The Senate is currently debating an amendment that would allow for the importation of prescription drugs from Canada to the U.S. The reason that this amendment is being pushed is that drugs prices are much lower in Canada than they are here. There is a simple reason for that—the Canadian government negotiates directly with the drug companies to purchase drugs for the whole country (Canada has a single-payer health system where the Government provides health care for all citizens). This is in contrast with individual insurance companies, pharmaceutical buying cooperatives and individuals here negotiating with the drug companies. The Canadian government has much more leverage and buying power than do these individual groups, which leads to lower prices for Canadians.
But instead of simply allowing our Government to negotiate directly with the drug companies, our esteemed Senate thinks it is a better idea to just allow our citizens to reimport the drugs from Canada and other places. Even leaving aside the health risks of reimporting drugs, there is simply no sound economic reason why we need this convoluted system to get cheaper drugs. Furthermore, there is no reason why American citizens need to pay higher prices for drugs than the rest of the world. Most other industrialized countries allow their governments to negotiate directly with drug companies. Like the Canadians, this allows them to get lower prices than the US, which bans the practice. Why should Americans have to subsidize lower prices around the world. JUST ALLOW OUR GOVERNMENT TO NEGOTIATE BETTER PRICES.
In the latest effort to get a “public option” in the health care reform bill, 10 senators are negotiating to open Medicare up to some people who are 55-64, but require them to “buy-in” to the system. In this proposal, certain people from the ages of 55-64 would be able to purchase insurance through the Medicare system that currently insures our seniors. (It is unclear if this program would be available to all people ages 55 to 64 or only those who cannot get insurance now). This will give all of the benefits of Medicare to a larger pool of people without the government having to set-up a whole new “public” insurance program. This will alleviate the federal government from having to set-up a new public insurance program because the infrastructure already exists. And from all of the polling data, Medicare seems to be extremely popular with its beneficiaries.
As the debate about health care reform has unfolded, at least one thing has emerged that almost everyone has agreed upon: we are spending too much on health care. Currently, we spend about 1 out every 6 dollars on health care or 16% of GDP. On a per capita basis, we spend almost double what the next highest country spends. And yet, on almost every important indicator from infant mortality to life expectancy to doctors per capita, we lag significantly behind most other OECD countries. Therefore, it is certainly possible to get better outcomes while spending less money.
Over the past year, I have been following the health care debate closely. But only recently have I realized how ridiculous parts of the debate are. Well, that is not exactly true. It has just gotten more ridiculous since August.
For those of you who do not know, Monday was my last day as an associate at Irell & Manella. In January, I will be a student again, pursuing and LL.M. in tax at Loyola Law School.
Based on feedback from many of you, my future posts will be substantially shorter. This should allow me to post more regularly. On ocassion, I will post more lengthy entries. But that will be the exception, not the rule.
In his column in the Sunday NYTimes, former GW Bush economic advisor and current Harvard Economics Professor, N. Greg Mankiw argues against the Health Care bill because of the way that the insurance subsidies are structured. He contends that it would discourage workers from working to their full potential.
In my last post, I advocated prohibiting investment and commercial banks from investing their own capital for gain. But there is another possible solution: these firms should cease being publicly traded companies and return to being general partnerships.
Before I turn to health care later this week, I wanted to return to a topic that I have written about before, namely compensation on Wall Street. Over the past few days, much has been written about Ken Feinberg’s decisions on the pay packages of the 25 highest paid executives of the seven companies who have received, and still retain, the most TARP funds (e.g., Citigroup, Bank of America and A.I.G.). There has been much discussion about the optimal way to pay Wall Street firm employees. What is the optimal ratio of guaranteed cash to stock? How long should the stock take to vest? Should the companies be required to put claw back provisions into their employment agreements with their bankers and traders so that if the employee’s investments go bad, the company can get their compensation they paid out back? But all of this misses the point in my mind. Read the rest of this entry »
For those of you who know me, know that I am a baseball fanatic. I believe it is the best sport to watch, especially come playoff time. But if I have to hear one more Senator discuss whether a nominee is a good umpire, impartially calling balls and strikes in our legal system, I might have to throw a baseball through my television. [Update: according to SCOTUSblog.com, no fewer than nine Senators made reference to umpire or umpires during the first day of hearings on the nomination of Judge Sonia Sotomayor for a seat on the Supreme Court]
Over the past year, two groups have been unfairly scapegoated for our country’s economic problems: (1) bankers and (2) unions. In particular, many people have blamed the incentives embedded in bankers’ compensation scheme for the near bankruptcy of the entire industry. Many people also blame unions for the down fall of the auto companies. But I believe both positions are misguided at best and flat out wrong at worst.
