three quarters of all the states. This is an impossibly high bar to clear. We can assume that the U.S. Constitution will not change barring social collapse.

In any case, I would be willing to revisit the jus soli doctrine somewhat. Not long ago, the Washington Post reported on the practice of birth tourism, where foreign couples come here to have their babies born and automatically acquire citizenship. Many of them will go back to their countries of origin - China was the featured country in the article. However, their children will be able to have the privileges of citizenship, such as subsidized college tuition, without having contributed to the country.

That doesn't seem right. A foreign couple comes here to give birth and their child is a citizen. The child returns 18 years later for school and is eligible for in-state tuition and federal support, but their parents haven't resided here and paid taxes. In contrast, a child who is undocumented and whose parents have lived here and paid their taxes (which is a more common scenario than many think) would not be eligible for such consideration. It would be more fair if we had a guest worker program that would enable the second family to earn their citizenship if they'd resided here for long enough, but we put the first family at the back of the line. Almost all the other OECD countries have revised their citizenship laws.

As I posted earlier, for progressives to even consider changing the 14th Amendment, we would need a guarantee that non-citizens who are able and willing to live and work here had a fair process by which they could become permanent residents and then citizens. We would need for children to be unconditionally eligible for public supports.

If conservatives were willing to trade modifications to the 14th for immigration reform otherwise, I think many progressives would listen. I'd encourage interested and reasonable conservatives to come forward.

Monday, May 03, 2010

NY Times: Attacks on Asians Highlight New Racial Tensions

An article by Gerry Shih discusses racial tensions between African Americans and Asian Americans in San Francisco. Prejudices on both sides must be combated:

George Gascón, the San Francisco police chief, announced last week the emergency deployment of 32 additional beat officers to the Bayview-Visitación Valley neighborhood. Although “crime numbers have not gone up,” Chief Gascón said in an interview, he wanted to address the “tremendous amount of fear and apprehension” among Asians.

It is these historically black neighborhoods in southeast San Francisco that have undergone the sharpest demographic changes in the city in the past 20 years. Decades after Koreans transformed the Fillmore district from what it once was — the “Harlem of the West,” its blocks lined by the swaggering, smoky haunts of jazz lore — Chinese started moving to the Bayview in large numbers.

Community leaders predict that the 2010 census will show the Asian population, almost all Chinese, now making up 40 percent of the Bayview’s residents and as many as 60 percent of Visitación Valley’s.

“At one point, one group may emerge because they’ve got greater population and another group feels pushed out — feels like they don’t have any voice anymore,” said the Rev. A. Cecil Williams of Glide Memorial Church. “It involves a kind of power shift. That, of course, creates some of the tension.”

The rapidly deteriorating climate has alarmed local leaders. The president of the Board of Supervisors, David Chiu, noted that on Wednesday, hundreds of Chinese lined up at a board meeting to tell stories of assaults and intimidation, sometimes without clear motivation, by young African-Americans.

Two days later, a young black man, Amanze Emenike, 21, said he was 12 when he heard older boys talking about why they singled out Asian and Latino immigrants: they would not report the crime and had no gangs to back them up. On Friday morning, on a Hunters Point hilltop with a breathtaking view of the Bay, Mr. Emenike and his sister, Sherry Blunt, 22, recounted their “spree” of crime against Asian and Latino immigrants several years ago.

By the time he was 15, Mr. Emenike said, he and his brother, Armani Bolmer, would get up at 5 a.m. to rob Mexican day laborers who got off the 23 Monterey bus from the Mission district.

They began to single out Chinese, he said, because they had more money. In 2006, they stalked a Chinese man at the last Muni stop, robbed him, and were arrested hours later.


But at these Chinese rallies and vigils, beneath the megaphone-amplified din of positive rhetoric, there are worrying murmurs about revenge, said Henry Der, who was the executive director of Chinese for Affirmative Action, an influential Chinatown organization, for more than two decades.

“I’m getting e-mails saying, ‘We need to retaliate, it’s time we pick up arms,’ ”Mr. Der said. “And these are from grown, supposedly responsible adults.”

At such a fraught time, leaders like Ms. Tan say they must tread a narrow path between irresponsibly amplifying racial tensions and dishonestly ignoring them.

Part of the frustration, some say, is fueled precisely by the reluctance — both among Chinese and among San Franciscans generally — to discuss such issues.

“Because San Francisco sees itself as very progressive, people just don’t want to talk about these issues,” Mr. Der said. “But that’s how people feel about it. You can’t argue it away.”


Mr. Emenike and his sister, Ms. Blunt, said the teenagers involved in the recent attacks were following in his footsteps, as he had followed older boys.

“It’s not ‘this is an Asian person let’s get him,’ ” Mr. Emenike said. “It’s we thinking, ‘this Asian person is probably carrying a large amount of money. And this is our neighborhood, this is our home, why not?’ ”

But if the motivations were largely strategic, and not out of unadulterated racial hatred, they were also influenced by complex emotions and a wariness of change.

“I wake up and I’m hungry, my stomach growling,” Ms. Blunt said. “Why am I just getting by when there’s this Asian walking out of the house with a laptop going to the cafe?”

There is also the frustration at perceived prejudice by Asians. Ms. Blunt still recalls a Chinese classmate in junior high ignoring her requests to borrow a pencil.

“You approach them, and they just keep giving you the cold shoulder,” Ms. Blunt said.

Emenike and Blunt are both to be commended for their candor. At the same time, it is counterproductive for both sides to downplay the role that historical racial tensions have played. In any case, Emenike's essay can be found here.

Sunday, May 02, 2010

Social insurance is not outdated

I was told by a friend that Rep. Paul Ryan, a rising star in the Republican party and a fiscal hardliner, remarked that social insurance systems, such as Medicare and Social Security, were outdated. Indeed, Mr. Ryan has offered privatized alternatives: replacing Medicare with a voucher system and allowing Social Security beneficiaries to invest up to 1/3 of their account values in IRA-like investment accounts with a government guarantee of minimum value.

The CBO responded that Mr. Ryan's Medicare vouchers would not keep up with the costs of medical price inflation. After several decades, the vouchers would cover only a fraction of the cost of insurance. As to his Social Security reform, the CBO said it would actually be more expensive than the present arrangement.

Social insurance is not outdated. The alternative, private savings, has already been tried and it failed. Before the New Deal, many elders were in poverty. Before Medicare, access to health insurance ceased for most retirees. Social Security and Medicare substantially eased those problems. Both programs could stand to be improved. Medical costs need to be controlled. Social Security's funding shortfall is a secondary but fixable problem. Taxes will have to be raised and benefits might be cut modestly. Additionally, given the expected decline in the number of workers relative to retirees, it is worth considering investing some of the trust funds in a pension fund arrangement, much as the Canada Pension Plan now does.

Medical and long-term care costs vary a great deal from person to person. If we relied on savings, many people would be bankrupted and a minority would over-save. In addition, socioeconomic disparities in impoverishment and access to care would be reminiscent of countries in the Global South. If we relied solely on savings for retirement security, the same thing would happen - instead, Social Security makes benefits for lower-income people more generous per dollar of tax they pay than for higher-income beneficiaries (i.e. richer folks cross-subsidize poorer folks). In addition, Social Security allows us to pool mortality risk over the entire country, meaning that we can guarantee everybody a stream of income that lasts until they die, plus survivor benefits for spouses and dependent children, plus disability insurance.

Ryan's reliance on a savings system would do none of that. It is his proposal that is foolish and obsolete, not social insurance.

Thursday, April 15, 2010

Slate: Martha Nussbaum's From Disgust to Humanity

Dahlia Lithwick writes on Slate about an intriguing argument made by Martha Nussbaum, a prominent law and philosophy professor at the University of Chicago:

[She] explains that much of the political rhetoric around denying equal rights to gay Americans is rooted in the language of disgust. Their activities are depicted as "vile and revolting," threatening to "contaminate and defile" the rest of us. Looked at starkly, she argues, much of the anti-gay argument is bound up in feces and saliva, germs, contagion and blood.

The philosophical question for Nussbaum is whether disgust of this sort is a "reliable guide to lawmaking." She cites Leon Kass, head of the President's Council on Bioethics in the George W. Bush administration, who has argued that it is; that visceral public disgust contains a "wisdom" that lies beneath rational argument. Then she proceeds to annihilate that argument by offering example after example of discarded disgust-based policies, from India's denigration of its "untouchables" to the Nazi view of Jews, to a legally sanctioned regime of separate swimming pools and water fountains in the Jim Crow South. Time and again, Nussbaum argues, societies have been able to move beyond their own politics of disgust to what she calls "the politics of humanity," once they have finally managed to see others as fully human, with human aspirations and desires.


Perhaps the most radical aspect of Nussbaum's work, however, is her prescription for moving past the politics of disgust to the politics of humanity. This will be a familiar call to anyone who listened to President Obama last spring, as he described the qualities he seeks in a jurist. Nussbaum calls for "imagination" and "empathy," for respect and the willingness to listen to new narratives. In effect, this is a moral call to walk in the other guy's moccasins before we call him revolting. She observes that this "capacity for generous and flexible engagement with the sufferings and hopes of other people" was described by Adam Smith (of all people) back in the 18th century, even though it is derided as unmoored, mushy-headed, and even dangerous today. In Nussbaum's formulation, imagination and empathy are essential to overcoming the childish biases that allow us to use our legal machinery to turn others into subhumans.

