Sarah Palin Didn't Know What?

Don't push it....

The recriminations against Palin, launched from within her own party, seems unnecessary and... well, they're pushing past the point of credibility. We're to believe Palin didn't know that Africa was a continent, or that it is comprised of many nations? Palin may have said something that reflected her lifelong disinterest in global affairs, including something that suggested a lack of familiarity with the nation states of Africa, but come on.

What's the point of all of this, anyway? We shouldn't be surprised that many within the McCain camp are eager to point the finger of blame elsewhere for their loss of the election, but Palin's nomination was a pretty obvious Hail Mary. Her addition to the ticket was perhaps a symptom of the campaign's collapse, but not its cause.
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Update: Sometimes when allegations appear to be pushed past the point of credibility it's because they're fake. This leaves open the question, why didn't the (post-election) McCain campaign aggressively deny the claims?

Update 2: Attacks from within the McCain campaign, crossed with opportunistic scamming, crossed with the McCain campaign's failure to rally to Palin's defense, leave the picture very confused. I'm still giving Palin the benefit of the doubt on such issues as supposedly not knowing that Africa is a continent, whatever the source of that allegation.

You Only Have To Fool Enough of the People...

The magic Palin brings to the McCain campaign is her remarkable ability to lie about pretty much everything. Apparently, Matt Drudge dredged up a January interview where Obama describes how carbon emission "cap and trade" works, and now Palin's hard at work lying about it:

• Lie: "You hear Barack Obama talking about bankrupting the coal industry" - Truth: You hear Obama state, "this notion of 'no coal', I think is an illusion" given its huge role in powering the U.S. and even greater role in powering China. He raises the question of how we can use coal without creating greenhouse gases. He observes that under a cap and trade system, if cleaner methods of producing coal energy are not developed, new coal power plants will not be economically viable. It's the person who ignores the carbon tax and builds a dirty coal plant who goes bankrupt, not the coal industry.

  Obviously, under any cap and trade system, sources of energy that produce high levels of carbon emission may lose their viability - that's the point of cap and trade - so the coal industry's focus needs to be on developing cleaner energy technology.

• Lie: "John McCain and I, we will not let that happen to the coal industry." - Truth: John McCain also supports a strong "cap and trade" system for carbon emissions, and if he's telling the truth about that his policies will produce exactly the same outcome as Obama's.

• Lie: Palin's demand to know why the video was "withheld from the electorate" suggesting a conspiracy by the media - Truth: "audio of the interview has been available on the web site of the San Francisco Chronicle since mid-January, when Obama made the comments in an interview with the newspaper's editorial board."

They say that when you've got nothin', you've got nothin' to lose. And I guess, when you've given up your honor, you've got nothin'.

Entrepreneurship and Taxes

Although there are some valid points buried within, it is hard to discern why ABC News deemed this editorial by Michael Malone worthy of publication. Although I agree with him, that entrepreneurship plays an enormous role in the success of our economy, and that laws and government regulations are nonetheless constructed in a manner that is favorable to large businesses, and in many ways unfavorable to small businesses and start-ups. I don't think that it can be reasonably disputed that this has become worse under G.W., who right now is trying to gut antitrust regulations on his way out the door.

But a lot of what he claims is just plain stupid. Platitudes like, "Sen. Barack Obama, being a Democrat, seems to have very little idea of how the economy actually works" and "Sen. John McCain, being a Republican, has a marginally better understanding of the economy and the role of business - but his attention, as usual with GOP elders, is focused upon established companies, which undergird our economy, but do little to create new jobs or new wealth" - as if McCain's expressions about the limits of his understanding of economics are reduced to vapor by his party affiliation, or as if Obama would have an economic epiphany if he switched parties. Facts? Evidence? Who needs those when you have stereotypes and caricatures.

Malone's observations about entrepreneurship are similarly trite,

Meanwhile, established and big companies understandably hate entrepreneurship and will do almost anything to slow the progress of entrepreneurs - like all of those onerous regulations described above. And it has worked: This year has seen almost no high tech company IPOs, traditionally that moment when entrepreneurs gained their freedom and rewarded their teams.

A low level of high tech IPO's can, it seems, only result from start-ups being stifled and crushed by the iron fist of established companies. It has nothing to do with, for example, their number, the economy, or their state of readiness for going public. Malone also forgets how rare it is for a company to go public, and glosses over the fact that, once public, they're well on their way to being one of the "established and big companies" that supposedly "hate entrepreneurship".

These days, the only recourse for a hot start-up company is to sell out to an established company - further consolidating power and wealth. And meanwhile, of course, those older companies find it much more pleasant to buy these new competitors than compete with them.

It's not the only recourse, but obviously when the economy is bad it can become a superior alternative to trying to ride out a recession - not every company is Google. But really, prior to the original dot-com bubble, how many software companies dreamed of an IPO rather than, for example, being purchased by Microsoft? How many V.C.'s, investing in these companies, expect every company in their portfolio to end up going public as opposed to accepting favorable buy-outs from established companies? And sometimes a buyout is the best option for a company that has no viable stand-alone business model. How many start-ups like YouTube can afford to operate at an extremely high cost indefinitely, while their owners struggle to come up with a way to monetize their content? For that matter, what's so bad about being purchased by a major player, whether pre-IPO or post-IPO?

Nothing in McCain's campaign suggests that he understands any of this, or will change the status quo. To look more hip and in-the-know about the tech world, the senator likes to point to the fact that eBay's Meg Whitman is his campaign's advisor on business.

She is, in fact, one of the finest business executives I know, but Meg is not an entrepreneur.

Wait - didn't Malone just tell us that an understanding of the economy can be inferred party affiliation alone? Okay, so even he knows that's bunk. But to attack McCain's association with Meg Whitman, as an attempt to "look more hip" because, although one of the best business executives in the nation who helped elevate eBay from a start-up to a titan, she didn't personally start eBay? Of all of the companies that have rapidly risen from start-up to multi-billion dollar enterprises, how many have done so without bringing in professional management? How many entrepreneurs are their who are considered to be word-class, great, or dare I say even good CEO's once their businesses went public? (I'm only half-joking here - Ford, Jobs (in the latter part of his career), Ellison... Do I need both hands to count them?) For the most part, professional managers don't start businesses, and entrepreneurs reach a point where they need to bring in professional management.

And this suggests that a McCain presidency is not going to come to the aid of America's entrepreneurs - and that the best we can hope for is that it will get out of the way, at least when it comes to taxes. That may work, but it will be a long, slow recovery.

So we've switched back from high tech to the more generic category of "entrepreneur", with a lot of entrepreneurs being decidedly low tech, most employing only themselves, and almost none earning so much as to not benefit from Obama's tax cut. But no, neither candidate is going to give the type of tax relief that would make a typical entrepreneur smile - relief from self-employment taxes, or (something that could benefit all wage earners) eliminating the double- and triple-taxation of income that results from payroll taxes.

Surely here Malone is focusing solely on capital gains taxes, something that would be a pressing issue for a minority of entrepreneurs - those seeking venture capital, with capital gains taxes figuring into the V.C.'s calculation of return on investment, and those giving out stock options and intending to go public. (I'm not overlooking other circumstances where capital gains taxes can arise; but most small businesses aren't actively looking for investors or buyers, and they typically don't fall from the sky.)

As for Obama, leaving aside all of his other proposals for massive social change, the single most frightening plank in his platform is his plan to increase the capital gains tax. If there is one single factor in the U.S. economy that defines the rate of new company creation, it is taxation on capital gains - in particular, the differential between the capital gains and regular tax rates. To understand the long Reagan/Bush/Clinton boom of 1980-2000, you need only look at Reagan's slashing of that differential.

Leaving aside for the moment the "sheer terror" of a 20% capital gains tax, did it occur to Malone that he should actually read Obama's tax proposal before attacking it?

The Obama plan will ... Eliminate capital gains taxes for small businesses, cut corporate taxes for firms that invest and create jobs in the United States, and provide tax credits to reduce the cost of healthcare and to reward investments in innovation.

Truly terrifying.

Assuming that his comments about "corporate greed," etc. indicate that he has no intention of getting rid of Sarbanes-Oxley or any other crippling corporate regulation, then Obama's plan to raise the capital gains tax will all but kill creation of new companies - especially new tech companies - in America.

