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.

WaPo: Lisa Miller on the Decline of Hell

Miller talks about the afterlife. She says that when you are motivating people to go fight in a war, promising them 72 virgins in heaven (an example from modern extremist Muslims) is a sensible thing to do.

However, in the US, belief in hell is declining due to increasing religious pluralism.

Michael Steele's flights of fancy

I normally don't discuss purely political matters. However, the Washington Post reports that Republican National Committee Chairman Michael Steele is in more hot water for profligate expenditures like private jets and expensive hotels ... and, apparently, a $1,946.25 visit to Voyuer West Hollywood, "a bondage-themed nightclub featuring topless women dancers imitating lesbian sex."

To which, one commenter posted, "You just can't trust Republicans. They say they love freedom, but they dream of putting everyone in bondage."

This review on Yelp by "Richard D" from Union City, NJ, has to be a joke (it's dated today, 3/29/2010):

Hi I really love this place its not only the new trendy place on the strip but offers a really kinky slant on nightclubs, The price is the real problem - My friend Michael and I spent $1946 dollars on bottle service and tips for dancers - lucky we were on an expense account !!!!!! We are from out of town and dont get to see this back east. We always new LA girls were hot and kinky but this was just too much. Its a great place to let loose when your on a business trip and no one knows who you are. Sometimes you have to drop your conservative ways and let loose - this is the perfect place - as long as its not on your dime!!

Steele denies making this particular expense.

Sunday, March 28, 2010

The Roman Catholic Church, Pope Benedict XVI and the child sex abuse scandals

I would like to never mention the Catholic Church and child sex abuse again. However, the issue has thrust itself back into the limelight. While Joseph Ratzinger was Archbishop of Munich in 1980, there are reports from the New York Times that he received a memo recommending that a priest who had reportedly molested several children be transferred. Archbishop Ratzinger denies having any knowledge of the recommendation to transfer the priest, which was approved by his subordinates. Indeed, another NYT article describes him as a theologian more than a manager. He may not have paid attention.

This may illustrate a leadership problem with then-Archbishop Ratzinger, although he wasn't alone in not giving this problem the seriousness it deserved:

Andreas Englisch, a leading German Vatican expert and the author of several books on Benedict, said that Cardinal Ratzinger “was never interested in bureaucratic stuff,” and noted that when he was first asked to be archbishop of Munich, he considered turning down the post because he did not want to work as “a manager.” In his autobiography, Benedict described taking the post as “an infinitely difficult decision.”

That said, as Archbishop, he was ultimately responsible for his archdiocese, including the personnel matters of the priests under his authority. Instead, he arguably abdicated that authority.

Mr. Englisch, the Vatican expert, said that transferring a problem priest was “such a difficult decision” that it would necessarily have required his opinion.

“I think the guy who handled it would have gone to his archbishop and said, ‘This case of transferring a priest is not common, and we should really have an eye on him,’ ” Mr. Englisch said. Referring to Benedict, he added, “I don’t think that he really knew the details; I don’t think he was really interested in the details.”

“As they say in the legal profession, you either knew or you should have known,” said the Rev. Thomas P. Doyle, who once worked at the Vatican Embassy in Washington and became an early and well-known whistle-blower on sexual abuse in the church. “The archbishop is the unquestioned authority in that diocese. The buck stops there.”

The Archdiocese of Munich did as every other Roman Catholic diocese at the time was doing: they cloaked the problem in obscure language and transferred the priest quietly. In many modern churches, that priest would likely be defrocked. We already knew that sexual abuse by priests had been widespread and had been covered up. I would not have mentioned this, because I would like to give the Catholic Church the benefit of the doubt and assume that they are attempting to improve their safeguards of priests who are sexually abusive. However, what is galling is that the Vatican has offered apologies but no consequences. In a normal organization, heads would have rolled by now. Furthermore, the Pope has been on the defensive, saying that he won't be "intimidated". The Catholic Church is giving the impression that it is more concerned about people going after their money and about avoiding scandal.

Now, money does weird things to people. There will always be someone after the church's money. However, their first priority should be to fix the problem and to prove to the public that this will not happen again. The rest will sort itself out. What does it tell the public if they're more concerned about protecting themselves?

The Catholic Church needs to remember that priests, bishops, cardinals and the Pope are all accountable to lay Catholics, and in fact, to the general global public. Jesus did not lord it over his followers, he washed their feet instead. All churches and clergy have leadership roles in society, but they are not kings - and yet the magisterium is acting like they were crowned kings over humankind.

Saturday, March 27, 2010

Health Reform Watch: AT&T takes $1 billion charge from health reform, files Chapter 11

The folks on the Wall Street Journal are starting to get hysterical over the $1 billion charge that AT&T took due to changes in health reform. What happened, exactly?

First, some accounting. AT&T took a $1 billion charge against earnings. This is not the same as the company writing the government a check for $1 billion. And the headline about AT&T going bankrupt is a joke.

The company, being heavily unionized, has many retirees for which it provides health benefits. In this case, it pays them some benefits for Medicare Part D, which is the prescription drug benefit. Previously, those payments were deductible, meaning that the company could deduct the value of those retiree benefits from its earnings when figuring its tax liability - just like a company can deduct the cost of its employee salaries from its earnings. Earnings, in the accounting sense, are what a company earns after its cost of doing business (like infrastructure, administration, etc), but before depreciation, amortization and taxes.

During the enactment of Part D, many companies threatened to drop drug coverage for their retirees, since they could then get the drug benefits through the public program. Congress then decided to give them a 28% subsidy to continue delivering the benefits - a significant subsidy. Corporations deduct salaries, retiree benefits and other costs like infrastructure from their revenue to figure their taxable earnings, and under the previous regimen, they were allowed to deduct the entire value of their contributions to drug benefits including the cost of the subsidy. Under health reform, companies are now not allowed to deduct the government subsidy from their earnings, which is what should have happened all along.

Ironically, this information comes from a WSJ article by David Reilly, Ellen Schultz and Ron Winslow.

At the time Congress granted the subsidy and allowed companies to deduct the subsidy from their taxes (and again, they should not have allowed companies to double-dip by also deducting the subsidy from their taxes), AT&T reduced its future tax liability by $1.6 billion. The charge they have taken for $1 billion affects their current earnings, but it is a non-cash charge. They will have to pay about $1 billion in extra taxes over a period of many years - basically, over the lives of their retirees. Due to accounting rules, they had to charge off the entire amount now.

A different WSJ article says that the impact to Caterpillar's bottom line, will be more like $7 million per year - in comparison, they took a $100 million charge, their retirees will receive $240 million in government subsidies from 2010-2019, and their profits last year were $895 million.

