The German flu epidemic

Why is Europe so wet on stimulus?

Remember German Finance Minister Peer Steinbrück complaining last December about Gordon Brown’s “crass Keynesianism” in the crisis? The German flu is spreading in Europe.

Europe’s economy is sliding even faster than America’s. But the EU members agreed in December only on a measly fiscal stimulus of 1.5% of GDP, focused on the “most important” sectors (BTW, a male chauvinist or Marxist concept). The American one is about 5.5%. But the 1.5% is not being met. After grumbling, Germany has actually done a little more: a €50 bn package makes 2%, France’s €26 bn of new spending 1.4%, of their respective economies; Spain’s was €11 bn, around 1%. Italy’s package is a token 0.2%, Greece’s 0.01%. And Spain is even backtracking: Zapatero has announced €1.5bn of spending cuts.

Where does this damaging wimpery come from? A few hypotheses:

Continue reading “The German flu epidemic”

The central economic policy issue concerning stimulus negotiations

How much can the economy stand 7 more months of GOP destructiveness?

Apropos of Andy’s thoughts concerning the stimulus negotiations, I suppose that the real policy question at this stage is: what are the economic effects of delaying any stimulus until October 1st?

That is the date by which a new budget must be passed: I am assuming that the Republicans will use any and every dilatory and destructive tactic possible. Budget reconciliation bills cannot be filibustered.

So if the House decides to call the Senate’s faux-moderates’ bluff, and so the Senate then fails to achieve cloture on the stimulus package, we won’t get new spending for 7 more months. That will surely hurt, and drive the recession deeper. The question is whether it will put the national and the world economy into a deflationary spiral.

Paul Krugman suggests in the terrific new edition of his book The Return of Depression Economics that one reason why Japanese fiscal stimulus might not have worked (and it is a “might”, because it still might have avoided a Japanese depression) is that Tokyo responded too slowly. Will seven months make that difference?

A superb overview of the federal budget process can be found here.

A fair question

President Obama is wrong to give such high priority to health IT in the stimulus.

Black guy from Chicago:

Q. …We’ve got the most inefficient health care system imaginable. We’re still using paper. We’re still filing things in triplicate. Nurses can’t read the prescriptions that doctors — that doctors have written out. Why wouldn’t we want to put that on — put that on an electronic medical record that will reduce error rates, reduce our long-term costs of health care, and create jobs right now?

RBC blogger:

A. Because there’s no plan. Candidate Obama quite reasonably proposed a policy, not a plan; and you don’t think the Bush administration prepared one, do you? The near-disaster of health IT in England, and the few American examples of success, strongly warn against throwing money at the problem before it’s all thought out. You have to solve tricky privacy issues and bring the different stakeholders on board – doctors, nurses, pharmacists, health managers, and above all patients. In this vital planning stage, you don’t need that much funding and can’t spend bucketfuls usefully. The recession will probably be long, leaving time to put the real money in a later recovery budget. A coherent health IT plan is very important, but it’s not a good way to “create jobs right now”.

The House stimulus bill left $2bn for health IT, which looks plenty for now. The Senate raised it to $5bn (here, spreadsheet line 433) so the issue will have to be addressed in conference. My suggestion: shift the $3bn difference to restore the funding for public health prevention. RBC’s very own public health expert Harold Pollack has the arguments here, supported in a petition by 500 670 of his fellow professionals. These are ready-to-roll programmes with rapid payoffs in both jobs and the welfare of Americans. Looking ahead they will lower the huge long-term financial burden of treating HIV and other diseases. Every case of HIV prevented saves on average $618,000; much of it to taxpayers.

But not if the parley delays the passage of the bill by one day.

(Previous blog jeremiads on EMR: here , here, here. Sigh.)

Update – 11 February

You read about “$20bn” for health IT in the Senate bill. Most of this looks to me (but I may be wrong) like hot air about grants to physicians etc from 2011, which will no doubt be changed in either direction. What the text does is set up the programme: there are 126 pages (pp 264 – 390) confirming the Office of National Health IT coordinator (established by Bush in 2004 as a figleaf for inaction), creating policy and advisory committees, standard-setting and grant-awarding processes, and so on. The newly promoted national health IT tsarik is given 12 months (p. 278) to appoint a chief privacy officer, clear proof that they have no idea of the storms about to hit. This repeats exactly the trajectory of the English NHS IT project: treat privacy as a technical problem you can solve with technical fixes, not the central policy dilemma of the whole thing.

