Preview of Republican-style health care reform

The local News & Record has a poignant story about the cold reality of private, go-it-alone health insurance--the kind of "choice" that Republican lawmakers like Sen. Burr are advocating.

In his mid-50s, George Kretchun was finally living the dream: After years of working for someone else, the Reidsville man opened his own catering business.

But when he went looking for health insurance, the dream dimmed.

At his age and with a pre-existing condition, he faced paying more than $25,000 a year in premiums.

Mr. Kretchun's problem was that he developed a liver condition several years ago. As part of a larger risk pool, such as a large employer, Mr. Kretchun's bad health draw would have been balanced by better health draws, making affordable insurance possible. However, as a self-employed person, Mr. Kretchun constituted a pool of exactly one. Insurance companies seeing his pre-existing condition would only offer him unaffordable policies. Mr. Kretchun's experience illustrates a well-known market failure that can arise in the presence of adverse selection.

The Republican plan, which calls for ending end tax subsidies to companies for providing health care and replacing them with individual subsidies, would lead to the further dismantling of employer-provided care. The plan hails itself as providing "choice," but choice in the insurance market is a two-way street--insurers also get to choose how much they will charge each customer based on that customer's health.

Mr. Kretchun was eventually helped through one of those supposedly awful government-established and subsidized programs, Inclusive Health, North Carolina's high-risk health insurance pool. The pool is administered by a non-profit that was established by North Carolina with strict rules regarding how much it can charge and who can be admitted. The plan is targeted toward people who are unhealthy and who lack access to employer-based plans. Because insurance for these folks would be unaffordable to them, the plan is subsidized by the state. Inclusive Health is still much more expensive than the insurance available to currently health people, but it's premiums are nevertheless within reach of most people.

The Republican plan rules out "new government spending." However, individually-affordable high-risk health insurance requires some type of subsidy. The Republicans also criticize "public plans," like Inclusive Health thusly

Patients should be able to choose from a variety of private insurance plans. The federal government would run a health care system—or a public plan option—with the compassion of the IRS, the efficiency of the post office, and the incompetence of Katrina.

Mr. Kretchun had his choice of market-based private insurance plans--the private insurance market failed him. As he put it "I don’t mind if they tell me you’ve got to pay double. But don’t tell me I’m not allowed to get any insurance." His experience shows that government intervention can be compassionate, socially efficient, and competent, "a God-send" in his words.

Prairie dogging in DC

I'm in Washington for the week attending a yearly research conference sponsored by the Administration for Children and Families (ACF). The conference covers programs, mostly anti-poverty and family assistance programs, funded by the ACF. There are also presentations on other promising programs, demonstrations, and social experiments.

A striking feature of the conference is the vast array of programs and services (and the accompanying alphabet soup of program acronyms). In one respect this is fascinating. I get to "prairie dog" for a week, poking my head out of the tunnel of my own research on food assistance and welfare programs and getting to hear about other initiatives.

In another respect, you have to wonder how potential clients navigate all of these various programs. The programs address many related issues but typically are run by separate agencies within states and communities. Depending on the state, one program could be in a health department, another in a workforce or employment security agency, others in social service departments, and yet others in agencies for children.

Having many programs means that services can be tailored toward specific issues, problems, and populations. It also means that program staff can become highly knowledgeable about these issues. It is certainly not a one-size-fits-all approach.

The problem, of course, is the services become fragmented and can be hard to find. Despite being a reasonably well-informed researcher, I have trouble keeping track of all of the programs. I can only imagine what a new client would face in trying to determine what services might be helpful or available. Many states and localities do operate "one-stop" centers to help with some groups of services; still the choices are bewildering.

Beyond this, there are inefficiencies associated with potential duplication of services. There are also inefficiencies associated with the administrative overhead for each of the programs.

In many of the presentations at the conference, we've heard about the dire fiscal situation. States are facing very tough budget conditions and paring (chopping?, gutting?) expenditures. The federal government is spending huge sums and running enormous deficits. However, relatively little of this money is being directed toward social services, and the federal government will have to close its spending gap going forward, putting pressure on social programs.

One thing that has not been discussed is the possible consolidation and simplification of programs. Given the budget exigencies and the existence of so many programs, it may be time to put consolidation on the agenda.

