Archive for May, 2006

Swift Boating the Planet

May 30, 2006

May 29, 2006

By: Paul Krugman

A brief segment in “An Inconvenient Truth” shows Senator Al Gore questioning James Hansen, a climatologist at NASA, during a 1989 hearing. But the movie doesn’t give you much context, or tell you what happened to Dr. Hansen later.

And that’s a story worth telling, for two reasons. It’s a good illustration of the way interest groups can create the appearance of doubt even when the facts are clear and cloud the reputations of people who should be regarded as heroes. And it’s a warning for Mr. Gore and others who hope to turn global warming into a real political issue: you’re going to have to get tougher, because the other side doesn’t play by any known rules.

Dr. Hansen was one of the first climate scientists to say publicly that global warming was under way. In 1988, he made headlines with Senate testimony in which he declared that “the greenhouse effect has been detected, and it is changing our climate now.” When he testified again the following year, officials in the first Bush administration altered his prepared statement to downplay the threat. Mr. Gore’s movie shows the moment when the administration’s tampering was revealed.

In 1988, Dr. Hansen was well out in front of his scientific colleagues, but over the years that followed he was vindicated by a growing body of evidence. By rights, Dr. Hansen should have been universally acclaimed for both his prescience and his courage.

But soon after Dr. Hansen’s 1988 testimony, energy companies began a campaign to create doubt about global warming, in spite of the increasingly overwhelming evidence. And in the late 1990’s, climate skeptics began a smear campaign against Dr. Hansen himself.

Leading the charge was Patrick Michaels, a professor at the University of Virginia who has received substantial financial support from the energy industry. In Senate testimony, and then in numerous presentations, Dr. Michaels claimed that the actual pace of global warming was falling far short of Dr. Hansen’s predictions. As evidence, he presented a chart supposedly taken from a 1988 paper written by Dr. Hansen and others, which showed a curve of rising temperatures considerably steeper than the trend that has actually taken place.

In fact, the chart Dr. Michaels showed was a fraud — that is, it wasn’t what Dr. Hansen actually predicted. The original paper showed a range of possibilities, and the actual rise in temperature has fallen squarely in the middle of that range. So how did Dr. Michaels make it seem as if Dr. Hansen’s prediction was wildly off? Why, he erased all the lower curves, leaving only the curve that the original paper described as being “on the high side of reality.”

The experts at http://www.realclimate.org, the go-to site for climate science, suggest that the smears against Dr. Hansen “might be viewed by some as a positive sign, indicative of just how intellectually bankrupt the contrarian movement has become.” But I think they’re misreading the situation. In fact, the smears have been around for a long time, and Dr. Hansen has been trying to correct the record for years. Yet the claim that Dr. Hansen vastly overpredicted global warming has remained in circulation, and has become a staple of climate change skeptics, from Michael Crichton to Robert Novak.

There’s a concise way to describe what happened to Dr. Hansen: he was Swift-boated.

John Kerry, a genuine war hero, didn’t realize that he could successfully be portrayed as a coward. And it seems to me that Dr. Hansen, whose predictions about global warming have proved remarkably accurate, didn’t believe that he could successfully be portrayed as an unreliable exaggerator. His first response to Dr. Michaels, in January 1999, was astonishingly diffident. He pointed out that Dr. Michaels misrepresented his work, but rather than denouncing the fraud involved, he offered a rather plaintive appeal for better behavior.

Even now, Dr. Hansen seems reluctant to say the obvious. “Is this treading close to scientific fraud?” he recently asked about Dr. Michaels’s smear. The answer is no: it isn’t “treading close,” it’s fraud pure and simple.

Now, Dr. Hansen isn’t running for office. But Mr. Gore might be, and even if he isn’t, he hopes to promote global warming as a political issue. And if he wants to do that, he and those on his side will have to learn to call liars what they are.