Update 2 – 12 February

To be quite fair, there does exist a 115-page document from June 2008, grandly entitled “The ONC-Coordinated Federal health IT Strategic Plan 2008-2012”.

Judge for yourself, but it looks to me like those pretty charts produced in the heyday of the SDI and the Second Iraq war: Powerpoint exercises in wishful thinking.


Milestone 2.4.5: By 2011, there will be established accreditation criteria and processes for all models for the exchange of health information, as appropriate.

That is, in two year’s time, they hope to have sort-of decided how the health IT network is supposed to work.

I also liked the combination of these objectives:

1.3.6 End 2009: Consensus about the components of a certified PHR [personal health record].

1.3.4 End 2010: Majority of [PHR] products are certified.

1.1.2 End 2010: Best practices used to develop standards and certification criteria [on confidentiality, privacy, and security.]

It’s taken five years in England for one contracted provider (iSoft) to not quite roll out a PHR suite starting with much clearer criteria than this.

There is precisely one idea for overcoming resistance by physicians to having their working lives turned upside down:

1.3.1: Remove business obstacles for provider use of EHRs.- Physicians using certified EHRs are eligible for malpractice credit.

Needs more work, don’t you think?

Update 3 – 12 February

The Finns who got it right.

Update 4 – 13 February

They did it! Health IT stays at $2bn, and $1bn back for prevention. Who says bloggers do not wield secret power?

Bipartisan like a fox

Many progressives feel that senate “moderates” have boxed Obama into a corner. Latest evidence: it’s the other way around.

Many progressives feel that Senate conservatives “moderates” have boxed Obama into a corner, taking out the best parts of the stimulus and making him thank them for doing so. Maybe. But consider three things that happened today:

1. Arlen Specter endorsed the stimulus, at length (by today’s standards) and in writing; he certainly praised his own preferences but in general stressed the need to act quickly in a crisis.

2. The Senate invoked cloture on the key stimulus amendment. Nate Silver astutely notes that Snowe and Collins, who along with Specter were the only Republicans voting “aye,” hail from a state that Obama won by 17 points.

3. Barack Obama, Mr. high-60s Approval, used his press conference to (1) stress that we’re in an economic crisis and must act very soon if we want a chance to dig out; (2) go out of his way (as E.J. Dionne notes, about :55 into this audio) to praise parts of the stimulus plan that the House passed but the Senate eliminated or gutted: aid to states, school construction, medical IT. Dionne thinks this is a signal to House Democrats to put such things back in during conference. I think he’s right.

Now: say the House bargains hard in conference; the conferees as a result put back in a lot of the good spending while taking out some of the ridiculous tax cuts that subsidize people who already intended to buy houses and cars; and the resulting conference report is passed easily by the House.

The self-styled Senate moderates will then be free to huff and puff. (Obama might not even mind: let them play to their constituents.) But will they seriously, given (1), (2), and (3), consider voting nay?

Let’s start considering the possibility that our president knows how to play this game.

True Bipartisanship on the Stimulus

The REAL way to get past partisan bickering on the stimulus.

Now that the alleged Senate centrists have worked their magic, stripping aid for states from the stimulus, there brews a fight between the House, which insists on the aid, and the Senate, which says it’s too expensive. It seems to me that there is an obvious compromise here:

All those Senators who think that the stimulus is too expensive should not receive federal aid for their states.

If you really are a fiscal conservative, then this should be great for you. You can say that you voted to cut spending! Besides, as we know from all of you, state budgets are “bloated,” and it’s important not to spend too much, you understand.

Besides, isn’t this the way federalism is supposed to work? Some states want to be tough-minded fiscal conservatives, and others are liberal softies. Can’t we all get along?

What’s that you say? That it wouldn’t be fair, because some states subsidize others? That’s true, I know, but I don’t think that that argument does what you think it does. It’s not a problem: just look at the numbers.

Now that’s a compromise. I don’t know why they didn’t think of this already.

Ralph’s Pretty Good Stimulus: A Missed Opportunity

An okay result from the sausage factory: just don’t tell me I have to like it.

A Prairie Home Companion is sponsored by, among others, Ralph’s Pretty Good Grocery: “If you can’t find it at Ralph’s, you can probably get along without it.”