I'd highly recommend reading the entire article.

Wednesday, April 14, 2010

10% of U.S. Households owe no net Federal taxes - NOT 47%

Conservatives have been going crazy over the fact that 47% of U.S. households owe no net Federal income tax. That statistic is correct. However, it is more like only 10% of U.S. households who owe no net Federal income and payroll taxes. The payroll taxes are flat taxes that fund Medicare and Social Security; in that sense, they are regressive in isolation (although as a whole the tax system is progressive, and could stand to be more progressive).

David Leonhardt debunks the 47% myth here in an editorial in the New York Times. This reckoning is before most state and local taxes. Conservatives think, and I agree, that everyone should pay taxes, even if it is just a nominal amount. It's a practice of citizenship, just like voting. However, The fact is that the vast majority of people do, in fact, owe net taxes. The U.S. has chosen to administer some tax credits through the tax system, like the Earned Income Tax Credit and, in the last year, the Making Work Pay tax credit as an economic stimulus measure.

Leonhardt's article is highly recommended, but I won't post it. I'll say instead that my wife and I had an adjusted gross income of $23,851 this year - only about 160% of the poverty level. We paid a total of $199 in Federal income taxes, net of the MWP credit. We aren't eligible for the EITC because we don't have children - the EITC limits are much lower than our income. We also paid a total of (I believe) $2,640 in Social Security and Medicare taxes. That figure works out to a tax rate of 12%. We are struggling to get by, but we are contributing towards our communities, and we expect our contribution to rise with our income in the years ahead. I have no beef if people making less than we do owe no net Federal taxes - most of them have children to feed. We ought not to tax people in poverty.

Newsweek: Ricky Martin, Coming Out and the Health of Nations

Julia Baird, writing for Newsweek, uses the World Values Survey to argue that richer nations which have moved towards "self-expressive" or "emancipative" values tend to be both happier and more accepting of homosexuality than nations which are still oriented towards "survival" values. Of course, it isn't only wealth that produces self-expressive or emancipative values. And there are certainly a lot of folks in the OECD countries who are oriented towards survival values who would not value Martin's ability to come out.

WSJ: An article on a community loan activist and the Community Reinvestment Act

A Wall Street Journal article details the struggles of Matthew Lee, who is still fighting for the Community Reinvestment Act and to make banks stop predatory lending. Despite what some conservatives say, loans made under the CRA did not default at higher rates than normal. However, predatory, high-interest loans made outside the CRA in low-income or under-banked communities did.

One of the last times I saw Matthew Lee was in April 2004. Mr. Lee had taken his fight to bring credit to the underserved to a special meeting of the Federal Reserve that was considering J.P. Morgan Chase & Co.'s acquisition of Bank One Corp.

A modest and somewhat rumpled attorney, Mr. Lee chastised the $60 billion deal, arguing that J.P. Morgan had failed to provide enough credit to urban areas. He argued that the bank and its mega bank rivals financed predatory check-cashing stores across the country.

Mr. Lee won, sort of. J.P. Morgan pledged $800 billion in new credit over 10 years and promised to review its support of predatory lenders. The merger was approved.

After the meeting, Rev. Jesse Jackson called Mr. Lee, 44 years old, a prime mover in the modern civil-rights movement: the fight for access to capital. "He's an enemy of predatory exploitation," Rev. Jackson said.

It's six years later, and to say a lot has changed is like saying the housing market has hit a hiccup. The Community Reinvestment Act, the banking law Mr. Lee sought to enforce and build on, has come under fire for allegedly fueling the financial crisis through a wave of defaults. The act requires banks to offer loans to underserved areas, mainly urban, poorer neighborhoods.

But if you think the backlash against community lending and the banking law has changed Mr. Lee's perspective you'd be wrong. Through his Bronx-based organization Inner City Press/Fair Finance Watch, Mr. Lee continues to challenge the banking industry for ignoring poorer neighborhoods and its support of predatory lending practices.

"Persistence is the key," said Mr. Lee. "There are still groups interested in the intersection on consumer protection and Wall Street sleaze."

If anything, the attacks have made Mr. Lee more resilient in challenging banks to end its support—directly and indirectly—of predatory lending, an effort that includes subprime loans.

The Impact of CRA Loans
Critics argue that Community Reinvestment Act loans fueled the mortgage bubble by offering credit to those who would have otherwise been turned down. A 2008 report by the Competitive Enterprise Institute concluded that banks that conform to the act are more likely to be less sound and that CRA loans create higher costs for borrowers.

But the evidence is scant that the legislation played a role in the recent crisis. More than 80% of subprime loans were made by institutions or big bank subsidiaries that weren't subject to CRA, according to 2008 testimony by Michael Barr, a professor at the University of Michigan. And a 2008 study by Federal Reserve found no correlation between the financial crisis and CRA lending.

Federal Reserve Chairman Ben Bernanke said in 2007 that CRA loans "usually did not involve disproportionately higher levels of default."

"I understand that your average 'blame the liberals' may not understand that," Mr. Lee said. "But when you actually look into it, you find the real sleazeballs were companies like Ameriquest, Countrywide and New Century and they didn't make a single loan for CRA because they weren't covered by CRA."

The Big Bank Connection
That doesn't mean banks bound by CRA didn't participate in risky lending.

Big banks, such as Citigroup Inc., are just holding companies. Their subsidiaries had different missions. Citibank generally made prime loans and was covered by the law. CitiFinancial didn't have a CRA requirement, but it underwrote more subprime loans. And Citigroup's investment bank, packaged and sold risky loans from many sources to investors.

"There's a good argument that if CRA would have been enforced, people would not have been fleeced on their loans," Mr. Lee said. "And regulators, had they not enforced CRA so narrowly, that when you look at Citigroup underwriting Ameriquest loans, they [the regulators] would have said 'are you kidding?'"

Citigroup declined to comment.

Part of the dispute may have to do with what the banking law actually does. The act does not require banks to make loans to people without credit or considered risky. It only requires that it provide credit in areas where there's a lack of bank finance. CRA loans generally don't carry higher-than-market interest rates.

Such misunderstanding is why Mr. Lee continues to push banks in a climate where inner city lending—fairly or not—is under attack. Because the banking law challenges can only be made when a bank merger is announced and few mergers are being made, Mr. Lee is stockpiling information.

He's poring through annual mortgage data supplied by banks to see what markets they've abandoned. He's gathering information about J.P. Morgan's and Bank of America Corp.'s ties to World Acceptance, a small-loan, consumer finance company that makes subprime and controversial loans called 78s.

A J.P Morgan spokesperson declined to comment.

Fair Finance Watch also is targeting Wal-Mart Stores Inc. for its in-store "money centers" that charge for check cashing and same-day bill payment.

So, the fight goes on. But there is one part of Mr. Lee's job that has changed. He said he's now fielding calls from distressed homeowners—not necessarily CRA beneficiaries—who are wrestling banks looking to foreclose.

Said Mr. Lee, "I've actually had to learn more about workouts than I ever really wanted to know."

Robert Wright: Against Pro-Israel (NYT blogs)

Robert Wright has a rather controversial piece on the New York Times Opinionator blog where he critiques what he sees as excessive and unquestioning support for Israel:

Are you anti-Israel? If you fear that, deep down, you might be, I have important news. The recent tension between Israel and the United States led various commentators to identify hallmarks of anti-Israelism, and these may be of diagnostic value.

As you’ll see, my own view is that they aren’t of much value, but I’ll leave it for you to judge.

Symptom no. 1: Believing that Israel shouldn’t build more settlements in East Jerusalem. President Obama holds this belief, and that seems to be the reason that Gary Bauer, who sought the Republican presidential nomination in 2000, deems Obama’s administration “the most anti-Israel administration in U.S. history.” Bauer notes that the East Jerusalem settlements are “entirely within the city of Jerusalem” and that Jerusalem is “the capital of Israel.”

That’s artful wording, but it doesn’t change the fact that East Jerusalem, far from being part of “the capital of Israel,” isn’t even part of Israel. East Jerusalem lies beyond Israel’s internationally recognized, pre-1967 borders. And the common assertion that Israel “annexed” East Jerusalem has roughly the same legal significance as my announcing that I’ve annexed my neighbor’s backyard. In 1980 the United Nations explicitly rejected Israel’s claim to possess East Jerusalem. And the United States, which normally vetoes U.N. resolutions that Israel finds threatening, chose not to do so in this case.

In short, accepting Gary Bauer’s idea of what it means to be anti-Israel seems to involve being anti-truth. So I don’t accept it. (And if you’re tempted to accept the common claim that Israel is building only in “traditionally Jewish” parts of East Jerusalem, a good antidote is this piece by Lara Friedman and Daniel Seidemann, published on Foreign Policy Magazine’s excellent new Middle East Channel.)

Symptom no. 2: Thinking that some of Israel’s policies, and America’s perceived support of them, might endanger American troops in Iraq and Afghanistan (by, for example, giving Jihadist recruiters rhetorical ammunition). This concern was reportedly expressed last week by Vice President Joe Biden to Prime Minister Bibi Netanyahu. And General David Petraeus is said to worry about the threat posed to American troops — and to America’s whole strategic situation — by the perception of American favoritism toward Israel.

Identifying threats to American troops is part of a general’s job, and it seems to me Petraeus could honestly conclude — without help from dark “anti-Israel” impulses — that some of those threats are heightened by the Israel-Palestine conflict and America’s relationship to it. But Max Boot, writing on Commentary’s Web site, seems to disagree; if Petraeus indeed holds such opinions, that’s a sign of “anti-Israel sentiment,” in Boot’s view.

