Obama & Waxman-Markey - Corrupted By Corporate Interests

Over in the U.S. Paul Krugman is trying hard to sell the “fairly strong cap-and-trade climate bill," the Waxman-Markey bill (otherwise known as ‘American Clean Energy and Security Act of 2009’). The bill has already passed the House and is due for floor action in the Senate where it will face renewed opposition.

Krugman asserts that, due to denial of climate change failing to gain sufficient purchase to block the bill, its main opposition will be based on the bill’s potential cost. In response to this, Krugman argues that whilst saving the planet will not come free - it will not cost all that much either. He quite rightly argues that the early stages of conservation to a lower carbon economy will not be particularly demanding.

First, the evidence suggests that we’re wasting a lot of energy right now. That is, we’re burning large amounts of coal, oil and gas in ways that don’t actually enhance our standard of living — a phenomenon known in the research literature as the “energy-efficiency gap.” The existence of this gap suggests that policies promoting energy conservation could, up to a point, actually make consumers richer.

Krugman then puts the longer-term costs in perspective.

[I]n 2020 the bill would cost the average family only $160 a year, or 0.2 percent of income. That’s roughly the cost of a postage stamp a day. [...] By 2050, when the emissions limit would be much tighter, the burden would rise to 1.2 percent of income. But the budget office also predicts that real G.D.P. will be about two-and-a-half times larger in 2050 than it is today, so that G.D.P. per person will rise by about 80 percent. The cost of climate protection would barely make a dent in that growth. And all of this, of course, ignores the benefits of limiting global warming.

Although Krugman successfully defends the bill from arguments based on expense, he misses a far more important point. Whilst Obama has edged away from his predecessor’s ‘head in the sand’ approach to climate change, the Waxman-Markey bill is a considerable distance from the ideal. There are too many loopholes and too many concessions. Obama's talk of taking a "bold and necessary step" to "confront America's energy challenge and reclaim America's future" is hollow.

In terms of the bill’s substance, George Monbiot notes that:

The cut proposed by 2020 is just 17%, which means that most of the reduction will take place towards the end of the period. What this means is much greater cumulative emissions, which is the only measure that counts. Worse still, it is riddled with so many loopholes and concessions that the bill's measures might not offset the emissions from the paper it's printed on. You can judge the effectiveness of a US bill by its length: the shorter it is, the more potent it will be. This one is some 1,200 pages long, which is what happens when lobbyists have been at work.

The bill also ignores the greenhouse impact of biofuels, thereby encouraging its usage.

In almost all cases, biofuels made from grain or oil crops create more greenhouse emissions than petroleum. This is partly because they lead to an expansion in total crop production, which means that forests must be cut down, unploughed pastures must be tilled and wetlands must be drained to accommodate it. The carbon stored in both the vegetation and the soil is released and oxidised.

The impact of biofuels has been devastating on the worlds poor.

In 2008, the expansion of biofuel production was directly responsible for the decline in global food stocks, which caused grain prices to rise, catalysing famines in many parts of the world. Cereal stockpiles declined by 53m tonnes; the production of biofuels, mostly by the US, consumed almost 100m tonnes, according to a piece in the Economist on 6th December 2007. As the UN's special rapporteur, Jean Ziegler says, turning food for people into food for cars is, "a crime against humanity".

What about the costs involved, has Obama been as clear and coherent as Krugman? No.

Instead of straight talk, however, Mr Obama has mostly been offering happy talk.

When the House of Representatives narrowly passed a climate-change bill on June 26th, he rejoiced that it would create millions of new green jobs and reduce America’s “dangerous dependence on foreign oil”. Almost as an afterthought, he mentioned that it might do something for the planet. As usual, he gave the impression that planet-cooling will require no sacrifice from voters.

This is drivel. The shift to a lower-carbon economy will destroy jobs as well as create them, and hit growth. Greens wish Mr Obama would use his immense popularity and rhetorical skills to persuade Americans that such costs are outweighed by the benefits of helping to avert planetary catastrophe. But rather than shaping public opinion, he is running scared of it. And so, even more, is Congress.

All too often, commentators are eager to lionise Obama for simply being better than Bush. (In fairness to Krugman, perhaps he is suppressing whatever discontent he may feel towards the bill for the misguided view that it is for the greater good). The Waxman-Markey bill is highly flawed. Those with a genuine concern for the environment and the world’s poor ought to be suspicious of this highly compromised bill, which has been corrupted by corporate interests.

U.S. healthcare & Obama's concessions

The current U.S. system is expensive and inefficient.

