The Daily Paper Sets the Agenda

for today's blog

Health care (two stories) and the White House beer-sipping with Henry Louis Gates and James Crowley made the front page of the Washington Post today. Elsewhere in the paper there are more stories on health care, a short piece on the approval of a $636 billion military budget by the House, a look at Israeli settlements and a lengthy piece about corporate banks, TARP money and generous employee bonuses.


Health Care
In "Industry Is Generous To Influential Bloc," reporter Dan Eggen's story begins with a focus on Rep. Mike Ross (D-Ark.), leader of the Blue Dog opposition to important aspects of proposed health care reform. Ross has been the beneficiary of "at least seven fundraisers...held by health-care companies or their lobbyists this year," Eggen wrote. A reader of the story would be forgiven for concluding that the results of health care reform would be better if we also had public financing for political campaigns.

"Doctors Reap Benefits By Doing Own Tests" explores the corrosive effects that wealth and self-interest have on health care reform. "A host of studies and reports by academics and the federal government shows that physicians who own scanners order many more scans than those who do not," wrote Shankar Vedantam. Though Vedantam used multiple sources for the story and includes both pro and con opinions, the story ends with the conclusion "that eliminating incentives for needless care could reduce the nation's health-care bill by as much as a quarter." A further look at which key players in the current health care debate are getting the most money from medical PACs would have strengthened the story.
(Though it does not focus exclusively on campaign contributions by physicians' groups, this study tracks the flow of dollars to key members of Congress.)

Blue Dog Democrats show up again in "GOP Senators Try to Slow Health Talks," a story that takes a look at slow progress and difficult compromises in both houses of Congress. There are two health care columns on the Post's Opinion page. "Health Reform's Taboo Topic" outlines one way to control the tremendous amount of wasted dollars generated by "defensive medicine." The piece ends on a note of despair.

"The real crisis here is not that health care is broken; people of good will could come together and create the conditions for rebuilding the incentive structure of health-care delivery. The real crisis is that Congress is broken, and that it answers to special interests instead of the needs of all Americans."

Racism and White Skin Privilege

Yesterday's White House meeting (over beer and peanuts) between Barack Obama, Joe Biden, Henry Louis Gates and James Crowley moved the "national conversation on race" only the tiniest bit (Post stories here and here), but a series of halting starts on that conversation is way better than the usual silence on the matter.

There is no reason to be critical of the lameness with which that conversation is lurching forward, either. The burdens of race and racism are huge.

A significant portion of the great wealth of this country has been built out of the coerced labor of black people, which materialized as profit controlled by Southern slaveholders and their business partners in the North and which was subsequently reinvested in industrial development (notably railroads) and in westward expansion. African Americans have never been compensated for that exploitation, or for economic disadvantages and the social and cultural attacks that Black America has suffered since.

White skin privilege does not spread its benefits equally. The bounty has fallen preponderantly on the haves. Have nots get less, though almost all whites have more immunity from suspicion, detention and arrest than any African American, including Professor Gates.

Still, whether they choose to cop to it or not, whites approach conversations about race with their own version of the burden of history. Sgt. Crowley, an instructor on policing in black communities, is one of the Cambridge PD's go-to guys on race, and he couldn't handle the confrontation with Gates. For the average white person, showing up daily, perhaps, to a job that doesn't pay all the bills or feed the soul, maintaining a household wrestling with all the slings and arrows of life, facing up to the notion that black folks sacrificed blood and sweat to create your life of dubious privilege and entering in to a conversation about race must seem nothing short of dangerous.

Regardless, race remains a major variable in determining who gains and who loses and, not surprisingly, who lives and who dies. Focusing on a single African American on death row, Gary Younge's piece, "Beer and Sympathy," in the Nation suggests another subject area that a conversation on race should explore.


Military Spending Is Killing Us
Clearly, it's killing them (mostly Iraqis, Afghanis and Pakistanis), but Americans die, too, as weapons and weapons systems seek relevance and justification, their own compelling raison d'etre. But the cost of buying weapons and maintaining a huge military establishment drains funds that could be invested in domestic infrastructure, job creation and health care. In a country which has the highest infant mortality rate and shortest life expectancy among Western democracies, not investing in those things kills people.

But, as the Post reports today in "House Backs $636 Billion Defense Bill," the enormous sum we are spending includes lots of things even the Obama administration doesn't want. And though it is not included in the story, the fact remains that our military has no equal worldwide, is equipped for wars that we will never fight and is supported by a budget that will almost certainly exceed one trillion dollars a year by 2020, if not sooner. And that does not include military and related spending that is buried in other budgets (including energy, homeland security, spying and classified spending).


Israeli-Palestinian Conflict
There are deep, reasonable and contentious questions about Israel's continued existence as a limited democracy and Jewish theocratic state that need far more discussion in the United States, though it is unclear when we will have the gumption, as a nation, to have that discussion. It isn't even completely clear to all parties to the conflict that Jewish settlements on land that has been part of the West bank since 1967 are continuing violations of international law. But "Settlement Foes Take Fight to Israel's High Court" reports on the work of Israeli "anti-settlement activist Dror Etkes," who has assembled a database that should simplify the challenge of proving that the settlements have been established on land owned by Palestinians. After years of apparent dormancy, the story of Etkes' efforts is one of many examples of a revived Israeli peace movement.