Now, for a lionized American general to even hint that America’s stance toward Israel might threaten American troops is a serious public relations problem for Boot’s ideology. That, presumably, is why Boot tries to show that this “anti-Israel” view, though attributed to Petraeus, is not in fact Petraeus’s view. Specifically, Boot aims to discredit journalists who attributed this quotation to Petraeus: “The [Israel-Palestine] conflict foments anti-American sentiment, due to a perception of U.S. favoritism for Israel … . Meanwhile, Al Qaeda and other militant groups exploit that anger to mobilize support.”

Boot assures us that this passage, far from being a good guide to Petraeus’s thinking, was just “pulled from the 56-page Central Command ‘Posture Statement’ filed by his staff with the Senate Armed Services Committee.” Well, I don’t know who did the filing, but the document itself is titled “Statement of General David H. Petraeus … Before the Senate Armed Services Committee.” So I’m guessing it’s a fair guide to his views — in which case, by Boot’s lights, Petraeus is anti-Israel, right? And in which case I’ll reject Boot’s criterion for anti-Israelism.

Boot has an ally in Abraham Foxman, the national director of the Anti-Defamation League. Foxman said the perspective attributed to Biden and Petraeus “smacks of blaming Jews for everything.”

Foxman’s claim may seem hyperbolic, but look at it this way: If he can convince us that blaming any Israeli policy for anything is akin to blaming Jews in general for everything, then anyone who criticizes an Israeli policy will be deemed anti-Semitic — and fear of that label will keep everyone from criticizing Israel. And by virtue of never criticizing Israel, we’ll all be “pro-Israel.” And that’s a good thing, right?

Actually, it seems to me that if we were all “pro-Israel” in this sense, that would be bad for Israel.

If Israel’s increasingly powerful right wing has its way, without constraint from American criticism and pressure, then Israel will keep building settlements. And the more settlements get built — especially in East Jerusalem — the harder it will be to find a two-state deal that leaves Palestinians with much of their dignity intact. And the less dignity intact, the less stable any two-state deal will be.

As more and more people are realizing, the only long-run alternatives to a two-state solution are: a) a one-state solution in which an Arab majority spells the end of Israel’s Jewish identity; b) Israel’s remaining a Jewish state by denying the vote to Palestinians who live in the occupied territories, a condition that would be increasingly reminiscent of apartheid; c) the apocalypse. Or, as Hillary Clinton put it in addressing the American Israel Public Affairs Committee conference on Monday: “A two-state solution is the only viable path for Israel to remain both a democracy and a Jewish state.”

So, by my lights, being “pro-Israel” in the sense embraced by Bauer, Boot and Foxman — backing Israel’s current policies, including its settlement policies — is actually anti-Israel. It’s also anti-America (in the sense of ‘bad for American security’), because Biden and Petraeus are right: America’s perceived support of — or at least acquiescence in — Israel’s more inflammatory policies endangers American troops abroad. In the long run, it will also endanger American civilians at home, funneling more terrorism in their direction.

The flip side of this coin is that policies that would be truly good for Israel (e.g., no more settlements) would be good for America. In that sense, there’s good news for Bauer and Boot and Foxman: one of their common refrains — that Israel’s and America’s interests are essentially aligned — is true, if for reasons they don’t appreciate.

Sadly, the Bauer-Boot-Foxman definition of “pro-Israel” — supporting Israel’s increasingly hard-line and self-destructive policies — is the official definition. All major American newspapers, so far as I can see, use the term this way. AIPAC is described as “pro-Israel,” but the left-of-AIPAC J Street isn’t, even though its members, like AIPAC’s, favor policies they consider good for Israel.

No doubt this twisted use of “pro-Israel,” and the implied definition of “anti-Israel,” keeps many critics of Israeli policies from speaking out — Jewish critics for fear of seeming disloyal, and non-Jewish critics for fear of seeming anti-Semitic.

So, if I’m right, and more speaking out — more criticism of Israel’s current policies — would actually be good for Israel, then the newspapers and other media outlets that sustain the prevailing usage of “pro-Israel” are, in fact, anti-Israel. I won’t mention any names.

Postscript: It has been reported that, notwithstanding accounts in Israel’s media, Biden did not, in fact, complain to Netanyahu in private about the threat of Israel’s policies to American troops. Perhaps predictably, the journalist who first reported this is the Atlantic’s Jeffrey Goldberg, who has been described by one New York Times columnist as Netanyahu’s “faithful stenographer.” I don’t doubt that Goldberg found an administration source who downplayed Biden’s remarks to Netanyahu; obviously, once tensions started to subside, and the goal of both America and Israel was to smooth relations, it wasn’t going to be hard to find an administration official who would do that, regardless of the truth about what Biden said. So I attach little significance to the administration’s revisionist account of what transpired between Biden and Netanyahu — especially given the heat the administration no doubt took over the original account of what transpired.

Update: A response from Gary Bauer, whose views I critique in this column, and my subsequent reply, can be read here.

Bauer says that Ramat Shlomo — the part of East Jerusalem where Israel’s controversial 1,600 housing units are scheduled for construction — is “not a settlement” and “not in a Palestinian neighborhood” and “not a neighborhood that the Palestinians have ever had any intention of taking control of” until Obama turned it into an issue. A useful supplement to Bauer’s perspective is this paragraph from the piece by Lara Friedman and Daniel Seidemann that I cite (and link to) above: “In 1993, when the peace process was taking off, the settlement of Ramat Shlomo — which last week caused such a headache for Vice President Biden — didn’t exist. The site was an empty hill in East Jerusalem (not “no man’s land,” as some have asserted), home only to dirt, trees and grazing goats. It was empty because Israel expropriated the land in 1973 from the Palestinian village of Shuafat and made it off-limits to development. Only later, with the onset of the peace process era, was the land zoned for construction and a brand-new settlement called Rehkes Shuafat (later renamed Ramat Shlomo) built.”

And here is a relevant paragraph from a Jan 26, 1994 Washington Post article (not available online) by David Hoffman titled “Israel Constructing a Jewish Cordon Around Jerusalem”: “The Jerusalem municipal boundary was enlarged after the ‘67 war to include Arab East Jerusalem… . For a quarter-century, Palestinian building has been sharply restricted, while Jewish building has expanded. Recently, the Jewish population in the annexed portion of the city surpassed the Arab population for the first time, boosted by construction of new Jewish neighborhoods there.”

Thursday, April 08, 2010

Washington Post: Gay Iranians fleeing their country in increasing numbers

The Washington Post has an article by Anthony Faiola describing the fact that lesbian and gay Iranians are being forced to flee their country in increasing numbers due to political persecution and hate crimes. Some excerpts:


Freedom is relative. But for Hassan, mother hen to a gaggle of gay Iranians fleeing a nation where their sexuality is punishable by death, relatively secular Turkey is one step closer to a life less shackled.

He is one of more than 300 gays who have fled Iran since the rise of President Mahmoud Ahmadinejad, who infamously proclaimed in 2007, to guffaws from his audience at Columbia University, that there were no gays in Iran. Most have crossed the border into Turkey, joining 2,000 Iranian refugees -- largely political dissidents and religious outcasts -- facing waits of two to three years as the United Nations processes their applications for asylum. Those who agreed to be interviewed asked that their last names be withheld for fear of reprisals against their families.

Turkey grants the refugees sanctuary just until the United Nations can find them homes in the United States, Canada, Western Europe or Australia. To avoid a critical mass in any one Turkish city, the refugees are dispersed to two dozen locations. The list does not include more progressive Istanbul, gem of the Bosporus, but rather, smaller metropolises such as Isparta that remain influenced by Islam in the same way Christianity influences the Bible Belt.

In Turkey, where the party that won the national elections in 2002 has sought to foster better ties with Tehranthe movements of the refugees are strictly limited. They can engage in no political activity, cannot work and must check in at police stations at least twice a week.

Human rights groups say the number of gays taking flight has jumped in recent months as some came out of the shadows for a fleeting moment around the time of the tainted elections last June. They attempted to join in the anti-government campaigns that have sparked a brutal crackdown against dissidents by the Iranian government. It marked the first time, gay activists say, that a reviled underclass in Iran poked its face to the surface. It stayed there just long enough to get slapped.

"The bravery that has come out of the gay community in Iran since the elections has been inspiring, but the government has not taken it lightly," said Saghi Ghahraman, an Iranian exile who helps operate a Canadian-based organization providing guidance to gays trying to escape Iran. "They have come down harshly and violently. They've made it more difficult than ever to be gay in Iran."


Sex between two men in Iran is punishable by death after the first offense; sex between two women carries a penalty of 100 lashes, with the death penalty applicable on the fourth violation. Two gay teenagers, Mahmoud Asgari and Ayaz Marhoni, were famously hanged in the city of Mashhad in 2005. Yet for those with severe gender disorders, the government actually offers financial assistance for sex-change operations -- the idea being, apparently, that if they change sexes, their desires would no longer violate religious law.


After Ahmadinejad came to power in 2005, however, the campaign against gays intensified, according to international gay organizations. In Isfahan, authorities raided gay parties, with photos circulating on the Internet showing revelers badly bruised following their arrests. Three refugees said they were raped in prison. Both Hassan and Farzan said they received 10 to 25 lashes on repeated occasions.