The companies probably correct in their accounting, but people should not be misled - AT&T is NOT out $1 billion in cash right this second because of health reform. Nobody is going to go bankrupt over this accounting change. In contrast, if we fail to control costs, the entire country is going to go bankrupt.

Health Reform Watch Post Mortem: Rep. Bart Stupak comments on why he wrote the Stupak-Pitts Amednent

Mr. Stupak, author of the infamous Stupak-Pitts amendment that would essentially have prohibited all insurance plans on the insurance exchanges from offering abortion services (although buyers might be able to shop for completely separate riders covering abortions), talks in a Washington Post op-ed about the flak he has taken from pro-lifers. Mr. Stupak and many of his original colleagues in the House dropped their earlier demands in exchange for an executive order.

His commitment to health reform as well as his pro-life principles seems clear to me. He even described the entire package, after his agreement with the President, as a pro-life bill, which was significant. In contrast, he says that many conservative pro-life organizations which rallied around him were doing so in hopes that the split on abortion would result in the bill's failure:

When I saw that Kathleen Parker's March 24 op-ed, "Stupak's original sin," defined me as a "backstabber," it reminded me of a Bible verse. Matthew 7:3 asks, "Why do you look at the speck of sawdust in your brother's eye and pay no attention to the plank in your own eye?"

The true motives of many blogs and organizations claiming to be pro-life have become clear in recent days: to politicize life issues as a means to defeat health care reform. One group even sent an e-mail to supporters saying they are "working feverishly to stop this legislation from going forward."

The pro-life groups rallied behind me -- many without my knowledge or consent -- not necessarily because they shared my goals of ensuring protections for life and passing health-care reform but because they viewed me as their best chance to kill health-care legislation.

He admits that an executive order does not quite have the force of law. However, while an executive order can indeed be overruled by legislation or by the judiciary, the order that the President signed will likely not be overturned.

Therefore, I and other pro-life Democrats struck an agreement with President Obama to issue an executive order that would ensure all Hyde Amendment protections would apply to the health-care reform bill. No, an executive order is not as strong as the statutory language we fought for at the start. We received, however, an "ironclad" commitment from the president that no taxpayer dollars will be used to pay for abortions.

Throughout history, executive orders have carried the full force and effect of law and have served as an important means of implementing public policy. Perhaps the most famous executive order was the Emancipation Proclamation signed by President Abraham Lincoln in 1863. More recently, in 2007, President George W. Bush signed Executive Order 13435, restricting embryonic stem-cell research. This executive order protected the sanctity of life and was "applauded" and "welcomed" by pro-life advocates. That these same people would now claim that President Obama's executive order maintaining the sanctity of life is not worth the paper it is written on is disingenuous at best.

Some, including Parker, have criticized Obama's executive order as unenforceable in the courts and therefore just a "fig leaf." Yet the language that critics point to is standard language with any executive order, including Bush's ban on embryonic stem-cell research. Again, many of these pro-life groups did not express concern over the Bush language but claim it is unacceptable under Obama.

To further protect against federal funding for abortion, during floor debate on the health-care reform bill I engaged in a colloquy with Rep. Henry Waxman to make clear congressional intent that the provisions in the bill, combined with the executive order, will ensure that outcome. Such colloquies are often referred to in court cases when an attempt is being made to determine Congress's intent. This, too, was no minor concession by those opposed to our efforts, and it is a tremendous victory for those protecting the sanctity of life.

I absolutely disagree with Mr. Stupak that an accounting segregation of funds was insufficient, as well as on the basic issue of abortion. While abortion is never good, because it ends a human life, it does not end the life of a human person. It is a terrible choice that should be left to parents, if they feel they need to make that choice. However, it should be emphasized that Mr. Stupak was committed to passing health reform. Speaker Nancy Pelosi said so herself in an interview with Rachel Maddow. Pro-choicers should cut him a break - we can live with the resulting legislation, and again, abortion deeply divides the American people and this uneasy cease-fire is something we have to live with. Furthermore, Mr. Stupak is to be commended for his willingness to abide by his principles and to be flexible in doing so. If the pro-lifers who thought that insuring all Americans was not pro-life want to take shots at him, let them do so on their own.

Wednesday, March 24, 2010

What progressives have to do to sustain health reform

Most readers in the U.S. will note that the U.S. has passed health reform. The Senate will soon vote on a package of fixes that take out certain parochial deals and make some changes, especially on the tax side, but it's basically done.

Public opinion is likely to shift in favor of the bill, and the bill does contain some good provisions that impact immediately, such as narrowing the donut hole in Medicare Part D (for non-US readers, the donut hole means that seniors buying prescription drugs have to pay the whole sum out of pocket between $2,700 and $6,100 - that may sound like a lot, but a lot of seniors fall into it), eliminating pre-existing condition exclusions for children, making funds available for a national high-risk pool so that adults with chronic conditions can get insurance, and a few others. However, the most disliked provision in the bill is the individual mandate - all adults will be required to buy insurance unless it costs more than 8% of income. Progressives will have to continue to make the case to the country that the bill is worth it, that the plan will not work properly without the mandate, and that the benefits are worth the cost. Additionally, the Federal government and the state governments will have to work very hard to implement the bill. Some state governments have passed bills purporting to opt out of health reform, and some Attorneys General (like my own state AG, Ken Cucinneli of Virginia) are filing suit against the mandate. Progressives will have to demand that their legislators implement the provisions, such as the Medicaid expansion and setting up the insurance exchanges. If legislators balk, heavy pressure must be applied.

There are two other priorities that are perhaps even more pressing: immigration reform and climate change. The immigration system must be reformed. Guest workers must be admitted on a reasonable basis, and they should preferably have a reasonable means to gain citizenship if they improve their skills here and develop ties to the nation and their communities. Furthermore, we seem to have punted on making sure that same-sex partners can receive full health care benefits, because at least people who aren't currently eligible for workplace benefits through their partner can shop on the exchanges and likely receive subsidies. However, we cannot punt on making sure that same-sex partners receive the same immigration benefits as everyone else - Canada, the UK, and most other OECD countries do this.

Climate change can start with government regulation of pollutants, but at some point either a cap and trade system or a carbon tax is vital. These, unfortunately, will be harder to sell to the American public.

Tuesday, March 23, 2010

NYT Bloggingheads: Mental Bandwidth Scarcity and Poverty

The New York Times Bloggingheads video section has a fascinating conversation between two economists on the effects of poverty on psychology. Basically, poor people have scarcer mental resources, as well as physical resources, to devote to raising their children well.