[T]he incredible cost of US health care is breath-taking, whether you're a reformer or anti-reformist. The US spent some $2.2 trillion (£1.34 trillion) on healthcare in 2007. It is a mind-boggling number which amounts to over 16% of US GDP. That is nearly twice the average spent by other rich nations with advanced health systems - yet you have to wonder if this is value for money when, by most measures, the US is a less healthy nation than other rich countries, on everything from infant mortality to longevity.

The U.S. healthcare system needs reforming. Cue Barrack Obama, one time advocate of single payer healthcare system.

As Paul Krugman writes, the single payer healthcare system would be the best option for reform.

True “socialized medicine” would undoubtedly cost less, and a straightforward extension of Medicare-type coverage to all Americans would probably be cheaper than a Swiss-style system.

The evidence makes interesting reading.*

Despite his previous endorsement of single payer healthcare, Obama repositioned himself in opposition to single-payer healthcare during the presidential candidacy campaign. His new proposition was for a public option to compete with private insurers.

Since the presidential election, Obama has constantly made concessions. In March 2009, Obama talked about the importance of being pragmatic

Each of us must accept that none of us will get everything that we want, and that no proposal for reform will be perfect. If that's the measure, we will never get anything done.

This was an exceptional piece of positioning; he presented himself as being open-minded and pragmatic whilst simultaneously ruling out a single payer solution. Since then, Obama has gone even further to placate those in opposition to significant healthcare reform, Obama recently said:

[T]he public option, whether we have it or we don't have it, is not the entirety of health care reform. This is just one sliver of it, one aspect of it. And by the way, it's both the right and the left that have become so fixated on this that they forget everything else.

Obama's change of discourse suggests that the competing public option proposal is now off the table. In a generous light, the initial change of stance could be viewed as born of the ugly reality of electoral politics rather than unprincipled toadying. If Obama makes this latest concession, which he seems willing to make, there can be no such generosity. In three moves Obama's stance on healthcare has changed from seemingly principled, to apparent pragmatism, to sell-out.

In the light of Obama making concession after concession, will the considerably watered down healthcare reform package pass?

At this point, all that stands in the way of universal health care in America are the greed of the medical-industrial complex, the lies of the right-wing propaganda machine, and the gullibility of voters who believe those lies.

Oh dear ... The lessons of Clinton healthcare plan of 1993 teaches us that this is a formidable opposition.

During the Clinton administration, support for completely rebuilding the health care system peaked in the spring of 1993 [55%] and declined subsequently. By June 1994, just 37% said the health care system needed to be completely rebuilt.

This does not mean that the opposition to healthcare reform is insurmountable. Healthcare reform has popular support. As Chomsky notes in Failed States, the majority of Americans recognise that their healthcare system needs reforming.

"An NBC-Wall Street Journal poll found that ‘over 2/3 of all Americans thought the government should guarantee everyone the best and most advanced health care that technology can supply'; a Washington Post-ABC News poll found that 80 percent regard universal health care as ‘more important than holding down taxes'; polls reported in Business Week found that ‘67 percent of Americans think it is a good idea to guarantee health care for all U.S. citizens, as Canada and Britain do, with just 27 percent dissenting'."

Regardless of the fact the U.S. polity is contradicting the will of the majority, the question is whether a reform so far removed from perfect is worth 'getting done' at all?

On the one hand, the reform itself is to be welcomed for improving America's healthcare system by potentially providing universal healthcare. The proposed healthcare reforms will make U.S healthcare more like the Swiss healthcare system, which primarily provides universal coverage through regulation and subsidy.

On the other hand, whilst the Swiss system provides good care, it is expensive. The only reason that the Swiss-style system is an improvement is that the status-quo is so inefficient and iniquitous. Obama has thrown away the opportunity to implement a progressive government-run healthcare system that would benefit more Americans significantly more so than this fudge. (Even his seemingly discarded proposal of 'competitive public option' system would be preferable).

With his endless concessions, Obama may have bought the votes of the odd 'blue dog', but by and large, the latest proposal continues to face the same opposition that a proposal for a single payer healthcare system would have faced. America needs Obama to be the strong and principled leader he portrays himself to be. America needs a president that ignores manufactured opposition, listens to the right-minded, and defends the interests of the people he serves. What America has is flaccid corporatist**.

*UK citizens might be interested to note that the NHS is comparatively cheap and efficient. In contrast to the current U.S system, it provides better care on almost every measure and costs around 40% as much per person. Although, when considering healthcare provision, it is important to bear in mind more than the degree of privatisation and amount of expenditure. Policy priorities significantly influence results. For instance, Cuba's universal healthcare includes preventive health care provision. Japan's citizens have healthy lifestyles. In both of these considerations the U.S. lags behind, which makes U.S. healthcare very inefficient in terms of expenditure versus life expectancy. A point well made by Chris Dillow at Stumbling and Mumbling. The American system is also hugely wasteful in term of 'over-treating' the elderly. (Of course, the argument could always be made that such factors are economically determined, but I digress).

