Tyler Cowen recommends Paul Krugman on the Medicare Drug Benefit:

The Deadly Doughnut - New York Times: Soon millions of Americans will learn that doughnuts are bad for your health. And if we're lucky, Americans will also learn a bigger lesson: politicians who don't believe in a positive role for government shouldn't be allowed to design new government programs. Before we turn to the larger issue, let's look at how the Medicare drug benefit will work over the course of next year.

At first, the benefit will look like a normal insurance plan, with a deductible and co-payments.

But if your cumulative drug expenses reach $2,250, a very strange thing will happen: you'll suddenly be on your own. The Medicare benefit won't kick in again unless your costs reach $5,100. This gap in coverage has come to be known as the "doughnut hole."... [I]f you are a retiree and spend $2,000 on drugs next year, Medicare will cover 66 percent of your expenses. But if you spend $5,000 - which means that you're much more likely to need help paying those expenses - Medicare will cover only 30 percent of your bills.... How will people respond when their out-of-pocket costs surge? The Health Affairs article argues... that it's likely "some beneficiaries will cut back even essential medications while in the doughnut hole." In other words, this doughnut will make some people sick, and for some people it will be deadly.

The smart thing to do, for those who could afford it, would be to buy supplemental insurance that would cover the doughnut hole. But guess what: the bill that established the drug benefit specifically prohibits you from buying insurance to cover the gap. That's why many retirees who already have prescription drug insurance are being advised not to sign up for the Medicare benefit.

If all of this makes the drug bill sound like a disaster, bear in mind that I've touched on only one of the bill's awful features. There are many others, like the clause that prohibits Medicare from using its clout to negotiate lower drug prices. Why is this bill so bad?

The probable answer is that the Republican Congressional leaders who rammed the bill through in 2003 weren't actually trying to protect retired Americans against the risk of high drug expenses. In fact, they're fundamentally hostile to the idea of social insurance, of public programs that reduce private risk. Their purpose was purely political: to be able to say that President Bush had honored his 2000 campaign promise to provide prescription drug coverage by passing a drug bill, any drug bill.

Once you recognize that the drug benefit is a purely political exercise that wasn't supposed to serve its ostensible purpose, the absurdities in the program make sense. For example, the bill offers generous coverage to people with low drug costs, who have the least need for help, so lots of people will get small checks in the mail and think they're being treated well.... Can the drug bill be fixed? Yes, but not by current management. It's hard to believe that either the current Congressional leadership or the Mayberry Machiavellis in the White House would do any better on a second pass. We won't have a drug benefit that works until we have politicians who want it to work.

I've been looking for something good and short on how the Center for Medicare and Medicaid Services is going to try to make this drug benefit work. It's not at all clear to me that they can.

In today's inbox--November 9, 2005--we have:

• George R.R. Martin (2005), A Feast for Crows (www.amazon.com/exec/obidos/asin/0618134328/braddelong00) http://www.amazon.com/exec/obidos/asin/061813428/braddelong00.
• Garry Wills (1970), Nixon Agonistes: The Crisis of the Self-Made Man (New York: Mariner Books: 0618134328) http://www.amazon.com/exec/obidos/asin/0618134328/braddelong00.
• Gregory Clark (2005), "The Problem of the Industrial Revolution" http://www.econ.ucdavis.edu/faculty/gclark/GlobalHistory/Global%20History-9.pdf

---

Yes, George R.R. Martin's A Feast for Crows is excellent. But it is one of the middle books of a series. Finishing this book reminds me why I have sworn an oath not to read any more series-in-progress: much better to wait to begin the first book of a series until you are certain that the very last book of the series has been... staked and encoffined.

Jim Fallows writes:

The Atlantic Online | December 2005 | Why Iraq Has No Army | James Fallows: When Saddam Hussein fell, the Iraqi people gained freedom. What they didn't get was public order.... This summer an average of ten Iraqi policemen or soldiers were killed each day. It is true, as U.S. officials often point out, that the violence is confined mainly to four of Iraq's eighteen provinces. But these four provinces contain the nation's capital and just under half its people.