Caltech: Your brain on income inequality

Groundbreaking research at Caltech University has found, using functional MRI scans, that our brains respond to income inequality:

Specifically, the team found that the reward centers in the human brain respond more strongly when a poor person receives a financial reward than when a rich person does. The surprising thing? This activity pattern holds true even if the brain being looked at is in the rich person's head, rather than the poor person's.


It's long been known that we humans don't like inequality, especially when it comes to money. Tell two people working the same job that their salaries are different, and there's going to be trouble, notes John O'Doherty, professor of psychology at Caltech, Thomas N. Mitchell Professor of Cognitive Neuroscience at the Trinity College Institute of Neuroscience, and the principal investigator on the Nature paper.

But what was unknown was just how hardwired that dislike really is. "In this study, we're starting to get an idea of where this inequality aversion comes from," he says. "It's not just the application of a social rule or convention; there's really something about the basic processing of rewards in the brain that reflects these considerations."

The brain processes "rewards"—things like food, money, and even pleasant music, which create positive responses in the body—in areas such as the ventromedial prefrontal cortex (VMPFC) and ventral striatum.

In a series of experiments, former Caltech postdoctoral scholar Elizabeth Tricomi (now an assistant professor of psychology at Rutgers University)—along with O'Doherty, Camerer, and Antonio Rangel, associate professor of economics at Caltech—watched how the VMPFC and ventral striatum reacted in 40 volunteers who were presented with a series of potential money-transfer scenarios while lying in an fMRI machine.

For instance, a participant might be told that he could be given $50 while another person could be given $20; in a second scenario, the student might have a potential gain of only $5 and the other person, $50. The fMRI images allowed the researchers to see how each volunteer's brain responded to each proposed money allocation.

But there was a twist. Before the imaging began, each participant in a pair was randomly assigned to one of two conditions: One participant was given what the researchers called "a large monetary endowment" ($50) at the beginning of the experiment; the other participant started from scratch, with no money in his or her pocket.

As it turned out, the way the volunteers—or, to be more precise, the reward centers in the volunteers' brains—reacted to the various scenarios depended strongly upon whether they started the experiment with a financial advantage over their peers.

"People who started out poor had a stronger brain reaction to things that gave them money, and essentially no reaction to money going to another person," Camerer says. "By itself, that wasn't too surprising."

What was surprising was the other side of the coin. "In the experiment, people who started out rich had a stronger reaction to other people getting money than to themselves getting money," Camerer explains. "In other words, their brains liked it when others got money more than they liked it when they themselves got money."

"We now know that these areas are not just self-interested," adds O'Doherty. "They don't exclusively respond to the rewards that one gets as an individual, but also respond to the prospect of other individuals obtaining a reward."

What was especially interesting about the finding, he says, is that the brain responds "very differently to rewards obtained by others under conditions of disadvantageous inequality versus advantageous inequality. It shows that the basic reward structures in the human brain are sensitive to even subtle differences in social context."

This, O'Doherty notes, is somewhat contrary to the prevailing views about human nature. "As a psychologist and cognitive neuroscientist who works on reward and motivation, I very much view the brain as a device designed to maximize one's own self interest," says O'Doherty. "The fact that these basic brain structures appear to be so readily modulated in response to rewards obtained by others highlights the idea that even the basic reward structures in the human brain are not purely self-oriented."

Camerer, too, found the results thought provoking. "We economists have a widespread view that most people are basically self-interested, and won't try to help other people," he says. "But if that were true, you wouldn't see these sort of reactions to other people getting money."

The researchers say more information is needed to find out how this drives actual behavior.

Monday, March 22, 2010

Slate: We're Blowing It - A new paper suggests U.S. military aid does nothing to reduce drug production in Colombia.

Ray Fishman writes for Slate. Check the original document for numerous hyperlinks. The report cited in the article is available at the Center for Global Development's website.

Last month, the U.S. military got some positive international P.R., as Marines landed in Haiti to provide food, supplies, and security for earthquake victims. That our other military aid efforts typically fail to garner such praise is hardly surprising given their focus on American interests around the globe. Drone attacks in Pakistan and bulldozing coca and poppy farms in Bolivia and Afghanistan may be critical to U.S. national security but are more controversial, particularly overseas. Proponents of military assistance argue that it can be good for people in recipient countries as well, pointing to the critical role of military aid in stabilizing nascent democracies (and market economies) by keeping the government—rather than vigilantes or rebels—firmly in control.

Civil war and drug trafficking have long, intertwined histories in Colombia. The current conflict has its roots in a 1960s communist insurgency, which has evolved into a three-way fight involving communist guerrillas, the government, and right-wing paramilitary groups. These days, two guerrilla armies—the FARC and ELN—continue to operate in the countryside with the stated aim of overthrowing the government. The paramilitary organizations have their origins in the private armies formed by drug cartels and landowners in the 1980s to fight back against guerrilla shakedowns. Despite the paramilitary's record of kidnapping, extortion, murder, and cocaine trafficking, the Colombian government subscribes to the belief that "the enemy of my enemy is my friend." Paramilitary groups were declared illegal in 1997, but the government continues to cooperate with them informally to fight insurgents, share intelligence and weapons, and sometimes even conducts joint operations.

Given the central role of the drug trade in financing both guerrilla and paramilitary operations, military and anti-narcotics support from the United States have been connected from the start, beginning not long after Richard Nixon declared the War on Drugs in 1971. American-Colombian collaboration has seen its share of successes—Delta Force and Navy SEAL experts helped to hunt down and kill the original Medellin kingpin, Pablo Escobar. But throughout the 1990s, U.S. assistance grew dramatically, making Colombia the largest recipient of military aid outside of the Middle East and Afghanistan. Has the money been well-spent?

Assessing the impact of American aid dollars is complicated, to say the least, by the Colombian government's connection to the paramilitary groups, and the paramilitary groups' connection to drugs and violence. Whether more aid leads to less drugs and turmoil—or exactly the opposite—depends in part on how much of it gets channeled to the government's paramilitary allies. Paramilitary groups may, for example, boost coca production to buy U.S. weapons to attack guerrillas, who in turn produce and sell more coca so they can fight back.

To see how all this actually plays out in the Colombian countryside, economists Oeindrila Dube and Suresh Naidu analyze how conflict and coca production were affected by the level of U.S. military aid during the years 1988-2005. They compare regions with Army bases (i.e. areas that receive U.S. military assistance) to regions without bases (i.e. areas that are relatively unaffected by U.S. aid). If, for example, coca cultivation plummets in regions receiving U.S. military assistance, but not in nonbase regions, then we can be reasonably sure that the change is due to military aid and not something else (like good weather for growing coca). To make sure that they're measuring the impact of U.S. aid on conflict and drug production (not the impact of conflict and drug production on U.S. aid), the economists focus on changes in aid to Colombia that go hand-in-hand with changes in U.S. military aid to the rest of the world, thus reflecting broader American foreign policy objectives rather than reactions to Colombia-specific events.