A Test of Our Character

May 26, 2006

May 26, 2006

By: Paul Krugman

In his new movie, "An Inconvenient Truth," Al Gore suggests that there are three reasons it's hard to get action on global warming. The first is boiled-frog syndrome: because the effects of greenhouse gases build up gradually, at any given moment it's easier to do nothing. The second is the perception, nurtured by a careful disinformation campaign, that there's still a lot of uncertainty about whether man-made global warming is a serious problem. The third is the belief, again fostered by disinformation, that trying to curb global warming would have devastating economic effects.

I'd add a fourth reason, which I'll talk about in a minute. But first, let's notice that Mr. Gore couldn't have asked for a better illustration of disinformation campaigns than the reaction of energy-industry lobbyists and right-wing media organizations to his film.

The cover story in the current issue of National Review is titled "Scare of the Century." As evidence that global warming isn't really happening, it offers the fact that some Antarctic ice sheets are getting thicker — a point also emphasized in a TV ad by the Competitive Enterprise Institute, which is partly financed by large oil companies, whose interests it reliably represents.

Curt Davis, a scientist whose work is cited both by the institute and by National Review, has already protested. "These television ads," he declared in a press release, "are a deliberate effort to confuse and mislead the public about the global warming debate." He points out that an initial increase in the thickness of Antarctica's interior ice sheets is a predicted consequence of a warming planet, so that his results actually support global warming rather than refuting it.

Even as the usual suspects describe well-founded concerns about global warming as hysteria, they issue hysterical warnings about the economic consequences of environmentalism. "Al Gore's global warming movie: could it destroy the economy?" Fox News asked.

Well, no, it couldn't. There's some dispute among economists over how forcefully we should act to curb greenhouse gases, but there's broad consensus that even a very strong program to reduce emissions would have only modest effects on economic growth. At worst, G.D.P. growth might be, say, one-tenth or two-tenths of a percentage point lower over the next 20 years. And while some industries would lose jobs, others would gain.

Actually, the right's panicky response to Mr. Gore's film is probably a good thing, because it reveals for all to see the dishonesty and fear-mongering on which the opposition to doing something about climate change rests.

But "An Inconvenient Truth" isn't just about global warming, of course. It's also about Mr. Gore. And it is, implicitly, a cautionary tale about what's been wrong with our politics.

Why, after all, was Mr. Gore's popular-vote margin in the 2000 election narrow enough that he could be denied the White House? Any account that neglects the determination of some journalists to make him a figure of ridicule misses a key part of the story. Why were those journalists so determined to jeer Mr. Gore? Because of the very qualities that allowed him to realize the importance of global warming, many years before any other major political figure: his earnestness, and his genuine interest in facts, numbers and serious analysis.

And so the 2000 campaign ended up being about the candidates' clothing, their mannerisms, anything but the issues, on which Mr. Gore had a clear advantage (and about which his opponent was clearly both ill informed and dishonest).

I won't join the sudden surge of speculation about whether "An Inconvenient Truth" will make Mr. Gore a presidential contender. But the film does make a powerful case that Mr. Gore is the sort of person who ought to be running the country.

Since 2000, we've seen what happens when people who aren't interested in the facts, who believe what they want to believe, sit in the White House. Osama bin Laden is still at large, Iraq is a mess, New Orleans is a wreck. And, of course, we've done nothing about global warming.

But can the sort of person who would act on global warming get elected? Are we — by which I mean both the public and the press — ready for political leaders who don't pander, who are willing to talk about complicated issues and call for responsible policies? That's a test of national character. I wonder whether we'll pass.

Talk-Show Joe

May 22, 2006

  

May 22, 2006 

By: Paul Krugman 

Friday was a bad day for Senator Joseph Lieberman. The Connecticut Democratic Party's nominating convention endorsed him, but that was a given for an incumbent with a lot of political chips to cash in. The real news was that Ned Lamont, an almost unknown challenger, received a third of the votes. This gave Mr. Lamont the right to run against Mr. Lieberman in a primary, and suggests that Mr. Lamont may even win.

What happened to Mr. Lieberman? Some news reports may lead you to believe that he is in trouble solely because of his support for the Iraq war. But there's much more to it than that. Mr. Lieberman has consistently supported Republican talking points. This has made him a lion of the Sunday talk shows, but has put him out of touch with his constituents — and with reality.