Yeah, "raising" the capital gains tax to zero will do that.... But let's pretend that Malone has a point - let's pretend that we're entering a business environment where the capital gains tax rate will be 20% instead of fifteen percent:

No new Apples or Facebooks or Twitters, no explosive new industries spinning off endless amounts of money and jobs, no new competitive advantages in the global economy.

That first example is fascinating. Apple, Inc., of course, was founded in 1976. You know, when the maximum capital gains tax rate was 49%. And yet Jobs and Wozniak still started their company? Amazing. Well, they reportedly incorporated on April Fool's day, so maybe they just didn't "get" that they were supposed to wring their hands and fret about their eventual capital gains tax exposure instead of starting their company.

Then Reagan came along and saved the world by cutting capital gains taxes to... fifteen percent? You're joking, right?

The late 1970s and early 1980s brought decreases to the top rates for both ordinary income and capital gains. The top tax rate on ordinary income dropped 20 percentage points to 50 percent in 1982. The capital gains exclusion increased from 50 percent to 60 percent in 1979. As a result of the exclusion and rate cut, capital gains tax rates fell from a maximum of 39.875 percent including an add-on minimum tax, which was widely applicable in 1978, to 20 percent in 1982.

The tax rate differential was eliminated by the Tax Reform Act of 1986 (TRA86) at the same time that top ordinary income tax rates were slashed to 28 percent. When tax rates on ordinary income increased in 1991, the top capital gains tax rate was held fixed at 28 percent. It was subsequently cut to 20 percent in 1997 and to 15 percent in 2003. In comparison, the top tax rate on ordinary income is now 35 percent.

Well there you have it - and don't go believing your lying eyes - we had no boom in tech start-ups, tech IPO's, or flood of so much money into tech businesses that we created a dot-com bubble, because the capital gains tax rate was at or above 20% until 2003. And we've had a boom in tech start-ups, IPO's, etc., since that time because... no, wait, Malone insists we haven't, and that it's a real problem. How is that possible? Maybe he's looking for his answers in the wrong place?

Now about those new Facebooks and Twitters? Those are Malone's best examples of businesses that might not have been started under a 20% capital gains tax, that should go public, or where it would be somehow a tragic loss if they were purchased by an established company? It sounds like Malone is trapped in a time warp - it's 1999, and all a tech company needs to justify a multi-billion dollar valuation and an IPO is a large user base. A business model? A path to profit? An ability to so much as break even? That's so old-school.

Facebook reminds me of the housing bubble. Back when things looked good, people were talking about its being worth $15 billion, and it was spurning proposals for acquisition by companies like Yahoo!, reportedly in the $billion range. Various companies wanted to buy in; Microsoft purchased a 1.6% share of Facebook for $246 million, suggesting a market value in excess of $15 billion. And it tried, and tried, and tried to turn its huge volume of user eyeballs into profit, and the result of those efforts?

As most of Facebook’s growth is outside the US, you’d expect that most of their revenue comes from advertisers targeting international audiences, as well. But that’s not the case. As TechCrunch pointed out months ago, many, many countries generate little to no advertising revenue per user.

* * *

Despite raising probably over half a billion in cash over the last two years, cash reserves are quickly depleting the future may be even more grim for Facebook as the economy slows. Advertising dollars may be one of the first things to be cut. However, as TC points out, Facebook CFO Gideon Yu is in Dubai, looking for more funding for the company.

Facebook grew quickly upon fantastic speculation about its possible future value, spent investor money like a drunken sailor, and is looking at a future where it may not be able to raise enough cash to sustain its operations. So are you thinking, "Why isn't this company going public", or are you thinking, "It needs to be bought out by somebody who has deep pockets and a way to either turn it into a money-maker or to use it to augment their existing money-making operations"?

Twitter is a clever concept, and it has a devoted user base, but it has no obvious path to profitability. Meanwhile, dare I say "established" companies like Facebook have added Twitter-like features to their user interface, to keep those eyeballs on their own sites. And they're having trouble with reliability - with their bandwidth exceeding their capacity - forcing the implementation of policies that may alienate some of their users.

Malone may have a point, that investors paying capital gains taxes at 20% won't invest in companies like pets.com, webvan, eToys.com, kozmo.com, Flooz.com, boo.com, mvp.com, kibu.com, Go.com, Twitter and Facebook, because the marginally lower potential return on investment makes it less desirable to invest in a company that may never develop a viable business model. He may also see companies like Twitter and Facebook as those most likely to turn into corporate giants after an IPO, rather than crashing and burning when they can't even hit a break-even point and run out of money. But let's not pretend that history supports him.

Basicaly, Malone misdirects uninformed attacks at both candidates, gets basic facts wrong, has no clue about the history of the capital gains tax, and seems to know just about nothing about, well, anything. And you know what? If you read the parts of Malone's piece I didn't discuss, you may conclude that I'm being too easy on him.

Premature Obituaries

I'm not personally going to declare a winner until after the election, but it's interesting to read the premature obituaries being penned about the McCain campaign and the Republican Party.

On the right, Clark Stooksbury describes the Republican Party as the "Party of Delusion", calling for an honest assessment of the reasons for the party's failure from inside, but expressing doubts about Republican-oriented conservatives' ability to do so:

A good example is this post from Robert Stacy McCain, who was engaged in some preemptive complaining about media spin of next week’s election. McCain describes the GOP as “the party of low taxes, limited government, traditional values and strong defense.” Only the part about taxes is accurate. the GOP would be more accurately described as the party of tax cuts, debt, cronyism, aggressive war and cultural resentment. The formula that worked for a couple of election cycles, but the party’s chickens have come home to roost.

In the referenced post, McCain also seems to expect that (the other) McCain will lose, but has words of criticism only for the mainstream media. Dan Larison is more in tune with Stooksbury,

Endorsing Obama is a vote of no confidence in the Republican Party, but in a weird way it is also an expression of what is probably utterly misguided hope that the Republicans will learn from the defeat and adjust to new political realities.

He seems to regard it as foolish to vote for Obama to "punish the GOP" out of hope "that there is some small chance that the GOP might change its ways", but presents no alternative. If you concede, as Larison does, that from a conservative standpoint "the GOP has failed so badly that it has made the unthinkable [a vote for Obama] mundane and ordinary", how could you possibly justify a Republican vote? While I recognize that there are third parties, and would not be surprised if Larison ends up voting for a third party candidate, the fact remains that our system is heavily biased against third parties and, in this election and into the foreseeable future, the two dominant parties will remain dominant.

On the left, Paul Krugman speculates on what the Republican Party will look like ("assuming that McCain doesn’t pull an upset"), suggesting,

the GOP that’s left after this election will probably be even further off in right field, even further out of touch with the rest of the country, than before.

If the Republican Party heeds those conservative intellectuals who call for it to reexamine its platform and priorities, that might be avoided. Or not. There's a possibility that if various conservative factions were invited to try to impose their brand of ideological purity on the Republican Party, the ensuing bloodshed would actually harm party unity, or that the bizarre, hybrid consensus version of conservatism emerging from the process would be a cure worse than the disease. Also, the branding issue would remain, as even a fruitful meeting of the party's best minds would have to overcome recent experience - "We're the Republican Party, and this time we really mean all those things we've been telling you we stand for all these years.... Trust us!"

But again, I'm not going to write the party off before it even loses, or after. Similar things could have been said about the Democratic Party many, many times over the past thirty years. They could have been said a year ago. No, actually, they have been - for most of the past year we've been hearing about how this election should be easy for the Democratic Party, how Obama can't "close the deal" and how the Democratic Party's only real strength lies in its ability to snatch defeat from the jaws of victory. If Obama weren't ahead in the polls, people would be saying them right now. If Obama loses, well, I don't have to tell you, do I.

When a party seems to be destined to lose, its pessimists expect the party to be reduced to ashes and its optimists expect a phoenix to rise, but a more likely outcome is that the party somehow manages to hobble itself together, keeps its "party faithful" in the fold, and gets the benefit both of time making people forget its past, and the other party's overreaching making them once again seem like the "lesser of two evils" to the block of "swing voters" that ultimately decides elections.