A bomb too far

North Korea's apparently successful detonation of a nuclear device presents a significant challenge to the still-new Obama administration. As with previous administrations, President Obama has few good options. Still, the North Korean kleptocracy may soon discover that it has finally over-played its hand.

Kim Jung Il and his cronies have shown that they are incapable of running a modern economy. Previous brinkmanship has brought some assistance, but the North Korean regime has not used that assistance to address any of the underlying vulnerabilities in the economy. If anything, the regime may be more vulnerable now to sanctions than it has been before.

President Obama will have one additional partner for a get-tough approach that President Bush did not have--South Korea. During the Bush administration, the South Korean government pushed for conciliation over confrontation. Now, however, the South Korean government is taking a tougher stand. Already, and at some risk to itself, South Korea has announced that it is joining the Proliferation Security Initiative and will support efforts to interdict nuclear materials coming out of North Korea.

From the Washington Post,

South Korea said Tuesday that it would join a U.S.-led effort to intercept ships from countries like North Korea that are suspected of exporting missiles and weapons of mass destruction -- a step it had been reluctant to take in the past for fear of provoking its isolated neighbor into additional retaliation. North Korea has repeatedly said it would regard the South's participation in the security effort as a "declaration of war."

For the time being, North Korea's main patron--China--as well as Russia have joined in the condemnation and seem to be discussing not whether but how to punish the regime.

Besides interdicting ships, the U.S. also has other levers including renewing financial sanctions and reducing food and energy assistance.

The important thing at this point, which the Obama administration seems to grasp, is a measured, calm, and unified response. The nuclear genie was already out of the bottle on the Korean peninsula. The current test does not change that unfortunate reality.

While Kim Jung Il's threats have to be taken seriously, he has resorted to brinksmanship too many times and reneged on too many agreements to be viewed as a credible partner. He will be hard-pressed to get the same kinds of rewards from this stunt that he has gotten from previous behavior. Cooperation with other countries in Asia will be key to denying Kim Jung Il those rewards.

President Obama may not be able to remove nuclear weapons from North Korea; however, he can make sure that the North Koreans do not benefit from their threatening behavior.

Empty threats by credit card companies

Michelle Singletary is usually spot on in her analyses of consumer finance issues. But today's "Color of Money" column on possible responses by credit card companies to new consumer protection measures misses the mark.

Singletary writes

Credit card users who crow that they're seldom charged interest on purchases because they pay their bills on time may not be able to crow much longer. President Obama is about to sign into law new restrictions on the credit card industry that lenders say may lead to the return of widespread annual fees.

I wouldn't be too sure.

Singletary seems to accept the basic industry arguments that one group of card-holders subsidizes another and that the new restrictions will force companies to raise fees on cardholders who use credit responsibly. She quotes industry spokesperson Edward Yingling

"Those who have managed their credit well and currently have very good credit card deals will find that card companies are limited in their ability to distinguish between them and those that have credit problems," Edward L. Yingling, president and chief executive of the American Bankers Association, said in a brief written statement after the legislation passed. "The result will be some subsidy from those that manage their credit well to those that have problems, affecting negatively the terms the former will receive."

Yingling added that the "new rules will limit the ability of card companies to price according to risk."

Singletary goes on to dismiss, correctly, the argument that companies won't be able to identify or discriminate among different levels of risk, but she allows the cross-subsidization argument to stand.

Responsible card users are profitable for card companies. Those users might not often rack up large interest charges and penalties, but the companies are still able to make money on the fees they charge retailers for each purchase, about 2 percent of the value of each transaction.

Also, even responsible customers sometimes miss payments or run into problems that keep them from paying off their full monthly balances. By extending credit, card companies are effectively buying an option on the probability of a payment stumble.

Finally, if the current arrangements with responsible card holders were really so costly to the card companies (at least costly enough to require subsidization), why would they extend credit to such customers at all? The profit-maximizing behavior would seem to be to extend credit only to people who are likely to run balances and to cut other people off. Companies can and do discriminate. From their behavior, we know they aren't charities.

