New America Blogs - New Voices, Innovative Ideas, Post-Partisan Policy

REFORM: Kennedy Spurs Bipartisan Conversations about Health Legislation

Joanne Kenen — Wed, 02 Jul 2008 17:10:00 -0400

We perk up when we hear phrases like "bipartisan support for a major healthcare initiative," especially when the bipartisan push is coming from Senator Edward Kennedy. Today's Boston Globe reports that while Kennedy recuperates from his brain tumor surgery, his office has begun a series of bipartisan meetings with an array of health care specialists to prepare for a major push to cover all Americans when the new president takes office next year. The paper reported:

Those involved in the discussions said Kennedy believes it is extremely important to move as quickly as possible on overhauling the healthcare system after the next president takes office in January in order to capitalize on the momentum behind a new administration.

Kennedy is chairman of the Senate Health, Education, Labor and Pensions Committee; Obama is a member, and his Senate staff has attended the roundtable discussions, the Globe reported. But Republican staff is also involved, as Kennedy tries to identify areas of agreement, possible starting points. Kennedy has made health care a signature issue in his 45 years in the Senate, and even before his aggressive brain cancer was diagnosed he made no secret that he wants to seize the moment and act next year.

"You have got to think this will be the Ted Kennedy Health Reform Act, because he's a beloved figure and he's championed the issue for so long," said John Rother, policy director for the AARP, which has been involved in the discussions. "There are a lot of unknowns right now, but what we do know obviously is he is very close to Obama, and he also has quite a network of health policy experts that he can draw from."

The newspaper reported that Kennedy's aides have also been working with a network of Massachusetts advisers, talking about ways the state's health program could possibly be adapted to a national model.

The many lessons of the 1993–94 health care reform debacle include that it was too partisan, and that the Clinton White House did not involve Congress enough in developing its plan. Kennedy is not alone in trying to do things differently this time. The Senate Finance Committee, chaired by Montana Democrat Max Baucus, in June held a day-long bipartisan summit on health reform. Oregon Democrat Ron Wyden and Utah Republican Bob Bennett have a health reform proposal that has attracted bipartisan interest. Various nonprofit groups are running bipartisan programs to help congressional staff better understand the challenges of health care reform. We know from our conversations with people around Washington that there really is a desire to do things differently this time, so we're thrilled to see Kennedy make this a priority for his country, even as he confronts his own health ordeal.

Is The Governor's Money Clip The New 'Shame of California'?

Joe Mathews — Wed, 02 Jul 2008 16:12:00 -0400

At the 1906 California Republican convention, a photographer for the San Francisco Call snapped a photo of gubernatorial nominee James Gillett with Southern Pacific Railroad men and other infamous operators of political machines. The rising Progressive movement turned the photo into a symbol of how corrupt and out of touch the state's leaders were. The photo had its own name: "The Shame of California."

The picture at left has similar potential, I'm afraid. The state is in recession, California's government is failing on any number of issues, from health care to water to prisons, and the budget is way out of balance and overdue. And on Monday, Schwarzenegger, who by his own admission is not engaged in the legislature's budget talks, waves his money clip during a press conferences and says that the state isn't out of money because he has some left. The legislative leaders behind the governor laugh.

Ha ha ha.

Bottom line: he might have been better off saying, "I am totally and completely out of touch." It is the most tone-deaf moment of his governorship.

California's Lack of Transparency

Joe Mathews — Tue, 01 Jul 2008 23:51:00 -0400

California has plenty of sunshine, but very little of it ever reaches the corners of government. Weak public records laws are part of a political culture hostile to scrutiny or investigation. The investigative journalist Thomas Peele compares California to other states, and explains all the various ways we're failing to meet standards for transparency.

Gov. Schwarzenegger has touted transparency, but has failed to lead. He said he would release his schedules after the passage of an open government measure, Prop 59, in 2004, but the schedules he's released offer no details and omit so many appointments and appearances that they are useless. He's also vetoed bills to create an office to train public agencies on records. Here's how bad things are in California: even basic court records and statements of charges are withheld by law enforcement agencies.