The crucial need to improve security and order in Iraq puts the United States in an impossible position. It can't honorably leave Iraq—-as opposed to simply evacuating Saigon-style—-so long as its military must provide most of the manpower, weaponry, intelligence systems, and strategies being used against the insurgency. But it can't sensibly stay when the very presence of its troops is a worsening irritant.... Early in the occupation American officials acted as if the emergence of an Iraqi force would be a natural process. "In less than six months we have gone from zero Iraqis providing security to their country to close to a hundred thousand Iraqis," Donald Rumsfeld said in October of 2003. "Indeed, the progress has been so swift that ... it will not be long before [Iraqi security forces] will be the largest and outnumber the U.S. forces, and it shouldn't be too long thereafter that they will outnumber all coalition forces combined."...

But most assessments from outside the administration have been far more downbeat than Rumsfeld's.... [I]f American troops disappeared tomorrow, Iraq would have essentially no independent security force.... The moment when Iraqis can lift much of the burden from American troops is not yet in sight. Understanding whether this situation might improve requires understanding what the problems have been so far.

Over the summer and fall I asked a large number of people why Iraq in effect still had no army, and what, realistically, the United States could expect in the future.... What I heard amounted to this: The United States has recently figured out a better approach to training Iraqi troops. Early this year it began putting more money, and more of its best people, on the job. As a result, more Iraqi units are operating effectively, and fewer are collapsing or deserting under pressure....

How the Iraq story turns out will not be known for years, but based on what is now knowable, the bleak prospect today is the culmination of a drama's first three acts. The first act involves neglect and delusion.... The second act involves a tentative approach to a rapidly worsening challenge during the occupation's second year. We are now in the third act, in which Americans and Iraqis are correcting earlier mistakes but too slowly and too late....

There is no single comprehensive explanation for what went wrong. After the tension leading up to the war and the brilliant, brief victory, political and even military leaders seemed to lose interest, or at least intensity. "Once Baghdad was taken, Tommy Franks checked out," Victor O'Reilly, who has written extensively about the U.S. military, told me. "He seemed to be thinking mainly about his book." Several people I spoke with volunteered this view of Franks, who was the centcom commander during the war. (Franks did not respond to interview requests, including those sent through his commercially minded Web site, TommyFranks.com.) In retrospect the looting was the most significant act of the first six months after the war. It degraded daily life, especially in Baghdad, and it made the task of restoring order all the more difficult for the U.S. or Iraqi forces that would eventually undertake it. But at the time neither political nor military leaders treated it as urgent. Weeks went by before U.S. troops effectively intervened....

Throughout the occupation, but most of all in these early months, training suffered from a "B Team" problem. Before the fighting there was a huge glamour gap in the Pentagon between people working on so-called Phase III—-the "kinetic" stage, the currently fashionable term for what used to be called "combat"—-and those consigned to thinking about Phase IV, postwar reconstruction. The gap persisted after Baghdad fell. Nearly every military official I spoke with said that formal and informal incentives within the military made training Iraqi forces seem like second-tier work.... But of course that didn't happen. "I couldn't believe that we weren't ready for the occupation," Terence Daly, a retired Army colonel who learned the tactics of counterinsurgency in Vietnam, told me. "I was horrified when I saw the looting and the American inaction afterward. If I were an Iraqi, it would have shown me these people are not serious."...

Language remained a profound and constant problem. One of the surprises in asking about training Iraqi troops was how often it led to comparisons with Vietnam. Probably because everything about the Vietnam War took longer to develop, "Vietnamization" was a more thought-through, developed strategy than "Iraqization" has had a chance to be. A notable difference is that Americans chosen for training assignments in Vietnam were often given four to six months of language instruction. That was too little to produce any real competence, but enough to provide useful rudiments that most Americans in Iraq don't have.... Every manual on counterinsurgency emphasizes the need for long-term personal relations. "We should put out a call for however many officers and NCOs we need," Daly says, "and give them six months of basic Arabic. In the course of this training we could find the ones suited to serve there for five years....

At the end of June 2004 Ambassador Bremer went home.... The first U.S. ambassador to postwar Iraq, John D. Negroponte, was sworn in as Bremer left. And a new American Army general arrived to supervise the training of Iraqis: Dave Petraeus, who had just received his third star.... Petraeus, who holds a Ph.D. from Princeton, had led the 101st Airborne during its drive on Mosul in 2003 and is one of the military's golden boys.... By all accounts Petraeus and Negroponte did a lot to make up for lost time in the training program.... More emphasis was put on embedding U.S. advisers with Iraqi units.... Negroponte used his discretion to shift $2 billion from other reconstruction projects to the training effort. "That will be seen as quite a courageous move, and one that paid big dividends," Petraeus told me....