"Bankers Bonuses Beat Earnings as Industry Imploded"


The Post also carried an article about the spectacle of bank's, so recently on the government dole, turning around and paying more than $30 billion in bonuses during the same 12-month period in which they received billions in federal aid. (Read the story here.) The story talks about steps various banks have taken to blunt some of the public criticism of their pay practices. But the biggest problems here lie with the zealous belief in "free markets" that have allowed banks and other major corporations to go largely unregulated and grow "too big to fail." Here's an old post from Robert Reich on the subject and a more recent one from Joseph Stiglitz on why we ought to breakup the big banks.

Dean Baker and the Economic Right Stuff

If there is a more delightfully rational and straightforward economist around than Dean Baker of the Center for Economic and Policy Research, somebody needs to tell me. I don’t write much--I wish I could make myself do it more. But reading Baker’s stuff makes me want to package his ideas and analysis and get it out to a wider audience. My reliance on Dean for economic and political truth is so complete, I would be roadkill without him.

“Paulson and Bernanke spread the wealth around” is a recent and useful example of Dean’s thinking. He observes that when Barack told Joe the Plumber that he favored tax increases on incomes over $250,000 in order to spread wealth, the loudest responses were critical and adverse.

But, Dean writes, “fortunes will be made or lost depending on how this bailout money is used. For example, Secretary Paulson just agreed to lend another $20 billion of the Treasury's bailout money to Citigroup.

“In addition, the Federal Reserve Board agreed to guarantee up to $300 billion of presumably bad assets. This is an enormously valuable guarantee. If Citigroup had to arrange a comparable guarantee in the private market, it would almost certainly pay more than $30 billion a year.

“This decision sent Citigroup's stock soaring. In the week since the bailout was announced, Citigroup's stock more than doubled, adding more than $25 billion to the company's capitalization. (The government could have bought the bank outright with the money it lent to Citi.) This is great news for Citigroup's shareholders, who would be holding almost worthless stock if Mr. Paulson had not been so generous.

“Paulson's decision was also good news for Robert Rubin and other top executives at Citigroup. If the government had not stepped in, Citigroup would almost certainly be in bankruptcy and most of its highly paid executives would likely be out on the street.

“Creditors of Citigroup also benefited. If Citigroup went into bankruptcy, their loans would be frozen for a period of time while the court determined what percentage of Citi's debts could be paid. At the end of this process, many creditors would only receive back a fraction of what they are owed.

“The fact that money is being redistributed doesn't make it wrong to bail out Citigroup or any of the other companies now being aided by the various Fed and Treasury funds. We need to keep the financial system functioning. However, there is every reason in the world to be concerned about the extent to which these policies may be enriching the wealthy and well-connected at the expense of the rest of us.

“In the case of the Citi rescue, there was no obvious reason why the shareholders should not be wiped out. They understood (or should have) that when they bought shares of the company that they could lose their whole investment if the company was poorly managed and went bankrupt. Similarly, there is no obvious reason that the management that wrecked Citi should not be thrown out and replaced with a more competent and lower paid team.”

There is more of Dean, lots more at www.cepr.net. Be sure also to check out “Paper wealth and the economic crisis.”

Dean may not have a prime place in the rolodexes of power, but journalists and commentators need to rely on him more often. Ordinary folks already can and do.

Blaming the sub-prime mortgagees for the sins of bankers

I keep trying to explain the current financial crisis to myself for two reasons. One, I believe there must be simpler explanations than the ones that seem to prevail in media reports and on op-ed pages. And two, I'm discovering that far too many people believe that one of the major causes of our current problems lays with homeowners who took mortgages that they couldn't afford.

There is of course, still a class of pundits who believe that too much regulation is a significant cause of the collapse of the financial markets, the freezing of credit, and the abysmal performance of American auto companies. We are going to have to agree to leave such people out of the conversation--they are market fundamentalists whose cultish practices are no doubt constitutionally protected however much they might frighten children and the simple-minded.

But to apply, at least minimally, the notion that it is markets that decide (rationally or otherwise) who gets what, when, where and why, it seems both wrong-headed and unkind to blame individual homeowners who have fallen behind or defaulted on their mortgages for our current financial difficulties. These homeowners must live with the decisions of markets. They are not the deciders, as our soon to be ex-president might say.

After all, a good many people who received sub-prime mortgages actually qualified for conventional mortgages at more favorable rates. They were channelled into the sub-prime market, which created huge difficulties for them when affordable adjustable rate mortgages suddenly climbed to much higher rates after the housing bubble popped. It is shoeing the wrong horse to ask such people to predict the end of the bubble when bankers themselves believed (or pretended to believe) that we were all going to profit from an endlessly inflating housing market.

Mortgage applicants are consumers, not financial experts. They rely, mistakenly as it happens, on the expertise of others.

It is arguable, of course, that it is the buyer who ought to beware. But historically, it is banks and mortgage companies who have decided who is eligible for their services and who is not. If we are to take reasonable steps toward resurrecting the housing market, it makes far more sense to examine the practices of bankers, mortgage brokers and the buyers and sellers of bundled mortgages than it does to swing away at people who are losing their homes.