A Citizen's Guide to Indiana

The Posner-Becker blog has a good debate between the two on the role of Freddie Mac & Fannie Mae in the financial crisis. Becker thinks it was more substantial than does Judge Posner.

Judge Posner:

As Becker points out, Fannie and Freddie were effective in obtaining congressional and presidential assistance to ward off threats to their activities and their profits. But I don’t think that that assistance, unseemly as it was, and perhaps corrupt as well, was the basic problem of Fannie and Freddie, or the cause of their collapse; nor do I think their collapse was of any great consequence for the nation.

Rather, he blames the depression on other factors and suggests that, without Fannie & Freddie, things could have been worse. Had their debts instead been those of banks like Goldman and Morgan Stanley, those banks may have collapsed and the government may have taken over those firms. Posner lays more of the blame at the feet of Greenspan and Bernanke keeping interest rates too low, encouraging the housing bubble. He also suggests that financial deregulation had gone too far.

Recently, I saw some off-hand post about how much better Japan was doing after its disaster than New Orleans was doing. I didn’t look beyond that to see whether there was anything like an apples-to-apples comparison going on. It just mentioned that “some parts” of New Orleans were still a wreck. And, some parts of Japan are not — I’m sure some parts of Japan are still in bad shape.

I threw out a glib remark, saying “Maybe it’s because their Constitution renounces war, freeing up resources for useful things.” The response to that was pretty revealing. “Maybe it’s because Japanese people are not afraid to roll their own sleeves up and get to work, unlike lazy government freeloaders in New Orleans.”

My response was “Uppity, shiftless freeloaders, no doubt.”

I’m not one to see racism under every rock, but there was certainly some of that going on here.

Of course, I have my own perception of difference between how the Japanese seem to react to a crisis versus our own. I was struck by the story recently in the news about how some of Japan’s elderly were volunteering to work in the radioactive areas, reasoning that the damage from radiation took some time to manifest and probably wouldn’t be felt until after they’d likely be dead in any case. I just can’t see something like that happening in the U.S.

But, that may well be because I’m afflicted by stereotypes as well. I have in my head a caricature of an older American formed by the summer of discontent over the health care reform debate — along the lines of an overweight white person in a hover-round shrieking about keeping government out of their Medicare. Such a person is mortally concerned over the prospect that someone, not them obviously, might be getting away with something. It’s the specter of the young buck using food stamps to buy T-bones and the welfare queen driving a Cadillac.

I don’t know if my stereotype is any more a reality than the Reagan-era welfare imagery is. But the stereotypes are powerful and shape our political discourse.

Rachel Sheeley, writing for the Palladium-Item, has a nice article on retiring Richmond High School journalism teacher, Ann Herrman. Not that it’s a huge deal in the scheme of things, but it is very likely that, without her, this blog wouldn’t exist. I had her as a teacher my junior year in high school, and she encouraged me to sign up for the paper. I did, and during my senior year, I fell into a niche writing an opinion column. (Which, by the way, has to be the easiest gig in the newspaper business.) That experience led, more or less directly, to my bloviating around here.

I had to laugh at this:

Some students tried, and managed to, sneak questionable headlines into the newspaper. However, the longer she taught, the more savvy Herrman got.

Now, I’m sure I wasn’t the only guilty party along these lines, but I distinctly remember getting read the riot act following the September 16, 1988 wherein I contributed the sports headline “Richmond scalps Indians after creaming Trojans” — referring to the football team’s victories over Anderson and New Castle respectively.

The newspaper was a great experience. To this day, the students I worked with are some of the most interesting people I’ve had the pleasure to know. Ms. Herrman is retiring after 25 years of working for the paper and the school yearbook. There is a party at the high school on June 18 for former students.

Shari Rudavsky, has a story on the new state policy making it tougher for kids with insured parents to get vaccines from county health departments. The state – possibly at the direction of the feds – is instructing county departments of health not to provide vaccinations to kids whose parents have health insurance. The rationale isn’t that horrible – they don’t want subsidized medicine going to people who don’t need the subsidy. The effects are a little more complicated.

Due to the weird economics of the vaccination business, it’s not uncommon for a family physician to not maintain stocks of the necessary vaccinations. Even at somewhat elevated prices, it doesn’t make financial sense for these family physicians to maintain stocks and provide vaccinations at the reimbursement rates provided by insurers. So, they send their patients to the county departments of health where the vaccinations have traditionally been available at a lower price in any case.

My family has been insured, but not generally in a way where we get much benefit that defrays the costs of vaccination. Initially, we went to our pediatrician for vaccinations, but discovered the county health department was a lot cheaper for routine shots for the kids. So far as I know, we weren’t asked about our insurance status or ability to pay; they just had a price that we paid. If those vaccines were subsidized, I had no idea.

