There is a whole crowd of new-home buyers today who are requesting little extras from their builders. Because of this, builders are being routinely asked to provide loads of features that buyers once considered luxury items available only to the wealthy few. For example, a decade or two ago, buyers thought of real hardwood flooring in their living rooms and extra-large bedroom suites as luxury items. They considered granite countertops in kitchens and two-sink vanities in master bathrooms to be beyond middle-class wallets.

Today's buyers, though, are different. They have found that many builders include that hardwood flooring and those large bedroom suites as standard in new homes. This taste of luxury has only fueled a desire for more, and buyers today have transformed other, more extravagant extras -- double-sink vanities, for example, or granite countertops -- into rather routine upgrades.

But let's move on to the real "oh please" moment -- the "tax advantages" issue. As it turns out, Krugman is less interested in what the plan will accomplish than he is in how the benefits will be distributed.

But for people whose income puts them in high tax brackets, these accounts are a very good deal; making the premiums deductible turns them into a great deal. In other words, health savings accounts will offer the already affluent, who don't have problems getting health insurance, yet another tax shelter. Meanwhile, health savings accounts, in the view of many experts, will actually increase the number of uninsured.

Ohkay -- first we have that patented Krugman phrase "in the view of many experts" -- since this is the New York Times and Krugman cites many experts who know more than you, the reader, the case is closed. Medical savings accounts will increase the number of uninsured.

Actually, Krugman may be offering the reader a silly Clintonian play on words. Of course these accounts will reduce the number of insured. Medical savings accounts replace insured people with people who are and have saved for medical expenses!

...look now to what the 9/11 report has to say about the man to whom President Clinton, under attack by an independent counsel,delegated so much in respect of national security, Samuel "Sandy" Berger. The report cites a 1998 meeting between Mr. Berger and the director of central intelligence, George Tenet, at which Mr. Tenet presented a plan to capture Osama bin Laden.

"In his meeting with Tenet, Berger focused most, however, on the question of what was to be done with Bin Ladin if he were actually captured. He worried that the hard evidence against Bin Ladin was still skimpy and that there was a danger of snatching him and bringing him to the United States only to see him acquitted," the report says, citing a May 1, 1998, Central Intelligence Agency memo summarizing the weekly meeting between Messrs. Berger and Tenet.

In June of 1999, another plan for action against Mr. bin Laden was on the table. The potential target was a Qaeda terrorist camp in Afghanistan known as Tarnak Farms. The commission report released yesterday cites Mr. Berger’s "handwritten notes on the meeting paper" referring to “the presence of 7 to 11 families in the Tarnak Farms facility, which could mean 60-65 casualties." According to the Berger notes, "if he responds, we’re blamed."

On December 4, 1999, the National Security Council’s counterterrorism coordinator, Richard Clarke, sent Mr. Berger a memo suggesting a strike in the last week of 1999 against Al Qaeda camps in Afghanistan. Reports the commission: "In the margin next to Clarke’s suggestion to attack Al Qaeda facilities in the week before January 1, 2000, Berger wrote, 'no.'" In August of 2000, Mr. Berger was presented with another possible plan for attacking Mr. bin Laden.This time, the plan would be based on aerial surveillance from a "Predator" drone. Reports the commission: "In the memo’s margin,Berger wrote that before considering action, 'I will want more than verified location: we will need, at least, data on pattern of movements to provide some assurance he will remain in place.'"

In other words, according to the commission report, Mr. Berger was presented with plans to take action against the threat of Al Qaeda four separate times — Spring 1998, June 1999, December 1999, and August 2000. Each time, Mr. Berger was an obstacle to action. Had he been a little less reluctant to act, a little more open to taking pre-emptive action, maybe the 2,973 killed in the September 11, 2001, attacks would be alive today.

Alonzo Fields [White House butler]: Now, when I went upstairs, they had set up in the bedroom and they were taking communications from what was going on. And Paul Watson came out and he had this message and he says, "Mr. President, the whole damn Navy is gone. What in the hell are we going to do?" And the President and Mr. Hopkins -- he said to Mr. Hopkins, he says, "My God, my God, how did it happen?" He had his head in hands and at his desk like this. He says, "How did it happen?" He says, "Now I'll go down in history disgraced."