If I were to speculate as to what future path the Republican Party might take that would help keep it in the minority, at risk of trying to get rich by overestimating the intelligence of our nation's people, it would be the path endorsed by Robert Stacy McCain, who offers an unabashed "defense of ignorance". For example, McCain argues,

Palin's honest ignorance of presidential-level issues was held up as evidence that she is, or was, unprepared for the vice-presidency - as if years of studying such issues were in itself qualification for the office. Evidence contradicts this idea.

Even if we assume that "evidence" contradicts the idea that years of serious study of foreign policy better qualify somebody to serve as Vice President, that does not automatically mean that foreign policy ignorance is an equal qualification to foreign policy study, let alone make ignorance a qualification for the job. And it's more than being unschooled - somebody who has lived a lifetime demonstrating disinterested in a particular subject, to the point that in her forties she is described by her supporters as "ignorant", is unlikely to ever achieve proficiency. Is it possible? Sure, but that's a gamble. McCain's observation that Palin is "a very popular and for all I know a very good governor" is fascinating - before urging the party to jump on her bandwagon, might it not make sense for him to learn enough about her that he doesn't have to qualify his endorsement of her record?

Sarah Palin is extraordinarily shrewd and is a natural as a politician. She figured out early on that some people on the McCain campaign are profoundly incompetent (hello, Tucker Bounds) and that other people on the McCain campaign are selfish and arrogant beyond words (you know who you are, sweetheart).

So if you can identify Tucker Bounds - this Tucker Bounds - and Michael Goldfarb - this Michael Goldfarb - as less than the best, you're "shrewd"? That seems like a pretty low bar - as low as the ground level bar set for Palin in the Vice Presidential debate. So really, what's the reason McCain likes (the other) McCain's pick so much?

Sarah's shortcomings on Aug. 29 have been rapidly remedied, and by 2011 could be remedied entirely. Considering that she is the strongest, most viable alternative to Jeb Bush, I would suggest that some of her conservative critics should try to befriend her, and not merely join the sneering snobs.

The only other choice being Jeb Bush, and the Bush brand having been burned so badly by his brother that, despite his having what appear to be far superior credentials, experience, intellect and interest in national and international affairs, you should saddle up the unknown horse and hope for the best?

Truly, J.S. McCain has a limited memory if he believes that the presidential nominee or eventual president can be spotted four years out. The Republican party doesn't have to hope, so much as it should expect new leadership to emerge over the next four years. If Palin turns out to be the best of the bunch, without wishing to caricature her, diminish her accomplishments, or underestimate her political skills and charisma, the party has a lot to worry about... assuming it loses on Tuesday.

But again, the election ain't over 'till it's over.

Bomb Bomb Bomb, Bomb Iran?

Clifford Orwin serves up plenty of nothing in an editorial that refuses to endorse either Obama or McCain, but attempts to attack Obama who Orwin clearly expects to win.

Fact No. 1 is that the new president will face very bad times. Already last spring, when lecturing at a leading U.S. political science department, I learned that a majority of my colleagues there, regardless of their leanings, held that each party should hope the other won this race. And that was before the financial meltdown.

Is Mr. Obama the man for such a dire moment?

Orwin attempts to insulate himself from criticism of this point by refusing to endorse McCain, but the obvious retort is, "Is McCain?" or "Is anybody?" As Orwin notes,

Already last spring, when lecturing at a leading U.S. political science department, I learned that a majority of my colleagues there, regardless of their leanings, held that each party should hope the other won this race. And that was before the financial meltdown.

So what we have here is not really so much a point about Obama or his qualification as Presidency, but Orwin setting himself up to say "I told you so" if things don't quickly come up roses without actually having to put his neck on the chopping block by suggesting how McCain might be more qualified or what a candidate might do to make roses grow from the fertilizer into which G.W. has transformed most aspects of American government.

Look at Mr. Obama's domestic plans. Behind his rhetoric of unity shelter the same old Democratic policies that the two parties have wrangled over for four decades. If that's what Mr. Obama means by Change We Can Believe In, well then Yes We Can.

So Democrats support Democratic policies, and believe that implementing Democratic policies in the place of Republican policies constitutes change? Is Orwin unfamiliar with the meaning of the word, "change"?

Now if he means to argue that the Democratic policies he chooses not to identify are somehow worse than the Republican policies they would replace, I'm eager to hear the argument - to me, that's red meat and, as with pretty much any policy debate, a robust debate can follow with valid points to be made on both sides. But the way Orwin goes about this? It's a cop-out.

Orwin's only specifics come in relation to "foreign policy", by which he apparently means war, war, and only war:

Here, the best news is that not even Mr. Obama's own advisers believe he intends an early withdrawal from Iraq.

Given Orwin's open support for the Iraq war, and ability to find self-vindication in any outcome, it's no surprise that he apparently finds perverse pleasure in the difficulty of ending that war. But what nonsense:

Al-Qaeda has declared again and again (contra Mr. Obama) that the main theatre of its struggle with the United States is not marginal Afghanistan but geopolitically crucial Iraq. Lately, it has been absorbing a royal beating there. Nothing would delight it more than for the Americans to abandon Iraq prematurely to chase Osama bin Laden. Handed a new lease on life in Iraq, it would press on with renewed confidence in Kandahar.

This man is a political scientist who has been writing for years in favor of the Iraq war, yet he is ignorant of Al-Qaeda's actual goals? In their wildest pipe dream, Al-Qaeda doesn't imagine gaining control of Iraq, and it's absurd and dishonest for Orwin to pretend otherwise. Their unambiguous goal has been to drag the U.S. into a perpetual conflict that bankrupts us as a nation, in much the same manner as Russia's war in Afghanistan contributed to its own collapse. Orwin tells us that we're in "an era of shrinking resources" that would force us to forego policies that might improve the lives of Americans - well, you know, that's kind of what Al-Qaeda wants, isn't it.

If Orwin were more honest, or is it more knowledgeable, he would be aware that a Shiite-dominated Iraq is not going to tolerate Al-Qaeda. They'll be vastly less tolerant than Hussein's Sunni government and, despite various specious efforts to tie Hussein to Al-Qaeda, they weren't connected. Odds are they'll be significantly more ruthless in rooting it out, once the U.S. is gone and they are no longer limited by western sensitivities or insistence upon "reconciliation".

Even if we assume that Orwin is engaged in the all-too-typical sleight of hand, conflating Al Qaeda in Iraq (AQI) with Bin Laden's Al Qaeda, really, does he think that the Shiite government is going to make any sort of home in Iraq for an aggressively expansionist, militaristic, fundamentalist brand of Sunni Islam, openly dedicated to its overthrow? Where in the Shiite world is Al-Qaeda tolerated, let alone welcomed? Meanwhile, there's a real price being paid for turning Iraq into a proving ground for AQI and other terrorist groups:

Despite debate over the extent to which AQI fighters are dispersing to new battlefields, there's little question that the organization's methods are increasingly being employed outside of Iraq. The number of suicide attacks, for example, rare in Afghanistan and Pakistan before 9/11, has grown exponentially; according to Pakistan's intelligence service, in the first eight months of this year, there were 28 suicide attacks in Pakistan and 36 in Afghanistan, together claiming over 900 lives. (During that same period, for the first time, suicide bombers killed more people in Pakistan than in Iraq: 471 versus 463.) "Whether or not the actual people migrate, the tactics and techniques are [migrating], and they're going to change the nature of warfare," says [Bruce Hoffman, a counterterrorism expert at Georgetown University]. "The people coming from Iraq have expertise almost across the board in insurgency, from suicide tactics to force-on-force attacks to sophisticated standoff attacks with remote-controlled missiles or rockets to IED types of technologies. It just means that the learning curve for insurgents is now short, and they're able to learn from previous experience and adapt almost immediately, almost in real time."

The disingenuous nature of Orwin's argument is only amplified by his suggestion that Obama's policy in Iraq would "hardly differ from Mr. McCain's". If that's true, what happens is going to happen under either leader.

So far, Orwin's offerings have been pretty generic. At best, he can be said to be criticizing Obama for offering "change" that doesn't involve ideas that are new enough, while refusing to endorse McCain who I guess we are to infer is offering "more of the same". So what's the one point of distinction that Orwin is willing to openly make?

