Is Obama a Moderate Republican?

One of the best aspects of the blogosphere is that sometimes a particularly interesting or controversial post will stimulate a discussion among other bloggers on the same topic.

That occurred yesterday with Ezra Klein's excellent piece about how bizarre it is that Republicans oppose Obama so vehemently when his policies are are very much in line with what a moderate Republican in the 1990s would have proposed.

Klein of Joe comments in basic agreement with Klein of Ezra and adds his own media spin on the story.

Kevin Drum is not so sure. He believes that it is tactics that have changed, rather than substantive Republican positions.

Ramesh Ponnuru ridicules Ezra Klein's argument with examples of policies that George W. Bush pursued that had a Democratic pedigree.

Ezra responds to Ramesh and Kevin here and here.

Owning Your Own Home is a Great Investment: NOT!

The claim that home ownership is a great investment has so deeply penetrated our national consciousness that it isn't even questioned. It is just assumed as an axiom of common-sense economics.

It is hard to think of a more widespread fallacy. Not only is home ownership not a great investment compared to the available alternatives, it is a lousy investment. Consider the following data.

As you can see from this chart, over the last 20 years national housing prices have lagged behind what an index fund based on the S&P 500 would have returned by a considerable amount. This is true even if you include markets in which housing prices grew faster than the national average (I included data for Washington D.C.). Surprisingly, the data is pretty much the same.

But, some will argue, this looks at a relatively short period of time. It fails to include the 1980s, when housing prices rose substantially. The problem with this line of argument is that over the long run the stock market rose even faster. Consider the data covering the post-war era.

A home that was purchased in 1945 for $10,000 could be sold in 2010 for $176,000--a huge windfall, right? The same $10,000 invested in the Dow Jones Industrial Average in 1945 would sell in 2010 for just under $700,000. If you index this for inflation, it looks even worse for housing. Of the $166,000 in profit all but $47,000 is eaten up by inflation.

Lastly, many will object pointing out quite rightly that home ownership serves two functions--that of an investment and as, well, a place to live. True, we must consider that returns from the stock market would have to purchase equivalent rental housing. Fair enough. However, we must also consider the associated costs with home ownership that do not apply to rental property. For example, a $500,000 home purchased with a 10% down payment will accrue over the life of a standard 30-year fixed mortgage at 6% slightly more than $1,000,000 in interest payments. Even with those payments being tax deductible, one still pays an extra $700,000 in interest over the life of the loan. Add to that approximately $300,000 in property taxes and insurance and $50,000 in repair and upkeep and we are now back to over $1,000,000 in extra costs over the life of the loan. That leaves a renter with $2,900 a month to pay for housing costs. Anywhere in the country outside of perhaps Manhattan $2,900 a month will cover a very nice and spacious rental property.

There may be all sorts of good reasons for home ownership. Seeking a good investment is not one of them.

Health Care Vouchers are a Really Bad Idea

Paul Krugman has an excellent post explaining why we shouldn't treat health care as a free market commodity.

I keep encountering discussions of health economics in which patients are referred to as “consumers”, after which the usual mantra of freedom of choice is invoked on behalf of voucherizing Medicare, or whatever.

We used to know better than this.

Medical care is an area in which crucial decisions—life and death decisions—must be made; yet making those decisions intelligently requires a vast amount of specialized knowledge; and often those decisions must also be made under conditions in which the patient is incapacitated, under severe stress, or needs action immediately, with no time for discussion, let alone comparison shopping.

That’s why we have medical ethics. That’s why doctors have traditionally both been viewed as something special and been expected to behave according to higher standards than the average professional. There’s a reason we have TV series about heroic doctors, while we don’t have TV series about heroic middle managers or heroic economists.

The idea that all this can be reduced to money—that doctors are just people selling services to consumers of health care—is, well, sickening. And the prevalence of this kind of language is a sign that something has gone very wrong not just with this discussion, but with our society’s values.

History Lives

I saw The Conspirator over the weekend, a reasonably good courtroom drama about the trial of Mary Surratt, who was convicted and hanged for her role in the plot to assassinate Abraham Lincoln.

The plot, which included John Wilkes Booth, Lewis Powell, David Herold, Samuel Mudd, John Surratt, and George Atzerodt, was hatched in Mary Surratt's boarding house at 541 H Street in Washington, D.C..