David McCullough [narrator]: [voice-over] At a Cabinet meeting that night, Labor Secretary Frances Perkins found Roosevelt deeply shaken. "He was having actual physical difficulty in getting out the words that put him on record as knowing the Navy was caught unawares."

Alonzo Fields: He looked drawn. His face was kind of pale-ish-like and tired-like, and it seemed to be a maze around him, just a blind sort of fog around him. When I looked at him, I got that impression from him, that he was in a fog, and he was so despondent over the fact-- he said, "We don't know what's out there."

Regarding Bush himself, much has been made, in Michael Moore's documentary Fahrenheit 9/11 and elsewhere, of the president's 11-minute "freeze" in a Florida classroom on hearing the news of the September 11 attacks. As for the US intelligence apparatus, it has been under fire for its apparent failures in the lead-up to the Iraq war, and the 9-11 Commission's report is sure to point to other failures preceding September 11. Yet such lapses are far from unprecedented.

In 1967, when the late Yitzhak Rabin was chief of staff of the Israeli armed forces, there occurred a rapid escalation of events that was to culminate in war between the Jewish state and its Arab neighbors. Just before the outbreak of hostilities, Rabin suffered a nervous breakdown and spent not 11 minutes, but the opening phase of the Six Day War in seclusion and under a doctor's care.

At the same time, some Israelis had serious doubts about the ability of their intelligence apparatus to cope with the crisis, and the mood in Israel was deeply pessimistic. The deeply divergent opinions suggest that in spite of the presumed prowess of Israeli intelligence and its spy network in surrounding countries, its specialists made serious mistakes in assessing Egypt's and Syria's military forces at the time. In the event, however, the war was over in just six days, and Rabin later went on to become prime minister.

...the evidence doesn't support it. Data from Assurant Health and eHealthInsurance on their early experience with HSAs shows that 43% of those people purchasing HSAs were previously uninsured, and 46% had family incomes less than $50,000. It's no mystery as to why: HSA plans, because they have higher deductibles, are cheaper than traditional plans. The data also suggests that it is people with more health risks who may be more likely to purchase HSAs.

Hogberg also catches Krugman once again uncritically quoting that often-heard yet debunked figure that there are 44 million Americans without health insurance. But he unleashes his most potent scorn against Krugman's contention that government reinsurance of health risks will lower the costs of insurance:

How can an economist contend that what amounts to a government subsidy will actually reduce the amount that America spends on health care? As Linda Gorman, an economist with the free-market Independence Institute, puts it, "When the government gets involved it is very difficult to control costs because no one in charge profits from cost control. The free market tries to accurately price risk to reflect the additional costs of potentially expensive behaviors, say, charging people more if they smoke or skydive. When politicians control prices, politically correct risks are likely to get a free pass." Indeed, the health-care costs are likely to rise much higher under the Kerry plan....insurance companies will have less incentive to price risk since they will be able to pass much of the resulting costs along to the federal government.

The only element of Krugman's health-care columns that Hogberg leaves undemolished is Krugman's admission that the cost of Kerry's proposals will entirely eat up the increased revenues Kerry expects he'll get by rolling back Bush's tax cuts. As we pointed out a couple weeks ago, it seems that all of a sudden all of Krugman's paranoia about debt and deficits -- all  that "fiscal irresponsibility" and fear of America becoming a "banana republic" -- is out the window.

Update... Reader Mike Tocci says: "Alas, I’m just a simple programmer, but I really believe these academic types need to do some sort of internship in the private sector as part of their education. All I needed to know about the way the economy works I learned working at Burger King!"

Posted by Donald L. Luskin at 8:31 AM | link    

Wednesday, July 21, 2004

Posted by Donald L. Luskin at 10:47 PM | link    

Posted by Donald L. Luskin at 7:48 AM | link    

Tuesday, July 20, 2004