The bottom line is that the extra revenue that companies have received from abusing their high-risk customers have gone into company profits, not into subsidies for other types of customers. The new rules are likely to reduce some of those profits (that is, to the extent that companies don't find new "gotcha" fees to replace the old ones). However, the rules are not likely to raise rates or fees for responsible card holders. To think that they would is to think that the companies were already cutting their responsible customers a break.

Proms in black and white -- part 1

One gets the sense that Ebony & Ivory won't be played at the segregated proms in Montgomery County, Georgia. (Okay, given the song's high cheese factor, Ebony & Ivory probably won't be played much of anywhere else--nobody's that lactose tolerant).

From the New York Times,

Racially segregated proms have been held in Montgomery County — where about two-thirds of the population is white — almost every year since its schools were integrated in 1971.

...The senior proms held by Montgomery County High School students — referred to by many students as “the black-folks prom” and “the white-folks prom” — are organized outside school through student committees with the help of parents. All students are welcome at the black prom, though generally few if any white students show up. The white prom, students say, remains governed by a largely unspoken set of rules about who may come.

The quotes from one white student effortlessly reprise some of the "greatest hits" in racial excuse-making.

Remember this classic (beloved by Confederate flag-fliers everywhere):

Trying to explain the continued existence of segregated proms, Edge falls back on the same reasoning offered by a number of white students and their parents. “It’s how it’s always been,” he says. “It’s just a tradition.”

Or how about this timeless favorite?

I have as many black friends as I do white friends. We do everything else together.

And of course the grand-daddy of rationalizations

I don’t think anybody at our school is racist.

Of course not.

The lone bright spot in this story is that it is rare enough to be news.

Liberty University and the scarlet "D"

It seems that the college that was founded by the leader of the "moral majority" can't abide a Democratic minority. The Washington Post reports that Liberty University is disestablishing a student Democratic Party organization.

Liberty University will no longer recognize its campus Democratic Party club because its parent organization stands against the conservative Christian school's moral principles.

The club, which has about 30 members, will no longer be able to use Liberty's name, hold on-campus meetings or be eligible for student activities money.

...students who violate the rule face reprimands under the school's conduct code, which could result in expulsion.

The school will continue to fund a College Republicans chapter, as its advocacy of preemptive wars, torture, capital punishment, unrestricted gun ownership, environmental despoliation, and income redistribution toward the wealthy is in keeping with the school's principles of "develop(ing) Christ-centered men and women."

Will David Horowitz's Freedom Center or other conservatives who have railed against one-sided policies on college campuses take up the cause of freedom of expression at Liberty U? Don't hold your breath.

A new federalism?

In a move that genuinely supports states rights, President Obama is directing federal agencies to review and, where possible, eliminate rules that "preempt" state actions.

President Obama continued to reverse his predecessor's policies this week by undoing a controversial Bush administration rule known as "preemption" that used federal regulations to override state laws on the environment, health, public safety and other issues.

...The president ordered department heads to review all regulations issued in the past 10 years that are designed to preempt state law and determine whether they are justified under the new policy. If they cannot be justified, Obama said, his administration should consider amending the regulations.

From the President's memorandum

Throughout our history, State and local governments have frequently protected health, safety, and the environment more aggressively than has the national Government.

An understanding of the important role of State governments in our Federal system is reflected in longstanding practices by executive departments and agencies, which have shown respect for the traditional prerogatives of the States. In recent years, however, notwithstanding Executive Order 13132 of August 4, 1999 (Federalism), executive departments and agencies have sometimes announced that their regulations preempt State law, including State common law, without explicit preemption by the Congress or an otherwise sufficient basis under applicable legal principles.

The purpose of this memorandum is to state the general policy of my Administration that preemption of State law by executive departments and agencies should be undertaken only with full consideration of the legitimate prerogatives of the States and with a sufficient legal basis for preemption.

Republicans "talk the talk" on the states' rights issue. Their current contrived fetish is the Tenth Amendment movement, whereby states reclaim sovereignty from federal regulations not expressly described in the Constitution.

What though did Republicans do while they held the reins of federal power? They used that power to run roughshod over the states, usually to the benefit of big business but sometimes as a sop to the religious right and other right-wing interests. Strengthen emissions standards? Protect consumers from the worst abuses of lenders and credit card companies? Decriminalize marijuana? Republicans couldn't leave those decisions to the irresponsible states.