I was not intending to use this blog to score “cheap” political points, but with the Republicans’ acerbic comments regarding the Speaker of the House in the face of their utter, bald-face hypocrisy, I feel I must write this post. On Monday, the former, now disgraced Speaker of the House Newt Gingrich stated:
“To have the person third in line to be president say that the CIA misleads us all the time is so utterly irresponsible and such an attack on the men and women who are risking their lives … that she disqualifies herself for being speaker of the House.”
On ABC Radio, he went further:
“I think she has lied to the House, and I think that the House has an absolute obligation to open an inquiry, and I hope there will be a resolution to investigate her. And I think this is a big deal. I don’t think the Speaker of the House can lie to the country on national security matters,”
“I think this is the most despicable, dishonest and vicious political effort I’ve seen in my lifetime.” “She is a trivial politician, viciously using partisanship for the narrowist of purposes, and she dishonors the Congress by her behavior.”
According to the Plum Line Blog: Fox News correspondent (yes, ever once in a while I will quote Fox News), Jonathan Hunt, says the Pelosi focus is a distraction from a real debate about torture:
“Instead of this debate being about national security, what is and isn’t torture, what the Bush administration should and shouldn’t have allowed and whether anybody in that administration should now be prosecuted, the Republicans are now able to frame this debate as to whether Nancy Pelosi is fit to continue as Speaker. So they are not about to let their foot off the gas in any way, shape, or form.
This is exactly why any focus on what the Speaker knew or did not know is irrelevant and simply a distraction. She had no authority, on her own, to authorize torture or to suspend Constitutional or statutory protections or prohibitions. Furthermore, it is also irrelevant to any criminal inquiry what we learned from torture. All that matter is whether the waterboarding and the other interrogation techniques used by the Bush Administration were legal.
Since President Obama took office and the possibility of criminal prosecutions for the torturing of detainees became a reality, supporters of the Bush Administration have been screaming that this is simply the criminalization of policy differences. Now, former VP-Cheney, in his effort to justify the use of torture, has called on President Obama to declassify certain documents he argues will show that the Bush Administration’s torture policy kept us safe.
This post is in response to the lengthy comment left by my friend and former colleague Doug. Because of the length of my response, I felt a new post was justified.
First, Doug, thanks for the thoughtful, though misguided response but you did not grapple with the main thrust of the post—that it is ludicrous to claim that the Speaker is somehow guilty of conspiracy to commit torture by failing object to torture. In my post, I tried to stay away from the Speaker’s moral culpability in the matter. But if failure to object is the standard, very few, if any, Congressmen acquitted themselves very well during this period. To her credit, at least the Speaker voted against the authorization to go to war.
But since you addressed your comment to whether the Speaker has any culpability in this matter, I will address your claims in succession. I have put what my response in italics.
As those of you who read my blog know, I read the Corner blog at Nationalreview.com regularly, to see what the sometimes intelligent but mostly hysterical political right is saying. Today, Andy McCarthy (former SDNY terrorist prosecutor) writes about whether Nancy Pelosi is guilty of conspiracy to commit torture. His argument, unless I am missing something, is that Speaker Pelosi is guilty of conspiracy to commit torture, because she knew either that the Bush Administration was committing torture or was about to commit torture and did nothing about it. The heart of his argument is:
Since President Obama proposed his stimulus, conservatives have been shrieking at the top of their lungs that President Obama is seeking to ration health care. There primary piece of evidence is inclusion of funding ($700mm) for what is known as Comparative Effectiveness Research (“CER”). What CER seeks to do is study the costs and benefits of certain medical treatments, procedures or drugs. For example, it would study whether physical therapy is more effective than shoulder surgery for healing an ailing shoulder. What people like Betsy McCaughey, author of the Bloomberg Op-Ed cited above, argue is that this is will lead to the Government deciding which treatments your doctor will be able to prescribe, and not you and your doctor. For example, if the Government believes that therapy is more cost effective for a certain amount of benefits as compared to surgery, you will not be able to choose surgery. In the end, according to Ms. McCaughey, the Government will simply ration health care as it sees fit. As will come as no surprise, I find many problems with the position advocated by these conservatives.
Here’s how [Cheney] recounts it in his interview yesterday:
Now, if you’d look at it from the perspective of a senior government official, somebody like myself, who stood up and took the oath of office on January 20th of ‘01 and raised their right hand and said we’re going to protect and defend the United States against all enemies foreign and domestic, this was exactly, exactly what was needed to do it.