Sometimes, I hear political and governmental leaders complain about a lack of public trust. How can you trust people who don't trust you?

The Nurdle Effect

Kristina Haddad — Tue, 01 Jul 2008 19:53:00 -0400

(By Sasha Abelson, Guest Blogger to the Climate Program)

I have been searching for the right word to describe a particular phenomenon and concluded that such a word does not (yet) exist. The phenomenon I am speaking of is as follows: upon becoming aware of a piece of information previously unknown to you, you become hyper-sensitized to that information. You now to see it, hear it and read it everywhere.

Take the nurdle for example. I had never heard the word until a scientist from Heal the Bay mentioned the nurdle in her lecture[i]. Nurdles are small plastic pellets which are melted down to create nearly everything made of plastic. These nurdles escape from factories and often end up on beaches where they become a significant source of ocean and beach pollution. Nurdles are frequently mistaken by marine life for fish eggs, and find their way into their digestive tracts causing starvation. After learning of the nurdle, no longer is a stroll on the beach just a stroll on the beach. Now, my eye cannot avoid spotting these tiny balls of brightly colored plastic. This is what I have coined the Nurdle Effect.

My recent submersion into the world of carbon credits has triggered the same phenomenon. I can see my carbon footprint everywhere, waning and waxing depending on the choices I make. I find myself at dinner, staring at the menu to determine the affect a hamburger, verses a tofu brown rice bowl, will have on my carbon footprint. Is washing the dog bed with my laundry really that bad? (If you met my dog, you would indeed agree, it is that bad.)

I have become acutely aware of how much energy I use and in turn how much CO2 I output and this has caused me to rethink nearly everything I do. I constantly see ways both big and small, to reduce my carbon footprint. I realize that achieving a smaller carbon footprint must occur at the corporate level as well as with each one of us. The first step is to changing our behavior as individuals, is to become aware of the issue. Thank you nurdles!

[i] (Governor Schwarzenegger signed AB258 that aims to address the problem the nurdle poses to marine life. http://www.healthebay.org/news/2007/10_18_ab258signed/default.asp)

Liberals for 'Conservative' Grand Strategy?

Patrick Doherty — Tue, 01 Jul 2008 15:07:00 -0400

I've been reading with some fascination the conversation by my friends over at the National Security Network's blog, Democracy Arsenal. If I am reading their meaning correctly, three consecutive posts on U.S. grand strategy are arguing that the essence of progressive grand strategy is about the U.S. becoming a conservative power.

Starting with Ilan Goldenberg at NSN and followed by Shawn Brimley of CNAS and David Shorr of the Stanley Foundation, all three say this pretty clearly:

Goldenberg: "The goal of American foreign policy should be to sustain the international system that that has served the United States and mankind so well for the past 60 years."
Brimley: "Beyond the defense of the homeland, a grand strategy of sustainment would commit the United States to the pursuit of three vital global interests: stable balances of power in key regions, an open international economy, and continued access to the global commons. Such things are international public goods, and are thus shared goals that can constitute a foundation of an efficacious approach to a stable world order."
Shorr: "We are indeed reorienting America from being a revolutionary power toward being a status quo power, and properly so. The last several years have been nothing if not a reminder of the hazards and unintended consequences of major disruptions toward the status quo."

I find this emerging consensus very troubling. So does Shadi Hamid, another blogger at Democracy Arsenal:

So, yes, I was concerned by David’s conclusion that “we are indeed reorienting America from being a revolutionary power toward being a status quo power, and properly so.” If this is indeed true – and if this is really what progressives want – then I’m really, really confused and more than a bit worried. Of course, we shouldn’t be a revolutionary power – in the sense that that revolutions are usually disrupting and often violent – but if we aspire to reinstate the status quo, let us just recall that the status quo wasn’t all that great for a lot of people.

