Sandra Fluke, Birth Control, and the Catholic Church

I’ve never heard of Dan Mitchell before, but apparently he’s a libertarian blogger. He’s also, apparently, an idiot. In this post he characterizes Sandra Fluke as wanting the government to pay for her birth control.

That might be a good idea, but it’s not what this controversy is about. Anuone who thought for 10 seconds would realize that this has nothing to do with the government’s paying for birth control. To sum up the obvious:

  1. Sandra Fluke is a student. Students are required to pay for health insurance as a condition of enrollment. That’s true today in Massachusetts, under Romneycare, and it will be true for the whole country once Obamacare is fully in effect.
  2. The Catholic Church, which owns Georgetown University, wants to take Sandra Fluke’s premium money, but deny her birth-control coverage. Note that this does not lead to a premium reduction, since covering birth control lowers health care costs rather than raising them.
  3. So what the church is saying is that it should be able to force its own beliefs on the students and employees of the universities (and hospitals) it owns, and should still be subsidized by our tax money (and universities are heavily subsidized – not just by grants, but federal financial aid and tax exemption for all their real estate).

A more intelligent libertarian view would be that our tax dollars should not go to subsidize sectarian institutions. If Catholic (or other religious) universities want to get all that federal aid, they should follow the same rules as everyone else.

Fukushima – Eve of Destruction?

I’ve always said the real problem with nuclear power is the radioactive waste. Nuclear plants produce tons of highly toxic, hard to contain materials that remain intensely radioactive and dangerous for about 250,000 years, and nobody knows what to do with it. Let me repeat that: no one has any idea how this waste can be dealt with safely, yet we continue to produce it, and governments have plans to produce even more. That’s insane.

I guess I still think that; but today’s release of an investigative report on the Fukushima meltdown in Japan has to make anyone stop and think. The report condemns the lack of preparedness of the company running the plant and the blunders of both company executives and government officials in trying to handle the disaster. But the scary point is that we came very close to an unthinkable catastrophe, “a series of massive chain reactions” that would have destroyed the heart of Japan. Officials considered an evacuation of Tokyo – a city of 35 million people.

In this case, the determination of the heroic Tsukushima 50, who continued working far beyond their safe radiation allowances, and a few lucky breaks pulled us back from the brink on that one. But what will happen next time? As I said, this is insane.

Europe and the US – A Natural Experiment in Economic Policy

Three years ago, as a new president took office in the depths of a staggering, world-wide recession, the US passed the American Reinvestment and Recovery Act (ARRA), better known as the “stimulus.” The idea was for the government to spend money on job-creating projects, even if that increased the federal government’s budget deficit. While many economists argued that the stimulus was a good idea but too small, those on the right called it the “porkulus,” and helped stir up the Tea Party protest movement against it.

In Europe, virtually every country took the opposite course. Instead of stimulating their economies with more spending, they turned to cuts to bring their budgets closer to being balanced.

Now, three years later, we can begin to see the results. The US economy has begun a modest recovery, with unemployment creeping down as sales begin to increase. In Europe, by contast, Greece is in a state of near collapse – and is having devastating budget cuts imposed on it – with serious worries about the fiscal stability of Spain, Italy, and France, and a real prospect that the entire Eurozone will collapse.

The US stimulated the economy by increasing its budget deficit, and is now experiencing a modest recovery. The nations of Europe sought to decrease their deficits by cutting spending, and is now threatened with economic collapse.

Which policy do you think was better?

Nuclear Weapons: Iran, North Korea, USA

Yesterday (February 25, 2012) the New York Times reported that US still agencies continue to believe that Iran is NOT trying to develop nuclear weapons. That was a shocker, given the current war fever being whipped up in the US and Israel.

However, there is a bigger question. Is the Nuclear Nonproliferation Treaty sustainable? This treaty basically says that there is a privileged group of nations that has nuclear weapons and will keep them, and the rest of the world which is prohibited from having them. Or, to put it more bluntly, there are a few countries which get to tell all the others what do do and when to do it.

For those of us who are Americans, it’s easy to miss the point here. Americans tend to think that we are benevolent and friendly, so we don’t see why anyone would mind if we dominate them. With a little effort, though, you can see it the way others do–which can be summed up as “The US is great until they want our resources.”