The pressure, the men here say, led them to hang their hopes on the June elections last year. A change in leadership, they believed, might help restore a greater degree of tolerance.

Last April, Farzan was among those who joined a budding gay rights movement. He and hundreds of other gays in Iran linked up using social networking sites, posting political messages supporting Ahmadinejad's opponents. They spread the word about rallies being organized by anti-government dissidents and student groups.

When those groups took to the streets to protest Ahmadinejad's claim of victory a month later, Farzan connected with gay men and lesbians via cellphones and the Internet to join in. During the protests in Tehran, some identified themselves as gay by wearing thumb rings, or toting small rainbow flags, a symbol of the gay movement in the West.

"For a moment, it felt so powerful," Farzan said through an interpreter. "We were marching in the streets. There were not that many of us -- maybe 150 in a crowd of thousands. But we were gay, and we were together, and we were calling for freedom."

Gay refugees in other cities, such as Shiraz, said student groups welcomed their participation. But after several days of protests in Tehran, Farzan said, gays were being discouraged from returning to the streets. "They did not want us to stain the reputation of the anti-government movement by joining in," he said.

Ultimately, Farzan said, their brief movement was broken up not by the demonstrators, but by the government crackdown in response to the protests. Gays were targeted, with dozens arrested. Several cafes where gays would gather were shut down. Worse, he and others here said, the government began tracing the profiles on gay social networking sites, informing their families and employers of their "crimes against religion."

In November, Farzan was expelled from his dental school in Tehran. He went home to his family in a town in Iran's north only to find out they had also received a call from security agents. His parents kicked him out.

He contacted Hassan, his friend who had fled to Turkey months earlier. As Hassan has done with a number of gay refugees, he offered to help put Farzan in contact with U.N. officials, and secure housing for him in Isparta as he waited -- like the rest of them -- for asylum. In late December, Farzan boarded a bus to the Turkish border with his life savings of $800.

"I have no idea how I'm going to make it here for two or three years on that," Farzan said. "But I keep telling myself that this is for the best, and I'll find a way. I once thought things could change in Iran, but now I know they won't. I did the only thing I could -- I got out."

Huffington Post: Lesbian student and students with learning disabilities segregated at fake school prom

Constance Miller, a high school graduate in Mississippi who sought to bring her girlfriend to her prom, was sent to a decoy prom with several students with learning disabilities. She had sued the school to let her attend prom and won, albeit the judge did not or was legally unable to force the school to allow her and her girlfriend to attend. It appears that parents and the school conspired to hold a decoy prom for the "different" students, while they held a real prom elsewhere for the "normal" students.

This incident is not criminal, but it is basically a hate crime in all other respects.

The author of the article links this Constance's treatment to bullying, which is a major public health problem in schools. She links readers to the Human Rights Campaign's diversity guide for schools, and mentions two anti-bullying bills that have been introduced in the House that HRC will likely support.

Donna Freitas in the Washington Post: On remaking the Catholic Church

Donna Freitas, another Catholic, writes about how liberation theology can remake Roman Catholicism:

As the Catholic hierarchy sweats in the harsh glare of media scrutiny, as they backpedal about investigations into past and current abuse, and get defensive in all the wrong ways, the question "Should the pope resign?" is valid -- the man at the top has been harboring criminals. There is no defense for this. There is no defense for those who shuffled around priests known to be guilty of rape and assault and other forms of abuse, be you the pope, a bishop or cardinal.

But now is also a moment with extraordinary potential for grassroots reform in the Catholic Church, and Catholic theology offers a powerful history and tradition of ground-up resistance and civil disobedience in its feminist, womanist, mujerista, and liberation theologies.

So what can these theologies offer in response to the abuse crisis?

Well, they call for no less than a revolution.

At their core, feminist and liberation theologies are concerned with the abuse of power, righting injustice and discrimination, dismantling oppressive hierarchies, and clearing space for the disenfranchised to have a voice in the tradition and a central role in its transformation. By their very nature these theologies are grassroots and practical--they start and end with everyday Catholics, the very people who have been denied power, who have been oppressed and silenced. In the 1970's, the liberation theologies of Gustavo Gutierrez, Jon Sobrino, and Leonardo Boff were instrumental not only in addressing poverty, but toppling oppressive governmental regimes that perpetuated poverty and forbade dissent. For five decades feminist, womanist, mujerista, and asian-feminist theologians (all types of liberation theology) like Elizabeth Johnson, Lisa Sowle Cahill, Diana Hayes, Ada María Isasi-Díaz, Dorothee Soelle, among many others, have been speaking out about the rights of women and children, and in particular, addressing the problematic implications for all Catholics of an all-male, hierarchical governing body.

For these same reasons--how powerful liberation theologies are in restructuring oppressive hierarchies--the Vatican has issued statements lashing out against them, publicly silencing theologians for speaking out, perhaps most famously with Leonardo Boff. (See the following Vatican documents for examples, "Instruction on Certain Aspects of "Theology of Liberation," "Instruction on Christian Freedom and Liberation," and "On the Collaboration of Men and Women in the Church"--all of which came out of the office of the Congregation for the Doctrine of the Faith during Ratzinger's tenure.) [Editor: links are in Freitas' blog post.]

Isn't the average Catholic today--those of us still in the pews--now also the disenfranchised in the wake of this second wave scandal? The abuse and criminal negligence rampant throughout the hierarchy has marginalized all of us. Staying Catholic does not equal approval of the pope, does not make someone complicit in criminal behavior. Our faith and our tradition are being stolen out from under us by a powerful few who fear responsibility and are terrified of being held accountable for harboring criminals and perpetuating abuse for decades in the process.

But liberation theologies speak directly to us, the marginalized Catholics, and provide us frameworks to move from disgust, dismay, paralysis, and disempowerment toward transformation and change.

And if the vast majority of us are now the disenfranchised, it is from this place that we can begin to remake the church. The Vatican is so embattled and its power undermined by the scandal that the center of the Catholic Church has shifted sideways as a result--if we claim it from this place on the margins. If we speak in large numbers from this place as Catholics who are the Church.

We have strength in numbers. There are far many more of us than them. And liberation theologies empower the average Catholic to enter into theological discourse. They take theology from the hands of the few, from the pope, the cardinals, and the bishops, and put the task of theology into our hands. They anchor the Catholic Church in the laity and its ordinary priests and nuns, effectively dismantling the hierarchy's power and redistributing it on a grassroots level, where it obviously belongs if the hierarchy's behavior tells us anything at all.

These frameworks of resistance and reform are the very structures that empowered me to stay, to remake my own place and sense of Catholic identity in a way that gave me a strong voice and solid place to stand. I do not speak as a Catholic approving of the hierarchy--absolutely not. I speak as a Catholic disgusted by it, certainly, but who also knows that reform must happen from within and will happen via those of us who stay and make it happen. I speak as a Catholic empowered by liberation theologies.

We are living in a different world than in the 1980's when the Vatican lashed out at liberation theologians, requiring their silence. Between today's technologies and the widespread disgust at the Vatican, the places where and opportunities for lay Catholics and disenfranchised victims to speak up and out are many--and the Vatican can do nothing to stop this.

For the Catholic laity, for the theologians and clergy who want change--in not only leadership but overall institutional reform and what the Catholic tradition stands for--now is the time for us to speak up and loudly.

For a particularly powerful, thoughtful, and thorough perspective on reform, please see feminist theologian Mary Hunt's article, "Father Does Not Know Best: How To Fix the Catholic Church" at Religion Dispatches.

Timothy Shriver in the Washington Post: Can the pope restore the purity of Catholicism?

Timothy Shriver, a Catholic himself and the Chair of the Special Olympics, writes in the Washington Post about what the Magisterium must do to regain the trust of Catholics. An excerpt:

The first part of the answer will depend on justice: Catholics and non-Catholics alike must hear a full confession -- evidence of contrition so pure that it cannot be mistaken. We must see bishops leave their teaching positions because their moral authority is lost. We must believe that civil justice will be served when crimes are committed.

But that isn't enough.

And it's not enough to say that 95 percent of priests and nuns are heroic and dedicated servants of the faith, baptizing our children, caring for the sick and the poor, ministering to our families and burying our dead. They are of course all of that.

It's not enough to say that the church has created an enormous diversity of religious practice and expression, giving birth to contemplative, monastic, scholarly and popular forms of faith that have brought the gospel to life for billions -- even though it has.

It's not even enough to argue that the church traces its roots to Jesus himself -- that it is His church. It does indeed trace its roots to gospel times. But not even that is enough to justify confidence in the bishops.

The capital of trust between the people of the church and their leaders is dangerously close to empty. The bishops cannot take the people for granted any longer. We were raised to love the gospel, to seek the truth, to serve justice, to grow in the bosom of the sacraments. But we will not do it under their leadership unless they change.

What's needed is a conversion of the bishops and the pope himself. That's right: It's time for the pope and the bishops to convert their culture to one that is centered on loving God from the depths of their souls and to leading a church that is as much mother as father, as much pastoral as theological, as much spiritual as doctrinal. It is time for them to listen to the deep and authentic witness of the people of faith, to trust the spirit that blows where it will, to abandon their defensiveness of their positions and trust only the gospel, and not their edifice of control. Conversion is a total experience -- letting go of the old and putting on the new.