While Shadi looks at the flaws from the perspective of those on the receiving end of our grand strategy, I prefer to look at it as tragically sub-optimal for U.S. long term interests. If we only focus grand strategy on an analysis of states and threats with a short-term horizon, I think Ilan, Shawn and David are right. But to limit ourselves to that level of analysis misses the real driver of international politics in the 21st Century.

Take for example the strategic importance of energy. Few would argue that energy, in particular oil, is the single largest source of strategic instability in the world today. Three major wars have transpired in the Persian Gulf since Washington and the world realized the U.S. was dependent on global oil markets in the 1970s. Prices are spiking and destabilizing politics around the planet. Likewise with food and raw materials. Increasing demand from rising Asian economies combined with high continued consumption from the West is squeezing existing supply chains. A recent New America/Terror Free Tomorrow poll discovered that 86% of Pakistanis cannot purchase enough wheat.

A state and power analysis of these issues argues that as the economic power of Asia increases, their military power will also increase so to avoid a period of more militarized strategic competition, it is time to recognize Asia's new power by giving them more of a stake in the structures of the international order. But the UN has a really bad track record when it comes to resource conflicts of major world powers. It is pretty much useless when such major strategic interests are at stake.

A deeper analysis yields better options. What lies behind these two economic dynamics is on-going and inexorable process of economic inclusion. In the 1990s, we thought about development, and helped close to a billion people enter the global market economy. But now that we have 2 billion people consuming at middle incomes or better, we're crashing the system. The net impact of two decades of post-Cold War development now forces us to think in terms of inclusion. How do we make economic space for--how do we include--the 4.5 billion people wanting to enter the formal sector of the global economy but for whom we have no energy, raw materials, land, or transport?

In China this narrative is about urbanization. By 2030, China will move an additional 700 million people into its cities. This is the single largest and fastest rural-urban migration the world has ever seen. As the McKinsey Global Institute points out, Chinese urbanization will overwhelm global patterns of of energy production, resource consumption, land use and mobility. Behind China is a long line of one billion more aspiring capitalists in India and 2 billion others scattered around the rest of the world.

Attempting to mount a conservative grand strategy in a period that will have to be one of massive economic transition is foolish. No institutional framework can manage the populist pressures of large nations without enough of the basic economic inputs to fulfill their aspirations, much less their aspirations. We can also anticipate that widespread discontent in illiberal societies will emerge either as militant nationalism or militant extremism. Either outcome poses major threats to international peace and stability and quite likely, the U.S. directly.

What is on offer from the two candidates is still insufficient to stem this tide. Even if Senator Obama wins the White House and signs into law the energy policy on his campaign website, it still won't be enough innovation in enough time to deal with the urbanization of China. Here, emissions reduction by 2050 is not the test. Consumption is. Obama promises only 35% reduction by 2030. Using the CIA's Factbook's oil numbers, we'll give back 7.3 million barrels per day of oil but, without a major shift, China will increase consumption by 8.5 mbpd. In that kind of scenario--where the U.S. commits to a 30% reduction of oil consumption--OPEC might not actually invest in additional upstream capacity. By 2030, in addition to many of the non-Opec major fields drying up, we will likely see a net reduction in production capacity and prices will spike even higher.

The problem is not Obama's, but it could be. The problem is the mindset in Washington's. Few in Washington are willing to think like FDR, Truman, and Eisenhower, in terms of grand strategies that shape the U.S. economy to do the nation's strategic heavy lifting. As a result, we are still talking about how much mitigating climate change will "cost" the United States and we are still talking about foreign policy as only the stuff we do "over there."

This should be government 101. Grand strategy is the correlation the economic engine and the national security strategy to meet the challenges of the day. When our economy is becoming more of a strategic liability than a strategic asset, it is time for a new grand strategy. With all due respect to my colleagues at Democracy Arsenal, a grand strategy of "conservation" is more akin to rearranging the deck chairs on the Titanic.