As a result, many countries have proceeded to develop their own nuclear weapons, ignoring the treaty (or refusing to sign it). These include, at a minimum, Israel, India, Pakistan, and North Korea. The list is likely to grow, whatever Iran might do.

Having fewer countries with nukes is better than having more; but it doesn’t work. The only real path to a safe future is the abolition of all nuclear weapons. The US, as the biggest nuclear power, has to take the lead on this. There is little sign that it will do so any time soon, but until it does nonproliferation will continue to fail.

Hospitals Are Not “Religious Institutions”

Wow! I haven’t posted for a long time – so to get my feet wet again, here’s a quick comment on the current controversy over whether Catholic hospitals and universities should have to cover contraception in their employee health insurance.

The bishops are arguing that this requirement violates their religious freedom. In my view, freedom of religion applies to – religion! It does not mean that a church can run a business – and these days, hospitals and universities are businesses above all – and avoid obeying the law.

If a Catholic order offers free care as a mission, that is a religious activity. If the Catholic church owns a big hospital, hires people who are not Catholics to work there, offers care to the general public, and charges much the cost of that care to the government – that is not a religious activity. It is a business activity, and should follow the same rules as everyone else.

Similarly, if a group of Jesuit priests runs a seminary to train future priests, that is a religious activity. If they run a big university with athletic teams, faculty and staff from all religious beliefs and non-beliefs, and high tuition – that is not a religious activity.

It seems pretty clear to me.

Occupy Movement Fights Foreclosures, Confronts “Big Lie” about Causes of Crisis

With the launching of several actions to “Occupy Our Homes,” the Occupy movement once again has shown its ability to cut to the heart of the crisis.

First they occupied Wall Street and other financial centers, highlighting who really holds power in America: the big investment banks that took huge bailout payments even while continuing to destroy the economy for the rest of us. By targeting Wall Street, not Congress, the movement avoided partisan wrangling and evoked widespread sympathy across the country.

The occupations were inspired in part by the occupation of Tahrir Square in Cairo. But this is America, not Egypt, and despite some notable successes (such as the general strike in Oakland), it is clear that the movement does not yet have enough active supporters to prevent police from violently closing all their camps.

Making this negative into a positive, the occupiers are now throwing themselves into the struggle against mortgage foreclosures. In some places occupiers are accompanying homeless people as they move into vacant foreclosed homes. In others, they are setting up tents in the front yards of families threatened with foreclosure.

The great thing about this move – besides that they are helping people stay in their homes – is that Occupy is making a head-on attack against the central myth of the Tea Party, namely that the economic crisis was caused by irresponsible mortgage borrowers. As I pointed out here, this is simply not true. The market in mortgage-based derivatives did not collapse because some borrowers defaulted; it collapsed because high-risk mortgages had been rated, fraudulently, as prime investment grade. You can get the details in this column by Barry Ritholtz, who calls the claim that home mortgage borrowers caused the crisis “the Big Lie.”

But the Tea Party has been making the opposite argument at the top of its collective lungs. They were inspired, in part by Rick Santelli’s televised rant on the floor of the Chicago Board Options Exchange, which concluded with Santelli’s rhetorical question, “This is America! How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills?” This video was immediately posted on the FreedomWorks website, and used to organize local Tea Party groups around the country.

Now Occupy is confronting this story head-on with its own narrative. The foreclosed-upon are victims, not perpetrators of the crisis. In many cases, the people threatened with loss of their homes have been making payments regularly but now have negative equity because the banks have destroyed the market in real estate. They are not asking the taxpayer for a handout; they are asking the banks, which did get handouts, to share the losses from the cisis they caused.

One year ago, the Tea Party was winning the war of stories. With this important move, the Occupiers are beginning to turn things around.

The Problem with “Payroll Tax” Cuts

As Congress debates a third round of the so-called “payroll tax cut,” more members have at least begun to acknowledge that this tax is what pays for social security. In fact, it is much more commonly referred to as the “social security tax,” the label used on my pay stub, and probably on yours as well. The first two times, hardly anyone in Congress even mentioned that this had anything to do with social security.

