Not Too Late To Veto, Mr. President
This is from economist John Seater via Don Luskin:
"I just read that the Senate has added a provision requiring insurance companies to cover mental illness. Somehow, insuring mental illness doesn't seem closely related to an imminent credit freeze, but it is just the kind of thing that one would expect our illustrious politicians to sneak through amidst a panic that they themselves have had a hand in creating."
I blogged on this mental illness coverage before, specifically regarding Timothy's Law. So we basically now have Timothy's Law gone national. Somewhere there is a government agency estimate on how much this law will cost, if someone can find that number for me, I will happily times that number by 7 to arrive at the minimum cost to you and me of this misguided provision that has absolutely nothing to do with the financial system. Regardless of whether you think we just bailed out Wall Street or in fact bailed out Main Street, we surely just bailed out the mentally ill by throwing billions at the very subjective and amorphous problem of mental health.
Two predictions. First, to the extent that Republicans were going to get slaughtered in November, you can increase those odds. They had an opportunity to pass this craptastic bill free and clear of normal Washington bullshit, but they cratered it and now we have the exact same plan adorned with the usual variety of disastrous Washington add-ons and distortionary rules. Forget about Nancy Pelosi's horrible leadership or all the Dems that voted no the first time around. This albatross will hang around Republican necks. Second prediction - health insurers will leave the business. This has the potential to grow like the Blob and it will wreck many a business model in the health insurance biz.
Which leads me to why the market is barfing now that we officially have this thing. Wells Fargo is going to raise $20 billion to absorb Wachovia. JPMorgan raised a few billion to take in WAMU. Warren Buffett let loose a few billion. The money is there to recapitalize the banks and it seems to be flowing in. So do we really need this $700 billion intervention? Probably not, but now we have it along with what could be a multi-billion dollar mandate that will drive healthcare insurance costs up for everybody. Thank you Washington.
"I just read that the Senate has added a provision requiring insurance companies to cover mental illness. Somehow, insuring mental illness doesn't seem closely related to an imminent credit freeze, but it is just the kind of thing that one would expect our illustrious politicians to sneak through amidst a panic that they themselves have had a hand in creating."
I blogged on this mental illness coverage before, specifically regarding Timothy's Law. So we basically now have Timothy's Law gone national. Somewhere there is a government agency estimate on how much this law will cost, if someone can find that number for me, I will happily times that number by 7 to arrive at the minimum cost to you and me of this misguided provision that has absolutely nothing to do with the financial system. Regardless of whether you think we just bailed out Wall Street or in fact bailed out Main Street, we surely just bailed out the mentally ill by throwing billions at the very subjective and amorphous problem of mental health.
Two predictions. First, to the extent that Republicans were going to get slaughtered in November, you can increase those odds. They had an opportunity to pass this craptastic bill free and clear of normal Washington bullshit, but they cratered it and now we have the exact same plan adorned with the usual variety of disastrous Washington add-ons and distortionary rules. Forget about Nancy Pelosi's horrible leadership or all the Dems that voted no the first time around. This albatross will hang around Republican necks. Second prediction - health insurers will leave the business. This has the potential to grow like the Blob and it will wreck many a business model in the health insurance biz.
Which leads me to why the market is barfing now that we officially have this thing. Wells Fargo is going to raise $20 billion to absorb Wachovia. JPMorgan raised a few billion to take in WAMU. Warren Buffett let loose a few billion. The money is there to recapitalize the banks and it seems to be flowing in. So do we really need this $700 billion intervention? Probably not, but now we have it along with what could be a multi-billion dollar mandate that will drive healthcare insurance costs up for everybody. Thank you Washington.
posted by Donny Baseball at 2:15 PM
5 Comments:
You know what is to me the most disturbing aspect of the housing bubble and credit crisis? The supply siders didn't see it coming. That is really disturbing. It suggests that there is something is wrong with the theory. Don't you think?
And this one is going to make Luskin look very bad: Krugman predicted the housing bubble and its aftermath in 2006. Krugman et al think Luskin is stupid. Maybe?
I disagree. I think many SSers saw this coming - Wesbury for one. But I don't see how this goes against SS theory. We lowered the tax on housing investment gains, so we got more investment in housing (in addition to lowering the outright cost of it through Fannie and Freddie). You could argue that this crisis is equally an indictment of Keynesian theory.
Well, Laffer did say California was in a bubble. But I don't recall Wesbury, or any supply sider, made the correct prediction with respect to the aftermath of the housing bubble. Do you? On the other hand, Krugman, the economist that supply siders hate the most, made all the right forecast. I am not discredit the supply side economics entirely, since I believe in Say's law. But the fact that Krugman had it right while supply siders didn't is very disturbing. It tells me that something important is missing. The monetary policy part of supply side economics is really bad, in my opinion. The funny thing is Mundell is a monetary policy expert. It's pretty screwed up.
STOCKHOLM -- American Paul Krugman won the Nobel economics prize on Monday for his analysis of trade patterns and location of economic activity.
Maybe Krugman is right, i.e., Luskin is stupid.
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