Which brings us to Iran, whose impending nuclear weapons (in tandem with its global terrorist network, advanced ballistic missile systems and proneness to messianic delusions) is the real sum of all fears confronting the next U.S. president. Mr. Obama has declared that a nuclear Iran is absolutely unacceptable to him, and I believe him. I believe that he'll talk just as hard as he can to prevent it, "without preconditions" if necessary. But what will he do once talking has failed?

I guess we are to presuppose that McCain would bypass any attempt to resolve Iran's nuclear ambitious through diplomacy, and would skip straight to the song and dance? If Orwin wants us to go to war with Iran, without bothering with so much as an attempt at diplomacy, he should have the courage and honesty to say so. If not, then we're first going to take steps short of war.

What Orwin appears to offer here is his disappointment that Obama isn't going to advance domestic policies that he prefers (but won't specify), and that neither candidate is likely at this point to endorse a never-ending war in Iraq or expanding that war into Iran.

Making The Most of that Fifteen Minutes....

As if we needed more evidence that John McCain detests our celebrity culture.

I have to hand it to "Joe the Plumber," though. He has apparently discarded his fantasy that he can become the owner of a plumbing business worth $250,000.00, with a comparable annual income, without engaging in the hard work and discipline involved in becoming an actual plumber or saving up a down payment, in favor of making the most of his momentary fame. Paris Hilton, eat your heart out.

The Cost of the Candidates' Health Care Proposals

The Washington post, demonstrating astonishing credulity, tells us about the McCain and Obama health care proposals:

Overall Price Tag

Obama

Says his plan would cost $50 billion to $65 billion a year when all elements are phased in. Money would come from ending tax cuts for people with incomes exceeding $250,000.

McCain

Says his plan would be budget-neutral over 10 years.

How hard would it be to find somebody else's estimates - devoting about five seconds to searching with Google, I came up with this from the Wall Street Journal:

The Tax Policy Center, which is affiliated with the Brookings Institution and the Urban Institute, projected the Obama plan would cost $1.6 trillion over 10 years, and the McCain plan would cost $1.3 trillion. Lewin Group had different figures putting the cost at $2.1 trillion for McCain’s plan and $1.2 trillion for Obama.

So if you ask anybody outside of Obama's campaign, you're likely to hear that he's probably (at best) halving the likely cost, and if you ask anybody outside of McCain's campaign you're likely to get a "He's claiming what?!"

Not that I'm suggesting that you shouldn't take political candidates at their word, but... No, wait, that's exactly what I'm suggesting.

Where'd The Other McCain Go?

Remember John McCain when he was funny, genial, collegial, able to make fun of himself? Whether you think that was a carefully cultivated image or a reality lost to desperation as his campaign flounders, you actually don't have to look back very far. The old John McCain showed up a couple of weeks ago at the Alfred E. Smith Memorial Foundation Dinner.

If that John McCain were the one running for office, I suspect he would be doing better in the polls.

Kathleen Parker: If Only McCain Were Less (or More?) Like Jörg Haider....

In a column that is insulting of men in general, and particularly of John McCain, Kathleen Parker can find only one explanation for John McCain's choice of Sarah Palin as his running mate - and she does emphasize "mate":

One does not have to be a psychoanalyst to reckon that McCain was smitten. By no means am I suggesting anything untoward between McCain and his running mate. Palin is a governor, after all. She does have an executive résumé, if a thin one. And she's a natural politician who connects with people.

But there can be no denying that McCain's selection of her over others far more qualified -- and his mind-boggling lack of attention to details that matter -- suggests other factors at work. His judgment may have been clouded by . . . what?

* * *

As my husband observed early on, McCain the mortal couldn't mind having an attractive woman all but singing arias to his greatness. Cameras frequently capture McCain beaming like a gold-starred schoolboy while Palin tells crowds that he is "exactly the kind of man I want as commander in chief." This, notes Draper, "seemed to confer not only valor but virility on a 72-year-old politician who only weeks ago barely registered with the party faithful."

You know, just maybe his mind was "clouded" by advisors who kept harping on the deficiencies of the other candidates on his short list, as contrasted with a couple who waxed poetic about how Palin would excite "the base". (No, I'm not using the term "excite" in the same sense as Parker.)

(Meanwhile, in Austria....)

Credit Where Credit Is Due

Given the tendency to try to hold candidates responsible for the worst behavior of their supporters, we should remember that the larger body of supporters is often opposed (and perhaps appalled) by some of that behavior.

Waiting for the Second Coming... of Reagan?

Michael Gerson laments the collapse of John McCain's campaign, in a piece that is 80% of the way to reading like a parody.

For all their talk about respecting the constraints of reality, conservatives generally hold to the great man theory of history. It is leftists who embrace economic determinism. Conservatives read biographies of Winston Churchill and wait in constant expectation for the second coming of Ronald Reagan. Charisma and truth, in this view, can always overwhelm material conditions.

And this often leads to the small man theory of electoral setbacks. A losing Republican is not merely unfortunate; he must be incompetent, politically blind, and betrayed by his bumbling underlings. If he is not a winner, he is a fool.

This reminds me a bit of the evolution I've seen in a lot of idealistic people who become fascinated with politics at too young an age. The first time he votes, he's backing the great leader of the best party - the man who is going to save the country. A few elections later he's voting for "the lesser of two evils" and hoping that a great man emerges for the next election. A few elections after that, and he's realized that you have only two choices - picking "the lesser of two evils" or not voting. The candidates are human, and humans are flawed. The parties are flawed. The system is flawed. And you gotta live with it.

I think both parties try to present their presidential candidates as a "great man", and many voters happily oblige them by buying into a mindset that their candidate is going to fix the world, while the opposing candidate is going to destroy it (metaphorically, and sometimes perhaps literally, speaking). More sophisticated voters are apt to recognize that while great leaders can transform a nation, no matter what the political parties say, it's unlikely that they're voting for a great leader. They're also apt to note, perhaps particularly if they're conservative, that a great leader out to transform a country can take things in the wrong direction. The opposing party is often happy to emphasize that point - vote for Barry Goldwater and... boom!

Meanwhile, how many attacks have been launched on Obama's supporters for being a "cult of personality", entranced by the man but ignorant of his policies? For goodness sake, McCain even had a "second coming" ad about Obama's rise. Now we're to believe that this conduct, attributed to Obama's supporters, represents their acting like conservatives?

As for "leftists" embracing "economic determinism", it's almost as if Gerson is trying to pick marxist terms out of Wikipedia to create... I'm not sure what. Which "leftists" believe that economics are at the root of all political issues or problems? You point out, "It's the economy, stupid", and suddenly you're a marxist? Then what of Gerson's own argument:

The diverging political fortunes of Barack Obama and McCain can be traced to a single moment. In the middle of September, the net favorable rating for each candidate was about the same. By Oct. 7, Obama was ahead on this measure by about 16 points. Did McCain suddenly become a stumbling failure? No, the world suddenly went into an economic slide.

Clearly, then, you can be something other than a "leftist" and recognize the role - at times the central role - of economic factors in political events and world history. You might even enjoy talking about this - for example, crediting Reagan with winning the cold war by bankrupting the USSR. And what does Gerson believe that "Club for Growth"-type tax policies are about, but the idea that you can create an economic circumstance that forces a political outcome. What of the cult of privatization, ignoring the contexts that markets create efficiencies in favor of a delusional mantra that private entities will always perform better than public entities?

No, really, not all conservatives believe in "the great man theory of history", let alone see it as desirable. There are almost no actual marxists in the United States, and none that I'm aware of with any political influence. And both parties correctly see that economics play a role, often a significant role, in politics - while simultaneously avoiding any endorsement of Marxist theory. Go figure.

Why did Gerson attempt to frame the election as a competition between hero-worshiping "conservatives" and marxist "leftists"? Because:

While America remains a center-right country, this may well be a Marxist election in which economic realities are determining the political superstructure.

Earth to Gerson: Marxists don't play any discernible role in American politics, and neither they nor their theories win elections in center-right countries.

