The Daily Link (6/24/09)

The Council of Economics Advisors outlines the "Economic Case for Health Care Reform."

Former Labor Secretary Robert Reich makes the case for a public insurance option.

Paul Starr, on the other hand, warns of potential unintended consequences of a public plan.

Atul Gawande, in The New Yorker, writes about the cost structure of the American health care system.

Economist Michael Mandel shows why the past decade has essentially been a "lost decade" in terms of private sector job growth.

Martin Wolf makes the case that strong incentives for risky investments and significant leverage helped facilitate the financial crisis, and the first step in reducing the likelihood of a repeat is to alter the incentive structure.

Quoted

"These arguments will come from the very people who denied that the economic recovery plan created any jobs. We have a very odd economic philosophy in Washington: It’s called weaponized Keynesianism. It is the view that the government does not create jobs when it funds the building of bridges or important research or retrains workers, but when it builds airplanes that are never going to be used in combat, that is of course economic salvation."

~Barney Frank (D - MA)

"Why would it drive private insurance out of business? If private insurers say that the marketplace provides the best quality health care; if they tell us that they’re offering a good deal, then why is it that the government, which they say can’t run anything, suddenly is going to drive them out of business? That’s not logical."

~President Obama on the public insurance plan option

The Daily Link (6/23/09)

Nate Silver, over at FiveThirtyEight.com, models the correlation between PAC dollars received by U.S. senators by private insurance companies, and the degree of support for a public health insurance option.

Jonathan Chait of the New Republic outlines "the Obama method."

Ezra Klein makes the case that the Obama administration is better off not directly taking control of the healthcare debate...at least not yet. He also links to his January 2008 essay detailing the lessons learned from the 1994 healthcare debacle.

Economists Barry Eichengreen and Kevin H. O'Rourke compare the trajectory of the current recession to that of the Great Depression of the 1930s, offering this revealing chart:

The Daily Link (6/22/09)

Paul Krugman asks why centrist Democratic senators are partying "like it's 1993."

Ezra Klein asks the following seemingly rhetorical question regarding the ongoing healthcare debate: "Are Republicans in this to preserve the healthy functioning of a competitive private market or preserve the profits of the currently dominant insurance companies?"

Martin Wolf explains the dangers of pulling back the fiscal and monetary lubricant too soon, with parallels from the 1930s and Japan in the 1990s.

And the NY Times looks at the Obama White House's approach to healthcare reform in the early goings.

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Must Read Paul Krugman

I know I've been linking to Krugman a lot lately, but the man is simply on the mark:

To sum up: A few months ago the U.S. economy was in danger of falling into depression. Aggressive monetary policy and deficit spending have, for the time being, averted that danger. And suddenly critics are demanding that we call the whole thing off, and revert to business as usual.

Those demands should be ignored. It’s much too soon to give up on policies that have, at most, pulled us a few inches back from the edge of the abyss.

Martin Wolf on current policy (with a note on inflation)

Martin Wolf's recent column in the Financial Times is an interesting and instructive read, debunking those views (here and here) that are hostile to expanding fiscal deficits and expansionary monetary policy. Wolf clearly states the case for sustained expansionary policy in the short term, while reminding us why public deficits will not "crowd out" private investment in times of economic downturn:

A deep recession proves there is a huge rise in excess desired savings at full employment, as Prof Krugman argues. At present, therefore, fiscal deficits are not crowding the private sector out. They are crowding it in, instead, by supporting demand, which sustains jobs and profits.

He then goes on to describe the "tightrope" being walked by policymakers:

The exceptional policies used to deal with extreme circumstances are working. Now, as a result, policymakers are walking a tightrope: on one side are premature withdrawal and a return to deep recession; on the other side are soaring inflationary expectations and stagflation. It is irresponsible to insist either on immediate tightening or on persistently loose policies. Both the US and the UK now risk the latter. But their critics risk making an equal and opposite mistake. The answer is both clear and tricky: choose sharp tightening, but not yet.