The house still stands, though it is now a Chinese restaurant. I find it odd that it has not been designated as a historical landmark.

Ryan and Medicare Cost-Shifting

Ezra Klein has an excellent article explaining why Paul Ryan's plan to transform Medicare into a voucher system is opposed by many who would otherwise be sympathetic to this approach. It is not because they oppose bringing competition into health insurance decisions, but because they oppose cost-shifting as a way of addressing the budget deficit.

The Ryan Budget

I had thought that I might write something on the Paul Ryan budget proposal, the "Path to Prosperity," but I needn't bother. The blogosphere is already deluged by much better analysis than I could ever muster. The best left-of-center critiques I have read come from Ezra Klein, Paul Krugman, and Jon Chait. What's interesting is that these criticisms are not primarily ideological. They primarily focus on  technical aspects of Ryan's proposal that make it implausible and unworkable even from the narrow standpoint of lowering the deficit.

Chait offers a follow-up column in Newsweek that is more ideological and describes Ryan as an Ayn Rand "nut" who is motivated more by a desire to pursue Randian class warfare than by any sincere desire to reduce the deficit. As he points out, Ryan voted for all of the legislation that drove the deficit up during the Bush years: the Bush tax cuts, the unfunded Medicare prescription drug benefit, and the unfunded wars in Iraq and Afghanistan.

Sidney Lumet (1924-2011)

A truly great figure of American film died Friday. Sidney Lumet, director of such classics as Network, Dog Day Afternoon, and 12 Angry Men, died Friday of lymphoma at the age of 87.

In the many articles that have been written about him since his passing, all emphasize that he was a New York story-teller who made serious films on substantive issues. His career, which spanned 6 decades, is so vast and varied it is difficult to narrow down his 10 best films, but he will probably be best remembered for a decade of work from 1972-1982, when his career reached its critical and commercial peak.

One of the subjects he often returned to was corruption in the New York police department. This is the central theme of a trilogy including Serpico, Prince of the City, and Night Falls on Manhattan. In many ways, Prince of the City is perhaps his most controversial film at least measured by the wildly divergent reactions it has inspired. This is made abundantly clear by tributes to Lumet published this weekend by Entertainment Weekly. Martin Scorcese writes "he was a New York filmmaker at heart, and our vision of this city has been enhanced and deepened by classics like Serpico, Dog Day Afternoon and, above all, the remarkable Prince of the City". In the same issue Owen Gleiberman writes "I confess I’ve never had much patience for Prince of the City (1982), the Treat Williams cop epic that was supposed to be the director’s magnum opus of men in blue. To me, it’s convoluted and sterile."

I have got to say that I am with Scorcese on this one (not bad company to keep!). Lumet was nominated for an Oscar for Prince of the City, oddly as a screenwriter rather than director. It is a 2-hour and 47-minute portrayal of the tension that arises when a corrupt cop decides to get himself clean while protecting his former partners. This gut-wrenching dilemma is at the heart of the film, which also exposes the unsavory details of how the justice system uses undercover cops who attempt to root out corruption that they used to be a part of. Treat Williams gives a star-making lead performance as Danny Ciello, and Jerry Orbach (later of Law and Order fame) gives the best film performance of his career as Ciello's mentor. Prince of the City is based on a true story told in a novel by Robert Daley. Interestingly, one of the prosecutors who befriends Ciello (and threatens to resign when the Justice Department debates whether to prosecute their star witness for past transgressions) is based on Rudolf Giuliani, a then-rookie federal prosecutor who, of course, later became mayor of New York and Republican presidential candidate. If I were pressed on the subject, I would have to list Prince of the City as one on my top ten favorite films of any era.