I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.
My italics, of course. Is Cheney’s ultimate defense is that he didn’t understand the oath he took?
In today’s NYTimes, Adam Liptak, in an article about replacing Justice Souter, wrote:
The first rule of the Supreme Court, Justice Brennan would say, holding up his open hand, is to get to five — meaning persuading five of the nine justices. . . “The replacement to Souter is not going to make an ideological majority for progressives,” said Abner J. Mikva, a former federal judge who taught with Mr. Obama at the University of Chicago. “The new justice has got to be someone who can persuade Kennedy and maybe even Alito.” Justice Anthony M. Kennedy is the court’s swing justice, and Justice Samuel A. Alito Jr., a conservative, is the court’s newest member.
Like I said before, the only thing that matters is 5. While it would be nice to have a Justice who could write memorable opinions, if they are mostly dissenting opinions, it won’t matter.
Maine joins Vermont as the 2nd state to legislatively approve gay marrige. Today, Democratic Gov. John Baldacci signed a bill legalizing gay marriage. Next up, New Hampshire.
With President Obama set to name his first nominee to the Supreme Court Democrats and liberals are debating whether the President should name a “Liberal Scalia?” On February 3, 2009, Dahlia Lithwick wrote on slate.com, “Indeed, the most consistent aspect of the liberal grousing about the court is that there is no left-wing counterpart for Justice Antonin Scalia.”
But appointing a liberal Scalia would be a mistake of epic proportion. There is no doubt Justice Scalia is incredibly smart, and a very gifted writer. In person, he is one of the funniest people I have heard speak. His intellect and writing skills make his opinions some of the most memorable you will read. Readability of writing and clarity of legal principles is what many liberals desire.
Pete Williams of MSNBC News is reporting that Justice David Souter will retire at the end of the term. If President Obama does not select a Hispanic (and there will be a lot of pressure to do so), my two “dark” horse picks for the seat are Professor Pam Karlan of Stanford Law School and if he picks a white male, Seth Waxman, former Solicitor General, now a partner at WilmerHale.
I make these “crass” political statements about selecting people based on race and sex, not because I think it is a good criteria for selecting Justices, but, rather, because I live in the real world and know every news story between now and when Obama selects someone will focus on women and Hispanics.
Update: I chose not to put any sitting judges on my list of candidates, because Pres. Obama indicated that it was important to have non-judges on the Court. If he were to put a sitting judge on the Court, my money is on Judge Diane Wood of the 7th Circuit in Chicago.
I am no expert on labor law. As we watch Chrysler go into bankruptcy, many on the Right blame the unions for the American car companies’ problems. They say that the American car companies are at competitive disadvantage to their foreign competitor (even those with plants in the U.S., mainly in the South) because the U.S. companies have unionized workers (and very high health care costs as a result) and the foreign ones don’t (needless to say this leaves out the fact that the Southern states have given generous tax breaks to the foreign car companies).
But is there any legal requirement that the U.S. companies negotiate with the unions? Why isn’t all of the blame on the management of these firms? The unions and their leaders have a responsibility to their members, not to the car companies. There obligation is to get the best deal for their members. Management and the Big 3’s Directors have the responsibility to get the best deal for their company, not the unions. Unless there is a legal requirement to bargain AND come to an agreement with the unions, no one forced the Big 3 to sign the deals that gave the unions their CBAs and the health care coverage and other benefits. I understand that they may have signed these deals for business or political reasons, but that is thierere decision and problem.
Any insight in the comments would be greatly appreciated.
“As for our common defense, we reject as false the choice between our safety and our ideals. Our Founding Fathers, faced with perils we can scarcely imagine, drafted a charter to assure the rule of law and the rights of man, a charter expanded by the blood of generations. Those ideals still light the world, and we will not give them up for expedience’s sake,” so said President Obama during his inauguration.
I have heard no more idealistic statement by a politician who actually held power since I started following politics more than 20 years ago. It was such a refreshing view of our country’s dreams, hopes, and ideals, especially after 8 years of utter disgrace.
Aaron Sorkin and his show West Wing have a knack of predicting the future of politics.First, the show predicted that one day Vermont would help lead the country into legalizing gay marriage.
In Season 5’s episode entitled “The Supremes,” when President Josiah Bartlett (played Martin Sheen) faced two openings on the Supreme Court at the same time, he wanted to nominate Glen Close, an extremely liberal, pro-choice appeals court judge.But if he wanted to nominate her, the politics of the situation would also require him to nominate William Fichtner, a young, archconservative appeals court judge.At one point during the show, the two potential nominees were sitting in a in the room together in the White House and proceeded to debate (like “cats and dogs”) DOMA (the “Defense of Marriage Act”).