Mr. Lieberman isn't the only nationally known Democrat who still supports the Iraq war. But he isn't just an unrepentant hawk, he has joined the Bush administration by insisting on an upbeat picture of the situation in Iraq that is increasingly delusional.

Moreover, Mr. Lieberman has supported the attempt to label questions about why we invaded Iraq and criticism of the administration's policies since the invasion as unpatriotic. How else is one to interpret his warning, late last year, that "it is time for Democrats who distrust President Bush to acknowledge that he will be Commander-in-Chief for three more critical years, and that in matters of war we undermine Presidential credibility at our nation's peril"?

And it's not just Iraq. A letter sent by Hillary Clinton to Connecticut Democrats credited Mr. Lieberman with defending Social Security "tooth and nail." Well, I watched last year's Social Security debate pretty closely, and that's not what happened.

In fact, Mr. Lieberman repeatedly supported the administration's scare tactics. "Every year we wait to come up with a solution to the Social Security problem," he declared in March 2005, "costs our children and grandchildren and great-grandchildren $600 billion more."

This claim echoed a Bush administration talking point, and President Bush wasted little time citing Mr. Lieberman's statement as vindication. But the talking point was simply false, so Mr. Lieberman was providing cover for an administration lie.

There's more. Mr. Lieberman supported Congressional intervention in the Terri Schiavo affair, back when Republican leaders were trying to manufacture a "values" issue out of thin air.

And let's not forget that Mr. Lieberman showed far more outrage over Bill Clinton's personal life than he has ever shown over Mr. Bush's catastrophic failures as commander in chief.

On each of these issues Mr. Lieberman, who is often described as a "centrist," is or was very much at odds not just with the Democratic base but with public opinion as a whole. According to the latest ABC News/Washington Post poll, only 40 percent of the public believes that we were right to go to war with Iraq.

Mr. Lieberman's tender concern for the president's credibility comes far too late: according to a USA Today/Gallup poll, only 41 percent of Americans consider Mr. Bush honest and trustworthy. By huge margins, the public believed that Congress should have stayed out of the Schiavo case. And so on.

Mr. Lieberman's defenders would have you believe that his increasingly unpopular positions reflect his principles. But his Bushlike inability to face reality on Iraq looks less like a stand on principle than the behavior of a narcissist who can't admit error. And the common theme in Mr. Lieberman's positions seems to be this: In each case he has taken the stand that is most likely to get him on TV.

You see, the talking-head circuit loves centrists. But a centrist, as defined inside the Beltway, doesn't mean someone whose views are actually in the center, as judged by public opinion.

Instead, a Democrat is considered centrist to the extent that he does what Mr. Lieberman does: lends his support to Republican talking points, even if those talking points don't correspond at all to what most of the public wants or believes.

But this "center" cannot hold. And that's the larger lesson of what happened Friday. Mr. Lieberman has been playing to a Washington echo chamber that is increasingly out of touch with the country's real concerns. The nation, which rallied around Mr. Bush after 9/11 simply because he was there, has moved on — and it has left Mr. Lieberman behind.

Coming Down to Earth

May 19, 2006

 

May 19, 2006

By: Paul Krugman

Um, wasn't the stock market supposed to bounce back after Wednesday's big drop?

We shouldn't read too much into a couple of days' movements in stock prices. But it seems that investors are suddenly feeling uneasy about the state of the economy. They should be; the puzzle is why they haven't been uneasy all along.

The rise in stock prices that began last fall was essentially based on the belief that the U.S. economy can defy gravity — that both individuals and the nation as a whole can spend more than their income, not on a temporary basis, but more or less indefinitely.

To be fair, for a while the data seemed to confirm that belief. In 2005, the trade deficit passed $700 billion, yet the dollar actually rose against the euro and the yen. Housing prices soared, yet houses kept selling. The price of gasoline neared $3 a gallon, yet consumers kept buying both gas and other items, even though they had to borrow to keep spending (the personal savings rate went negative for the first time since the 1930's).