My guess is that you won't see the Republican apparatchiks behind the Tenth Amendment movement lauding this latest change in policy. They want their states to be able to enact every kind of kooky, right-wing strangeness; they just don't trust all those other states that might do something different.

Incidence of sick leave

A couple of updates on Saturday's post on pending sick leave legislation, the Healthy Families Act...

In the comments, Pino called shenanigans on the numbers I gave for the incidence of paid sick leave benefits. I cited the most recent BLS employee benefits report that gave figures for personal leave benefits in March 2008 but not sick leave benefits specifically. I had assumed that the leave categories listed in the report were exhaustive and that sick leave was included in personal leave. I should have remembered the old saying about the work assume and done some more research.

I have not been able to find sick leave information for 2008; however, an earlier BLS report gives figures for workers in private industry in 2007. That report (Table 19, p. 28) indicates that 57 percent of workers in private industry have paid sick days as a benefit, a much higher incidence than paid personal days though still far from universal (about four out of every nine workers don't have the benefit).

Just over two-thirds of full-time workers get paid sick leave, while fewer than a quarter of part-time workers do. The incidence among managers and professionals is 80 percent, while the incidence among service workers is 39 percent.

Another update is that the Healthy Families Act has now been introduced as H.R. 2460.

Profiles in courage, circa 2009

In a stirring display of utter fecklessness, Senate Democrats yesterday announced that they are, at least for now, refusing to fund the closure of the Guantanamo Bay detention facility.

Senate Democrats said they still backed Mr. Obama’s decision to close the prison. But lawmakers have not exactly been eager to accept detainees in their home states. When the tiny town of Hardin, Mont., offered to put the terrorism suspects in its empty jail, Montana’s senators, both Democrats, and its representative, a Republican, quickly voiced opposition.

Administration officials have indicated that if the Guantánamo camp closes as scheduled more than 100 prisoners may need to be moved to the United States, including 50 to 100 who have been described as too dangerous to release.

Of the 240 detainees, 30 have been cleared for release. Some are likely to be transferred to foreign countries, though other governments have been reluctant to take them. Britain and France have each accepted one former detainee. And while as many as 80 of the detainees will be prosecuted, it remains unclear what will happen to those who are convicted and sentenced to prison.

Many of these same Democrats have spent the last seven years criticizing the Bush administration's operation of the detention facility. Now when the time has come to make the hard choice about providing a secure facility in the U.S., they tuck their tails and run.

A new, empty, jail in an economically distressed part of Montana has offered to take the prisoners. This or another facility could be made suitable in short order--that is, if Democrats restore the funds.

New fuel standards costly? Not really

The Obama administration is announcing new emissions and mileage rules for cars.

The Obama administration today plans to propose tough standards for tailpipe emissions from new automobiles, establishing the first nationwide regulation for greenhouse gases.

It will also raise fuel efficiency targets to 35.5 miles per gallon for new passenger vehicles and light trucks by 2016, four years earlier than required under the 2007 energy bill, sources close to the administration said.

The new rules are the result of negotiations intended to bridge differences between California and other states that were pushing for their own tougher standards, the White House, and automobile manufacturers. In return for the tougher new national standards, California will drop its fight to establish its own standards.

While cleaner air, fewer oil imports, and a more uniform regulations are big pluses, there will be added costs for manufacturers and ultimately consumers.

A senior administration official said the new standards would raise the cost of an average car by $1,300, $600 of which could be attributed to the rules being announced today. The remaining increase would stem from previous energy policy.

At first glance those costs seem high. However, upon closer inspection, they will be more than balanced by fuel cost savings over the life of each car.

The current CAFE standards for passenger cars are 27.5 mpg. Assuming that gas prices are $2.25 per gallon, it costs just under $818 to drive each ten thousand miles. The new passenger car standards will be 39 mpg. Assuming the same gas prices, it will cost just under $577 to drive the same distance, a savings of about $241. Ignoring discounting, a driver would recoup the $1,300 after about 54,000 miles driven or about four years of driving. If gas prices rise, the costs would be recouped even sooner.

That's not a bad deal at all.

Guns don't hurt people, 6-year-olds do

The local News & Record updates information about a tragedy over the weekend.

Police released more information Monday in a shooting involving two juveniles over the weekend.