The problem, of course, is that the social security trust fund is predicted to run out in 2043. With less money in, it will run out sooner – unless the money lost through the tax cut is replaced by money from somewhere else. This time, at least, the President’s proposal is to replace the funds with a new tax on those with annual incomes greater than $1,000,000.

At this point, extending the tax cut is probably a good idea, if it’s paid for. While I don’t think the original cut provided much of a stimulus, ending it would take money out of everyone’s pocket, and probably would hurt the economy. However, there are some problems, and we should all be aware of them.

Social security falls into the broad category of social welfare: government programs that help everyone maintain at least a minimum standard of living. However, there are two kinds of social welfare program, often classified as social insurance and social assistance.

Social insurance programs are paid for by individual contributions, usually in the form of a tax. People become eligible for the benefits by participating in the contributions. Social security and Medicare are social insurance programs, as is unemployment compensation (with the proviso that the tax in this case is paid by the employer, not the employee).

Social assistance programs are paid for by general revenues. People become eligible for the benefits because of economic need. Medicaid and Transitional Assistance for Needy Families (“welfare”) are social assistance programs.

So there are two important differences between social insurance and social assistance. The former is contributory and universal; the latter is noncontributory and means-tested. However, there is another important difference, generated by the first two: social insurance programs are popular, while social assistance programs are not.

The popularity of social security and Medicare come from the feeling that we have earned them. By paying into them over the years, we create a sense that we are getting back something we paid for. This makes it very hard for anyone to suggest repealing them. “Welfare” and Medicaid are far less popular; in fact, TANF has been almost eliminated, and Medicaid is cut whenever there is a budget crisis.

The risk in changing the tax basis for social security is that it will come to be seen as a social assistance program, one that taxes the rich to pay the poor. Obama’s proposal does not get us there, but it is a small step in that direction. We should proceed with caution.

Poor Mitt Romney

I didn’t want to write the following – Romney was a terrible governor, he’d be a terrible president, and I hate to defend him. But fair is fair, and he’s taking a bum rap on this one. Read on for the details.

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Poor Mitt! Everybody’s beating up on him for supposedly flip-flopping on health care, because the plan he helped negotiate – and still supports – in Massachusetts works the same way as the federal Affordable Care Act, aka “ObamaCare.” Both the Massachusetts and federal plans contain an individual mandate: a requirement that any individual not covered by some other health insurance must purchase an individual policy, or else pay a fine.

Without such a mandate, it would be very difficult to include an important feature of each plan, the rule that insurance companies may not exclude preexisting conditions from their coverage. The logic of this is simple: if you can’t be denied coverage for a preexisting condition, it would make sense to not buy any insurance until you get sick. Once you got sick, you could pick up a policy, as the insurer would not be allowed to refuse you.

The net effect would be that only people with high medical expenses would get coverage, which would therefore cost just as much as paying for treatment directly. The system would collapse under its own weight.

There are two ways to design a program to avoid this contradiction: either a single-payer system, where everyone is covered all the time by a government plan; or an individual mandate, which basically forces healthy people to get insurance.

So that’s why Romney’s plan included the individual mandate, and it is similar to Obama’s in that way. But there is a crucial difference all the same:

Romney’s plan individual mandate was an order from the state; Obama’s is an order from the federal government.

The issue is the Tenth Amendment, which says that any powers not expressly given to the federal government belong to the states. States clearly have the power to make people do things: wear motorcycle helmets, get immunizations, obey quarantine laws. The federal government has such power only when it is part of another power.

Now, I firmly believe that the Affordable Care Act is legitimate under the interstate commerce clause. There are 100 years of precedent for this, and only the right-wing nuts currently on the Supreme Court would quesion it. But that’s not what the Tea Party thinks: they maintain that the Tenth Amendement prohibits a federal individual mandate. That’s the basis of most of the pending lawsuits on ACA.

Romney’s position – and he did spell it out early in the campaign – is that the state of Massachusetts wanted to impose an individual mandate, and it had the power to do so. The federal government, in his opinion, does not. No flip flop there, just straightforward (albeit incorrect) constitutional reasoning.

Unfortunately, that argument is too sophisticated for the Tea Party folks to grasp.

Forget the Supercommittee, Just Raise the Debt Ceiling!