Over the last few weeks, however, gravity seems to have started reasserting itself.

The dollar began falling about a month ago. So far it's down less than 10 percent against the euro and the yen, but there's a definite sense that foreign governments, in particular, are becoming less willing to keep the dollar strong by buying lots of U.S. debt.

The housing market seems to be weakening rapidly. As late as last October, the National Association of Home Builders/Wells Fargo housing market index, a measure of builders' confidence, was still close to the high point it reached last summer. But on Monday the association announced that the index had fallen to its lowest level since 1995.

Finally, there are preliminary indications that consumers, hard-pressed by high gasoline prices, may be reaching their limit.

The National Retail Federation, reporting on a new survey, warns that "while consumers have seemed resilient in the face of higher energy costs, a tipping point may soon be in sight."

I can't resist pointing out that the Bush administration's response to the squeeze on working families has been, you guessed it, to accuse the news media of biased reporting.

On May 10 the White House issued a press release titled "Setting the Record Straight: The New York Times Continues to Ignore America's Economic Progress." The release attacked The Times for asserting that paychecks weren't keeping up with fixed costs like medical care and gasoline. The White House declared, "But average hourly earnings have risen 3.8 percent over the past 12 months, their largest increase in nearly five years."

On Wednesday Treasury Secretary John Snow repeated that boast before a House committee. However, Representative Barney Frank was ready. He asked whether the number was adjusted for inflation; after flailing about, Mr. Snow admitted, sheepishly, that it wasn't. In fact, nearly all of the wage increase was negated by higher prices.

Meanwhile, the return of economic gravity poses a definite threat to U.S. economic growth. After all, growth over the past three years was driven mainly by a housing boom and rapid growth in consumer spending. People were able to buy houses, even though housing prices rose much faster than incomes, because foreign purchases of U.S. debt kept interest rates low. People were able to keep spending, even though wages didn't keep up with inflation, because mortgage refinancing let them turn the rising value of their houses into ready cash.

As I summarized it awhile back, we became a nation in which people make a living by selling one another houses, and they pay for the houses with money borrowed from China.

Now that game seems to be coming to an end. We're going to have to find other ways to make a living — in particular, we're going to have to start selling goods and services, not just I.O.U.'s, to the rest of the world, and/or replace imports with domestic production. And adjusting to that new way of making a living will take time.

Will we have that time? Ben Bernanke, the chairman of the Federal Reserve, contends that what's happening in the housing market is "a very orderly and moderate kind of cooling." Maybe he's right. But if he isn't, the stock market drop of the last two days will be remembered as the start of a serious economic slowdown.

D for Debacle

May 15, 2006

 
May 15, 2006 

By: Paul Krugman 

Today is the last day to sign up for Medicare Part D, the prescription drug benefit. It appears that millions of Americans, confused by the array of competing plans or simply unaware of the cutoff date, will miss the deadline. This will leave them without drug coverage for the rest of the year, and subject to financial penalties for the rest of their lives.

President Bush refuses to extend the sign-up period. "Deadlines," he said last week, "help people understand there's finality, and people need to get after it, you know?" His real objection to extending the deadline is probably that this would be an implicit admission that his administration botched the program's start-up. And Mr. Bush never, ever admits mistakes.

But Part D's bad start isn't just another illustration of the administration's trademark incompetence. It's also an object lesson in what happens when the government is run by people who aren't interested in the business of governing.

Before we get there, let's talk for a moment about the problems older Americans have encountered over the past few months.

Even Mr. Bush has acknowledged that signing up for the program is a confusing process. But, he says, "there is plenty of help for you." Yeah, right.

There's a number that people needing help with Part D can call. But when the program first went into effect, there were only 300 customer service representatives standing by. (Remember, there are 43 million Medicare recipients.)

There are now 7,500 representatives, making it easier to reach someone. But should you believe what you're told? Maybe not. A survey by the Government Accountability Office found that when Medicare recipients asked for help in determining which plan would cover their medications at the lowest cost, they were given the right answer only 41 percent of the time.