The conversion we seek for them is the same conversion they invite for us: Put on a contrite heart and fall in love with God, recklessly, totally and passionately. Let the love of God be the only measure of their actions.

We live in a spiritual age, and until the bishops and the pope learn to lead a people hungry for authenticity, trust and spiritual nourishment, we will look elsewhere. There are millions of Catholics with deep spiritual wisdom -- millions of faith-filled people who love God in transformative ways. We will trust their faith and witness if the bishops fail us.

Wall Street Journal: War on Drugs is a Failure

This is an older article from the Wall Street Journal, dated February 23, 2009. The former Presidents of Brazil, Mexico and Columbia make a very interesting argument: that the war on drugs is a failure and we should concentrate on harm reduction:

The war on drugs has failed. And it's high time to replace an ineffective strategy with more humane and efficient drug policies. This is the central message of the report by the Latin American Commission on Drugs and Democracy we presented to the public recently in Rio de Janeiro.

Prohibitionist policies based on eradication, interdiction and criminalization of consumption simply haven't worked. Violence and the organized crime associated with the narcotics trade remain critical problems in our countries. Latin America remains the world's largest exporter of cocaine and cannabis, and is fast becoming a major supplier of opium and heroin. Today, we are further than ever from the goal of eradicating drugs.

Over the last 30 years, Colombia implemented all conceivable measures to fight the drug trade in a massive effort where the benefits were not proportional to the resources invested. Despite the country's achievements in lowering levels of violence and crime, the areas of illegal cultivation are again expanding. In Mexico -- another epicenter of drug trafficking -- narcotics-related violence has claimed more than 5,000 lives in the past year alone.

The revision of U.S.-inspired drug policies is urgent in light of the rising levels of violence and corruption associated with narcotics. The alarming power of the drug cartels is leading to a criminalization of politics and a politicization of crime. And the corruption of the judicial and political system is undermining the foundations of democracy in several Latin American countries.

The first step in the search for alternative solutions is to acknowledge the disastrous consequences of current policies. Next, we must shatter the taboos that inhibit public debate about drugs in our societies. Antinarcotic policies are firmly rooted in prejudices and fears that sometimes bear little relation to reality. The association of drugs with crime segregates addicts in closed circles where they become even more exposed to organized crime.

In order to drastically reduce the harm caused by narcotics, the long-term solution is to reduce demand for drugs in the main consumer countries. To move in this direction, it is essential to differentiate among illicit substances according to the harm they inflict on people's health, and the harm drugs cause to the social fabric.

In this spirit, we propose a paradigm shift in drug policies based on three guiding principles: Reduce the harm caused by drugs, decrease drug consumption through education, and aggressively combat organized crime. To translate this new paradigm into action we must start by changing the status of addicts from drug buyers in the illegal market to patients cared for by the public-health system.

We also propose the careful evaluation, from a public-health standpoint, of the possibility of decriminalizing the possession of cannabis for personal use. Cannabis is by far the most widely used drug in Latin America, and we acknowledge that its consumption has an adverse impact on health. But the available empirical evidence shows that the hazards caused by cannabis are similar to the harm caused by alcohol or tobacco.

If we want to effectively curb drug use, we should look to the campaign against tobacco consumption. The success of this campaign illustrates the effectiveness of prevention campaigns based on clear language and arguments consistent with individual experience. Likewise, statements by former addicts about the dangers of drugs will be far more compelling to current users than threats of repression or virtuous exhortations against drug use.

Such educational campaigns must be targeted at youth, by far the largest contingent of users and of those killed in the drug wars. The campaigns should also stress each person's responsibility toward the rising violence and corruption associated with the narcotics trade. By treating consumption as a matter of public health, we will enable police to focus their efforts on the critical issue: the fight against organized crime.

A growing number of political, civic and cultural leaders, mindful of the failure of our current drug policy, have publicly called for a major policy shift. Creating alternative policies is the task of many: educators, health professionals, spiritual leaders and policy makers. Each country's search for new policies must be consistent with its history and culture. But to be effective, the new paradigm must focus on health and education -- not repression.

Drugs are a threat that cuts across borders, which is why Latin America must establish dialogue with the United States and the European Union to develop workable alternatives to the war on drugs. Both the U.S. and the EU share responsibility for the problems faced by our countries, since their domestic markets are the main consumers of the drugs produced in Latin America.

The inauguration of President Barack Obama presents a unique opportunity for Latin America and the U.S. to engage in a substantive dialogue on issues of common concern, such as the reduction of domestic consumption and the control of arms sales, especially across the U.S.-Mexico border. Latin America should also pursue dialogue with the EU, asking European countries to renew their commitment to the reduction of domestic consumption and learning from their experiences with reducing the health hazards caused by drugs.

The time to act is now, and the way forward lies in strengthening partnerships to deal with a global problem that affects us all.

Mr. Cardoso is the former president of Brazil. Mr. Gaviria is a former president of Colombia. Mr. Zedillo is a former president of Mexico.

Wednesday, April 07, 2010

U.S. keeps first-strike nuke strategy, but reviews policy

Not long ago, President Obama reached an agreement with the Russian Federation's Dimitri Medvedev to begin reducing the number of nuclear weapons that the U.S. and Russia hold. The cuts were modest, but they were an important first step. Both sides will reduce the number of deployed nuclear weapons by around 30%. This treaty needs a two-thirds vote in the Senate to be ratified.

The U.S. is also reviewing its policy on the use of nuclear weapons. Previously, the U.S. stated that it was willing to use nuclear weapons on non-nuclear opponents, especially if faced with an overwhelming conventional attack. In fact, the Bush administration sought to widen the permissible uses of nuclear weapons, using them against hardened targets with substantially less provocation. Now, the President seeks to declare that the U.S. will not use nuclear weapons against any non-nuclear state that is a signatory of the Nuclear Non-Proliferation Treaty.

The eventual goal must be a world with zero offensive nuclear weapons. However, President Obama has taken some important first steps and I urge the Senate to follow through. Critics of these reductions are off-base: both the U.S. and Russia have more than sufficient nuclear weapons to destroy each other. Should Iran or North Korea foolishly decide to start a nuclear war with the U.S., there are sufficient weapons to annihilate each country several times over.

Articles are linked from the Washington Post, Voice of America and the Wall Street Journal.

Tuesday, April 06, 2010

Implementing health reform: Why do Republicans oppose Obamacare/Romneycare?

Numerous bloggers on the left have pointed out that health reform is, at least as far as the insurance exchanges go, basically the same as health reform in Massachusetts. The latter was passed with a Democratic legislature, but then-Governor Mitt Romney, a Republican, signed off on it. It's important to analyze Republican opposition to the principles of health reforms, because sooner or later, they will come back to power - it's important to know and plan for what might happen.

Prior to reform, the state had very high health insurance coverage. Medical care is very expensive in Massachusetts, but standards of living are high. The state had strict insurance rating regulations, including community rating (everyone charged more or less the same price regardless of health) and guarantee issue (everyone who applies gets offered). These provisions meant that individual insurance was very expensive for young, healthy people. However, sicker and/or older people could at least get an offer of insurance.

Massachusetts created an insurance exchange in 2006. In addition to GI and CR, they imposed an individual mandate. This forced all (or most) of the young uninsured folks to get into the insurance pool and subsidize others. This was branded as a personal responsibility requirement by some Republicans. Massachusetts provides free health care to everybody under 150% of the Federal Poverty Limit through a program known as Commonwealth Care, or CommCare. CommCare also provides discounted insurance (on a sliding scale) to people from 151-300% of FPL. Everyone else in the exchange is on the Commonwealth Choice, or CommChoice, program.

Massachusetts mandates that all people eligible for CommCare receive it through the exchange. They mandate that the companies offer benefits in three broad tiers, Bronze, Silver and Gold. The deductibles and copays are standardized in each tier (e.g. all Bronze plans have a $2,000 deductible and $5,000 maximum out of pocket for individuals). Bronze plans cover an average of 65% (if I recall right) of your medical expenses. Silver does about 75% and gold does about 85%.

This level of regulation of the marketplace is objectionable to conservatives and probably leads them to think that the "Comm" in CommChoice stands for Communism. However, there is a good rationale for this. If you present people with too many choices, they will choose poorly. Evidence shows that having a large number of investment options in 401k retirement plans can cause people to not invest. Evidence shows that many people in Medicare Part D, which offers a large and sometimes confusing array of insurance companies, don't choose the plan which maximizes their savings - seniors who didn't choose the lowest cost plan could have saved an average of $360-520 by doing so. By standardizing the benefits to some degree and putting them in tiers, CommCare makes it easier for people to choose and easier for them to compare plans. It guarantees that all plans in each tier will provide about the same amount of coverage.

Even with the actuarial value specifications for each tier (i.e. the % of average expenses the plans cover), insurers can vary the designs quite a bit. They can also vary those policies to make their plans less favorable to people with certain conditions. For example, they could impose a separate and additional deductible for prescription drugs - this means that anyone with diabetes or asthma or depression would pay more, perhaps quite a bit more, on that plan, so they will choose another one. This pushes sicker people onto other plans, which raises their costs. If you allow unrestricted variation, you end up with some plans with relatively skimpy coverage and healthy people and some plans with generous coverage and very sick people. The latter plans are very expensive. This undermines the whole exchange system. Sarah Lueck of the Center on Budget and Policy Priorities has more on this topic.