COST: Jumping on the Wellness Bandwagon

Elena Harman — Mon, 30 Jun 2008 20:55:00 -0400

The Cleveland Clinic is using wellness programs to practice what it preaches. The clinic, well known for its quality cardiac care, stopped hiring smokers in September 2007, banned trans-fats from its menus and vending machines earlier in 2007, and has now announced its plans to offer Weight Watchers programs to employees for free, according to an AP report. But it’s not just large companies with mammoth health care costs and doctors who constantly see the effects of unhealthy lifestyles that are investing in wellness efforts. Small companies and insurance providers are starting to jump on the bandwagon too.

Small Businesses. Many small businesses already have trouble meeting rising health care costs,so how can they afford to add wellness and prevention programs? Last week, the Wall Street Journal examined programs that even employers on a tight budget could consider workable. Suggestions included discounts for healthy living (using screening tests provided by some insurance companies), online wellness programs, care advocates (to help employees with claims questions, treatment options, or locating a doctor), disease management, nurse hotlines, and purchasing cooperatives (banding together to gain the bargaining power of a large company).
Insurance Providers. WellPoint has recently adopted a wellness and prevention program—but not one aimed at improving the wellness of its own employees. Instead, the insurance company gives financial incentives to its employees for improvement in the quality of preventive care received by plan members or beneficiaries. WellPoint’s 42,000 employees received bonuses linked to improvements in the quality of prevention, screening, and care management of their 35 million members in 2007, according to a recent article in the Chicago Tribune. It’s a different approach to be sure, but an interesting one.

Data to support cost savings of wellness programs is scattered. There is some debate over whether the wellness programs will prove to be a good investment for businesses in the long-term, as workers change jobs so frequently. It's possible that having health plans invest in a healthier population might turn out to be a better economic model. We're just beginning to think about how to shift our health care system from one oriented to chronic disease, not just acute episodes. The more that providers, employers, insurers—and individuals who can avail themselves of things like Weight Watchers or smoking cessation—think about how to achieve this transformation, the better.

Shameless Anti-Redistricting Web Site Goes Up

Joe Mathews — Mon, 30 Jun 2008 19:17:00 -0400

I've been critical of the political strategy behind advancing redistricting reform by ballot initiative in this November's California elections. But looking at the web site put up by opponents of the initiative makes me think that perhaps it's worth fighting for reapportionment reform, regardless of the long odds.

In a display of chutzpah, the opponents -- state senate Democratic leader Don Perata and others -- have put together a web site called "Citizens for Accountability." The argument is Clintonian--it accuses redistricting reform supporters of doing precisely the thing (trying to protect politicians) that the opponents themselves are doing. Totally shameless.

Cold Weather and Wobbly Incomes

Ellen Seidman — Sun, 29 Jun 2008 17:12:00 -0400

It's a foggy Sunday morning in Maine, and I was struck by both the truth and the missing pieces in Ben Stein's column in today's New York Times. Stein points out that while the increase in gasoline prices has very little effect on him (and other members of the professional classes), it can be devastating to the "average private worker [who] now earns very roughly $600 a week, not counting fringe benefits." His solution-which he quickly dismisses-is to balance the budget. In the meantime, he says, "the only thing for workers to do is to drive less, buy fuel-efficient cars and trucks and, above all, whip their children into a frenzy to get more education."

Accepting that Stein was to some extent engaging in hyperbole (we'll assume he's not urging corporal punishment), the steps he suggests may be necessary, but they're almost certainly not sufficient. In particular, self-help will not be sufficient.

First, up here in New England, it's cold a good part of the year, and the dominant form of heating is oil. Home heating prices have skyrocketed over the past several years, and the upcoming winter is expected to be even worse. Both homeowners and renters are affected, some of the latter when their landlords, unable to afford high oil prices (and, frequently, an exploding mortgage), walk away from the property leaving an empty oil tank. Businesses and local governments are feeling the pain too.

Maine isn't alone. Families across the country, especially lower-income families, are feeling the pain of higher energy costs to heat and cool their homes. The recently-released 2008 Energy Costs Survey by the Energy Programs Consortium (EPC) found that higher gasoline and home energy prices had impacted the ability of a significant proportion of families at even 350% of the poverty level to purchase basic necessities, including food and medical care.