Clearly, nobody in the Bush administration took responsibility for making Part D's start-up work. But then you can say the same thing about the whole program.

After all, prescription drug coverage didn't have to be bafflingly complex. Drug coverage could simply have been added to traditional Medicare. If the government had done that, everyone currently covered by Medicare would automatically have been enrolled in the drug benefit.

Adding drug coverage as part of ordinary Medicare would also have saved a lot of money, both by eliminating the cost of employing private insurance companies as middlemen and by allowing the government to negotiate lower drug prices. This would have made it possible to offer a better benefit at much less cost to taxpayers.

But while a straightforward addition of drug coverage to Medicare would have been good policy, it would have been bad politics from the point of view of conservatives, who want to privatize traditional social insurance programs, not make them better.

Moreover, administration officials and their allies in Congress had both political and personal incentives not to do anything that might reduce the profits of insurance and drug companies. Both the insurance industry and, especially, the pharmaceutical industry are major campaign contributors. And soon after the drug bill was passed, the congressman and the administration official most responsible for drafting the legislation both left public service to become lobbyists.

So what we got was a drug program set up to serve the administration's friends and its political agenda, not the alleged beneficiaries. Instead of providing drug coverage directly, Part D is a complex system of subsidies to private insurance companies. The administration's insistence on running the program through these companies, which provide little if any additional value beyond what Medicare could easily have provided directly, is what makes the whole thing so complicated. And that complication, combined with an obvious lack of interest in making the system work, is what led to the disastrous start-up.

All of this is, alas, terribly familiar. As John DiIulio, the former head of Mr. Bush's faith-based initiative, told Esquire, "What you've got is everything — and I mean everything — being run by the political arm." Ideology and cronyism take complete precedence over the business of governing.

And that's why when it comes to actual policy as opposed to politics, the Bush administration has turned out to have the reverse Midas touch. Everything it gets its hands on, from the reconstruction of Iraq to the rescue of New Orleans, from the drug benefit to the reform of the C.I.A., turns to crud.

Who’s Crazy Now?

May 8, 2006

May 8, 2006

By:Paul Krugman

Some people say that bizarre conspiracy theories play a disturbingly large role in current American political discourse. And they’re right.

For example, many conservative politicians and pundits seem to agree with James Inhofe, the chairman of the Senate Committee on Environment and Public Works, who has declared that “man-made global warming is the greatest hoax ever perpetrated on the American people.”

Of more immediate political relevance is the claim that the reason we hear mainly bad news from Iraq is that the media, for political reasons, are conspiring to suppress the good news. As Bill O’Reilly put it a few months ago, “a good part of the American media wants to undermine the Bush administration.”

But these examples, of course, aren’t what people are usually referring to when they denounce crazy conspiracy theories. For the last few years, the term “conspiracy theory” has been used primarily to belittle critics of the Bush administration — in particular, anyone suggesting that the Bush administration used 9/11 as an excuse to fight an unrelated war in Iraq.

Now here’s the thing: suppose that we didn’t have abundant evidence that senior officials in the Bush administration wanted a war, cherry-picked intelligence to make a case for that war, and in some cases suppressed inconvenient evidence contradicting that case. Even so, it would be an abuse of the English language to call the claim that the administration misled us into war a conspiracy theory.

A conspiracy theory, says Wikipedia, “attempts to explain the cause of an event as a secret, and often deceptive, plot by a covert alliance.” Claims that global warming is a hoax and that the liberal media are suppressing the good news from Iraq meet that definition. In each case, to accept the claim you have to believe that people working for many different organizations — scientists at universities and research facilities around the world, reporters for dozens of different news organizations — are secretly coordinating their actions.

But the administration officials who told us that Saddam had an active nuclear program and insinuated that he was responsible for 9/11 weren’t part of a covert alliance; they all worked for President Bush. The claim that these officials hyped the case for war isn’t a conspiracy theory; it’s simply an assertion that people in a position of power abused that position. And that assertion only seems wildly implausible if you take it as axiomatic that Mr. Bush and those around him wouldn’t do such a thing.