Actuaries are able to do a function called risk adjustment, which is to redistribute premium payments on an exchange from the plans with healthier populations to plans with less healthy populations. This aims at correcting for insurers attempting to cause adverse selection like in the example I described above. However, risk adjustment isn't perfect. It doesn't compensate fully for people with higher medical expenditures. Additionally, it's harder to do when plans vary significantly in benefit design. And furthermore, if you have an exchange that is risk adjusted but insurers can still sell outside the exchange, then the plans will probably try to recruit healthy people outside the exchange and sicker people in the exchange. This could be as simple as a marketing campaign on college campuses or at gyms and fitness clubs. But it will undermine the exchange, because people on the exchange are supposed to cross-subsidize each other.

If we want to put up with a system of competing insurance companies, then this sort of infrastructure is required to ensure that the system runs well and pools risk properly. Some Republicans would just set up exchanges and let the companies run wild, but then they would merely be "innovating" on thousands of variations of benefit schemes with no apparent purpose other than to weed out unhealthy enrollees, instead of concentrating on improving efficiency, negotiating good prices with providers and manufacturers and managing their enrollees' chronic diseases. If and when the Republicans return to power in Congress, it is likely that they will attempt to overturn these regulations. However, doing so will cause the system to unravel, and any attempt to deregulate this system should be resisted at every opportunity.

Monday, April 05, 2010

Forward on Health Reform: Undocumented immigrants and healthcare

The United States has chosen, for better or worse, to organize access to health services on an insurance model. In contrast, in countries like the United Kingdom and Canada, you just show up with minimal documentation at a clinic or hospital, which gets reimbursed directly by the government.

In health reform, the issue of undocumented immigrants was so contentious that the Democrats left undocumented immigrants completely out of the bill. They are forbidden to participate on the exchanges at all. The original House bill would allow them to buy insurance on the exchanges if they used their own money.

Undocumented immigrants will continue to access community health centers, which will charge sliding scale fees. They will be eligible for emergency treatment, and hospitals will still receive compensation for treating them under Disproportionate Share Hospital funds (DSH, pronounced "dish", funds).

Access to care for this population will continue to be a problem. The U.S. will have to keep investing in community health centers, which will also serve Medicaid patients and many minority communities.

What is clear is that as the ranks of the uninsured diminish, immigrants like Medrano will continue to patch together health care as they can — at health centers such as Fresno's Clinica Sierra Vista, at hospital emergency rooms, or through programs like Healthy San Francisco, which offers universal health care to all who live in the city.

"We have to be very creative — not asking for labs unless it's really essential, working with generics, working with drug companies, giving them samples," said Juan Carlos Ruvalcaba, the doctor seeing Medrano at Clinica, which charges on a sliding scale of $40 to $70, depending on the patient's ability to pay.

Once an undocumented immigrant himself, Ruvalcaba was able to become a citizen and attend medical school because of an amnesty program in 1986. He remains committed to serving all patients, no matter their insurance or immigration status, but there is only so much he can do, he said.

He was able to give Medrano the drugs she needed, but he asked, "What happens when they need a specialist? What if they end up in the emergency room, and end up with a big bill?"

Some who work with this population are afraid that with the focus shifting onto providing care for the newly insured, those shut out of the system will be forgotten, left to fend for themselves with even fewer resources.

"It may make things worse — if you say 32 million are covered, there may be less done for these large groups who are here, who are working, who are such a large part of our agriculture industry," said Norma Forbes, executive director of Fresno Healthy Communities Access Partners, a nonprofit network of eleven health care organizations in California's rural Central Valley.

One anti-immigration commenter interviewed for the article said there is no foolproof way of verifying documentation to keep undocumented immigrants from participating on the exchanges. That's a fatuous comment, because there is no foolproof way of doing anything. That said, she does have a point in that someone with a false Social Security number belonging to a citizen could potentially get into the exchanges and receive subsidies. I don't expect that this will happen very much, though.

All permanent residents and refugees would be eligible for subsidies, and in the latter case, for Medicaid. If undocumented immigrants had participated in the exchanges, they would be easily identifiable because they weren't receiving subsidies. If the government wanted to round them up, the information on the exchanges could be subpoenaed. I'm not sure that many of undocumented immigrants would participate in health reform if they could, but I still think they should be given the chance. Furthermore, in the long run, we do not want a market outside of the exchanges for technical reasons. In any case, this is one of the things we will have to fix, along with the immigration system.

Sunday, April 04, 2010

Oscar Romeo's resurrection and lessons for the United States

On March 24, 1980, Oscar Romero, the Archbishop of San Salvador, was murdered by agents of the government. The right-wing government at the time regularly murdered its citizens and received significant military aid from the U.S.

I've blogged about Msgr. Romero before. A National Catholic Reporter article by John Dear, SJ, offers theological insight, as well as a criticism of then-Pope John Paul II's handling of the situation; many priests who supported the poor in El Salvador were associated with Marxism, which was anathema to the Catholic Church. Oscar's martyrdom offers many critical lessons for Christians.

His martyrdom also offers a critical lesson for U.S. foreign policy.

Meanwhile, Romero's preaching reached biblical heights. "Like a voice crying in the desert," he said, "we must continually say No to violence and Yes to peace." His August 1978 pastoral letter outlined the evils of "institutional violence" and repression, and advocated "the power of nonviolence that today has conspicuous students and followers." He wrote: "The counsel of the Gospel to turn the other cheek to an unjust aggressor, far from being passive or cowardly, shows great moral force that leaves the aggressor morally overcome and humiliated. The Christian always prefers peace to war."

Romero lived in a sparse, three-room hermitage on the grounds of a hospital run by a community of nuns. During his busy days, he traveled the country, met with hundreds of poor Salvadorans, presided at Mass, and met with local community leaders. He assisted everyone he could. Later, he said that one of his primary duties as archbishop had become not just challenging the U.S.-backed government and its death squads, but claiming the dead bodies of their victims, including priests, nuns and catechists.

On one of my visits, a Salvadoran told me how Romero would drive out to city garbage dumps to look among the trash for the discarded, tortured victims of the death squads on behalf of grieving relatives. "These days I walk the roads gathering up dead friends, listening to widows and orphans, and trying to spread hope," he said.

In particular, Romero took time every day to speak with dozens of people threatened by government death squads. People lined up at his office to ask for help and protection, to complain about harassment and death threats, and to find some support and guidance in their time of grief and struggle. Romero received and listened to everyone. His compassionate ear fueled his prophetic voice.

By late 1979 and early 1980, his Sunday sermons issued his strongest calls yet for conversion to justice and an end to the massacres. "To those who bear in their hands or in their conscience, the burden of bloodshed, of outrages, of the victimized, innocent or guilty, but still victimized in their human dignity, I say: Be converted. You cannot find God on the path of torture. God is found on the way of justice, conversion and truth."

When President Jimmy Carter announced in February 1980 that he was going to increase U.S. military aid to El Salvador by millions of dollars a day, Romero was shocked. He wrote a long public letter to Carter, asking the United States to cancel all military aid. Carter ignored Romero's plea, and sent the aid. (Between 1980 and 1992, the U.S. spent $6 billion to kill 75,000 poor Salvadorans.)

Augusto Pinochet of Chile was on the U.S. payroll - the CIA acknowledged involvement in his repression in this link. Saddam Hussein was on the payrolls as well, as a counterweight to Iran - by the way, the U.S. supported the Shah, who was unpopular and who repressed his people. The U.S. has particularly sinful relationships with the Middle East and Latin America that will take generations to mend. But if Msgr. Romero has a lesson for U.S. foreign policy, it is that we must indeed mend those relationships.

Wednesday, March 31, 2010

Time: Why Japan Keeps Fighting the Whale Wars

Bryan Walsh writes for Time magazine.

While the team behind The Cove, the hidden-camera documentary about dolphin slaughter in Japan, was in Los Angeles last week accepting an Oscar for Best Documentary, it took a detour to help carry out another undercover sting operation — this time at a Santa Monica sushi restaurant.

Together with federal officials, the team members discovered evidence that a restaurant called the Hump — really — was secretly serving whale meat, in violation of the Marine Mammal Protection Act. When confronted, the restaurant accepted responsibility for serving whale, and now faces a fine of up to $200,000. As Andre Birotte Jr., a U.S. Attorney on the case, told the New York Times, "Someone should not be able to walk into a restaurant and order a plate of an endangered species."

Which leads to the question — who would possibly eat whale meat?
Well, for one: me.

Before you begin flooding the Internet with electronic hate mail — or contacting the nearest U.S. attorney — you should know that my eating whale was a onetime thing, as part of my reporting, and it happened in Japan, where eating whale is not only legal but sometimes considered a national right. (Japan is not the only country to refuse to accept the whaling ban, but it's the only one that pursues whale in any significant way.)

In June 2005 I attended an annual whale-tasting event held by the Japanese Whaling Association at the national legislature in Tokyo. Restaurants from around Japan served their best cetacean recipes — whale sushi, whale sashimi, whale on crackers, canned whale, whale with Osaka noodles — to black-suited Japanese legislators, who grazed from one table to the next.
So I had to try it. When you cover a whale-tasting event, you have to taste whale. And morality aside, I can tell you that whale meat isn't good. As sushi and sashimi, it was fatty and chewy with a bland, blubbery taste — like salmon that's been kept out too long. The one exception was the whale noodle dish, but I'm going to say its success had more to do with the noodles and spicy broth than it did with the whale. All in all, the experience made it hard for me to keep a straight face when people referred to whale as a "delicacy." It was like eating leftovers from a submarine.