Ethnic tensions divide Iraq, and they divide the new army. "Thinking that we could go in and produce a unified Iraqi army is like thinking you could go into the South after the Civil War and create an army of blacks and whites fighting side by side," Robert Pape, of the University of Chicago, told me....

What is needed for an honorable departure is, at a minimum, a country that will not go to war with itself, and citizens who will not turn to large-scale murder. This requires Iraqi security forces that are working on a couple of levels: a national army strong enough to deter militias from any region and loyal enough to the new Iraq to resist becoming the tool of any faction; policemen who are sufficiently competent, brave, and honest to keep civilians safe....

The U.S. military does everything in Iraq worse and slower than it could if it solved its language problems. It is unbelievable that American fighting ranks have so little help. Soon after Pearl Harbor the U.S. military launched major Japanese-language training institutes at universities and was screening draftees to find the most promising students. America has made no comparable effort to teach Arabic. Nearly three years after the invasion of Iraq the typical company of 150 or so U.S. soldiers gets by with one or two Arabic-speakers. T. X. Hammes says that U.S. forces and trainers in Iraq should have about 22,000 interpreters, but they have nowhere near that many. Some 600,000 Americans can speak Arabic. Hammes has proposed offering huge cash bonuses to attract the needed numbers to Iraq....

[I]f the United States is serious about getting out of Iraq, it will need to re-consider its defense spending and operations rather than leaving them to a combination of inertia, Rumsfeld-led plans for "transformation," and emergency stopgaps. It will need to spend money for interpreters.... It will need to make majors and colonels sit through language classes.... It will need to commit air, logistics, medical, and intelligence services to Iraq—-and understand that this is a commitment for years, not a temporary measure. It will need to decide that there are weapons systems it does not require and commitments it cannot afford if it is to support the ones that are crucial. And it will need to make these decisions in a matter of months, not years—-before it is too late.

America's hopes today for an orderly exit from Iraq depend completely on the emergence of a viable Iraqi security force. There is no indication that such a force is about to emerge. As a matter of unavoidable logic, the United States must therefore choose one of two difficult alternatives: It can make the serious changes—-including certain commitments to remain in Iraq for many years—-that would be necessary to bring an Iraqi army to maturity. Or it can face the stark fact that it has no orderly way out of Iraq, and prepare accordingly.

Today's mail consisted of nine catalogs. Nine. Not a scrap of other mail. Nine catalogs.

Do we really look like people who would pay $99 for a sheaf of wheat?

(Don't answer that.)

Josh Micah Marshall reports that the Nelson Report is really shrill. It is calling for the impeachment of George W. Bush:

Talking Points Memo: by Joshua Micah Marshall: November 06, 2005 - November 12, 2005 Archives: A snippet out of this evening's Nelson Report ...

Scandals.... on the torture scandal part of the ongoing psychodrama called America, the political theme is that the Republican Leadership continues to trip all over itself, contradicting each other, insulting each other, and generally looking like incompetent fools. This is almost too much for the Democrats, who can hardly believe what they see unfolding, and who thus, so far, remain in something of a comic stupor, pending an organized, coherent attack.

But things are happening, and Senate Dems are coalescing around efforts to force real hearings on the misuse of Iraq war intel, and the torture scandal...even as the Republicans flounder between trying to deny everything, while simultaneously excusing or explaining it away. Latest example...former Republican Senate Majority Leader Trent Lott, whom, you will recall, was forced to resign for insensitive racial remarks, is clearly revenging himself with comments that it was a fellow Republican who leaked the "CIA torture" story to the Washington Post last week.

On the larger topic, law and morality...the ethic of being an American leader, and its betrayal by the Bush Administration...the NY Times today details last year's CIA Inspector General's classified report that Bush Administration torture directives carried out by the Agency "might violate some provisions of the International Convention Against Torture..." and remember we warned last night that the CIA pros have it out for the White House....