Dube and Naidu's analysis provides a dark view of U.S. involvement in Colombia and suggests that the $5 billion we've sent to the country in the past couple of decades hasn't exactly been well-spent. When U.S. aid to Colombia increases, so do paramilitary attacks in areas with Army bases—but not in regions without bases, where the number of guerrilla attacks stays the same. Despite the explicit focus of aid on reducing drug production, the researchers found an actual decline in anti-narcotics operations by the Colombian military in response to greater U.S. aid, with coca production continuing unchanged. There's also some evidence that U.S. dollars may have been channeled to paramilitaries to intimidate voters and keep its government allies in power. Greater U.S. aid is associated with a decline in voter turnout, concentrated in municipalities with Army bases. (A related study finds that paramilitary presence leads to the election of legislators sympathetic to their cause.)

There may be nothing wrong with using American money to pursue American interests, but we should make sure that that's indeed what our aid dollars are doing. Which brings us back to Haiti. The country is getting a much-needed infusion of relief funds, but as some have noted, when the camera crews pack up and move on, public attention will likely wane. Haiti will then face the complicated task of building the institutions—absent even before the earthquake hit—that might allow it to develop a functional economy. Economist Paul Collier has argued that a military presence can be critical to maintain the peace and stability that's required for investment and rebuilding to take place in nations torn apart by war and other turmoil. Haiti, with its legacy of weak, ineffective government, makes it a particularly promising candidate for such assistance. Even before the earthquake, Haiti was the beneficiary of outside intervention, with thousands of Brazilian peace-keepers stationed there. Haiti would surely benefit if these forces were augmented by a longer-term U.S. presence. Given the budget crunch in Washington, however, it seems unlikely that there will be extra foreign aid funds available. A dollar more of aid for Colombia is likely one less dollar available for keeping the peace in places like Haiti.

Health Reform Watch: Abortion Update

As readers probably know, the House passed both the Senate health reform bill and a reconciliation package containing some fixes. The underlying bill now goes to the President for his signature. The reconciliation package goes to the Senate where it must pass by a mere 50 votes out of 100, as opposed to the regular 60.

Bart Stupak, a Democrat from Michigan who inserted the Stupak-Pitts amendment that would have essentially barred all plans on the exchanges from offering abortion services, struck a deal with the President to drop his earlier requirements. In exchange, the President will issue an executive order stating that the Hyde Amendment applies to the exchanges. That amendment was the first pro-life victory after Roe v Wade. It mandates that no federal dollars can be used to subsidize abortion services, except where the mother's life is endangered. Executive orders come close to having the force of a law passed by Congress, although a future President can undo them.

Substantively, this is no change from the proposed policy from the view of the pro-choice side. The bill is already relatively restrictive of access to abortion. I think we can live with this.

However, I believe one of the major concerns on the pro-life side is that the Hyde Amendment is an annual amendment. Although it's practically permanent law, if the Congress didn't pass it one year, then abortion services would be available on the exchanges and the plans would not have to take steps to segregate the dollars, accounting-wise.

Also, it appears that Mr. Stupak may have seen that his previous "money is fungible" argument was incorrect. Either way, the pro-life Democrats have agreed that this is an acceptable compromise.

These contortions are symptomatic of Americans' conflicted attitudes toward abortion. The uneasy detente between pro-choice and pro-life was nearly shattered during health reform, and it could have taken the bill down. It's good that it didn't.

Going forward, the pro-life side is likely to seek a permanent passage of the Hyde Amendment. The Catholic Bishops still don't agree with the compromise and they are likely to press for changes.

A number of pro-choicers are not happy with this compromise. The pro-choice side wanted to work with the President to loosen the Hyde Amendment. If that is not possible, my guess is that pro-choicers will work to secure funding to make sure that abortion services are affordable.

For those interested in reading further, Kaiser Health News has two op-eds, one from the Chuck Donovan with the conservative Heritage Foundation and another with Jessica Arons of the liberal Center for American Progress.

Sunday, March 21, 2010

The Future is Cao - some political musings

On December 7, 2008, House Minority Leader John Boehner wrote a memo to his caucus about Rep. Anh "Joseph" Cao (pronounced "Gow"), who beat a thoroughly corrupt William Jefferson in a House race in Louisiana. An excerpt:

As House Republicans look ahead to the next two years, the Cao victory is a symbol of what can be achieved when we think big, present a positive alternative, and work aggressively to earn the trust of the American people. Joseph Cao is a Vietnamese immigrant whose experience in America drew him to the Republican Party and its traditional commitment to freedom and reform. Working with like-minded Republicans such as Governor Bobby Jindal, he took an aggressive stand against corruption, offering a principled alternative to what voters were offered by the local Democratic establishment. Shrugging off conventional wisdom, he ran as a reformer in a district hungry for new representation in Congress. And he won.

Mr. Boehner got more than he bargained for. Mr. Cao supported the House reform bill passed in 2009, saying that he had considered it carefully and that it would benefit his constituents, who are very poor. A former Jesuit seminiarian who apparently worked with the poor in Latin America, Mr. Cao said that he required fairly strict anti-abortion language in order to be able to support the bill. Nonetheless, many Republicans excoriated him.

Mr. Cao has said that he can't support the Senate bill's abortion subsidies language. However, President Obama talked personally to Mr. Cao, as reported by Nola:

President Barack Obama on Wednesday asked Rep. Anh "Joseph" Cao, R-New Orleans, to take a fresh look at the language on abortion in the Senate health care bill to see whether he could, in good conscience, support landmark health care legislation now days from a final vote.

Cao, the only Republican to vote for the health care bill in either the House or Senate, said he would take another look.

"He's asked if I would restudy the Senate language and that I would approach it with an open mind. And I promised that I would go back and study the Senate language again," Cao said after meeting with Obama in the Oval Office for about 10 minutes Wednesday.

Cao said he appreciated the president's sensitive approach in seeking his vote on an issue that many observers say could make or break Obama's presidency.

"He fully understands where I stand on abortion, and he doesn't want me to vote against my conscience because he, like me, believes that if we were to vote against our conscience, our moral values, there is really nothing left for us to defend," Cao said. "I'm glad that the president is very understanding. He really shows his own moral character."

I very strongly disagree with Mr. Cao on abortion. Furthermore, even the Senate bill's language on abortion is very likely to reduce the availability of abortion coverage in insurance plans on the exchanges. Even if the Bishops are correct that the Senate bill will have taxpayer subsidies going to abortion services (they are absolutely wrong), the substantive result is probably in favor of the pro-lifers. I would strongly urge Mr. Cao to take that into account when reconsidering his vote.