This new policy doesn’t consider whether the insurance you have mitigates the out-of-pocket expense for the vaccination. It just, apparently, requires county departments of health not to provide vaccinations to the insured.

I guess my main beef with this whole thing is the opaque pricing for vaccinations. How much does it cost to produce the medicine? Tack on a little bit more, and I’ll pay it. But, with pharmaceuticals, you have some unknown cost to recoup for its development, a little more to pay for development that didn’t pay off, a little more to pay for sale of the medicine in jurisdictions where the price can’t be jacked up, and a little more just because they can. The combination of the monopoly power inherent in intellectual property coupled with the dysfunctional medical market place is a toxic brew. Getting medicine reminds me a little of that scene in “Family Vacation” where the Griswolds need tires in the middle of nowhere near the Grand Canyon and they have the exchange, “how much do I owe you?” // “How much you got?”

Eric Zorn of the Chicago Tribune digs into the historical predictions of Medicare’s demise. Suffice it to say, Medicare’s death has been greatly exaggerated. Repeatedly.

New York Times July 7, 1981: Medicare payroll taxes already imposed by Congress, including two increases scheduled for 1985 and 1986, will only be able to keep the hospital insurance system solvent for eight to 10 more years, three Cabinet officers informed Congress. Even under the Reagan Administration’s highly optimistic economic projections, the fund will be bankrupt before 2000, the three said.

Washington Post,March 6, 1983: Senate Budget Committee Chairman Pete Domenici warned the nation’s governors the other day, “Medicare can be bankrupt in 2 1/2 years,” unless some way is found to put the brakes on its burgeoning costs.

Chicago Tribune: June 25, 1983: Medicare is in danger of bankruptcy as early as 1986, the system’s trustees declared Friday.

Chicago Tribune, March 10 1984: To avert Medicare’s expected insolvency, a federal advisory council proposed Friday raising the eligibility age to 67, taxing employer paid health insurance benefits and boosting the tax on alcohol and tobacco… the Congressional Budget Office said Medicare may be insolvent in 1989

New York Times, January 20, 1985: In the last few years, when it appeared that the Medicare trust fund would run out of money in 1987-89… But the need seemed less urgent after the Congressional Budget Office issued new estimates last September indicating that the Medicare trust fund would not go bankrupt until 1994.

Chicago Tribune February 6, 1985: Medicare is still expected to go bankrupt in 1991, and a new flood of red tape is not helping America’s hospitals.

New York Times, March 27, 1985: Reagan Administration officials said tonight that new projections showed the Medicare trust fund would not go bankrupt until late in 1990’s.

Chicago Tribune, Nov. 17 1985: Last spring, the government estimated that the Medicare trust fund would run out of money by 1998. Given less optimistic assumptions about the economy, it could happen as soon as 1992

Washington Post, April 1, 1986: The Medicare hospital insurance program faces bankruptcy by 1996, two years earlier than projected last year.

Chicago Tribune, June 29, 1986: Dr. Jerald Schenken of Omaha, an AMA trustee, said the doctors have worked for more than two years on formulating the plan, because they fear the current Medicare system will go bankrupt by the end of the century.

New York Times, May 22, 1988: Reflecting the view of the Reagan Administration, Dr. William L. Roper, the head of the Federal Medicare and Medicaid agency, said, ”With the Medicare Trust Fund expected to go insolvent shortly after 2000, it is hard for us to sign on for a major expansion of the Medicare program beyond the catastrophic care bill.”

And that’s just the Reagan years.

Keep in mind that, during this period, predictions of the demise of Social Security and Medicare were used to justify increases in payroll taxes. Those increases created a sizable surplus in the Social Security Trust Fund which was raided for general fund expenditures such as tax cuts for the wealthy and some overseas wars. Rather than pay for those things with more progressive income tax revenues, the common wisdom in D.C. is to cut Medicare and Social Security benefits. Bait, meet Switch.

(h/t Amy) The Associated Press is reporting:

Police have arrested two people after finding a one-year-old child in the back seat of a car at a strip club.

When police arrived, the child was crying and soaked in sweat, according to the arrest record reported by WLKY-TV.

The child’s mother, Laura DiPrimo, ran out of the club, started the car and rolled down the rear window. The child’s father, Thomas Lee, followed. He was wearing a home incarceration bracelet from Clark County, Ind.

The kicker: “Police said Lee complained the back seat of the cruiser was hot as he was transported to jail.”

But, really, what else are you going to do with your one-year-old if you’re on house arrest and want to get drunk at the strip club?