We checked with a highly informed/involved former State Department source. His comments: "...in 1988 when John Whitehead signed the Convention in New York, and then later, when we ratified it, we enacted domestic laws where necessary to make it 'the law of the land'... we had this to say to the UN, copy to the Senate:

Torture is prohibited by law throughout the United States. It is categorically denounced as a matter of policy and as a tool of state authority. Every act constituting torture under the Convention constitutes a criminal offense under the law of the United States. No official of the government, federal, state or local, civilian or military, is authorized to commit or to instruct anyone else to commit torture. Nor may any official condone or tolerate torture in any form. No exceptional circumstances may be invoked as a justification of torture. US law contains no provision permitting otherwise prohibited acts of torture or other cruel, inhuman or degrading treatment or punishment to be employed on grounds of exigent circumstances....

Hummm....sounds like a pretty solid case for an impeachment proceeding, were there anything resembling either a sense or shame, or national ethics, in the Leadership of the House of Representatives and Senate. Something to be argued out in the 2006 Congressional campaigns?

They've brought us very, very low.

Impeach George W. Bush. Impeach Richard Cheney. Do it now.

The fall 2005 problem set 8.

Due in lecture on November 16.

My father clashes with Larry Lessig over GooglePrint:

IPcentral Weblog: Wednesday Morning Fights: DeLong vs. Lessig: Larry Lessig objects to my characterization of his characterization of Causby, and its connection to the Google Print program. At the end of the entry, though, he comments on an area in which we are in partial agreement, and that is worth re-emphasizing:

But there is one great and true part to DeLong's email. As he writes,

Causby was entitled only to the decline in his property value, not to a share of the gains from the air age.

Truly, if there is a principle here, that should be it. The baseline is the value of the property BEFORE the new technology. Does the new technology reduce THAT value. Put differently, would authors and publishers be worse off with Google Print than they were before Google Print?

To ask that question is to answer it -- of course the authors and publishers are better off with Google Print.

Are they as well off as they could be, if the law gives them the power to extort from the innovator some payment for his innovation?

To ask that question is to understand why this case has been filed: Like Valenti with the Betamax, the publishers and Authors Guild simply want to tax the value created by Google Print. They are not complaining about any "decline in [their] property value" caused by Google Print. They are instead racing to claim the value that ancient law is said to give to them, despite the harm that claim produces for "progress."

This is indeed the crucial distinction. But I don't think Lessig is fair to either Valenti or the authors; they have genuine and legitimate concerns about the impact of the new technologies on their existing values.

Would they like to hold the new technologies for ransom? Probably. There is certainly grounds for suspicion in a recent oped co-authored by Pat Schroeder. And I agree with Lessig that such ransom should not be permitted, as the Supreme Court specifically noted in the Sony case. But to refuse to allow ransom does not mean that the legitimate interests can be ignored.

In the case of Google Print, the publishers legitimate concerns include two problems:

1) A digital copy of each book goes to the participating library, and the only restriction is that it abide by copyright law. There can be no guarantee that the library will impose security akin to that adopted by Google.

2) The law has no doctrine that allows Google to be special. So what Google is allowed to do, others can do. The authors and publishers can legtimately object to having a huge burden of policing imposed on them. In our internal PFF debates, I am the Google-symp -- but I have not come up with a way to solve these problems.

Nonetheless, as I said in another, longer recent discussion of these issues: "So the bottom line is -- and must be -- that when technological change occurs, we as a society will not automatically assign the value created by the new technology to existing property holders.

I tend to put on my right-wing public-choice hat here, and side with GooglePrint. The private beneficiaries from assigning too much of the value of innovation to the dead hand of old property rights are concentrated. The private beneficiaries of assigning too little of the value are diffuse. In a public-choice world ruled by lobbyists, there will be strong pressures on legislation and law to overprotect existing property. And it is the duty of intellectuals seeking the sweet spot to push back--to be an anti-lobbyist lobby.

The fall 2005 problem set 7.

Due in lecture on November 9.

To read the extra readings on JSTOR from a computer outside the berkeley.edu domain, you may have to set up your web browser to use Berkeley's proxy server service:

UC Berkeley Library Proxy Server Service: Proxy Server Setup Instructions

The fall 2005 problem set 6.

Due in lecture on November 2.