At 9:27 a.m. Saturday, police were called to 2032 Willow Road regarding a shooting call.

Capt. Janice Rogers said that a 6-year-old child accidentally shot a 3-year-old child while playing with a handgun. The child, who was not identified, was taken to Moses Cone Hospital and remains in critical condition, she said.

Rogers said police are continuing their investigation of the incident and declined comment on possible charges against adults supervising the children.

No doubt 2nd amendment enthusiasts will soon be arguing that this wouldn't have happened if the 3-year-old had been packing too.

Let's pray that the 3-year-old pulls through and that the 6-year-old isn't mentally scarred. After that, let's hope that the "adults supervising the children" are locked away and never allowed to be alone with a child again.

Credit conditions easing

Bloomberg reports that

The cost of borrowing in dollars between banks dropped by the most in two months as record low interest rates and rising customer deposits quicken the thaw in lending.

The London interbank offered rate, or Libor, for three- month loans fell four basis points to 79 basis points today, the biggest decline since March 19, according to British Bankers’ Association data. It declined 11 basis points last week, the most since January.

...The TED spread (shown to the right), the difference between what banks and the U.S. Treasury pay to borrow for three months, narrowed one basis points to 66 basis points, the lowest level since August 2007, when the credit crisis began. The Libor-OIS spread, another gauge of banks’ reluctance to lend, narrowed five basis points to 58 basis points, the least since March 24, 2008.

Bloomberg "credits" several factors including a flood of central bank money, lessening concerns about further financial shocks, and rising savings.

This trend, if it holds, would be especially encouraging as it would indicate that the end of the credit crisis. It would be more encouraging still if lending were to resume without such massive assistance from central banks.

Party of No looks forward to the Supreme Court fight

It looks like the Party of No is going to adopt the "Joe Jackson" strategy for confronting any possible Supreme Court nominee from President Obama--every one gives you cancer.

From the New York Times:

If President Obama nominates Judge Diane P. Wood to the Supreme Court, conservatives plan to attack her as an “outspoken” supporter of “abortion, including partial-birth abortion.”

If he nominates Judge Sonia Sotomayor, they plan to accuse her of being “willing to expand constitutional rights beyond the text of the Constitution.”

And if he nominates Kathleen M. Sullivan, a law professor at Stanford, they plan to denounce her as a “prominent supporter of homosexual marriage.”

Preparing to oppose the confirmation of Mr. Obama’s eventual choice to succeed Justice David H. Souter, who is retiring, conservative groups are working together to stockpile ammunition. Ten memorandums summarizing their research, obtained by The New York Times, provide a window onto how they hope to frame the coming debate.

Do conservatives really hope to win on these arguments? No, their motivations are somewhat more venal.

While conservatives say they know they have little chance of defeating Mr. Obama’s choice because Democrats control the Senate, they say they hope to mount a fight that could help refill depleted coffers...

Legislation to feel good about

House Democrats have introduced legislation to require businesses who have 15 or more employees to provide a minimum amount of paid sick leave each year.

The bill, the Healthy Families Act, would be binding on employers that had 15 or more workers. It would guarantee employees one paid hour off for each 30 hours worked, enabling them to earn up to seven paid sick days a year. They would be entitled to claim their days when they or a child, a parent, a spouse or someone else close to them became ill.

As we see each flu season, too many sick people come to work infecting others. People should have the opportunity (and be encouraged) to stay home when they are sick. The availability of paid sick leave would also help to even the employment playing field between women and men and possibly provide incentives for men to shoulder a more equal share of home responsibilities.

According to the Bureau of Labor Statistics, 41 percent of civilian employees currently have paid personal days as an employee benefit. Nearly three-fifths of businesses with 500 or more employees offer the benefit. (Information has been updated). The lack of a universal mandate puts sensible businesses at a disadvantage.

Setting the benefit in terms of hours worked instead of a flat yearly rate also means that the costs of the benefit to businesses will be marginal rather than lump sum. This should help to minimize the employment impacts. It is also a reasonable way to extend the benefit to part-time workers.

To be sure, some small businesses would be put at a disadvantage. Besides the cost of paid leave days, businesses also face possible replacement costs for workers who are absent. Small businesses typically have the least flexibility to cover temporary replacements.