However, regardless of which way Mr. Cao votes - in other words, even if he votes against health reform - Mr. Boehner's sentiment is correct. The future is with people like Anh Cao (who goes by Joseph). He is willing to listen to the evidence and possibly to make a decision that bucks the will of his political party, but is good for the country.

My political science professor once contended that political parties are inherently polarizing - any candidate has to first get vetted by the party "base". The Democrats are a more diverse party and have been willing to elect candidates who are anti-abortion, for example. The Republicans have been much less willing to elect pro-choice candidates - Sens. Olympia Snowe and Susan Collins are notable pro-choicers, but Maine is an unusual state. The inherently polarizing nature of political parties is something that we will have to guard against. One small step would be to take a broad tent approach in constructing a political party - and the Republicans are notably failing at this.

Friday, March 19, 2010

Why Immigration Reform is a Critical Issue for Christians in the US

The time is coming for the United States to reform her immigration laws. Immigration advocates have criticized President Obama for not addressing immigration and are pushing for action. It will be a difficult fight.

It is critical for progressive Christians to engage with the issue of immigration. We need to address the theological background for immigration, backing it up with economic and sociological facts. And conveniently, there are a number of classic passages in the Old Testament that deal with immigration, which I pulled from an immigration messaging strategy piece by Partida Associates:

Exodus 22:21 - Do not mistreat an alien or oppress him, for you were aliens in Egypt.

Exodus 23:9 - Do not oppress an alien; you yourselves know how it feels to be aliens, because you were aliens in Egypt.

Leviticus 19:10 - Do not go over your vineyard a second time or pick up the grapes that have fallen. Leave them for the poor and the alien. I am the LORD your God.

Leviticus 19:33 - 'When an alien lives with you in your land, do not mistreat him.

Leviticus 19:34 - The alien living with you must be treated as one of your native-born. Love him as yourself, for you were aliens in Egypt. I am the LORD your God.

Deuteronomy 10:18 - He defends the cause of the fatherless and the widow, and loves the alien, giving him food and clothing.

Deuteronomy 10:19 - So show your love for the alien, for you were aliens in the land of Egypt.

Deuteronomy 1:16 - Then I charged your judges at that time, saying, `Hear the cases between your fellow countrymen, and judge righteously between a man and his fellow countryman, or the alien who is with him.

Deuteronomy 24:17 - You shall not pervert the justice due an alien or an orphan, nor take a widow's garment in pledge.
Psalm 146:9 - The LORD watches over the alien and sustains the fatherless and the widow, but he frustrates the ways of the wicked.

The Bible tells us that the ancestors of the ancient Israelites, led by Joseph, were driven to seek refuge in Egypt because of a famine in their homelands. Joseph, of course, had been sold into slavery but had risen through the ranks to be a senior minister in Egypt. Later, of course, the Egyptians mistreated the Hebrews, fearing their growing numbers.

The situation of the ancient Israelites is parallel to that of many immigrants in modern times, who are seeking better opportunities outside of their homelands. Many are fleeing persecution or economic underdevelopment. The U.S. Conference of Catholic Bishops respects the right of countries to regulate their own immigration policies but notably places first the right of people to migrate to seek better lives for themselves and their families. Richer nations are certainly not obliged to admit so many immigrants that their public infrastructure is strained, but they are obliged to set their immigration policies justly and with regard to the common good. Many mainline Protestant denominations, such as my denomination the Episcopal Church, hold similar positions.

Furthermore, in, Isaiah 16, the Israelites were instructed to give asylum to Moabites who were refugees from war. The Moabites had been in open conflict with the Israelites many times before.

Now, it is not practical to demand that countries admit immigrants no matter what the consequences to their own citizens. There are concerns with overcrowding and demands on public services. However, the President's Council of Economic Advisers finds that overall:

1. Americans score a net benefit from immigration. Immigrants (especially lower-skilled ones) tend to complement natives in the job market - NOT substitute for them.

2. In the long run, immigration improves the country's fiscal situation. Immigrants pay taxes and while they're working, they support the major government social insurance programs like Medicare and Social Security.

3. Higher-skilled immigrants are especially beneficial, because they pay more in taxes and contribute to innovation and entrepreneurship.

Interestingly enough, immigrants are more likely than natives to have either a high school education or less, or a Ph.D. education. That means that overall, immigrants aren't competing at the same skill levels as Americans. While Americans with a high school education or less do indeed face competition from immigrants and do present a public policy challenge, restricting immigration to boost their wages is a poorly targeted and inefficient intervention. We would be better off investing in education. Overall, immigrants boost GDP, because they do not do precisely the same things in the workforce that natives do.

While immigrants, mainly the lower-skilled ones, do impose costs on local and state public budgets, their overall contribution to public finances is slightly positive. All the available evidence indicates that immigrants have lower overall crime rates than natives.

Jeremiah 22:13 says "Woe to him who builds his house by unrighteousness,
and his upper rooms by injustice;
who makes his neighbours work for nothing,
and does not give them their wages; "

Labor abuses anywhere undermine labor practices everywhere. Already, the Washington Post reports that give the recession, bosses have been quicker to short-change workers, especially immigrant workers. In the DC area, construction, janitorial and restaurant workers appear particularly vulnerable to wage theft, where bosses don't pay wages in full. Lack of English proficiency and legal status compounds this. Again, Americans do benefit when immigrants push wages down in some occupations, but everybody loses if wages are pushed down by theft - the workers lose, Americans lose when unfair labor practices undermine their own wages, and the public loses by not collecting its dues in taxes. Legalizing immigrants will be step one in bringing wage theft out of the shadows. Woe to him indeed who makes his neighbors work for nothing.

On March 21, immigration advocates will march on the Capitol in the March for America. It's time for Christians who support immigration reform to make their voices heard.

Thursday, March 18, 2010

SocImages: Portraying Lesbian Parents

Melanie Leon and Vanessa Alenier are partners (life, not business) who are seeking to jointly adopt a child in Florida. The state bans such adoptions, and Leon/Alenier are filing suit to overturn the ban.

They look terrifying, I know.

This is the picture the Family Research Council "accidentally" used in an advertisement against the decision (which was in favor of Alenier/Leon). After being confronted by a blogger on the Orlando Sentinel, John Stemberger offered his "sincerest apologies" to the couple.