Economics 101b Fall 2005

Syllabus Part II

October 14, 17: Japan's Decade-Long Slump

Readings: Paul Krugman, “Japan’s Liquidity Trap” http://web.mit.edu/krugman/www/japtrap2.html
Adam Posen, “Macroeconomic Mistake, Not Structural Stagnation” http://www.iie.com/publications/chapters_preview/35/1iie2628.pdf
Adam Posen, “Recognizing a Mistake: Not Blaming a Model” http://www.iie.com/publications/chapters_preview/35/6iie2628.pdf

October 19, 21, 24: Europe's High Unemployment

Readings: Olivier Blanchard and Lawrence Summers (1986), "Hysteresis and the European Unemployment Problem" http://papers.nber.org/papers/w1950
Olivier Blanchard and Justin Wolfers (1999), "Shocks and Institutions in European Unemployment" http://papers.nber.org/papers/w7282
Olivier Blanchard (2004), "The Economic Future of Europe" http://papers.nber.org/papers/w7282

October 26, 28, 31: America's "New Economy"

Readings: Alan Blinder and Janet Yellen (2001), The Fabulous Decade: Macroeconomic Lessons from the 1990s (New York: Century Foundation)
William Nordhaus (2004), "The Story of a Bubble" http://www.nybooks.com/articles/16878

November 2, (no class on the 4th), 7, 9: Emerging Market Financial Crises:

Readings: Michael Mussa (2002), Argentina and the Fund: From Triumph to Tragedy http://bookstore.iie.com/merchant.mvc?Screen=PROD&Product_Code=343
Morris Goldstein (1998), The East Asian Financial Crisis http://bookstore.iie.com/merchant.mvc?Screen=PROD&Product_Code=22

November 14, 16: America's Current Macroeconomic Dilemma

Readings: Lecture notes to be issued...

The fall 2005 problem set 5.

Paul Krugman writes about the virtues of single-payer:

Pride, Prejudice, Insurance - New York Times: Employment-based health insurance is the only serious source of coverage for Americans too young to receive Medicare and insufficiently destitute to receive Medicaid, but it's an institution in decline. Between 2000 and 2004 the number of Americans under 65 rose by 10 million. Yet the number of nonelderly Americans covered by employment-based insurance fell by 4.9 million.

The funny thing is that the solution - national health insurance, available to everyone - is obvious. But to see the obvious we'll have to overcome pride - the unwarranted belief that America has nothing to learn from other countries - and prejudice - the equally unwarranted belief, driven by ideology, that private insurance is more efficient than public insurance.

Let's start with the fact that America's health care system spends more, for worse results, than that of any other advanced country. In 2002 the United States spent $5,267 per person on health care. Canada spent $2,931; Germany spent $2,817; Britain spent only $2,160. Yet the United States has lower life expectancy and higher infant mortality than any of these countries. But don't people in other countries sometimes find it hard to get medical treatment? Yes, sometimes - but so do Americans. No, Virginia, many Americans can't count on ready access to high-quality medical care.... Americans are far more likely than others to forgo treatment because they can't afford it. Forty percent of the Americans surveyed failed to fill a prescription because of cost. A third were deterred by cost from seeing a doctor when sick or from getting recommended tests or follow-up.

Why does American medicine cost so much yet achieve so little?... The U.S. system is much more bureaucratic... because private insurers and other players work hard at trying not to pay for medical care. And our fragmented system is unable to bargain... for lower prices. Taiwan, which moved 10 years ago from a U.S.-style system to a Canadian-style single-payer system, offers an object lesson in the economic advantages of universal coverage. In 1995 less than 60 percent of Taiwan's residents had health insurance; by 2001 the number was 97 percent. Yet... this huge expansion in coverage came virtually free: it led to little if any increase in overall health care spending beyond normal growth due to rising population and incomes.... The economic and moral case for health care reform in America, reform that would make us less different from other advanced countries, is overwhelming. One of these days we'll realize that our semiprivatized system isn't just unfair, it's far less efficient than a straightforward system of guaranteed health insurance.

Gene Sperling writes about his excellent new book: Gene Sperling (2005), The Pro-Growth Progressive: An Economic Strategy for Shared Prosperity (New York: Simon and Schuster: 0743237536) http://www.amazon.com/exec/obidos/asin/0743237536/braddelong00.:

TPMCafe || The Pro-Growth Progressive: I felt frustrated by the view - often from both sides - that there was an inherent conflict between promoting progressive values and being hard-headed about the power of markets incentives, the law of unintended consequences and the inevitability of globalization.