Indeed, even in Japan, whale meat isn't that popular. Though some coastal towns have hunted whale for centuries, relatively few Japanese ate whale regularly before the postwar years, which is when it took off. What changed? Blame U.S. General Douglas MacArthur, head of the U.S. occupation of Japan, who thought whale meat would be a cheap source of protein for an impoverished country and effectively launched the modern Japanese whaling industry. A generation of Japanese schoolchildren grew up accustomed to having whale in their lunch boxes.

But it's been decades since Japan could be described as impoverished, and a 2008 survey found that 95% of Japanese either eat whale meat very rarely or not at all. The fishing company that owns Japan's whaling ships estimated that annual per capita consumption from its catch might amount to less than four slices of sashimi a year. If Japanese whaling — which is allowed under the international ban only on a very small scale, as "scientific research" — ended tomorrow, your average salaryman in Osaka would barely notice.

And yet the whale wars continue — and even seem to be worsening. In January a vessel belonging to the Sea Shepherd Conservation Society, a group that tries to disrupt Japanese whaling on the high seas, was badly damaged in a collision with a Japanese whaling ship. On March 12, the Japanese Coast Guard in Tokyo arrested Peter Bethune, a member of Sea Shepherd, after he tried to board a whaling ship without permission in February. Yet Sea Shepherd — the subject of the popular Animal Planet reality show Whale Wars — isn't holding back. "Nothing is going to keep us from trying to save whales," says Laurens de Groot, a deckhand on a Sea Shepherd vessel. "We're not going to stop."

But neither is Japan. In part, the Japanese may be protecting their right to whale as a stand-in for a separate issue they actually care about: fishing for bluefin tuna, which is popular in sushi. The Japanese eat an estimated 80% of the world's catch of the species, which many scientists believe is in danger of being fished out of existence. If Japan holds the line on whaling, the argument goes, it would send a signal that limits on bluefin tuna aren't up for debate either.

We'll see if that message gets through. At the meeting of the Convention on International Trade of Endangered Species, beginning on March 13 in Doha, the E.U. and U.S. will push for a ban on international trade of the bluefin. Japan has already said it would oppose the ban, but Tokyo faces an uphill battle. "A ban is the only possibility to prevent a total collapse of this species," says Sergei Tudela, Atlantic bluefin tuna expert for the World Wildlife Fund.

But there is more than just fish politics and food culture at stake for Japan when it comes to whaling. Even though few Japanese ever sit down to a plate of whale sashimi, they still resist viscerally the idea that the international community could force Japan to stop whaling. A country that arguably never returned to full sovereignty after World War II — its constitution greatly limits its military, and U.S. armed forces are still based throughout Japan — can get tired of the world telling it what to do. As a Japanese chef told me at that whale festival in 2005, "If other people don't want to eat whale, that's fine. But we should be allowed to do what we want." A side of national pride makes a blubbery dinner go down a lot easier.

On Leadership: A step-by-step plan for the Catholic Church

Bill George, a management professor at Harvard Business School, has some management advice for Pope Benedict.

Q: Pope Benedict XVI's efforts to deal with the Church's sex scandal raises this question: Can a leader hold managers to account on an issue where his own past performance is in question?

Pope Benedict XVI is facing the greatest crisis of his long career. It's not just his leadership of the Vatican that is on the line, but the reputation of the entire Roman Catholic Church. If the Pope fails to face the reality that problems of pedophilia by priests have brought on the church, many Catholics may lose faith that their church leaders practice the same high moral standards that they preach. This situation is ironic for a Pope whose hallmark has been enforcing moral and sexual standards for one billion of the faithful. Does he have any choice but to require his priests to do the same?

Why is it so hard for the Vatican and especially this Pope to face reality? Is it denial? A cover-up? A double standard? Or simply a desire to protect its own leaders?

First of all, doing so means acknowledging that the church in not dealing as harshly with sexual deviants as civil law and basic morality would require. To suggest that these problems are limited to very few priests or a distant problem corrected long ago only accentuates public denial of the depth of these problems and widespread knowledge of them throughout the church hierarchy.

While addressing a crisis of this magnitude is painful, it must start with the Pope admitting mistakes the Vatican has made, including his own. Next, the Pope needs to deal as aggressively with past defenders as would be expected in a court of law. Then, he needs to install a compliance system that will prevent future occurrences and ensure the early identification of offenders. Finally, Pope Benedict XVI needs to make the Vatican itself much more transparent in order to prevent covering up problems in the future.

These steps, which are similar to what would be expected in government, public corporations, or other religious denominations, are required to protect children who believe in their church. Their protection is far more important than preventing wayward priests from being held to high moral standards.

Tuesday, March 30, 2010

Mother Jones: The Man Who Almost Killed Health Reform

Rep. Bart Stupak, while sincerely committed to the pro-life position, was sincerely determined to see health reform pass. In the case of Richard Doerflinger, a senior analyst with the U.S. Conference of Catholic Bishops and a key architect of their anti-abortion campaign, the commitment to health reform is much less clear, as Mother Jones magazine reports. An excerpt:

Like many other Catholic groups, the bishops have long advocated for universal health care. But as abortion moved to the forefront of the health care debate, a schism occurred. As the health care bill neared a vote in the House last November, Stupak claimed that by providing tax credits to help people buy insurance, the legislation would result in government money being used to pay for abortions. With Doerflinger’s help, he drafted an amendment that required women to purchase a separate "rider" policy with their own money if they wanted abortion coverage. When the action shifted to the Senate, Sen. Ben Nelson (D-Neb.) inserted slightly different anti-abortion language requiring women who receive tax credits to cut a separate check to pay for the part of their insurance policy that would cover abortion. Many Catholic groups who favored health care reform decided that the Senate anti-abortion provisions were acceptable. By late March, Catholic nuns, the Catholic Health Association, and many individual pro-life faith leaders had admitted publicly that the Senate bill would not fund abortion, and expressed support for the Democrats' plan.

But the bishops wouldn't budge. Doerflinger insisted that the Senate bill would still lead to federal financing of abortion, and that only the House version would do. Soon, the ostensibly pro-reform bishops had joined forces with a coalition of conservative groups who had no desire to see a health care bill pass. These included Focus on the Family and the National Right to Life Committee (NRLC), which attacked the Democrats' plan as "death care" and warned that it would lead to the "rationing" of medical treatment.

Before long, liberal Catholics were questioning the motives of Doerflinger and the bishops in aligning themselves with these right-wing groups. In mid-March, the National Catholic Reporter slammed the bishops for embracing a "red herring" argument served up by the NRLC that the Senate bill would allow community health centers to fund abortions. In fact, community health care centers have never performed abortions and there was no plan for them to do so in future. "The bishops have to be clear that some of their talking points might lead honest observers to question their competence—or worse," the National Catholic Reporter concluded. (Doerflinger declined to respond to follow-up questions regarding the community health centers issue.)


Stupak pushed Doerflinger's position almost until the very end. On March 17, he told Fox News that he didn’t listen to nuns when drafting pro-life language, and instead relied on "leading bishops, Focus on the Family, and The National Right to Life Committee." But four days later, on the day of the final vote, he abruptly changed course. Over the bishops' objections, he accepted the White House’s compromise: an executive order reiterating that no government money would be used to pay for abortions.

In the days since Stupak voted for the bill, relations between his bloc and the bishops have soured. "The church does have some work to do in dealing with frayed nerves and divisions on policy questions," Doerflinger told Catholic News Service. Last week, Stupak attacked the bishops and other anti-abortion groups for "great hypocrisy" in opposing Obama's executive order after having supported former President George W. Bush's executive order banning stem cell research in 2007. He told the Daily Caller he believed the bishops and the groups they were allied with were "just using the life issue to try to bring down health-care reform." In other words, he suspected he was wrong to trust that his former allies were acting in good faith.

Health Reform Watch: First administrative problem with health reform

Ezra Klein, who blogs on the Washington Post, reports that insurance companies initially tried to weasel out of the requirement to immediately. cover all kids regardless of pre-existing conditions. They agreed that, for kids they actually insured, they could not exclude pre-existing conditions. However, they argued that they were not subject to guarantee issue requirements and that they would not need to offer insurance to sick kids.

Clearly, Congress intended to have all kids covered. The insurers read the law correctly but they would not have been following the spirit of the law. This is irrelevant: the Secretary of Health and Human Services, Kathleen Sebelius, was infuriated and threatened to clarify in regulation that the insurers were subject to guarantee issue. The insurers have folded. If they had been willing to accept a PR disaster, the substantive consequences would not have been terrible, since most such children would be eligible for the Children's Health Insurance Program, the publicly-sponsored kids' insurance program which covers uninsured children. In any case, the insurers would have found it difficult to justify not covering children for obvious reasons - kids are ahead of even the military, small businesses and kittens in terms of public sympathy.

This does highlight the considerable challenge that HHS and other government entities will face in the years to come. It's simply not possible to write a law to cover every contingency - and some folks were already complaining about the 2700-page bill. We clarify a lot of the law in regulations. However, when the exchanges are up and running, a lot more wrinkles will surface at the exact same time. HHS and state agencies will need to be on their collective guard. Consumer representatives will need to hold their governments accountable.

Monday, March 29, 2010

Health Reform Watch: The Tax Foundation: How Health Reform is Financed

The Tax Foundation is an anti-tax foundation in DC. I disagree with many of their positions. However, they do have an informative graph of how the taxes in the health reform bill break down.