The truth is that many of the people who throw around terms like “loopy conspiracy theories” are lazy bullies who, as Zachary Roth put it on CJR Daily, The Columbia Journalism Review’s Web site, want to “confer instant illegitimacy on any argument with which they disagree.” Instead of facing up to hard questions, they try to suggest that anyone who asks those questions is crazy.

Indeed, right-wing pundits have consistently questioned the sanity of Bush critics; “It looks as if Al Gore has gone off his lithium again,” said Charles Krauthammer, the Washington Post columnist, after Mr. Gore gave a perfectly sensible if hard-hitting speech. Even moderates have tended to dismiss the administration’s harsh critics as victims of irrational Bush hatred.

But now those harsh critics have been vindicated. And it turns out that many of the administration supporters can’t handle the truth. They won’t admit that they built a personality cult around a man who has proved almost pathetically unequal to the job. Nor will they admit that opponents of the Iraq war, whom they called traitors for warning that invading Iraq was a mistake, have been proved right. So they have taken refuge in the belief that a vast conspiracy of America-haters in the media is hiding the good news from the public.

Unlike the crazy conspiracy theories of the left — which do exist, but are supported only by a tiny fringe — the crazy conspiracy theories of the right are supported by important people: powerful politicians, television personalities with large audiences. And we can safely predict that these people will never concede that they were wrong. When the Iraq venture comes to a bad end, they won’t blame those who led us into the quagmire; they’ll claim that it was all the fault of the liberal media, which stabbed our troops in the back.

Our Sick Society

May 5, 2006


May 5, 2006

By: Paul Krugman

Is being an American bad for your health? That’s the apparent implication of a study just published in The Journal of the American Medical Association.

It’s not news that something is very wrong with the state of America’s health. International comparisons show that the United States has achieved a sort of inverse miracle: we spend much more per person on health care than any other nation, yet we have lower life expectancy and higher infant mortality than Canada, Japan and most of Europe.

But it isn’t clear exactly what causes this stunningly poor performance. How much of America’s poor health is the result of our failure, unique among wealthy nations, to guarantee health insurance to all? How much is the result of racial and class divisions? How much is the result of other aspects of the American way of life?

The new study, “Disease and Disadvantage in the United States and in England,” doesn’t resolve all of these questions. Yet it offers strong evidence that there’s something about American society that makes us sicker than we should be.

The authors of the study compared the prevalence of such diseases as diabetes and hypertension in Americans 55 to 64 years old with the prevalence of the same diseases in a comparable group in England. Comparing us with the English isn’t a choice designed to highlight American problems: Britain spends only about 40 percent as much per person on health care as the United States, and its health care system is generally considered inferior to those of neighboring countries, especially France. Moreover, England isn’t noted either for healthy eating or for a healthy lifestyle.

Nonetheless, the study concludes that “Americans are much sicker than the English.” For example, middle-age Americans are twice as likely to suffer from diabetes as their English counterparts. That’s a striking finding in itself.

What’s even more striking is that being American seems to damage your health regardless of your race and social class.

That’s not to say that class is irrelevant. (The researchers excluded racial effects by restricting the study to non-Hispanic whites.) In fact, there’s a strong correlation within each country between wealth and health. But Americans are so much sicker that the richest third of Americans is in worse health than the poorest third of the English.

So what’s going on? Lack of health insurance is surely a factor in the poor health of lower-income Americans, who are often uninsured, while everyone in England receives health care from the government. But almost all upper-income Americans have insurance.

What about bad habits, which the study calls “behavioral risk factors”? The stereotypes are true: the English are much more likely to be heavy drinkers, and Americans much more likely to be obese. But a statistical analysis suggests that bad habits are only a fraction of the story.

In the end, the study’s authors seem baffled by the poor health of even relatively well-off Americans. But let me suggest a couple of possible explanations.