I was amused by Gerson's reaction to other pundits, as he complains about their advice to McCain:

If only the candidate would fire his entire campaign staff and travel the country in a used Yugo, speaking in the parking lots of 7-11s, the gap would be closed. If only the candidate would buy three hours in prime time and give a bold, historic speech (which has been helpfully sent under separate cover), the entire election would be turned around. If only the candidate would finally highlight his opponent's ties to Colombian drug cartels, the illuminati and the British royal family -- or perhaps abandon all this suicidal negativity -- the election could certainly be won. And yes, above all, the candidate must be himself.

I'm not sure who the first target is, but the "buy airtime" comment seems to be about Kristol, and the "smear, baby smear" comment seems to be about Krauthammer. (When even Michael Gerson recognizes your advice as bad....)

Gerson is also much to quick to blame the economy for McCain's problems at the poll. It's been very important, certainly, but there's a lot more to McCain's problem.

In the middle of September, the net favorable rating for each candidate was about the same. By Oct. 7, Obama was ahead on this measure by about 16 points.

I think McCain's problems started with his leading campaign tactic - one Gerson continues to endorse:

But the McCain campaign also proved itself capable of constructing an effective narrative: Obama as lightweight celebrity, McCain as maverick reformer. Until history intervened.

Political junkies forget that, although political buzz and ads can have a significant impression on the voting public, for many people the election doesn't begin until after the political conventions. McCain ran a pre-debate campaign that was largely premised on the notion that, "I'm so much better than him, all I should have to do to win is list my name on the ballot." Then he picked Gov. Palin as his running mate and enjoyed a brief surge in the polls. Then she was interviewed by Charlie Gibson, and independent voters started to shift in large numbers from McCain to Obama. By September 17, he had lost his lead. A couple of days later, we met Henry Paulson's $750 billion bailout plan. McCain was down in the polls, but only by a couple of points - within the margin of error.

Following the onset of the crisis, McCain was left with flawed options. He reasonably chose to work for a responsible bailout while hoping the markets would stabilize quickly.

McCain's slide in the polls was continuing. As the nation was introduced to the financial crisis, McCain engaged in some obvious grandstanding, noisily "suspending" his campaign to feign taking leadership of negotiations for a bail-out package. Except he didn't really suspend his campaign, didn't really contribute to the debate over the first bail-out proposal, and came across as trying to grab headlines to obscure his diminishing poll numbers.

Then, on September 26, Obama stood on the same stage as McCain and managed to not only hold his own, but in many ways to appear more presidential than McCain. McCain's "lightweight celebrity" theme crashed and burned and his campaign seemed to lose focus. Recall at this moment that Gerson's complaint is not that McCain's standing in the polls slipped, but that his favorables slipped. The performance of the markets played a part in the erosion of his support, but I suspect that the slide in his favorables had much more to do with his grandstanding on the fiscal crisis, his debate performance as contrasted with Obama's, and the fact that attacks that may well have been fair if raised at a different time or in a different manner seemed small, mean-spirited and misplaced within the context of a major financial crisis - they seemed timed and constructed to try to overcome a slide in the polls. How much of that is perception and how much is reality? It doesn't matter - that perception caused McCain's favorables to slide.

(Can anyone doubt that the past political association of McCain with a right-wing terrorist would attract some attention?)

Letterman had fun with that one.

Gerson's column seems to have three goals: Reinvigorate the failed "Obama's a lightweight celebrity" theme;¹ reinvent McCain as something "close enough" to a great man and second coming of Reagan; and to try to remove the economy and the financial crisis as bona fide election issues. Is it just me, or did he fail on all counts?
________________
1. Gerson attacks Obama, claiming,

His only recent accomplishment has been to say questionable things in the debates - attacking Republicans and capitalism for a credit meltdown congressional Democrats helped to cause, blaming America for Iran's nuclear ambitions, talking piously about genocide prevention when his own early Iraq policies might have resulted in genocide - all while sounding supremely reassuring and presidential.

The first? That's what passes, in this nation, as "good politics". As Gerson concedes, the government's contribution to the meltdown was bipartisan in nature, but this is the season for finger-pointing. The second, a silly exaggeration by Gerson. The third? What's Gerson smoking?

Krauthammer's Late To The Party

Months ago, Peggy Noonan lamented that it would be difficult to attack Barack Obama because many of the attacks on him would be construed as having racial overtones. Her column made it appear that she wished to use attacks with racial overtones, so I guess she was doubly vexed. But then the whole Rev. Wright thing blew up, and it appeared that her concerns were misplaced. And then, whodaguessedit, Obama pulled through.

Now, Charles Krauthammer is in one of his trademark tizzies because the McCain campaign didn't follow his advice of "Smear, smear, and smear some more." You know, Charles, some useful advice you could have given to McCain? "Don't underestimate Obama. Don't assume that you'll win just by showing up." Except, you know, underestimating Obama is Krauthammer's other theme.

Krauthammer's thesis, that McCain could win if only he would get down in the gutter and smear Obama, has two huge flaws: First, it would require McCain to abandon the public persona that he has carefully built over the last couple of decades, risking both that he would alienate his more moderate supporters and look desperate, and second, polling showed that the smear tactics employed by "independent" groups are not working. Does it need to be said? It's counterproductive to tarnish your own image through tactics that do not diminish your opponent's support. Further, as Krauthammer has to know, there has been a concerted effort made to attack Obama's character and associations through Sarah Palin, resulting in negative media attention and perhaps contributing to Palin's diminishing approval rating with independents.

Krauthammer takes umbrage over this New York Times editorial, which dares to accuse the McCain-Palin team of "race-baiting and xenophobia". That editorial notes some of Palin's antics:

Ms. Palin, in particular, revels in the attack. Her campaign rallies have become spectacles of anger and insult. “This is not a man who sees America as you see it and how I see America,” Ms. Palin has taken to saying.

That line follows passages in Ms. Palin’s new stump speech in which she twists Mr. Obama’s ill-advised but fleeting and long-past association with William Ayers, founder of the Weather Underground and confessed bomber. By the time she’s done, she implies that Mr. Obama is right now a close friend of Mr. Ayers — and sympathetic to the violent overthrow of the government. The Democrat, she says, “sees America, it seems, as being so imperfect that he’s palling around with terrorists who would target their own country.”

Now perhaps the Times is reading too much into how some of the people at McCain-Palin rallies have responded to statements like that - "Kill him", "Terrorist", etc. - while Krauthammer is happy to divorce the campaign tactics from those responses. But how would he characterize those dishonest attacks? Or does he endorse them?

Krauthammer proceeds to attack Bob Herbert, pointing to Herbert's misinterpretation of some of the imagery in McCain's "celebrity" ad.

He took to TV to denounce McCain's exhumation of that most vile prejudice, pointing out McCain's gratuitous insertion in the ad of "two phallic symbols," the Washington Monument and the Leaning Tower of Pisa.

Except that Herbert was entirely delusional. There was no Washington Monument. There was no Leaning Tower.

The truth is a bit more amusing.

Herbert mistook the images flashed across the ad behind Obama as being of landmarks that were more familiar to him.

Krauthammer's apoplectic that people see racial overtones in "the Republican attack on ACORN". You know, the organization McCain lavished with praise a couple of years ago. Maybe Krauthammer is correct that this is political opportunism and the racial element is purely coincidental, but you don't have to be a genius to see how an attack on Acorn, particularly one replete with misrepresentations and distortions, is likely to be perceived.

What makes the charges against McCain especially revolting is that he has been scrupulous in eschewing the race card. He has gone far beyond what is right and necessary, refusing even to make an issue of Obama's deep, self-declared connection with the race-baiting Rev. Wright.

Here, Krauthammer is attempting to blow out of proportion and generalize the Times editorial's criticism of the tactics of the McCain-Palin campaign, and most notably of the tactics employed by Palin, as an unfair broadside against McCain. It seems too easy to point out that McCain has to know about, and should be held responsible for, the tactics of his vice presidential candidate. Otherwise, how could we not infer that he's so out of touch that he is completely incapable of governing a nation? But more to the point, Krauthammer is doing what he's accusing others of doing - taking an isolated comment, blowing it out of proportion, then suggesting that the exaggerated version he presents is typical of McCain's critics.

It is not. McCain's favorables have slipped, certainly, but that appears to relate to his performance in the debates, his simultaneous floundering and grandstanding on the fiscal crisis, and his (as far as independent voters are concerned) poor choice of a running mate. There's no evidence that he's being affected by racial issues, and there's reason to believe that his eschewing Krauthammer's chant of "Smear, baby, smear" has saved him from further erosion of his support.

