Month: January 2014

President Obama’s State of the
Union address last night was in no small part an attempt to
rehabilitee himself and his party after the damage done by the
botched rollout of Obamacare. That’s why so little of the speech
was focused on the law, which has never been popular, and has
become even
less so over the last few months.

But he had to say something about his signature
legislation. And so, at the end of a section of providing Americans
financial security, he segued into a brief litany of upbeat
statements about how the law has changed health care for the
better. The problem is that not all of it was exactly true.

For example, he said that the law’s benefits came “while adding
years to Medicare’s finances.” But the only way you get to that
conclusion is through gimmicky double counting. Now, since gimmicky
double counting is how the program keeps track of its trust fund,
Obama’s statement was, on paper, true. But as the Congressional
Budget Office has explained rather clearly, the “savings”
attributed to Medicare’s trust fund are actually the same dollars
being used to finance the law’s coverage expansion. 

“To describe the full amount of [Medicare] HI trust fund savings
as both improving the government’s ability to pay future Medicare
benefits and financing new spending outside of Medicare would
essentially double-count a large share of those savings and thus
overstate the improvement in the government’s fiscal position,” the
budget office said
in a 2009 letter. That’s not just CBO’s judgment. It’s also the
position of Medicare’s chief actuary, Richard Foster. While he was
still with the program, he
explained several
times that the Medicare savings were basically an illusion
created by the program’s accounting conventions.

A few lines later, Obama also touted enrollment in health
coverage through Obamacare. “Already, because of the Affordable
Care Act, more than three million Americans under age 26 have
gained coverage under their parents’ plans,” he said. “More than
nine million Americans have signed up for private health insurance
or Medicaid coverage.”

The first half is correct. But it’s not right to credit
Obamacare with providing private coverage or Medicaid to more than
nine million Americans.

That number comes from combining the six million people the
federal government says have signed up for Medicaid coverage since
Obamacare’s exchanges went live in October with the three million
people it says have signed up for private coverage. 

The Medicaid count dramatically overstates the effect of the
law, however, because it includes people who were already enrolled
in Medicaid and merely renewed their coverage. More than half of
the enrollments in the first two months were in states that didn’t
even participate in the Medicaid expansion.
As Sean Trende recently pointed out, the true number of people
enrolled in Medicaid because of the law is likely an order of
magnitude smaller than these counts suggest.

As for the three million private coverage sign-ups—they’re just
that: sign-ups. It’s the number of people who have selected a plan,
whether or not they have paid a premium. And given the lags and
delays in payment deadlines, it seems safe to assume that
collecting payments has been a bumpy process so far. One
well-connected insurance industry consultant has said that we
should
expect a 10-20 percent attrition rate as a result of
nonpayment.

And of course, none of this tells us how many people are
newly insured as a result of the law. Insurers and
consumer surveys have suggested that the majority of the sign-ups
so far have come from people who already carried health
insurance.

It’s a sign of how big a disaster the law has been for Obama and
for Democrats that in the same year its biggest changes go into
effect, the most consequential legislative achievement of the Obama
era is shuffled reluctantly into the most high-profile policy
speech of the year. And it’s even more telling that not only does
Obama still have to downplay his signature achievement, he has to
rely on misleading statements to promote it. 

I spent the State of the Union
Address high on the CVS generic version of NyQuil (not as part of
Peter Suderman’s
drinking game, so it wasn’t even fun). Most of the speech was a
blur to me, other than a brief bit of rage when he described his
murderous use of drones as “prudent.”

Nestled into the seemingly neverending speech was the
introduction of some lady named Myra. She was going to help
Americans save money for retirement. Now that I’m off the drugs, I
see that he is actually referring to a new federally operated
savings program. Here’s the text from the speech:

Let’s do more to help Americans save for retirement. Today, most
workers don’t have a pension.  A Social Security check often
isn’t enough on its own.  And while the stock market has
doubled over the last five years, that doesn’t help folks who don’t
have 401ks.  That’s why, tomorrow, I will direct the Treasury
to create a new way for working Americans to start their own
retirement savings: MyRA. It’s a new savings bond that encourages
folks to build a nest egg.  MyRA guarantees a decent return
with no risk of losing what you put in.  And if this Congress
wants to help, work with me to fix an upside-down tax code that
gives big tax breaks to help the wealthy save, but does little to
nothing for middle-class Americans.  Offer every American
access to an automatic IRA on the job, so they can save at work
just like everyone in this chamber can.”