What do I mean by progressive?.... A belief in economic dignity for those who take responsibility... the opportunity for upward mobility... life's outcome should not be determined by the accident of your birth.... [W]e best promote the three values above when we seek policies that are focused on both raising the tide and lifting all boats.... [An] agenda that focuses on personal savings and wealth creation, as well as a laying a foundation for private sector growth, can be completely consistent with progressive values if we make our test not only whether we are raising the tide, but lifting all boats. I push hard for progressives to champion an expansive Universal 401 K and a Flat Tax Incentive where everyone gets a 30% refundable credit for savings.... Democrats need to not only have these policies on the shelf - we need to move them to the front of our policy agenda if we are to show Americans we not only a party that is there for you when your down, but a party that wants to see you reach your highest economic aspirations.

[T]he reigning conservative assumption that all expansions of government are anti-growth and interfere with markets is just as unfounded.... [T]here are a host of powerful public policies that because they flow directly to workers... are progressive, pro-growth and in no way interfere with markets or restrict employers. The EITC.... A quality 0-5 education program.... Yes, it is an expansion of government, but how exactly is that anti-growth?...

[T]here was nothing I struggled with and agonized about more than the sections on a new progressive compact on globalization. These are the most difficult issues we face... while our nation benefits enormously from the innovation, low-prices and competition that open markets bring... we still have little means to prevent or cope with the unacceptable degree of economic devastation this openness brings for some workers and families both here and abroad.... [T]hose seeking to restrict trade too often have no vision of the future, while those pressing for open markets have no vision for the present.... [P]rogressives on both sides of the trade debate should be more open in recognizing the exaggerations and flaws in their arguments.... I do support the labor standards we put in the Jordan Free Trade agreement, [but] progressives have to understand that poor nations often see our approach as punitive, and that we should be looking for to add to labor standards a broader array of tools from positive partnerships and incentives....

I realize that by standing by President Clinton's effort... I... have perfectly positioned myself to draw fire from all sides....

While many of us may agree that President Bush has been the worst fiscal President in our nation's history, I imagine there will be more lively disagreement on where progressives should go from here....

I eagerly await the discussion to come and thank the excellent array of commentators that Josh has pulled together for this book forum for agreeing to participate.

Robert Samuelson has been driven mad by all the budget phonies he sees in government:

Fiscal Phonies: The scramble by congressional Republicans and White House officials to show they're serious about dealing with the budget... most Republicans are phonies. So are most Democrats. The resulting "debates" are less about controlling the budget than about trying to embarrass the other side....

What have Republicans actually done? Last week the Senate Budget Committee endorsed spending "cuts" of $39 billion. That covers five years when total federal spending is projected at $13.8 trillion. So the "cuts" amount to a mere 0.3 percent -- one-third of one percent -- of projected spending.... Republicans also pledge to cut taxes by $70 billion from 2006 to 2010. The overall effect would be a slight rise in deficits....

There's a basic mismatch between the existing taxes and existing spending commitments. Neither party yet faces this candidly, because the only way to solve it is either to raise taxes or cut benefits.... Practical politicians like to confer benefits and tax cuts, not withdraw them. They don't like the discipline of inflicting pain (taxes) to distribute gain (benefits).

As Samuelson says, people are mad when you raise their taxes and mad when you cut (or slow the growth of) their benefits. So what's the plus side of fiscal responsibility? The plus side is:

1. The happiness that comes from knowing that you have done the right thing.
2. The applause of sophisticated members of the press who laud you for doing the right thing.
3. The votes of those in the electorate who value good public service, as they learn from the press about how you have done the right thing.

And here Samuelson is part of the problem, for Samuelson tries to weaken the plus side to budget virtue. He's anxious to minimize the fiscal accomplishment of Bill Clinton and his team:

Democrats embrace class rhetoric and a self-serving mythology -- only they are "responsible"... Bill Clinton... those surpluses resulted largely from events beyond his control: the huge tax windfall of the tech and stock market booms, and the end of the Cold War, prompting much lower defense spending...