Even at this point, Krauthammer can't bring himself to cut his losses. He has to accuse Obama of having played "the race card" against McCain. For this he resorts to the Obama comment that inspired some of McCain's campaign staffers to accuse Obama of "playing the race card", in what turned out to be a severe and premature overplaying of their own hand. Those poor tactics, still endorsed by Krauthammer, got media play, but their limited effect on poll numbers likely play a role in McCain's reluctance to again delve into race issues.

And Obama has shown no hesitation in [deploying the race card] to McCain. Weeks ago, in Springfield, Mo., and elsewhere, he warned darkly that George Bush and John McCain were going to try to frighten you by saying that, among other scary things, Obama has "a funny name" and "doesn't look like all those other presidents on those dollar bills."

That's all he has? Obama's joking about how he has a "funny name", even as McCain supporters continued and continue to make Obama/Osama comments, or emphasize that his middle name is Hussein? Or that he doesn't look like other presidents on the dollar bill? You mean, like this McCain web ad illustrated even before Obama made that comment? Obama's response to the "race card" nonsense was to point out that it was nonsense. Krauthammer's case against Obama here seems far weaker than the one he is attempting to refute against McCain. (And let's just say, some of McCain's backers aren't helping.)

All in all, I suspect Krauthammer's tantrum will play well with some factions on the far right, but will do nothing to help McCain with the voters he needs to win over. But that's no surprise - other than their mutual underestimation of Obama, one place McCain has demonstrated a great deal of sense is in consistently rejecting Krauthammer's notions of what it will take to win the race. The obstacle before McCain is not insurmountable, although I suspect it will quickly become so if Krauthammer takes the lead on his campaign.

McCain Didn't Insult Arabs

McCain is being attacked in some corners over this exchange:

"I have read about him and he's not…he's not…he's a…um He's an Arab. He's not..."

"No ma'am. No ma'am."

"No?"

"No ma'am, no ma'am. He's a decent family man, citizen, that I just happen to have disagreements with on fundamental issues."

This is clearly not a response to the woman's words, but to her subtext, and to the larger set of attacks coming from some of McCain's supporters at public events. In calling Obama a "decent family man", he's not saying that Arabs cannot be "decent family men".

Does anybody believe he was saying that non-citizens can't be decent family men? Or that Arabs can't be citizens?

This was an off-the-cuff remark. Banter. You can fault him for not trying to shut down some of the anti-Obama rhetoric earlier if you wish, or for not going far enough in his response, but I see no evidence at all that this was an insult directed toward Arabs or Americans of Arab descent.

It Was A Typo?

Perhaps Hassett meant, "Dow 3,600".

Health Insurance - The New Republican Entitlement Program

Today, Michael Gerson rallies to McCain's defense on health care, lamenting that Joe Biden mischaracterized the tax effects of McCain's plan. He criticizes Obama for making accurate observations about the plan, such as his noting that the tax credit is payable"directly to your insurance company". He also complains,

"At least 20 million Americans," charges Obama, "will lose the insurance they rely on from their workplace." As Yuval Levin of the Ethics and Public Policy Center points out, this is a distortion. He cites a Tax Policy Center estimate that the McCain plan would result in 21 million people entering the individual insurance market by 2018 - many because individual ownership of insurance will be more attractive

Let's see what Obama actually said:

And here’s something else Senator McCain won’t tell you. When he taxes people’s benefits, many younger, healthier workers will decide that it’s a better deal to opt out of the insurance they get at work – and instead, go out into the individual market, where they can buy a cheaper plan. Many employers will be left with an older, sicker pool of workers who they can’t afford to cover. As a result, many employers will drop their health care plans altogether. And study after study has shown, that under the McCain plan, at least 20 million Americans will lose the insurance they rely on from their workplace.

So Obama accurately states that about 20 million people are projected to lose employer-sponsored health care. He specifically addresses the fact that this will result in part from workers who find private plans more appealing (younger, healthier workers) opting for those plans instead of their employers' group plans. That other people would acquire health insurance during the first ten years of the plan is neither a surprise nor relevant to the issue Obama was addressing. Further, if the number of new enrollees is something that must be mentioned, Gerson is guilty of the same sin by not acknowledging that Obama's plan is projected to insure a significantly greater number of people than McCain's.

Gerson also complains,

Obama terms the McCain plan "radical" - which is its main virtue. It goes to the root of the problem - a system that depends mainly on businesses to provide health coverage.

Er, right... How dare Obama mention the plan's "main virtue".

Over the past few decades, the rising cost of health coverage to employers has eaten up pay increases, acting as a wage cap and leaving many incomes stagnant or falling. Business-based health coverage leaves many workers afraid to change jobs - a handicap in the constant employment churn of the new economy. It discriminates against the self-employed and places unique burdens on small businesses. And it insulates workers from decisions about health-care costs.

So let's see... Under McCain's plan:

• Rising costs of health care will continue to devour wage increases, except workers will have to absorb 100% of the increase. The employer will no longer share in that increased expense.

• It's not clear who the people are who are "afraid to change jobs" under the current system. Even if you don't change jobs, you can't rely upon your employer to maintain the same plans or coverage from year to year under the current system. Changing jobs to an employer with inferior health coverage or no health coverage translates into a pay cut, so we shouldn't expect people to voluntarily do that. The current system can be an impediment to self-employment, but that's something McCain has chosen to ignore.

  The McCain plan does nothing to address the real problem - if you lose your job, you lose your coverage. Whether it's your employer who stops paying for it, or you who can't afford it, if the premiums aren't paid you lose your coverage. Gerson's later argument makes it plain that he understands this, so it seems dishonest of him to not admit it.

• In terms of the current plan discriminating against the self-employed, how does that change? McCain envisions employers giving their employees raises equivalent to the employer's share of their current health plan - in his memos and talking points he likes to talk about a $9,000 raise for a family, 75% of a $12,000 health plan. Who's going to hand a raise like that to a self-employed individual? Or does he think this is a good economy in which the self-employed can raise their prices and fees? (After all, according to his reinvention of his past remarks, the self employed number among the "fundamentals of our economy", and thus they are "strong".)

• Is it a bad thing to insulate an insured person from the costs borne by the insurer? Isn't that the whole point of insurance - to spread the costs, so that individuals aren't disadvantaged when they have unexpected medical emergencies or illnesses? So that they don't have to fret over whether they can take their child to a doctor or afford needed medications? And all assumptions aside, who says that individuals will do a better job of assessing which costs are unnecessary or avoidable? That's a nice gloss, but if Gerson wished to be honest he would acknowledge that the real goal is to shift more cost onto the consumer and, once that shift occurs, sponsors of McCain-style plans don't care if there are cost savings.

Gerson apparently rejects the McCain camp's argument that a government-sponsored insurance plan would be subsidized, instead arguing,

Unlike private companies, government can cut costs by imposing price controls and shifting costs to others (just as Medicare does). Over time, this would give the government an unfair price advantage over private insurance, causing more and more businesses to pay into the public program.

I recognize that Gerson rarely knows what he's talking about, but is he for real? Has he ever seen an "explanation of benefits" form from a private insurer, describing the discount the insurer has negotiated for medical services? An insurance company may pay $560 for a procedure that would be billed to a private consumer at $1,000. There's no "cost shift" there? Also, if an insurer (public or private) doesn't offer enough money to doctors and hospitals, they will opt out of the program. Perhaps it hasn't occurred to Gerson that this one of the reasons why many doctors, hospitals, clinics and pharmacies don't participate in certain insurance plans. He also can't explain why a private insurer couldn't negotiate the exact same rate as the government, or benefit from being able to offer a much larger network of participating doctors, hospitals and pharmacies due to even modestly higher reimbursement rates.

Obama's health plan is really slow-motion Medicare for all. And the problem with Medicare-like price controls is that they reduce the number of people willing to provide medical services, which always means longer lines and rationing.

Ah. That must be why people in nations with national health care plans are so eager to switch to "American-style" plans, and why the elderly of this nation are so unhappy with Medicare. And when did France and Germany get waiting lists? No system is perfect, but it's better to point to actual defects than to instead spout right-wing canards.