Sidney Lumet's 10 best films

12 Angry Men  (1957)
Lumet's first film starring Henry Fonda. Action takes place exclusively within the confines of a jury deliberation room and centers on the rush to convict on scanty evidence. The success of this film made Lumet's career as a film director, though he had already been working successfully in television for years.
Fail-Safe  (1964)
One of the best Cold War dramas centers on an accidental U.S. nuclear attack on the Soviet Union. It is a serious version of Dr. Strangelove, which was released the same year. Henry Fonda stars again as the U.S. President seeking to avoid a global holocaust with mixed success.
Serpico  (1973)
Based on a true story, the first--and best-known--of Lumet's police corruption trilogy. Al Pacino stars as NY Detective Frank Serpico, who wants to expose corruption when no one wants to listen.
Murder on the Orient Express  (1974)
Arguably the best of the many Agatha Christie adaptations, this star-studded mystery showcases Lumet's talent outside of his usual New York setting.
Dog Day Afternoon  (1975)
An enormous hit, this story inspired by actual events portrays a failed bank robbery and hostage crisis. Al Pacino stars as the pathetic Sonny who needs the money for a sex change operation. John Cazale (Fredo in The Godfather) co-stars in his next-to-last film before his untimely death in 1978.
Network  (1976)
Lumet's most acclaimed film. I do not rank it as his best only because much of the credit goes to screenwriter Paddy Chayefsky. Network won Oscars for best actor and actress (Peter Finch--posthumous award, and Faye Dunaway) and best original screenplay. "I am mad as hell, and I am not going to take it anymore" has become an international catchphrase. Rocky swept the remaining Oscars that year.
Prince of the City  (1981)
See above. For my money, Lumet's best film and one of the best American films by anyone.
The Verdict  (1982)
Paul Newman stars as an aging, alcoholic, down-and-out ambulance chaser who gets the case of a lifetime. Containing great performances, it was nominated for Oscars in all major categories, but failed to win any.
Night Falls on Manhattan (1996)
The last of Lumet's police corruption films, Andy Garcia stars as a cop-turned-D.A. who must expose police corruption that reaches into his own family. James Gandolfini co-stars as a corrupt cop and Richard Dreyfus has a nice supporting role as a liberal defense attorney. This is an excellent film that failed to get much of an audience.
Before the Devil Knows You're Dead  (2007)
Lumet's last film, completed when he was 83, is also one of his best. It is a classic crime drama in which bad deeds escalate beyond the control of the perpetrators and an entire family is destroyed. Philip Seymour Hoffman and Ethan Hawke star. Marissa Tomei has a eye-opening role that began something of a comeback.

Some New Conservative Objections to Health Care Reform

In March, 2011 the CBO issued updated estimates to the costs of the 2010 Patient Protection and Affordable Care Act (PPACA), otherwise known as ObamaCare. These updated estimates led to a new round of conservative complaints.

• On March 21 the Republican House Energy and Commerce Committee released a statement claiming that the costs of PPACA had risen by 54%.
• A March, 23 a Wall Street Journal editorial announced that the costs of PPACA had risen by 8.6% since the original CBO estimate a year earlier.

The Washington Post fact checked this and concluded that both figures were inaccurate, and that the projected costs for PPACA have not substantially changed at all.

The gist of the Post article is that the House committee and Journal numbers come from comparing different time frames for the revenue and expenditure aspects of the bill. If you don't trust the Washington Post's fact checking, then you can read the CBO's explanation for yourself.

The money quotes:

The difference is primarily attributable to the different time periods the estimates cover, and not to substantial changes in the year-by-year estimates.

and,

In its ongoing monitoring of developments, CBO has seen no evidence to date that the steps that will be taken to implement the legislation—or the ways in which participants in the health care and health financing systems will respond to the legislation—will yield overall budgetary effects that differ significantly from the ones projected earlier. Therefore, the evolution of the estimates does not reflect any substantial change in the estimation of the overall effects of PPACA and the Reconciliation Act from what was projected in March 2010.

So, the costs of health care reform and its effect on the deficit have NOT changed substantially since it was originally passed.

Another criticism leveled by conservatives is that the effect PPACA will have on the deficit over the next ten years has been deliberately obscured by including 10 years of revenues, but only 6 years of expenditures. This assertion does not withstand careful scrutiny for two reasons.

First, the expenditures during the first 3 years are relatively small, but so are the revenues. Starting in 2014, both the revenues and the expenditures rise substantially. The CBO estimates that PPACA will reduce the deficit in the 2011-2021 period somewhere in the range of 100-150 billion dollars.

Second, in the out years when all of the revenue and expenditure provisions of the bill have been phased in, the deficit reduction is even larger. This is because the savings and revenues grow faster than the increased expenditures.

 
See the original CBO report for details.

The simple fact is that PPACA is essentially a market-oriented attempt to insure more people and lower health care costs that Republicans would almost certainly support were it not for the fact that it is Barack Obama's plan.