Main Components in Net Cuts to Medicare ($416.5 billion)

Reductions in annual updates to Medicare FFS payment rates = $196 billion cut
Medicare Advantage rates based upon fee-for-service rates = $136 billion cut
Medicare Part D "donut hole" fix = $42.6 billion increase
Payment Adjustments for Home Health Care = $39.7 billion cut
Medicare Disproportionate Share Hospital (DSH) Payments = $22.1 billion cut
Revision to the Medicare Improvement Fund = $20.7 billion cut
Reducing Part D Premium Subsidy for High-Income Beneficiaries = $10.7 billion cut
Interactions between Medicare programs = $29.1 billion cut

Main Components in Other Provisions ($149 billion)

Associated effects of coverage provisions on revenues = $46 billion
Exclusion of unprocessed fuels from the cellulosic biofuel producer credit = $23.6 billion
Require information reporting on payments to corporations = $17.1 billion
Raise 7.5% AGI floor on medical expenses deduction to 10% = $15.2 billion
Limitations to the use of HSAs, MSAs, FSAs, etc. = $19.4 billion

Other Net Spending Cuts ($52 billion)

Education reforms = $19 billion cut, which is the difference between approximately $58 billion in spending reductions via reform of the student loan program and approximately $39 billion in greater spending on higher education programs, most notably Pell Grants
Community Living Assistance Services and Supports = $70 billion in cuts
Category is netted lower by increases in other health programs such as public health programs and spending on community health centers

CSRWire: Does greater equality benefit the rich?

Corporate Social Responsibility Wire asks if greater economic equality benefits the rich, as well as the poor:

By Jeffrey Hollender

“We want bigger houses and more cars, not because we need them, but because we use them to express our status. Material goods are how we show the world we’re keeping up, and in a more hierarchical society that’s more important. Status competition becomes more intense, and that increases our need to consume… We came across a website in England called ‘Ferraris for All,’ making the point that if everybody had a Ferrari, there would be no status in owning one.” -Kate Pickett

For years, I have worked to create a more just and equitable society, knowing that it would lead to a more sustainable world but also deeply believing that it was a moral imperative. If you are one of the globe’s vast majority of citizens who live daily with the adverse impacts created by the concentration of wealth in the hands of a very few, chances are you agree with this point of view. However if you are part of the wealthy and powerful 1% of the population that controls 90% of the world’s wealth, you’re likely to think this point of view reeks of a liberal disorder.

But what if increased justice and equity was also the key to greater happiness and fulfillment for the wealthy as well, and would mean less pollution, higher levels of educational achievement, lower health care costs, less crime, more vibrant local communities, and declining rates of cancer and depression? What if the bad stuff we all want less of and all the good stuff we want more of was exponentially achievable if we lived in societies where the spread between the rich and the poor was reduced?

A brilliant and critically important new book, The Spirit Level: Why Greater Equality Makes Societies Stronger, by Richard Wilkinson & Kate Pickett, provides compelling evidence that, in fact, each of eleven different health and social issues-physical health, mental health, drug abuse, education, imprisonment, obesity, social mobility, trust and community life, violence, teenage births, and child well-being-fare substantially better in more equal societies.

Until I read the research assembled in The Spirit Level it was difficult to argue that the problem of income inequality in modern societies is about anything other than fairness. But Wilkinson and Pickett methodically compare the scale of income differences in both different countries and different states within the U.S. to reveal just how much the fabric of society is affected by high levels of inequality. Research carried out since the early 1990s shows that many of our most pressing problems are worse in more unequal societies, and that societies with bigger income differences suffer more from a very wide range of health and social ills.

Statistics comparing countries with very high-income inequality like the U.S., the U.K., and Singapore to countries with very low-income inequality like Sweden, Norway, Finland, Netherlands, Belgium and Denmark tell a stark story:

When being asked to agree or disagree with the statement, “most people can be trusted,” people in Sweden, Norway, Finland and Denmark agree 50% more often than citizens of the U.S. and Singapore.

Comparing levels of foreign aid, Sweden, Norway, Finland, and the Netherlands spend on average 400% to 500% more of their national income than does the U.S.

60% more individuals suffer from mental illness in the U.S. and U.K. than in the Netherlands and Belgium.

If you live in Sweden or Norway you’ll live on average 2 to 3 years longer than if you live in the U.S. or Singapore.

Infant deaths per thousand are 100% higher in the U.S. than in Sweden, Norway, and Finland.

Obesity is 200% higher in the U.S. than in Sweden and Norway.

What can we do to erase these and many other remarkable disparities? Here are 10 ideas that would go a long way toward that critical goal:

Develop a national economic plan that places a priority on investing in health, education and welfare over military spending.
Raise income taxes on the wealthiest individuals and families and close loopholes.

Eliminate estate tax deductions.

Change capital gains tax rates to provide aggressive incentives for long-term investments. Short term rates (investments for under 1 year) may need to increase to as much as 90%, with long term rates declining to zero over a twenty-five year time horizon.

Mortgage deductions must be eliminated on second homes and limited to $200,000 for primary residences.

Charitable giving needs to receive even greater financial incentives.

Limit deductions for executive compensation to $500,000.

Minimum wage requirements must be transitioned to “Livable wages.”

We must ensure that “green jobs” are only funded and incentivized in sustainable businesses and industries.

Small Business Administration loan guarantees and tax credits for job creation must be aligned with the interests of local sustainable economies.

For more information on the issue and impacts of inequality, please visit the Equality Trust, Wealth for the Common Good, and Fair

An Inequality Index from the Institute for Policy Studies

Percentage of U.S. total income in 1976 that went to the top 1% of American households: 8.9. Percentage in 2007: 23.5.
Only other year since 1913 that the top 1 percent’s share was that high: 1928.
Combined net worth of the Forbes 400 wealthiest Americans in 2007: $1.5 trillion.
Combined net worth of the poorest 50% of American households: $1.6 trillion.
U.S. minimum wage per hour: $7.25.?· Average hourly wage in 1972, adjusted for inflation: $20.06.?· In 2008: $18.52.
From 2006 through 2008, the top five executives at the 20 banks that have accepted the most federal bailout dollars since the meltdown averaged $32 million each in personal compensation. One hundred average U.S. workers would have to work over 1,000 years to make as much as these 100 executives made in three years. (Institute for Policy Studies, Executive Excess 2009)
About Jeffrey Hollender

Jeffrey Hollender is co-author of the recently published book, The Responsibility Revolution and Co-Founder and Executive Chair of Seventh Generation, the leader in green household products. He is also the author of Inspired Protagonist , the leading blog on corporate responsibility and a co-founder of the American Sustainable Business Council and the Sustainability Institute.

NPR: Microlending comes to the US

When I was an undergraduate, I wrote a paper on microlending. Everyone, including me, admires the concept. As practiced in the Global South, it relies on social networks to guarantee credit - microloans are made to groups of women, under the assumption that if one defaults, the others will pressure her to make good on her promise, since they too will be considered in default. I thought microlending would not take off in the US because social norms would not allow for that business model, and the legal system might not support it.

Well, microloans are starting to come to the US, but they aren't guaranteed by the group lending model. National Public Radio has a good story on how non-profits are doing a lot of micro loans in the US, and how they have become a significant source of credit for small businesses in this recession.

Basically, large traditional lenders in the US mainly work with your credit score, which is a summary measure of how well you've repaid your debts (both secured, like mortgages and car loans, and unsecured, like credit cards) in the past. For the big banks, their business model is based on doing a lot of mortgages quickly, which is why they use the credit scores. However, the credit scores miss a lot of new immigrants and a lot of poorer people who haven't been banked in the past. They may also miss small businesses who don't have a track record of credit, but have a good business model and need funds to expand. This describes Ryan Folcher of Arlington, Virginia. A traditional bank was about to extend him a loan before the recession hit - then they pulled their offer. Folcher was nearly forced to liquidate until a local nonprofit microloan corporation (that was incorporated to help Hispanics but extended him credit anyway) worked with him.

The radio segment described that the loan process was quite labor intensive. The loan officer worked with Folcher in detail to understand his financial situation and how much cash flow he was generating. Businesses development assistance is one prominent feature of microlending which is harder to translate to commercial banking because of its labor intensity; Self Help Credit Union is a community development credit union which offers such services (disclosure: I have some money on deposit with them).

When I was an executive VP at a student housing cooperative, we worked with a local for-profit bank. We were refinancing a loan, and our loan officer took the time to understand our unique and quirky business model, and the fact that we could, in a worst case, liquidation scenario, pay the loan off. He said that he'd heard a case of a local businessman working with a larger commercial bank. He, too, had a slightly unusual financial situation. He had always been good on his debts, but some newly-minted MBA loan officer came in, took a look at the documents, and called in his loan. He had to shut his business down, but a loan officer who had taken the time to go through the business would likely not have made that call.

In the US, business opportunities are readily available. I suspect that non-profits will continue to dominate the micro-loan space in normal times; we had a credit glut not so recently, but the big banks are being very careful now. The smaller amounts involved in working with small businesses and the time it takes to offer business development assistance and to work intensively with clients probably rules the big banks out from being major suppliers of small loans. The microloan person interviewed on NPR said that his goal was to eventually be put out of business by the bigger banks, but I still think we will need to rely on nonprofits and smaller community banks to fill this gap in.