Workers will also bear some, if not most, of the costs. To the extent that the costs to businesses of employing people increase, businesses are likely to offer lower wages or fewer other compensated days off than they otherwise would have. That is, the incidence of the cost of the benefit will be split between businesses and workers. If job markets are competitive, economists expect that nearly all of the cost would be passed on to workers.

As expected, the Party of No vows to block this bill.

Michael Steel, a spokesman for the House Republican leader, Representative John A. Boehner of Ohio, said, "Republicans want to ensure that working families have the flexibility to get the health care they need, but we don’t think the answer is a 'one size fits all' government mandate."

The Republicans offer a newspeak definition of flexibility, as working families without paid leave would lack the time and money to attend to their health needs.

The BLS figures indicate that most high wage workers already enjoy this benefit. However, less than a quarter of workers in the bottom quartile of the wage distribution have paid personal days. (Again, see updated figures). So, the workers with the least flexibility in terms of money also appear to have the least flexibility in terms of paid time off.

Diversity

It's news like this that makes me regret goofing off in Spanish class.

The U.S. Census Bureau reported Thursday that the minority population reached an estimated 104.6 million - or 34% of the nation's total population - on July 1, 2008, compared to 31% when the Census was taken in 2000. Nearly one in six residents, or 46.9 million people, are Hispanic, the agency reported.

Even more telling for the future: 44% of children under age 18 and 47% of children under the age of five are now from minority families.

My wife and oldest son have taken French classes; my youngest son is also signed up for French. That should help.

Strategy for the Party of "No"

William Kristol offers the clearest strategy yet for the Party of "No."

...the GOP might focus on taking on the Obama administration, whose policies are surprisingly vulnerable to political and substantive attack. Battling Barack Obama is an enterprise that offers better grounds for Republican hope than indulging in spasms of introspection or bouts of petty recrimination.

No, the payoff from a policy confrontation with Obama won't be immediate. The economy appears to be set for a short-term uptick. Obama remains popular. Many of his proposals look superficially attractive. But we haven't yet had a thorough airing of their implications, to say nothing of their real-world consequences if they are enacted.

So one should assume Obama will stay strong through the summer and perhaps even the fall. But 2009-10 could be the winter of Obama's discontent. Republicans should be making the case against Obama's policies now so that citizens know whom to blame next year.

He goes on to list five planks of the "Anti-Obama" agenda: debt, defense, diplomacy, Guantanamo Bay and health care. Kristol correctly points out that these are all vulnerabilities. If the President fails, he will undoubtedly draw the ire of voters.

Missing, however, from Kristol's analysis is any hint of a positive agenda to fix these problems. With respect to the debt, Republicans contributed to that. What is their current fiscal recommendation? Additional tax cuts for the wealth that would only add to the debt.

Defense policy? Republican policy gave us the ill-advised war in Iraq, the mis-managed war in Afghanistan, and the neglected insurgency in Pakistan. Building additional F-22s isn't going to solve those problems.

Diplomacy? We're well acquainted with the all-bluster, go-it-alone, no-results approach of the Bush years. Shouting at other nations feels good but accomplishes nothing.

Guantanamo Bay? Here the Republicans don't even make a pretense of a solution. Keeping the facility open is a "head in the sand" approach that ignores problems that eventually have to be addressed, including the final disposition of the terrorists there and the release and repatriation of the non-terrorist detainees.

Health care? The primary Republican health care accomplishment from the last eight years was a bloated and inefficient prescription add-on for Medicare. Insurance companies got massive corporate welfare, while the taxpayers got the bill and the looming entitlement crisis got worse. The Republicans remaining recommendation is once again tax cuts.

In a nutshell, Kristol is recommending opposition from the opposition party. With nothing else to offer, it's a strategy for remaining in that position.

How to stall auto sales

House Democrats have settled on a deal on the Cash for Clunkers subsidy, which would pay car buyers $3,500 to $4,500 when they trade in inefficient, older cars for new, fuel-efficient vehicles.

Under the deal, buyers could trade in cars or SUVs that get worse than 18 mpg. Car buyers would qualify for a $3,500 subsidy if the new car that got 4 mpg better than their old vehicle and at least 22 mpg overal. SUV buyers would qualify for the same credit if the new SUV got 2 mpg more than their previous vehicle and at least 18 mpg overall. Larger subsidies would go to buyers of even more fuel efficient vehicles. There are also subsidies for heavier trucks and work trucks.