Thus, while high and rising gasoline prices and suggestions to change car-buying and driving habits are helpful, at least as big a challenge will be to improve the manner in which we build, heat and cool our homes. We're also going to have to do a much better job of supporting low- and moderate-income families through this period with both income supports and more effective assistance in improving the energy efficiency of their homes. Public and philanthropic efforts, such as EPC's Weatherization, Rehab and Asset Preservation (WRAP) project and private efforts such as the Homeowners' Energy Conservation Loan available at ShoreBank in Chicago and energy efficient mortgages available from other lenders, to improve both home energy efficiency and its financing, are a start, but obviously not enough.

Second, as Peter Gosselin points out in his new book High Wire, which he and I discussed at a New America forum on Friday, even a college education is no longer a guarantee against very significant income volatility. In the period between 1970 and today, the percentage of college-educated households whose income dropped by more than 50% over a two-year period increased from 2% to 6-8%. While this is still less volatility than those without a college education experience, it suggests that Stein's prescription for avoiding the impact of higher energy prices may not be so simple as "more education."

The solution will need to involve more and better jobs and incomes for a far broader spectrum of Americans as well as improvements in critical risk factors such as health care and enhanced safety nets for the times when risk overwhelms income. In short, what we're talking about here are major policy changes, not just self-help.

California Rolls Back Its Ballot Measure Odometer

Joe Mathews — Sat, 28 Jun 2008 20:59:00 -0400

Once a decade, California starts over at 1 in the numbering of its ballot measures. This November's ballot thus provides a fresh start. After Prop 99 in June, we start with Prop 1 this November. The Secretary of State is out with the numbers of all 11 measures on the November ballot. Here they are:

The big ones to watch are Prop 2 (the Humane Society is the champion of direct democracy), Prop 8 (the much talked about gay marriage initiative), and Prop 11 (the redistricting measure).

Prop. 1: High speed rail bond.

Prop. 2: Humane Society farm animal confinement initiative

Prop 3: Children's hospital bond

Prop 4: parental notificatoin before minors have an abortion.

Prop 5: lighter sentences, easing of parole restrictions for non-violent offenders.

Prop 6: Anti-gang initiative

Prop 7: Initiative to require utilities to generate 20 percent of power from renewable sources by 2010.

Prop 8: anti-gay marriage initiative.

Prop 9: a crime victims' bill of rights.

Prop 10: $5 billion alternative fuel bond.

Prop 11: Redistricting reform.

Big Trouble with Small Savings at India's Sahara

Jeff Meyer — Fri, 27 Jun 2008 18:00:00 -0400

I recently came across a news story from India that I think offers both a couple of cautionary points for regulators regarding deposits, and a few questions for bankers and microfinance practitioners who are thinking about how to expand savings opportunities to more poor households.

First, stick with me while I give a brief rundown of the story. It centers on Sahara India Financial Corp., a non-bank financial institution in India, with more than 42 million depositors. (By comparison, the State Bank of India, the country's largest lender, has 100 million customers). Sahara India Financial is a key property in the empire of Subrata Roy, a magnate whose group holdings are estimated to be worth US$10 billion. Sahara's savings business accomplishes such a reach in large part through its army of hundreds of thousands of agents who go door-to-door in largely rural and poor areas collecting as little as one rupee (about two U.S. cents) per day from its clients to apply to savings plans they hold with Sahara. A number of the products offered by Sahara are commitment savings plans that lock-up client deposits for many months or years, offering them their deposits, plus interest, back at the end of the time period. The appeal of commitment savings plans, which are popular in a number of developing countries, is that it commits people to save, thus enforcing savings discipline. (For a review of commitment savings products in developing countries, see this paper by researchers Nava Ashraf et. al.)