One is that having health insurance doesn’t ensure good health care. For example, a New York Times report on diabetes pointed out that insurance companies are generally unwilling to pay for care that might head off the disease, even though they are willing to pay for the extreme measures, like amputations, that become necessary when prevention fails. It’s possible that Britain’s National Health Service, in spite of its limited budget, actually provides better all-around medical care than our system because it takes a broader, longer-term view than private insurance companies.

The other possibility is that Americans work too hard and experience too much stress. Full-time American workers work, on average, about 46 weeks per year; full-time British, French and German workers work only 41 weeks a year. I’ve pointed out in the past that our workaholic economy is actually more destructive of the “family values” we claim to honor than the European economies in which regulations and union power have led to shorter working hours.

Maybe overwork, together with the stress of living in an economy with a minimal social safety net, damages our health as well as our families. These are just suggestions. What we know for sure is that although the American way of life may be, as Ari Fleischer famously proclaimed back in 2001, “a blessed one,” there’s something about that way of life that is seriously bad for our health.

Death By Insurance

May 2, 2006

May 1, 2006

By: Paul Krugman

For lower-income working Americans, lack of health insurance is quickly becoming the new normal. That’s the implication of survey results just released by the Commonwealth Fund, a nonpartisan organization that studies health care. The survey found that 41 percent of nonelderly American adults with incomes between $20,000 and $40,000 a year were without health insurance for all or part of 2005. That’s up from 28 percent as recently as 2001.

Many of the uninsured reported spending their entire savings on health care and/or that they were having difficulty paying for basic necessities. And most uninsured adults reported cutting corners on medical care to save money — failing to fill prescriptions, skipping medications, going without preventive care.

Here’s the other side of the same coin: health insurers’ business is lagging, reports The Wall Street Journal, as “rising premiums and medical costs push more of their traditional-employer customers to shun or curtail company health benefits.” And some investors are feeling the pain. Aetna’s stock price fell sharply last week, on news that its “medical cost ratio” — a term I’ll explain in a minute — rose from 77.9 to 79.4.

Taken together, these stories tell the tale of a health care system that’s driving a growing number of Americans into financial ruin, and in many cases kills them through lack of basic care. (The Institute of Medicine, part of the National Academy of Sciences, estimates that lack of health insurance leads to 18,000 unnecessary American deaths — the equivalent of six 9/11’s — each year.) Yet this system actually costs more to run than we would spend if we guaranteed health insurance to everyone.

How do we know this? The medical cost ratio is the percentage of insurance premiums paid out to doctors, hospitals and other health care providers. Investors are upset about Aetna’s rising ratio, because it leaves less room for profit. But even after the rise in the cost ratio, Aetna spends less than 80 cents of each dollar in health insurance premiums on actually providing medical care. The other 20 cents go into profits, marketing and administrative expenses.

Other private insurers have similar ratios. And here’s the thing: most of those 20 cents spent on things other than medical care are unnecessary. Older Americans are covered by Medicare, which doesn’t spend large sums on marketing and doesn’t devote a lot of resources to screening out people likely to have high medical bills. As a result, Medicare manages to spend about 98 percent of its funds on actual medical care.

What would happen if Medicare was expanded to cover everyone? You might think that the nation would spend more on health care, since this would mean covering 46 million Americans who are currently uninsured. But the uninsured already receive some medical care at public expense — for example, treatment in emergency rooms that would have been both cheaper and more effective if provided in doctors’ offices.

And Medicare manages to spend much more of its funds on medicine, as opposed to other things, than private insurers. If you do the math, it becomes clear that covering everyone under Medicare would actually be significantly cheaper than our current system.

And this calculation doesn’t even take into account the costs our fragmented system imposes on doctors and hospitals. Benjamin Brewer, a doctor who writes an online column for The Wall Street Journal, recently commented on the excess expenses he incurs trying to deal with 301 different private insurance plans. According to Dr. Brewer, he currently employs two full-time staff members for billing, and his two secretaries spend half their time collecting insurance information. “I suspect,” he wrote, “I could go from four people in the paper chase to one with a single-payer system.”

Many pundits see red at the words “single-payer system.” They think it means low-quality socialized medicine; they start telling horror stories — almost all of them false — about the problems of other countries’ health care. Yet there’s nothing foreign or exotic about the concept: Medicare is a single-payer system. It’s not perfect, it could certainly be improved, but it works.