The possible failure of the so-called Super Committee is being trumpeted as one more piece of evidence that Congress is unable to do its job. Twelve members of Congress – 6 from the Senate, 6 from the House, 6 Democrats, 6 Republicans – have so far been unable to come up with an agreement to cut the federal deficit by a specified (large) amount of money. They still have a couple of hours, but as of now it seems that they are going to report failure – triggering huge automatic cuts in both domestic and military spending.

Certainly, Congress is dysfunctional right now. But it is important that we remember that the “problem” assigned to the Super Committee is purely and completely fictitious; or rather, it is created by Congress.

Last summer, the total federal debt reached the statutory debt ceiling set by Congress in the past. In order to keep the US out of default, Congress needed to pass a law authorizing additional borrowing (NOT additional spending; this was simply authority to borrow money to pay the bills, including interest on past debt, that had already been incurred).

Normally, this is a simple housekeeping matter. Congress simply votes to raise the debt ceiling, and things go on as normal. In this case, however, the Republicans in Congress chose to risk destroying the credit of the USA in order to score political points; and the Democrats played along, pretending that the debt ceiling couldn’t be raised unless there was also a tax increase on the rich.

Don’t get me wrong, the rich should pay more taxes – but it is simply not true, as the Democrats in Congress have been saying, that we can’t pay for federal programs unless we raise taxes.
We can; we just need the authority for the government to borrow.

The country’s most pressing need is not to cut the deficit; it is to create jobs. It is worth borrowing money to do so – more jobs means more income, means more income tax, more revenue to the government, and the ability to pay down the debt in the future. So we need a higher debt limit in order to let the government create jobs.

The Super Committee was threatening to cut social security and medicare, so it’s good they failed. It’s especially good when we consider that they were completely unnecessary in the firt place.

Investment Banks Caused the Crisis – NOT Mortgage Borrowers

Barry Ritholtz of the Washington Post recently published this excellent column about the causes of the current economic crisis. It’s important, because one of the main talking points of the Tea Party delegation in Congress (and in the public) is that the crisis was caused by loose credit.

To give the full-blown loony conspiracy version: ACORN, inspired by the writings of Frances Fox Piven and Richard Cloward, set out to destroy capitalism by overloading the system. Specifically, they:

  • Lobbied to get the Community Reinvestment Act passed, and then to modify it to require banks to issue sub-prime mortgages without credit checks.
  • Organized people, many of them without means, to apply for mortgages they couldn’t afford.
  • Ran fraudulent voter registration drives to register illegal aliens and others to elect Barack Obama and keep the government handing out the money.

There are other parts to it, but you get the picture. And of course it is rare that anyone lays out the full story like this; instead, right-wing voices just mention all the parts and let people put them together for themselves; so anything they say about ACORN, for example, becomes confirming evidence.

The reality is very different. The Community Reinvestment Act requires banks to make loans in the areas they get deposits from; it does not require them to make bad loans! And almost everyone who got a mortgage was able to pay for it initially; the problem was that the mortgage companies, who were going to resell the mortgage anyway, concealed the fact that the rate was likely to go way up at some point in the future.

But there is another, more basic point: the crisis was not caused by people who defaulted on their mortgages. People default on mortgages all the time. High-risk mortgages earn higher interest, and when the markets are working right the high return will balance the risk of loss.

The problem was different. Mortgages known to be high-risk were combined into packages with others thought to be low-risk; then the ratings certified the packages as safe investments, and the packages were sold (or rather, derivatives based on their value were sold) to investors.

When the default rate went up, it suddenly became clear that these safe investments weren’t safe after all. Even more important, investors realized that no one knew what the packages were worth. Since no one knew what to buy or sell them for, the market just collapsed – and there was the crisis.

Well, Ritholtz explains it much better than I, so go back to the top of this post, click on the link, and read his article. I just want to conclude by looking at the implications.

  • If the problem was caused by poor people getting mortgages, then the lesson is that we all have to learn not to live beyond our means. Austerity!
  • But if the problem was caused by the banking system (and it was!), the lesson is different: we have to get the banks under control! Unfortunately, governments around the world are moving in the opposite direction, using the IMF to force us all under the thumbs of the bankers.