Clinton was lucky, yes. But Clinton was also good. The federal budget in 1992 had a deficit of 4.7% of GDP, projected to grow to a deficit of 5.2% of GDP by 2000. In actual fact we had a surplus of 2.4% in 2000--a swing of 7.6 percentage points roughly relative to expectations. Of this swing, approximately 2.0% was due to a booming economy, perhaps an additional 1.0% to the high value of capital gains taxes paid in 2000 because of the high value of the stock market, about 3.5% to the effects of the Clinton 1993 deficit-reduction package, and 1.0% to the additional post-1992 effects of the 1990 Bush-Mitchell-Foley deficit reduction package that had not yet been enacted as of the end of 1992.

Until Samuelson can screw his courage to the sticking point and praise--yes, praise--politicians who do take effective steps to balance the budget (even if they also have good luck), he has no standing to lament that his calls for budget balance are so pathetically ineffective. Journalists who don't praise good policies are part of the problem, not part of the solution.

Were There Really That Many Vases?

Wonkette reminds us of the sacking of the Iraqi museums, and of the days when Donald Rumsfeld was busily turning the astounding operational victory of the 3rd Infantry Division into America's biggest strategic defeat since the days of General McClellan:

Iraq Finally Conquers Vase Overcrowding Crisis - Wonkette: The Washington Post today reports that Iraq's cultural treasures looted after the fall of Baghdad are unlikely to resurface. Of 14,000 lost items, 5,500 have been recovered. Antiquarians and other fusty, book-learning types despair at the loss of these objects, but we just recall the jocularity with which Donald Rumsfeld met the looting: "My goodness," he asked, "were there that many vases?" Well, not so much any more.

DoD News: DoD News Briefing - Secretary Rumsfeld and Gen. Myers:

Q: Mr. Secretary, you spoke of the television pictures that went around the world earlier of Iraqis welcoming U.S. forces with open arms. But now television pictures are showing looting and other signs of lawlessness. Are you, sir, concerned that what's being reported from the region as anarchy in Baghdad and other cities might wash away the goodwill the United States has built? And, are U.S. troops capable of or inclined to be police forces in Iraq?

Rumsfeld: Well, I think the way to think about that is that if you go from a repressive regime that has -- it's a police state, where people are murdered and imprisoned by the tens of thousands -- and then you go to something other than that -- a liberated Iraq -- that you go through a transition period. And in every country, in my adult lifetime, that's had the wonderful opportunity to do that, to move from a repressed dictatorial regime to something that's freer, we've seen in that transition period there is untidiness, and there's no question but that that's not anyone's choice.

On the other hand, if you think of those pictures, very often the pictures are pictures of people going into the symbols of the regime -- into the palaces, into the boats, and into the Ba'ath Party headquarters, and into the places that have been part of that repression. And, while no one condones looting, on the other hand, one can understand the pent-up feelings that may result from decades of repression and people who have had members of their family killed by that regime, for them to be taking their feelings out on that regime.

With respect to the second part of your question, we do feel an obligation to assist in providing security, and the coalition forces are doing that. They're patrolling in various cities. Where they see looting, they're stopping it, and they will be doing so. The second step, of course, is to not do that on a permanent basis but, rather, to find Iraqis who can assist in providing police support in those cities and various types of stabilizing and security assistance, and we're in the process of doing that.

Q: How quickly do you hope to do that? Isn't that a pressing problem?

Rumsfeld: Wait. Wait. But in answer to your -- direct answer to your question are we concerned that this would offset it, the feeling of liberation -- suggests that, "Gee, maybe they were better off repressed." And I don't think there's anyone in any of those pictures, or any human being who's not free, who wouldn't prefer to be free, and recognize that you pass through a transition period like this and accept it as part of the price of getting from a repressed regime to freedom.

Myers: Charlie, another point, I think, to make is that it's uneven throughout the country. In the south, where we've been for some time, where the clerics have been speaking out against looting and for civil order, where some of the Iraqis citizens themselves are saying let's don't loot, and that sort of thing, that actually the situation is pretty good. In Umm Qasr it's in good shape. In Basra, looting has been going down over time as we track it. So as we go up from the south, it's getting better and better for obvious reasons. So --

Rumsfeld: Let me say one other thing. The images you are seeing on television you are seeing over, and over, and over, and it's the same picture of some person walking out of some building with a vase, and you see it 20 times, and you think, "My goodness, were there that many vases?" (Laughter.) "Is it possible that there were that many vases in the whole country?"