** The link is to an excellent (but very long) article by Paul Street about Obama. As it is on Znet, you may have to register to view it.

Update

I might try to re-write this and offer it as a new post in the future, because, in attempting to pre-emptively defend my argument, it has become diffuse. The latest article by Paul Krugman reiterates some of the arguments contained above in a clearer manner.

[T]here’s a point at which realism shades over into weakness, and progressives increasingly feel that the administration is on the wrong side of that line. It seems as if there is nothing Republicans can do that will draw an administration rebuke: Senator Charles E. Grassley feeds the death panel smear, warning that reform will “pull the plug on grandma,” and two days later the White House declares that it’s still committed to working with him.

It’s hard to avoid the sense that Mr. Obama has wasted months trying to appease people who can’t be appeased, and who take every concession as a sign that he can be rolled. [...]

[T]he supposed alternative, nonprofit co-ops, is a sham. That’s not just my opinion; it’s what the market says: stocks of health insurance companies soared on news that the Gang of Six senators trying to negotiate a bipartisan approach to health reform were dropping the public plan. Clearly, investors believe that co-ops would offer little real competition to private insurers.

Also, and importantly, the public option offered a way to reconcile differing views among Democrats. Until the idea of the public option came along, a significant faction within the party rejected anything short of true single-payer, Medicare-for-all reform, viewing anything less as perpetuating the flaws of our current system. The public option, which would force insurance companies to prove their usefulness or fade away, settled some of those qualms. [...]

So progressives are now in revolt. Mr. Obama took their trust for granted, and in the process lost it. And now he needs to win it back.

Basically, Obama should take a leaf out of Barney Frank’s book.

Krugman on Brown

As is often my want, I thought that I would point in the opposite direction to much of the blogesphere. Paul Krugman, receiver of the Nobel Prize in Economics, has this to say about Gordon Brown:

Do Mr. Brown and his party really deserve blame for the crisis here? Yes and no.

Mr. Brown bought fully into the dogma that the market knows best, that less regulation is more. In 2005 he called for “trust in the responsible company, the engaged employee and the educated consumer” and insisted that regulation should have “not just a light touch but a limited touch.” It might as well have been Alan Greenspan speaking.

There’s no question that this zeal for deregulation set Britain up for a fall. […] But here’s the thing. While Mr. Brown and his party may deserve to be punished, their political opponents don’t deserve to be rewarded.

After all, would a Conservative government have been any less in the thrall of free-market fundamentalism, any more willing to rein in runaway finance, over the past decade? Of course not.

And Mr. Brown’s response to the crisis — a burst of activism to make up for his past passivity — makes sense, whereas that of his opponents does not.

The Brown government has moved aggressively to shore up troubled banks. This has potentially put taxpayers on the hook for large future bills, but the financial situation has stabilized. Mr. Brown has backed the Bank of England, which, like the Federal Reserve, has engaged in unconventional moves to free up credit. And he has shown himself willing to run large budget deficits now, even while scheduling substantial tax increases for the future.

All of this seems to be working. Leading indicators have turned (slightly) positive, suggesting that Britain, whose competitiveness has benefited from the devaluation of the pound, will begin an economic recovery well before the rest of Europe.

Whilst the victories of hateful fascists across Europe are a grotesque articulation of anti-political feeling, resentment & bigotry, the victories of this hateful ensemble is largely symbolic. A loathsome symbol to be despised by all the right-minded and politically aware. They serve as warning to future voters. Yet, for now, they have little power.

In terms of the legislature, the gentle shift of the Europe further rightwards is more potent. The centre-left coalition shrank– the right is even more powerful.

As we reject New Labour we reject the ‘third way’ economics. The even more laissez-fair economics of the right awaits us.

When ‘socialist’ means ‘liberal’

Paul Krugman ‘Tea Parties Forever’

President Obama is being called a “socialist” who seeks to destroy capitalism. Why? Because he wants to raise the tax rate on the highest-income Americans back to, um, about 10 percentage points less than it was for most of the Reagan administration. Bizarre.

But the charge of socialism is being thrown around only because “liberal” doesn’t seem to carry the punch it used to. And if you go back just a few years, you find top Republican figures making equally bizarre claims about what liberals were up to. Remember when Karl Rove declared that liberals wanted to offer “therapy and understanding” to the 9/11 terrorists? […]

So what’s the implication of the fact that Republicans are refusing to grow up, the fact that they are still behaving the same way they did when history seemed to be on their side? I’d say that it’s good for Democrats, at least in the short run — but it’s bad for the country.