Hat tip to SocImages for the link. They comment that:

I think the use of the photo on the left to represent scary lesbians is fascinating. This isn’t just about homophobia. Being lesbian per se isn’t sufficient. The use of the photo on the left, rather than the one on the right, combines a lot of stereotypes and prejudices about body size, gender, attractiveness, social class, and sexual orientation in an effort to stigmatize gays and lesbians as inappropriate parents.

In any case, the issues at hand are whether or not a prospective couple will be good parents and offer a stable home and whether or not same-sex couples should be allowed to adopt kids. Fear-mongering, whether it is an "accident" or not, does not serve the debate no matter which side you fall under.

Tuesday, March 16, 2010

Washington Post: Are unemployment benefits no longer temporary?

Most workers employed on a full-time, permanent basis have unemployment insurance paid on their behalf by employers. Economists generally agree that the costs of the insurance are ultimately borne by workers. If someone is involuntarily laid off, they receive up to (I think) 26 weeks of UI. The share of unemployed workers who are eligible for UI benefits is around 1/3 (if memory serves me right, but it's definitely a fraction).

Each state organizes a UI trust fund. During recessions, the Federal government usually boosts that fund and allows states to extend their UI benefits; at present, workers in states with the highest unemployment levels can collect for up to 99 weeks. That may seem like a long time, but when you have 5 or more workers for each job opening, it can take people a year or more to get re-employed. UI is probably one of the biggest short-term boosters for the economy, because people receiving UI benefits generally spend them all on necessities. That extra money replaces demand for goods and services that would otherwise have been lost.

Lately, there has been some hysteria among conservatives that UI reduces the incentive for people to find work. Opponents have wondered if it's becoming a permanent entitlement. Senator James Bunning, a Republican from Kentucky, recently held up an extension to UI coverage in the U.S. Senate. He also cited disbelief that UI boosts the economy.

Unemployment insurance is a critical social insurance provision that provides some support to people who are between jobs and enables them to keep looking. In recessions, it is also a core countercyclical economic booster. We can debate later if eligibility levels should be scaled back - and they certainly don't need to be as long as 99 weeks in normal times - but it is insane to oppose extending unemployment insurance when people are unable to find jobs to replace the ones they lost.

Monday, March 15, 2010

Urban Institute: The cost of failing to enact health reform will be high

The Republicans have constantly assailed the proposals for health reform as a government takeover of healthcare. They harp on the promise that then-Senator Obama promised in his campaign that if you like your health insurance, you can keep it.

The Republicans are wrong in that this is a government takeover of healthcare. The part of the plan involving the insurance exchanges is basically the bipartisan solution in Massachusetts - that then-Governor Mitt Romney signed off on. It is basically what the Republican Senator John Chafee proposed in response to the Clinton health reform proposal.

However, without health reform, if you like the insurance you have, you may be unable to keep it. The Urban Institute has projections of what happens without reform, and things look quite bad. Under their intermediate scenario, where incomes grow and the historical rate of healthcare cost growth slows somewhat, the 55.9% of Americans who are covered through their employer would decline to 50.8% in 2020. An estimated 18.4% of people are now uninsured, but that rate would rise to 21.9% in 2020. Presently, about 5.5% of Americans purchase non-group coverage on the individual market; this number would decline by about 1% in 10 years as such coverage became less affordable.

Most of the decline in employer-based coverage would occur among small and medium-sized firms - basically, people working at employers with less than 1,000 employees. Furthermore, Americans further up the income scale would be affected. Presently 7% of individuals or families over 400% of the poverty level are uninsured. In 2020, the Urban Institute estimates that 13% of them would be - nearly twice the present rate. For a family of 4, 400% of the poverty level means an income of over $80,000 a year.

Medicaid enrollment would pick up some of the slack, increasing from 16.9% of the population to 19.6%. It obviously wouldn't be enough. Furthermore, the Urban Institute assumed that states maintained their present eligibility levels. If health care costs continued to grow, state governments would likely decrease their eligibility levels or freeze enrollment unless the Federal government subsidized them at greater rates.

None of the solutions the Republicans have proposed attack the underlying problem of cost growth. The Republicans boast that their proposed package of reforms would decrease costs. However, the Republican plans would make it cheaper for healthier people to get coverage but harder and more expensive for older and sicker people to get coverage. Again, they do not attack the problem of cost growth, whereas the plans the Democrats have put forward do everything that we know works except start a government body to approve or disapprove treatments or set payment rates, or open a publicly-sponsored insurance plan that pays Medicare rates. If the Republicans don't want a government takeover, they need to get with the current plan, because if they win and the status quo remains, the only thing that will work in 10 years is a real government takeover.

Saturday, March 13, 2010

Energy Policy Series 3: The politics of nukes

The New Republic discusses the Republican Party's unreasoning love for nuclear power. An excerpt:

Granted, much depends on what nuclear backers actually ask for. NEI recently circulated a wish-list to Congress calling for new tax breaks and a green bank that would dole out $100 billion in loan guarantees for clean-tech projects, including nuclear. Critics fear a disproportionate focus on nukes would crowd out more cost-effective energy projects and tie up money in plants that can take a decade to build and have a high risk of default. (A 2009 Moody's report called new reactors a "‘bet the farm' endeavor for most companies" and said that federal support would only "modestly" mitigate this risk.) More contentious still, NEI and its allies have stressed the need to "streamline" the licensing process and reduce the delays that have plagued the industry and scared off investors.

At the moment, few environmental groups will publicly say what their red lines on nuclear are, but, privately, some suggest that any moves to weaken safety oversight or restrict public participation over the siting of new plants could repel even moderate greens. "There are a lot of very technical issues at stake here, and we don't think Congress should be tying the Nuclear Regulatory Commission's hands," says Ed Lyman of the Union of Concerned Scientists, a nuclear watchdog organization.

Plus, there's little point in acceding to the GOP's nuclear demands without getting anything in return. Alexander, for one, recently admitted that, even though he's taking part in talks over new nuclear provisions, nothing will persuade him to support a cap on carbon--which is the crux of any climate bill. "That's something to watch out for," grumbles one observer. "Is NEI actually going to work to bring new votes to the table?" Perhaps it's finally time to see just how much this love affair is worth.

NYT Economix blog: food subsidies and food prices

The NYT Economix blod discusses why a Big Mac costs more than a salad. I think these graphs say it all:

From the Physicians Committee for Responsible Medicine.

From David Leonhardt's discussion of food prices.

Catholics in Alliance for the Common Good and Catholic Health Association both urge passage of health

Both the Catholics in Alliance for the Common Good (joined by other Catholic and Evangelical leaders) and the Catholic Health Association, which represents Catholic health systems, have both urged Congress to pass the reform bill. They feel the restrictions in the Senate bill do not constitute federal funding for abortion and are no more lenient than current law.