Here's where Gerson highlights the deficiency of McCain's plan that he previously glossed over - the fact that if you lose your job, you lose your insurance:

McCain's health plan has a problem of its own. It is not too radical but too timid. A refundable tax credit of $5,000 per family - in addition to increased cash wages from employers no longer burdened with paying for health care - would help middle-class workers get insurance. But for people on the lower end of the scale - who don't qualify for Medicaid - the $5,000 credit alone would not be enough to buy adequate coverage, which can cost more than double that amount.

It's interesting here that Gerson isn't suggesting that we eliminate Medicaid (or Medicare) in favor of this new "tax credit for all" - why not? Isn't that the proper "market" solution? And if we're keeping Medicaid, thereby rejecting the idea of a pure "market" solution, why not expand its reach to pick up people who can't afford private insurance? It's also interesting that Gerson claims that health coverage for a family can cost "almost double" the amount of the $5,000 tax credit. It can cost a lot more than that - and that's before we start talking about copayments and deductibles.

To be a genuine alternative, Republicans should follow their own logic and make the ownership of private health insurance an entitlement.

That should be an easy sell to the population of true "compassionate conservatives" in the Republican Party. But now that Gerson's convinced himself, how's he going to sell that idea to everyone else?

Fund the purchase of a basic health insurance plan completely, through a refundable tax credit, so every low-income American can afford insurance.

Help me out here - what's a "basic plan"? It isn't enough to provide a "basic plan" to somebody you know can't use it because they can't afford deductibles and copays, so would the "basic plan" minimize those amounts? You know, and insulate participants "from decisions about health-care costs"?

They say the devil is in the details. Apparently Gerson's religious beliefs prevent him from directly addressing the devil.

McCain's Enormous Health Care Assumptions

While asserting that (but not explaining why) Obama's plan is superior to McCain's, Ruth Marcus provides a rose-colored view of the McCain health care plan that illuminates how McCain expects - or probably more accurately, expect us to believe - that the plan would work.

So what does John McCain's plan do? It has just such a refundable credit: $2,500 for an individual, $5,000 for a family. The Obama campaign tries to scare voters into believing that this is a terrible deal, noting that the average family policy costs about $12,000.

True, but if you get $12,000 in health insurance from your employer and are in the 25 percent tax bracket, you would owe another $3,000 in taxes. The credit would let you take $5,000 off your overall tax bill. You come out ahead -- unless your insurance is hugely generous, in which case it's serving to drive up everyone's health-care costs.

In other words, if you currently have a $12,000 plan for your family and your employer picks up 75% of the cost, the McCain plan envisions your getting a $9,000 raise when your employer stops paying that 75% contribution to the cost of your health insurance. She assumes you would pay 25% in taxes, thus paying $3,000 in federal taxes on the cost of your health plan. She then assures you that the McCain tax credit more than makes up for the difference, as $5,000 is greater than $3,000.

What's wrong with these assumptions?

• People at the lower end of the job market are not getting $9,000 per year subsidies of their insurance. We can argue that they are also covered by cheaper policies - man of them are underinsured - but let's not pretend that the McCain plan will enable them to afford $12,000 per year health insurance.

• Employees won't get raises equivalent to the employer's contribution to their health plan, let alone to a family plan. The assumption that the market will compel employers to give raises equivalent to a family-sized contribution is absurd. If raises are offered they will at most be at the level of the benefit to a single employee, or the average cost to all employees, resulting perhaps in a boon to single employees but a net loss to people on family plans.

  • Employers are not going to increase their payroll by giving oversized raises to employees who don't participate in family health plans - those who are single, or opt out because they have insurance through their spouse or domestic partner.
  • Employers have an incentive to shave their costs by giving raises smaller than their current contributions.
  • Employers may not give raises at all. John McCain may not understand this, having married rich and found himself a sinecure in the Senate, but a lot of employees right now will have a hard time making a lateral move at equivalent pay. For employees who have been on the job for twenty or thirty years, earning significantly higher wages than their peers due to annual raises, the employer may see a golden opportunity to both cut their effective pay and shift their increasing insurance costs off of its books.

• Health insurance costs are increasing much faster than the rate of inflation, and wages are not. Even if we assume a raise that covers this year's cost, with each passing year the employee will bear more and more of the cost. Not just an increased copay on a 25% contribution, but an increase of the full cost. With health care inflation at about 6% per year, if we assume inflation of 3%, that translates into a $360+ pay decrease every year a worker maintains that (presently) $12,000 plan. Marcus indicates that McCain will index the tax credit to inflation, but not to health care inflation.

• If a raise is offered that, in fact, makes it a "better deal" to drop employer-sponsored coverage, at least in terms of take-home pay, younger, healthier employees are likely to go uninsured or to opt for minimal coverage. That will raise the costs of health insurance for older and sicker employees, while increasing the likelihood that the increased population of uninsured and underinsured people will end up passing the costs of catastrophic injury or illness on to the taxpayer or other patients.

• Employers are apt to drop their health plans quickly, not "eventually" as Ruth Marcus suggests. Doing so when the job market is bad makes sense, as employees are less able to seek jobs with more generous health plans. Smaller businesses are likely to quickly drop employee health plans. Once a few major employers successfully make the shift, you'll see a cascade. Let's not forget, that's the design of the plan, and is what Ruth Marcus assures us makes it attractive.

• Oops - no mention of payroll taxes. Employers aren't going to transform their tax-deductible insurance contributions into a raise of equivalent size. They're going to reduce it by their share of payroll taxes. Your $9,000 raise drops to about $8,200. After your own share of payroll taxes and state income taxes, your tax bill is probably $4,000. Under McCain's rosy assumptions you come out slightly ahead this year, but the benefit disappears next year or the year after due to health care inflation - it's just delaying by a year the amount of time it takes for you to go in the hole. But even that one- or two-year benefit is abstract - as we previously discussed, if your job is at all typical, you won't be getting that $9,000 raise McCain and Marcus assume.

• Your "free market" plan, even at the same cost, will be vastly inferior to your employer-sponsored plan. You will be denied coverage over pre-existing conditions, or perhaps simply because of your age. (Marcus concedes that insurers will "cherry-pick the healthiest enrollees" under McCain's plan.)

• Your immediate costs - copays, deductibles, the cost of care excluded from the plan, etc. - will go up the second you sign up for an equivalently priced plan as as individual. A few years ago when I was about to reach the end of COBRA coverage on a really nice employer-sponsored plan, I priced private plans - I found many at comparable cost, but none which offered anything even close to the same level of coverage. Some of the plans were then in the range of $16,000 - $20,000 per year for a family of three, but they didn't offer the same benefits of the $12,000 plan, available to federal employees, that McCain likes to ballyhoo as the type of insurance you are likely to be able to afford under his plan. Not even close. And that's assuming you don't try to "save money" by purchasing a less expensive plan that shifts an even greater portion of the cost of your care and prescriptions onto you.

Marcus asserts that we should assume that McCain's on the right track, because one of Obama's economic advisors endorses the idea of replacing employer-sponsored care with a tax credit. But if Marcus were to read past the McCain memo she seemingly cribbed when writing her column, she should be identifying the elements that the advisor asserts would be part of any effective plan - progressive tax credits, mandatory coverage "or other institutional mechanisms to increase participation", new pooling mechanisms, and reducing adverse selection in existing pooling mechanisms. She should also acknowledge that plan is intended to "eliminate the incentive to go from some insurance to more insurance," while "increasing the incentive to go from no insurance to some insurance" - but without clear concepts of what that means, it's literally an experiment with people's health and lives.

A huge hole in this type of plan is that, even if we assume that everything else goes as promised and disregard the many reasons to believe that won't happen, the distortion of tying insurance to employment isn't eliminated. It's reduced - once you're buying your own plan you can keep it even as you move from job to job - but if you lose your income you can't pay your premiums, and thus lose your coverage. As with employer-sponsored care, that could still result in your loss of coverage if you become disabled from working due to illness or injury - and if you recover, you will almost certainly face increased costs for an equivalent private plan or may even find that you cannot get health insurance, rather that being able to get coverage at a group rate through an employer-sponsored plan that doesn't consider your pre-existing conditions. Obama's plan is better in this regard only because it maintains employer-sponsored plans, such that if you return to work you can again get insurance at a group rate, but neither plan actually addresses the problem of paying for insurance when you're between jobs.