I am a middle-class American, and my bank is constantly asking
me if I want to open up an Individual Retirement Account with them,
so I’m a little skeptical that people aren’t saving for retirement
because they just don’t have access.

There wasn’t much information about this plan last night, but
this morning Josh Barro at Business Insider offered an
explainer. He says, “MyRA would be a program of small Roth IRAs
with access to a special, safe investment that pays a little better
than Treasury bills. Remember, a Roth IRA is a retirement account
where you contribute after-tax earnings, and can then
withdraw money in retirement without ever paying tax on your
investment returns.”

It does seem like a modest plan, compared to something like Iowa
Sen.
Tom Harkin’s proposal to create a national retirement pension
system (pdf).  

But this program will have costs. Barro calculates:
“Essentially, instead of issuing short-term Treasury bills at
almost no cost, the federal government will do a little bit of its
borrowing through this G Fund-like security, paying an extra point
or two of interest in the process. If you imagine a program at
scale with 50 million accounts averaging $5,000 in balances, the
cost to taxpayers would be $2.5 billion per year for every point of
interest rate premium.”

I’m not so much concerned about the costs so much as: one, the
suggestion that the administration has no idea why people don’t
save money on their own (and still thinks that home-ownership for
everybody is the way to go); and two, anything the government
provides as a voluntary service has the potential to be made
mandatory. It’s easy to imagine this new government program put
into place, and then in order to increase the “success” of the
program, pushing for more and more sign-ups. It is very easy to
imagine a future where anybody who doesn’t have an
government-recognized IRA or 401(k) plan being forced to
participate in this program.

Virginians who think of colleges and universities
as bastions of free inquiry and no-holds-barred arenas for
intellectual engagement might be shocked at how inaccurate that
picture can be. Some of the state’s colleges and universities have
put in place policies that make a mockery of such notions. A.
Barton Hinkle reviews Virginia’s mixed results found in a report on
the state of free speech on U.S. campuses.

View this article.

Last night, in one of the only
passages that departed in any significant way from his four
previous State of the Union Addresses (plus his 2009 SOTU-like
speech), President
Barack Obama made a curious and passing reference to
drone-warfare due process and America’s increasingly controversial
surveillance state:

So even as we actively and aggressively pursue terrorist
networks—through more targeted efforts and by building the capacity
of our foreign partners—America must move off a permanent war
footing. That’s why I’ve imposed prudent limits on the use of
drones—for we will not be safer if people abroad believe we strike
within their countries without regard for the consequence.

That’s why, working with this Congress, I will reform our
surveillance programs, because the vital work of our intelligence
community depends on public confidence, here and abroad, that
privacy of ordinary people is not being violated.

As

J.D. Tuccille and
Ed Krayewski have pointed out in these pages, what Obama calls
“prudent limits” are basically things that exist inside in his own
cranium, and therefore not particularly useful as a legal template
going forward. (Do remember that the Obama team
scrambled to think about creating drone rules before the 2012
election when they thought for a brief moment that they might lose
it…. Don’t worry, the fever soon passed.) And Jacob Sullum can
give you a succinct tour of Obama’s late-breaking
epiphany on surveillance reform.

But here’s a startling historical nugget I turned up when
conducting my annual
ritual of reading past SOTUs of presidents at the same juncture
of their second terms: Do you know who had a longer and more
convincing passage about personal privacy vis-a-vis the
surveillance state? Richard Nixon.
In 1974:

One measure of a truly free society is the vigor with which it
protects the liberties of its individual citizens. As technology
has advanced in America, it has increasingly encroached on one of
those liberties—what I term the right of personal privacy. Modern
information systems, data banks, credit records, mailing list
abuses, electronic snooping, the collection of personal data for
one purpose that may be used for another—all these have left
millions of Americans deeply concerned by the privacy they
cherish.

And the time has come, therefore, for a major
initiative to define the nature and extent of the basic rights of
privacy and to erect new safeguards to ensure that those rights are
respected.

I shall launch such an effort this year at the highest levels of
the Administration, and I look forward again to working with this
Congress in establishing a new set of standards that respect the
legitimate needs of society, but that also recognize personal
privacy as a cardinal principle of American liberty. 

On the one hand, this is an always-timely reminder that
presidents are inherently full of shit, presiding over actions that
make a mockery of their rhetoric. On the other, it’s hard to think
of a more damning indictment than the most imperious president of
my lifetime coming off as more robustly concerned with the 4th
Amendment than the constitutional law professor who was elected in
a spasm of disgust at executive-branch overreach. Whoever thought
that saying “Obama, you’re no Nixon!” would be an insult?