Foreign Policy: Inside a Dictator's Secret Police

Reed Brody writes about uncovering evidence on Chad's Hissène Habré and his secret police. Habré may be facing a trial soon.

The article is interesting, but one excerpt caught my eye:

Back in 1981, it would have been hard to imagine Habré where he is today. U.S. President Ronald Reagan saw the then-warlord as a bulwark against the ambitions of Libya's Muammar al-Qaddafi, Chad's expansionist neighbor to the north. Habré had already earned a reputation for extreme brutality, once kidnapping a French anthropologist and then murdering the officer sent to negotiate her release. But Washington could not pass up a chance to "bloody Qaddafi's nose," as Secretary of State Alexander Haig reportedly put it, and Habré's march on N'Djamena in 1982 was buoyed by generous covert U.S. support. Once he took over, the United States provided Habré with massive military aid and used a clandestine base in Chad to train captured Libyan soldiers as members of an anti-Qaddafi force. Habré served Washington's purpose; when the Libyans moved into northern Chad in the 1980s, Habré swiftly kicked them out. But Habré also turned his country into a police state, the legacy of which still lingers today under the current Chadian president, the man who ousted Habré, Idriss Déby.

Both the U.S., under then-President Ronald Reagan, and France supported Habré, as Feeding a homeless person might cost you $300 in Miami

Jacqueline Dowd reports for that doing the good deed of giving a homeless person some food might result in a $300 fine in Miami. Several other cities are adopting these ham-handed fines.

Seriously, what would Jesus say about this?

Energy Policy Series 2: Natural Gas May Help Cut Emissions (Steven Pearlstein)

Steven Pearlstein writes for the Washington Post, endorsing the merits of natural gas over coal for electricity generation.

As a rule, it is always best to adopt an attitude of enhanced skepticism whenever people tell you they have a simple solution to a complex problem.

But the more I look into it, the more I'm beginning to think there is a fairly simple way to meet President Obama's short-term pledge of reducing carbon emissions in the United States by 17 percent over the next decade.

The silver bullet: Decommission about two-thirds of the electric-generating capacity fueled by cheap and plentiful coal, and replace it with power generated from cheap and plentiful natural gas, which emits half as much carbon for each megawatt of electricity.

Until recently, this really wasn't a viable option. Not only was natural gas a lot more expensive than coal, but its price was also very volatile. Utilities therefore couldn't buy it using the kind of long-term contracts they need for the "base-load" plants that operate around the clock and provide the country with most of its electricity. Because they are easy to turn on and off, gas plants were used mostly to provide "peak load" power, during the hours when demand is highest.

Two recent developments have altered the economics of power generation and, with it, the politics of global warming.

Because of overbuilding in the late '90s sparked by deregulation of energy markets, there are so many gas-fired plants in the country that on average, they are used only about 25 percent of the time.

At the same time, thanks to improved drilling techniques, it is possible to extract gas from shale rock -- so much that it has increased reserves by as much as 40 percent. Indeed, there is so much shale gas, and the cost of extracting it is so low, that a few gas companies have begun to offer long-term contracts to utilities at a price that comes close to making it competitive for base-load generation. One of those is Anadarko Natural Gas, whose chief executive, Jim Hackett, tells me that more companies will follow suit once state utility regulators give their blessing.

What does this have to do with global warming? Last month, the Congressional Research Service released a study that found that if the utilization rate at existing gas plants were doubled, it could displace about a third of all coal-fired generation. That alone would get us more than a third of the way toward the 2020 target for reductions in carbon emissions.

Moreover, since it costs a lot less to build and operate a modern gas plant compared with a coal-fired plant, building additional gas plants could be more cost-effective than the industry's current plan to spend billions of dollars to modernize its aging coal plants to make them more efficient and environmentally friendly.

This gas-for-coal swap has been tossed around in energy policy circles for some time, but it got political traction last summer when it was embraced by environmentalists such as Robert Kennedy Jr., former senator Tim Wirth (D-Colo.) and blogger Joe Romm of the Center for American Progress.

The momentum increased last fall when Exxon, BP and other big oil companies announced major investments in shale-gas exploration. Given that cap-and-trade legislation is firmly stuck in the Capitol Hill quicksand, a modest and focused proposal to nudge electric utilities toward natural gas looks like a viable interim step toward a more comprehensive global warming policy.

Political reality dictates that the winners from this shift -- which include all of us -- provide compensation for the losers. But despite what you'll hear from the coal industry, the price is hardly exorbitant. Since most of the coal plants that would be shut down are more than 40 years old and are fully depreciated, utility shareholders wouldn't be entitled to much relief.

As for workers, if the government were to offer an annual payment equal to current pay for two-thirds of the nation's 87,000 coal miners, along with a similar annuity to an equal number of laid-off railroad and utility workers, a back-of-the- envelope calculation suggests a first-year cost of $8 billion, declining every year after that. You could pay for this "cash-for-coal-clunkers" program with a temporary 2 percent surtax on all electric bills, or about $2 a month for the average household bill.

That's a small price to pay for dealing with global warming -- and the cost would almost certainly be less than that. Because of a stunning bit of politically convenient geology, many states that have the most to lose from declining coal production -- Pennsylvania, Ohio, Kentucky, West Virginia and Virginia -- would also be among the big winners from shale-gas development, suffering little net loss in employment, income, tax revenue or royalty payments. That doesn't mean that King Coal will go down without a fight, but this time he'll be up against not only the Sierra Club but also the Petroleum Club of Houston.

Energy Policy Series: Why Nuclear Gets More Love Than Natural Gas (EnviroKnow)

Josh Nelson of Enviro Know has a very informative post about the merits of nukes versus natural gas. He tries to answer why nukes have got so much more attention, especially on the right. While he personally is not sanguine about public investments in nuclear energy and would prefer that the government invest in wind, solar, geothermal, advanced biofuels and basic energy research, nukes do have a couple of advantages over natural gas: they emit far less CO2 per kilowatt hour of energy generated, even when considering factors like building plants.

Additionally, natural gas prices are very volatile:

Finally, natural gas combustion produces nitrogen oxides. Natural gas extraction from shale deposits is very likely to introduce chemicals into water tables. The industry has stalled, but the House Energy and Commerce Committee is probing this. Action is being taken on the local level as well (see the Pittsburgh Post-Gazette and the Earthworks Action on the formation of a Texas watchdog group.

I personally disagree with the author in that I think nukes are worth exploring. They are a proven source of power. Waste disposal and safety concerns need to be thoroughly addressed. However, I do agree that the federal government needs to invest much more into basic research on alternative energy.