The legislation is far from complete. House Democrats are hoping to include it in a larger climate bill to be voted on by Memorial Day and enacted this year. The legislation would also have to be reconciled with a narrower Senate bill that requires greater fuel efficiency to get the subsidies (under the proposed House legislation, new cars wouldn't even have to meet the CAFE averages to qualify for a subsidy).

The legislation is intended to provide a shot in the arm for struggling automobile companies. A similar provision in Germany is credited with boosting auto sales there.

In the near term, however, it is likely to have exactly the opposite effect. While the legislation is pending, rational, forward-looking buyers who might qualify for the subsidy have a $3,500-$4,500 incentive to put off buying a car. Why buy a car today that might cost $3,500-$4,500 less in a few months?

It's not clear that the subsidy is good policy (it's expensive; it rewards people who made the worst decisions regarding vehicle purchases; it continues to subsidize gas-guzzling SUVs, etc.). Regardless of the merits, debating the policy and delaying its enactment are likely to cannibalize current car sales and prolong the recession in the automobile industry--truly a worst of all worlds outcome.

President for subsidies to jail illegal immigrants before he was against them

The Hill reports

President Obama voted in the Senate to provide additional funding for a program targeted for elimination by his budget that provides states a federal subsidy to offset the costs of jailing illegal immigrants.

Killing the State Criminal Alien Assistance Program (SCAPP) would save $400 million, according to Obama's budget for fiscal 2010 released Thursday. It's one of the largest non-defense discretionary cuts proposed in the president's budget.

...As an Illinois senator, Obama co-sponsored an amendment offered by then-Sen. Hillary Rodham Clinton (D-N.Y.), now Obama's secretary of state, that would have provided additional funding for the program. It also would have established a grant program to defray local government healthcare and education costs for non-citizens.

If one wants to give President Obama the benefit of the doubt, he can claim that now proposing to cut the program is a "hard choice." Of course, plain ol' opportunism is a more likely explanation.

UNCG's commitment to recycling

UNCG employees are taking a mandatory furlough in the next two months and will likely have to contribute more to cost-cutting in the next year.

Nevertheless, UNCG continues to print and distribute copies of its Campus Weekly newsletter (shown at right above) to all employees. Printing costs alone worked out to $331.50 this week. There are about 40 newsletters per year, so the annual cost for printing works out to more than $13,000. The costs for distributing it add to that.

UNCG also produces and distributes 13,000 copies of a glossy magazine, UNCG Research (shown at right below), on its research accomplishments. The cost of the copies is listed as $11,579 per copy. Fortunately, this only appears to come out once a year.

So, in the middle of one of the worst budget crises the university or state has faced and at a time when employees are being asked to sacrifice, UNCG continues to spend the equivalent of several undergraduate scholarships or a pair of graduate fellowships or two dozen conference presentations on two publications that could easily be distributed electronically.

At least the University is showing a commitment to recycling, judging by the Department recycling bin, which is currently full with copies of both publications.

Repent boomers

David Ignatius warns about boomers' lack of retirement savings. The really bad news is that most of his figures come from the years BEFORE the housing and financial collapse.

For a closer look at the retirement squeeze, consider a study released last month by the Congressional Research Service. Patrick Purcell analyzed the most recent data on consumer finances gathered by the Federal Reserve. He found that for the 53 percent of households that hold at least one retirement account, the median combined balance was a mere $45,000.

Hold on, you say, that figure includes some younger workers who haven't started saving in earnest yet. Okay, for households headed by persons between the ages of 55 and 64, the median value of all retirement accounts was just $100,000. Purcell noted that for a 65-year-old man retiring last month, that $100,000 would buy an annuity that would pay a paltry $700 a month for life, based on current interest rates.

One suggestion if you are having trouble saving is to adopt Richard Thaler's "Save More Tomorrow" plan. Under the plan, you commit a percentage of future raises to go directly into retirement savings. Basically, you get most of the consumption benefits of a raise, but you also start putting aside savings. It's a relatively painless way to substantially increase your savings rate over time.