Open any newspaper or put on any news program, you are bound to see the same or similar headlines: The global credit system is in a state of paralysis. Simply, those institutions that normally lend to businesses and consumers (such as banks and credit card companies) have decided a more prudent course of action is to limit or entirely cut off credit lines, bank loans, credit revolvers, home equity loans or mortgages, or refuse to purchase corporate or high yield bonds. While the equity markets normally get all of the headlines, it is the credit markets that is the lifeblood of the economy. It terms of size, the credit market dwarfs the equity markets. That is why Bill Clinton was so concerned with how the bond market reacted to his policy proposals. Therefore, if we are going to get out of this deep recession, we need to somehow stimulate the credit markets, and get lenders to lend more money to businesses and consumers.
As someone who likes to know what people I disagree with are thinking, I frequently read conservative websites such as the National Review. It does not take me long to realize how much I disagree with their contributors.
Same-sex marriage is quite different from bans on interracial marriage in one powerful respect: It asks religious Americans to surrender a core belief — not only Leviticus (disapproval of gay sexual acts), but Genesis (the idea that God himself made man as male and female and commanded men and women to come together in a special way to image the fruitfulness of God).
Today, the Vermont legislature overrode the veto of Governor Jim Douglas, and became the first state in the Union to legalize gay marriage through the legislation legislative action (as opposed to a judicial decision).
As I previewed two days ago, “my” solution to the toxic asset problem is for the government to buy these assets at the value the banks currently have for them on their balance sheets—what they have the securities marked at on their books (I use the scare quotes because I cannot remember if I came up with this idea on my own or read about elsewhere). In return, the seller gives the Government essentially an insurance policy that they will pay for any losses the Government actually suffers, but only when those losses are suffered. Essentially, the Government will not only be purchasing the assets, but also be purchasing a Credit Default Swap from the bank. Read the rest of this entry »
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This morning, the Treasury Department unveiled its “Public-Private Investment Program.” This program is designed to entice private investors to “partner” with the Government to buy the so-called toxic assets (most of the assets are mortgage-backed securities). But this is not a “partnership” in any sense of the word. While profits will be split 50-50, the Government, and in turn the taxpayers, bears more than 92% of the risk.
In criticizing the Treasury Deptarment’s Bank rescue plan, Paul Krugman, on his blog, expresses the same fear I do if there is a “run on the bank.” While he is not discussing mark to market in particular, the implication is clear: unless creditors know what a bank’s assets would be worth now, in a forced sale, their assets will not be safe.
“Start with the question: how do banks fail? A bank, broadly defined, is any institution that borrows short and lends long. Like any leveraged investor, a bank can fail if it has made bad investments — if the value of its assets falls below the value of its liabilities, bye bye bank.
But banks can also fail even if they haven’t been bad investors: if, for some reason, many of those they’ve borrowed from (e.g., but not only, depositors) demand their money back at once, the bank can be forced to sell assets at fire sale prices, so that assets that would have been worth more than liabilities in normal conditions end up not being enough to cover the bank’s debts.”
As of late, there has been a lot of talk of doing away with or at least suspending Mark to Market Accounting. Many on Jon Stewart’s favorite channel, CNBC, have blamed it for the banks’ tenuous financial position. They argue that if we did away with this accounting, the banks would actually look and be much healthier. Leave aside for the moment that it was the banks’ dumb investments in illiquid residential and commercial mortgage backed securities that got them into this position, not the accounting. Should we really be looking to suspend, repeal or in anyway minimize the use of mark to market accounting?
When the Obama administration proposed that we lower the deduction for mortgage interest for those in the 33 and 35% tax brackets, you would have thought that he demanded people give up their first born. But if we step back for a minute and get away from the hysteria that is sweeping the airwaves, we will realize that giving a tax break for mortgage interest does nothing to benefit anyone except mortgage bankers and real estate brokers; it certainly does not benefit home buyers.
To all of my friends and readers, this blog represents something I should have done a long time ago: put in one place all of my views, rants and screeds on the political, economic and financial world we live in. Here, I will opine (and sometimes vent) on politics, economics and finance. Occasionally, I will comment on legal topics, mainly on Constitutional law, so long as they do not touch upon the areas of the law that I practice in, namely Securities law, Antitrust and White Collar Criminal Defense. I do not want to do any thing that would reflect badly upon my clients or their positions or my law firm. Many times my views run counter to the positions that my clients advocate. Therefore, I feel it is best for me to stay away from those topics.