In the debt collection business, once I get a judgment for my client, the next step is trying to locate income or assets to apply to that judgment. One tool for that purpose is the proceeding supplemental, where the debtor is required to appear in court to testify as to their income and assets. It’s not uncommon during this process for a debtor to tell me: a) they don’t have the money; and b) they don’t think they owe the debt.

The presence of “a” by itself is unsurprising and creates absolutely no suspicion in me. After all, if they had enough money to pay the debt, my involvement probably never would have been necessary. But, when they mix it in with “b,” a red flag goes up immediately. In my mind, that’s code for “maybe I have the money, I just don’t want to use it on this debt.”

I have the same reaction when I hear people say something like, “global warming isn’t real, and besides we couldn’t pay for the solutions even if it was.” What that says to me is, “I’m denying that it’s real, not because of the evidence, but because I don’t like the consequences if I believed the evidence.”

In the debt collection scenario, when you have someone who is resigned to the judgment but doesn’t have enough money, you set up a payment plan and you start chipping away at the problem. If you ignore it entirely, the interest alone can be a monster, let alone having to deal with the principal. But, if they aren’t resigned to the judgment — to borrow a phrase from Cool Hand Luke — you have to get their mind right first. They’ll never make a credible effort otherwise.

In the Cool Hand Luke scenario, the Prison Captain did it by physically exhausting Luke. In the debt collection scenario, I try to do it by explaining and demonstrating the effect of a judgment. Luke was never going to agree that he should stay in prison. Some debtors will never agree to the validity of an underlying debt. Global warming deniers (who are more worried about the cost than neutrally assessing the evidence) will never do much more than seize on material that confirms their bias. I confess that I don’t know how you would go about getting their mind right.

But, when you hear someone who tells you global warming isn’t real and it would cost too much to fix or it’s arrogant of humans to think they can change nature or some such, you can be reasonably certain that knowledge of the cost is contributing to their denial of the problem. And even the interest can be a monster to deal with, let alone the principal.

The Midwesterner has a blog post up on a territorial review the OECD will be doing on the Chicago region. One of the problems it will encounter is a parochial attitude between Wisconsin, Illinois, Indiana, and Michigan which has served to inhibit the areas of those states around Chicago from working together. Generally, the political impulse is to to fight one another to poach each others’ businesses rather than working together to make a region that can compete globally.

It’s a good post over all, but what caught my eye was our old friend Mitch Roob, who you might remember from such cautionary tales as “Privatizing welfare eligibility evaluations” and “Phantom economic development success stories.”

At least the state governments of Illinois and Wisconsin agreed to take part in the OECD study, although given their past record, I’m surprised they were invited. Not Indiana, which apparently is under the impression that the main challenge to its depressed economy comes from Illinois, not China.

The Chicago Tribune quoted the Indiana Commerce Secretary, Mitch Roob, as saying “we don’t do studies, we do deals,” which pretty much epitomizes the parochialism that cripples so much Midwestern economic development. Roob later told the Fort Wayne Journal Gazette that, because it’s trying to filch businesses from Illinois, Indiana can’t cooperate in a project that could strengthen both states. “Until Illinois gets its fiscal house in order, we are being forced to differentiate ourselves,” he said.

As the Journal Gazette noted, whatever Roob is doing isn’t working. “The state,” it said, “ranks 42nd in the nation for per-capita income, down from 33rd in 2000.”

The hot streak continues.

U.S. Attorney Joe Hogsett is going to make an announcement today with respect to charges against Family and Social Services Administration employees alleging their involvement in “large scale theft.”

I’ve never been impressed with FSSA. A lot of that stems from first impressions when I was trying to help a state senator secure then-FSSA chief Kathy Davis’ testimony for a commission on autism hearing. It wasn’t so much that she didn’t agree to come testify. It was the utter lack of responsiveness from her office. I was left with the impression that if I, with a law degree and the General Assembly at my back, could not get a response; someone with little means and a great need probably had no hope at all.

But, I don’t know a thing about the charges Hogsett will be alleging, so my impression of FSSA as an organization might be a complete aside if the charges are tangential or completely unrelated to the services provided by FSSA. The nature of those services likely make it a place ripe for abuse. A lot of money involved. The people served are generally powerless. The benefits derived from the services are hard to measure. So, if a chunk of money gets diverted one way or another, it might be more difficult to notice or care about than money diverted from other areas.

Anyway, it will be interesting to see what Joe Hogsett is alleging.

Update According to Zach Myers, writing for Fox59, three FSSA employees are accused of using information from TANF recipients to create bogus debit cards and either use them to withdraw cash or sell to third parties. They are accused of stealing $191,103.