The aforementioned McCain memo accuses Obama and Biden of "lying" about the plan, and purports that their claims have "failed every fact-check". Unfortunately no links to those fact-checks are provided, and that claim itself seems dubious. But let's check out the truthiness of McCain's claims about Obama's plan:

Barack Obama's Plan Continues The Push Toward Government-Run Healthcare: The Obama plan will create a brand new government-run health plan at the cost of $243 billion a year – a financial burden of more than $3,000 a year on American families.

McCain doesn't explain how he came up with that figure. I did find this:

Researchers at the Urban Institute-Brookings Institution Tax Policy Center project McCain's plan would reduce the number of uninsured by 1.3 million in the first year at a cost $185 million. About 20 million people would lose their employer-sponsored coverage under McCain's plan, but 21 million would gain coverage on the individual market.

Obama's plan in its first year would reduce the number of uninsured by 18.4 million at a cost of $86 billion. Over 10 years, McCain's plan would cost $1.3 trillion and Obama's would cost $1.6 trillion, according to the report.

So McCain wants to spin a fiction that his plan is free, whereas in fact its projected cost is only marginally less than that of Obama's plan, and he neglects to mention that in the first year alone Obama's plan is projected to provides coverage to more than 17 million people who McCain would leave out in the cold.

Barack Obama's Plan Will Harm Employer Coverage: The Obama plan includes a $179 billion a year employer mandate. The mandate requires employers to either provide "meaningful" coverage or pay a tax towards the government plan. Faced with tough economic conditions and rising health costs this creates a clear incentive for employers to drop coverage and move families into the new government plan.

So we're supposed to accept that the biggest benefit of McCain's plan is that it will end employer-sponsored health care, but simultaneously pretend that Obama's plan will do more to bring about that end?

Barack Obama's Plan Will Damage Private Coverage: The government-run plan will have a clear advantage over private insurance since it will be subsidized by American taxpayers. A recent analysis of both plans by the nonpartisan CATO Institute concluded that the Obama government-run plan will be able to "keep its premiums artificially low…since it can turn to the U.S. Treasury to cover any shortfalls" resulting in "undercutting the private market."

Obviously, fears of a subsidy can be addressed in the legislation that authorizes any government-run plan, so McCain's claim amounts at best to overblown rhetoric and at worst to fear mongering. McCain aparently regards the words "could" and "will" as interchangable - let's not confuse what could happen with what will happen.

We should also consider what happened, for example, when we allowed private insurers to compete with Medicare through "Medicare Advantage". We ended up subsidizing the private insurers because Medicare was able to offer the same (or better) coverage for less money. The real fear here is probably not that the premiums will be artificially low, but that they will be naturally low, particularly as compared to plans offered to individuals by private insurers.
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1. Marcus writes,

No one designing a health-care system from scratch would set things up this way. Tying insurance to employment makes little sense in a world where workers hop from job to job. Excluding the value of insurance from taxable income leads to overconsumption of health care, driving up costs. It favors better-off employees who, because they pay higher marginal rates, derive a greater benefit from not being taxed on their health insurance.

Eliminating this distortion - if done the right way, and that's a big if - could help more Americans obtain insurance, push down costs and reduce the drain of health-care costs on the federal budget.

Even if we assume that there's a free market solution to this issue, Marcus does not explain what it would be and, abetted by columns like this, McCain is simply hoping that nobody is paying attention to the glaring flaws of his own plan. By all appearances, McCain is trying to dress up what amounts to a Gingrich-style plan to kill off affordable health insurance and shift costs onto consumers.

Well, He's Right....

Except the angry barrage of insults was directed at Obama and came from his supporters.

What's The Story Here

According to the Times,

Senator John McCain has also been targeted by a liberal group suggesting that his years in a prison camp have made him unfit to serve as president.

If anybody passing by here knows, what's the group and where can I find their website? (I know about "Vietnam Veterans Against McCain", but they don't appear to be a liberal group, it doesn't appear that anybody takes them seriously, and they don't fit the description.)

Good Health Insurance? That's for Rich People

John McCain opines,

[McCain a]ppeared to concede that his health care plan would result in higher taxes for some. McCain favors a $5,000 annual tax credit to help individuals and families afford health insurance, but that could leader employers to drop their current plans, including some that could not be replaced for $5,000.

"It depends on, on, on what plan they have," McCain said. "But that's usually the wealthiest people. Ordinary working Americans have the kind of, or an overwhelming majority have the health insurance plans that this tax credit, refundable tax credit, will actually put more money in their pockets for the purchase of health care than what they had before."

So as McCain sees it, most people have crappy insurance and thus would profit from McCain's proposal?

No offense, John, and conceding that you're a rich person who doesn't have to care, but how much would cost you to obtain insurance - even crappy insurance - on the private market? How much would the coverage you receive as a Senator cost if you had to purchase equivalent coverage as an individual? The official McCain campaign position:

While still having the option of employer-based coverage, every family will receive a direct refundable tax credit - effectively cash - of $2,500 for individuals and $5,000 for families to offset the cost of insurance.

A dose of reality:

In 2007, employer health insurance premiums increased by 6.1 percent - two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $12,100. The annual premium for single coverage averaged over $4,400.

Even if we assume that the cost of insurance won't rise for individuals purchasing coverage as individuals, as opposed to at group rates through an employer-sponsored plan, and even if we assume that the average cost of health care is misleading with a median cost of insurance considerably below the average, this doesn't sound like a good deal for working people or their families. If the goal is to lock working people into policies with minimal coverage, though, it sounds like a heckuva plan.

The Absurdity of Running Against Earmarks

John McCain's official campaign position on earmarks:

I will veto every bill with earmarks, until the Congress stops sending bills with earmarks.

John McCain, acting as a Senator:

Republican presidential candidate John McCain said Sunday he probably would have voted for legislation to keep the federal government running after midweek, even though it was packed with the kind of "outrageous pork-barrel spending" he has long opposed.

"That's the way they always do," the Arizona senator said dismissively of fellow lawmakers. "You put in the, you put in the good deals, and then you put in the pork, as well." He said separate votes should be allowed on the bill's different provisions.

McCain did not vote on the measure when it cleared Congress on Saturday, although he returned to Washington after Friday night's campaign debate in Mississippi. McCain said he was working on other matters at the time of the vote, including negotiations on a bailout of the financial industry.

"I certainly would have done everything in my power to remove those earmarks," he told ABC's "This Week" in an interview. "But I may have voted for it if, I probably would have ended up voting for it, but I decry a system where individual members are, are faced with taking all this unacceptable, outrageous stuff that has contributed to the largest growth in spending since the Great Society."

So as a Senator he sees the necessity of voting for a bill, loaded with earmarks, to keep the government running or to avoid a financial crisis, but as President he would veto the bill and shut down the government or allow the credit markets to freeze up? Why do I doubt that.

Focusing on government waste and excess is easy because there are so many measures that either appear wasteful or are wasteful, and people don't like to see their taxpayer dollars wasted. But they're a reality in our political system, and it's not realistic to threaten to veto "every bill" that contains earmarks. There's also the question of whether particular earmarks, even those that are among the easiest to ridicule, are inappropriate uses of federal funds. Does McCain understand the purpose of analyzing bear DNA in Montana? If so, does he oppose the goals of those who requested and obtained that earmark? Also, unfortunately, we can't balance the budget, or even make an appreciable dent in the deficit, even with the total elimination of earmarks - technically they don't even increase the budget, but instead allocate funds that have already been appropriated to specific projects.

I'm singling out McCain hear because of the particular absurdity of his concession that, yes, he would vote for bills with earmarks (and in fact voted in favor of the bill containing the Grizzly Bear DNA earmark). I'm not sure, though, if it is worse to throw out fake "solutions" to deficits, or to take Obama's approach, pretty much ignoring the issue. I don't expect Presidential candidates to spend a lot of time talking about how to balance a budget, save perhaps for those rare occasions when they're fighting over how to burn through a budget surplus. But I wish we were in a culture where we could have a mature discussion of deficits and tax policy within the context of a Presidential election, or for that matter at any other time. There's a media failure here, but it's also a societal failure of will.