However, the Reserve Bank of India, the country's central bank, earlier this month ordered Sahara to stop taking deposits, charging the firm with putting the savings of depositors at risk in several ways. For one thing, the RBI said Sahara failed to invest a portion of its US$4.3 billion of deposits in required low-risk investments. (Sahara is required to invest all deposits in low-risk investments, such as treasury bonds). Also, the central bank charged Sahara with taking advantage of its customers - many of whom are illiterate - by cutting interest payments whenever they fell behind on installments. (Many depositors receive only one percent interest a year on their savings, according to a Wall Street Journal article). Thus, given that inflation in India has recently been running at more than 11%, many Sahara depositors appear to be paying a significant sum for having the firm hold their money for them). Moreover, the firm often keeps records of millions of deposits in "tattered paper notebooks," according to another Wall Street Journal article. In recent days, the central bank softened its stance and told Sahara that it can continue taking deposits, but only those that mature before June 30, 2011. This will effectively halt Sahara's savings plan business, according to a third story in the Wall Street Journal.

What struck me about Sahara was the massive scale of its outreach and modest size of deposits it typically collects. On the surface, by extending savings products to poor households likely passed over by banks, Sahara seems to be providing a useful service - enabling households to set aside money now that can be used later for investment or other purposes. However, in the end, it appears that Sahara treated its customers unfairly, and its business practices may have run the risk of destabilizing India's financial system.

As such, Sahara's case presents a couple cautionary points about regulating savings:

Regulators must regard ensuring the safety of deposits in financial institutions as of paramount importance. The failure - or even a perception of the potential failure - of a financial institution can cause it to collapse and erode trust households have in the entire financial system. Regulators must closely monitor institutions and, ideally, introduce some sort of deposit insurance, such as the Federal Deposit Insurance Corporation (FDIC) in the United States, which insures the first US$100,000 per depositor per bank.
Governments have an important role to play in promoting financial literacy and requiring financial institutions to explain in a clear, concise manner features of financial products. Also, it is critical that consumers (both literate and illiterate) can understand the concept of interest rates, and, more generally, the value proposition presented by various financial products (such as Sahara's commitment savings plans).

At the same time, Sahara's story raises a few questions that may be useful for bankers and microfinance practitioners to reflect upon with an eye toward figuring out how to give more people around the world the "luxury" of a low-cost savings account:

What is the value proposition that Sahara's tens-of-millions of customers saw in the company's savings products? My guess is that, for many, Sahara was the only game in town. Setting this aside, I would also guess that the convenience of an agent coming by regularly to collect a modest sum of money was attractive, in part because it enforced savings discipline. Moreover, even if there was a bank relatively close by, Sahara's customers may have felt more comfortable conducting transactions with an agent than with bank teller. (Research has shown that some poor people can be intimidated by banks, i.e. feeling they must dress-up to be treated fairly). Also, it appears that Sahara required little (perhaps too little) personal information from clients (as opposed to banks in some countries that require individuals to present a number of supporting documents - some of which individuals may not have - just to open an account).
How can banks make mobilizing small savings into a viable business? I find it hard to believe that, if no corners are cut, Sahara's business model is sustainable. This is because, even in a low-wage country like India, it is very expensive to go door-to-door to collect very small deposits. Operational expenses of such an outreach would be difficult for the financial institution to recoup by investing in low-risk (and thus likely low-yield) investments. Can a financial institution ever run a successful small-scale deposit collection operation that has the reach of Sahara (without exploiting their customers, or receiving subsidies from governments or donors)? A "yes" answer will likely depend on advances in technology, such as the ability to make deposits at retail outlets like pharmacies using point-of-sale (POS) banking terminals. But it may be worthwhile to think more boldly. One (admittedly dreamy) idea that jumps to mind is emulating an advertising-supported business model that Google has had so much success with by placing ads on the front of passbooks (or the shirts of deposit collectors, as my colleague Ellen Seidman suggested).

I don't want to extrapolate too much from the case of one financial institution in one country. Indeed, I believe there is a political component to Sahara's case that I don't have insights on. Yet, if nothing else, it may be interesting for someone to pick apart the details of Sahara's savings mobilization business model and see if there are any lessons that can be extracted and applied in a safe, legal, and socially responsible way by financial institutions in India and further afield.