Friday, March 12, 2010

Subsidies for abortion and other things: economic standards versus accounting standards

Congressman Bart Stupak, a Democrat from Michigan, has gotten a lot of press lately. He has vowed to oppose health reform if it does not contain restrictive provisions on abortion. In particular, he and the U.S. Conference of Catholic Bishops oppose the Senate bill's treatment of abortion. In the Senate bill, people buying coverage through the exchanges would have to make a separate payment to cover the actuarial value of the abortion services in a plan.

Mr. Stupak's argument is that because the government is providing tax credits to people to buy insurance plans, that is the same as funding abortion because even if they use their own money to buy abortion services, they wouldn't have been able to do so without the subsidies. The only solution, in his mind, is that plans on the exchanges cannot offer coverage for abortion.

Clearly, Stupak isn't an accountant. The Generally Accepted Accounting Principles, which guide the accounting practice in the US, contain provisions that deal with segregation of funds. A religious soup kitchen receiving public subsidies would separate funds used for religious purposes from public subsidies under GAAP.

If GAAP standards aren't enough, then we must also eliminate the tax exclusion for employer-based health care: most employer plans offer abortion services. Furthermore, we should stop paying taxes: they fund the government's purchase and maintenance of nuclear weapons, and the only potential use for nuclear weapons is murder (or perhaps deflecting incoming asteroids and propelling spacecraft, but that's another story).

I've argued that tax expenditures, which occur when a government excludes something like employer-sponsored healthcare, from taxable income, are effectively subsidies. That is true but it is completely different from arguing that GAAP standards are meaningless. They are not the same because if the government provides you a tax credit, those dollars could have been used for anything from buying abortion, to buying food, to buying components for the nuclear weapon you're building in your back yard. If the government wanted to change that, it would have to take the incredibly intrusive steps of controlling every cent you spent.

I do not want my taxes funding offensive nuclear weapons or wars, but the solution to that is not to stop paying taxes. The solution is to help educate people to seek peace and to urge my politicians to vote for peace. If you think abortion is bad, then unless you want to ban it and force people to use coat hangers instead, your solution is to educate people not to have abortions, to teach people to refrain from having premarital sex or to use contraception properly, and to create socioeconomic conditions that reduce the need for abortions.

Businessweek: Lessons of a $680,000 death

Amanda Bennett and Charles Babcock write a very compelling story on Businessweek about Amanda's husband's death at age 67. It details his multiple struggles with a very aggressive cancer and their struggles to keep him alive. It also highlights the tension between wanting to live, or at least not die before one's time and the costs of heroic medicine. It's very well-written, not quite on par with Dr. Atul Gawande's famous (or infamous) story about McAllen, TX's excesses, but still very very good. No matter what your position on palliative versus heroic care, it's worth ploughing through its whole 6 pages.

Thursday, March 11, 2010

LA Times blogs: Chase apparently the worst at mortgage modifications

One of the blogs on the LA Times has an interesting report showing that JP Morgan Chase is - for whatever reason - the worst among the big banks at finalizing trial modifications to mortgages under a government program. These trial modifications do not appear to write down principal - thus, they are best suited for borrowers who are in temporary difficulty. In any case, Chase claims it hasn't been receiving adequate documentation of income from its borrowers.

Vox EU: The Nordic Model in the Global Crisis

Several economics professors and advisors write on Vox EU about the Nordic model, which includes a comprehensive social safety net not tied to the fortunes of any particular company, a different and more cooperative labor model than the US, and significant government spending during the fiscal crisis. They argue that the Nordic model was a significant asset and enabled the region to recover far faster than the US. In addition, it enabled the Nordic countries to avoid bailing out unsustainable industries merely to preserve jobs.

There are two differences that the US cannot easily replicate. First, the US's public finance situation is more precarious; many Nordic countries had significant reserves built up. This is not an easy challenge for the US to address. Second, the Nordic countries made significant investments in education. The resulting high-skilled workforce finds it much easier to retrain and seek different employment. The US can and should increase its investments in education. Because many legal immigrants to the US have fewer skills and limited English proficiency, the US will have an additional challenge in ensuring that these immigrants are not left behind.

Foreign Affairs: The end of the Beijing Consensus

Yang Yao, writing for Foreign Affairs, argues that China will only be able to sustain economic growth by greater democratization and an increased role for social insurance provisions. An excerpt:

Despite its absolute power and recent track record of delivering economic growth, the CCP has still periodically faced resistance from citizens. The Tiananmen incident of April 5, 1976, the first spontaneous democratic movement in PRC history, the June 4 movement of 1989, and numerous subsequent protests proved that the Chinese people are quite willing to stage organized resistance when their needs are not met by the state. International monitoring of China's domestic affairs has also played an important role; now that it has emerged as a major global power, China is suddenly concerned about its legitimacy on the international stage.

The Chinese government generally tries to manage such popular discontent by providing various "pain relievers," including programs that quickly address early signs of unrest in the population, such as reemployment centers for unemployed workers, migration programs aimed at lowering regional disparities, and the recent "new countryside movement" to improve infrastructure, health care, and education in rural areas.

Those measures, however, may be too weak to discourage the emergence of powerful interest groups seeking to influence the government. Although private businesses have long recognized the importance of cultivating the government for larger profits, they are not alone. The government itself, its cronies, and state-controlled enterprises are quickly forming strong and exclusive interest groups. In a sense, local governments in China behave like corporations: unlike in advanced democracies, where one of the key mandates of the government is to redistribute income to improve the average citizen's welfare, local governments in China simply pursue economic gain.

More important, Beijing's ongoing efforts to promote GDP growth will inevitably result in infringements on people's economic and political rights. For example, arbitrary land acquisitions are still prevalent in some cities, the government closely monitors the Internet, labor unions are suppressed, and workers have to endure long hours and unsafe conditions. Chinese citizens will not remain silent in the face of these infringements, and their discontent will inevitably lead to periodic resistance. Before long, some form of explicit political transition that allows ordinary citizens to take part in the political process will be necessary.

The reforms carried out over the last 30 years have mostly been responses to imminent crises. Popular resistance and economic imbalances are now moving China toward another major crisis. Strong and privileged interest groups and commercialized local governments are blocking equal distribution of the benefits of economic growth throughout society, thereby rendering futile the CCP's strategy of trading economic growth for people's consent to its absolute rule.

An open and inclusive political process has generally checked the power of interest groups in advanced democracies such as the United States. Indeed, this is precisely the mandate of a disinterested government -- to balance the demands of different social groups. A more open Chinese government could still remain disinterested if the right democratic institutions were put in place to keep the most powerful groups at bay. But ultimately, there is no alternative to greater democratization if the CCP wishes to encourage economic growth and maintain social stability.