That’s my initial and preliminary take on some of the energy and transportation provisions of the stimulus, although a lot that isn’t in there we probably can’t get along without, like a real commitment to energy efficiency and transit.

In all, it seems to me that this is okay, but really a missed opportunity: of course there is a whole lot of good spending in there, but that’s what a stimulus is for. Priorities have not really — what’s the word I’m looking for? — changed. It’s going to take a lot more to turn this aircraft carrier around.

Highways: $27 billion

Mass Transit: $8.4 billion

Rail: $3.1 billion

“Competitive Grants for Transportation”: $5.5 billion

Sigh: the Highwaymen win again. Might as well face it, you’re addicted to concrete. Better than what I thought was going to be in there for transit, but not really serious.

Of particular interest is $5.5 billion in “Competitive Grants for Transportation,” which can go for either highways or transit: Ray LaHood could be making some important decisions. What is the precise language for these grants? Who from the White House will be riding herd on this? And what will they tell DOT? Enquiring minds want to know.

The energy side also has some news that is, well, pretty good:

$2.6 billion for energy efficient and renewable energy research. Nearly doubling the Bush Administration’s FY 2009 request, but let’s get serious. Compare this to the research budget of NIH, which is $29 billion. That means we are spending more than 10 times more on medical research what we are on energy. Oy. (If this is not an apples-to-apples comparison, readers should let me know and I will update).

$4.2 billion for Energy Efficiency and Conservation Block Grants, which go to state and local governments. These can be quite significant, providing money for key retrofits that can yield enormous (and enormously cost-effective) emissions benefits, like cool roofs. Again, a doubling (even a little more) than the traditional $2 billion, not nearly enough. The US Conference of Mayors asked for $5-10 billion, but given how things ratchet up, this may be all they expected or could have hoped for.

One thing that jumps out at the environmentalist in me: $4.6 billion for the Army Corps of Engineers, and $1.4 billion for the Bureau of Reclamation. Just what we need: more dams. I don’t trust these agencies. But I shouldn’t paint with so broad a brush, and they do provide stimulus.

That’s the sausage factory: not unexpected, but don’t tell me I have to like it.

Call the fire department, not the arsonists

Rachel Maddow shamelessly flouts bipartisanship, calls some claims about economics better than others.

Rachel Maddow shamelessly flouts bipartisanship, calls some claims about economics better than others.

I’m too technically challenged to embed the video directly, but I’m happy to link to Steve Benen’s money quote, as it would be mine too:

Cutting food-stamp funding to attract Republican support is proof-positive that the Republicans are not trying to come up with an effective stimulus here. If your house is on fire, and you call your fire department, and your fire department tells you to pour gasoline on the flames, they’re not actually making a good-faith effort to help you put out the fire. They’re not a good fire department.

If you’re working up policy to fix an economic crisis, which is characterized by there being no spending in the economy, and someone in that debate says, ‘OK, but cut the spending out of the rescue plan,’ they’re bad at making policy.

And you know what? It matters when you’re wrong. A whopping proportion of the Republican rhetoric about stimulus is wrong…. It’s just wrong. The time is now to take the radical step, as Americans — as civic-minded Americans concerned about our future — it’s time to take the radical step of privileging correct information over incorrect information….

If you are wrong, from here on out, you should lose the argument and you should lose your political potency. Form a flat-earthers club or something, where you talk enthusiastically to each other about your made-up economic ideas that aren’t based in reality. But get out of the way of the people who are actually trying to save the country.

Chortle loudly. Then, more usefully, send the link to a few low-information acquaintances.

Sorry to be repeating so much material posted elsewhere. But at times like these, repetition is a virtue.

Republican Stimulus Hypocrisy

The McCain stimulus substitute amendment that got 40 Republican votes yesterday had procurement of military items in it, but somehow the Republicans insist that icebreakers be removed from the Democratic package.

The McCain stimulus substitute amendment that got 40 Republican votes yesterday had procurement of military items in it, but somehow the Republicans insist that icebreakers be removed from the Democratic package.

Quote of the Decade

Nancy Pelosi today, on the stimulus:

Washington seems consumed in the process argument of bipartisanship, when the rest of the country says they need this bill.

Meanwhile, the headline in Politico? “Pelosi Dismisses Bipartisanship Calls.” Mao Zedong might have been the most evil ruler in history, but things like this make me want to send every Washington political reporter Down To The Countryside.