So here we are. Our current health care system is unraveling. Older Americans are already covered by a national health insurance system; extending that system to cover everyone would save money, reduce financial anxiety and save thousands of American lives every year. Why don’t we just do it?

The Crony Fairy

May 2, 2006

April 28, 2006

By: Paul Krugman

The U.S. government is being stalked by an invisible bandit, the Crony Fairy, who visits key agencies by dead of night, snatches away qualified people and replaces them with unqualified political appointees. There’s no way to catch or stop the Crony Fairy, so our only hope is to change the agencies’ names. That way she might get confused, and leave our government able to function.

That, at least, is how I interpret the report on responses to Hurricane Katrina that was just released by the Senate Committee on Homeland Security and Governmental Affairs.

The report points out that the Federal Emergency Management Agency “had been operating at a more than 15 percent staff-vacancy rate for over a year before Katrina struck” — that means many of the people who knew what they were doing had left. And it adds that “FEMA’s senior political appointees … had little or no prior relevant emergency-management experience.”

But the report says nothing about what caused the qualified people to leave and who appointed unqualified people to take their place. There’s no hint that, say, President Bush might have had any role. So those political appointees must have been installed by the Crony Fairy.

Rather than trying to fix FEMA, the report calls for replacing it with a new organization, the National Preparedness and Response Agency. As far as I can tell, the new agency would have exactly the same responsibilities as FEMA. But “senior N.P.R.A. officials would be selected from the ranks of professionals with experience in crisis management.” I guess it’s impossible to select qualified people to run FEMA; if you try, the Crony Fairy will spirit them away and replace them with Michael Brown. But she might not know her way to N.P.R.A.

O.K., enough sarcasm. Let’s talk about the history of FEMA.

In the early 1990’s, FEMA’s reputation was as bad as it is today. It was a dumping ground for political cronies, headed by a man whose only apparent qualification for the job was that he was a close friend of the first President Bush’s chief of staff. FEMA’s response to Hurricane Andrew in 1992 perfectly foreshadowed Katrina: the agency took three days to arrive on the scene, and when it did, it proved utterly incompetent.

Many people thought that FEMA was a lost cause. But Bill Clinton proved them wrong. He appointed qualified people to lead the agency and gave them leeway to hire other qualified people, and within a year FEMA’s morale and performance had soared. For the rest of the Clinton years, FEMA was among the most highly regarded agencies in the federal government.

What happened to that reputation? The answer, of course, is that the second President Bush returned to his father’s practices. Once again, FEMA became a dumping ground for cronies, and many of the good people who had come in during the Clinton years left. It took only a few years to transform one of the best agencies in the U.S. government into what Senator Susan Collins calls “a shambles and beyond repair.”

In other words, the Crony Fairy is named George W. Bush.

So what’s the point of creating a new agency to replace FEMA? The history of FEMA and other agencies during the Clinton years shows that a president who is serious about governing can rebuild effective government without renaming the boxes on the organizational chart.

On the other hand, the history of the Bush administration, from the botched reconstruction of Iraq to the botched start-up of the prescription drug program, shows that a president who isn’t serious about governing, who prizes loyalty and personal connections over competence, can quickly reduce the government of the world’s most powerful nation to third-world levels of ineffectiveness.

And bear in mind that Mr. Bush’s pattern of cronyism didn’t change after Katrina. For example, he appointed Julie Myers, the inexperienced niece of Gen. Richard Myers, to head Immigration and Customs Enforcement — an agency that, like FEMA, is supposed to protect us against terrorism as well as other threats. Even at the C.I.A., the administration seems more interested in purging Democrats than in improving the quality of intelligence.

So let’s skip the name change for FEMA, O.K.? The United States will regain effective government if and when it gets a president who cares more about serving the nation than about rewarding his friends and scoring political points. That’s at least a thousand days away. Meanwhile, don’t count on FEMA, or on any other government agency, to do its job.